China’s decline is an exception, while its ascendancy has been a rule, asserted India’s Chief Economic Advisor on Monday.
“China has the resources, the political will, and a desire for wealth, power and stability deep rooted in its DNA to enable it to cushion this transition to the best of its abilities. If you take a long view of Chinese history, the exception has been a Chinese decline, the rule has been of a Chinese ascendancy in global markets,” Arvind Subramaniam said on Monday in New Delhi, responding to concerns about a slowdown in the world’s second largest economy.
India, the government’s top advisor argued, must support China’s bid to include its currency in the IMF’s basket of reserve currencies.
The IMF’s Special Drawing Rights (SDR) basket, currently includes the US dollar, euro, yen and British pound.
“India must support the entry of the Renminbi into the IMF’s basket of SDRs. As the Chinese currency becomes more and more international, China will have to open up its economy which is good for the world, good for China,” India’s Chief Economic Advisor argued in a conference in the Indian capital.
“India should seek to emulate the Chinese model of development that is based on exports and building reserves. The power of $3.5-4 trillion of reserves is not to be sneezed at,” he added.
The International Monetary Fund pushed back until Sept. 30, 2016, the date that China’s yuan could be included in its basket of reserve currencies.
The IMF executive board will take the final decision on the issue.
“While the board is currently expected to complete the review in November 2015, staff sees merit in agreeing now on a limited extension of the current valuation basket,” the IMF said last month.