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Resumption of China's Lawful Seats in International Financial Organizations (1979 - 1980)


 

Following the resumption of China's lawful seat in the United Nations at the 26th Session of UN General Assembly in 1971, the majority of UN organizations also resumed China's seats successively pursuant to the resolution of UN General Assembly, except for several international financial organizations including International Monetary Fund (IMF) and World Bank for many reasons.

After the adoption of the reform and opening-up policy, China was badly in need of funds and technology as its focus shifted to economic development. Participation in such international financial organizations would enable China to obtain a great amount of low-interest loans for economic and cultural projects as well as technological support and assistance conducive to the improvement of fiscal, financial and foreign exchange administration. After the establishment of China-U.S. diplomatic relations, the international situation became apparently milder. In this situation, Bank of China, which had been engaged in the research of international financial organizations, regarded this as a good opportunity for China to resume its lawful seats in the international financial organizations.

In order to further ascertain the rights and obligations of the member states of IMF and World Bank as well as the advantages and disadvantages of the membership for China, in May 1979, with the approval by the State Council, Bank of China together with relevant departments including Ministry of Foreign Affairs sent a delegation, which was led by Bank of China and participated by Ministry of Foreign Affairs, Ministry of Finance and National Bureau of Statistics of China, to Yugoslavia and Romania for an observation tour. After the observation and research, a concensus was reached in the delegation that the resumption of China's membership in IMF and World Bank would expand new channels for China to utilize foreign capital and technology, and be favorable for the expansion of its export and implementation of its reform and opening-up policy. In the observation report submitted to the State Council, Bank of China suggested inviting the officials of IMF and World Bank to visit China and carrying out negotiations in the name of Bank of China. Subsequently, subject to the approval of the State Council, Bank of China was committed to undertake the negotiations aiming at resumption of China's lawful seats in IMF and World Bank.

In March 1980, the delegation of IMF paid a visit to China upon invitation to negotiate with the delegation of Chinese Government headed by vice president of Bank of China regarding China's membership in IMF. The following results were generated: it was clarified that China had become an IMF member state as early as in 1945 with the lawful seat held by the Government of the People's Republic of China; that China's quota in IMF should be raised and its right to delegate an executive director should be resumed. On April 17, 1980, IMF announced a resolution to resume China's lawful seat in IMF.


On April 4, 1980, Wang Weicai, Vice President of Bank of China, and Dun Xin, Director of Asia Department of IMF, signed the memorandum on resumption of China's lawful seat in IMF.

After China's re-accession to IMF, an urgent task for it was to strive for an increase in China's quotas in this organization so as to make the quotas match China's national strength, because too few quotas will affect China's voice in IMF and the amount of loans available to China. After IMF proposed the relevant outline of observation, Bank of China and other relevant departments rendered active cooperation and, after a great deal of observation and preparation, suggested that China's quotas be increased to 1.2 billion units of special drawing right (SDR). On September 8, 1980, on its annual meeting, IMF increased China's quotas to 1.2 billion SDR from 550 million by a resolution, and gave an additional seat to China in the Board of Executive Directors of IMF.

In April of 1980, Chinese Government's delegation headed by vice president of Bank of China and the delegation headed by McNamara, President of World Bank, who was invited to Beijing, carried out negotiations concerning the resumption of China's membership in World Bank. Through the negotiations, both parties reached an agreement on the resumption of China's lawful seats in World Bank, International Development Association and International Finance Corporation. On May 15, 1980, World Bank Board of Directors officially resumed China's power of representation in World Bank.


On April 14, 1980, Wang Weicai, Vice President of Bank of China, and Golson, Vice General Legal Adviser of World Bank, singed the memorandum to resume China's lawful seat in World Bank

At the early state of the reform and opening-up, the resumption of China's membership in IMF and World Bank marked further integration of China into the international community and an important step forward on the road of opening up to the outside world.

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