US official critiques IMF for being 'Too Polite' on China

October 02, 2024 (MLN): The International Monetary Fund is "too polite" when it comes to criticizing China's economic policies and should more fully disclose financing assurances given by China and some other countries to support IMF loan programs, a senior U.S. Treasury official said on Tuesday, Reuters reported.

Brent Neiman, the Treasury's deputy undersecretary for international finance, said the IMF has failed to apply enough analytical rigor to China's industrial policies.

Speaking at an event hosted by the OMFIF financial think tank, Neiman offered unusually pointed criticism of the IMF's approach to China ahead of IMF and World Bank annual meetings later this month.

The Treasury manages the dominant U.S. shareholding in the IMF and has repeatedly warned China about its industrial overcapacity, technology transfer and currency practices over the past year, including during a trip to China by Treasury Secretary Janet Yellen that laid groundwork for higher U.S. tariffs that took effect last week.

Neiman said the IMF needed to be a "ruthless truth teller," but that its annual economic assessment on China do not give adequate attention to exchange rate and industrial policies.

"The IMF does not publicly comment on the role of state-owned banks in managing China's exchange rate or on why changes in the People’s Bank of China's balance sheet don't line up with reserve transactions in China's balance of payments data," Neiman said.

An IMF spokesperson could not immediately be reached for comment. The IMF and World Bank will assess a number of policies during the week of Oct. 21 at their annual meetings in Washington.

Neiman also criticized the IMF's lack of transparency in disclosing external financing assurances given by China and other countries to supplement IMF loan programs. Such assurances were given in recent programs for Argentina, Ecuador and Suriname, that were not delivered or significantly delayed, he said.

The IMF last week approved a $7 billion program for Pakistan that included financing assurances from China, Saudi Arabia and the United Arab Emirates, but declined to provide details on the assurances.

Neiman said the IMF also only referred to China as Ecuador's "main bilateral creditor" in its program documents adding that such "politeness" can reduce incentives for creditors to honor their assurances in a timely manner.

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