China wants to become the world's banker

China’s Finance Minister Lou Jiwei (L) talks with International Monetary Fund (IMF) Managing Director Christine Lagarde during the China Development Forum in Beijing March 23, 2014.

The International Monetary Fund is meant to be the firefighter of the world economy. Recently, though, it is China that has responded to the ringing of alarms. First, it lent Argentina cash to replenish its dwindling foreign-exchange reserves. Next, with the rouble crashing, China offered credit to Russia. Then Venezuela begged for funds to stave off a default. Strategic interests dictate where China points its financial hose: these countries supply it with oil and food. But if a government anywhere goes bust, it now has an alternative to the IMF. In the past six months China has also invaded the development patch of the other great Bretton Woods institution, the World Bank. First, China–along with Brazil, Russia, India and South Africa–established the New Development Bank. Then it unveiled the Asian Infrastructure Investment Bank. Finally it launched the Silk Road Fund, backed by yet another development bank. None has started operating, but China has pledged more than $140 billion to these new institutions. ┬áChina’s clout should not be exaggerated. The yuan is not yet fully convertible and will not be for several years, which limits its influence. But the country’s leaders are clearly marshalling the cash and the strategy to become a banker to the world. This is at once welcome and worrying. More