IMF ‘Too Polite’ About China’s Policies and Financing Assurances, Says US Treasury Official

By David Lawder

WASHINGTON – A senior U.S. Treasury official expressed that the International Monetary Fund (IMF) is “too polite” in its critiques of China’s economic policies and should be more transparent about the financing assurances provided by China and other nations that support IMF loan programs.

Neiman, the deputy undersecretary for international finance at the Treasury, stated that the IMF has not applied sufficient analytical rigor to evaluate China’s industrial policies.

Importance:
Speaking at a financial event, Neiman critiqued the IMF’s approach to China just ahead of the upcoming IMF and World Bank annual meetings. The U.S. Treasury, which holds a significant share in the IMF, has consistently raised concerns about China’s industrial overcapacity, technology transfer, and currency practices. These issues were highlighted during a recent visit by Treasury Secretary Janet Yellen to China, which set the stage for increased U.S. tariffs that took effect recently.

Key Quotes:
Neiman emphasized that the IMF should act as a “ruthless truth teller,” arguing that its annual economic assessments of China do not adequately address exchange rate and industrial policies. He pointed out, “The IMF does not publicly comment on the role of state-owned banks in managing China’s exchange rate or on the discrepancies between changes in the People’s Bank of China’s balance sheet and the reserve transactions in China’s balance of payments data.”

An IMF spokesperson was not available for immediate comment as the organization prepares to evaluate various policies during the week of October 21 in Washington.

Context:
Neiman further criticized the IMF for lacking transparency in reporting external financing assurances from China and other nations that supplement IMF loan programs. He noted that these assurances have not been effectively delivered or were significantly delayed in recent programs involving Argentina, Ecuador, and Suriname.

The IMF approved a $7 billion program for Pakistan last week, which included financing assurances from China, Saudi Arabia, and the United Arab Emirates, but did not disclose details about these assurances. Neiman remarked that the IMF’s reference to China merely as Ecuador’s “main bilateral creditor” in its program documents reflects a level of “politeness” that may undermine incentives for creditors to fulfill their commitments promptly.