China's growing power in the world economy was given official recognition yesterday as members of the International Monetary Fund voted overwhelmingly to increase the Asian giant's voting share in the institution.
However, the decision also fired the starting gun on a two-year debate over a more radical reform of the financial watchdog that will be particularly contentious in Europe.
The IMF said countries holding 90.6 per cent of votes had voted in favour of a two-stage plan that will see China, South Korea, Mexico and Turkey - the most under-represented states - increase their quotas. China moves from ninth to sixth largest member.
This was above the 85 per cent threshold required, but showed the measures did meet some opposition. One source said 50 countries, mainly in Latin America and the Middle East, had cast their votes against, although the IMF declined to comment.
The IMF will now start a review to find a formula for adjusting all the countries' voting shares, alongside a plan to boost the number of votes held by low-income countries to ensure they do not get left behind.
Rodrigo de Rato, the IMF's managing director, who pushed through the package, will tell its annual meetings in Singapore today: "This vote is a great start. It shows that the spirit of international co-operation is alive and well at the fund. These reforms are tremendously important for the future of institutions."
The review is likely to see a lot of wrangling by European countries that believe a formula based purely on economic weight would dilute their influence.
Mr de Rato drew up the voting reform as part of a package of measures to restore the fund's credibility, which had been affected by crisis-hit countries paying off their debts, denying the IMF an income and a raison d'être.
Mr de Rato said the decision would "add legitimacy" to other reforms, such as a move away from solving crises to identifying and preventing them.
The vote received a lukewarm reception from campaign groups. The Bretton Woods Project, an alliance of groups such as Oxfam and Christian Aid, described it as "completely inadequate". Peter Chowla, its senior policy officer, said: "It is a real shame that this proposal has succeeded despite the reservations of more than 50 developing countries."
Peer Steinbrueck, the German finance minister, admitted a defeat on the vote would have "cast a shadow over the meetings".
However, one observer noted it was ironic that a proposal to shake up the quotas was passed using a voting system that the IMF acknowledged was archaic.Reuse content