Lin’s appointment thus marks a major break with political tradition. Hitherto there have been hardly any appointments of Chinese to senior positions in the major international Organizations Martin Jacques IN June, Justin Lin Yifu, a Beijing professor, will take up the post of chief economist at the World Bank. Nothing could be a clearer sign of the times.

This is the number two job in one of the two major international economic institutions, the other being the International Monetary Fund. Earlier, incumbents have included the Nobel prize winner Joseph Stiglitz, the former US treasury secretary Lawrence Summers and the UK’s Nicholas Stern.

Previously the top jobs in these two outfits have always been shared between Americans and Europeans. Lin’s appointment thus marks a major break with political tradition. Hitherto there have been hardly any appointments of Chinese to senior positions in the major international organisations.

In the past the World Bank, like the IMF, has been the tame captive of US and European governments, never straying from the prescribed western free-market orthodoxy. The very public disagreement at the time of the Asian financial crisis between Stiglitz and his counterpart at the IMF, Stanley Fischer – with the World Bank man strongly critical of the IMF’s disastrous policy towards the crisis, and supportive of Malaysia’s temporary imposition of capital controls – was highly unusual. But the appointment of a Chinese chief economist takes us into an entirely new realm.

At the centre of Chinese policy remains a highly interventionist state and state-owned firms. Lin himself has written that the government is the most important institution, determining whether development is successful, and argues that privatisation is neither necessary nor sufficient for making Chinese state-owned enterprises more efficient.

Imagine such sentiments being expressed by the Bush or Clinton administrations, or Gordon Brown for that matter. Nonetheless, Lin’s appointment is a clear indication that China can no longer be ignored, notwithstanding the fact that it espouses policies at variance with western free-market orthodoxy.

China, by virtue of its growing economic power, is in the process of barging its way into the citadels of global economic governance. Western governments are faced with a difficult dilemma: either they can choose to hold China at arm’s length until it can no longer be ignored, or alternatively they can usher China into the corridors of power before that decision becomes, in effect, a question of force majeure. Lin’s appointment suggests that in this case a more far-sighted approach is being pursued.

The entry of the Chinese into the highest echelons of the World Bank parallels the extraordinary turn of events at the back end of last year when major Wall Street investment banks were forced to turn to Chinese banks and the China Investment Corporation, among others.

The financial pillars of Wall Street, as a consequence, are now significantly underpinned by Chinese money. Like the appointment of Lin, these events herald the arrival of China not only at the centre of the global economy, but in the very heartlands of American financial power. It would be naive to think that Lin’s appointment will result in a major shift in the policies of the World Bank. The latter will still be a creature of Washington.

But nor will it be possible for Lin’s voice to be ignored. And if that is true now, it will become increasingly the case in the future. The western countries that dominate them, along with Japan, account for a declining share of global economic activity, and, with the rise of countries like China and India, that proportion is destined to fall rapidly over the next two decades.