Lunch with the FT

August 23, 2013 7:01 pm

Lunch with the FT: Zhu Min

The IMF deputy managing director talks to Henny Sender about Mao, the fund’s profile in Asia – and about going home
Zhu Min©Luke Waller

Zhu Min, deputy managing director at the International Monetary Fund, has chosen to lunch at a Chinese restaurant around the corner from his offices in downtown Washington DC. Dressed down in khakis, a blue checked shirt and a navy jacket (it’s a Saturday), he still looks every bit the international diplomat.

Because Zhu, 61, goes on more than 30 overseas trips every year, it has taken months for the meal to be arranged. Two days after our lunch he will be off to Brazil, Kyrgyzstan, Jordan and Paris. His appointment in 2011 to one of four deputy MD positions at the fund made him one of the most senior Chinese people serving in a global policy organisation.

Zhu’s life is very different from that of his peers in Beijing. While he spends more time on an aeroplane than at his Washington home, state officials back in China have strict limits on their movements. They can only take two trips abroad a year and have further restrictions on the number of countries they can visit and how long they spend outside the mainland. Such constraints “are horrible,” Zhu says. “You have to understand, in the effort to treat everyone the same and have a unified policy, people with real business abroad [suffer], because local government officials want to travel when they don’t have any real business abroad.”

This is a fairly blunt criticism of an oppressive government policy and, as such, is unusual in our conversation. In general, when talking about anything from the Chinese Communist party’s travel rules to his own responsibilities, Zhu appears to inhabit a role he has played for most of his adult life: attempting to serve as a bridge between two sides that often fail to understand each other.

“I am always facing two ways,” he says, with a sigh. When news of his appointment broke, China’s state-run Global Times ran a comment piece headlined: “Zhu Min bears weight of a nation in new IMF role”.

Zhu says he has no doubt that he works for the fund and reflects its views rather than that of the Chinese central bank, where he was deputy governor, and which originally sponsored his appointment. “I represent the IMF. I serve the world. I am responsible for 70 countries,” he adds. “China has an executive director [at the fund] to represent its policies”.

Our chat is interrupted by a waitress who slams down two menus encased in plastic binders. Before we order, we must decide on the tea. I defer to Zhu, who I assume will have stronger views on the subject than me. “I want good tea,” he instructs the waitress in Chinese. “Whatever is the best.” Most Chinese have much stronger preferences than this, but there is something characteristically diplomatic in the way Zhu defers to the waitress’s expertise. The tea, fresh with fragrant jasmine petals, arrives an instant later with an additional pot of hot water.

Zhu pours for me and we both sniff our bowls appreciatively. He then takes the initiative in ordering a simple meal of snow peas with garlic, mapo tofu (a spicy Sichuan speciality), and steamed fish with bamboo shoots, red peppers, and a sort of fungus considered good for the heart. We share, Chinese style. Despite the fact that I am talking in Chinese, suggesting that I have some familiarity with the culture, the waitress dismissively flings a fork and knife in my direction.

“Chinese food is much better in New York,” Zhu concedes as we discuss the small probability of getting really fresh fish here. “It is because New Yorkers care much more about the quality of the food than people in Washington.”

. . .

Born in 1952, Zhu looks far younger than he is, despite the hardships he experienced as a teenager in Shanghai during the Cultural Revolution. Zhu and his brother, who is four years younger, grew up in an initially privileged household in Shanghai. His father, who had studied economics at the elite Beijing University, was a government official, and Zhu received a high standard of primary education. He was requ­ired, for example, to master both a western musical instrument (he chose violin) and a Chinese one (the bamboo flute). But when Chairman Mao orchestrated the chaotic attacks on the establishment in 1966, both Zhu’s parents suffered greatly, along with many others in positions of authority who lost their jobs, their status, their friends, and often their lives.

Zhu was forced to drop out of high school (to this day, he lacks a high school diploma). He spent the next 10 years working at a food canning factory and driving a truck along the eastern seaboard. But he was fortunate because he was allowed to stay in Shanghai. His brother was sent to the impoverished Anhui province to work as a farmer.

It was only in 1977, when the universities reopened, that life finally returned to some sort of normality.

“My parents told me, you must help your brother pass his exams and get into college because he is in a worse situation than you,” Zhu recalls. “But I wanted to go to college as well. Imagine the competition [for places] after 10 years!”

Both brothers got into Fudan University, the best in Shanghai. Zhu, who had always been fascinated by physics, felt he was by then too old to take on that challenging subject, and when his father suggested economics (“to help rebuild China after the decade of chaos”), he followed his advice. It was a strange time. As with so many of his generation, the contrast between what he went through then, and where he is now, is so stark that sometimes life feels slightly unreal, he admits. “For 10 years, I did manual labour. Then the universities were reopened. I studied poetry and calligraphy ... I [had been] a truck driver. What is my real life?”

Both parents died while he was at Fudan, says Zhu, his eyes filling with tears. “They suffered a lot,” he adds, removing his glasses to dab at his eyes. “There was a huge human cost to the Cultural Revolution.” For a minute or two, I can’t ask him any more questions; he is too distressed.

Zhu and his brother both went on to serve as assistant professors and then continued their education abroad; Zhu at Princeton, where he received a masters in public administration at the Woodrow Wilson School, and his brother at Northwestern. In the early 1990s, Zhu taught economics while studying as a postgraduate at Johns Hopkins, receiving his PhD in 1996.

According to some Chinese academics who have worked in both countries, it could be 50 years before the quality of education in universities such as Fudan is comparable to that at the best US colleges. The party’s tight control of institutions, and its awarding of grants on the basis of loyalty rather than merit, mean that many of China’s best and brightest – whether students or teachers – go abroad to study. Does that worry Zhu?

“The important thing is to have choices,” he says. “In China today, people have choices. There is a huge difference between 30 years ago and today. I had to study Das Kapital for six hours a week for 18 months and we had two hours a week, for one semester, for western economic thought. Today, maybe you study Das Kapital for one hour.”

Zhu is on the board of Princeton, and the advisory board of the University of Chicago business school, both of which have links with Chinese educational institutions. “There is a lot of convergence today,” he notes.

The food arrives all at once and Zhu takes on the role of host, serving me portions of all three dishes. The waitress eyes me sceptically as I lift my plastic chopsticks. I glare at her.

When I first met him a decade ago in Beijing, Zhu was at the Bank of China, one of the country’s four major commercial banks. His job title was group executive vice-president; in practice, he was responsible for a great deal of the day-to-day running of the bank, and led its restructuring before its listing on the Hong Kong stock exchange in 2006.

In that assignment, as in all subsequent ones, Zhu had to maintain a delicate balance: between those who supported the IPO experiment and those who viewed it as a disturbing departure from Marxist methods. When Zhu suggested the bank hire an international accountancy firm to go over the numbers, the idea was received with horror in Beijing. “Can we let them see everything?” he recalls officials asking, implying that the balance sheet was a state secret. “They asked me, ‘How can we allow foreign directors? How can we lose our 100 per cent ownership?’ ”

Zhu persevered, recruiting foreigners to the board (though the party still makes all the crucial decisions) and to sensitive roles in risk management and credit. He also brought in advisers from foreign banks, including HSBC and Goldman Sachs, to give seminars on best practice. Meeting potential investors as the bank prepared to list in Hong Kong, he spoke in terms that non-Chinese investors could understand. (This was at a time when one offer document for a Chinese IPO warned that senior management risked execution if they were found guilty of fraud.)

“International practice was completely different [to the way things were done in China],” Zhu continues. “It was important for our state-owned enterprises to also be good companies. If we were following international standards, we needed to be commercial. Our leaders were very open-minded and forward-looking then.”

He pauses, then refills my plate and his own. Zhu today is still committed to reform, though he declines to answer directly when I ask whether the momentum for change in Beijing has waned over the past 10 years. He similarly resists my inquiries into the nature of the personnel changes at the top of Beijing’s regulatory agencies in recent months. But he certainly isn’t an obvious propagandist for the regime, as some senior Chinese economists can appear to be.

In 2009, after more than a decade at the Bank of China, Zhu joined the People’s Bank of China, where he was responsible for policy research. He had already shown a capacity for both boldness and prescience: in the summer of 2007, he argued in a speech that the world was at the beginning of a long deleveraging process, at a time when that view was not widely held (especially not at the Federal Reserve). At Davos the following year, he correctly predicted that China would maintain its high growth rate but argued that, because it would be achi­eved by increasing the role of the state, it would lead to a reversal of reform.

. . .

One of his preoccupations today is the tension generated by the interventionist policies of central banks – led by the Fed and the Bank of Japan – whose loose monetary policy has complicated the task of money management for other countries. “I debate with all central banks,” he explains. “They say, ‘Money is the only game in town.’ They have their own mandate and jurisdictions. But I ask countries to please take the global spillover impact into account.”

Many of Zhu’s recent speeches are about the contradiction of a China whose manufacturing sector is an active global player while its financial sector is still rigorously sealed off. He talks about the need for growth but also the need “to ensure that the benefits of growth are shared and shared fairly.” These views are hardly edgy but then, in his role at the IMF, he is not expected to be a rabble-rouser. Gently nudging people towards reform has always been more his style.

As the three platters slowly empty, we turn to less professional matters. In contrast to many Chinese who consider India the most primitive place on the planet, (there aren’t enough glitzy shopping malls), Zhu loves India and is a big fan of Indian spirituality. “Every human being has two sides,” he says. “There is the physical side and the journey of the soul. The hard question is what you have contributed at the end of it.”

For himself, Zhu hopes to contribute something towards repairing the relationship between the IMF and Asia. Since the Asian financial crisis just over 15 years ago, the fund has been viewed with some suspicion in many of the region’s capitals. Zhu feels progress is being made. “The rift between Asia and the IMF is much better,” he says. “I was in a regional conference in Seoul in 2010 and saw a big change ... Korean officials tell me, ‘We trust the IMF now.’ ”

Like many of his countrymen, Zhu seems entirely comfortable in the US, only peppering his day-to-day life with small reminders of home – whether it’s the mapo tofu he is eating now or the traditional Chinese brush paintings on the walls of his expansive office. He loves to spend weekends in the Hamptons. His daughter works at a boutique advisory firm on Wall Street. And, while most Chinese prefer their vegetables cooked (which, given the pesticides with which they are usually laced in China, is a good idea), he adores fresh salads.

I ask Zhu what he will do when he retires. Will he stay in the US or return to China? In some ways, my question is disingenuous. In the west, stature means choices but that isn’t always the case in China. His fate is always subject to the party. “Oh, of course, I will go back to China,” he says without hesitation. “After studying abroad, when I came back to China, people said, ‘It is good to come back to China, China needs you.’ I said to them, ‘But I need China. I am Chinese.’ ”

We have sat for nearly two hours. Most customers have left the restaurant, our tea is cold, and nobody has come to replenish it or the pot of what was once hot water.

The waitress, who has disappeared, is finally summoned and presents Zhu with the bill. When he hands it to me, as per the FT practice, she gives me a look that combines triumph and pity. She takes the credit card and reappears with two plates containing a few slices of melon and oranges and two fortune cookies.

Zhu opens the message he has removed from his cookie and reads it to me. It says, “The star of riches is shining upon you.” Mine has the same message. “That isn’t supposed to happen,” he says, shaking his head.

“More likely you than me,” I say as we walk out into the bright sunshine.

Henny Sender is the FT’s chief international finance correspondent

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Chalin’s

1912 I Street NW, Washington

Mapo tofu $9.95

Fish fillet with rice wine sauce $15.95

Snow peas with garlic $15.95

Complimentary jasmine tea, rice and fortune cookies

Total (incl tax) $46.04

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