Could Strauss-Kahn’s successor be Chinese?
By George Chen
The opinions expressed are the author’s own.
So, Dominique Strauss-Kahn has resigned with immediate effect. But to the International Monetary Fund it’s hardly the end, just a new beginning.
So who will be the new leader of the IMF? In Beijing, there’s growing ambition and confidence that a Chinese candidate should be appointed, or at least considered.
Zhu Min, a native of Shanghai who experienced the horrible Cultural Revolution and then managed to be admitted into the prestigious Fudan University after the political movement ended, is widely considered and promoted by domestic media as a strong Chinese candidate for the top IMF post.
In the West, Zhu is probably not so well known, although he made his reputation in the banking world after he helped the Bank of China go public in Shanghai and Hong Kong. Last year, Zhu was named by Strauss-Kahn as his special advisor in the IMF, providing Zhu with an international platform from which to raise his profile.
Zhu also studied at Princeton University and John Hopkins University where he obtained a doctorate degree in economics. He speaks fluent English. He’s also widely considered in the financial industry as a master of presentation and communication skills — he led the IPO roadshows for the Bank of China in 2006. Later he was promoted to be a deputy governor of China’s central bank, the People’s Bank of China.
Another possible candidate promoted by domestic media and some scholars and economists is China’s central bank chief Zhou Xiaochuan. Some money-losing Chinese investors say Zhou knows how to do nothing but raise banks’ required reserve ratio again and again, which is already at a record high of 21 percent.
Zhou is no stranger to the West. To some extent, he may be considered even more influential in moving global markets than U.S. Federal Reserve chief Ben Bernanke, especially in the wake of the global financial crisis as the world looks more to China for economic trends.
Zhou, who was born in 1948 and took the top central banker post at the end of 2002, could retire next year when Vice-President Xi Jingping is expected to take over the top leadership from President Hu Jintao and a new administration is formed. Were Zhou to move to the IMF, he could earn some decent money as central bank chief in addition to keeping a high profile on the global financial stage. Whereas now he is considered a civil servant, Zhou’s monthly salary may be just a couple of thousand yuan.
Neither Zhou nor Zhu have made any public comment on their interest in the post, but Zhou last night said something meaningful for China in a statement on the central bank’s website. Zhou noted that the IMF’s future leadership should reflect the growing clout of emerging economies, joining other developing nations in pressing for greater influence on the world stage.
The reason I raise the topic here is not just because of the importance of the IMF but more so because Beijing’s growing ambition in international financial affairs could reflect its growing determination to make the yuan more internationally powerful.
I am not saying Beijing wants to make the yuan fully convertible anytime soon, but it’s clear the government is keen to use the yuan, a symbol of its strong economic development as well as a political weapon to defend its role and influence in global affairs.
This is good news for capital markets. If Beijing had shown no interest in the IMF, I might have been worried.
When you harbor the ambition of putting your man in the top IMF seat, you know you have to be part of the global game. When you play the global game, you must obey some of the rules, which means China’s economy must become more open and its currency stronger.
Beijing already has supported Taiwan-born Justin Lin to take the post of chief economist at the World Bank. It now has its sights on the top IMF post. As a native of Shanghai, I wish my Shanghai fellow Zhu Min the best of luck.
George Chen is a Reuters editor and columnist based in Hong Kong.
Photo: Zhu Min, special adviser to International Monetary Fund Managing Director Dominique Strauss-Kahn, attends a session at the World Economic Forum in Davos January 26, 2011 REUTERS/Vincent Kessler