Money Is Power An Inside View of the IMF's Massive Global Influence
Part 9: 'Europe Must Reform Itself, That's Clear'
A short time later, Min Zhu serves Chinese green tea in his office, which is number 12-200 C. He doesn't use teabags. "Don't swallow the leaves," he says. "You'll need them again, because the second cup is the best," he says with a smile.
Most of the offices at the Fund are sparsely decorated, but there is not a single picture in Min Zhu's orderly office, not even a photo. He wears rimless glasses and sports a ponytail, handing over his business card with both hands. The card reads "Special Advisor to the Managing Director." It's a new position, as new as China's influence at the Fund.
Min Zhu is the human face of the billions coming from China, and Min Zhu is here to explain Asia to his boss, Strauss-Kahn.
"I don't get paid by China," he says. "I think as an IMF man." These are the words of a diplomat, but in the world in which Min Zhu operates, no positions are filled without a nod to national interests.
When he talks about the new Fund, the changed Fund, Min Zhu says that the IMF today is "an international organization" that is supposed to "supervise and sustain global macro-stability, on both an economic and financial level." The Fund observes and analyzes, and its true strength stems from the fact that an insecure world is searching for economic competence, and that the IMF's competence is no longer questioned, the way it was after the Asian crisis in the 1990s.
What the World Could Learn from Asia
The IMF's purpose is to interpret and admonish. It may have a better understanding of crises than others, but it has little power to impose sanctions. It is constantly dependent on the instructions of those it is intended to monitor.
Min Zhu is proud of the Fund's new tools. One of them is the Financial Sector Assessment Program (FASP), which the IMF's detectives can use to monitor the global financial market and its complex instruments, those with complicated names like credit default swaps. The new IMF, says Min Zhu, is a beacon in the lunacy of the crisis. He likes it when IMF staffers are referred to as "global citizens who present global issues and developments in a neutral way."
Min Zhu says that the rest of the world could learn a thing or two from Asia's emerging markets, which he says have "a stronger heartbeat and better macro-economic conditions" than European countries, which leads to "greater political reserves." Deficits are lower, he says, and so is foreign debt, and many of the emerging markets are holding foreign exchange reserves, as well as having reached "reasonable inflation rates." Also, he adds, the Chinese and Indian markets understood, much earlier than the Americans, for example, that real estate has been the "most unstable market worldwide over the last 50 years." As a result, they have already introduced careful monitoring.
Is he predicting the fall of Europe and the rise of Asia? Min Zhu isn't that quick to make such assessments. He knows that China, outside its major cities, is still poor, and he knows that Europe has its strengths. "Yes, it sometimes takes a while to get decisions through all the parliaments, but Europe is taking steps, solid and strong steps in one direction," says Min Zhu.
But there are two things he finds amazing about Europe, an assessment he shares with his French boss. "There is the issue of social welfare, and demographic change. Everybody has longevity, so the cost for the pension and health insurance is very different today than, say, 20 years ago. The model, of course, does not fit today's needs. It would not survive tomorrow." Besides, he adds, Europe needs a growth strategy, an industrial strategy. Europe must invent new products and sectors that meet the demands of the world -- otherwise, with labor costs of $30 an hour, they won't prevail "against a country that pays $3." Reforms -- that's what it all boils down to, even at the new IMF, except that the target of the reforms has changed.
"Europe must reform itself, that's clear," says Min Zhu, the Chinese adviser at the International Monetary Fund. And then he adds, with a smile: "We'll be happy to help."
Translated from the German by Christopher Sultan
- Part 1: An Inside View of the IMF's Massive Global Influence
- Part 2: From Capitalist Mean Machine to Think Tank
- Part 3: Instant Flows of Cash
- Part 4: Shedding Its Image as the Headquarters of Hardcore Neoliberalism
- Part 5: Dropping 250 Billion over Europe
- Part 6: 'The End of Begging'
- Part 7: 'A Greek Bankruptcy Is Unavoidable'
- Part 8: Europe's Euro Challenge
- Part 9: 'Europe Must Reform Itself, That's Clear'