Min Zhu on Asia's Economy and More

Min Zhu is Special Advisor to the IMF’s Managing Director. He was most recently Deputy Governor of the People’s Bank of China, China’s central bank, and before that had more than a decade of commercial banking experience as a senior executive at the Bank of China.

Dezhi Ma of the IMF’s External Relations Department met with Zhu shortly after his arrival at the IMF to talk about Asia in the new world order, global economic issues, and the IMF’s relations with the region that is favored to lead the world out of crisis.

Asia in the global economy

F&D: How do you view Asia’s future in the world economy?

Zhu: Asia is obviously becoming more and more important in the global economy. In 2009, the United States had GDP growth of –2.4 percent; Europe, –4.8 percent. But India had 7.3 percent growth, and China 8.7 percent. The center of growth is moving from the West to Asia, and in particular emerging Asia. I think that’s a pattern that will continue for at least the next five years, which will change the whole global economic structure.

Another important change for Asia is its role in world trade. Because the crisis started in the advanced economies, trade flows from Asia to the advanced economies fell dramatically. In response, the region further strengthened intraregional trade flows. Looking forward, I believe we will see trade flows among the developing countries and emerging economies growing dramatically, and emerging Asia becoming the centerpiece of a whole new global trade pattern.

Because emerging Asia has strong growth, and advanced economies are experiencing rather weak growth, we see a multi-level, multi-speed recovery. Moreover, emerging Asia had much sounder financial situations, while the advanced economies are experiencing fiscal difficulties. So we can expect global assets to relocate, with Asia attracting more capital.

When these elements are combined, Asia will move more to the center of tomorrow’s global economy.

F&D: That seems to be an optimistic assessment from your side. Are there any big challenges, in terms of economic policymaking, for the region?

Zhu: I am optimistic about Asia’s future and its growth prospects. But that doesn’t mean everything is fine for Asia. Indeed, Asia is facing a lot of challenges. The recent crisis tells us that Asia is not isolated; it really is part of the global economy and finance. You see how much trade shrunk in the first quarter of 2009. You see how much capital fled in the fourth...