“Because of globalization, the world experienced dramatic changes” in the past several decades, Min Zhu, deputy managing director of the International Monetary Fund, told an audience of about 50 students and community members in a talk at the Joukowsky Forum Tuesday evening.
Zhu, whom Bill Rhodes ’57 described as “one of the most respected and listened-to economists from China in the world today,” said in his lecture that increasing interdependence over the last few decades has completely restructured the global economy. Zhu highlighted China’s growth as an economic powerhouse.
The lecture, titled “A Changing China in a Changing World,” was the third in a series on international finance cosponsored by the Watson Institute for International Studies and the Rhodes Center for International Economics and Finance.
President Christina Paxson, who once taught Zhu at Princeton’s Woodrow Wilson School of Public and International Affairs, attended the talk, prompting Zhu to joke that he hoped she would give him a higher grade on his talk than the C- he had received in her class.
In a globalized economy, domestic changes in powerful countries have a massive impact on the global market, Zhu said. He spoke about how financial shocks to a single national economy can have huge ramifications, citing the 2008 financial crisis in the United States as an example. Even small adjustments in the financial policy of a key economy such as the United States or China can have a significant impact on trading partners, he said, adding that “financial links define today’s globalization.”
Zhu also talked about the growth of emerging and developing economies, which he said are becoming “the global growth engine” and completely changing the global demand structure. These nations are catching up at unprecedented levels, he added, consuming more, producing more and occupying more significant positions in the global market.
After discussing increased globalization in broad terms, Zhu turned to China’s particular relationship with the global economy. He called China a manufacturing powerhouse that provides a crucial link between Asian economies and the rest of the world. The nation’s economic growth is rapid, and China continues to assert itself as a major component of the interconnected economic web, he said.
Despite the many ways in which China is developing, Zhu said its current growth model of high investment and low consumption is not sustainable. Zhu partially attributed the low levels of consumption to low household income, restrictions on the private sector and the speed of China’s economic ascent.
Zhu said China needs to enact structural reforms such as private sector deregulation, implementation of social safety net policies and improved educational opportunities to reduce unequal income distribution and stimulate further growth.
“It’s important for China to learn the lessons from its international experience,” Zhu added. He said he believes China’s industries will be further liberalized and opened up to the global marketplace in the future.
“Much more change is coming,” Zhu said.
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