Former IMF Executive Director Zhixiang Zhang: Seize the Opportunities, Even in the Hardest Times

By Yilin Wang
This interview was conducted in 2016.
It was subsequently published in the Blue Net China magazine, Vol.2.

I first met with Mr. Zhang at the IMF headquarter in Washington DC. It was the day before snowstorm, snow still covering the road. Mr. Zhang drove through the terrifying morning traffic jam all the way from Gathersburg to DC to meet us. Before the meeting, I had read a lot of materials about him, including his interviews and papers. I studied his viewpoints on the current credit rating mechanism and his analysis on the aftermath of RMB’s entering into the “basket of currency”. I couldn’t stop picturing his image in my head: the former executive director of IMF, former director of International Division of People’s Bank of China, and a professor at the Renmin University of China. The Mr. Zhang in my mind was serious and rather intimidating. But he wasn’t. 

You would never tell his age from his appearance: he was dressed in a suit, high spirited. He showed us around the headquarter, and finally to the thirteenth floor of the building where all the 24 executive directors worked. According to Mr. Zhang, eight countries around the world have their own representatives at the IMF, or the executive directors. They are the US, Japan, UK, England, France, Germany, Russia, Saudi Arabia and China. The other executive directors represented regions apart from these eight countries, each region consisting of several countries. Mr. Zhang held the position of Executive Director from China from 1996 to 1999. 

We only talked for about an hour. It felt like taking a history and economic class with a professor, or having a conversation with an upperclassman about college life. 

“Grab the opportunities, even in the hardest time.”

College students nowadays are always rushing. They rushed into the career field to look for the most ideal jobs, and were eager to achieve great accomplishment as soon as they started to work. Even in our freshmen year, my friends and I felt the great pressure from the job-hunting process that seemed to be approaching. Simply put, we were scared of a life that’s too simple. 

The story of Mr. Zhang, like many others of successful figures, delivered us the lesson that we needed to be patient and calm when faced with the odds in life. He talked about his experience when he first came to the States. It might be sheer luck, but he completed his college education during the Cultural Revolution in China, a time when very few people did that. He joked and told us that he was considered a student under the influence of “revisionism”. Secretary of State Henry Kissinger paid visit to China in 1971, and President Richard Nixon in 1972, when there wasn’t any official statement regarding the friendly relationship between China the the US. It was the “honeymoon” time for these two countries, when they kept testing each other and tried to probe into each other’s mind. Mr. Zhang came to the States during that time and worked for the Chinese correspondence office in the US. He spent his first eight months in the “Mayflower” hotel on Connecticut Avenue in DC. The living conditions there weren’t ideal, so he experienced a difficult time. But that eight months turned out to be rewarding, laying a solid foundation for his further development later. Before long he was transferred to the Chinese Central, and later to IMF, where he spent a total of eight years working from the base all the way up to Executive Director. During the years he worked at IMF, Mr. Zhang studied at the Paul H. Nitze School of Advance International Studies (SAIS). Before he joined the IMF, he had spent around ten years in the States. It wouldn’t be an overstatement to say that it was way harder for a Chiense to live a life in the States then than now. 

“College is the arsenal where your brain is armed.”

While being Deputy Director of IMF, Mr. Zhang completed his education at SAIS. Speaking of his college education, Mr. Zhang said that the choice of SAIS to him was way more than just a convenient location. The resources and the teaching of methodology there were invaluable. They were, of course, not something that only existed to this one university. But taking the example of his experiences there, he benefited a lot from the outstanding lecturers at SAIS, many of them experienced staffs at IMF or the World Bank. Mr. Zhang had learned practical knowledge from their “war stories”, and the way they thought and dealt with real-world problems. 

College students often feel lost, wondering why they are learning things seemingly irrelevant to the real society and their career paths. Such complaints were often heard, like “Why am I learning what was served on people’s dinner table thousands of years ago and what they used to write? How will this help me find a job?” “Why am I learning so many crazy functions? Am I going to be a mathematician?” Indeed, the practicality of these knowledge was limited, but it was the way of thinking we should be studying in college. College was the arsenal where your brain is armed. You are armed with abilities to predict the future and to solve problems. 

From “Special Drawing Rights” to “Education”

Economics has long been thought ambiguous. Economists come up with various kinds of theories, yet they can’t even prevent economic crisis; they can’t even tell what will happen tomorrow. But if we look at this from another perspective, we will see that it is this unpredictability that makes economics intriguing. The reason is rather straightforward: We can’t just give a problem up just because we can’t solve it. It is true that we are incapable of predicting everything that will happen in the future, and it is also true that crisis happens as a part of economic or business patterns. What we can do is trying to create stability in the middle of disorder, and seek for a better development even in chaotic situations. 

Mr. Zhang introduced “special drawing rights” and “basket of currency” to us during the conversation. In the past, people could only exchange their own money for US dollars, and several different prices emerged in the gold markets. It all became quite chaotic. In order to balance the situation, IMF created the concept of “special drawing rights”. We can see today that the function of special drawing rights went way beyond just a buffer in the USD-dominating market. For example, after IMF granted special drawing rights to China and admitted RMB into the basket of currency, we see an increase in diversity in the basket, which now included voices from developing countries. Before, the basket contained only USD, euro, pound and yen, resulting in reliance on the currency of developed countries. Now that the RMB was in, we heard more voices from the developing countries and saw a more balanced basket. Moreover, the admission of RMB into the basket of currency forced China to maintain the stability of RMB and promoted the opening of capital accounts in China. Considering the fact that China has been playing a more and more important role on the world’s stage, this more opening state of China and more efficient distribution of the world’s resources were undoubtedly beneficial. Let us take one step back and think about this: Why would people come up with this idea of “special drawing rights” decades ago? How could they be so sagacious like this to devise something that would benefit the world in the future? From this we see the meaning of education. We learn from the people before us and study the knowledge that seems irrelevant to us in order to arm our brains. We thus are able to predict the future and even solve the problems that haven’t occurred yet. 

Of course, we can’t only look at the bright side of one issue. China was granted the special drawing rights and joined the basket of currency last October, but this decision would not go into effect until October 1, 2016. How would RMB change and how would it adjust? Or, how should it change and how should it adjust? It wasn’t hard to see from the circuit breaker in stock market, middle income trap and the GDP increase below 7% that Chinese economy was faced with various underlying problems. Meanwhile, the aging population was threatening the economic development of China. How should China deal with these problems, ensure its stable development, and let the rest of the world have confidence in it? When encountering with such problems related to future, or problems that are abstract, we can only use the ability we have now to analyze and predict the uncertainty, and education is the way to gain such abilities. 

Development, either personal or national, ought to be achieved step by step, steadily and patiently. We look forward to the actions of China in the upcoming eight months, as well as the changes that will take place after the decision of China obtaining special drawing rights goes into effect. 

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