BANK OF CHINA VICE PRESIDENT ZHU MIN MOVES TO

C O N F I D E N T I A L BEIJING 002908

SIPDIS

STATE FOR E, EAP, EAP/CM
TREASURY FOR OASIA/DOHNER/WINSHIP AND LOEVINGER
NSC FOR LOI

E.O. 12958: DECL: 10/20/2034
TAGS: EFIN PGOV PREL ECON CH
SUBJECT: BANK OF CHINA VICE PRESIDENT ZHU MIN MOVES TO
PEOPLE'S BANK OF CHINA, NEXT STOP IMF?

Classified By: Acting Economic Minister Counselor Robert W. Forden; Rea
sons 1.4 (b, d)


1. (C) Summary. The Bank of China (BOC),one of China's "big
four" state-owned banks, announced October 19 that Executive
Vice President Zhu Min had resigned to take a new position
elsewhere. Contacts at the People's Bank of China (PBOC)
have told us Zhu began working as a Vice Governor in late
September, although the central bank has not officially
announced the appointment. The PBOC appears to be
positioning Zhu for an eventual senior-level appointment at
the International Monetary Fund. End Summary.


2. (SBU) After weeks of media speculation and financial
sector rumor, as well as a disingenuous denial by the subject
that anything was afoot, on October 19 the BOC announced that
Executive Vice President Zhu Min had resigned October 16 to
take a new, unspecified position. Zhu had worked for the BOC
in various capacities in Hong Kong and Beijing since 1996,
following six years as an economist at the World Bank. The
other half of the Zhu rumor, reported most recently by
"Caijing" magazine on October 13, has been that he would
receive an appointment as a PBOC Vice Governor, which in turn
would lead at some unspecified time to a senior management
position at the International Monetary Fund. On the same
date, Zhu told Bloomberg News he knew nothing about any
pending appointments to the PBOC or the IMF. Over the past
week, however, contacts at the PBOC have told us Zhu had been
working as a PBOC Vice Governor since late September.

Comment
--------------

3. (C) Zhu is highly articulate and engaging in English,
frequently representing the BOC (and China) at
high-visibility events such as the recent "Summer Davos"
forum in Dalian. The Chinese Government and the PBOC
undoubtedly are positioning him for an appointment to a
senior position at the IMF, most probably one of the Deputy
Managing Director slots (we understand there currently are no
vacancies at that level). Such a move would be fully
consistent with China's stated desire to play a larger, more
active role in the international financial institutions.


4. (C) During his time at the BOC, Zhu regularly has met with
senior visiting USG officials, including Treasury DAS Sobel
in July 2008, Federal Reserve Governor Kroszner in November
2008, and Fed Governor Lacker in May 2009. We have found him
to be an extremely bright, critical, and engaging
interlocutor, willing to express opinions on relatively
sensitive topics. For example, with DAS Sobel he detailed
BOC plans to diversify sectorally -- into insurance and other
non-banking financial services -- as well as geographically.
With Governor Kroszner, Zhu accurately predicted China's
rapid economic recovery, strongly urged the USG to implement
additional stimulus measures ("how much can you spend?"),and
jokingly observed that China needed Milton Friedman and the
University of Chicago in China to facilitate its rapid
transition to a market economy.


5. (SBU) This openness has extended to Zhu's interactions
with the press, his recent denial of his impending job change
notwithstanding. In an April 2009 interview with
"Euromoney," Zhu acknowledged that the main reason Chinese
banks largely had avoided serious problems during the global
financial crisis was their "more vanilla business model,"
rather than any better risk management procedures. He also
said BOC had learned from the crisis and "completely rebuilt"
its market risk management system. More recently, Zhu told
Bloomberg that China needs to ensure that government stimulus
funds go to real projects, lest they lead to asset bubbles.
He also observed that "Wall Street is myopic" and feels like
the crisis never happened.


6. (SBU) Zhu was born in Shanghai in 1951 and educated at
Fudan University (bachelor's degree, 1982),Princeton
(master's),and Johns Hopkins (doctorate).
HUNTSMAN