(1) The rise of an extraordinary man
(2) The mighty plans for the economy
(3) A devoted son of the nation, a premier with an unemployed cousin, and a private family man
     Footnotes

ZHU Rongji, the man who has guided China's economy for the past five years, was enthusiastically confirmed as Premier by the 9th NPC last Tuesday. While his portfolio remained largely unchanged in the new and carefully balanced "power triad," the cabinet that was approved last week strengthened his hand for the difficult tasks ahead, as the economic and fiscal posts all went to Zhu's capable reform-minded aides.  His appointment raised sweeping high expectations across the country, compared by some to those prevailing when the late paramount leader DENG Xiaoping came back to power in 1979. People pin great hopes on Zhu to make the country stronger and more prosperous.

Zhu was born in rather humble circumstance in 1928.  His father died before his birth, and his mother when he was a boy.  His uncle raised him, and saw him being admitted to the No.1 high school in the capital of Hunan (the alma mater of Mao), and then Tsinghua University in Beijing with a merit scholarship.  There he majored in engineering, and became the chairman of the Student Council, a stint to which Zhu credited his leadership skills.  In 1949 he joined the Communist Party.  After a promising start as a planning bureaucrat following his graduation, Zhu's career in the government was sidetracked for more than two decades by endless political turmoil, typical of Mao's era.

In the late 1970s Zhu was finally rehabilitated, following the come-back of DENG Xiaoping. A few years later Zhu was brought to the attention of Deng, reportedly by an industrial minister.  Zhu began to serve as the liaison for the then-Premier ZHAO Ziyang, to regularly brief Deng on the state of affairs of the economy.  By all accounts, Deng was deeply impressed by Zhu's command of economics, and in 1987 put him on the fast track.

That year, Zhu, the somewhat obscure Vice Chairman of the State Economic Commission, became an alternate member to the Central Committee of the Party.  Shortly after, Zhu was named the Mayor of Shanghai, China's largest city.  His meteoric rise to power thus began, but driven as much by the sheer force of his achievements as by the patronage of Deng.

In Shanghai, he immediately won his popularity by launching an anti-corruption drive to instill an honest and hard-work government.  When he was called back to Beijing by Deng to become a Vice Premier in 1991, the city residents fondly remembered him as one of the toughest and best mayors in the history of the city.  Among his legacy are the improvement of the city's infrastructure, the increasing of foreign investments, the establishment of production bases for affordable grocery goods, and one of his biggest political assets, the well-known peaceful resolution of the local demonstrations in 1989.  By this time, Zhu also earned blessing from the late CHEN Yun, which was unprecedented in the Party's recent history. Chen, a prominent hard-liner in the Party, was said to be a long-time rival of Deng.  Reportedly at the time Zhu left Shanghai for his new post, Chen offered Zhu a ride with him back to the Capital in his personal plane.

At the Party Congress in 1992, Zhu made a rare "triple jump"--formal induction into the Central Committee of the party, the Politburo and the Politburo's all-powerful seven-member Standing Committee, all at once.  It left no doubt that he was a Premier in the making

In 1993, when Premier Li Peng suffered a heart attack, Zhu was handed the task of managing the economy, which by then was in danger of overheating, with inflation raging at 24 percent a year.  Zhu skillfully steered a "soft-landing," bringing down the runaway inflation while maintaining a strong growth rate.  The task was once deemed nearly impossible by outside economists, particularly given the chronic "boom-bust" cycle that had plagued China's capitalist-style reform effort for 15 years.  During this period, the Chinese foreign exchange reserves also drastically increased from some $20 billion to an astonishing $140 billion today, providing China with a conformable cushion amid the current lingering Asian financial crisis.  Zhu gained widespread admiration and respect at home, and abroad.  Some ranked him with Ludwig Erhard, who engineered most of Germany's post-war economic miracle.

By any measure, China's economy is in grave trouble.  Over one-third of the state-owned enterprises are losing money, bad loans keep pilling up in the sate banks, creating an insolvency crisis.  The engines of the economy--foreign investment and exports--are eroded by the Asian Financial turmoil.  Unemployment is rising alarmingly, raising fear of social unrest. According to a mainland-based labor scholar, in the next five years, China would have a staggering 16 million registered urban unemployed, and 30 million laid-off from the state sector, in addition to 137 million surplus rural workers.

But again, Zhu is no ordinary man.  A dazzling series of plans, priorities, or goals masterminded by him have come to light since the party congress in September.  Emerging from these measures are four clear and consistent themes: 1) constructing genuine sate regulation machinery and banking system that      will be compatible with a market economy; 2) purging vestiges of mini-welfare entities from the state-owned      enterprises, building a modern system of social welfare; 3) reforming the lumbering state-owned enterprises; 4) implementing a huge but prudent stimulation package along with the safety net.

State Regulation and Banking System.  The government departments closely associated with state industries will be eliminated, ostensibly leaving economic decision-making to market forces.  The spotty and antiquated tax system will be further patched up. In addition, the status of the central bank (The People's Bank) will be reinforced.  Zhu's cabinet will also inject fresh capital into the four major banks to allow them start shedding bad loans, and lending on the basis of credit analysis, rather than politics.  These alignments are aimed at bringing China's economy in line with international business practices, and eventually allow the state to regulate the economy with finance and tax policies.  Such a mechanism will certainly lay a sound foundation for a healthier economy, and likely spur growth and job creation in the long run.

Social Welfare.  By shifting the social burden, enterprises can be judged based on their productivity.  The subsidized allocation of housing will be phased out entirely, although the government must work out how to assist people having no means to afford housing on their own.  Another linchpin for Zhu's reform is a society-wide health care network.  Other measures, such as urban poverty assistance programs, are also being put into effect, as reflected in a sharp increase in moneys set aside for unemployment benefits in the new budget.  Once a safety net is created outside the state-owned enterprise structure, it will be easier to let go millions of redundant workers in inefficient enterprises.

Reforming State-Owned Enterprises.  The party hammered out in September a radical plan under which some 1,000 largest enterprises would be strengthened, and the rest essentially privatized or let go under.  Strong state companies would also be urged to buy up the weaker ones to create conglomerates.  Some outside economists were quick to compare the strategy to South Korea's chaebol model, questioning the measure's effectiveness, given the current South Korean financial trouble.  At the news conference Thursday, however, Zhu hinted that he would not be swayed while stating, "We should draw upon the experience and lessons of the affected countries."

Stimulation Package.  By some estimates, the government will spend anywhere from $750 billion to $1.2 trillion over the next three years on new construction projects, a 15% increase over last year.  The funds will go to infrastructure, housing and technical upgrades.  Realizing the golden days of export-led growth might be ending, Zhu is also eyeing at building a stronger domestic demand; the first target is likely the housing sector.  To accomplish all these, China will tap an array of sources, including international markets and the huge domestic savings deposits, lowering interest rates, encouraging more loans to consumers for mortgages, and finally letting more firms issue bonds and equities. Lastly, to alleviate the size of unemployment, the redundant government workers will be retained and relocated through job training and reassignment over a period of three years.

Zhu's tasks are Herculean, complex, and ambitious, and the timetable of three to five years optimistic.  But Zhu is surprisingly confident, and he might have his reasons.  If history is any indication, he has the needed ability, expertise, and above all, willingness to knock heads to get unpleasant things done.  Some years ago Deng said of Zhu simply, "He understands economics."  Indeed, he has proved he knows his stuff, and he pretty much sticks to his stuff.  In addition, some of the measures have already been in progress or have been nearly accomplished.  To name a few, a comprehensive tax reform was implemented in 1994.  This January, Zhu daringly closed all provincial branches of the People's Bank, and replaced them with regional ones directly under Beijing's control, something reminiscent of the Federal Reserve Bank in the U.S.  This is a far cry from the days when the bank was literally a cash box for officials' pet projects and for state enterprises.  Finally, a number of health care pilot experiments are underway.

For the moment, Zhu has going for him high expectations, hopes and the trust of many, and the full backing of the leadership.  This might be just enough to carry him through three difficult years, and at the end of it all, hopefully the country will be more prosperous, and people better-off.

Zhu's achievements are largely due to three things: a clear long-term vision for the economy, an engineer's ability to map out technical details meticulously so as to get where he wants to go, and guts. Underlining his toughness is his unquestionable passion for his causes and the country, and his willingness to risk all for it.  This rare, unselfish and deep sense of "public service" was so vividly, genuinely, and movingly displayed at the news conference Thursday.

"No matter what is waiting in front of me -- whether it be land mines or an abyss -- I will blaze my trail," he said. "I have no hesitations and misgivings, and I will devote myself to the people and the country to the last days of my life."

By all accounts, Zhu paid dearly for his austerity program of 1993 that was introduced to combat inflation, but which angered many privileged officials and special interest groups.  One of his daughter's relatives was murdered, and his ancestor's tomb was destroyed--one of the gravest insults in Chinese culture.  But Zhu did not budge.  Also according to an account in the Hong Kong-based Ming Pao, Zhu at one point was even accused of being anti-Deng, who a year before had made an "imperial journey" to the south to promote economic growth.  Reportedly, Zhu indicated flatly in private that he was prepared to lose his post if necessary, or to be labeled "rightist" again.  The latter was a reference to a dark period in the 1950's, when he was denounced for criticizing  Mao's administration and banished to do menial rural labor.  Nonetheless at the end, Deng, along with CHEN Yun, stood up for Zhu, and rightly so.

It's less well-known to the outside world that people support Zhu not only for his ability, but as an exceptionally clean leader amid increasingly corrupt Chinese politics.  Zhu's "not-good-looking" face actually bears some resemble to Bao Gong, a famed Chinese historical figure of integrity and honesty.  Indeed, Zhu is an outspoken critic of corruption and nepotism.  Not surprisingly, by at least one account, none of Zhu's relatives benefit from the association with him, and one of his cousins is presently unemployed.  According to a Hong Kong source, Zhu is also the driving force behind the case against CHEN Xitong, the disgraced mayor of Beijing.  The corruption case is arguably the biggest one in the Republic's history.  When met with resistance and threats in pushing the case, Zhu once characteristically vowed to prepare "100 coffins with 99 for corrupt bureaucrats and one for myself."

Despite his "iron man" public image, many people closely associated with Zhu describe a soft side of him. Zhu reportedly shed tears at a funeral for a trusted aide.  In the mid-1980's when he was Vice Chairman of the State Economic Commission, Zhu became Dean of the School of Management at Tsinghua, his alma mater, a post he still holds today, in addition to a professorship.  Many students there fondly call him "Dean Zhu."  Some of his Ph.D. students remember him as being "cautious and humble", and very gentle towards them.

Zhu is also intensely private.  His wife is rarely seen in public, and their two adult children (both of them are U.S.-educated) remain very low-key.  What we do know, however, is that he met his wife in college, and she has stood firmly with him throughout the years, for better and for worse.  They both enjoy Beijing opera, and often sing and play opera segments at home together.

1) CNN reported this morning that the China's central bank just cut the interest rate by six-tenths of 1 percent.

2) Zhu's reforms of the bureaucracy may have far-reaching political implications, as they will lessen the state's grip on business, and inevitably lead to more emphasis on regulation and law.  This will be conducive to transforming China into an open and transparent society, one that will observe "the rule of law" and create a level playing field for everyone.  More than a dozen "streamlining" attempts have been made since the founding of the People's Republic, but were always reversed by a new cycle of expansion.  Nonetheless, there can be no doubt that Zhu's proposal is serious,  "revolutionary" and different, as it was designed fundamentally to meet the needs of a market economy, and not merely to "downsize" the bloated government.  Once the new governing structure is in place, one that is deprived of most of the existing "management" functions, new expansion will be less likely.

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