Former premier championed Beijing's entry into the World Trade Organization
By James T. Areddy
Zhu Rongji, a former premier who steered China toward Western market principles and championed its entry into the World Trade Organization, died Wednesday after an illness, according to the official Xinhua News Agency. He was 97 years old.
When Zhu rose to national prominence in the 1990s, China's economy was adolescent -- growing rapidly but direly in need of stewardship. Plucked by the Communist Party from Shanghai, where he was mayor, and named a vice premier in 1991, Zhu took personal charge of central banking, financial regulation, agricultural policy and a sprawling system of state-owned enterprises that he considered wastefully bloated, ineffective and corrupt.
He tamed 27% inflation, slashed the currency's value by one-third and laid off tens of millions of people. Those market-oriented actions earned China global respect for economic policymaking but unsettled the Chinese people. Crowned China's unofficial economy czar under President Jiang Zemin -- another Shanghai figure who moved into national office in the political tumult following the 1989 Tiananmen Square crackdown -- Zhu was elevated in 1998 to premier, serving in that position until 2003.
Logical and combative, Zhu plugged China into global systems of trade, banking and communications. His approach posed threats to the Communist Party's old guard and Zhu looked to the U.S. government to help him get China into the World Trade Organization, where international rules would prevail. The process, which damaged Zhu politically at home, took 15 years until China gained admission in 2001.
Setting the stage for growth
Zhu fused international market principles with domestic realities in a construct his officials called a "socialist market economy with Chinese characteristics." It set the stage for China to claim credit for the longest stretch of growth for any major economy, despite still being run by a Communist Party schooled in Maoist isolationism.
By centralizing financial regulation, Zhu also created an environment for China to build some of the world's largest banks and markets in stocks, bonds and commodities, plus a controlled yet internationally recognized currency Mao might have been proud to have his face on.
Flashing a mischievous smile in a 1999 interview with The Wall Street Journal, the tall technocrat described himself as an "ordinary Chinese with a bad temper."
For his willingness to toss out Communist Party ideology, Zhu was sometimes called China's Mikhail Gorbachev. In fact, Zhu shored up state power instead of letting it go but the comparison rang true in one respect: Like the Soviet leader, Zhu often won more accolades overseas than at home. Breaking the party's traditional "iron rice bowl" promise to support its people from cradle to grave was an affront to avowed Communists.
"If Deng [Xiaoping] was the architect of reform and Jiang Zemin the general contractor carrying out his vision, then Zhu Rongji was the hammer," former U.S. Treasury Secretary Henry Paulson wrote in "Dealing with China."
"He had no shortage of big ideas himself, but above all he got things done. He was frank, practical and to the point. I never doubted for a second what he wanted, nor did his subordinates," Paulson wrote.
A long political exile
Zhu grew up near Hunan province's capital Changsha and was raised by uncles, since he never knew his father and his mother died before he turned 10. But the family was wealthy, so even as China's war with Japan and its later civil war raged around him, Zhu got an education. He won a spot at Beijing's prestigious Tsinghua University and was a party member before he graduated from its electrical engineering department in 1951.
In the late 1950s, the party accused him of failing to uphold Maoist orthodoxy. He was sent to do farm work and didn't regain his political status until 1978, when Deng pivoted China away from Communist orthodoxy after Mao's death.
"Though that part of my life was a painful experience for me, it was also a useful one. It taught me more, and allowed me exposure with more strata of society," Zhu told the Journal in 1999.
During the early years of China's period of overhaul and opening up, Zhu worked in an economic commission in Beijing and then landed in Shanghai, where Deng was grooming officials to spearhead a national economic transformation.
Zhu was Shanghai mayor in 1989, when he made a practical public appeal to diffuse Tiananmen Square-like demonstrations in the business-minded city. "What we need is the greatest possible unity among all the people of Shanghai rather than social chaos and a decline in production, which would create difficulties in people's lives," he told the local TV audience that May. Protests in the city fizzled, unlike in Beijing, where Deng two weeks later ordered the People's Liberation Army to shoot.
Tackling inflation
In 1991, Zhu was elevated to vice premier and took charge of an economy that was soon barreling ahead at a 13% growth pace, "like a plane taking off," he said. A critical duty was arresting 27% inflation, which Zhu accomplished by putting himself in control of the financial sector and firing hapless officials including the country's central-bank chief.
He later took aim at bloated government monopolies posing as state companies, furloughing tens of millions and courting foreign investors. He called out fellow policymakers for "tax evasion, tax fraud, obtaining foreign currency through deception and smuggling" and charged that authorities produced statistics from "a wind of embellishment and falsification."
Zhu handpicked lower-level leaders, including Zhou Xiaochuan for the central bank, who would later run it for more than 15 years. When China permitted Morgan Stanley to create the first Sino-U.S. investment-banking joint venture in the mid-1990s, China International Capital, Zhu's son Levin Zhu Yunlai gained a senior position and remains active in the financial industry.
Little of Zhu's effort endeared him to China's traditional power structure, but he was the reform camp's standard-bearer. His biggest challenge was convincing the Clinton administration in Washington that China would play fair in global commerce so Washington would support its bid to join the WTO. "I need you to push from the outside so I can push from the inside," he told Sen. Max Baucus, a Democrat who later became the U.S. ambassador to China.
Zhu stayed out of the public eye after he retired but Chinese publishers have released volumes of his old speeches, some of them previously unknown, that give some insight into how the economy czar helped create the world's biggest trading nation.