Zhu Rongji

Zhu Rongji (Chinese: 朱镕基; IPA: [ʈʂú ɻʊ̌ŋtɕí]; born 1 October 1928) is a Chinese politician who served as Mayor and Party chief in Shanghai between 1987 and 1991, before serving as Vice-Premier and then the fifth Premier of the People's Republic of China from March 1998 to March 2003.
A tough administrator, his time in office saw the continued double-digit growth of the Chinese economy and China's increased assertiveness in international affairs. Rumored to be engaged in a testy relationship with General Secretary Jiang Zemin, under whom he served, Zhu provided a novel pragmatism and strong work ethic in the government and party leadership increasingly affected by corruption, and as a result gained great popularity with the Chinese public. His opponents, however, charge that Zhu's tough and pragmatic stance on policy was unrealistic and unnecessary, and many of his promises were left unfulfilled. Zhu retired in 2003 and has not been a public figure since. Premier Zhu was also widely known for his charisma and tasteful humour.

Zhu Rongji was born in Changsha, Hunan, to a family of intellectuals and wealthy landowners. According to family tradition, his family was descended from Zhu Yuanzhang, the first emperor of the Ming dynasty. His father died when he was born, and his mother died when he was nine. Zhu was subsequently raised by his uncle, Zhu Xuefang, who continued to support Zhu's education.

Zhu was educated locally, and after graduation from high school he attended the prestigious Tsinghua University in Beijing. While attending Tsinghua he became a student leader and took part in activities that were organized by the Communist Party. He graduated with a degree in electrical engineering and joined the Communist Party of China in 1949, the same year that the Communists captured Beijing, ended the Chinese Civil War, and declared the beginning of the People's Republic of China. In 1951 he became the chairman of the Tsinghua Student Union.

Following his graduation, Zhu began his career as a civil servant. He began his career in the Northeast China Ministry of Industries, where he was appointed the deputy head of its production planning office. From 1952-1958 he worked in the State Planning Commission, where he worked as group head, deputy director, and deputy section chief. In 1957, during the Hundred Flowers Campaign, he criticized Mao Zedong's economic policies, saying that they promoted "irrational high growth". His comments led to him being subsequently identified as a "rightist" in 1958, for which he was persecuted, demoted, disgraced, and thrown out of the Communist Party. In the late 1950s his family was also persecuted for their pre-revolutionary status as wealthy landowners, and their family mansion was destroyed.

After his persecution as a rightist, Zhu was sent to work at a remote cadre school. In 1962, following the famine and industrial collapse caused by the Great Leap Forward, Zhu was pardoned (but not politically rehabilitated), and was assigned to work as an engineer at the National Economic Bureau of the State Planning Commission. During the Cultural Revolution Zhu was purged again. From 1970-1975 he was sent for "re-education" to the "May Seventh Cadre School", a special farm for disgraced government workers and former Party members. During his exile in the countryside Zhu worked as a manual laborer, raising pigs and cattle, carrying human waste, and planting rice.

Shortly after the death of Mao Zedong in 1976 Deng Xiaoping initiated economic and political reforms which led to Zhu's rehabilitation, and he returned to work in the government. From 1976 to 1979 he worked as an engineer in the Ministry of Petroleum Industry, and served as the director of the Chinese Academy of Social Sciences' Industrial Economic Bureau. In 1978 he was formally rehabilitated and allowed to rejoin the Communist Party. During the late 1970s Zhu's positions were relatively low-profile, but after Deng consolidated his power in the 1980s and the government became more meritocratic, Zhu was promoted to work in increasingly demanding positions. He had few connections in the army, the Party, or the bureaucracy, and was able to rise through the ranks of the government mostly through his own skills. In 1979 he was reassigned to the State Economic Commission, in which he served as vice-minister from 1983-1987.

After being politically rehabilitated and re-entering the civil service, Zhu resumed connections with his alma mater, Tsinghua University. In 1984 he was named the founding dean of the Tsinghua University School of Economics and Management. He held his position as dean at Tsinghua for seventeen years, throughout most of his subsequent public career. As he became increasingly able to meet and make connections with foreign academics and world leaders, he was able to promote a close academic relationship between Tsinghua and M.I.T. Later in his career he gained a reputation for lecturing subordinates, a habit that observers interpreted as being a product of his position as an educator at Tsinghua.

Zhu (second left) leading the Chinese delegation at the European Management Forum in 1986

In 1987 Zhu was promoted to work as the mayor of Shanghai, which was then China's largest, most industrially developed, and wealthiest city. During Zhu's term as mayor of Shanghai he oversaw large, rapid improvements in telecommunications, urban construction, and transportation, especially in Pudong, a large and high-profile Special Economic Zone.

It was during his time as Mayor of Shanghai that he developed a public reputation as a strong opponent of corruption, and as a talented economic reformer. His efforts to simplify the process by which the government approved business deals earned him the nickname "One-Chop Zhu". In order to improve relations with the foreign business community and solicit outside advice, he formed an advisory committee composed of foreign businessmen. While working in Shanghai he began his long working relationship with Jiang Zemin, which continued throughout Zhu's career.

He also became known while administering Shanghai for his strict adherence to law and Party discipline, and for his refusal to grant extrajudicial favours to those close to him. Once in 1988, when some family members asked him over dinner if he could bend China's residency laws to allow them to move to Shanghai, he turned them down, responding: "What I can do, I have done already. What I cannot do, I will never do."

In 1989, when large-scale protests broke out in numerous cities around China, there were also large, well-organized protests in Shanghai. Unlike the government's violent crackdown of protesters in Beijing, Zhu was able to peacefully resolve the local situation. At one point a group of protesters derailed and burnt a train, for which several participants were arrested and executed, but there was otherwise little loss of life, and Zhu was able to retain significant public sympathy throughout the event. Following the violent resolution of the Tiananmen protests there was a brief struggle for control of the Chinese government within the Communist Party. Zhu assisted Deng in regaining his prestige and authority by assisting Deng in organizing his 1992 Southern Inspection Tour.

In 1990 Zhu led a delegation of Chinese mayors to meet with local and national political and business leaders from the United States, attempting to maintain and improve political and business relationships which had been threatened following the suppression of the 1989 protests. Some of the officials Zhu met on the visit included Richard Nixon, Henry Kissinger, Bob Dole, and Nancy Pelosi. During the visit Zhu gave unscripted speeches in Chinese and English, and was praised by American journalists, politicians, and business leaders for his frankness, openness, energy, and technical background.

Although he demonstrated a desire and ability to enact large, thorough legal and economic reforms, and political reforms aimed at making the Chinese government more efficient and transparent, Zhu made it clear that he did not support dramatic political change. When asked by Western journalists in 1990 whether he was China's Gorbachev, he responded "No, I am China's Zhu Rongji".

Overview

In 1991, largely due to his success in managing the development of Shanghai, Zhu was promoted into the central government in Beijing, where he focused on planning and resolving economic projects and issues as the vice-premier of the State Council and the director of the State Council Production Office. He also served concurrent terms as the governor of the central bank, overseeing monetary policy. His first issues after arriving in Beijing were to restructure the debts owed by state owned enterprises, and to simplify and streamline the process by which farmers sold their grain to the government. Zhu was able to enact relatively far-reaching reforms largely via the broad support of Deng Xiaoping, who noted that Zhu "has his own views, dares to make decisions, and knows economics." In comparing Zhu to his peers when considering his appointment, Deng said, "The current leadership do not know economics... Zhu Rongji is the only one who understands economics."

When a global recession occurred in 1992, China was challenged with excessive investment in fixed assets, excessive monetary supply, and chaotic financial markets. Inflation rates reached over 20%. As the director of the central bank and the vice-premier and head of the State Council Economic and Trade Office, Zhu resolved these issues by limiting monetary supply, eliminating duplicate low-tech industrial projects, devaluing the Chinese currency, cutting interest rates, reforming the tax system, and investing state capital in the transportation, agricultural, and energy sectors. He attempted to reform the state banking sector by introducing greater oversight to discourage reckless lending, introducing "asset management companies" to manage the many large, non-performing loans that many of China's banks had accumulated, and privatizing large banks in order to expose them to free market competition. Following Zhu's management, the Chinese economy was able to maintain stable growth and avoid dramatic price fluctuations. Zhu's ability to stabilize the economy led to his being named to the Politburo Standing Committee in 1992, after which he also retained his other posts.

The most active opponent of Zhu's plans to reform the Chinese economy was Premier Li Peng. Li and Zhu clashed in the first two years following Zhu's appointment as vice-Chairman; but, by the time that he suffered a heart attack in 1993, Li had lost influence within the government and was no longer able to block many of Zhu's reforms. That Zhu's reforms had quickly gained wide support within the central government was made clear at Li's confirmation process during the Party's 1992 convention: although Li's appointment was already agreed upon by China's top leadership, Zhu received a relatively large and unusual protest vote by many of the Party delegates. Throughout Zhu's term as both vice-premier and premier, Li was successful in blocking Zhu from introducing regulation or government oversight over China's power companies, and they remained private monopolies essentially run by Li's family throughout Zhu's term of office.

Zhu once used the term "patriotic organizations" in a speech in the mid-1990s to describe the triads, citing their past history as secret societies in resisting foreign invaders and playing a key role in Chinese history. This was interpreted by some observers as indicating a cultural connection between the triads and the Communist Party.

Contributions to state capitalism

Zhu and Deng's vision of China's future was not simply one of rapid growth. It included a programme of continuous reforms, which they believed would be necessary to achieve this growth. There were two major goals Zhu believed were necessary to achieve this vision, which Zhu began while serving as China's vice-premier. His first goal was to rationalize and centralize the fiscal and financial system. The second goal was to streamline and strengthen the state sector.

Zhu's first task was to regain central control over the country's burgeoning yet dangerously decentralized tax revenues. Before reforming China's tax system he went in person to each province in China to sell a new "tax sharing" idea modeled on the U.S. federal tax system. Under this new policy, revenue from provinces would go first to Beijing, and then the other portions would be returned to the provinces. Following the introduction of this tax system, the central government's cut of total revenue increased by over 20% in a single year, balancing the central budget and putting Beijing's resources on track to reliably increase over time. In order to manage China's financial affairs he appointed himself governor of the People's Bank of China with jurisdiction over monetary policy and financial regulations, bringing the highly decentralized banking system more closely under Beijing's control.

Zhu's next task was to deal with China's four colossal state-owned banks, which had accumulated billions of dollars in nonperforming loans due to profligate local lending to unprofitable State Owned Enterprises (SOEs). He quarantined these bad loans in newly created "asset-management companies", and recapitalized the banks through government bonds in a restructuring strategy. After his promotion to premier in 1998, Zhu saved the biggest SOEs and allowed thousands of other small and medium-sized firms and factories to go under, assuming that new growth in the private sector could alleviate any surge of unemployment. This strategy resulted in millions of workers losing their "iron rice bowl" guarantees of cradle-to-grave employment, health care benefits, and pensions. Zhu challenged managers to base salaries on performance and market competitiveness and made profitability and productivity determining factors in managerial and executive promotions within surviving SOEs.

All these economic reform efforts by Zhu did not dismantle the state sector, but streamlined it with the goal of accomplishing Deng's new form of marketized socialism. Although many in the West were skeptical when Deng announced that he would pursue "socialism with Chinese characteristics," Zhu's reforms helped increase China's wealth and power while leaving it under the firm grip of the Communist Party.

Economic management

Zhu was chosen to become China's fifth premier in 1998, largely due to his success in managing large macroeconomic projects. During his term Zhu continued to focus on issues related to economic development. He generally favoured stable, sustainable development supported by robust macroeconomic control measures and a tight monetary policy. He continued to promote investment in China's industrial and agricultural sectors.

Early in his term he began a programme of privatization that lasted throughout his period in office, during which China's private sector experienced rapid growth. He responded to the 1997 Asian financial crisis by dramatically reducing the size of the state bureaucracy, maintaining strict capital controls, and through funding massive infrastructure projects. During the crisis he refused to devalue the Chinese yuan, and angrily defended his decision when some international leaders suggest that he do so. Following the crisis, Zhu advocated improving international financial markets in order to prevent harmful market speculation.

He was successful in reducing the size of the official bureaucracy by half by the end of his term in 2003, though the bureaucracies in districts far from the capital continued to expand, leading to increased tension between some local governments and the farmers whose income supports them. His reform of state-owned enterprises led to approximately 35% of their workforce, forty million workers, being laid off over five years. Zhu introduced limited reforms in China's housing system, allowing residents to own their own apartments for the first time at subsidized rates.

By the end of Zhu's term as premier, the Chinese economy was stable and growing confidently. While foreign direct investment (FDI) worldwide halved in 2000, the flow of capital into mainland China rose by 10%. As global firms scrambled to avoid missing the China boom, FDI in China rose by 22.6% in 2002. While global trade stagnated, growing by one percent in 2002, mainland China's trade soared by 18% in the first nine months of 2002, with exports outstripping imports.

Anti-corruption initiatives

Zhu earned a reputation as a strong, strict administrator, intolerant of corruption, nepotism, or incompetence. In Beijing he was sometimes known by the nicknames "Madame Zhu" and "Boss Zhu" for his hard, transparent work ethic and his tendency to disregard the bureaucratic status quo. In addition to investigating individual examples of potential official corruption, Zhu attempted to make the Chinese government more regulated and transparent by increasing the number and powers of independent regulatory commissions, downsizing government bureaucracy, opening government positions to outside experts and reforming the government's system of hiring and promotion based on merit, and improving administrative predictability by strengthening the rule of law.

Before Zhu came to office, employment in China's bureaucracy was largely obtained via tenure and political connections. Zhu attempted to modernize the bureaucracy's seniority system and improve the government's ability to attract and retain talented workers by opening senior- and mid-level positions to public selection, and by reforming the civil service's examination system. He made a strong effort to attract and promote economists and technocrats from academia and the private sector to work under him as advisors in the central government, and was successful in attracting a small core of several dozen such officials to work under and advise him. By opening mid-level appointments to outside experts, he was able to ensure that the Chinese bureaucrats who were promoted during his term as premier were generally supportive of his ideas.

During his term as premier Zhu engaged in frequent large-scale efforts to fight official corruption. At one time he was reported to have read 16,000 letters a year, sent to him by aggrieved citizens, in order to get a better understanding of the circumstances of ordinary Chinese people. He made frequent official visits outside Beijing to inspect working conditions, especially in the south. Shortly after coming to office, in 1998, he required the People's Liberation Army to relinquish its involvement in business interests that had been making high-ranking officers and their children rich, and later barred civil servants from taking part in business enterprises. He attempted to introduce stricter, more formal oversight to keep provincial leaders from receiving kickbacks from businessmen and embezzling state funds.

Zhu's investigations into official corruption led to his discovery of numerous large-scale misdeeds by provincial officials. After discovering that 25.8 billion RMB allocated for the purchase of grain over six years had gone missing, he launched an investigation which concluding that at least 10 billion RMB had been instead used to construct hotels and luxury apartments, and on speculative business investments. In one inspection tour in 2001, Zhu uncovered the largest corruption ring in modern Chinese history, discovering that many of the highest-ranking officials in Fujian had conspired to operate a massive smuggling ring. In the resulting purge, numerous top-level Party leaders and governors were arrested and executed. On one inspection tour, after noticing that dikes had broken because funds allocated to their proper construction had been stolen by corrupt officials, he flew into a rage over such "son-of-a-bitch construction projects", which were not uncommon in China at the time. Referring to his efforts to fight corruption, he once said, "I will prepare 100 coffins for the corrupt, and one for me, for I will die of fatigue". Much of his efforts to increase the role of the private market in the economy, to improve legal protection for businesses, and to introduce a true commercial banking system were implicitly undertaken in the interest of reducing the kind of official corruption and waste that he uncovered through his personal investigations of government officials.

He took the lead in negotiating China's entry into the World Trade Organization, which the country achieved in 2001 to domestic and international acclaim. Joining the WTO opened China to increased foreign investment, but also required it to conform to international conventions of trade, intellectual property, and environmental management. Zhu expected that China's entry into the WTO would lead to economic expansion, but also hoped that entering the WTO would force economic and legal changes within China that Zhu himself had little power to implement.

Zhu, along with his successor Wen, attempted to set limits on the power of local officials to levy miscellaneous service charges and fees in order to protect farmers from indiscriminate taxation by corrupt officials.

Retirement

Zhu's premiership, especially related to free-market reforms, was controversial. He retired from his position as premier in 2003, when he was replaced by Wen Jiabao. Wen was the only Zhu ally to appear on the subsequent nine-person Politburo Standing Committee.

Zhu's position on Taiwan changed over the course of his time as premier. During the 2000 ROC presidential election in Taiwan, Zhu warned Taiwanese voters not to vote for the DPP, which favours distancing Taiwan's relationship with Beijing, stating, "those who are pro-Taiwan independence will not have a good ending." His attitude towards Taiwan changed after the election. Three years later, in his farewell speech to the National People's Congress in 2003, Zhu encouraged Chinese politicians to use softer language in discussing the issue of China-Taiwan relations, saying that China and Taiwan should improve economic, transportation, and cultural ties in order to improve their relationship. During the speech Zhu accidentally referred to China and Taiwan as "two countries" before quickly correcting himself and referring to them as "two sides". The incident was reported in Taiwanese media as a "gaffe".

Among the international leaders he met and negotiated with as premier, he gained a reputation for intelligence, energy, impatience for incompetence, shrewdness, and as a person who must be respected, even among those who disliked him. Journalists noted his proficient command of English and his "disarming" sense of humor.

Zhu Rongji and his wife, Lao An (1956)

Zhu Rongji has been recognized as a good public speaker and was notable during his career for his proficient command of English. He often made public speeches without the aid of a script, and when he did so his speeches were said to be entertaining and dramatic.

He enjoys literature, and has reportedly spent much of his retirement reading books he had no time to read while in office. He plays the erhu, an instrument similar to a two-stringed violin. He enjoys Peking Opera, and once appeared on stage as an actor in a performance.

His wife, Lao An, once served as the vice-chairman on the board of directors of China International Engineering and Consulting. She and Zhu attended two schools together, first at the Hunan First Provincial Middle School, then at Qinghua University. They have two children, a son and a daughter. Their son, Zhu Yunlai, was born in 1957. He was once the president and chief executive officer of one of China's most successful investment banks, China International Capital Corp. Their daughter, Zhu Yanlai, was born in 1956. She is currently the assistant chief executive for the Bank of China (Hong Kong), and holds a seat in the National Committee of the Chinese People's Political Consultative Conference.

Before his retirement Zhu publicly acknowledged that he had not been able to complete many of his desired reforms before his term ended. In 2003 he gave a 90-minute address to several thousand delegates in the Great Hall of the People, outlining the "outstanding difficulties and problems" which he expected his successor as premier, Wen Jiabao, would have to face. After Zhu retired, Wen attempted to continue many of the reforms that Zhu had conceived and designed, creating and increasing the powers of independent regulatory commissions and restructuring the bureaucracy on the basis of merit. Some of Zhu's reforms were reversed under the leadership of Hu Jintao, and other reforms he hoped would be addressed by the incoming administration were not implemented. Notably, state-owned enterprises were allowed to regrow and re-establish a dominant place in the Chinese economy, and large areas of the banking sector remained unregulated. Hu may have reversed the Chinese government's previous position and promoted state-owned enterprises in an effort to promote social stability. During Wen's term of office many of the reforms Zhu proposed were opposed by conservative government ministers, notably including the former commerce minister, Bo Xilai. Zhu's position as head of the central bank was given to one of his close associates, Zhou Xiaochuan, and Zhu's views retained some influence in China's financial sector following his retirement.

After his retirement, Zhu withdrew from any obvious involvement in Chinese politics, but he retained ties with Tsinghua University, where he continued to make numerous visits during ceremonies and special events. In 2014, he wrote a rare public letter for the 30th anniversary of Tsinghua School of Economics and Management, but was not able to attend due to poor health. In the letter, he encouraged the students at the prestigious business school to visit poor and rural areas of China, in order to better understand the conditions of most Chinese people.

Since he left office Zhu has written, and has been the subject of, numerous books. Zhu's first book, Zhu Rongji Meets the Press, a collection of speeches and interviews with foreign and Chinese journalists and officials, was released in 2009 (an English translation of the book was released in 2011). A second book, Zhu Rongji's Answers to Journalists' Questions, a four-volume compilation of Zhu's speeches, articles, and letters, was also released in 2011. The second book was translated and published in English in 2013, under the title: Zhu Rongji on the Record: The Road to Reform. By the end of 2013 over six million copies of his books had been sold. Henry Kissinger wrote that the translation of his books into English represented a significant contribution to Sino-US relations and promoted international understanding of Chinese culture and politics. One Western biography of Zhu encouraged leaders in other developing countries to study and emulate his reforms, and compared his influence on practical economic theory to that of Keynes. Although he has published books compiled from his speeches and interviews, his daughter has reported that he has no interest in writing a memoir.

After retiring, Zhu invested much of his time and energy into public philanthropy. In 2013 and 2014 alone he donated 40 million RMB (c.$6.5 million US) to charity. The donated money reportedly came from the royalties from his books, and was given to a charitable foundation promoting education in poor rural areas. The amount of money given was considered unusual among retired Chinese politicians, leading to speculation about Chinese political culture. The donations prompted some commenters to compare his character to that of China's first premier, Zhou Enlai.

By the time he retired, Zhu had become noticeably more popular than his predecessor, Li Peng, both in China and abroad. Economists noted that during his time in office he had shown himself to be much better at economic management than Li.

Zhu was well known for his efforts to fight official corruption, but was not able to contain official corruption in his term. Following the 18th National Congress in 2012 one of Zhu's proteges, Wang Qishan, became the head of China's Central Commission for Discipline Inspection, the Communist Party's main organ in charge of investigating internal corruption. Zhu publicly supported Xi Jinping's anti-corruption campaign, in which Wang played a major role.