State-enterprise overhaul left an estimated 30 million state workers jobless
Zhu Rongji, China’s former premier, has died at age 97, with state media giving the cause of death as illness. An acerbic technocrat and trained engineer, Zhu was renowned for far-reaching economic reforms in the 1990s that carried China from its post-Mao years to a more global, market-oriented financial system, without completely ceding the Communist Party’s control over the economy.
He remained both loved and reviled in the country indelibly shaped by him, despite staying almost completely out of the public eye after retiring from the premiership in 2003. In freeing up China’s enormous labor and financial resources, he helped create vast amounts of wealth over the next three decades while also seeding institutions with future vulnerabilities. His reform legacy remains contested in China.
Zhu spent years negotiating China’s entry into the World Trade Organization. “From the point of view of a policymaker, [he] embraced the notion of a China whose economic system was more compatible with that of the West. And by compatible, I mean vastly reformed, more open, less state-dominated, very limited state intervention,” said Charlene Barshefsky, a lawyer and former U.S. trade representative who sat across the negotiating table from Zhu during the years-long talks. In April 1999, Zhu answered reporters’ questions at a joint news conference with then-President Bill Clinton in Washington.
To join the WTO, China first needed preferential trading status with the United States, which required hard concessions and demanded that China open its closed economy to American companies. Zhu was under huge pressure to find compromise, and he let his views be known. In 2000, the U.S. Senate voted to give China that preferential trading status, and the following year China joined the WTO. The agreement was a windfall for the nascent Chinese economy: the country became an export powerhouse, and foreign businesses rushed to China to establish a foothold.
The six-and-a-half-year process showed off Zhu’s flinty personality, though he struck U.S. officials as inquisitive and flexible. “This was not talking points. It was a lot of give and take,” said Kenneth Lieberthal, a China expert who was a national security adviser for then-President Bill Clinton and met Zhu multiple times during the negotiations. “Regardless of what country your company is from, when you arrive in China, you should receive fair and equal treatment. I just want you to pay taxes,” Zhu joked in 1999 to an audience of American businessmen, explaining that China was open for foreign investment.
Zhu was born in 1928 in the city of Changsha, in China’s Hunan province, and graduated from Beijing’s Tsinghua University with a degree in electrical engineering. He joined the Chinese Communist Party in October 1949, when the new republic was founded, and rose as an unusually direct official — “My defining characteristic is independent thought. I say what I think,” he told bureaucrats in 1987, right before becoming mayor of Shanghai. His bluntness twice made him a target: in 1958 he was labeled an ideological “rightist” and briefly expelled from the party for criticizing Chairman Mao Zedong’s economic policies, and he was purged again during the Cultural Revolution. He was rehabilitated after Mao’s death in 1976 and worked his way back up the bureaucratic ladder.
When Chinese troops fatally fired on pro-democracy protesters in Beijing’s Tiananmen Square in 1989, Zhu did not issue the standard line denying the tragedy. “The event that occurred recently in Beijing is a historical fact, and historical facts cannot be covered up by anybody. The truth will always come out,” he wrote in an essay published in a Shanghai newspaper.
A career state planner, Zhu nevertheless quickly adjusted to the instability of the 1990s economy, as China careened between capitalism and state-led socialism. As central bank governor, he successfully tamed runaway inflation. As vice premier, he led a dramatic centralization of the tax system that incentivized land sales and huge wealth creation, along with hugely unsustainable levels of debt. After being appointed premier in 1998, he entered office with a bold promise — reform the indebted state banks within two years and inefficient state enterprises within three — that earned him both instant enemies and fans. “No matter whether what lies ahead is a minefield or a bottomless abyss, I will carry out my duties until the last breath in my body,” he vowed.
Zhu’s most controversial legacy by far remains restructuring China’s bloated state-owned enterprises. He axed smaller, inefficient companies, leaving an estimated 30 million state workers suddenly jobless, and worker protests erupted all over China. Zhu had the willpower — or callousness, as his critics would say — to ignore them. “The central government decided that the laid-off worker problem could just be ignored and forgotten,” said Dorothy Solinger, a professor emeritus of political science at the University of California, Irvine, who studies migrant labor in China.
Zhu tried to offset the layoffs’ impacts. He created a basic social welfare system that exists to this day and made steps to boost basic health care, which had crumbled in rural areas. But pockets of China, especially in the northeast, where workers relied on state employment in heavy industry, never fully recovered economically. “I think their children also have a problem because they miss out on the things that the better-off part of the population could do, such as hiring tutors or going on extracurricular activities, going to the better schools. It’s a growing underclass,” Solinger said.
Unlike most Communist leaders, who read off staid and carefully prepared scripts, Zhu loved engaging with and ad-libbing to the press. “He loved answering all the questions, no matter how tough or sensitive. The only way he refused to answer was using a quite humorous way to dodge the questions,” remembered Rose Luqiu, a former journalist for Hong Kong outlet Phoenix News who spent 10 years covering Zhu during his international state visits. His gallows humor helped him weather intense periods of criticism from senior ideologues within the Communist Party; during an anti-corruption campaign, he once quipped, “I have prepared 100 coffins: 99 for the corrupt officials and one for myself.”
Other reforms of his never materialized, in part because an austere Zhu never managed to cultivate the political patronage networks that would have allowed him to overcome fierce opposition within party ranks to his proposals. His efforts to reduce bad debt at China’s state banks and reform the pension system floundered.
Zhu is now invoked with pleasant nostalgia, even as China under Xi Jinping has taken a different direction. “I think that Zhu Rongji represented really a different time, a different era for China: the time when China wanted to find its way in what, due to that time, was the best possible way, which was to move towards Western-style economics, to move toward Western-style rules,” Barshefsky said.
Zhu spent the last years of his life at his Beijing home in the western hills of the Chinese capital. He loved Peking Opera and spent much of his days listening to music — and quietly advising some of the newest generation of technocrats running China, though not all appear to have listened to him. As recently as October 2017, he attended the closing session of the 19th Communist Party Congress at the Great Hall of the People in Beijing.