Reformer Named Chinese Premier

With state industries and banks crumbling and millions out of work, China's legislature on Tuesday chose as premier a no-nonsense technocrat who tamed high inflation but kept the economy growing.

The National People's Congress gave Zhu Rongji, a vice premier who has steered economic policy for five years, a solid mandate, electing him by a vote of 2,890 in favor to 60 no votes or abstentions.

Zhu replaces Li Peng, who was obliged to step down after serving the constitutional limit of two five-year terms. Li, No. 2 in the party hierarchy, was named Monday to head the legislature, allowing him to retain much of his influence over policy making.

Key to how free a hand Li and Communist Party General Secretary Jiang Zemin will give Zhu will be how many of his own proteges and supporters the congress installs in the Cabinet on Wednesday.

Zhu ran unopposed, as did Li on Monday. Their appointments were certain, having been decided in advance by party leaders. Still, the largely rubber-stamp legislature, two-thirds of whose delegates are party members, shows its faint independence by casting dissenting votes.

Although a member of the same technocratic generation as Jiang and Li, Zhu, 69 years old and No. 3 in the party, is widely seen as having climbed to the top through competence, not political connections.

He engineered a soft landing from 22 percent inflation in 1993, breaking the boom-bust cycle that has plagued China's 20-year capitalist-style reform effort. Growth has remained steady, although it is slowing this year to 8 percent or less.

Jiang and other Chinese leaders have turned to Zhu at a critical time for the reforms. More than a third of state industries are insolvent and state banks forced to lend to them are virtually bankrupt. At the same time, spillover from the Asian financial crisis is eroding exports and investment and undermining growth.

Zhu is said to be the architect of a far-reaching government overhaul, approved by the congress last week, that is intended to streamline the bloated, corrupt bureaucracy and prevent it from meddling in business.

A foreign economist who has advised Zhu says he also was the leader behind the party's decision last fall to free state firms to use such capitalist tools as stock issues and bankruptcy.

Having served briefly as central bank governor, Zhu also has declared he intends to rescue China's tottering financial system by instilling discipline in banks that have been obliged to lend money to prop up failing state firms.

If his reforms fail, Zhu is also easily expendable. He lacks a strong, independent power base in the country's main institutions, while Li has strong links to the bureaucracy and Jiang has deftly maneuvered supporters into key party posts and has courted the military.

Jiang, however, may find Zhu a useful counter-balance to the politically powerful and conservative Li, widely disliked for his stronsupport for the military suppression of democracy demonstrators in Tiananmen Square in 1989.

Zhu, by contrast, gained a reputation for moderation when as mayor of Shanghai he successfully placated demonstrators and averted violence.

A sharp-tongued taskmaster, Zhu has managed to alienate many potential political allies. His outspokenness has cost him dearly in the past.

Educated as an engineer at Beijing's elite Qinghua University, Zhu's promising career as a central planning bureaucrat went into a 22-year eclipse in 1957 when he was condemned for praising reforms in Hungary and Yugoslavia. During the 1966-76 Cultural Revolution, he was banished to the countryside to do manual labor.

Rehabilitated in 1979, Zhu rose swiftly. He became deputy party secretary of Shanghai in 1987 and mayor the next year. His boss, Jiang Zemin, was summoned to Beijing by supreme leader Deng Xiaoping and made head of the Communist Party in 1989. Zhu followed two years later and was named vice premier in 1993.

Written by Charles Hutzle
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