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ASIA | March 16, 1998 VOL. 151 NO. 10 |
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If that thought plays to Zhu's well-known obsession with order, some of his other proposals seem to reveal a capitalist bent. His plan to spend $750 billion on public infrastructure projects over the next three years-creating thousands of construction jobs-has been likened by associates to a Roosevelt-style New Deal. Sources say Zhu's interest in providing decent housing explains a $12 billion Bank of China mortgage scheme for individuals, designed to greatly expand the ranks of home-owners. To recapitalize fragile banks, Zhu has moved to issue $12 billion in government bonds. At the same time, he has ordered that the central bank's branches be reorganized along regional rather than narrow, provincial lines-a system modeled after the U.S. Federal Reserve. Zhu's motive, however, is homegrown: to reassert Beijing's grip over lending practices that had been beholden to local politicians and powerbrokers. The much-vaunted plan to privatize China's state sector betrays a similarly authoritarian impulse. While thousands of small firms will be cast loose by the turn of the century, Zhu has indicated that the 1,000 largest will be reborn as massive conglomerates modeled after South Korea's chaebol, which have long been locked in cozy relationships with the state. "Like every economist of his generation, Zhu has a background in central planning," says an official who has worked closely with him. Still, she adds, "he realizes that if he is to keep the economy going, he has to introduce market factors." Indeed, recent reports suggest Zhu may be reconsidering the chaebol model in light of South Korea's recent troubles. Concludes St. Pierre: "Deep down he believes in market forces. But he knows he can't unleash the free market on China. He's looking for an imaginative way to modernize the economy that no economist has seen before." His plans for the political system are apparently more modest. Although Zhu's new title will entail a more visible diplomatic role, most observers expect him to cede control over non-economic decisions to Jiang and Li, who will replace Qiao Shi as npc chairman. Zhu has little choice: his difficult personality and, some say, lack of ambition have limited him to a power base made up mostly of younger economists, technocrats and academics. Away from the capital, he inspires fear but little loyalty. "Guangdong must learn to live with Zhu's iron fist," sighs a local cadre, who remembers the Vice Premier upbraiding the powerhouse coastal province in 1993 for its independent taxation policies. Zhu has taken steps to install proteges in places like Guangdong and Guizhou, where he recently arranged for trusted adviser Lou Jiwei to become vice governor. Still, Zhu had originally wanted Lou in Beijing as part of his cabinet; opposition from Jiang and Li nixed that. The two top leaders have each reportedly clashed with the short-tempered technocrat in the past. They suffer his elevation now largely because of his macroeconomic skills. "He's under the gun every day," says Wadsworth. "If I were in his shoes, I'd be looking at the economic numbers every morning." But Zhu and his policies may have the last word. His reforms diverge so radically from previous custom that no one can predict their consequences. If they can be sustained, Beijing hopes, they will remove the land mines threatening the Chinese economy. His admirers hope they will also plant the seeds of a more open system. -Reported by John Colmey and Mishi Saran/Hong Kong, Jaime A. FlorCruz/Shanghai, Terry McCarthy/Singapore and Mia Turner/Beijing
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