Zhu Rongji's Year of Living Dangerously

TERRY McCARTHY ShanghaiLife looks different down the barrel of a gun--more focused, urgent. Zhu Rongji seems to like it that way, relishing the edge it gives him. China's Premier is a risk-taker, a breed apart in the Chinese leadership. In Beijing they sometimes call him Zhu Fengzi, Madman Zhu, as he crashes through the rickety communist superstructure in the name of reform, laying off millions of workers at state-owned enterprises, terrorizing corrupt officials, having smugglers shot. On a good day they call him Zhu Laoban, Zhu the Boss, the only man capable of imposing order on an economy of 1.3 billion money-hungry people snarled in one of the greatest economic traffic jams the world has ever seen.Discipline has always been Zhu's touchstone, from his early days as a lowly planning official to his current post as China's fiscal field marshal. When he was mayor of Shanghai in 1988, two relatives asked him over dinner to bend strict residency laws so they could come to live in the city. Zhu turned them down, according to another family member present, saying: What I can do, I have done already. What I cannot do, I will never do.

The moment the mad boss steps off his Air China jet in Los Angeles this week on the first stage of his U.S. visit, he knows he will be in the crosshairs. Many Americans, fed up with allegations of nuclear espionage and China's dismal human rights record, are sure to take it out on the visitor from Beijing. He's looking forward to it. Let them vent their anger, Zhu told a press conference last month. I will go to tell the truth.

The truth is not pretty: a Chinese crackdown on domestic dissent harsher than anything since the Tiananmen massacre in 1989, allegations of a concerted campaign of nuclear espionage in U.S. labs, a trade surplus with America that Washington calculates at $57 billion--second only to Japan's, a brewing showdown over U.S. plans to provide Taiwan with a defense system against China's ballistic missile buildup. Relations between Washington and Beijing are frostier than they have been for years, as the old epithet red creeps back into America's discourse on China. Some Congressmen are even talking as if China has become the new cold war enemy.

Having reached the age of 70, Zhu should be resting on his achievements, letting others take the hits. But if anything he is wading in deeper, taking on the weight of a troubled bilateral relationship just as China's own economy is teetering on the edge of breakdown. His reasoning is simple: if he doesn't do it, nobody will. And time is short. Black hairs have already turned to gray, he said last month, expressing his frustration at the slow pace of negotiations with the U.S. over China's long-delayed entry into the World Trade Organization. But he could have been referring to his own life story, an ever more difficult struggle against the forces of disintegration, anarchy and corruption that could yet rip China apart. He has four years left as Premier, and so much still to do.

Tall and sharp with the features of a falcon, Zhu dominates meetings with his quick mind. His IQ must be 200, deputy U.S. Treasury secretary Lawrence Summers once said. He has a Rolodex memory, endless energy and overpowering impatience. Zhu is a verb, an active verb, says Wu Qing, professor of American studies at Beijing Foreign Studies University. He is not a man that one likes, but a man that one respects, says Singapore's Senior Minister Lee Kuan Yew. Above all, Zhu is a man in a hurry, with a mission to make up for lost time, both for himself and for China.

PAGE 1||Zhu knows how much time China lost under Mao. Coming from the suspect background of a wealthy landowning family, Zhu spent two decades in political disgrace while incompetent planners pushed an already poor country into famine and industrial ruin. Only since his political rehabilitation in 1978 has Zhu been able to pursue his goal of modernizing China's economy.

Zhu is painted a different shade of red than the standard communist cadre. The Chinese character for his name means vermilion, the color used on the gates of wealthy people's mansions in old China. Descended from Zhu Yuanzhang, the first Ming dynasty emperor (1368-98), the Zhu clan were large landowners around Changsha in Hunan province where Zhu was born in 1928. The Zhu family was very rich, says Zhu Yunzhong, 66, a retired doctor and a cousin of Zhu Rongji's. That caused many of them problems after the revolution--even myself.

Yunzhong lives in the township of Ansha, 30 km from Changsha. Ten minutes' walk up the valley from his two-room house he points out the site of the Zhu clan's onetime palace. It had dozens of rooms, he says, I can't remember how many. A covered walkway once led over the hill to the family temple. We used to say that whichever path you took from here to Changsha you had to pass over Zhu land, says Yunzhong. The palace was destroyed in an anti-landlord campaign in the late '50s, but Zhu's privileged background would not be forgotten.

Zhu's father died before he was born, and his mother perished when he was nine. Losing them at such an early age made him quiet, thoughtful, says Yunzhong. The boy was brought up by his uncle, Zhu Xuefang, who gave his charge 100 pieces of silver when it came time for him to go to university. Zhu studied electrical engineering at Qinghua, joined the Communist Party in 1949 and found work in the State Planning Commission. It was there that he made a speech in 1957 questioning the party's economic policies. He was disgraced, thrown out of the party and sent to the countryside. He spent several years in China's northeast tending livestock until the late 1970s, when Deng Xiaoping began looking for people to help lead his economic reforms. Zhu was brought back as an economic planner and rose quickly in the ranks. His success was a tribute to his raw skills: after two decades in the political wilderness he had no base of support in the army, the party or the bureaucracy. He was always a wild card, following a different script from most of his comrades. Everyone knew Zhu, not just for being efficient and honest, but primarily because of his rightist background, says Zhu Xingqing (no relation), who as a journalist observed Zhu in Shanghai in the 1980s.

After taking over Shanghai's reins in 1988, Zhu opened the city to foreign investors, starting a boom that lasts to this day and demonstrating a no-nonsense approach to the business of doing business. To show his seriousness, Zhu reduced costs by trimming official banquets from 12 dishes to four. First of all, most of us couldn't eat that much, recalls Gareth Chang, who headed a McDonnell Douglas joint venture in Shanghai in the 1980s. And second, he thought the longer meals were a waste of time. In 1991 Zhu was recalled to Beijing, where he was made vice premier and given the task of curbing China's worrisome inflation. With characteristic bravado, he announced that he was preparing his own coffin in case he failed. Zhu imposed an austerity package that brought prices under control, contrary to all predictions. His success won him the premiership, which he assumed last year just as Asia's economic collapse threatened to push China into the abyss.

This is Zhu territory, right on the edge--between disgrace and success, between oblivion and the front cover of newsmagazines, between smiling self-confidence and apoplectic fury at incompetence and corruption among his underlings. Those diatribes are becoming legendary. I've seen documents detailing corruption involving local leaders, says a Beijing official. On the margins are Zhu Rongji's terse inscription: che (Fire him!). When TIME wrote last October that Zhu's wings had been burned as his overly ambitious reforms were being hurriedly scaled back, he sent a message through visiting former U.S. trade negotiator Carla Hills, Tell TIME my wings are still strong.

|2|Zhu is very conscious of his image, and he often quotes from stories about himself in the Western press--including their exact date. With little institutional support in the government, Zhu seems to feed on his own esteemed self-image to keep himself going. In public he is forceful and given to lecturing others, a habit he has retained since his days teaching economics at his alma mater, Qinghua University. Qinghua appreciated his talents: he became dean of the university's business school, and in that capacity pioneered its links with M.I.T.'s Sloan School of Management, where he plans to give an address when he visits Boston next week.

Zhu is widely admired for integrity in a society where holding an official post is all too often a license for self-enrichment. Zhu has served as a role model to other bureaucrats, says Rana Talwar, group chief executive of Standard Chartered Bank in London, who has met Zhu on several occasions. You notice the upgrading of people around him. Li Shan, a Beijing-born graduate of Qinghua, had been an executive director at the London office of Goldman Sachs until Zhu invited him back to China last year to set up an investment banking arm at China Development Bank. He asked me on April 4, says Li. By April 15, I was in Beijing. You cannot say no to him. But even Zhu's strongest supporters question whether he can single-handedly save China's economy from deflation, mounting unemployment and massive bad debts in the banking system. Zhu is my No. 1 person in China, says Li. But just by one man I don't think you can change the country.

What could do Zhu in is his obsession with micro-managing China's affairs. Insiders say he relies on about two dozen key advisers, most of them economists and technocrats in think tanks, who regularly send him policy papers and research material. But he insists on having the last say on every decision. A voracious reader, Zhu pores over many of the 16,000 letters he receives each year from citizens with grievances. It is good for him to read them and know how people feel, says one Zhu aide. But he should not be doing that too often--he should be dealing with the big problems.

To some, that attention to detail suggests a lack of vision. You need someone at the top who can think of systemic change, says Andy Xie, China economist for Morgan Stanley Dean Witter in Hong Kong. With his engineering background, Zhu attacks specifics. But he is not trained to think of system implications. When Zhu's patron Deng Xiaoping made his legendary trip through China's south in 1992, Deng said nothing more specific than that it was not a bad thing for socialists to get rich. With that, an unprecedented countrywide business boom ensued. By contrast, when Zhu traveled south to Guangzhou last October, in the space of five hectic days he personally supervised the closing down of a big, indebted investment trust and at the same time ordered the firing of 600 provincial officials involved in smuggling.

How will China's marksman stand up to Washington's crossfire? The war in Kosovo may be preoccupying American lawmakers, but Zhu cannot hope to pass entirely under the radar of China critics like Senator Jesse Helms. Zhu said he knows the trip won't be easy, but he is amazingly calm, says Fred Hu, head of Asia economic research for Goldman Sachs in Hong Kong and a former student of Zhu's at Qinghua. He is super-confident about himself.

The English-speaking Premier brings charm, shrewdness and a disarming sense of humor to the task of softening U.S. opinion on China. Though economics is his field, he will have to deflect questions on the thornier issues of human rights and nuclear espionage. In last month's press conference he won over his audience when he complained that a recent business magazine cover had made him look like a dead man. He then went on to concede that difficulties in the economy were greater than he had expected in the past year: I have not done a good job. A red with a sense of humor who admits he is wrong? Even Jesse Helms might hold his fire on that.

With reporting by Jaime A. FlorCruz and Mia Turner/Beijing and Wendy Kan and Isabella Ng/Hong Kong

||3