Zhu Rongji - China's Maggie

[Baron von Lotsov]

There's a great long history of his time in office in this Wikipedia article.



https://en.wikipedia.org/wiki/Zhu_Rongji">https://en.wikipedia.org/wiki/Zhu_Rongji



We can look back at his time with hindsight and get some economic tips.



"A tough administrator, his time in office saw continued double-digit growth of the Chinese economy and China's increased assertiveness in international affairs."



Double digit growth. Have we ever seen that? We are growing at 1.8% at the moment.



I'll do some quick quotes here on economic and productivity matters where I think he did the right thing.





1) Stamp out government corruption and make yourself popular:



"Zhu provided a novel pragmatism and strong work ethic in the increasingly corrupt government and party leadership, and as a result gained great popularity with the Chinese public. "



"during his time as Mayor of Shanghai that he developed a public reputation as a strong opponent of corruption"



2) Develop infrastructure



"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.[3]"



3) Develop relations with foreign business.



"In order to improve relations with the foreign business community and solicit outside advice, he formed an advisory committee composed of foreign businessmen."



"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. "



4) Strict control of your party - cut out cronyism



"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. "



5) Restructuring banks and monitory 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."



"When a global recession occurred in 1992, China was challenged with excessive investment in fixed assets, excessive monetary supply, and chaotic financial markets.[8] Inflation rates reached over 20%.[14] 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,[15] devaluing the Chinese currency, cutting interest rates, reforming the tax system,[8] and investing state capital in the transportation, agricultural, and energy sectors.[15] 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.[16] Following Zhu's management, the Chinese economy was able to maintain stable growth and avoid dramatic price fluctuations."



"His first goal was to rationalize and centralize the fiscal and financial system. The second goal was to streamline and strengthen the state sector.[22]"



6 Encourage capitalism



"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.[24]"





So there you go, a short summary of the technical points of his reforms. They say he was the only one to really understand economics. I'd agree with that. He turned a country of paddy fields into a superpower. I wonder if he will end up getting a state funeral.