A Former Premier of China Speaks

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Translated excerpts from the just-released book of speeches by Zhu Rongji

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Zhu Rongji as he gave his final report in 2003 / Reuters

When top leaders in Chinese politics enter retirement, they seem to be sequestered in a nether region where no sounds are emitted. Indeed, they reappear fleetingly during important Communist Party events and celebrations, solemn and silent. Memoir-writing and speech-giving are entirely alien concepts to former Chinese leaders. They may well work behind the scenes in some capacity, but public life essentially ends when they step out of the Zhongnanhai leadership compound.

And so on the rare occasions that published works of former leaders arrive, China nerds like me salivate. This time it's a compilation of speeches by former Premier Zhu Rongji -- the unyielding and effective economic czar credited with steering China out of the Asian financial crisis, securing China's accession into the World Trade Organization, and reforming an inefficient state sector at the cost of massive layoffs. Zhu was known to have an intimidating and no-nonsense style, for which he earned praise and engendered hostilities. Many of these speeches are being published for the first time, and I think they offer glimpses into a man many in China miss today. Because the published texts are in Chinese, I thought I would translate some excerpts.

Classic Zhu quotes:

"You (referring to cadres) are neither diligent nor independent. You go out drinking and eating at banquets, then arbitrarily approve projects.You put cronyism first, cultivating guanxi (networks) everywhere, not giving a damn about the state's money and assets. When you're sitting here reporting to the chairman, how can you expect people below you not be disgusted?"
 --speaking at financial work conference in 1993

"To fight corruption one must go after the tiger first, then the wolf. There will be absolutely no tolerance for the tiger. Prepare 100 caskets and leave one for me. I'm ready to perish together in this fight if it brings the nation long-term economic stability and the public's trust in our government."
--speaking after major corruption case that ousted Beijing Mayor Chen Xitong

"I've slammed my hand on tables, given intimidating stare-downs, and people say I do it to scare the public. Well I don't think anyone believes that is the case. I don't intimidate the public, I only intimidate those corrupt officials."
--speaking at a press conference at a national legislature session in 2002

"My only hope is that after I leave public service, the Chinese people will think of me in one way: that he was a clean official, not a corrupt one. I will be immensely satisfied with that judgment alone. But if they are feeling particularly generous and say that Zhu Rongji got some real things done while in office, then I'll thank heaven and earth."
--speaking to press at a national legislature session in 2000 

The rest is taken from a speech at a full cabinet meeting in January 2003, Zhu's last full session at the helm. As the sun set on his career, Zhu understandably touted his government's achievements at some length. But more interestingly, it was his warnings and assessment of China's economic ailments nearly a decade ago that seem prescient and instructive today.

On government accomplishments:
The past five years were a particularly unique time in the development of modern China. One, we were facing head on global economic uncertainty, with the Asian Financial Crisis having a disastrous effect on many Asian countries. Two, we also faced enormous domestic challenges, including the 1998 flooding natural disaster, compounded by major economic restructuring and production declines that led to 10 million laid off workers in 1997. Having survived these five years was truly extraordinary. In fact, not only did we conquer these challenges, we managed to use the opportunity to expand our economy. Although I can't claim that this was the fastest growth period in history...it really was one of the best periods of economic performance in history...Let me use some statistics to prove my point. For example, investment in infrastructure in the last five years was double or triple that of the last decade or more. This huge scale not only transformed the natural environment and the social fabric, it also changed the quality of people's lives...

...We originally projected that post-Asian Financial Crisis, our exports would see negative growth for 2 or 3 years. But because we took a series of judicious policies, it turned out that exports didn't contract, they actually grew quite well...Frankly, we never thought that foreign direct investment would grow so tremendously--just last year FDI reached $52.8 billion, first in the world. Foreign investment has spurred reforms in the state sector, improved enterprise and sales management systems, all of which are beyond our imagination...

...And one more point. If we do not improve and refine our social welfare system, with social stability as a precondition, we would not have today's optimistic environment. Since 1997 we have been building a social welfare and unemployment system. We've done a lot of detailed work, issued numerous policies, and allocated significant spending from central coffers to that end...

On problems:

...I want to remind those cadres who are staying on the job beyond me: my biggest worry right now is an overheating economy, I've already worried about this for a year now. I wouldn't say this publicly, but only bring it up to the top leadership, that overheating is the one thing that preoccupies my mind. Many signs seem to have emerged, and if we're not vigilant, the economic situation will be difficult to rein in. I've had 50 years of macroeconomic work experience and I can sense deeply this creeping "national syndrome". Every time things improve just a little bit, people start to adopt an exaggerated swagger, become blindly self indulgent, randomly complicate things, and ignorantly devise policies. I've already commented that I think the property market is overheating, but I notice that the majority of my colleagues have not internalized the gravity of this issue. They always tell me "the overall conditions are quite good" as their bottom line and only spend little time discussing the problems. That's a bunch of malarkey! This is serious overheating, it was precisely overheating in the housing sector in 1993 that crippled Hainan. I've been reading some foreign media and they all say China is already a bubble, property is overheating, and risk is growing...

Our banking and financial sector colleagues must grasp this dynamic, because at the end of the day, all the money will come from banks. I must reiterate to our bank colleagues: perhaps you think you are being promoted to higher office in two years and that you will no longer manage financial portfolios, so why not just leave current problems for the next administration to fix...You cannot just leave these problems to your successors and blindly pursue development. I'm particularly concerned about this trend toward "urbanization". Urbanization now has been interpreted as simply constructing more housing at low cost, seizing farmers' land, and allowing foreign investors or domestic developers to move in without appropriately dealing with the farmers--this is a dangerous development. This does not align with the central government's intentions at all. We've discussed this internally on numerous occasions because we were precisely afraid of these kinds of trends. Our own think tank has published a report called The Cost of Urbanization to Rural Residents and Farmers that I suggest you all read. The study details a case in Luoyang, Henan, where it began massive township developments in 2001. It proceeded for two years without any comprehensive plans nor obvious sources of funding. So what do you do when you don't have the money? Well, what was originally a single floor house, they just built another taller wall along the street to make it look like it's a two or three-story house. They didn't invent this method, it has been used before, it's all fake! I don't know where they got their money, how could the village and county governments put up that kind of money? Either they got it through some kind of bank loans or they tapped local funds that were meant to be spent on education. I think this report is more poignant than a comparable one from the State Council. In 1993 it was all these urbanization projects in major cities, Hainan and elsewhere. If everyone starts to "urbanize" going forward, how can that be sustained! Our bank colleagues must remain alert. You always say that macro conditions are good, nonperforming loans are declining, but I just don't believe it...

...Moreover, setting up theme parks seems to be all the rage these days. But even in foreign countries they aren't this gun-ho about it. Take Disney for example, the US has two, France has one, and Japan has one. Yet now theme parks in China are popping up everywhere. The foreigners aren't taking money out of their pockets, but you sell the land at a discount, destroying the country's natural resources, and using your own money. Why the hell are you doing that??!! We've got millions of farmers to feed and all you want to do is build theme parks, who's gonna go there? Shanghai failed in its effort to build a Disney World, but still wants to do a theme park. Tianjin wants to do one and so does Beijing, so close to each other. The two Disneys in America are far apart, one in LA and the other in Florida, why are we building two next to each other? We must continue to clamp down on this...all these projects must be approved by the State Council first before proceeding. I assume many haven't even heard of the "Jurassic Park" in Sichuan. It was set up by the forestry bureau there, taking up 9 square km--it's a joint venture with an Australian bank and only because the local guys wanted to build a five-star hotel...

...Now the auto sector is getting hot too. Last year auto prices were slashed, we had massive auto imports, and banks were willing to lend to the sector. I don't believe that building compact cars should be our development trajectory, there's no need for this irrational exuberance, where young people adopt this mindset that owning a car is a badge of prestige. We've said this long ago, China is not that kind of a country, and I still haven't changed my mind. We should instead make public transport a central pillar of our development. Right now, Beijing's traffic is horrendous, how are we going to handle the 2008 Olympics? All sorts of basic infrastructure, transport infrastructure, and management infrastructure aren't up to standards. Shanghai has half as many cars as Beijing, but it still faces huge traffic jams, how are we going to accommodate the 2010 World Expo?...

...We cannot waver on our resolve in expanding public transport systems. There just isn't that much oil in the world! Cadres, last year crude imports stood at 70 million tons, and this doesn't account for smuggled products, so who knows how much we've actually imported. We can only produce 160 million tons domestically, but consumption is 260 million tons, how can this be sustained? When we run out of oil, how can we grow an auto sector? Public transport has been our persistent weakness, and we've never gotten it right...

Plenty more in there to read over, but I think that's enough of to give a sense of how Zhu once operated. His warnings on the economy, made at the beginning of the last decade, are similar to the warnings we hear as this decade opens. And it is clear that his sharp language often did not go over well with others, but it was this same uncompromising stance that enabled major changes to the Chinese economy.

The timing of the speeches' publication coincides with the current political transition in China. It would be impossible to divine precisely what impact Zhu's words will have on the Chinese "campaign season" under way, if they have any at all. Yet the simple fact that the voice of a respected former premier is now mixed into the larger political intrigue should not be dismissed outright -- especially during a time when vigorous debates are taking place among Chinese elites over the country's development trajectory, ideology, and identity. With some now questioning the ability of sitting Premier Wen Jiabao -- derided as the "greatest actor" in some quarters -- will Zhu's perceived effectiveness be used against Wen just as the latter is forging his own legacy? Is he like an Al Gore who never quite stepped out of the shadows of Bill Clinton?

Will Zhu's words cause the public to recall the reforms of yesteryear and ask questions of why many reforms have seemingly stalled? So far, the liberal Guangdong paper Southern Weekend has scored a coup in publishing excerpts of Zhu's speeches. But will official media pick it up or remain completely silent? Indeed, suppression of the speeches may be a good barometer to gauge the extent to which current leaders feel threatened by the return of Zhu.

These are interesting times in China.

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Damien Ma is a Fellow at The Paulson Institute, focused on investment and policy programs and the Institute's research and think tank activities. Previously, he was a lead China analyst at Eurasia Group, a political risk research and advisory firm. More

Damien Ma is a Fellow at The Paulson Institute, focused on investment and policy programs and the Institute's research and think tank activities.

Previously, he was a lead China analyst at Eurasia Group, a political risk research and advisory firm. He specialized in analyzing the intersection between Chinese policies and markets, with a particular focus on energy and commodities, industrial policy, U.S.-China trade, and social and internet policies. His advisory and analytical work served a range of clients, from institutional investors and multinational corporations to the U.S. government. Prior to joining Eurasia Group, he worked at a public relations firm in Beijing, where he served clients ranging from Ford to Microsoft. He also was a manager of publications at the U.S.-China Business Council in Washington, DC.

Ma writes regularly for The Atlantic online and publishes widely, including in Foreign Affairs, The New Republic, and Foreign Policy, as well as appearing in a range of broadcast media, such as the Charlie Rose Show, Bloomberg, and the PBS NewsHour. He also served as an adjunct instructor at Johns Hopkins University's Nitze School of Advanced International Studies (SAIS). He is currently working on his first book on China (co-authored). He speaks fluent Mandarin Chinese and some Shanghainese dialect.

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