Suffering a Bumpy Ride.(Zhu Rongji)(Brief Article)

Zhu Rongji began his tenure as China's prime minister with a promise. During his now famous March 1998 press conference at the National People's Congress, the bold and freewheeling Zhu pledged that within three years he would turn around China's ailing state-owned enterprises, long a weak link in the country's economic boom. As China's prime minister prepares to step down, his critics are accusing him of failing to deliver. These behemoths of Chinese industry continue to be an enormous drag on the economy. And now that China has entered the World Trade Organization, many fear that China's state-owned companies will collapse under the pressure of foreign competition.

While Zhu cannot claim total victory, there is little doubt that the pace of economic reform accelerated during his tenure. Perhaps the most important benchmark of his success is the smaller number of workers employed by the state sector. Under Zhu's predecessors, public-sector employment marched relentlessly upward, even as the relative output of state enterprises declined. But in Zhu's first four years state-sector employment in cities fell by 34 million jobs, or 30 percent. Many of these cuts were accomplished by selling off tens of thousands of small- and medium-size state companies. Others came from state-owned companies simply thinning their ranks. The state railroad system alone has slashed almost 4 million jobs, and China's largest oil company cut 660,000 positions. Even the four largest state-owned banks, long oblivious to their inefficient management, have laid off 250,000 employees since 1997.

Zhu's fingerprints are all over the recent streamlining of the Chinese economy, much of it in anticipation of entering the WTO. The prime minister has argued time and again that the marketplace, in the proper doses, could do much of Beijing's work for it. Indeed, reduced trade barriers have allowed foreign goods to enter the country more freely and at lower tariffs. These cheaper, foreign-made goods are one of the most surefire means of ...