WORLD

The new emperor

BERTON WOODWARD September 29 1997
WORLD

The new emperor

BERTON WOODWARD September 29 1997

The new emperor

WORLD

CHINA

The slick-haired leader of one-fifth of the world’s population has been known to break into song at official gatherings. Elvis Presley’s Love Me Tender is among his favorites, along with 1940s ballads. Diplomats and foreign journalists used to regard Chinese President Jiang Zemin as a bit of a buffoon. No longer. When he closed the Chinese Communist Party’s 15th congress last week, Jiang declared the meeting ‘Victoriously over.” The victory was all his.

The 71-year-old leader emerged from the week-long congress, held every five years, significantly more powerful than he was before it. He had succeeded in pushing through a radical plan to privatize much of the country’s deeply troubled state industry. He had also sidelined key party opponents. His smooth performance capped a year in which he has sailed easily through such potential storms as the passing of party patriarch Deng Xiaoping in February and Britain’s return of Hong Kong in July. Jiang, whose biggest job had been mayor of Shanghai before Deng elevated him to successor status in the wake of the 1989 massacre of pro-democracy protesters in Beijing, has clearly grown into his new role. “I think he has been pretty impressive since the death of Deng Xiaoping,” said a Western political scientist in Beijing. “He has shown that he’s a pretty clever politician.”

The key challenge he and his colleagues

Power flows to Jiang Zemin

now face is handling the world’s fastestgrowing economy. Under the direction of arch-browed economic czar Zhu Rongji, it has been a glowing success story in recent years. The once double-digit inflation rate has been brought down to less than five per cent, the country’s fledgling stock markets are soaring, foreign investment is flowing in, and growth is tipped to pass 10 per cent this year. But foreign and Chinese analysts alike have long known that China would one day have to bite a very hard bullet—reform of the country’s vast, money-losing array of state-owned enterprises. Weighed down by heavy debts, a huge welfare burden, too many workers and obsolete equipment, the 370,000 enterprises represent a massive drain on the economy. But they also employ more than 100 million Chinese, who would face losing their “iron rice bowls” if downsized out of their lifetime jobs. China’s leaders have long feared the social unrest that could create. Nonetheless, in his opening address to the congress, Jiang indicated that the party was finally sharpening its bullet-biting teeth.

Although his speech was longer on rhetoric than detail, Jiang outlined a series of groundbreaking measures for the state enterprises. Careful not to use the taboo word “privatization,” he talked of allowing mergers, sell-offs and bankruptcies, as well as share issues to employees and the public. If fully implemented, the new policy would effectively mean that China’s system was Communist only in name.

Jiang did stress that public ownership must remain dominant. However, he stretched the definition to the breaking point. Shareholding, for instance, could exist “under both capitalism and socialism,” he maintained, explaining: “The key lies in who holds the controlling share.” The president also touched on the touchiest issue about reform: unemployment. “It will cause temporary difficulties to part of the workers,” he acknowledged. “But fundamentally speaking, it is conducive to economic development, thus conforming to the long-term interests of the working class.”

Still, Jiang offered no timetable for the reforms nor details of how they would be brought in. He also implied that while smaller outfits might be allowed to go under, large state enterprises would continue to receive support. The process is likely to be gradual, says Tim O’Neill, Toronto-based chief economist for the Bank of Montreal, whose board will hold its first meeting outside North America in Beijing next week. “There isn’t yet a fully committed willingness to make the state sector run as if it were a privately owned firm,” he says. “The real key to progress here is to allow failure to occur. That is probably the most difficult thing for any highly controlled socialist economy.”

Jiang, however, will have a much freer hand to deal with such issues in the wake of the congress. In a surprise move, he managed to engineer the political demise of his leading rival, Qiao Shi, the 72-year-old chairman of the National People’s Congress, China’s parliament. Qiao failed to make the list of the party’s central committee, elected at the congress. A week earlier, Jiang had scored against another key opponent. Former Beijing mayor Chen Xitong was stripped of his party membership, then finally arrested for alleged involvement in a long-running corruption scandal.

When the new party lineup was unveiled late last week, economic boss Zhu had jumped from fifth to third place, behind Jiang and Premier Li Peng. The urbane Zhu, like Jiang a Shanghai politician and an English speaker, now seems likely to take over the premiership when Li steps down next March. Li, long a powerful figure but increasingly beholden to Jiang, is tipped to take over Qiao’s post at the National People’s Congress. Other appointments made it clear that Jiang will still have to dicker with some lessfriendly colleagues, but there is no doubting his increased clout. “China can have only one emperor, and Jiang is clearly it,” said a European diplomat in Beijing. It may be too early to declare the Jiang Dynasty, but the president has plenty to sing about

BERTON WOODWARD

PAUL MOONEY