China's economy may need a Zhu Rongji-style reformist once again
Commentators argue that China faces the same slowdown, deflation and debt problems that former premier Zhu Rongji tackled in the late 1990s, and suggest a return to his aggressive reform approach.
The piece reflects on Zhu Rongji’s legacy, highlighting his bold moves such as closing loss-making state firms and transferring work-unit apartments to workers, which created a massive shift of public wealth to private hands. Today’s slowdown, deflation and mounting debt echo the conditions he faced in 1998, prompting experts like Fred Hu and Joerg Wuttke to argue that Zhu would be uneasy about weak consumer confidence and unreliable statistics.
While Zhu’s reforms spurred infrastructure growth and market opening, they also entrenched state dominance and sparked inequality, a paradox noted by Arthur Kroeber. The article warns that current leadership’s focus on manufacturing and subsidized exports could exacerbate economic fragility, echoing concerns from former U.S. trade chief Michael Froman. Overall, the author calls for a redistribution of state assets to households, reminiscent of Zhu’s earlier policies, to revive domestic demand.
Why it matters
Understanding Zhu Rongji's reforms helps gauge whether similar policies could revive China's faltering economy.
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