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China Leans Heavily on Trouble-Shooter : Politics: Vice Premier Zhu Rongji's assignment is to cope with economic troubles, corruption, rural anger.

July 31, 1993|DAVID HOLLEY | TIMES STAFF WRITER

BEIJING — Confronted with a range of economic and political crises, China's aged leaders seem to have seized upon a new, surprising and singular solution:

So, the peasants are rioting in the countryside? Call in Zhu Rongji, the blunt-talking former mayor of Shanghai, now serving as vice premier.

Lending and inflation out of control? Well, give Zhu the central bank to run too.

Are provincial officials ignoring Beijing's orders? Zhu will send out enforcers.

Is Premier Li Peng sidelined with heart trouble? Hmm, let Zhu function as acting premier.

How Zhu, 64, copes with the herculean tasks now assigned to him will go far to determine whether China faces a smooth or rocky road in the months and years ahead, analysts say.

Experts note that the problems Zhu has now been saddled with are so serious and intractable that it is almost tempting to wonder whether his growing accumulation of power is the work of his friends or enemies: If things go well, Zhu will grow even stronger, and China's market-oriented reforms should be further strengthened. But if the economy falters, Zhu may be the most obvious potential scapegoat.

All signs are that China's new economic czar and trouble-shooter nonpareil, feisty as ever, is plunging into his latest assignments with zest.

A fluent speaker of English and viewed as one of the most competent and open-minded of China's top leaders, Zhu has enjoyed the clear support of increasingly frail senior leader Deng Xiaoping, 88. He also appears to have a satisfactory working relationship with President Jiang Zemin, 67, who holds at least titular authority over Communist Party and military affairs.

Zhu will need all the political clout he can muster to deal with the troubles ahead in China's economy. It grew 12.8% in real terms last year, according to official statistics, and even faster in the first half of this year.

But as urban life grows richer, rural envy rises. As the Chinese economic expansion hits unsustainable speed, everyone worries about what comes next. As the economy becomes freer, inequality and graft proliferate. Inflation, now running at about a 20% annual rate in major cities, threatens to burst out of control.

Zhu's assignment is to somehow cope with an interlocking web of financial disorder, corruption and rural anger.

In China now, the inefficient state industries soak up subsidies, which are covered by printing money, which, in turn, boosts inflation. Local officials divert funds earmarked for grain purchases or rural services to ill-conceived industrial schemes, construction projects or luxurious living by the powerful. They then try to make up shortfalls by boosting local taxes or issuing IOUs to peasants at grain-purchase time.

Extraordinary scandals are striking near the heart of China's power structure. A Beijing banking official recently drew a suspended death sentence after he was convicted of trading loans for bribes. A prominent company president has been jailed for allegedly running a 1-billion-yuan ($174 million) investment scam.

Graft and rural unrest resonate with special irony in China, where the Communist Party rose to power by organizing the peasantry against a corrupt elite. Rioting by peasants cuts at the very core of the party's legitimacy. Success in coping with these troubles could give the Communist Party a renewed grip on power, even as its ideological nature fades away. Failure could lead to its fall.

Internal Chinese government documents have recorded 200 or so incidents of rural rebellion in the last eight months, most involving demands that IOUs be cashed, or refusal to pay taxes, according to reports in Hong Kong media.

Some clashes have been openly acknowledged. The official China Daily reported in early July on troubles in at least 11 provinces after rural post offices issued IOUs to peasants trying to cash money orders from relatives in more prosperous areas.

A dramatic case of rural upheaval came in Renshou County in central China's Sichuan province. Simmering anger over heavy taxes and the lavish lifestyles of local leaders finally erupted into open defiance early this year when officials demanded "donations" for highway construction. The protests escalated in late May to include vandalism of government buildings and leaders' homes, the official China News Service said.

About 2,500 angry farmers protesting new fees blocked an intersection for 10 hours on June 1. Police cracked down four days later, arresting protest leaders. A mob of perhaps 1,000 peasants freed one woman as she was being led away in handcuffs, residents later told visitors from Beijing.

Zhu has orchestrated a two-pronged response to such rural unrest. On the one hand, local police and paramilitary forces still have orders to crush any disturbances.

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