Zhu on slippery slope
The crisis for Zhu Rongji is not over. This is despite the fact that to dispel rumours about the premier's resignation, the propaganda machinery arranged two high-profile trips for him earlier this month.
During a one-day tour of the Kunming Horticultural Exposition last Wednesday, Mr Zhu hobnobbed with visiting foreign dignitaries.
And while inspecting Shaanxi and Henan provinces, the economic tsar held forth on his favourite topic, reform of state-owned enterprises (SOEs). Mainland papers gave top billing to a picture of a smiling Mr Zhu mixing with Shaanxi peasants, a photo reminiscent of Chairman Mao Zedong meeting the masses in the 1960s.
The truth of the matter, however, is that Mr Zhu has failed to claw back territory he has lost during a relentless onslaught by conservatives since April.
Moreover, the support that he got from President Jiang Zemin at the recent Beidaihe leadership meetings was hardly unqualified.
While briefing cadres in Shaanxi and Henan, Mr Zhu confirmed that at Beidaihe, the zhonyang (central authorities) had taken 'major steps' in economic work.
He asked local officials to 'further firm up their confidence, deepen enterprise reform, and change the mechanism of management'.
Uncharacteristically, however, Mr Zhu breathed no word on specific measures.
No mention was made of the experiment of gufenhua, or transforming SOEs into shareholding companies and listing them on stock markets. Nor did Mr Zhu repeat arguments he had given in internal meetings that even large SOEs can be sold to companies in the public and non-state sectors.
Instead, the premier emphasised that 'all areas and departments must seriously implement General Secretary Jiang Zemin's important instructions on SOE reform and development, as well as the series of goals and policies of the zhongyang'.
Disturbing questions have arisen about Mr Zhu's authority. Firstly, it is obvious much of the initiative of reform has gone to Mr Jiang. During his trip to Britain in March last year and to the US in April, the premier liked to remind foreign audiences that Mr Jiang was 'China's No 1'.
However, when speaking in a domestic setting, and particularly when the topic is the economy, Mr Zhu seldom appealed to the authority of Mr Jiang.
While on a swing through the northeast last week, the president left no doubt he was calling the shots on economic reform. At Dalian, he presided over a seminar on SOE reform to cadres from eight provinces and leading cities.
It was the fifth time since April that Mr Jiang had made key pronouncements on economic matters while touring the provinces. The neo-conservative leader's speech was typical Jiang: forward-looking exhortations hedged with cautions about going too fast.
The president said there would be a 'strategic regrouping of SOEs'. He hinted that more leeway would be given to the non-state sector. 'SOEs must be capable of making both advancements and retreats,' he said. 'They should do certain things but also refrain from doing other things.' Then came caveats galore. Mr Jiang said there must be no privatisation, adding this was a 'major principle with no room for transgressions'. He added that Communist Party authorities must have tight control over the managers of SOEs that 'affect national security and the economic lifeline of the country'.
Mr Jiang's statement showed that some of the ideas of Mr Zhu and his advisers, including the partial retreat of the state from business, had been adopted.
However, the president had put many of Mr Zhu's pro-market initiatives in a bird cage. For example, Mr Jiang stressed that party control as well as the livelihood of workers must not be hurt in the course of reform.
'More than before, Zhu has to submit his proposals to the party Central Committee's Leading Group on Finance and Economics before they become policy,' a source in Beijing said.
'Since Jiang chairs the leading group, the president is in a position to fine-tune or at times water down Zhu's suggestions.' The second question about Mr Zhu's influence concerns personnel. Developments in the past fortnight seem to have confirmed that big chunks of the decision-making powers of Mr Zhu and his lieutenants have gone to Mr Jiang's proteges, particularly members of the Shanghai faction.
Among cadres who accompanied Mr Jiang to Dalian last week were Shanghai faction stalwarts such as Vice-Premier Wu Bangguo, organisation chief Zeng Qinghong, economic planning chief Zeng Peiyan, Leading Group on Finance and Economics official Hua Jianmin and political adviser Wang Huning.
Mr Wu, whose division of labour is industry and economic reform, has been sidelined by Mr Zhu since the former became vice-premier in March last year. Now he has the support of both Jiang and Zhu foes such as National People's Congress Chairman Li Peng to get his old portfolio back.
'In private meetings, Jiang has criticised Zhu for favouring only his proteges - and not using capable officials from other factions,' a veteran cadre said.
'The president admonished the premier to heed the principle of the 'four lakes and five seas' - or promoting officials from different backgrounds.' The cadre added while quite a few of Mr Zhu's proposals may be passed at Beidaihe and endorsed at a Central Committee plenum next month, the premier may have little say over how they will be implemented.
Zhu watchers said the premier had been trying to resuscitate the political fortunes of associates whose clout had declined in tandem with his own.
Take, for example, protege Zhu Xiaohua, former head of China Everbright, who was recalled to Beijing last month for investigations into his alleged business irregularities in Hong Kong.
Premier Zhu is reportedly lobbying hard to have Zhu Xiaohua given a senior position at the State Office for the Reform of the Economic Structure, a leading think-tank.
At Beidaihe, Mr Zhu also advocated luring back to the government a large number of professionals now working in the United States and Hong Kong.
Analysts said unless his new, pro-market ideas could be translated into national prosperity soon, the economic tsar could remain in the woods for quite some time.