Zhu seizes his chance to take control
EXECUTIVE Vice-Premier Zhu Rongji has taken advantage of his brief to ''cure and rectify'' China's economy to take effective control over the entire State Council.
And while his powers as economic tsar and watchdog over the regions have increased, those of Prime Minister Li Peng and his faction continue to recede.
After taking over the finance portfolio from central bank governor Li Guixian, whose resignation will be announced tomorrow, Mr Zhu has been given new authority by patriarch Deng Xiaoping to whip recalcitrant localities and enterprises into line.
Chinese sources said Mr Zhu had profited from his position as Chief Rectifier of the economy and was able to restructure the plans and finances of ministries and local administrations, as is evident from the austerity programme Beijing has unveiled.
But while Mr Zhu had effectively displaced Mr Li as head of government, his political risks had also increased because he would be held responsible if Beijing failed to restore fiscal order.
Sources in the State Council said Mr Zhu, who also heads the state commission on securities, had put his allies and proteges in charge of restructuring.
They include Minister of the Economic and Trade Commission Wang Zhongyu and State Planning Minister Chen Jinhua.
By gaining control over finance and planning systems, Mr Zhu and his allies had broken the back of the Li faction, also known as the faction of the alumnae of Soviet colleges.
''Planners who are followers of conservative politicians including Chen Yun, Yao Yilin and Li Peng have traditionally controlled the banks, the Finance Ministry and the State Planning Commission,'' a source said.
''Such former reformists as [ousted party chief] Zhao Ziyang were unable to extend their influence to these departments. Zhu seems to be doing so successfully.'' Western diplomats said despite his partial recovery from a heart ailment, Mr Li has missed major public functions and State Council conferences.
On Tuesday, it was Mr Zhu who chaired a major meeting of ministers on the resettlement of residents displaced by the Three Gorges hydroelectricity project.
He also made the decision to call the ''summit'' of central and provincial leaders on re-imposing financial control. Yesterday, Mr Zhu stood in for Mr Li in a briefing session for non-communist politicians.
As well as the deposed Governor of the People's Bank of China, Li Guixian, other Li planners and proteges, such as Vice-Governor of the Bank, Guo Zhenqian, and Vice-Minister of the State Science and Technology Commission, Li Xiaoshi, are believed to be on the way out.
In addition, Vice-Premier Zou Jiahua, a Li ally who used to head the State Planning Commission, has lost power as he has not been given a big role in the restructuring campaign.
Analysts said, however, that the Li Peng faction still controlled up to a third of State Council ministries and departments, and the planners were still in a position to sabotage Zhu policies.
They said Mr Zhu was walking a high wire because his personal prestige had now been inextricably linked to the success of the austerity programme.
A senior diplomat said: ''Should inflation and the problem of the runaway money supply worsen, President Jiang [Zemin] will be the beneficiary. The two have been keen competitors from the days when they worked together in Shanghai.'' As Head of the Central Committee's Leading Group on Finance and Economics, the nation's highest organ for economic decision-making, Mr Jiang is in a position to supervise Mr Zhu's restructuring efforts.