CHINA'S economics czar Zhu Rongji reportedly loves to tell the joke that if he orders 10 coffins, nine will be for those he is after and one for himself. The remarkably blunt man - or 'One-chop Zhu' as he is known in Shanghai - would have loved to bury Chinese state bankers and corrupt government officials who fail to live up to his expectations. He also expects to be buried in return by his enemies. His list of enemies grew last week when he made what could be his parting shot as head of the central bank to Chinese bankers: shape up the state banks or ship out. Admirers said it was precisely his decisiveness and no-nonsense approach to business and economics that helped steady the chaotic economy he inherited in mid-1993 and steer the archaic banking system towards a modern and commercial structure. By clamping down on new fixed-asset investments and credit, he gradually managed to rein in the overheated economy and produce the soft landing few thought he could. In his two years at the helm of the People's Bank of China, the country's foreign reserves and investments have ballooned, the yuan has stabilised and the antiquated banking sector is being pushed towards a modern commercial system. Today, the reserves stand at US$60 billion and foreign investments at more than $30 billion annually, while the yuan has risen to about 8.3 to the US dollar. When he took over the reins of the People's Bank, the country had under $20 billion in state coffers while the yuan plummeted to nearly 11 yuan as mainlanders rushed to buy hard currencies to protect their savings against inflation. Today, inflation at about 20 per cent remains high but it is falling, albeit much slower than Mr Zhu had hoped. For the more difficult task of transforming the banking sector, he helped lay the groundwork by pushing through a central banking law, a commercial banking law and a commercial papers law. 'These three laws will form the basis of a modern banking system in China and Zhu Rongji will be remembered for that,' said Sheng Mujie, vice-president of the Shanghai Society of Finance. Although still in an experimental stage, China's stock markets have expanded considering during his reign while treasury bonds are increasingly being used to help finance the budget deficit. He also helped pave the way for the yuan's free convertibility when he suddenly announced the merger of the official and swap centre rates of the currency early last year. Although foreign bankers spoke of him with great admiration, they regretted he did not open up the banking and financial services sector wider and faster to foreign competition. 'It's remarkable, the things he has done during his short tenure at the People's Bank. But I wish he had allowed some of us to do business in yuan,' said Akira Ito, general manager of Bank of Tokyo's Shanghai branch. Despite much talk of opening up yuan business on a restricted basis to a select few, it remains just that: talk. Analysts said it was high time that Mr Zhu handed over some of his responsibilities to younger men as the two key tasks facing him were enormous and needed his full attention. They were to see the reform of the moribund state sector and to ensure the effective implementation of the new tax system.
