Zhu Rongji dies at 97, closing China's market reform era

Zhu Rongji, the former premier who negotiated China's 2001 WTO entry and restructured state-owned enterprises, died Wednesday at 97 in Beijing, state media reported.

"Zhu embraced the notion of a China whose economic system was more compatible with that of the West — vastly reformed, more open, less state-dominated," said Charlene Barshefsky, former U.S. trade representative who led WTO negotiations with China.

Zhu served as premier from 1998 to 2003 under President Jiang Zemin, after a decade as vice premier and central bank governor. He introduced a tax-sharing system in 1994 that shifted fiscal power to Beijing, abolished the housing distribution system in 1998, and cut state-owned enterprise workers from 77 million in 1995 to 42 million by 2003. China's global trade volume surged from roughly $510 billion at WTO accession to $6.5 trillion by 2025 — a twelvefold increase.

Zhu's death removes the last major figure of China's reform-era leadership, and his legacy now sits in tension with Xi Jinping's reassertion of state control over the economy. The state-controlled monopolies Zhu preserved became the foundation Xi used to strengthen party oversight, while the fiscal and housing reforms he championed seeded the local debt and real estate vulnerabilities that now weigh on China's growth.

Born in Changsha, Hunan Province, in 1928, Zhu graduated from Tsinghua University with a degree in electrical engineering and joined the Communist Party in 1949. His career was derailed twice under Mao Zedong — labeled a "rightist" in 1958 for criticizing economic planning and purged again during the Cultural Revolution in 1970, when he was sent to five years of manual labor at a party reeducation school.

Zhu's rehabilitation came after Mao's death in 1976. He became Shanghai's mayor in 1988, driving the development of the Pudong financial district, and moved to Beijing in 1991 as vice premier. As central bank governor from 1993, he tamed runaway inflation and resolved triangular debt chains between companies, guiding the economy to a soft landing.

The Reform Record

Zhu's most consequential policy was the "holding onto the large and releasing the small" restructuring of state-owned enterprises after 1997. He sold or closed uncompetitive small and medium state firms and merged large ones, triggering an estimated 30 million layoffs and worker protests across the country. He created a basic social welfare system to offset the impact, but pockets of China — particularly the northeast's heavy-industry belt — never fully recovered.

His WTO gamble reshaped China's economy. Many Chinese officials worried he had conceded too much, but membership turned China into the world's factory. Trade volume grew more than twelvefold in two decades, and foreign businesses rushed to establish footholds in the country.

The Contested Legacy

Zhu's reforms left structural imbalances that his successors inherited. The tax-sharing system strengthened central finances but pushed local governments to rely on land-use rights sales, entrenching a model that produced real estate bubbles and local debt. WTO accession and manufacturing growth created massive trade surpluses that later fueled trade conflicts with the United States and other major economies.

Leaders after Zhu, notably President Hu Jintao, reversed some of his reforms, particularly on state-owned enterprises, and ended the free-market drive. Xi Jinping has since reasserted party control over the economy's commanding heights, using the state-controlled monopolies Zhu preserved as the institutional foundation.

Zhu's blunt speaking style set him apart from most Chinese leaders. His four-volume collection of speeches, published in 2011, became a bestseller for its sharp criticism of officials — describing poorly constructed flood-control dykes as "tofu dregs" built by "parasites" and erring bankers as "half-wits." He once quipped during an anti-corruption campaign: "I have prepared 100 coffins: 99 for the corrupt officials and one for myself."

With Zhu's death, the third-generation leadership that drove the latter half of reform and opening-up has faded into history. Following Jiang Zemin's death in November 2022 at 96, only former President Hu Jintao and former Premier Wen Jiabao remain from that era.

This article is for informational purposes only and does not constitute investment advice.