China's new PM takes an axe to mandarins

CHINA'S annual parliament opens today to appoint the country's first new prime minister in 10 years.

Zhu Rongji, the top economic policy-maker, will take over the job with a mandate to impose the most sweeping structural reorganisation of China's over-manned and inefficient government bureaucracies since Deng Xiaoping launched the country on the path of reform two decades ago.

The Zhu blueprint includes abolishing up to a dozen ministries, a clear- out of many senior ministry officials and large-scale lay-offs among the bloated ranks of civil servants. "Mr Zhu is putting his reputation on the line from the word go," said one Western diplomat.

"He wants a more powerful and effective government to come out of this. It is quite a daring thing to do."

Mr Zhu, 69, has already made enemies in his current job as first deputy prime minister in charge of the economy. His austerity measures since 1993 successfully brought down inflation and curbed excessive spending by free-wheeling provinces, but also targeted corruption and the interests of local cadres.

Mr Zhu is widely viewed by Western diplomats as the most able Chinese leader and the best-qualified for prime minister, although not a political reformer. But his restructuring is set to be imposed just as the country is facing a new raft of economic problems.

Growth is slowing, unemployment is soaring, foreign investment is falling, and exports are suffering because of competition from neighbouring Asian countries whose currencies have collapsed. Mr Zhu must also sort out China's shaky domestic state banking system which, it was announced at the weekend, is to receive a capital injection of $32.5 billion as financial ballast against an estimated $200 billion in non-performing loans to the country's loss-making state-owned enterprises.

This month's 15-day National People's Congress (NPC) will formalise the "triumverate" which now runs China and which must negotiate solutions to all these problems.

President Jiang Zemin, 71, who is also party chief and head of the armed forces, will retain his position as "primus inter pares".

Mr Zhu will replace Li Peng, 69, who must step down after two full terms. But Mr Li will keep his ranking as the second most powerful man in the political hierarchy, and is expected to take over as chairman of the NPC, ousting Qiao Shi, the party elder who was dumped in a power struggle with Mr Jiang at the party congress.

The appointment of Mr Li as NPC head is the most controversial because of his role in implementing the brutal crackdown on the Tiananmen Square protestors in June 1989.

It remains to be seen how the relative power of the three men will evolve in a closed political system normally riven by factional rivalries. The elevation of the able Mr Zhu to prime minister is an obvious threat to the power of Mr Jiang and Mr Li.

"If Zhu is too successful, then he clearly becomes a very big man indeed in China," said the Western diplomat.

"It is going to be difficult for Mr Li to retain his Number 2 position."