Zhu Rongji Dies: The “100 Coffins” — Who Did They Ultimately Bury?

On August 12, Zhu Rongji died in Beijing. An official Xinhua obituary said he was 98. Zhu rose to prominence during what was arguably the most successful period of the Chinese Communist Party's reform and opening up era, leaving him with a dual image— a reform-minded modernizer and an iron-fisted leader. His economic legacy was substantial, reforming state-owned enterprises, overhauling the fiscal tax-sharing system, bringing China into the WTO, Some of these reforms brought clear benefits, others caused real pain, and some did both. Today, we'll look at several lesser-known but highly important aspects of Zhu Rongji's career. Zhu Rongji came from the Zhu clan of Changsha, Hunan. He was a descendant of Zhu Yuanzhang, the Hongwu Emperor and founder of the Ming Dynasty, through the emperor's 18th son. Zhu belonged to the Rong generation in the family genealogy and was a 19th-generation descendant. His childhood was extremely difficult. His father died before he was born, and his mother died when he was just over nine. He was then raised by his uncles. Yet he was an exceptional student. On his high school graduation exams, he reportedly scored a perfect 100 in 7 of 11 subjects. Zhu was known for being candid and straightforward. In a 1988 speech delivered when he was a candidate for mayor of Shanghai, he said, Later, the Chinese public became particularly fond of Zhu's tough rhetoric on corruption. To fight corruption, we must go after the tigers first, then the wolves. We must never tolerate the tigers and allow them to keep causing harm. Prepare 100 coffins and leave one for me. At worst, we all go down together. But in exchange, we will secure the country's long-term stability and development, as well as the people's confidence in our cause. His words gave voice to decades of pent-up public anger. But this is also where the real question begins. If there truly were 100 coffins, who ultimately ended up in them? The Xiamen Yuanhua case offers a revealing window into the limits of Zhu Rongji's anti-corruption campaign. During the Lunar New Year period in 1998, Lai Changxing, the owner of Xiamen's notorious Red Mansion, tried through intermediaries to arrange a meeting with Zhu. In front of numerous officials, Zhu replied bluntly, First pay all the taxes you owe. Then we can talk. How much was owed? Two figures have circulated. RMB 2.6 billions In 1999, a central government task force launched a full investigation into the Yuanhua case. The network it uncovered was staggering in scale. But the higher the investigation reached, the murkier the picture became. At the time, overseas media focused attention on more senior figures, including Jia Qinglin, who had served as party secretary of Fujian and later joined the Politburo Standing Committee, as well as his wife, Lin Yufeng. Yet Zhu Rongji, who was directly overseeing the case, clearly stopped short of pursuing Jia Qinglin, a close political ally of Jiang Zemin. Even Xi Jinping, then deputy party secretary of Fujian, was among those who benefited from this restraint. On April 20, 1999, the central authorities established the 420 Task Force to conduct a rigorous investigation into the Xiamen Yuanhua smuggling case. Yet Lai Changxing, the principal suspect, learned of the directive six days before He Yam, the deputy secretary of the Central Commission for Discipline Inspection and Minister of Supervision, who was in charge of the central task force. Lai, therefore, had ample time to destroy evidence, move assets, and flee to Canada. Who leaked the information? Years later, in interviews conducted in Canada, Lai Changxing was explicit. He named Jia Qinglin, director of Jiang Zemin's office, with whom Lai said he had a very close personal relationship. The deeper Zhu Rongji tried to investigate, the more he discovered that, despite being premier of the State Council, he was not the head of an executive branch operating alongside an independent judiciary. He had no independent prosecutors, no courts insulated from Politburo interference, and no parliamentary investigative authority capable of compelling the family of any Politburo Standing Committee member to appear before a hearing. Personal courage cannot substitute for institutions. Zhu Rongji and the 1999 WTO gambit, winning the economic bet, losing the institutional one. Washington, in 1999, revealed a different side of Zhu Rongji. That spring, he traveled to the United States to negotiate China's accession to the WTO. At a White House press conference, he openly acknowledged that China had made its greatest concessions. He later made a crucial point. If China wants to join the international community, it must play by the rules. That idea lay at the heart of Zhu's reform philosophy. He understood how difficult it was to move China's ministries, state-owned enterprises, and entrenched local interests. If he could not force them to change from Beijing, he would bring in WTO rules and use international commitments to compel domestic reform. When the Clinton administration initially rejected the deal and publicly released details of China's offer, a fierce backlash erupted in Beijing, with critics accusing Zhu of conceding too much. Over what some branded an act of selling out the country, Zhu was reportedly forced to engage in self-criticism within the party. But he did not back down. On November 15, 1999, in the final hours of the China-US WTO negotiations, the American delegation outwardly appeared ready to pack up and head for the airport. At 9.30 that morning, Premier Zhu called Long Yongtu and pressed him sharply. You've been negotiating with them for years. Give me your judgment. Do the Americans actually want to sign or not? What evidence do you have? Long replied without hesitation, They've already started going through the text with me line by line. They're even revising punctuation. That means they're preparing to sign. Zhu immediately decided to go in person to the Ministry of Foreign Trade and Economic Cooperation and negotiate directly with the U.S. side. The Americans raised three difficult conditions. Zhu responded to the first, I agree. Long Yongtu, alarmed, repeatedly passed him notes saying, The State Council has not authorized this. When the second difficult issue came up, Long sent the same warning again. Zhu turned and snapped, Long Yongtu, stop passing me notes. And that settled it. Later that day, On December 11, 2001, with strong U.S. support for its accession, China formally became the WTO's 143rd member. China then entered the period of its true economic takeoff. It gained access to markets, capital, technology, and global supply chains. In the West, many believed that bringing China into an international rules-based system would gradually push its economy toward marketization, and that economic liberalization might eventually produce some degree of institutional or political change. Zhu was not afraid of losing that bet. He believed China possessed unmatched labor advantages and a sufficiently complete industrial base to absorb global manufacturing. Once China crossed the threshold into world markets, Chinese goods could spread across the globe and generate vast amounts of foreign exchange. What followed largely proved him right. China rapidly became the factory of the world and eventually the world's second-largest economy. On that front, Zhu won. China became vastly richer. But he also lost. He believed rules could transform China's economy, but he did not succeed in making those rules constrain China's political power. Markets came in. Capital came in. Technology came in. Yet the Party remained above every set of rules. Zhu Rongji won the negotiation. The Chinese Communist Party's political system won the next 20 years. Zhu Rongji's knife and the demise of township and village enterprises. One of the most controversial episodes of Zhu Rongji's career was his role in choking off what some saw as a natural and healthy path of development for China's economy. The story begins with the 1993 campaign to rectify financial order, when Zhu was serving as first vice premier of the State Council. Over roughly five or six years, from the late 1980s to the early 1990s, rural China witnessed an unprecedented boom in so-called township and village enterprises. In essence, these were small businesses rooted in the countryside, operating mainly in basic processing and the circulation of goods. Their emergence was remarkably organic. Imagine you are a farming household growing soybeans and wheat. The weather is good, and you have a bumper harvest. But so does everyone else in the village, sending grain prices plunging. The classic problem of cheap grain hurting farmers leaves you desperate for another way to survive. When an industry produces too much, one natural response is to develop downstream processing. So you decide to turn your soybeans into soy sauce. The idea makes perfect sense. You are turning risk into opportunity. But there is a huge gap between an idea and a functioning business. Making soy sauce requires labor and capital. Family members can provide the labor, but where do you get the money for machinery, packaging, and transportation? Chinese peasants had been poor for generations. Apart from a few rooms and some land, they owned little of value. Worse still, the land was not privately owned, so it could not be pledged as collateral. To state-owned banks, these farmers were effectively penniless and had no credit history. Even if a bank was willing to lend, it would hand them stacks of complicated forms that might as well have been written in an alien language to an illiterate elderly farmer. By the time the paperwork was completed and the state's cumbersome approval process had run its course, the grain and storage might already have gone moldy and spoiled before the loan was ever dispersed. Out of that vacuum, informal finance emerged on its own. Farmers raised money from relatives and friends Community-based arrangements such as Rotating Savings Associations, or BIAOI, appeared. Everyone contributed to a small common pool, and whoever needed the money first could use it, paying interest to those who received the funds later. Even more strikingly, indivisible assets such as an ox or a tractor were, in a very primitive sense, securitized. Several households might divide the right to use an ox by allocating different days of the year. If Old John wanted to start making soy sauce but lacked cash, he could sell half of his allotted ox use time to Old Lee and use the money to buy equipment. Once the business became profitable, he could rent the ox back, or simply buy grain outright from his neighbors. The point is that finance is not necessarily some mysterious form of high technology. When survival demands it, even an illiterate farmer can figure out leasing, So what does any of this have to do with Zhu Rongji? By the early 1990s, Zhu Rongji and China's top leadership viewed these grassroots rural practices as financial disorder. Fraud was emerging, asset valuations lacked standards, and local trust companies were proliferating. But what truly alarmed Beijing was more fundamental. Private businesses were finding ways to obtain capital outside the state banking system. Once businesses could bypass party-controlled banks for financing, they could also grow beyond direct state control. An alliance between informal financiers and small rural industrialists could create an independent economic force responsible for the livelihoods of millions. Under the regime's governing logic, such a force might eventually become political as well, something the system could not tolerate. As vice premier, one of Zhu's first hardline moves was the 1993 decision on rectifying financial order. Thousands of trust companies were shut down, and securities trading was consolidated into just two exchanges in Shanghai and Shenzhen. More importantly, the government dismantled the rural cooperative funds and forced their assets into state-controlled rural credit cooperatives. It was, in effect, like shutting down private food stalls and making everyone eat in a state-run cafeteria. After successive rounds of financial rectification from 1993 to 1998, township and village enterprises were largely crushed, bringing locally driven rural industrialization to a halt. The consequences, the argument goes, are still visible today. As township and village enterprises disappeared, so did jobs close to home. Farmers seeking higher incomes increasingly had little choice but to leave their villages, endure crowded train journeys, and travel thousands of miles to garment factories in Guangdong or construction and manual labor jobs in major cities. The 1980s were a rare period in modern Chinese history when the urban-rural income gap narrowed organically, thanks to both the household responsibility system and employment in township and village enterprises. Once those enterprises declined, rural income growth hit a ceiling, and the wealth gap between cities and the countryside widened sharply. Many of China's most persistent social problems today, from the rural elder care crisis and millions of children left behind by migrant parents to soaring housing pressure in major cities, can, in this telling, be traced in part to Zhu Rongji's campaign to rectify financial order. Sometimes, the people most deeply harmed by a system are not necessarily the most willing to abandon it. Admitting that the system was wrong can also mean admitting that some of the deepest beliefs of one's life may have been wrong as well. What do you think of Zhu Rongji's policies? Leave a comment below. Thanks for watching and see you next time.