Chinese state-company managers listened glum-faced as Vice-Premier Zhu Rongji lambasted them on TV recently. The 68-year-old economic czar bluntly told them they needed to slash bloated workforces, manage more effectively, and drum up profitable new products. It was classic Zhu. "In a meeting," says a Beijing economist, "Zhu blames everyone."

Zhu's abrasive style hasn't earned him many friends. But the results he is achieving are suddenly making him a hot contender to replace Premier Li Peng, who is due to step down in 1998. Financial and tax reforms promoted by Zhu are helping China to manage the economy better and avoid the debilitating boom-or-bust cycles that dogged it in recent years. Annual growth is now a more sustainable 9.7% rather than the sizzling 13% of 1993. And inflation has tumbled to single digits from a peak of nearly 22% in 1994, while central government tax revenues have soared to record levels. Zhu, says conservative economist Hu Angang of the Chinese Academy of Sciences, "is the best candidate."

Zhu, fluent in English, would help create warmer ties with the U.S. Unlike Li Peng, Zhu is not tainted by involvement in the Tiananmen massacre. As mayor of Shanghai at the time, he avoided violent reprisals against protesters. His direct style appeals to foreigners. "[They] feel he's someone they can do business with," says a Western diplomat.

STRONG ARM. His position is improving as reforms take hold, but Zhu has powerful detractors. Anticipating the fall Communist Party Congress, some observers say, President Jiang Zemin is opposing the energetic Zhu because he doesn't want to be upstaged on the global scene. Jiang would prefer Vice-Premier Wu Bangguo, 56. And the outgoing Li Peng favors Vice-Premier Li Lanqing, who is in charge of foreign trade.

Zhu's detractors dismiss his reputation as a reformer, seeing him as a heavy-handed central planner. Too often, say local critics, Zhu resorts to strong-arm methods such as choking off funding from state agencies and banks rather than letting the market take its course.

All the same, Zhu, who was long regarded as a leader without a power base, is gaining a solid backing among constituencies ranging from conservative party elders to technocrats. The elders, though no longer in official posts, have clout in key appointments because of their revolutionary credentials. Many favor Zhu, says one analyst, because "they want to maintain the monopoly power of the [Communist] Party, and to do that they need healthy economic growth."

Technocrats like his reforms, too. Although Zhu stopped short of forcing deadbeat state companies into bankruptcy, for fear of social unrest, he is trying to wean state companies off cheap loans. Zhu also forbade banks to make high-risk loans in the property and stock markets. "For the first time, someone said `no' to the demand from state enterprises for cheap credit," says Shan Li, Goldman, Sachs & Co. executive director in Hong Kong.

Zhu has also nursed China's foreign-exchange reserves to more than $100 billion in 1996, even as its renminbi currency strengthened against the U.S. dollar. "His contribution is like [Alexander] Hamilton's in the U.S.," says the Academy of Science's Hu. "What he has done is lay the infrastructure for a modern economy."

If Zhu succeeds in becoming Premier, it will be largely on merit. His achievements are impressive, but the big question is whether they will win over enough of his many critics.

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