China: What's Going Wrong

Plans for reform are screeching to a halt as it enters a year of economic peril

We will prevail. That was the message Chinese Premier Zhu Rongji sent to the world a year ago, when the National People's Congress unveiled a $1.2 trillion, three-year plan to keep the Asian crisis at bay. The public-works spending would keep China's millions employed and the economy expanding by 8% annually. Meanwhile, Zhu would tackle the thorny tasks of shutting down profitless state factories, curbing corruption, streamlining a bloated bureaucracy, cleaning up the banking system, and privatizing housing. With China still growing, Zhu thought the country could absorb the shock of reform.

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