Once the National People's Congress officially names Zhu Rongji as Prime Minister, look for him to start radically shrinking the government and pursuing deep structural economic reforms. He will be the best thing to hit China for a long time. China is blessed with a corps of realistic, talented people at the top, many of whom I met during a recent visit to Beijing. None disguises the difficulties the country faces, although some couch them in elliptical prose. To achieve the next stage of economic development, China has to clear away the twin deadweights of unproductive state-owned enterprises and bad debts in the official banks.
China needs to make capital and labor more productive.
That cannot be achieved simply by pumping additional investments into the economy. China's leaders, led by Zhu, are aware of this. To get the economy moving they need to find a new accelerator, in the form of enhanced productivity. But to make it work, they have to remove the drag from state enterprises, the bureaucracy and bankrupt banks. Success will mean higher growth.