The Story of a Technocrat
Even for the Party, Talent Counts the Most
By Steven Mufson
Lou, who was then vice governor of Guizhou province, surveyed the aging plant, sniffed the sulfur byproduct in the air and went over the chemical processes with the factory manager. Wearing gold wire-rimmed glasses, a jacket and tie, and an off-white trench coat, Lou also cross-examined the manager about international markets and delivery prices.
This wasn't your average meet-and-greet by a provincial politico or Communist Party hack. Lou wanted to talk about transportation costs, competing manufacturers, the relocation of laid-off workers and the fine points of the company's balance sheet. Over a cup of tea and cigarettes he smoked through a cigarette holder like Franklin D. Roosevelt, Lou spelled out stringent conditions the factory must meet before it can be allowed to sell shares to the public.
"If you make a mistake on my turf, don't come running to me to solve it," he told the factory manager. "But if something is wrong with the way my province is run, I'll fix it."
Lou represents the best hope for China's troubled Communist Party, the prototype for a generation of technocrats rising through the upper ranks of the government. A computer programmer turned economist, this 48-year-old protege of Premier Zhu Rongji has played a pivotal role in the overhaul of China's tax system and in drawing up plans for a domestic bond market. After a two-year stint as vice governor in Guizhou, one of China's poorest provinces, he was recently elevated to vice minister of finance. Many expect it to be just another steppingstone in his promising career.
When Lou was young, then-Communist Party chairman Mao Zedong said he wanted cadres who were "red and expert," although in reality Mao favored the former.
But as the party's devotion to Marxist and Maoist ideology has waned, talent in running China's increasingly sophisticated economy has become more important. Good educational background matters more than good class background. Increasingly the party that claimed to be the vanguard of the proletariat looks more like a national elite.
Born in 1950, Lou has no "revolutionary" experience, but he is educated, cosmopolitan and competent. He did his economics graduate thesis on general equilibrium theory. As Guizhou's vice governor, he could recite everything from the price of kiwi fruit to the price of electricity, and he knew how a state-owned company cooks its books as well as how the international economic crisis might affect a landlocked province.
"The Chinese Communist Party is facing a lot of pressure," Lou said. "With the reform and opening up, people know more about the outside world, and if the party doesn't produce economic results, people will rise up against it."
That's why Lou trekked here. Red Star, once one of the "third-line" military factories that Mao hid in remote areas, is on front line of economic overhaul. Aiming at international markets, the company now produces a powder used in the manufacture of television screens. The old military factory managers have surrendered control of Red Star, and the new managers want to raise money through a stock offering.
During his visit, Lou said that,During his visit, Lou said that, before selling shares, the company had to show a profit of $6 million a year and a profit margin of 30 percent. It had to bring manufacturing parts into Guizhou and pay its value-added taxes in Guizhou too, he said, wagging his finger. Finally, it had to disclose all its debts and its plans for dealing with the 1,200 laid-off workers.
Respect, if not affection, is what most Chinese feel toward Premier Zhu and the members of his brain trust. Zhu has dispersed his trusted aides around the country and throughout the bureaucracy, giving them key posts in provinces, ministries and the central bank. The effect has been to broaden their experience and help them build their own political contacts.
When Lou was dispatched to Guizhou in October 1995, he had never set foot there before.
"In Beijing, you deal with hundreds of millions of yuan, here with a million," Lou said at the end of one 14-hour day. "There, if you do something right, you can save millions. Here, if you work hard, you can save a million. In Beijing, the work is mentally taxing, but here it's physically demanding."
Lou the econometrician-policy wonk normally wouldn't attend a benefit soccer game, as he did in Guiyang one afternoon. His name boomed out on the loudspeakers to the packed stadium as he stuffed the equivalent of $25 into the contribution box for Operation Hunger.
In a typical week in Guizhou, he also met with army detachments and county party members. He dined with Japanese environmentalists to win concessional loans for anti-pollution projects. He wooed some investors, while others he weeded out. One American aluminum company offered to invest if it received a one-third discount on energy costs for its smelter. Lou rejected the offer, noting that it would reduce incentives for private investors in future power projects.
"In Beijing, you set policy and the policy creates an environment," Lou said. "Here you're deciding on projects and paying attention to details."
After lunch at Red Star, Lou's next stop was an abandoned military plant where he heard a pitch by a private businessman who wanted to use the site to make gelatin.
The entrepreneur, who built a large beef jerky company, wanted the government to build a small reservoir so he'll have a water supply and a place to dispose of waste water. He also hoped Lou would help him get the endorsement of the provincial planning commission, which would make it possible for him to get bank loans. Lou gazed over the fields that would be covered by the reservoir, and asked whether the entrepreneur had any idea what he's doing in this new business.
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