The Zhu Rongji legacy: How China marketised without liberalising

Former Chinese premier Zhu Rongji died in Beijing on August 12, 2026, aged 97, closing the chapter on one of the most consequential economic policymakers of post-Deng Xiaoping China. Premier from 1998 to 2003, Zhu was the blunt-speaking technocrat who took charge as China confronted an inefficient state sector, inflationary pressures, banking fragility and the aftershocks of the Asian financial crisis. His response was uncompromising: restructure state-owned enterprises (SOEs), tighten fiscal control, overhaul banks, expand markets and push China deeper into the global economy.

Who was Zhu Rongji?

Zhu’s reputation was forged before he reached the premiership. As Shanghai’s mayor and party chief from 1987 to 1991, he acquired a reputation for administrative efficiency and an unusually direct political style. As vice-premier from 1991 and later premier, he became the operational face of economic reform under Jiang Zemin. Brookings’ collection of his speeches describes a leader determined to reduce the size of government, reform indebted banks and SOEs, establish stock exchanges and modernise agriculture. His defining approach was pragmatic rather than ideological: reform had to produce a functioning economy, even when the process was politically painful.

What did he change?

The biggest rupture came through SOE restructuring. Zhu pursued the principle of “grasping the large and releasing the small”—retaining strategically important state enterprises while allowing weaker ones to be closed, merged or restructured. The result was greater efficiency but also mass layoffs and the erosion of the socialist-era employment system. He simultaneously strengthened central fiscal authority, tightened financial regulation and advanced housing reform, helping shift China towards a more market-driven economic architecture.

But Zhu’s most consequential reform may have happened beyond China’s borders. He was central to securing China’s accession to the World Trade Organization in December 2001, accepting difficult concessions in the belief that global competition would force domestic industries to become more productive. WTO membership subsequently became a major platform for China’s export-led expansion and integration into global supply chains.

Why does his legacy remain politically important?

Because Zhu’s reforms expose the paradox embedded in China’s rise: marketisation did not require political liberalisation.

Zhu challenged bureaucratic inefficiency, protected state enterprises and economic vested interests, but he did not challenge Communist Party rule. His project was to make the socialist state more economically effective—not to replace it. That distinction matters when assessing the China that emerged after him. The economy became dramatically more commercialised and globally integrated while political authority remained firmly concentrated within the Party.

The costs, meanwhile, did not disappear. The restructuring that created a leaner state sector produced social dislocation, while fiscal reforms and the changing relationship between central and local governments generated distortions that later policymakers inherited. Zhu himself had warned about problems including corruption, local debt and inequality—issues that remain part of China’s economic debate today.

Where does the legacy extend beyond China?

Zhu also understood that economic reform required a new regional strategy. In 2000, he proposed a China-ASEAN free-trade area, an initiative that culminated in the 2002 framework agreement establishing the process for an ASEAN-China FTA. The move was economically strategic but also diplomatic: as China’s rise generated anxiety across Southeast Asia, closer trade ties offered a way to turn competition into interdependence.

Why does Zhu matter now?

Two days after his death, Zhu’s relevance lies less in nostalgia for a vanished reform era than in the unresolved questions his tenure left behind. He demonstrated that China could *liberalise economic structures without liberalising political power. He made the state more market-oriented, globally integrated and commercially competitive while keeping its political architecture intact.

That is the paradox at the heart of his legacy—and perhaps the clearest lens through which to understand the China that exists today: Zhu Rongji helped build the economic machinery of a global power without ever attempting to dismantle the political system driving it.