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Tech Industry

New hope for business in China

The appointment of pro-business Zhu Rongji as China's new premier could open the door to new opportunities for U.S. companies.

China's appointment of a new premier today could open the door to new opportunities for U.S. companies seeking to do business on the technology-hungry mainland.

Nicknamed "the Boss" for his blunt, no-nonsense style, Zhu Rongji has made abundantly clear his commitment to cut through China's bloated bureaucracy, shutter money-losing state enterprises and stimulate the development of domestic industries, particularly in high technology.

As the country's former economic czar, Zhu understands the technology industry's potential for high profit margins and employment in its manufacturing plants. According to one U.S. technology industry representative in Beijing, Zhu has influenced many economic changes well before his official appointment as premier.

Last week, for example, the government announced that it would either merge or eliminate 11 ministries as a first attempt in cutting away bureaucratic fat. In particular, foreign executives have praised the merging of the two main agencies regulating China's information technology industry: the Ministry of Electronics Industry (MEI) and the Ministry of Post and Telecommunications (MPT).

"The elevation of Zhu and the restructuring of the MPT and MEI are clearly indicating there will be a greater emphasis in the development of high tech," said Rich Brecher of the U.S. China Business Council.

Market figures show that the country is ripe for information technology business. China's IT market is estimated to grow 20 to 40 percent annually for the next 15 years, according to the American Electronics Association, a trade group that represents more than 3,000 high-tech companies. The country's estimated $6.8 billion computer industry is expected to reach $22.5 billion by the year 2000, while its telecommunications industry could top $7.5 billion.

Zhu has also taken pains to calm fears that China would fall victim to the economic meltdown seen in other parts of Asia. He has made it known to businesses and political leaders that China has no plans to devaluate its currency to compete with the plummeting price of exports from neighboring countries.

But while Zhu is introducing more initiatives to stimulate growth, such as lowering tariffs and touting the Information Technology Agreement, analysts say the country is far from turning itself over to Western-style free capitalism.

"You must be aware that he matured within the communist bureaucratic system," said Michel Oksenberg of Stanford University's Institute for International Studies. "While he has demonstrated a willingness to learn, he is also very comfortable within the command economy."

Brecher agreed. "Business in general thinks the elevation of Zhu is good for promoting China's economic growth and for trade and investment as well," he said. "But he's not a free trader. He's been a very cautious state reformer in the state sector. All of the leadership is focused on maintaining political and social stability while pursuing economic reforms."