President Jiang Zemin, often written off as a weak Chinese leader, yesterday emerged from the 15th Communist Party Congress in Beijing strengthened by the removal of his main rivals in the top leadership, and bolstered by enthusiastic endorsement for his economic reforms from the World Bank.
Mr Jiang's most prominent opponents, the chairman of parliament, Mr Qiao Shi, and a veteran military officer, Gen Liu Huaqing, failed to get elected to a new 193member central committee, and are eliminated in the vote today for a new ruling Politburo.
Mr Qiao (72) is chairman of the National People's Congress. His surprise dislodgment opens the way for the Prime Minister, Mr Li Peng, whose term ends in March, to get his job and remain in a top leadership position.
The man to succeed Mr Li Peng as Prime Minister will almost certainly be economic mastermind Mr Zhu Rongji, and the triumvirate of Mr Jiang, Mr Li and Mr Zhu looks set to be the core leadership of China for the next five years.
Mr Qiao's fate was apparently sealed long before he stuffed his ballot along with 2,047 delegates into a red box decorated with the hammer and sickle as the congress ended. As he did so he gave a farewell wave to the others queuing to vote in the Great Hall of the People.
A secret ruling appears to have been made at an August seaside meeting that Politburo members who had reached 70 by the time of the congress should retire. This meant the exit of Mr Qiao Shi (73), Mr Zou Jiahua (71), and Gen Liu Huaqing (81). Mr Li Peng and Mr Zhu Rongji are both 69.
The age limit applies to everyone except Mr Jiang (70), and will facilitate a transfer of power to the fourth generation of Communist leaders. None of China's more prominent "princelings" - children of veteran revolutionaries - was elected to the central committee.
Senior officials of the International Monetary Fund and the World Bank yesterday praised the congress decision to reform state enterprises. "What I hear is encouraging," an IMF managing director, Mr Michel Camdessus, said in Hong Kong. The congress had "put the finger" on the essential challenge of "the transformation of state enterprises into efficient enterprises."
"We are encouraged by the statements made at the party congress that China realises the importance of liberalising state-owned enterprises," said Mr Yukon Huang, the World Bank's country director for China.
In a major report on China up to 2020, issued yesterday, the World Bank forecast that it could sustain high growth by "building on its strengths of relative stability, a remarkably high savings rate, a strong track record of pragmatic reforms, a supportive Chinese diaspora and a growing administrative capacity".
It said that China had telescoped into two generations what took centuries in rich industrialised economies. It had the capacity to reach the standard of Portugal, South Korea or Argentina by 2020.
However, the World Bank, which invested $2.8 billion towards projects in China last year, believes fundamental reforms are necessary in the state sector where, of 305,000 enterprises, half are making a loss.
If China can free up the resources tied up in the state-owned enterprises, it can continue with success, the report team leader, Mr Vikram Nehru, said. He added he was very pleased with the signals coming from the party congress.
The report also found asset stripping by corrupt managers to be widespread and corruption a growing problem, with 65,424 prosecutions in 1996 alone. The banking system was also in need of reform. The banks' accounting, risk management and credit analysis systems were woefully inadequate, the report said. About a third of lending is allocated to projects selected by the state planning commission.
Major reform was necessary to avoid the banks becoming insolvent. If the government had to borrow to prevent a bank collapse, there would be fewer resources for health, education, the environment and the infrastructure.
But if the problems were tackled, one-fifth of humanity would then have within its grasp the power to break free of the shackles of poverty and underdevelopment and accomplish what could become the most remarkable economic transformation the world has ever seen, the World Bank report said.