In the early 1990s, China’s economy was caught in a whirlpool of complexity and lack of control. State-owned enterprises were burdened with debt, investments were reckless and uncoordinated, inflation was at alarming levels, and the shadow banking system was expanding informally. At this point, conservative yet pragmatic reformer Zhu Rongji took charge. In the West, he was known as the “Economic Czar.” While Chinese political discussions usually highlight figures such as Mao Zedong, Deng Xiaoping, or Xi Jinping, Zhu Rongji remains one of the top leaders outside that circle who is now almost forgotten.
In 1991, as Vice Premier, he began China’s economic reforms from the ground up. At the time, state-owned enterprises had created economic stagnation by lending to each other, a situation known as the “triangle debt dilemma.” In this system, one company’s default would directly cause another to default, and that company would then fail to repay a third. This chain reaction threatened to bring the entire economic system to a standstill. The crisis was worsened by the poor management of state-owned enterprises (SOEs) and the “iron bowl” mentality, where employees and managers believed that “no matter what happens, the government will bail us out.” This mindset led to massive bad debts, low productivity, and inefficiency. Zhu Rongji took tough measures, allowing non-performing “zombie” enterprises to go bankrupt. This resulted in millions of workers losing their jobs and a huge amount of bad loans in the banking sector. However, the move freed China from a Soviet-style failed economic model and steered it toward a market-oriented, competitive economy. He personally took charge of recovering non-performing loans. He traveled to three provinces to oversee the financial accounts of enterprises and prepared lists of debtors. He set deadlines for the settlement of each loan. Through this effort, 12.5 billion yuan in debt was repaid in just 26 days. (Source: China Emerging: 1978–2018 — Wu Xiaobo) When Zhu Rongji assumed economic leadership, China’s revenue collection system was fragile. Local administrations kept a large portion of tax revenue for themselves, weakening the central treasury. In 1994, Zhu introduced a landmark tax reform that significantly increased central government revenue. Under the reform, the main responsibility for tax collection was centralized under the State Administration of Taxation. Value-added tax (VAT), consumption tax, and customs duties came primarily under central control. His goal was to bring order to revenue collection, reduce fiscal deficits, and ensure a stable flow of funds for the central government to invest in development and infrastructure. As a result of such reform, the central share of revenue collection rose from 22 percent to more than 55 percent.
Zhu Rongji was uncompromising in his approach to reforming state-owned industries. He believed in a “survive or perish” policy. His principle was, “The state will not run businesses, it will collect taxes; if you succeed, the state benefits, if you fail, it will not intervene.” He believed that simply opening the market was not enough. To keep state-owned companies competitive in the market, they needed restructuring. He said, “If you have the ability to survive, then survive. If not, your elimination is inevitable.” At the time, hundreds of China’s state-owned enterprises were running on subsidies and depended on political patronage. Zhu Rongji first examined which enterprises were structurally viable for reform. He declared, “Not all enterprises can be saved. Those that are efficient must be supported. The rest should be left to fail.” Under this policy, small and medium-sized state-owned enterprises were transferred to private or cooperative ownership. Zhu’s policy was, “From today, the old parent-child relationship between the state and enterprises will no longer exist. You will run the business, and I will collect taxes.” He brought large enterprises into the stock market for public listing so that they would be market-oriented instead of relying on government subsidies. He first converted subsidy funds into bonds, and then turned those bonds into shares before listing them on the stock market.
In 1995, Haier, based in Qingdao, announced its plan to join the world’s top 500 companies by 2006. Soon after, around 30 Chinese companies made similar declarations. Zhu skillfully used these announcements to name six companies as the “national team.” They were Baosteel, Haier, Changhong, Founder, North China Pharmaceutical, and Jiangnan Shipyard. He opened these companies to foreign investment and technological cooperation, emphasizing international standards in corporate governance and accounting systems. At the same time, he encouraged market-based competition while maintaining state control over strategic sectors. They were given special loans, technical assistance, and administrative concessions—all part of a plan to create “national corporate champions.” Baosteel and Haier later entered the Fortune 500 list, becoming China’s representatives on the global stage.
Fueled by Zhu Rongji’s reforms, China’s contracted foreign investment in 1993 reached $111.4 billion, nearly double the previous year. Procter & Gamble, Anheuser-Busch, Nokia, Boeing, Whirlpool, and Kodak—these Western giants stepped into a new world. In some places, towering factories rose; in others, partnerships were forged with Chinese counterparts, while piles of massive orders filled contract ledgers. Amid this global competition, a sense of national industrial pride emerged. Announcements from Lenovo and Changhong became symbols of building national brands.
In the 1990s, Zhu Rongji identified small and medium-sized enterprises (SMEs) as one of the driving forces behind China’s economic growth. He believed an economy solely dependent on large state-owned industries would not be sustainable in the long run. Instead, he saw dynamic and innovative small entrepreneurs as key to keeping the market vibrant. Under his leadership, banking policies were reformed to make loans more accessible for SMEs. Tax cuts, reduced administrative fees, and the removal of business registration complexities opened doors for new entrepreneurs. He broke the monopoly of state-owned enterprises by ensuring the participation of small companies in government procurement and infrastructure projects. Rongji also encouraged technology transfer, training programs, and investment in innovation so that SMEs could boost productivity and compete globally. These initiatives triggered unprecedented growth in China’s SME sector, with the number of registered SMEs nearly tripling. Employment jumped from 70 million to over 110 million, and industrial output grew at an annual average of 12 to 15 percent—more than double the growth rate of large state enterprises. SMEs’ share of exports climbed from 40 percent to nearly 60 percent.
Since ancient times, economic development and planned modern urbanization have been closely linked—a connection Zhu Rongji understood well. He reimagined China’s cities, not just physically but economically. Smoky gray factories and run-down port districts gradually transformed into modern business hubs. Recognizing the need for investment-friendly, job-oriented, and livable cities to survive global competition, he shut down outdated state-owned factories and replaced them with high-tech industrial zones, export processing zones, and modern port facilities. He developed Pudong as an international gateway for trade, with skyscrapers, free-trade zones, and world-class logistics networks emerging side by side. In Beijing, his infrastructure upgrades focused on creating a business-friendly environment. He also influenced policy in industrial and port-based cities like Tianjin and Guangzhou to boost investment and productivity. Urban modernization extended beyond industry—he opened the housing sector to private investment, leading to a boom in high-rise residential complexes. Roads, bridges, tunnels, and metro systems were built at record speed, transforming Shanghai into a truly global city. Improvements in sanitation, utilities, and public transport strengthened business confidence. This wave of modern urbanization soon spread to other cities, and within a decade, China’s urban development gained unprecedented momentum.
Rongji also forced China’s complex bureaucracy to reform, earning a reputation for unyielding—sometimes intimidating—administrative policies. Some described him as “less than half-popular” because his strictness made many uncomfortable, while analysts argued, “If China wants reform, it must take the medicine prescribed by this tough doctor.” During the 1997 Asian financial crisis, he refused to devalue the yuan. He personally led efforts to rescue the Bank of China and reformed banking, insurance, and stock market regulations, strengthening the central bank’s authority.
He maintained a clear boundary between politics and economics. Under his leadership, China laid the foundation for a responsible, competitive, and regulated market economy—transitioning from a conservative communist state into a competitive global powerhouse.
On August 5, 2024, a student–led mass uprising brought down Sheikh Hasina’s 15-year authoritarian rule. At the time of her fall, Bangladesh’s economy was plagued by looting, inefficiency in state institutions, capital flight, massive defaulted loans, chaos in the banking sector, high inflation, a dollar shortage, major failures in attracting foreign investment and creating jobs, a shrinking reserve, unlivable cities, bribery, corruption, extreme inequality, and disorder. During Sheikh Hasina’s tenure, a mafia-like business system paved the way for plunder. Monopoly and patronage-based projects, along with irregular access to financial institutions, gave the looting process a structural form. Economic mafias crippled the banking system and siphoned off their assets abroad.
After the July uprising, Dr. Muhammad Yunus took charge of the state. People had unyielding expectations that the new government would at least carry out urgent, surgery-like structural reforms to stabilize the economy, revive investment, restore the banking sector, and break down bureaucratic barriers. But one year after the July uprising, it became clear that the year-long political reform discourse had overshadowed discussions on building the state’s economy and institutions to be sustainable, equitable, and efficient. Reforms essential for creating a market-based, competitive, equitable, and orderly economic structure did not get priority.
Rapid economic reforms had put China on the path to becoming a modern, technology-driven, production-oriented economy within just a few years. Today, China is not only an economic superpower but also home to many cities considered models of a technology-based future world. In contrast, one year after the uprising, Dhaka remains unfit for living. In many areas, disorder, uncleanliness, and insecurity have worsened. This city cannot provide even minimal comfort to its residents, let alone attract foreign investors. When the interim government took office, the country’s macroeconomic situation was in a fragile state. Over the year following the mass uprising, Bangladesh has managed to overcome many of these macroeconomic crises. A major factor behind this recovery was the flight of corrupt elements in the changed circumstances after August 5. Those who had exploited the economy for a decade and a half fled the country after the fall of the government. As a result, the flow of plunder stopped, and the macroeconomic crisis eased somewhat in a kind of “natural healing.” However, the state-building process from a politically neutral position through economic reforms has not advanced.
Under the fallen government, the banking sector suffered the most plundering. After taking office, the interim government announced the merger of several weak private banks. Bangladesh Bank has already identified potential partners for some banks, and initial discussions have begun. This aims to address capital shortfalls and governance problems by linking weak banks with stronger institutions.
There have been three major events in bank restructuring in Bangladesh: the transition from BICIC to Eastern Bank Limited (EBL), the merger of Bangladesh Shilpa Bank (BSB) and Bangladesh Shilpa Rin Sangstha (BSRS) to form Bangladesh Development Bank Limited (BDBL), and the renaming of Oriental Bank into ICB Islamic Bank. Among these, EBL is the only successful example, surviving through efficient management and modern banking services in the private sector. In contrast, BDBL remains mired in losses and inefficient management. Despite foreign investment, ICB Islamic Bank has failed to recover due to irregularities and weak structures. Analyzing these three cases clearly shows that with structural reform, professional management, and good governance, even failing banks can recover—EBL stands as a living example of this approach.
While some initiatives have been taken regarding private banks, there has been no significant action yet concerning state-owned banks. Over the past decade and a half under the ousted government, the country’s banking sector, especially state-owned banks, became a haven for opaque loan processes, corruption, and plundering. Huge loans were disbursed under political influence and special recommendations, much of which turned into non-performing loans. During this time, securing loans by mortgaging land was the most common and easiest method. In many cases, the value of mortgaged land was artificially inflated on paper multiple times to increase the approved loan amounts. Corrupt bank officials actively participated in these schemes. As a result, recovering loans by selling mortgaged properties has become practically impossible. According to Bangladesh Bank data, the recovery rate through selling collateral in default loans is only 12.77 percent. Although non-performing loan identification began after the mass uprising, there has been no fundamental structural reform in state-owned banks. These banks still rely excessively on collateral for loan disbursement. A crucial area for urgent reform should have been to base loan approval primarily on the applicant’s financial history, repayment records, and cash flow analysis instead of just land or other asset mortgages.
Even banks in better condition have made more income from the government treasury. These banks now lend more to the government than to the private sector. As a result, most banks’ profits have inflated significantly. Previously, their primary income came from interest and commissions on loans to the private industrial and service sectors. Now, a large portion of bank profits comes from investing in government treasury bills and bonds. This level of dependency is neither sustainable nor healthy for any bank.
The interim government has yet to implement any reforms that could serve as an example for the next political government. Over the past 15 years, government institutions have been the biggest victims of corruption and looting, but the interim government has taken no effective steps to strengthen or reform them. Inefficiency and waste continue as before. In the past year, the interim government has also shown no reform plan to change this situation. In the 1990s, China began restructuring unprofitable and loss-making state-owned enterprises as part of its public sector reform. In Bangladesh, that policy reform space remains empty under the interim government.
The Bangladesh Power Development Board (BPDB) is the state-owned buyer, seller, distributor, and producer in the power sector. Over the past decade and a half, the BPDB, in its effort to increase electricity purchases and capacity, has become dependent on private power plants. Since the 2010–11 fiscal year, this dependency has trapped the agency in a massive loss cycle. Due to inefficiency in power purchases and sales, the BPDB has received BDT 2.37 trillion in subsidies from the government over the past 15 years, of which BDT 1.33 trillion was spent on capacity payments to power plants. Poor management in the power sector has caused the agency to lose its own financial capacity, while also bearing large personnel costs despite keeping its own capacity idle.
Petrobangla, once a profitable state-owned enterprise in the energy sector, is now struggling with energy production, imports, and distribution. Over the past eight years, it has spent BDT 2 trillion on LNG imports, neglecting local gas exploration and production. In contrast, only BDT 80 billion was invested in domestic gas exploration from 2009 to June 2024. The focus on import-dependent energy has not only increased risks to national energy security but has also turned Petrobangla from a profitable entity into one dependent on loans from various domestic and international organizations.
Among government agencies, the Bangladesh Chemical Industries Corporation (BCIC) is a key institution. Its main product is fertilizer, essential for sustaining the country’s agricultural sector. However, due to a gas shortage, most fertilizer plants remain shut for much of the year. As a result, despite having factories, the country spends a large amount on fertilizer imports to meet demand. According to the Bangladesh Economic Review and the Ministry of Industries, BCIC incurred losses of BDT 79.8 billion from fiscal year 1996–97 to 2023–24, with losses in 24 out of those 28 years. At its inception in 1976, BCIC had 88 factories. This number has now dropped to 18. Yet, with efficient management, transparency, and sustainable reforms, the fertilizer factories under BCIC could have emerged as a major contributor to the agricultural sector.
The main source of employment and investment in the country is the private sector. After the fall of the military government in 1990, the country began moving toward a more market economy. Since then, the private sector has been the main foundation of the economy’s growth. However, stakeholders allege that since the interim government assumed office, a major distance has developed with the private sector. Their lack of motivation is evident from capital machinery imports. For the past year, the trend of opening letters of credit for importing the three essential inputs of the manufacturing sector—capital machinery, intermediate goods, and raw materials—has been declining.
Even as a communist country, when China moved rapidly toward a market economy in the 1990s, it took major initiatives to include both state-owned and private companies in the Fortune 500 list. In Bangladesh, although many in the private sector face allegations of corruption, looting, and mafia-like behavior, there are also large ventures that could potentially make it to the Fortune 500 companies if properly encouraged. Yet, the government led by Dr. Yunus is leaving nothing inspirational for the next government to start that journey. This is despite Dr. Yunus having close ties and personal connections with many companies on the Fortune 500 list, from whom he often receives invitations and gives inspiring speeches and advice.
In developed countries, the main source of capital is the stock market. In Bangladesh, however, the capital market has been neglected since independence and has turned into a place for manipulation by unscrupulous groups. While the interim government has taken action against a few individuals, it has not implemented any structural reforms. Not a single IPO has been launched in the past year. Without a strong capital market, it is not possible to build an advanced economy solely on bank loans or foreign investments.
The public aspiration behind the July uprising was to build a people-oriented, transparent, accountable, and efficient public administration. However, various controversial actions taken after the interim government assumed office have raised doubts about that expectation. The reform proposals submitted to the government by the reform commission for the purpose of overhauling public administration have not seen visible implementation. Recruitment and promotion in government jobs are still following the old process. Even after the announcement of a possible election schedule, there has been no visible impact on the field administration. As a result, concerns remain about holding free, fair, and neutral elections. Since the new government took office, there has been no qualitative change in the quality of public services either. Following the path of the previous administration, large-scale contractual appointments are still ongoing. The government is running its activities by prioritizing admin cadre officers, which has raised questions in various quarters. In fact, admin cadre officials played the most significant role in Sheikh Hasina’s government turning authoritarian. Moreover, the Senior Secretary post, created during the Awami League era as a reward for loyal bureaucrats, is still being filled under the interim government.
One of the driving forces of the rural economy is the micro, small, and medium enterprises (MSMEs). Many developed countries, including China, have strengthened their economic foundations by prioritizing the MSME sector. However, in Bangladesh, this sector has often been neglected. MSMEs have the potential to be a key driver in ensuring inclusive growth. Contributing 25 to 30 percent to the GDP, MSMEs play a crucial role in the country’s employment and industrialization. Yet, the sector faces many challenges such as lack of technology and capital, limited market expansion, and infrastructural weaknesses. Since the interim government took office, there has been no significant step or role observed to revitalize this sector.
A developed economy and modern, livable, technology-driven, and well-organized cities are interconnected. The Global Cities Index, created by UK-based independent economic consultancy Oxford Economics, presents a comprehensive picture of the economic attractiveness of cities worldwide. The 2025 edition of this index covers over a thousand cities in more than 160 countries, evaluating each city based on five criteria: economics, human capital, quality of life, environment, and governance. In this ranking, Dhaka stands at 1,000th in the economy category and 306th among cities overall. It ranks 174th in human capital, 702nd in quality of life, 914th in environment, and 873rd in governance. Other Bangladeshi cities included are Rajshahi, Chattogram, Khulna, Sylhet, Mymensingh, Cumilla, and Bogura. However, only Dhaka is classified as a “developing megacity.” None of the other cities are recognized internationally as urban centers, which means no urban area, including Dhaka, is currently prepared to attract significant foreign investment or tourism.
During the interim government’s one-year tenure, no city has begun any journey of improvement in quality of life, environment, or governance that could serve as an example for the next government.
Zhu Rongji demonstrated that rewriting economic destiny is not just paper promises; it requires courage, leadership, and unwavering resolve. He broke slow-moving structures and planted seeds for the new, restoring order with an iron hand. He introduced reforms that opened the sky of prosperity for future generations. He said, “Even if a minefield or the abyss should lie before me, I will march straight ahead without looking back.” Such an iron mindset is essential to bring radical change. Those who can do so earn an eternal place in the pages of transformative history.
Dewan Hanif Mahmud: Editor, Bonik Barta
[Mahafuz Rahaman contributed to the writing.]
[Minhazul Abedin assisted with the translation.]