China: Three decades, six leaders – Levin Zhu
Zhu Rongji was one of the great figures of China’s modern era. Wherever you looked in Beijing throughout the 1990s and well into the new millennium, he was there, moving from the concurrent position of central bank governor and vice-premier to, from 1998 to 2003, premier of the People’s Republic.
His great feats stemmed from a desire to learn from the break-up of the Soviet Union. Moscow made a pig’s ear of privatizing its economy, which wound up in the hands of self-interested oligarchs.
Zhu and his fellow reformers wanted none of that. Rather than dismantle the state, he set out to make it stronger, breaking up state owned enterprises and placing good ones under the aegis of a new regulator, the State-owned Assets Supervision and Administration Commission (SASAC). As premier, he bailed out the big state banks, setting them on the road to being public vehicles, listed in Hong Kong and Shanghai.
It was his son, Levin Zhu Yunlai, who benefited most immediately and visibly from that push to create a system of socialism with Chinese characteristics. In China, the children of influential senior communist party officials are often referred to as princelings because thanks to their pedigrees, they wield power and influence.
Levin Zhu was no stand-out student, graduating with degrees from the University of Wisconsin and Nanjing Institute of Meteorology. Yet family ties left him perfectly placed to act as a bridge between the country that was rapidly being left behind and the one it would become, driven by private capital, innovation and a desire to place China on the global trade map.
In 1995, China International Capital Corporation became the first international investment bank to be granted a licence by the People’s Bank of China. Morgan Stanley invested $35 million for a 35% stake, which John Wadsworth, the US firm’s Asia chairman at the time, called both a gamble and a “gigantic opportunity”.
CICC’s first mega-mandate involved the restructuring and IPO of China Mobile, which raised $4.2 billion in 1997 by selling shares to investors in Hong Kong and New York. That marked the first government-sponsored privatization of a big state vehicle, but it was arguably Levin’s arrival a year later that sparked CICC’s vertiginous rise. He became the public face of the investment house, helping it become the go-to underwriter for any SOEs keen to go public.
The next decade saw the Party carefully peel off layers of the state and expose them to the glare of global investors. More often than not, Zhu, seen by many as China’s first and perhaps only true rainmaker, was at the heart of the action. CICC was selected to arrange the $2.9 billion listing of PetroChina in 2000, a complex deal that included a two-year restructuring process, as a lumbering unit of the state was transformed into an international energy group.
In the mid 2000s, it helped a trio of state lenders – ICBC, China Construction Bank and Agricultural Bank of China, to complete a series of ever-larger listings. Zhu oversaw each of those sales from atop CICC, having been appointed chief executive and chairman in 2004.
By the time he left, 10 years later, China had changed. Under Zhu, CICC was transformed into a full-service investment bank, powered by sales and trading and investment management. Yet it was no longer cock of the walk, having been overtaken by a slew of brokerages that once nipped at its heels, including Citic Securities, and was struggling for traction in Hong Kong and Shanghai.
Profits were sharply down and it had lost some of its sheen.
Plus, there was a new sheriff in town. President Xi Jinping rose to power promising to tackle graft and take on some of the princelings, widely loathed in mainland society because of their excesses.
Levin Zhu didn’t fall into that category, but fortunes shift rapidly when a new leader takes power, and the astute and straight-talking man, then in his late 50s, could perhaps see the writing on the wall.
Zhu clearly learned much from his father, not least the ability to know when to speak up – and when to be silent. After stepping down as premier, Zhu senior, still admired at home, disappeared from public view. When Zhu junior left CICC, he followed suit, sitting on boards and giving regular lectures, but never giving public interviews.