PLAY TO OUR STRENGTHS IN SCIENCE AND TECHNOLOGY, AND FIGHT THE GOOD FIGHT FOR KEY INDUSTRIAL PROJECTS1
MAY 11, 1988
While visiting Shanghai last December, central government leaders repeatedly emphasized that Shanghai’s path to large-scale importing and exporting lay in integrating sci-tech with production and playing to Shanghai’s strengths in science and technology. This is a very challenging task, and how to accomplish it is indeed a tough problem. If Shanghai doesn’t use its strengths in sci-tech, it will have no way out of its doldrums.
1. Focus on Achieving Breakthroughs through Our Sci-Tech Strengths
We don’t have many natural resources or raw materials, so if we don’t use our strengths in science and technology, if we don’t integrate these with production, if we don’t fight our way into the international markets, and if we don’t attract large amounts of foreign investment, we won’t be able to turn our difficult situation around. The bit of money from the central government will soon have been spent, and our finances will continue to go downhill. At a certain point, the populace’s dissatisfaction with us will explode. That’s why integrating sci-tech with production is such an important tool for resolving our problems, and that’s how we’ll use Shanghai’s strengths. We may not have raw materials, but we have an edge in science and technology—other places are no match for Shanghai in this regard.
Currently, there’s no method in place for Shanghai to use its strengths to accomplish the tasks the Party Central Committee and the State Council have assigned to it. After much consideration, it seems that we should try to make breakthroughs in a few selected major projects. Some might say that trying for breakthroughs is an old strategy—it won’t work. I, too, wanted to rely on collective wisdom and hear new ideas, but I’ve been listening for two months now, and after all that, it still comes down to trying for breakthroughs.
Some old methods just can’t be relinquished. For example, given China’s current circumstances, we can’t forgo administrative intervention. If we did, nobody would be in charge and work wouldn’t be done properly. That’s the case even in foreign countries. If we were to rely entirely on economic benefits, on raising prices and paying bonuses, the effects would ultimately be limited and chaos would ensue. We can’t abandon old methods, yet we must also consider new ones. We should make use of economic measures, follow the laws of value, and use economic means to bring together the energies of all sectors. Our methods are still being refined, but once a decision has been made we must act resolutely without wavering. We must have the confidence to stay on this path. Economic measures plus administrative intervention—this is a new path.
2. Select the Major Projects for Breakthroughs
The crucial first step is to identify breakthrough projects and then to assemble the necessary talent. The key is to boost morale and attract talent. We must recognize that there is hope for Shanghai and once we truly get started, we can work very quickly. Even in the 1950s, Hong Kong was more backward than Shanghai and didn’t really start developing until recently. Bo Yibo2 recently signed off on a document expressing the hope that Shanghai would make significant progress within 10 years. Although that’s a very high expectation, we must have this level of confidence.
The 12 key projects we have settled upon include indigenization of raw materials and a production line for photosensitive colored materials—these will be models, handled by the city government. These projects involve fairly extensive collaboration, though the work will be relatively hard to coordinate and there will be a considerable amount of buck-passing. With the city government in charge, however, progress will be faster. Once you [return to your offices], all [representatives of] industrial bureaus must take charge of some models and select your breakthrough projects. By doing so, we will gain some experience in integrating sci-tech with production and come up with a set of methods. I believe that by taking this path, we can change the look of Shanghai’s industries within a few years. Hence we must hurry up and choose the breakthrough projects.
Key projects should include endeavors to produce 300,000 tons of ethylene a year and to indigenize the production of equipment that can yield 300,000 tons of ammonia a year, but we can further look into when they should be scheduled. These are both in rather large industries that are also among Shanghai’s competitive industries. In the future, China will still need these two things to develop. If Shanghai can provide the equipment, there’ll be no need for imports. We ought to have high aspirations of this nature.
3. Organize Projects via Economic Cooperation with the Entire Country
Projects don’t necessarily have to be branded as Shanghai ventures. Rather, we should work with the entire country on this, so that once we issue the call, its forces will be fully united around Shanghai. With the essential elements of scientific research, design, and processing in Shanghai, it will be able to lead the way. When discussing the indigenization of the Santana, Jiang Zemin and I have repeatedly said we want to build up the China brand, not the Shanghai brand. That way all of China’s forces in the automotive industry will be united around Shanghai. This approach goes beyond Shanghai’s administrative jurisdiction, and we must use economic means to hold things together.
4. Raise Funds through Many Channels
There are two aspects to the funding issue: money required for technical development and money for technical upgrading.
Funding for Technical Development. Once a project has been selected, it will need development funding. Without this money, we won’t be able to keep scientific and technical personnel, and even if something is produced, it will be of a low standard. How should we raise development funds? First of all, we should use existing technical development funds. All industrial bureaus should make appropriate adjustments to their present technical development funds and concentrate these on the breakthrough projects. Second, we should try to obtain new development funds from the state. For example, the State Economic Commission has already agreed to provide funds for the Bell digital telephone project. Other projects should also seek some financial support from the various departments of the State Council. Next, we can take out some long-term, low-interest loans from the Jiushi Company3 and the Shishi Company.4
The industrial bureaus shouldn’t engage in departmental rivalries and should be willing to truly invest. To make real breakthroughs and produce results with high standards, we still have to marshal the scientific and technical forces from all sectors. Borrowing from business enterprises means assuming some risks. As a first step, we’ll borrow funds for development research; these will be repaid in three to five years, when products are introduced. These loans have to be repaid because the money of these business enterprises comes from the sweat and blood of Shanghai’s people.
Funding for Technical Upgrading. This support should come from three sources: funds raised by enterprises themselves, jointly raised with other locales, and obtained through foreign investments (loans to be made by the Jiushi Company). This is the economic approach. We must be good at operations. This is going to be different from previous breakthrough efforts. It’s not entirely based on the old method—namely investment without compensation and eating from the “big pot.” We won’t do that anymore. Overall, it seems that there are three scenarios for funding.
Funding already resolved. The Santana and its associated indigenization project are already self-sufficient in funding and have a surplus, so the original team can move on to the next step of organizing to make a breakthrough.
Some prospect for obtaining funding. The Bell digital telephone project lacks sufficient funding but has the state’s backing. Once conditions are ripe, the state will provide funds. This project should try to be listed as one of the State Economic Commission’s end-to-end indigenization projects. The Municipal Instrumentation Bureau should treat it as a key project. With a ready-made organization as well as good prospects, its funding can gradually be resolved.
Funding not in place. Projects that would produce 300,000 tons of ethylene and 300,000 tons of ammonia a year have not been funded, but they already have a group of people with the necessary technical expertise, supplemented by the reputation of Gong Zhaoyuan5 and Chen Genlin’s6 experience as factory directors. They can build a command headquarters on this foundation, form a company, and gradually bring it to life. Put the essential functions in Shanghai—it will be the engine. In addition, funding needs to be put in place for a batch of projects at the various industrial bureaus.
5. Reward People
The most important policy is to reward people: those who truly contribute to the completion of these dozen or so projects should receive the title of “Exceptional Model Worker.” Give each of them a bonus of a few thousand renminbi, and if they have housing problems, help them solve these. By extension, those who help with bureau-level breakthrough projects should also receive bonuses and the title of “Model Worker.” In short, rewards should be both intangible and tangible. Give people something to strive for so that those who contribute to the revitalization of Shanghai are respected by everyone.
6. Do Substantive Work
Agency leaders cannot be leaders in name only—they must do substantive work. The city government will form a group to be at the forefront of this endeavor.7 I suggest that Gu Chuanxun8 head this group, with Liu Zhenyuan9 as his deputy. There’ll be an office under this leading group. It will be directed by Jiang Yiren, vice chairperson of the Municipal Economic Commission, and the deputy director will be Jin Zhuqing, chairperson of the Municipal Science Commission. These two commissions can have a joint office and convene work conferences once or twice a week.
Within the leading group, adviser Gu Xunfang will be responsible for all-round coordination, mainly in the areas of research, policy formulation, progress-checking, and the identification and resolution of some major issues. The leading group of each project should do the project’s main work itself.
The leading groups of individual projects should include whoever was originally in charge of the projects, but responsibilities should be clearly delineated and a group leader identified. Retired cadres can be invited to serve as advisers, but the list of advisers should be drawn up by the various units in charge. Apart from having a leading group, each project must be associated with a business entity. The Santana and its associated indigenization project are backed by Volkswagen AG. The other projects must also have related economic entities, preferably located in their factories.
1. Zhu Rongji gave this speech at a Shanghai conference on integrating sci-tech with production to make breakthroughs. In 1988 the Shanghai Municipal Party Committee and municipal government conducted research on playing to Shanghai’s strengths in sci-tech and comprehensively implementing Shanghai’s economic development strategy. On the basis of views solicited from over 300 experts, scholars, and frontline workers, they decided on 14 projects that could earn forex through exports or import substitution, and that would promote technical advances in related industries. These were to become decisive industrial efforts for the entire city, efforts to make end-to-end breakthroughs, from conducting research and development, indigenizing technologies, and remaking technologies to batch production.
2. Bo Yibo was then the executive vice chairman of the Advisory Committee of the Party Central Committee.
3. The Shanghai Jiushi Group Co. Ltd. was established in December 1987 by the Shanghai municipal government in line with the spirit of the State Council’s 1986 Document No. 94, “Directive on Increasing the Scale of Shanghai’s Use of Foreign Investment.” It was a specialized economic entity created to reinforce urban infrastructure construction, speed up technical upgrading of industries, strengthen the capacity for exporting and earning forex, and develop tertiary industries and tourism. (This policy was known as the “94 Special Project.”)
4. In March 1988, the Shanghai municipal government established the Shanghai Shishi Company in order to implement the spirit of its “Report on Deepening Reforms, Further Opening Up, and Speeding Up the Shift of Shanghai’s Economy to an Externally Oriented One,” which had been approved by the State Council. This was an enterprise directly under the leadership of the city government. Its main functions were to engage in general operations and development in order to quickly grow the additional RMB 1.4 billion in fiscal revenues Shanghai earned after implementing the new fiscal contracting system, promote Shanghai’s production and exports, and accumulate funds for urban construction. In January 1990 the Jiushi and Shishi companies merged to form the new Jiushi Group Co. Ltd.
5. Gong Zhaoyuan was then director of Shanghai’s Office of Ethylene Projects.
6. Chen Genlin was then deputy director of the Wujing General Petrochemical Factory in Shanghai.
7. On June 10, 1988, the Shanghai municipal government established a leading group to direct the key industrial effort to integrate sci-tech with production. Zhu Rongji was the group leader, vice mayors Gu Chuanxun and Liu Zhenyuan were the deputy leaders, and Gu Xunfang was adviser.
8. Gu Chuanxun was then a vice mayor of Shanghai.
9. Liu Zhenyuan was then a vice mayor of Shanghai.