RESOLUTELY IMPLEMENT GOVERNANCE AND RECTIFICATION MEASURES1
NOVEMBER 14, 1989
To implement the spirit of the Fifth Plenary Session of the 13th Party Central Committee it is essential to fully understand Shanghai’s economic problems, formulate appropriate governance and rectification measures, and unite and lead the people through the difficulties surrounding rectification.2
Obtain a Full Picture of Shanghai’s Economic Difficulties
This year, Shanghai experienced relatively good results from rectification.
Signs of This Year’s Progress. Despite difficulties, we managed to move ahead in the following ways.
1. Production continued to grow. Last year, our industrial growth rate was 10%. Before this July, we maintained this rate; it began to decline in August and turned negative in September and October. It may still continue to decline in November and December. We should be mentally prepared for this, but we expect that the overall growth rate for this year will stay at 4% or a bit more.
2. The consumer price index (CPI) has been falling each month. In January, it was 26.4%, but by October, it had dropped to 9.2%. That is to say, the trend of rising prices is now holding steady. We expect prices to fall further in November and December, which means the increase in the CPI for the entire year can be kept under 20%. Last year it was over 21%, and this year it might be 3 percentage points lower than last year. The current situation can be described as steady markets, steady mindsets, and increasingly steady prices; in addition, bank deposits have risen sharply. All this is a good sign.
3. The increase in consumption spending has been controlled somewhat. In the first half of the year, the total expenditure on wages had risen by over 20%, but by October, it was only 9.5% higher than during the same period last year.
4. The scale of infrastructure construction has shrunk. This year, fixed asset investment was reduced by 20% nationally and by 35% in Shanghai. In absolute numbers, fixed asset investments last year amounted to RMB 15.6 billion; they’re asking us to bring this down to RMB 10.3 billion this year, which is greater than one-third. Why? Because the “Jiushi Projects”3 were originally not put into the “cage” of the plan, but this year they have been included. However, in the spirit the central government expects of us, we will still resolutely reduce the scale. We will preserve the key projects but then basically cut all the fancy buildings and ordinary technical upgrading projects. From January through October of this year, we completed 65% of the RMB 10.3 billion of fixed asset investments within this year’s “cage.” We expect to be able to remain within the “cage” in the next two months, thereby meeting the reduction plan assigned to us by the central government.
5. Exports have increased. Although the production growth rate has declined, exports have continued to grow, reaching upward of US$3.9 billion in the first 10 months of the year. We expect them to reach at least US$4.8 billion by December and will continue to try to meet our original target of US$5 billion. Because we spend a lot of forex on imported raw materials, our actual forex earnings aren’t higher than last year’s, and since we absolutely must meet this US$5 billion target, we have to keep working hard at it.
6. Utilization of foreign capital has been quite good. From January to October, we attracted US$349 million in foreign direct investment (FDI), which is greater than last year’s full total. Foreign interest in and enthusiasm for investing in Shanghai has not dwindled. At the moment, we don’t dare sign contracts for certain projects because we lack the matching funds. Otherwise, we could attract even more foreign investment.
7. We have had good results in infrastructure construction. Key projects including the Metro, the Huangpu River Bridge, and the combined sewage wastewater treatment project are all under way, and what’s more, they have progressed quite rapidly. A few days ago, we converted to seven-digit phone numbers. Citywide, we now have 500,000 telephones, of which 280,000 are program-controlled. This is of great significance for improving the investment environment and for economic growth.
8. Our fiscal situation is still quite acceptable. Although the production growth rate has slowed, we expect to fulfill our fiscal plan for the year. While we must hand over RMB 10.5 billion [to the state], in fact we will be handing over RMB 12.5 billion, because the special consumption tax, the state budget adjustment fund, the state fund for key energy, and transportation construction and land taxes are added on separately. Shanghai ought to make a greater contribution. In addition, grain prices have gone up. This year’s subsidies for grain, [edible] oil, and non-staples alone have increased by RMB 1.37 billion, which has offset a very large portion of our increased revenues. I should say that Shanghai’s fiscal and tax work this year has been done quite well. Of course we are still having some difficulties because the price increase for public transit’s monthly passes didn’t go through and we have to increase subsidies for the city’s gas and tap water. The cost is going to approach several hundred million and hasn’t been resolved yet.
Next Year’s Concerns. Cadres in leadership positions need to fully recognize the seriousness of our present difficulties and be more aware and more steadfast in governance and rectification. Next year’s difficulties will be greater than this year’s, and everyone must be sufficiently mentally prepared, especially for the following challenges.
1. Markets are unpredictable. It is truly hard to predict when a market will take a turn for the better. Many factors can give rise to market softness, a very important one being that people feel calm and the value of their savings is holding steady. In the past, consumption was blind and outstripped [earnings]. Now the general attitude toward consumption is “waiting quietly for prices to fall.” Of course, fundamentally speaking, our country’s economy is still an economy of shortages, and the supply of commodities still cannot meet demand. I don’t think the current stagnant sales of color TVs will last for long, but it’s still hard to predict when the markets will revive. Production may still decrease before that turnaround occurs. Right now, it is mainly textiles and home appliances that are selling poorly. What’s worth noting are the early signs of a slowdown in sales of electrical machinery. Because investments in fixed assets have shrunk, there is less demand for such equipment.
2. Energy prices will go up. Coal prices will rise by RMB 15 a ton next year, and we still don’t know if it can be limited to that. Moreover, the price of crude oil will go up, and the increase will be quite significant. These will all directly add to the burden of enterprises. According to our calculations, we will use 25.25 million tons of coal next year. If each ton rises by RMB 15, expenditures will increase by almost RMB 400 million, which will be a terrible burden for enterprises.
Everyone should understand that times were quite good for enterprises last year—the central government allowed us to have a bit more retained profits and we allowed enterprises to retain RMB 1 billion more. Although the price of raw materials rose a bit last year, so did the price of finished goods. As a result, enterprises still gained over a billion renminbi. This year, that billion-plus is being handed over because the price of coal and crude oil is rising by a billion. That means enterprises will just barely be able to meet their contracted amounts.
Of course there’s some unevenness among enterprises—some won’t meet their amounts while others will do better, but the overall average will be just enough to meet their contracted amounts. However, debt repayments and retained profits will be a problem. Last year, enterprises repaid RMB 1.4 billion in loans, but so far this year they’ve only repaid RMB 660 million, and we estimate that for the whole year, they’ll repay RMB 800 million to 1 billion at most. Moreover, they’ll have very few retained profits. If coal prices go up another several hundred million next year, the difficulties will be dire. That’s why we must use every means possible to get coal included in the state’s transportation plan—that would save us some money. The city’s Bureau of Materials, fuel company, and Bureau of Electrical Power must do a good job of this. The planning and economic commissions should lighten the burden of enterprises. Prices of power and gas must not go up next year; otherwise, the enterprises won’t be able to cope. Also, we must burn less oil.
3. The price of agricultural products will go up. This year, the state has already reduced by one-half the quantity of inexpensive grain and inexpensive animal feed that it provides to Shanghai. The Ministry of Commerce has informed me that there may be further reductions next year. Therefore even if [state-controlled] grain prices don’t increase, we will still have to increase subsidies because the proportion of grain at the negotiated price will rise. The price of [edible] oil will also increase, but the retail price must not change, so that also means more subsidies. Because of price increases for cotton, we estimate the textile industry’s burden will be RMB 290 million greater, which will add to its costs.
Subsidies for grain and oil are a heavy burden for Shanghai. In 1986 these only amounted to RMB 260 million, but this year it will be RMB 2.7 billion, and that doesn’t include the RMB 900 million burden of our enterprises. When that is included, it comes to RMB 3.6 billion. Add to that the RMB 1 billion for subsidies given to us by the central government, a total of RMB 4.6 billion will be spent on subsidizing grain, oil, and non-staples. If we then add the subsidies for public services and the losses incurred by enterprises, the figure comes to RMB 5.6 billion. Such enormous subsidies stretch our fiscal resources to the utmost.
4. We will still need a program next year to keep prices stable. There must be absolutely no letup in the effort to keep prices stable—except, of course, in the case of goods where it is impossible not to raise prices. The national price [increase] index for next year has been preset at 16%, and it can’t be less than 16% for Shanghai either. For example, public transit fares will have to go up. If they don’t, what will we do about the RMB 250 million subsidy? The increase for monthly passes will mainly affect enterprises and won’t have much of an impact on people’s lives, but that doesn’t mean there won’t be grumbling and that people won’t say strange things—we must be mentally prepared for this.
Gas is also a problem. Right now a cubic liter of gas produced by the Pudong Gas Factory costs RMB 0.59, but it sells for only RMB 0.10. That RMB 0.49 loss is assumed by the government, and we can’t cope with it either. Residential and industrial uses each account for 50% of Shanghai’s gas. This year, the price of industrial gas has gone up, but not the price of residential gas. If enterprises had to cover the subsidies for the coal used for residential gas, they wouldn’t be able to cope because this proportion is too high. Of course I’m not saying that gas prices must rise next year, but the difficulties are there for all to see. Shanghai’s CPI this year is three percentage points lower than last year, and next year’s must also be noticeably lower than this year’s, but there must still be some increase. Therefore we have to do good work in helping our residents and employees understand, so that to some extent people become mentally prepared for some price increases.
5. The state’s difficulties are even greater than Shanghai’s. The state has several tens of billions of renminbi in debts. Next year will be the peak repayment period for domestic debt, and the year after for foreign debt. Shanghai’s foreign loans have relatively long terms and our current debt burden isn’t very heavy, so we should do more for the state. All those provinces and municipalities that are required to turn money over to the central government must now turn over a higher percentage. We must all be mentally prepared—and recognize that it isn’t RMB 10.5 billion any longer. Of course we in fact already turned over RMB 12.5 billion this year, and I’m afraid that will increase further—the actual figure will be assigned by the state. From the top to the bottom, we must all be mentally prepared and must not grumble.
Resolutely Implement Governance and Rectification Measures
Although the difficulties confronting us are serious, they are, after all, temporary challenges that arise in the course of progress, and current political and economic conditions will enable us to overcome them.
The Political Situation.Shanghai’s present political situation is good and it is stable. This is our political guarantee for overcoming difficulties. To date, the Municipal Party Committee has earnestly implemented the spirit of the Fourth Plenary Session of the Party’s 13th Central Committee and launched a cleanup. It has further cleaned up and rectified companies and investigated cases of speculation and profiteering among work units; it launched a fight against corruption and bribery and strictly investigated some cases of using power for personal gain; it made comprehensive plans for clean government, did several substantial and practical things to win the trust of the people, and won the approbation and support of the people.
In particular, Shanghai extended its work on clean government from bureau-level cadres to section-level cadres and then to enterprises and drew up relevant rules—feedback from the people was very positive. We sang the “Song of the Incorruptible Cadre,”4 and while it was only a song, the people were very approving. They said it was a fine thing that the Municipal Party Committee and the municipal government were determined to do this and asked that the song be broadcast daily over the radio. Of course just singing it doesn’t amount to much; the key is to act—words must be matched by deeds. The people now have confidence in the Municipal Party Committee and the municipal government, and this enables our Party to bring people together. This will play a positive role in uniting all the people of the city to be of one mind and surmount our difficulties together.
Shanghai has a very strong working class. It has rendered great services in the past, and I’m sure that it will continue to be our mainstay as we tackle our current difficulties. The farmers in our rural areas will also play a positive role.
Our Economic Conditions. Our current economic conditions are better than they were last year. For one thing, we are much better positioned in terms of energy. When I came to work in Shanghai last year, we had three days’ worth of coal in stock—that is, over 100,000 tons. During the most pressing times, we had only a few hours’ worth. Now we have ample electricity, and coal reserves are also much greater. With the earlier rush shipments, Shanghai has 1 million tons of coal in inventory, enough for half a month, and there might be even more by year’s end.
Next, there has been a temporary easing of supplies of raw materials. Things like cold-rolled steel plates used to be in very short supply, but now we have stockpiles of them. You can buy any raw materials as long as you have the money. That’s why even though capital is very tight, we still must focus on preparations for production. Since last year we’ve also been focusing on the 14 key breakthrough projects, on technical upgrading, and on technology development. This is now beginning to show results, and the degree of indigenization of many products is rising steadily. All this creates the conditions for us to further develop production.
As we overcome our difficulties now, where should we direct our energies? We should work hard on the following three challenges.
1. Quickly turn around the continual decline in industrial production. We must carefully analyze market trends, differentiate between different commodities and different circumstances, and employ different methods. This issue calls for intense study by those in charge at every enterprise and at every bureau-level department. First we must hurry up and focus on exports. There aren’t any great constraints on exports—the key to exporting is product quality and delivery time. For things that don’t sell out domestically, do your best to sell the highest-quality items abroad; for things that don’t sell in our city, send them elsewhere; if they don’t sell in other cities, put them in the rural areas. In other words, don’t wait for customers to come to you, and use every possible means to “fight our way out.” Provided we are good at operations, adjust our product mix in a timely way, and focus unceasingly on technology development, our products will still sell.
We must also strengthen our deployment of capital. The city government holds a meeting on capital deployment every week. Although banks are responsible for capital, they need guidance from the government so that capital flows in a direction consistent with adjustments in product mix. Given that cases of serial debt and triangular debt are occurring almost daily, it is particularly important for banks and the agencies concerned to greatly intensify their work in capital deployment. Doing so will ease our current difficulties.
Next, in conjunction with the cleaning up of companies, we must continue to rectify and smooth circulation, lopping off those intermediaries that disrupt markets or commit usury. At present, much of our state-owned commerce is not the main channel of commerce—this must be changed. The interfaces between industry and commerce and between industry and foreign trade must be strengthened. Particularly for exports, industry and foreign trade must work together well and continue to implement the export agency system. We must do a good job of the “two notifications and four joint actions.”5
2. Support agriculture and solidly strengthen our agricultural foundation. All industries and sectors must make a major effort to increase the benefits of the “vegetable basket” project and fully utilize it. The Fifth Plenary Session of the 13th Central Committee strongly emphasizes that agriculture should be our [economic] foundation. It calls on the entire Party and entire nation to mobilize and concentrate its forces to do good work in agriculture, increase investment in agriculture, and build up its capacity for continuing growth. For Shanghai, this likewise means we must give agriculture high priority, and a guiding principle in all economic work should be to treat agriculture as the foundation. “Without agriculture, there can be no stability.” Grain production in the rural areas and the “vegetable basket” project affect the lives of thousands upon thousands of families, and they touch on our confidence and drive to overcome our current economic difficulties. Therefore, there must be no laxity whatsoever regarding the “rice sack” and the “vegetable basket.”
However, we cannot increase subsidies for their losses. I said just now that the proportion of grain at the negotiated price is increasing and this price itself may go up, so what should we do? Foremost is the need to improve the performance of agricultural production. We spent so much money building so many production bases for non-staples, building pig farms for several tens of thousands of pigs and chicken farms for several tens of thousands of chickens—expenditures on feed cannot be as high as before! Management has to be improved, costs must be lowered, the amount of meat produced per unit of feed must be increased, and losses must be reduced. We should give good support to farming families that raise chickens and grow vegetables, but at the same time should educate them to sell their products to state-owned vegetable markets. Since they’ve taken subsidies from the state, they mustn’t then sell their products for high prices at farmers’ markets—right now this loophole is still quite large. Didn’t we recently catch some “weevils”? If we don’t firmly plug this loophole, it won’t be possible to reduce losses. If we don’t think of ways to lower costs from this angle and ask the government for several hundred million or a billion in additional subsidies next year—that just isn’t possible. This problem requires the city government and relevant departments like the Municipal Agricultural Commission and the Office of Finance and Trade to take forceful measures. Moreover, all industries and sectors must support agriculture. We must undertake major construction of agricultural waterworks this winter and next spring in order to lay a solid foundation for a bumper harvest next year.
3. Increase production and decrease waste. The campaign to increase production and decrease waste, to increase revenues and decrease expenditures, must be launched to great effect as this will truly improve economic performance. This year’s governance and rectification measures are already having an effect, notably in shrinking investment in infrastructure construction and controlling the growth of money spent on consumption. These must be tightly focused on and continued—there can be no wavering.
Reviewing the progress of a waterworks project at Taiqinggang, Fengxian County, Shanghai, December 7, 1989. On the left, Feng Guoqin, Party secretary of Fengxian County; to Zhu’s right, Shen Yunzhang, deputy head of Fengxian County.
At the same time, we have to think of ways to turn around the sharp increases in subsidies for losses. For example, there’s a great deal of room to save on subsidies for grain and edible oil, and even a reduction of 5% would amount to over RMB 100 million. Those who are profiteering from grain sales should be strictly punished in accordance with the law. We must teach our people not to help those profiteers. As for the industrial use of grain, except for food and beverage businesses that make popular foods like crepes and fried crullers, I’m asking the city government to consider only supplying grain at a negotiated price—we can’t keep subsidizing low prices. This means there may be some impact on the prices of pastries and sweets, but it can’t be helped; we can’t afford such subsidies. We should continue to supply low-cost grain to makers of popular foods like crepes and fried crullers, but only to specified companies and in specified quantities. They must be strictly supervised and not allowed to raise prices at will. The relevant departments of the city government must study ways to implement measures to overcome our current economic difficulties.
Unite with and Lead the People through the Temporary Difficulties of the Rectification Period
During the Central Work Conference, Jiang Zemin said the wisdom and art of leadership are particularly reflected in the ability to discover and solve problems during difficult times, and in the ability to unite with the people in overcoming difficulties. An arduous test for our leading agencies and cadres at all levels will be whether or not we can correctly assess and quickly turn around the current difficulties in our economic work. In order to unite and pass the test posed by the temporary difficulties of the rectification period, our Party members and leading cadres must meet three qualifications.
First, Lead by Example. That is to say, we must live up to the Party’s fine traditions and political strengths, change our leadership style, continue to keep in close contact with the people, and lead them in truly getting through several challenging years. We leading cadres and Party members must practice what we preach, go through thick and thin with the people, and overcome difficulties together with them. This is crucial.
Some enterprises are run well and some are run poorly—it largely depends on their leading cadres and Party organizations. Many of our factory directors and Party secretaries are united as they lead the people in tackling difficulties and forging a path ahead—they’ve performed admirably. I suggest that Shanghai’s news organizations strongly publicize these advanced role models and use them to show the way, thereby encouraging everyone to be braver and more confident in overcoming difficulties.
A very important way to motivate everyone to be of one mind in overcoming difficulties is to always rely on the people, improve our leadership style, actively participate in labor, and pay careful attention to popular sentiment. This is because we rely on the people to accomplish our tasks, we rely on them to accumulate experience, and we also rely on them to overcome difficulties. Our leading cadres at all levels must do away with the bureaucratic behaviors of not going down to the grass roots, not caring about the people’s hardships, and being detached from the people. We must forcefully advocate cadre participation in labor. In terms of changing our leadership style, many people at this meeting have pointed out that this should start with the Municipal Party Committee. This is absolutely correct: we should be the ones to start changing our leadership style. We must not only take the lead in governing diligently, cleanly, and efficiently, but we must also take the lead in going deep into the grassroots and making it common practice to study and do research—we can no longer confine ourselves to the higher levels of government.
Since the current phase of work started, I myself have been spending somewhat more time on the surface, going to this meeting and that meeting, and appearing more and more often in newspapers and on television. I’m not satisfied with this situation, but I also hope for your understanding. Wouldn’t it be all right for the leaders of our Municipal Party Committee and government to not attend some meetings? Everyone should go down to investigate and participate in labor, going through thick and thin with the people. What can be achieved by sitting up there at meetings all day? Of course we should still attend the necessary meetings, but the problem is that there are too many meetings—their number is excessive. Moreover, there are all sorts of meetings—commendation meetings, review meetings, this meeting and that meeting—we’re being asked to attend all of them, so if we didn’t go, it might look as though we thought them unimportant. Even a primary school or a secondary school will invite me to their anniversary or choral performance—I really cannot handle them all. I keep writing to apologize, but there’s really no way for me to go. I feel we must call upon everyone from top to bottom to streamline meetings, do away with anything that is only done for appearances, and go do some practical good deeds for the people.
Second, Reinforce Centralization, Strengthen Organizational Discipline, and Oppose Uncentralized Decisionmaking. We made our position clear at the plenary session: we support having the Central Committee reinforce centralization and strengthen planning. Shanghai belongs to the whole country, and it is only right that we make a greater contribution. As Chen Yun6 points out, there are too many “feudal barons” everywhere. They talk without deciding, decide without acting, and each does as he pleases. Does Shanghai have this problem? We must examine ourselves. All levels of our Party organizations and government agencies must carefully look into this problem.
At the moment, people in Shanghai decide on their own, they do as they please, organizational discipline is lax and weak—these trends are fairly widespread. The State Council recently criticized Shanghai for taking it upon itself to invite the Iranian Minister of Energy for a visit—as the leader, I should assume responsibility for this. I went over the process and at every step found uncentralized decisionmaking. In foreign affairs, nothing is trivial. The power to conduct foreign affairs belongs to the central government, so how could we have just casually agreed and given approval? This very much deserves self-criticism on our part. I’ve discovered that nowadays some section heads, county heads, district heads, and bureau heads are too bold—they don’t give the slightest notice about what they’re doing and just do it on their own—if they go on like this, sooner or later they’ll make a major mistake. This episode has sounded a warning bell for us. There are also policy issues like increasing wages and starting projects—none of these should be done on your own; they should be reported and approval should be obtained.
As Deng Xiaoping made especially clear in his speech on September 4, we should make full use of collective leadership. Our Municipal Party Committee and government should take the lead in carrying out his directive, and every level of Party organizations and government agencies should do the same. Nothing should be decided by one person alone. Yet some bureau-level agencies can’t even convene an administrative meeting, and one person has the final say—how can this be? The members of a leadership team must be tolerant of each other, understanding of each other, and helpful to each other. As Deng Xiaoping said, everything of any importance should be presented to the leadership team for discussion, and then its members should implement, make speeches, and issue directives separately, but they cannot say whatever they want. We should have a system of democratic centralism—leading cadres should exhibit a democratic style and listen to different views. Personally, I’m very willing to listen to different views—as long as they’re raised straightforwardly, I’m very willing to listen no matter where they’re raised. However, you must implement things that have been decided by the Municipal Party Committee and government even if you have a different opinion. It won’t do for you to appear to comply while secretly resisting.
I hope our organizational departments will be strict in this regard. If anyone keeps on not saying anything directly, seeming to comply but secretly resisting, he must be transferred out. During difficult times, we must emphasize the authority of the Party Central Committee and the State Council. We must treat decisions of the Municipal Party Committee and government very seriously. These must be carried out, and you must not make unilateral decisions.
Third, Study the Marxist Worldview and Methodology. Starting with the Municipal Party Committee, we must seriously learn and study Marxist philosophy, learn the dialectical method, improve the way we think, and make our policies more scientific. Jiang Zemin discussed this issue in his speech on National Day7 and at the Fifth Plenary Session of the 13th Central Committee, urging us to study philosophy and gain full command of the Marxist worldview and methodology. On many recent occasions, Chen Yun has told the Central Advisory Commission to study philosophy. His profound message is that if we study philosophy well, it will reward us for the rest of our lives. As we confront our current economic difficulties, we should make all the more effort to master the basic principles of Marxist philosophy in order to avoid one-sidedness as we execute policies and implement directives of the central authorities. In particular, we must stress stability and must keep both policies and people’s hearts stable during trying times.
Jiang Zemin has repeatedly said that Shanghai occupies a crucial position in the country—keeping Shanghai stable will play a major role in keeping the entire country stable. Whenever we execute a policy, we must think things over very carefully and be sure not to keep “flipping the pancake.”8 Many problems must be viewed dialectically—don’t just emphasize one side and overlook the other side. Some policies that played a positive role at one time may now seem to have some flaws, but you shouldn’t change them immediately. For example, to this day I still think the city government’s decision last year to devolve powers to districts and counties was a correct one, because it greatly roused the initiative of the districts and counties, increased their revenues, and allowed them to do many good things. Had it not been for those revenues, the good things wouldn’t have been done. There would be no one to share our concerns, and we ourselves would not have been able to do well on our own.
Of course now a new situation has emerged: fiscal revenues of the districts and counties are increasing rapidly whereas a deficit has appeared in the city’s finances. As a result, some are asking whether a policy change is in order. My view is that we still shouldn’t make major changes at this point. We not only have to keep this policy stable, but we also have to study the further devolution of powers. The districts and counties should handle certain matters: they’re closer to the people and closer to the actual situations. It’s better to give them some appropriate measures and let them handle things.
However, districts and counties must also take heed: now that their revenues have increased, their expenditures are growing too quickly. Some district heads are even groaning and asking the city government to give them more support—that I don’t quite agree with. We have to have a little centralization here! We also have to think about looking after the big picture! I admit that you have considerable difficulties, but compared to the city government’s, your difficulties are still minor. From January to October of this year, the city’s revenues fell by 5.9% while district revenues increased by 18.9% and county revenues by 18.5%. As for expenditures, the city’s fiscal expenditures over the same period rose by 4.5%, which is a tremendous reduction, whereas district expenditures rose by 32.5% and county expenditures by 34.6%, which is far too great an increase! Don’t try to do all good things in a day—prioritize them!
We won’t change the policy of fiscal contracting for districts and counties. We may ask you to assume a little more of the burden of subsidizing non-staples, but this won’t be a great increase. However, you do have to constrain yourselves. You’re giving too many salary subsidies to government agency staff. These subsidies are much higher than those given by the Municipal Party Committee and government—that’s not good! Some districts and counties are still putting up fancy buildings and doing everything on a grand scale. I know all about this—it’s wrong and must be corrected! I’ll say it again: we’re giving you higher revenues because we want you to do several things.
First, do a good job of the “vegetable basket.” Run the vegetable markets well, have the farmers’ markets move into the vegetable markets and make the streets a bit more orderly. Don’t complain that we’re devolving sanitation, garbage collection, and sewage treatment to you—that work was yours in the first place, so we’re only asking you to make things a little cleaner. Second, do a good job with education, especially primary and secondary education. Also, regarding infrastructure construction, we must strictly control the building of housing in the urban area and do as much as possible to build in Pudong. Depending on what is possible with your fiscal resources, you must identify what is important and what is not, what is urgent and what is not. Do things one at a time in order of priority. Some district Party secretaries and district heads are doing a fine job: they are frequently among the people, visit the poor and inquire about their hardships, and help those with problems to solve them in a timely manner—this is a very good way of working and I thank them, as this saves me from having to go about everywhere. You district Party secretaries and district heads should go out more often and the people will then support you. Also, we’ve devolved review and approval power for projects under US$5 million to the districts and counties.
We are now finding that many of your projects don’t meet the needs of Shanghai’s industrial restructuring. This will cause you to lose out—they will eventually become a burden on you, and that’s also not conducive to Shanghai’s economic development. There are already several dozen such projects. Some have proposed that the city rescind this power, but I think we should keep this policy stable as well. However, the districts and counties must make good use of this power. You must meet the needs of the city’s industrial restructuring, and you mustn’t engage in any projects that cause pollution, incur losses, or are redundant. We won’t rescind this power, but you yourselves must use it well. Remember, too, that our departments in charge, the city’s Foreign Investment Commission, and its Foreign Economic Relations and Trade Commission have veto power [over your projects]. If you’ve signed contracts that are unfavorable for Shanghai’s development, they will be vetoed.
1. This is the main part of Zhu Rongji’s speech at the closing ceremony of the Ninth (expanded) Plenary Session of the Fifth Shanghai Municipal Party Committee.
2. The Fifth Plenary Session of the 13th Central Committee was held in Beijing on November 6–9, 1989. It reviewed and passed the “Decision of the Central Committee of the Chinese Communist Party on Further Rectification and Deepening Reforms.”
3. The Shanghai Jiushi Company 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 the construction of urban infrastructure, speed up technical upgrading of industries, strengthen the capacity for exporting and earning forex, and develop tertiary industries and tourism. This project was known as the “94 Special Project.”
4. The “Song of the Incorruptible Cadre” was composed by the Publicity Department of the Shanghai Municipal Party Committee by combining the melody of “The Three Main Rules of Discipline and the Eight Points for Attention” with collectively written lyrics.
5. The “two notifications” refer to the requirement that industries notify foreign trade companies of the production costs of their export products and foreign trade companies notify industries of the currency exchange costs of export products; the “four joint actions” refer to industries and foreign trade companies jointly traveling abroad on study trips, jointly negotiating with foreign parties, jointly signing contracts with foreign parties, and jointly making production arrangements.
6. Chen Yun was then chairman of the Advisory Committee of the Party Central Committee.
7. The National Day speech was delivered by General Secretary Jiang Zemin of the Central Committee of the Chinese Communist Party on September 29, 1989, at the meeting marking the 40th anniversary of the founding of the People’s Republic of China.
8. Translator’s note: this refers to excessively frequent policy changes.