Zhu Rongji on the Record: The Road to Reform 1991-–1997

Comments on the Economic Development of Western China

17 2 Comments on the Economic Development of Western China1 october 1, 1991 to comrade Lü dong: (cc: Bo Yibo) how to speed up the economic development of Western china is indeed a “big question,” and this is also the question raised by deng Xiaoping regarding“common prosperity.” “interviews” presents some good ideas, which are worth further consideration and study. My general impressions are: 1. Western china must play to its own advantages in resources and science and technology, and develop energy, raw materials, and knowledge-intensive industries. relying on its strengths and avoiding its weaknesses will yield twice the results with half the effort. 2. the “structural transformation” in the west must keep in mind the industrial structural adjustments in the whole country. this region should be very cautious in dealing with the question of “developing processing and value adding , extending the industrial chain, and connecting the upstream and downstream industrial cycles.” this path will inevitably lead its industries to become more and more like the already redundant coastal processing industries. they will also be unable to compete in product quality and variety, the result will be twice the effort with half the results, and they will fail to realize hopes. 3. it will be important to step up price reforms, rationalize price parity between upstream and downstream products, and turn around the poor profitability of natural resource products. 4. Matching policies must be adopted (in the calculation of production value, taxes, profits, and product allocation) to encourage coastal processing industries 1. on August 24, 1991, The Domestic Situation of Xinhua news Agency published “interviews on Provinces and Autonomous regions of the West” in issues nos. 2105 and 2106, presenting the ideas and suggestions of some government officials from the western region on its development. Bo Yibo regarded this as a “big question” and suggested that Lü dong, chairman of the china Society of industrial economics and director of the State economic commission, organize some experts to conduct studies. Lü dong forwarded Bo Yibo’s comments and the reports to zhu rongji, who made these comments on the reports. 18 Comments on the Economic Development of Western China to operate jointly with inland industries. this cooperation can take many forms (the west could provide raw materials, the east the processing; the west could do rough processing and the east final processing; or final processing might move from east to west). the key is to tilt to the west in the apportionment of benefits. ultimately there must be a plan that integrates the long and the short, but the plan can only set the direction. it must be accompanied by policies that support Zhu Rongji’s written comments (top of page) on the letter from Lü Dong. Comments on the Economic Development of Western China 19 it and by macroeconomic control measures, and implementation must be based on voluntary cooperation between provinces. i agree with Mr. Bo that we should first ask the china Society of industrial economics to organize some experts to conduct studies and come up with some ideas and measures for the relevant policymaking departments of the State council to choose from. For your consideration, zhu rongji With Lü Dong (center), founder of China’s metallurgical industry, at the First East China Fair in Shanghai on March 4, 1991. ...