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23 3 Utilizing Foreign Investment and Developing Foreign Trade1 February 12, 1988 At present, some of our government agencies are managing things they shouldn’t be managing. Not only is this a drain on their energies, but it also often leads to mistakes because they don’t understand the circumstances involved. When we engage in contracting, the contractor knows best how well the project is doing and whether or not he is up to the task. If things go wrong, he is responsible and we need not interfere excessively. By way of example, when Mei Shouchun2 of Shanghai’s Municipal Textiles Bureau sent me a list of 27 joint venture projects that had already been negotiated with foreign companies, the city agencies in question procrastinated and wouldn’t give their approvals, so the foreign companies all went to Guangdong. What a pity! I feel that we should “let go” and allow people to do their jobs. If they perform poorly, they will be responsible for it themselves. We Must Be Bold in Devolving Powers The intellectual caliber and management standards of Shanghai officials are good and should be acknowledged—they won’t make a mess of things. In fact, a report by the Municipal Agricultural Commission suggests that the authority to approve projects of up to US$5 million, or RMB 10 million, be devolved to districts and counties. The general departments need to devolve those powers. The central leadership is asking Shanghai to procure US$10 billion to $20 billion in foreign direct investments, but so far we only have US$1.8 billion, and we won’t be able to reach this level unless we devolve powers. We must let approval power in particular go to districts and counties and let them decide for themselves. But they will have to file reports with higher levels, and the general departments should supervise them. 1. These are the key points of remarks by Zhu Rongji in response to a report by the Shanghai Municipal Foreign Economic Relations and Trade Commission. 2. Mei Shouchun was then director of the Shanghai Bureau of Textile Industry. Zhu_Shanghai Years_1987-1991_hc_9780815731399_i-xii_1-620.indd 23 12/26/17 12:00 PM 24 Utilizing Foreign Investment and Developing Foreign Trade The Rule of Law Must Supersede the Rule of Man These days it is truly hard to get a project approved at the grassroots level. According to one count, it takes 109 chops [official stamp]. In some cases, the officials in question tell you that it’s all right, then a little later that it isn’t; or one person might give it the green light, but the next person won’t. There’s no basis for any such decisions. Instead things should be managed in accordance with the law. If you first compare the facts of a project with the relevant laws and act according to those laws, you won’t have to require so many chops. But remember this: if upon inspection the departments concerned later discover that the project does not accord with laws and regulations, you will be heavily penalized. We want to follow the rule of law, not the rule of man. Right now it’s the rule of man. Officials have too much power and can hold you up if they please. Hence the term “increasing efficiency” rings hollow. Policies Must Be Further Eased and Enthusiasm Generated for the “3+1” Industries3 To promote the 3+1 industries and large-scale exports and imports, our policies must be a bit more preferential. In some areas we can’t just copy Guangdong’s 3. The “3+1” industries are ones that process imported material, process imported samples, assemble imported parts, and engage in compensation trade. At a preview of the Shanghai Commodities Trade Fair, August 23, 1990. Second from left, Zhang Junjie, director of the Shanghai Office of Finance and Trade. (Photograph by Wu Wenji) Zhu_Shanghai Years_1987-1991_hc_9780815731399_i-xii_1-620.indd 24 12/26/17 12:00 PM Utilizing Foreign Investment and Developing Foreign Trade 25 methods. It already has a good foundation for such industries and thus can be a bit tighter with enterprises about the division of forex earnings. We, on the other hand, are just getting started, so our policies have to be more preferential than the current ones in Guangdong. Initially, we have to give enterprises enough of a stimulus—give them big profits, give them a real jolt here—for otherwise no one will be willing...


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