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28 5 Invigorate Shanghai’s Finances, Support Economic Revitalization1 March 2, 1988 Without the collaboration and support of the banks, it is hard to get anything done. The trend in the future will be less funding from the fiscal budget and more from the banks. There’s a limit to the money the mayor can allocate—the banks are the big bosses. Everywhere the tallest buildings are bank buildings. That was the case in Shanghai in the past—the present City Hall is the former Hong Kong and Shanghai Banking Corporation building. In fact, very few of the big foreign capitalists got their start using only their own capital. They relied on bank loans. Shanghai is currently facing many difficulties , and I hope those of you in banking will actively support and assist Shanghai in overcoming these difficulties. Release Circulating Forex as Soon as Possible So It Can Yield Benefits Release the forex at our disposal and put it to use as soon as possible. Once we start importing and exporting on a large scale, everyone will go to the international markets to import raw materials, so prices will inevitably go up—we must be aware of this. If we can’t import raw materials, how can Shanghai carry out large-scale importing and exporting? I’ve already worked this out with Li Lanqing.2 The Ministry of Foreign Economic Relations and Trade will make an exception for Shanghai and allow it to import on its own a portion of the nine commodities that are under centralized control. We have to concentrate on implementing this. Also, as soon as possible, the banks have to arrange for the matching renminbi enterprises need to obtain circulating forex so they can import raw materials. I hear that the forex loan quota Shanghai receives annually from the head office of the Bank of China is often not completely used up. Actually, the city has good production potential, while its forex isn’t fully used because our 1. These are the main points made by Zhu Rongji in response to a work report by Shanghai’s banking sector. 2. Li Lanqing was then vice minister of Foreign Economic Relations and Trade. Zhu_Shanghai Years_1987-1991_hc_9780815731399_i-xii_1-620.indd 28 12/26/17 12:00 PM Invigorate Shanghai’s Finances, Support Economic Revitalization 29 thinking isn’t liberated, project approval procedures are too complicated, and enterprises lack initiative—they just sit there and wait. Shanghai is not short on comprehensive economic capacity, but it lacks dynamism. We must be determined to change this situation. Make Bank Credit Policies a Bit More Flexible Banks should have some strategic vision and support Shanghai’s economic revitalization. It’s vital to rethink some of their ideas about making loans. One is that loans should be directed mainly toward basic industries, while processing industries should be scaled back; they also want to support products that are in short supply and reduce production of those that are not. These guidelines are correct, of course, but there still should be differentiation and some flexibility in the course of implementation. Develop Processing Industries Shanghai has no choice but to develop processing industries—of course these would be for high-level processing. On the question of abundant products versus those in short supply, remember that although some products may be Visiting with staff during an inspection tour of the Jing’ansi Community Savings Bank of the Shanghai branch of the Industrial and Commercial Bank of China, October 20, 1988. Far right, Shi Huiqun, deputy secretary-general of the Shanghai municipal government and deputy director of its General Office and Research Office. Zhu_Shanghai Years_1987-1991_hc_9780815731399_i-xii_1-620.indd 29 12/26/17 12:00 PM 30 Invigorate Shanghai’s Finances, Support Economic Revitalization abundant nationally, those made in Shanghai are competitive, have potential, and can go into international markets. Other places would definitely be unable to outdo Shanghai, so the city shouldn’t necessarily reduce its production of these more abundant items. Needless to say, we should focus on product quality , variety, and upgrading, not basic construction. Over the long term, this will also be good for the economic development and industrial restructuring of the entire country. Shrink Working Capital, Use It More Efficiently, and Maintain Enterprise Vitality For various reasons, Shanghai used to rely on allocation for raw materials and on transfers for [finished] products, so little capital was used. Now that we are transitioning to a commodity economy, the amount of working capital needed...


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