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174 29 We Must Use Foreign Investments Boldly1 August 10, 1988 The only way to revitalize Shanghai is to further open up, implement the economic development strategy for coastal areas, engage in large-scale importing and exporting, and attract large amounts of foreign investments— otherwise we will have no future. I am not precluding the development of a large domestic cycle of circulating goods, stronger horizontal collaboration and contacts with other provinces and municipalities, and the use of domestic raw materials to the extent possible, but given the present circumstances, it seems this will be increasingly hard to do. Shanghai is such a “gigantic creature” that it can’t be “rescued” without relying on international capital. Because urban construction is highly indebted, it will be very hard to change Shanghai’s appearance without an investment of tens of billions of dollars. The only way to achieve this is to utilize foreign investment on a large scale. To do so, we must have the ability to repay, and in order to repay, we must have goods that can be expected to earn forex. This means we will have to make a major effort to revamp existing enterprises and strengthen their ability to earn forex through exports. Once we have the products, we will still have to open up export channels. The only way out for Shanghai’s enterprises is to form joint ventures with foreign firms and draw foreign entrepreneurs here, so that their products can find their way into international markets. Without such a foundation to ensure that exported products can earn forex, we can’t dare to borrow tens of billions of dollars from the World Bank and the International Monetary Fund to rebuild our city’s infrastructure. Foreign investments have great potential to speed up the pace of urban construction , but Shanghai still hasn’t done enough in this regard. When I recently discussed this with Jiang Zemin, he agreed we should use foreign investments more extensively to rebuild our urban infrastructure. The question now isn’t whether to use foreign investments more extensively or more quickly, but whether our corresponding renminbi and construction capacity can keep up. 1. These are highlights of Zhu Rongji’s conversation with a reporter from the Xinhua News Agency. Zhu_Shanghai Years_1987-1991_hc_9780815731399_i-xii_1-620.indd 174 12/26/17 12:00 PM We Must Use Foreign Investments Boldly 175 Our current pace of foreign investment utilization is too slow. The central government has given Shanghai permission to use US$3.2 billion during the period of the Seventh Five-Year Plan. Of this sum, US$1.4 billion is to be used for building urban infrastructure, yet so far we’ve used less than US$100 million . I’ve discussed this with Vice Chairman of the State Planning Commission Gan Ziyu, who said that provided Shanghai has the ability to use foreign investments , it won’t be limited to US$3.2 billion—the city may use whatever it is able to use. One major project in this category is designed to channel water from the upper reaches of the Huangpu River and thus solve Shanghai’s problem of drinking water—a serious concern of the city’s residents. Last year the first phase of this project was completed, but the second phase was halted for lack of funds. I say we absolutely can use foreign investment for the second phase. Many foreigners are now willing to lend to Shanghai. The World Bank, for example, has already promised to lend us US$200 million annually, of which US$50 million will be soft loans. There are still two-and-a-half years left until the end of the Seventh Five-Year Plan. I think there’s no way the US$1.4 billion Speaking at a reception celebrating the signing of a contract for a US $128 million syndicated loan for the Shanghai branch of the China Construction Bank, February 28, 1989. Zhu_Shanghai Years_1987-1991_hc_9780815731399_i-xii_1-620.indd 175 12/26/17 12:00 PM 176 We Must Use Foreign Investments Boldly allocated for urban infrastructure in the plan can all be used up—at the present rate, we would only use US$500 million to $800 million. I’ve therefore asked the Municipal Planning and Construction Commissions to hurry up and write reports on how to start work on the Waigaoqiao port, the Hongqiao International Airport, the Huangpu River Bridge, and the Metro as soon as possible. Apart from these large...


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