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259 45 Further Promote Stable Growth of the Rural Economy1 February 18, 1989 Rural work in Shanghai had great results last year and the public was quite satisfied. The “vegetable basket” project, in particular, played a great role in boosting the morale of Shanghai’s people. A few days ago, Zhuang Xiaotian2 and I both attended the finale and awards ceremony of the “Prestige Cup” competition for vegetable farms. I said “Thank you!” three times to those from the vegetable farms and the city’s finance and trade departments, noting that we haven’t forgotten how hard our farmers from outlying districts battled against high temperatures last year and worked diligently to ensure a supply of nonstaple foods for our residents. Nor have we forgotten the strenuous rural efforts of our county Party secretaries and county heads, and the contributions to the “vegetable basket” project of Vice Mayor Ni Hongfu as well as colleagues from the Municipal Agricultural Commission and other departments. Today, I again want to say to all of them, “Thank you! Thank you! Thank you!” Last year’s good results were also due to the good policies of the Municipal Party Committee and the municipal government and their forceful implementation by rural cadres. What was so effective about these policies? The answer is, they devolved power to districts and counties, giving them greater autonomy , so that measures taken could be better suited to actual circumstances and cadres and ordinary people would be more strongly motivated. This policy of devolving power must not waver. Some other policies also played a very positive role, including those that had all sectors and industries support agriculture , especially preferential policies toward township and village enterprises (TVEs), and had industry compensate for agricultural shortfalls. This year, they must be further developed. Before this meeting, I heard colleagues from rural areas say that the central government is going to collect more money from Shanghai again, so the city will be taking both money and power from the counties; they’re also worried that the 1. This is the main part of Zhu Rongji’s speech at the closing ceremony of a Shanghai conference on rural work. 2. Zhuang Xiaotian was then a vice mayor of Shanghai. Zhu_Shanghai Years_1987-1991_hc_9780815731399_i-xii_1-620.indd 259 12/26/17 12:00 PM 260 Further Promote Stable Growth of the Rural Economy policy of fiscal contracting will change. On this point, I am today reiterating that the rural policies adopted by the Municipal Party Committee and government will remain stable and will continue to be implemented. This is essential both for rural areas and for Shanghai. I’ve exchanged ideas with Jiang Zemin about this and he is strongly in favor of keeping our rural policies stable. Of course stability does not mean no changes whatsoever—it appears that there will be some very minor policy changes this year. This is mainly because the central government has recently decided on a series of policies aimed at fiscal tightening so as to regulate the economic environment and impose economic order. Some of these policies will affect rural areas. For example, an extra 10% of the extrabudgetary funds of TVEs will be collected for an energy and transportation fund. In the past, 7% was collected for this; now an additional 10% will be collected, with half of this amount to be turned over to the central government and half to be retained locally. I’m afraid there’s no way to waive or reduce the more than RMB 20 million that has to be turned over to the central government, but the city government won’t take the locally retained portion —which is another RMB 20 million or more—this will all be retained by the counties. Otherwise there are no changes. We’ve said the fiscal contracting system won’t change for three years, but I think it won’t change for five years, and the amounts in excess of the baseline will still be kept by the counties. Exports will also be contracted for: let’s see who is most capable, who is best able to export more and earn more forex. The forex in excess of the baseline will be kept by the county and can be used to import animal feed. Also, the State Council recently decided to tighten up somewhat on tax waivers and reductions. Last year, the city enacted a preferential tax policy that waived or reduced the income tax of new TVEs for...


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