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405 73 Resolutely Implement Governance and Rectification Measures1 November 14, 1989 To implement the spirit of the Fifth Plenary Session of the 13th Party Central Committee it is essential to fully understand Shanghai’s economic problems, formulate appropriate governance and rectification measures, and unite and lead the people through the difficulties surrounding rectification.2 Obtain a Full Picture of Shanghai’s Economic Difficulties This year, Shanghai experienced relatively good results from rectification. Signs of This Year’s Progress. Despite difficulties, we managed to move ahead in the following ways. 1. Production continued to grow. Last year, our industrial growth rate was 10%. Before this July, we maintained this rate; it began to decline in August and turned negative in September and October. It may still continue to decline in November and December. We should be mentally prepared for this, but we expect that the overall growth rate for this year will stay at 4% or a bit more. 2. The consumer price index (CPI) has been falling each month. In January, it was 26.4%, but by October, it had dropped to 9.2%. That is to say, the trend of rising prices is now holding steady. We expect prices to fall further in November and December, which means the increase in the CPI for the entire year can be kept under 20%. Last year it was over 21%, and this year it might be 3 percentage points lower than last year. The current situation can be described as steady markets, steady mindsets, and increasingly steady prices; in addition, bank deposits have risen sharply. All this is a good sign. 1. This is the main part of Zhu Rongji’s speech at the closing ceremony of the Ninth (expanded) Plenary Session of the Fifth Shanghai Municipal Party Committee. 2. The Fifth Plenary Session of the 13th Central Committee was held in Beijing on November 6–9, 1989. It reviewed and passed the “Decision of the Central Committee of the Chinese Communist Party on Further Rectification and Deepening Reforms.” Zhu_Shanghai Years_1987-1991_hc_9780815731399_i-xii_1-620.indd 405 12/26/17 12:01 PM 406 Resolutely Implement Governance and Rectification Measures 3. The increase in consumption spending has been controlled somewhat. In the first half of the year, the total expenditure on wages had risen by over 20%, but by October, it was only 9.5% higher than during the same period last year. 4. The scale of infrastructure construction has shrunk. This year, fixed asset investment was reduced by 20% nationally and by 35% in Shanghai. In absolute numbers, fixed asset investments last year amounted to RMB 15.6 billion; they’re asking us to bring this down to RMB 10.3 billion this year, which is greater than one-third. Why? Because the “Jiushi Projects”3 were originally not put into the “cage” of the plan, but this year they have been included. However, in the spirit the central government expects of us, we will still resolutely reduce the scale. We will preserve the key projects but then basically cut all the fancy buildings and ordinary technical upgrading projects. From January through October of this year, we completed 65% of the RMB 10.3 billion of fixed asset investments within this year’s “cage.” We expect to be able to remain within the “cage” in the next two months, thereby meeting the reduction plan assigned to us by the central government. 5. Exports have increased. Although the production growth rate has declined, exports have continued to grow, reaching upward of US$3.9 billion in the first 10 months of the year. We expect them to reach at least US$4.8 billion by December and will continue to try to meet our original target of US$5 billion. Because we spend a lot of forex on imported raw materials, our actual forex earnings aren’t higher than last year’s, and since we absolutely must meet this US$5 billion target, we have to keep working hard at it. 6. Utilization of foreign capital has been quite good. From January to October, we attracted US$349 million in foreign direct investment (FDI), which is greater than last year’s full total. Foreign interest in and enthusiasm for investing in Shanghai has not dwindled. At the moment, we don’t dare sign contracts for certain projects because we lack the matching funds. Otherwise, we could attract even more foreign investment. 7. We have had good results in infrastructure construction. Key projects...


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