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133 17 Thirteen Measures for Strengthening Macroeconomic Controls1 June 9, 1993 In accordance with the decision made at the Premier’s work conference, a study team headed by 7 ministers spent a month conducting investigations in 14 provinces and municipalities. Upon their return, the State Planning Commission took the lead in summarizing and integrating (the reports) and made recommendations on which measures should be taken now. The results of this project should be affirmed. The current economic trend has two characteristics: on one hand, the economy is growing faster and faster; on the other hand, more and more money is being printed, and prices are rising higher and higher. Last year GDP grew at a rate of 12.8%, and it reached 15.1% in the first quarter of this year. Of that, the industrial growth rate last year accounted for 20.7%; it reached 22.4% in the first quarter of this year and 27.3% in May. More and more finished goods are piling up in warehouses, and exports are declining. The consumer price index rose by more than 10% in both March and April, and by more than 17% in 35 large and medium cities. It was still trending upward in May. At last year’s informational meeting, I noted that once inflation starts, it will pick up speed. Don’t think that double digits are nothing to be afraid of—it might break through 20% very 1. On June 9, 1993, Zhu Rongji chaired a Premier’s work meeting at the State Council. In light of the challenges posed by an overheating economy and rising inflation at the time, the meeting explored measures for strengthening and improving macroeconomic controls. This was a speech given by Zhu Rongji at that meeting. The meeting started with presentations by the State Planning Commission and the State Commission on Restructuring the Economic System. The State Planning Commission also reported on the results of work done by seven investigative teams sent out by the State Council and their policy recommendations.After much consideration, Zhu Rongji proposed 13 measures at the meeting for strengthening macroeconomic controls. At the same time, he instructed the State Planning Commission to supplement these with several administrative measures. After the meeting, the State Planning Commission added three suggestions, and this resulted in the first draft of “The Opinion of the Party Central Committee and State Council on the Current Economic Situation and on Strengthening Macroeconomic Controls” (“The 16 Articles”; “Party Central Committee Document No. 6,” 1993). After being submitted to the Party Central Committee for approval, the paper was issued as Party Central Committee Document No. 6. This document had a decisive role in reversing the economic overheating at the time, controlling inflation, and achieving a “soft landing.” 134 Thirteen Measures for Strengthening Macroeconomic Controls soon. Because projects had already been started up last year, there were massive investments in infrastructure, the prices of production materials shot up, and money was printed faster than the economy was growing. These conditions are sure to cause a faster rise in the consumer price index. This morning, Li Tieying2 and I met with leading representatives from the World Bank and the IMF [International Monetary Fund]. Their views were quite unanimous—they all felt that China’s economy is already overheating. We can’t drag things out any longer and we can’t go on arguing. The hard facts of these indicators are right in front of us, and we have to take the problem more seriously . Last year, infrastructure investment grew by 60%, and it increased again by almost 70% in the first five months of this year. Also, RMB 115.8 billion of currency was issued last year, and another 110 billion before this year’s Spring Festival. To this day, there’s still 47.7 billion that hasn’t been recaptured. In the past, there was always a net recapture in the first half of each year, yet this year the net amount issued might be as high as RMB 55 billion. If we take no steps to curb the issuing of currency, this year it might reach RMB 180 billion or more. Three Thoughts What steps should we take? Let me discuss three thoughts. First, the Most Important Thing Right Now Is to Unify Our Thinking. If you’re still thinking, “It is not overheated here,” or “If you just give me the money, I can definitely make the economy grow,” or “Inflation doesn’t matter—right...


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