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171 20 Eight Measures for Solving the Shortage of Funds1 July 29, 1993 The current financing difficulties that have appeared in these provinces are due to a variety of reasons, one important reason being chaos in the financial system. If we don’t fundamentally change this present condition, we won’t be able to solve the problems even if we inject billions. The deep reason for the financing difficulties is that the scale of investment is too large: there isn’t that much money, but they insist on doing too many things, so if they do one thing, it squeezes out another, and if they do something they shouldn’t, it squeezes out a key project they should have done. This is precisely what we don’t want to see. Of course these problems don’t affect our affirmation of achievements, and the overall situation is excellent. At the same time, we mustn’t ignore existing problems. Otherwise, how could the shortages have gotten to this point? The only way to solve this problem is to act in the spirit of Party Central Committee Document No. 6,2 take desperate measures, block illicit channels, 1. After the national conference on financial work in early July 1993, financial departments acted in the spirit of Party Central Committee Document No. 6 and achieved results in recovering interbank loans that had been made in violation of the rules. However, there was universal feedback that the banks were recovering but not lending. Enterprises had a shortage of working capital and were encountering difficulties in production. In order to ascertain the actual situation and adopt timely measures, Zhu Rongji went to Jiangsu Province on an inspection visit on July 29–31. On July 29, he chaired a meeting in Nanjing that was attended by responsible leaders from the provincial governments of Jiangsu, Zhejiang, and Anhui and that studied ways to solve the funding shortage in those three provinces. This is the main part of Zhu’s speech at the meeting. At this meeting, it was decided that the central bank would relend RMB 5 billion to the specialized banks in those three provinces and let them set priorities as they resolved the shortage of working capital. Subsequently , from early August until late November, Zhu chaired eight successive meetings on the allocation of funds. These looked into the forcefulness of the macroeconomic controls and degree of tightness of the money supply and made concrete adjustments to credit quotas that solved the problem of shortages of working capital in these places. 2. See chapter 18, note 3. 172 Eight Measures for Solving the Shortage of Funds and open up licit ones. If we don’t take desperate measures now and think we can use a few billion renminbi to solve the financial difficulties of the three provinces , we won’t be able to solve them. To address them, I’d like to propose several measures based on the spirit of Party Central Committee Document No. 6. 1. Resolutely Put a Halt to Illegal Fund-Raising I’m asking the governments of the provinces concerned to come up with several effective and practicable measures to be promulgated at all levels. If any fundraising exceeds legally mandated interest rates, it must be halted regardless of who is behind it. This includes all those illegal financing activities by self-started financial institutions, money changers, and pawnshops. None of that is permitted , and they should still go through the main channel of the banks. Under the present circumstances, if we don’t go through the main channel of the banks, there’ll be no industrial policy to speak of, and the consequences will be dire. If we can put a stop to irregular fund-raising, it will mark a turnaround in the shortage of funds. Those responsible in these provinces must be resolute on this issue and send capable work teams out to inspect and monitor. 2. Resolutely Put a Halt to Lending That Violates the Rules For illicit lending that occurred before the national conference on financial work on this July 7, we won’t pursue the matter if it is reported factually and cleared up meticulously. If anyone continues to lend against the rules after July 7, we must trace the responsibility of the leaders concerned. Money that has already been lent out must be recovered, and suggestions must be proposed as to how to handle money that temporarily cannot be recovered. For illicit loans, even if used for...

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