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274 33 A Conversation with Japanese Finance Minister Takemura Masayoshi1 January 9, 1995 Takemura: I’m extremely honored that our delegation is able to meet with you immediately upon arrival in Beijing. ZRJ: I visited Japan last year and regretted not having met with a statesman as famous as you. Today, I’m delighted to meet with you in Beijing, and as a colleague in charge of fiscal and financial work, I’m delighted to make your acquaintance. This will enhance our mutual friendship and understanding and is good for the friendly cooperative relationship between our countries. I sincerely welcome you on your visit to China. TM: Your Excellency, I very much appreciate your taking the time to meet with us despite your busy schedule. Before coming to China, I read your résumé, and understand that you’re a native of Hunan. I myself once served as Governor of Shiga Prefecture. Twelve years ago Shiga Prefecture established a friendship, a prefecture-province relationship, with Hunan, so this is very close to my heart. You’re in charge of economic work in such a large country and may be said to be the highest-ranking person responsible for the economy. It must be very hard work, and I admire you for it. China’s economic growth has caught the attention of the world, and the Japanese people have also taken note of China’s outstanding achievements. However, for the past few years Japan has been in the longest economic slowdown of the postwar era. There were signs of a recovery last year, and this year our economy may grow at a rate of about 2.8%. ZRJ: Let me also say a few words about the state of China’s economy last year. Overall, the development of our national economy and the state of our reforms were quite good. In the past year, we adopted unprecedented macroeconomic reform measures in the areas of fiscal and tax [policies], foreign investments, 1. This conversation between Zhu Rongji and Japanese Finance Minister Takemura Masayoshi took place in the Hall of Purple Light in Zhongnanhai, Beijing. Minister Takemura’s remarks, which were made in Japanese, are here translated from the Chinese. A Conversation with Japanese Finance Minister Takemura Masayoshi 275 finance, and foreign exchange. There were significant risks in these reforms, but all the measures were successful. First, we implemented a tax-stream system and established a unified taxstreaming system. This measure touched on local interests, and could have resulted in trouble if mishandled. However, we passed the test, and our fiscal situation last year was quite good. Tax revenues increased by 20%, fiscal revenues by 18%, and the economy also grew by over 11%, though of course we don’t want it to be so high. Fiscal revenues grew faster than the national economy, with an actual increase of over RMB 80 billion. In the financial area, we also strengthened macroeconomic controls, controlled the money supply, and reduced the amount of money issued. The year before last we issued RMB 150 billion, and last year we issued RMB 145 billion . We also reformed the foreign exchange system and established a unified exchange rate set by the market. The exchange rate has remained relatively stable, and the RMB has even risen slightly while remaining generally stable. Our foreign exchange reserves also increased substantially last year. At the beginning of the year they were only US$21.2 billion, and by the end of the year they had increased to US$51.6 billion. Last year was also the year with the greatest increase in foreign direct investment—reaching US$33 billion. When it comes to the use of foreign investment in particular, we added many hi-tech projects from large foreign corporations, leading to a great improvement in the investment structure. In Beijing, Shanghai, and Dalian, we have Meeting with Takemura Masayoshi, then Japanese finance minister, in the Hall of Purple Light, Zhongnanhai, on January 9, 1995. (Photograph by Liu Jianguo, Xinhua News Agency) 276 A Conversation with Japanese Finance Minister Takemura Masayoshi very effective cooperation with the Japanese and have brought in some hi-tech joint ventures. Looking back at our economic situation in 1994, I could say that on the whole it was normal, but there have indeed been some problems. For instance, the inflation index is still very high—last year it was over 21%. However, I don’t feel it’s that frightening because 60% of the inflation was due...

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