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286 36 A Memorable Two Years as Governor of the Central Bank1 August 28, 1995 This advanced seminar on financial law organized by the People’s Bank has been very well run and is very timely. You’ve discussed many excellent ideas, which is very good for helping us to align our thinking within the entire banking system. I’ve been Governor of the People’s Bank for two years, and all you bank presidents here have been colleagues working with me during this period. You’ve written monthly reports for me that I’ve read carefully, and I’ve joined you in acquiring financial knowledge. This period of time has been memorable both for me and for all of you. During these two years, under the leadership of the Party Central Committee and the State Council and with the guidance of Party Central Committee Document No. 6, you’ve done a great deal to rectify the financial order, deepen financial reforms, make financial discipline more rigorous, and make financial oversight stricter. The financial system has changed considerably. The achievements of these two years are worth remembering in the history of the People’s Bank, or, I might say, in the history of financial systems. During this time, we’ve clearly defined the functions of the central bank. In the past, the branches of our People’s Bank were to a large degree agencies that helped local Party and government leaders raise money and start up projects. At one point they erroneously thought that their mission was to find ways to help local economies grow quickly. But they were unclear about how to help the national economy grow sustainably, rapidly, and healthily, or how to maintain monetary stability and how to avoid inflation. They were enthusiastic about signing off on approvals and working on specific matters. During these two years, we’ve come to deeply understand the importance of finance to macroeconomic controls and the necessity of making oversight of financial institutions our foremost priority. It’s fair to say that during these two years, under the leadership of the Party Central Committee with Jiang Zemin 1. Zhu Rongji made these remarks during a discussion with attendees at an advanced seminar on financial law organized by the People’s Bank of China. Zhu was Governor of the People’s Bank (concurrently with his post as Vice Premier) from July 2, 1993, to June 30, 1995. A Memorable Two Years as Governor of the Central Bank 287 at its core, and in the spirit of Party Central Committee Document No. 6, we’ve done a great deal of work and turned a new page in the history of the People’s Bank. You all deserve credit. Even though some have done a bit better and some a bit worse, and even though some may even have shortcomings and made mistakes , your achievements are indelible. To be able to do these few things in our lifetime allows us to live up to our obligations to the nation and to the people. We should say that the financial order has indeed taken a great turn for the better over these two years. If we had continued on the trajectory of the previous two years, doubling money issuance every year and issuing over RMB 100 billion at a time, the national economy would have gotten out of hand very quickly and not been able to develop sustainably, healthily, and rapidly. Things are very different now. I can say that so far, the financial situation has been quite good, though of course we shouldn’t be overoptimistic. We had originally planned to recover RMB 20 billion at most in the first half of the year, but in fact we already have a net recovery of RMB 28.5 billion. I am still hopeful that we can achieve the goal I had originally proposed of limiting money issuance to less than RMB 100 billion, a goal that can be achieved. If we can do that, we will be able to ensure that this year’s price index will not rise more than 15%, and we can be very hopeful of ensuring that next year’s increase will be below 10%. Our achievements in reforming the forex management system are there for the world to see. When my dual appointment as Governor of the People’s Bank was announced in July 1993, our forex reserves were only US$18 billion, but they are now more than US...

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