Chapter 22 Chapter 21 Flying against the trend in the storm

On March 19, 1998, Beijing held the National "Two Sessions", and Zhu Rongji was elected as the new Premier of the State Council.At the press conference that followed, Zhu Rongji made an impromptu speech that will often be savored in the future. He said: "The first session of the Ninth National People's Congress entrusted me with a heavy responsibility. I feel that the task is arduous. My expectations. However, no matter whether there is a minefield or an abyss ahead, I will go forward without hesitation, do my best, and die." The descriptions of "breaking through the minefields" and "the abyss" fully express the difficulty of deepening China's reform.

It was also at this "two sessions" that Wu Jinglian was elected as a member of the Standing Committee of the National Committee of the Chinese People's Political Consultative Conference and served as the deputy director of the Economic Committee. At this moment, the Chinese economy is being shrouded in the shadow of a huge, unprecedented storm, and this storm comes from beyond its borders. Beginning in the spring of last year, some American investors began to make waves in Asia, the representative figure being George Soros.Soros decided that the economies of Asian countries had been overheated as a whole, and currency devaluation had become a fact, so he decided to take a big gamble.The Quantum Fund led by him first aimed at Thailand and began to sell the Thai baht aggressively, causing the exchange rate of the Thai baht to fluctuate violently against the US dollar. On July 2, the government was forced to announce that the exchange rate would be allowed to float freely. Within a day, the Thai baht plummeted by 20%.After successfully sniping the Thai baht, international speculators turned to attack Malaysia, the Philippines, Indonesia, South Korea, and Hong Kong, China. The countries and regions attacked suffered huge financial damage.This financial turmoil started in the summer of 1997 and lasted for more than four months. It had a major impact on Asian countries and regions and all industries. The property of the middle class in the Philippines, Malaysia and Indonesia shrank by 50%, 61% and 37%, and the assets of residents in Hong Kong, Singapore and Thailand fell by 44%, 43% and 41%.

When the East Asian turmoil first broke out, mainland China, whose financial market was not open to the outside world, was not affected. On September 22, 1997, the World Bank held its annual meeting in Hong Kong, and Zhu Rongji was invited to give a special speech. He declared, "China will adhere to the position of not depreciating the renminbi and assume the historical responsibility of stabilizing the Asian financial environment."As soon as this remark came out, the leaders of the Asian countries present heaved a sigh of relief. The "Far Eastern Economic Review" said, "For the first time, China has demonstrated the demeanor of an economic power in the global economic crisis."

Wu Jinglian recalled that at that time, the decision-makers seemed to have not realized the seriousness of the impact of the financial turmoil on China, and fiscal and monetary policies were still mainly tight.He has repeatedly suggested to leaders to loosen monetary policy. But what happened next was completely beyond people's expectations.After entering autumn and winter, South Korea and Japan, the most economically powerful Asian countries, were also knocked down by the storm. On September 18, Yaohan, a star enterprise in the Japanese retail industry, filed for bankruptcy in the Shizuoka District Court. The austerity effect quickly spread to all industries, and eventually caused political turmoil.South Korea was even worse. The Korean won under attack depreciated by 50% in more than two months. The national economy was almost on the verge of collapse. The South Korean government had to ask for emergency assistance from the United States, Japan, and the International Monetary Fund. A record 55 billion U.S. dollars, and was forced to promise to implement a strict economic stabilization plan and reduce economic growth rate, economic autonomy was once lost.During the storm, the national unemployment rate was as high as 11%, and many large companies declared bankruptcy or fell into despair.

The financial turmoil ravaging neighboring countries will naturally affect China's industrial economy and people's mentality.Amid the global stock market crash, China's stock market, which was quite active in the past, fell into a downturn, and the Shanghai Composite Index fell to a low level of more than 1,000 points.The consumer market is even more sluggish.After several years of macro-control, the pressure on inflation has gradually been released, and the inflation rate has almost dropped to zero. However, the phenomenon of overcooled consumption has appeared at the same time.According to the report of the National Bureau of Statistics, by the middle of 1997, the total value of industrial inventory products in the country exceeded 3 trillion yuan, and the phenomenon of "structural surplus" appeared.Zhu Rongji said at a state conference that 95% of industrial products are oversupplied, "There are too many things, but there are not too many."Even more worrying is that the total number of workers laid off from state-owned enterprises reached a record 12.75 million in 1997, only a few of whom found new jobs.

At this moment, before the decision-making level is an extremely dangerous chess game: the domestic economy has experienced another Great Depression after 1988, and the sudden financial turmoil is a scene that has never been encountered since the founding of the People's Republic of China.Internal and external difficulties, this is the most dangerous moment since the reform and opening up. Wu Jinglian wrote worriedly in an article at the time: "The depth and breadth of the East Asian financial crisis are much more serious than originally estimated. At that time, none of us expected it." In particular, I did not expect Japan's economic and political crisis to be so profound... At present, there are many discussions in the world, and there is no conclusion, and we also need to prepare for the worst."

It was at this moment that "if you are not careful, you may fall into the abyss", Zhu Rongji showed the wisdom and courage of an outstanding leader. In February 1998, Zhu Rongji played his decisive and resolute style and urgently ordered the implementation of a "active fiscal policy". The first issue of 100 billion yuan of national bonds was invested in infrastructure construction.Wu Jinglian recalled: "Issuing national bonds needs to be approved by the National People's Congress. Before being approved, he ordered the list of projects to be listed first. We can't wait any longer. Throughout the Spring Festival, the people in the Development and Reform Commission did not rest at all. They re-submitted the projects that were originally reported. Queue up, quickly pull out the list for review, and then complete the legislative procedures as soon as possible, and dispatch it in place as soon as possible.”

Wu Jinglian was in favor of Zhu Rongji's emergency response, but he believed that it was obviously not enough to rely on investment alone.He is familiar with the economic history of New China, and he knows that relying on expanding investment to get rid of the crisis is the old road that the Chinese economy has taken for many years. If this is the only way, it may be effective in the short term. in the future.He wrote in a consulting research report to the central government, "If we only want to boost the growth in 1998, we will not only fail to promote efficient growth, but will also lead to serious negative consequences."

Therefore, the only way to get rid of the crisis is to rely on market-oriented reforms to activate the micro vitality of enterprises. On April 24, Zhu Rongji convened a dialogue between the new State Council and the Standing Committee of the Chinese People's Political Consultative Conference to discuss the reemployment of laid-off workers from state-owned enterprises.Tens of millions of laid-off workers have become a serious social problem, and vicious incidents have occurred in many places.At that time, the relevant departments formed a working opinion. There were three main measures. One was to control the layoffs of enterprises in a "planned" manner; The third is to strictly control the employment of migrant workers in cities, so as to free up jobs to absorb the laid-off workers of state-owned enterprises.Wu Jinglian believes that none of these methods will work, because the overall macro environment is deteriorating, and the "blocking" method cannot solve the problem.He pointed out that to solve the problem of laid-off workers, more "addition" must be done, and the development of small and medium-sized enterprises should be the focus of work to open up new employment opportunities.Jing Shuping, vice chairman of the Chinese People's Political Consultative Conference and chairman of the All-China Federation of Industry and Commerce, quoted data and said that in 1997, non-public enterprises absorbed a total of 3.53 million laid-off workers from state-owned enterprises. Therefore, creating a good business environment for small and medium-sized enterprises is the real solution. way.In terms of specific policy implementation, Wu Jinglian suggested the establishment of the National Small Enterprise Development Promotion Bureau, and at the same time, improve the financing, supply and marketing, and trading environment of small and medium-sized enterprises, and provide loosening and support for credit policies.Liu Minxue, the former director of the State Administration for Industry and Commerce, also proposed that "private small and medium-sized enterprises are the main channel for the steady flow of laid-off workers from state-owned enterprises."Dong Fu and other scholars also expressed similar opinions.

The opinions of Wu Jinglian and others were immediately approved by Zhu Rongji. He instructed the State Economic and Trade Commission to establish a small and medium-sized enterprise department as soon as possible to help them develop. At the same time, he urged commercial banks to implement loose lending policies for small and medium-sized enterprises.Wu Jinglian later said that in early 1998, one "release" (relaxing credit) and one "increase" (increasing support for small and medium-sized enterprises) played an important role in helping China's economy get out of the predicament.

In June, even the gods came to join in the fun. The Yangtze River Basin suffered a once-in-a-century flood, 29 provinces and cities were affected, 4,150 people died, and the direct economic loss was 255.1 billion yuan.At that time, the global public opinion declared almost in unison: If the RMB does not depreciate, China's economy will struggle. Just when the flood had just receded, Wu Jinglian went south to Zhejiang from June 30 to July 8, traveling 1,000 kilometers, and conducted field research in Shaoxing, Wenzhou, and Yiwu.After returning to Beijing, he quickly wrote "Assessment of the Economic Situation and Countermeasures and Suggestions" and submitted it to the State Council. In this report, he wrote in a tone of surprise, I visited some factories and talked to many local cadres and business leaders. Although I have been famous for the economic vitality of these places for a long time, I know their actual performance first-hand. In the future, I am still amazed by the performance it has achieved.I am deeply encouraged by the production development, product quality improvement speed of thousands of small and medium-sized enterprises in these places, and their international marketing capabilities. From January to May 1998, Wenzhou's industrial growth rate was 12%, which was much higher than the national industrial growth rate. Comrades in Zhejiang Province said that they had no major difficulty in completing the province's GDP growth plan of 10%.In my opinion, the reason is that a large number of non-state-owned small and medium-sized enterprises with strong vitality have become the main force of Zhejiang's economy. When the clouds were flying, Wu Jinglian's discovery undoubtedly impressed Zhu Rongji deeply, which strengthened his determination to support small and medium-sized enterprises through reform. On July 23, the full text of Wu's report was published in the "Decision Reference" of the State Council Research Office.According to Zhu Rongji's personal revision, the research office changed Wu's letter to Zhu into an editor's note and placed it in front of the main text of the report, which read: "The huge and untapped potential contained in small and medium-sized enterprises is obviously to overcome the current difficulties and move toward The strength that the new upsurge should rely on has strengthened our confidence in the bright prospects of our country's economic development." This issue of "Decision-making Reference" spread to Zhejiang, and the leaders of the province are also very excited, because in the past few years, they have been recognized by some people as "taking the capitalist road" because of their support for the development of private small and medium-sized enterprises. Now, this top The hat can be removed. In this report in July, Wu Jinglian also put forward his own views on the "renminbi devaluation" that was very popular at the time, and believed that "it is obviously not the time to actively devalue in the near future."The reason is: my country's exports to Asian countries are sluggish. The main reason is not that the RMB is strong and the competitiveness of Chinese goods is relatively weakened, but that the purchasing power of the importing countries is seriously insufficient. adverse political and political consequences.His suggestion is to improve foreign trade operations, increase tax rebate rate, increase export credit and export value-added, and improve product quality. While improving the ability to respond to the international financial turmoil, the central government has adopted strong policy measures to stimulate economic growth in the domestic market. From 1998 to 2001, the authorities issued 510 billion yuan of long-term construction treasury bonds, and major state-owned commercial banks issued the same amount of "supporting funds", mainly investing in infrastructure, such as highways, transportation, power generation and large-scale water conservancy projects. The decline in investment was stopped. At the same time, the central bank lowered deposit and loan interest rates seven times, increasing the money supply. While expanding investment, various market-oriented reforms are also advancing rapidly.Wu Jinglian believes that there are four most important items. One is to further accelerate the restructuring of property rights. In the next few years, hundreds of thousands of small and medium-sized state-owned enterprises and township enterprises were transformed into private enterprises with clear property rights and market orientation.The central government has repeatedly advocated the implementation of loose financial policies for small and medium-sized enterprises, and various provinces have successively established small and medium-sized enterprise credit guarantee companies and fund companies.Private investment increased rapidly. In the four years after 1998, the average growth rates of domestic private investment in fixed assets were 20.4%, 11.8%, 22.7% and 20.3% respectively. The second is to increase support for the foreign-oriented economy.The State Council successively issued policies to allow private enterprises to export on their own, which greatly stimulated the enthusiasm for foreign trade.After the East Asian financial crisis, the economic vitality of the "Four Asian Tigers" was severely damaged. Relatively speaking, the Chinese economy, which was not seriously injured, had the effect of "discovering the truth". "Prosperous scene. Third, in order to reverse the current situation of overcooled consumption, the central government decided to open up the real estate market. In July 1998, the State Council made a major decision that all party and government agencies stopped the practice of distributing welfare housing in kind for more than 40 years, and promoted the monetization of housing distribution.Almost at the same time, the People's Bank of China promulgated the "Personal Housing Loan Management Measures", allowing commercial banks to provide housing mortgage loan services.These two major measures directly stimulated the recovery of the real estate industry, which also opened up a real estate boom that lasted more than 10 years.Since the real estate industry has a wide range of correlations, it has a great impetus to resource industries such as steel and cement, and has indeed played a role in revived domestic demand. Fourth, the "state-owned economic layout adjustment" stipulated in the "Fifteenth National Congress" in 1997 was actively carried out. In the East Asian financial turmoil, many conglomerates in Japan and South Korea that pursued a mixed business model were in trouble one after another, especially the bankruptcy of South Korea's Daewoo Group, which greatly stimulated China.Since then, the strategy of "grasping big" has quietly shifted, and state-owned capital has gradually withdrawn from competitive fields such as textiles, home appliances, and food, and has instead formed a dominant and monopoly position in so-called strategic sectors such as resources, energy, and heavy chemicals. The state-owned assets in the field underwent a large-scale reorganization, forming the advantages of oligopoly management. This pattern was finally finalized in 2003.China's state-owned enterprise model has a new look, and its advantages and disadvantages have become a controversial topic. In this big regulation, some propositions that have been debated endlessly in the past few years have been frozen in the face of the crisis. No one thought that in 1998, when the world was full of devastation, China's economy would be able to "return to prosperity".As is often the case in global economic history, a major economic crisis is often accompanied by an economically powerful country. In the crisis-ridden East Asian financial turmoil, China was fortunate to play such a role. It not only was not knocked down, but even went against the current , It has become a trend of rising.It was during this period that China’s economy gradually formed a “troika”—consumption, investment, and export. For nearly 10 years thereafter, China’s GDP growth remained at a high level of 8%, while consumers The price index (CPI) has always been lower than 3%, walking out of a "perfect curve" of high growth and low inflation.