Chapter 28 1981: Revolution in the Cage

No one expected that the reform situation would take a sharp turn for the worse at the beginning of the year. Charles Abrams was the first American businessman to feel the chill.Just last year in Fortune magazine, he was described as "a successful representative of the new American dream of going to China to pan for gold."The 57-year-old New York real estate dealer established a trading company in China. After visiting China more than 40 times, he concluded that China is like a huge company.He was warmly received by many Chinese officials, from whom he obtained white papers from several state-owned enterprises, and even some preliminary orders worth tens of millions of dollars.Because of these contracts, he also managed to raise $25 million from the New York stock market.

But in the following year's "Fortune", Abrams became the unlucky guy in another bad news.According to the report, “Beijing has recently suspended contracts in many major industries on a large scale. This behavior has frustrated many Chinese companies and also caused losses to many American companies trying to make money here and start to move.” Charles Abrams is the first to bear the brunt Or, many orders and contracts he got turned into waste paper overnight. Shougang, which became China's first reform pilot enterprise three years ago, was one of the first state-owned enterprises to be hit.Over the past two years, Shougang's net profit has grown by an average of 45.32% per year, and its paid profits and taxes have grown by an average of 27.91% per year. The company is showing signs of prosperity.However, trouble soon arose. In April, eight units, including the State Economic Commission, the Ministry of Finance, the General Administration of Materials, and the Ministry of Metallurgy, jointly issued a notice to impose strict restrictions on the national steel production. nine.Factory director Zhou Guanwu had to order the shutdown of the No. 2 blast furnace, which had just started production.

This is not the only thing to hold your breath. At the same time that the production restriction task was issued, Zhang Peng, the deputy mayor of Beijing, rushed to Shougang again. He brought the city's instructions: due to the government's financial constraints, as the industrial enterprises in Beijing, As a "leader", Shougang's handed-in profit this year will strive to reach 270 million yuan, an increase of 9.3% over the previous year.Zhou Guanwu showed the mayor with a pen and paper, "Shake out all of Shougang's family assets, and the profit of the full account is up to 265 million yuan, which has been paid up. The enterprise retains no cents, and the welfare of the employees has gone to the sky. .” However, Zhang Peng also said frankly, “This year, the city is having a hard time, so I want to put pressure on you.”

Life will suddenly be difficult, which many people did not expect. After nearly three years of reform, China has completed a "baptism" politically, and the reformists have become the mainstream on the stage. The public trial of the "Gang of Four" has made the whole people deeply disgusted with left-leaning ideology. In Fengyang, Anhui Province, the joint production contract responsibility system began to be popularized on a large scale, and the enthusiasm of farmers for production was greatly mobilized. In cities, the pilot reform of state-owned enterprises expanded and expanded, and sporadic individual economies appeared in the field of retail business.According to the words of many observers at the time, "it is a rare good economic situation since the founding of the People's Republic of China."Accompanied by this, the central finance has experienced serious difficulties.The most notable sign is the huge fiscal deficit in two consecutive years in 1979 and 1980. According to the data disclosed in the "China Economic Yearbook (1981)", the deficit was more than 17 billion yuan in 1979 and more than 12 billion yuan in 1980.By 1980, prices were no longer stable, and commodity prices rose by 6%, of which 8.1% in urban areas and 4.4% in rural areas.

The reason is that the financial crisis is largely brought about by the reform process.In order to improve the living standards of workers and farmers, in the past three years, the central government has issued a series of "goodwill policies", including employee salary increases, bonuses, job placement, policy refunds, agricultural product price increases, and expansion of corporate and local financial power Wait.At the same time, the recovery of the economy will inevitably lead to the revival of infrastructure construction, and the scale of infrastructure construction in various places has continued to expand, gradually reaching the point where the budget cannot be controlled.On the one hand, the reform of delegating power and transferring profits to state-owned enterprises has reduced the revenue of the central government by a large amount. On the other hand, the overall effect of this reform is really unsatisfactory. The investigation team investigated the pilot projects of expanding enterprise autonomy in Sichuan, Anhui, and Zhejiang, and produced a survey report "The Beginning of Economic System Reform-Investigation Report on the Pilot Project of Expanding Enterprise Autonomy in Sichuan, Anhui, and Zhejiang", stating that the situation of the pilot reform is not optimistic On the one hand, decentralization is still limited. Enterprise power is still very small in terms of enterprise profit retention, raw material supply, labor management system, wage system, and unplanned production, and its role in invigorating enterprises is limited.On the other hand, the price system under centralized management and unreasonable price comparisons lead to wide disparities in the profit levels of various industrial sectors. The most typical is that the cost-profit ratio of the oil industry is 100 times higher than that of the coal industry, resulting in uneven competition and unfair competition. and compare with each other.The investigation team also found that in the absence of hard budgetary constraints, the pilot enterprises had behaviors such as "withholding tax profits, distributing costs indiscriminately, and distributing bonuses and subsidies indiscriminately."Hierarchical fiscal management has strengthened local interests, "a few areas have begun to show signs of 'separatism', which not only competes for profits from top to bottom, but also hinders horizontal economic linkages."The chaotic phenomenon of competition for raw materials between urban and rural areas and between regions, redundant construction, blind production, crowding out the big by the small, and crowding out the advanced by the backward has also developed.In foreign economic exchanges, there have also been phenomena in which bulls compete with each other, and "fertile water falls into other people's field".In response to this situation, Deng Xiaoping judged that "a great danger lurks in the economy. If it is not done well, an economic crisis may break out." Chen Yun, a veteran figure, even warned, "If the economic work is not done well, the Yichuan work will not be done well." Well, it will capsize."

Under such circumstances, the first macro-control after China's reform and opening up began in the third year after 1978. Deng Xiaoping's thinking was very clear: First, to protect the central government's finances, take emergency braking measures, comprehensively reduce unplanned investment, borrow local fiscal deposits, issue treasury bills to enterprises and local governments, temporarily freeze enterprises' own funds in banks, and tighten bank loans. In 1981, infrastructure investment decreased by 12.6 billion yuan compared with the previous year, and the accumulation rate dropped to 28.3%, keeping the annual deficit within 3.5 billion yuan.The direct result of these measures is that the enthusiasm for investment in various places has been greatly reduced, and the projects negotiated with foreign countries have been stranded one by one, so the scenes described in Fortune at the beginning of this chapter appeared.The second is to protect state-owned enterprises.

How to protect state-owned enterprises has been controversial.On the issue of the diminishing effect of the state-owned enterprise pilot program, there were two voices in the economic circles to respond.The promotion group, represented by Xue Muqiao, an economist who participated in the overall plan of the reform at that time, believed that the reform of delegating power and transferring profits had limitations, and advocated that the focus of the reform should be placed on the "reform of the price management system" and "reform of circulation channels", and gradually cancel Administrative pricing system, establishment of commodity market and financial market.In his memoirs published sixteen years later, he said that if he had followed his ideas, China's economic reform would have avoided many detours.Another opinion is that the reform of state-owned enterprises "must strengthen the centralization and unification" and "the final foothold is the centralization and unification", so Chen Yun put forward the theory of "cage and bird", to the effect that an enterprise is a bird A bird cannot always tie its wings and let it fly freely. However, the state-owned economic system is a big cage. No matter how the bird flies, it should not fly out of this cage.Chen Yun's discussion finally convinced Deng Xiaoping and the central decision-makers that the "cage and bird" theory dominated the thinking of enterprise reform throughout the 1980s, and the reform of state-owned enterprises became a "reform in a cage."

Starting from this theory, looking at the situation in 1981, the conclusion is very easy to draw: the reform of state-owned enterprises must be carried out step by step under the control of stability and the central government, how to reform can be "crossing the river by feeling the stones" and taking one step look at one step.The most urgent task now is to deal with those "birds outside the cage" who do not obey orders and cannot be controlled, and it is they who are disrupting the entire economic situation. The judgment of the situation and the resulting directional decisions directly lead to a major turning point in the reform policy.

In fact, before the beginning of 1981, the direction of the policy was still moving towards encouraging the individual economy.But by 1981, there was a sudden 180-degree change in caliber. In January, the State Council issued two emergency documents "Crackdown on Speculation and Smuggling". Industrial products are allowed to be sold.”, “Rural communes and brigades can traffic in the second and third types of agricultural and sideline products that are redundant after the completion of the state procurement tasks and fulfillment of the negotiation contract by the own commune and nearby communes. Agricultural products.", "Private purchase of large vehicles such as automobiles, tractors, and motor boats is not allowed to engage in trafficking." Then, on the 30th, the State Council issued a document "Several Regulations on Adjusting the Industrial and Commercial Tax Burden of Rural Cooperatives and Team Enterprises", clearly stating that "In order to limit the competition for raw materials with large and medium-sized advanced enterprises, the provisions that cooperatives and brigade enterprises are exempted from industrial and commercial tax and industrial and commercial income tax for two to three years in the initial stage of establishment are changed to different treatment according to different situations... Those who compete with large advanced enterprises for raw materials , Cooperatives and brigade enterprises with more profits, no matter they are new or existing enterprises, shall be levied industrial and commercial income tax according to the regulations." These two documents have a strict tone and detailed measures, and they are required to publish reports on the front pages of major media .For a time, "cracking down on speculation" became the most important economic movement of the year.

These two severe documents of the State Council—they were not formally abolished by the State Council until July 1986. If interpreted from a policy perspective, they are not groundless. For this reason, it is necessary to refer again to the State Council’s announcement in July 1979. "Regulations on Several Issues Concerning the Development of Community and Team Enterprises (Trial Draft)".Through this comparison of documents, we can see that in the early 1980s, the central government defined the roles and functions of private enterprises, especially township enterprises that sprouted in the countryside.

Generally speaking, the "Regulations on Several Issues Concerning the Development of Communal and Team Enterprises (Trial Draft)" encourages the establishment and development of commune and brigade enterprises, and the regulations also put forward very specific guiding directions.However, in the details of the charter, traces of the planned economy can be clearly seen. From the strategic thinking of development, it can be seen that the central government's development of commune and brigade enterprises is mainly to solve rural problems.In the second chapter of this regulation, "Development Policy", it is clearly stipulated that communes and brigade enterprises must adhere to the direction of socialism, actively produce products needed by society, mainly serve agricultural production, serve people's lives, and also serve large-scale industry. , For export services.The development of commune and brigade enterprises must be tailored to local conditions, according to local resource conditions and social needs, from small to large, from low-level to high-level.Do not engage in "cooking without rice", do not engage in processing industries with excess production capacity, do not compete with advanced large industrial enterprises for raw materials and power, and do not destroy national resources. In the above-mentioned articles, "mainly serving agricultural production" specifies the industrial direction and product direction of commune and brigade enterprises, while "not competing with advanced large industrial enterprises for raw materials and power." limits the radius of commune and brigade enterprises' growth.Therefore, when after nearly two years of development, commune and brigade enterprises suddenly grew vigorously outside the cage and began to compete with the state-owned enterprises inside the cage for market and raw materials in certain fields, these restrictive clauses in the regulations were activated. "The days in 1981 were very sad." Many years later, Lu Guanqiu of Xiaoshan recalled that the price of steel was increased by 1.3 times, the price of coal was increased by 5 times, and the cost continued to rise. It was suspended for only one reason, "According to the regulations of the superior, we can no longer enter the products of township enterprises." Lu Guanqiu wanted to ask for a college student in the university. At that time, there was only one high school student among the hundreds of people in the factory, let alone an engineer. .The person from the university distribution office looked at him as if he saw an alien: "Did you come to the wrong place?" In Daqiuzhuang, Tianjin, Yu Zuomin, who was running a prosperous cold-rolled strip steel factory, also came under pressure from above. His steel factory clearly competed with state-owned enterprises for raw materials, and the steel it produced was Disturbing the planned market for steel is the first thing this movement will strike.Soon, the county dispatched an investigation team.Thus, a dramatic scene appeared. First, the tough Yu Zuomin was very resistant to the investigation team. The members of the investigation team said to him: "You have done nothing wrong, and you are not afraid of ghosts knocking on the door." He, who is very gifted in language, immediately retorted: , "Although you have done nothing wrong, but the old ghost is knocking on your door, can life be easier?" Under his leadership, the attitude of the villagers in Daqiuzhuang towards the inspection team can be imagined. Every day, old men come with sticks. Asked the investigation team, "We just had a few good days, and you came, why didn't you come when we were hungry?" There were also young men who came to "bomb", "We have been single for many years, and we just found a partner. If you can't find this daughter-in-law, you will be responsible!" The investigation team fell into an unbearable "people's war", and finally couldn't live in Daqiuzhuang, so they had to move to the countryside. Such struggles and wrestling are going on one after another in various places.Regarding factories like Lu Guanqiu and Yu Zuomin that have emerged from the countryside, the government’s attitude is very clear: please continue to develop locally, provide farmers with a radius of about ten kilometers with necessary labor farm tools, and solve the problem of idleness in rural areas. In addition to the employment problem of the population, don't go to the city—or to grab food in a cage.In order to prevent the urban population from being "harassed" by the rural population, where the educated youths who returned to the city had been under great employment pressure, on December 30, the State Council even issued a notice, "Strictly control the rural labor force from entering the city to work, and control the agricultural population from turning into non-agricultural population." This series of measures caused the fledgling township enterprises to suffer the first cold snap, and almost all the enterprises established around 1980 saw their economic indicators decline or stagnate in 1981. Adjustments to the macroeconomy are not just changes in economic policies, but also involve ideological debates.People who were already quite disapproving of the loose policy found a weapon to attack.And the first target they attacked was the newly ascendant special zone in the south. Ren Zhongyi, the first secretary of the Guangdong Provincial Party Committee, was the one under the most pressure.At the beginning of the year, the central government held a working meeting and informed the heads of all provinces and regions in the country that they must all attend. The central topic of the meeting was to discuss the adjustment of the national economy. During the meeting, someone distributed a letter about economic adjustment written by four young people to the central leadership. , the letter put forward the 12-character policy of "slowing reform, suppressing demand, readjustment, and abandoning development".Ren Zhongyi, who has an upright personality, certainly cannot avoid this challenge. He spoke at the meeting: The intention of the letter is good, but the prescription is wrong.What is "slow reform"?It is precisely because of conservative thinking in the past, unwillingness and daring to carry out reforms, and the pace of reforms being too slow, that many economic problems have arisen.suppress demand?It is inevitable and normal for the needs of the society and the material and cultural needs of the people to continuously increase. We can only actively solve them and satisfy them step by step. Especially under the circumstances at that time, we should no longer emphasize the suppression of the needs of the masses.For the vast majority of the masses, their lives are already hard enough, and their needs cannot be suppressed any longer.Adjustment is necessary, but it is not right to "give up development".The central government implements special policies and flexible measures for Guangdong, and establishes a special zone in the hope that Guangdong will take a step ahead and develop faster.If we follow the "12-character policy", especially "slow reform" and "abandon development", how can Guangdong be one step ahead? Ren Zhongyi's remarks did not match the tone of the meeting, and some even ran counter to it.Everyone turned their attention to Deng Xiaoping.Deng continued to smoke, but kept noncommittal to Ren Zhongyi's speech.Many years later, Ren Zhongyi told reporters who came to interview this period of history, "Guangdong had to bear tremendous pressure to fight a bloody road. At that time, Guangdong's reform and opening up had to be explored, and it had to face some confusion and even accusations. The Guangdong Provincial Party Committee Unswervingly clear up misunderstandings and insist on opening up to the outside world." After he returned to Guangdong, he only made some "articles" in adjustments, and there were no major changes in the SAR and related opening policies. Compared with Ren Zhongyi, Xiang Nan, who has just taken power in Fujian, is in a more delicate situation.Xiang Nan, who was over sixty years old, was reused on the recommendation of Hu Yaobang. In the autumn of 1980, he was sent to Fujian as the secretary of the provincial party committee. His gift to Fujian was that the central government listed Xiamen as the first batch of coastal cities to open to the outside world.Xiang Nan has always acted like a thunderbolt, blowing a new wind into Fujian, which has been sluggish for many years. In terms of opening up to the outside world, Xiang Nan's actions are no smaller than Ren Zhongyi. Soon after he took office, he asked the central government for special policies: The attractiveness of foreign capital is not as good as Guangdong, let alone Hong Kong and Macau.Therefore, Fujian should adopt more favorable and attractive policies than Guangdong, Hong Kong and Macao.Specifically, there are "three things to do", that is: if both the foreign businessman and us are beneficial, we will do it; , but we have to do what can solve our employment and other problems.The State Council is requested to approve it in principle. In June 1981, Fujian Hitachi TV Co., Ltd., a joint venture between Fujian and Japan's Hitachi Corporation, officially started production. This was the only Sino-foreign joint venture company that started construction in China that year.Before it was put into production, domestic public opinion was already tightening. Discussions about whether this company should be built have been quarreling from Fujian to Beijing. Some people characterized it as a "colonial factory".The Fujian provincial government once decided to let the company temporarily "suspend for a while" and wait for the political wind to make a decision. Only Xiang Nan stood alone and insisted on "going up as soon as possible."Japan's "Yomiuri Shimbun" reviewed the matter two years later and said, "Xiang Nan used his official hat to cut the ribbon for the production of Fujian Hitachi." On the issue of developing the private economy, Xiang Nan was also much more open-minded than his contemporaries. He was one of the few officials who saw the bright future of township enterprises in 1981.He said, "How can the 25 million people in Fujian get rich so quickly? Agriculture and industry can't pay off quickly, so what is the way out? The way out lies in the development of commune and brigade enterprises, and diversification. The commune and brigade enterprises are our The place of hope." When all kinds of brakes sounded everywhere, Xiang Nan publicly stated his position on various occasions: "Should the commune and brigade enterprises be up or down? I said yes, we must go up firmly and bravely, and we must overcome all obstacles to go Forward!", "Township enterprises must be treated more closely than their own sons!" Thanks to the tenacious persistence of Xiang Nan, Ren Zhongyi and others, the economies of the Special Economic Zone and South China have not been fatally impacted by this macro-control, and these provinces have finally become one of the most active areas in the private economy in the future. In 1981, few new projects were reported.Even the few large projects started in the past two years were met with unprecedented doubts at this time. This year, the only one that can be called "big money" was CITIC Corporation founded by Rong Yiren in 1978. This "China's first red capitalist" and vice chairman of the National Committee of the Chinese People's Political Consultative Conference finally dug the first "big gold mine". In the past two years, Rong Yiren, who is in his 60s, and Li Wenjie, a director in his 70s, received various foreign guests every day. From 1979 to 1981, the whole company received more than 6,000 foreign businessmen. US Secretary of State Henry Kissinger, as CITIC's adviser, tried his best, but only three or four of the projects negotiated by CITIC were worthless.One day, Rong Yiren chatted with Wang Jianshi, a director of CITIC who was born in a businessman, and suddenly came up with the idea of ​​"borrowing local projects to issue bonds to raise funds".Rong, who has been the vice minister of the Ministry of Textiles for more than ten years, remembers that there is a Yizheng chemical fiber project in Jiangsu, which was originally a large project of 22 key national projects. Production, with a total investment of 1 billion yuan, is about to be dismantled due to insufficient funds, and CITIC is about to take over.Rong Yiren thought of a way to raise funds by borrowing money. He proposed to the State Council to revive the Yizheng project by issuing bonds abroad. "New China has always had a proud record, that is, it has neither domestic debt nor foreign debt. If Mr. Rong wanted to borrow money from foreigners, he first had to face ideological difficulties." Chen Guanren, the author of "Rong's Father and Son", recorded at that time Many people went to the State Council to sue CITIC for the controversy. "Socialism borrows money from capitalism. What kind of economy is this? What does CITIC want to do?!" If it were to be discussed at the political level, Rong Yiren would definitely not be able to gain any advantage, not to mention that the overall climate at the time was not conducive to his motion at all.Fortunately, with his deep connections, he quickly sought the support of the main leaders, and the State Council agreed with CITIC to issue 10 billion yuan of private placement bonds in Japan. Rong Yiren completed all the preliminary work non-stop for more than half a year. It is no exaggeration to say that his personal credit and the political status of the vice president of the country have become the most important guarantees for this fundraising.In January 1982, CITIC bonds were successfully issued, and 30 Japanese financial institutions subscribed for the bonds with a term of 12 years and an annual interest rate of 8.7%. Three years later, the first phase of Yizheng Chemical Fiber Project was completed and put into production.CITIC's approach is known as the "Yizheng model", and after this battle, Rong Yiren and CITIC finally found a feeling. "The capital is back." Rong Yiren later told the American reporter in a nutshell. Due to the tightening of the entire policy, 1981 naturally became the low tide year for foreign capital to enter China.Only some sporadic joint venture reports appeared in the newspapers.Coca-Cola opened its second bottling plant in Guangzhou.Two years after the old rival entered China, Pepsi also came to China.At that time, Li Wenfu, the business representative of PepsiCo in China, rode a bicycle across the Luohu Bridge to Shenzhen to contact the Shenzhen Special Economic Zone for joint venture matters.Negotiations took little effort, and the two sides hit it off immediately. PepsiCo invested 60%, Shenzhen 40%, and built a Pepsi bottling plant in Shenzhen. One year later, the factory covering an area of ​​more than 13,000 square meters was officially put into operation.There were only 110 employees at the time. Germany's Siemens also wants to test the waters in China, but the approach is obviously much more cautious. It did not rush to open a branch or invest in building a factory in China, but quietly started its business in the form of an informal office.At the age of 33, Bei Yinsi was sent to Beijing from Hong Kong, and later became the president of Siemens China, he said humorously, "I used to look at Beijing with a telescope in Hong Kong before, but I have never been here, and I don't know what Beijing is like." look." Because the company has not yet registered in China, Bayins cannot do business directly, nor can it go to the factory to meet customers directly.Every morning, he goes to the negotiation building in Erligou near the Beijing Zoo. There is a counter there, and there are many envelopes for different companies in the counter.If there is an envelope from Siemens, he will open it, and there will be demands for various commodities inside, asking Siemens to provide quotations, and then he will transfer the information to Siemens’ Hong Kong company, who will provide specific quotations and product catalogs, Then, Bei Yin Si can continue to negotiate.These negotiations were mainly carried out in Erligou. The targets of the negotiations were China's machinery import and export companies and some military hospitals. The factories that needed equipment actually didn't know how to deal with Bayins.Bayins’ business is doing very well. In the first year, it negotiated a business of about 50 million marks. Three years later, Dr. Kask, the global president of Siemens, came to Beijing. Since then, Siemens has truly entered the China. At the University of Chicago, Zhang Wuchang, a Hong Kong scholar who watched three workers mending a hole in Guangzhou two years ago, published a paper titled "Will China Go to "Capitalism"?" ".In this academic article full of various conclusions, Zhang Wuchang, who will be very popular in the Chinese economics circle in the future, tried to argue that "China will eventually embark on a road close to the private enterprise system." He believes that "Deng Xiaoping obviously wanted to modernize Insist on opening the door to China for what is needed—introducing scientific and technological knowledge, foreign exchange, and capital. Gradually absorbing knowledge from abroad will help to lower the cost of information about the economic system in general...The pragmatists in power in China today clearly believe that, as long as With sufficient funds and technology, all economic mistakes under communism can be overcome.” He then boldly wrote: “I speculate that China will adopt a property rights structure similar to private property rights in time... I can infer that , in the future, labor, production tools, machines, buildings, and even land will have a certain degree of private use and transfer rights." Zhang Wuchang also said in the footnotes of the paper: Even if China allows the transfer of resources and private ownership in the future Usufruct, China may and will never use terms like "capitalism" or "private property rights" to describe its economic system.More than ten years later, it was discovered that he was half right. Around 2000, "private property rights" became a term that was used publicly. These voices of Zhang Wuchang are very bold, so he will become famous in China in the future.However, in 1981, he seemed very lonely. The air of austerity still pervaded the entire country. Newspapers were reporting the news of the crackdown on "speculation" in various places every day.