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By Root 1275 0

they asked that the bonds be loosened included the following. First, with regard to more autonomy in employment decisions, they demanded full right to hire and fire, with the exception of the appointment of the factory chief, who would be appointed by the superiors. They asked that the factory chief be granted permission to appoint his deputy, with a review of qualifications and approval by the authorities. Second, regarding the right to decide on budgeting and finance, they wanted the management to decide upon and distribute bonuses, without outside interference. Third, with respect to managing the business of the company, after the state-mandated production quota had been fulfilled under the central planning, they asked to be allowed to produce more with self-procured materials and to sell the products at the market rates. The local government immediately issued a response that was in full support of the requests. It said, “We will not be a new mother-in-law. We resolutely support reform; we support the loosening of bonds and the transfer of authority down the line.” A week later, the People’s Daily in Beijing carried a positive report on these fifty-five factory chiefs on the second page. The news that the managers had called for a loosening of the bonds was accompanied by a supportive editorial. Relevant authorities at the provincial level in Fujian were encouraged to respond favorably to the call.

For the first time, this “open letter” raised the subject of implementing a “responsibility system for factory heads/managers,” which was meant to

stimulate an active response from managers by transferring certain rights and responsibilities down to their level. This quickly became common knowledge around the country. On May 10, the State Council issued the

G L O S S A RY 2 . 2

Responsibility system for factory heads/managers

A system whereby only one person—the “factory head”—was in charge and was also the factory’s legal-person representative. Before this, each state-owned enterprise in China had two persons responsible for its operations. One was the secretary of the Communist Party Committee, and the other was the head of the factory (manager). The term “manager” is placed in parentheses because it was only gradually adopted as the proper term. This new system clarified the extent of responsibility between party representatives and actual managers.

“Provisional regulations on further expanding the autonomy of state-run industrial enterprises.” Not long after, it publicized the “Various decisions on the reform of urban economic systems.” Within the next two years, the State Council issued a number of documents promoting the responsibility system for factory heads/managers. These documents clearly stipulated that the factory head (manager), in industrial enterprises owned by all the people, was the head of the factory, the legal-person representative of the enterprise, and held all responsibility with regard to the enterprise. Further, they mentioned that he was in a central position and played a central role.

Throughout the Deng Xiaoping period, the government never stopped reforming the state-owned enterprises—whether it was to pursue the cheng-bao (contracting) system or the responsibility system for factory heads/managers. However, since property ownership was unclear, relying solely on “internal reform” to raise efficiency was bound to fail in the end. Reforms to save state-owned companies or enterprises were effective for

A flood of bicycles at dawn in Shanghai, 1991.

a while, but given the conditions later, they could only have a transient effect. Fortunately, the stumbling and erratic progress of these reforms gave breathing space to the emerging collective-owned township-and-village as well as privately-operated enterprises.

A Two-track Pricing Policy and a Trip to the Hainan Island

E

ventsthatoccurredontheHainanIslandinthe1980snowseemlikea fairytalefromthedistantpast.Peoplefindithardtobelievewhattook place there, except for those who actually participated in the events. The news of “victory on the