China Emerging_ 1978-2008 - Xiao-bo , Wu [22]
G L O S S A RY 2 . 5
Rotten-tail building
The term refers to real estate projects that have been put on hold or abandoned for a year or more due to legal disputes, substandard engineering quality, or the inability of the developers to continue the investment.
Massive fires occurred at the Great Hinggan Range in 1987, which first alerted people to the importance of environmental protection.
Hula hoops were the rage in 1989.
bankrupt.Theypackedfivethousand tons of equipment into boats, planes, and trains, and shipped them off to Tianjin. In Tianjin, a factory took the whole lot over and reconstructed it into a production line producing twothousandnewrefrigeratorsdaily. Similar phenomena can be witnessed everywhere in China. Throughout Europe, Chinese delegations can be seen with their hands clutching lists of things they want to buy, looking for second-hand factories and equipment. To European companies, this is a great blessing. If they do not sell the equipment, they would destroy it or let it sit idle. China is also an extremely seductive trading partner because it always pays in cash.” By the end of 1985, China’s negative trade balance stood at a record of US$13.78 billion, equal to about 52% of its exports.
Due to the economic overheating, enterprises were soon facing shortages of raw materials. In order toprotecttheinterestsofstate-owned enterprises, the government finally settledonapolicyknownasthe“twotrack pricing system.” This decision was to lead the Chinese economy into a cataclysmic upheaval.
What this two-track pricing system meant was that for any given raw material used in production there would be two prices. One was the “inside-the-Plan price,” controlled by the state and intended for state-owned enterprises. The other was the market-driven “outside-thePlan price,” intended for privately operated enterprises and collective
On May 9, 1986, the rock musician Cui Jian first sang “Without Anything” and brought the house down. This was the cover of one of Cui Jian’s bestselling tape.
Poetry was the primary medium through which the idealism of the 1980s was expressed. The modern poetry exhibition of 1986 was a major event.
enterprises. The inherent costs of the outside-thePlan price were far higher than those of the insidethe-Plan price.
The unintended consequences of this policy soon escaped the bounds of policy makers’ expectations. The two-price system for raw materials immediately evolved into a crazy game. “Resellers”—traders who could smell an opportunity a thousand miles away—instantly began a business to make profit from the discrepancy between the two prices. With a simple change of hands, the price of a ton of steel would double. Propelled by such exorbitant profits, all kinds of government-controlled goods and materials flowed to the market one way or another.Thecommandeconomy completely lost rigor or control. In fact, during the years in which China implemented a two-track pricing system, suppliers of state-allocated goods and materials had never fulfilled a single contract with the state. Any state-operated enterprise that honorably abided by state planning became instant road kill. State-operated enterprises did not benefit from this policy. Resellers profited most, and these included all kinds of government officials. It can be said that the actions of these officials were the last straw that led to the collapse of China’s planned economy.
According to a scholarly report studying the issue, in the year 1988 alone, the total margin between state-fixed prices and market prices exceeded RMB 150 billion. If the difference in preferential and non-preferential interest rates on bank loans and the exchange rate differential between the controlled rate and the market quotation are added, the sum amounts to over RMB 350 billion, or roughly 30% of the national income in 1988. Of this amount, 70% is believed to have flowed into private pockets.
At the first Great Wall Cup bodybuilding competition in May 1987, female contestants went on stage in bikinis for the first time in Beijing.