China Emerging_ 1978-2008 - Xiao-bo , Wu [33]
A folk storyteller at the “Majie storytelling fair,” Baofeng county, Henan Province, 1994.
A peasant worker washing the walls of a skyscraper in Shenzhen, 1997.
Mother and daughter putting on make-up in front of mirrors.
cleared up RMB 3.5 worth of debt. The knots were untangled and a problem that had wound itself around the central and regional governments for years was finally resolved.
To some extent, the appearance of a man like Zhu Rong-ji at this time was a necessity. On the one hand, the economy had taken off like a stallion after Deng Xiaoping’s tour to the south and his subsequent pronouncements. In 1991, the costs of construction projects underway in the country totaled about RMB 900 billion; by 1992, this number rose to RMB 2.2 trillion, and by May 1993, it had increased by another 69% on the previous year’s base. The central bank injected another RMB 50 billion of liquidity into the system; however, all regions were crying out for more money. On the other hand, supply and demand continued to be out of balance—the financial system was chaotic, and the reform of state-owned enterprises was not making substantive progress. The Economist warned in an article in 1992: “At some point in 1993, the vibrant Chinese economy will face overheating. The last time was in 1988, when China almost caught fire.” In the first half of 1993, prices of materials rose by 44.7%. Underground banks were extremely active, and the unofficial rates of “people’s financing” went through the roof. The official interest rate stayed low; therefore, those with connections, who could obtain money at an official rate, loaned it out and made an instant profit of 20–30%.
The first group of “peasant workers” graduating from the Shanghai Peasant Workers’ School on June 16, 1994. The surge of hundreds of millions of “peasant workers” into cities was the source of the cost advantage of “Made in China.” This labor migration is an important and often overlooked force behind the economic rise of China.
The annual movement of peasant workers from cities to their homes during the Spring Festival and then back to the cities has been called the “Spring Transportation.” It is a uniquely Chinese phenomenon. At train stations in cities like Guangzhou and Shanghai, workers have to frequently line up for several days and nights to board trains, meanwhile sleeping outdoors on the ground.
At the train platform: A tearful parting between a young worker from Shandong, Liu Yong, and his fiancé from Sichuan, Zhao Gui-hua.
A young boy from the countryside. Photographed in 1994, in Shuangbo County, Yunnan Province.
The train station in Shanghai before the Spring Transportation in 1995.
Young people head out to do menial labor, while older people stay home in towns and villages. Photographed in 1995 in Guang’an County, Sichuan.
After Zhu Rong-ji’s first battle of cleaning up the triangular debts was concluded, his second battle in the realm of finance began. He aimed at the illegal financing consortiums that were becoming increasingly uncontrollable. One company, for example, prided itself on investing only in high-tech companies. It raised altogether RMB 1 billion in less than half a year. More than one hundred thousand common people loaned it money for the interest rates they could earn, with some 93% of the investors being individuals. Soon, this consortium got involved in a Ponzi scheme, charging and paying increasingly higher rates of interest. It quickly came up against the wrong end of Zhu Rong’ji’s rifle, who was at the time also serving as head of the central bank. The person responsible was given the country’s severest punishment.
All reforms at any significant level eventually came back to the problem of how to divide the benefits. To those who were true reformers, this was the biggest test. Finally, in the face of tremendous opposition, Zhu Rong-ji proposed a reform in which tax revenues would be split between national and provincial governments. He went through the fiscal relationship