Chapter 228 Where Will the Money Come From: Transportation Development is Essential
The dining table was truly quiet, with only the sound of cafeteria staff bringing hot dishes to the table.
To be honest, this meal wasn't luxurious. There were no abalone, lobster, or any other fresh seafood, no bear paws, bird's nest, or shark fin. There wasn't even any sea cucumber.
The dishes are all made with common ingredients like chicken, duck, fish, and meat, but they are prepared in a more refined way. For example, there are dishes like braised chicken with pork belly, eight-treasure duck, four-happiness meatballs, and peacock fish. They are presented in a way that is both visually appealing and fragrant.
Paired with boiled cabbage in clear broth, shepherd's purse mixed with dried tofu in a pagoda shape, stir-fried pea shoots, and pickled radishes, it's truly... well, for someone without much cultural knowledge, all they can say is that it has both meat and vegetables.
Wang Xiao's eyes lit up when she saw the braised turtle served on the table; she had never eaten this in Moscow.
Secretary Fang was still pondering: "Giving loans to farmers? We can consider it."
In fact, rural credit cooperatives do offer loans to farmers.
For example, if a farmer wants to start a livestock business, he can apply for a loan.
As for mortgages, although they don't exist in China right now, Secretary Fang knows that it's a very common form of lending internationally. It's fair to say that without mortgages, people in many countries around the world wouldn't be able to own their own homes.
It's actually a good thing for farmers to take out loans from credit unions to build houses.
This is also a good thing for township enterprises.
They took out a loan, which means they need stable employment to repay it on time.
This will likely reduce staff turnover and frequent job-hopping, helping township enterprises maintain a stable workforce and ensuring sufficient manpower to handle orders.
As for whether credit unions can issue mortgages, well, rural credit unions have a more flexible business model than banks.
Some things are one thing on paper, but quite another in practice.
The farmer said he wanted to take out a loan to raise livestock, and he would repay the loan regularly. The credit union wouldn't keep an eye on whether he actually set up the farm.
The provincial leaders' affirmation made the heads of state-owned factories and collective enterprises present feel a pang of envy.
"Oh, the countryside is still the best. Look, every household has a homestead, and they can build a house whenever they want. It's so comfortable. Now, the city really can't compare to the countryside."
Wang Xiao was particularly annoyed by this kind of talk. Right now, changing from an agricultural to an urban household registration costs a lot of money, and agricultural household registration doesn't even allow you to take the civil service exam, so you can't become a government official at all. It's so enviable.
Her smile remained unchanged: "The factory can do it all. We can pool our money to build a house. Building a house is much cheaper than building a detached house in the countryside. The company contributes some, and individuals contribute some. It's so much better to build a new house."
Secretary Fang also stated: "The country encourages various organizations to build housing through collective fundraising. If people live comfortably, their enthusiasm for work will also increase."
The bosses laughed it off, not really keen on taking the bait.
It's supposed to be a fundraising effort, but the company is still footing the bill the majority of the way. Where did all that money come from?
Secretary Fang was well aware of the situation and did not force the entrepreneurs.
Wang Xiao said seriously, "Actually, it's not that we can't build houses by raising funds. Even if the employees have to pay for everything, they might still agree."
The general manager of the provincial garment company waved his hand: "Oh dear, our employees are different from yours. Let me put it this way, we have to call our employees our ancestors!"
The whole table was filled with laughter.
Wang Xiao laughed, "No, don't try to fool me. I'm also from a steel factory family. Seriously, if you really want to raise funds to build houses for the employees at cost price, there will be plenty of employees willing to pay. Hey, leaders, let me finish. I'm from a big factory family, so I can probably understand why you disagree."
She tapped the table lightly with her finger. "It boils down to four words: not wanting to be taken advantage of. People who participate in the full-funding housing allocation are worried that they will be excluded from the list if there is another welfare housing allocation later. As long as this is prevented, and the unit signs an agreement with the employee guaranteeing that this collectively funded housing will not affect his (or her) eligibility for housing allocation again if there is another welfare housing allocation, then employees will naturally dare to participate in the collectively funded housing allocation."
She emphasized, "It can't always be the squeaky wheel that gets the candy."
She really hated that kind of distribution method that bullied honest people.
If those who follow the rules always suffer losses, it only means that the rules are worthless and the people who made them are incredibly weak.
Most of the bosses shook their heads.
Oh dear, things in government units are quite complicated.
Wang Xiao smiled and said, "What's so complicated about this? It's like farmers have homesteads and can build their own houses and live in apartment buildings. The company also provides land. If things continue like this and people still can't get housing, then when the employees complain in the future, you'll have something to say, won't you?"
One manager analyzed seriously: "This is really different from farmers building their own houses. If we want to control the cost of building houses so that the factory workers can raise the funds, the location definitely won't be good. In the countryside, when you build a house on your own homestead in the village, it's convenient no matter what. If the location of our collectively funded housing is too remote, it will be inconvenient for the workers in every way. Not to mention, how will they get to work? It will also be a big problem in their daily lives."
Wang Xiao laughed: "With more people, the supporting facilities will be built. One unit has few people, but there are so many units here today. If you all work together, you can build a large workers' community. I can guarantee right here today that on the day the buildings are completed, I will open a supermarket in your community. I guarantee that everyone can buy whatever they want for their daily lives at the supermarket."
Secretary Fang immediately chimed in, "I think this is a good idea. We'll coordinate with the city later to see which area of land is suitable for you."
Among the CEOs at the dinner table, some actually started to seriously consider this question.
Having more people does indeed allow you to secure more resources.
Putting everything else aside, with so many people and so many organizations, coordinating bus routes is much easier. It saves the trouble of having organizations arrange special buses to pick people up.
If we can take this opportunity to solve the problems of transportation and living facilities for the collectively funded housing, then we can truly say we've hitched a ride on a wave of good fortune.
Next time, if their unit is working alone, the planning won't be so easy. The government can't just re-plan everything for one unit.
Seeing this, Wang Xiao smiled broadly: "I'm just waiting to open the supermarket in the new community!"
The atmosphere at the dinner table became a bit more lively. Everyone talked about houses and transportation, and the main topic was that the roads are too narrow now, there are too many cars on the road, and the traffic jams are really unbearable, especially during peak hours.
As they were talking, someone suddenly remembered and asked, "Hey, Secretary, I heard that Jinning is going to build a subway, right? When will they start? Wow, once the subway starts operating, it will be very fast and convenient. I rode the subway in Shanghai and it was great; it's faster and more comfortable than the bus."
Wang Xiao's ears immediately perked up.
subway.
Unfortunately, Secretary Fang shook his head: "Oh dear, I have indeed been paying attention to this. It was progressing very smoothly in the early stages, but now all infrastructure projects have stopped, including the subway, and approvals are not being granted."
Everyone looked disappointed. Having a subway makes all the difference; it feels like a big city now.
Some of the people present had been to Moscow and still fondly remember the Moscow Metro.
The meal consisted of talking, eating, and drinking coconut juice. Secretary Fang said everyone could drink alcohol as they pleased, but the men at the table collectively said that drinking coconut juice would be fine.
Someone even joked, "Secretary, you said we're family, so family doesn't need to drink."
Ah, look, what's drunk at the table depends on what the person in charge likes.
We talked about eating and drinking for about an hour before dinner finally ended.
Wang Xiao ate her favorite braised turtle, showed off her boneless duck feet, and drank a bowl of chicken soup. She was truly full.
After putting down their chopsticks, everyone stayed, gathering in small groups to chat.
Why do business people fight tooth and nail for a ticket to a high-end social gathering place? It's because once you're in that circle, you'll have more business opportunities than others.
Of course, the bosses were also surprisingly well-mannered this time; none of them indulged in a cigarette after dinner, living like gods.
Even those who couldn't resist the urge to smoke would consciously go outside for a smoke.
So despite the large number of people inside, the room wasn't smoky or chaotic.
Secretary Fang beckoned to Wang Xiao: "Come on, President Wang, let's have a chat. Communicating with smart and insightful young people like you makes me feel like my mind is sharper."
Wang Xiao walked over with a smile, sat down next to her, and said with a smile, "It's our good fortune to be able to listen to the leaders' teachings."
“What advice could I possibly give you?” Secretary Fang smiled and gestured to her. “Tell me what you think. You’re a young man with sharp eyes. You’ve been away for more than half a year. Now that you’re back, you should have some ideas, right?”
There's no need to worry about anyone intruding and disturbing you from this corner of the sofa.
If you don't even have this much discernment, you wouldn't be sitting in this seat today.
Wang Xiao continued, "You mentioned the subway earlier, and I do have some thoughts on that. The government is currently controlling overheated investment and has halted infrastructure projects. But personally, I think that if the government can stop, Jiangdong Province cannot. Precisely when others are not moving, we should act quickly and get the infrastructure done ahead of time so that we can have a competitive advantage later."
"For manufacturing to develop, transportation is key. Jiangdong has a natural advantage because it is located by the river and has direct access to the sea. However, if road construction doesn't keep up, that advantage will be diminished."
“Last year during the Spring Festival, I went to Xiaozhou on business. There are villages in Jiangbei Province that have raised funds to build roads so that vehicles can drive there and they can get orders to work.”
"So they are very enthusiastic about road construction and volunteer to work."
She said this because, so far, in rural areas, tasks such as road repair and dike reinforcement can be assigned as tasks, and the government doesn't have to pay wages, only provide meals.
"The country is now talking about urbanization. I understand there are two ways to achieve urbanization. One is the urbanization of large cities, which leads to the rapid hollowing out of surrounding small cities and rural areas due to the siphon effect. On the surface, this does seem to concentrate resources on major projects. However, the problems of large cities are also very serious, resulting in many social issues. The other way is the urbanization of rural areas, where rural infrastructure catches up, transportation is convenient, and medical care and education are not much worse than in the city."
"The second type is what I saw in Romania before. Before their political reforms, the construction of their small towns was really outstanding. They were very beautiful and had complete supporting facilities. However, because their industry has shrunk significantly in recent years, people have been forced to migrate to other places to find work, so small towns and rural areas have indeed declined quite a bit."
"So, I think the key to keeping small towns going is industry. Only when there are factories in the area, and the factories can get orders, can people stay."
"And people are always the key to development."
“Our Jiangdong Province actually has this advantage. Because our township enterprises are well-developed, they can be developed in a regionally concentrated manner.”
The concept she proposed was the e-commerce village that would become very famous in the decades to come, originally called Taobao Village.
These villages and towns can almost monopolize the entire industry from a single location.
For example, the mention of "horse-face skirt" immediately evokes the image of Cao County.
Take, for example, snow boots, which are associated with the village of Sangpo, a place of mixed reputation.
These things can actually be planned in advance.
Once your industrial chain is complete and scaled up, orders will naturally come to you.
Even without e-commerce platforms now, it doesn't prevent them from becoming a well-known brand in the industry and selling their products worldwide.
Wang Xiao shared her thoughts: "To achieve this, and to enable people to find jobs near their homes, we need policy support. At the very least, the roads and bridges need to be repaired."
Fearing she wasn't convincing enough, she pressed on, saying, "If our manufacturing industry wants to maintain its advantage, we must maximize our transportation advantages."
"Our biggest competitive advantage is that our labor costs are lower compared to those of developed countries and regions."
"But our labor costs are relatively high compared to the central and western regions. The wages in our township enterprises can be more than double."
“In labor-intensive manufacturing, labor costs are the biggest expense. If there is no absolute advantage of convenient transportation to reduce transportation costs, then capital will definitely be willing to go to places with lower labor costs.”
“These places face greater pressure to attract investment, and local governments are able to offer more favorable policies to attract investment.”
"In this situation, if we want to retain capital, we have no choice but to use both soft and hard tactics."
"The 'soft' aspect refers to the government's excellent service and harmonious relationship between government and businesses. The government can relieve enterprises of their worries and provide policy support and interpretation. Enterprises don't need to worry; once they come here, they become like Tang Monk's flesh, everyone wants a bite."
"Hardware refers to infrastructure, and the most basic of these infrastructures is transportation."
Secretary Fang shook his head helplessly: "What you've mentioned is something the province has also considered. But the problem lies in the finances, which is a major challenge. For example, why was the subway project in Jinning halted? Once the fiscal policy changes, raising funds becomes extremely difficult."
Ivanov's ears stood up high.
Outsiders might not notice, but he and Wang had a particularly good understanding in this regard.
When the people at the dinner table were talking about the subway, Wang was clearly paying attention.
"Speaking of raising funds for subway construction, I actually have a little idea. The government could actually issue bonds to raise funds for public construction investment."
Wang Xiao explained with a smile, "Many people have some spare cash these days, but they're just sitting there, afraid that prices will rise and their money will lose value. To be honest, after the Spring Festival last year, many employees from our steel plant came to me asking me to issue shares so they could buy them. I told them I couldn't do that and to put their money in the bank. They said bank interest rates were low and they hoped for something a little higher than bank interest rates."
Secretary Fang listened attentively without offering any opinions.
She strongly suspected that the steel mill workers' refusal to deposit money in the bank was not simply due to low interest rates, but rather because of a bank run crisis.
Last spring, due to overheated investment across society and irregular fundraising by enterprises, banks faced difficulties in attracting deposits, leading to a payment crisis. This caused panic among depositors, who were afraid to deposit money in banks for fear of not being able to withdraw their funds.
Wang Xiao was naturally aware of this matter, but it was not appropriate to bring it up at this time.
In her view, the government was largely responsible for last year's payment crisis, and the banks were merely scapegoats.
The reason why banks are experiencing a payment crisis is because of the cleanup of triangular debt.
This matter not only tied up a lot of the bank's funds and manpower, but also forced the bank to inject funds into a bunch of companies that had no market competitiveness and should have been eliminated directly in order to maintain stability, resulting in a large number of bad debts.
Banks aren't mints; they don't let their money flow out uncontrollably. So where do they get the money to pay out depositors?
However, the banking crisis may also be an opportunity for local governments.
Wang Xiao said seriously, "I think that rather than letting people hold money in their hands and not know how to invest it, and end up being scammed by illegal fundraising, it would be better for the government to step in and help everyone build an investment channel."
Secretary Fang frowned and shook his head regretfully: "It's not possible to issue them now. Two years ago, the policy allowed local governments to issue local bonds to raise funds for bridge and road construction. But last year, the State Council was afraid that local governments wouldn't be able to fulfill their obligations, so this practice is no longer permitted."
Wang Xiao had to admit that she genuinely didn't know this before.
The problems caused by insufficient attention to finance are now fully exposed.
So now her regret is genuine: "Oh dear, I thought I was a little clever, I was even hoping to take this opportunity to get an order."
Secretary Fang laughed and said, "You have great wisdom, not just cleverness. What kind of orders are you trying to secure? You're not planning to have the construction team organized by the steel mill dig up the subway, are you?"
Wang Xiao chuckled: "Then I'll have to bring people over from Moscow. They have experience digging subways. I can't do that; I originally wanted to sell the rails."
"Selling railway tracks?" Secretary Fang raised his eyebrows in surprise. "When did you get into this business again?"
Wang Xiao shook his head and laughed: "Hey, not really. It's that Russian company that's being privatized, right? Ivanov is taking over the Kuznetsk Steel Plant. They specialize in making rails, the quality is good, and the price is cheap."
Secretary Fang then nodded: "Oh, I see."
She didn't say anything pretentious like, "The factory was auctioned off, so how come Ivanov got it?" As the top official in the province, she couldn't possibly adopt that kind of naive and saccharine persona.
She could only sigh, "Kugang's rails are indeed excellent. They were used extensively when the railway was being built in the 1950s, and they're still in good condition. You young people are truly remarkable; you managed to acquire such a large and established company so easily."
As the top official in Jiangdong Province, she naturally had a deep understanding of the situation in Russia, an important trading partner of the province.
She even knew the location of the Kuznetsk steel plant and its approximate production capacity.
Wang Xiao sighed, "Oh dear, all the glamour is superficial. The factory has more than 30,000 employees. Putting aside everything else, we have to pay at least three million US dollars in wages every month. The pressure is immense."
“My original idea was that if a subway could be built, my joint venture could get tax breaks on imported steel, which would naturally make the price cheaper. Since I’m in the wholesale and retail business, I could get the rails from Kugang through barter, which would further reduce my costs. This way, the price I offered would be much lower than the domestic supply, and I could make a profit myself.”
She shook her head, full of regret, "I also wanted to ask, after Jiangdong issues bonds, can foreigners also buy them? I don't know the policy on this."
She explained, "Russian banks are unreliable, and countries in the CIS, as well as Romania and Hungary, are also experiencing significant currency devaluation. Therefore, they are also looking for more secure investment opportunities."
Secretary Fang became interested: "Speaking of which, I'm a bit puzzled. Why do Russian banks keep failing? It doesn't seem to happen in other capitalist countries. Are they all just con artists who make a quick buck?"
“Not really,” Wang Xiao shook his head. “Most banks initially wanted to operate well. But Russia’s industrial decline was severe, and it was difficult to make money by lending to businesses and collecting interest. Russian banks basically made money by lending to people and then reselling rubles for dollars. But to make money, you have to be able to control the exchange rate precisely. It’s like gambling.”
She gave an example: "For instance, last July, the Russian government suddenly abolished the circulation of the old ruble. In just two days, the exchange rate plummeted from 1:1000 to 1:2000. Then the president announced an extension of the exchange period, and the ruble returned to its original exchange rate. In just a few days, a number of Russian banks collapsed, and a group of people became extremely wealthy."
Secretary Fang sighed, "This is really not a good thing. If the money doesn't go where it's supposed to go, it will cause trouble."
Wang Xiao sighed deeply, "That's right. Everyone says that money, like people, will always flow to where there's no shortage. The real estate market is currently under control, so the next hot money to flow into the securities market is either illegal fundraising or... Everyone's worried about their money depreciating if they keep it in their hands."
Secretary Fang pondered for a moment: "In June of last year, bonds were indeed issued to foreigners, but it was led by the Ministry of Finance. Starting in April, local governments were no longer allowed to issue bonds."
Wang Xiao's eyes crinkled with laughter: "Could it be that some local governments went to Hainan to speculate on real estate and issue bonds to raise money before?"
This sounds absurd, but it's not impossible in a climate of economic frenzy.
How did a county or city raise money to speculate on land in Hainan? It was through forced allocations and issuing bonds, among other things.
Secretary Fang just shook his head, his mind still preoccupied with the matter of issuing bonds.
With the central government's policies coming to an abrupt halt, she, herself a cadre who had come down from above, naturally understood the difficulties involved.
However, she also has to say that every place has its own situation. In a region like Jiangdong, where manufacturing is developed and local finances are supported by manufacturing, issuing bonds for infrastructure construction is perfectly acceptable and quite necessary at present.
But a policy is a policy. If it's appropriate, you have to implement it; if it's inappropriate, you still have to implement it.
These are the most basic rules and regulations.
She was starting to have a problem: how could she raise money by issuing bonds if the policy allowed?
The subway will definitely be built, and infrastructure construction is essential; otherwise, it will severely hinder development.
Seeing her pondering, Wang Xiao did not disturb her.
Ivanov brought over a bowl of white fungus and pear soup for Wang Xiao, approached cautiously, and asked softly, "What are you talking about?"
“I’m trying to sell railway tracks,” Wang Xiao explained in a low voice, “but current policies don’t allow local governments to issue bonds, so it’s uncertain.”
Ivanov looked at her strangely, wondering if he had misheard: "Wang, why is it the local government issuing bonds? Shouldn't it be the companies doing this?"
Wang Xiao was stunned for a moment, then a sudden inspiration struck him.
yes!
She's limiting her thinking.
As is well known, for a very long period after the founding of the People's Republic of China, the government and enterprises were not separated.
Local governments cannot issue bonds, but local government financing platforms can.
Theoretically, the company and the government are two separate entities. However, the company is backed by the government, meaning the government is essentially endorsing the company.
Wang Xiao gave Ivanov a thumbs up: "You wait, we can work harder on our orders."
Ivanov looked at the snow fungus and pear soup that had been pushed back into his hand, thought for a moment, and then drank it himself.
He felt that Wang would need to explain things further.
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It's Lunar New Year's Eve! Everyone, eat well! O(∩_∩)O
This article provides background information on China's domestic financial market. The information is sourced from the internet.
On April 11, 1993, the State Council issued the "Notice on Resolutely Curbing Irregular Fundraising and Strengthening the Management of Bond Issuance" (Guofa [1993] No. 24). While retaining the People's Bank of China's (PBOC) authority over short-term financing bonds, the notice attempted to transfer the PBOC's power in bond management to the State Council Securities Commission. The notice required strengthened management of bond issuance and strict control over the annual issuance scale of all bonds. The national bond issuance plan targets were the maximum annual issuance limit, which all regions and relevant departments must strictly adhere to. Without the consent of the State Planning Commission and the State Council Securities Commission, no one was allowed to exceed the target or arbitrarily adjust any planned targets. Going forward, internal corporate bonds would be merged into local corporate bonds for unified management, no longer classified as separate bonds, and controlled within the annual planned targets based on actual issuance amounts. Corporate short-term financing bonds will not be included in the domestic securities issuance plan for the time being. Their issuance scale and management methods will continue to be implemented in accordance with the relevant regulations of the People's Bank of China. The terms will be strictly controlled at three, six, or nine months. Funds raised can only be used to make up for temporary and seasonal working capital shortages of enterprises and cannot be used for long-term turnover or fixed asset investment. All corporate short-term financing bonds with a term exceeding nine months will be included in the local government corporate bond issuance plan.
This line of thinking was reflected in the Company Law enacted that year. Article 164 of the Company Law, adopted at the Fifth Session of the Standing Committee of the Eighth National People's Congress on December 29, 1993, stipulates that the securities regulatory department of the State Council shall approve the issuance of corporate bonds.
However, this regulation was not enforced.
In the early stages of China's securities market, the People's Bank of China was the competent authority. The establishment of the State Council Securities Commission and the China Securities Regulatory Commission only separated the power to manage stock issuance. The Company Law of 1993 was too idealistic and attempted to change the existing power structure through a single legal provision, which was not feasible. The State Council Securities Commission was originally established to manage the "national securities market", but it never accomplished this task. [7]
On August 2, 1993, the State Council issued the "Regulations on the Administration of Corporate Bonds," which abolished the "Provisional Regulations on the Administration of Corporate Bonds." The regulations stipulated that the issuance of corporate bonds by central enterprises shall be approved by the People's Bank of China in conjunction with the State Planning Commission; the issuance of corporate bonds by local enterprises shall be approved by the provincial, autonomous region, municipality, or separately listed city branches of the People's Bank of China in conjunction with the planning authorities at the same level,[8] except for financial bonds and foreign currency bonds.[9] The People's Bank of China also shared the approval authority for corporate bonds with the provincial planning authorities.
After 1994, the practice of institutions over-issuing and short-selling treasury bonds in the form of custody agreements became quite common, posing significant market risks. In the same year, stock exchanges launched treasury bond futures trading. In 1995, regional treasury bond repurchase markets, represented by the Wuhan Stock Exchange, were closed due to rampant fraudulent treasury bond collateral. In May of the same year, the "3.27 Incident" involving treasury bond futures occurred, leading to the closure of the treasury bond futures market. In August 1995, the state suspended all over-the-counter bond markets, making stock exchanges the only legal bond market in China. In 1996, book-entry treasury bonds began to be issued in large quantities on the Shanghai and Shenzhen Stock Exchanges. With the development of bond repurchase transactions, a secondary market for exchange-traded bonds was initially formed.
The problem of triangular debt emerged in the 1980s and was even mentioned in novels. Generally, triangular debt is considered to be debt between businesses and banks, but closer examination reveals that local governments bear the lion's share of the debt. In the 1980s and 90s, IOUs were rampant, and there was even a phenomenon of reselling them. However, much of the government debt didn't even have IOUs; it was all based on verbal agreements.
In 1986, inter-enterprise debts across the country totaled 20 billion yuan. This surged to 60 billion yuan in 1987, reached 100 billion yuan in 1988, and 200 billion yuan in 1989. This growth rate was almost manic, far exceeding not only the economic growth rate itself but also China's overall capacity to bear the institutional and economic costs. To put it bluntly, only China's large size allowed it to withstand it; in most countries, such a rapidly growing and extremely chaotic debt structure would have been enough to destroy the entire society. By 1990, the scale of triangular debt had ballooned to an astronomical and appalling level, reaching a point where it could no longer be ignored. It was in this year that relevant departments began to truly pay attention to and address the triangular debt problem. However, the results were far from satisfactory.
In early 1990, the first year of the cleanup, the total amount of triangular debt was only 200 billion yuan. However, by the end of May 1991, the national triangular debt had surged to 300 billion yuan. In just over a year, the debt not only did not decrease but increased, directly expanding by half, exceeding the total amount of the previous few years. For example, in Liaoning Province, the triangular debt was 21 billion yuan at the beginning of 1990, and 14.5 billion yuan was cleaned up. However, by early May 1991, the debt had increased to 25.3 billion yuan. In Jiangxi Province, the triangular debt even doubled after the cleanup.
In 1991, during the second year of the cleanup, a method called "closed-loop cleanup" was implemented to address this issue. This involved prohibiting the commencement of new projects and the creation of new debts until the cleanup was completed, while injecting capital with government guarantees. However, since the triangular debt problem is a macroeconomic issue, this technical closure could not resolve the macroeconomic liquidity issue, and therefore failed to stop the further expansion of the debt.
By the time the cleanup was last carried out in 1992, the implementing department had completely given up hope of clearing up the triangular debt. The triangular debt continued to expand endlessly, and the cleanup work was essentially meaningless. Therefore, the department only required the companies that had been holding onto the debt to reduce the scale of their inventory products in order to reduce the scale of the debt. At the same time, it cut off the supply to companies that continued to produce products with no market and were creating stockpiles, and stopped injecting funds. In addition, it carried out some follow-up work on the previous two cleanup efforts, and that was all.
After three years of cleanup, the debt scale has grown larger and larger. The injected funds could not even cover the new debt, let alone solve the problem of triangular debt. The debts resolved by various cleanup methods were just a drop in the bucket. By the end of June 1997, the outstanding receivables in the form of triangular debts of enterprises alone had grown to more than 1 trillion yuan. The overdue payments for goods occupied and products stockpiled by state-owned and state-controlled industrial enterprises alone exceeded 578.9 billion yuan. Moreover, most of the debts were over three years old, becoming truly old debts. This is only the triangular debt at the enterprise level. The scale of triangular debts, chain arrears, and IOUs at the government level had already expanded to an incalculable level.
The loans and capital injections undertaken by banks to complete the task of clearing up triangular debt tied up a large amount of their working capital, resulting in a significant gap in the capital chain of the national banking system at the time. At the same time, the banks' participation in the clearing up of triangular debt also led to them being deeply involved in various complex debt chains and the resulting complicated accounting operations. This occupied a large number of bank staff and business resources, making it impossible for banks to allocate enough manpower to run regular business, and making daily operations extremely difficult.
This dual shortage of labor and capital indirectly led to the full-blown payment crisis in China's banking system in 1993.
In particular, at that time, in order to maintain stability, the banking system was ordered to provide loans and capital injections to some enterprises with backward production structures, serious aging, and huge backlogs. After these funds entered these enterprises that were already dead in fact, they formed non-performing loans and bad debts. The chaos caused by the funding gaps resulting from these non-performing loans and bad debts directly triggered the national banking system in 1993, causing the 1993 banking payment crisis.
At the end of 1993, of the total loan balance of RMB 2.6461 trillion in the national banking system, a full RMB 528 billion was in a state of bad debt with no money to pay. This amount even exceeded the size of the banks' own funds at the same time. At one point, the banks had no money to pay, which triggered a bank run and the situation was extremely dire.
In addition, the practice of farmers taking civil service exams began in Jilin in 1995.
According to incomplete statistics, since 1996 alone, a total of 17,188 farmers (including those who have undergone restructuring) have stood out from open selection examinations and entered local government agencies to become civil servants.
"This indicates a fundamental change in China's traditional personnel system for recruiting administrative officials. The decades-old methods of recruitment, such as allocation, dispatch, and transfer, have been replaced by a new civil service recruitment system that relies on open examinations and merit-based selection," a relevant official from the Ministry of Personnel affirmed. All applicants from rural areas have at least a college diploma.
Shandong Province's 2002 national civil service recruitment plan aimed to hire 4,824 civil servants and government workers at the provincial, municipal, and county levels. Previously, county-level government positions were limited to those with non-agricultural household registration, but for the first time, the pool of applicants was expanded to include those with agricultural household registration. Other requirements included being under 35 years of age and possessing a college diploma or higher. It was reported that among the young farmers applying for county-level civil service positions were farmers, employees of rural enterprises, self-employed individuals, and young migrant workers, all of whom had obtained college diplomas or higher through self-study examinations or adult education.
It's true, Akin keeps saying the country is getting better and better, and he means it. It's so much better now than before.
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