Chinese economy FEATURES in a shambles
enterprises troughout the country are operat- Standing Committee of the National Peopic's State subsidies on enterprises with delicits were increasing every year, from 37.5 billion yuan in 1987, to 44,5 billion in 1988, to 59.9 billion in 1989. Ir is even more scrions this ycar, judging trom the mcreused deficits of that "al present, 40% of big and medium ing at a deficit". Zhou Jiabua's report to the Congresx on Septeniber 3 pointed out that the total deficit of state-owed enterprises for January to July this year was 15.09 billion yuan, an increase of 99.2%% nver a year earlier. Increased subsidies the enterprises. whether "the most difficult period in China's economic situation" is over or not. But on September 3, Zhou Jiahua, Director of the State Planning Commission, None of the Chinese leaders has explained when this "difficult period" started. In the past few months, party and state leaders in Beijing have disagreed on On June 25, Wang Bingqian, Minister of Finance, announced that "China's In fact, it has only been since June this year that such difficulty has been admitted, reports ZHANG KAI of the Hong Kong October Review group. that: "We are overcoming the most difficult period in the economy". national economy has basically passed the most difficult stage."
They are quitc differcot in natue from the authorities would adopt three measures in the the purchase of modemised office facilities with public funds: some unilx or guest-houses. chase of quiliry consumption goods such as don old cart and to buy new ones - in ander to • To 'appropriately' increase fixed capital investments. Two years ago, such investments. were severely suppressed, and the construc- tion of villas or guest houses was either halted ar owed down in order to alleviate the shortage of constriction materials, now that the latter are overstocked, the restraints are implementation of these three cocomaging the bureaucrats to more material privileges rather than curbing them, Bureaucrats cruld con- tinue all their "legal privileges. For the ordi- At the same time, Impaid taxes from enterprises almady amount lo 10.8 billion yuan for the first seven months this year. Jin Jini, Director of the State Taxation Bureat. sand on September 5 that there bad been a sharp increase in non payment of taxes (in- and com- mercial taxes), and this was already over 20 The above problems and difficulties werc Accurding 10. the report by the China News Service from Beijing on August 14, the second hall of 1900 to "stimulate the marker": • To appropriately relax control over te purchasing power of institutions, and allow related to foreigners are elighle for the pur- nary folk, life continues to be one of hardship. Page 21 amost unprecedented in the past 40 years. • To direct enterprises and units to aban "stimulates the market" crce ycars of famine in the endly 1960s reduce the overstocking in car factones; How the bureaucracy eluding customs tax and industrial mean : enterprises almady would hillion yuan. colour TVs: mcasures The lifte owned entesprises ran on a delicit, in 1987. The refusal of entorprises to cicar their Bon yuan. This is cquivalent to aver 705 or materials. The diector of the People's Bank. their default in payment by saying that this Yuan Chongwu, Minister of Lahour, said that since last year, "the contradiction in the supply and deniand of labour power has been very acute, and this year, those waiting for ar- The excess supply of labour power in the The extent and amount of deficits of state- nwned enterprises are growing every ycar. According to official figures given on the situation in previous years, ahout 15% of state demand and shortage in the past, suffered Up to the end of June. overstocked chemical fertiliser products rose 3.7 times over a year ago. Quite a number of small chemical fertiliser enterprises have been Torced to slop or reduce in producton The major reason for Their retarded sale was a glut of grain in some regions, bringing a fall in the payments of goods with other enterprises has cansed a grave situation, and it is citimated that the som amounts to as much is 200 bil- tie total revenuc for the whoic country in tal tumover, and many enterprises now lack purchase of raw I. Guixion, said that "Some enterprises justify will being them the optimum efficiency." rangement of work totals || miltion." (New Even chemical fertiliser, so much in 1989. This default in payment obstructs capi- prive. and peasaats reduced the use of chemi- Prevalence of 'triangle debts' Huge deficits of state-owned A new high in unemployment cities is now the highest in the last ten years, cal fertilisers. (People's Daily, August 24) China News Agency, August 25) enterprises (People's Daily, July 12) from overstocking- the circulating SOCIALIST OUTLOOK no 29, December/January 1990/91 her, coal and cement corsisted with their timated that for the first half of 1990. it the barcaucracy was compelled to release 30 credit halance of all banks was 1,279 billion the end of July. the credit halance of the banks Apparently, the policy of tightening credit had gineering. textiles, construction materials, and even extended to raw materials and fuels which in the past bad been in high demanid" The situation has aggravated to the stage of "the more the production. the more the oversiocking". Economir Reference, July 23, pointed out that it was startling that the rise in prisduction of raw materials such steel, Tum- overstocking. From January to May this year. piled as was over one third of the increased The rural market was weak parly due to a decline in the real income of the peasants: there was a drop in the sile of agricultural sideline products; the per capita cash income of the 800 million peasantx in 1989 dropped Central Committee in November 1989, appealed to the people to undergo The situation deteriorated further in the following months, and in January this year, billion yuan of credits. By the end of May, the yuan, which was 28.3 billion yuan more than the amount in the kame period last year. By was 1.315 billion yuan, which was 74.2 bil Tien yuan more than the same period last year, The market purchasing power had not re- -The overstocking has been affecting major 90% of increased steel produced was stock- 3.3% over the previous year, and it was ex THE FIFTH Plenary session of the Party started in response to an influx of capital. sectors including fight indostry. electrical en Unprecedented overstocks dropped 256 over the same period in 1989. "several more years of hardship". (China News Service, August 11) gone baikrupt. coal produced.