Textile Industry Overcapacity? 5 Major Initiatives Made By Zhu Rongji In 98 Years

In 2014, the output of chemical fiber was 43 million 900 thousand tons, while the "12th Five-Year" plan was 41 million tons at the end of 2015, and the chemical fiber "12th Five-Year" plan was completed two years ahead of schedule.

Chemical fiber accounts for 82% of the total textile fiber processing, and the current start-up rate is about 70%. The polyester polyester production capacity planned for commissioning will reach 3 million 660 thousand tons only this year.

Too fast capacity growth, resulting in intensified competition, the decline in efficiency, capacity structural surplus contradictions are still outstanding.

How to deal with a large number of "overcapacity" has become an industry.

"Key first World War".

17 years ago, China was faced with the same problem.

At that time, high speed credit supply led to a large number of excess capacity, serious mismatch of resources and large losses of state-owned enterprises in textile industry.

But through a series of reforms, the government successfully resolved this "chronic disease".

We can draw lessons from that. In the process of capacity development in the period of 98-02, taking the textile industry as a breakthrough, large-scale bankruptcy reorganization, and Asset Management Co stripping bank debts may provide important reference for the "going capacity" of the current round.

92 years since Deng Xiaoping's southern tour, the whole country has launched a round of accelerating investment climax.

High speed credit investment, asset investment growth remained high.

In the past 92-96 years, a large number of inefficient production capacity was accumulated, and institutional obstacles led to slow capacity and deleveraging, mismatch of financing structure and performance structure, serious resource mismatch, and continuous credit flow of credit resources to state-owned deficit sectors.

On the other hand, overheated investment has led to an increase in inflation, which has affected the tight demand of monetary policy in the past 94-96 years and the reduction of demand under the external shocks of the 97-98 year Asian financial crisis.

5 measures to overcapacity

In view of the problem of overcapacity, the government led by Premier Zhu Rongji then adopted the following measures:

1, monetary policy "neutral tight", forcing enterprises to capacity, leverage.

In 98 years, Premier Zhu Rongji stressed at the meeting of the State Council, "two things can not be done: banks relax their money supply, produce squeezed products are equal to committing suicide, and go all in to build up duplication."

From the perspective of monetary policy, 98 years ago, "moderately tight", 98 years changed to "appropriate monetary policy", and 99 years of "prudent monetary policy", bank credit did not go up sharply due to the economic downturn.

2, administrative means should be used to reform the supply side: terminating redundant construction, clearing excess capacity, merging backward enterprises and laid-off workers.

In the 96-98 years, the number of state-owned enterprises dropped from 11.38 to 6.5, with a reduction of 42%.

At the same time, the number of employees in state-owned enterprises has dropped by about 22 million from 98 to 99 in the same period.

3, corporate debt to equity swap, financial policy, Asset Management Co stripped bank debt.

The four Asset Management Co received the capital provided by the Ministry of Finance and the refinancing of the central bank. They were allowed to issue special financial bonds to the counterparts in the commercial banks and acquire bad assets from the four major banks.

Over the past 1999-2005 years, the total amount of non-performing assets has been stripped up to 2 trillion and 580 billion.

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4, implement a proactive fiscal policy based on the issuance of long-term treasury bonds.

In 1998, the proactive fiscal policy was launched. In the year, 100 billion yuan of long-term treasury bonds was issued and 100 billion yuan of bank loans were allocated to strengthen infrastructure construction (for agriculture, forestry, water conservancy, pportation, infrastructure and power grids).

Overcharging and clearing up 727 arbitrary charges will reduce the burden on enterprises and society by about 37000000000 yuan.

During the past 1998-2003 years, a proactive fiscal policy was maintained. Until 2004, when the economy stabilized, the proactive fiscal policy gradually withdrew.

5, demand side reform, the release of new needs: housing reform, tax reform, foreign exchange reform.

98 years later, the housing reform started to become a new economic growth point. Housing reform led to high-speed urbanization, digestion of manufacturing capacity, and land finance to repair the local government's balance sheet.

Secondly, after 94 years of tax system reform, the centralization of power was intensified, and the tax reform made the Treasury full.

Again, in the past 94 years, the RMB exchange rate reform and RMB depreciation have taken place. In the 94 years, the export oriented economy has gradually taken shape.

After 2000 (especially after China's accession to the WTO), the developed countries increased leverage, savings and external demand, and the growth of domestic exports led to the digestion of excess capacity.

Choose the textile industry as a breakthrough point

The position of the textile industry was no less than that of iron and steel in 90s.

As of 90s, China was the largest textile producer, accounting for 1/5 of the world's total output value, and the textile industry accounted for the first place in the world's total industrial output value.

However, due to overcapacity and backward equipment, China's textile industry at that time suffered low profit and serious losses.

The proportion of redundant personnel exceeds 30%.

And because most of the textile industry belongs to state-owned enterprises, the industry was the most difficult state in China's state-owned industry at that time.

The way that local governments maintain the operation of textile deficit enterprises through financial subsidies is becoming more and more difficult.

At that time, the resistance to reform came from the employment contribution, economic growth, tax revenue and the local protection barriers generated by the textile industry.

In terms of political significance, the pformation of the textile industry is the most difficult and the biggest resistance. Once the most difficult textile industry has broken through, other industries will be more determined and motivated to push forward the reform.

Textile industry reform

Given by the State Council

The goal is to start from the 98 year of the 3 year national lifting force, to directly accomplish tasks by administrative means, to complete capacity production, and state-owned enterprises to turn over deficits and get rid of difficulties in three years.

At the beginning of 98, the State Council issued the notice of the State Council on issues related to deepening the reform and restructuring of the textile industry at the beginning of the year, which specifically referred to the main objectives of deepening the reform, adjusting the structure and reducing the losses in the textile industry. Since 1998, we have eliminated about 10 million spindles of backward cotton ingots in 3 years or so, and allocated 1 million 200 thousand people to lay off workers. By 2000, we can turn the whole industry into a deficit and make profits, laying the foundation for the industrial upgrading and revitalization of the textile industry.

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According to the requirements of the State Council, all regions, departments and all enterprises shall not add cotton spinning spindles for any reason during the "95" period, and shall not pfer backward cotton ingots for any reason.

The following reform measures are more vigorous.

1, direct financial subsidies and loan subsidies.

The subsidy for eliminating 10 thousand spindles of backward cotton ingots is 3 million yuan, 1 million 500 thousand yuan for the central and local governments, and 2 million yuan for bank discount loans. The interest rate loans are borne by local governments, and the repayment period is 5 to 7 years.

The backward cotton spinning ingot equipment, which is compressed and eliminated, is supervised by the Textile Federation.

2, the merger and bankruptcy policy focuses on the textile industry.

Arrangements for mergers and bankruptcies and personnel reduction and efficiency of textile enterprises 537 households, plans to write off the scale of 12 billion 600 million yuan, accounting for 31.5% of the total national scale 40 billion yuan.

3, shunt the policy of laid off workers.

In the 98 years, the 35 thousand retirees in the ingot enterprises should be laid off, and the laid-off workers in the textile enterprises should enter the re employment service center of the enterprises to ensure the basic life of the laid-off workers and the payment of their old age and medical insurance expenses.

4, land support policy.

In the work of "pressing, reducing, adjusting, and increasing efficiency", the cotton textile industrial enterprises should use the original allotted land use right to operate.

In the assets reorganization, the right to use the land that has been replaced after disposal can be used in the whole enterprise to distribute and lay off laid-off workers and reduce debts.

5, the allocation of export quotas is tilted to textile self export production enterprises.

6, improve the export tax rebate rate.

In order to improve

Export competitiveness, encourage textile exports, raise the tax rebate rate to 11%, implement export credit and full rebate preferential policies for textile machinery exports, and continue to carry out zero tax rate policy for approved textile enterprises engaged in import processing.

7, cotton circulation system reform.

The textile enterprises that are approved to engage in the processing of imported materials shall adopt a zero tax policy when using Xinjiang cotton to import and export the imported products.

8, we must firmly control the new cotton spinning production capacity by way of administrative restriction.

Textile productivity

Withstand 98 years of impact.

In the 98 years, the output value of state-owned enterprises in the system was 165 billion 300 million yuan, 0.31% lower than the previous year; the added value was 38 billion yuan, an increase of 5.53% and a percentage increase over the previous year; sales revenue was 165 billion yuan, 5.85% lower than that of last year; the total profit loss was 1 billion 900 million yuan, which was 2 billion 600 million yuan lower than that in 97 years, and basically realized the goal of reducing losses by 3 billion yuan.

02 years later, the textile industry has significantly improved its capacity.

1, new capacity has been launched; employment has decreased from 5 million 100 thousand in 99 to 4 million 560 thousand; 2, debt ratio has decreased and profit margins have increased; yarn and cloth output has steadily increased in 02 years; 3, labor productivity has increased from 17 thousand and 500 / person in 98 years to 32 thousand and 400 / person in 02 years.