Rebirth: I am in Jin-Cha-Ji

Zeng Shan, director of the Fifth Office, responded to Chen Yun bluntly. Why did they all say the Handicraft Cooperative had problems?

Zeng Shan, director of the Fifth Office, happened to be in charge of the Central Handicraft Administration. In Zeng Shan's view, while the chaotic steel market in 1954 had caused some problems for handicraft cooperatives, including some engaging in black market steel scalping, the real reason lay elsewhere.

Some of your large units not only obtained steel allocated by the state, but also came to the market to purchase steel, which directly caused chaos in the steel market.

Those infrastructure units are the big spenders.

Can the amount of steel purchased by handicraft cooperatives be compared with that of large units?

"Prime Minister, I admit that some of our infrastructure units purchased steel from the market this year, causing some disruption in the steel market. However, some of our units also have their own difficulties. The tasks assigned by higher authorities are high, but the allocated steel is insufficient. We cannot afford to use less steel and produce substandard projects. To complete the tasks assigned by higher authorities, we need steel. If the allocated steel is insufficient, we have no choice but to purchase it from the market. This is a problem with allocation, not a problem with our grassroots infrastructure units."

Chen Zhengren, Minister of the Ministry of Construction, immediately expressed his injustice.

"You didn't distribute enough steel." And he directly said there was a problem with distribution. Chen Zhengren was a Party member during the Great Revolution and a cadre who followed Chairman Mao to Jinggangshan. So he dared to criticize directly.

Their construction engineering department already has a heavy workload.

Not to mention the construction of important units across the country, even military camps and the Construction Engineering Department had to manage them. Therefore, they were allocated a large amount of steel each year. However, compared to the tasks, the allocated steel was still insufficient.

So what to do?

The only solution was to find something unplanned: buying steel on the market. Chen Zhengren continued, "Although our infrastructure unit did purchase a batch of steel, the amount we purchased wouldn't have caused such chaos in the steel market. Ultimately, it's all due to the emergence of a large number of speculators."

I saw Zeng Shan and Chen Zhengren arguing with each other.

The Prime Minister immediately said, "This is the first time such a serious steel problem has occurred since the founding of the People's Republic of China. We should be happy because it shows that our economic development is strong and there is strong demand for steel. We are holding this meeting today to resolve the issue. Everyone, please speak up."

After the Prime Minister said this, Zeng Shan and Chen Zhengren stopped talking.

Chen Yun continued, "What the Premier said is correct. The steel market is facing so many problems. Overall, this is because economic development is driving increased demand for steel. However, most of our steel is allocated to planned units, leaving insufficient steel flowing into the market. But that's not entirely the problem. Comrade Zeng Shan just mentioned that some of our infrastructure units are also involved in buying up the market."

"still have a question."

Deng Zhihui put down the report in his hand and said, "In 1954, national production was somewhat chaotic. Some unnecessary items were overproduced, directly disrupting the market. Take iron beds, for example. Millions were produced in 1954, using hundreds of thousands of tons of steel. I'd like to ask everyone, are iron beds really necessary at this time? Are we so extravagant that we even need steel beds? The central government has always emphasized the importance of thrift and diligence. Shouldn't all units use other types of beds? Must iron beds be used?"

"And chairs! They've made so many iron chairs. Why don't you sit on them? Are your butts so precious that they have to sit on iron chairs? And every unit and school, despite such tight budgets, has custom-made iron racks, parallel bars, horizontal bars, dumbbells, barbells, and more."

"Comrades, although our country's steel production has grown significantly, most of it must be used in industry and on the railways, and the amount of steel that can actually enter the market is limited. Steel supplies must first be used to produce necessities for people's lives, such as cooking utensils, heating appliances in northern China, daily hardware, small tools, and small farm implements, so that the limited supply can be prioritized to meet people's needs and stabilize people's livelihood."

"But what was the actual situation in 1954? The limited steel that entered the market was all used by some businesses for their own enjoyment. Instead, there was a severe shortage of daily necessities for the people, which led to rising prices for these products."

Deng Zhihui doesn't care what others think.

He blurted out everything he wanted to say. Deng Zhihui was indeed very angry when he read the report.

They were in charge of rural affairs, racking their brains to earn an extra 100, 200, or 1,000 yuan a year for the cooperative, but look at these units, they buy this kind of iron products at every turn.

Mao Zemin echoed, "What Comrade Deng Zhihui said makes perfect sense. Our steel production has increased rapidly in recent years, so the amount of steel put on the market has also been increasing year by year. Logically speaking, the good economic development in 1954 should have led to increased market demand. Even if some infrastructure units were rushing to buy steel on the market, it wouldn't have caused such chaos. The biggest problem, then, is that various units ordered too much that they shouldn't have, wasting hundreds of thousands of tons of steel."

"Normally, steel released into the market should be used first for necessities. These are essential items in life, like iron pots. They're essential, not iron beds, iron chairs, or iron bookshelves. Do we really have to use these things right now? Can't we replace them with something else? Actually, we absolutely can. It's just that some companies use iron products, and others follow suit. Many handicraft cooperatives, seeing the high volume of orders and profits in this area, use all the steel they buy on the market for these products. The result is a lack of production of truly needed necessities."

"If we don't change this situation, then things like what happened in 1955 and 1956 will continue to happen. So many units across the country are making iron beds, iron chairs, iron bookshelves, and all kinds of iron products for their own people. So no matter how much steel we put into the market, in the end it won't be enough. We have to admit that our steel is insufficient. So we have to use it first for essential products."

Wei Hongjun remained silent.

Just kept recording.

It's only been a few years since the founding of the People's Republic of China. The economy has been developing fairly well over the past few years, and various units have begun to have some money. The central government has maintained strict control, preventing corruption. However, these units haven't said they need to be frugal.

Instead, I started thinking about how to spend the money.

In an era of abundant resources, this wouldn't be a problem. But China is now a typical country with insufficient resources. If your units purchase more, there will be less available on the market.

There wasn't enough steel.

If the steel is snatched away by these units, the market will become increasingly short of steel.

Listening to Mao Zemin and Deng Zhihui, the Premier said, "Some units have gone beyond the norm. Comrades, we Communists have always insisted on enduring hardship first and enjoying comfort later. During wartime, our troops emphasized protecting the civilians during their retreat. Now, some units and some cadres are beginning to prioritize comfort first and are even seizing supplies from the people. This tendency must be stopped. Comrades Rong Zhen and Zhao Zhensheng, you must take responsibility for this matter."

"Okay." Marshal Nie nodded.

Marshal Nie is in charge of the First and Second Offices, which effectively means he's in charge of the Political and Legal Affairs Commission and the Cultural Affairs Commission. Therefore, Marshal Nie won't offer many specific suggestions on other matters concerning the State Council.

He just takes care of his own work.

"Premier, many organizations have this need, and we could use a different procurement method. Currently, Heilongjiang and Jilin regions are engaged in import and export trade with the Soviet Union and Eastern European countries, and there are a large number of furniture factories there. Why do we have to focus on iron products?"

Strong demand is a good thing.

But it must be guided.

These companies shouldn't compete for the already scarce steel supply in the market. If this money could flow into furniture factories, it would boost the national furniture market. And they wouldn't have to compete for the already scarce steel supply in the market.

Wei Hongjun listened to the discussion and said to Li Fuchun next to him, "We still need to speed up the release of steel into the market. These problems are ultimately caused by a shortage of steel."

"The First Five-Year Plan had many projects. And new ones were constantly being added. Every time a new project was added, allocations had to be increased and market supply reduced. For example, the addition of so many bicycle and motorcycle factories in the past two years alone has necessitated a significant increase in steel allocations. Now all the steel is needed, and it's giving me a headache."

Li Fuchun spoke.

Wei Hongjun nodded.

To increase the amount of steel put on the market, in addition to increasing steel production, the central government must adjust the proportions of heavy industry, light industry, and agriculture. Otherwise, there will always be a shortage of steel on the market.

The reason why Wei Hongjun did not express his opinion.

Deng Zhihui has said everything he needs to say. The current situation is that no matter how adjustments are made, there will undoubtedly be a shortage of steel. So, despite the scale of this meeting, the final adjustments won't result in significant changes.

The goal is to further control the rush to buy steel by large companies, curb their purchases of unnecessary iron products, crack down on the black market, and prioritize the supply of essential goods to the people. However, no matter how we crack down on it, as long as there is a shortage of steel, speculative trading will never be completely eradicated.

"When you look at the Second Five-Year Plan, can you take into account the development of light industry and agriculture? That way there will be more steel on the market, alleviating the current contradiction."

Wei Hongjun is now considering the issue of the Second Five-Year Plan.

Li Fuchun nodded and said: "Let's find a time to discuss this specifically." Li Fuchun also believed that the proportion of the Second Five-Year Plan should be adjusted.

There is too much investment in heavy industry now.

The two quickly reached an agreement, reserving details for later discussion. Just as Wei Hongjun had suspected, the final outcome of the State Council meeting was a strict ban on all units within the plan from purchasing steel on the market, as well as on all units purchasing unnecessary steel products. Black market activity and speculation would be severely punished. Prioritizing steel supply for the people was essential.

Chapter 952 Urban Supply Issues

"Mr. Deng, it still has to be you."

After the meeting, Wei Hongjun and Deng Zhihui returned to the office together. On the way, Wei Hongjun said with a smile, "I wonder how many companies that were planning to spend money on iron products are secretly cursing you after what you said today."

Those who dare to purchase steel in the market outside the plan are not ordinary units.

These weren't infrastructure units under the Ministry of Construction, but rather industrial units under the Ministry of Industry. These included units under the Ministry of Heavy Industry and the Ministry of Machinery Industry, as well as some units under the Ministry of Light Industry. These units were powerful departments during the planned economy era, and they had the backing of many central government ministries and commissions.

Deng Zhihui launched a powerful attack, severely criticizing these departments. The smooth passage of the ban on these departments from purchasing steel in the market at this meeting was inseparable from Deng Zhihui's leading role.

In fact, it is very offensive.

Deng Zhihui, however, didn't care. It wasn't because of his seniority or rank that he wasn't afraid of these units. It was simply Deng Zhihui's personality. Ever since his Red Army days, he'd never been afraid of offending anyone. Consequently, Deng Zhihui's life had its ups and downs.

“Some units are really in a mess now.”

Deng Zhihui gets very angry when talking about this.

He said, "Right now, our country is short of supplies, especially strategic resources like steel, which need to be used for cutting-edge steel. Yet, many businesses are wasting steel on completely unnecessary products. Think of those iron beds, iron tables, iron chairs, and even some businesses buying iron windows. They're just enjoying themselves because they have a little money. If we don't curb this trend, our work next year and the year after will be difficult. This year, because it's just the beginning, nothing serious has happened yet, and it hasn't spread to the countryside. But if it continues, the steel market will be even more scarce next year and the year after. Then, the prices of iron products like rural necessities and farm tools will definitely rise, and that's a real problem."

"Yes."

Speaking of this, Wei Hongjun also sighed.

In addition to the current policy of unified purchase and marketing, the government also operates a policy of creating a scissors gap between industry and agriculture. State-set prices for industrial products are slightly higher than actual prices, a method used to withdraw money and increase profits.

Let’s talk about the common agricultural tools currently available.

The price of a hoe varies from place to place, but the average price is around 2.3 yuan. A walking plow costs around 7 yuan, an iron-toothed loquat around 13 yuan, and rice threshers and waterwheels cost over 50 yuan each.

This is a heavy burden for rural areas.

It was not easy for rural cooperatives to purchase all the necessary agricultural tools. Wei Hongjun and Deng Zhihui even prepared a report to the Central Committee, hoping that the prices of these tools would be reduced during the Second Five-Year Plan.

However, if the shortage of steel in the market becomes severe, it will eventually spread to rural areas. The price of steel products will rise, including farm tools. This will seriously affect the rural economy.

Wei Hongjun and Deng Zhihui were not only angry about the chaotic steel market, where some companies were using steel for personal gain, but also about the impact such chaos was having on rural development.

"Have you read the report I submitted yesterday?"

As they walked, Deng Zhihui said to Wei Hongjun, "Since the free market for agricultural and sideline products was liberalized, the supply of agricultural and sideline products has been very abundant in counties and towns, including some prefectures close to rural areas, and the market has been booming. However, some large cities have encountered some problems with the supply of agricultural and sideline products. Many large cities far from rural areas are very dissatisfied with the supply of agricultural and sideline products."

"I saw it."

When the state-owned supply and marketing cooperatives were responsible for the purchase and sale of agricultural and sideline products, they prioritized the supply of agricultural and sideline products to large cities. In other words, the state-owned supply and marketing cooperatives and state-owned commercial companies prioritized supplying large cities, followed by small and medium-sized cities.

But the situation changed after the liberalization of the agricultural and sideline product market. Most agricultural and sideline products were now sourced locally, with priority given to addressing the needs of small and medium-sized cities, towns, and rural areas. However, supporting infrastructure lagged behind, leading to a sudden shortage of agricultural and sideline products in large cities.

The Ministry of Commerce shared the issues with the Ministry of Rural Affairs. They stated that major cities, including large factories, were complaining a lot. Therefore, they hoped to work with the Ministry of Rural Affairs to address the sudden shortage of agricultural and sideline products in these cities.

Wei Hongjun asked, "Mr. Deng, what do you think about this?" "I think it's best for us not to interfere in this matter." "Let the big cities solve it themselves?"

"Ah."

Deng Zhihui said, "My idea is that any major city short of agricultural and sideline products can find ways to purchase what they need from the counties and cities below. Previously, the biggest problem with the state-owned supply and marketing cooperatives and state-owned commercial companies in supplying agricultural and sideline products was excessive waste during storage and transportation. For example, if we collected 10 kilograms of produce from the countryside, we'd end up wasting a third due to problems with transportation, storage, and distribution. This time, with the free market opening up for agricultural and sideline products, since we've allowed the state-owned supply and marketing cooperatives and state-owned commercial companies to withdraw from the market, there's no need to have them re-enter."

Wei Hongjun nodded.

I understand what Deng Zhihui means.

State supply and marketing cooperatives and state-owned commercial companies are integrated government and business entities. While they are companies, they are not entirely so, as they are more of an institution that implements state policies.

Therefore, they operate not from a business perspective, but rather from an administrative perspective. Some industrial products and agricultural products like grain, which can be stored for a period of time, are not a problem. Furthermore, their control over these products plays a significant role in stabilizing market prices and centralizing state funds.

But agricultural and sideline products are different from industrial products and grain. Vegetables and fruit, in particular, will spoil after just two days. They're not suitable for unified purchase and sale. By the time the order comes down, everything's already spoiled.

The free market for agricultural and sideline products is now developing very well.

If the state-owned supply and marketing cooperatives and state-owned commercial companies were allowed to intervene again in the free market, it would severely impact the current normal development of the free market. Wei Hongjun thought for a moment and said, "But we can't completely ignore it. If a major urban agricultural and sideline product supply problem arises, the local government will likely issue orders requiring local governments to provide a certain amount of agricultural and sideline products. This would also undermine the current free market for agricultural and sideline products."

"What do you mean?"

"It's true that local governments at all levels should be left to address the issue themselves. However, since agricultural and sideline products are not included in the unified purchase and marketing list, cities cannot resolve the shortage of agricultural and sideline products through administrative orders or unified purchase and marketing. Instead, they should explore the free market for agricultural and sideline products. This requires facilitating the flow of agricultural and sideline products between large and medium-sized cities, and between towns and rural areas. If done well, it will greatly improve the government's resource allocation and logistics capabilities."

Many local officials now do not have a scientific concept of distribution and circulation.

When faced with any situation, their favorite thing is to issue orders and resolve problems through administrative means. While administrative means are certainly acceptable, even these methods involve significant knowledge about scientific allocation and efficient distribution. The more scientifically these methods are deployed, the more losses in circulation and storage can be reduced.

"Ah."

Deng Zhihui nodded and said, "I've heard that some large European and American trusts employ hundreds of thousands of people. They have a complete set of storage, transportation, and distribution methods. They have experience in this area, and if we have the opportunity, we should learn from them."

"The central government is organizing a delegation to visit various European countries recently. We should go and investigate these issues and buy some European books on this subject."

Don’t underestimate Deng Zhihui, he is almost sixty years old.

But the mind is still very active.