主题：【原创】讲讲我对工厂中层的看法 -- wqnsihs

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Why Zhu practised stringent monetary policy?--because banks lent like crazily to real estate speculators in early 1990s. Many banks started to have solvency and liquidity problem and without dramatic action, China's financial system might have collapsed in late 1993s/early 1994.

Why Zhu shut down those inefficient state owned plants?--because he faced big central gov deficit due to insufficient sharing of the tax revenue(cash flows) with provincial gov. He had to totally reform the tax system so that he could control 75% of the value-added tax to pay off all the central government obligations.

What are those state-owned enterprises--they were fiscal black holes, creator of huge bank bad loans (eventually the burden on central gov. fiscal budget again, not on provincial gov.), and creator of inflation, due to constant fiscal deficit.

Nobody shuts down cigar firms/liquor producers, because they can at least generate profit and positive cash flows. Zhu is not stupid.

I audited several state-owned enterprises before IPOs. In terms of cash flows, those state-owned firms are constant negative cash flow players.

Except for the monopolistic large state firms, most state firms in 1990s were cash suckers. Many of them still are cash blackholes, with total negative cash flows--do not be fooled by the polished financial statements of its listed subsidiaries. The parent group firm siphoned off 50b RMB from the listed firm as late as 2006. ( Lee and Jiang, 2008)

I am always puzzled why the Chinese state owned firms can not finance its own capital expenditure with its positive operating cash inflows, just like many mature US firms do? Some auditor friends reminded me: the group firm, as a whole, is cash sucker. Think about all those kindergarden, hospital, post office, security forces, union chairs, woman union leaders... not counting those stupid high-price purchase orders, low-price sale contracts...

Just like what you wrote in your own posts.

China has a funny combination of cash generators, monopolistic state-owned firms + private family firms + export sector, AND cash suckers, those ailing state-owned firms.

The latter fed off banks in 1980s and finally Zhu cut off the blood line to these "cancer cells" and asked them to feed off average Chinese. That's why we have the stock exchanges.

The funny thing is that most Chinese are fond of this Ponzi scheme speculating with their hard-earned savings every day.