Today is March 8, International Women's Day
So let’s say hello to all the women who are celebrating the day
Today, I will give you a very difficult topic
We’ll be talking about the first crisis in China
in the years 1949 to 1951, the three years ’49, ’50 and ’51
It was the beginning of new China; revolutionary China
or communist China, or socialist China
whatever naming is ideology
Giving China a label is the practice of western ideology
in order to describe China
In fact China is just a big indigenous Asian country
When it gained independence
it first met with a very serious economic crisis
No, I don't want to say economic crisis
It was in fact a very complicated situation
We can say it was a comprehensive crisis
not only affecting the economic field
but also the social, political, and other fields
So let me try to explain this title
why I have set this title as ‘a revolutionary bonus plus regional war
to cover the serious inflation crisis in the economy
It means there were two factors involved
First, revolutionary bonus or revenue refers
to the point that in this peasant country
almost 90% population lived in the countryside
and they had joined the revolution
and created a large amount of institutional revenue
The ruling party, or the new authorities, the new government
had utilized or developed this institutional revenue
to fund the sovereign currency system
to deal with the high inflation
That means they had used or developed this big institutional revenue
to cover the cost of the economic crisis
Not only that
There was also the factor of the Korean War - which was a regional war
In the 1940s the whole world was led by those two big countries
the United States and the Soviet Union, into a Cold War
That was a very special historical period
During this so-called Cold War
there were several regional wars around China
The first regional war around China
was the Korean War in the Korean peninsula
That was a very big battle that started in the year 1950
That regional war had created a large demand
for China's domestic industries
One thing we can see is the institutional revenue
the other is this external war that created a large demand
hence a chance for the domestic industry to produce more
That means from 1950, 1951 on, because of the war
China recovered from the economic crisis
It was a so-called cyclical crisis: from 1948-49
hyperinflation, and from 1949 on
with the communist party becoming the ruling party
taking power and setting up the new government
the first challenge was for the new government to solve the crisis
We are going to give you ten topics
dividing the more than 67 years
of Chinese modern history into ten periods of crises
We will briefly explain what has happened in modern China since 1949
This is the first topic, the first lecture
Earlier I tried to tell you why nowadays
in recent years
the international society has been paying a lot of attention
to China's growth
Somehow the media, the published studies
have reported that China, as one of the emerging countries
would grow very fast
Some western media even estimated that China will
overtake the United States in the year 2018
Now it’s 2017. Next year is 2018
We can see what happens
especially when the new president takes power in the United States
A lot of people think that he will very urgently
want to regenerate the American physical economy
which means the industries
That urgency is caused by the Chinese industries
China has achieved its own industrialization
and has a large yield in the industrial sector
and is now competing with western countries
So that is why the West very urgently
wants to understand China’s growth
I think that is why they are so concerned
It's caused by China’s rising as an industrialized country
In conjunction with the recent comments on China's growth
“China rising” and so on, there are many different explanations
But what we really need to learn is to follow the economic laws
Here I show two curves
The upper one is the United States, the lower one is China
to show their cyclical crises, the ups and downs
It's a kind of economic regulation
Before any country industrializes
the economic growth curve is almost flat, with no big changes
That is because when it is in agricultural production
over that agricultural history
it would only be affected by the climate
or by natural disasters – floods, rain, heavy snow, whatever
But when it industrializes it would have multiple risks
not only that one sector
is affected by the risk of natural disaster or climate change
When it starts to have mass production
it would mean market uncertainty
The economy situation would vary
So the ups and downs are typical of the industrialization process
They are very common phenomena
No matter what -ism these countries subscribe to
for example the United States is a capitalist country or imperialist country
whatever the ideology used to describe this country’s system
or China’s system
a lot of people think that China is a communist country or a socialist country
all these descriptions come from a Eurocentric ideology
created by western countries
Very few people can give a detailed explanation
that can deepen the understanding on China
especially that China is a developing country and not a western country
Yet the difference is very clear
The so-called developed countries, almost all of them
had a historical chance to take resources from others. That was colonization
Almost all the developing countries, including China
had no chance to go outside and take resources
from others or turn other people into slaves
So their processes of primitive accumulation for industrialization were different
If you have the chance to go out
to take over others’ resources, others’ properties
certainly you’ll find it easier
to go beyond primitive accumulation to set up capital-intensive industries
because you have taken over a lot of properties
But if you have no such chance
you only can turn inside to take over the surplus from your own people
from your own resources
then it means you have to accept a bigger cost
There will be very hard conflicts
The conflicts are the confrontations among different interest groups
The social contradiction in developing countries
is more severe than that in the colonizing countries
That is the big difference
It means that the history prior to industrialization
is the basic knowledge for understanding the difference
But most of these west-centric textbooks never give you this basic knowledge
Rather, they would say, for a lot of developing countries
the reason that they cannot set up industries
that they cannot join the world industrial competition, is they’re backwards
Not that they have no chance, they’re just backward
They have some kind of institutional problems
or cultural problems, even racial problems
But that is a misunderstanding
We should know that even the so-called advanced countries like the United States
during the time when they industrialized there were also big crises
There's the 1920s-1930s
the time when the economic crisis happened in the United States
What happened in these advanced countries then?
Even though they had big resources
they had so-called advanced education
science, technology, and institutions
yet what happened there? Unemployment
a large number of people went out of work
These so-called radical groups
they captured the black people and burned them
thinking that black people worked hard and took white people’s jobs
There was social chaos, murders and massacres
A lot of bad things happened during the economic crisis
Social relations were very tense
Many countries, especially those in Europe
when they had the crisis
their economic problems were turned into social problems
even political problems
like fascism or racism, in Europe
and in other western countries
We should do some comprehensive studies and come to some basic arguments
from the perspective of the indigenous countries, from developing countries
from our own experience, from the analysis of this experience
Now we should talk about our innovation, theoretical innovations
First we need to talk about the institution
The institution is not there originally
not there to make decisions and decide what should happen
The institution comes from the process of industrialization
from primitive accumulation
based on the kind of resource structure
that’s there, you could develop that certain kind of institution
So the institution is not an original concept set up
by some leader or government
It follows the process of industrialization
That is the first point we need to challenge
A lot of Eurocentric ideologies talk about institutions
They say you have institutional problems
so you need transition
Transition from where to where?
They say, “Okay, you need to transition from your institution to my institution”
And then they make you believe the institutions determine a lot of things
That is their base
But we should turn this idea around to make
the people in developing countries understand
that the institution did not happen before industrialization
The institution, the system, the measures and the mechanisms
all follow the process of industrialization
That means you cannot simply duplicate
others’ institutions, systems or political regimes
You need to think about how you can carry out your own industrialization
then set up and apply the institutions for yourself
That is the first challenge we need to raise
Then, we should know that economic crisis is very common
Everybody can easily acknowledge that there are cyclical crises occurring
not only in other countries but also internally
We need to pay attention to the studies on
how governments deal with these economic crises
what kind of measures the governments adopt
If you believe in the market system
you may go to market measures, which is to go “short”
But if you believe in the other side
the government will go “long”
Going short and going long, these are two different streams
two different systems
Sure, if the economy is rising
if it’s a booming economy
certainly one can just release control and let private sectors go “short”
to take their profits
But in facing the challenge of an economic crisis
governments must take responsibility and adopt the measures of going long
That is a very simple idea but a very complicated system problem
because if there is not sufficient capacity to use the treasury system
which means the government fiscal system
it would not be possible to adopt “going long”
If there is no independent financial system
meaning the banking system
if the banking system is controlled by transnational companies
then even if the will is there in the government
it would be hard to take going long measures
We should understand that there is a kind of regulation
a kind of law, of cyclical crises. That is not so difficult
Going forward in the studies
we should know what measures
governments should take when facing the challenge of crisis
going short or going long?
If you want to go long, what are your hands?
Do you have the hands?
One hand will be the fiscal system, the other hand the banking system
If you don't have these two hands, if you have cut off your two hands
then what do you have? You only have a big head, and a big mouth
You can speak loudly like the politicians
They have said all the good words to the common people
But eventually the people would think they’re liars
They speak a lot, but do little
But you cannot just blame these politicians for doing little
It’s because they don't have these two hands
That is the problem
So if you are the people of a particular country
you have to understand what hands your country has
what your country can use
Then you may do something
Not just follow some slogans
some flags, and join the campaigns
You cannot save your country and you cannot save your people with that
This is very important
When we know what kind of measures the government
can adopt to deal with crisis
we can go forward in our studies
and we would also take note that the measures require institutional change
If we set up a very strongly controlled banking system
the outcome will certainly be a big interest group
the government-controlled banking system
would turn into a big interest group
very much influencing government policies
We would need to pay attention to what they do
They may become a kind of monopolistic interest group
that controls all the financial resources
or they may welcome the transnational companies to share the profits
or they may turn back to long term construction
What kind of role does this interest group play?
It’s very important to understand the post-crisis measures
or post-crisis policies
I strongly recommend that developing countries’ progressive scholars
spend a bit of time to see how the new Chinese government
when on its establishment in 1949 it faced the problem of hyperinflation
took the opportunity to use the government’s hands
to attain economic recovery
It’s very important
Here in this slide I have put two pictures
The left one shows that since 2012
China has become the largest industrial country
If you calculate the industrial GDP based on PPP
you may find that this one big economy’s total industrial product
was equal to two United States
and eight other advanced, industrialized countries
This means China has now regained the position
it had at the beginning of the 19th century
Before the 1840s
the total production volume in China was one third of the world’s
Since imperialist countries attacked China, it declined
Now after 170 years
China has regained its position as one third of the total
amount of the world's economic volume in terms of industrial output
China now produces one third of all industrial products
The picture here on the right is very interesting
It shows three leaders having a conversation
Germany is still a very big industrial country
China also. Each of their two leaders has a big wrench
But the new president of the United States only has a small one
This picture shows that the industrial production
of the United States is only 11% of global GDP based on PPP
But China’s industrial production
nowadays is 37 to 38% of the global total
and Germany is similar
So, the two countries, China and Germany
their industrial GDP is still one third each
The Chinese industrial production is one third of the world’s
That is a new phenomenon
It makes people pay attention to China and becomes concerned about China
Next we’re going to talk about the historical constraints
Almost all these developing countries, including China
want to learn from western countries
but the critical issue for them is that they cannot learn from the west
given that for them there is no more opportunity to exert colonialism
The western countries had that kind of historical opportunity
The developing countries do not
One thing this means is they cannot offload their population
China is now the most populous country, with 1.37 billion
This population gives China a very heavy pressure
It’s a heavy burden
If they're going to set up industries
there is a problem because industries have an inherent mechanism
industries are capital intensive and use less labor
These highly populous countries all need to pay attention to employment
because they have very big populations
If they set up industries
industries would always use capital while reducing use of labor
Employment will be a big problem. In the 1930s
you can see from these black and white pictures from the 1930s
that because of the crisis
the Kuomintang government could not solve the economic problems
a large number of the population became migrants
with no jobs, flowing around like a flood
This picture is from 2008
when the United States was in financial turmoil
The overseas demand on Chinese goods had largely decreased
From 2008
a large number of the labor force in coastal China was laid off
Just when they wanted to go back to their home villages
a natural disaster occurred due to global warming
A lot of electrical facilities were frozen
there was no electricity supply
and the transportation network stopped
Thousands of people huddled in squares in front of railway stations
There was social chaos
I don't want to belabor you with the story
but just to show you by means of these pictures
that big population countries are always developing countries
If you go to a less populous country
it would either be a colonial country or a colonized country
In the colonized country
there would have been a loss of the indigenous population
the colonizers came to take their resources
and the indigenous population declined
In the colonial countries
they would have sent out a lot of their population to the colonies
and the domestic population then became smaller
Comparing these two basic situations you may realize
how difficult it is in developing countries when they want to set up industries
The conditions are quite different
So, because of colonization there have developed
three different kinds of capitalisms in three different parts of the world
It divides up the whole world into three parts
With that you will have a basic picture to know where you are
dThe first part consists of the United States, Canada
Australia, Brazil, and some former colonized regions
They have smaller population size, but big resources
They have more advantages and can give more priority to industrialization
If they fail, there is no excuse
The second part is the so-called “colonial master countries”
that is to say old Europe
Old Europe all set up industries
and because they all set up industries
they faced the challenge of overproduction
That is why
the First World War and Second World War both happened in Europe
I don't want to give more explanations on the culture in Europe
but anyway, people will note that industrialization
never solves the problem of conflicts
Rather, it adds more events to the complexity, making things worse
Then the third part is the Asian model
The first one is the Anglo-Saxon model, the second the Rhine model
and the third one is the Asian model
The Asian model includes Japan
South Korea, China, Chinese Taiwan and Vietnam
the East Asian area, they have the Asian model
This area has all set up industries
I mean finished industrialization
No matter what -ism they claim
no matter what their Cold War ideology is
all this area, these countries and regions hadve set up industrialization
So we should divide capitalism, the capitalist world
into these three parts, then study and compare the different parts
Then we may know the true picture
When we talk about economic crisis
especially when we talk about the 1949 economic crisis
we must note that this ’49 economic crisis was not created in ’49
It was created in the 1930s
which was the so-called golden age of the KMT government
when the KMT government also was trying to set up modernization
through urbanization and industrialization
These two –zations, urbanization and industrialization
will always be the main components of modernization
So, when the KMT set up the government
they wanted to, going forward, set up modernized society
Modernization is the long-term target, the aim
So in the 1930s
the KMT dominated the whole country
Nominally all the local warlords joined the central government
and claimed to be part of the central authorities
The KMT government's industrialization started
from the late 1920s to the early 1930s
They had ten years of high annual growth
If you calculate their GDP
the annual growth was 8.6%., 8.4 or 8.6%
Not small. It's high growth
If you calculate this for new China it was 9.6%
So Old China with ten years of 8.4%
it was not low, it’s high growth
But this growth was constrained by the 1929-1933 western countries’ crisis
A lot of people know that there was a western countries’ crisis in the 1930s
but few people understand that the golden age
in the 1930s of old China, I mean KMT government’s China
was very strongly impacted by the 1930s world economic crisis
It’s because originally China’s currency was silver
Silver was the currency in China
But China did not have many silver mines
So China had large imports of silver since the 15th century
since the 15th century, not the 20th century
China had large amounts of imported silver for 500 years
because China exported a lot, Chinese tea, silk…
It had a large amount of trade surplus
With this surplus, it did not need to trade for products
it only needed silver
A large amount of silver flowed into China for almost 500 years
So although China had no silver mines
the whole society was able to use silver as the currency
as the exchange, the reserve
Not only the governments, but also the private sector
Even the landlords
and businessmen all wanted to keep more silver as a property
to show that they’re rich enough to have a lot of silver
They even buried it underground
for their future generations
for their family’s sustainability
But during the 1930s western countries’ crisis
the silver price
was increased by the silver mining states in the United States
In the United States there were six states
that contributed a lot of silver for exports
When the crisis happened, initially there was deflation
Deflation means that the price of gold and silver decreased
So, these states were short on meeting the budget
They wanted the federal government
to give them the priority to increase the price
When they increased the price, the world market price of silver increased
But then, the silver in China was the currency
and the Chinese governments could not raise the price of the silver by much
So China had a low-priced silver while overseas there was high-priced silver
Then what happened?
Low-priced silver was smuggled out
I mean, if you use silver as the currency you must stabilize the silver price
If you allow your silver price to increase
it means everything will be very much negatively impacted
When silver flowed out through smuggling
that means there was a shortage of silver
and the domestic silver market price went up higher and higher
with bad impact on the entire economic growth
At first, the KMT government changed the financial system
by issuing paper money
The paper originally issued in 1935, issued in November 1935
was in the name of “legal currency.” It’s a paper currency
That is, first when the Chinese economy was urbanizing and industrializing
then there was the reform
the currency system reformed from the silver system to a paper system
That was the first time the KMT government tried to
set up a sovereign, legal currency system
If the government could succeed
they would be able to stabilize the economy
reducing the influence by the overseas silver markets
So this effort was very important
Even though it’s made by the old government
we need to be very objective in doing analysis on such efforts
It's important
When the KMT government wanted to stabilize the new money system
they also faced the big challenge of Japan
because Japan at that time was failing
in its battle against the Soviet Union in Mongolia
Initially Japan was supported by Britain and the United States
to move forward to the north, attack Mongolia and Siberia
to take the resources from this area
That was why the United States and Britain backed Japan
Then, in the 1930s
when Japan failed in the battle against the Soviet army
Japan turned back to the south
Their first strategy was to control northeast China
Second, to go into northern China
That all happened in that same year, 1935
When the KMT government wanted to stabilize the currency system
the Japanese army controlled northern China
When they controlled these areas they increased the silver price
so that gold and silver would flow into northern China
to the areas they controlled
When the KMT government lost silver and gold
their legal currency, the paper currency, had less backing
So the currency value was reduced due to competition
From 1936
the Japanese prepared further attacks on the KMT government
On this side the KMT government also needed to apply more revenue
more resources, for the preparation on war with Japan
So, in the local markets, resources became higher prices
The currency system went into inflation
From 1936 to 1937, inflation started in China
That is why you can see that originally the currency
this one on the left side, the upper one
when they just issued this paper currency
the denomination of the currency was smaller
This one was 20
Later it became much bigger. A million
Look on the right side
The left side was 20, or 10, or 30, small denomination, small bills
Then it became big, millions
Ten years later
or twelve years later, in 1948, you can see this bill
How much is this one?
Six billion, one bill was six billion
which meant inflation became much more severe
The high inflation
attacked the KMT government's economy
In the 1930s and 1940s
almost all people suffered from this hyperinflation
Almost all the industries could not stand
Almost all the local businesses could not stand
because the inflation had badly attacked the economy
the physical economy
On the other side, there were many white
small pieces of paper
What's that?
These were circulating in the communist party's controlled area
a guerrilla-controlled area
They didn’t have currency
but they needed resources
They needed to take cloth, food, whatever
They didn’t have any legal money
How did they deal with the problem?
They gave out the white paper
On the write paper I signed how much grain I took from your village
how much cloth, how many shoes, whatever
and how many laborers you have contributed to the guerrilla movement
For all this, I gave you a certification
With this certification, they didn’t need a modern economic system
They used a very traditional one, and it’s low cost
The local people believed that when they won
when they set up the new regime, they would be paid back
So it meant they had no modernized economic sector
They had no such modern sector
If the guerrilla movements could succeed
to mobilize the common people to join, they would win
So on one side there was modernization with a very high cost
The other was a very traditional way in these rural areas
Ultimately, you find that the rural surrounded the cities
the villages surrounded the industrialized cities
that was the so-called ‘nongcun baowei chengshi’
and that was the way of the Chinese revolution’s success
When we give this kind of description
it’s a story to show that when the countryside surrounded the cities
when the Chinese revolution succeeded
ultimately, these guerrilla controlled the big cities
when they took the cities
They needed to run the cities
That was a challenge
You could not stop outside the gates of the cities
No, you’ve got to get inside
So they said
“We have taken the cities! It's now our next stage of revolution”
But running the cities was much more difficult than taking them
That is why beginning in the 1940s
especially in the late 1940s
within the Communist party leadership there were many discussions
How can we run, how can we maintain, the cities?
How can the new government avoid the old government’s problems?
It was a big challenge
That is why we first give you a picture of that lesson
The KMT government wanted to modernize
They tried but failed. Why?
Externally and internally there were different events
that had impacted and made them fail
Consider that: they had a modern army with modern armaments
heavy artillery, tanks, air force - that needed to be paid for
87% of the old government’s fiscal revenue went to support the army
Then there was another side
The government had the fiscal system - that was one hand
The other hand was the banking system
but the banks
could only give out loans in these useless currency
useless because it had no value
The common people when they wanted to buy some food
they needed to take a large pack of currency
Certainly the common people had a lot of complaints
Nobody was satisfied
Then the government could not give to the soldiers
and the officers the big packs of currency as salary
They could not
That is why almost all the generals
all the officials would exchange this currency for gold or silver
That is why there was serious corruption in the old government
The old government wanted to deepen the currency system reform
They wanted to set up a new currency system
and give up the old currency because it was valueless
like the bill here, valueless
They wanted to set up the new money
and this bill of six billion, which was too big a bill
was changed to ten thousand of the new money
The new money was set up backed by the American “gold note”
When United States won the war and occupied Japan and Europe
they made the claim
that one American dollar could at any time be changed into gold
There was a fixed price between the paper dollar money and gold
So the American dollar at that time
was called in Chinese the gold-backed bill, or “gold note”
The Chinese government borrowed 50 million American dollars, the gold notes
Based on that, based on that foreign debt
the government issued the ‘gold dollar notes’, or ‘dollar gold notes’
Meanwhile, the government had forced the private sector
as well as government officials and military officers
to “contribute” whatever they had in gold and silver
The people did not have the right to hold gold or silver
It must be contributed to the government
The government wanted to reestablish the base for the treasury
and based on the amount of gold controlled by the government
to reissue the sovereign currency system
It was also another good effort
but failed again after only four months
because nobody wanted to “contribute” their gold and silver to the government
So when the KMT failed to
deepen the financial system reform
the government also failed, collapsed
The army - a million soldiers in the modern army - was also disbanded
For the peasants who joined the guerrilla movement
they didn't need the many modern sectors
When they won the fighting and took the big cities
they had no experience in maintaining the city economy
or to deal with the inflation
Think about these peasant revolutionary leaders
They might know how to mobilize people to join the guerrilla
but they had no knowledge of running a modern economy
That was very interesting
So, when we talk about this slide, we would give you the detailed story
First
the KMT government retreated from the mainland to Taiwan
Before that they gave orders to the central bank
to transfer all its gold and silver to Taiwan
Taiwan was an island with just a small population of several million
It was enough to set up a currency system based on that gold reserve
So the Taiwan currency system was stabilized
which strongly facilitated the Taiwanese economy
But, on the mainland
when they set up the new authorities, the new government
there was no gold – a large amount of it had flowed out to Taiwan
When they took the big cities, they needed to pay for everything
That was not the way in the countryside, which was mostly self-reliant
In the city, every day there’s the need to supply food
clothing, coal and whatever
There was a need of supply
Like Beijing, at that time with a population of four million
like Shanghai at the time with five million
how could they supply enough
to keep this large number of citizens in the cities?
And then they tried to issue paper currency
So there was inflation
What did they have? They had no gold
They also had no products, no physical resources
They only said
“We won the fight, we set up the government”
but that’s only a part of leading a country, the political part
As for economic effort, what could they do?
So look at this slide
When they first issued paper money
they needed to treat almost the same amount as fiscal deficit
When they wanted to feed all the cities
with the government’s fiscal system
it meant a large deficit immediately came up
The fiscal expense turned into deficit
They had no resources
They could only issue paper money, to fill the deficit
Whatever the amount of deficit
they needed to issue that much paper money
It meant, at the beginning, the currency system was an inflationary system
For the private sector businessmen
inflation was not just a heavy pressure, but could also be a chance
If they could obtain some rice or cloth or whatever resources
they would have the chance to enjoy profit from the rising prices
If they bought for a hundred and several days later
it might be worth five hundred, they could sell it for a profit
So a lot of the private sector people joined the market
to hoard physical goods for the rise in price
That was speculation
So there's no normal markets
Also, these private sectors had invested in silver
The new government had ordered that silver should be handed in
just like the KMT government
But they could not stabilize the silver price
They said, “OK, one hundred new currency can buy one piece of silver”
Two days later, the silver price increased ten times
They could not stop it. So, the government tried to use the market way
The market’s good – let’s use it!” They held an auction
The government did have some silver
They held an auction and immediately the silver was taken by the private sector
The government failed, and silver price went up
not only ten times but in this case it was 18 times
We have to give you a very important concept
In the late 1940s, under instructions from the Soviet Union
the Chinese communist party understood that it was a peasants’ party
not a workers’ party, since the party was joined mainly by peasants
At that time in China there were few workers
In the total population, the working class was less than 5%
Even if they all joined the communist party
they would still only be 5%
So the Soviet Union’s communist party said to them
“You're a peasants’ party”
So, the first target for them after occupying the cities
was to develop national capitalism
They need first to set up national capitalism
When national capitalism was developed
when they set up mass production, when they finished industrialization
then they could upgrade to socialism
Before that they would remain in capitalism
So in the late 1940s
the Chinese ruling party accepted advice from Soviet Union
They wanted to develop private capitalism, that is, national capitalism
in the name of neo-democratism, xin minzhu zhuyi
Then they said that Sun Yat Sen
and the KMT government were old democratism
They wanted to set up a new one
new in the sense of encouraging private businessmen and private capitalists
to run their businesses in both cities and the countryside
So even though they did these things
speculation and a lot of bad things
the government was constrained by this target
which was the unanimous decision of party leaders
They also announced to all the so-called democratic parties
to come and join the new authorities
At that time, a lot of ministers
even vice premiers had come from the democratic parties
not the communist party
It means all of them joined to make political decisions
They first needed to develop the private sector, national capitalism
How could they deal with that complicated situation?
That was a big challenge
At that time the central government’s leader in charge of economic affairs
claimed that the inflation was coming from the oversupply of currency
They decided, “Yes, it was our problem”
If they were to make market readjustment
they needed to go short
meaning to reduce issuing currency
because issuing too much had brought inflation, right?
So, there’s a contradiction
Which way should they go, long or short?
If they're a market system, they would go short, right?
I’ll leave this question to all of you in the audience