EXECUTIVE Vice-Premier and central bank governor Zhu Rongji yesterday laid down tough new rules to restore fiscal discipline in a national meeting with leading bankers and financial officials. During the meeting, which was attended by the heads of the People's Bank of China and its main branches, Mr Zhu called on regional leaders to restore financial discipline, promote financial reform and strengthen macro-management. Chinese sources said several central bank cadres as well as the officers of specialised banks such as the Agriculture Bank would soon be sacked or disciplined for alleged mismanagement. According to China Central Television news and the New China News Agency, Mr Zhu said it was necessary to affirm successes and criticise failures, restore order, push forward reform and turn around the current situation in which funds were in short supply. He said that since senior leader Deng Xiaoping's call for reform early last year, and last October's 14th National Congress of the Communist Party, the overall economic situation had been good. But new problems had appeared. One of them was the shortage of funds, which was caused by excessive investment without improving economic structures. He said there were many problems in economic discipline and management. The remark apparently referred to provincial and local government defiance of Beijing's directives aimed at cooling the economy. Mr Zhu said that while heeding Mr Deng's call to seize the opportunity to develop the economy, it was also necessary to play safe and avoid losses. He called on all those present to keep the economy from getting out of control. The new deputy governor of the People's Bank, Zhou Zhengqing, reported to be a protege of Mr Zhu's, also delivered a report at the meeting calling for financial rectification and reform. The official media did not disclose yesterday the measures recommended by Mr Zhu and Mr Zhou, but Chinese sources said they were in line with the Central Document No 6 released last week. On lending policy, central as well as specialised banks were asked to give priority to sectors including agriculture, energy and transport. All banks have been given orders to chase back loans illegally or improperly lent to non-official financial institutions as well as companies engaged in speculative activities in the real estate and stock markets. The sources said the bankers deliberated on the extent to which the interest rate would be raised in the coming weeks. Other matters discussed included ways to cut down the money supply and to contain inflation to within 10 per cent.
