We should make use of foreign funds and let former capitalist industrialists and businessmen play their role in developing the economy

January 17, 1979

We are very pleased to hear that you have excellent suggestions as to how to develop the economy. Today I should like to talk on this topic.

Now that we are developing the economy on a large scale, we have come to understand that we do not have adequate knowledge or funds. At the Third Plenary Session of the Eleventh Central Committee, the Party decided to shift the focus of its work onto socialist modernization. As we have wasted a lot of time, we now have to develop rapidly. But how can we do this without repeating the mistakes we made in 1958? This is a problem we must solve. At present, it is necessary to develop the economy in many ways. For example, we can utilize foreign funds and technology, and overseas Chinese and foreign citizens of Chinese origin should be allowed to establish factories in China. In order to absorb foreign capital, we may either use compensatory trade or establish Sino-foreign joint ventures, beginning with enterprises where the turnover of capital is quick. Of course, we must not use more foreign capital than we can repay.

We should allow former capitalist industrialists and businessmen to play a role, using those who are well-trained and appointing capable individuals as cadres. Since you are familiar with them, you will be able to persuade them to assume appropriate positions. Take tourism for example, you can recommend capable industrialists and businessmen to serve as managers of tourist companies; some of them can serve first as advisors. I also hope that you will recommend industrialists and businessmen with knowledge of techniques as well as managerial expertise to manage enterprises, especially those enterprises comprising new trades in China. We should utilize Chinese people, both at home and abroad, as long as they are patriotic, devoted to work and capable.

We should implement our policies concerning the above-mentioned industrialists and businessmen and their descendants. These people stopped receiving a fixed rate of interest long ago. As long as they no longer exploit others, we have no reason to continue to label them "capitalists". After we have implemented these policies, these people will retain some of their money. They should be allowed to set up factories or invest in tourism in order to earn foreign capital. It is better for them to use their money to do something rather than keeping it idle. Industrialists and businessmen should choose a few projects in which they are willing to invest. In short, both industrialists and businessmen and their money should be utilized.

Comrade Rong Yiren, I hope that you will concentrate on economic work and on opening to the outside world in any way that you see fit. You should follow this rule: accept only those tasks which you consider reasonable and refuse any unreasonable ones which the government assigns to you; you have full powers to deal with corporate affairs. You will not be blamed should you deal with some affairs wrongly. You should manage the economy according to economic principles. When signing contracts, you should judge from commercial perspectives, signing only those contracts which will bring about profit and foreign exchange. You should proceed regardless of administrative interference. The full powers mentioned above include the power to employ personnel. You should not hesitate to do anything conducive to socialist economic development.

(Excerpt from a talk with Hu Juewen, Hu Zi'ang, Rong Yiren and other leaders of industrial and commercial circles.)

(From Selected Works of Deng Xiaoping, Volume II <1975-1982>)