Establishing Offices in Shanghai [1]
(September 14, 1950)

To all central bureaus and party committees of the major military regions:

We have received a telegram from the Shanghai Municipal Party Committee dated September 12, stating: "From early June to the end of August, the Municipal Party Committee received reports from various district committees reflecting incidents involving personnel from various regions coming to Shanghai to purchase goods, who were defrauded, engaged in embezzlement, or deposited public funds in private banks under false names, totaling as many as eleven cases. Among the more serious cases, the Taiyuan Coal Mine purchased steel wire ropes, embezzled ten million yuan, and was deceived by merchants into accepting inferior goods passed off as imported products (already reported). Xu Fei, Director of the Transportation Department of the Third Army of the Northwest Military Region, deposited five to six hundred million yuan under assumed names in private banks. Upon investigation by the district bank, Xu himself displayed an arrogant attitude and used lame arguments. He and Zhang Ruiqing, representative of the Pingyuan Military Region, negotiated the purchase of a factory from Rong Erren without prior consultation with the East China Financial and Economic Committee, and directly signed a contract with Rong. Later, due to an improvement in the financial and economic situation, Rong reneged on the contract, and the matter remains unresolved. Comrade Wen from the First Field Army came to Shanghai to procure automobile materials and entrusted private agents to handle the purchases; the merchants passed off refurbished old goods as new, while the comrade himself engaged in corruption and debauchery, with no fixed residence. The Zhejiang Hemp Company, the Ministry of Industry and Commerce of the Central-South Region, the Northeast Forestry Bureau, and others, when purchasing hardware and electrical materials, all accepted commissions amounting to tens of millions of yuan. The Logistics Health Department of the Fourth Field Army, when purchasing books at the Guangxie Book Company and the Commercial Press, demanded extra books worth over three hundred thousand yuan. The above circumstances have all created adverse effects among the masses. We have separately forwarded copies to the relevant units for investigation and handling. However, because a large number of personnel from various regions come to Shanghai and are unwilling to make contact with the local Party and government authorities, and because Shanghai merchants are exceptionally cunning and crafty, our personnel are easily deceived by them. To prevent the recurrence of similar incidents, in addition to notifying the industrial and commercial departments to strengthen necessary care and assistance for comrades coming from other regions to Shanghai for procurement, we suggest that the Central Committee telegraph all regions, instructing them to establish offices in Shanghai based on major strategic areas (including large cities) to coordinate the trade and procurement affairs of all units, and to establish contact with the Shanghai Industrial and Commercial Office, thereby avoiding the malpractices of multiple channels here and merchants seeking illicit profits. We request your decision on whether this is appropriate." The Central Committee deems the opinion of the Shanghai Municipal Party Committee to be correct. You are requested to establish offices in Shanghai based on major strategic areas (including large cities) to coordinate the trade and procurement affairs of all units, and to establish contact with the Shanghai Industrial and Commercial Office, so as to avoid various malpractices. The errors committed by personnel previously dispatched to Shanghai from various regions should be reviewed, and necessary disciplinary measures should be imposed.

To the Shanghai Municipal Party Committee:

Central Committee
September 14

Your telegram of September 12 has been noted. We agree with your opinion and have ordered all central bureaus to establish offices in Shanghai in accordance with your suggestion to coordinate procurement and to contact you.

Central Committee
September 14