Central Instructions on the Report by Nan Hanchen et al. Concerning Financial Conditions Since the Three-Anti Campaign (February 19, 1952) To All Central Bureaus and Military Region Commands, with Copies Sent to Sub-bureaus and Provincial, Municipal, and Autonomous Regional Party Committees:  (1) This report by the bank’s leading officials [1], as the Central Finance and Economic Commission has noted, is correct in all respects except for its inaccurate depiction of the recent decline in output in both state-owned and private industries. The remaining assessments and recommendations are sound.  (2) All Central Bureaus and provincial, municipal, and autonomous regional party committees are requested to pay close attention to those recommendations in this report that can be implemented locally, and to direct the financial authorities to address them in the course of the Three-Anti and Five-Anti campaigns.

Issued by the Central Committee on February 19, based on Mao Zedong’s handwritten draft.

Notes [1] Refers to the report dated February 14, 1952, submitted by Nan Hanchen, Governor of the People’s Bank of China, and Hu Jingyun, Vice Governor, to Chen Yun, Chairman of the Central Finance and Economic Commission, and to Vice Chairmen Bo Yibo and Li Fuchun, concerning the state of the financial market since the commencement of the Three-Anti Campaign. The report states that since the start of the Three-Anti Campaign, the following developments have occurred: prices have continued to fall; the fiscal situation has further improved; deposits in the state banks have kept increasing; trade has contracted slightly; the trade deficit with capitalist countries and the shortage of foreign exchange have begun to reverse; industrial production is proceeding normally; and private commerce is being acceleratedly reorganized.

In these circumstances, the bank proposes to take the following measures:

1. In conjunction with the Five-Anti Campaign among private industry and commerce, local Party and government organs are urged to actively guide and oversee the Five-Anti movement in joint-stock and private banks and money changers, so as to thoroughly rectify and transform these institutions.

2. Adapting to the new situation of price stability, private interest rates should be promptly reduced by 20 percent, and the monthly interest rate on monetary savings should be lowered to around 1.2 percent.

3. Given the current stability of prices and the continuous withdrawal of currency from circulation, there is no need to tighten monetary policy. Banks may appropriately increase trade loans to stimulate the market, expand the sphere of state-owned trade, and thereby support production.

4. While maintaining an adequate stock of foreign exchange, efforts should be stepped up to make more effective use of such reserves in order to avoid risks.

5. The bank’s own Three-Anti Campaign will continue, with the next phase focusing on examining bourgeois ideology and revising rules and regulations, primarily through the establishment of a budgetary oversight system and a centralized credit allocation system.

6. It may be considered not to issue public bonds this year, and work on printing bond certificates could be suspended.