Dr. Fengbo Zhang

Seeking the Truth for 20 years 

-A Chinese Economist’s Journey


On invitation, this article was contributed to the book  "Seeking the Truth" edited by Ding Shisun, Vice Chairman of China Congress and former President of Beijing University, published by the China Youth Publishing House in 2000, has been included author’s New book  A Chinese Economist’s Journey.


Original Chinese Version


This account begins on my departure from China, over 20 years ago. The Kyoto campus scenery, Zhongnanhai (the equivalent of USA’s White House)’s multi-colored sunlight, Harvard Universities Laboratory's lights, Wall Street's winds and clouds, and China’s vicissitude, made my faith deepen: The absorption in the worlds newest scientific and technical payoffs, the establishment of science's economic theory and the methods, were at this time urgent matters for Chinese economic development, that reformed either success or failure.


1. Eastern Journey to Japan


In October of 1980, I went to study in Japan, and was set to study the Japanese language and its literature. I witnessed Japan's economic miracle achieved, and I thought for a long time : China's Human Sciences has a brilliant history spanning over several thousand years, and the Natural sciences in China had largely caught up with the rest of the world, illustrated by such cutting-edge aerospace technology that was unmatched by Japan. However, China's economy was still backward, and the key to this lies in the lack of economic theory guiding China's economic development. Therefore, I decided to study economics.

       I was determined to study the economic practices that promoted Japan’s rapid advancement of the economy. This namely was not Marxism economics, nor was it Keynes's western economics. The Japanese economical scholars and the policy-making bureaucrats had not imitated the Western economic system, but had profited from the modern economic theory. In order to accomplish this objective, it was necessary to implement the effective components of the Japanese system diligently.  The utilization of both the modern measurement analysis and computer methods carries on the empirical analysis of the Japanese economic structure and the change rule, which drove the government economic decision-making which resulted in the Japanese being characterized as “The Governmental Economics”.  The Governmental Economics had provided the theory that facilitated the rapid growth for the Japanese economy.

In the beginning, I taught the Chinese language in the evening to cover my expenses for my studies abroad. In order to concentrate on my studies, I applied for a Japanese government scholarship. My professor’s tireless efforts resulted in a recommendation letter from the Faculty board:  “He has made research achievements that surpassed the Japanese students".  The President of the University presented this letter to the Education Minister. As a result, the Ministry of Education revised the rule, allowing me an exception, and resulting in my being the first Chinese student who domestically obtained a Japanese government scholarship in Japan.

Kyoto University Professor Kawagami’s Marxist economics textbooks once enabled Marxism to pass to China. Now this course passed to the Dean of the Faculty of Economics, Professor Ikegami Jun, who was one of my principal teachers, and Western Economics renowned scholar and former Dean of the Faculty School of Economics Professor, Yamoda Hiroyuki, and the top econometrics professor in Japan, Professor Sawa Liuko, who became my deputy instructors. I initially studied economic theory history, systematically Marxism economics and Keynes West economics, the two classical theories.But my focus was on the analysis of the modern economic theory and method of Economics, specializing in Japanese Government Economics. Japanese Government Economics founder and former Foreign Minister, Okita Saburo, gave me much assistance.  Professor Baba Masao, Director of Kyoto University Institute for Economic Research, had been in charge of the Japanese Government Institute for Economic Research and as a key scholar of Japanese Government Economics, was a big influence. I had the opportunity to study and master the Japanese government enacted economic planning, economic policy decisions of a large number of documents, along with the analysis of the econometric model with related computer software and so on.  I published monographs and books, developed software, with the research results obtaining the Japanese academic circle's endorsement, resulting in numerous Japanese newspapers accounts and media coverage.

I was also invited to participate in a dinner hosted by the Japanese Prime Minister Nakasone, at the Prime Ministers House. November 1983, the General Secretary Hu Yaobang visited Japan, and cordially met with me, giving me warm encouragement.  "People's Daily", the No1 newspaper in China, reported on me many times, with enthusiasm and earnest expectations.  During my study in Japan, I was always invited to return to China for regional lectures. After obtaining the doctorate, I was offered a position as visiting professor at the School of Economics, Kyoto University, and had other offers as well.   In April of 1986, however, I instead decided to return to Beijing’s State Council, as Senior Research Fellow, participating in Chinese top economic decision-making and research.



2.  A Wonderful Life


       11 3 CCP plenary conference's brought with it a new sense of hope, like the awakening of spring after a long winter.  It brought order out of chaos.  The new reform and open policy, by our Leader Deng Xiaoping, opened the door to economic development.  Zhongnanhai’s red ocher walls encirclement, and the shade folds of the green jade, along with the bright red Ziguangge house, looked like a group flame, reflecting the yard brilliantly.   Of one mind, in a united mission, illustrated on that bright sunlit day, I spent a lifetime’s most unforgettable years.



                       Dr. Fengbo Zhang (Center) at Zhongnanhai (China’s White House)

                             for China’s top policy-making and research, in the 1980s.


       Looking forward with enthusiasm and a lofty sense of mission, I was inspired to work day and night. In my mission to create a Chinese-style macroeconomics for China's governmental policy-making, I profited from Japan’s governmental economic theory and methods, and analyzed the Chinese economic structure and economic factors inherent in mutual relations, as well as the change characteristics and rules of development; summarized as the theoretical system, guiding China’s economic decision-making. I also continued to develop the computational procedure and improved the analysis method.

My research reports were issued as internal government documents, including the Chinese economical history, the components of  economic structure, monetary aspects, finance, price, consumption, agricultural, foreign trade, investment, macroeconomic models, and other measures encompassing more than a dozen issues. By request, I organized seminars at the State Council esearch Center. Many young scholars were spontaneously organizing themselves to conduct joint research with me. Therefore, the State Council Development Research Center was officially established across the super group "China's Macroeconomic Group."  I was appointed as Head, Ma Hong, Sun Shangqing, Ma Bin and Wu Jinglian as Advisors. The 17 key group members were selected from the previously mentioned State Council researchers who self organized to be a part of this process. China’s No.1 economist Xue Muqiao and other Senior Advisors also often had lengthy conversations with me, and supported my research. I always emphasized that:  As the economic research involves a huge investment of manpower and financial resources, the standard for evaluating the economic research achievement should be does the economic research produce significant social benefits and the desired economic effect?

         Therefore, I established three rules for all to adhere to:

1. There should be centralized energy on economic research, absolutely no political counter to the right, or left.;

2. Do not struggle - for regardless of if it’s Socialism or Capitalism, races against time for the economic development;

3. Rigorous research style.   We should learn from the massive overseas research results, but must certainly understand thoroughly, conduct our own thorough and meticulous research proved with China's reality, written with clear and understandable language. We cannot utilize other research results from the copy of overseas example, or present obscure terms or concepts.

The first time I proposed the above position was in 1985.  When I was invited back to China to present a lecture to the Central Government leaders, in answering a question from an audience member, there was a round of applause from the audience.  Later, I learned that the audience member who asked the question was Mr. Ma Bin, the former Vice Minister of the Ministry of Industry, who was then the Deputy Director of Economic Research Center of the State Council.

The computer heat and the economic analysis heat were not only scattered in the State Council at this time, as the leaders and scholars in other Ministries also rushed to join us in this endeavor.

I was invited to teach at the Top Universities, including the Central Party School, the Chinese Academy of Social Sciences graduate school, The Graduate School of the Chinese People's University, Tsinghua University, etc.   My research results very quickly appeared in such authoritative publications as "Economic study", "Social Sciences in China" and so on, and the related newspapers reprinted one article after another.  I completed more than 100 papers and reports at home and abroad, as well as publishing 10 books. Among them, the top publisher, People Press, had published my two books:  "Chinese Macro economic Analysis" and "Chinese Transportation Economic Analysis", in less than six months as urgent top priority projects.

At this time, Chinas academic community finally recognized that modern economics is the crystallization where the natural sciences and the social sciences unify, and bestowed the name “the soft sciences” on this unified theory.   Reviewed by the academic experts, the "China Macroeconomic Research" project I headed had been included in  “China 7th 5 years Plan of National key Scientific Research Projects”.  “The national economy system research” I led had also been incorporated into the “Chinese National Natural Science Foundation Project. F”

I made some regional investigations, and issued a group of research reports for decision-making. Simultaneously, we recognized that we additionally must solve national economic problems in emergencies. I used some analysis methods from the Japan Economic Planning Agency to analyze China's national economic situation and policy-making, and issued regular economic situation reports. With Chairman Ma Hong's management, at the State Council Research Center, I introduced the components and the analysis method of the Japanese governments annual report, referred to as the “Economic White Book”. Soon, these methods were recognized and approved by top Chinese leaders, with the center deciding to publish China's “Economic White Book” every year.

Price was the most controversial issue. Some people suggested that the liberalization of prices, with high inflation, stimulate economic growth. I remained committed to using the established pricing theory and econometric analysis method, to analyze the Chinese basic price structure, the change rule, the rationale for price increase, along with the countermeasures for preventing price increase and so on, and had written a number of reports illustrating these points. I insisted on a conservative stance against the use of administrative measures to relax restrictions on prices. Among my internal governmental reports, a few have been published to the public: e.g. "We must grasp the objective economic rules of price changes, by establishing a reasonable price policy to maintain the relative stability of prices”. , "Particularly to in-depth analysis of the reasons for the price increases, and understanding its change rule, formulates each pricing policy very prudently. Otherwise, the economic activities will have a host of new contradictions, and that runs counter to the results.”  (Fengbo Zhang " Analysis on the fundamental reasons for the price rise in China” published on the State Council Research Center Magazine " Management World "1987 No. 5, 1st article).  "We believe that the inflation policy is not in line with China's national conditions, and could not stimulate the growth of China's economy." (Fengbo Zhang  "Research on operation and regulation of the macroeconomic" Page 264),  " The transportation pricing reform also needs the same financial reform, for the monetary policy to unify.  Otherwise, in the decontrol of finance or inflation's situation, losing the price control will cause the price to rise suddenly.”( Zhang Fengbo  "Chinese Transportation Economic analysis" Page 201).

I introduced the Western countries’ price theory guiding decision-making, , the extremely strict and complete macroeconomic management system, along with the laws and regulations system.    The professional management staff, as well as the general public, formed consumer awareness of this concept, along with need for supervision.

Whether in the United States or Japan, price stability is the most important economic issue to maintain political stability.  The Government's price adjustment plans need be subject to strict review by consumer groups and the professional committee, as well as receiving parliamentary approval.  In 1987, In order to profit from the reform of the political system, the State Council Research Center delegation inspected Northern Europe's social welfare system. However, in my written inspection report, I strictly clarified the necessity of price stability by elaborating that inflation to Northern Europe countries harms the countermeasure.  My report was issued and distributed as the top priority government official document at that time.   Additionally, when I was invited by Chinas Communist Youth League Central Committee to make a speech on the economic situation, I emphasized once again the need to inhibit inflation. Before leaving Beijing to go to United States, “The price and the current situation” seminar held in Beijing also published my conservative opinion against the liberalization of prices, and used my comments as the concluding remarks of the seminar: " On the government, after introducing the market mechanism to the price, cannot wash their hands. In other countries, such as Japan, the government formulated a series of laws, regulations and the pricing policy, and is very strict to several kind of basic price management. For example, even the Prime Minister has no right to change the prices of agricultural products, and any changes made must be subject to examination and approval by Congress. The transportation price changes must be proposed by the Transportation Minister, and reviewed and approved by Congress ” (" China Youth Daily "April 8, 1988). At the State ouncil Research Center, the majority of us have taken a cautious attitude, and denied all the proposals and plans for decontrol of prices.

At this time, the State Council's Development Research enter’s collective research project I headed was completed.  After it was submitted for publication, we celebrated with a dinner. In my speech I noted: “The first fight has already announced a victory, the modern western economic research theory and methods have struck root in the hearts of the Chinese people. We have completed all of our tasks and risen to every challenge.  If we are held again in the tall building, deep courtyard, we will be eliminated by the train of time, which is speeding up.   We must fire into the forefront of the world’s science and technology unceasingly to accelerate the updating of knowledge.” I indicated,” We have long way to go. When everyone gathers together again, we should produced more advanced achievements. Also raise money to set up the Chinese Economic Research Award, which will reward excellent Economists who use advanced scientific and technological research to benefit Chinas economy, avoiding mistakes in economic policy-making, thereby creating enormous economic benefits”.  At this time, I did not realize that these would be my final words and thoughts on my point of departure.



3. Moving Towards a Worldwide Perspective


In June of 1988, on the invitation of Martin Feldstein, who was at that time Chairman of the Economic Advisers Committee for the President of the United States, I went to the USA to conduct visiting research at both the National Bureau of Economic Research and Harvard University’s Economics Department. Here were gathered the world's best economists of the time, where Nobel Prize winners had been innumerable. I participated in various research projects and academic discussions. The profound theoretical studies, along with mathematical proof, contrasted to the focus of Japan’s economic studies.  The many scholars in the USA were pursuing an abstract, academic and theoretical study. The result of this focus produced a large number of Nobel Prize winners over the years.  In contrast to the theoretical approach of the US, I observed the distinction of economic focus with Japan, where the attention to the usability of economic analysis is of primary importance and where the allocation of economic research demands resulting financial benefit. Japan did not have a Nobel Prize winner in economics, however was experiencing an economic miracle in which the economy soared, although underneath very backward conditions and on the ruins of defeat. An authoritative scholar at Harvard University recognized the miraculous success of Japan, wrote the book  "Japan as No.1".

 When I was reading the "Guangming Daily"  a leading Chinese newspaper in the Harvard-Yenching Library, the front page On September 15, 1988 had an eye catching title that attracted me: “<Analysis of Chinese Macroeconomy > etc. 10 books won the 1987 Chinese National Book Award".  The report indicated that: "The award-winning books are selected from 233 kinds of outstanding books recommended by 233 publishers. Nationwide, nearly 100 experts and scholars participated in the judging." Although my work topped the list, and had won the highest prize for a Chinese book, as I was so physically removed being in the US, I was unable to imagine the grandeur of the award ceremony which was held at the Great Hall of the People, located in China’s Capitol. 

Although the information from China was limited, press releases indicated that I was the Editor in chief of "China's Macroeconomic Structure and Policy" which was collectively authored by the State Council Research Center, and had been published by the China Financial and Economic Publishing House.  The first edition of 20,000 copies was sold out, and the second edition was rushed to print.  I later learned that this book also attained the “Chinese National Book Award" the following year.

Additionally, I was editor-in-chief, and worked along with hundreds of scholars from the Central government relevant Ministries and research institutions (including the Central Party School, Chinese Academy of Sciences, Chinese Academy of Social Sciences, People's University, Tsinghua University, etc.) and authored "Macroeconomic Operation and Regulation Research" which was published by the Shanghai People Publishing House, and also won a book award.

I received the Japanese version of "Chinese macroeconomic analysis," from the famous Japanese Publishing House, Yuhigaku Publishing Co.  On the back cover, Okita Saburo, who was the Japanese governmental economics founder, as well as former Japanese Foreign Minister, endorses the book via photo and commentary that included: "The Pinnacle of China’s Economic Analysis". The Chinese Foreign Language Publishing House sent the English edition manuscript to me for review, the Chinese Copyright Proxy Corporation had also mailed to me the agreement with Taiwan publisher for the overseas Chinese edition.

I explored the theory and method for Chinese economic analysis, and attempted to create the Chinese Macroeconomics, and finally received recognition academically at home and abroad.

However, in these contingency days, an unanticipated event occurred in China: the decontrol price plan which was denied by us, but unfortunately, was later revived and forcibly introduced, caused nationwide panic buying and led to the biggest scale inflation since the founding of the People’s Republic of China in 1949. The people’s long-term basic life stability suffers major destruction as a result of this economic turbulence. China could not avoid the basic rule verified by all other countries, which was that inflation became the key reason which caused the Chinese economic turmoil and social unrest in 1989.

                                   4. The Silver Lining


As a result of my journey and stay in the US, my outlook broadened not only theoretically, but in that I was also given the advantage on the broad international finance arena, I was able to further my knowledge and display my skills.

I utilized this advantage, in both Japan and the United States, and often wrote articles for both the USA and Japanese magazines, introducing the United States real estate market, to attract Japanese investments to the US. There was considerable shock when finally Japan had a major push into the United States real estate market.  In the vast stage of America, the Japanese investors were playing out a historic drama as illustrated by large purchases, most notably of these, Citibank’s building, and Rockefeller Center - a financial symbol of the United States.  There were exclamations by the international community such as:  "The United States 's soul has been bought by the Japanese.” The US citizen’s response to this was: “Japan's economics has the potential to be more fearful than the Soviet Union's military menace.” 

Japan additionally sought to retain the United States most talented personnel. Every year, the largest Japanese Companies held job fairs in the US.   I prepared a resume detailing my accomplishments, subsequently interviewed and received offers from several banks and financial companies.   I eventually accepted an offer from Takenaka Corporation, the leading Japanese construction company, which was actively investing in the US real estate market.

After my training at Tokyo Headquarters, and at my request, I was assigned to New York, and was responsible for the company’s investments in the US real estate market.

 From New York's commercial buildings, the western luxurious hotels and resorts, to Hawaii's browsing paradise, and golf courses, the investment business launched comprehensively.

Japanese investments in the United States were a very complex business. At that time, the United States was in an economic crisis, and various negative aspects were trying to bluff the Japanese investors.  Adulteration, false specializations were everywhere.   Lawsuits were commonplace.I handled many kinds of complicated joint ventures, with the company structure involving a large number of legal issues requiring my careful attention.  The financial analysis and management were enormous, but due to my background of econometric analysis I was more than able to handle all those business tasks.

My main office at that time was located in the New York Nippon Club Tower, which was owned by the Takenaka Corp. The Nippon Club Tower is Japan's largest overseas center, whose   members are composed of leading Japanese Companies and three Japanese ambassadors to USA, UN and New York. Japan’s biggest business organization’s US offices are also located in this building. The Building is called “Japan's window and symbol” by the international journalistic circles.

Japanese Prime Ministers and American political leaders, such as the New York governor, and the New York mayor visited the Nippon Club Tower and made speeches. The building is one of main places for the Japanese and US leaders to promote cooperation and exchange.  I was appointed to be one of three members of the Tower management committee, as well as the Committee's Secretary and Treasurer. I additionally was in charge of several Japanese investments as well as various Japan-US joint venture projects.

In the company, a Japanese colleague was of great assistance to me. His grandfather was the most well known Japanese Prime Minister who promoted Japan's financial reform.  He had grown up with the Japanese emperor's family, and was a classmate of the emperor's younger brother Prince Mikasa, since kindergarten. 

At that time, the seemingly endless economic recession in the USA was having an impact on people from all walks of life.   Many companies, and fundraisers turned to Nippon club for assistance.   When a cancer research center needed assistance to open, they came to the Nippon Club Tower.  My colleague was of great assistance. He invited Prince Mikasa to New York, and an elaborate fundraising banquet was held at the Nippon Club Tower.   As soon as New York's Japanese population heard that Prince Mikasa had come and his attendance at the fundraiser, it was an event every Japanese American or visiting Japanese businessperson and all of their family members would be most excited to attend.  As a result of my kind colleagues assistance, the planned donation funds were easily obtained.

 On June 28, 1993, the “Fortune” magazine announced the ranking of the world's richest people. Mr. Takenaka, President of our company, England’s Queen Elizabeth, as well as Saudi Arabia's King, were selected to the world's top 10 richest people.  (Bill Gates ranked 12,  Li Ka-shing ranked 16).   Mr. Takenaka has the same qualities as many other successful rich people, in that he amassed his wealth through diligent hard work and thrifty practices.  Excluding the necessary external business entertainment, his living and working conditions are very simple.   He always selects the economy class cabin to fly anywhere, and his typical business lunch is bowl of noodles. From Japan's Imperial Palace, the Prime Minister House, the National Theatre, to USA’s luxury commercial buildings, resorts, golf course etc Takenaka Group completed numerous world-famous constructions. However, when I worked at the headquarters in Tokyo, I visited Mr.Takenaka and found that he did not even have his own office. He and other directors shared a large room with each desk and chair. For any important matter, they meet at one desk to discuss. The inter company envelope has been divided into dozens of columns for repeated use.  The rules for power saving and water-saving are strictly implemented at company. This attitude of thrift created Japan’s economic miracle.

               One of the world's top ten richest people Mr. Takenaka (left 2) and

                             Dr. Fengbo Zhang (right 2) at Nippon Club Tower, New York.


I represented the Japanese consortium investment in American business; there were no Chinese in the business area. But at the Nippon Club Tower, I received many Chinese delegations. I also provided buildings for China's television shows to use as locations for movies. The establishment ceremony of "Chinese Science and Technology Association USA" - the largest Chinese Professional organizations in the USA, was held at the Hilton Hotel, with all of the preparatory work was done at my office. I was often invited to make speeches on investments in China. I also helped our Takenaka Corp.’s Chinese business, including the top 3 Japanese government free aid projects to China: the China-Japanese Friendship Hospital, the China-Japanese Youth Exchange Centre, the China-Japan Environment Protection Center – all were constructed by the Takenaka Corp.



5.  My Return to a Changed China 


After Deng Xiaoping's southern tour, I was advised to go back to China. I could no longer sit still. I finished the revised draft of "Analysis of Chinese Macroeconomy". As a companion to that book, I spent more time to prepare the years’ of rich information and personal experience of business operation and management, with the practice China, to complete the book of  "Operation and Management of Chinese Business". I called the senior editor of People Press, and he enthusiastically supported my plan.  I flew to Tokyo, the headquarters Takenaka Corp., and handed in my resignation.

At the end of 1993, when I once again set foot on Chinese soil, the immediate scene was very different from what I remembered and recently imagined: all the people were in sales, everyone was oriented only to money. The research groups of the past had been dispersing, and many of my State Council colleagues had moved south to Shenzhen Special Zone for monetary ventures.  Purchasing buildings, stocks, the changes impacted all of my former staff. Not only Directors, Section Heads, but even my former driver, who previously drove the economical “Santana” car, now is sitting in the luxurious Mercedes Benz 500 as a Company’s CEO.

In the past, we regularly called General Directors of each ministry for the meetings at the State Council. Financial concerns were so grave, and the resources were so sparse that the Director had to request the Minister to ask me several times for such financial issues as reimbursement of the lunch box meals for the meetings from my research fund.

This drastic change was a big shock to me, one that I needed to recognize, as my now peers and former friend made clear.  All of them indicated that I was holding onto the Old Imperial practices.  In the past, there was a big focus on ideas, now the focus everywhere was on money.   My old friend, the Deputy Director of the Theoretical Physics Institute of the Academy of Sciences, also told me that now Millionaires from Hong Kong and Taiwan are more revered and welcomed in China than the scientists of the Nobel Laureate I had invited from the United States.  He indicated that people would respect you only if you can bring these millionaires to China from the International capital market.

Then, I had interviewed with and got offers from several multinational companies operating in China that were based in Hong Kong,  I accepted Orix Corp, an investment bank very active in China’s business. I served as Chief Economist of the Asia-Pacific headquarters and Senior Manager in charge of China business. Based in Hong Kong, I promoted their investment and financing business in China. From Corporate finance, project loans, aircraft leasing, shipping finance, real estate development, to the company IPO/ listing, and so on, I covered all these business areas. There were trips to north Beijing, south Hainan, with the business developing smoothly. 

Due to tension in this daily schedule, I occasionally escaped to Beijing to participate in the meetings for economic policy-making, satisfying a craving for that part of my past that was so meaningful to me. I was also invited by the Foreign Experts Bureau of the State Council, as the key speaker for the "Mainland Senior Financial Leaders Training Center" in Hong Kong. I had the opportunity to teach the modern financial management methods to the leaders of numerous Chinese financial institutes and many government officers.   I found that some of the students wanted to simplify this teaching, based on the focus of learning everything quickly, forgetting that thoroughness is necessary in financial management, others deliberated on the newest Government Documents from the State Council, the State Development Planning Commission, Administration of Foreign Exchange Bureau, and discuss the skills of “playing the edge ball”.

 While in China, I found myself often going to bookstores, and looking for some analysis of China's economic book, and was disappointed that, in the corner of the economy, all the books are about money making from stock, investment in real estate, a fortune to the rich etc. Occasionally, I found several economics books, but these were Marx's "Das Kapital", or Western economic books. When I discovered the book of "Chinese Macroeconomic Structure and Policy Analysis" that I was editor-in-chief, was reprinted and on the shelves, I felt emotional and nostalgic. What grieved me, however, was that the book of  "Das Kapital", which was 100 years old, was still the main Economics textbook at the Chinese Universities.  Our textbooks defied Western countries’ scientific macroeconomic theory, consummation, Government management mechanism, the macro-control function and the extremely strict law and regulations monitoring system, and still used the "market economy", "free economy” etc. the age old simple model to describe contemporary Western countries’ economy.

At that point in China, economic theory, economic management, financial control mechanisms and regulations had not yet been established, and trained professional staff had not yet moved to leadership positions, but China entered the "market economy", "free market economy". China was like a big stadium, the competition rules had not been built in, there were no referees and professional athletes, and the audiences cannot wait, and jump to the stadium to compete with each other. On behalf of foreign banks, we invested a large amount of funds in China, but a large number of investments had become bad debts.  Only one of Our bank’s company – the first Sino-foreign joint venture financial institution had billions of dollars of bad debts, and the matter was reported as top news at major international newspapers. The huge amounts of foreign capital flowing into China, had become bad debts, and we could not recover. As an international bank’s investment manager, I have to accept the blame. With these changes in the market with increasing turmoil, it was like the winds howling before a storm hits. On the eve, before the Asian financial crisis hit, I made a decision: withdraw.



 6.  Defeating the World Financial Storm



In early 1996, I bid farewell to Hong Kong, and flew back to New York and returned to Wall Street. The next day, I went for an interview at Fuji Bank, the world’s largest bank, at their New York Headquarters, and was hired immediately.  On Wall Street, I was in charge of corporate finance to the worlds leading enterprises and handled the project's finance.  In the boundless business sky, things were going smoothly. However, out of the Asian financial crisis that swept through the end of the world, a large number of multinational companies dominating the world are either on the verge of bankruptcy or bankrupt, have been closed down. This spread to some companies of which I was in charge. Among them, Yamaichi Security became the post-wars largest bankruptcy company, which shocked the world. As the main bank deciding survival or death of Yamaichi Security, we were facing strong inquiries by major international medias in unison: "Why does Fuji Bank refuse to save Yamaichi Securities?" In this regard, we could only remain silent. The responses of Fuji Bank’s Director at the news conference had become our shield: "Even though we repeatedly urged, Yamaichi Securities has failed to submit a credible reconstruction plan, which leads to such a conclusion." Two years later, the Chairman and President of Yamaichi Securities were sentenced to one and a half year’s imprisonment due to concealing financial facts.

Financial turmoil dealt a heavy blow to the Japanese economy.  Japan’s position of arrogating the world's top 10 banks to oneself, dominating the international financial market, started to crumble.  Major banks in Japan, with the support of the Government, spent huge sums of money to speed up the strategic adjustment, and the main battlefield of international competition on the technology, talent, and the upgrading of knowledge. As the strongest, the most modern, most-effective Japanese bank, the Industrial Bank of Japan took the lead in a bold reform. From New York headquarters as the core form international market, the Industrial Bank of Japan recruit talent to understand and use the most advanced international financial management system to replace the original staff and management system. At the Industrial Bank of Japan’s repeated invitation, I joined the Industrial Bank of Japan at the end of March 1999. A few months later, on August 20, 1999, this bank became the top news of  "The Wall Street Journal" and other major newspapers, and shook the world's financial markets.  This news was that the Industrial Bank of Japan, Fuji Bank, DKB, formed a bank merger into the world's largest financial group - Mizuho.

Economy, information and society change with each new day, and the financial market was developing. As the result, the Marxist Economics, Keynes Economics, are difficult to deal with in the current economy, and this become a great historical milestone for later viewing. Economics textbooks in American Universities are upgrading each year, but still haven’t caught up with the train of time.

Finance is the crystallization of economics, and is the most effective means of government regulating and controlling of the national economy. U.S. financial authorities’ miniscule suggestions on the interest rates arouse very rough seas in the financial markets, the economy and society. Japanese government seizes the opportunity to intervene in the market, a small depreciation of the yen can create huge foreign trade income. Banks, as the economic artery, decided that business survival affects everyone living. To achieve standardize enterprise behavior, improve operational efficiency, and serve the purpose of every consumer guide, the banks must establish consummation financial regulation and control system under the guidance of the modern economy, business management theories and financial regulations. Citibank, and Chase Manhattan Bank annually input 2 billion US dollars for system development, the newly merged three Japan Banks also set the financial management system as the most important issue, with the annual plans to invest 150 billion yen. The financial industry absorbs, and develops today's latest science and technology achievements, which made Wall Street attractive to technological personnel even more than Silicon Valley. In the world's largest bank, developing and using the most advanced financial management system had become my main duty.

Here at the world's financial center, more than 10 years previously, my farewell words to my staff of the State Council rang true in my ears.  I could not help but look at the ancient oriental civilization country on the other side of the Pacific Ocean:  The reform and opening policy have produced fruitful results; the Government's macroeconomic and scientific management mechanism have begun to take shape through economic adjustment and financial consolidation; the new professional generation is gradually active on all fronts. The new Chinese economics theoretical system guiding China's economic development and reform, reflecting the China’s inherent structure, operation mechanism, laws of changes, and the trend of development will be established. Analysis method based on the ever-changing computer sciences and technology will also be established.  It is as if seeing that after 500 years of sleeping, with 50 years of a painful struggle and earth shaking roar, the Eastern lion is waking up.

  (End of 1999 in New York)