Huang Qifan

Huang Qifan, a research fellow with an MBA degree, formerly served as mayor of Chongqing and as vice chairman of the Financial and Economic Affairs Committee of the 12th National People’s Congress, and later became an academic adviser to the China Finance 40 Forum and executive vice chairman of the academic committee of the China Institute for Innovation and Development Strategy. He worked for many years in Shanghai, Chongqing and elsewhere, taking part in and leading a series of restructuring efforts. As he recalled in the preface to his book Restructuring and Breakthrough, the restructurings he took part in and led over more than 50 years of work included restructuring local stocks, revitalising industry and developing Pudong in Shanghai, and advancing reforms in all areas of the economy and society in Chongqing. He summed up the essence of restructuring as the optimal allocation of resources and the innovation of systems and mechanisms, holding that deepening reform cannot be separated from restructuring, and neither can transforming the mode of economic development.

Restructuring and Breakthrough was published by CITIC Press Group in April 2024. It collects Huang Qifan’s thinking and practice of “seeking breakthroughs through restructuring” when he encountered difficult problems during his time working in Chongqing, and is divided into two parts, on enterprises and on industries. The first part deals specifically with the restructuring and management of enterprises, discussing in detail five types of enterprises: urban investment platform companies, capital operation and investment companies, financial enterprises, state-owned industrial and commercial groups, and private enterprises; for each type, the book explains the severity of the difficulties they faced at the time and the urgency and necessity of restructuring, and sets out the framework and principles of the restructuring plan, the countermeasures, and the results and outcomes. The second part focuses on restructuring and management at the industry level, covering six sectors: urban real estate, industry, the transformation of inland processing trade, education, finance and public finance; the restructuring of each sector aims to optimise and restructure all kinds of factor resources from the supply side, in order to achieve extraordinary development within a structural balance. The book argues that restructuring is problem-oriented and is generally launched in five situations: to achieve extraordinary development, to resolve problems left over from history, to solve widespread problems, when encountering explosive, crisis-level acute problems, and when new policies, new systems and new environments suddenly enlarge the space for enterprise activity.

In terms of methods, Huang Qifan summarised five restructuring methods: boundary adjustment, optimal allocation of resources, distribution of interests, structural adjustment, and adjustment of management policies. He stressed several key points that restructuring must observe: restructuring is a matter for management and must not resort to “populism”; it must pay attention to timing and opportunity, acting at the right moment and handling matters decisively; restructuring should be a win for all parties, and, taking the restructuring of ST companies as an example, he proposed the “quadrilateral rule,” that is, balancing the interests of four parties: the original major shareholder, strategic investors, retail shareholders and creditors; it must be carried out in the open, in accordance with the law, market rules and the public interest; and it must be done within one’s means and stop at the right point, and must not use high leverage and high debt to restructure. He also pointed out that restructuring involves multiple levels, from enterprises’ micro-level systems, the national investment and financing system and the financial regulatory system to the macroeconomic control system, and that cross-border restructuring must also take into account legal and cultural differences between countries.

Huang Qifan believes that a good promoter of restructuring must possess five major qualities: being good at integrating all kinds of knowledge, setting no boundaries and focusing on opening up ideas; being good at simplifying the complex, cutting a complicated problem into several simple problems and solving them one by one; being good at using all kinds of national policies, making full and good use of legal systems and market economy rules; being good at using the conditions and resources at hand; and being good at bottom-line thinking, guarding against “treating the head when the head aches and the foot when the foot hurts,” pushing present problems into the future, or shifting troubles onto neighbours. He summed up the highest level of restructuring as “following one’s heart’s desire without overstepping the rules,” that is, keeping central policies, legal restrictions, workable leverage resources and conditions acceptable to ordinary people in mind to form a frame, and combining them freely within that frame.

Huang Qifan once analysed that, taking multiple indicators together (population ageing having begun, a nominal urbanisation rate of 63.9%, annual sales of newly built commercial housing of 1.7 billion square metres, about half of the global total, national per capita housing floor area of 41.76 square metres in 2020, land and housing prices having doubled four times over twenty years, a national housing vacancy rate of about 20%, and large-scale shantytown and old-neighbourhood redevelopment nearing completion) and comparing them with international conditions, one can conclude that China’s demand for new housing has reached a turning point of relative saturation. He also believed that the COVID-19 pandemic that began in early 2020 affected household incomes and adjusted expectations for the future, accelerating the approach of this turning point.