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Copyright 2005 The Financial Times Limited
Financial Times (London, England)

July 19, 2005 Tuesday
London Edition 1

SECTION: ASIA-PACIFIC; Pg. 7

LENGTH: 630 words

HEADLINE: Fears of unrest drive Chinese 'democracy': The Communist party is allowing local elections in an effort to quell concerns over instability, says Alexandra Harney

BYLINE: By ALEXANDRA HARNEY

BODY:


One Saturday morning in June, 45 residents of Xingyuan, a neighbourhood in the southern Chinese city of Guangzhou, gathered at a local school lecture hall to exercise their right to vote.

This was democracy, Chinese-style: as ceiling fans pushed damp air around the room, a solemn official read instructions into a microphone. The residents stood for a recording of the national anthem, pink ballots were distributed and filled out, and each resident dropped his or her paper into a red box at the front of the room.

The residents, mostly elderly women in brightly coloured blouses, were electing the neighbourhood committee - an increasingly common occurrence in China.

Although large-scale political reform is still not on the agenda in China, Beijing is expanding experimentation in democratic techniques at a local level. Village elections began in the countryside in 1987 and elections for neighbourhood committees, the lowest level of administration in Chinese cities, followed in 2002. In recent years candidates for neighbourhood committee elections have been allowed to hang campaign posters and even contest poll results. Other areas have given residents a voice in decisions on public works projects.

The government's efforts come amid rising popular assertiveness on policy issues, fuelling concerns of instability. Villagers and city residents alike now regularly voice their views in demonstrations. Strikes occur with increasing frequency at Chinese factories.

"The (Chinese Communist) party has a real intention to prevent social instability at the local level," says Joseph Fewsmith, a professor at Boston University who has researched village elections in China. "The elections are a way of doing that."

The Xingyuan poll provides a rare glimpse into the limits - and opportunities - of China's relatively new urban elections. Of the 5,463 people in the neighbourhood, only 50 were allowed to nominate candidates and vote for the seven-person committee (five of the representatives did not show up to vote). Each of these 50 people had been chosen by groups of 20-30 households.

Liu Yonghong, the 37-year-old woman who was re-elected director of the committee, is also the neighbourhood's Communist party secretary.

This kind of overlap is the norm in most other parts of the city - only 16 per cent of Guangzhou's neighbourhood committee directors are not party members - and elsewhere in China, according to Huang Weiping, dean of the college of management at Shenzhen University. Ms Liu dodged questions about her campaign techniques. "This will be my second term," she said after her re-election. "I think the community has approved of my work and my performance."

Under Chinese law, neighbourhood committees' res-ponsibilities include publicising government laws, resolving conflicts between residents, assisting the state in public hygiene, family planning and education and reflecting residents' views to the government.

But how much power these committees actually have is unclear. While the village committees, which decide some land use issues, carry weight with farmers, electing neighbourhood leaders is still a new concept to many of China's city dwellers. Because committee members serve three-year terms, this was only the second time Xingyuan residents had elected their neighbourhood committee.

"In urban areas, people have various ways to survive. They are not tied to the community as tightly as in rural village committees," says Prof Huang.

That relative underdevelopment was apparent in Xingyuan. With 10 candidates vying for seven seats, the election was hardly hotly contested. As the votes were tallied it quickly became clear that Ms Liu would win by a landslide. All the winning candidates finished with more than 40 votes. Rise of nationalism, Page 17

LOAD-DATE: July 18, 2005

The Danger of Adopting a Soft Approach to China

By Peter Morici
884 words
8 July 2005
The Asian Wall Street Journal
A9
English
(c) 2005 Dow Jones & Company, Inc. To see the edition in which this article appeared, click here http://awsj.com.hk/factiva-ns

In 1876, Europeans flocked to the Philadelphia Centennial Exposition and were astonished by American industrial prowess. In two generations, the United States had progressed from a simple agrarian society to a rival of the most advanced European economies. Today, Americans are confronted by China, like a distant image in the mirror of their childhood -- an emerging power, quickly developing the means to alter global events.

This struggle is about whose values will prevail. Americans believe individuals, each building their own lives, best chart the progress of a nation. Governments draw their legitimacy from collective approval, because the people, collectively, are the sovereign. Democracy and markets are as essential to what is America as are words and paper to books. Its political and economic institutions organize competition among individual ideas and initiative that define its civic and material lives.

Democracy and markets are mutually reinforcing. Markets work best when personal freedoms are protected and democracy does the best job of safeguarding those. Free markets give individuals a strong interest in securing democracy. To protect these values and ensure their success, the U.S. has worked with its allies in Europe and elsewhere to build an international system that permits democracies and market economies to flourish. America doesn't always agree about everything with its friends, but that hasn't stopped the development of a human-rights system and global economic institutions that reflect a good measure of these beliefs.

China is not a Western nation as, for example, Japan and Taiwan have become. Nor is China a 19th century America. China has an authoritarian government with no plans or timetable for relinquishing power. By word and deed, the Communist Party assumes parental authority over Chinese citizens, and asserts sovereignty, without consent, over all people within its borders and ethnic Chinese beyond them.

China embraces market reforms only as necessary and seeks to participate in global markets on its own terms. Unless compelled by need, the Chinese government is not about to embrace market reforms that could engender popular sentiment for democratic change. Unlike 19th Century America, China's development is not driven by largely home-grown technologies, skilled labor or abundant resources. In the 19th century, Americans either pioneered or made important contributions to steam power, the railroad, telegraph, and other major technologies. Wages were higher than Europe or Asia, which is why many skilled immigrants came. Americans had the advantage of considerable resource wealth to power development.

In contrast, China is accomplishing growth with other people's technology, on the backs of cheap labor, and desperately dependent on Middle Eastern oil and other imported resources. It is compensating for its shortcomings, and then some, by maintaining an undervalued currency, subsidizing exports, and keeping the living standards of workers artificially low. China is building a middle class but on the backs of factory labor paid less than the value it creates.

During the Cold War, U.S. moderates advocated a policy of engagement toward the Soviet Union believing the Soviet people would see, through our example, the power of individual liberty and compel change from within. Now, those principles are being applied to China, because many believed they worked with the Soviet Union.

This is folly. The Soviet Union collapsed, not because it bought into Jeffersonian ideas, but because its economy failed. China's economy is succeeding. Don't look for its leaders to call for free elections anytime soon. The Chinese government sees itself as redressing hundreds of years of Western humiliation, and boasts that China soon will be making the international rules of the game. To sustain the Communist Party, China has a strong interest in selling its brand of authoritarian capitalism to its neighbors, and making the international rules of the game less supportive of democracy and human rights.

To secure its supply of oil, extend its influence and solidify internal security, the Chinese government is building a blue-water navy and spending massively to modernize its army. Seen in this context, the present policy of engaging China is very unwise.

Pressuring China to change by imposing explicit costs when its actions harm others makes more sense. For industries harmed by subsidized Chinese imports into the U.S. market, direct trade sanctions can redress the situation and better promote trade and employment based on genuine comparative advantages. That means targeted trade sanctions if China does not revalue its yuan, respect intellectual property, exploits worker rights to achieve export advantages, or otherwise break the norms and rules it has embraced by joining the World Trade Organization, International Labor Organization and other international organizations.

Such actions need to be taken in the context of a broader and more realistic view of the challenges China poses. It's time to confront the fact that China, rather than evolving into a democratic society with a market economy, could just as easily morph into a fascist menace with global reach. Not recognizing this challenge and acting to address it means contributing to China's success and supporting its agenda. That is appeasement, and history has taught us the hard way the perils of such a policy.

---

Mr. Morici is a professor of international business at the University of Maryland.

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LexisNexis(TM) Academic - Document

LexisNexis(TM) Academic - DocumentCopyright 2005 The Financial Times Limited
Financial Times (London, England)

June 11, 2005 Saturday
USA Edition 2

SECTION: LETTERS TO THE EDITOR; Pg. 6

LENGTH: 260 words

HEADLINE: China lacks the economic stability needed for political reform

BYLINE: By STANLEY LUBMAN

BODY:


From Mr Stanley Lubman.

Sir, In arguing that China must move faster to promote democracy ("Sooner or later China will embrace democracy", June 7) Victor Mallet ignores the complexities involved in changing China's governance.

Unwilling leaders combine with social instability to create conditions more likely to result in political disorder than orderly transition.

China's leaders obviously lack the will to bring about a meaningful rule of law, not to mention representative government. They are at best ambivalent about the relationship between civil society and the state, and are often hostile to institutions they perceive as detrimental to continued Chinese Communist party dominance, such as religion and the internet.

China also presently lacks the economic and social stability needed for political reform. Economic reform of state-owned enterprises, a bankrupt financial system, a casino-like stock market and the lack of a national social safety net are only the most obvious difficulties.

Offering moralistic advice to other nations on democratisation is a venerable tradition in US foreign policy. Such advice to China might be more credible, however, if it were buttressed by substantial assistance to legal reform and budding non-governmental organisations.

Congress, however, has been niggardly. More basically, in the face of China's size and its social and economic flux, progress towards political reform can only be slow and impossible to accelerate.

Stanley Lubman, Lecturer in Chinese law, University of California, Berkeley, Berkeley, CA 94720, US

LOAD-DATE: June 10, 2005

LexisNexis(TM) Academic - Document

LexisNexis(TM) Academic - DocumentCopyright 2005 The Financial Times Limited
Financial Times (London, England)

June 24, 2005 Friday
London Edition 1

SECTION: ASIA-PACIFIC; Pg. 10

LENGTH: 792 words

HEADLINE: China's 'go west' investment policies to limit wealth disparities show limitations: Even Beijing's communist leaders admit a regional economic balancing act is impossible, writes Mure Dickie

BYLINE: By MURE DICKIE

BODY:


South Korea's SKTeletech raised eyebrows last year when it announced plans to build a mobile phone factory in Urumqi, capital of China's far western region of Xinjiang.

Xinjiang, a sparsely populated and economically backward region with an economy based heavily on desert oil drilling and cotton cultivation, is not an obvious place to try to establish an electronics business.

But SK Teletech, an affiliate of the SK Telecom group, did not have much choice.

Asked why the Koreans would choose a remote region with limited skilled labour, Cha Xinming, a senior official of the Urumqi economic and technological development zone, points out that only companies approved by the government can make mobile phones in China.

Allowing SK Teletech to set up in China's more developed east could have resulted in a "major loss of social resources", Mr Cha says. "(They had to) fit in with the Great Western Development policy," he says. Such determination to direct high-technology investment towards Xinjiang reflects the importance put by China's government on boosting the economy of the country's western regions.

The five-year-old western development policy is aimed at limiting regional wealth disparities that have yawned ever wider as the economies of China's eastern provinces boom.

It is also intended to ease ethnic tensions and cement Beijing's rule in frontier areas such as Xinjiang, where many among the mostly Uighur local population see Chinese officials and settlers as foreign occupiers.

In Xinjiang, the impact of the policy is easy to see. Urumqi boasts a gleaming new airport terminal and upmarket department stores in its Chinese-dominated centre. A local executive talks with pleasure about the speeds he can reach in his Mazda sports car on a new road built into the desert. "Practice has proved that the central authorities' policy decisions, guiding principles, policies, and key tasks for implementing the strategy of the great development of western regions are absolutely correct," a meeting of Chinese leaders concluded last month.

Even Beijing's self-congratulatory communist cadres recognised that "myriad difficulties and problems" still plagued the western regions, however.

Indeed, some senior officials publicly acknowledge the limitations of the western development policy. Lou Jiwei, vice-finance minister, says fiscal transfers to western regions totalled Rmb600bn (Dollars 72.5bn, Euros 60bn, Pounds 40bn) last year, but that this was only enough to ensure public spending there matched eastern levels.

"I think it is impossible for development of the west to rely on fiscal spending. It has to rely on the strength of the market," Mr Lou says in an interview.

In Xinjiang, officials see pulling in investors such as SK Teletech as a way of putting market forces to work for the region's benefit.

The new SK Mobile, a joint venture with Chinese telecommunications equipment manufacturer Datang and a Xinjiang property group, is expected to prompt a number of related investments from parts producers that will lay the foundations of a new electronics sector in the region. "By helping Xinjiang to attract some relatively high-tech companies . . . the state is driving Xinjiang's economic development," says Mr Cha.

SK Mobile is also keen to look on the bright side of its Xinjiang base. Ma Chaoying, company vice-president, says the venture sees a potential market in central Asian states that border the region, although he admits it is still "not clear" how big a source of demand they might be.

But the reliance on administrative influence to push investment westward highlights regional authorities' inability to offer the kind of generous tax breaks and other special treatment that might make private companies eager to come.

SK Mobile will get cheap land, but even that is often available much further east. "The government's attitude is 100 per cent supportive, but the scope of its incentive policies are limited by state regulations," admits Mr Ma.

Even if SK Mobile confounds its doubters and thrives in China's hugely competitive handset market, Xinjiang is likely to be forced to seek new ways to attract investors.

General liberalisation of the Chinese economy is gradually reducing officials' leverage over investment decisions. Since SK decided to set up in Xinjiang, new regulations have allowed a number of new mobile handset manufacturers based in eastern areas to enter the market.

Even if Xinjiang is able to drag in other electronics investors, it is unlikely to ever become a centre of Chinese high-tech manufacturing - and it might be wiser to focus on other opportunities.

It is impossible to achieve complete economic balance between China's regions, warns Mr Lou. New Asian invasion, Page 17 Samuel Brittan, Page 19

LOAD-DATE: June 24, 2005

People's Daily Online -- Widening income gap, the most serious social problem in China: survey

People's Daily Online -- Widening income gap, the most serious social problem in China: survey

Home >> Business
UPDATED: 10:07, July 09, 2005
Widening income gap, the most serious social problem in China: survey



The widening income gap was the most serious social problem in China in 2004, according to a recent survey conducted by the Party School of the Communist Party of China (CPC) Central Committee.

The survey also found that reform of the income distribution system in 2005 is the top concern of the respondents, including officials at the provincial level, Xinhua Telegraph Daily reported Friday.

"Irrational income distribution is the main cause of widening gap between the rich and the poor", the paper quoted Peng Zhao, a member of the Standing Committee of the National Committee of the Chinese People's Political Consultative Conference, as saying.

Statistics showed that the ratio of the average annual disposable income between urban and rural citizens stood at 1:3.23 last year, compared with 1:2.57 in 1985.

Rural residents with low income, or 865 yuan (104 US dollars) per person a year, number 90 million, accounting for 10 percent of the country's total rural population.

An Qiyuan, another CPPCC member, said that the income gap between different social sectors is also wide. Those working in some monopolized industries, such as power, water and gas supply units, telecommunications, air and railway transportation, enjoy much higher salaries than those working in other industries.

The income gap between those poorly-paid and highly-paid industries increased by 4.25 times last year, against 3.98 times in 2003 and 2.62 times in 2000.

There is a cry for breaking the monopoly of these industries to narrow the income gap.

Meanwhile, Peng called for improvement of the country's personal income tax collection system.

It is reported that 80 percent of the country's personal income tax came from salary earners, while tax evasion is common among "rich people", as it is difficult for tax collection departments to control and identify the actual income of the rich because of their diversified income sources.

"The role of the personal income tax in adjusting income distribution is decreasing, which results in great losses for the state coffer," Peng said.

The two CPPCC members proposed to improve the tax collection system and readjust the existing minimum amount of personal income to be exempted from taxation, which has been standing at 800 yuan for 20 years.

They also called for the establishment of a sound public financial budget system and a monitoring system. Banks, financial, auditing and taxtion departments are urged to play a supervisory role to make the distribution system "more fair and reasonable."

Source: Xinhua

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人民网>>中国经济周刊 2005年 第一期



“国计”当为“民生”


回首2004，关注民生已成为全国人民的共识；展望2005，关注民生必将成为举国上下的行动。
想必今年的农民工不再更多地为拖欠工资而过不好春节了，因为此前专门出台了相关考核领导和企业的管理办法。想必今年的首都市民将更少地为沙尘暴和空气污浊而苦恼，因为北京的绿地覆盖率将计划达到50%，半个京城有望掩映在绿色海洋之中。
而像这样实实在在为百姓生活考虑的规划计划和政策法规，不仅贯穿了整个2004年，在2005年有望更多，尤其是将更加务实地把既定的制度与计划落在实处，让百姓切切实实享受到好处。国计当为民生。国计之所以重要，在于民生之多艰。改革开放，是为民生；加入WTO，是为民生；“三个代表”，是为民生；和平崛起，是为民生；求真务实，也是为民生；科学发展，也是为民生；宏观调控，更是为民生。
铁本事件，嘉禾拆迁事件，阜阳奶粉事件，西安宝马彩票事件，德隆系崩盘事件——没有一桩不涉及“民生”，也没有一件不事关“国计”。政策救市的金牌一道接着一道，以WTO规则抗击WTO效应的战斗一场接着一场，没有一道不为民生，没有一场不是国计。利国利民的投资体制改革果断推出，而心存余悸的直销立法千呼万唤仍犹抱琵琶；行政许可法限制公权，保护私人财产入宪，外贸权对个人开禁等等。正所谓，国为民生计，国计为民生。“国富民强”是中华民族近百年来孜孜以求的目标。当今的中国已从旧中国积贫积弱中走出，以大国的形象崛起于世界民族之林。然而，我们离“国富民强”尚有一段距离。要完全达到“国富民强”或说“民富国强”，还需要我们的逐步缩小贫富差距，兼顾公平与效率的关系，消除二元现象，改善经济结构。“企业无人便止”，“国无民不立”。一个企业是“社会公民”，一个国家理应是“公民社会”。企业以人为本，国家当以民为本。立党为公、执政为民，为人民服务，情为民所系、利为民所谋、权为民所用，是侍国为政之天职，是经世济民之宝杖。
2005年是继续加强宏观调控的一年，是最后敲定“十一五计划”的一年；是距WTO全面开放的最后一年，也是北京奥运准备工作全面展开的一年，更是各方面务求突破的一年。所谓突破，就是既定的“国计”要真正发挥作用变成服务“民生”的现实。
可以想见，百姓在新的一年里，将会享受到更多的价廉物美的商品与服务，将会呼吸到更加清洁的空气，将更少地为交通堵塞而烦恼，失地农民有望复耕，下岗工人将有更多的就业机会，公民享有的社会保障和福利也会越来越多。人民有望过上一个“生活实惠年”、“社会和谐年”。
可以预见，因为2004年的转折以及2005年的突破，我们离一个全面安居乐业的小康社会将越来越近。


《中国经济周刊》 (2005年 第一期)