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News Review Jie
SHEN 1. World Trade Organization (WTO) Since the conclusion of U.S.-China bilateral trade negotiations, the White House has mobilized to persuade the Congress to grant China the permanent normal trade status. Such a grant will end the annual ritual of Most Favored Nation (MFN) vote. The Corporate America, with an ever-increasing hope to open up the Chinese market, has also stepped up its lobbying effort. CNBC reported that American corporations had already spent close to six million dollars on their lobbying efforts. However, a Business Week article reported that this year's unusual calendar at the Capitol Hill might prove to be a problem. "Given a long summer break for the Presidential nominating conventions and a fall recess for House and Senate members to conduct their campaigns," the article says, "only about 70 legislative days remain in the year." Furthermore, the Republicans in the Congress, albeit normally supporters of big business interest, may deliberately delay the vote till the eve of the Democratic National Convention. The Republicans might wish to weaken Al Gore's labor endorsement. The labor groups are traditionally the backers of the Democrats, but they oppose the WTO membership and permanent MFN status for China. On the Chinese side, it seems that any resistance against China's WTO bid has subsided. Several ministry heads have recently come out to voice their support for China's WTO bid and announced plans to open up the market in their respective industries. At the end of January, 2000, China concluded the first round bilateral negotiations with the European Union (EU). The second round of negotiations are still on-going. It is rumored that the price tag put forth by the EU is at least as high as the one set by the U.S. Trade Representative Charlene Barshefsky. 2. Education On January 30, 2000, China's Ministry of Education issued a circular, allowing both undergraduate and graduate students to take leaves of absence from their education to establish high-tech startups. These students, according to Hua Xia Wen Zhai (HXWZ), can maintain their student status while on leave. The Chinese Educators Association reported that there are severe delinquencies on the payment of teachers' salaries. The cumulative amount of salaries overdue nationwide has recently reached RMB 710 million, which is about 90 million U.S. dollars. 3. Taiwan The "presidential" election in Taiwan is to be held on March 18, 2000. It will be a tense moment for many Chinese people around the world. The race to "presidency" is locked in dead heat, and it is difficult to predict its winner. To gain a wider support base, all three candidates are moving towards the middle on issues concerning the mainland-Taiwan relationship, all announcing that they will promote more communications across the Taiwan Straits if elected. The mainland of China is clearly infuriated over the passage of the Taiwan Security Enhancement Act (the Act) by the U.S. House of Representatives. Many suspect that the Act will not be passed in the Senate. Moreover, the White House has made it clear that if the Act were to be passed, it would veto it. Therefore, the overwhelming (5:1) approval of the Act in the House is primarily symbolic. On February 20, 2000, the mainland Chinese government issued a white paper entitled "The One-China Principle and the Taiwan Issue." Most of the white paper repeats the long held positions of the mainland. For a long time, the Chinese government has made it clear that Taiwan is to be "liberated" if the renegade province declares independence. It is, however, startling when the white paper makes the policy statement that if Taiwan refuses indefinitely to pursue "the peaceful settlement of cross-straits reunification through negotiations, then the Chinese government will only be forced to adopt all drastic measures possible, including the use of force, to safeguard China's sovereignty and territorial integrity." On the other hand, according to Ming Pao, the PRC government has denied that there is a definitive time table or deadline for re-unification. 4. Taxation According to HXWZ, on December 31, 1999, China's General Bureau of Taxation reported that the tax authorities in China had successfully increased the annual tax collection by 100 billion RMB. The total tax revenue in 1999 exceeded 1 trillion RMB. The government's budget deficit, warned by many experts, remains sizable. It was also reported in HXWZ that China is to establish a tax police force. More than twenty tax officials were killed and more than one hundred were injured in the process of collecting taxes since 1993. In 1999, the total uncollected taxes outstanding reached 3.6 billion US dollars. 5. Market Liberalization The Chinese government recently promulgated a number of new laws and policies to allow greater labor mobility and market freedom. The Ministry of Human Resource has recently permitted people with technical background to move freely around the nation while maintaining their "Hu Kou" (residency status). The Ministry has also allowed employees of non-enterprise organizations to hold second jobs, while permitting state-owned enterprises to pay high salaries to attract talents. On January 11, 2000, the government for the first time permitted minerals, land use and other public resources to be freely traded on competitive markets. On January 18, the government further reduced restrictions on the development of private enterprises. Chinese economy is moving at a very fast pace towards a free-market system. In some cases, China's pace of liberalization has even exceeded that of some developed countries. For example, China Telecom went public and offered its shares on the U.S. market more than two years ahead of Deutsche Telecom. As another example, while most airports in the U.S. are still owned by the government, Beijing International Airport has already offered its shares to private Chinese investors. 6. Internet In 1999, the Internet experienced amazing growth in China. There are now almost nine million Internet accounts in China. An average Chinese user surfs the net for seventeen hours a week. The China Securities Regulatory Commission recently announced that it will promulgate rules to regulate securities trading on the Internet. It seems that the Chinese government is now struggling between utilizing the Internet as an engine of economic growth, on the one hand, and preventing the Internet from becoming an disseminator of unwanted information and a political threat, on the other. This is reflected in China's flip-flop position on whether to allow foreign investors to own 50% or more share of an Internet Service Provider or Internet Content Provider. The latest position is yes. In addition, on January 26, 2000, China's State Security Bureau promulgated the Regulations on State Security Protection for Computer Information System on the Internet (the "Regulations"). Although the Regulations did not come as a surprise, their severity was unexpected. As "matters of state security" are usually loosely interpreted in China, the Regulations potentially encompass much more than the protection of important state intelligence. The Regulations charge the owners of websites and chat rooms with the responsibility of censoring the information flow on their websites, even if the owners are not the source or publisher of the content. 7. Corruption Recent corruption cases in China have reached a new level in terms of both the amount of money and the rank of the officials involved. The Xiamen Yuanhua case was reported by HXWZ to involve 80 billion RMB. Almost all government and party officials in Xiamen City are implicated. Some high-level officials in Fujian and Beijing are also being investigated. A four-hundred-people-strong investigation team was sent down from Beijing to Xiamen. The suspects at the center of the scandal, Lai Changxing and Lan Fu, the latter being the former Deputy Mayor of Xiamen, are reported to have been apprehended at overseas locations and then brought back to China. In another high-profile case, Cheng Kejie, Vice Chairman of the Standing Committee of the National People's Congress is reportedly under investigation for serious corruption charges. The Central Government has played two hands in handling the ever-escalating problem of official corruption. On the one hand, Premiere Zhu Rongji is using a strong hand to lay heavy penalties on corrupt officials. On the other hand, President Jiang Zemin has been very active in advocating higher moral standards amongst party members and government officials. The effectiveness of these approaches remains questionable. (Jie SHEN is a J.D. candidate at the New York University Law School.) |