China News - Spring 2006


Ma Ying-jeou, leader of the KMT (Kuomintang or Guomindang in pin yin) party in Taiwan gave an interview to Newsweek (26 Dec 2005/2 Jan 2006). The KMT, which favours closer relations with the Chinese mainland and eventual unification recently won local elections over the ruling pro-independence Democratic Progressive Party (DPP). Hence Ma Ying-jeou will be a leading contender the Taiwanese Presidential elections to be held in two years time. Ma said that if the KMT are returned to power, they will open up direct flights to the mainland. The present Taiwanese government only allows indirect flights (e.g. via Hong Kong), which means that Shanghai is seven hours travelling time from Taipei. The prolonged journey time has resulted in many Taiwanese companies moving their headquarters to the mainland; direct flights would cut the time from Taipei to Shanghai to only 80 minutes.

Ma believes that the mainland is not actually pushing for reunification at this time-they have their hands full. However, if Taiwan does declare independence, the mainland has no choice but to use force. He believes that the correct path for Taiwan is to maintain the status quo, not provoke Beijing, to increase trade and investment and to relax cross-strait relations. Issues such as arms purchase from the USA needs very careful consideration.

Asked about reunification, Ma said that 10 years ago he would not have believed that this nor local elections on the mainland would happen in his lifetime. Mainland local elections are now being held, but it is not known how far democratisation will proceed and if it will eventually equal that already in place in Taiwan. However the sovereignty issue may not be solvable in his lifetime. He appreciates that the mainland has problems with Xinjiang and Tibet and any loosening up with Taiwan would not help. (From Newsweek 26/12/05 to 2/1/06)

China's-planned capitalism

China has revised its GDP upwards by 20% ($300 billion) and is now believed to be the fourth biggest economy in the world after the USA, Japan and Germany. Most economists believe this is a more accurate figure, which takes the service sector and small businesses (both hard to measure in the past) into account. Most people do not understand China's economy-it appears to be central planning that works and many assume that like Japan in the 1980s, China will stumble and collapse. But the situation in China is very different from that of Japan. Japan's development into a super economy required every aspect of Japan's society be modern. Japan's GDP per capita at that time was $30,000 and similar to that of the USA. At present, China's is about $1,700 and at some point it will meet the same type of problems that Japan did, but before this happens it will be the second biggest economy in the world with a GDP per capita of only $3,400-similar to present day Brazil. Growth has been possible in China because, the government has been relentlessly focused on economic growth doing anything necessary to achieve it. However, the growth has produced huge gaps between the cities and the rural areas and according to a UN report, the inequality gap is the highest in the world. This has given rise to increasing numbers of protests. About 10 years ago there were a reported 10,000 protests a year. Last year there were 70,000 protests-about 200 every day. The Chinese government is well aware of this situation is now focussed on 'balanced growth' and is listening carefully to local communities more carefully. It is trying to make officials more attentive, responsive and media-savvy. (From a view by Fareed Zakaria in Newsweek 26/12/05-2/1/06)

From the British Press

Liverpool pays tribute to Chinese seaman

Chinese merchant seamen who served Britain during two world wars will be honoured today. A plaque commemorating their contribution to Britain's victories will be unveiled at the Pier Head in Liverpool. Liverpool civic leaders will be joined by some of the oldest surviving seafarers from Shanghai. More than 80 members of the Chinese community are expected to attend and the Lord Mayor of Liverpool, Councillor Alan Dean will lay a wreath on behalf of the city. He has said that the plaque should have been unveiled years ago to thank those who made the ultimate sacrifice and lost their lives for our country.

The plaque is also a memory of the Chinese seamen who were forcibly sent back to China after the war during October 1945 to July 1946. About 2,000 had settled in Liverpool and official records show that more than 230 had married local girls and had families. They were rounded up and put aboard ships without being given a chance to say goodbye to loved ones. Many wives did not know what happened to their husbands and believed that they had been deserted.

A whole generation of their children grew up not knowing anything of their fathers. It was only very recently that a group of the children, now in middle age, carried out research in the National Public Records Office and uncovered the truth. The Home Office at the time wanted the Chinese population in Liverpool reduced to the pre-war level of 300 and ordered Special Branch police to carry out the repatriations. One of the group, Keith Cocklin has managed to trace his father to Shanghai. Unfortunately his father died several years ago, but he has met his half brother and his two half sisters in Shanghai. (From The Liverpool Daily Post 23/1/06)

Lord Chan-leading paediatrician and pillar of the Chinese Community

Lord Chan of Oxton has died the age of 65. He was the first peer of Chinese descent. He was a leading paediatrician, and a dedicated campaigner for ethnic minority rights. He also served as a director of the NHS Ethnic Health Unit based in Leeds and served on many other public bodies and advisory groups. A committed Christian, he was an elder of the Liverpool Chinese Gospel Church and was well known for his charity work. He was chairman of the British Chinese Forum, the Wirral Multicultural Association and the Afiya Trust.

He published many professional papers and contributed sections on developing countries to Robertson's Textbook of Neonatology ( 3rd Edn 1999) and also on health and social care to the Parekh Report of the Commission on the Future of Multicultural Britain in 2000.

Michael Chew Koon Chan was born in Singapore on 6 March 1940, the son of a headmaster and was educated at Raffles Institution. He trained as a medical student at Guy's Hospital where he met his wife, Irene. After a time back in Singapore, he returned to Britain for a spell at the University of London Institute of Child care and Great Ormond Street Hospital. In 1976 he became a senior clinical lecturer and consultant paediatrician at the Liverpool School of Tropical Medicine. He was awarded the MBE in 1991 and became one of the first 'People's Peers in 2001. He married Irene Wei-Len Chee in 1965 and had a son and a daughter who survive him. (From The Telegraph 26/1/06)

Chinese language studies compulsory

Chinese is now compulsory at two sharply contrasting schools. Brighton College, in East Sussex (£20,466 a year fees) has made the learning of the Chinese language part of its core curriculum. Kingsford community school in the East End of London (where 50% of pupils qualify for free school meals) made the language compulsory for all pupils in years 8 and 9 since the school opened in 2000. Pupil reaction at Kingsford School is reported to be favourable, especially amongst the boys, possibly because of Chinese culture and martial arts-many of the commands are in Mandarin. The new head of Brighton College, Richard Cairns believes that it is madness that the vast majority of children are not exposed to Far Eastern language and culture. The first thing he did when he took over at Brighton was to add Mandarin to French-both now both compulsory for all incoming pupils at age 13. He intends to join the Mandarin classes himself.

The British Council and Hong Kong and Shanghai Bank are sponsoring the biggest conference ever on the teaching of Mandarin will be held at Wellington College in Berkshire. Dr Anthony Seldon at Wellington College, believes that we will never understand the Chinese until we get inside their psyche. The conference is being staged to bring everybody together. At present everything seems disjointed. Those already teaching Mandarin and those thinking about teaching it will be there.

The number of sixth-formers taking Chinese at A-level has risen by almost 50% since 2001 and at GCSE there has been 40% more candidates. There are about 3,000 candidates sitting GCSE Chinese compared to 50,000 sitting French and 100,000 sitting German. The students sitting Chinese seem more committed, because as many as 2,000 continue to A level compared to about 12,000 for French and 5,000 each for German and Spanish. It is suspected that many of the Chinese studies candidates are from Chinese community schools-pupils with a Chinese family background.

There is concern about the supply of teachers of Chinese. Only two or three teacher-training institutions in England are offering courses in Chinese. (From The Guardian 31/1/06)

China's Columbus-beating map

An ancient map of the world is to be shown at Beijing on 16 January and the next day at Greenwich. It was bought by Mr Liu Gang, an eminent Chinese commercial lawyer form a dealer in Shanghai in 2001. He thought it was of significance and showed it to five experienced collectors who agreed that it was more than 100 years old. He then asked specialists in ancient Chinese history but without any real conclusions. Mr Liu thought it might be a modern fake but then he became aware of Gavin Menzies' book, "1421: The Year China Discovered the World'. (Mr Menzies is a retired submariner and amateur historian who wrote the best-selling book, published in 2003 after extensive research.) Mr Liu became convinced that his map was a relic of the voyagers of Zheng He, the Chinese admiral whose fleets roamed the oceans between 1405 and 1435. Mr Liu's map is believed to be a 1763 copy of a map dated 1418.

There are some errors in the map: California is shown as an island, the distance of the Red Sea to the Mediterranean is ten times what it should be and the British Isles do not appear at all. However the map makes good estimates of latitude and longitude and recognises that the world is round. Some of the error apparently appear on European maps e.g. California appearing as an island. The Portuguese were aware of a map of the world which was drawn before 1420 showing Africa and the Americas and before any Portuguese explorers had been to these places.

Five academic experts on ancient charts note that the 1418 map brings together information that was available piecemeal in China from earlier times, going back to the 13th century. They believe it is authentic. The copied map is being analysed by Mass Spectroscopy to date it, by the University of New Zealand. The results will be announced in February. However the analysis can only date the paper and inks. (From The Economist 14/1/06)

British firm designs Chinese eco-friendly Manhattan

Shanghai Industrial Investment Corporation, the Shanghai city investment arm is to build a new city on Chongming Island in the estuary of the Yangtze River. It will be the size of Manhattan, covering 8,800 hectares and will be called Dongtan. Arup, the London-based consultancy has been chosen as the master planner of the new city, which it is clamed, will be the world's first genuinely eco-friendly city. Dontan will be powered by renewable energy sources and as close as possible, will be carbon free.

Arup are 'over the Moon' about their appointment. It is important deal for them and also for the future environmentally friendly direction being encouraged by the Chinese government. The first phase will cover 630 hectares-about three times the size of the City of London and it will include space for high-tech industry and housing and also a transport hub for fast ferries from the mainland and the new Shanghai airport. The first phase is expected to be complete by 2010-in time for the World Expo to be held in Shanghai in that year. The Dongtan development underlies the Chinese government's determination to take environmental considerations into account in future initiatives. Last week Beijing announced plans to put high sales taxes on gas-guzzling cars. (From The Sunday Times 28/8/05)

China now world's fourth largest economy

China's economy grew by 9.9% last year overtaking Britain and France. It is valued at $2.25 trillion (£1.26 trillion), excluding inflation, which puts it marginally ahead of the UK at about $2.07 trillion. The final figures will depend on inflation in the UK economy last year. China is expected to overtake Germany in 2008 and eventually become the world's largest. In 2004, the USA's economy was $11.7 trillion and the Japanese, the second biggest was $4.9 trillion-according to figures from the World Monitory Fund. (From The Times 26/1/06)

Note: After taking purchasing power parity into consideration, China becomes a close second to the USA. However with a GDP per capita of only $1,700, China is a long way down the list. The UK's is $38,860, Brazil's $4,460 and India's $772. (The Economist's figures)

Chinese acquire companies in Europe

The Chinese fridge manufacturer Greencool is considering setting up a European bus factory in the next two years. This comes after it bought a British bus designer, Leyland Product Developments and a French vehicle components factory.

Greencool which originally made only white goods and CFC-free fridges, bought the Yangzhou Yaxing Motor Coach company and will use Leyland, which has 40 employees for its new products. Leyland will continue as a separate company. Greencool is studying the feasibility of making maybe 100-200 buses a year for the European market.

The company also plans to keep production going at the loss-making French Bourgogne factory it bought from the British company Tomkins. The Bourgogne factory makes automotive rubber hoses, has 238 staff and has a turnover of 24 million euros. The objective is to expand the R & D facility to design up-market hose products. (From The Financial Times 27-28/ 11/05)

Bad bank loans problem over

Leaders of China's commercial banking group insisted yesterday that the problem of bad loans has been eradicated. China's two biggest banks, Bank of China and Industrial and Commercial Bank of China are claimed to be in good shape for floatation expected later this year. Zhu Min, executive assistant at the Bank of China said that the aggressive efforts to clean up Chinese bank's balance sheets-backed by billions in government support had resolved the problem. The chief economist of Morgan Stanley, Stephen Roach backs this statement by saying that he believes the fears of a Chinese banking crisis have been overblown for a long time and they will continue to be overblown.

However Mr Roach thought that an emerging 'bubble' in parts of the urban property market could collapse presenting some banks with non-performing loans. Mr Zhu on the other hand beieved that any problems would be confined to luxury homes-only 3%- of the homes market and also to some areas of the office space sector. (From The Times 26/1/06)

Chinese government takes action against non-paying employers

There are 140 million migrant workers in China whose labour has helped transform China into the world's workshop and sixth largest economy. At this time of year, they return home for the Chinese New Year and it is the time that they ask for their unpaid wages. According to official figures employers have defaulted on wage payments to 48% of migrant workers. Non payments have caused public order disturbances and last year the police handled 87,000 incidents-an increase over 2004 of 6.6%. So this year the government is taking firm action and for the first time courts have jailed eight company executives in Shenzhen for withholding £500,000 owed to 1,200 workers. Because no law exists at present to protect unpaid migrant workers, most of whom have no contract or legal status, the bosses were charged with offences such as fraud.

Employers are afraid that if they pay wages in full, the employee may not come back after the holiday. The practice is illegal, but most peasant workers have little education and less knowledge of the law and are afraid of being sacked if they seek help from the Labour Bureau. (From The Times 21/1/06)

Agricultural Tax to be lifted

This tax, which is to be lifted this year, has been the traditional source of revenue for the Chinese government for 2,000 years. The 800 million people in the countryside pay a flat-rate tax irrespective of the profit they make. It is one of the grievances expressed by the farmers and is believed to be one of the causes of growing unrest. Last year, agricultural tax was 300 yuan (about £20) per farmer per year which is about 10% of the rural per capita annual income. In 1950, the agricultural tax raised 40% of government revenue, but today the proportion is only one percent.

The growing inequality between the urban and rural areas is now reaching a point which economists associate with social instability. Urban incomes are 3.3 times those in rural areas. However some analysts fear that the loss of revenue to local governments will only reduce their ability to pay compensation for land given to business for development. (From The Telegraph 21/12/05)

Bank of China to float on Hong Kong stock exchange

The Bank of China (BoC), China's second biggest lender, is about to file for a $8 billion (£4.5 billion) float in April or May this year. The listing is pending final approval from the China Securities Regulatory Commission. Merrill Lynch and the Royal Bank of Scotland are amongst other western banks that have taken stakes in BoC. China's banks are being prepared for successful floatation after more than three years of financial restructuring and the injection of billions of dollars into them by the Chinese government to deal with bad debts. The float will value BoC at $53 billion compared to the China Construction Bank's current $84 billion market capitalisation. The Commercial Bank of China is also planning a multibillion dollar floatation but has not yet selected investment bankers.

Bank investigation

Three Chinese banks (BoC, Bank of Communications and China Merchants Bank) are being investigated after finding 'illegal abuse' of $36.3 billion of government funds. An estimated 22,000 officials have already been audited with 196 referred to the Communist Party for scrutiny and possible punishment. (From The Times 10/1/06)

Chinese versions of Lonely Planet guides

About 17 million Chinese travel abroad each year but this figure is expected to increase to reach 100 million by the year 2020 according to the World Tourism industry. Until recently the only places Chinese tourists were allowed to visit were Australia, New Zealand and the countries of South East Asia. However, last year, the entire EU was granted approved destination status. Although rigidly scheduled coach tours dominate the Chinese foreign tour market, Lonely Planet are banking on the emergence of more individual minded Chinese travellers. The Lonely Planet books were founded by British backpackers 30 years ago and now have some 600 titles. The books scheduled for 2007, included destinations such as Australia and the UK and feature Chinese writers. These writers will tailor the Chinese books more to Chinese readers' needs because the typically anecdotal casual style of existing Lonely Planet books may not make sense to Chinese readers. In addition the book contents may need adjusting. Chinese tourists are brand-conscious and tend to enjoy shopping and would probably appreciate a list of luxury good shops. Chinese are also likely to prefer different restaurants, hotels and entertainments than their European and American counterparts. (From The Financial Times 13-14/1/06)

From the Chinese press

Hu Jintao keynote speech-tougher measure against corruption

The Chinese Communist Party's (CCP) top anti-graft investigations have targeted the sectors where collusion between officials and businessmen sparked off riots in urban and rural areas over the past few years. These incidents included misappropriation of education funds, bribery in the health service, illegal confiscation of farming land for urban development, failure to pay migrant labourers, illegal fees imposed on farmers and negligence and corruption that lead to industrial disasters. The rural officials whose illicit activities helped spark off riots leading to deaths in Huanxi (Zhejiang province) and Sanwei (Guangdong province) were given special mention. The CCP will draw up measures to combat corruption in rural areas including more inspectors being sent to monitor the officials and steps will be taken to force them to open their account books and other items for villagers to inspect.

Hu Jintao said that the fight against corruption is a long-term, complicated and arduous task and urged officials to put in place more safeguards against corruption and to monitor the conduct of officials in 'all round ways', especially top-ranking officials.

Last year, the National Peoples' Congress ratified the UN Convention Against Corruption. This is an effective tool to enable Beijing to seek extradition of corrupt officials who have fled China with billions of US dollars. (From South China Morning Post 9/1/06)

Fuel from pigs

Li Demin of Shuitang Village, Guiyang, Guizhou Province has a 'methane pit' housing eight pigs from which methane gas can be extracted to provide energy for cooking and washing. Li believes one pig can provide enough fuel for one person. The pig manure is used as natural fertiliser for green plants. His household has saved so much money on coal and fertiliser that it has been able to build another three-story house to rent out to town people at weekends. In the past, villagers had to cut down trees for fuel. The village has been approved as an experimental eco-village for the construction of a recyclable economy and since 1999 the village has delineated 3,000 hectares of natural forest reserves and restored 200 hectares of plantations. Green coverage has been increased from 28% to 43%. In 2005, two businesses were started to process village agricultural products. The village becomes greener every year. Other villages in the region have followed Shuitang's example.

In November 2004, Klaus Topfler, under-secretary general of the UN, spoke highly of Guiyang's recreating itself as an eco-city. He expressed his belief that this modal of a recyclable economy provides a valuable example of sustainable development to all developing countries. (From China Today February 2006)

Grassroots democracy

The first Constitution of the People's Republic of China in 1954, defined the neighbourhood committee as an autonomous organisation of residents that carries out self-government and self service. Now the neighbourhood committee has become a trial base for the Chinese government's efforts to promote urban grassroots democracy. In 1987 some villagers began to promote self-governance and in 2001 all village residents began to have the right to vote for leaders of their village committee.

The first step in urban grassroots democracy is voting which allows residents to select their neighbourhood committee. However neighbourhood committees in towns are not an economic entity because most residents salaries, welfare and work responsibilities are bound to their place of work. People thus pay more attention to affairs of work rather than community matters. However work units focus more on their daily operation and economic performance and spend less time on employees' affairs. In their own interest, residents will have to participate more in community activities.

During the last three years, China's political democracy has been constantly developed with more than 30 statutes enacted to speed up the process and on 19 October 2005, China issued a white paper entitled, 'The Building of Political Democracy in China'. This presents a comprehensive and authoritative explanation of political democracy. (From Beijing Review 5/1/06)

China not responsible for energy shortage

Some analysts believe that the oil price increases in the past year are due to the increased demand from China and India. The Chinese vice-minister in charge of the National Development and Reform Commission has pointed out that this is not true.

In 2004, China satisfied 94% of its own energy needs and imported only 6%. This 6% amounted to 117 million tonnes-which was only 23% of the amount imported by the USA and 56% of the figure for Japan. In China the present per capita energy consumption is 1.08 tonnes compared to 8.02 tonnes for the USA and 3.82 tonnes for Britain. The world average is 1.63 tonnes-so despite the huge economic growth, China's per capita oil consumption is still far below the world average.

China is still a developing country but the basic energy policy is to rely primarily on domestic resources and focus on efficiency. In fact legislation was introduced in 1997 aimed at energy conservation. During the period 1978 to 2004, China's economy grew at an annual rate of 9.4% but the annual growth of energy consumption was substantially less at 4.8%. China's energy requirements do not depend heavily on other countries and the world should not overreact to these increasing requirements. The international community should respect China's right to develop and the Chinese people's desire to improve their standards of living. The economic development of China also benefits the rest of the world in many ways.

China has mapped out a medium to long-term energy development programme (11th Five Year Plan). The key points are efficient energy use, reliance on domestic sources whilst exploring overseas supplies, integration of urban and rural areas and rational distribution, innovation, environmental protection and security. There will be diversified development based on coal as the main fuel source as well as acceleration of development of nuclear power, renewable energy and hydropower. The government has adopted a Law on Renewable Energy that provides legal guarantee for its development.

China plans to increase the proportion of renewable energy in primary energy consumption from the current 7% to 15% by 2020 and substitute fossil fuels by 400 million tonnes of coal. This will be equivalent to carbon dioxide reduction of 1 billion tonnes and sulphur dioxide reduction of 7 million tonnes. (From Beijing Review 20/10/05)

Development of technology in China

A whole raft of incentives and plans to boost technological innovation in China is to be announced today at a three-day national science and technology conference. Hu Jintao's strategy of promoting domestic innovations to drive China's future growth will be aired. Senior leaders from government departments such as the Ministry of Finance, the Ministry of Science and Technology and the Chinese Academy of Science will be present.

Last month, the State Council announced that it had approved a blueprint for technological and scientific development for the next 10 to 15 years. The plan took two years to prepare and was the work of over 2,000 officials, scientists and industry experts. It is expected to include key principles for all government departments on how to promote technological development. This is the first major meeting on this subject and it will be important to hear what the views of the new administration. It is believed that central government will probably direct funding and incentives to the five areas of information technology, biotechnology, hi-tech materials, energy and aerospace and aviation. Beijing is also believed to be ready to adopt a new approach to the management of science and technology and the conference would involve concrete proposals.

Ministers understand that although the economy has grown tremendously over the past 20 years, China lags behind in terms of technological innovation. Businesses mostly compete on cheap labour and lax environmental regulations, which turn a blind eye to poor energy efficiency and pollution.

Mainland businesses spend very little on research and development. The 2004 figures were 1.23% on economic output and 0.56% on sales. Industries have relied on foreigners for expertise, specialist equipment and core technology. There have been attempts in the past to improve technological expertise but without much success. However, the central government now puts greater emphasis on science and technology and on the concept of self-reliance. The significance of innovation is likely to be turned into a national strategy and government input is expected to really count and translate scientific research into real products. (From China Daily 9/1/06)

Bridging the straits

There was a direct charter flight from Taiwan to the mainland for the Chinese Spring Festival (Chinese New Year) on the 20th January. There have now been a total of 72 direct flights between the island and the mainland. This year Xiamen in Fujian province was added to the list of destinations. The direct flights are now a permanent fixture during festive periods. Every year there are 3.5 million trips from Taiwan to the mainland for sightseeing, visiting relatives as well as for business. More than 70,000 Taiwan based businesses have invested more than $100 billion into the mainland to date.

Following the visits of the two Taiwanese opposition party leaders to the mainland last year, a party-to-party platform between them and the Communist Party of China has been established. There are likely to be more people-to people links and further economic and trade links as well as cultural, academic and sports links. The mainland now allows tourists to go to Taiwan and has presented a pair of giant pandas to the island. (From Editorial, Beijing Review 9/2/06)

Sino File is compiled by Walter Fung with some input for From the Chinese Press by Teresa Ray.

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