China News - Summer 2007

From the British Press

The West does not understand China

In a revealing article in Newsweek, Fareed Zakaria made some interesting and important observations triggered by the falls on the Shanghai stock market. He said it highlighted the confusion and misunderstanding about China because China is not conforming to the West's basic beliefs about what makes nations grow.

There is little linking the Shanghai stockmarket with the overall Chinese economy. The Shanghai stockmarket does not play the same role as the stockmarket does in the UK or USA. Most Chinese companies raise money through banks and not through equities. In fact for the last 10 years, Chinese stocks have gone down while the economy has boomed.

A Western scholar has argued that clear and strong property rights are the prerequisites for economic growth, but China, the fastest growing economy in history, has an extremely unclear and weak system of property rights. The World Bank and the International Monetary Fund believe that if currencies do not float freely, huge distortions in the economy will result. China does not heed that advice yet continues to prosper.

The political scene is even more puzzling. Scholars see a Leninist party with a total monopoly on power and are sure that it is crumbling; yet China has defied predictions of collapse for 25 years. The West believes that Chinese people must hate their government but polls show 80% support for the political system. China topped the list in a poll, asking 'Are you satisfied with the state of your nation?' In the USA, less than 30% of Americans said, 'Yes', but 81% of Chinese said they were satisfied. Perhaps, people lie to pollsters, but these numbers were consistent in several polls and the general consensus is that Chinese people agree with their government's aims.

People's feelings about their government are made up of a complex mixture of cultural, historical, and emotional attitudes. Americans generally do not understand this because the basis of American nationalism is ideology. Americans believe that regimes with bad ideologies must be deeply unpopular with that country's people. Thus they believe that the Iranian mullahs have no public support, that Putin is regarded by the Russians as a dictatorial thug and that Saddam Hussein must have been hated by his own Sunni brethren.

Many books have appeared, written by very intelligent authors, about the frailties and weaknesses of the Beijing government. However, considering the massive challenges that this government has faced, it has handled these challenges quite skilfully year after year. At every juncture, the Chinese government has been able to tackle seemingly overwhelming problems. It has managed the migration of 200 million peasants into cities and the mass unemployment caused by shutting down state-owned factories. Periodically it has slowed the economy to stop overheating. Plans have been made for the largest and fastest urbanisation in history and it has controlled the social discontent bred by such headlong growth. None of their actions have been perfect, but compared to other countries, China has managed its problems well.

It is not too difficult to understand why the Chinese might be satisfied with their current situation. Over the past century, there has been chaotic turmoil almost every decade, from the collapse of the monarchy, the warlord period, the Japanese invasion, the civil war, the communist take-over, the Great Leap Forward and the Cultural Revolution. In the last 30 years, China has enjoyed stability as well as the fastest growth ever of any country. Some 350 million people have been lifted out of extreme poverty and modern China has a sparkling image across the world. (From Newsweek 12/3/07)

China shifting to higher-end product

China is demonstrating a surprising ability to use its strength in low-end manufacturing as a lever into sophisticated high-tech business. The speed at which the country is moving from a low wage economy, making cheap goods to a high-wage economy, producing valuable ones is a sign that the transition may not be as difficult as once thought. The Chinese government last week approved Intel's application to build a $2.5 billion integrated-circuit manufacturing plant in Dalian. Other high-end products now being made in China include top quality steel, which once had to be imported and automobile industry products. The latter has gone from near total reliance on imported parts to components being made and designed in China. (From The Wall Street Journal 23-25/3/07)

Bill to protect private property in China

The bill is the first of its type since the 1949 revolution and will be submitted to the National People's Congress despite fierce opposition from left-wing politicians and academics. Old style Marxists oppose the property rights bill, which they believe, will worsen inequalities in society and legitimise the theft of state assets by corrupt officials. However, in a sign of the growing influence of the private sector and the middle class, the government has decided to press for the enactment of what officials describe as a basic law for the market economy.

Since Deng Xiaoping's reforms in the late 1970s, billions of dollars of state-owned assets have been privatised and huge swathes of communal land requisitioned for developers generating one of history's most spectacular booms. However the rapid marketisation of China's economy has created an unequal society as well as resentment that corrupt officials have illicitly made fortunes from privatisation. Critics of the bill believe it will legitimise what they see as mass theft from the people. They say it is too liberal and too rightwing. (From The Telegraph 5/3/07)

N.B. See New Property Law in 'From the Chinese Press'.
N.B. The right to private property for John Locke and Thomas Jefferson was at the heart of individual liberty. (Fareed Zakaria in Newsweek 7/5/07)

Mr Li and green Jiangsu province

Mr Li Yuanchao, the Communist Party secretary of Jiangsu province is coming to Britain next week. He will meet MPs and visit Oxford and Cambridge. He hopes to publicise Jiangsu province which borders on Shanghai. Jiangsu has one of the fastest growing economies in China. It was at Mr Li's suggestion that Rover's bankers sought out Nanjing Automotive, China's oldest carmaker as a solution to the Rover crisis. The first China-made MG models are set to roll off the production line on 27 March, the 60th anniversary of Nanjing Automotive.

However it is as an environmental warrior that Mr Li is likely to win wider recognition because Jiangsu province met the target of a 4% cut in energy consumption per unit of gross domestic produce, which was set by China's central government for 2006. The figure was 4.02% compared with a national average of 1.23% and Jiangsu was only one of two provinces achieving the target.

There are also pilot projects in the province to narrow the gap between the rich southern part of the province and the more rural north. The annual per capita income of the south of Jiangsu is $8,000 compared to just $1,000 in the north. Mr Li has initiated projects to help the poorer buy subsidised housing, to have access to education and to ensure that even the poorest has a living area of more than 8 sq metres.

Mr Li is 56 years old, has degrees in mathematics and law and spent time at Harvard. He is one of four or five names that may be in line for promotion when the present Chinese leader's terms expire in five years time. (From The Times 16/3/07)

China puts pressure on Sudan

China has urged Sudan in unusually strong terms to accept UN peacekeepers in Dafur. Sudan has been resisting the replacement of a weak African Union force by a 20,000 strong UN one. (From The Economist 14-20/4/07)

Beijing sent a special envoy, Zhao Jun to Khartoum to press the regime there to accept UN peacekeepers with the result that Sudan duly agreed to such a force on 16 April. (From Newsweek 14-21/5/07)

The Olympic Flame

China unveiled the Olympic torch relay route yesterday during a ceremony at the Millennium Monument in Beijing. The torch will be lit at Olympia in Greece on 26 March 2008 and 20,000 bearers will carry it through 20 international cities and 113 Chinese cities. The route through China will include the cities of Hong Kong, Macau, Sanya and Haikou (on Hainan Island), Shenzhen, Shantou (Guangdong), Fuzhou, Nanchang, Hangzhou, Shanghai, Nanjing, Hefei, Wuhan, Changsha, Shaoshan (Mao's birthplace), Naning, Kunming, Lijiang (Yunnan), Guiyang, Chongqing, Chengdu, Lhasa and Mount Everest (Tibet), Xining, Urumqi (Xinjing), Lanzhou, Wuzhhong, Xi'an, Datong, Hohot, Harbin, Changchun, Shenyang, Jinan, Zhengzhou, Shijiazhuang, Tianjing and Beijing. (From The Independent 27/4/07)

China sets up state investment agency

China is to set up a state investment agency to manage parts of its $1 trillion plus holding in foreign reserves. The objective is to manage the reserves, which increase by about $20 billion each month more prudently, but also more profitably and efficiently. Although the funds are held as assets on the balance sheet of the People's Bank of China-China's central bank-many senior leaders think the money could be used to make strategic investments in resources such as oil or to spend it on social programmes. (From The Financial Times 10-11/3/07)

China tries to reassure markets on dollar

China yesterday sought to reassure global currency markets that the new state investment agency to find higher returns for its $1 trillion plus holding in foreign reserves would not harm the US dollar. Both Wen Jiabao (Chinese prime minister) and the central bank of China said that frequent major adjustments to the structure of the reserves in response to market movements would not be made. China is cautious about what they say about their reserves for fear of encouraging speculation that it is reducing its holdings of US dollars. The precise make-up of China's holdings is unknown but is it is believed that about 75% is in dollar-denominated assets. Mr Wen acknowledged that China held the majority of its reserves in dollar instruments, which he said had been purchased 'on the basis of mutual benefit'. (From The Financial Times 17-18/3/07)

Many senior women in China

A survey published in International Business Report conducted on women in business shows that Far Eastern countries have far larger numbers of women senior managers. The survey involved 32 countries and the UK was in 25th place with only 19% of senior managerial positions occupied by women. A selection of countries is as follows:-

China (mainland)32%
Global average19%

(From The Sunday Times 11/3/07)

Anglo-Chinese urged to talk politics

Christine Lee, lawyer and Chinese community activist believes that this year, 4704 on the Chinese lunar calendar, is the time the Chinese community should finally raise its political profile. Ms Lee has been the British Chinese community's most prominent representative since the death of Lord Chan last year. More than 560,000 people of Chinese descent lived in Britain by 2003, an increase of nearly 12% over 2001-estimated by projection from the 2001 census. This does not include recent immigration and of illegal immigrants believed to be 70,000 to 100,000. The large Chinese community is widely dispersed because of commercial considerations-60% of Chinese are employed in takeaways, restaurants and cash and carry stores. Their business contributes more than £1 billion to Britain's economy.

The Chinese community is concerned about the recent tightening of immigration policies, which have squeezed Chinese restaurants' ability to hire enough low-skilled Chinese labour. Also of concern is racial harassment of Chinese businesses and the government's refusal to fund Chinese language schools. Ms Lee has tackled catering issues with a group of MPs, but she is grooming Chinese political representatives for the next generation through her 'Integration of British Chinese into Politics' project. Ms Lee says that the first generation of Chinese who arrived in the 1950s thought like Chinese people, i.e. they thought politics was trouble, preferring to sort out their own problems. The second generation has many professional high achievers who also think they don't need politics. Ms Lee is doing this work for them. (From The Financial Times 17-18/2/07)

Ethnic Chinese woman in Northern Ireland Assembly

Anna Lo who was born in Hong Kong and who has lived in Belfast for 32 years became the first person from an ethnic minority to be elected to the Northern Ireland Assembly. She is 56 years old, a mother of two, a former BBC journalist and is chief executive of the province's Chinese Welfare Association. Her party, Alliance, won seven seats in the 108-seat assembly, (the Democratic Unionist party took 36 seats, Sinn Fein 28).

She says she is a Taoist, not a Christian and maintains that, although Northern Ireland once prided itself on being a non-racist society, racism was always there; it's just that the troubles overshadowed it. In the late 1970s, she was the victim of a racist attack.

The Chinese media, yesterday, proclaimed Lo as the first Chinese person to be elected as a lawmaker anywhere in Europe. (From The Sunday Times 11/3/07)

China helped by GlaxoSmithKline (GSK) to bust pharmaceutical counterfeiters

Chinese undercover agents employed by GSK posed as traders in fake medicines to help close down a global pharmaceutical counterfeiting racket based in China. GSK will receive official recognition today for its sting operation in the form of an award from China's Quality Brands Protection Committee, China's leading anti-counterfeiting organisation. (From The Times 26/4/07)

China's expanding aviation industry

A cargo airline is to be started in Shanghai by Cathay Pacific (49%) and Air China (51%). The plan for this operation originated last year when the two airlines agreed to take a 17.3% stake in each other. Hong Kong is the world's second largest cargo hub behind Memphis, but other cargo centres in China are expanding rapidly. China has overtaken Germany as the second biggest air transport market in the world. Passenger growth in China exceeds 15% per year and cargo is expanding by 19% a year. Last year there were 160 million Chinese passengers.

Four years ago, the Chinese government essentially compelled six small airlines to merge with the three dominant ones to create Air China, China Southern and China Eastern. Analysts expect all three will all be within the world's top 10 airlines by revenue within 15 years. Their combined assets total £9.2 billion and they employ about 80,000 people and have over 400 planes. Chinese airlines are expected to have 3,000 planes by the year 2020.

Airbus estimates the Chinese market for planes, spares and technical support to be worth £144 billion but China's state council has given the go ahead to build a Chinese passenger aircraft of more than 150 seats. Foreign and domestic investors are invited to participate. In addition, China intends to build aero engines potentially challenging Rolls Royce.

China's airports are also being developed. Guangzhou already has a brand new airport while terminals at Beijing and Shanghai are being upgraded in time for the 2008 Olympics. The number of civilian airports is to increase from 142 to 186 in the next few years and air-traffic control is being modernised. (From The Sunday Times 29/4/07)

From the Chinese Press

The property debate

Although the Chinese philosopher Mencius said over 2,000 years ago, 'People can have a long-term life plan only after knowing their private property is secure', public ownership played a more dominant role after 1949. Since the early 1980's, and the start of a market economy, private property rights and ownership have been increasing, but they remain an unfamiliar concept for many Chinese.

The Property Law is likely to be adopted this month following a revision to China's Constitution and about five years of research and deliberation. This will be the first time property rights have been defined and regulated. The property law had its first reading in 2002 as part of a civil code. In 2004, the Constitution was revised stating, ' Citizens' lawful private property brooks no violation.' The full text of the third draft was published on the internet to solicit public comment and more than 10,000 suggestions were collected from the public as a result. The National Peoples' Congress (NPC) then hosted more than 100 meetings to collect opinions from economists, law experts and the general public. In October 2006 the NPC Standing Committee reviewed the draft law for the sixth time making it the most deliberated law in China's history. Consensus was finally reached on the seventh version of the draft law in December 2007 at a session of the 10th NPC Standing Committee. (From Beijing Review 1/3/07)

China's 'Green day'

Pan Yue, China's Vice Minister of the State Environmental Protection Administration joined dozens of celebrities from literary and art circles in a tree planting ceremony in north Beijing on 31 March to mark the country's first, 'Green China Day.' He stated that the environmental challenge is severely hindering China's modernisation drive as well as threatening public health. In addition, petitions and mass incidents caused by environmental-related accidents are increasing at an annual rate of 30%. A government report shows that pollution caused losses in 2004 of 3.05% that of that year's GDP. Pan said that people from all walks of life should fully exercise their constitutional rights and get involved with eco-preservation efforts.

In early 2006, China promulgated measures on public participation in the assessment of environmental impacts of engineering projects. Later this year, China's first regulations on the publication of environmental information will be finalised to ensure that all social groups are well-informed in environmental matters. (From Beijing Review 12/4/07)

Chinese company leads 'Green Ranking'

Lenovo, the Chinese PC maker has displaced Nokia to lead the latest 'Green Ranking' of the technology industry as organised by Greenpeace. (From Beijing Review 12/4/07)

China's six major goals for space development

These are; a manned space flight and moon exploration, independent development of a hard X-ray modulation telescope (HXMT), recoverable space science experimental satellites, the Sino-Russia Mars space exploration programme, more research into key technologies for space solar telescopes and begin key scientific and technical research into space science. These were outlined in the 11th Five Year Plan.

Chinese space vehicles will begin to circle the moon this year and plans to land and begin an automatic inspection of the moon before 2012 and return to earth by 2017. China's HXMT's launch is planned for 2010 and the intention is to research black hole physics. The 'Practice-10' recoverable space satellite will conduct experiments into microgravity science and space life science. China will co-operate with Russia in space exploration of Mars and with France in a Solar Burst Probe Small Satellite probe. It will also participate in the World Space Observatory Ultra Violet Project.

Research will continue into space solar telescopes, space astronomy, solar physics, solar system exploration, microgravity and space life sciences. (From People's Daily Online 14/3/07)

Young Blood

The Communist Party of China (CPC) is pushing younger figures up the political ladder in a search for future leaders. At the end of last year, prior to a reshuffle of provincial leaders, the Central Government instructed that at least three appointments of persons under 50 years of age and at least one of under 45 years of age must be made. This shows the determination of the present Central Government to add vitality to the top leadership.

The younger generation will have grown up during the reform and opening up period and are direct beneficiaries of the reforms. They matured during the time of mind emancipation and are able to absorb Western thoughts. They are more flexible and tend to ignore petty regulations. Higher educational background is another feature of the rising younger generation of leadership. Many of them had already made outstanding achievements in their fields of work before coming to power.

China has undergone a dramatic change in its social structure and more comprehensive understanding of modernisation reveals the importance of social reform as well as technology. As a result the (CPC) is looking for a wider range of talents; management expertise is required as well as technological knowledge. The new crop of younger leaders have qualifications in economics and law, for example, one has a masters degrees in economic management and another a doctor's degrees in jurisprudence. A professor at the Party School of the CPC Central Committee believes that developing countries go through several stages that require different skills in governing them. At one stage of the development, engineers assume more power, whilst at a later stage, scholars with skills in social management will be in greater need. (From Beijing Review 1/3/07)

Comments on hutong life (by a German expat)

For Maja Linnemann of Bremen in Germany, there are few pleasures in Beijing as fine as strolling through the hutongs (small lanes). She says it's like a small oasis, a little paradise. Linneman however worked as she strolled because she participated in a nine-month project called, 'Friends of Old Beijing', organised by the Beijing Cultural Heritage Protection Center ( in October 2006. Volunteers were asked to regularly walk amongst the hutongs to help monitor conditions in parts of the old city. She says that if you go to a hutong once or twice, you find it very nice and romantic, but if you go into a siheyuan (traditional courtyard house), it is very crowded. You sometimes see 20 or 25 electricity metres reflecting the number of people living inside and many have lost their courtyard structure.

Linneman liked the opportunity to talk to the actual residents and understand their lives. She was invited in for tea whilst strolling. She says that there is not very much appreciation amongst the locals for protection work, because they prefer to leave the old houses for better living conditions. It is common for several families to live within a single compound. Bathrooms are shared and there is no privacy. 'Hutongs are so typical of China and what makes Beijing, Beijing-but it's a very low standard of living there'. (From China Daily 24/4/07)

Use of human organs for transplant

A senior Chinese court official maintains that China has strict restrictions on the use of organs from executed criminals and cases of such usage are in fact 'quite exceptional'. The official maintained that health organisations or scientific research institutions could not make use of executed criminals unless the criminal had voluntary given their consent and signed relevant documents, or that their families had given consent. In actual fact the main source of organs for transplant in China is by voluntary donation in their wills. (From Xinhua 14/3/07)

China's safety watchdog calls for thorough inspection of coal-mines

On 12 March China's State Administration of Work Safety (SAWS) called for thorough inspection of major state owned coal mines. SAWS says that all coal mines should go through safety inspection and clearance from governing bodies and local government before resuming production. The head of SAWS said that carelessness and lack of preventive measures were to blame for the accident at Laohutai mine in Fushun City (Liaoning). According to SAWS 357 people have been killed in coal mine accidents in the first two months of this year. (From Xinhua 14/3/07)

Income tax in China

China has announced that those earning more than 120,000 yuan a year must declare their annual income within the first three months of the following year. However, by 30 March, only 1.37 million people (estimated to be about 15% of those eligible) had actually filed their income statements. (From Beijing Review 12/4/07)

Top honour for Chinese scientists

Two Chinese scientists have been officially granted the honour of becoming foreign associates of the National Academy of Sciences (NAS) in America in recognition of their outstanding achievements in their fields. Yuan Longping, director-general of the National Hybrid Rice Research and Development Centre in Hunan province and Bai Chunli, vice-president of the Chinese Academy of Sciences in Beijing were formally admitted to the academy last Saturday at a global meeting of American academy members and foreign associates. Foreign associates are nonvoting members of the academy with citizenship outside the USA.

The two Chinese scientists were amongst 72 members and amongst 18 foreign associates from 16 countries to be named for one of the, 'highest honours in American science and engineering' announced in April 2006. Yuan, 77 has been called the 'father of hybrid rice' for his efforts in developing high-yield rice. His name is a household word in China. More than half of China's paddy fields grow Yuan's rice and his 'super rice' has been introduced to more than 20 other countries. An online poll last November showed that many Chinese believe that Yuan deserves a Nobel Peace Prize for his immense contribution in fighting hunger. Bai aged 52 is a leading expert in molecular nanostructure and nanotechnology.

Many Chinese scientists have been named to the elite US academy, the first was the renown bridge expert, Mao Yisheng (1896-1989) in 1982. (From China Daily 2/5/07)

China-Japan relations thaw

The Chinese Prime Minister Wen Jiabao visited Japan during April. It was considered an 'ice breaking' tour and he became the first Chinese leader to address the Japanese parliament in 22 years. Mr Wen met the Japanese Emperor, Akihito and agreed on the harmonious co-existence of China and Japan, which will be beneficial to Asia and the world as a whole. Mr Wen met the Japanese Prime Minister Abe and other officials. The two countries would co-operate in an all-round way at bilateral, regional as well as international levels. China and Japan should enhance defence dialogue and personnel and cultural exchanges as well as co-operating on energy, environmental protection, finance and intellectual property protection issues.

Bilateral trade has quadrupled in the last 10 years and China is now Japan's top trading partner. Trade totalled $249 billion last year and Japan has invested more than $53 billion into China in the last twp decades. (From Beijing Review 19/4/07)

Beijing etiquette committees

The 2008 Olympics will showcase the city and besides spending on new infrastructures, etiquette committees under the local government are working to 'show our best face to welcome the Olympics'. There are anti-spitting campaigns, (offenders are offered paper tissues to clean up their discharge), rectifying 'Chinglish' signs and menus, encouraging queuing (the 11th day of each month is declared 'queuing day') and anti-littering campaigns. Taxi drivers are being asked to be polite and friendly and to dress in neat clean clothes and to brush their teeth after eating garlic! Smoking in taxis is forbidden and drivers with a smelly taxi will be suspended for two days. Smoking is also to be prohibited in all city parks, major tourist sites and certain hotels.

To rectify 'Chinglish' notice boards, a panel of 35 experts including some from the UK, USA, Hong Kong and Singapore have worked on translations and more than 6,500 standard English signs have been erected in eight districts and those in other areas will be changed before the end of the year. Menus however present a bigger challenge and because translations could be lengthy, photographs of the dishes are being suggested.

In stepping up anti-spitting efforts, municipal authorities have announced fines of up to 50 yuan-quite a significant sum for low wage earners-but this law is not new. Anti-spitting laws have been in place for years, but never strictly enforced. Enforcement is difficult and so it is important to make people realise that spitting is bad for both the environment and for public health. (From South China Morning Post 2/5/07)

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

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