Friday, 26 December 2008


Report: China plans to issue new medical reform plan in January

BEIJING, Dec. 26 (Xinhua) -- China's long-awaited medical
reform plan, which aims at providing universal medical
service to 1.3 billion people, is likely to be issued in
January, Friday's 21st Century Business Herald reported.

Five supplementary plans on medical insurance, basic
medicine, grassroots medical service, public health service
and public hospital reform will be issued at the same time,
the newspaper quoted an unnamed source as saying.

Growing public criticism of soaring medical fees, a lack of
access to affordable medical services, poor doctor-patient
relationship and low medical insurance coverage compelled
the government to launch the new round of reforms.

On Oct. 14, the National Development and Reform Commission
(NDRC) issued a draft plan on its website for public
debate. The commission received more than 35,000
suggestions in one month.

A health official told Xinhua that the announcement of the
new plan in January is "likely". "A revised version based
on the public feedbacks has been submitted to the State
Council," said the official, who declined to be named.

According to the newspaper, "the new version didn't have
significant difference from the old one."

In the draft, the government promised to set up a "safe,
effective, convenient and affordable" medical system that
would cover all urban and rural residents by 2020.

It clarifies government's responsibility by saying that it
plays a dominant role in providing public health and basic
medical service. Central and local governments are required
to increase health funding to ease financial burden of

The draft, written by a team of officials and experts from
16 departments, including the Ministry of Health and the
NDRC, has been criticized as being "too general" and "full
of empty principles".

The five new supplementary plans are believed to outline
specific measures. Among them, the one on the building of a
basic medicine system and reforms of state-run hospitals
are the most important, the newspaper quoted the source as

The basic medicine system includes a catalogue of necessary
drugs that would be produced and distributed under
government control and supervision, according to the draft

The draft plan did not outline clear measures for state-run
hospital reform. But it said government should increase
funding to public hospitals to improve their services.

Insufficient government funding resulted in deficits for
public health institutions, thus opening doors for
hospitals to generate their own revenue by raising fees and
aggressively selling drugs.

"Reform of state-run hospitals is a very complicated and
difficult project," Bai Chong'en, a professor with the
Tsinghua University, said.

"I think the government should pilot the reform in some
places and then work out a reform plan based on China's
realities," he said. Editor: Wang Hongjiang

Friday, 12 December 2008


Up to Sarkozy to get ties back on track

By Zhang Haizhou
(China Daily)

It is up to French President Nicolas Sarkozy to put
Sino-French relations back on track, the Ministry of
Foreign Affairs said on Tuesday.

France holds the rotating presidency of the European Union
(EU) till the end of this year. And since Sarkozy is the
president of that country, his decision to meet with the
Dalai Lama in Poland on Saturday forced China to defer the
China-EU meeting, scheduled for Monday.

"The French president, who ignored China's concern, should
be fully responsible (for the downturn in bilateral
relations)," Foreign Ministry spokesman Liu Jianchao told a
regular briefing.

"This is the time for France to make an important decision
and we hope it will create conditions for advancing China's
relations with the EU and France," he said.

No likely date has been chosen for the meeting, and Liu
said it can only be held "in a proper atmosphere", for
which France must take "pressing measures".

Despite China's opposition, Sarkozy will go ahead with his
meeting with the Dalai Lama, said Feng Zhongping, director
of European studies at the China Institute of Contemporary
International Relations.

Sarkozy had angered Chinese earlier, too, by hinting that
he might not attend the Beijing Olympic Games Opening
Ceremony over the Tibet policy.

"Sino-French relations are likely to sour further," Feng
said. The 11th China-EU meeting, an annual event, could
eventually be cancelled because there are just four more
weeks left in the year, during which it would be hard to
find a date for the meeting.

The 12th China-EU meeting has already been allotted to the
Czech Republic, which takes over the EU presidency next

China's decision to defer the meeting was taken "after
thoughtful deliberation", Feng said. There could have been
a chain effect had it not done so because some other
European leaders, too, want to meet with the Dalai Lama.

"Pulling out of the meeting is sending a message to other
countries to respect China's core interests," Feng said.

Deteriorating Sino-French ties are bothering Europeans in

The EU Chamber of Commerce in China said it was
"disappointed that in time of global financial turmoil and
a significant economic slowdown the Chinese leadership
decided to postpone the EU-China meeting".

Wu Baiyi, a professor at the Chinese Academy of Social
Sciences, suggested France should first focus on how to get
out of the financial turmoil.

"They (China and France) should first clarify what they
want to do." But, Wu said, Sarkozy's decision to meet the
Dalai Lama is an example of being "irresponsible to his own


Chinese President Warns Nation Losing Its Economic Edge

BEIJING — Chinese President Hu Jintao warned that China has
started to lose its competitive edge in trade amid the
global financial crisis, as he told Communist Party leaders
the challenge posed a test to the government's ability to
rule, state media reported.

China's economic growth is expected to fall to about 9
percent this year, down from last year's 11.9 percent. That
would be the fastest of any major economy, but Chinese
leaders worry about possible unrest as unemployment rises,
especially in export industries where factories are
shutting down as global demand plummets.

"External demand has obviously weakened and China's
traditional competitive advantage is being gradually
weakened," Hu said, according to the Communist Party's
official People's Daily newspaper.

Hu told members of the Communist Party's powerful Political
Bureau that the financial meltdown posed critical
challenges to a government that has staked its legitimacy
in part on competent management of a rapidly developing

"Whether the pressures can be turned into a driving force
and the challenges turned to opportunities ... is a test of
our ability to control a complex situation, and also a test
of our party's governing ability," Hu said.

Hu urged party leaders to step up efforts to reform its
economic growth model to achieve development that is

He said greater effort should be made to raise living
standards, use resources more efficiently and develop rural
and urban areas, the report said.

The remarks come after China's top economic planner Zhang
Ping, chairman of the Cabinet's National Development and
Reform Commission, warned Thursday that the impact of the
global financial crisis is worsening and that rising job
losses could fuel instability.

But a government researcher said that despite the impact of
the global slowdown, the country's economy is expected to
grow by 10 percent next year as domestic consumption grows
with rising personal incomes.

"Personal income continues to increase as millions of
migrant workers flow into the city to get their lives
improved. Enlarging demand for houses and autos will form
huge and lasting consuming power," said Zhang Liqun, a
researcher at a think tank attached to the Cabinet's
planning agency.

On Wednesday, Beijing announced its biggest interest rate
cut in 11 years to increase consumer and company spending.
A multibillion-dollar stimulus package launched on Nov. 9
aims to boost growth through heavy new spending on
construction, tax cuts and aid to the poor and farmers.

Beijing plans to spend 18 trillion yuan ($2.6 trillion) in
2009 alone to help blunt the impact of the global financial
crisis, using the immense capital accumulated over years of
double-digit economic growth and booming exports to build
railways, roads, airports and electricity networks.

Tuesday, 25 November 2008


China keeps proving socialism’s worth

Havana, Monday November 17 2008. Year 12 / Number 320
Oscar Sánchez Serra

A CubaNews translation.
Edited by Walter Lippmann.

On November 23, 2004, Commander-in-Chief Fidel Castro said:
“In the face of all the mortal dangers of times past and
the even worse ones we face today, socialism will
definitely remain humanity’s only real hope of peace and
survival. That’s precisely what the Communist Party and the
people of China have proved beyond question. They have also
shown, as have Cuba and other friendly countries, that
every people must fit their revolutionary strategies and
goals to their own specific conditions, and that no two
revolutionary socialist processes are identical. We can
learn from each country’s best experiences and worst

Recently, while we enjoyed the privilege of traveling for
17 days across more than 6,000 kilometers of the great
Asian nation (the world’s third largest one), where we
witnessed its impressive scientific and technological
development and were dazzled by the magnificence of cities
like Beijing, Shanghai or Suzhou, not without realizing
that they also have social problems, those words spoken by
the leader of the Cuban Revolution seemed to reverberate in
our ears.

Those who have never visited that huge country and do it
now in 2008 might as well think they have arrived in
another galaxy or been abruptly pushed into the setting of
a science-fiction movie, all with its futuristic
architecture, its highly computerized society, its
extraordinary road infrastructure, its modern means of
transport, and its vast and functional airports –Beijing’s
is considered to be the world’s largest one– its amazing
industrial and construction activity, and a remarkable boom
in trade, to name just a few of China’s realizations that
the whole world, almost in wonder, can appreciate nowadays.

At the same time, you can feel all around you the respect
paid by the People’s Republic to a time-honored culture
rich in traditions that defies the brisk pace of
development to give us a nation where modern and ancient
features merge into a fascinating, mind-blowing ambiance.

China knows what it has, but also what it lacks

2008 marks the 30th year of a process of reforms for
China’s development spearheaded by Deng Xiaoping. Based on
the premise that progress is reason, it set in motion a
gigantic wave of investments which soon bore rich rewards.
Not that the negative effects of such a hasty spiral took
too long to appear either: there still exist unequal income
levels, noticeable differences between urban and rural
areas and a damaged environment, the yardstick some use to
find fault with China instead of its achievements.

But watch out! Regardless of the gloomy picture the West
intends to give us, China’s success and reforms by no means
point to an abdication of socialism, much less a move
towards capitalism, another media-fed idea intended to
present the country’s colossal advance in only 30 years as
an excuse to vilify the socialist model.

In October 2007, the XVII Congress of the Communist Party
embraced a scientific approach to development based on the
assurance that the human being is paramount and the
integral, coordinated and sustainable development of the
nation, qualities at once intrinsic to socialism and
contrary to capitalism. History has proved them right:
owing to the latter’s long-standing ills, children are
dying of curable diseases and there’s illiteracy,
malnutrition and poverty in more than 100 nations

Underlying the above concept is a long list of goals,
including a harmonized development between cities and the
countryside as well as between regions, economy and
society, and individuals and nature. In other words, it
means acting on the main problems currently facing China,
which shows consistency between what the authorities preach
and what they do, but also makes it plain that they know
what they have and don’t have.

Development is proportional to the Chinese Communist
Party's leadership

Those were precisely the topics discussed in the III
Meeting of the Party’s Central Committee, which held its
final session last October 12, the day of our arrival. For
instance, it launched a strategy for rural development
until 2020 to improve the peasants’ living and working
conditions and double their per capita income by the end of
next decade. In 2007 they earned around 605 dollars, a
figure to be raised in more than 6% before the end of the

In a meeting with Political Bureau member Liu Yunshan, who
is also Head of its Information and Propaganda Division, we
learned of other projects that come high on the
government’s list of priorities, such as plans to meet the
Chinese people’s increasing demands by focusing on a more
just distribution of wealth and better measures to protect
the environment. As Liu himself said, “We have
environmental problems, and a country aiming for high
levels of development must do it in a sustainable manner".

He insisted that only by persevering with today’s
Chinese-style socialism –which welcomes foreign investment
and fosters state and private ownership, known as "one
country, two systems", in line with the present situation
of this large nation of almost 1.4 billion inhabitants and
56 ethnic groups– and the rules of scientific development
followed for the last 30 years of reform will the People’s
Republic be able to deal successfully with its current

Powerful though they are, the West’s media machinery and
the top exponents of that select world can disregard
China’s advancement no more than they can deny that its GDP
has steadily remained a two-figure number since 2002
–estimates for this year place it between 10.1 and 10.4– or
downplay the fact that it’s the world’s second exporting
country, with reserves adding up to two billion dollars.
But they fail to mention both the institutional work
carried out by the Chinese people and their government and
the role of the Communist Party as the driving force of
this process.

No matter how much they twist reality, they can’t make it
go away. Suffice it to walk the streets of the big cities
or countryside villages, even in the most backward regions
of central or western China, to notice the Party’s force
and how it has managed to stick to its history and
principles and highlight the consistency of the scientific
theories it practices with Marxism-Leninism, Mao Zedong’s
ideas, Deng Xiaoping’s postulates, and the triple
representativeness, that is, the Party must always stand
for what is needed to develop the most advanced productive
forces, the direction national culture must take, and the
interests of the great mass of the population.

As compañero Fidel stated on November 23, 2004 when the
Council of State of the Republic of Cuba bestowed upon
president Hu Jintao the José Martí Order –our Homeland’s
highest award: “China has objectively become the most
promising hope for and the best example to all Third World


Friday, 21 November 2008


Hu Jintao addresses Peruvian Congress, vows to establish comprehensive cooperative partnership with Latin America

LIMA, Nov. 20 (Xinhua) -- China is willing to make concerted efforts with Latin American countries to establish a comprehensive cooperative partnership of equality, mutual benefit and common development, Chinese President Hu Jintao said here Thursday.

China, as the largest developing country in the world, is willing to work with Latin America, an important developing region, to boost mutual cooperation to a higher level, which conforms to the trends of the times and their respective development needs, President Hu said in his address to the Peruvian Congress.

Hu put forward five proposals to boost Sino-Latin American ties.

Firstly, China and Latin American countries should maintain high-level exchanges and contacts, improve bilateral and multilateral political consultation and dialogue systems at various levels, while continuously enhancing mutual political trust.

Secondly, to deepen mutually beneficial cooperation in economy and trade, China and Latin America should optimize trade structure and increase mutual investment, especially in the fields of manufacturing, infrastructure construction, energy, minerals, agriculture and high technology, said Hu.

China is willing to continue providing assistance for the economic and social development of Latin American and Caribbean countries within its ability, Hu said.

Thirdly, China and Latin American countries should enhance communication and coordination on their stances on such global issues as climate change, food security, energy and finance, multilateral trade system and the UN Millennium Development Goals.

Under the current complex international financial and economic situation, China and Latin America should join hands and participate in the framing of international economic, financial and trade rules, so as to help the international economy develop in a fairer and more reasonable direction, the Chinese president said.

Fourthly, Hu said China and Latin America should learn from each other and make progress in the fields of social welfare and development.

Both sides should carry out pragmatic cooperation in poverty reduction, education, social security, medical and health care, environmental protection and disaster relief, he said.

Finally, both sides should take effective measures to deepen and boost cooperation in culture, sports, media and tourism, said Hu.

The Chinese leader arrived in Lima on Wednesday for a state visit to Peru and the APEC Economic Leaders' Meeting scheduled for Nov. 22-23.

During his speech, Hu said that to forge the comprehensive cooperative partnership, both sides should first grasp the theme of common development because development is a basic way to improve people's well-being and promote social development.

He added that both China and Latin America are at a crucial time of development and China is willing to expand pragmatic cooperation with Latin American countries in various fields to boost common development.

The president said that to forge the comprehensive cooperative partnership, both sides also need to pursue the basic principle of equality and mutual benefit.

According to Hu, China will unswervingly follow the path of peaceful development and uphold the opening up strategy of mutual benefit and win-win progress. It maintains that all countries, big or small, rich or poor, strong or weak, should be equal and regards safeguarding and developing the common interests of China and Latin American countries as the starting point and the purpose of bilateral cooperation.

China respects the rights of people in Latin American countries to independently choose their paths of development, treats Latin American countries equally and takes into account their concerns in cooperation in a bid to realize mutual benefit and win-win results.

Hu stressed that innovation and all-round cooperation are also required to build China-Latin America comprehensive cooperative partnership.

He added that China is willing to work with Latin American countries to innovate their cooperation mode, expand their cooperation field, and enrich cooperation content in order to achieve more tangible results and better benefit their peoples.

Hu said that he has agreed with his Peruvian counterpart Alan Garcia to build a strategic partnership between the two countries.

"We have agreed to build a China-Peru strategic partnership and strive to deepen and enrich the mutually-beneficial cooperation between the two countries in all fields," Hu said.

Peru, which is one of the fastest growing economies amongst Latin American nations, is playing an increasingly important role in the world and regional affairs, he said.

Recalling the long history of friendship between the Chinese and Peruvian peoples, Hu said their mutual political trust is ever expanding and cooperation and exchanges in various fields is developing rapidly in an all-around way.

China and Peru have each other's support and have worked closely in dealing with international affairs, Hu said. China has become Peru's second largest trading partner and Peru is one of the major destinations for Chinese investment in Latin America.

Hu had talks with Garcia on Wednesday afternoon on efforts to expand mutually beneficial cooperation and further develop bilateral relations.

"We've come to the agreement that China and Peru, both developing nations, share wide common interests and the same target for development. Strengthening their links is not only in keeping with the fundamental interests of the two countries and their peoples, but also conducive to exchanges and cooperation between the Asian and Latin American regions," Hu said.

"China has always attached strategic importance to promoting cooperation with Latin America," Hu said.

"I made it clear that China hopes to become a trustworthy and all-weather friend, a mutually beneficial cooperative partner of Latin America and make the two a role model for active dialogues between different civilizations when I visited the region in 2004," the president said.

Hu thanked Latin American countries for their aid during the devastating earthquake in southwest China in May and their support for China on Taiwan, Tibet and other issues.

Hailing the rapid expansion of trade between China and the region, Hu noted that their trade reached the threshold of 100 billion U.S. dollars last year, an over ten-fold increase compared to 10 years ago.

In addition, their cultural exchanges continue to grow with an increasing number of events featuring each other's cultures and more tourist arrivals and exchange students, Hu said.

Confucius Institutes have been set up in more and more Latin American nations and many renowned media in the region have set up their branches in Beijing, he said.

The mutual understanding and friendship between the Chinese and Latin American peoples is ever deepening, while the foundations of their ties have further consolidated and China and Latin America are facing more opportunities for the future development of their relations, Hu said.

Thursday, 20 November 2008


Chinese President Hu Jintao (L) visits Fidel Castro, first secretary of the Central Committee of the Communist Party of Cuba, in Havana, capital of Cuba, Nov. 18, 2008

HAVANA, Nov. 18 (Xinhua) -- Chinese President Hu Jintao on Tuesday visited Fidel Castro, first secretary of the Central Committee of the Communist Party of Cuba, in Havana.

The two leaders warmly shook hands, exchanged greetings and had a long conversation in a sincere and friendly atmosphere.

Hu said he was delighted to see Castro again. The comrades of the Central Committee of the Communist Party of China "have all cared about your health and I brought their sincere greetings to you," he said.

"I see in person that you have recovered and have been energetic so I feel very pleased," he told Castro.

Castro extended a warm welcome to Hu for his second state visit to Cuba. "We are old friends. I am happy to see that you are as energetic as when I met you last time," he said.

Hu said that as the founder of the Cuban socialist revolution and construction, Castro is dearly adored by the Cuban people. During the past half century, Castro led the heroic Cuban people in their fearless struggle to safeguard state sovereignty and adhere to the path of socialism, thus winning respect from people worldwide, including the Chinese people.

Hu said that Castro has followed closely his country's development, showed great concern about people's life and dedicated himself to profound reflections of major strategic issues, such as international affairs and national development.

"Your thoughts and experience will surely guide the Cuban people to continue their march on the road of socialist construction," he said.

On Sino-Cuban relations, Hu said relations between the two countries have withstood the changes of international situation thanks to the joint efforts to forge and nurture their bilateral ties by generations of Chinese leaders, including Mao Zedong, DengXiaoping and Jiang Zemin, and Castro and other Cuban leaders.

"The brotherly friendship between our two countries and two parties has been deeply rooted in the hearts of our two peoples," he said.

"The Chinese people will never forget that thanks to your concern and effort that Cuba became the first Latin American nation to forge diplomatic ties with China 48 years ago," he said.

Thanks to the concerted efforts of both sides, the Sino-Cuban mutually beneficial and friendly cooperation in all areas have been expanding continuously, and bilateral ties have entered a new era of all-round development, said Hu.

"Our two nations, parties and peoples have become reliable friends and brothers who share weal and woe," he said.

"What affected me and other Chinese leaders most is that you always pay close attention to China's development and remain committed to promoting friendly cooperation between our two countries," Hu added.

Hu noted that Castro ordered to send a medical team to China immediately after the devastating earthquake in Wenchuan, southwest China's Sichuan province on May 12.

The Cuban leader also made constant phone calls to offer instructions on the team's work in China, Hu added.

Moreover, in his article entitled China's Victory, Castro has showed his firm support for China on such major issues as Taiwan, Tibet and the Olympic Games in Beijing, the Chinese president said.

The Cuban leader has also showed great concern about the Chinese students studying in Cuba and the progress of a joint ophthalmic hospital. "The Chinese people, the Communist Party of China and the Chinese government will for ever remember all these," he said.

Castro expressed appreciation of China's relief and reconstruction efforts following the Wenchuan earthquake and other natural disasters. He once again congratulated China on its successful hosting of the Beijing Olympic Games and Paralympics as well as the success of the Shenzhou-7 manned space mission.

Hu said that the Chinese government will always adhere to the principle of long-term friendship between China and Cuba. The Chinese people will, as always, support the just struggle of the Cuban people in safeguarding state sovereignty and opposing outside interference.

China will continue to provide assistance for Cuba within its capacity, and will firmly support the country's socialist cause, he said.

"We will work with the Cuban people to continuously push forward the development of friendship between China and Cuba," he added.

Castro said he and other Cuban comrades have followed closely "everything that happened in China."

"China has a large population and a culture of long standing and the Chinese people are known for their diligence," he said, adding that the Chinese people "have surmounted all manner of unimaginable difficulties and accomplished great achievements in construction."

"As the current international financial crisis is spreading, the Chinese economy has kept a sound momentum for development, demonstrating that China is the most prepared country," he said.

China is the most dynamic nation in the world and "no force can stop it from forging ahead," he said.

The two leaders also exchanged views on the two countries' economic development and major international and regional issues, including the international financial crisis and the world economy.

Before the conclusion of the meeting, Hu again expressed his heartfelt wish for Castro's good health. Castro, in return, expressed his gratitude.

Cuba is the third leg of Hu's five-nation trip. He has attended a Group of 20 summit on the financial crisis in Washington and visited Costa Rica.

He will also visit Peru and Greece, and attend the Economic Leaders' Informal Meeting of the Asia-Pacific Economic Cooperation (APEC) forum in the Peruvian capital of Lima.

Monday, 10 November 2008


The credit crunch

Oct 30th 2008 | BEIJING
From The Economist print edition

In a whirl of financial summitry, China ponders how to wield its new-found clout


“WE SWIM together, or we sink together,” said the European Commission’s president, José Manuel Barroso, as Asian and European leaders gathered in Beijing for a summit on October 24th and 25th that was dominated by the global financial crisis. But China, proclaiming itself relatively unscathed, is in no rush to act.

The crisis is pushing the world’s fourth-largest economy, with the biggest foreign-exchange reserves, to the centre of global summitry. The prime minister, Wen Jiabao, has said China will “actively participate” in a meeting of world leaders called by George Bush to discuss the issue on November 15th. After the Asia-Europe meeting, or ASEM, Mr Wen headed to Russia and Kazakhstan, venue for a pow-wow of Central Asian leaders, for more talks with global finance at the forefront.

But for all its avowed confidence in its own future (“the impact is limited and controllable,” said Mr Wen), and its hinted aspirations for a world financial order less dominated by America and its dollar, China does not want to throw its weight around. At ASEM, the seventh such biennial gathering since 1996, China echoed Mr Barroso’s calls for concerted international action. But it had few ideas to offer on what this should involve. More regulation of the international financial system, Mr Wen unadventurously proposed.

The most concrete idea discussed by the Asian countries at ASEM was to set up an $80 billion fund by the middle of 2009 to help countries in the region deal with liquidity problems—a plan already agreed in May. The bulk of the money would come from China, Japan and South Korea, but details of how much each would contribute and how the fund would be managed have yet to be announced.

For China, with $1.9 trillion in reserves, and Japan, with nearly $1 trillion, the proposed amount is hardly massive. But the countries giving most are likely to wield most clout. The participating countries, which also include the ten members of the Association of South-East Asian Nations, are a fractious lot and have differing views, not least over the roles of China and Japan in Asia. Most of them are still far too touchy about sovereignty to agree on any meaningful pooling of it.

Chinese leaders told ASEM that their priority was to keep their own economy running smoothly. This, said Mr Wen, was China’s “greatest contribution to the world”. China’s economic growth has recently slowed, unusually, to a single-digit rate (9% in the third quarter) and many economists expect it to remain that way next year. But its buoyancy is a solace to Asian countries, several of which enjoy trade surpluses with China, and to the European Union, for which China is the fastest-growing market—albeit, as the Europeans like to point out when they complain about Chinese trade barriers, still no bigger than Switzerland. At least European moans about successive years of the yuan’s depreciation against the euro, making European exports costlier, have now been silenced by a reversal of the trend.

China seemed reluctant at first to let the financial crisis dominate ASEM’s agenda. But it lost nothing by doing so. It deflected attention from climate change, another big issue of concern. The Europeans want China to make stronger commitments to cut its carbon emissions. But if there were concerns at ASEM about backsliding by China as it focuses more on boosting growth and employment, participants were too well-mannered to raise them publicly (just as they were all far too tactful to complain that Taiwan, Asia’s fifth-biggest economy, is not even represented at ASEM because of China’s objections).

A shared sense of crisis also gave China a face-saving way of engaging in some fence-mending. Germany’s chancellor, Angela Merkel, who had riled the Chinese by meeting the Dalai Lama in September last year, was told by President Hu Jintao during a meeting on the sidelines that China’s relations with Germany were “good”.

That is as far as a Chinese leader will ever go towards saying that all is forgiven. Japan’s new prime minister, Taro Aso, was also cordially received despite his China-sceptical views, and despite his just having signed a security pact with India, which some at least in China will see as directed against their country. Japan and China agreed to set up a hotline. China and Vietnam agreed to finish marking their contentious land border by the end of the year.

But while China relishes the attention it commands at such gatherings, it is resisting the temptation to swagger in its dealings with America. There are concessions China would like. One would be an end to America’s de facto power of veto in the IMF. Recently it has been showing its pique at this by blocking publication of an IMF report examining whether China has been manipulating its exchange rate for the sake of trade advantage. A Chinese newspaper said America must give up its control over the IMF in return for China’s helping out in the crisis. But the government has not gone that far in public.

In Russia, with whose leaders China shares strong misgivings about America, Mr Wen did allow himself to say that developing countries should have a stronger say in a new financial system. He also said there was a need to “diversify” the global currency system, a tactful way of saying the dollar’s sway should diminish. But ASEM’s closing statement said the IMF should play a critical role in helping badly-hit countries. Its only caution was that this should be “upon their request”.

Albert Keidel of the Carnegie Endowment for International Peace, a Washington think-tank, says China does not want “to be seen as a problem for existing powers” at this stage of its economic development. But he also argued in a recent paper that there could be trouble ahead as recession in the West, which he believes China could ride out, stokes protectionist demands. The crisis could also result in China’s economy surpassing America’s earlier than expected—well before 2030, Mr Keidel suggests. Hard as Chinese diplomats try to wear a friendly face, this would be a psychological jolt for Americans.

Thursday, 16 October 2008


A Limping West Sees a Confident China
Sukant Chandan*

China returned back into the Western media spotlight this
last year. While the Western press went into over-drive in
its negative reporting of China in the lead up to the
awe-inspiringly successful Beijing Olympics over the Tibet
riots, at the same time people in the West could not
completely ignore the many impressive aspects of Chinese
society and government. Few could ignore the stark contrast
between the social and political system and leadership of
Peoples Republic of China and that of the West,
particularly the USA.

The Sichuan earthquake and its tragic consequences for the
Chinese people saw the swift reaction of the Chinese
government with Premier Wen Jiabao rushing off to the
earthquake epicentre minutes after it occurred, as well as
the massive mobilisation of the Peoples Liberation Army,
Communist Party and other social organisations in the
service of those affected. Many people have contrasted this
with Bush's cowardice when he flew thousands of feet in the
air above New Orleans after the floods and government
incompetence left many residents of the city, especially
the Black and working classes sure that their President is
not working for their interests.

China's holding of the most impressive Olympics to date was
soon followed by another historic achievement in being only
the third country in the world to have sent astronauts for
a space walk. Today China is showing that while the West is
quivering on an economic and financial precipice it is
distinguishing itself as economically calm and in control,
and furthermore confidently planning additional economic
and social development for its people.

The last thirty years or so has not only seen China
accomplishing great strides for its own people and nation
in terms of economic growth, but these developments have
also impacted internationally as statistics released by the
World Bank last year showed that in the last two decades
China accounted for 67 percent of the achievements in
global poverty reduction. Today China is playing a crucial
role in the world economy with Western leaders queuing up
to request money from its massive currency reserves to bail
them out from the current financial capitalist crisis.

China has made it clear that it is committed to
contributing to a stable world economy. However this does
not mean that China will necessarily be ready and willing
to bail out the West indefinitely, China has to think of
its own economic well-being. China's position is that the
best contribution it can make to the world economy is to
maintain its own strong and relatively fast growth. Indeed,
a strong and economically successful China means the rest
of the world; especially the countries of the South have a
major world economic trading partner in China that treats
them with respect and friendship.

China has shown its economic self-confidence in the last
few weeks while Western governments are running scatter
shot by the financial crisis. The Central Committee of the
Communist Party of China announced agricultural reforms
intended to double farmers' incomes by 2020, stating
further that "the country's overall economic situation is
good. The economy is growing quickly and the financial
sector is operating steadily. The basic momentum of the
country's economy remains unchanged".

There are many reasons why China will not suffer the same
economic fate as Western nations: at a time when there is
capital flight from the West, China experiences capital
inflows. Mortgage assets and the housing market in China
shows much greater stability and strength compared to the
very shaky and risky mortgages and lending set-up in the
West epitomised by the 'sub-prime' crisis. Amongst other
problems China faces difficulties from high energy costs
and pressure from inflation, but the country still has
massive untapped potential despite global uncertainties
because of its large working population and a vast domestic
market. China of course cannot remain wholly immune from
the adverse effects of the present financial crisis, but
vitally China is not at the mercy of modern-day capitalism,
indeed capitalism in China is at the mercy of the Communist
Party and the socialist system, and this people-centred
economic planning enables China to avoid that which is
taking place in the West.

The full extent of the political fall-out for international
capitalism in this Great Crash remains to be seen. Even if
it manages to limp away from this crisis, the crash the
next time will overshadow the current one, of this no
honest commentator can deny. However, in the midst of all
this people can learn from the positive lessons that China
demonstrates and not be taken in by the duplicitous
behaviour of many Western leaders as they on the one hand
mouth-off and encourage subtle sinophobic anti-communism
and then, as in the case of Bush recently, phone Chinese
President Hu Jintao asking for hand-outs.

Peoples and nations of the world, including in the West,
are interested in building an alternative international
economic order where development is under the control and
in the interests of the masses. This is a challenge which
is being taken up by countries from Venezuela to Vietnam
who believe in a truly multi-polar world, a world that has
no place for US hegemony and aggression or economic
precariousness. Nations and peoples of the world,
particularly those of the South are developing their ties
of friendship, trade and cultural exchanges with China.
Those involved in progressive cultural and social movements
in West may also want to develop a mutually respectful
relationship with a country which is putting into practice
on an enormous scale the principles of peace and social
progress in which we believe. As Malcolm X used to say in
the early 1960s when the US vetoed China's membership of
the United Nations, no-one can ignore 800 million Chinese
people who have stood up. Since then China has made many
strides and stands as one of the biggest allies for
progressive change in the world today; something which
today cannot be ignored. This Great Crash, as well as the
failed 'War on Terror' is teaching people across the world
in the words of a recent Peoples Daily editorial in China
that the financial crisis is a manifestation of the
dead-end of liberalism and the destruction of the myth of
all-powerful American institutions.


*An edited version of this article appeared in the Morning
Star. Sukant Chandan is Chair of Friends of China and can
be contacted at

Wednesday, 15 October 2008


Full text of Chinese Premier Wen Jiabao's speech at U.N. High-Level Meeting on MDGs

Special Report: Premier Wen Attends UN Meetings

UNITED NATIONS, Sept. 25 (Xinhua) -- The following is the full text of the speech by Chinese Premier Wen Jiabao at the U. N. High-Level Meeting on the Millennium Development Goals (MDGs) on Sept. 25, 2008:

Mr. President,Mr. Secretary-General,Ladies and gentlemen:

Eight years ago today, the United Nations solemnly adopted the Millennium Declaration, offering new hopes to the people living in poverty around the world.

China is the most populous country in the world. Since 1978, we in China have accelerated development mainly with our own efforts and through reform and opening-up. As a result, China has brought down the number of people in absolute poverty from 250 million to 15 million in less than 30 years. China has made free nine-year compulsory education universal in the country and particularly in the rural areas. We have put in place a new type of cooperative medical care system mainly financed by the government for 800 million farmers. We have set up the system of village and community self-governance for rural and urban residents and introduced government transparency, democratic oversight and direct election at the community level.

In the final analysis, all that we do in China now serves but one purpose -- to eradicate poverty and build on this basis to achieve modernization with prosperity, democracy, advanced culture and harmony.

China is a responsible, large developing country. Though not rich, it has honored its commitments to the Millennium Declaration and done what it can to help some least developed countries. By the end of June 2008, China had cancelled a total of 24.7 billion billion yuan of debts for 49 heavily indebted poor countries and least developed countries in Asia and Africa and provided 206.5 billion yuan in various forms of assistance, of which 90.8 billion yuan is free aid. China has provided zero-tariff treatment to the goods of 42 least developed countries. The number of covered tariff items ranges from 736 to 1,115, accounting for 98 percent of the export volume of least developed countries to China. China has trained 15,000 African professionals, sent medical teams and provided free anti-malaria medicine to Africa. China will continue to do so and will dispatch up to 100 senior agricultural experts to Africa and build 30 hospitals and 100 rural schools for Africa. To enhance Africa's capacity for independent development, China decided at the end of 2007 to provide 2.377 billion yuan of free aid and 700 million yuan of interest-free loans to Africa.

Statistics released by the World Bank last year showed that over the past 25 years, China accounted for 67 percent of the achievements in global poverty reduction. The vision set out in the U.N. Millennium Declaration is being gradually turned into reality in the vast country of China. This is also the most important international responsibility that the Chinese today should fulfill.

Nonetheless, we have to recognize that about one billion people in the world still live below the poverty line and hundreds of millions suffer from hunger. China is also under pressure in terms of population, resources and the environment, and it faces such challenges as uneven development between urban and rural areas and between different regions, imbalance between economic and social development and a large low-income group.

To attain the goals of the Millennium Declaration globally remains a long and uphill journey and the difficulties cannot be underestimated.

Ladies and Gentlemen:

Counting from today, we have only seven years to go before the end of 2015 to reach the goals in the Millennium Declaration of halving the proportion of people living on less than a dollar a day and the proportion of people who suffer from hunger, and no more than 12 years before the end of 2020 to significantly improve the lives of at least 100 million slum dwellers. The task is indeed an arduous one. I hope that, we, leaders present today, will join hands to shoulder greater responsibilities as statesmen and pay closer attention to and show more compassion for the poor regions and people in the world.

To this end, I wish to suggest the following:

-- It is important for governments to give top priority to development. Underdeveloped countries should make poverty eradication through development a central task, and developed countries should provide enabling conditions for the development of underdeveloped countries. Development is, first and foremost, economic development and educational, cultural and social development should also be high on the agenda.

-- It is important to give encouragement and support to all countries in taking development paths suited to their national conditions and exploring development models conducive to their national development and poverty eradiation efforts. Respect for the right of people of all countries to independently choose development paths and models should serve as a basis and precondition for democracy.

-- It is important to resolve regional conflicts and ethnic strife through peaceful means rather than by force. We should promote democracy in international relations and encourage all countries to have consultations on an equal footing, seek common ground while reserving differences, pursue win-win outcomes and live in harmony with each other.

-- It is important to step up international assistance. Developed countries in particular should assume the responsibility of helping underdeveloped countries. Assistance should be provided selflessly, with no conditions attached. It is particularly important to increase assistance for least developed countries and regions, with the focus on addressing hunger, medical care and schooling for children. I wish to propose that donor countries double their donations to the World Food Program in the next five years and that the international community do more to cancel or reduce debts owed by least developed countries and give zero-tariff treatment to their exports.

-- It is important to improve the working mechanisms for the development goals in the Millennium Declaration. It is necessary to coordinate the efforts of international organizations to jointly overcome the difficulties facing developing countries, including the immediate challenges of soaring oil and food prices, make plans, raise finance for assistance and implement the plans in real earnest.

To facilitate the attainment of the MDGs, China stands ready to take the following actions:

1. In the coming five years, China will double the number of agricultural technology demonstration centers we build for developing countries to 30, increase the number of agricultural experts and technicians we send overseas by 1,000 to double the original figure, and provide agricultural training opportunities in China for 3,000 people from developing countries.

2. China will contribute 30 million U.S. dollars to the U.N. Food and Agriculture Organization to establish a trust fund for projects and activities designed to help developing countries enhance agricultural productivity.

3. China will increase exports and aid to countries facing food shortages.

4. In the coming five years, China will give 10,000 more scholarships to developing countries and offer training programs exclusively for 1,500 principals and teachers from African countries. China will ensure that the 30 hospitals it builds for African countries are properly staffed and equipped and train 1,000 doctors, nurses and managers for the recipient countries.

5. China will cancel the outstanding interest-free loans extended to least developed countries that mature before the end of 2008 and give zero-tariff treatment to 95 percent of products from the relevant least developed countries.

6. In the coming five years, China will develop 100 small-scale clean energy projects for developing countries, including small hydropower, solar power and bio-gas projects.

Ladies and Gentlemen:

Four fifths of the world's population live in developing countries while only one fifth in developed countries. Everyone has the equal right to survival. But if developing countries remain in poverty, this will show that today's world is neither fair nor harmonious. Such a world will inevitably be an unstable one.

If we have those poor mothers and their hungry babies crying for food on our mind, then there is no difference that we cannot put aside and no obstacle that we cannot surmount. As long as governments have a strong sense of responsibility and mission, as long as people of all countries bring out the best of human sympathy and compassion, and as long as we unite to overcome difficulties, no matter where we come from and who we are, we will attain the MDGs.

I look forward to the day when the poor people no longer suffer from hunger and are all able to lead a frugal but comfortable life through their own hard work. I look forward to the day when all children can go to school and everyone enjoys proper medical care. I look forward to the day when we all live in a democratic and free society in which everyone has the opportunity and right to pursue happiness. I look forward to the day when on one is discriminated against for his or her skin color, race or belief and the family of mankind lives in greater harmony.

I believe that this is not just a day that I look forward to, but a day that everyone present here today looks forward to. Let us work towards the goals of the Millennium Declaration, so that the day will come, and will come early.

Tuesday, 14 October 2008


Sunday, October 12, 2008

BEIJING: China's ruling Communist Party expressed confidence Sunday in the country's economy and said it would strengthen efforts to expand domestic demand to counter the effects of the global financial turmoil.

The party, led by President Hu Jintao, released a statement at the end of a four-day meeting of its Central Committee at which it also approved an agricultural reform and development plan aimed at doubling rural incomes by 2020.

"The country's overall economic situation is good. The economy is growing quickly and the financial sector is operating steadily. The basic momentum of the country's economy remains unchanged," said the statement, released through the official Xinhua News Agency.

It said China should adopt flexible and prudent economic policies and ramp up domestic demand, while maintaining the stability of the economy, the financial sector and capital markets.

"We should continue keeping social stability and pushing the country's economy toward sound and fast development," the statement said.

But it also acknowledged there were inherent "contradictions and problems" with China's economy and that all party members should prepare to face greater challenges as more instability emerges in the international economy.

Economists have cut growth forecasts for China this year to as low as 9 percent, down from last year's 11.9 percent. That would still be the highest rate for any major country, but Communist leaders want to keep growth robust to reduce poverty and avoid job losses, which could fuel political tensions.

China lowered interest rates on Wednesday in the latest official effort to revive slowing economic growth and help struggling exporters.

China faces difficulties from high energy costs and inflation pressures, but officials say the country has growth potential despite global uncertainties because of its large labor pool, vast domestic market and the improved competitiveness of its companies.

The party's statement said it aims to double the income of the country's farmers in 12 years in a move aimed at easing the growing and politically explosive gulf between the urban elite who have benefited most from China's two-decade-old economic boom and its vast poor majority.

The meeting also set goals of boosting rural consumption levels by a "big margin" and eliminating poverty in rural areas by 2020, Xinhua said.

In 2007, the average income of rural residents was 4,140 yuan (US$590) and there were 15 million people living in absolute poverty in the countryside, the report said.

The party also pledged to develop and modernize the country's agricultural system for better efficiency and increased productivity through innovation.

State media reports ahead of the meeting said the committee would review an amendment to the land management law to give its 750 million rural dwellers more freedom to lease or transfer their land, but the statement did not mention it. Such practices are increasingly common as rural workers move to the city.

Chinese economists hope the agricultural reforms will lead to larger, more efficient farms that are better able to meet the demands of the evolving economy while maintaining the country's self-sufficiency.

Monday, 6 October 2008


‘We Should Join Hands’

China's prime minister speaks out in his first interview with a Western publication in years.

Fareed Zakaria
From the magazine issue dated Oct 6, 2008

In New York last week for the opening of the United Nations General Assembly, Chinese Prime Minister Wen Jiabao gave a rare exclusive interview to NEWSWEEK's Fareed Zakaria. Wen, 66, is known for his openness and economic mastery, and has presided over some of the fastest growth in China's history. He began the conversation by pledging to "tell the truth" and invited Zakaria to interrupt him, since Wen "prefers dialogue to long-winded speeches." The two covered topics ranging from Tibet and Tiananmen Square to Darfur and human rights, from political philosophy to the U.S. elections, from the current financial crisis to the future of Chinese democracy. Excerpts:

ZAKARIA: What do you think of the financial crisis affecting the United States?

WEN: We should join hands and meet the crisis together. If the financial and economic system[s] in the United States go wrong, then the impact will be felt not only in this country, but also in China, in Asia and the world at large.

Regarding your own economy, many people now say there will be a significant slowdown. Do you think that will happen? And if it does, what do you think will be the consequences?

China's economy has been growing at an annual average rate of 9.6 percent for 30 years running. This is a miracle. And between 2003 and 2007, China enjoyed double-digit growth—yet the consumer price index grew less than 2 percent a year.

China has been proactive in adopting regulatory measures. Our previous concerns were to prevent a fast-growing economy from overheating and to prevent soaring prices from becoming inflation.

But things have changed very fast [because of] the subprime crisis in the United States and the serious turbulence that followed. We have seen a decline in external demand, and China's domestic demand cannot be significantly increased in a short period of time. [So] we do risk a slowdown. We must re-adjust macroeconomic policy.

Do you think you can continue to grow if the United States goes into a major recession?

Given the statistics for the first eight months of this year, we have managed to do that. [But] a U.S. recession would certainly have an impact on China's economy. Ten years ago, China–U.S. trade stood at only $102.6 billion. Today the figure has soared to $302 billion—a 1.5-fold increase. A shrinking of U.S. demand would certainly have an impact on China's exports. And U.S. finance is closely connected with Chinese finance. If anything goes wrong in the U.S. financial sector, we would be anxious about the security of Chinese capital.

China is the largest holder of U.S. Treasury bills by some accounts, they ' re worth almost $1 trillion. Can you reassure [Americans] that China would never use this status as a weapon in some way?

We believe that the U.S. real economy is still solidly based, particularly the high-tech and basic industries. Something has gone wrong in the virtual economy, but if this problem is properly addressed, it is still possible to stabilize the economy. The Chinese government hopes to see sustained development in the United States, as that will benefit China. Of course, we are concerned about the safety and security of Chinese money here. But we believe that the United States is a credible country. And particularly at such difficult times, China has reached out to the United States. And actually we believe such a helping hand will help stabilize the entire global economy and finance and prevent major chaos from occurring ... I believe now that cooperation is everything.

Many people see China as a superpower already, and they wonder: why is it not being more active in political resolution of issues such as Darfur or Iran?

I need to correct some elements of your question. China is not a superpower. Although China has a population of 1.3 billion and although in recent years it has registered fairly fast economic and social development, China still has … 800 million farmers in rural areas and we still have dozens of millions of people living in poverty. We need to make committed and very earnest efforts to address these problems. That's why we need to focus on our own development and on our efforts to improve people's lives.

But surely the Chinese government could pressure the Sudanese government or the Iranian government or the government in Burma to be less repressive. You have relations with all three of them.

That brings me to your second question. China is a justice-upholding country. We never trade our principles. Take the Darfur issue that you raised just now, for example. China has always advocated a dual-track approach: China was among the first countries sending peacekeepers to Darfur. China was also the first country that gave assistance to Sudan, and we also keep [up] our efforts to engage the leaders in Sudan to try to seek a peaceful solution.

Do you think it would be dangerous for the world if Iran got nuclear weapons? And what do you think the world should do to try to prevent it?

We are not supportive of a nuclear rise for Iran. We believe that Iran has the right to develop a utilization of nuclear energy in a peaceful way. But such efforts should be subject to the safeguards of the IAEA, and Iran should not develop nuclear weapons … We hope that we can use peaceful talks to achieve the purpose, rather than resort to the willful use of force, or the intimidation of force. It's like a relationship between two individuals. If one individual tries to corner the other, the effect will be counterproductive. Our purpose is to resolve the problem, not to escalate tensions.

I have a question for you: don ' t you think that the efforts made by China in resolving the Korean nuclear issue have actually helped that situation? I know it will take time to [achieve] a complete solution to the Korean nuclear issue. But the model we have adopted has proved to be r ight in this direction.

China's efforts have been appreciated in the United States and around the world. And it makes people wish that China would be active in other areas in the same way.

We have gained a lot of experience and learned lessons from the years of negotiations. The progress made also had a lot to do with the close cooperation among the six parties in the talks.

The Dalai Lama says now he would accept China ' s rule in Tibet. Why don ' t you negotiate directly with him and solve this issue once and for all?

The Dalai Lama is a religious leader and enjoys certain influence in the Tibetan region. He is not an ordinary religious figure. The so-called government in exile founded by the Dalai Lama practices theocratic rule. And the purpose of this so-called government in exile is to separate Tibet from China. All over the world, the Dalai Lama keeps preaching about autonomy for the greater Tibetan region. He wants to separate the so-called greater Tibetan region from the motherland. Many people in the United States have no idea how big this region is; it covers Tibet, Sichuan, Yunnan, Qinghai and Gansu: a quarter of China's territory.

For decades, our policy [has been that] as long as the Dalai Lama is willing to recognize that Tibet is an inalienable part of China's territory, and as long as the Dalai Lama gives up his separatist activities, we're willing to have contact and talks with him or his representatives. Now, sincerity holds the key to producing results out of the talks.

What action would you like to see from the Dalai Lama that would show sincerity?

His sincerity can be demonstrated in giving up separatist activities. … Of course, talks may continue, and in light of the progress in the talks, we may also consider raising the level of the talks.

Premier Wen, your country has grown, as you pointed out, 9.5 percent for 30 years the fastest growth rate of any country in history. What is the key to your success? What is the model?

[The answer is] the reforms and opening-up policy we introduced in 1978. We emancipated productivity in China. We had one important thought: that socialism can practice market economy.

People think that ' s a contradiction. How do you make both work?

Give full play to the basic role of market forces in allocating resources under the macroeconomic guidance and regulation of the government. Ensure that both the visible hand and the invisible hand are given full play. If you are familiar with Adam Smith, you will know that there are two famous works of his. "The Wealth of Nations" deals with the invisible hand: market forces. The other book deals with social equity and justice. In the other book, he stressed the importance of the regulatory role of the government to distribute wealth among the people. If most of the wealth in a country is concentrated in the hands of the few, this country can hardly [have] harmony and stability.

Some Americans and Europeans, particularly human-rights observers, say that China has cracked down on human rights over the last few years. They say they had hoped that the Olympics would lead to an opening, but there has been more repression. How would you respond?

By hosting the Olympics, China has become more open. Anyone without biases will see that. Freedom of speech and of media coverage are guaranteed in China. The Chinese government attaches importance to, and protects, human rights. We have incorporated these into the Chinese Constitution, and we also implement [them] in earnest. We don't think that we are impeccable in terms of human rights—it is true that in some places and in some areas, we have problems. Nonetheless, we are continuing to make improvements.

When I go to China and I ' m in a hotel and I type the words " Tiananmen Square " into my computer, I get a firewall, what some people call the Great Firewall of China. Can you be an advanced society if you don ' t have freedom of information?

China now has over 200 million Internet users and the freedom of the Internet in China is recognized by many, even in the West. To uphold state security, China, like many countries in the world, has also imposed some proper restrictions. On the Internet in China, you can have access to a lot of postings that are quite critical about the government. It is exactly through reading these critical opinions on the Internet that we try to locate problems and further improve our work. I don't think a system or a government should fear critical opinions or views.

What are your favorite sites?

I've browsed a lot of Web sites.

There is a photograph of you at Tiananmen Square in 1989. What lesson did you take from your experiences in dealing with that problem? Did you feel it was necessary to stop political reform? Do you think in 25 years there will be national elections in w hich there will be competition?

I believe that while moving ahead with economic reforms, we also need to advance political reforms, as our development is comprehensive in nature, our reform should also be comprehensive. I think the core of your question is about the development of democracy in China. When it comes to the development of democracy in China, we can talk about progress in three areas. No. 1: we need to gradually improve the democratic election system so that state power will truly belong to the people and state power will be used to serve the people. No. 2: we need to improve the legal system, run the country according to law, and [have] an independent and just judicial system. No. 3: government should be subject to oversight by the people. That will [require] us to increase transparency in government affairs. It is also necessary for government to accept oversight by the news media and other parties.

We need to take into account China's national conditions and we need to introduce a system that suits China's special features and we need to introduce a gradual approach.

It's hard for me to predict what will happen in 25 years. This being said, I have this conviction: that China's democracy will continue to grow. In 20 to 30 years, Chinese society will be more democratic and fairer and the legal system will be improved. Socialism as we see it will further mature and improve.

People say you ' re studying the Japanese system because there ' s democracy, but only one party seems to win elections. Is that the model you see for China?

There are multiple forms of democracy in the world. What is important is whether it really represents the interests of the people. Socialism as I understand it is a system of democracy. And such a democracy first and foremost should serve to ensure the people's right to democratic elections, oversight and decision making. Such a democracy should also help people to develop themselves in an all-around way in an environment featuring freedom and equality. And such a democracy should be based on a full-fledged legal system.

You ' ve said that you ' ve read the works of Marcus Aurelius a hundred times. He is a famous Stoic philosopher. My reading of him says that one should not be involved in the self, and in any kind of pursuits that are self-interested, but should be more for the community as a w hole. When I go to China these days, I am struck by how much individualism there is, how much consumerism there is. Are you trying to send a signal to the Chinese people to think less about themselves and more about the community?

It is true I read the meditations of Marcus Aurelius on many occasions, and I was very deeply impressed by the words that he wrote. I very much value morality and do believe that entrepreneurs, economists and statesmen alike should pay much more attention to morality and ethics. In my mind, the highest standard to measure ethics and morality is justice. When we think about the economy, we think more about companies, capital, markets, technology, and so on. We might forget about elements like conviction and morality. Only when we combine these two kinds of factors can we [have] a full picture of the DNA of the economy. It is true that in the course of China's economic development, some companies have pursued profits at the expense of morality. We will never allow such things to happen, because such an approach simply cannot be sustained. That's why we advocate corporate, occupational and social ethics.

Let me ask you a final question. You must have been watching the American election. What is your reaction to this strange race?

The presidential election of the United States should be decided by the American people. What I follow very closely is [what] the relationship between China and the United States [will be like] after the election. In recent years, there has been sound growth in China-U.S. relations. We hope that whoever is elected president, he will continue to grow the relationship with China. And China hopes to continue to improve its relationship with the United States no matter who takes office.

Friday, 3 October 2008


Private Equity Executives Walk Away Empty Handed
Greedy Privatisation Bid Smashed in China
August 7 - Zero. Absolute zilch. That’s what big time private equity group Carlyle ended up getting when they attempted to take over a state-owned Chinese manufacturer. The final defeat for the U.S.-based Carlyle Group was announced on July 23. Carlyle and Chinese state-owned Xugong Construction Machinery announced that the original takeover deal signed in October 2005 had now expired. China’s Communist Party regulators had rejected the sell-off.

The three-year Carlyle-Xugong saga was a hot issue in the Peoples Republic of China (PRC.) Xugong is China’s biggest manufacturer of construction machinery although by the standards of the PRC’s state-owned enterprises it is not big: it is not one of the 160 or so giants controlled directly by the Beijing national government but is owned by the local government of Xuzhou city in Jiangsu province. But had Carlyle succeeded in its grab for Xugong it would have been the biggest foreign takeover of an existing Chinese state-owned enterprise (most of the foreign investment into China has gone into new factories or into joint ventures with state firms.) So when it was announced that Carlyle were to takeover 85% of Xugong it unleashed a storm of opposition. The opposition to the sell-off was led by left-wing academics, staunch elements within the Communist Party of China (CPC) and Chinese state media. They protested that too many state-owned firms were being sold off.

Before long what had seemed like a formality became tied up with regulatory authorities. The fate of Xugong became an issue far, far larger than the enterprise itself. Opposition to its sell-off became a symbol of resistance to erosion of the socialistic state-owned core of the PRC’s economy. But the capitalist side mobilized too. The finance pages of Western mainstream media sneered at the delay in approving Carlyle’s bid. The U.S. government blatantly interfered and demanded that the privatization go ahead. Then in July 2006, Carlyle, working with the American Chamber of Commerce in Shanghai (which later became notorious for trying to scuttle China’s new pro-worker Labour Law), hosted a visit and advocacy speech by Colin Powell. However, as we noted last year in Trotskyist Platform Issue #8, “Powell would ultimately find that getting PRC authorities to approve the imperialist takeover of state-owned Xugong was not as easy as getting the United Nations to endorse the ‘weapons of mass destruction’ pretext for the imperialist takeover of Iraq!”

There was animated debate within the PRC authorities themselves over Xugong. Reports circulated of deadlock within the Ministry of Commerce over what to do about the issue. In 2006, senior PRC officials held an unprecedented meeting just to deal with the question. The Xugong dispute reflected a broader political struggle occurring within the PRC. On the one side stand those who want to strengthen the PRC’s foundations of socialist-type state ownership of key economic sectors. On the opposite side are rightist elements who want to facilitate greater - and some secretly even wanting total – capitalist economic penetration. In the middle of these opposites are various political shadings that represent the stance of the current PRC leadership. This official path has as its final declared destination socialism and seeks to maintain state control of key economic sectors but at the same time continues with the post-1978 “reform and opening up” policies that have led to a degree of capitalist encroachment and inequality. The problem with this current course is that in the long term it is not sustainable. To be realistic there are in the end only two ways that China can go. In one variant, the still tenuously riding layer of capitalists spawned by post-1978 reforms will, with the backing of Western and Taiwanese capitalists and in alliance with right-wing sections of the officialdom, manipulate mass grievances to smash pro-communist rule and grab political power for themselves. In the other variant, the Chinese toilers, emboldened by the successes of their socialistic development but enraged by the inequalities caused by pro-market reforms, move to complete their class struggle victory gained in the 1949 Revolution. They defeat capitalist restorationist forces within China and proudly advocate socialist triumphs internationally. The workers of the world need this second variant to emerge. But if this is to occur then it will require the international working classes to do all in their power to stop the Western and other capitalists from fomenting capitalist counterrevolution in China.

On 13 November 2006 there was an act of solidarity in Sydney with the pro-communist opposition to the Xugong privatization. A small group of protesters rallied outside Carlyle’s Australian headquarters under the slogans “Stop the Carlyle Group Profiteers from Grabbing Control of Chinese State-Owned Firm Xugong Machinery! Defend State Ownership of Major Industry and Banks in Red China.” The call for the demonstration which was distributed by Trotskyist Platform supporters insisted that: “It took the Heroic 1949 Revolution to Achieve Nationalisation of Chinese Industry – Let’s Protect this Anti-Capitalist Triumph! Keep Carlyle and Other Capitalist Exploiters Out! …. The capitalist parasites should get nothing.”

One Country in The World Where The Carlyle Group Can’t Run Roughshod
In October 2006 it became public that Chinese regulators had quashed Carlyle’s full-scale takeover bid. A new scheme had emerged for 50-50 ownership. On the eve of a trip to China by U.S. Commerce Secretary Carlos Gutierrez in November 2006 Chinese media announced that the new arrangement had been approved by China’s state assets watchdog. But two days later the same media reported that the state assets body was still scrutinizing even the revised Carlyle 50% bid. Then in January 2007, with the Carlyle-Xugong issue in mind, the Chinese government released a circular prescribing that the state should maintain its absolute control over enterprises in key industries. A couple of months later PRC authorities knocked back Carlyle’s revised bid and the private equity capitalists settled for a minority 45% stake. The U.S. capitalist rulers were furious that the full-scale privatisation had failed. In a March 29 speech in Beijing U.S. Commerce Undersecretary Frank Lavin arrogantly ranted that “China needs a hundred Carlyles to come in and buy a hundred Xugongs.” His heavy-handed behaviour was to no avail. By July of this year Carlyle went from losing on points to being totally knocked out. The 85% that had turned to 50% and then 45% went to … a big fat 0 %.

It turns out that Xugong was not the only Chinese state company that Carlyle could not get its hands on. The PRC’s Communist Party authorities have knocked back Carlyle from claiming even minority holdings in other state firms. In early July Carlyle failed to grab a stake in state-owned chemical producer Shandong Haihua. The private equity high-riders have also been locked out of investments in two state-owned banks, Guangdong Development Bank and Chonqing City Commercial Bank. By contrast, Carlyle and other similar companies have been allowed to grab many stakes in Chinese privately owned firms. That is not so bad. If an enterprise is to be run by capitalists it is a secondary consideration which lot of profiteers run them; and in any case foreign-owned ones like Carlyle may be easier to squeeze out in the future than domestic Chinese ones.

Xugong Victory: A Good Step Forward But A Long March Ahead
The defeat of the Xugong privatization attempt was certainly a victory for China’s masses. It is the continued public ownership of key economic sectors in China (including major banks, all agricultural land, communications, steel, oil, aluminium, automotive, aircraft manufacturing, shipbuilding and transportation) that has enabled the PRC to pull hundreds of millions of its people out of poverty in the last 59 years. In the PRC the socialistic state-owned industries not only grant their employees higher wages and better conditions than do China’s privately-owned firms but they are able to be steered to meet broader social goals - goals that in a private company would clash with the capitalist imperative of higher profit at all cost. So PRC public firms are often directed towards meeting targets in hiring of disabled people, development of poorer regions, relieving of unemployment and opening up of opportunities for women to reach high positions. In response to the devastating May 12 earthquake in Sichuan, PRC state-owned enterprises were at the forefront of relief and reconstruction efforts. Major state-owned steelmakers like Boasteel and Angang Steel stepped up production to ensure that there would be adequate steel supply to build 1 million movable houses for those left homeless by the quake. Of course, to constrain PRC public firms to act as truly socialistic enterprises is a political struggle in itself. Chinese state enterprise managers are often tempted to want to act like their counterparts in capitalist firms. Mass participation by elected worker representatives both from within and from outside a particular enterprise must be asserted to ensure the success of anti-corruption drives, to increase equality within the firm and to ensure that employees genuinely understand that the workers state’s enterprise really does belong to them.
Beijing to Tianjin Intercity service. This, the world’s fastest passenger service, uses trains built by a Chinese state-owned enterprise, CNR Tangshan Railway Vehicle Co.

Despite the Xugong victory, the danger of erosion of state ownership over the Chinese economy has not been averted. It is unclear whether the relative weight of the public ownership in the Chinese economy has increased or decreased in the last few years. Certainly, the speed of privatization that was cranked up in the late 1990s has slowed down. Furthermore, in the last three or four years the biggest state-owned enterprises have grown rapidly. Indeed, in some sectors there has even been a defacto partial renationalization. For example, in the last three years many, terribly unsafe, privately-owned coal mines have been closed while government funding for the safer, big state-owned mines has increased. But at the same there has been some whittling away of state ownership in a range of big state-owned enterprises through sell-offs of minority stakes to private holders. And it is planned that a minority (some 20%) of the Agricultural Bank of China – one of China’s “Big Four” state banks – will be privatized. The presence of private part-owners, motivated as they are by personal profit, are a pressure on state companies to veer away from their social goals. For example, could you imagine what the minority capitalist stakeholders (which include some big foreign banks) in Chinese state banks were saying when they heard that the banks would be cancelling the requirement to repay loans of those affected by the Sichuan earthquake: they would have been screaming!

The mooted partial sell-off of the Agricultural Bank of China and other part-privatisations must be stopped. The defeat of Carlyle’s takeover of state-owned Xugong should be used to embolden the fight to extend the PRC public sector. One factor influencing this struggle will be the fact that while Red China’s economy continues to boom, similarly populous countries that are capitalist like Indonesia and India are having their masses hit with unbearable rice and grain price increases and the U.S. is verging on recession. That makes it even less palatable when U.S. capitalist officials lecture that “China needs a hundred Carlyles to come in and buy a hundred Xugongs.” Another factor is that owners of private companies in China (which are concentrated in the light manufacturing export sector) are being squeezed by the PRC’s new pro-worker, Labour Law. With the help of this law and more aggressive state support for trade unions, workers in the private sector have recently been able to achieve rapid wage rises. Many sweatshop private firms are as a result closing down. It has been estimated that by the end of this year, up to 7,000 factories owned by Hong Kong capitalists in mainland China will have been closed. The state should take over these closing plants, retool them and consolidate them into larger more efficient operations. Existing public firms should in the meantime increase hiring to make up for lost jobs.

We should never forget that the struggle over ownership systems of the economy cannot be separated from the question of power: from the question of which class rules. To maintain the pre-eminence of collectivised ownership of key sectors requires maintaining the PRC workers state. On the other hand those who want to bring back capitalism to all of China will have to smash the existing political regime along the way. Capitalist forces in China certainly understand this. They are preparing their future open bid for power by pushing now for greater representation for capitalists in political bodies. They do this by playing victim and having a big sob about how private bosses are “unfairly” despised in PRC society. These capitalist restorationists, some of whom are in right-wing factions of the CPC and some outside the party, often promote their goals with calls for greater political “pluralism” in China. They advocate more influence for the All China Federation of Industry and Commerce (an officially welcomed body of private bosses.) They also “advise” that there should be more leading posts granted to the smaller non-communist parties that are part of the CPC-led governing coalition in China. Within some of these non-communist parties, capitalist elements have a proportionately much greater representation than they do in the CPC.

All these counterrevolutionary methods are of a piece with the Western imperialists’ demands for “human rights” in China. These demands have reached a crescendo in the lead up to the Beijing Olympics. But the imperialist concerns for the “human rights” of anti-communist forces in China can be compared to a capitalist boss’s concern for the “rights” of scabs that are firmly stopped by striking workers. Workers in the West should reply with a concern for the PRC that is equivalent to the solidarity that proud unionists show for a strike by their fellow workers. The 1949 creation of a state in China that is based on a public economy is a great strike for all the workers of the world. State ownership of an enterprise in a workers state means the collective ownership of that enterprise by all the people in that country. It is the basis on which a more humane, egalitarian future can be won. It is a future worth fighting for. Let us be inspired by the political defeat of the private equity bid for state-owned Xugong.