../images/line4.gif
-FEBRUARY, 1999-
../images/line4.gif

Click on the calendar date in the chart below to see articles posted for that day.

01 02 03 04 05 06 07 08 09 10
11 12 13 14 15 16 17 18 19 20
21 22 23 24 25 26 27 28 29 30
31

Click on the article title below to view the article.  Follow the 'Back to Top' links to return here.  Follow the 'Back to Article Index' links to return to the group of articles corresponding to that article's post- date.

02/25/1999 U.S. Photographer Finds No Paradise in Tibet
02/22/1999 China Signals Intensified Campaign against Dissent
02/22/1999 Taiwan Names First Ambassador To Macedonia
02/04/1999 Amnesty International Accuses China of Torturing Uighurs
02/04/1999 Official: Tiananmen Dissident Suffers 'Political Monomania'
02/04/1999 Anniversary Sino- US Relations
02/04/1999 9,000 Armed Police Sent to Xinjiang
02/04/1999 Banned China Democratic Party Establishes Five New Branches
02/03/1999 Peng Ming appeal
02/03/1999 Dissident crackdown regrettable, says Canada
02/01/1999 China Hypocritical? No, Just a Bit Itic-al
 Foreign investors shy away as Beijing refuses to guarantee bankrupt investment firms' debt
02/01/1999 Battle to sustain economic eminence

../images/line3.gif

U.S. Photographer Finds No Paradise in Tibet

LOS ANGELES, Feb. 25, 1999 -- (Reuters) Photographer Steve Lehman went to Tibet in search of paradise but he did not find it. Now the Chinese have barred him from continuing his search.

That is because, rather than photographing a Shangri-la in the Himalayas, he took pictures of riots, police beatings and a campaign of oppression by Tibet's Chinese masters. His new book, "The Tibetans: A Struggle to Survive," aims to shed light on what he says is the day-to-day brutality of Beijing's heavy-handed rule in the devoutly Buddhist region.

Speaking about his feelings before he went to Tibet, the Los Angeles photographer said: "I had this romantic vision that everyone has, I had this kind of naive or primitive view of the situation there.

At that time I couldn't imagine actual unrest." Spanning a decade, the photos resemble life in Tibet: often harsh, sometimes beautiful and always thought provoking. The book opens with dramatic pictures of bloody riots in Tibet's capital, Lhasa, in September and October of 1987.

Dozens of people were killed as Tibetan independence marches sparked violent clashes with police and soldiers.

Lehman, 35, recalls his shock at stumbling across the marches on his first foray into Tibet. "I knew the implications, I knew the courage it took.

I had never seen a true act of courage," he said. On one page, a man cradles an 8-year-old boy who grimaces in pain from a bullet wound in his back. The boy later died.

Another page shows a grainy photo of what Lehman says is a plainclothes Chinese policeman firing a pistol into a crowd. "It's very violent subject matter, very serious subject matter," Lehman said.

Flipping the pages, the photos become subtler. Black-and-white portraits bring the expressions of monks, beggars and herdsmen into sharp relief. Brilliant color shots pay tribute to peaks, plains and other unspoiled natural wonders of the plateau.

Garbage dumps and construction sites reveal the price of modernization brought by the Chinese.

"As I grew as a photographer I was able to interpret those issues more coherently and interpret them in a visual form," Lehman said.

His book, and an exhibit of Lehman's photos at New York's Newseum, join a rising chorus of voices in the West clamoring for more freedom for Tibet's 2.5 million people.

Films such as "Seven Years in Tibet" starring Brad Pitt and pro-independence oratory from well-known figures such as actor Richard Gere have galvanized support for Tibet.

But Lehman said he hopes his book will spur readers to delve beneath Hollywood's glossy handling of a deadly serious issue.

"I wanted a book that told the story of Tibet in a real way.

No one has really had a good idea what's going on in Tibet," he said. That is largely because China has clamped restrictions on foreigners, especially journalists, travelling in Tibet.

Lehman is personally blacklisted from returning.

His book's cover is a testament to this state paranoia, showing a policeman's hand closing in on the camera lens, trying to block a view of protesting monks.

Lehman himself played cat-and-mouse with Chinese police, often eluding stakeouts and dragnets intended to nab him.

On several occasions when his luck failed he was detained and questioned overnight and one time he was too obvious when he leaned out of his hotel window to snap a picture of a convoy of Tibetan prisoners.

"They stopped the convoy, went into the hotel and busted down my door," he recalled.

Lehman does not hold the reader's hand as he chronicles his trip.

Hand-scrawled notes and clippings from newspaper articles and books lend a scrapbook quality, sometimes requiring an effort to decipher them but also creating a sense of intimacy.

"The information-gathering process is messy and I believe it's important to reflect that," Lehman said.

Photos and notes also offer insight into Tibet's exiled spiritual leader, the Dalai Lama (pictured in archive photo), whose eyes Lehman describes as like those of a "super-intelligent deer."

"The man emits compassion and sincerity -- the laugh, the incredible laugh/chuckle of the Dalai Lama. Ho, ho, ho. The guy is funny -- wisdom and knowledge in his eyes," Lehman scribbled beside pictures of the smiling, bespectacled monk.

His observations clash with China's Communist-controlled press, which demonizes the Dalai Lama as a deposed tyrant who plots to reinstate slavery in Tibet and split the motherland.

Beijing is keeping an extra-wary eye on the region now, with March marking the 40th anniversary of a fizzled uprising against Communist rule that forced the Dalai Lama to flee to exile in India.

He has never returned home. Lehman's personal admiration for the Dalai Lama is obvious but that does not stop him from doling out respectful criticism of the 1989 Nobel Peace Prize laureate.

In particular, he finds fault with the globetrotting monk's recent overtures to Beijing seeking more internal autonomy for his people while conceding China's ultimate rule over Tibet.

"His being a spiritual leader has impeded him from making the hard political decisions to get his country back.

The Dalai Lama does not need to go as a beggar to the Chinese," he said. "The Chinese are not going to leave Tibet because they're nice people. They're going to leave Tibet because they're forced to, and the Tibetans have the ability to force them."

By Reuters

From Inside China Today

Back to Top
Back to Article Index


China Signals Intensified Campaign against Dissent

BEIJING, Feb. 22, 1999 -- (Agence France Presse) China on Monday signaled an intensified campaign against dissent just 11 days before its parliament meets to debate the inclusion of "acts against state security" as a new crime under the constitution.

In an apparent attack on dissidents, the state-run Legal Daily said in its editorial that there were "people who have weak awareness and low consciousness of state security.

"Some people block the state security organs tasked with implementing public affairs according to the law. Some people leak state security secrets and cause severe damage to the government's work," said the paper, the official voice of China's judiciary.

"These hostile elements always hide under a legal and open cover to carry out their secret and illegal activity.

"The special organs of the government should depend on the people to get their support and assistance to expose our enemies and give them no place to hide," the paper said.

Authorities have cracked down on the outlawed China Democracy Party (CDP) whose members have defiantly called for a congress next week -- just days before the annual full session of parliament, the National Peoples Congress (NPC), which starts on March 5.

The CDP, the first group to actively seek to challenge the Communist Party's 50-year monopoly on power, plans to hold its congress in the central city of Wuhan on March 1 to 3.

Police on Saturday broke up a Lunar New Year party by CDP activists in the eastern city of Hangzhou in Zhejiang province and detained one member from neighboring Shandong province who had attended the gathering.

On Feb. 12 authorities detained Wuhan-based CDP activities Xiao Shicheng and his colleague Chen Zhonghe for several hours and warned them against holding the congress.

Police in Beijing, in the northern city of Xi'an and in Wuhan also detained three other party members, warning them to stop activities related to the fledgling democracy party.

Authorities last December jailed the CDP leaders Beijing-based Xu Wenli, together with Wuhan activist Qin Yongmin and party founder Wang Youcai, for 13, 12 and 11 years respectively on charges of subversion.

A western diplomat said the ongoing crackdown was "not unusual" as the government normally likes to "tidy things up before the NPC."

One of the issues to be debated is the move to drop the term "counter-revolutionary" crime from its constitution and replace it with acts against state security.

The new crime of "acts against state security" was already applied in December against several prominent dissidents including the CDP leaders.

The old crime of counter-revolutionary actions actually disappeared from the legal lexicon in 1997 but several dissidents sentenced under it are still being detained, human rights groups said.

By Agence France Presse

From Inside China Today

Back to Top
Back to Article Index


Taiwan Names First Ambassador To Macedonia

TAIPEI, Mar. 22, 1999 -- (Agence France Presse) Taiwan is to appoint its deputy representative to the United States as the island's first ambassador to Macedonia, barely two months after the nation switched diplomatic recognition from Beijing to Taipei, it was reported Sunday.

"It has been decided that Peter Cheng would be named the first envoy to Macedonia," said the Central Daily News, which is affiliated with Taiwan's ruling Kuomintang.

But it said Cheng would first be titled "minister" rather than ambassador until October following Macedonia's presidential elections, an arrangement aimed to avoid political embarrassment to the two sides.

Local media expect Macedonian Prime Minister Ljubco Georgievski, leader of the ruling center-right government, to win the presidential elections.

There have been unconfirmed reports that Macedonia's left-wing head of state Kiro Gligorov would reject Cheng's credentials.

Macedonian Foreign Minister Aleksandar Dimitrov and his Taiwan counterpart Jason Hu signed a joint communiqué for diplomatic links on Jan. 27, without informing Gligorov.

An angry Gligorov did not meet with Hu on the Taiwanese minister's trip to the Macedonian capital early this month.

Media reports said as a "minister," Cheng would not be required to present his credentials to Gligorov.

Macedonia hopes for substantial Taiwanese investment in the wake of setting up diplomatic ties with Taipei, with Dimitrov saying Taiwan would invest more than $1 billion.

Beijing, which regards Taiwan as a renegade province, broke off diplomatic ties with Macedonia last month and vetoed a six-month extension of the U.N. peacekeeping force there in retaliation for the switch.

Twenty-eight countries recognize Taiwan, rather than China. Of these, Macedonia and the Vatican are the only European states.

By Agence France Presse

From Inside China Today

Back to Top
Back to Article Index


Amnesty International Accuses China of Torturing Uighurs

BEIJING, Feb. 04, 1999 -- (Reuters) Amnesty International accused China on Thursday of arbitrarily detaining and torturing members of a minority ethnic group in the country's restive northwest over the past few months.

China quickly denounced the accusation as groundless.

The London-based human rights groups said in a statement that Beijing stepped up the persecution of Uighurs in the Xinjiang region after a spate of ethnic unrest in early 1997.

"Some Uighurs have been detained merely for being relatives or friends of political prisoners or fugitives, or simply for being Uighurs," Amnesty said.

"Many have been held without charge for several months in violation of Chinese law. Their relatives have received no news of them," the group said.

Foreign Ministry spokeswoman Zhang Qiyue denied the charges.

"The allegations are baseless and irresponsible," Zhang said. She did not elaborate.

Rioting, bombings and assassinations since the mid-1990s have rocked Xinjiang, home to Turkish-speaking Uighurs.

Muslim Uighur militants have agitated for an independent East Turkestan in Xinjiang, which borders Afghanistan, Pakistan and three former soviet Central Asian Republics.

An official with the Xinjiang provincial Department of Justice defended China, saying: "Some Uighurs were detained because they violated the state's criminal laws." He declined further comment.

A provincial official in charge of ethnic minority groups said he had not heard of reports of arbitrary detention or torture.

Amnesty said a crackdown on separatism and religious activities in Xinjiang after rioting and bombings in February 1997 "is believed to have exacerbated ethnic tensions and contributed to the escalation of violence in the region."

It called on authorities to immediately release all prisoners held simply for peacefully exercising their fundamental human rights.

Amnesty urged Chinese authorities to ensure that Uighur and other ethnic detainees and prisoners were not tortured or subjected to other cruel, inhuman or degrading treatment or punishment.

In one case, the People's Liberation Army had reportedly detained a doctor in Yining city since July 1998 for giving medical treatment to alleged separatists, Amnesty said.

Scores of Uighurs had apparently been detained in villages near Yining in April 1998 after security forces reportedly shot dead six local Uighur youths, the group said.

Four men were taken into custody in September 1998 after they were forcibly returned from neighboring Kazakhstan, it said, adding they might have been tortured to extract information about their escape.

The Xinjiang Legal Daily reported last month that police in Kashgar's Yicheng county arrested more than 80 people last year for involvement in 15 bomb attacks over a five-month period.

Police raided a "terrorist training cell" in the region and rounded up an additional 60 people, the newspaper said.

Authorities also shut down an illegal arms pipeline and recovered hundreds of vehicles stolen by an armed gang in 1998, officials told the newspaper. ((c) 1998 Reuters)

By Reuters

From Inside China Today

Back to Top
Back to Article Index


Official: Tiananmen Dissident Suffers 'Political Monomania'

BEIJING, Feb. 04, 1999 -- (Agence France Presse) Wang Wanxing, a Chinese dissident held for nearly seven years in a psychiatric asylum, is officially suffering from "political monomania."

The condition is not in any medical textbook, but that has not prevented the Chinese authorities from keeping Wang in indefinite detention for trying to commemorate the Tiananmen Square massacre.

"His act was not serious enough to merit him being jailed, but the authorities did not want him to go free so they decided to throw him in a psychiatric asylum," said the dissident's wife, Wang Junying.

Wang Wanxing, 50, was arrested on June 3, 1992 after attempting to unfurl a banner on Tiananmen Square to mark the massacre of pro-democracy protestors by Chinese troops there three years earlier.

He was taken against his will to the police-run Ankang hospital about 50 kilometers (31 miles) southwest of Beijing.

There he has remained, stuck in a peculiarly Chinese Catch 22.

According to the authorities, my husband is suffering from 'political monomania'," said Wang Junying. "When I ask what that is, I'm told that you have to be mad to want to protest on Tiananmen Square."

She said the hospital had never attempted a serious diagnosis of her husband's alleged condition.

Hospital officials refused to specify the nature of Wang's supposed illness, saying that only his family was allowed to know.

"Everybody knows he's mentally ill," the assistant director's secretary said matter-of-factly.

The hospital has been giving Wang a narcoleptic drug that can bring on depression and apathy, according to a foreign psychiatrist who said he had never heard of a medical condition called political monomania.

When Wang Wanxing was first taken away, the authorities convinced his wife to sign a document saying he was mentally unwell.

"They assured me that he would be out within a month if I signed," said Wang Junying.

From his hospital bedroom the "madman" has kept abreast of political developments, firing off an open letter following the jailing at the end of last year of dissidents Xu Wenli, Wang Youcai and Qin Yongmin for trying to set up an opposition political party in Communist-ruled China.

China's signing in October of the United Nations charter on civil and political rights also failed to escape Wang's notice.

"I do not understand why you signed this pact and then threw in jail people who simply wanted to form a party," he said in his open letter to the Chinese leadership in December.

"I have been confined for six-and-a-half-years in a psychiatric hospital. However, I never called for the overthrow of the government or attempted to set up a party," he added.

Wang has been jailed before. He was detained in the late 1970s after writing to the leadership demanding the return of Deng Xiaoping, who had been dismissed by former ruler Mao Zedong shortly before his death in Sept 1976.

He thought he could therefore count on the support of Deng, by then Mao's unrivalled successor as China's leader, when he staged his protest on Tiananmen Square demanding the rehabilitation of the massacre victims.

He was wrong, but Wang Junying hopes her husband may benefit from some clemency at Chinese New Year on Feb 16.

Her hopes have been raised since last month, when Wang Wanxing was allowed for the first time to leave the hospital -- under strict guard -- to attend his father's funeral. ((c) 1998 Agence France Presse)

By Agence France Presse

From Inside China Today

Back to Top
Back to Article Index


Anniversary Sino- U.S. Relations

Welcome to Inside China Today's special section on the 20th anniversary of normalized Sino-U.S. relations.

Introduction

In February 1950, Beijing and Moscow, the capitals of the Communist block, signed the Sino-Soviet Alliance Treaty, designed to last 30 years and aimed at fighting U.S. influence in Asia.

On Jan. 1, 1979, Beijing and Washington established full diplomatic relations. But what happened in between?

The crises of Korea, Tibet and Vietnam have gradually redesigned the Moscow-Beijing-Washington triangle. Former allies have become enemies, and former enemies have become strategic allies.

The Korean War

On October 1949, Chairman Mao Zedong (pictured) is at the head of the newly founded People's Republic, the largest Communist country in the world. Preoccupied by consolidating power over the country and challenged in Tibet and Taiwan, Mao has no desire to start a new front in China.

Meanwhile, most Western countries adopt a wait and see attitude, not knowing Mao's policy and willing to keep the door to dialogue open.

But Moscow, which declares itself the leader of the Communist bloc, wants Beijing on its side to strengthen its struggle against Washington. The Korean War is the occasion.

When North Korean troops invade South Korea in June 1950, Beijing refuses to intervene despite Moscow's calls. It is only when U.S. troops cross the Yalu River, the border between North Korea and China, that Beijing agrees to send 700,000 troops led by General Peng Dehuai in October 1950.

China is engaged almost against its will in the conflict. Amid the backdrop of the anti-communist McCarthy era, China is designated Enemy No. 1 by the American public.

The emergence of communist China as a military power convinces Washington to guarantee Taiwan and station U.S. troops on the island.

By the end of the Korean War in 1953, the chances for a Beijing-Washington dialogue are closed. Moscow has secured Beijing's military dependence on Soviet weapons bought during the Korean War and created a situation of direct antagonism between Beijing and Washington.

The Tibetan Crisis

The Beijing-Washington confrontation opens a new chapter in 1959, when the Tibetan spiritual leader, the Dalai Lama (pictured), flees his homeland and is exiled in India. The CIA then offers financial support to the Dalai Lama and military training to Tibetan soldiers who hope to retake Tibet from the People's Liberation Army (PLA).

Beijing feels Washington is attacking its two weak points, Taiwan and Tibet. As a result, American imperialism is labeled the biggest threat to China.

Yet during this period, Sino-Soviet relations are already at a low level because Mao is opposed to Soviet Secretary General Nikita Khrushchev's policy of de-Stalinization. The dispute ends brutally in July 1960 as Moscow repatriates all its experts from China, causing economic and strategic damage to China.

Moreover, Moscow, deceived by China's independent line, turns to India. Beijing and New Delhi both compete for the role of leading Asian power, and Moscow's alliance with India is perceived as an attempt to contain China.

The protection New Delhi offers to the Dalai Lama and his government in exile in Dharamsala sharpens the tension between New Delhi and Beijing.

In 1962, India and China fight a border war over disputed territory. Both countries share a 4,000-km (2,486 mile) long border. India says China holds 40,000 square kilometers (15,444 square miles) of its territory in Kashmir. China lays claim to a swathe of Indian territory in the far eastern state of Arunachal Pradesh.

The Tibetan crisis fractures South Asia: while the USSR brings its support to India, China in response seeks alliance with Pakistan. The domino effect of the Cold War installs durable antagonism in the region.

Against Washington and Moscow

In July 1963, Moscow and Beijing try to settle their dispute but fail to do so at a joint conference in Moscow. Beijing requires a revision of the Soviet-Chinese borders, inherited from Czarist times.

When the Cultural Revolution starts in 1966, anti-Soviet feelings reach a new peak as Moscow openly mocks Mao's utopian project. The August 1968 invasion by Soviet tanks of Czechoslovakia sparks violent anti-Moscow demonstrations in Chinese cities.

In March 1969, a group of Chinese troops take the island of Chen Bao on the disputed Usuri river in Siberia, launching a series of military incidents on the Sino-Soviet border.

The deterioration of Sino-Soviet relations does not improve relations with the West. The Red Guards take control of the Chinese Ministry of Foreign Affairs, burn archives, and invade foreign embassies. All Chinese ambassadors are recalled to Beijing and China is regarded as a troublemaker in all Western capitals.

The Vietnam War

The U.S. bombing of north Vietnam in January 1965 creates a second Korean War-like dilemma for China. But this time, Mao imposes his views and refuses to engage his troops on the ground and increase dependence on Soviet military equipment.

Avoiding direct confrontation with the U.S. in Vietnam, Beijing is perceived as open to compromise in Washington. The U.S. makes a first step by informing the Chinese side U.S. bombers will not approach the Sino-Vietnamese border.

Beijing's neutral position helps Washington to start its disengagement in Vietnam in the late 1960s.

At this point, a new alliance between Beijing and Washington, this time against Moscow, is suggested.

Ping-Pong Diplomacy

In January 1970, the Chinese and U.S. ambassadors in Warsaw reestablish regular conversations. Both sides step up their cooperation and in July 1971 Henry Kissinger, former U.S. secretary of state makes a secret visit to China.

This point in history is remembered as the "Ping Pong Diplomacy" period as the first U.S. Ping-Pong team visits China in April 1971, a symbol of new ties.

This policy reaches success in Feb. 1972 as then U.S. President Richard Nixon visits mainland China. During his stop in Shanghai, he delivers a joint-communiqué, in which Washington recognizes Beijing as the sole legal representative of the Chinese nation and Taiwan as part of China.

Having cleared the U.S. position on Taiwan and ceased support to Tibetans, Washington is regarded as an acceptable partner in Beijing.

The last episodes of the Cultural Revolution and the death of Mao Zedong in September 1976 delay the rapprochement, but finally on Jan. 1, 1979, Washington officially switches its recognition from Taiwan to mainland China.

This event is crowned in Feb. 1979 when Deng Xiaoping visits the U.S., making the first presidential visit by a Chinese leader to the U.S.

From Inside China Today

Back to Top
Back to Article Index


9,000 Armed Police Sent to Xinjiang

BEIJING, Feb. 04, 1999 -- (Agence France Presse) China has sent almost 9,000-armed police to Yining city in its northwest Muslim region of Xinjiang, the scene of previous anti-Beijing rioting, official Chinese media reported Thursday.

"The Central Committee of the Communist Party is paying special attention to social stability in Xinjiang and particularly in Yili county, and has taken an important decision to station troops in Yining city," the Xinjiang Legal Daily said in an edition seen here Thursday.

It said 8,660-armed police had been posted permanently on Jan. 16 to Yining from a location some 150 kilometers (90 miles) away. Yining has a population of 300,000, of whom less than 50 percent are ethnic Uighur Muslims, the majority ethnic group in Xinjiang.

The city was the scene of rioting on Feb. 5 and 6, 1997 after a demonstration calling for the release of prisoners and the establishment of an Islamic state independent of Beijing turned violent.

According to official reports, 10 people died during the riots and 132 were injured during the course of "aggression, looting and pillage" on the part of separatists who were "attempting to overthrow the state."

Overseas Uighur organizations said at least 100 people died in the incident.

The situation has remained tense in Yining, where hundreds of people have been arrested and sentenced for "separatism" in recent months. Around a dozen people have been handed death sentences.

The most recent reports of death sentences came in a report by human rights group Amnesty International, which said at least 18 people had been detained without charge in and around Yining in recent months.

"It is feared that the prisoners may have been tortured to force them to give information about others or to sign 'confessions', and that they may still be at risk of torture or other ill-treatment," Amnesty's report on the detentions said.

China reacted angrily to Amnesty's report.

"The allegations of Amnesty International are baseless and irresponsible," Foreign Ministry spokeswoman Zhang Qiyue told a news briefing.

By Agence France Presse

From Inside China Today

Back to Top
Back to Article Index


Banned China Democratic Party Establishes Five New Branches

HONG KONG, Feb. 04, 1999 -- (Reuters) The banned China Democratic Party defied Communist authorities and set up five new party cells in China on Thursday, a Hong Kong human rights group said.

Beijing has outlawed the party, which has repeatedly tried and failed to officially register. Ruling Communist authorities sentenced the banned party's three founders to long jail terms late last year.

The Information Center of Human Rights and Democratic Movement in China said in a statement that the party had formed cells in the northern province of Hebei, northeastern province of Liaoning and north-central province of Henan.

It had also set up cells in Xian city of the northwestern province of Shannxi, and Huanggang city of the central province of Hubei. The cells were formed as there were no written laws in China against the formation of a party, the group said.

"This signifies that the China Democratic Party will confront the severe crackdown by the Chinese Communists," the human rights group said.

The Communist Party has made clear it will not tolerate any challenges to its monopoly on power, with President Jiang Zemin vowing to "nip in the bud" subversive activities.

The opposition party plans to hold a major meeting in March in Wuhan City, the Hong Kong-based group said.

The China Democratic Party, which was formed by veteran dissidents Xu Wenli, Qin Yongmin and Wang Youcai, already had a party cell in Beijing and 23 branches across the country with well over 1,000 members, the human rights group said.

Different from the branches, the party cells are more formally structured and engaged in member recruitment.

The party said it would hold a seminar in March to discuss human rights in China to coincide with a meeting of the United Nations Human Rights Commission.

Xu was sentenced to 13 years in prison last December on subversion charges for trying to set up the opposition party, while Qin and Wang were jailed for 12 and 11 years, respectively.

By Reuters

From Inside China Today

Back to Top
Back to Article Index


Peng Ming appeal

Wednesday  February 3  1999

AGENCE FRANCE-PRESSE

Peng Ming has filed an appeal against his jail sentence with a Beijing area court, sources said yesterday.

The appeal was filed at the Tongzhou branch of Beijing's Public Security Bureau on Monday by Peng's lawyer, dissident Zhou Guoqiang , the Information Centre of Human Rights and Democratic Movement in China said. Peng is due to be released from the Tongzhou detention centre on February 10, according to his common-law wife Nie Ying.

From South China Morning Post

Back to Top
Back to Article Index


Dissident crackdown regrettable, says Canada

Wednesday  February 3  1999

ELAINE PAK LI

The crackdown on mainland dissidents was described by Canada's ambassador to China yesterday as a regrettable step backwards on human rights.

Howard Balloch said societies tended to change slowly, making it longer for China's political institutions to catch up with expectations of greater sensitivity.

The management of recent trials of three dissidents, all jailed for alleged involvement with prostitutes, was "very unfortunate", Mr Balloch told a Hong Kong luncheon. Referring to Han Lifa and Cai Guihua of the China Democracy Party - both jailed for nine months - and Peng Ming , founder of the China Development Union and detained for 15 days, Mr Balloch said: "We did not understand, nor did we have explained to us, how these people had carried out the crimes.

"My Government made it clear we saw this as a regrettable step backwards in a situation which otherwise seemed to be moving in a positive direction."

The positive direction included changes in 1997 to the Criminal Procedures Act to incorporate the presumption of innocence and the right to legal counsel, said Mr Balloch.

But he added: "The judicial processes that were pursued fell short of the standard set in the Criminal Procedures Act. We made [this] very clear to Beijing. When one is watching the one step backwards today, the two steps forward of yesterday are quickly forgotten."

Copyright ©1998 South China Morning Post Publishers Ltd.
All Rights Reserved.

From Asiaweek

Back to Top
Back to Article Index


China Hypocritical? No, Just a Bit Itic-al
Foreign investors shy away as Beijing refuses to guarantee bankrupt investment firms' debt

By TERRY MCCARTHY Shanghai and JAIME A. FLORCRUZ Beijing

February 1, 1999

A French banker with large exposure in China asked an economist with a U.S. investment bank in Hong Kong last week for a briefing on what's really happening with China's foreign debt. Beijing announced Jan. 10 that it would not back the $4.4 billion in obligations (with just $2.6 billion of assets) of bankrupt Gitic, the Guangdong International Trust & Investment Corp. The banker sensed that something bad was happening but couldn't fathom just how bad. Like the rest of Hong Kong's financial community, he had a big shock coming.

China has 240 "itics," first set up in the 1980s to funnel foreign investment into provinces around the country. Foreigners had assumed loans to these entities were an iron-clad sovereign risk, guaranteed by the involvement of local government officials who routinely met them with fleets of Mercedes when they flew in to sign loan agreements. But many of the loans were frittered away on corrupt or unproductive projects--and more Mercedes. Now the hammer is falling, and it has hit the French banker hard. "I explained that a lot of banks were going to lose a lot of money--and that a lot of people were going to lose their jobs," says the economist, who declines to be identified. The banker exploded. "He said, 'You mean to tell me the government and the itics are not the same thing?' He was furious."

As bankers rush to assess how much red ink they will require over the coming months and as shares in another form of China play--Hong Kong-listed "red-chip" companies with mainland links--plummet, a bigger truth is slowly sinking in: the rules have changed in China. Forced to choose between honoring foreign debts and ensuring domestic stability, Beijing is showing that internal concerns are paramount. And if that means French, German, Swiss, Korean and Japanese bankers will lose their shirts--and even their socks and underwear--so be it. (American and British banks, having similarly burned their fingers in Latin America in the 1980s, are far less exposed in China.)

The other lesson of the itic saga--which spread last week to the northern city of Dalian, once favored by Japanese investors but now suspect since Dalian International Trust & Investment Corp. defaulted on loans to Japanese banks--is that all roads in China lead to Beijing. And on the financial highways, China's top traffic cop is Premier Zhu Rongji. "Zhu is very firm," says Fred Hu, chief economist for greater China with Goldman Sachs in Hong Kong. "A lot of other people would have blinked with all the pressure from foreign bankers."

Zhu, whose efforts to reform the economy came under attack for much of last year, traveled to Guangdong in October shortly after Gitic was closed--with what was initially rumored to be just $2.4 billion in bad debts--to sort out the mess personally. There was considerable debate over whether to back the crumbling corporation, says a Chinese official in Beijing. The Guangdong government was prepared to pump in as much money as necessary to keep Gitic from going under, to preserve confidence in the province. "One school of thought was to take the stance of xiabu weili [just this once]," explains the official. "The other was shayi jingbai [execute one as a warning to a hundred]." Foreign creditors waited nervously on the sidelines. Few expected the central government to pay off all of Gitic's foreign debt, but they had hoped to recover the $1.2 billion in loans officially registered by Gitic with the authorities in Beijing as foreign currency borrowing.

Zhu came down hard: there would be no bailout. Wu Jiesi, deputized by the People's Bank of China to take charge of the liquidators, explained that China's bankruptcy laws do not give foreign creditors priority. The Prime Minister was looking at the bigger picture. "Zhu can clearly see the frailties in the economy," says Andrew Ballingal, chief analyst for Schroders Asia in Hong Kong. "The fading of foreign direct investment, deterioration of the export environment, all the pain ahead--this is battening down the hatches." Together the 240 itics have $10 billion in registered foreign debts, but bankers in Hong Kong estimate that, if unregistered debts are included, the total could be twice that figure. Or more. Liaowang, the weekly magazine put out by the government-run Xinhua news agency, recently estimated total itic debts at $30 billion.

Zhu came down hard: there would be no bailout. Wu Jiesi, deputized by the People's Bank of China to take charge of the liquidators, explained that China's bankruptcy laws do not give foreign creditors priority.

If Beijing's goal is to choke off unrestrained foreign borrowing by provincial governments and centralize control over China's finances, Zhu's willingness to let Gitic die means his economic reform agenda has not been completely blocked, argues Ballingal. "Zhu has got serious religion about reform," he says. Closing down or merging the itics "is consistent with his reform credentials," as are much-publicized attempts to reduce corruption and smuggling, divest the army of its businesses and clean up the financial system.

Chinese bankers and finance officials held a three-day meeting in Beijing last week to sketch out ways of closing and merging the itics to reduce their number to fewer than 40. But no matter how the itics are rearranged, foreign lenders aren't likely to rush back in. Over the short term, China's chances of getting fresh commercial credit are close to zero. "The government may have underestimated the potential fallout in the international financial markets," says analyst Hu. The new environment suggests that guanxi, or personal connections, will no longer count for much. "What will bankers base their credit on?" asks a Western financial executive in Beijing. "Bank accounting standards here are not up to international levels."

To reap the long-term benefits of financial reform, China must endure the short-term pain of a severe credit crunch--just as it needs to support industry to curb labor unrest. Andy Xie, chief China economist for Morgan Stanley Dean Witter in Hong Kong, points out that if foreign creditors don't roll over debts for red-chip companies, most of which are severely overstretched financially, the latter could start going under too. "This thing is getting bigger and bigger," says Xie. "The unreported debt of China's companies is much larger than the government thought. But there is no way to back down now." Zhu Rongji is playing a dangerous game. But the smart money knew that all along.

From Time Magazine

Back to Top
Back to Article Index


Battle to sustain economic eminence

Published on Monday  February 1  1999

DAVID IBISON

When Heritage Foundation president Edwin Feulner turned up for breakfast on December 1 with Chief Secretary Anson Chan Fang On-sang, Financial Secretary Donald Tsang Yam-kuen and Deputy Secretary for Financial Services Rebecca Lai Ko Wing-yee, the discussions that followed were - to use the Government's word - "robust".

Mr Feulner was trying to explain why the foundation would soon issue a report that carried the headline: "Hong Kong No Longer Has World's Freest Economy." The foundation argued that as a result of the Government's decision to intervene in the markets, the honour now belonged to Singapore.

To say Hong Kong representatives were displeased would be an understatement. One source described the meeting as a "bloody great row", and even a government spokesman confirmed "voices were raised".

Rumours were that Mr Tsang stormed out but, as it turned out, "he had to leave early to attend another engagement".

The issue at the heart of these "robust" discussions has dominated government policy-makers since the handover - the maintenance of Hong Kong's position as Asia's leading business centre in an environment of unprecedented challenges.

And why is the Government so sensitive? Because many in the international financial community believe it is not just failing to maintain the SAR's position, but undermining it, making the coveted title of Asia's premier financial hub available to eager rivals such as Singapore, Shanghai, Tokyo and Taipei.

Consider the critics. Federal Reserve chairman Alan Greenspan mirrored the Heritage Foundation's conclusion, saying the Government had eroded Hong Kong's "credibility" by intervening in the financial markets. No end of academic economists have also railed against the decision, the most prominent being Nobel Laureate Merton Miller who described it as a "serious blunder".

The criticism did not end at the intervention. The Government has - rightly or wrongly - taken some blame internationally for wider economic woes such as the high cost of doing business, rising unemployment, the recession, deflation and the increasing budget deficit.

All this conveniently ignores the fact most of these negatives have been caused by the regional economic crisis. But the criticism certainly has been a factor in making it easier for pretenders to Hong Kong's throne to emerge.

SG Securities Research, the analysis arm of Societe Generale, said: "Hong Kong has to counter an unprecedented intensity of competition. Not only is Singapore aggressively bidding for its financial sector business, Tokyo's big bang could also draw some business away.

"The financial sector is not the only one threatened: Chinese ports are winning more business from Hong Kong, and growing direct economic relations between China and Taiwan should also diminish Hong Kong's intermediary role. Even in air cargo, Singapore and other regional centres are slashing charges to woo business."

Moreover, SG said, the Government was not seen as handling things too well.

"The new SAR Government has to tackle multiple challenges with limited resources. It needs to manage domestic expectations over asset prices, deflation, economic growth, unemployment, etc. It must convince the market that it is not averse to the necessary adjustments to maintain long-term competitiveness. Confidence is key in keeping the rates low and the peg stable. This confidence is being eroded by the manner in which the challenges in 1998 were tackled."

David Dodwell, co-author of The Hong Kong Advantage, a study of competitiveness, said: "You have a new Government operating in a highly uncertain context and learning a wholly new agenda. It is a very unstable period of political evolution."

The effects of what SG calls an erosion of confidence are already being felt. The Economist Intelligence Unit, since the second quarter of 1997, has forecast problems for Hong Kong's business climate over the next five years due to "an expected deterioration in the operating environment associated with the handover and fallout from the regional economic crisis".

So severe is the anticipated decline that it predicts the SAR will drop from being the best place in the world to do business to 12th-best by 2003.

What is the reason? According to experts, the recession and various other woes stemming from the regional economic downturn - while important - do not go to the heart of what is undermining competitiveness. The real damage has been done in an area far harder to pin down: the perception internationally that Hong Kong has been politicised.

One prominent Western banker said: "There is a feeling that Hong Kong has lost something. We all know that Singapore has a much more politicised environment than Hong Kong, but it has always been that way. There is a fear that this could be the beginning of an ongoing erosion and that things are going to get worse not better, whereas in Singapore at least you know things are going to stay the same."

Robert Broadfoot, head of a think-tank, the Political and Economic Risk Consultancy, says three events led to accusations that the economy was becoming politicised.

"The emergency programme announced by Tung Chee-hwa at the end of May to stabilise the property market was a mistake. Prior to that point the official strategy was clear: hold the Hong Kong dollar steady and permit the market to force a downward adjustment in prices that will help the Government maintain Hong Kong's competitiveness.

"The May package made it seem like the Government was trying to protect property developers. By siding with developers, the Government has shown that it might be vulnerable to pressure from vested interest groups in ways that could compromise the SAR's non-intervention, more international image."

Hot on the heels of the property package came Mr Broadfoot's second example - the new airport. "The airport was opened prematurely, mainly for political reasons. Someone at high level decided it would be a good idea to time the opening with the first anniversary of Hong Kong's transition, Jiang Zemin's visit to the SAR and US President Bill Clinton's stopover.

"What was intended to be a symbol of Hong Kong's bright new future under China has become an example of poor planning, worse implementation and finger-pointing. Hong Kong's image as an efficient entrepot has been seriously tarnished." The third indication of politicisation was, according to Mr Broadfoot, intervention in the stock and futures markets. "This has thrown into doubt the Government's commitment to maintaining a laissez-faire system. These doubts, in turn, are causing some critics to speculate that Hong Kong's role as a regional trading and financial centre could be in jeopardy."

All of this leaves the Government with a problem. In seeking to affirm Hong Kong's position as Asia's leading business hub, it must enhance competitiveness. There is also the need to reassure investors that the SAR has not become politicised.

Mr Tung tried last week at an economic conference in Davos, Switzerland. He conceded "there are some businesses in Hong Kong who are concerned with the investment climate" but insisted "the voices you hear are really a demonstration of our strength rather than our weakness".

What else has the Government done? In a written reply to questions, Mr Tsang pointed out that it has, crucially, maintained currency stability. It has kept the banking system intact in a time of crisis. In addition, it has moved aggressively to change the regulatory framework for the securities and futures markets to further protect their viability.

The Government has also commissioned a study to enhance financial infrastructure and attempted to attract new financial products such as international debt to the market.

Reacting to competitive challenges from rival business centres, the Government has set up the Services Promotion Programme to "ensure Hong Kong remains the premier services centre in Asia". It has also established the Helping Business Programme to "review ways the Government can help the business sector by cutting red tape".

"To meet international competition, the Hong Kong Government is acutely aware of the need to sharpen our competitive edge and will continue to respond creatively to the economic adjustment process," Mr Tsang said.

But for many critics, the Government must do two fundamental things to restore the competitive edge: sell the $120 billion stock portfolio as soon as possible and undertake to bring property and other asset prices to market levels.

Mr Dodwell said: "The Government will over time be seen to have made a mistake intervening in the markets. Hong Kong can take pain on the chin and move on. It did it in the 1970s and the 1980s and, when it recovered, you knew it was recovering from a firm foundation - a real bottom. This time the Government did not allow it to hit bottom.

"The Government now appears to be unified in planning to withdraw from the markets and reassert its historic distance from them. What's missing is serious attention being paid to the property market. The cost of property in Hong Kong needs to fall significantly to take the stranglehold off the retail, restaurant and business sector and make it possible for people to own their own home."

Andrew Freris, managing director of the Bank of America and former head of economics and finance at City University, said: "Where I would criticise the Government is that they did not come out at the very beginning of the crisis and say the peg is going to stay and it is going to take a hell of a lot of pain."

The pain, said Mr Freris, would have been to allow asset prices - primarily property - to deflate to market levels. "The choice of gun to shoot the tiger was wrong," he said.

Mr Broadfoot agreed, saying the Government could effectively kill two birds with one stone by allowing property prices to make Hong Kong a cheaper place to do business, while demonstrating it was not influenced by a few powerful businessmen.

"Important cartels continue to exist. The most notable is the property sector which is dominated by a handful of players. It is one thing for Hong Kong to have some of the highest property prices and rents in the world during boom times. As Asia wallows in recession, however, Western banks and multinationals are taking a much close look at profitability in Asia. Firms that cannot justify the commitment of capital are being ordered to reorganise (which often means scale back) their operations.

"What is good for Hong Kong's property sector might not be good for other businesses in Hong Kong, particularly not these days, and it is these businesses - more than property - that have established Hong Kong's credentials as an international business centre."

If this is what some in the international community want to see, it now appears they might get it - at least in part. Sources confirm the Government is now committed to offloading its stock portfolio. It has taken advice from major international banks on methods of doing so and a gradual unwinding of its positions seems imminent.

But on the property sector it appears less willing to act; it is expected to resume modest land sales in April, enough to keep prices near current levels but not enough to bring them down further. The Government says property prices have fallen about 50 per cent from their 1997 peak to what it terms competitive levels.

Nevertheless, the latest EIU survey on business costs says Singapore has dropped from being 11th most expensive to 13th, while Hong Kong remained third. Indeed, the Government's own Regional Representation Survey found more multinational firms closing their local offices, citing high costs.

This has not gone unnoticed. Edgar Cheng, head of the Government's powerful think-tank, the Central Policy Unit, is expected to propose action to tackle property's disproportionate influence on the economy.

The Government's need to act may gain urgency if Beijing comes up with ideas of its own. Two weeks ago, it despatched an "observer" to Shenzhen to assess how Hong Kong's competitiveness and economic viability were being affected by the crisis and the Government's response to it.

"China has been one power centre in Hong Kong that has not really flexed its muscles publicly to shape government policy," said Mr Broadfoot.

"However, if Beijing perceives that other local power centres [property developers] are exerting too much influence and threatening China's plans for Hong Kong, it would be not at all surprising if Beijing were to use its own influence more to protect its interests."

From South China Morning Post

Back to Top
Back to Article Index

../images/line3.gif

Previous Month | News | Next Month

../images/line4.gif

BackHome

../images/line4.gif

Copyright DateRichard R. Wertz