==+==+==+== C h i n e s e C o m m u n i t y F o r u m ==+==+==+=== Wednesday, August 3, 1994 (Issue No. 9441) +=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+= Chinese Community Forum (CCF) is an e-journal published on China-Net. CCF is dedicated to the discussion on the issues related to the Chinese community. The opinions expressed here do not necessarily represent the views of the Editorial Board of CCF. Contributions to the discussions and suggestions of new topics are very much appreciated. +=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+= # of Table of Contents Author | Lines ===========***==========***==========**==========***==========***=========== --*--China Watch--*-- 1. The State of China Address................................Min Yang 72 2. Economic Growth and Inflation: Which Trade-off Should China Pursue?..................William Deng 90 3. City in China Disappears, More than $500m Needed........Ming Cheng 63 4. Who Wants China to Be Strong?........................Newton X. Liu 87 5. Keep Higher Education Free for Awhile......................Bo Peng 71 6. Healing the Wounds - 6.4.................................Asia Week 118 ===========***==========***==========**==========***==========***=========== -- From The Editor -- Leaving aside the heated debate on human rights and democracy, let's look at the Chinese Circumstances in this issue of CCF. What is the biggest problem in China today? Corruption? Pollution? Education? Inflation? Or the healing of historic wounds such as those from the Cultural Revolution and the June 4th tragedy? With these questions, we leave you several articles. ===========***==========***==========**==========***==========***=========== 1. The State of China Address................................Min Yang 72 ---------------------------------------------------------------------------- Neither President Jiang Nor Premier Li asked me to prepare the State of China Address for them. Yet, as a Chinese citizen with a potential voting privilege, I think I'm entitled to address the issue of the state of China's national conditions or temperament, i.e. Guo2 Qing2. China is great. Besides the Great Wall, now we are having an economy as the world's third, or even second, largest one, as we are told by the world-class economists world-wide. Using a high-tech device called PPP (Purchasing Power Parity), our income per capita is said to be somewhere around US$4,800. Then you time 1.2 billion with that figure, gee, you'll need Professor Fang Lizhi, the astronomer, to read it. (It's a shame Prof. Fang does not stay in Beijing to calculate this national wealth.) Even President Clinton is very happy about this China Miracle. Short of praising the CCP as the most efficient and effective government on earth, Clinton repeatedly cited this phenomenal figure of China's economic strength and recently officially asked China to be crowned as a developed country to enter GATT (soon to be the WTO, i.e. the World Trade Organization.) As Chinese, we are all so proudly excited. Thank God (No, Thanks to Our Party)! We are developed at last! Yet, while I was intoxicatedly hailing our Party and our country, I got a letter from my parents which puzzled me. They are both retired teachers. They each has about 200 yuan monthly pension. That's more than US$200 in terms of the high-tech PPP calculation. Years ago I sent them about US$6,000 to buy a shabby and primitive two-room apartment. (That was before the high-tech PPP was invented, so I wouldn't say it was dear a price.) They do live a comfortable life: spending about 90 yuan on rice (1.80 yuan/catty x 50 catty), another 90 yuan on gas ("market Price" plus 50 yuan additional as 'gifts' to make sure the empty gas jar can be replaced by a half-full one). And they leave so much for such luxury as vegetables. They never asked me, their poor student son struggling a life in the US to send them any money until this time. (Keep this State of China in mind: how many of the Chinese students overseas do not save a considerable portion of their poor stipend to send home?) This time, my parents told me, they were really in trouble: the local government has not been able to pay them their monthly pension for three months! And, their medical care has been frozen for about more than a year! When they went to the city government to ask for their pension, they were told to "understand China's Guo2 Qing2". Instead of coming to the city government to collect salary, they were told to ask their overseas son to contribute. "Your son should be dutiful to you as well as to the country," they kindly educated my parents. I thought both my parents and I were educated enough. As retired teachers, they were asked to contribute to the "Hope Project" to help the poor kids in the countryside where they taught, and they did. (They hardly see any improvement of the miserable conditions in the country schools -- kids and their teachers drop out together, only the problem of the desk-shortage was solved -- empty adobe stools and desks emerged because the kids dropped from school). I even was preparing to send some money to the school district where my parents taught and I myself studied as a kid. Now I am asked to help my parents buy rice and to help the farmers' kids go school, when I was informed that ours has become a developed, rich country! The high-tech PPP is really beyond me. So is the China Miracle and the State of China's Guo2 Qing2. Not long ago I met a guy from Beijing. "Gee, you've got only such a shabby Nissan! We in China now are all riding in Mercedes!" Now I'm going to trade in my Nissan, not for a Mercedes, but for rice for my parents and hope the government that hold my parents' pensions can use that money to buy gas to run their Mercedes. I also hope Clinton will pay due respect to a Chinese student riding bicycles in the US because I come from a country where we only drive Mercedes. [From: wuyuanpe@student.msu.edu] ---------------------------------------------------------------------------- 2. Economic Growth and Inflation: Which Trade-off Should China Pursue?...................William Deng 90 ---------------------------------------------------------------------------- Since the beginning of this year, inflation has been the major concern of China's economy. The government even set an artificial ceiling of 10% for this year which has little scientific backing. Nobody, especially economists, likes inflation. But inflation is only one of many factors which determine the economic well-being and shouldn't overshadow economic growth. Last year China's economic growth is 13% and the inflation is also 13%. Economic growth will definitely bring about inflation, let alone economic decline may cause much higher inflation. But many people, including many economists, have cried that the inflation is too high and the economy is overheating. If it's usual that the U.S. economy grows at 2% with a 3% inflation, what is so unusual to have an economy grows at 13% with a 13% inflation? >From the economic point of view, China's economy in 1993 did very well by having only 13% inflation with the amazing 13% growth. What has worried the government most is that the 13% inflation may cause social discontent and consequently social unstability. But even with 13% inflation, urban residents' price-adjusted real income in 1993 increased more than 10% and rural folks more than 2%, on average. Most people, especially city folks, are better off. And a large portion of the inflation is contributed by price rise in construction materials and luxury goods, which weigh inappropriately large in the calculation of overall inflation. The price rise of basic consumption goods is much slower. When I visited my hometown Nanning last June, I was surprised in seeing the prices of most foods sold on street-side (Da4 Pai2 Dang4) are almost the same as that in 1989 when I left for the U.S. When real income of city dwellers increase by more than 10%, it's difficult to envision any serious trouble such as large scale strikes. Although some folks may be worse-off by being layoff, his economic loss may be more than offset by income hikes of other family members. The biggest concern is about the rural area. The real income increase there is much slower and the gap from urban area is widening. But this rural problem is essentially caused by the small per capita capital in agriculture production. The only way out is industrialization which will move most farmer from the over-crowed fields to increase per capita acres in countryside. The current policy of slowing economic growth in order to cut inflation just serves the opposite, at least at the long term. >From the Chinese history, we all know that Chinese peasants rebel only when they starve. Today although peasants are far from living as well as city fellows, fewer and fewer are starving. Besides, it's very difficult for farmers to organize among themselves, which is a necessity to make any significant social trouble. Therefore, I think the government is overcautious by sacrificing economic growth to cut inflation so as to avoid any possible social unstability. To me, the biggest potential danger to social stability is not inflation, but lag in economic growth. Now China has 100 million unemployed or under-employed farmer, let alone millions of urban unemployed. Inflation may eat away some salary, but economic slowdown will cost millions their jobs. Keeping up high economic growth will not only give millions new jobs but also speed up national industrialization which is the only way to liberate farmers from over-crowed fields and narrow the gap of living standards between rural folks and urban folks. Even from the pure academic point of view, when real unemployment rate is so high (12.5%, assuming the labor force in China is 800 million strong), inflation should not be the problem but instead unemployment should be the problem. Thus, the current policy of trying to cut inflation on the expense of economic growth is really wrong. >From the release about the first quarter performance of Chinese economy, we saw that the growth did slowdown but the inflation didn't and more state firms were suffering loss. If this trend continues, unemployment will increase and social discontent will mount. The current economic policy will achieve just the opposite of its goal of avoidance of social discontent and unstability. Fortunately, now China has the ability to revise her policy whenever she finds it improper. In a previous article published by CCF, I pointed out some shortcomings in the radical financial and tax reforms, and China did postpone enforcement of some provisions. When an economy is slowing down, it decreases demand but it decreases supply as well, therefore the inflation doesn't necessary fall significantly, but foreign investment will also slow down. When an economy keeps growing fast, demand grows but supply grows too, the inflation will be higher but income for most people will rise much faster simply because the economic pie is bigger. And foreign investment will keep moving in with large amount, which is vital to China's industrialization because what China really lacks is capital. (Copyright Reserved by the author) [From: xiaojian@ccit.arizona.edu, May 2, 1994] ---------------------------------------------------------------------------- 3. City in China Disappears, More than $500m Needed........Ming Cheng 66 ---------------------------------------------------------------------------- [This article is a review of the original Wall Street Journal report on July 25, 1994 by Marcus W. Brauchli.] Chinese are proud of the Great Wall which is only man-made object could be identified from the satellite. But recently, the satellite has sent back some bad news to Chinese: Benxi, a northern city of China, disappears from the picture taken from the satellite due to the terrible polluted air above the city as described in the article in Wall Street Journal, July 25, 1994. Other problems of China's environment addressed in the articles include: part of Shanghai keeps sinking as its water table is depleted; four out of ten rains in Guangdong are acidic, the Grand Canal in places resembles an open sewer; etc. While China's economy has been taking off with double digit annual growth over the last decade, its environment is severely stressed with global implications such as the sulfuric rain clouds drifting from China to other countries, among them Japan is in fear now for that its own cleanup effort will be non-effective. "We can't say we have enough capability to solve all our problems without some foreign help," the article quoted what a high-ranking Chinese officer said. For a country sensitive to suggestions that it needs help, China's effort for seeking foreign help shows the seriousness of the problem. The World Bank now channels as much as $500 million a year into environmental programs in China. Japan, Europe, Canada and Australia are offering hundreds of millions more in loans, technical assistance and equipment. But all these are far from enough for the enormous scope of China. The author of the WSJ article hold out a hope of the roles many western companies can play. "There could be big opportunities," says Thomas G. Smith, who heads the Waste Management Inc. "No country needs environmental technology as badly as China. This isn't abstract." adds California Lt. Gov. Leo McCarthy. The big drawback should be the system of China in which no officer is under supervision of people. "Get rich " is the only thing they want now. "The story is always the same", David Braga, manager director of Energy & Environment Technologies Ltd, HK moans, "'We'd love to do it. Can you lend us the money?' Then the guy gets into his Mercedes and drives off." The projected environmental expenditures of 83 billion yuan between 1991 and 1995 are less than 0.7% of GDP. "If anybody's economic development is unsustainable, it's China's," frets Prof. Smil of University of Manitoba at Canada, "Many people on the top leadership are aware that it's bad to develop and let the environment slip. But their hearts aren't in it." Many foreigners care about the Chinese problems. Macr Brody, president of a private US group called the China Environment Fund, is getting money for environmental projects. He would like to direct aid from an international agencies. He says the World Bank, the Asian Development Bank and other agencies now provide less than 5% of the $40 Billion or so that Asia as a whole is estimated to need each year for environmental cleanup. "Unless private capital comes forward and says, 'Here's a chance to get a return,' China's industrialization will be very, very damaging," Mr. Brody says. The articles also says that the US, which is barred under sanctions imposed after a crackdown on democracy demonstrations in 1989 from giving direct support to environmental programs, is considering regulations that would encourage American companies to help China cleanup. I would like to confirm this situation and push IFCSS presided by Dr. Luo Ning to lobby the US Congress/Government to lift the bar if any. [From mchn@chevron.com] ---------------------------------------------------------------------------- 4. Who Wants China To Be Strong?........................Newton X. Liu 87 ---------------------------------------------------------------------------- [This article is review of an article by Bryce Harland, published on Foreign Affair, Spring 1994.] "The withdrawal of MFN status would undermine support for the reform process and jeopardize all that has been achieved, in the political as well as the economic spheres. Far from advancing the cause of human rights, it could prejudice that cause severely." Sounds familiar, eh? This statement was not, I repeat not, made by a Chinese even if you thought that you might have said the same thing when the MFN debate was raging on. But, let's not hold grudges on that issue against each other, because now that the dust has settled down somewhat and it may be time for us to read Bryce Harland's "For a Strong China" (Foreign Policy, Spring, 1994) and reflect about our emotions and logic we have invested in the past couple of months. In the opinion of some of us, the MFN issue really begs the question: who wants China to be strong? Bryce Harland, New Zealand's first ambassador to China and a self-claimed outsider (of Sino-American relations), seems to have maintained a clear mind during the heat of the MFN debate and is genuinely concerned about the future of not only China but also the entire Asia along the Pacific Rim. For instance, after the Asia-Pacific Economic Cooperation summit in Seattle in November 1993, Clinton told the world that "the Asian-Pacific region should be a united one, not divided." He spoke of a "shared commitment to mutually beneficial cooperation." And Mr. Harland was quick to hold Clinton's administration responsible to its policy statement and asks all of us to take heed of Clinton's message. It is no secret that some of us are tired of oldman politics going on in China and others think that China's weakness is actually due to its long history. But we should not forget what history and sometimes an old man like Bryce Harland can teach us. "Anyone who lived through the long confrontation between America and China, from 1950 to 1971, must share Clinton's hope for an Asia-Pacific region that is united, not divided. To achieve the relationship with China essential for that purpose, Americans will need perspective, as well as a vision for the future." It goes without saying that Chinese also need some perspective and a vision for the future. In other words, it is easy said than done to keep Asia united, not divided. For a united Asia, and possibly the welfare of world peace, Mr. Harland suggests that China has an essential role to play here. He emphatically claims that Clinton's "goals can hardly be achieved without good relations between the United States and China, a growing economic powerhouse and the most populous country in the world." As Chinese, before we let this stroke to our collective national ego get to us, we should keep in mind, as Harland points out, that there is only "one remaining superpower" in the world and it will take China a long time, if ever, to be the equal. China is an important player but not a decisive power. If China ever becomes a world superpower, she must learn how to use that power. This is of course another issue. Before envisioning too far into the distant future, we can't forget this distinct possibility in the near future that the current regime would collapse and China would fall into turmoil. The days are so near and the possibility so eminent that we are already hearing clamors in the background or even in the foreground; there are those who openly wonder "whether it would be better if the coastal provinces could free themselves to join the rest of the Pacific rim in export-led growth." This is where Harland' distinguishes himself from the rest of the crowd because he questions those self-serving China experts that a China in turmoil is "Better for whom?" Does "better" mean that a divided China would create easy-to-access markets and manufacturers for outside trading partners? Whose interests is that? Definitely not the majority of people in China. A breakup would mean consequent disorder and strife and human suffering for the ordinary people. This is a point that some of us tend to forget from time to time, as if we don't see the suffering, it did not exist. Some of us certainly share Mr. Harland's knowledge that there are forces who don't wish China to be strong because a strong China may give them fits. Even from the former colonialist points of view, Harland knows "what happened earlier this century suggests that a weak and divided China would cause far greater problems than a strong one. China could once again become an object of international competition and stimulate rivalries that would make regional cooperation an idle dream." The hope is that we as Chinese are not ready to brush this painful historical lesson to the back of our mind. The other lesson or virtue we must bear with us is patience. If Harland, the New Zealander can see that life has become better and ORDINARY people have gained more freedom under Deng Xiaoping than under Mao Zedong, we the children of the ordinary people (at least some of us are) probably should also think at least twice before deciding what future China should have from this side of the Pacific. [From: nxliu@well.sf.ca.us] ---------------------------------------------------------------------------- 5. Keep Higher Education Free for Awhile......................Bo Peng 71 ---------------------------------------------------------------------------- I heard that the Chinese government decided to impose tuition fee on universities sometime last year. I have been waiting to hear some outcries of objection from the CSS community ever since, only to be surprised and disappointed by the silence. Heck, I'll do it then. How many of you, the CCF subscribers, would have the chance to sit here and read these irrelevant craps if it were not for the free higher education system in China? How much would the "tuition fee" be if the term were to retain a significant portion of its original meaning? My rough guess is it would be in the neighborhood of 10,000 Yuan/yr at least. The average monthly salary of Beijing employees is ~400 Yuan, which is among the highest in China -- if the government banks could somehow manage to get enough cash, that is. Then there is price reform (read as "hyper-inflation"), housing reform, healthcare reform, and the increasingly thicker cloud of unemployment. Adding to the dismal picture, there is the growing trend of ignoring education and going for quick bucks in the most direct way, by all means necessary. How many Chinese could afford to put away that kind of money for higher education? Out of those who could afford it, how many would care to spend the money? Let's take a look at the US of A for a moment. The education is free up till the college level. The average in-state college tuition is about a third or a quarter of the average salary. There are so many alternate ways to pay for college without taking it out of one's pocket. The financial incentive for getting college education, at least when compared to China, is quite immediate and obvious. Yet the illiterate rate is almost 30%. What about the possibility of setting up a system of alternatives for paying for higher education in China AT THE PRESENT STAGE? Again, let's take the US of A as a reference. There are four types of alternate means for college tuition: 1. Through work-study. 2. Obtaining fellowship. 3. Joining the ROTC or other types of military service. 4. Getting a loan (low-interest or interest-free). None of the above has a chance in China for the time being. The unemployment rate in China, if calculated the same way as in developed countries, would probably make an all-time world record. Adding millions of college kids to the already jammed service sector, in which most of the work-study program would have to be, would be unimaginable. Loan? For God's sake, the banks can't even get the cash for salary! (Actually dispensing the salary in cash was emphasized by the Chinese government as a top-priority political task right before the last Spring Festival -- for the sake of social stability.) I guess the unpracticality of Alternative No.2 and No.3 is obvious. To be sure, the higher education system in China needs reform. Perhaps a system similar to the one in the States should be adopted eventually. It's just not the right time yet. Or China's future would suffer a big blow on the belly. This is the money China cannot afford NOT to spend. In fact, the entire education system in China has been "commercialized" for years. Asking a peasant to pay hundreds of Yuan for his kid in preliminary school, for the shaky buildings and sloppy books, while spending billions upon billions on military build-up and the Three Gorges Damn Project? It's a shame. [From: bo@saavik.Stanford.EDU] ---------------------------------------------------------------------------- 6. Healing the Wounds - 6.4.................................Asia Week 118 ---------------------------------------------------------------------------- For China's rulers, it must have been a great relief that the sensitive fifth anniversary of the June 4 Incident - as Chinese everywhere call the TianAnMen crackdown of 1989 - passed without unrest. In Beijing, the scene of the tragedy, citizens and students alike said they were more interested in the money - making opportunities made possible by economic reform than in political protests. But the calm, reinforced by massive security precautions, is deceptive. The trauma remains deeply etched in psyches and the souls of Chinese. How to deal with it may become the biggest political test facing China's leaders upon the death of their aged mentor, Mr. Deng Xiao Ping. Already, there are rumors that different factions are planning to exploit the issue to their own advantage in a tussle for power. It is almost inevitable that the official verdict on June 4 will be revised. Most of today's leaders know it; in his bones, even Mr. Deng likely knows it. Such a revision would be in keeping with Communist Party tradition - official views of disasters such as the Great Leap Forward, the Cultural Revolution and the Tiananmen Incident of 1976 were all reversed. And so should be the one on June 4. For what happened in BeiJing five years ago was not a "counter revolutionary riot" or "conspiracy" to topple the party. It should be recognized for what it was: a largely spontaneous, patriotic protest by Chinese youth against the corruption of the nation's - and the party's - highest ideals. Later, workers joined in to gripe about more mundane, though no less important, matters such as soaring inflation and deteriorating livelihood. In time the 1989 movement will probably be seen as the most seismic intervention in national affairs by Chinese students since the May 4 Movement of 1919. It will mark a milestone in China's long and winding journey toward political liberalization. Yet a rational, balanced reassessment will not be possible unless the darker side of the students' involvement is also recognized. Their political immaturity contributed directly to the bloody denouement that engulfed their well-meaning movement. At a critical juncture, after their demonstrations had more than made their point, student leaders allowed radical and confrontationist elements in their midst to hijack the whole enterprise. Delicate negotiations with peace-seeking government emissaries unraveled. That not only brought down Mr. Zhao Ziyang, the party chief, and his relatively liberal allies but set the stage for the high tragedy that followed. Such monumental errors of judgement and tactics have since been acknowledged by the student leaders themselves. The authorities, of course, could also have handles things much better. Their imperious manner precluded almost from the start a meaningful dialogue that could have nipped the crisis in the bud. Once the chance was lost early on, the prospect of a happy ending grew dimmer by the day. The crackdown's horrific side is universally decried, but it had positive aspects too. Under the magnifying glass of the international media, the stakes of the face-off in Beijing had mushroomed to epic proportions. If the party had backed down as the result of a full - fledged student-worker uprising, it would have lost the authority it needed to continue managing the epochal changes unfolding in a fast-changing and emotionally volatile nation of vast size and complexity. The greatest disaster imaginable in today's Asia - China in chaos - would have been a real prospect. Mr. Deng had the wisdom to determine his nation's priorities and the political courage to act accordingly. Having some blood on his hands, he decided, was a price worth paying to have China avoid the fate that would soon befall the Soviet Union. Another salutary effect of the June 4 Incident was that it unequivocally served the Chinese government notice about the extent of popular discontent. The party would have to deliver the goods (some goods, anyway) or there was going to be a bigger and uglier eruption. Since Beijing was not ready to liberalize politics and not really able to check corruption, it chose to earn its keep on the economic front - which was consistent with the Dengist agenda. The Tiananmen tragedy was a major impetus that enabled Mr. Deng early in 1992 to kickstart the conservative - dominated economy, with spectacular results. In a very real sense, the party was trying to make it up to the people for June 4, if only to extend its own right to rule. The Chinese ship of state has now entered treacherous waters. The intensification of economic reform has produced a host of problems ranging from high inflation and a widening income gap to growing unemployment and a loss of central control. There is a nervous uncertainty as people await the passing of Mr. Deng. More than ever, Beijing needs the goodwill of the populace if it is to manage the nation's development successfully. Under the circumstances, it would be better that the authorities move sooner, rather than later, to rehabilitate the 1989 movement and its victims. The task, of course, will be a tricky one. Above all, it will require unity within the leadership. And military chiefs will have to give their backing. But it can be done. A sense of crisis fostered by the nation's difficulties has helped unite top party leaders. They have another powerful motive: if they don't hang together after Deng's demise, they may well hang separately. The army, whose reputation took a drubbing after June 4, is likely to go along with a decision that will help restore its image. Won't those leaders who were closely associated with the crackdown - like Premier Li Peng and former military strongman Yang Shangkun - oppose a rehabilitation? Not necessarily. Mr. Deng's death will enable them openly to lay the responsibility for what happened at his feet. In truth, that is where it must lie. If Beijing is able to push through a measured and reasonable rehabilitation of the June 4 Incident, it will reap many benefits. One would be a flood of international goodwill. In the past five years, some foreign governments often with the willful or unwitting help of exiled dissidents, have persistently used June 4 as a weapon against the Chinese government. The crackdown is usually portrayed as a crushing of the demands for Western- style democracy. The students wanted nothing of the sort (most weren't even clear about what that was), nor did they demand elections or an ouster of the Communist Party. They simply wished the authorities to be less corrupt and more responsive to the grievances of the people. Foreign distortions of the students' aims often were used to push those countries' political or economic agenda vis-a-vis China. More importantly, a rehabilitation would do wonders to heal emotional scars not only in the mainland but throughout the global Chinese family. Especially happy would be Hong Kong, which is set to rejoin China in three years, and Taiwan. Such a move would be a major boost to the country's all - important social and political stability. China needs to put the June 4 Incident behind it and get on with more important things. An official rehabilitation by the Deng leadership would be a decisive step in that direction. 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