• Introduction
• Founders and Board Members
• Honorary Advisors
• Foundation Events
• China This Week
• Washington Journal of Modern China
• US-China Policy Review
• China Forum
• USPCF Staff
• Other Links
Week of September 30, 1999

Week of September 30, 1999


    The U.S. and China This Week


    Next Summary

    TRADE: WTO and China's Importance

    SUMMARY:

    Chinese trade minister Shi Guangsheng traveled to Washington, DC, on Monday to resume negotiations on China’s accession to the WTO. Shi met with U.S. Trade Representative Charlene Barshefsky to try to work out a deal which would allow China to be admitted before the "millennium round" of WTO negotiations begins in Seattle in November.

    Last April, Premier Zhu Rongji presented a comprehensive WTO package with many concessions. To the detriment of American businesses, the U.S. did not accept his package and Premier Zhu Rongji returned home empty-handed having failed to secure accession to the WTO for China. With the rejection of his offer and the publishing on a U.S. government website of specific concessions offered, Zhu lost quite a bit of prestige in the eyes of his peers in China. While negotiations continued, this failure to reach a deal was quickly followed by the mistaken bombing of the Chinese embassy in Belgrade, which completely halted all negotiations for the summer.

    Time appears to be running out for China’s accession to the WTO as a new round of global trade discussions are set to begin November 30. In a meeting of the UN General Assembly last week, U.S. Secretary of State Albright warned Chinese Foreign Minister Tang Jiaxuan that U.S. Congress recesses in November. This recess is significant because Congress would have to ratify a package for China’s entrance to WTO before that recess in order for the US to support China’s accession before the "millennium round."

    The main points of contention over negotiations are the WTO protocols of timetables for opening markets in a industry, agriculture and services and China’s reduction of tariffs rates to meet global norms. The U.S. has raised specific demands regarding market access to financial services and the telecommunications industry. If China is not a member by November, the country will miss out on the opportunity to participate in important negotiations regarding the progressive liberalization of the service sector, and it is uncertain at what point in the future China might again try to gain membership to WTO.

    The repercussions of China’s remaining a nonmember of the WTO are far reaching, with effects felt throughout the global economy. The U.S. already has a huge budget deficit in its trade with China, due in part to the fact that China does not have to adhere to the WTO’s trade practices. Many U.S. firms cannot compete with China’s cheap labor and high government subsidies, which decrease the price of Chinese products. In fact, the American Textile Manufacturers Institute is lobbying Congress to keep protectionist quotas on Chinese competitors beyond the present 2005 deadline until 2010. Such protectionist measures hinder free trade and are counter to the ideals of the WTO, but as China is not a member of the WTO, the U.S. feels it must take these measures to ensure the strength of its own market.

    Were China to become a member of WTO, it would have to conform to WTO standards and end many of its own protectionist measures, which severely hinder international trade. For example, transparency issues arise in markets such as medical equipment, wherein a firm’s product must pass several tests and pay large fees to sell to gain permission to sell its product in China without the foreign firm being given any information on the testing process. Transparency is a major issue in the WTO, as it is considered an essential ingredient for international free trade. Market entrance in China is highly restricted by the government. Should China not enter the WTO, they will face far less pressure to end unfair trade practices. At the same time, the rest of the world may feel compelled to react by taking measures to protect their domestic markets from China’s violation of WTO rules. Such measures could include voluntary export restraints, import quotas, and anti-dumping duties. A vicious circle of protectionist measures could occur between the U.S. and China causing even more barriers to trade. Thus, China’s entry into WTO is a global necessity to ensure the further opening of markets and the flourishing of international trade.


    Previous Summary || Next Summary

    BUSINESS: The Fortune Forum in Shanghai

    SUMMARY:

    Chief executives from many Fortune 500 companies embarked on a 3 day conference in Shanghai on Monday. President Jiang Zemin is scheduled to speak at the Fortune Global Forum, as this event is considered of great importance to China and the international community. Many VIPs and about 300 CEOs met with well-known political leaders for this international conference, which is of importance to overseas investment and WTO negotiations. Heads of the world’s largest corporations were expected to discuss China’s development in the next 50 years and how foreign investors will affect said development. Most prominent CEOs understand the vital importance of China’s WTO entrance as a means of securing market access within China and are pushing for China’s entrance. Ernest Micek, chairman of Cargill Inc., said, "It is certainly the desire of the U.S. people that China and the U.S. resolve their differences and China be admitted to the WTO." As such, this business conference should help send a clear message to US and Chinese negotiators regarding the need for China’s timely admittance to the WTO.

    At the Shanghai Fortune Forum, Zeng Piyan, Chairman of the State Development Planning Commission, was asked many difficult questions about China’s trade policies. One man asked Chairman Zeng to explain how the government will reconcile its attempts to increase foreign investment and all the restrictions it places on investment. Chairman Zeng responded that the government is looking into different possibilities to streamline the state approval process, including increasing the regulatory power of local officials. Thus, the government is aware of problems with foreign investment and is trying to find the right combination of restrictions and freedoms to increase trade in a manner that helps and does not harm the Chinese economy. This situation is rather tricky and will take time to be resolved, which is extremely frustrating to foreign businesses in China as they have heard promises of greater market freedoms in return for their patience and continued foreign investment in China. These promised market freedoms and profits have not happened for many foreign firms, leaving firms to wonder if they ever will. As such, though foreign companies recognize the potential profits of China’s vast markets and continue to invest in China, there is much frustration with the regulatory climate and the product approval process both of which are cluttered with red tape.


    Previous Summary || Next Summary

    TRADE: China's WTO Perspective

    SUMMARY:

    In contrast to most U.S. reports, Beijing’s chief negotiator, Long Yongtu, said that a WTO deal with the U.S. was "very close." In an interview with CNN, Mr. Long stated that the U.S. had misunderstood China’s April offer and there were approximately 15 mistakes in the U.S.’s version of China’s WTO position posted on the U.S. government webpage. He continued explaining that the U.S. must accept these "clarifications" for a WTO agreement to be reached. It still remains to be seen whether these changes will be acceptable to the U.S., but according to John Foarde, vice-president of the US-China Business Council, "…Neither of the presidents really want this deal at this time." Even if a WTO agreement can be reached in the next month there is much doubt that congress will have time to approve it. As such, China’s WTO entry appears unlikely this year.

    Responding to the possibility of not joining WTO, China has moved to give slightly more freedoms to foreign capital. China’s administrators are trying to attract multinationals through trade promotion programs and expanding bilateral trade deals with many of its trading partners. Though Beijing would like to join WTO, they are trying to ease the possible blow of not entering the organization this year. Basically, China is walking a tight rope of opening its markets too quickly to international competition, which could destroy the domestic firms and protecting its domestic markets, which hinders trade. As such, WTO may not occur, but certain trade deals may be possible as China seeks to maintain its state owned enterprises and domestic markets, while engaging in international trade.


    Previous Summary || Next Summary

    GOVERNMENT: Questions about Hu Jintao’s Succession

    SUMMARY:

    As reported last week, Hu Jintao was recently promoted to the position of vice chairman of the Central Military Commission. With this promotion, he has become the most likely successor of Jiang Zemin. Despite, his close ties to President Jiang, questions have arisen over his quick rise in the party and potential competitors. Hu Jintao main achievement within the party was his crackdown on Tibet in 1989, which illustrated his ability to take whatever action is necessary to maintain party dominance. Most recently, he made the speech regarding the NATO bombing of the Chinese embassy in Belgrade. In this speech, he supported anti-NATO protests held by individuals with the correct permits. As the first government response to the mistaken bombing, Vice President Hu had the responsibility of representing the party view and was in a dangerous position with all the media focused on his words. Hu came through his speech well and continued his rise in the party. Some people hold that he has not been tested enough in his career, but he appears to have passed 2 significant tests. Hu’s main competitor, Zeng Qinghong, is noted for having "better" credentials than Hu. Mr. Zeng is a trusted aide of President Jiang. Hu is the 5th highest ranking man in the Communist hierarchy, while Mr. Zeng is director of the party’s Organization Department. Mr. Zeng’s position gives him a considerable base of power, as he appoints personnel throughout the party. Whether Mr. Zeng will rise higher and actually become a threat to Hu’s is unclear. This political speculation could be idle gossip or a genuine possibility, but it is clear that Vice President Hu may have some obstacles in his path to President of the PRC.


    Previous Summary || Next Summary

    BUSINESS: Economic Losses After the Quake

    SUMMARY:

    Taiwan, one of the world’s largest electronics producers, faces huge losses in its semiconductor and personal computer industries. Being the third largest producer of personal computers, and the 4th in semiconductors, the earthquake that hit Taiwan last week, will cause economic aftershocks throughout the world. South Korea, Taiwan’s main rival in the chip making industry, saw an increase in company stock prices as their firms produce chips unhindered by damaged equipment. Chip prices rose 12% last week as a result of the earthquake shutting down most of the semiconductor factories in Taiwan. The earthquake was not located near the factories but shut them down for several days because of the delicacy of the machines that make semiconductors, the need to precisely reset them and the lack of electricity. As producers gear up for Christmas sales and increase demand for microchips, chip production is of vital importance and this earthquake will cost Taiwan millions of dollars. Thus, the effects of the Taiwan earthquake reverberate across the global economy.


    Previous Summary || Next Summary

    POLITICS: Talk of Anti-NATO Alliance

    SUMMARY:

    There has been a noted thaw in relations between Russia, India and China as all 3 agree that the U.S.’s power must be checked. All 3 nations opposed the NATO bombing of Kosovo and concurrently agreed that the U.S.’s global dominance should be countered in some manner. Presently, the countries are building relationships such as in the arms sales by Russia to these Asian countries. This "strategic triangle" is in the nascent stages and has not taken any definitive shape. Still, the U.S. might be threatened should these 3 countries unite to counter the U.S.’s world leadership. Thus, though the U.S. presently dominates world decisions, there is a possibility of an alliance to counter her world domination on the horizon.


    Previous Summary || Next Summary

    ARTS & CULTURE: Photo Exhibit on May Fourth Era in Beijing

    SUMMARY:

    In central Beijing, at the Museum of Chinese History in Tiananmen Square, there is an ongoing exhibit of photographs taken by American photographer Sidney D. Gamble. The exhibition, entitled "Turbulent Years: China Before and After the May Fourth Movement" includes photographs taken from 1908-1932 during four periods in which Gamble resided in China, and includes a focus on the May Fourth Era.

    May 4, 1919 was the peak of a student movement which called for drastic cultural and political changes in Chinese culture and society, including an emphasis on science and democracy, but was followed in the 1920’s by disillusionment with the republican government and increasing support for the Chinese Communist Party. While in pre-1949 history the anniversary was celebrated as symbolic of embracing the West and questioning Chinese culture for the purpose of strengthening the country, in post-1949 history the emphasis has been on interpreting May Fourth as a patriotic holiday. While young students may not have heard both interpretations, many intellectuals see a clear contradiction between the two interpretations, often referring to the ‘Spirit of May Fourth?as a euphemism for the right and duty to publish constructive criticism of the government in hopes of encouraging change.

    This reminder of past calls for democracy in China and for the right to express criticism of the government is surprising on the eve of the 50th anniversary of the Communist government, when such careful security preparations have been made. Only last year the would-be China Democratic Party was refused permission to register as a political party and its leaders arrested. Just two months ago the practice of Falungong was banned because it was viewed as critical of and a threat to the government’s control over society.

    What is also surprising is that Gamble, whose photographs make up the entire exhibit, was a benefactor of the YMCA, which supported humanitarian, evangelical Christian projects in China, such as hospitals and schools, before 1949. To a limited extent, the YMCA is active again today, providing a cultural center and evening English classes for adults in several Chinese cities, but western evangelical activity is expressly discouraged.

    The exhibition is co-sponsored by a private firm, the Beijing Haiyin Arts and Culture Co.


    Previous Summary || Next Summary

    INTERNATIONAL COMMUNITY: China Rejects UN Peacekeeping Role as Interference in Sovereignty

    SUMMARY:

    While UN peacekeeping troops continue to spread across East Timor, arresting anti-independence militia members, and setting up a new civil administration, they do not have Chinese support. China rejected an appeal by UN Secretary-General Kofi Annan to participate in or support humanitarian intervention in cases where governments kill their own citizen. This is part of a consistent view in Beijing that the term humanitarian intervention is merely an excuse for interference in the internal affairs of a sovereign state. Chinese Foreign Minister Tang Jiaxuan stated the belief that such a policy could lead to ‘gunboat politics? a restatement of the prevailing Chinese interpretation.


    Previous Summary || Next Summary

    ONE COUNTRY TWO SYSTEMS: Tung Chee-hwa to Meet with Margaret Ng to Discuss Visa Refusal

    SUMMARY:

    Hong Kong legislator Margaret Mg was refused entry into China on September 12 to attend a conference on Chinese legal reform, making her the most recent addition to a growing list of elected Hong Kong officials who have been denied entry into China. Some conference attendees briefly considered withdrawing from the conference to protest her absence, but decided that they could accomplish more by proceeding with presentations on legal reform issues. Hong Kong Chief Executive Tung Chee-hwa, who was born on the mainland and emigrated to Hong Kong in 1949, finally agreed under pressure to meet with her to discuss the situation. Tung, who was born on the mainland and emigrated to Hong Kong in 1949, was appointed by the Chinese government.


    Previous Summary || Next Summary

    SOCIETY: Further Preparations for China’s 50th Anniversary

    SUMMARY:

    China’s plans for the October 1st anniversary of the founding of the People’s Republic will reach their apex this weekend. University students are being given a week’s vacation, and many businesses are closing down as well. On Friday morning, or Thursday evening our time, 500,000 people, including soldiers and performers, will parade through Beijing. Security in preparation for the anniversary has been a special priority.


    Previous Summary

    SOCIETY AND POLITICS: China Bans Qigong Practice in Public Places

    SUMMARY:

    China officially banned qigong exercises in ‘important public places?this week, two months after the Falungong sect was officially banned. Qigong is a traditional form of exercise which posits that an individual can attain greater health and power over one’s body through meditation and exercise which aim to control and redirect the flow of Qi or energy through the body. It is an ancient practice, which in modern times has become popular among the elderly in China, and has found many believers in Europe and America. Taiqi, a popular exercise regime based on traditional martial arts, involves more movement and less meditation and theory. The public practice of taiqi has not been prohibited at this point. The government’s rationale for banning qigong in ‘important public places?may be to further discourage persistent Falungong followers from organizing demonstrations which criticize the government.


    This week's articles were written by Kourtney C. Heintz and Amy Winchester. All views expressed herein are those of the writers and editors and do not reflect the views of USCPF itself.
    The U.S. and China This Week
    The U.S. and China This Week

    USCPF Homepage

    uscpf@uscpf.org
    Last updated: October 5,1999
 
   316 Pennsylvania Avenue SE, Suite 201-202 • Washington DC 20003 • phone: 202.547.8615 • fax: 202.547.8853