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Week of November 9, 2001

Week of November 9, 2001

The U.S. and China This Week



DOMESTIC: China’s Tibet Governor Forecasts Tibet Development

SUMMARY (11/7) - The Chinese governor of Tibet, Guo Jinlong, is forecasting major economic development of the Tibet region, which he says will lead to social harmony. "Conditions for large numbers of Tibetans are still quite backward," Guo said in an interview. "This is all for the good of the people and to strengthen national unity." The Communist Party secretary of Tibet said the Beijing government will double its spending in Tibet from that spent over the past five years. The investment and subsidies will make Tibet’s economy expand by more than 12 percent a year over the next five years, Guo said, significantly eclipsing the growth rate in the rest of China. He predicted incomes in Tibet will catch up to the national average income level by 2012.

The Chinese government has been criticized for not negotiating with the exiled Dalai Lama for autonomy for Tibet as well as for enticing Han Chinese to settle in the region. The Dalai Lama, who fled Tibet in 1959 after an uprising, is considered a separatist by the Chinese government. Guo said "public support for the Dalai Lama has drastically declined" and also that he is perceived by most Tibet residents as a "schemer, a split-ist and an opportunist."

Guo also said 93% of Tibet’s population of 2.6 million people are ethnic Tibetans. Critics argue that figure does not count many unregistered migrants in the cities and the large Chinese military presence in Tibet.

Guo has been softer on religious issues than the previous governor, but still maintains a ban on Party members practicing Buddhism due to Communism’s adherence to atheism. While there is freedom of religion and monasteries destroyed during the Cultural Revolution are being rebuilt, the number of monks are limited and any thought to be aiding the Dalai Lama are arrested. The Potala, the former residence of the Dalai Lama, is a protected World Heritage Site and a major tourist attraction.

The direct payments to the government of Tibet over the next five years, which will provide 90% of its regular budget, will be used for education, infrastructure projects and training. Farmers have also been exempted from taxes that are controversial in the rest of China, and education is free in Tibet from primary school through high school, unlike elsewhere in China.

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DOMESTIC: Taiwan Eases Mainland Investment Rules

SUMMARY (11/8) - The government of Taiwan has eased the rules for its citizens on investing in mainland China. Experts expect the November 7 action will hasten the commercial integration of Taiwan and the mainland, while critics in Taiwan fear that it will lead to Taiwanese dependence on the mainland. Already, Taiwanese have invested $60 billion in mainland China. Now rules requiring them to use loopholes to invest are gone, as is a $50 million limit on individual investments. In addition, Taiwanese will get automatic approval for investments under $20 million and will be able to wire money to and from Chinese banks directly.

The move came as Taiwan prepares for membership along with China in the World Trade Organization, which is expected to occur this weekend at a meeting in Qatar. Tsai Ingwen, chairwoman of the Mainland Affairs Council, said the old “no haste, be patient?policy towards investing in the mainland was outdated. The new slogan is “aggressive opening, effective management.?The old policy, designed by former president Lee Teng-hui, was meant to prevent China from accessing sophisticated technology. But with Taiwan currently experiencing economic difficulties, a committee consisting of executives, scholars and government officials recommended removing the restrictions. President Chen Shui-bian clearly wants the new policy to garner him support from business leaders and others who want to see the economy boosted.  The prohibition of manufacturing notebook PC’s and semiconductors in China was not ended, but a task force will study what technology should be permitted into China. The task force will also deliberate on projects of more than $20 million.

Taiwan could benefit from the new policy through increased profits sent back; companies will be required to report earnings. Peter Kurz, the founder of Insight Pacific, an investment research firm in Taipei, said, "Right now, capital flows are a one-way street from Taiwan to China. Taiwan is trying to increase the flow back."
Wang Yung-ching, a Taiwanese businessman who supported the changes, said, "There is only one road for Taiwan to walk, and that's the road of liberalization."

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