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The U.S. and China This Week

Week of August 8, 2003

The U.S. and China This Week

Cabinet Reshuffle in Hong Kong

It has been a little over a month since half a million people took to the streets in Hong Kong in protest of a national security law that Chief Executive Tung Chee-hua attempted to shepherd through the Hong Kong legislature at Beijing's behest. Tung was ultimately forced to postpone consideration of the bill when Liberal Party Chairman, James Tien, defected from Tung's cabinet and withdrew his party's support for the bill, giving pro-democracy parties the votes necessary to force postponement should Tung have continued to press the legislation. Tung then announced that he would shift his focus to the economy, but gave every indication that he intends to take up the bill later, under more favorable conditions.

Encouraged by their initial success at forcing postponement of the security legislation, tens of thousands of demonstrators encircled the Legislative Council on July 9 and demanded Tung's resignation and called for direct elections. Organizers reported a turnout of 50,000 participants, which although significant, constituted a mere fraction of the July 1 turnout. More moderate voices called for Tung to reshuffle his unpopular ministers.

It seems the moderates have one out: Beijing leaders reasserted their support for Tung, who has declined to step down. Instead, he is reshuffling his cabinet in an attempt to restore faith in his government. Mr. Ambrose Lee, formerly the head of Hong Kong's Independent Commission Against Corruption, will replace Regina Ip as security chief. Ms. Ip had strongly supported the security legislation despite concerns that it would erode press and religious freedom in Hong Kong. Henry Tang, formerly the secretary for commerce, will replace Anthony Leung as finance secretary. Mr. Leung was recently embroiled in a tax scandal when it became known that he had purchased a luxury automobile just days before announcing a tax increase on vehicle purchases. It will fall to Mr. Lee to push through a watered down version of the security bill. Chief Executive Tung has already agreed to seek public input before re-introducing it, but opposition parties affirm they will still fight the legislation.

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Deficit Spending on Public Works Attracts International Bids

China is implementing and planning a number of large-scale public works projects to ensure that its development isn't stymied by lack of infrastructure. In fact, the government is projecting a record 320 billion Yuan ($39 billion) budget deficit this year due largely to increased public works spending. Among those projects already underway are 100,000 miles of new roads, a $3.3 billion railway linking the western province of Qinghai with Tibet, and the Three Gorges Dam, built to control flooding on the Yangtze River and generate power.

The world's fastest train, the $1.25 billion Maglev, began operation in October of this year. The Maglev traverses the 19 miles between Shanghai's financial center and the Pudong airport in eight minutes, at up to 267 miles per hour. Another high-speed rail line linking Shanghai and Beijing is currently on the drawing board; however, the Maglev technology is likely still too cost-prohibitive for longer projects, in this case 1,300 kilometers. The leading bidders for the project include a consortium of Japanese companies pushing Japan's Shinkansen technology. Among the suppliers of the 168-mile-per-hour Shinkansen are Mitsubishi Heavy and Kawasaki Heavy, the countries largest and second largest heavy machinery makers. This week, Japanese Transportation Minister Chikage Ogi is visiting China to bolster their bid. Her visit follows a similar lobbying effort by France's trade minister, Francois Loos, who was in Beijing in July to push Alstrom's TGV technology, which can travel at speeds up to 186 miles per hour. The Chinese government has not said when it will announce the winning bid for the Shanghai-Beijing link.

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U.S.-China Relations: Chinese Dissident Tried on Espionage Charges

Yang Jianli, a forty-year-old permanent resident of the United States who resides in Brookline, Mass., was tried in Beijing Tuesday on espionage charges. The court adjourned without giving a verdict after a three-hour closed hearing, according to Yang's attorney. Yang is the second U.S. based dissident to be tried this year on charges of spying for Taiwan. Wang Bingzhang, a New-York-based activist, was sentenced to life in prison after being convicted of espionage and terrorism in February.

Yang first came to the U.S. in 1985 to study, but returned to China to participate in the 1989 student-led democracy protests. After the military crackdown in June 1989 Yang fled to the U.S. and was banned from returning to the PRC. He later earned a PhD in political economy at Harvard, after which he started the Foundation for China in the 21st Century, which he still leads.

Yang was detained in April 2002 while traveling in China to meet with disgruntled workers who had participated in protests across China. He is also said to have met with a number of other young activists. Originally he was charged only with entering the country illegally (he used a friend's passport), but the focus soon became a number of grants his organization had received from Taiwanese sources. The case has attracted quite a bit of attention in the U.S., where Yang's wife and two young daughters reside, and the Bush administration has repeatedly raised Yang's case with Chinese officials. Moreover, both the House and Senate passed resolutions urging Beijing to release him. A verdict on Yang's case is expected within the month.

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