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• Mass Promotion of Generals Casts Doubt on Jiang Zemin’s Retirement
• Shanghai Cooperation Organization Establishes Antiterrorism Center in Central Asia
• China to Implement Corporate Bankruptcy Law

Mass Promotion of Generals Casts Doubt on Jiang Zemin’s Retirement

Beijing’s Central Military Commission (CMC) has promoted fifteen high-ranking lieutenant generals to the rank of full general, reportedly the largest mass-promotion of senior officer’s since 1949. At the 20 June ceremony, CMC Chairman Jiang Zemin awarded the certificates of promotion while CMC Vice-Chairman Hu Jintao read the announcement orders.

Significantly, among those promoted was Lieutenant General You Xigui, director the Bodyguard Bureau responsible for the safety of China’s top leaders and Jiang Zemin’s personal bodyguard. Local analysts are speculating that Lieutenant General You’s promotion is evidence that Jiang will not retire from political life this year, as was previously anticipated. According to China’s military code, senior military officers below the rank of general must retire at age 65. As a full general, 64-year-old You Xigui may now remain in the military indefinitely.

Many analysts previously predicted that Jiang Zemin’s transfer of power to Hu Jintao would follow the model of Deng Xiaoping’s transfer of power to Jiang in the early 1990s. Initially this appeared to be the case when Jiang transferred Chairmanship of the Party and the PRC Presidency in 2002 and 2003 respectively. According to this formula however, Jiang should relinquish his final post to Hu by the end of the year. While such a power is still possible, this mass-promotion suggests that Jiang could be trying to build support for his continued leadership of the Central Military Commission.

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Shanghai Cooperation Organization Establishes Antiterrorism Center in Central Asia

The heads of state from the six SCO member nations – China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan – as well as Mongolia and Afghanistan met at the fourth summit of the Shanghai Cooperative Organization in Tashkent, Uzbekistan on 17 June. At the summit, the leaders of attended the inauguration of the Regional Antiterrorism Structure (RATS). The RATS is the Organization’s second office and its inauguration marks a significant turning point in its history.

The Regional Antiterrorism Structure is to serve as a think tank and intelligence center for member states. The Tashkent office will also serve as a base of operations to direct campaigns against terrorists and drug traffickers in the region. Leaders at the conference spent a considerable amount of time discussing ways to help rebuild Afghanistan and reintegrate it into the regional economy in the face of the United States preoccupation in Iraq. At the conference the leaders also signed the "Tashkent Declaration", as well as many other agreements that specify the terms of enhanced economic and security cooperation.

After the United States opened the Central Asian front of the war on terror, many analysts predicted that the SCO could not compete with the United States for influence in Central Asia. However in addition to the new office, the 2004 SCO summit also produced a number of landmark agreements including Uzbek-Russian and Uzbek-Chinese security treaties, Russian and Chinese pledges of significant investment in regional economic integration and development. According to Chinese President Hu Jintao, "in order to halt the spread of terrorism we must use more than just military means".

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China to Implement Corporate Bankruptcy Law

This week, the Commission on Supervision and Management of State-Owned Properties has submitted the Corporate Bankruptcy Law to China’s top legislature, the National People’s Congress Standing Committee after a ten-year drafting process. The new law will put all businesses operating in China, whether state-owned, private or foreign, on equal footing in terms of competition. It stipulates that insolvent enterprises must first pay back their creditors and then settle with their employees.

At the same time, the Commission also announced that China will allow its last group of some 2,000 money-losing state owned enterprises (SOEs) to declare bankruptcy over the next three years. A spokesman for the Commission stated that this will be the last time the central government intervenes to help a failing enterprise. According to one Commission official, the 2,000 failing SOE's are "mainly military factories and mining operations in remote mountainous regions who can barely afford to pay their employees."

Zhou Xiaochuan, governor of the People’s Bank of China stated that the new bankruptcy law is crucial to non-performing loan (NPL) disposal, adding that banks and asset management corporations will be able to reclaim their assets through law suits.

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