From: xc17@cicero.spc.uchicago.edu ()
Subject: CND-EP, Year-End Special, December 23, 1992
Keywords: CND-EP, Year-End Special, December 23, 1992
Organization: U of Chicago, SSPPCC
Date: Wed, 23 Dec 1992 05:42:29 GMT
Summary: CND-EP, Year-End Special, December 23, 1992
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NNTP-Posting-Host: sol.ctr.columbia.edu

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===================  Europe / Pacific Section (CND-EP)  ===================
                             Year-End Special
                             December 23, 1992

        *********  Merry Christmas and Happy New Year  *********

---------------------------- Table of Contents ----------------------------
No. Subject                                                      # of Lines

1. News Brief (1 item) .................................................. 9

2. The Titan Stirs - the Chinese Economy .............................. 244

3. China - Children's Deaths Trigger Public Debate on Child Abuse ...... 68

4. The Wild, Wild East - Rising Crime in China ........................ 138
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1. News Brief (1 item) .................................................. 9
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The Australian satellite launched two days ago in Xichang is lost in 
space. The ground tracking station has so far not received any signals from 
the satellite, which is believed to have been damaged and lost. A small 
explosion in mid air during launch was thought to be a fuel leakage but 
could be the cause for the satellite not being put into orbit, or its 
electronic equipment being damaged. Although the cost of the 250 million
dollar satellite is insured and recoverable, it will set back two years
of time of Australia's pay TV industry. (Forwarded by: XU Ming Yang)

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2. The Titan Stirs - the Chinese Economy .............................. 244
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Forwarded by: Zuofeng Li
Source: The Economist 11/28 - 12/4/92
via met152s@vaxc.cc.monash.edu.au (soc.culture.china)

If China's economy grows as fast for the next 20 years as it has for the
past 14 years, it will be the biggest economy on earth. Jim Rohwer explains
why this will probably happen.

As far as anyone can guess, it was around 1500 that Europe overtook China as
the world's most advanced civilisation. For centuries - maybe always--
before then, Chinese science and technology and Chinese productivity and
incomes were the world's best. Over the next 500 years, as the West grew
rich and strong, China first lay torpid and then, for most of this century,
was convulsed by revolutions war, famine, Communist tyranny and a decade of
anarchy called the cultural revolution. It may therefore come as a surprise
that, just a generation from now , one of the world's weightiest questions
may well be how to handle a self-confident nuclear-armed China presiding
over the biggest economy on earth.

The awakening of China that Napoleon warned the West to beware of ("let
China sleep", he advised) is sometimes traced to the dramatic moment on
October 1st 1949 when a victorious Mao Zedong, proclaiming the People's
Republic of China, told a cheering crowd in Beijing's Tiananmen Square that
"the 475m people of China have now stood up." The real awakening came almost
30 years later, during what sounds like a snoozer: the third plenary session
of the 11th Central Committee of the communist Party of China. This meeting
was held in December 1978, two years after Mao's death. It agreed to the
proposals of Deng Xiaoping, Mao's long-time comrade-in-arms and recent
ideological foe. He wanted the Chinese economy, until then a slave to
Stalinist principles of central planning, state ownership and import
substitution, to be reformed and opened up to the outside world.

China's economic performance in the 14 years since then has brought about
one of the biggest improvements in human welfare at any time. Real GNP has
grown by an average of almost 9% percent a year. By 1994, China's economy is
almost sure to be four times bigger than it was in 1978; if China hits its
targets, which are reasonable, by 2002 the economy will be eight times
bigger than it was in 1978. At that time, China will have matched the
performance of Japan, Taiwan and South Korea during their fastest
quarter-centuries of economic growth.

The overall figures mask a startling rise in living standards. Some 75% of
Chinese -- around 800m people today -- still live on land. Mr Deng's first
reforms concentrated on freeing farmers from the suffocation of commune
system.  This increased farm production enormously: grain output grew by a
third in six years, cotton almost trebled, oil-bearing crops more than
doubled, fruit production went up by half. Real incomes in the countryside
grew even more spectacularly -- three-fold in eight years.

Trickle-down economics has little to apologize for in the case of China.
Guesses vary, but 200m-270m Chinese are thought to have been living in
"absolute poverty"(basically, not even enough food) in 1978. The number of
absolutely poor in 1985, when the farming reforms had largely been
accomplished, was 100m. A Japan, two Britains, or half of America: about
that many people were lifted out of poverty in China by the first six years
of economic reform.

Not only the wretched had reason to be thankful. Between 1978 and 1991,
grain consumption of the average Chinese went up by 20%; seafood consumption
two fold, pork consumption 2.5 times; egg consumption more than three-fold;
edible-oil and poultry consumption four-fold. In 1981 each 100 urban
households in China averaged less than one colour television among them; ten
years later it was 70.  In 1981 there were six washing machines for each 100
city households, in 1991 more than 80; in 1981, 0.2 refrigerator, ten years
later almost 50.

A visitor to China this autumn -- provided he can secure a seat on the
vastly overbooked flights going there from HongKong or Tokyo -- greeted on
arrival by the world's biggest booming economic boom. Shops are clogged with
people buying consumer goods, often costly ones like western designer
clothes. Factories, offices and homes are being built as fast as
round-the-clock construction crews can put them up. China's economy will
have grown by some 12% this year, with industrial output by 20% or more.
Despite the rich world's economic lethargy, China's foreign trade will have
grown to around $170 billion this year, up from $135 billion in 1991 and
from a mere $21 billion in 1978, the year the reforms begin.

An Unseen Giant

These events would of great significance even without a glance beyond
China's borders. How could it be otherwise when the destiny of 1.2 billion
people is at stake ? Yet China impinges on the rest of the world far more
than most people realize. China is already the world's third -- or fourth --
biggest economy, behind America, Japan and maybe Germany.

The official figures belie this. The World Bank says that Chinese GNP per
head was $370 in 1990; this year it might reach $380. That would make for a
total GNP of around $455 billion. That is smaller than the economy of
Canada, with 27m people, and only twice the size of Swiss economy.

The official figure about China are gibberish. Even a casual visitor to the
place knows this. the cities in the coastal provinces along the southern and
eastern seaboard, from Guangzhou (ex-Canton) next to Hongkong, up through
Hangzhou, Shanghai, Nanjing, Tianjin and Beijing itself, are bursting with
obvious prosperity. The suburbs in these provinces, where China's farmers
have pushed to the hilt the opening given them by the reforms, are even
richer than cities.

The great industrial cities of the interior -- places like Chongqing and
Wuhan, practically unknown in the West even though they are big,
respectively, as greater Los Angeles and London -- are drab and dirty. But
their streets, too, are clogged with traffic, their shops full of goods and
shoppers, their markets, restaurants and night clubs buzzling with
customers.

Yunnan in the south-west, on paper China's third-poorest province, is better
off in real life than the official figurers say -- in part, unhappily,
because of a booming trade in heroin from next-door Myanmar. but drug
dealers did not build the smooth paved road two hours outside the provincial
capital, Kunming, nor do they tend the well-kept fields there or run the
roadside restaurants crowded with locals enjoying big meals of soup, fresh
vegetables and roast duck -- quite a treat for people whose net household
incomes are supposed to be $100 a year.

Even those who compile the official figures know they make no sense. The
World Bank said China's GNP per head in 1976 was $410, roughly twice as high
as India' or Indonesia' and a bit ahead of Thailand's. After 7.5% annual
growth in real GNP per head in 1978-1990, China officially ended up with a
lower nominal GNP per head than it had in 1976. It is now, supposedly, as
poor as India, half as well off as Indonesia and a Quarter as rich as
Thailand, even though in 1978-90 China's real GNP per head has grew faster
than that of any of these other countries.

The explanation of this absurd results is that the fall of the yuan, China's
currency, from 1.7 to the dollar in 1978 to 5.5 now (and 7 or so on the
freeish stock market) has in dollar terms more than counterbalanced the
entire growth of China's economy over this period. A look a the real economy
by Ma Guonan and Ross Garnaut, two economists at the Australian National
University, shows just how misleading China's dollar GNP figure is.

The Australians multiplied China's physical output of basic commodities like
coal and grain by their world market prices; this alone yields a figure of
more than $160 per Chinese in 1990. Include the value-added output, again at
world prices, of pork, eggs, cement, televisions, bicycles, textiles, shoes,
steel, fertilizers and wood and the figure rises to more than $370: more
than China's theoretical GNP per head for that year, even though that list
of products represents only a fraction of Chinese output. Trade figures
indirectly confirm the suspicion. China's exports of $85-90 billion this
year - the world's 11th or 12th biggest -- will equal some 20% of official
GNP. You would expect an economy as big and diverse as China's to have, as
Brazil and the US do, an exports-to-GNP ratio of only about 7%. China's
export figure is fairly accurate, which implies that its GNP figure is badly
understated.

Comparing China's physical output and consumption with those of its East
Asian neighbours a generation ago drives home the point. Dwight Perkins, an
economist at Harvard, has calculated China's output per head of some basic
industrial products. He finds that China in 1991 was in most ways a bit more
advanced than South Korea was in 1970 -- a year when Korea's GNP per head
(1991 dollars) was $1,100, supposedly three times China's dollar GNP per
head in 1991 (see table on previous page). The Chinese are also eating as
well as neighbours like Taiwan, South Korea and even Japan did 20 - 25 years
before. This helps explain why China's social indicators -- life expectancy, 
literacy, concentration of doctors and calorie intake -- less like those of 
the 25 poorest countries on earth (of which China is officially one) than 
like those of middle-income countries with dollar GNP ps five times as big.

If China, with more than a fifth of the world's population, really is a mere
generation behind the East Asian tigers, the implications are staggering. A
conservative estimate would be that the true output of the Chinese economy
will equal $1.4-1.5 trillion this year, a quarter the size of America's.
That is conservative because of what happens when you see figures based on
purchasing power parities, or actual living standard: according to Lawrence
Summerence, the World Bank's chief economist, PPP would make China's economy
around 45% the size of America's. Another recently PPP survey of China
suggests another ten or 15 percentage points on top of that.

Each year, on average, for the past 14 years China's real GNP has grown 6.5%
percentage points faster than America's. If that difference persists, a
little after 2010 China will have the world's biggest economy. By Summers's
reckoning, if China had Taiwan's GDP per head today the Chinese economy
would already be bigger than all the OECD economies put together. A China
that continues to follow in Taiwan's footsteps with a 25-year delay will be
as rich as today's Taiwan by around 2020, when its output should equal some
80% of the output of the OECD then. So one question about stands out above
all others, and this survey's main aim is to try to answer it. Can China's
economy go on doing what it has done ever since Deng Xiaoping began
unshackling it in 1978 ? If it does, the world is in for the biggest change
since the industrial revolution.

CROSSING THE RIVER BY FEELING THE STONES

That can happen only if China carries out two modernization at the same
time.  Both are difficult, and the second immensely complicates the first.
Nobody has ever tried to escape from third-world poverty and communism at
the same time.

At least China has a roadmap for getting out of poverty. The guide is
provided by China's East Asian neighbours, and the Chinese has studied it
carefully. The main features of the East Asian approach are a land reform
that sharply raises incomes in the countryside; a transfer of profits and
labour from farming to industry; high saving rates, which finance industrial
investment; low taxes; vigorous domestic competition; and an openness to
foreign influence. The last element can consist of foreign prices, goods,
investment, technology or a combination of all four: but the result must be
something that brings world standards heavily to bear on the local economy.

One way or another, China's reformers have managed to implant versions of 
all these elements in the Chinese economy. The risk is that the communist 
Party may eventually strangle them.

The biggest trouble with the party is not, as television viewers of the
Tiananmen Square killings of 1989 assume it must be, that China's Communists
terrorize people when their absolute monopoly of power is threatened. It is
easier to forget that now-democratic Taiwan and South Korea (and, farther
afield, Chile) had their share of police heavies, censors and even massacres
in the 20-30 years when their government were obsessed with fast economic
growth and social order.  What these authoritarian did not have, however,
was a political system rooted in the idea that even smallish economic
decisions can be taken on the sufferance of the ruling party.

All the signs are that China's industrial commissars--the party men still on
most companies' boards and on the factory floor-- are today as economically
savvy as the businessmen they work with. Yet the instruments of political
control are intact. When one western economist asked the political boss of a
state enterprise why the government did not simply pay the company's chief
executive a vastly higher (ie. market) salary instead of providing him with
a car, home and so on to compensate for the low pay, the answer was:"because
we can take the car away but couldn't take the salary away."

Such a system's inherent weaknesses--corruption, political interference and
the temptation to override market signals-- are so great that many people
believe it is impossible to reform a communist economy gradually. They point
to the experience of past half-way reformers like Hungary and
Yugoslavia, whose gradualist efforts in 1970s and 1980s withered and
eventually died. The radicals say that only a headlong plunge into
privatisation and free trade will bring long-run success.

Plunges do not appeal to the Chinese, who call their method of reform
"crossing the river by the feeling the stones underfoot". As early as the
mid-1980s, Chinese economists were arguing that quick wholesale reform has
the same effect as central planning: it requires the government to take too
big decision on questions, such as the right sequence to reform or the right
way to privatise,, that it knows too little about. Far better to experiment
cautiously,letting different companies try different things. if they
work, extend them. If not, bury them.

So far, the argument is running strongly China's way. The tides of history
may have given Russia and east Europe no choice but "big-bang" reform. But 
it is Russia, not China, that is suffering from hyperinflation and 20%-a-year
falls in industrial output and is asking for western hand-outs to make up for
a collapse in living standards. What has made gradualism work in China?

---
PS: this is the top article in a complete survey in THE ECONOMIST 1992.11.28
===

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3. China - Children's Deaths Trigger Public Debate on Child Abuse ...... 68
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Forwarded by: Zhao Hua
Source: The Associated Press 12/16/92
By: Kathy Wilhelm

When 3-year-old Hu Dandan forgot a word in the poem his father was teaching
him, the father exploded in anger. He boxed the boy's ears, then kicked him,
sending him reeling into a closet.

Dandan died of head injuries hours later, one of three Chinese children
whose deaths have caused an unusual public debate over a problem barely
acknowledged before in China.

When Dandan and two other children died at their fathers' hands in November,
authorities decided it was time to launch a public education campaign.

"People are furious that such a barbaric and stupid thing can happen now,
at the end of the 20th century," said Song Gaotang, an adviser to the China
Committee Concerned About the Next Generation.

"But many people still hold that wrong idea, 'Spare the rod and spoil the
child,'" he said.

He was among educators and child experts who took part in a forum on child
abuse sponsored by the nation's leading newspaper, the People's Daily.

The paper published the experts' remarks, including Song's, over several
days last week. Its editors said they hoped to prevent more deaths.

The common impression in China's large cities is that children, whose
parents are usually allowed only one child under the state's family planning
program, are more likely to be spoiled than abused.

But the lingering Confucian notion of absolute obedience to parents,
combined with parents' high ambitions for their single child, have shaded
Chinese childhood in darker tones.

All three children who died in November came from urban worker families.

Eight-year-old Wang Xiaochuan got in trouble when he went out to play,
ignoring orders to study. His father boxed him in the ears and kicked him
twice, knocking him unconscious. He died in a hospital.

The father of Xia Hiu, 11, tied a rope around the boy's stomach and hung him
from a ceiling beam after he played hockey from school.

The father left and returned half an hour later to find the boy unconscious.
He, too, died in a hospital.

Confucius held that a father was entitled to kill a disrespectful son and
fathers have traditionally remained king at home. Abusive parents generally
have not faced arrest or punishment.

But police have arrested the fathers of Hu Dandan and Wang Xiaochuan. There
has been no report about the fate of Xia's father. A court in the central
Chinese city of Guiyang recently gave a 2-year sentence to Xie Hongfei, who
struck his 7-year-old son with a red-hot metal hook for forgetting to do his
homework. The boy survived with burns.

The sentence received wide publicity, with many Chinese expressing surprise
that a man could be punished for disciplining his son.

The experts who took part in the People's Daily forum blamed the low
education level of most parents in a country where even a high-school
education is far from universal.

Parents need to learn that some mischievousness is normal and reflects
creativity, said Sun Puyuan, a Beijing grammar school teacher.

He said 47 of the 48 children in his first-grade class told him they'd been
hit by their parents, including 27 who said their parents used some sort of
paddle or rod.

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4. The Wild, Wild East - Rising Crime in China ........................ 138
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Forwarded by: C. Mok
Source: Business Week 12/21/92
By: Pete Engardio in Guangzhou, with Dave Lindroff in Hong Kong

Murder, extortion, drugs - suddenly, China is awash in crime, and the West
is jittery

During a routine business trip to the Chinese border city of Shenzhen on
Aug. 16, 1991, Hong Kong citizen Chong Kwee-sung was seized by armed police.
Even though they had no arrest warrant, they took Chong, 55, to Zhengzhou,
in central China, where he has been held incommunicado in an unheated jail
cell ever since.  Authorities have refused to allow visits by Chong's
attorney.  Nor has Chong been formally charged.

Chong is neither a smuggler nor a dissident.  He is an ordinary trader who
is a victim of China's growing lawlessness.  In this case, Chong works for a
Hong Kong employer that had refused to pay for a shipment of bicycles from a
Zhengzhou factory that failed to meet U.S. Customs Service safety standards.
Zhengzhou police have said they would be willing to free Chong for $500,000,
cash.  Appeals to Beijing for help from British diplomats and four U.S.
senators have been fruitless.  "He has simply been kidnapped and is being
held for ransom," charges Michael R. Doram, Chong's Los Angeles lawyer.

PANDORA'S BOX. Chong Kwee-sung's ordeal may be extreme.  But it's part of a
disturbing trend.  China's headlong dash to "get rich" has unleashed a greed
so pervasive that it's getting difficult to tell the lawmen from the
profiteers.  Armed Chinese maritime police are seizing the cargos of foreign
vessels off Hong Kong on the pretext that they may hold smuggled goods.
Stolen luxury cars, which vanish from Hong Kong at the rate of 20 a day, are
being traced to the Public Security Bureau across the border.  Small traders
complain their factories are being threatened with closure unless they make
payoffs.

Add this to a wave of violent crime that is spilling into Hong Kong, which
this year has been rocked by gun battles between police and mainland gangs.
In two incidents on Dec. 2, shootouts with a mainland gang and a local group
armed with semi-automatic pistols, grenades, and AK-47 assault rifles
smuggled from China left 3 suspects dead and 11 police and 3 bystanders
injured.  For Hong Kong, it was the worst day of criminal violence on
record.

These are shocking scenes to outsiders who associate China's free-market
reforms with Avon ladies and party cadres in crisp business suits. Indeed,
with the economy growing 12% nationwide, and at a breathtaking 15% clip in
Guangdong province, China is poised to become the first communist country to
make a peaceful transition to a market-driven economy.

But now, Beijing is faced with the Pandora's box of social problems from
prostitution to drug dealing set loose by rapid growth - in a country where
the rule of law is weak at best.  "With the pressure to create 106 million
new jobs this decade, China can't go back on its reforms," says Kenneth G.
Lieberthal of the University of Michigan's Center for Chinese Studies. "But
focusing exclusively on maximum growth is creating enormous problems."

Indeed, some of the measures most responsible for China's boom are part of
the problem.  The devolution of power from Beijing has allowed cities in the
Pearl River Delta such as Guangdong and Dongguan to cut deals with foreign
investors, sometimes in defiance of central planners.  In the process,
enormous power flows to local party officials and even law-enforcement
agencies that are evolving into money-making fiefdoms. "There's no
supervision from the top and no supervision from the bottom," contends
Thomas Chan, coordinator of Hong Kong Polytechnic's China Business Center.
"The result is capitalism in its worst form."

China's disorder is of growing concern internationally.  In Hong Kong,
already in a major row with Beijing over Governor Chris Patten's proposal
for greater democracy, it raises jitters over the rule of law after 1997.
Veterans China traders say the rising costs of graft and highway robbery are
starting to make them loose elsewhere to obtain goods.  And a reluctance at
the local level to crack down on abuses raises questions about whether
Beijing can live up to international agreements.

The optimistic view is that China is going through a difficult transition
and that many problems will be sorted out in time.  "The Chinese are making
tremendous progress in developing legislation, professionalizing the
judiciary, and training lawyers," maintains Hong Kong-based attorney David
C. Buxbaum.  The leadership has formed task forces to fight corruption and
counterfeiting and has launched a crusade against everything from drug
smuggling to the $20 million slave trade in women and children that has led
to massive arrests and hundreds of public executions.

LOSING FAITH. But despite the grisly shows of force, authorities are
fighting an uphill battle.  Even some of the most seasoned China traders are
losing faith.  One U.S. executive who has been buying garments on the
mainland for 15 years says corruption "is accelerating at an alarming pace.
My worry is how far this is going to go."  Last year, one of his trucks was
stopped by uniformed men on a highway in Guangdong, and the driver was
forced to unload cargo at gunpoint. Another time, the highwaymen drove off
with the truck as well.  Now, on some stretches in Guangdong and Fujian
provinces, the company only transports goods during the day.

It gets worse.  Three months ago, Chinese customs authorities showed up at
the Guangdong luggage factory of a Hong Kong trading company. Claiming the
factory illegally sold imported raw materials, the agents seized the entire
stock of leather and levied a $300,000 fine.  The company denies the charge.
But an appeal could take months, and if the company doesn't get its leather
soon, it will miss crucial orders from U.S. retailers.

Not long ago, says an executive of the company, the factory's Chinese staff
was visited by a "retired Customs official" driving a European sports car.
He offered a deal: Give him 60% of the money in cash, and he could get the
leather released in two weeks.  Five other Hong Kong companies were also
shaken down, according to the executive.  "As far as I know, this sort of
thing never happened in China until this year."

Defenders say only businesspeople ignorant of the system get in such jams.
"You need connections, but there is a rule of law," says Buxbaum. "I've
handled hundreds of commercial cases, and in almost all of them I've been
able to get reasonable justice."  But he concedes there is a "hierarchy when
it comes to who can avoid getting squeezed." Foreigners, especially those
connected to high-profile joint ventures, often shell out dinners, small
gifts, and overseas trips.  But rarely are they hit up for money, partly
because they refuse to pay and have embassies to back them up.  Ethnic
Chinese executives who have solid "guanxi", or connections, with ranking
cadres also are immune.

Hong Kong small businesspeople such as Chong Kwee-sung, who lack
connections, are most vulnerable.  Regarded as Chinese nationals, they lack
the civil rights granted to foreigners.  The same goes for Taiwanese
investors.  So experts advise Taiwanese to invest through third countries
with diplomatic ties to Beijing.

Crime experts in Hong Kong view many of their counterparts across the border
as thoroughly corrupt in other sectors as well.  "The security forces
clearly are involved in organized crime and syndicated smuggling," says a
senior Hong Kong investigator.  Police have long suspected that mainland
officers have a finger in the thriving black-market trade that brings an
estimated $650 million in electronic goods and thousands of automobiles to
Guangdong's coastal cities.

Increasingly, there's a blurred line between crime-fighting and police
corruption.  Last year, Chinese marine patrols started chasing into Hong
Kong waters speedboats and fishing vessels suspected of smuggling.  So far
this year, Chinese patrols have seized 29 ships under Vietnamese and
Panamanian registries, freeing the ships and crew but keeping an estimated
$40 million in cargo, claiming it as contraband subject to confiscation.

It's just as difficult to figure out which side the law is on when it comes
to car smuggling.  So far this year, nearly 7,000 vehicles were stolen in
Hong Kong, up 10% from last year.  Cars in China have steering wheels on the
left, so new Mercedes, Lexus, and Honda Legend models with right-hand drive
are immediately suspect as thefts from Hong Kong.  Even public-security
staff can be seen tooling around in cars presumed to be stolen.

Defenders say corruption, crime, and vice are normal growing pains for newly
industrialized countries.  But so far, Beijing's gerontocracy is unable to
replace Marxist ideology with new guiding principles, so government is
"deteriorating into confusion and the wild pursuit of gain," says author and
Guangdong expert Ezra F. Vogel.  To keep these problems from boiling over,
China's leaders will have to put as much emphasis on reforming legal and
political institutions as they have on following Deng Xiaoping's exhortation
to "get rich."

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