From: gaojeng@durras.anu.edu.au (J. Gao)
Newsgroups: aus.culture.china
Subject: China News Digest (Global), Tue, 11/23/1992
Date: 23 Nov 92 06:13:27 GMT
Organization: Australian National University
NNTP-Posting-Host: 150.203.22.8
Summary: CND
Keywords: CND

	       * * *  C h i n a   N e w s   D i g e s t  * * *

				(News Global)

			 Monday, November 23, 1992


Table of Contents                                                 # of Lines
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1. China Stresses Sino-U.S. Trade to Clinton ............................ 43
2. The New Gospel of Economic Reforms .................................. 115
3. Chronology of Economic Reforms in China .............................. 43
============================================================================

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1. China Stresses Sino-U.S. Trade to Clinton ............................ 43
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Forwarded by: A CND Reader
Source: UPI, 11/22/92

BEIJING -- In an attempt to soothe wounds from past trade disputes before 
President-elect Bill Clinton takes office, China has called for closer 
Sino-U.S. trade cooperation, an official newspaper said Sunday.

Speaking to the weekly business edition of the English-language China Daily, 
vice-Minister of Foreign Economic Relations and Trade Tong Zhiguang said 
China and the U.S. should not let disputes hinder closer trade ties between 
the two countries.

"Trade conflicts may well crop up between the countries as time goes on, but 
the overall direction should be positive," Tong said.

Tong also sent a clear message to Clinton not to tamper with trade links and 
suggested that Clinton would be powerless to stop growing trade between the 
two countries.

"Sino-U.S trade has gained so much momentum that no single person could hold 
it back," Tong said.

Clinton voiced his support during the election campaign for imposing 
conditions on Sino-U.S. trade and China's Most Favored Nation trading status 
to force Beijing to improve its human rights record.

Post-election observers, however, have suggested the need to revive the 
American economy may force Clinton to moderate his stance and protect 
Sino-U.S. trade, worth $16.3 billion in U.S. exports to China in 1991.

In an attempt to hammer home the importance of Sino-U.S. trade to Clinton, 
Tong described China's recent decision to buy 2 million tons of U.S. wheat 
"as a signal that trade relations are normalizing and China is sincere in 
its desire to help it go forward."

He added "China would keep channels open to the new administration of 
President-elect Bill Clinton."

The China Daily said "China's trade with the U.S. has grown faster than its 
trade with the world as a whole." It said the United States was the second 
biggest investor in China after Hong Kong, with U.S firms committing 
investments totalling $5.5 billion.

Tong also called for an end to disputes that have plagued Sino-U.S. trade 
relations in recent months, including President Bush's decision to sell F-16 
fighter planes to Taiwan, and "market access" arguments finally resolved in 
October after the U.S. threatened imposing punitive tariffs on Chinese 
goods.

"Relations between China and the U.S. are bouncing back from snags that 
developed over the last several months," Tong said.

Tong's conciliatory tone suggested China had resigned itself to the fighter 
sale and signaled the issue would not be used against Clinton -- who has 
indicated he backed the decsion to sell the planes to Taiwan despite China's 
heated objections.

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2. The New Gospel of Economic Reforms .................................. 115
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Forwarded by: A CND Reader
Source: UPI, 11/22/92
     
CANTON, China -- Zhang Yihuang appeared an unlikely pioneer of China's 
far-reaching economic reforms.

A short, bespectacled young man with a sparse mustache, Zhang stood near an 
information booth by the giant Light Industrial Products exhibition at the 
recent autumn Canton Trade Fair.

He had only a visitor's pass and a single sheet of paper, bearing hand-
written prices for various fluorescent lamps and textile products.

But when foreign businessmen who stopped to ask for directions in the
cavernous trading hall, the smiling Zhang approached and made his pitch
for his Hubei Province development zone and its products.

"Because we found out about applying to the fair too late we could not book 
a room," Zhang said in passable English.

But Zhang did not let the lack of an exhibit space deter him, partly because 
he had been inspired by top leader Deng Xiaoping, who in January called for 
accelerated economic reforms.

"Deng encouraged people to change their ideas and change from the old 
policies," he said.

Zhang represents a development zone established last May in Shashi, a city 
in inland Hubei Province on the Yangtze River. The Shashi city government 
owns the handful of factories set up so far in the zone.

Most Chinese exporters at the Canton Trade Fair -- a twice-a-year event -- 
were members of huge central government trading corporations.

China National Light Industrial Products Import/Export Corp. ran one of the 
exhibitions at the fair, occupying thousands of square feet on three floors.

Zhang's nerve in playing David to the state corporation's Goliath is rare in 
China today. But it will take thousands of giant killers to implement the 
latest bold phase in China's economic reforms -- establishment of a market 
economy.

Zhang is on the crest of the new wave of reforms precisely because he
exemplifies entrepreneurial persistance in the Chinese heartland, where
central planning has its deepest roots.

Chinese economic reforms begun in the early 1980s focused on instilling 
autonomy and market savvy in an economy strangled by central planning.

Most success came in the South. Beijing gave the southern provinces of 
Guangdong and Fujian the right to offer incentives to foreign businessmen 
in order to attract investment from nearby Hong Kong.

Hong Kong businessmen swarmed to Guangdong to take advantage of cheap labor 
and land and cultural and language links.

The warming of Chinese relations with Taiwan unleashed a flood of investors 
through Hong Kong into Guangdong and into Fujian, 100 miles across the 
Taiwan Strait.

Hong Kong and Taiwanese businessmen set up thousands of joint ventures in 
the South and the market-wise newcomers reshaped the local economy.

Businesses established by provinces, cities and villages gradually adopted 
flexible management that enriched capitalists in Hong Kong and Taiwan. The 
private sector, although still small, is the most robust in China and is 
growing fast.

The new drive for economic reforms, launched by Deng Xiaoping during a 
January visit to Guangdong, aims to extend gains made in the South.

In the summer, China gave cities along the Yangtze, including Shashi, the 
right to offer foreign investors the same kind of incentives that formerly 
could be extended only by Guangdong and Fujian.

The 14th Party Congress in mid-October enshrined a "socialist market 
economy" as China's economic goal. And in early November, the spokesman for 
the State Council, China's Cabinet, said China should open the entire 
country to foreign investment.

Expanding reforms to other parts of the country, where the state-run sector 
still drags down the economy, is the key to building a solid foundation for 
a market economy.

Hitoshi Matsuda, deputy general manager of the Mitsui & Co. Ltd. office in 
Canton, the capital of Guangdong, said reform could take "two or three" 
possibile directions in coming years.

"The worst case would be a repeat of the Tiananmen Square massacre in 1989. 
This is not a large possibility -- under 20 percent," he said.

"The second possibility is that all of China will become like the South. 
This is the biggest possibility," Matsuda added.

There also is a chance rampant inflation, fueled by an overheated economy, 
could derail reform as it did in 1989 and 1990. But Matsuda said, "I don't 
think this will happen."

Experience with market-oriented reforms allows China to restrain the 
boom-and-bust economic cycle that bedeviled the country in the 1980s, he 
said.

Zhang's dogged salesmanship at the Canton Trade Fair is just the type of 
initiative needed in China's industrial heartland.

Shashi is one of many industrial cities on the Yangtze River, which flows 
from near Shanghai through populous central China. The region is home to 350 
million people and accounts for 40 percent of China's industrial output.

Chinese heavy industry got its start near Shashi in the city of Wuhan during 
an economic modernization drive in the late 1800s. The newly established 
People's Republic of China later placed many of the 156 large factories 
built with Soviet help in inland cities, including those along the Yangtze, 
to lessen dependence on coastal cities.

The preponderance of huge factories tied to the central plan ensured that 
the state-directed economy, with its enervating "iron rice bowl" of 
guaranteed jobs and pay, dominated inland cities.

Lack of contact with Hong Kong and foreign businessmen for decades allowed 
socialist economic thinking to be accepted without contradiction.

The legacy is a morass of large, backward state-run enterprises piling up 
debts large enough to threaten the entire economy.

While the need to reform the inland economy is clear, so are the obstacles.

Communist leaders must stand behind the shift to a market economy even 
though it will weaken their hold on the levers of power during a potentially 
tumultuous period of succession, when 88-year-old Deng Xiaoping and other 
powerful Party elders leave the stage.

Inland leaders and businessmen must overcome decades of immersion in the 
planned economy.

And some new reforms might make change more difficult.

The Canton Trade Fair will scrap most centrally run exhibits next spring. 
Instead, provinces and municipalities will run their own exhibits, giving 
dynamic joint ventures and locally owned companies full scope to 
participate. The officials concede there is concern that well-developed 
coastal companies will dominate the fair and block attempts by inland firms 
to enter the international market.

But there are hopeful signs of change.

In June, Wuhan No. 2 Dyeing and Printing Factory became the first 
state-owned factory in China to sell a controlling interest to a foreign
company. It sold a 51 percent stake to Hongkong Hongtex Development Co.

And Hubei cities on the Yangtze have set up nine development zones that have 
attracted 86 foreign-funded enterprises.

Hong Kong conglomerate Wharf (Holdings) Ltd. is conducting feasibility 
studies for a "mega-containerization center" on the Yangtze in Wuhan.

Still, much of the chance for success rests on the shoulders of determined 
businessmen like Zhang.

And Zhang is ready -- looking forward to the next Canton Trade Fair.

"Next spring we want to be part of the Hubei delegation," he said. "Next 
year we'll have more commodities."

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3. Chronology of Economic Reforms in China .............................. 43
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Forwarded by: A CND Reader
Source: UPI, 11/22/92

1978 -- China embarks on ambitious program of reforms in foreign trade, 
        banking, enterprise management and rural development.

        Guangdong and Fujian provinces are given autonomy to develop 
        foreign trade.

1979 -- China formulates first Joint Venture Law, signaling its desire for 
        foreign capital and expertise.

1980 -- Shenzhen, Zhuhai, Shantou and Xiamen are granted Special Economic 
        Zone status, allowing these South China zones to grant preferential 
        treatment to foreign and domestic investors and traders.

1981-83 -- All prices for industrial products allowed to float in a 
        prescribed range. By 1983, a total of 510 commodity items are freed 
        from price controls.

        Most arable land is divided among peasant households which contract
        to grow crops for the state.

1985 -- The four specialized state banks are allowed to conduct business 
        outside their traditional areas of specialization. Non-bank 
        financial institutions are set up.

1986 -- Reacting to criticism of bureaucratic interference, China 
        promulgates rules giving foreign investors more flexibility.

        Tentative steps are taken to start stock markets in Shanghai and
        Shenzhen.

1987 -- China calls on coastal areas to go all-out for an export-led growth 
        strategy.

1988 -- Foreign trade system is decentralized from Beijing to provincial 
        governments and foreign trade corporations are required to be 
        financially independent.

1989 -- Sweeping economic retrenchment is carried out after rampant 
        inflation breaks out and the military cracks down on dissent.

1990 -- New laws allow foreign ownership and development of large tracts of 
        land.

        The People's Republic of China's first stock exchange is officially
        opened in Shanghai.

1991 -- The state announces removal of all export subsidies as part of an 
        effort to meet entry requirements for the General Agreement on
        Tariffs and Trade.

        The second official stock exchange is opened in Shenzhen.

1992 -- Trade authorities agree to publish and make freely available all 
        tariff rates, rules and regulations. Import tariffs are lowered on
        225 items.
     
        Only a handful of daily necessities, including cooking oil and 
        grain, remain under price controls.
     
        The 14th Communist Party Congress calls for implementation of a 
        "socialist market economy."

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