From: xc17@cicero.spc.uchicago.edu ()
Subject: CND-Global, December 22, 1992
Keywords: CND-Global, December 22, 1992
Organization: U of Chicago, SSPPCC
Date: Wed, 23 Dec 1992 05:41:03 GMT
Summary: CND-Global, December 22, 1992
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NNTP-Posting-Host: sol.ctr.columbia.edu

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

                                (News Global)

                          Tuesday, December 22, 1992


Table of Contents                                                 # of Lines
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1. News Brief (5 Items) ................................................. 44
2. U.S. Senator Boren Suggests "Sophisticated" China Policy ............. 42
3. Paths of Mitsubishi into China ....................................... 62
4. YiHe (Jardine) Targeted in Sino-Britain Tug-of-War ................... 51
============================================================================

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1. News Brief (5 Items) ................................................. 44
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[DPA, 12/21/1992] BEIJING -- A Chinese "Long March" carrier rocket lifted
off successfully from the Xichang space center in Sichuan province Monday to
launch an Australian communications satellite, China's official Xinhua news
agency reported.  The launch of the "Optus B-2" satellite follows that of
the "Optus-B-1" last August, five months after an unsuccessful launch of the
carrier rocket.  Monday's launch is part of a deal signed four years ago by
China's Great Wall Industrial Corporation and the Hughes Aircraft
Corporation.  (Forwarded by: Wenfeng)
                                ___ ___ ___

[AFP, 12/18/1992] -- Hong Kong's two leading banks will issue New Year's Day
new banknotes relecting the run-up to China's takeover in 1997, the banks
said. The two note-issuing banks, Hongkong and Shanghai Banking Corp.
(HSBC) and Standard Chartered Bank, will begin 1993 with a new series of
banknotes, following the government's introduction of new coins without the
portrait of Britain's Queen Elizabeth. The Royal Coat of Arms which has
graced the British colony's notes for the past 127 years will be replaced by
the head of a lion -- the HSBC's symbol -- on its notes, while the bauhinia,
the flower for the post-1997 Hong Kong government, will appear on Standard
Chartered Bank's notes. HSBC's has two denominations, 50 and 500 Hong Kong
dollars, while Standard Chartered issues banknotes of 10 dollars and 100
dollars. (Forwarded by: Tina Tong <skn1@cunixf.cc.columbia.edu>)
                                ___ ___ ___

[AP-DJ, 12/21/1992] HONG KONG -- Chinese B-shares ended slightly lower Mon-
day, with both Shanghai and Shenzhen issues sliding. The Standard Chartered
Securities Shanghai B-Shares Index shed 0.31 point to 67.59, while the
firm's Shenzhen B-Share Index sank 1.28 points to 101.17. Samson Chau, a
broker at Credit Lyonnais Securities (Asia) Ltd., attributed the bourses'
slide to investors' selling ahead of the Christmas season, which starts Fri-
day. (Forwarded by: Huijie)
                                ___ ___ ___

[USAToday, 12/21/1992] -- China's Business Weekly newspaper reported Sunday
the country expects to open its first oil futures market in March. The news-
paper, published by China Daily, said the market will allow trading in im-
ported oil and would be set up in Nanjing. Earlier reports refused to con-
firm a starting date or whether import trading would be allowed.
(Forwarded by: A CND Reader )
                                ___ ___ ___

[USAToday, 12/21/1992] -- General Electric Co. and the Shenzhen Energy Corp.
have agreed to sell a $23 million GE system in China. The gas turbine elect-
ricity system represents the company's biggest GE contract. The turbine has
an output of 300 megawatts per year. Department of Commerce sources report
that the sale was approved a month earlier, but the sale was delayed to al-
low the Commerce Secretary to attend. (Forwarded by: A CND Reader)

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2. U.S. Senator Boren Suggests "Sophisticated" China Policy ............. 42
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Forwarded by: Zhao Hua
Source: AP, 12/18/1992

The Clinton administration risks a foreign policy disaster if it doesn't
adopt a more sophisticated approach toward China than it displayed during
the presidential campaign, a leading congressional ally says.

"If relations sour, there is the potential for a new Cold War and superpower
confrontation," Sen. David Boren said in an interview Thursday.

The Oklahoma Democrat, just back from a 10-day trip that included stops in
China, Pakistan, India, Israel, Syria and Somalia, said he was impressed by
the rapid economic growth in the world's most populous nation.

"I came back convinced that there is no more important relationship as we
look toward the next century," said Boren, who is completing a six-year
tenure as chairman of the Senate Intelligence Committee.

At his economic conference in Little Rock, Ark., this week, the president-
elect said he was "very happy" with the growth in China's markets and called
for a more cautious policy toward Beijing.

Boren said such a view will be essential.

"The opportunities (are there) to link our own development strategy to the
growing Chinese market," he said. "We are fueling China's economic growth.
We should be able to let China fuel our growth as well."

This year's U.S. trade deficit with China is expected to reach $18 billion,
second only to the deficit with Japan.

A heavy-handed approach such as the one Democrats pushed for just a few
months ago could be disastrous, Boren suggested. "There are enormous dangers
to a bad relationship with China," both economically and in the area of na-
tional security, he said.

When Democrats pushed for slapping conditions on most-favored-nation status,
"everybody knew that wouldn't become law" because Bush would veto it, Boren
said.

Now, he said, the United States needs "a whole range of different ways in
which we can relate" rather than having "an all-or-nothing policy where you
either go off the cliff or stand on the edge and look over."

In meetings with senior Chinese officials, Boren advised them that U.S. in-
telligence will be closely watching China's trade in weapons. A Boren aide
said the senator told officials that Beijing could send an important and
welcome message to the new administration by curbing its activities.

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3. Paths of Mitsubishi into China ....................................... 62
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Forwarded by: Liu Jian
Source: AP-DJ, 12/20/1992

TOKYO -- Mitsubishi Corp. is widening its involvement in China through a
multi-pronged approach that reflects its diverse core of business interests.
In the northeast province of Liaoning, Japan's most profitable trading house
plans participation in two gigantic projects - construction of a 15-billion-
yen industrial park and a 500-billion-yen oil refining and petrochemical
complex. New plants in Shanghai and southern China will soon churn out
consumer goods. And Mitsubishi's trading business also is profiting by
channeling goods and raw material in and out of the country on the back of
increased investment by other foreign companies.

"By the year 2000, our investment in China will be five times more than what
we have there now, and by 1995, we will put in at least twice of what we
have," said Masahisa Koyama, assistant manager of Mitsubishi's China divi-
sion in Tokyo. The company's operating income from China will grow 10-20%
annually.

Mitsubishi says its current China holdings are worth 55.7 billion yen. The
company, with total assets of more than 10 trillion yen, has far more in-
vested in Japan and other parts of the globe, but economic activity in most
of those places looks downright sluggish compared with high-growth China.

"What they are doing is playing the role of a venture capitalist - putting
money in various deals that in one way or another contributes to their core
business," observed Akira Sato, an analyst at Nomura Securities Co.

The China infiltration comes at a time of droping profits for the Japanese
trading houses because of weakness in the domestic economy. Mitsubishi's net
profit declined 43% to 12.69 billion yen for the six months ended Sept. 30,
on the back of a 19% drop in net income for fiscal 1992.

Analysts say the moves also jibe well with Chinese efforts to jumpstart in-
dustrial development in its northeast and open up more areas for oil ex-
ploration.

"With China's economy growing at its current pace, energy demand will be
substantial," said Mitsubishi's Koyama.

After more than a decade of exporting heavy equipment and machinery to main-
land China and in turn shipping out crude oil, textiles, silk and other raw
materials, the group has also branched into manufacturing and processing.
The company already has about 30 manufacturing joint ventures in the main-
land, plus the interests in its more traditional trading, leasing,

"We're mainly using China's cheap labor now to make our products more com-
petitive in Japan," said Ryuji Sato, deputy general manager at Mitsubishi's
Hong Kong office. "But in the long term, we'd like to sell the goods to the
China market."

The recent surge in investment by Japanese companies - many from small- to
medium-sized companies - in China also benefits Mitsubishi as these com-
panies will need trading houses to channel their products to customers from
the source or vice versa.

Japanese investment in China gained 2.5% to 830 million dlrs in this year's
first half from the same period a year ago, according to the Chinese embassy
in Tokyo.

"What they are doing in China is extremely wise," noted Nomura's Sato,
referring to Mitsubishi's overall diversification move. "They realize income
generated from being a mere middleman is going to diminish in the years to
come so they are laying out the groundwork for the future."

Added Jason James, a strategist at James Capel Pacific Ltd. in Tokyo, "By
extending their business base in China now, they can be assured of a firm
grasp on the market."

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4. YiHe (Jardine) Targeted in Sino-Britain Tug-of-War ................... 51
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Forwarded by: Jian Liu
Source: AP-DJ, 12/18, 12/20/1992

HONG KONG -- China couldn't have selected a symbolically more fitting target
for attack than Jardine Matheson Holdings Ltd.(Chinese name: YiHe), one of
the colony's oldest and largest conglomerates.

Jardine shares a long, acrimonious history with China stretching back to the
days of opium trade and, later, the seizure of its assets in Shanghai when
the Communists came to power in 1949. Its shift of domicile to Bermuda in
1984 was viewed as a vote of no-confidence in Kong's future. It also lobbied
behind the scenes for Patten's appointment as governor and in support of his
reforms here and in London, according to Hong Kong analysts and businessmen.

Symbols aside, China's criticism represents yet another attempt to step up
the pressure on Patten by leaning on the business community. And while busi-
nessmen hope this is an isolated case, the message to other companies is
clear. With the warning to either stay out of politics or take Beijing's
side, corporate Hong Kong increasingly is being forced to choose between its
current and future masters.

China's official Xinhua news agency last week ran a harshly worded commenta-
ry criticizing Jardine for conspiring with Patten over his plan. Although
Xinhua didn't name the group, it made the identity clear by referring to an
old British conglomerate that sold opium to China. The commentary sent the
stock market plunging 2.57% to 5192.66 Friday, with Jardine shares tumbling
6% to 42.75 HK dlrs.

The attack on Jardine reflects what is fast becoming a pattern in Beijing's
attempts to manipulate local sentiment against Patten. What remains unclear
is how far Beijing is willing to pursue such a pattern. Some Chinese offi-
cials believe Beijing's stance on Hong Kong has been set directly by Deng
Xiaoping. They say that, if necessary, Beijing wouldn't hesitate to bet Hong
Kong's prosperity in exchange for political stability and nationalist pride.

Even if China is bluffing, its attacks are hitting Hong Kong in its most
vulnerable spot. Since the row with Patten began to escalate in November,
the local stock market has fallen 19%. "First it was Britain, then Hong
Kong, then Patten, now it's big business in Hong Kong," says James Osborn, a
director at Baring Securities. By targeting Jardine, China also ensures it
is hitting out at a company with excellent connections in London.

Although the Xinhua commentary didn't list any concrete measures to be taken
against Jardine, sources close to Chinese officials say companies that sided
with Patten could find it difficult to do business in China or to win con-
tracts in Hong Kong in the future. According to an agreement with Britain,
China is to be consulted on the awarding of contracts that straddle 1997.

Jardine, for example, could see its China-related businesses affected. Its
involvement in a shipping-terminal project valued at as much as 12 billion
HK dlrs could also be threatened. Angered that it wasn't consulted on the
contract award for that project, China already said last month it might not
honor contracts for projects after 1997.

"I think Jardine should be concerned will it have a footing in Hong Kong at
all," says a Hong Kong fund manager. "Can it expand as it wants? These days
companies are looking to China for future development, but the Xinhua state-
ment probably rules out any meaningful development there."

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