From: xc17@cicero.spc.uchicago.edu ()
Subject: CND-US, Year-End Special, December 23, 1992
Keywords: CND-US, Year-End Special, December 23, 1992
Organization: U of Chicago, SSPPCC
Date: Wed, 23 Dec 1992 05:43:46 GMT
Summary: CND-US, Year-End Special, December 23, 1992
X-Posted-From: cicero.spc.uchicago.edu
NNTP-Posting-Host: sol.ctr.columbia.edu


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

                               (US Regional)

                              Year-End Special
                        Wednesday, December 23, 1992

    CND-US Stuff Wish Our Readers A Merry Christmas and A Happy New Year

+--------------------------------------------------------------------------+
| CND-US, normally 1 or 2 issues a week, is a supplement to CND-Global and |
| has  basically no overlap with the daily news.  CND-US provides in-depth |
| information concerning Chinese students/scholars in the United States.   |
+--------------------------------------------------------------------------+

Table of Contents                                                 # of Lines
============================================================================
1. News Brief (2 Items) ................................................. 23
2. The Titan Stirs - the Chinese Economy ............................... 242
3. A Dream Holiday in China - Travel Stories by a CND Reader (5) ....... 140
============================================================================

----------------------------------------------------------------------------
1. News Brief (2 Items) ................................................. 23
----------------------------------------------------------------------------

[Digital Today, 12/14/1992] BEIJING -- Digital Equipment Corp.  recently
opened its new, 15,000 sq. foot Beijing headquarters in the New Century
Hotel complex.  It also announced that it has appointed individual district
managers to head its offices in Beijing, Shanghai, and Guangdong.  Digital
has been a major investor in China for more than 10 years.  In addition to
its three sales offices in China, Digital operates service centers, training
centers, a software development joint venture with Taiji Computer
Corporation, and an MRP II Class A manufacturing plant in Shenzhen.
(Forwarded by: Charles Mok)
                               ___  ___  ___

The Department of Computer Science of The Hong Kong University of Science
and Technology will have 8 faculty positions open at all levels for the
1993-94 academic year.  The dept. has active research groups in the areas of
artificial intelligence, data and knowledge management, software
engineering, computer engineering, and theoretical computer science.  New
faculty are sought for with research interests in these areas as well as
computer graphics, human-computer interaction and other research areas.
Applications/nominations should be sent with a curriculum vitae together
with names of at least three references to: Prof. V. Y. Shen, Head,
Department of Computer Science, The HK Uni. of Science & Technology, Clear
Water Bay, Kowloon, Hong Kong, Fax No.: (852) 358-1477, E-mail:
<shen@uxmail.ust.hk> (Forwarded by: Charles Mok)

----------------------------------------------------------------------------
2. The Titan Stirs - the Chinese Economy ............................... 242
----------------------------------------------------------------------------
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 authoritarians 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 11/28/1992

----------------------------------------------------------------------------
3. A Dream Holiday in China - Travel Stories by a CND Reader (5) ....... 140
----------------------------------------------------------------------------
Forwarded by: Kangmei Wang
Written by: A. Qu (psp1wl@central.surrey.ac.uk)
Abridged and edited by CND-EP

BOTTOMS UP (GAN BEI) WHEN THE RED CURTAIN DREW UP

On the evening of the day when the red curtain of the long-awaited 14th
Congress of CCP drew up, I was at a dinner table, accompanied by a dozen of
officials, clinking our glasses. It was not a celebration to the party
congress. They were entertaining a potential "foreign investor". I
enjoyed the feast : river crabs, turtle soup, steamed fish etc. During the
dinner, I was told that their unit alone would spend about 200,000 yuan on
the dinner table. Most business was settled over the dinner table, not in
the conference room. I truly had a feeling that if you wanted to be somewhat
successful in business or other aspects, you had to smoke, drink and even
play majiang. My eldest brother is the headmaster of my former school. He
does not like smoking. But in order to be sociable, he carries cigarettes
with him and smokes when necessary. I had always hated smoking. However, my
brother almost silently changed my attitude. During a visit to my former
school, my brother gave me a packet of cigarettes and asked me to give them
to the teachers. From then on, I was picking up smoking and wherever I went,
I carried a packet of cigarettes. I gradually felt the power of cigarettes. I
thought to myself, if I was ever going to do business in China, the first
thing I needed to learn was smoking, why not start from now? Some weeks
later, when I met with one of my closest friends, he praised my change of
attitude towards smoking.

To many, the 14th Party Congress was a signal for a large scale price rise.
But it did not come fortunately. A friend of mine, a professor in economics,
told me her views about the congress. The policies were good, but came too
late. The central government was not leading, but was rather lacking behind.
For example, limited companies appeared several years ago. They were
only affirmed now. Policies about stock exchange and private businesses
were still not clear. Many provincial or municipal government work in their
own ways, while at the grass-root level, things were even worse. It seems
to me, the party is firmly in control of their power, but losing control
over economics. You can do almost anything, except overthrowing the
government - that's my impression. People have fair freedom to do business.
Making money is no problem. Even party officials are encouraged towards (at
least not barred from) money-making in legal ways.

But who knows. Time is money, and power means more money. One of my school
mates is now a village party leader. He is also the chief manager of the
village enterprises. He has a car for his personal use and a motorcycle of
his own (it is very difficult in Shanghai to get a private vehicle license).
One day, he invited me and some other school mates for dinner at his home.
During the meal, one of us asked the host why we had not dined out
somewhere. He answered that it was "cleaner" at home and it was not too
expensive. He hinted that if we had dined out somewhere, the bill would be
paid by some other means. After dinner, we were planning to organize a
dinner on a larger scale for some later year. When I volunteered to foot the
bill, one of us pointed to my school mate and hinted that he could foot the
bill, but it would have to be before he gave up his post.

Another party official publicly advised me that it was good time to do
business in China. It is easier to make money out of the Communist Party's
pocket than a capitalist boss's. The key is tax-avoidance. A village factory
was in business for 4 years without profit. Is it true?  No. When the profit
margin is within some 3%, all the pre-paid tax can be reclaimed. So how do
they balance the books? The boss sets a target and then lets the accountants
meet it. After 4 years, it is no longer possible to cheat again. There is
another way, changing the company name. The same facility, the same
business, but it is now a joint venture with foreign investment - 2 years
tax free and 3 years at half tax. This gave me a good idea. If I should open
a business, I would have the first 5 years as a joint venture. Then I would
change the name and claim it as a hi-tech company which would have the same
benefit. In this way, I could have 10 years of easy life. Just to end, here
is another story for your eyes. An assistant town leader had a dog. In the
summer, he used an electric fan to cool the dog while playing the music of
"Go with Your Feeling". Unfortunately, the dog caught a cold. He asked
someone to take the dog to a hospital, and instructed a nurse to look after
the dog. When paying the bill, he filled in his name and naturally the cost
was met by the public medical fund.

TIAN'ANMEN SQUARE REVISITED

Before I came back to the UK, I spent 3 days in Beijing. The day when I
arrived in Beijing, it was cold and sleet was falling. I could not get a
taxi as I was only going to a place that was less than 1 km away. A man
in rain coat approached me and asked me if I wanted a tricycle. He knew my
destination already and offered a price of 10 yuan. I boarded his coach
which was covered with canvas with a tiny window through which you could
peek at the outside world. He peddled to the west through a narrow street
and then turned right at Chongwenmen Street towards the north. We passed
under the footbridge where the body of a soldier had been hung after the
June 4th military crack down. That reminded me my last terrifying trip to
Beijing on the very morning of June 4th to get my visa. I arrived from
Shanghai at about 10 o'clock. When I got out of the station, I found it was
absolutely deserted. I walked to the main street in front of the station. A
coach (Banche) came towards me at high speed and stopped suddenly in front
of me. "Where do you want to go?", the man asked. "Mashenmiao", I said. "40
yuan", he offered without thinking. It was certainly too expensive to me.
But he explained "There has been shooting all night. Where else can you get
taxis or buses? Nowhere! I am risking my life."  On an earlier trip for an
interview in the British Embassy, I visited Tian'anmen Square and took some
pictures of the demonstrators. This time, I dared not go since I could hear
the gun fire at distance.

How was Tian'anmen Square now? It appeared the same as before. But I was eager
to have a walk and to refresh my memory of my last visit. The Square looked
clean everywhere. Not many visitors at this time of the year. The queue to
Chairman Mao's Memorial was not long, compared with the time when I
previously visited it. There was now no charge to see Chairman Mao, but
inside, no bags or cameras were allowed. There were about 10 baggage deposit
counters. The fees vary from 0.6 yuan to 2 yuan, depending on the item. It
is said that this business could make several thousand yuan a day. Then, of
course, there were the gift shops.

My second stop was Wangfujing which was as busy as before. Here and there, I
could see small booths or stands selling lottery tickets. Being a bookworm,
I spent a good hour in Wangfujing Bookstore. To my surprise, the price of
some of the hardback books were in the order of 50 yuan. I personally had
never seen books with such prices in China. Computer books are now very
popular. Among the other popular books were business management,
accounting, car repair, English, electric appliance repair etc. Mathematics,
physics and chemistry were no longer popular.

My last stop were the Asian Game Village and the adjacent National Olympic
Centre. I was very much impressed by its scale, architecture and modernness.
It was the most beautiful cluster of buildings I had ever seen in China. It
was certain that the city and the country benefited from the Game. I wish
the Olympic Game of Year 2000 could be held in Beijing so that it could
further improve Beijing's appearance.

EPILOGUE

Seeing is believing. My story can in no way replace a personal trip.
Therefore, if you have been away from China for some time, it is good time
now to go back and visit. The changes have been dramatic. Travel regulations
have also been simplified. For a short visit, no exit visa, no medical exam,
no blood test are needed (but as always, the policies change from time to
time. I heard that in middle of this year, a blood test was required). If you
should decide to go, we'll be waiting to hear from you next time.

Finally, I wish to thank the CND editors for accepting my stories and
polishing my poor English and Pinyin. I also wish to thank Kangmei Wang for
her forwarding the stories to CND. My appreciation also goes to the readers,
in particular those who have forwarded their favourable comments to me.

[Editor's Note: We extend our sincere appreciation and thanks to Andrew Qu
for writing such a good, objective and entertaining travel story. It has a
personal touch that most of Chinese students and scholars can relate to. CND
welcomes similar stories from our readers to share our experience]

+--------------------------------------------------------------------------+
|   Editor of This Issue: Zuofeng Li    Coordinating Editor: Bo Xiong      |
+--------------------------------------------------------------------------+
|  China News Digest (CND) offers the following services:                  |
|     (1) Global News (daily)        (2) US Regional News                  |
|     (3) Canada Regional News       (4) Europe & Pacific Regional News    |
|     (5) Hua Xia Wen Zhai (a weekly Chinese magazine)                     |
|     (6) several information packages.                                    |
|  To subscribe or get help, mail to:   cnd-help@library.uta.edu           |
|  Please send news contributions to:   cnd-editor@sdsc.edu                |
+--------------------------------------------------------------------------+