JPRS-CAR-89-104

23 OCTOBER 1989

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JPRS-CAR-89-104 CONTENTS 23 OCTOBER 1989

INTERNATIONAL

UNITED STATES

U.S. Tourists Visit Tiananmen Square [RENMIN RIBAO 21 Aug] x

NEAR EAST/SOUTH ASIA

Commentary on Mubarak Visit to U.S. [RENMIN RIBAO 7 Oct] ...

2

POLITICAL

Dissident Ren Wanding Reissues Article on Human Rights

[Hong Kong MING PAO YUE KAN No 280] •••••■■ 1.

Shortcomings of Official Title-Oriented System [XINHUA WENZHAI No 5] '

ECONOMIC

PROVINCIAL

Jiangxi Governor's Speech on Economy [JIANGXI RIBAO 5 Sep] 12

Shaanxi Meeting Stresses Price Control [Xian Radio] -

u

FOREIGN TRADE, INVESTMENT

Measures for Dealing With U.S. Antidumping Law [GUOJIMAOYI WENTI No 7-8] 21

New Approach to Improved Investment Climate [GUOJI SHANGBAO 26 Aug] lb

Examination of Issues in Export Agency System [GUOJI SHANGBAO 26 Aug] 28

CEIEC To Expand Electronics Trade [CHINA DAILY 2 Oct] ^

Dalian Exports Cargo Vessel to Belgium [XINHUA] •"""7r-"V;v;;^;Veuri' in Guangxi Called 'Major Channel' in Foreign Trade [ZHONGGUO XINWEN SHE] 30

Qinghai Exports Horsemeat [XINHUA] il

Shaanxi Attracts Foreign Funds [Xian Radio]

TRANSPORTATION

Harbin-Acheng Highway Opens to Traffic [Harbin Radio] 31

Shanghai-Huangshan Mountain Air Route Reopens [XINHUA] i\

Suburban Shanghai Completes Highway Network [XINHUA] i2- New Type of Bridge Constructed in Sichuan [XINHUA] il

AGRICULTURE

Henan Farmers Destroy Tobacco Crop [JINGJI CANKAO 17 Sep] 32

Agricultural Development Planned for Southern Hunan [JINGJI RIBAO 8 Aug] H

Hunan Subsidizes Grain Production [HUNAN RIBAO 17 Aug] 34

Rural Banks Promote Agricultural Investment [XINHUA RIBAO 5 Sep] •*->

SOCIAL

River Elegy Author Plans Sequel [Hong Kong MING PAO 28 Sep] 37
JPRS-CAR-89-104

23 OCTOBER 1989 2

MILITARY, PUBLIC SECURITY

Speculation on Future PLA Leadership, Direction [Hong Kong KUANG CHIAO CHING No 203] 38

Report on 'Red Army Regiment' [RENM1N RIBAO 25 Sep] 41

Military Unit Builds Hydroelectric Power Station [JIEFANGJUN BAO 5 Aug] 42

Commander Outlines Need for Rapid Reaction Ability [JIEFANGJUN BAO 5 Aug] 42

Institute Develops Antiriot Vehicle [KEJI RIBAO 29 Jul] 43

Jinan Military Unit Crime Rate Decreases [JIEFANGJUN BAO 3 Aug] 44

Fresh Water Supplied to Troops in Southern Islands ]JIEFANGJUN BAO I Aug] 44

Officers Placed in Hebei [HEBEI RIBAO 8 Jul] 44

REGIONAL

EAST REGION

Anhui Governor Addresses Forum on Enterprises [Hefei Radio] 45

Xiang Shouzhi Speaks on Study of Marxism [Nanjing Radio] 45

Jiangsu Governor Attends Meeting on Party Building [Nanjing Radio] 45

Shandong Troupe Stages Play About Confucius [XINHUA] 46

CENTRAL-SOUTH REGION

Guangdong Finances Public Security With Levies, Fees [RENMIN GONGAN BAO 22 Aug] 46

Model for Restructuring Hainan Provincial Government [LINDAO KEXUE No 5] 48

SOUTHWEST REGION

Yunnan Publicizes Offices for Reporting Government Corruption [YUNNAN RIBAO 21 Jul] 49

TAIWAN

DPP Faces Intraparty Power Struggle [Hong Kong CHIUSHIH NIENTAI No 234] 52

KMT Election Tension Leads To Unrest, Withdrawal Threats [TZULI WANPAO 15 Aug] 54

DPP Suggests 'IQ Test' for Aging Assemblymen [TZULI WANPAO 10 Aug] 55

Schools Seen as Factor in Juvenile Delinquency [TZULI WANPAO 14 Aug] 55

HONG KONG, MACAO

Acting Governor Interviewed on Hong Kong Situation [MING PAO 29 Aug] 58
JPRS-CAR-89-104

23 October 1989 INTERNATIONAL

UNITED STATES

U.S. Tourists Visit Tiananmen Square

40050666b Beijing RENM1N RIBAO in Chinese

21 Aug89p4

[Article by Chen Xian 7115 0341, Su Jinghua 5685 2529

5478, reprinted from BEIJING RIBAO: "What They

See—An Objective Report of a 'See Tiananmen Square

Yourself Touring Party From the United States of

America"]

[Text] At noon on the 12th, under the bright sunlight,

Tiananmen Square looked even hotter than it was. The

hundred U.S. tourists of the "See Tiananmen Square

Yourself tour group came here happily with small

buttons on their chests saying "Invited To Tour China."

As soon as they got off the bus, the tourists were amazed

by the scene in front of them. The Tiananmen Rostrum

was set off by the blue sky, white clouds, green trees, and

red walls. Many of them immediately took out their

cameras and set up their tripods...

An old American whose hair already turned white looked

exceptionally special. He didn't laugh with the crowd,

but checked around the National Hero Monument as if

looking for something.

It is not surprising that during the past a few months

Tiananmen Square had become the center of the unbridled exaggerations of some Western news media and

brought a heavy shadow upon the tourists. It is understandable how eager they are to verify the truth for

themselves.

We walked up to the old man and started talking with

him. The old man said honestly, "Oh, this does not look

like what I heard about." This retired steelworker came

to Beijing in the winter of 1981 and saw Tiananmen

Square then. After the incident occurred in Beijing this

year, the old man became more concerned about Tiananmen. After 1 day ofsightseeing he already had some idea.

He said, "Before coming to China, many people said that

one may run into trouble if one goes to China at this

moment. I came, but did not have any problems. It is

quite normal and very peaceful."

We again randomly interviewed more than 10 other

tourists and learned that most of them had the same

feeling as the old man did. The five members of the

Walter Connie family from northern New York had a

good time. They were very curious about the largest

square in the world. When the father, who is a professor,

wandered around the square tirelessly, with his 9-

year-old daughter on his shoulder, he told us that his

family had always wanted to come to China, but was

worried about the safety. After noticing an advertisement from Guohua Vacation Travel Service about this

tour and its guarantee of safety in THE NEW YORK

TIMES, the whole family decided to join the tour

immediately. On the way to China they felt safe and

calm.

The young people among the tourists were more excited.

One American young man dramatically stretched out his

right arm, pointing to Tiananmen Rostrum while saying,

"This is Tiananmen!" His companion's camera captured

this moment for him.

Mr Peter Fafenlos of New Jersey had some difficulty

walking, but like the others, he wandered around the

square as well. He has a farmland development and

design job.

"How do you feel about Beijing?" asked a few reporters.

He naturally shrugged his shoulders and said, "It is my

first visit to China. Beijing impresses me as a large city.

It is surprisingly clean for such a large city. And the

people in Beijing are very friendly to us. Wherever we go,

many people talked with us without any hesitation. I am

very happy. I love this city."

While talking, he kindly handed out as souvenirs to the

people around a few buttons with the symbol ofthe state

of New Jersey.

Finishing the interview with Mr Fafenlos, we again

started talking with an old man in a black T-shirt with a

sun visor on his head. He is a retiree of a publishing

agency in the United States and currently lives in

Boston. For this old man, coming to Beijing indeed

required some courage. He told us, "Before coming, my

ears were full of advice not to go, but I insisted on going.

Until the last minute, the state government agreed to let

us go. Some propaganda machines always make counterpropaganda. Today I arrived in Beijing and saw the

peaceful life here. People have beautiful clothes and

smiles on their faces. It doesn't look like anything bad

happened here before. It tells me that it is the most

realistic if I see by my eyes."

A yellow-skinned man and woman seemed to be discussing something.

"I am in the transportation business. Some time ago I

heard a lot of propaganda about the turmoil in China

which made normal exchange impossible. I was really

confused about what was happening. It is very good to

have a chance to see for myself this time. My hesitation

is gone. I will bring the message back and tell people that

they may feel free to come to China for vacations or

business." The female tourist beat the male tourist to

telling us first about her feelings.

A male tourist with a small cap said even more deeply,

"To know China, it is necessary to give people an

opportunity. Slowly, people will see clearly. We honestly

hope the China's cause can flourish."

We were deeply touched by their words.
INTERNATIONAL

JPRS-CAR-89-104

23 October 1989

NEAR EAST/SOUTH ASIA

Commentary on Mubarak Visit to U.S.

HK1210084289 Beijing RENMIN RIBAO in Chinese

7 Oct 89 p 3

[Article in "International Outlook" column by staff

reporter Lin Jiaoming 2651 4109 2494: "Mubarak

Revisits the White House"]

[Text] On 2 October, as Egyptian President Muhammad

Husni Mubarak shook hands with President George

Bush in the White House for the second time, the climate

in the Middle East was not as cold as it had been 6

months ago when they met for the first time.

When Mubarak visited the United States this spring, he

"did not bring any concrete plan," but explained the

Arabian position and principles regarding the peace

talks. The United States invited the leaders of the three

countries—Egypt, Israel, and the Palestinian state—to

the White House for talks, listened carefully, spoke very

little, and acted with prudence. In the White House's

Rose Garden, Bush responded with only a 4-point proposal, which included nothing more than ending Israeli

occupation, "exchanging land for peace," realization of

the political rights of the Palestinian people, and protecting the safety of Israel. However, regarding the

problem of how to get started in solving the problem of

the Middle East, no decision was made.

Six months elapsed, and Mubarak revisited the White

House, with a very clear goal for talks: The peace process

in the Middle East at this moment must begin with a

direct Palestinian-Israeli dialogue. The 10-point "implementation plan" proposed by Egypt in response to

Shamir's election plan was precisely one which

demanded that "first, both the Israeli side and Palestinian side sit down at the dialogue table."

President Mubarak reminded people that "a dialogue is

not a negotiation; there is a big difference between

them." A dialogue involves no preconditions; one should

discuss first and see what is needed later. He disclosed

that the issues he had discussed with Bush were "promised" by Yasir 'Arafat, chairman of the Palestine Liberation Organization [PLO], and that the list of members

ofthe Palestinian delegation he carried was "also agreed

to by 'Arafat" and they "are not members of the PLO."

It seems that the Bush administration should not have

any objections to actively promoting a direct Palestinian-Israeli dialogue as urged by the Egyptian president

based on the constructive stand adopted by Egypt and

Palestine.

In fact, the U.S. Government has time and again

expressed consent to the Egyptian plan, stressing, however, that the dialogue must lead to the eventual implementation of Shamir's election plan. Its rhetoric still

opposes convening now an international conference on

peace in the Middle East. The common point of the

stand ofthe United States and of Egypt is that both want

to see that a channel for direct Palestinian-Israeli dialogue is first opened.

The current political situation in the Middle East has

become active because discussions have been underway

in the Arabic world, with Egypt acting as the initiator.

Some expressed support, some waited and observed, and

some still held a skeptical attitude, but Chairman 'Arafat, as a party directly involved in the conflict, said in

Tokyo that the result of talks between Mubarak and

Bush in Washington was "very positive."

The international community has attached great importance to the intermediary function played by Egypt.

Soviet Foreign Minister Eduard Shevardnadze said the

Soviet Union would support talks between Israel and

Palestine when he met Israeli Foreign Minister Moshe

Arens, and urged Arens to take part in direct dialogue

with the PLO. At the same time, Shevardnadze has

recently written to Chairman 'Arafat, saying that

without the PLO in the negotiations, it would be impossible to reach a plan for solving the Middle East problem.

The position of the West European nations urging talks

on peace in the Middle East has been clear, and they

generally attached importance to the mediation by a big

Arabic country like Egypt.

After Egypt and the United States finished their talks in

Washington, Secretary of State James Baker said something interesting: "The peace process in the Middle East

now depends on the result of meetings of the Israeli

cabinet; ifthe Likud bloc and Israel's Labor Party cannot

reach consensus on the Egyptian plan, we can only start

all over again." According to analysis, his words have

two meanings, one of which is what has been alleged by

the press in the West, that "the United States is exerting

pressure on Israel" and "urging Israel to agree to a direct

Palestinian-Israeli dialogue." This might be true. Bush

said in February 1989 that the United States hoped that

the parties concerned in the Middle East "adopt measures first," implying that the United States would not

easily step onto the stage. The Egyptian plan provided an

"opportunity for a breakthrough," which was already

noted by THE WASHINGTON POST. No one can

ignore the other meaning; that is, if the Israeli cabinet

accepts direct dialogue, it will have to shoulder the

serious consequence of a breach within it, and it would

be better to play for time. This apparently is to provide

Israel with a way out and with room to maneuver.

Within the Israeli cabinet, the Likud bloc and the Labor

Party now face the critical decision of whether to accept

a direct Palestinian-Israeli dialogue. National Defense

Minister Yitzhaq Rabin, who has been looked upon by

the United States and Egypt as an important figure, has

been described as a person who is "more flexible than

Shamir and tougher than Peres." The fact that Rabin

could go to Cairo to discuss the dialogue problem with

Mubarak has indicated that something has been going on

within the Israeli cabinet. Shamir, in order to back off

from the stand of opposing direct dialogue, has proposed
ESStJÄS04

23 October 1989 INTERNATIONAL

must tested overall by ,he Palestinian side. It seems log«, or follow Baker's old «ay; that ,s, delaying.
POLITICAL

JPRS-CAR-89-104

23 October 1989

Dissident Ren Wanding Reissues Article on

Human Rights

40050506a Hong Kong MING PAO YUE KAN [MING

PAO MONTHLY] in Chinese No 280, Apr 89 pp 14-16

[Article by Ren Wanding 0117 3979 3957: "The Practical Meaning of the Slogans of Human Rights and

Equality—Marking the 10th Anniversary of the Beijing

Democracy Wall"]

[Text] Mr Ren Wanding, who organized the Human

Rights Alliance and published a 19-point "human rights

declaration" in Beijing in 1978, played an important role

in the democratic movement at that time. But he was

arrested in March 1979 and sentenced to 4 years in prison.

After his release from prison, he kept his silence until

recently, when he became active again.

Note by the writer: China's democratic and social reform

movement started with the Beijing Democracy Wall in

1978. The movement continued until 1981.

The Democracy Wall opened a new chapter in China's

political history, ideology, and culture. Because of press

censorship and publishing difficulties, the Democracy

Wall theories have never been fully known and studied

by the people of China and the world. Those theories

undoubtedly occupy a dominating position in the field of

social science of contemporary China. Some of the

theories are outstanding even by today's standard.

The article, "The Theoretical and Historical Bases ofthe

Democratic Movement," published in the third issue of

ZHONGGUO RENCHUAN [HUMAN RIGHTS IN

CHINA] was representative of the Democracy Wall

movement.

The movement produced the Human Rights Declaration

of China and a human rights organization. The declaration may be brief and the organization may be small and

weak, but, in the entire movement, they came closest to

taking on the forms of a program and a mass organization. The fact that both the declaration and the organization were named human rights was not ignored by the

world, nor by the 6 August student strike. The human

rights movement directed the entire tide of the Democracy Wall. It was the strongest voice of the Democracy

Wall movement.

Sixty years after the inception of the human rights

movement (1919-1979), demands for human rights and

democracy rose to occupy first place in the people's

movement. It was a new milestone in the political

awakening of the Chinese people.

In the past decade, this movement has forced official

political circles and academic circles to retreat again and

again and finally to accept the new idea of socialist

human rights.

On the occasion of the 10th anniversary of the Democracy Wall, I am offering to readers, through MING PAO

YUE KAN, an article about human rights, which I wrote

10 years ago in prison.

20 March 1989, Beijing

The course of history in the 7 short months since I was

arrested as an active counterrevolutionary on 4 April this

year (1979) has shown again and again not only the

profound and extensive practicality and rationality of

human rights as a revolutionary democratic slogan, but

the revolutionary inspirational value of human rights as

a new meaning that history has given to socialism.

It was totally unexpected that the publication of the

Human Rights Declaration (revised on 17 January 1979)

would attract so much attention from the entire society,

the media at home and abroad, and government authorities.

The HONG QI journal, organ of the CPC Central

Committee; ZHONGGUO QINGNIAN BAO, organ of

the CYL [Communist Youth League] Central Committee; BEIJING RIBAO, organ of the Beijing Municipal CPC Committee; and GUANGMING RIBAO and

RENMIN RIBAO have all published and reprinted each

other's articles criticizing the human rights slogan. The

state security organs have done a lot of work. The

authors of the Human Rights Declaration and the

leading members of the alliance have been arrested and

put in prison.

All this shows that the new consciousness of human

rights has been generally recognized as a social consciousness, and that the force of human rights (people's

rights) has been recognized as a social force. This is the

force of history.

What is wrong with the Human Rights Declaration? Like

people's movements of the past, the Human Rights

Declaration has in various ways pushed forward and

influenced the country's political, spiritual, and economic lives since the 3d Plenary Session ofthe 11th CPC

Central Committee. Of course, it has also directly influenced the legislative preparations and results of the

Second Session of the Fifth NPC [National People's

Congress].

The charter movement of the 20th century has achieved

its intended goals.

The Electoral Law, which had been abolished, has been

promulgated anew and revised; various government

financial and economic targets have been made public;

the role of the democratic parties in the NPC has been

strengthened; organs of power and administrative organs

at the local level have been separated; legislative preparations are being made for the autonomy of minority

nationalities; the charging of "ideological offenders" as

criminals is criticized; the profit system is being

reformed again; job opportunities and welfare have been

improved for citizens; Sino-Soviet talks have resumed;
JPRS-CAR-89-104

23 October 1989 POLITICAL

doors have been opened to advanced industrial nations;

an initial appraisal has been made of the period from

1957 through the Cultural Revolution; the personality

cult has been further criticized; socialist state ownership

in agriculture has been abolished; many theoretical and

academic forbidden zones have been broken through;

and so on.

In September last year, equality, that is, human rights, as

a slogan in the movement to emancipate the mind,

finally attained the lofty place it deserves. It appeared in

the National Day slogans on the 30th anniversary of the

founding of the People's Republic of China. And this

slogan was published by none other than the CPC

Central Committee.

Some newspapers and magazines criticize the slogan of

human rights for not being a proletarian slogan, but why

don't they criticize the same type of bourgeois slogans,

"everyone is equal before the truth" and "everyone is

equal before the law," which appeared among the

National Day slogans?

What is equality? "To put it in a nutshell, equality means

bourgeois equality before the law." (Frederick Engels,

Anti-Duhring)

What are human rights? "The rights of man are his rights

to freedom and equality." (Anti-Duhring) Not only are

the rights of man declared to be bourgeois rights, but

they are naturally declared as rights to freedom and

equality. {Anti-Duhring)

"Equality" is one of the most important human rights.

The bourgeoisie frequently expresses its demands for

freedom and equality in a concentrated way as a human

rights program.

It is not hard to see that the demand for equality is a

demand for human rights, and that a demand for human

rights includes the demand for equality. The two are like

son and father, and also like full brothers.

Marxism holds that these two slogans have been of great

value and very inspirational to the proletariat in socialist

movements in all countries since the French Revolution.

The demand for people's rights in China's Declaration of

Human Rights is a demand for equality, but the unfairness is that the slogan of human rights has not obtained

the same legitimate status as the slogan of equality. And

that is not all. We are arrested and prosecuted for

advocating the human rights program. This has made a

stinging mockery of the current slogan that everyone is

equal before the truth and the law. It proves again that

the lack of legal protection for citizens' democratic

rights, the existence ofspecial privileges, and the rule by

man and not by law remain serious problems in China.

All this is directly related to the fact that our legal system

has been and still is incomplete and fragmentary.

China's state apparatus is a completely new apparatus

built after the destruction ofthe old one. The builders of

the apparatus are directly responsible for its normal

operation.

However, because there are major shortcomings in

China's social, state, and party systems, it is inevitable

that these systems often fall back into the beaten track of

the old systems and become seriously repetitive and

conventional.

Over the years, the democratic centralism of the party

and state has been almost totally destroyed; the NPC has

been dissolved at will; the president of the state was

dismissed at the word of one person; the Constitution

became a mere scrap of paper; the armed forces took

control of everything; NPC sessions were held in secret;

the CPPCC [Chinese People's Political Consultative

Conference] was abolished; and, up to the time of the

Fifth NPC in 1978, the most fundamental right of

citizens—the right to vote—was given no respect.

This is enough. It certainly is not the way a socialist

system should be under the dictatorship of the proletariat. Instead, it is a feudalistic small producers' patriarchal system, which runs entirely counter to the principles of a new proletarian political power. It is not the

wrongdoing of a few persons, but the responsibility ofthe

whole party.

The above-mentioned historical retrogression is sufficient proof that our systems are fragmentary and incomplete, not just imperfect and immature. If the party is

afraid to admit this, then it is not a party on the side of

truth.

It has been borne out by all progressions from an old

system to a new one in history and also by the bitter

lessons ofthe decade of domestic turmoil that a fragmentary and incomplete system can lead to the collapse of

the new and restoration ofthe old. It is also what usually

happens when great men choose to block and disrupt the

course of history.

As far as today's Democracy Wall movement is concerned, this kind of disruption and retrogression have

made it inevitable for the current movement to emancipate the mind to take on a democratic character. This

character is reflected and manifest not only in mass

movements, but in the party's decision on National Day

slogans.

The masses have long been dissatisfied with the limited,

indirect, and veiled theoretical discussions on the "criterion of truth." Even the party is dissatisfied with this

form of discussion and has bluntly called for the slogan

of "equality."

The masses have resorted to the programmatic weapon

which is even more effective in expressing the historical

trend and public will. The slogan of "human rights" was

reborn at this historical moment. Isn't "rights of the

people" the newest and most comprehensive meaning of
POLITICAL

JPRS-CAR-89-104

23 October 1989

"human rights"? Human rights have gained a new form

not only in words but also in substance.

The old slogan has been reformed.

The power of the "human rights" slogan lies deep in the

hearts of the people.

The loss ofthe people's democratic rights in many places

is both the end result and the root cause.

Opposition to an individual means counterrevolution.

How many years has China been dominated by this

retrogressive rule, which has strangled truth, progress,

and the people? Even in formal documents around the

time of the 11th National CPC Congress and the Fifth

NPC, this erroneous rule was still being reaffirmed

repeatedly. Many "criminals in thought and speech" and

people wrongly sentenced as counterrevolutionaries are

still in prison. The people and cadres are still tightly

controlled in their way of thinking by the divine and

monarchical authority.

To those who say that today's revival of the slogan of

human rights, as an an idea of bourgeois enlightenment,

is a historical mistake, I say you can put it better as an

invitation extended with love by the evil gods of feudalism and special privileges to Miss Enlightenment in

the 20th century, the era of electronic information.

A backward economy generates backward thinking. The

chopped-up history should be reconnected.

The slogan of human rights has demonstrated its tremendous practical significance in pushing forward the discussion on the "criterion of truth" and in emancipating

the cadres' minds. The slogan of human rights is worthy

ofthe revolutionary, rational, and active character ofthe

times.

The Xidan Democracy Wall is a new atheist movement.

The shock waves of the slogan of human rights have

rocked the land of China.

Just as the publication of Ludwig Feuerbach's The

Nature ofChristianity enabled materialism to regain the

throne in 19th century Germany, the slogan of human

rights and equality has historically ascended the throne

in 20th century China toward the end of the 1970's.

The slogan of human rights and equality of Europe and

the United States has acquired its modern and improved

form in China. This is a success of the people and

socialism in China.

The reformed slogan of human rights and equality has

played a very suitable complementary role for China's

very underdeveloped socialist democracy. This slogan

has played an appropriate role in promoting the political,

economic, cultural, and diplomatic exchanges and cooperation between China and the advanced industrial

nations.

Yes, the lofty goal of the proletariat is the abolition of

classes. But slogans must take root in the soil of reality.

Although the landlord and capitalist classes have disappeared in China, the liberation of the proletariat as a

class has only begun with the seizure of political power,

and the complete liberation ofthe proletariat is the most

important condition for the abolition of classes.

In China, the abolition of classes is still in the distant

future, and we had better work for the continued liberation of the proletariat.

The young always follow the reformers. When the god of

history forces us to retreat, the slogan of human rights

and the slogan of equality are one and the same. When

the battle drums of the times urge us to advance, we can

only march together with the party of the reformers.

The bourgeois human rights movement starts from and

belongs to eternal reason and justice. The proletarian

human rights movement makes antifeudalism and

antidespotism its goal, while constantly advancing

toward and embodying itself in socialism. This is the

difference, and the basic stand of the Declaration of

Human Rights. The Declaration of Human Rights keeps

fighting and remains undefeated, because its ideology

keeps fighting and remains undefeated.

The historical contributions of the Declaration of

Human Rights are indelible. If the discussion on the

criterion of truth, which began in May last year (1978),

provided the ideological preparations for the 3d Plenary

Session of the 11th CPC Central Committee, then the

Democracy Wall movement for emancipation of the

mind represented by the Declaration of Human Rights,

which began toward the end of the last year, is having a

profound impact on future reform and cultural

rethinking.

The Declaration of Human Rights, albeit imperfect and

brief, has won the hearts ofthe world with the initial test

of its cutting edge and its dazzling brilliance.

The sources of social changes and events can be found

only in the depths of economic and political relations.

All ignorant criticism, cliches, and slander are equally

lamentable.

The Declaration of Human Rights and the legitimate

associations around it have formed a new tide led by it,

placing itself forever in an invincible position.

When the slogan of human rights and equality is

silenced, the time has come for unfair treatment.

We may experience the "high degree of socialist democracy" in prison. But, there is only one conclusion: We

should be set free with a verdict of not guilty. This is the

will of history and a painful trial and challenge by the

people to the political system. We are full of hope while

waiting for this day.
JPRS-CAR-89-104

23 October 1989 POLITICAL

Those who are afraid of the people are unable to

shoulder the heavy responsibility of historical reforms.

Industrious and courageous but leading a hard life,

highly talented but deprived of rights, the Chinese

people are holding high the righteous banner of human

rights. What crime have they committed?

December 1979, in the Detention House of the Beijing

Municipal Public Security Bureau

Shortcomings of Official Title-Oriented System

40050601a Beijing XINHUA WENZHAI [CHINA

DIGEST] in Chinese No 5, 25 May 89 pp 10-13

[Article by Hu Zhenmin 5170 2182 3046: "'Official

Title'-Oriented System Must Be Eliminated"; originally

published in ZHONGGUO RENSHI, 1989 Nos 1-4,

revised by author prior to reprinting]

[Text] In the wake of political and economic structural

reform and the intensification of the socialist commodity economy, the elimination of the "official title"-

oriented system, which has long been a part ofsocial and

cadre personnel management, is now confronting the

party and the entire population. A complex and arduous

piece of social systems engineering, this piece of reform

covers an extremely extensive area and is closely related

to the personal interests oftens of millions of people. To

map out a theoretically sound and practically effective

reform plan, it is significant that we analyze systematically, comprehensively, and thoroughly the main manifestations of the official title-oriented system, its formation and development, its shortcomings and dangers,

and the principles and implementation of reforming the

system.

A. Origins and Meaning of the Concept of the Official

Title-Oriented System

The "official title"-oriented system is not a technical

term in common international academic usage. Instead,

following the intensification of economic and political

structural reform in China in recent years, it was coined

bv borrowing concepts like the "gold standard" and

"silver standard" from the currency system to describe

the characteristics of traditional social management and

cadre personnel management. There are three aspects to

its meaning:

First, all social organizations, whether they are enterprise's, institutions, or mass organizations, are ranked

according to the administrative levels of party and

government bodies (such as provincial departmental

level, prefectural bureau level, county office level, and

township section level). Party and government management of the economy, politics, culture, and society is all

based on this kind of administrative hierarchy, giving

rise to many written and unwritten regulations. For

instance, financial planning, materials distribution,

organizational setup, cadre allocation, managerial jurisdiction, document circulation, participation in meetings,

and the control of social institutional purchasing power

are all related to the administrative ranking of a unit. As

a result, without its administrative ranking, a unit is

powerless in society.

Second, cadres of all types, whether they are leaders or

workers in mass organizations or managerial personnel

and assorted professionals in enterprises and institutions, are all ranked in accordance with the administrative rank of cadres in party and government bodies. The

selection and management by the party and government

of all cadres of all types, particularly their political

treatment and material rewards in all aspects, are dependent on the cadres' ranks, giving rise to many written

and unwritten regulations. As a result, the administrative rank of a cadre in effect becomes the equivalent of a

variety of political treatments and material remuneration and the passport to social intercourse.

Third, the administrative rank of a unit and that of its

cadres is interrelated and interdependent. The former is

often determined by the personal rank ofthe leader. And

since "a rising tide lifts all boats," when the administrative rank of a unit rises, its cadres, big and small, are also

promoted. As a result, administrative ranks objectively

function as the "sacred standard" for measuring all kinds

of social organizations and determining the relationship

between those organizations and their members. Society

at large too becomes a clearly stratified order.

B. The Formation and Development of the Official

Title-Oriented System

The official title-oriented system did not begin at the

dawn of human society. Instead it is the special product

of the highly centralized and unified way in which the

state manages the economy, politics, and social culture

in times of economic, scientific, and cultural underdevelopment. Feudal society, with its landlord class, rested

on a self-sufficient natural economy and bureaucratic

politics. The official title-oriented system and its concomitant clearly stratified social order dovetailed with

the economic and political base offeudal society. Hence,

it developed and matured under feudalism. The capitalist society rests on the commodity economy and the

democratic politics of the bourgeoisie. The official titleoriented system and its clearly stratified social order are

not compatible with the economic and political base of

capitalism. Hence, it was gradually replaced by the

commodity economy and the bourgeois democratic

political order. From a semicolonial, semifeudal society,

China directly became a socialist society, skipping the

stage of full-blown capitalism. For a variety of complex

reasons, the official title-oriented system has survived

and thrived in New China as a means of social management and cadre personnel management.

1. Political and Economic Reasons

Faced with the shambles of "poverty and blankness,"

foreign imperialist aggression and subversion, and resistance and sabotage by hostile forces at home, consolidating the new people's regime, healing the deep scars of
POLITICAL

JPRS-CAR-89-104

23 October 1989

war, and launching large-scale economic construction

became overwhelming top priorities in the early days of

liberation and during the period of socialist transformation. In this situation, China copied the Soviet experience and established a highly centralized national political and economic system. The highly centralized

political and economic system not only did not change

over time, but actually was reinforced through successive

political movements. Under this system, enterprises,

institutions, and mass organizations became appendages

of party and government and were directly controlled by

them through administrative methods. The natural outcome is the official title-oriented system, under which

these organizations are ranked in accordance with the

administrative ranks of party and government bodies

and are managed using the uniform methods of running

party and government bodies.

2. Reasons Having To Do With the Cadre Management

System

In the course of establishing and steadily consolidating

its highly centralized and unified political and economic

systems, China also created and steadily strengthened a

cadre management system. Under this cadre management system, the objects of management—workers in

party and government bodies, workers in mass organizations, managerial personnel in institutions and enterprises, and assorted professional and technical personnel—are all managed, without exception, as "state

cadres" diverse as they are. Managerial powers are

excessively centralized. All state cadres are centrally

managed, allocated, and deployed by the party committee at the appropriate level. The methods of management are archaic and monotonous. Basically, they are

the same methods used to manage party and government

cadres. Moreover, here in the PRC it was the party that

first came into existence. Then the Army appeared under

the command of the party. Only after the Army seized

power did the people's government come into being.

After liberation, therefore, the leaders of institutions,

enterprises, and mass organizations and large numbers

oftheir managerial personnel were former party, government, or military cadres. The natural outcome is the

"administrative official title-oriented" system and "military official title-oriented" system under which these

personnel are ranked and managed in accordance with

the administrative ranks of party, government, and

military cadres. How they are received politically and

rewarded materially are also dependent on their position

in the ranks. The two official title-oriented systems can

also be combined, forming such ranks as the provincial

army rank, prefectural division rank, and county regiment rank.

3. Reasons Related to the Distribution System

Because of harsh material conditions during the revolutionary war, the revolutionary ranks followed a supply

system known as "war communism." For a long time

after liberation, the level of productive forces remained

very low, the commodity economy was extremely backward, and there was a dire shortage of material goods.

Under these conditions, the political and material

rewards for cadres smacked heavily of the "state guarantee and state management" ofthe supply system. They

were perpetuated as a superior feature of socialism.

Naturally, therefore, the supply system and ranking

system merged, which means that distribution standards

are defined by administrative ranking.

4. Social Historical Reasons

China has the longest feudal history behind it and the

official title-oriented system has ancient roots. After

liberation, elimination of lingering political and ideological influences offeudalism remains unfinished business.

Consequently, while the existing official title-oriented

system is essentially different from its feudal counterpart, the two are somehow related historically in form

and content.

5. Ideological Cultural Factors

In the long-lasting feudal society, Confucianism, which

was compatible with the feudal economic and political

systems, was the reigning culture and ideology. In the

30-odd years since liberation, although Marxism has

gradually asserted itself as the paramount ideology, the

influence of the ideological and cultural remnants of

feudalism still act on public consciousness. This must be

described as the ideological and cultural root of the

present official title-oriented system.

C. The Serious Shortcomings and Perniciousness of the

Official Title-Oriented System

The current official title-oriented system has played an

important role in consolidating the newborn political

regime, unifying the nation politically and economically,

accomplishing socialist transformation, and launching a

large-scale economic construction program. But as the

socialist enterprise continued to develop in depth, the

serious drawbacks of the official title-oriented system

also became more apparent. After political and economic structural reform was under way across the

nation, in particular, the inconsistencies and conflicts

between the official title-oriented system and the new

system, new institutions, and new standards have

become increasingly acute by the day. It has developed

into a major barrier to the intensification of reform.

1. Stifles Competitive Mechanisms and Hinders Development of a Commodity Economy

Under the official title-oriented system, the social and

political value of all social organizations and their personnel as well as all their political and economic interests

are defined by their officially determined administrative

rank. The superior do not come out on top; the inferior

are not eliminated. Consequently, competitive mechanisms are stifled and all kinds ofsocial organizations and

their personnel are deprived ofthe pressure and motivation to improve their work and excel. Enterprises and
JPRS-CAR-89-104

23 October 1989 POLITICAL

workers, in particular, are under no pressure to improve

operations and management and increase profitability.

Nor are they motivated to do so. The upshot is a society

lacking the vitality and vigor that it should have.

2. Stifles Democratic Mechanisms and Hinders Development of Democratic Politics

The result of defining everything by administrative rank

is a clearly stratified order where the different nature,

functions, and characteristics of different types of social

organizations and their personnel are eliminated. Under

this system, an individual inevitably becomes dependent

on a specific political organization. The interests and

demands of different social classes, strata, and groups

can be articulated only through one political channel. All

social conflicts and contradictions can only be resolved

politically. As a result, the development of a sense of

citizenship and the notions of equality, freedom, legality,

and self-determination, not to mention the full development of socialist democratic politics, has been retarded.

3. Intensifies the Desire To Be an Official

Because all social organizations and their personnel are

defined by administrative rank, an individual's social

status is determined largely by his administrative rank

and his personal success is also measured by the norms

of administrative ranking. The notion of administrative

rank became the highest value and yardstick in society.

The seeking of political power became the most profitable shortcut to economic benefits. The inevitable result

is the worship and pursuit of power.

4. Encourages Organizational Empire-Building and

Over-Staffing and Increases the Burden on the National

Treasury

Under the official title-oriented system, all the political

treatment and material rewards of all social organizations and their personnel are a function of their administrative ranking. This impels people to go after higher

and higher ranks in order to get better treatment. In the

process, the number of departments and the size oftheir

staff get out of hand. The result is empire-building,

over-staffing, and a rising burden on the national treasury.

5. Gives Rise To the Tendency To Regard Officials as

Superior to Experts, Which Militates Against the

Healthy Development and Appearance in Large Numbers of All Kinds of Qualified Personnel

Under the official title-oriented system, all kinds of

qualified personnel, including experts in all professions,

are managed in the same monotonous way as administrative officials. Not only is their political and material

treatment inferior to that of administrative officials, but

their respective laws of development are also violated,

which saps their initiative and hinders their healthy

development. Consequently, qualified personnel have

been deserting their professions in droves to join officialdom. The ranks of officials swell even as assorted

qualified personnel become a scarce commodity in

society both qualitatively and quantitatively.

6. Gives Rise To the Keep-Up-With-the-Joneses Phenomenon and Exacerbates Social Conflicts

Under the official title-oriented system, the political and

material rewards of an individual are all determined by

his administrative rank. The administrative rank of an

individual or unit also differs according to his or its

administrative subordination relationship and the

administrative department in charge. Unavoidably,

there is a keep-up-with-the-Joneses phenomenon

between sectors, professions, units, and cadres. On issues

like wages and welfare, "workers, peasants, soldiers,

merchants, and students all look to the central government."

D. Major Principles To Be Followed When Reforming

the Official Title-Oriented System

The official title-oriented system, which determines

everything with reference to one's administrative rank, is

a key component of the traditional political system and

cadre management system. To reform the official titleoriented system, we must consider two questions. One,

what should we reform and what direction should reform

take? In other words, we must determine the direction of

reform. Two, how do we go about reforming and in what

way? In other words, we must determine the methods

and measures of reform. In considering either question,

we should abide by the following major principles:

1. The Principles of Decoupling and Classified Management

Two characteristics epitomize the official title-oriented

system: over-centralization of managerial power and

monotonous and archaic management methods. To

reform the official title-oriented system, therefore, we

must begin by reforming the old economic and political

systems and social management system. In accordance

with the principles set forth by the 13th National Party

Congress of "party and government separation, government and enterprise separation, the close integration and

reasonable restraint of personnel management and management affairs," we should practice classified management for different kinds ofsocial organizations and their

personnel. In other words, we should establish separate,

independent management systems, forming a variety of

management systems, methods, and standards, each

with its own special features, based on the different

nature, functions, and characteristics of the social organization concerned and its personnel. Through "decoupling" and "separation," the various social organizations

and their personnel will each have their own specific set

of duties and functions and find their own special niche.

This will be fundamentally different from a system

under which one model, one system, one set of standards, and one method, all determined by administrative

ranking, prevail.
10 POLITICAL

JPRS-CAR-89-104

23 October 1989

Two points need to be made here. First, administrative

ranking guarantees normal order in the administrative

system and is indispensable to the improvement of

administrative efficiency. Among workers in party and

government bodies, therefore, we cannot and should not

completely eliminate administrative ranks. However, as

far as social organizations other than party and government bodies and their personnel are concerned, we

should no longer continue to define them by administrative ranks. Second, even as we reform the official titleoriented system as a system of cadre management, we

should put the reform ofthe system as a system ofsocial

management on the agenda. The failure to do so would

create a serious hindrance to the reform of the official

title-oriented system as a system of cadre management.

2. The Principles of Self-Inspiration and Self-Restraint

A fatal flaw of the official title-oriented system, under

which administrative ranking defines everything, is that

the political and material interests of all social organizations and their personnel are related to their officially

determined rank and are divorced from how well they

perform their duties and responsibilities as units or as

individuals. As a result, there are neither self-inspiring

mechanisms to impel various social organizations and

their personnel to improve their work and forge ahead,

nor self-restraining mechanisms to prevent them from

becoming ever more greedy for political and material

benefits. The result is all manner of problems. Thus, if

we want to reform the system successfully, we must take

effective measures to create such mechanisms as they

relate to political and material treatment in social organizations and among their personnel. An effective

approach would be to gradually abolish the administrative ranking of enterprises, institutions, and mass organizations and their personnel. Under the guidance of

effective overall control by the state and national policies, we should follow the principles ofself-management

and self-operation and delegate to the institutions, enterprises, and mass organizations the power to determine

their internal setup, level of staffing, and personnel

structure, and personnel appointments, as well as the

power of internal distribution regarding wages, housing,

medical services, and transportation. In this way, these

organizations can practice self-management in accordance with their own regulations within constitutionally

and legally prescribed limits and explore a variety of

personnel management and internal distribution models

and methods in accordance with the principles of selfmanagement and self-distribution. Only thus can we put

an end to the old situation in existence for a long time

under which all political and material conditions were

controlled and allocated by the state, making it possible

for the personal interests of social organizations and

their personnel to be closely integrated with the economic and social benefits of the unit to which they

belong as well as the individuals' own personal contributions. Instead of fighting for a higher rank, people

would then work hard to improve management and to

secure better economic and social benefits in earnest as a

way of demanding higher pay and better terms of

employment. This would fundamentally put an end to

the phenomenon of units "eating from the big rice pot"

ofthe state and individuals doing likewise at the expense

oftheir unit, a situation in which all social organizations

and their personnel depend on the state for every political and material reward.

3. The Principles of Picking the Right Person for the Job

and Distribution According to Work

Under the official title-oriented system, personnel movements and transfers are characterized by the fact that

"the rank follows the person," as do all political and

material rewards, which are all defined by administrative rank. Hence the three permanents: "job," "status,"

and "terms of employment," which seriously violate the

principles of creating a position to get a job done, picking

the right person for the job, and determining one's pay

based on the job. Henceforth, after they are transferred

to enterprises, institutions, and mass organizations,

workers of party and government bodies should no

longer have the status of workers of party and government bodies. Nor should they continue to keep their

administrative rank and related political and material

treatment. Their duties and responsibilities and treatment should be redetermined by the receiving unit based

on its own constitution and regulations in accordance

with the principles of classified management and "picking the right person for the job." Similarly, when a

worker of an enterprise, institution, or mass organization

is transferred to another unit, his duties and responsibilities as well as pay and other terms of employment

should also be reviewed by the receiving unit in accordance with the same principles. In this way the existing

three permanents—"duties," "status," and "terms of

employment"—would largely disappear.

Closely related to "picking the right person for the job"

is the principle of distribution according to work. When

the development level of productive forces is low and

material goods are in extremely short supply, the supply

system and low-wage system, both characterized by a

dependency on administrative ranking in many respects,

not only are shockingly and increasingly wasteful, but

also spawn prerogatives in all forms and shapes, which

sharply dampen the initiative of the masses and hinder

the development of productive forces. As a key component ofthe official title-oriented system, this distribution

system grossly violates the principle of distribution

according to work and is highly incompatible with the

demands of developing a commodity economy. A point

has been reached where change is the only way out. To

reform the official title-oriented system, therefore, we

must begin by commercializing housing and making

other changes in accordance with the demands of developing a commodity economy and the principle of distribution according to work and cut down as much as

possible on monetary and nonmonetary supplies other

than wages from the state that are based on administrative rank. The ultimate goal is the monetarization ofthe

distribution of consumer goods.
JPRS-CAR-89-104

23 October 1989 POLITICAL 11

4. The Principles of Horizontal Coordination and Comprehensive Balance

As comprehensive reform, especially reform of the

internal mechanisms and external environment of enterprises, gets under way, the entire old order, a monolithic

structure where uniformity and the "big rice pot," the

result of the official title-oriented system, reign to the

detriment of the vitality ofsocial development, has been

dismantled. The actual treatment of many social organizations, particularly economic organizations and their

personnel, is no longer determined, solely or otherwise,

by their administrative rank. An unprecedented energy

and vitality have appeared in society. At the same time,

however, assorted serious imbalances and chaotic conditions have also emerged in the distribution of social

income. Among the most striking problems is the substantial imbalance between primary distribution under

the market mechanism and redistribution under government allocation mechanisms. Another serious distribution imbalance occurs between different industries and

different individuals under the two distribution mechanisms. In the final analysis, these imbalances and confusion can be attributed to the fact that, although the old

order created by the official title-oriented system is

beginning to crumble, it has not been wiped out completely. Meanwhile, the fledgling order of socialist democratic politics has not yet matured. The resultant socalled "order vacuum" is what causes the imbalances

and chaos. The basic solution is to make full use of the

overall regulatory and control function of the state,

augment horizontal coordination and comprehensive

balance between primary distribution and redistribution, and gradually create the control mechanisms and

automatic regulatory mechanisms of social distribution

so that all kinds of social organizations and their personnel obtain the political and material treatments due

them, while at the same time widening the earnings

differential by reasonable margins, through honest labor

and competition within a framework of overall balance

and equal opportunity. The crux of the current problem

is this: Our social management has not yet freed itself

from the straitjacket of the official title-oriented system,

with its uniform administrative methods dependent

solely on administrative rank. Its regulatory and control

methods lack variety and are often feeble and ineffective. There is an urgent need to examine it closely and

improve its effectiveness.

5. The Principle of Comprehensive Coordination and

Phased Implementation

The official title-oriented system, under which administrative ranking determines everything, is an important

component of the traditional, highly centralized economic and political systems and cadre management

system. It is a microcosm of the old order, old system,

old ideas, and old standards in the field of administration, management, cadre management, and material

distribution. To turn this situation around fundamentally will involve structural reform in the political and

economic systems, including such areas as planning,

investment, material supply, finance, cadre management, and income distribution, as well as reform in

specific institutions in various industries, professions,

and sectors. An extremely complex piece of social systems engineering, it also requires changes in our thinking

and value system. Accordingly, we must follow the broad

vision of the CPC Central Committee concerning total

reform and plan comprehensively. The reform of the old

system, institutions, and standards in such areas as

administrative management, cadre management, wages,

welfare, medical and health services, transportation,

housing, retirement, and social insurance, must be

thought through in relation to one another. Dismantling

the old order of the official title-oriented system

throughout society and establishing a new order based on

socialist democratic politics and the commodity

economy is a historic mission of herculean proportions,

not something that can be achieved overnight. Instead it

requires a long historical process. For this reason,

reforming the official title-oriented system is not a

one-shot affair. It must be implemented under good

leadership in stages in accordance with a plan.

I believe the reform of the official title-oriented system

can proceed in three stages based on the progression of

political and economic structural reform:

Stage 1: Gradually alter the relationship of direct subordination between enterprises, scientific research units

that can be commercialized, and cultural and artistic

performing troupes that can be given decisionmaking

authority and assume responsibility for their own profits

and losses, and their personnel, on the one hand, and

government bodies, on the other. Abolish their administrative ranks. Straighten out and reform all old rules and

regulations that are based on administrative rank and are

designed to exercise direct management of the three

kinds of units mentioned above and their personnel. The

aim is to enable them to operate under market distribution mechanisms truly in accordance with the principle

of "having their own decisionmaking authority and

being held accountable for their own profits and losses."

Stage 2: Find a way to gradually decouple from administrative ranks independent institutional units and mass

organizations and their personnel who are either selffinancing in part or totally dependent on government

appropriations, so that under the guidance of state

overall regulation and national policies they would

closely integrate their own interests with the economic

and social benefits ofthe unit and operate under the dual

mechanisms of primary market distribution and government redistribution in accordance with the principles of

self-government, self-inspiration, and self-restraint.

Stage 3: Decouple from administrative ranks institutions

affiliated with party and government bodies at all levels.

Have them function as independent institutions.
12 ECONOMIC

JPRS-CAR-89-104

23 October 1989

PROVINCIAL

Jiangxi Governor's Speech on Economy

OW3009104589 Nanchang JIANGXI RIBAO in

Chinese 5 Scp 89 pp 1, 2

[Two-part "excerpts" of a speech by Jiangxi Governor

Wu Guanzheng at a provincial meeting of prefectural

commissioners, city mayors, and county magistrates:

"Several Economic Jobs That This Province Must Stress

and Do Well at Present"—date and location not specified]

[Text] Parti

Since the beginning of this year, all localities in the

province have seriously implemented the policy of

improving the economic environment, rectifying the

economic order, and deepening reforms. They have

made efforts to curb turmoil while developing the

economy. They have continued the campaign to increase

production and practice economy and to raise revenues

and reduce expenditures. They have particularly strived

to reap a bumper agricultural harvest. Gratifying

achievements have been made. Since June, the whole

province has seriously implemented the guidelines ofthe

4th Plenary Session ofthe 13th CPC Central Committee

and the 8th (Enlarged) Plenary Session ofthe 8th Jiangxi

CPC Committee, even more firmly carried out the

party's basic line of "one central task and two basic

points," constantly deepened reforms and opened wider

to the outside, and made new progress in improving the

economic environment and rectifying the economic

order. The overall economic development situation in

the province is good. Agricultural development is being

stepped up, and agricultural production is showing

better growth. Industry has maintained a certain growth

rate. Market commodity price increases are slowing.

Provincial revenues and savings deposits have increased.

The rapidly rising trend of consumption has begun to

slow. The scale of construction projects has been brought

under control, with noticeably fewer newly started

projects. Some improvement has been made in the

investment pattern.

These achievements have not come easily. They have

been made only after overcoming serious floods and

other natural disasters and after making up for the losses

caused by the turmoil. They are the result of the joint

efforts, unity, and hard work of the whole province. In

this province, as in China as a whole, there are still many

economic difficulties. In addition to a shortage of raw

and processed materials and electricity, there are also

other major difficulties. For instance, it is hoped that we

can fulfill this year's agricultural production plan, but

there are great difficulties to overcome. The declining

trend of economic efficiency has not yet been checked.

There is a shortage of capital funds. It will be a very

arduous task to keep this year's price increases noticeably smaller than last year's. The retail market is weak,

some popular goods have become barely marketable or

even unsellable, and the contradiction between production and sales is noticeable.

Here, I want to stress several economic tasks that we

must do well at present.

Accomplishing this year's economic tasks has a bearing

on the comprehensive implementation of the guidelines

of the 4th Plenary Session of the 13th CPC Central

Committee and on the political and social stability ofthe

province. For this reason, we must take effective measures to overcome difficulties; further implement the

policy of improving the economic environment, rectifying the economic order, and deepening reforms; continue to deepen the campaign to increase production and

practice economy, raising revenues while reducing

expenditures; strictly control the scale of investment in

fixed assets; bring the excessive increase in consumption

funds under control; strictly control the commodity

price increase; try in every possible way to reap a bumper

agricultural harvest; make great efforts to readjust the

product mix; speed up the turnover of capital funds;

further invigorate the market; strive to improve economic efficiency; and fulfill or overfulfill this year's

economic tasks.

1. Try in Every Possible Way To Reap a Bumper

Agricultural Harvest

Reaping a bumper agricultural harvest is an important

way to stabilize the overall situation. All localities should

resolutely fulfill the demand for "not wavering in three

areas" put forward by the provincial party committee

and the provincial government, and should not neglect

the guiding principles.

The key to ensuring a good grain harvest lies in paying

attention to late rice in double cropping and to autumn

grain crops other than v/heat and rice. We should pay

particular attention to field management, make efforts to

increase per unit area yield, and strive to attain the

objective of gathering a total grain harvest of 31.5 billion

jin this year.

We should pay attention to tending cash crops in their

later stages of growth until they are harvested. As the

harvesting of cotton, jute, hemp, and oranges will soon

begin, it is necessary to gather the harvests carefully, do

a good job in purchasing, marketing, storage and processing, and ensure good economic returns. We should

work hard to accelerate livestock and aquatic production. In livestock production, we should do a good job in

autumn breeding and pay special attention to stabilizing

hog production to prevent a drop in production. Active

efforts should be made to raise more livestock and

poultry that feed on plants and do not consume much

grain. We should rush repair the damaged fish ponds and

other fish farming facilities. Further efforts should be

made to promote feed production and supply and to

enlarge the source of feed supply. Epidemic disease

prevention should be improved.
JPRS-CAR-89-104

23 October 1989 ECONOMIC 13

While the economic environment is being improved and

the economic order being straightened out, rural enterprises should improve and develop themselves while

implementing structural readjustment and strive to fulfill the quotas and goals for this year. They must make

structural readjustments, deepen reforms, intensify management, and upgrade quality and efficiency in accordance with local conditions.

We must try every possible way to increase the peasants'

output and income. All localities must rationally distribute manpower, develop forests, and develop the

production of fruit, tea, mulberries, and herbal medicines. We should pay close attention to harvesting minor

autumn crops and actively develop household sideline

production.

We should continue to exercise effective leadership in

combatting natural disasters to ensure a good harvest.

Late autumn crops are now growing well, but we must

not lower our guard or slacken our attention. We must

pay greater attention to predicting and preventing insect

pests and plant diseases. It is necessary to send agrotechnicians to provide technical guidance in the countryside.

Leadership at all levels should go to the countryside to

conduct research and investigation, get a better understanding of the situation, and help solve problems. All

trades and professions should provide support and services to agriculture.

2. Improve Economic Efficiency and Achieve Industrial

Growth

Vigorous efforts should be made to readjust the product

mix and to produce more goods that meet market

demands. The provincial people's government recently

released a short-term plan for readjusting the product

mix in the province. All localities and departments

should pay close attention to implementing this in light

of their actual conditions. In accordance with the

requirements for improving the economic environment

and straightening out the economic order, production

plans for the dozens of key products designated by the

province must be fulfilled in order to increase effective

supply. Special policies should be implemented to vigorously increase the production of daily necessities in short

supply. Relevant departments should support the production of such daily necessities with coal, electricity,

transport services, or funds. Production quotas of those

products whose demands have slackened should be readjusted to reflect changes in the market. We should limit

the production of products in stock for 6 months or

more. We should no longer support the production of

slow selling goods as key products.

Greater attention should be paid to coal, electricity, and

transportation. Elaborate plans should be drawn up for

power generation and supply to ensure steady supply.

Beginning in September, the average daily power supply

of the Nanchang power grid should not be lower than

1.12 million kw. We should try our best to raise this

figure to 1.15 million kw. Continued efforts should be

made to improve power planning and economize on

consumption. Power consumption late at night should

be kept to no lower than 950,000 kw in order to make

more efficient use of the limited power. We should pay

close attention to the allocation and transportation of

power and coal to ensure adequate supply in the province. As for coal and power shortages outside the province, we should step up transportation to help ease the

shortages. While meeting the quantity quotas, we must

stress quality and prevent adulteration. It is hoped that

railway departments, which have made great contributions to coal transportation, will overcome difficulties

and strive to overfulfill by 500,000 metric tons the

annual coal transport quota of 8.3 million metric tons.

Promoting production in large and medium enterprises

is of vital importance. We must devote great attention to

this. This year, the growth rate of the province's industrial enterprises has been rather slow and economic

returns have not been very good. In the first half of 1989,

the total output of the 1,236 industrial enterprises operating under the provincial budget rose by 5.9 percent;

their profits and revenue rose by 9.9 percent. The total

output of the 91 enterprises with an annual profit and

revenue of 5 million yuan each rose a mere 4.3 percent;

their profits and revenue rose a mere 4.4 percent. These

91 enterprises, which account for more than 50 percent

of all the output, profits, and revenues of the industrial

enterprises operating under the provincial budget, are a

decisive force in the province's economic development.

We should do everything possible to create better

external conditions for the development of these enterprises and bring into full play their key role in economic

development.

We should further improve enterprise management and

operations. Efforts should be concentrated on improving

product quality, lowering material consumption, stopping deficits and increasing profits, and accelerating the

circulation of funds. In strictly controlling quality, we

should introduce a system of rejecting products with

substandard quality, thereby improving product quality.

It is necessary to work out production plans strictly

according to technical procedures and reduce excessive

consumption of electricity, coal, and raw and semifinished materials through applying new technology.

In order to build strength for future economic development, it is necessary to speed up the construction of key

projects, providing them with funds, material supply,

and manpower. We should ensure that the construction

of Guixi Chemical Fertilizer Plant and Wanan Power

Station are completed on time. It is also necessary to

accelerate the second stage of construction of Jiujiang

Power Plant, the research projects on acrylic silk fibers

and other raw and semifinished materials, and the construction of the Nanchang - Jiujiang Highway and other

postal and transportation facilities. Technical transformation projects for this year should be completed and

put into operation as soon as possible. Those that have

already been completed should meet the targeted production goals so as to build Jiangxi's economic strength.
14 ECONOMIC

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23 October 1989

3. Strictly Control Commodity Price Rises; Further

Promote Market Prosperity

In controlling price rises in the next 4 months, we will

encounter the following major problems: Some local

governments, departments, and units have not yet

achieved unity in understanding the target of a "conspicuous drop" in prices. Contradictions caused by irrational

prices in economic life over the years—that is, factors

that can trigger price rises—have not been eliminated.

The supply and demand situation has changed since the

end of March, and the sales of Jiangxi manufactured

goods for daily use, which were once brisk, have stagnated, causing a drop in the market of provincially

produced goods. Such a trend in the market situation has

dampened production and adversely affect financial

revenues. We should strive to stop the trend, otherwise it

will affect the economy as a whole.

We should continue to strictly control price rises. The

goal of achieving a conspicuous drop in price rises and

the demand for strictly controlling commodity prices,

which are still in force, should be regarded as an overriding task for the current economic work and be carried

out at each level. Governments at all levels should

strengthen leadership, while every department should

fulfill its responsibilities, with principal leaders personally attending to this task. In the remaining 4 months of

this year, aside from the state's policy decisions to hike

prices, the provincial government will not approve any

price rises, nor will it adopt any economic measure that

will considerably affect the overall index of retail commodity prices, thereby stamping out any factor for price

rises. We should do everything possible to stabilize

prices of vegetables and other nonstaple foodstuffs,

manufactured goods for daily use, and the means of

agricultural production. Leaders of local governments,

departments, and enterprises who disregard the overall

interests and violate discipline by hiking prices without

authorization shall be duly investigated for responsibility. All-out efforts should be made to improve commodity circulation, resolutely implement the decision of

the party Central Committee and the State Council on

furthering the work of screening and rectifying companies, and grasp this work firmly, earnestly, and to the

finish. Particular attention should be paid to screening

and rectifying wholesale enterprises and enterprises

doing both wholesale and retail business. Units doing

wholesale business on major means of production and

daily necessities should be strictly limited in number and

put under state control. It is necessary to manage well

and invigorate trade fairs in both cities and countryside

and to establish a price inspection and control system for

them. We should strengthen price control and improve

the market order. It is also necessary to strictly enforce

law and discipline in dealing with prices and continue to

improve price inspection. The general price inspection

for this year should be conducted earlier than usual. The

State Council decided to raise passenger fares nationwide on trains, ships, and civil air transport, beginning 5

September. All localities and departments must firmly

comply with the State Council's plans and requirements,

do meticulous organizational and propaganda work, and

formulate necessary emergency measures to guard

against local market fluctuation that may be induced by

the hike of transportation costs. It is strictly prohibited

to take opportunities to raise prices. Violators should be

dealt with severely.

Great efforts should be made to enliven the circulation

of commodities, open up new markets, and increase the

sales of products made in the province. We should

strengthen the cooperative relations between industry

and commerce and between industry and trade so that

they will coordinate with, support, and benefit each

other. We should make every effort to bring about a

conspicuous rise in purchase, sales, and the export of

products made in our province. For commercial units

operating in cooperation with the state, the volume of

business of industrial products made in the province

should account for at least 40 percent of their total

business volume. In addition, it is necessary to use

flexible and diverse methods to organize a sales promotion force and to make every effort to market our

products, so as to use sales to promote the purchase of

raw materials and spur on production.

We should achieve real success in the procurement of

farm and sideline products and do a good job with regard

to the reserve and supply of funds for developing agriculture. We should make every effort to ensure the

fulfillment ofthis year's procuremnt quotas for grain and

cotton. At present, we should try in all conceivable ways

to solve the difficulties with regard to grain procurment

funds and grain storage and see to it that there is no such

practice as using promissary notes instead of cash payment in grain procurement. Low price materials to be

supplied in connection with the procuremenmt of grain

should be made available as promised so that the people

will trust what we say. In addition, proper arrangements

should be made in all localities for the procuremnt of

autumn grain, cotton, jute, armbary, citrus fruits, sugarcane, tobacco, and other farm and sideline products

required in large quantities. State-owned commercial

units as well as supply and marketing cooperatives

should view the rural market as a significant place. On

the one hand, they should send industrial products to

rural markets so as to provide peasants with the required

industrial products and other commodities produced in

the province. On the other hand, we should make a

success of the procurement of farm and sideline products.

We should ensure plentiful supply of daily necessities

and strive to stabilize Jiangxi's urban and rural markets

and its people's livelihood. Above all, we should provide

enough meat, vegetables, and other nonstaple foodstuffs

for the people. It is necessary to properly arrange the

production, procurement, and marketing of hogs and

storing of pork in accordance with the market demands

this winter and next spring. Sufficient good vegetables

must be planted and tended so as to ensure supply in the

market. In order to alleviate the shortage of vegetables

and stop rising vegetable prices in the county capitals,
JPRS-CAR-89-104

23 October 1989 ECONOMIC 15

counties and cities should set up their own vegetable

production bases. This year, prices of pork in large and

medium cities and industrial and mining areas should be

stabilized at the level of those in July, and prices of

ordinary vegetables should be kept at the same level of,

or markedly below, that ofthe same period last year. We

should ensure the supply of manufactured goods for

daily use during different seasons. As the Mid-Autumn

Festival and the 40th national founding anniversary are

drawing near, we should see to it that there will be a

plentiful supply of goods to enable the masses to enjoy

comfortable holidays.

4. Strive To Increase Revenues and Reduce

Expenditures; Use Funds Flexibly and Effectively

In view of the current financial difficulties, we should

launch the double increase and double economy campaign, improve economic efficiency, strengthen collection and management of tax revenues, and strictly control expenditures so as to get out of the predicament.

Governments at all levels should strive to fulfill this

year's plan and targeted increase for industrial and

commercial taxes. Efforts should be concentrated on

improving tax collection from individually owned businesses in urban and rural areas. All local governments

should strive to fulfill the tax collection quotas set by the

provincial government. It is necessary to strictly control

tax reductions and exemptions, and no additional reductions and exemptions should be granted. Efforts should

be made to severely crack down on tax evasion, refusal to

pay tax, and other illegal acts. We should pay close

attention to revenues derived from special projects and

ensure that the target of selling value insured bonds is

fulfilled. It is necessary to strictly control expenditures.

Except for price subsidies, all expenditures should be

reduced by 5 percent over the budget set at the beginning

of this year. Administrative expenses, self-raised funds

for capital construction, and expenditures needed for

tapping potential and carrying out technical innovation

and transformation should be controlled within the

limits of the provincial government. Institutional purchases should be reduced by 20 percent over those made

last year. It is necessary to reinforce financial and

economic discipline, and funds obtained through illegal

channels should all be turned over to the treasury. In

enforcing the principle of striving to balance revenues

and expenditures, we should never approve a deficit

budget. From now on, we should not set a precedent for

decreasing revenues and increasing expenditures. Where

collection of revenues fails to meet the target, efforts

should be made to reduce expenditures. No arrangements should be made this year for spending the funds

derived from overfulfilling the state revenue task and

other plans. It is necessary to strictly control and conserve expenditures. Special efforts should be made to

guard against excessive issuance of yearend bonuses in

cash or in kind, and to live a few years of austerity.

In the next few months, the state will speed up the

withdrawal of money from circulation. Hence, it will be

difficult to ease the shortage of funds in Jiangxi. A

fundamental way to solve this problem is to go all out to

tap the potential of funds through increasing savings

deposits and improving the structure ofloans. We should

strive to expand the channels for saving deposits and

increase this year's total deposits by more than 2 billion

yuan. It is necessary to improve the structure and control

the scale of loans in accordance with the principle of

ensuring funds for key projects while reducing loans for

ordinary projects. We should conduct a general inventory of warehouses and retrench funds used for finished

products so as to reduce the irrational use of funds. It is

necessary to pay particular attention to retrenching

funds used for finished products. We should improve the

management of cash and take the initiative to straighten

out delinquent funds so as to stop unauthorized circulation of funds as quickly as possible.

5. It Is Necessary To Adhere to Reform and Opening to

the Outside World and Deepen the Transformation of

Enterprises, Especially Large and Medium-Sized

Enterprises

In the past 10 years, reform and opening to the outside

world have achieved great results and promoted economic development and the improvement of people's

living conditions. We must continue to firmly implement the line, principles, and policies formulated since

the 3d Plenary Session of the 11th CPC Central Committee and wholly and correctly carry out the party's

basic line of concentrating our work on promoting economic construction and adhering to the four cardinal

principles and reform and the open policy. Measures

adopted by the provincial party committee and the

provincial people's government for carrying out reform

and the open policy and invigorating the economy

should be continued and deepened so long as they are

conducive to developing the productive forces and do

not run counter to the guidelines of the party Central

Committee. We should continue to improve and develop

various enterprises' contract responsibility system. In

particular, we should find ways and means to invigorate

large and medium enterprises, grasp the work of open

bidding for contracts, and create good conditions for

large and medium enterprises in their competition with

others on equal footing. We should continue to promote

and improve the form and method of linking the total

wages of an enterprise with its profits, tax, labor productivity and rate of decrease in the consumption of raw

materials. We should continue to implement and

improve the system of having the plant director assume

full responsibility. The important task now is to

straighten up the leadership of various enterprises. The

party organization of an enterprise is the political center

at the basic level. Its central task is to lead and carry out

political and ideological work. The party organization of

an enterprise should support the plant director in performing duties in accordance with the law. The plant

director should do a good job in carrying out ideological

and political work by linking it with production and

operation and actively improve material conditions for

building spiritual civilization. The plant director and the

secretary ofthe party organization should take the whole
16 ECONOMIC

JPRS-CAR-89-104

23 October 1989

situation into consideration; respect, coordinate, and

support each other; and wholeheartedly rely on the

working class in running their enterprise well. We should

continue to promote lateral economic cooperation with

various regions and departments and promote the

merging of enterprises. We should develop enterprise

groups in a planned way and promote reasonable utilization of resources.

While grasping the reform of enterprises, we should

strive to grasp the work of opening to the outside world.

We should made great efforts to promote exports and

increase the accumulation of foreign exchange. The

production, procurement, and distribution of items for

export should be done in the same way as implementing

a mandatory plan. We should improve operations and

management, reduce costs in earning foreign exchange,

and insure the fulfillment of the annual export plan. We

should continue to adopt various ways to absorb foreign

investment and give prominence to absorbing capital

from Hong Kong, Macao and Taiwan. Regarding established contracts, we must seriously implement them. We

should also continue to improve the investment environment. We should effectively develop the existing joint

ventures, cooperative ventures and wholly foreignowned enterprises so as to expand their influence. We

should seriously sum up the experience of reform in the

southern Jiangxi experimental reform area and the 18

counties with expanded authority, continue to run well

various preferential areas and development zones, promote border trade with other provinces, and constantly

expand the scope of this province's opening to the

outside world.

In order to do a good job in improving the economic

environment and rectifying the economic order, we

should formulate a 3-year plan including the current year

and understand the tasks and specific goals of improving

the economic environment and rectifying the economic

order. Next year will be the second year in improving the

economic environment and rectifying the economic

order, so we must immediately make preparations for

carrying out the task. We must formulate plans, prepare

raw materials and spare parts, inspect and repair equipment and facilities, make arrangements for linking production and marketing, and obtain necessary funds at an

earlier date.

While grasping the above tasks, governments at various

levels should persist in grasping the building of both

spiritual and material civilizations, do a good job in

carrying out ideological and political work, educate the

people with the basic thinking of adhering to "one center

and two basic points," and link ideological and political

work with our economic work, administrative work, and

management. We should continue to carry forward the

spirit of hard struggle and of building the country and

doing everything through thrift and hard work, attach

great importance to building an honest government, and

solve various problems including unfair distribution in

society, social security, family planning, land administration, environmental protection, rebuilding of hazardous buildings of various middle and primary schools,

and job placement for workers. We should follow the

decisions and arrangements of the State Council, the

provincial party committee and the provincial people's

government for building an honest government, persevere in carrying out our tasks to the end, and refrain

from doing things perfunctorily in order to make even

greater achievements.

Part II

Since the provincial meeting of prefectural commissioners, city mayors, and magistrates was held in July

1988, we have vigorously waged total warfare in agricultural development across the province and achieved

initial victory. During last winter and spring, our province's winter planting acreage reached 25 million mu, an

increase of 3 million mu from the previous year. Jiangxi

also afforested 4.25 million mu, removed 150 million

cubic meters of earth and stone to build winter water

conservation projects, and transformed 2.66 million mu

of medium and low yield farmland, thus improving

conditions for agricultural production and sharpening

the ability to resist natural disasters. Jiangxi is building

agricultural development bases and commodity bases on

a large scale. The construction of the red soil development projects and Nanchang City's freshwater fish

farming is progressing smoothly. Jiujiang's 2,799

projects, as well as agricultural development projects in

central and southern Jiangxi, 6 marketable grain bases,

the improvement of 10 lakes in Jiujiang, agricultural

credit loans, the use of foreign capital in forestry, and

comprehensive agricultural development in Jihu are all

under construction successfully. As for the forthcoming

winter and spring agricultural development, the provincial government has held many meetings on specialized

trades, and preparations have been made in all places. In

order to advance agricultural development in a deeper

way and more extensively, we must lose no time in

further mobilizing people in the whole province and be

determined to engage in the coming winter and spring

agricultural production as the second battle in the warfare in agricultural development. Our specific goals are:

1. We must make great efforts to transform low yield

farmland and orchards. We must transform 2 million mu

of low yield farmland, 80,000 mu of orchards, 100,000

mu oftea plantations, 10,000 mu of mulberry fields, and

260,000 mu of low yield fish ponds.

2. We must continue to expand winter planting acreage

and increase the multiple crop index. This winter,

Jiangxi will plant green manure on 15.5 million mu, rape

on 6.5 million mu, barley and wheat on 1.5 million mu,

and broad beans and peas on 1 million mu.

3. We must afforest barren hills. In accordance with the

goal of artificial afforestation on 30 million mu within 7

years and making the province basically green by the end

ofthis century, we will afforest 4.1 million mu during the
JPRS-CAR-89-104

23 October 1989 ECONOMIC 17

coming winter and spring and increase orchard acreage

by 200.000 lira, tea plantation acreage by 60,000 mu and

mulberry fields by 30,000 mu. It is necessary to speed up

the construction of the cocoon and mulberry project.

4. We must build irrigation works and expand acreage

which guarantees a stable yield despite drought or excessive rain. During the forthcoming winter and spring, it is

necessary to remove 149 million cubic meters of earth

and stone, increase irrigated acreage by 150,000 mu, and

increase acreage which guarantees a stable yield despite

drought or excessive rain by 200.000 mu.

5. We must develop the production of raw materials for

light industry. We must make preparations for planting

cotton on 1.2 million mu. sugarcane on 650,000 mujute

and ambari hemp on 150,000 mu, and tobacco leaves on

500.000 mu next year.

6. We must make full use of surface resources and

develop 150.000 mu of large surfaces. We must seriously

complete the goose and duck project and strive to

increase the total number of geese and ducks across the

province to 100 million within the coming 4 years.

7. We must develop 50,000 mu of winter pastoral farms

to speed up the development of herbivorous livestock

and poultry.

8. We must make great efforts to store farm manure. It is

necessary to store 1.5 billion dan of farm manure.

9. We must build bases for good seeds, breeding stock,

and seedlings.

10. High quality farm and sideline products must also

increase by a large margin compared with last year. It is

necessary to regard the development of new products

and projects as an important task and to integrate it with

the development of sources of export goods which can

earn foreign exchange, so as to build food, forest and

fruit, breeding, rural enterprise, and other basic industries.

It is nccessasry for every locality to define its own

specific objectives on the basis of a unified arrangement

for the province and in light of its own conditions.

Efforts must be concentrated on the major tasks of

expanding the cultivated area of rape, afforestation,

building water conservation facilities, doing a good job

in maintenance of these facilities, and working successfully to sow and harvest green manure and farmyard

manure during this winter and next spring. As for rape,

we must see to the implementation of the plan for

expanding its cultivated area as well as the measures for

boosting its output. We must work vigorously to plant

more brassica [gan Ian 3927 5695] rape, spread the

advanced techniques for cultivating and transplanting

seedlings and transplantation on hard fields [ban tian

2647 3944]. and increase per unit yield. With regard to

greening our environment, we must pay equal attention

to planting more trees wherever possible and closing

hillsides to livestock grazing and fuel gathering to facilitate afforestation. While making continued efforts to

properly afforest mountainous areas, we must also focus

on hilly land and integrate our efforts in these areas with

the efforts to make the villages and roads green. We must

also address the problem of soil erosion. Every locality

must suit measures to its own conditions, and encourage

people to plant more hydrophyte pine trees on hilly land

and European and American [ou mei 2962 5019] poplar

trees on hollow areas along river banks and lakesides. In

areas where soil erosion is serious, it is necessary to

improve irrigation and grow grass, make the soil firm

and improve its quality, and then develop orchards.

Every locality is urged to carry out its plans for putting

the labor force and funds to good use and cultivating

seedlings. We must continue to do a good job in the

construction of flood prevention projects and reinforcement of dams to eliminate any possibility of harm. We

must build a new batch of backbone irrigation works in

a planned way. We must pay attention to building

support facilities for water conservation facilities for the

newly developed agricultural projects and make vigorous

efforts to develop medium and small hydropower stations. Collecting as much farm manure as possible is a

very important measure for promoting an increase in

agricultural production. It is necessary for every locality

to mobilize and organize the masses to dig more ponds,

clean up their pig sties and cattle pens, and send manure

and garbage from urban to rural areas.

In order to achieve success in the second phase of our

tasks, every locality is urged to properly handle tasks in

the following areas:

Further Enhancing People's Awareness About

Succeeding in the Total Warfare of Promoting

Agricultural Development Throughout the Province

To reinvigorate Jiangxi's economy, we must make vigorous efforts to tap and take full advantage of the

abundant agricultural resources, take the road of industrializing agriculture, and build the mansion ofJiangxi's

economy on the foundation of agriculture. To be specific, we will have to greatly increase the output of

agriculture, forestry, animal husbandry, and fishery

products and improve their quality, as well as increase

the commodity rate through the development of agriculture. We must strive to develop series processing and

intensive processing of various kinds of farm and sideline products. We must develop the food, textile, garment, and wood and bamboo industries with Jiangxi

characteristics. We must develop chemical, farm

machinery, fodder, packaging, and communications and

transportation industries that will support and facilitate

the production, processing, and transportation of agricultural products, so as to gradually promote the process

of industrialization and form the main structure of the

industrial system. We must expand trade as well as

economic and technical cooperation with other regions

in China and foreign countries to introduce funds,

technology, and qualified personnel into Jiangxi,

enhance the production scale and level of all the major
18 ECONOMIC

JPRS-CAR-89-104

23 October 1989

industries, and promote the industrialization of agriculture. These are measures which aim at further readjusting the structure of agriculture, industry, and social

economy in our province. They are necessary for

bringing about rational distribution and arrangement of

resources, stabilizing economic development, improving

macroeconomic benefits and results, and increasing

financial revenue in our province. It is necessary for us to

employ the strategic thinking of "industrialization of

agriculture" to guide the implementation of the total

warfare in promoting agricultural development. At

present, given the conditions in our province, we must

consider the laying of the foundation for industrializing

agriculture as our main objective. We must consolidate

and expand the achievements that have been scored so

far from the commencement of the total warfare

unfolded since last winter and this spring, strive to make

new progress both in breadth and in depth, and take a

new step forward on the way to industrialization of

agriculture. This has very important significance for

working successfully in the campaign to improve economic environment and rectify economic order,

increasing effective supply, endeavoring to get an agricultural bumper harvest next year and facilitate a sustained development of agriculture, and promoting sound

development of the national economy. It is incumbent

on the whole province to turn this awareness into conscientious action.

Arousing and Organizing the Masses More Extensively

and Intensively

Judging from the agricultural development situation

since last autumn and winter, we can see that the

state-run and collective institutions as well as large

specialized households have taken the lead in development. They have set up many bases equipped with initial

facilities for promoting further development and played

an exemplary role. How to further arouse thousands of

households to dedicate themselves to the total warfare in

promoting agricultural development is a task to which

due importance must be attached and which must be

done well. In order to arouse the masses more extensively, every locality must do meticulous organizational

work item by item, raise specific requirements for each

and every township, village, and household, and focus on

earnestly carrying out the following three links in line

with the annual requirements mapped out by the plan for

comprehensive agricultural development. First, wide

publicity must be given to mobilize the masses. All kinds

of propaganda and public opinion tools must be fully

utilized to keep giving wide publicity to the important

significance of working successfully in waging the total

warfare in promoting agricultural development. In particular, in light of the actual conditions of peasant

households, the method of working out accounts and

contrasting one thing with another must be employed to

make it clearly understood that agricultural development

is an important means for the masses to get rich through

industriousness and thrift. It is necessary to publicize

various policies ofthe party for rural areas as well as the

progress made in promoting agricultural development

and advanced examples so as to boost the morale of the

masses and their confidence. In short, it is necessary to

step up publicity on the necessity of agricultural development and mobilization ofthe masses on all sides, give

full play to the traditional favorable political situation in

rural work, and create a powerful ideological driving

force. Second, it is necessary for us to fully rely on the

role of organizations at the village level, strengthen it,

and turn it to good account. This is an organizational

guarantee for promoting economic development in the

rural areas. We must speed up economic development at

the village level, stress the need to assign the task of

promoting development to every village which will be

considered a unit, draw up unified plans for development projects, organize the labor force, and formulate

specific measures for unified management, maintenance,

and distribution of profits and interest. We must integrate the efforts in arousing the masses to take part in

development with those in promoting economic development at the village level. We must increase the economic strength of village-level organizations in the

course of agricultural development. Third, we must

make vigorous efforts to explore and spread effective

methods of organization which will facilitate participation by thousands of households in development. In this

respect, every locality has already explored and acquired

many experiences, such as implementing the system of

encouraging the masses to become shareholders by contributing their "three wasteland areas" of labor, techniques, and funds; establishing and running forestry

centers, orchards, and aquatic products breeding centers;

taking the road ofstriving for development through joint

efforts and cooperating with partners in business operations; and distributing dividends pro rata to the percentage of shares owned. The village (organization) will

be responsible for unified planning for development

projects in the "three wasteland areas," unified supply of

seeds and seedlings, unified management and maintenance, and unified capital construction in regard to

water pipes and electric cables, and implementation of

the system under which "households are divided in their

responsibility for planting seedlings and taking care of

them and enjoy benefits based on their share of responsibility" or the system under which they will make joint

efforts to promote development, contract undertakings

for business operations, and divide the dividends among

the masses pro rata to the percentage of shares owned.

These are good methods for arousing the masses to take

part in development. Moreover, they are good methods

for guiding scattered development projects to concentrated development projects which are comparatively

larger. As such, they are worthy of our encouragement

and promotion. We can also consider setting up small

pilot villages for promoting the production of agriculture, forestry, animal husbandry, and fishery on a trial

basis in the counties surrounding Boyang Hu Lake. They

may use lakes and river branches to breed fish, plant

European and American poplar trees on grassy sandbars,

and develop orchards and economic crops alternately on

hill slopes. They may make up for the deficiency of one
JPRS-CAR-89-104

23 October 1989 ECONOMIC 19

locality with the sufficiency of another to fulfill the

objective of comprehensive development. The development may be undertaken by an individual, several

households, or scores of households jointly. The point

here is to cause an appropriate scale of businesses to be

set up as quickly as possible. Every locality should feel

free to consider and weigh this proposal.

It is necessary to further stabilize and improve policies

for promoting development. The provincial party committee and the provincial government have formulated a

series of policies for promoting economic development.

We should continue to implement them as long as they

do not violate central authorities' guidelines.

At present, we should also emphasize the following

points: 1) It is necessary to continue to develop various

forms of the contracted managerial responsibility

system. We should continue to stabilize the established

operational forms such as operations by the state, by

collectives, or by individuals at various levels, and

should not change them hastily. We should further relax

the control over the right to management and use barren

hills, wasteland, and unused water areas. In order to

promote the development of uncultivated land

resources, we should completely decontrol the rights to

their management and use, and permit their transfer,

lease, and exchange as well as their use for profit-making

purposes in partnership business operations, provided

they remain public-owned. We should impose forceful

administrative intervention on those who have obtained

the right to management and use of barren hills, wasteland, or unused water areas for a long time but who have

not yet started the land development. We should ask

them to start the development within a prescribed time,

lease the land, swap one barren hill for another barren

hill, or swap a barren hill for a piece of wasteland. We

may also revoke their rights and contract the land out to

other contractors. 2) We should uphold the principle of

benefit to the developers, correctly handle the distribution of proceeds, and fully arouse the developers' enthusiasm. In partnership operations, it is necessary to determine a rational proportion of earnings among those who

have become partners by contributing land, labor, funds,

or technology. For a joint development project shared by

the state and peasant households, or shared by a collective and peasant households, the proportion of earnings

for peasant households should not be set too low, so as to

prevent the peasants from losing interest in the joint

development project. 3) Developers of new agricultural

and sideline products should be allowed to sell the new

products freely and be exempt from state purchase

quotas, so that they can make more profits, enhance

their self-accumulation and self-development ability,

and accelerate agricultural development.

It is necessary to increase investment of various forms in

agricultural development. Agricultural development

requires a large amount ofinvestment. We will be unable

to accumulate sufficient development funds if we do not

have firm determination, a spirit ofself-reliance, and the

fine tradition of diligence and thrift. At present, a

shortage of funds is the biggest problem in areas undertaking agricultural development. In order to solve the

problem, the first thing for governments at various levels

to do is to raise agricultural development funds through

various channels as the State Council has instructed this

year, and to appropriate them to rural areas as soon as

possible to provide timely support to autumn and winter

development tasks. It is necessary to widen the sources of

agricultural development funds and strive to attract

investors from other localities and from all sectors ofthe

society. For instance, we may encourage factories to set

up raw and processed materials bases in rural areas, and

encourage rural collectives to invest in agricultural

development. All these are effective ways. We should

increase investment of labor, take the road of substituting labor for funds, and, under a unified plan,

encourage the masses to invest their labor and let them

share earnings according to their investment.

It is necessary to resolutely protect the developers' legitimate rights and interests. In organizing agricultural

development, we should pay great attention to clearly

defining the titles of property, and prevent the developers' legitimate rights and interests from being violated

because of unclear titles for property. We should resolutely protect the contracts signed and the ownership of

forests and water areas legally obtained under the output

related system of contracted responsibilities, under the

"three point" forestry policy [the policy ofstabilizing the

right to use of hilly land and the ownership of forests,

setting aside private plots of hilly land, and establishing

the system of responsibility for forestry production], or

in the course of agricultural development in recent years.

Under no circumstances should they be violated at will.

Before any barren hills, wasteland, or unused water areas

are developed, relevant contracts or agreements must be

signed and legally notarized. Unclear property titles and

inadequate contracts and agreements signed in the past

must be redressed as soon as possible. In settling any

disputes over property titles in agricultural development,

we should pay attention to protecting the developers'

reasonable interests. It is necessary to adopt administrative, economic, and legal measures to punish those who

infringe upon developers' legitimate rights and interests.

During the forthcoming winter and spring, departments

concerned in all localities must grasp typical cases of

rushing to seize or steal mountain forests, fruits in

orchards, or fish in ponds, or cases of extorting money

from developers. All these have a very bad influence, so

a special struggle should be waged. Those who should be

penalized must be penalized; those who should be fined

must be fined; and those who should serve a sentence

must serve a sentence. This can form a general mood of

acting in accordance with laws in the vast rural area. It is

necessary to strengthen ideological-political work, to

formulate and perfect rural regulations which can help

agricultural development proceed normally, and to educate peasants so they can restrain and manage themselves, observe the law, work hard to become rich, and

conscientiously follow the new order of agricultural

development.
20 ECONOMIC

JPRS-CAR-89-104

23 October 1989

We must rely on progress in science and technology and

develop service trades well. In line with the demand set

by the total warfare in local agricultural development,

departments concerned in all localities must promote the

popularization of agricultural techniques. It is necessary

to integrate this with the bumper harvest plan, the spark

program, the prairie fire program, and the plan to shake

off poverty, and to offer technical services in an organized manner and with a purpose. It is necessary to

develop agriculture by relying on science and technology.

It is necessary to continue to implement the policy of

giving preferential treatment to scientists and technicians who volunteer to do contract work in science and

technology on the forefront of agriculture. It is necessary

to mobilize all departments and all trades to offer good

service before, during, and after production, promote the

integration of production, processing, and marketing of

farm and sideline products, and set up and improve all

socialized service systems. Departments of agriculture,

science and technology, water conservation, farm

machinery, commerce, supply and marketing, grain,

foreign trade, and finance must actively offer services to

peasants in terms of funds, technology, good seeds,

information, storage and transport, and purchase and

marketing. It is also necessary to bring the active role of

service organizations run jointly by rural specialized

households and ordinary households into full play. It is

particularly necessary to substantially support specialized cooperatives or associations which are organized

with certain farm and sideline products as their leading

products, by using producers of special products or

similar products as the principal parts and with circulation, technology, processing, materials, and other services as the means. It is necessary to finely process and

finish farm and sideline products so as to repeatedly

increase quality.

We must conscientiously strengthen leadership over

agricultural development. After this meeting, leaders at

all levels must rapidly turn the plans drawn at this

meeting into concrete action. On the one hand, in

accordance with the goal of agricultural development

and the experience acquired in the past several years, we

must speed up revising or drawing up plans for agricultural development and strengthen overall guidance; on

the other hand, leaders at all levels must go deep into the

realities of life, personally grasp typical cases, set

someone as a pacesetter, acquire experience, and use the

experience of selected units to promote work in the

entire area. It is also necessary to mobilize personnel in

all leading organizations to personally engage in agricultural development. Comrades of all leading organizations must take part in voluntary labor and actively join

the total warfare in agricultural development with the

people of Jiangxi. After we work hard for one or two

generations, our lovely Jiangxi will become prosperous,

with its mountains covered with green trees and its river

water flowing pollution free.

This meeting is an important one which implements the

guidelines of the 4th Plenary Session of the 13th CFC

Central Committee. If we can reach a consensus,

heighten our revolutionary spirit, keep forging ahead,

work hard, and do our work well in a down-to-earth way,

we will certainly fulfill and overfulfill all economic tasks

for this year.

Shaanxi Meeting Stresses Price Control

HK3009064789 Xian Shaanxi Provincial Service in

Mandarin 0030 GMT 30 Sep 89

[Text] An urgent report meeting of city mayors and

prefectural commissioners, convened by the provincial

government, has stressed that it is essential to unify

thinking, summon up resolve, and do everything possible to get a good grasp of controlling prices during the

last 3 months of the year. During the meeting, reports

were delivered on the price problem and measures were

proposed for further controlling prices.

Vice Governor Xu Shanlin gave specific views on further

controlling prices. He pointed out that it is necessary to

further solve problems of understanding among the

leadership at all levels and the leaders of all departments.

We must bring everyone's understanding into line with

the idea that controlling prices is the cardinal task in this

year's economic work and with the idea that all reforms

and construction must be subordinate to and serve the

overall effort of stabilizing prices. We must also work

hard to increase effective supply. Only thus can we

fundamentally resolve the problems.

Xu Shanlin said that the large- and medium-sized cities

must be determined to firmly control prices. This particularly applies to cities such as Xian. We must summon

up great determination to straighten out companies, the

wholesale trade, and the markets. We must also do a

good job in the major inspection of prices.

Governor Hou Zongbin pointed out at the meeting that

we must subjectively examine our previous work on the

price issue, and make subjective efforts in the future. In

previous months we failed to get a good grasp of price

work and our measures were not effective enough. We

must get a really good grasp ofthis work in the remaining

months of the year.

Hou Zongbin said that there have been three main weak

links in our work this year: controlling prices, screening

companies, and investigating and dealing with major

and important cases. These are three issues of most

concern to the masses and are also the main issues in

improvement and rectification work. The climate for

tackling these three issues is good now. The leadership at

all levels must be resolved to produce results.

Yu Ming, vice chairman of the provincial People's

Congress Standing Committee, attended the meeting

and listened to the reports from the cities and prefectures.
JPRS-CAR-89-104

23 October 1989 ECONOMIC 21

FOREIGN TRADE, INVESTMENT

Measures for Dealing With U.S. Antidumping

Law

90OH0024A Beijing GUOJI MAOYI WENTI

[INTERNATIONAL TRADE JOURNAL] in Chinese

No 7-8, 30 Aug 89 pp 68-73

[Article by Wang Zhuilin 3769 6620 2651 and Zhang

Bingxu 1728 4426 2485: "Key Problems Posed by the U.S.

Antidumping Law and a Study of Countermeasures"]

[Text] Antidumping laws are one ofthe important problems in present-day international economic relations

and trade, and also a thorny problem that China is

frequently confronted with in its foreign trade.

Antidumping legislation is not of long standing, as it is

only since the beginning of this century that such laws

have been adopted by several countries. Their purpose

was originally to fend off unfair trade practices and to

eliminate unfair price differentials to prevent harm to

one's own industry. However, following World War II,

antidumping legislation was widely used to restrict

imports, and it rapidly developed into a powerful means

of trade protection and into a large obstacle to international trade.

The United States has been one of the most frequent

users in the world of an antidumping law, and it is safe to

say that not one country having trade relations with the

United States has not suffered the restraining effect of

that law.1Studying the U.S. antidumping legislation is

therefore very meaningful as it is a representative

example of this type of legislation. The present article

intends to pursue the discussion along the lines of core

problems posed by the U.S. antidumping law and will

explore what preventative measures and countermeasures China may adopt.

I. Core Problems in the U.S. Antidumping Law

According to the provisions of the U.S. antidumping

law, the sale of a foreign product in the U.S. market at

less'than "fair value," and thereby causing or threatening

to cause "material injury" to a relevant branch of U.S.

industry is to be regarded as dumping. We see from this

formulation that the determination of what is "fair

value" and "material injury" constitutes the core question in the U.S. antidumping law.

A. Determination ofFair Value

The way fair value is determined is one of the focal

points in deciding what constitutes dumping. Because

according to the provisions of the U.S. antidumping law,

only the U.S. Department ofCommerce can decide what

imported product may be sold at less than fair value,

otherwise a dumping tax will be imposed on the product.

An analysis and study ofthe rules and practices ofthe U.S.

Department of Commerce will easily reveal that the socalled fair value is established through an assessment ofthe

price in the foreign market of the commodity in question.

In other words, the U.S. Department of Commerce compares the price in the U.S. market with the price ofthe said

commodity in the foreign market. Ifthe former is less than

the latter, it assumes the existence of dumping. By doing

so, the Department of Commerce in effect regards the

price in the foreign market as fair. But then, what is the

price in the foreign market? The U.S. antidumping law

prescribes three methods to determine fair value, and in

the course of its investigation and hearing of a case, the

Department ofCommerce may successively determine fair

value of a commodity under dispute, with due regard for

the specific circumstances of the case, by selecting one of

these methods.

First, its domestic market price. Normally, the U.S.

Department of Commerce will regard domestic market

prices (prices for sale in large lots) of export commodities

as fair value. However, if this method is used to determine fair value of a commodity under dispute, it must be

first of all established that domestic sales volume of the

said product is sufficient to allow a comparison with the

sales volume intended in the U.S. market. For instance,

if the domestic market is too small or the sales volume

there too limited, so that these data will not provide

satisfactory material for a determination ofthe product's

domestic market price, the domestic price cannot be

adduced as criterion for a determination of its fair value.

Second, its price in a third country. In case domestic prices

cannot be ascertained, it is permissible, according to the

rules of the Department of Commerce, to regard the sales

price ofthe products in question in a third country as fair

value. Selection of a third country must conform to the

following criteria: Apart from the fact that exports of the

commodity under dispute to the said third country must

be of sufficient quantity to allow a comparison with U.S.

conditions, the commodity under dispute as sold in the

said third country must also be the same or very similar to

the commodity under dispute that is to be sold in the

United States; the said third country must be the largest

market, apart from the domestic and the U.S. market, for

the commodity under dispute; the developmental level and

market structure of the said third country must be very

similar to conditions in the United States.

Third, a constructed price. This would be a price computed'on the basis of production and marketing costs of

the commodity under dispute. The constructed price

(also called "composite price") comprises the following

components: production costs, general expenses

incurred in regular business operations, interests,

packing expenses, warehousing expenses, and any other

expenses in getting the commodity ready for shipment to

the United States.

B. Determining "Material Injury"

As already mentioned, dumping is always assumed if a

comparison of U.S. market prices and the fair prices in

foreign markets shows that the former are lower than the

latter. However, even ifthe Department ofCommerce in
22 ECONOMIC

JPRS-CAR-89-104

23 October 1989

the end determines that the said commodity is sold in

the United States below fair value, it only constitutes

dumping in a general sense, and the said commodity is

not immediately subject to dumping tax. To constitute

dumping in the legal sense, it must still fulfill another

condition, namely that this sale below fair value inflicts

"material injury" on the relevant branch of U.S.

industry, or that the threat exists that "material injury"

will be caused, or that it will obstruct the establishment

of a new industry in the United States.

The determination of "material injury" is a matter which

the U.S. International Trade Commission will examine

and decide, at the same time that the Department of

Commerce will examine and decide whether the said

product is being dumped in the United States. According

to the rules of the International Trade Commission, determination whether "material injury" will be caused to U.S.

industry must first of all determine the exact industry and

the scope of the investigation, which generally means, to

determine that the product is produced by an U.S. industry

that manufactures products which in all respects are the

same as the commodity in dispute. If it is by an industry

that does not produce the same kind of product as the

product in dispute, then an industry that manufactures a

product that is very similar, in both characteristics and

usages, to the commodity in dispute must be selected. The

scope of the investigation must comprise the whole range

of domestic U.S. production ofthat line of product, or at

least those domestic manufacturers who produce the major

proportion of the total domestic production of the said

type of product.

When determining the "material injury," the International

Trade Commission must also give consideration to the

following three factors: volume of imports of the commodity under dispute; impact of the importation of the

goods under dispute on the price of similar type of U.S.-

produced goods; impact of importation ofthe goods under

dispute on U.S. factories producing similar types of goods.

In concrete terms, this comprises: actual and potential

effect of the importation of the goods under dispute on

U.S. factories producing similar products, in respect of

volume of production, marketing, market share, interests,

production capacity, return on investments, and utilization rate of equipment; actual and potential effect of the

importation of the goods under dispute on U.S. factories

producing similar products, in respect ofthe flow offunds,

movable property, employment, wages, enlarged reproduction, and investments.

In short, the so-called material injury is an extremely

abstract concept. The U.S. Trade Agreement Law of

1979 bases on the formulation of GATT [General Agreement on Tariffs and Trade], and when mentioning the

term "material injury," it summarizes it as "a harm that

is not inconsequential, immaterial, or unimportant."

Obviously, this definition is extremely vague and gives

the U.S. International Trade Commission a very considerable measure of discretion in deciding whether an

imported commodity causes material injury.

C. "Special Provisions" Applicable to Non-Market

Economy Countries

In the actual execution of antidumping measures, there

are important differences between market-economy

countries and non-market-economy countries, and the

most important difference is in the determination offair

value. The above-mentioned methods of determining

fair value apply mainly to market-economy countries,

while in antidumping proceedings involving nonmarket-economy countries, the United States applies a

set of "special provisions." These "special provisions"

constitute a supplement of utmost importance to the

core content of the U.S. antidumping law.

1. Legal Basis for the "Special Provisions"

In Appendix 9 ofthe GATT it is pointed out in reference

to the definition in Article 6 Section 1: "For commodities imported from countries where trade is a state

monopoly, or from countries in which the state fixes all

domestic prices...it is not always suitable to use the

domestic prices of these countries for strict comparisons." It is this provision that serves the Western developed countries as legal basis in their antidumping legislation to prescribe special provisions dealing with

commodities from so-called non-market-economy countries. Thus, the United States has adopted this principle

in differentiating between market-economy countries

and non-market-economy countries in the provisions of

its antidumping legislation.

The U.S. antidumping law considers production and

exports of non-market-economy countries to be to a very

large extent controlled by the governments of these

countries. Their commodity prices are not at all closely

related to production costs, also not determined by the

law ofsupply and demand of a market economy, but are

fixed administratively by the government, therefore not

factually true. Moreover, raw materials, energy, wages,

and similar elements in the non-market-economy countries are also restricted by plan norms, which distorts the

production costs of enterprises, so that their prices

cannot reflect the structure of their production cost. In

view of all these facts, it stands to reason that the

domestic prices of goods in non-market-economy countries cannot serve as basis for a comparison with sales

prices in the U.S. market, thus cannot serve as basis for

a determination of fair value, and that is why it was

necessary to formulate special provisions.

2. Main Content of the "Special Provisions"

How to determine fair value for goods coming from

so-called non-market-economy countries? In its special

provisions, the U.S. Antidumping Law establishes a

"surrogate country" system. According to this system,

fair value for these goods may be determined in the

following manner:

First, the Department ofCommerce may select a marketeconomy country which has a similarly developed
JPRS-CAR-89-104

23 October 1989 ECONOMIC 23

economy to serve as surrogate country for the nonmarket-economy country in question. The domestic

market price of similar goods produced in the surrogate

country may then serve as basis for comparison of sales

price of goods produced by the non-market-economy

country in question, and may thereby determine the

extent of dumping that might be involved in the case of

this particular product. If production of the same or

similar products makes up only a very small proportion

of the domestic market in the surrogate country, the

export price ofthe said product to a third country may be

regarded as its fair value. In the 10 or more cases of

alleged dumping by China, the countries ofIndia, Brazil,

Indonesia, Sri Lanka, and the Philippines had been

selected as surrogate countries.

Second, if the Department of Commerce cannot select a

surrogate country, or if the selected country does not

produce similar products, or if the surrogate country or

its producers refuse to provide relevant data relating to

their production and marketing, a method of "constructed prices" may be adopted to determine fair value.

This method consists oftwo steps: First, the Department

of Commerce carefully studies the production process of

the product involved in the non-market-economy

country concerned to determine the costs of producing

the product in question, such as its raw materials, labor

expenses, marketing and administrative expenses, and

its profit margin. Second, the Department of Commerce

will effect certain adjustments, taking as basis the

assessed costs of the mentioned factors in a marketeconomy country of a similar economic development as

the country in question, and will in this way finally

compute the "constructed price" for the said nonmarket-economy country as criterion for the determination of fair value. Obviously, this method still involves

the problem of selecting the right surrogate country.

It must be pointed out that the new provisions of the

U.S. Comprehensive Trade and Competition Law of

1988 (hereafter "Comprehensive Trade Law") will

change the method of mainly adopting domestic and

export sales prices of surrogate countries as criteria for

determination, as mainly prescribed in the U.S. Trade

Law of 1974, in the matter of determining fair value of

goods exported by non-market-economy countries. In

their stead, preference will be given to the use of the

method of constructed prices (key elements of production). It means that fair value will be composed of the

key production elements used in producing the product

under investigation, which include labor, raw materials,

energy, and any other expenses for equipment, depreciation, and so on.2

These key elements of production

must still be assessed according to prices prevailing in

market-economy countries of equal economic development.

Third, if the above-stated two methods will not yield a

fair value, the rules ofthe Department ofCommerce will

allow, as a final option, an appropriate adjustment

according to data on expenditure for the same or similar

products in U.S. production, so as to compute constructed prices, as criteria for determining fair value; this

method is called "U.S. pricing."

The special provisions applying to non-market-economy

countries in the U.S. Antidumping Law contain much

that is irrational and discriminatory. They seriously

harm the interests ofthe non-market-economy countries

in their export trade to the United States. As a result,

they place the products of non-market-economy countries in a highly unfavorable position in all antidumping

proceedings.

II. Precautions and Countermeasures Against the

Antidumping Law

During the 10 years of reform and opening up, China's

foreign trade has made considerable progress. However,

in the present international economic climate, when a

stage has been reached of economic slow-down in the

major countries of the Western economy, a new trade

protectionism has gradually arisen with intensified force.

For this reason, a continuous string of cases has occurred

in China's export trade to the United States, where U.S.

authorities have utilized their antidumping legislation to

impede the importation of Chinese commodities. Since

1983, dumping was charged by the United States in the

case of 19 items of Chinese products. As seen in the

decisions in the great majority of these cases, the outcome ofthe proceedings has been unfavorable for China.

Among items involved, potassium permanganate,

canned mushrooms, printed cotton-terylene cloth, dishcloth, tungsten sand and tungsten products, and cast

iron, were all declared subject to U.S. dumping tax, and

such products as brushes and candles were also mandatory in being precluded from the U.S. market. The

above-mentioned antidumping cases involved millions

upon millions of dollars of foreign trade, and have

resulted in China suffering huge economic losses.

The U.S. Antidumping Law constitutes by now a big

obstacle that affects China's export trade to the United

States, and this makes it necessary to carefully study it

and to adopt various precautions and countermeasures

to respond to the antidumping problem in a rational,

favorable, moderate, and effective manner, so as to

prevent further harm to China's export trade, and to

protect the interests of our country and of our enterprises.

A. The "Surrogate Country" Problem

To resolve the problem of China's exports to the United

States being accused of dumping, it is necessary to first

resolve the problem of the so-called surrogate country,

i.e., the question whether China should be counted as a

non-market-economy country. In actual practice, China

has all along been treated as a non-market-economy

country. On the one hand, it was to be governed by the

general principles ofthe U.S. Antidumping Law and also

by its special provisions. On the other hand, China was

also subjected to the restrictions of a system that was
24 ECONOMIC

JPRS-CAR-89-104

23 October 1989

devised particularly against communist countries. In all

antidumping proceedings involving Chinese products,

China has always tried to prove the existence of a market

economy in China, but China's domestic market prices

have never been taken into consideration in the determination of fair value. This has been the case even for

commodities, such as candles, bristle brushes, and menthol, where the Chinese government does not exercise

effective and direct control over their production and

marketing, and where prices are to a considerable extent

determined by negotiations between buyers and sellers

and by market quotations. However, the U.S. Department of Commerce still refuses in its quibbling ways to

accept China's domestic market prices as basis for determining fair value.3

The system of "surrogate countries" completely ignores

the comparative cost advantage in non-market-economy

countries, and makes it impossible for the nonmarket-economy countries to predict whether their

products will be accused of dumping. Because the ways

in which the surrogate countries are selected, and the

ways adjustments will be effected due to differences in

industrial conditions, marketing conditions, and differences created by the degree of economic development,

are all determined to a very large extent by uncertain

factor and subjective factors. For instance, during the

dumping proceedings concerning Chinese steel nails and

various steel pipes, the U.S. Department of Commerce

adduced Argentina and South Korea—countries much

more industrialized than China—as surrogate countries

to determine the fair value of China's steel nails and

various steel pipes.4This is a case of much subjective

assumptions and actually opens a large convenient door

for discrimination against non-market-economy countries.

Moreover, if it happens, when using the method of

"surrogate countries" to determine fair value, that the

selected surrogate country or its manufacturers refuse to

provide production and marketing data, or that they

provide false data to mislead the competition, this

method will in every case seriously harm the interests of

the non-market-economy countries. In actual fact, even

ifthe surrogate country and its manufacturers are willing

to sincerely cooperate, there is also possibly no way to

assemble and sort out in a short time the data required

for so extremely widespread a scope and in the great

detail required. Under these conditions, the method of

constructed prices may be used to compute fair value,

with the result that these prices will be much higher than

the domestic prices in the non-market-economy countries. This method was, for instance, used by the U.S.

Department of Commerce in antidumping proceedings

concerning China's exports of cast iron and porcelaininsulated steel tools.

An appropriate resolution of the "surrogate country"

problem will depend on a variety offactors, in particular

on efforts on both sides. First, as far as China is concerned, since opening to the outside world and invigorating the domestic economy was established as the

country's fundamental policy at the 3d Plenary Session

of the 11th CPC Central Committee in 1978, China has

carried out a series of economic structural reforms, as,

for instance, instituting the output-related contractual

responsibility system, allowing a variety of forms of

enterprises, trials of the shareholding system, of the

leasing system, and so forth; especially as the initial

reform of the pricing system has begun a shift of the

former seriously distorted pricing system toward a more

rational system. The former ossified state of prices being

unifiedly fixed by the state has been abolished, and a

variety of pricing forms have been introduced, such as

prices uniformly fixed by the state, floating prices, and

free prices. Prices for agricultural products have essentially been decontrolled. Prices for small commodities

among industrial consumer goods have been decontrolled. A double track system is in effect for prices of

capital goods, and, furthermore, markets begin gradually

to appear and take shape for capital funds, labor, and

commodities and raw materials. The further deepening

of China's political and economic structural reforms is

bound to promote the increase of the market element.

This trend is initially laying the foundation for the

replacement of the "surrogate country" method by the

method of using true domestic market prices in the

computation of fair value.

Second, both China and the United States must use

various ways to intensify "dialogue," and on the basis of

equality and mutual benefit appropriately resolve the

problems of protectionism and discrimination in trade,

and press for an early resolution of the "surrogate

country" problem. In actual fact, it is absolutely possible

to regard China as a market-economy country. In recent

antidumping proceedings concerning importation of

Chinese candles, the U.S. Department of Commerce

mentioned that the sustained impact of the free market

on China's economy may allow the Department of

Commerce to change China's status of nonmarket-economy country in future antidumping investigations. On official and private occasions, officials ofthe

U.S. Department of Commerce have hinted that under

appropriate circumstances they do not rule out the

possibility of applying to Chinese products the methods

of analyzing particular economic sectors. That means,

they will examine to what extent respective single economic sectors of China are controlled and subject to

intervention by the state, when they will determine

whether to use China's domestic market prices to compute fair value. 6

For this reason, China's foreign trade

corporations, export enterprises, and others should

strongly argue their point on the basis of reason and take

positive action in the case of those industries and products for which the Chinese Government has already

relaxed economic control, firmly insist that true

domestic market prices be used to replace the methods

used by the "surrogate country" in computing fair value.

B. The "Price War" Question

If we objectively analyze the reasons for complaints in

the United States against China's export products, we
JPRS-CAR-89-104

23 October 1989 ECONOMIC 25

will discover that "price war" is one of the major

reasons. The structural reform of foreign trade and the

downward delegation of management powers have

brought about a sharp increase in China's export channels Add to this the relaxation of macroeconomic controls by government departments, and we find that the

foreign trade corporations and export enterprises, in

order to accomplish their export and foreign exchange

earning plans, engage in overlapping and speculative

business operations without regard for profit or loss,

competing with one another and cutting prices. This

form of internal strife, a "price war," did not only

seriously damage China's macroeconomic effectiveness

but also disturbed the regular international trade order,

and it also provided a handle for the United States in its

antidumping proceedings. For instance, in 1979, China

exported only 120 metric tons of canned mushrooms,

which made up 0.24 percent of the value of all canned

mushroom imports by the United States during that

year By 1981, China's shipments had increased to

13 005 metric tons, which accounted for 28.9 percent of

the total value of all U.S. imports of this commodity. In

2 years the net export volume had increased 108 times,

while the export unit price had declined from an average

of $0.67 to $0.47, and as a result, China was accused of

violating the antidumping law. According to another

report, a certain Chinese textile company, a certain

handicraft articles company, and a certain animal products company, all were handling the sale of dishcloth.

They competed with each other and cut prices, until

finally the dishcloth was offered at 8 or 9 cents a piece,

which made the United States impose an antidumping

tax of 38.8 percent. Similar chaotic conditions exist in

China's export trade to other countries and territories.

The above-mentioned conditions clearly show that due

to deficiency in China's foreign trade system and management, an insufficient understanding on the part of

foreign trade companies and export enterprises of the

international market, and their irresponsible "price

wars" are factors that have led to much too low a price

for many products, thereby providing some parties with

a convenient handle in antidumping proceedings. It is

therefore necessary that government departments intensify macrocontrol of the export trade, that they strictly

mend defects within the next few years, and that they

unswervingly, on the basis of having everybody "responsible for his own profits and losses," decontrol business

operations, establish, perfect, and fully bring into play

the role of chambers of commerce for import and export

trade in respect of coordinating prices and trade volume.

At the same time, foreign trade corporations and export

enterprises must greatly intensify their research of international markets, so as to be able to set rational prices,

and to avoid unnecessary loss of export profits, also to

avoid the troublesome involvement in antidumping

suits.

C. The Question of "Active Response"

Generally speaking, after antidumping proceeding has

started, and during the hearings and investigations ofthe

case, it is possible for the exporting country being sued to

have an active influence on the ruling if the exporting

country energetically adopts measures on his own

accord provides promptly abundant material in evidence,'closely watches the trend of investigations and

hearings, and uses all legal facilities to argue his case on

the basis of reason. This is what I tentatively call it a

"positive response." In the opposite cases, if the

exporting country being sued ignores the proceedings

and allows matters to drift, that, no doubt, is a "negative

response." China's practical experiences have proven

this point. In the past, when accused by foreign businessmen in antidumping proceedings, China's foreign

trade corporations were in the habit of waiting, looking

on passively, procrastinating, or pinning their hopes on a

resolution of their problem by some negotiations

between the two governments. This way of handling the

situation is totally unsuitable. We must on our own

accord launch the attack, take the initiative, and use all

legal means to protect and ensure China's export trade

interests.

Every foreign trade corporation and every domestic

enterprise that manufacture export goods must regularly

and systematically gather and preserve relevant export

product data obtained from the international market,

each concerning its own sphere of trade, such as changes

in the supply and demand relation, changes in product

prices, in production techniques, in quality, and in the

volume available abroad of similar products. The data

should also include the proportions and distribution of

the products in the international market, who the main

international competitors are, and whether the product

has potential to expand, the unique characteristics ofthe

technique used and the quality of the product manufactured by the domestic enterprises, any disparity in

quality as compared with similar products produced

abroad, changes in production costs, the income differential by the export producing enterprise between

domestic market and the international market. In the

process of gathering data, one must also pay attention to

gather data from the surrogate country normally selected

by the capitalist country that accuses China of dumping.

The above could mainly be undertaken by the commercial information departments, institutes (sections or

offices) established in the various departments.

Long-term and systemic gathering of relevant data will

be helpful not only for us to open even broader international markets and to allow timely action to adjust our

export marketing policy, but also to avoid as much as

possible foreign antidumping proceedings against us.

Gathering pertinent information can also help us gain

the initiative in antidumping proceedings, enabling us to

make a "positive response," thus avoiding unnecessary

losses. In several antidumping proceedings in which

China came out victorious, the most important experience was that full and effective data could be promptly

presented as basis for China's retorts and arguments.

First, prompt presentation offull and effective proof can

have a certain influence on the choice of the surrogate
26 ECONOMIC

JPRS-CAR-89-104

23 October 1989

country. Although according to the provisions of the

U.S. Antidumping Law, the Department of Commerce

enjoys a certain freedom of decision in its determination

of the surrogate country, fully substantiated suggestions

by China's foreign trade corporations and export enterprises as to which country would be most suitable will

certainly be an important factor in influencing the

Department of Commerce in its selection. An extremely

decisive reason why China was successful in the "dumping" proceedings concerning Chinese menthol sold to the

United States was, we may say, that the Chinese side

exerted great effort to have selected Paraguay instead of

Brazil as surrogate country in South America. In the

opposite case, one of the important reasons why China

suffered defeat in the proceedings about printed dacron

fabric was that we could not get Pakistan but had to have

Thailand as our "surrogate country."7

Second, prompt presentation of full and effective material as proof can also influence the decision of the

International Trade Commission. In the process of that

commission's findings whether the sale of the commodities in question cause "material injury" to a similar

branch of U.S. industry, China's foreign trade corporations and export enterprises must present material in

proof of the following types to bring about an appropriate resolution of the case: First, the scope of the

investigation on the said industry must be broadened as

much as possible, because the broader the area of investigation, the smaller the impact would be on the

imported product, and the more difficult it would it be to

establish that there is a condition of "material injury."

Second, to prove that there is no causality relationship

between the "material injury" suffered by the related

industry of the opponent and the importation of the

Chinese products. In fact, China can say that that

"injury" was caused by factors on the opponent's part,

such as ineffective enterprise management, strikes, inflationary prices in raw materials, and so on. For instance,

in the "dumping" proceedings concerning Chinese menthol, the head office of the China Native and Animal

Products Export Corporation presented actual material

that successfully proved that the injury suffered by the

U.S. industry was not at all due to the importation of

Chinese menthol, but was brought about by wrong

assessments on the part of the U.S. firms on their

menthol supply and demand situation and on the international market price trend of the menthol product.

Third, to prove that the increased share of the market

taken up by China's export product depresses the market

share that had been taken up by the export products of

another country, and that this does not impinge on the

markets of the opponent's industry.

During investigations and hearings of antidumping proceedings, China's foreign trade corporations and export

enterprises must also actively link up with the importing

merchants (customers abroad), to engage specialized

lawyers on the spot and to jointly counter the antidumping charges, because the foreign importer has a

direct interest in victory or defeat in such proceedings.

The importer, furthermore, will generally have broad

social connections and convenient working conditions at

the location in question, and will be familiar with the

production, supply, and sale ofthe domestic products, as

he will also be well informed of the importation of

similar products from third countries. He will be able to

provide background material relevant to the case and

will be able to find witnesses and material proof which

may be unavailable to us. Moreover, the local specialized

lawyer will be familiar with trade and legal regulations of

the country in question, and will know of past precedents

to the case in question. This will be extremely beneficial

for the analysis of cases and the selection of different

countermeasures to cope with different circumstances.

Finally, during investigations and hearings of antidumping cases, if circumstances indicate that chances of

victory are minimal, it may be still possible to actively

seek other remedial measures to achieve a mutual compromise or mutual concessions with the plaintiff, and it

may then be possible to take the initiative in urging the

plaintiff to withdraw his complaint, or to take the

initiative in cooperating with the organization in charge

to reach a certain agreement on eliminating any

dumping and any cause of harm. The organization in

charge may be able, in conformity with the so-called

public interest and with effective control and supervision, to suspend further examinations and hearings in

the antidumping proceedings. This method of dealing

with the situation may, under certain conditions, be also

beneficial for our side.

Footnotes

1. Selection ofImport and Export Cases, by Qian Yiming

[6929 4135 2494] Vol 3, p 15.

2. DUIWAI JINGMAO YANJIU [STUDY OF FOREIGN ECONOMIC RELATIONS AND TRADE], No

40 (1988) p 3.

3. "The U.S. Antidumping Law and Sino-U.S. Trade,"

by Wang Guiguo [3769 6311 0948], JINGJI YU FALU

[ECONOMICS AND LAW], No 8 (1987).

4. GUOWAI FAXUE [JURISPRUDENCE ABROAD],

No 5 (1987), p 21.

5. Ibid.

6. Ibid.

7. DUIWAI JINGMAO YANJIU, No 31 (1982).

New Approach to Improved Investment Climate

40060729b Beijing GUOJISHANGBAO in Chinese

26Aug89p 3

[Article by Wang Jiquan 3769 4949 0356: "From Competition To Improve Terms to Competition To Improve

Climate: A Discussion of the Approach China Should

Take To Improve Her Investment Climate"]
JPRS-CAR-89-104

23 October 1989 ECONOMIC 27

[Text] On the question of how we should improve

China's foreign investment climate, many comrades

continue to stress tax incentives and, even in this era of

control and consolidation, still hope that the state and

localities will be able to open the door again and wider

and thus have neglected comprehensive improvement of

the investment climate.

It should be admitted that, for a time, tax incentives did

play a big role in attracting foreign investment. However,

constant flux in the world economy alters the efficacy of

such incentives. As the board chairman of the Western

European Headquarters of the International Wool Secretariat puts it, 350 trade barriers will be eliminated and

free trade inaugurated when the EC establishes a unified

market in 1992, and when that happens China's clothing

and textile exports to Western Europe will no longer be

able to compete solely on the basis of price. He raised the

following three suggestions on how to expand exports to

Western Europe:

1. Continue improvement in supply service capability in

the region.

2. Improve product quality.

3. Be attentive to the requirements of specific subregions.

Ever since China opened up to the outside world, governments at all levels have drawn up a succession of

income tax abatement schemes. According to statistics

from the State Administration of Taxation, the actual

income tax rates for production enterprises established

in open coastal cities were 7.2-7.9 percent during the 5

years and 15.6-17.2 percent in the decade prior to this

year.

In Nanjing, for example, the vast majority of the 53

joint-equity ventures established from 1984 to the end of

last year were production-oriented and thus received

appropriate preferences. Computed in terms of the

average annual profits of the firms that have gone into

production, the actual income tax rate for during past 4

years was 7.6 percent.

This tax policy is very favorable indeed. Yet what

troubles foreign businessmen about our tax policy for

foreigners is not insufficient concessions but the following:

1. Many administrative levels are involved. Some

regions frequently provide "more concessions" than

provided in state tax law, to which foreigners respond:

"Since you can beckon us in, who can guarantee that you

won't one day wave us off." It now appears that such

concern is not unwarranted.

2. Laws are not strictly enforced. Some state policies,

though on the books for years, have not been carried out

in certain localities and, even when implemented, are

effected haphazardly; and problems foreign businessmen

urgently need resolved get ignored and go unremedied.

Under such conditions, rather than putting effort into

drawing up new rules and regulations, it would be better

to hunker down and fully implement existing state

preferential policies, for this approach would be more

effective.

Income tax abatements are a basic approach employed

by developing countries to attract foreign investment.

But do such incentives appeal to investors? The answer

varies.

China has already signed agreements to prevent double

taxation with 22 countries and has drafted or is negotiating such agreements with 10 other nations.

The Chinese government stipulates: "Income tax paid by

a joint venture or its branches in other countries may be

credited against the assessed income tax of the head

office as a foreign tax credit" (The Income Tax Law of

the PRC Governing Joint Ventures Employing Chinese

and Foreign Capital). In accordance with the agreements, joint ventures based in countries signing the

agreements are eligible for the credit. Simply put, this

means that the tax is paid once, not twice, in the country

of residence, not the country in which the investment is

made. So if foreign firms have already been rendered

eligible for the credit by their own governments [through

the act of signing of double tax avoidance agreements

with China], the firms stand to lose that credit if the

Chinese government grants them tax abatements. Thus

our tax incentives do not benefit the firms very much,

and such concessions alone do not provide the firms with

sufficient incentive to invest in China.

In our dealings with other countries, we have discovered

that tax preferences constitute but one way to attract

investment. What concerns most foreign investors in

China is the stability and continuity of our policies as

well as availability of transport, communications, water,

electricity, producer goods and materials; administrative

efficiency; and the like. In some localities, infrastructure

is poor, and communications, especially, are backward:

"Fingers swollen from dialing local calls and bones

wearied from waiting for long-distance calls to get

through" irk foreign businessmen.

Comrade Ye Longfei [0673 7893 5777], Shanghai deputy

secretary general and a responsible member of the

Shanghai Foreign Investment Work Commission stated

at the recently convened Symposium on Cities in the

Pacific Region that the current trend in the effort to

attract foreign investment is changing away from competition to extend favorable terms toward competition to

create good investment climates. Years of experience has

shown that, in improving the policy environment, tax

incentives, on which we previously relied, are no longer

effective.

Because the economies and productive structures of

developing countries are converging, the laws and preferential treatment the countries, with few exceptions,

employ to encourage foreign investment have become

very similar. Everyone is reducing income tax rates, and

the differences in concessions granted are gradually
28 ECONOMIC

JPRS-CAR-89-104

23 October 1989

narrowing. Foreign businessmen increasingly are basing

their siting selections on the administrative systems,

experience, and efficiency and the urban infrastructures

of the host countries.

Thus, to attract more foreign investment, we must shift

our focus from tax incentives to investment climate

improvement, such as improvement of our administrative system, infrastructures, joint venture management,

administrative work methods, and so on.

Since opening up in 1984. Dalian has conscientiously

implemented state policy on foreign relations and unstintingly effected comprehensive development of its

investment environment, in terms of both policy and

infrastructure.

First, the city has concentrated human, material, and

financial resources on a number of key infrastructural

projects, which began to yield benefits in 1988, so that

international investors' demands concerning civil aviation, transport, port facilities, communications, housing,

energy, and the like have basically been met. Second, for

two straight years the city has stressed improvement of

its investment climate, established local laws, regulations, and policies; set up the External Economic and

Technological Cooperation Center; become a true

window to the outside world; simplified approval procedures; and initiated efforts to improve administrative

efficiency and service throughout the city.

Third, to provide proper service to enterprises funded

with foreign investment, the city has set up a special

Production Coordination Team for Foreign-Financed

Enterprises and graduated improved markets for the

means of production, personnel, capital, information,

and other things foreign investors need.

These preliminary steps toward the development of a

good investment climate have enabled Dalian to win

notable success in attracting foreign investment. In 1988,

the city approved the establishment of 127 joint-equity

ventures, exceeding the total of 11 set up in the previous

4 years combined. We could profit by drawing some

inspiration from the Dalian experience.

Examination of Issues in Export Agency System

40060729a Beijing GUOJ1 SIIANGBAO in Chinese

26. tug 89 p 3

[Article by Peng Kean 1756 0344

tion of Export Agency"]

344: "A Recxamina-

[Text] China is a developing country, and encouraging

exports and increasing foreign exchange earnings form

the basic starting point of our policy of opening up to the

outside world.

Nevertheless, with the planned market economy still

undeveloped, our market and price systems need to be

improved and completed, pricing remains "doubletracked," competition is unfair, and the economic environment and order are targeted for control and consolidation. Thus, we must use state regulation to resolve

concrete problems in export agency and create "leeway"

for both industry and foreign trade, especially for producer enterprises. The GDR and the Soviet Union

possess much experience in "integrating industry and

trade" and in encouraging exports on which we might

draw. In view of actual conditions prevailing in China,

the following five problems must be clarified and

resolved.

I. Prices

Domestic prices arc the key to and have a direct bearing

on export costs and international economic competition

The transformation ofChina's price mechanism remains

incomplete, so the state cannot relax and abandon price

control.

The "gap" between the costs of Chinese exports and

international market prices is manifested primarily in

the fact that domestic prices are higher than international prices for processed products, a situation that is

most inimical to our export competition. Full resolution

of this state of affairs awaits advances in economic

restructuring and improvement in enterprise productivity. Nevertheless, domestic price "distortion" cannot

be eliminated overnight, yet implementation of the

export agent system cannot be delayed. Two interim

measures may be employed to resolve this contradiction.

The first is to have the state formulate "base prices" for

goods exported through agents, making these base prices

the production cost for exports and thus providing

enterprises with preferential treatment. The advantages

ofthis measure are, first, that it would enable the state to

reward advanced units and spur laggard units and,

second, that the measure would prevent "cutthroat

underpricing and letting profit go abroad."

The second measure is to have the state effect planned

allocation of raw materials to enterprises producing for

export. Without this approach, enterprises would be

responsible for their own profits and losses; with it, we

can prevent units from exploiting unusual circumstances

to reap huge profits. These interim measures would be

readjusted as economic restructuring advances and production develops.

II. Tax Rebates for Exports

The reason why the state, at the present stage, rebates

indirect taxes imposed on goods sold abroad is to reduce

to some extent international-domestic price discrepancies. Another aim of the program is to eliminate a past

bias of looking down on exports, which stems from the

fact that our processed and manufactured exports generally are taxed twice—it makes sense to rebate one tax

while retaining the other. The rebate will help enhance

international competition and improve our export line.

When export agency is instituted, responsibility for
JPRS-CAR-89-104

23 October 1989 ECONOMIC 29

export profits and losses will be turned over to producer

enterprises, which should receive rebates to offset their

export production costs.

III. Bank Credit Funds

Banks are one ofthe three principal economic regulatory

institutions in China and play two regulatory functions

in market economy development: one is the scale and the

other the structure. The Bank of China, a specialized

bank for foreign exchange, is responsible for managing

China's opening to the outside world and its foreign

exchange and credit operations. To implement the

agency system on a broad basis, to encourage exports,

and to dispel the anxieties and difficulties of producer

enterprises, I suggest that Bank ofChina create a "special

credit account for exports in transit" for producer enterprises whose goods are exported through export agents.

When exports leave Chinese port, the bank would issue a

"credit" loan based on export agency contracts and

copies ofthe various documents presented by the export

agents of the foreign trade companies. The loan and

interest would be deducted from the amount received

through export foreign exchange settlement. The advantages of this approach are as follows. —Producer enterprises would have a secure source offunds and thus have

their anxieties relieved. Bank institutions would be

involved in circulation, be on top of information, and

monitor and control expenditures abroad. —The

approach would increase the degree of understanding by

the producer enterprises on export cost accounting.

—Banks would have the basis to control and adjust the

investments.

IV. How Foreign Exchange Contract Base Figures Are

Apportioned

Beginning in 1988, the State Council approved the task

of setting foreign exchange earnings quotas and the

implementation of contracts integrated both centrally

and locally and within the producer enterprises. The

producer enterprises exporting through agents are to

subcontract a portion of the contract quotas assumed by

foreign trade companies, so industry and trade both will

assume responsibility for fulfilling foreign exchange

earning targets (contract base figures). Producer enterprises bear responsibility for remitting their quotas of

foreign exchange to central and local governments. The

government and financial departments in the producer

enterprise's locale will show solicitude for and help the

firm resolve problems. Foreign exchange is to be distributed according to the following principle: First, remittances are to be delivered to the state, then localities and

enterprises may retain their respective shares. When the

producer enterprises complete the foreign exchange

above their quota, besides having the privilege of

retaining a share oftheir contract earnings, they are also

entitled to the share by the reverse 2:8 ratio established

by the state for the above-mentioned quota earnings.

When producer enterprises fail to earn enough foreign

exchange to fulfill their quotas, they must come up with

funds to purchase foreign exchange so as to pay off the

quota shortfall. Producer enterprises are authorized to

use and distribute their share of foreign exchange. In

accordance with state regulation, this share is to be

treated as aftertax profits and may be used to defray

employee benefits and bonuses.

V. Formulate an Incentive System for Export Agency

Upon implementing export agency, producer enterprises

should be eligible for state-approved export incentives.

We should draw on foreign experience and have foreign

trade companies draw up "reward and penalty systems

for external sales personnel." This approach would give

such personnel a greater sense ofresponsibility, as well as

incentive, in foreign affairs work. After signing agency

contracts with foreign trade companies, producer enterprises may, depending on how the agency work is proceeding, allocate bonuses from export profits in order to

reward merit in foreign trade work.

CEIEC To Expand Electronics Trade

HK0210001689 Beijing CHINA DAILY in English

2 Oct 89 p 2

[By staff reporter Zhang Yuan]

[Text] China's major trader of electronics products is

poised for an ambitious expansion programme, aimed at

increasing its exports by an annual 15 per cent over the

next few years, CHINA DAILY has learned.

To achieve this goal, the China National Electronics

Import and Export Corporation (CEIEC), whose total

import and export volume reached $900 million last

year, has devised a three-pronged plan.

The scheme calls for CEIEC to launch a nationwide

conglomerate for exports, the exploration of new overseas markets, and readjusting the products for export.

Ouyang Zhongmo, CEIEC's president, told CHINA

DAILY that he plans to set up a group of closely related,

export-oriented enterprises and to find new markets

abroad.

The export group, whose establishment is waiting

approval, is expected to be made up of enterprises from

the economically more advanced areas of eastern,

southern and southwestern China, he said.

The group would bolster the Beijing-based CEIEC's

export ability because each member company has its

own export products and overseas markets.

CEIEC, which already has four subsidiary and 29 branch

companies throughout China, is now a major electronics

importer and exporter in China.

To promote foreign trade, it has set up representative

offices in Hong Kong, New York, Frankfurt and

Bangkok.
30 ECONOMIC

JPRS-CAR-89-104

23 October 1989

The corporation will stress opening West European and

North American markets as well as expanding exports to

the Soviet Union and Eastern Europe.

At present, CEIEC mainly exports its products to Hong

Kong, Macao and Southeast Asia, the president said.

Some products, such as colour television sets, have

already entered Western Europe.

Electronic products are among the most popular imports

from China in the Soviet Union and some East European

countries, and the market is expected to expand substantially there. But for now, imports of Chinese electronic

exports to these countries are limited by the form of

trade—barter, he said.

Given the present technical level and production

capacity of the country's electronic industry, the president said, consumer products such as television sets and

audio equipment will remain the key export items and

the corporation will aim for the middle and low-grade

levels of the international electronics products market.

"We'll expand the output of technology-intensive products and products with high-additional value for

export," he said.

This will require CEIEC to improve its ability to adapt to

changes in the world market, he said.

To do so, CEIEC will emphasize readjusting the products for export in a timely manner and upgrading and

modernizing those products.

At present, the range of electronic products exported by

the corporation has increased from a few dozen to

several hundreds, including television sets, audio equipment, electronic medical instruments, digital multimeters, communication equipment, small-scale electronicprogrammed telephone switching systems and various

other electronic devices.

Dalian Exports Cargo Vessel to Belgium

OW3009030189 Beijing XINHUA in English

1714 GMT 29 Sep 89

[Text] Dalian, September 29 (XINHUA)—China's first

roll-on-roll-off cargo ship for export, named the "Eglantine," was launched at eight o'clock this morning at the

Dalian shipyard, in northeast China's Liaoning Province.

This is the first time for China to build and sell abroad

this type of vessel, and it is also the 18th ship built for

export by the Dalian shipyard over the past ten years.

The ship, of 7,200 dwt, was made for the Cobelfret

Company of Belgium. It is 147 m long and 21 m wide. It

can accommodate 415 standard containers and 75 automobiles.

The ship is fitted with satellite navigation, double main

engines, unmanned engine room and other modern

installations. Its speed can exceed 15 knots.

The Dalian shipyard is the only one in China that can

build 100,000 dwt to 150,000 dwt cargo ships. It has

been approved by the classification societies of Norway,

Sweden, Britain and the United States.

Guangxi Called 'Major Channel' in Foreign Trade

HK0210025989 Beijing ZHONGGUO X1NWEN SHE

in Chinese 0756 GMT 27 Sep 89

[Report: "Guangxi Serves as a Major Channel of Southwestern China in Opening Up to the Outside World"—

ZHONGGUO XINWEN SHE headline]

[Text] Nanning, 27 Sep (ZHONGGUO XINMEN

SHE)—Guangxi, which has a boundary line of 1,020 km,

has always been an important military center on the

southern border of China. Since entering the new period

of reform and opening up, Guangxi has gradually

become a major channel through which southwestern

China opens up to the outside world, and it has demonstrated great importance both militarily and economically.

To support the front during the counterattack in selfdefense against Vietnam 10 years ago, Guangxi's economic construction was affected. It sacrified itself in

exchange for tranquility in the rear area of China. In

Guangxi there was a land route, called the "Ho Chi Minh

Path," leading to Vietnam; there was a water route, also

called the "Ho Chi Minh Path," originating from today's

Fangcheng port.

In 1984, the state incorporated Fangcheng port into

Beihai City and opened it to the outside world. By 1986

the port had built seven 10,000-ton class wharves with

an annual handling capacity of 3.6 million tons, thus

becoming one of the 10 major ports in China. Two

10,000-ton class wharves have also been built in Beihai

City. Some provinces and cities in southwestern and

central south China first deliver their materials to these

two ports and then, after loading them onto ships,

transport them to Southeast Asia and Western Europe.

This route is several hundred km shorter than that

through Guangzhou and Zhanjiang. This once littleknown military port has now become the most convenient export trade port for some provinces and cities in

southwestern and central south China. At present, the

two harbors have business contacts with more than 80

countries and ports throughout the world.

There are three trunk railways linking Guangxi and

southwestern and central south China, the GuizhouGuangxi, Hunan-Guangxi, and Zhijiang-Liuzhou railways. The linking of the Nanning-Fangcheng and

Hunan-Guangxi railways in 1984 has even more closely

connected the hinterland of southwestern and central

south China with the coastal areas of Guangxi. More

than 80 percent of the exported materials from some
JPRS-CAR-89-104

23 October 1989 ECONOMIC 31

provinces and cities in southwestern and central south

China, and nearly all of their imported materials, are

exported or imported through Guangxi, which is the

transfer point. Liuzhou City, situated in the central part

of Guangxi, has become a hub of railway communications linking southwestern and central-south China.

In the past, there were hardly any vehicles from Yunnan

and Guizhou running on the highways of Guangxi, but

now there are always big transport motorcades from

Yunnan and Guizhou. In the first 10 days of September,

Guangxi and Guizhou also succeeded in jointly opening

up land-and-water coordinated transport through the

Nanpan Jiang, Beipan Jiang, and Hongshui He, thus

opening another passage for the transport of mineral

products, like coal and phosphorus, from Yunnan and

Guizhou to Guangdong and their export abroad. Meanwhile, some 20 airline routes from Guilin, Nanning,

Beihei and Liuzhou to various parts of the country have

shortened the spatial and temporal distances between

Guangxi along the southern border of China and the

hinterland.

Following the opening up of cities and counties like

Beihai, Fancheng port, Yulin, Wuzhou, and Qinzhou,

Guangxi is gradually becoming an investment center for

economic construction, southwestern and central south

China have asked Guangxi to join in their economic

cooperative regions. Over the past few years, some

provinces and cities in southwestern and central south

China have invested more than 200 million yuan in over

700 cooperative projects in Guangxi. A responsible

person of the department concerned said, "This is just

the beginning. The trend of other provinces investing in

Guangxi will grow rapidly in the future."

Qinghai Exports Horsemeat

OW0310172389 Beijing XINHUA in English

1433 GMT 3 Oct 89

[Text] Xining, October 3 (XINHUA)—Qinghai Province in northwest China recently delivered its first batch

of 30,000 kg of horse meat to Japan.

Compared with pork and beef, horse meat is low in fat

but high in protein and iron.

Qinghai is the main horse-raising area in China. There

are about 500,000 horses in the province. With the

development of modern means of transport, horses are

no longer used as draught animals. Besides, horses vie

with cattle and sheep for forage which damages the

grasslands.

Qinghai Cereals, Oils and Foodstuffs Import and Export

Corporation handles the export of horse meat.

Shaanxi Attracts Foreign Funds

HK0410104689 Xian Shaanxi Provincial Service in

Mandarin 0300 GMT 4 Oct 89

[Excerpt] In the 10 years of reform and opening up, our

province has made much headway in using foreign

funds.

By the end of August this year, the province had

attracted foreign investment funds of $1.3 billion in the

form of signed agreements and used over $500 million;

and there had been 142 Chinese-foreign joint ventures,

cooperative enterprises and exclusively foreign-funded

enterprises throughout the province. While securing and

using foreign investment funds, our province has made

continuous efforts to improve the investment climate

and developed more production-oriented and exportoriented enterprises. Foreign investment in productionoriented projects in the proportion of using foreign funds

increased from 43.8 percent in 1985 to 85.7 percent,

with the focus on industrial enterprises, the building

industry, the processing industry and service trade. This

has played a positive role in readjusting the production

structure of our province, [passage omitted]

TRANSPORTATION

Harbin-Acheng Highway Opens to Traffic

SK0410050989 Harbin Heilongjiang Provincial Service

in Mandarin 1000 GMT 30 Sep 89

[Summary] The Harbin-Acheng Highway, the province's

first totally separated, and enclosed, first-grade highway

specially made for vehicle transport service, was open to

traffic on the morning of 30 September. This highway is

one of the key projects of the Ministry of Communications and Heilogjiang Province, during the Seventh

5-Year Plan period. It is an important outlet ofHarbin to

the east areas, as well as a trunk section of highway to

Yuquan and Acheng, major building materials bases of

Heilongjiang Province. Begun in May 1987, this 34-

kilometer-long highway has undergone a construction

period of 2 years. This whole project has consumed an

investment of 185 million yuan. With a width of 16.5

meters, this four-lane highway has the capacity of accomodating 18,000 vehicles at one time.

Shanghai-Huangshan Mountain Air Route Reopens

OW1010012389 Beijing XINHUA in English

1528 GMT 9 Oct 89

[Text] Shanghai, October 9 (XINHUA)—After two

years' suspension, the civil air route between Shanghai

and Huangshan Mountain has been reopened.

From this month, the Huangshan Mountain Airport,

which has been reconstructed, is able to take the BAE146 planes made in Britain. Next April it will be able to

take MD-82 planes.
32 ECONOMIC

JPRS-CAR-89-104

23 October 1989

In the reconstruction of the airport the runways have

been lengthened from 1,800 meters to 2,200 meters and

their surface has been changed from crushed stones to

cement. The airport has also installed advanced equipment for blind landing, navigation and communications.

The China Eastern Airlines flies planes on the route

every Wednesday and Friday.

Suburban Shanghai Completes Highway Network

OW0610080089 Beijing XINHUA in English

0158 GMT 6 Oct 89

[Text] Shanghai, October 6 (XINHUA)—A 2,800-

kilometer highway network has been completed in suburban Shanghai after 40 years of efforts in line with

intensified economic activities, according to the Shanghai-based newspaper JIEFANG DAILY.

The total length of the roads is 14 times that in the

1950s, and the roads link Shanghai, the country's largest

manufacturing center, with other parts of China.

Before liberation, there were only 200 kilometers of

highways in suburban Shanghai.

In the late 1950s, the Shanghai Municipal Government

began to increase investment in major highway projects

in the suburban area. On this basis, highways were built

to link up all counties and villages in the area.

There are 2,275 highway bridges in suburban Shanghai,

an average of one bridge for each kilometer of highway.

New Type of Bridge Constructed in Sichuan

OW0610104089 Beijing XINHUA in English

0835 GMT 6 Oct 89

[Text] Chengdu, October 6 (XINHUA)—A bridge built

with steel fiber reinforced concrete, the first ofits kind in

China, has been recently completed in Sichuan Province

in southwest China.

Steel fiber reinforced concrete, a new building material,

conserves steel and concrete, and is resistant to bending,

fatigue and shock.

Jointly designed and constructed by the Chongqing

Institute of Communications and the Chongqing City

Government, the bridge, located in Dazhu County, is

8.57 meters high, 81.2 meters long with a 60-meter span.

AGRICULTURE

Henan Farmers Destroy Tobacco Crop

90OH0026a Beijing JINGJI CANKAO [ECONOMIC

INFORMATION] in Chinese 17 Sep 89 p 2

[Report by Liu Caiwang 0491 1752 2598 and Wang

Zhifu 3769 1807 1381: "Henan Tobacco Farmers

Destroy a Large Acreage of Tobacco—A Reportedly

Unprecedented Phenomenon Since the Founding of the

PRC"]

[Text] In August, a phenomenon unprecedented since

the founding of the PRC—destroying a large acreage of

tobacco crop by tobacco farmers—occurred in Henan

Province which is known as the "tobacco kingdom."

According to the survey and statistics of Henan's tobacco

departments, 64,450 mu of tobacco leaves have been

destroyed by angry tobacco farmers, turning over 2.6

million jin of tobacco leaves into man-made rubbish.

The direct economic damage of tobacco farmers is 6

million yuan, and the state will lose over 2 million yuan

in revenue income.

Henan's tobacco is the main raw material of cigarette

industry in China. It is also a ready source of money for

tobacco farmers. Why did tobacco farmers personally

destroy their own tobacco leaves before they were turned

into money? The Henan Provincial Tobacco Monopoly

Marketing Bureau specially organized related personnel

to carry out investigation in tobacco production areas

and talk to some tobacco farmers and county and township cadres. They thought that tobacco farmers

destroyed tobacco because of the following reasons:

The prices of agricultural capital goods and the production cost of tobacco leaves have increased. Since the

beginning of this year, capital goods needed for the

production of tobacco leaves such as chemical fertilizer,

plastic film, pesticide, bamboo pole, and rope have

increased by a large margin. Especially the prices of coal

used to cure tobacco have increased over 1 fold. In coal

production areas, a ton of coal sells for 180 yuan when it

reaches the hands of tobacco farmers. In Zhoukou,

Shangqiu, and Nanyang where no coal is produced, a ton

of coal costs about 230 yuan and the quality is poor. To

cure green tobacco into brown tobacco, farmers have to

pay 0.5 to 0.7 yuan as processing fee for each 500 ke of

tobacco leaves. So the production cost oftobacco per mu

is between 190 and 220 yuan, more than double of last

year's figure.

The price parities between tobacco and other farm

products such as grain, cotton, and oil-bearing crops are

irrational. In recent years, the procurement prices of

grain, cotton, and rapeseeds were adjusted upward several times while the procurement prices oftobacco leaves

remained unchanged, resulting in a reduction of income

for tobacco farmers. The production cycles of other

crops are short. In one year, farmers may have a harvest

of wheat and a harvest of corn or other crops. The

current market price of wheat is 0.6 yuan for 500 ke and

that of corn is 0.38 yuan. The annual net income per mu

can reach 300 to 350 yuan. Tobacco farmers can have

only one harvest of tobacco leaves a year. Their production cost is high and production cycle long. They are

labor intensive and time consuming. But the annual net

income from 1 mu of tobacco is only 150 to 220 yuan,

lower than the profit of growing grain.
JPRS-CAR-89-104

23 October 1989 ECONOMIC 33

Cured low-grade tobacco leaves lose money. Since July,

tobacco production areas have had an unbroken spell of

wet weather and low temperatures. Due to a lack of

sunshine, the upper part of green tobacco contains a

large amount of water and takes a long time to cure. The

average procurement price of seven lower grades of

tobacco is 0.3 yuan for 500 ke. Among the seven grades,

the highest one is the medium-brown fifth grade which

sells for 0.6 yuan for 500 ke; the lowest one sells for only

0.05 yuan. If tobacco farmers can cure their tobacco

leaves into the medium-brown fifth grade tobacco, they

will break even. The remaining six grades oftobacco will

lose money or may not even earn enough to pay for the

coal used for curing.

Due to the "tobacco war" in the last 2 years, out oftheir

own interests, some areas and tobacco departments

raised the grade and price during tobacco procurement.

Many tobacco farmers had abnormal income by mixing

low-grade with high-grade tobacco and by cheating.

Statistics show that tobacco farmers' per-mu net income

was 400 to 600 yuan last year. Some even had as much as

800 yuan. According to the estimates ofthe departments

concerned, last year Henan Province suffered an economic damage of 206 million yuan as a result of raising

the grade and price of tobacco, mixing the grades, and

cheating. This year tobacco procurement departments

procured tobacco leaves in accordance with state standards. They did not lower the grade and price, nor did

they raise the grade and price. But many tobacco farmers

could not understand this. They became angry and

restless.

At present, the departments concerned have managed to

basically stop the phenomenon of tobacco farmers

destroying their tobacco. But if they do not readjust the

policy in a timely manner, tobacco production is bound

to drop sharply next year.

Agricultural Development Planned for Southern

Hunan

90OH0016C Beijing JINGJI RIBAO in Chinese

8Aug89p2

[Article by Xiong Qingquan 3574 3237 3123, Hunan

CPC Committee Secretary: "Vigorous Development of

Agriculture in Southern Hunan"]

[Text] The province's tremendous achievements during

10 years of reform are universally acknowledged. Nevertheless, the situation we face in a year-by-year population increase, a year-by-year cultivated land decrease,

and a steady increase in demand for commodity grain

remains rather serious. It has become a major problem

affecting the survival and development of the nation.

Given these circumstances, simply going around in circles on conventional agriculture will not suffice to solve

the difficult situation existing in agriculture. Comprehensive development of agricultural resources must be

done in a planned, step-by-step way. This is both a

strategic measure to assure the sustained, steady development of agriculture, and also the hope for the development of agriculture. It was in this realization that our

provincial CPC committee and provincial government

heard the views from all parties as a basis for taking

advantage of a favorable opportunity for readjustment of

the economic structure to work out a strategic policy for

development of agriculture in southern Hunan Province.

Southern Hunan is territorially contiguous with both

Guangdong and Guangxi provinces; it has plentiful

agricultural resources; conditions for development are

rather good; and the potential for development is very

great. The region comprises both Chenzhou and Lingling

prefectures as well as Hengyang City, 31 counties and

cities, a population of 15 million, 12 million mu of

cultivated land, 34 million mu offorests, 9 million mu of

reclaimable land, and 17 million mu of barren mountains suitable for forests or pastureland. The topography

of southern Hunan is generally flat, suiting it to the

development of diversified agricultural crops and the

aquatic breeding industry. Were the region's wasteland

and barren mountains to be developed, they could produce an additional approximately 2.5 billion jin of grain,

5 million lean meat hogs, 1 million livestock, 1 million

cubic meters of timber, and 2 million dan of fruit for

very great economic and ecological benefits. When we

reported our ideas for the development of southern

Hunan to Central Committee and State Council leaders

during the winter of 1988, they were immediately

accepted, and a decision made to provide state support

for development.

After southern Hunan was made a key national agricultural development area, the province immediately established a leadership team for the comprehensive development of agriculture in southern Hunan with a deputy

governor in charge. Responsible provincial CPC committee and provincial government comrades conducted

several on-site development surveys and studies, and

leaders in cities and counties throughout southern

Hunan concentrated their energies on stirring the

thinking of the masses and the development of model

demonstrations. They devoted themselves to the validation of development plans, the formulation of policy

measures, and to the task of organizing and coordinating

in various ways. Thanks to the painstaking organization

and leadership of leaders at all levels, the enthusiasm of

the broad masses for the development of agriculture was

very high. During the winter of 1988 and the spring of

1989, a "craze for development" occurred in southern

Hunan. During the winter of 1988 and the spring of

1989, a total of 400,000 mu of land was reclaimed,

including 140,000 mu of land suitable for the growing of

grain, 50,000 mu for the growing of cash crops, and

210,000 mu for the growing of fruit. Additionally, work

was'completed on changing 55,000 mu from dryland to

wetland fields; 880,000 mu of low yield fields were

transformed; 680,000 mu of ton grain fields were built
34 ECONOMIC

JPRS-CAR-89-104

23 October 1989

(i.e., high standard paddy fields having 1,000 kilogram

per mu grain yields), and 1.12 million mu of barren

mountains were afforested.

The first act in the development of southern Hunan has

begun, but the future tasks will be daunting. We conscientiously summarized experiences in the previous stage

of development, further strengthening leadership, firmly

relying on the masses, carrying forward a revolutionary

spirit of self-reliance and arduous struggle, and striving

to overcome all hardships. We are firmly resolved to do

a good job from start to finish in the development of

southern Hunan, which is of such importance to the

economic development of the whole province. On the

basis of the knowledge gained from previous surveys in

southern Hunan, we will have to adhere to the following

guiding thoughts during the future development of

southern Hunan.

Adherence to taking grain as the key link, suiting general

methods to specific circumstances for comprehensive

development. The overall principle for the development

ofsouthern Hunan should be to proceed from realities as

they exist in each area, suiting general methods to

specific circumstances to grow grain in places suited for

the growing of grain, to raise livestock in places suited

for raising livestock, to produce fruit in places suited for

growing fruit, and to grow forests in places suited for

growing forests. However, under the natural conditions

existing in southern Hunan, quite a few places are suited

not only to the growing of grain, but also to the growing

offorests, fruits, and cash crops. This poses the problem

as to where the emphasis on development should be

placed. In present terms, grain is the precious commodity that the country needs most. Not only do we

ourselves need it, but several neighboring provinces also

need it. Therefore, in the overall development of agriculture in southern Hunan, it is only grain that should be

taken as the key link. Suiting general methods to specific

circumstances can only be construed to mean growing

grain in places suited for the growing of grain; growing

something else only when grain cannot be grown. We

must seize this opportunity to develop agriculture,

increasing southern Hunan's output of commodity grain

as rapidly as possible to make southern Hunan the

second largest granary in the province (after the

Dongting Hu region).

Adherence to building water conservancy facilities first,

paying attention to the planned building of water conservancy as a priority matter. In Hunan, growing grain

means mostly growing paddy. "Paddy, paddy, only

where there is water can there be paddy" goes the saying.

Not only does grain production require water, but neither can cash crops be grown without water. Only by

solving water conservancy problems can the yields of

southern Hunan's large tract paddy fields be increased,

can large tracts of dryland fields be converted to wetland

fields, and can large tracts of barren slops be developed

into cultivated land. Thus, in a certain sense, the development ofsouthern Hunan amounts to the development

of water conservancy.

Adherence to development both in breadth and in depth,

fully tapping available cultivated land potential. Inbreadth development should not be construed to mean

only reclamation of wasteland. In some places, a greater

potential exists for increasing the utilization rate of

existing cultivated land. A decision must be made to

develop winter agriculture and agriculture on the raised

paths between fields, putting these resources to full use.

In-depth development means mostly the transformation

of low yield fields, and the building of "ton of grain

fields," increasing yields per unit of area and increasing

the quality of agricultural products.

Adherence to the removal of restrictions to spur development, building a development system that is filled

with vitality. Development of southern Hunan requires

adherence to the country, collectives, and individual

rising together, the pooling of funds through various

channels, many methods of development, and arousing

the enthusiasm of all quarters. The leasing of development and the joint development that some places are

now using are workable. However, no matter the method

used, attention must be given to bringing into play the

enthusiasm of the broad masses of peasants. Hunan has

been approved by the State Council as a "pilot project

area in the transition of reform and opening to the

outside world from the coast to the interior." Transitional policies and flexible measures should be fully

applied to attract entreprenural units and individuals

both in China and abroad, and from inside and outside

the province to invest and to contract development,

taking a road of using the removal of restrictions to spur

development.

Hunan Subsidizes Grain Production

90OH0026b Changsha HUNAN RIBAO in Chinese

17 Aug89p 2

[Article by Guo Shenghua 6753 4141 5478, deputy

director of the Hunan Provincial Grain Bureau: "We

Should Know That Every Grain on Our Plate Is Subsidized—Introducing Grain Subsidy to Urban Residents"]

[Text] When we urban residents eat, we should not only

know how hard it is for peasants to produce grain but

also understand what a large amount ofsubsidy the state

has to pay to supply us the ration offood grain. The state

financial department loses money in every link of grain

procurement, storage, transportation, and supply.

Indeed "every link is subsidized, and so is every grain."

Here I would like to use a corner of your newspaper to

introduce the concrete situation in this regard.

According to the current policy, Hunan Province pays

22.1 yuan for 50 kg of paddy when it buys contracted

procurement grain from peasants, and the state supplies

food grain to urban residents at the unified sales price of

9.5 yuan. (About 70 percent of paddy is turned into

second-grade standard rice which is sold at 14.2 yuan for

50 kg in cities like Changsha and 13.8 yuan in other

localities. To improve the living standards of urban

residents, most areas process and supply first-grade
JPRS-CAR-89-104

23 October 1989 ECONOMIC 35

standard rice whose quality and price are both higher

than those ofthe second-grade standard rice.) Therefore,

for every 50 kg of paddy, the state financial department

has to subsidize 12.6 yuan to make up the difference

between purchasing and sales prices. To supply grain

from rural procurement to the hands of urban residents,

we also need a sum of circulation fees which include

interest, safe-keeping and packaging fees, freight, loading

and unloading fees, workers' wage and welfare funds,

wastage, and management fees. For every 50 kg of

paddy, Hunan Province needs on the average of 6 yuan

to cover over 10 items of fees. Moreover, the amount of

state-price grain supplied in Hunan Province is greater

than that of state-price grian procured. The 700 million

kg of difference between the supply and procurement of

paddy is made up by purchasing grain from peasants at

free market price and then supplying it at state price

(which is called "market price turned to state price").

The free market price of 50 kg of paddy is 20 yuan higher

than the state price. Furthermore, the state has to subsidize part of the price difference when supplying stateprice chemical fertilizer and diesel oil to peasants, which

is part of the agreement of contracted grain procurement. The state also needs to pay interest on the

advanced payment of forwarding purchasing contracts.

After putting all this together, the state financial department has to subsidize about 0.6 yuan for each kg of rice

and about 2 yuan for each kg of edible oil consumed by

the urban residents ofHunan Province. Calculated based

on the current per apita average annual ration of Hunan

Province—180 kg of rice and 3.2 kg of edible oil—the

state financial department subsidizes about 115 yuan

every year for each urban resident and about 460 yuan

for each 4-member family. It is estimated that this year

the total amount of state revenue used for the grain and

edible oil subsidies of Hunan Province will exceed 1.6

billion yuan. What a huge sum of expenditure this is!

Here I also need to point out that peasants are making a

great contribution to the state when they sell grain to the

state at state prices. Calculated based on the current

market price, peasants make 20 yuan less for every 50 kg

of contracted procurement paddy they sell to the state.

Since the average contracted procurement is over 70 kg

per person, each peasant will lose about 30 yuan. This

means that for each kg of rice consumed by urban

residents, the state financial department subsidies 0.6

yuan and peasants contribute around 0.6 yuan.

Ensuring that every urban resident has rice to eat and

stabilizing the supply prices of food grain and edible oil

are concrete manifestations ofthe superiority ofsocialist

system. Urban residents over 50 years old may still

remember that in the old society the biggest worry of

urban residents was the price increase and shortage of

rice. After the liberation, such days were gone forever.

Today nobody needs to worry about the price increase

and shortage of rice in urban areas. They can buy rice

any time at grain stores. The monthly cost of food grain

for each person is only 4 to 5 yuan. The contrast between

the old and the new society is so sharp that we cannot but

thank socialism, the communist party, the people's government, and fellow peasants who work so hard and offer

so selflessly!

Rural Banks Promote Agricultural Investment

90OH0016A Nanjing XINHUA RIBAO in Chinese

5 Sep 89 p 2

[Article by correspondent Zhu Xinhua 2612 2450 5478:

"How To Conduct a Tilt Policy Toward AgricultureDirector of Province Replies to Reporter's Questions"]

[Text] How can rural banking units, which share a

common destiny and prosper along with agriculture,

make a contribution in invigorating the agricultural

economy to rise to new heights? It was with this question

in mind that I interviewed the provincial Agricultural

Bank director, Zhao Jingbang [6392 2529 6721]

Director Zhao said: "Agriculture is the prerequisite and

the foundation for the existence of the Agricultural

Bank. Promoting the development of agricultural production is our bounden duty. In operating in accordance

with the government-proposed policy of tilting toward

agriculture, we have won definite accomplishments."

Increased Investment—"Warming" Agriculture While

"Cooling" the Atmosphere

Bank director Zhao said that the goal of state control of

the macroeconomy and tightening of the money supply

was to force a "cooling" of the overheated atmosphere;

however, as far as agriculture was concerned, there was a

"maintenance of warmth" and further "warming." Consequently, no matter how tight funds become, agriculture

will be taken care of. Plans will include exceptions for

agriculture; agriculture will receive priority for funds;

investment priorities will be set; and appropriate preference will be granted for interest rates. We will give

priority to supporting development of the farming and

breeding industries, highlighting support for grain,

cotton and oil-bearing crop production in order to support and assure production for effective market supplies

of meat, poultry, eggs, milk, fish and vegetables. Statistics show that loans for support of the farming and

breeding industries during the first half of 1989 year

accounted for 93.2 percent of the increase in all agricultural loans, up 13 percent from the same period in 1988,

substantially assuring fund needs for grain, cotton, and

oil-bearing crop production. Original plans called for a

40 million yuan investment in the "shopping basket

project" for meat, poultry, and eggs, but 100 million

yuan was actually invested.

Bank director Zhao said that "sustenance" will needed if

agriculture is to develop. During the first half of 1989,

we invested 4.45 million yuan in the transformation of

small chemical fertilizer plants. We also made funds

needed for the franchising of agricultural means of

production an important part of the increase in agricultural investment. Loans for investment in the means of

agricultural production increased by 300 million yuan
36 ECONOMIC

JPRS-CAR-89-104

23 October 1989

during the first half of 1989, up 23.5 percent from the

same period in 1988. More than 200 million yuan was

also paid as surety to departments concerned with the

means of agricultural production for the importation of

chemical fertilizer. In addition, credit investment was

also appropriately increased to promote agricultural science and technology, for the agricultural production

service system, and for sensible resources development.

No Issuance of "IOUV—Solid Mass Basis for the

Development of Agriculture

Bank director Zhao said that in conducting the policy of

tilting toward agriculture, it was necessary to focus on

more than support for production alone. The whole

process had to be stressed, namely providing support

from the production to the procurement to the circulation of commodities, and before production, during

production, and after production. Right now the

emphasis is on procurement, which has an important

bearing on peasant enthusiasm for production, and

whether agriculture can grow steadily. Under the unified

leadership of government at all levels and with the

vigorous support of the People's Bank, all Agricultural

Bank's have made the supply of procurement funds for

agricultural and sideline products a matter of major

importance during the summer season this year for a

substantial turn around of the previous straitened circumstances. During the period January through July, the

province issued a cumulative total of 4.981 billion yuan

in loans for the procurement of agricultural and sideline

products. 3.327 billion yuan, or 66.8 percent ofit, issued

from April through July. No "IOU's" were issued to

support summer procurement of 1.705 billion kilograms

of grain, 900,000 dan of spring silkworm cocoons, and

118 million kilograms of oil-bearing crops.

Helping Along the Superior and Restricting the

Interior—Strengthening the "Underpinnings" of the

Rural Economy

Bank director Zhao said he believed that in carrying out

the policy of tilting toward agriculture there was also the

question of how to help agriculture enhance its own

capabilities for development. As far as Jiangsu Province

was concerned, particularly the rural villages ofsouthern

Jiangsu, there are limits to the dependence that has been

placed during the past 10 years on the national treasury

and on financial investment for the development of

agriculture. The main reliance is to be on industry

helping agriculture, and industry building agriculture,

meaning the development of township and town enterprises to provide the materials and funds needed to

assure the steady development of agriculture. Thus, we

cannot overlook township and town enterprises as a

mainstay for the development of agriculture. Our past

efforts were marred by rushing headlong into rash action

and providing support blindly. Today, there can be no

rushing headlong, doing everything with "arbitrary uniformity." All during 1989, we upheld the principle of

"controlling total amounts, readjusting the structure,

and both maintaining and restraining," using cutbacks

as a means of freeing funds to support enterprises that

earn foreign exchange from imports, and to support

enterprises whose products are readily marketable and

who insure effective rnarket supply. Control over the

total amount of township and town enterprise funds

spurs improvement of the loan structure, and also promotes the beginning of a fall in the overly high speed

development of township and town enterprises. It helps

bring about a gradual solution to the previous abnormal

situation of dependence on overloaded operations to

maintain overheaded development.

"What is the main task of provincial agricultural banks

during the last half of 1989? What is the funds situation?", the correspondent asked.

Bank director Zhao said that we will continue to carry

out a tilt policy toward agriculture in accordance with

the aforementioned priorities. First, we will have to

marshal some funds in time for the farming season to

support overfulfillment of autumn crop production.

Second, we will have to do a diligent job of organizing

and supplying funds for the procurement of autumn

agricultural and sideline products. Third is the need to

provide a certain amount of funds to support township

and town enterprises, the principle continuing to be

support for the superior and restricting the inferior,

actively supporting "sunrise" enterprises, and selectively

intensifying loan risk management for "sunset" enterprises as circumstances warrant.

Finally, bank director Zhao said that there will continue

to be certain difficulties in funding during the second

half of 1989. We will have to base our efforts on tapping

the potential of what is available, for which the possibilities must be said to be very great. If 10 percent of the

currently available more than 20 billion yuan credit can

be loosened up, that will mean more than 2 billion yuan.

Incomplete statistics show that this will require collecting 3.8 billion yuan in delinquent funds owed by the

enterprises. Prying loose these funds is a major way in

which to ease the funds shortage. In this regard, we plan

to concentrate for a time on waging a "war of assault."

We will also have to continue to muster funds vigorously. As of the end of July, the rural savings surplus in

agricultural banks and credit cooperatives throughout

the province amounted to 14.43 billion yuan, 1.539

billion more than during the same period in 1988 for an

all time high. During the next 5 months of 1989, we must

"maintain the increase and add to it," organizing more

idle funds in society the better to support development

of agricultural production.
JPRS-CAR-89-104

23 October 1989 SOCIAL 37

River Elegy Author Plans Sequel

HK0310082189 Hong Kong MING PAO in Chinese

28 Sep 89 p 8

["Special" dispatch from France by staff reporter Li

Yueh-hua 2621 2588 5478: "Su Xiaokang Says River

Elegy Will Have a Sequel]

[Text] Most of the co-authors of the banned telefilm

River Elegy have either been arrested by the authorities

on the Chinese mainland or have fled China in the wake

ofthe "June 4th Incident." Nonetheless, River Elegy will

soon have a sequel, which will mainly discuss the harm

that communist culture has done to Chinese society.

Su Xiaokang, chief author ofRiver Elegy, is now living in

exile in France. During an interview held yesterday, Su

Xiaokang said that he and a number of students began

writing a sequel for it in September 1988. The sequel to

River Elegy will mainly review China's development

over the past 100 years, including the recent student

unrest. Parts of the sequel have already been finished.

However, when he fled China, he did not take the

manuscript with him.

Su Xiaokang also said that, during the recent student

unrest, he often went to Tiananmen Square to view the

situation there. Each time he returned from the square,

he altered his draft sequel because a lot of changes took

place on the square each day during that period. Su

Xiaokang believes that, since the "June 4th Incident"

took place, he will probably have to rewrite his draft.

Su Xiaokang said that River Elegy laid stress on China's

cultural development, whereas the sequel will lay stress

on system building. China's backwardness over the past

100 years has not only been a result of the decline of

Chinese culture, but also a result of the implementation

of Stalin-style ultracentralism, which has done enormous

harm to Chinese society.

Besides the sequel, this well-known exiled reporterwriter is also planning to write more works based on the

life experiences and destiny of his generation. Su Xiaokang hopes that, while promoting the democracy movement in China, he will be able to continue his literary

work abroad.

Once a writer leaves his own motherland, the source of

his literary creation will gradually dry up. Su Xiaokang

said that at present he has no difficulty in continuing his

literary creation work because he has accumulated a lot

of material over the past years. Nevertheless, after a few

years, when the source of his literary creation dries up,

he will not be able to write about what happens in China

as vividly as he can now. Su Xiaokang said that although

literary creation has developed rapidly on the Chinese

mainland over the past decade, it is still under rigid

ideological control. As a result, the works produced are

still immature. That a large number of the Chinese

writers have fled and are living in exile has provided a

good opportunity for Chinese literary creation to achieve

its full maturity. Su Xiaokang said that a lot of masters of

modern literature in the world are exiles.

Su Xiaokang maintained that, as an intellectual, he

always has good intentions and hopes that he can help

the CPC to correct its mistakes with his literary works.

During the recent student unrest, although a dark cloud

was hanging over China, he had predicted that he would

at most be criticized and repudiated for his River Elegy

and banned from publishing his literary works. He never

expected his safety to be endangered. When he heard

that he had been listed as wanted by the authorities on

the Chinese mainland, he was not ideologically prepared

in the least. He thought that, if worst came to worst, he

would at most be jailed for a couple of years. However,

later on, he realized that what the CPC wanted was to see

the destruction of Chinese intellectuals.

"I was extremely terrified. I was afraid of being killed

and afraid of being killed in such a simple way. Intellectuals like me who are still in the prime of life can still do

a lot of things for the country. It was not simply a

question of death. Once arrested, I would most probably

have been turned into an instrument of the authorities,

just like Liu Xiaobo. That would be the most miserable

thing for our intellectuals, more miserable than death."

Su Xiaokang added that although the people of his

generation have experienced the nationwide catastrophe

of the Cultural Revolution, they have not personally

experienced persecution and have had no experience in

this respect. The "June 4th Incident" has enriched their

life experiences and helped them become more mature.

At the inaugural meeting of the Federation for Democracy in China, Su Xiaokang was elected a council

member. Su Xiaokang said that he plans to do more

liaison work for the federation in the future, including

establishing links to Overseas Chinese intellectuals and

mainland intellectuals who have fled and are currently

living in exile. The future ofChina's democracy is closely

connected with the destiny of the intellectuals. Su Xiaokang suggested that all intellectuals living in exile unite

to do some specific work to promote the development of

democracy in China. For instance, they can start running

newspapers and magazines and set up research institutions. However, Su Xiaokang said that he still has no

specific plans in this respect at present. Su Xiaokang

suggested that the federation should first of all concentrate its human and financial resources to start a highstandard newspaper as soon as possible.
38 MILITARY, PUBLIC SECURITY

JPRS-CAR-89-104

23 October 1989

\

Speculation on Future PLA Leadership, Direction

40050689a Hong Kong KUANG CHIAO CHING

[WIDE ANGLE] in Chinese

No 201 16 Aug 89 pp 18-21

[Article by Chin Po 6855 1591: "38th Group Army

Commander Li Jijun 2621 7139 6511 Relieved of

Duties; High-Level Transfers To Occur in Chinese Military"]

[Text] Early this month, Western news services reported

that more than 200,000 martial law troops had been

withdrawn from Beijing, and that, following reorganization, more than 20,000 troops were left to guard Beijing,

where they will remain until after the 1990 Asian Games.

Ever since the Beijing student movement and the "June

4th Incident," trends within the military have drawn

close scrutiny within China and abroad.

Stamp of the Soldier Deeply Ingrained in Chinese

Society

The Chinese Communists fought their way to power

with the gun. Therefore, the regime inevitably carries

quite prominently the mark of the soldier.

Following the founding of the People's Republic, Mao

Zedong put into practice a government in which military

and political power were combined in a single entity.

The various large military regions and governmental

administrative districts—North China, Northeast, East

China, Northwest, Southwest, South China—were set up

in a structure basically parallel to the party and its

subordinate branches. Every field army commander and

political commissar wielded party, administrative, and

military power over a certain area. Later, to meet military exigencies, Mao Zedong reorganized the first-level

military regions, drew up 11 military regions, and implemented a military command system in which power was

highly centralized and authority at the local level was

limited. Only after this was achieved did military participation in local administration begin to diminish. However, the leading administrators in all levels ofthe major

government departments at that time were all founding

fathers of the nation who had only recently doffed their

military uniforms. In politics, the Chinese Communists'

unified leadership under the Party Committee was borrowed from the military. In the economic sphere,

planned supply, equal distribution, the concentration of

all efforts on a single battle, and the distribution ofration

tickets, without exception clearly exhibit traits of the

wartime economy.

As a tool ofthe rulers, the military undoubtedly served as

the most convenient and effective trump in the hands of

the authorities. According to one thought process of the

Chinese Communists, no matter what situation arises,

all that is needed to head off disaster is to throw the

military at the problem. For example, during the Cultural Revolution, when Mao Zedong realized that the

movement was spinning out of control, he assigned the

military to carry out the "three supports" [support the

peasants, support the workers, support the left] and "two

militarys" [military administration and military

training] and made military personnel join "revolutionary committees" at all levels. Thus, the unity of the

military and government reappeared. During the 1989

Beijing incident, the influence of the military was even

more apparent. For the foreseeable future, the military

will be a factor in political change in China that cannot

be overlooked.

In reality, military strongmen have always played a

decisive role in Chinese politics. The chairmanship of

the Military Commission of the Chinese Communist

Party Central Committee has always been occupied by

the Central Committee chairman or one of the next two

most powerful people in the party. Those in the Politburo and the Central Advisory Commission who have

been capable of determining the direction of policy and

shaping the political situation have generally been senior

military leaders. Deng Xiaoping spoke very frankly when

he met on 9 June with cadres (of group army-level or

higher) from the capital's martial law troops. He stated

that this disturbance was bound to occur sooner or later,

and that it was a good thing that it happened when it did.

"The best thing about it is that we still have a large corps

of old comrades with us. They have been through many

disturbances and understand the gravity of this situation. They were in favor oftaking resolute action against

the rebellion. In the military, as well, there is also a group

of key cadres who have participated in every period of

the revolution, so it was easier to handle the incident

because it occurred now."

That should be considered the salient characteristic of

China's current political situation.

Current Military System and Its Deployment

The highest leadership organ in the Chinese military is

the CPC Central Military Commission [CMC] Underneath it are such leadership organs as the General Staff

Department, General Political Department, General

Rear Services Department, the General Logistics

Department as well as the Navy, Air Force, and Strategic

Rocket Forces. There are also various arms and services

directly under the central command.

The military regions consist of military territories which

have been drawn up in accordance with strategic necessities, as well as their corresponding first-level militaryorgans. They are under the direct leadership ofthe CMC

. There are leadership organs within each military region

which exercise unified leadership over military work

within their respective regions.

In 1985, the enlarged meeting of the CMC decided,

based on requirements imposed by actual conditions,

decided to reduce troop strength by one million and to

merge the 11 military regions into seven:

Beijing Military Region—Includes Hebei, Beijing,

Shanxi, and Inner Mongolia. It is not only the capital
JPRS-CAR-89-104

23 October 1989 MILITARY, PUBLIC SECURITY 39

garrison, but is also responsible for repelling any Soviet

tank advance from Mongolia, and for resisting any

surprise attack. The current commander is Lieutenant

General Zhou Yibing [0719 5902 0393], and the political

commissar is General Liu Zhenhua [0491 2182 5478].

Shenyang Military Region—Includes China's three

northeastern provinces, and is responsible for the security of the northeastern border. The commander is Liu

Jingsong [0491 4737 2646], and the political commissar

is Song Keda [1345 0344 6671].

Jinan Military Region—Includes Shandong and Henan.

It serves to surround and protect Beijing, and to seal off

the eastern seaboard. The commander is Li Jiulong

[2621 0046 7893], and the political commissar is Song

Qingwei[1345 3237 3262].

Nanjing Military Region—Includes Jiangsu, Anhui, Zhejiang, Jiangxi, and Fujian. It is responsible for defense of

the "eastern seacoast front line." Its territory is China's

richest and most populous. The commander is Xiang

Shouzhi [0686 1343 1807], and the political commissar

is Fu Kuiqing [0265 1145 3237].

Lanzhou Military Region—Includes Shaanxi, Qinghai,

Xinjiang, Gansu, and Ningxia Provinces. It covers the

largest territory and has the longest border with the

Soviet Union. The commander is Zhao Xianshun [6392

0341 7311], and the political commissar is Li Xuanhua

[2621 1357 0553].

Chengdu Military Region—Under its jurisdiction are

Sichuan, Tibet, Yunnan, and Guizhou. It maintains

military alertness on the Vietnamese border and is

responsible for defense along the Sino-Indian border.

The commander is Fu Quanyou [0265 0356 2589], and

the political commissar is Wan Haifeng [8001 3189

7364].

Guangzhou Military Region—Includes Guangdong,

Guangxi, Hunan, Hubei, and Hainan. It is responsible

for China's South Sea defenses. The commander is

Zhang Wannian [1728 8001 1628], and the political

commissar is Zhang Zhongxian [1728 0112 0341].

Among the current three million military personnel in

the People's Liberation Army (PLA), two-thirds belong

to the Army, which has 30 group armies, 100 infantry

divisions, more than 10 armored divisions, and more

than 10 artillery divisions. Ofthe seven military regions,

Beijing wields the greatest military power, followed by

Shenyang.

38th Group Army Commander Li Jijun Relieved of

Duties

The Beijing Military Region's 38th Group Army is one

of the Chinese Communists' crack units. It began as a

single arms unit in the arms and services, but developed

into a combined arms unit with armor, artillery, telecommunications, engineering, antiaircraft, and air support capabilities. This is a fighting group army with

strong mobility, defensive capability, and rapid strike

capability. The quality of its armaments and completeness of its military structure have made it the "fairhaired boy" of China's armed forces. The precursor of

this unit was the "Heroes Brigade" of Marshal Peng

Dehuai [1756 1795 2037], which was organized during

the Pingjiang Rebellion and achieved many military

feats during the War of Resistence Against Japan, the

war of liberation, and the Korean war.

Li Jijun, the 38th Group Army commander, is a shrewd

and competent military official with an intellectual

mindset. He was engaged in research on military theory

during the 1950's in the Academy of Military Sciences.

Later, he was transferred to serve as commander of the

Beijing Military Region's 38th Group Army, which he

built into China's first mechanized group army. He also

commanded over battle exercises performed by this

group army somewhere in northern China, during which

time he displayed outstanding leadership ability. Li Jijun

is a member of the Chinese Communist Party Central

Committee, and was awarded the rank of lieutenant

general in 1988. It is reported that Li Jijun violated

military discipline when martial law was declared in

Beijing, and he has now been relieved of his duties by the

CMC.

Among the leaders ofthe seven military regions, the one

with the longest list of credentials is Xiang Shouzhi,

commander of the Nanjing Military Region. General

Xiang Shouzhi is from Xuanhan, Sichuan. He joined the

revolution in 1934 and the party in 1936. At one time he

was a deputy platoon commander in the Red Army's 9th

Army Group, 76th Regiment, and he participated in the

Long March. During the Anti-Japanese War he served as

a company commander, battalion commander, and

deputy regimental commander in the 8th Route Army's

129th Division, 386th Brigade. At that time, the brigade

commander was the great general Chen Geng [7115

6342], and the division commander was Marshal Liu

Bocheng [0491 0130 2110]. During the war ofliberation,

he served as deputy brigade commander of the ShanxiHebei-Shandong-Henan Field Army's 6th Column, 18th

Brigade. The commander of that column was Qin Jiwei

[4440 1015 0251]. Later, Xiang Shouzhi became commander of the Central Plains Field Army's 9th Column,

26th Brigade, and then a division commander in the 2d

Field Army's 15th Army Group. He rolled into the

central plains along with the great army of Liu and Deng.

Since the Chinese Communists came to power, he has

served as: division commander in the People's Volunteer

Army, chief of staff for a group army, commander of a

group army, director of the Artillery Science and Technology Institute, deputy artillery commander, commander of the 2d Artillery, assistant commander of the

Nanjing Military Region, and commander of same. In

1955, Xiang Shouzhi was awarded the rank of major

general, and in 1988 was awarded the rank of general.

Xiang Shouzhi, 72 years old, has borne the trials of a

military existence all his life. He has been through

countless battles and will undoubtedly retire from the
40 MILITARY, PUBLIC SECURITY

JPRS-CAR-89-104

23 October 1989

front line soon. In 1988, he wrote A Preliminary Discussion of the Overall Combat Effectiveness of Strategic

Battlefield Troop Convergence. This high-level leader

summed up the experience of the Battle of Huaihai from

a theoretical perspective. He used events of the past to

comment upon the present, which was noteworthy.

Liu Zhenhua [0491 2182 5478], political commissar of

the Beijing Military Region, is 69 years old, and is also

one of the old generals. Liu Zhenhua joined the 8th

Route Army in 1938. Under the command of Xu Xiangqian [1776 0686 0467), he served as a company-level

political instructor, battalion-level political instructor,

and a regimental political commissar. Early in the war of

liberation, the Shandong Column, of which he was a

part, marched to the northeast along with Marshal Luo

Ronghuan [5012 2837 2719]. He served in the Liaoning

Military District as: deputy political commissar ofthe 3d

Public Security Brigade; deputy political commissar of

the Independent 3d Division; deputy political commissar of the 2d Group Army; political commissar ofthe

20th Regiment. 7th Division, 3d Column, Northeast

Democratic Allied Army; political department director,

7th Division, 3rd Column, Northeast Field Army. His

general commander was Lin Biao [2651 1753], and his

political commissar was Luo Ronghuan. He participated

in the great battle of Liao-Shen and the battle of PingJin. After the Chinese Communists founded the People's

Republic, he went to Korea to participate in the war

there. He served as a division-level political department

director, division commander, deputy commander ofthe

People's Liberation Army, PLA political commissar,

Shenyang Military Region deputy political commissar,

and (concurrently) Luda Garrison District first political

commissar. During the Cultural Revolution, he served as

ambassador to Albania and as deputy foreign minister.

After the Cultural Revolution he served as Shenyang

Military Region's deputy political commissar, then political commissar. In 1987, he was transferred to serve as

political commissar of the Beijing Military Region. He

was awarded the rank of major general in 1964, and in

1988 was awarded the rank of general.

Lieutenant General Fu Quanyou Has Potential To Rise

Lieutenant General Fu Quanyou [0265 0356 2589] was

chosen to serve as commander of the Chengdu Military

Region when the CMC readjusted the leadership corps in

1987. He is 59 years old, tall, has an impressive appearance and dignified demeanor, and he exudes a military

air. He participated in the war of liberation, the war

against the United States and in support of Korea, and

the war of self-defense and counterattack against

Vietnam. He rose step by step through the ranks, from

company, battalion, regiment, and division to group

army. In his work he considers questions deeply, yet he

looks for results. He has a rich store of experience in

military administration, and is very knowledgeable

about management theory. In recent years he has contributed several articles to influential publications, both

military and nonmilitary. His writings include: "New

Era Military Management and Outstanding Traditions,"

"Scientific Management of Combat Strength," "A Preliminary Discussion of The Chinese Army's Philosophy

of Military Development in the New Era," "High- and

Middle-level Cadres Must Strive To Raise the Quality of

Their Thought and Morals," and so on.

Organs of Military Leadership in Beijing Now

Beginning a Thorough Investigation of Their Ranks

After the June 4th Incident, the Chinese instruments of

public opinion began a propaganda campaign of unprecedented intensity, vigorously singing the praises of the

PLA. This is the second time in the past 10 years that the

PLA has received special treatment. The first time was in

1979 during the battle to counterattack Vietnam. After

this incident, Deng Xiaoping not only received a visit

from the leaders of the martial law troops, but also

bestowed the title of "Defender of the Republic" upon

the 22 soldiers who lost their lives during the incident in

Beijing. However, at the same time, thorough investigations are proceeding in all the organs of military leadership stationed in Beijing. This operation is being pursued

across the board. The Chinese Communists feel that the

influence of liberalization has been fairly great in the

military in recent years. Although thinking is quite

lively, extreme views of the problem have been inevitable. This has had a negative impact within the military.

The PLA's General Political Department has demanded

that investigations carried out by the military be stricter

than those carried out at the local level. In particular, all

party cadres at the level of division or higher must pay

close attention to practical matters, examine the past,

rectify their thoughts, "make a clear distinction between

right and wrong, and raise their level of consciousness."

People familiar with such issues forecast, on the basis of

the Chinese Communists' past record, that not long from

now, after the investigations have been completed, a

reshuffle will inevitably take place at high levels within

the military leadership. However, China's armed forces

are going to have a greater say in decisions about issues

relating to the military system, training, equipment,

technology, and thought. Furthermore, greater resources

will be allocated to the military.

Who Will Command the Entire Army After Deng

Xiaoping?

Recently, with the enormous change that has occurred in

Chinese politics, people have become concerned about

whether General Secretary Jiang Zemin, who is unversed

in military affairs, will be able to join the CMC and

command and make use of the military. This is an issue

of concern within China and abroad.

A knowledgeable person in Beijing told this writer that

regardless of whether Deng retires or Jiang joins the

CMC, there will be no major shakeup in the CMC. Yang

Shangkun, vice chairman of the CMC Standing Committee (as well as president of China and a member of

the Politburo), has not only become a major powerholder

in the military, but is also one ofthe policymakers within

the Politburo. In terms of seniority and power, the
JPRS-CAR-89-104

23 October 1989 MILITARY, PUBLIC SECURITY 41

82-year-old Yang Shangkun could very well succeed

Deng Xiaoping in the next few years as China's highest

military commander. Furthermore, he could be a key

figure as the Chinese military passes the torch from one

generation to the next.

Report on 'Red Army Regiment'

HK3009014489 Beijing RENMIN R1BAO in Chinese

25 Sep 89 p 5

[Article by XINHUA reporters Cao Guoqiang 2580

0948 1730 and Chen Zhiqiang 7115 2535 1730: "Steeling the Military Spirit With Political Work—Notes on a

Certain 'Red Army Regiment' of the Martial Law

Enforcement Forces"]

[Text] Among the army units enforcing martial law in

the capital, there is a regiment known as the Red Army

Regiment. When they were called into the capital to put

down the rebellion on 3 June, they crushed furious

attacks by counterrevolutionary ruffians by drawing

upon powerful political work. When they enforced martial law later, they again consolidated the unit by means

of political indoctrination, and won widespread acclaim.

The Red Army Regiment got the first prize when the

group army compared and appraised appearance, discipline, bearing, administration, and management of different army units recently.

Early morning of 4 June saw major streets in Beijing

enveloped in billowing smoke and blazing flames; military vehicles set afire by ruffians were found everywhere.

The area around Lijiao Bridge at Jianguomen, which was

guarded by the Red Army Regiment, however, was

another story: More than 40 military vehicles were in

neat array, sentinels stood at either end of the bridge,

guns in hand, and the crowd was kept off the security

line.

On the evening of 3 June when the regiment arrived at

the Lijiao Bridge, they were immediately surrounded by

tens of thousands of people. Political department

director Lu Liansheng spoke in a loud voice over his

portable microphone: "We were ordered to enter the

capital to maintain order. You are welcome to raise

questions. Whoever injures our soldiers will be regarded

as a ruffian, and prosecuted without mercy!" At the same

time, there was an officer or a soldier at every military

vehicle propagandizing the crowd over his portable

megaphone.

Questions were rained upon the announcers. Some

people, ignorant of the facts, asked for explanations,

while others made malicious attacks. But the officers and

men calmly answered every question put to them, and

received much applause.

Seeing their soft tactics did not work, a group of ruffians

swarmed forward unscrupulously, in a vain attempt to

overturn the military vehicles and set them on fire. Many

people shouted in chorus: "Hands off. Get out!" With

the determined resistance of officers and men and the

help of the masses, the ruffians were forced to lower the

vehicles that they had lifted. The ruffians made six major

charges that evening, but their attempts were foiled one

by one by the officers and men who got support from the

masses. Toward dawn, the ruffians were compelled to

abandon their efforts and stampeded, cursing: "This

army unit is damned difficult to deal with."

How much energy the officers and men spent to convince the masses! When they arrived in Beijing on 22

May, having endured the hardships of a long journey, the

regiment political department immediately launched an

education campaign, teaching members of the whole

regiment to "strictly follow the instructions ofthe central

authorities and combat bourgeois liberalism." They also

compiled 120 handbooks on how they should act in

enforcing martial law, including "Main Points To Discuss With the Masses," "Ways To Handle Complicated

Issues," "Points for Attention in Politely Fulfilling

Duties," in light of the party's relevant policies and the

difficulties they were likely to encounter. The officers

and men received intensive training before they were

sent to their posts. The People's Liberation Army General Political Department transmitted their experience

throughout the country.

II

By taking advantage of powerful political work, the Red

Army Regiment not only withstood a life-and-death test,

but also a test of tough conditions.

The 9th company was the vanguard of the regiment.

Officers and men of the whole company were unable to

have supper before they set off. By the evening of 4 June,

they had not had anything to drink for more than 30

hours, and 11 soldiers fainted from hunger at their posts.

Seeing his subordinates fainting one after another, company commander Yang Huicheng, who was too impatient to wait, hurried to the battalion headquarters and

brought back two bags of biscuits weighing a half jin

each. The amount was so small for scores of soldiers in

the company that each member could only get a very

small piece. The first man who got a biscuit was the 4th

squad leader, Zheng Weidong, a party member. Seeing

that there were not enough biscuits to go around, he

insisted that he was not hungry and rejected it. Other

soldiers followed his example. As a result, two bags of

biscuits were left intact and returned to the company

commander. The company commander got excited and

shouted: "Eating biscuits is for the purpose of accomplishing our mission. I order you to have them."

Six days and nights after the rebellion was crushed,

officers and men ofthe whole regiment slept in the open

under the Lijiao Bridge at Jianguomen. They had no

tents or mosquito nets, so they were exposed to the

scorching sun by day and mosquitoes at night. When it

rained, officers and men could take shelter only under

automobiles. The leadership of the Changfugong Hotel
42 MILITARY, PUBLIC SECURITY

JPRS-CAR-89-104

23 October 1989

repeatedly told them to stay in the hotel, but their

invitation was invariably politely declined. As there was

no boiled water to drink, many comrades contracted

enteritis, going to the toilet seven or eight times a day,

but nobody abandoned his post. On the first day they

were transferred from the outpost line of defense to fixed

posts, 37 officers and men from the 3d battalion stood

sentry for 5 hours in succession. Eight comrades passed

water with their trousers on, never moving a bit. When

coming to the bridge for inspection, leaders from the

headquarters praised them for conscientiously observing

discipline.

Ill

Officers and men of the Red Army Regiment were

praised by higher authorities and people of all walks of

life for their remarkable political work. However, they

warned themselves against conceit and arrogance amid

the widespread applause, sounding the alarm.

One day last July, driver Xiao Wang violated traffic

regulations at Tiananmen Square by running a red light

while carrying out his mission. Someone criticized him

for that, but he said in a casual way: "The police will not

bother about vehicles of martial law forces." From this

incident the regiment party committee keenly realized

that conceit and arrogance had developed among the

soldiers. They immediately straightened things out in

every field, teaching the soldiers to observe discipline,

fulfill their duties, preserve their image, and uphold

unity with other organizations.

In July, two small groups comprising office workers and

political instructors from various battalions and headed

by Political Commissar Gong Zhuxing, and Director Lu

Liansheng visited over 30 units, including the 116th

Middle School, Changfugong Hotel, Jianguomen Police

Substation, and so on, to solicit their opinions. Late at

night on a certain day in mid-July, Fan Songshan, a

cadre from the Beijing Highway Transportation Management, came to a guard post of the Red Army Regiment

on his way home from the airport in a car. When the

soldiers on duty inspected his certificates, the two sides

had a quarrel, and Fan and his car were detained. In the

rectification drive, the cadres and soldiers realized they

too were to blame if they set higher demands on themselves. Then they made a special trip to Fan Songshan's

place, traveling a few dozen li. They apologized to him in

person and also made self-criticism.

Military Unit Builds Hydroelectric Power Station

40050689fBeijing JIEFANGJUN BAO in Chinese

5 Aug 89 p 2

[Article by Zhao Guo 0340 0948 and Wang Long 3769

7893: "Sichuan Military Reserve Corps Contracts To

Build Hydroelectric Power Station"]

[Text] In early June, a hydroelectric power plant with a

generating capacity of 510 kilowatts was built in Chenjiagou, Dazhu County, Sichuan Province. Now, more

than 2,000 peasant households in the villages of Xinqiao

and Paifang (not far from Chenjiagou) have brought an

end to their history of oil-lamp lighting. At the same

time, electricity supply problems have been solved for

some irrigation systems, rice and wheat milling operations, and village-run enterprises in the area.

This hydroelectric plant was built on contract by a

reserve military unit. This reserve unit has sent out a

construction team, ate and slept on the job site, and

struggled for five months to ensure that the power plant

would be finished on time.

Commander Outlines Need for Rapid Reaction

Ability

40050689c Beijing JIEFANGJUN BAO in Chinese

5 Aug 89 p 2

[Article by Guo Jingchun 6753 2529 2504, Tianjin

Brigade deputy general commander: "Emphasis Placed

on Raising Rapid Reaction Ability"]

[Text] The mobile units of military and police forces

constitute the primary force that deals with rapidly

occurring incidents of violence and security incidents

involving the masses. These types of incidents are characterized by the fact that they almost always develop

suddenly, change rapidly, and spin out of control if the

opportunity for action is not seized upon immediately.

In order to stay in control ofthe situation and stay on the

offensive, speed must be countered with speed, that is,

rapid response capability is required. Based on our

experience, four points must be grasped firmly.

1. A plan must be in place ahead of time. Although we

cannot know in advance the time, place, or scope of any

incident, some general forecasts can be made. Four

different contingency plans should be drawn up based on

the brigade experiences in recent years in dealing with

security incidents involving the masses, and with rapidly

developing violent incidents. They include a contingency

plan to deal with major disturbances involving the

masses, a contingency plan to deal with counterrevolutionary rebellions or riots, a contingency plan to deal

with rapidly developing violent incidents, and a contingency plan to deal with mass disturbances at recreational

and sports activities. The contingency plans should

clearly establish a leadership structure, combat units,

areas of responsibility, principles for dealing with situations, and coordinated action. Communications, vehicles, supplies, and political work must be worked out.

2. Simplified command procedures. If command procedures are to be simplified, it is a prerequisite that organs

within headquarters and the mobile units be of high

quality. That is to say, when headquarters staff and

communications personnel are on duty in normal times,

they must be very conscientious and mobile units must

always be on the alert so that they can respond immediately when called for. On this foundation, as soon as any

incident arises, the "one accurate and four rapids" must

be achieved as the command system is organized. The
JPRS-CAR-89-104

23 October 1989 MILITARY, PUBLIC SECURITY 43

"one accurate" refers to the fact that the situation must

be sized up accurately, and there must be clear information regarding the incident's location, nature, scope, and

current conditions. The "four rapids" are: Orders must

be given quickly, troops must organize and advance

quickly upon the scene, division of tasks at the scene

must be accomplished quickly, and coordination and

deployment must be achieved quickly. As the "four

rapids" are being implemented, circumstances with differing degrees ofgravity must be distinguished, and there

must not be a lot of people separately asking their

superiors for instructions. Under emergency conditions,

reports should be able to skip over the chain of command and be transmitted directly to top commanders,

and these commanders should be able to bypass the

chain of command when giving orders. Telephones,

radios, and messengers should all be used.

3. Reliable communications must be ensured. Mobile units

should rely primarily on radio communications. The range

of communications must be increased so that communication command can be from top to bottom all the way

without obstruction and delay, but also can be carried out at

different levels. Commanders must be in direct communication when near the scene, and maintain relay communications when at a distance. When choosing radio equipment, one must look for high power, many channels,

portability, and resistance to interference. In keeping with

the principles of sure performance and flexibility, each link

in the line of communication must be guaranteed, and the

network must be divided into distinct nodes. We must equip

every squad and section with walkie-talkies, every division

with a communications base, and every brigade and detachment with communications sets installed in vehicles.

4. Vehicles with relatively high-performance equipment

are needed. We cannot equip all our vehicles in the same

way. Because mobile units must carry out a wide range of

assignments, we must strive as much as possible to equip

vehicles to handle conditions in cities, towns, and villages; in avenues and back alleys; and over long hauls

and short distances. We must use buses that can carry

many people, jeeps that handle cross-country terrain

well, and light and maneuverable motorcycles. We must

use passenger/freight vehicles to transport special

weapons and supplies. When possible we should also

make use of armored transport vehicles.

Institute Develops Antiriot Vehicle

40050689b Beijing KEJI RIBAO in Chinese

29 Jul 89 p 1

[Article by Ji Hongguang 1323 3163 0342: "China Now

Capable of Producing Antiriot Vehicle; Equipment

Essentially Up to International Level, Departments in

Charge Need Not Import Any Longer"]

[Text] Reporters learned recently during a visit to

Research Institute 201 of the Ministry of the MachineBuilding and Electronics Industry that the institute has

recently succeeded in building an antiriot vehicle for

police use which it had been designing. The specialist in

charge of this project told reporters that, apart from the

Chinese-made chassis presently being used, all the vehicle's technology and equipment is basically on a par with

international standards, and can satisfy user damands

both in China and abroad.

The antiriot protection-security rotation style armored

vehicle, which is called the JG-01, has been designed to

meet the demands of foreign users. According to the

specialist, this vehicle incorporates features of other

vehicles of the same class from around the world and

combines them with the strong points and advanced

technology of the armored vehicle which this institute

had designed for military use. Besides serving the function of transporting police or personnel of other armed

organs quickly, comfortably, and safely to their destination where they may patrol or carry out duties involving

armed support, it can also serve as an armored medical

vehicle, command vehicle, or be used to transport prisoners.

A specialist told reporters that the JG-01 has a speed of

80 kilometers per hour. Its armor can support light arms

attack capability, including machine guns. The great

majority ofthe equipment needed by police and security

forces is installed inside the vehicle, including light arms,

tear gas grenades, and smoke bombs. Each vehicle can

transport a maximum of 12 people. As it advances, it can

easily overcome and destroy traffic barriers that are

present during incidents of rebellion. In addition, it is

installed with a gunner's turret that can rotate 360

degrees, which no other such vehicle has. It is also

equipped with communications equipment, infrared

night vision instruments, a periscope, cameras, video

cameras, tape recorders, and loudspeakers. In order to

guard against attack by thugs, this antiriot vehicle is

equipped with an advanced air conditioning and ventilation system, as well as antipoison, fire fighting, and

first aid equipment.

After presentation, concerned departments are preparing

to import 10 police antiriot vehicles from abroad in

order to guarantee that next year's Asian Games will go

off smoothly, as well as to augment the antiriot equipment of the public security organs.

Experts from Research Institute 201 feel that in terms of

performance, equipment, and practicality, this police

antiriot vehicle, designed and built in China, is basically

on a par with foreign products, and in some aspects it

surpasses foreign products of the same type. Furthermore, the product's price is clearly lower than foreign

products. In addition, the neighboring Factory 618 is

capable of quickly producing in quantity and can deliver

the goods by the time concerned departments will need

them. Therefore, they stress to concerned departments

within China that it is completely unnecessary to import

this type of police antiriot vehicle from abroad and urge

them to save for other purposes the considerable sum of

money involved.
44 MILITARY, PUBLIC SECURITY

JPRS-CAR-89-104

23 October 1989

Jinan Military Unit Crime Rate Decreases

40050689c Beijing JIEFANGJUN BAO in Chinese

3 Aug89p 3

[Article by Xin Fuyi 6580 4395 5030: "Jinan Military

Region Logistics Department Crime Rate Decreases for

4th Straight Year"]

[Text] The crime rate among troops under the logistics

department of the Jinan Military Region has decreased

for 4 years in a row. This is because organs in the logistics

department have paid close attention to security work,

have not resorted to bluster and high-sounding phrases,

and have been willing to work conscientiously.

Cases occurred at a relatively high rate for the Jinan

Military District's logistics department before 1984.

Since 1985, the logistics department's party committee

and its various levels of safety and protection departments have freed themselves from the mountains of

documents, endless meetings, and excessive high-level

activities, and have used their energy to work hard on

fundamental tasks. First, they have investigated warehouses, sentry posts, and hospitals, where the number of

cases was greatest. In some instances they took decisive

steps, carried out comprehensive rectification, and lowered the crime rate in the two worst areas: warehouses

and hospitals. Second, with troop reductions and drastic

cuts in the number of guards, they have organized a unit

to train dogs for military use. They have provided nearly

100 military dogs for the troops and made up for the

insufficient manpower of the guards. Third, they have

used several different methods to train security cadres,

thereby establishing a unit of security cadres with

combat capability. During the last 4 years, this logistics

department has solved 100 percent of its cases, and its

security cadres have had the highest group scores in two

joint training exercises in the military region.

Fresh Water Supplied to Troops in Southern

Islands

40050689d Beijing JIEFANGJUN BAO in Chinese

1 Aug9p 1

[Article by Liu Xingan 0491 5281 1344 and Fan Juwei

5400 3515 3555: "People of Sanya Conserve on Water

Usage, Ensure Water Supply for Soldiers Guarding

Spratlys and Paracels"]

[Text] The citizens of Sanya City have conserved on

domestic water use in the middle ofthe summer in order

to guarantee a supply of fresh water for the troops

patrolling the Spratly and Paracel Islands. The troops

stationed in the Spratly and Paracel Islands each sent

telegrams to the people of Sanya to express their gratitude.

Hainan Province's Sanya City, situated in the tropics,

has extremely tight water supplies in the summer. Early

this year, when leaders from the Hainan party committee

and provincial government visited the Navy troops

stationed in the islands, the officers and soldiers who

bear responsibility for patrolling the Spratlys and Paracels reported the problem of short water supplies on the

ships and islands. The leaders from Hainan Province

and Sanya City declared promptly that the next time a

drought occurs, they will ensure fresh water supplies for

the South Sea troops even if it means cutting off the

people's drinking water. The weather in Sanya has been

hot and dry this summer. The city leaders, with the

understanding and support of the residents, directed the

appropriate departments to cut off household water

supply several times and direct most ofthe fresh water to

the military piers. Highest priority was given to meeting

fresh water needs of troops stationed in the Spratlys and

Paracels and the needs of the naval ships. When the

South Sea defenders learned of this they were deeply

moved, and they declared they would prove themselves

worthy of the deep affection of the people in the special

zone. They swore to defend the fatherland's southern

gate. They also stated that they would further carryforward the "save every drop of water" activities in

order to lighten the people's burden.

It is reported that, during the lunar new year holidays, a

delegation sent from Hainan to convey greetings and

congratulations spoke about other measures of support

for the Navy, including awarding priority to supplying

the daily necessities of South Sea troops; subsidizing the

food expenses of the troops, and so forth. These measures are already in place or are in the process of being

implemented.

Officers Placed in Hebei

40050689g Shijiazhuang HEBEI RIBAO in Chinese

8 Jul 89 p I

[Article by Zhang Helin 1728 0678 2651: "Hebei Province Will Accept 3,021 Transfer Officers This Year"]

[Text] The 2-day 1989 Provincewide Work Conference

for the Placement of Military Officers Changing Careers

came to a close on 29 June in the provincial capital of

Shijiazhuang. Hebei Province will absorb 3.021 military

officers this year who are changing careers. Six of them

came from the division level, 485 from the regiment

level, 1,188 from the battalion level, 640 from the

company or platoon level, and 702 were technicians.
JPRS-CAR-89-104

23 October 1989 REGIONAL 45

EAST REGION

Anhui Governor Addresses Forum on Enterprises

OW1310061689 Hefei Provincial Service in Mandarin

1100 GMT 24 Sep 89

[From the "Provincial Hookup" program]

[Excerpts] According to ANHUI RIBAO, after making

an investigation of large and medium-sized enterprises

in the Hefei area regarding their present conditions and

problems and how to bring their key role into full play,

Governor Fu Xishou recently discussed outstanding

problems facing such enterprises, [passage omitted]

In this connection, five forums were held from 7 to 20

September, [passage omitted] Comrade Fu Xishou

attended and addressed the fifth forum, held at the

Anhui Printing and Dyeing Mill on the afternoon of 20

September. After stressing the importance of large and

medium-sized enterprises, he pointed out that large and

medium-sized enterprises are the pillars of the national

economy and the main sources of state revenue. Large

and medium-sized industrial enterprises in our province

account for only 1 percent of its industrial enterprises

that practice an independent accounting system. However, their fixed assets and output value and the taxes

and profits they turn in to the state account for about 60

percent, [passage omitted]

On outstanding problems facing enterprises, Governor

Fu stressed that we must stabilize our policies and

deepen reforms. He said the most outstanding problem

raised by factory directors is that of the leadership

system. It is necessary to unswervingly implement the

system of full responsibility offactory directors. A major

problem at present is that of the need to strengthen

ideological and political work in enterprises. Efforts

must be made to resist bourgeois liberalization and to

adhere to the socialist orientation in running enterprises.

Therefore, while affirming the enterprise law, the party

Central Committee has reiterated the political core position of enterprise party organizations, [passage omitted]

Governor Fu pointed out, "A basic principle in running

socialist enterprises is wholeheartedly relying on the

working class. Our working class is the main force in

socialist revolution and construction, and workers are

the masters of the country. To effectively run socialist

enterprises, it is necessary to fully arouse the enthusiasm

of workers and staff, to give full play to their role as

masters ofthe country, and to open up a regular channel

for democratic participation and supervision so as to

enable them to fully exercise their democratic rights."

[passage omitted]

Xiang Shouzhi Speaks on Study of Marxism

OW0110095189 Nanjing Jiangsu Provincial Service in

Mandarin 1015 GMT 23 Sep 89

[Text] The 4-day meeting ofthree-level party committee

secretaries of the Nanjing Military Region closed in

Nanjing on 23 September. The main topics discussed at

the meeting were ways to promote the study of basic

Marxist theories and how to strengthen party building.

Xiang Shouzhi, secretary of the party committee and

commander of the Nanjing Military Region, made a

report during the meeting. His report was entitled:

"Thoroughly Implement the Guidelines of the 4th Plenary Session of the 13th Party Central Committee and

Whip Up an Upsurge of Studying Basic Marxist Theories."

He said, "Practical struggle has made us feel that it is

very important to uphold the guiding role of Marxism,

and it is imperative for us to study and understand

Marxist theories. We should build up a great momentum

and enthusiasm for studying basic Marxist theories,

make the theoretical study more systematic, and have an

accurate grasp ofMarxism as a system. We should clarify

major ideological issues in view of realities."

Comrade Fu Kuiqing, deputy secretary of the party

committee and political commissar of the Nanjing Military Region, spoke on ways to strengthen the leading

bodies of party committees.

Some members of the standing committee of the party

committee of the Nanjing Military Region attended the

meeting. They included Shi Yuxiao, Zhang Ming, Liu

Lunxian, Yu Yongbo, and (Wang Tainan).

Jiangsu Governor Attends Meeting on Party

Building

OW1010023289 Nanjing Jiangsu Provincial Service in

Mandarin 0915 GMT 12 Sep 89

[By station reporter Wang Mingsheng, from the "News"

program]

[Text] A provincial conference on party building opened

in Nanjing today. The meeting is being attended by

deputy secretaries in charge of party affairs in all city

party committees, directors of the organization departments of all city and county party committees, and

responsible comrades of party groups and party committees of all provincial departments and major units

directly under the province, totaling some 400.

The main purposes of the meeting are to transmit and

implement the CPC Central Committee's circular on

strengthening party building and the guidelines of the

national conference of directors of organization departments of all provincial, autonomous regional, and

municipal party committees; to further carry out the

tasks detailed by the 4th Plenary Session ofthe 13th CPC

Central Committee; and to discuss questions about the

strengthening of party building.
46 REGIONAL

JPRS-CAR-89-104

23 October 1989

Chen Huanyou, deputy secretary of the provincial party

committee, presided over the plenary meeting today. Gu

Hao, member ofthe Standing Committee and director of

the organization department of the provincial party

committee, transmitted the CPC Central Committee's

circular and the guidelines of the national conference of

directors of organization departments.

Pledging to do their utmost to ensure the conference is a

great success, the participants said, "We should enhance

our understanding of the importance and [words indistinct] of party building and concentrate our efforts on

ensuring a good job in party building. We should also

earnestly examine the ideological confusion and

undoubted influence caused by Comrade Zhao Ziyang's

errors in weakening the role and leadership of the party

and seriously neglecting party building to make a clear

distinction between right and wrong and to thoroughly

correct the errors. It is necessary to clearly define the

pressing tasks in the current party building and study

concrete measures for carrying out those tasks. We should

heighten our spirit, enhance our confidence, and work

together in promoting the work of party building to a new

level.

Shandong Troupe Stages Play About Confucius

OW0510125889 Beijing XINHUA in English

1534 GMT 4 Oct 89

[Text] Jinan, October 4 (XINHUA)—A stage play

depicting the life of Confucius, ancient China's greatest

thinker and educator, opened here yesterday.

The play, which lasts more than 2 hours, was created and

performed by the Shandong Provincial Modern Drama

Troupe.

It portrays the sage as a man with an insatiable desire to

learn, who teaches with tireless zeal and regards wealth

and rank as floating clouds, said local critics.

The play is scheduled to be shown next Saturday for

participants in the international seminar on the study of

Confucius, which is being held at Qufu, the sage's

birthplace.

A cultural festival and grand ceremony were held late

last month in Qufu to mark the 2,540th anniversary of

the birth of Confucius.

CENTRAL-SOUTH REGION

Guangdong Finances Public Security With Levies,

Fees

40050693a Beijing RENMIN GONGAN BAO in

Chinese 22 Aug 89 p 2

[Article by Zhao Xiaogang 6392 2556 0474 and Guo

Zheng 6753 6086]

[Excerpt] I. "Spending Money To Buy Public Order":

Background and Basis

Simultaneous with Guangdong's economic construction

and social development since the advent of reform and

the opening to the outside world, predicaments and

crises in social order have also showed an accompanying

increase.

1. The public order situation has become more serious

each day. In 1988, criminal cases throughout the province increased 32.7 percent compared to 1987, and the

more serious criminal cases increased 75.7 percent. In

proportion to the population, the rate of cases instituted

in Guangdong did not exceed 5.8 per 10,000. Internationally, this is still considered low. It is obviously lower

than Hong Kong's 140 per 10,000, Singapore's 163, and

Taiwan's 35. However, with regard to violent crime,

Guangdong in 1988 had 0.07 murder cases instituted per

10,000 people. This approaches Japan's 0.14 per 10,000

and the GDR's 0.08. The rate ofrobbery cases, including

snatchings, instituted was 0.34 per 10,000, higher than

Japan's 0.15.

Guangdong criminals especially are in the distinct position of being subjected to outside persuasions and influences. Comrades at the Shenzhen municipal public security bureau have summed these up in the following five

words: "the black" (the persuasions of underworld organizations); "the false" (counterfeit currency and merchandise); "the yellow" (obscene videos, films, and

books); "the poisonous" (drug addicts and dealers); and

"the illicit" (smuggling and illicit trade). In a survey of

10,000 people conducted by the Guangdong Provincial

Academy of Social Sciences and the provincial statistical

bureau, it was clear that the rise in prices and public

order are the social issues about which the people are

most concerned.

2. The police force is seriously understaffed and its

members overloaded with work. Relative to its population, Guangdong clearly has a lower proportion of public

security cadres and police officers than other countries

around the world allocate to their police forces, which is

commonlya 1:500 ratio and for the cities 1:200 or 1:300.

Guangdong is even further away from Hong Kong's

1:169 ratio. Most areas in Guangdong's Pearl River

Delta have already been urbanized or are about to be.

The rapid growth of industrial enterprises is pushing up

the expansion of cities and towns and increasing population. We are even seeing temporary residents outnumbering permanent residents. If the police are allocated

according to the permanent resident population, then

the disparity is even greater. From the standpoint of the

work for which they are responsible, this disparity is

extremely obvious.

Even basic-level cadres and police rotate round the clock

without any time off. Moreover, during "attacks,"

"struggles," "improvements," and "rectifications,"

criminal cases have increased month after month. If we

cannot once and for all find a way out, it is hard to think

that we can turn the situation around.
JPRS-CAR-89-104

23 October 1989 REGIONAL 47

3. Guaranteeing resource for public security has been rather

lacking, and it has been hard to keep up appearances.

Everyone knows that funds for public security organs are

insufficient and that their equipment is outdated. It is still

this way even though Guangdong is a preeminently wealthy

region. Nearly every unit has to rely on solicitation to raise

funds and to pay the expenses of handling cases. Criminals'

use of high-speed automobiles and radios to keep in touch

while committing crimes is already common practice. Some

have even provided themselves with equipment for rescue

and medical treatment. In the special zones of Shenzhen and

Zhuhai, there are some branch bureaus where even onthe-spot investigation equipment is difficult to come by, and

except for a few pieces of bulletproof clothing, other protective gear is completely lacking. Bureau chief Zhu [2612] of

the Luohu branch bureau in Shenzhen says that progress

now being made in protective gear is being countered with

the even more clever tricks of the criminals. We still catch

the mentally deficient criminals; the wiser ones we cannot

cope with.

Areas of rapid economic development are also areas where

there is a high concentration of criminal cases instituted. A

fifth of the murder cases in Guangdong Province in 1988

were concentrated in Guangzhou. This makes clear that

areas where there are an accumulation of wealth and a

dynamic economy are areas where there are many types of

criminal activities. It also makes clear that these areas

should be obligated to make a greater investment from

their enhanced national income in improving public order.

Otherwise, the damage will be tremendous. In addition,

the change in the sense of values that came with the

development of a commodity economy diluted people's

social consciousness and weakened their sense of social

responsibility. The impetus of an overheated economy

caused people to focus their attention on material interests

and daily necessities. As a result, on the one hand this

created the false perception that public order problems

were not very serious, and on the other it weakened

people's enthusiasm and support for public security work.

The past methods of relying on administrative orders and

on organizations to mobilize their members to promote

mass public security work present some difficulty now.

We are thus facing the contradiction whereby the

unfolding of public security work is out of step with social

and economic development, the contradiction whereby

integrating public order work into the community has

reduced people's sympathy for this type of work, and the

contradiction of remaining passive to attacks while developing a public security strategy. On the basis of this

situation, Guangdong comrades have put forth a tentative

plan for "spending money to buy public order," and they

have adopted diverse means suitable to local conditions to

carry this out.

II. The General Methods of "Spending Money To Buy

Public Order"

From our investigations, we discovered that "spending

money to buy public order" has rather broad implications and embodies various characteristics and forms.

1. Recruiting local people's police to collect money from

local financial sources. Foshan County has already

recruited 1,167 local people's police, 32.3 percent of its

public security cadres and policemen. Nanhai County,

which recruited 512 police, and Shunde County, which

recruited 280, were, as a result, able to expend no less

than 1.5 million yuan and 840,000 yuan each year,

respectively.

2. Money collected from the people in the community

should be used for the people in the community.

Throughout Guangdong there are now 150,000 full-time

joint defense unit and patrol unit personnel, nine times

more than the existing police force has. In September

1985, Sanshui County began to set up in 11 towns

throughout the county 11 professional public security

units made up of 377 people. Their living together,

wearing the same clothing, doing the same work, and

receiving the same pay had a large impact on how they

safeguarded public order. The Shunde County government has stipulated that, as a levy for public security

administrative expenses, each year every inhabitant of

the cities and towns in the county is to pay 1 yuan, every

industrial and agricultural production department, 0.07

percent of its output value, and every trade department,

0.03 percent of its total sales. The Luohu District "three

protections unit" (factories, shops, homes) in Shenzhen

already has more than 1,000 personnel. Each person

receives a monthly salary of more than 250 yuan, not

including the clothing allowance. Annually, this comes to

more than 3 million yuan. The entire amount is collected

from the community.

3. Setting up nongovernmental companies to ensure

public security. Guangdong is the first province in the

country to establish nongovernmental companies to

ensure public security. Since first being set up in Shenzhen in 1983, they have seized more than 500 criminals,

and in the more than 200 units and places of duty to

which these companies have provided their service, only

one criminal case has occurred.

4. Export-oriented economic departments of the "three

receives and one compensation" type (receives materials

for processing, receives styles for processing, receives

parts for assembling, and compensates trade) are implementing the methods of self-management to guard their

enterprises, taking the road of "letting a hundred enterprises invigorate themselves, letting a hundred enterprises manage their own public security." Baoan County

public security bureau, in setting up an industrial district

substation in an area where "three receives and one

compensation" enterprises are concentrated, proposed a

program of "spending money to buy public order," with

each enterprise unit contributing a share to the expense

of having professional public security work directed by

public security organs.

5. Instituting compensation for providing administrative

services to the populace. In Zhuhai Municipality, all

temporary residents who are issued temporary resident

cards, must, except for the cost of producing the cards
48 REGIONAL

JPRS-CAR-89-104

23 October 1989

themselves, pay for the public security administrative

expenses involved. Each person engaged in business

must pay 2.50 yuan a month. Others must pay 1.50 yuan

a month.

6. Zhuhai Municipality has established a "fund for

rewarding conspicuous valor." Each year the municipal

government specially allocates 1 million yuan to be used

for rewarding and compensating citizens and their families who have been injured or killed while combating

criminal acts, [passage omitted]

Model for Restructuring Hainan Provincial

Government

40050598a Zhengzhou LINDAO KEXUE

[LEADERSHIP SCIENCE] in Chinese

No 5, May 89 pp 34-35

[Article by Dong Shujun 5516 2885 0689, member ofthe

Organization Department of the Inner Mongolia Autonomous Regional Chinese Communist Party Committee,

in the 'Leadership in Special Zones' column: "Small

Government, Big Market—A Model Scheme for

Restructuring the Hainan Provincial Government"

[Text] In 1988, as a special project, some ofthe students

in the CCP Central Committee Party School investigated

the restructuring of the Hainan provincial government.

After Hainan became a province in September 1987 an

effort was quickly launched to extensively restructure its

political system based on the new model of "small

government and greater society." The intention was to

apply the principle of "administrative simplification to

improve results" by substantially retrenching overlapping organizations and bloated staff; to work according

to the rule of "coordinated action" in making the "three

decisions" (determining the functions, setup, and plan)

for new provincial-level units; to completely redirect

administrative companies and the specialized economic

management sector along a new path based on the

principle that we should "transform consumption into

production"; and to gradually reallocate the flow ofwork

in line with the precept of "transforming bureaucratic

management into popular management." We were

delighted to find that the restructuring under way in the

move toward "small government and greater society" is

now bringing new changes to Hainan.

However, further investigation revealed that many problems still plague the restructuring effort in Hainan: 1)

Organizations at the provincial level are still redundant

and overabundant. Many provincial departments apply

the "three decisions" on three separate levels: under the

department is the division, and under the division is the

section. In some departments there is even a four-level

structure: the department, the bureau, the division, and

the section. Some units cling to gradations: There may be

as many as 19 different division offices, under which

there are 76 additional sections. In some units the

auxiliary administrative posts constitute 44 percent of

all posts (though regulations stipulate they should not

exceed 15 percent). 2) The organizational facilities in

many departments still take on certain tasks that are

either outside their proper sphere of management or that

they cannot handle adequately or completely. For

example, many retain direct supervision over enterprise

personnel, finances, goods, and operating activities, and

correspondingly have set up additional personnel departments, economic management departments, and so

forth. 3) It is almost as if there were one organization

with two signs: One points downward toward administration, and one points upward toward funding.

All these derive from one source: Because reform

revolves around the political organization system alone,

there is no coordination between reform and the more

basic economic organization system, nor do the two

progress in step with each other. And the emergence of

this tendency is a direct result of the fact that the "small

government, greater society" model of reform was both

shallow in depth and narrow in scope. Consequently, to

resolve the above issues we simply cannot adopt a

method which treats the symptoms but not the disease.

Rather, we must proceed with a complete, comprehensive "small government, greater society" model.

We feel that, with the overall goal of "socialization" in

mind, restructuring in Hainan ought to fuse the political

with the economic in the smelter of "small government

and big market."

1. The Inevitability of "Small" Government and "Big"

Market

The coordination of a "small" government with a "big"

market, and the progress of the two in step with each

other, is an inherent requirement of modern systems

theory. Structurally, society is an enormous system.

Although the political and economic systems of organization each have their own characteristics, they are

nevertheless intimately related. This is particularly evident in their resonant effect on the overall operation of

society. The results of modern social economic research

indicate that, of all the functioning factors in economic

development, noneconomic factors play a greater role

than economic factors themselves. This kind of internal

correlation and consistency within society itself

strengthen the correlation and consistency in the overall

content of social reform. Consequently, when we carry

out a restructuring effort we cannot change only this and

not that, or change first one thing and then the other: We

must conduct reform in a coordinated fashion.

This simultaneous progress toward "small" government

and "big" market and the coordination between the two

also exemplify the experience of East European socialist

nations. Hungarian leaders believe that, without political

restructuring, economic restructuring cannot be intensified. Economic reform inevitably ushers in profound

political changes. Yugoslavia has not only surmounted

traditional political corruption, it has also resolved problems in its traditional economic structure—reforms in

these two areas proceeded together. Reform in Poland
JPRS-CAR-89-104

23 October 1989 REGIONAL 49

during the 1980's has been characterized by simultaneous economic and political restructuring. The 27th

CPSU Party Congress proposed a "thorough reform" of

the economic system and then, when the issue of political restructuring was raised subsequently, it stressed

that the two should be coordinated.

2. The Relationship Between a "Small" Government

and a "Big" Market

First, the criterion for streamlining the political system

must be the development of a perfect market. The

assertion that "big government" must become "small

government" provokes no dissent. The issue lies in the

standards used to define "small government." Some

comrades say that "the Hainan provincial and party

government has a smaller complement of authorized

personnel, something rare nationwide, and this makes it

a 'small government' truly worthy ofthe name." We feel

otherwise. As everyone knows, the existing setup in all

Chinese provinces is huge, even unwieldy, beyond all

proportion. A "small government" for which the criterion is the size of decrease in "big government" is not

really a "small government" at all. To differentiate this

"small government" from "big government" is akin to

the pot calling the kettle black.

The real standard for distinguishing "small government" is

market requirements. A true "small government" is inconsistent with market regulation. Consequently, only if we

perfect the market can we know how many affairs the

government should handle, and only then can the government determine how many organizations it should encompass and what complement of personnel it needs.

Second, the transformation of government functions

must be predicated upon the development of a complete

market. Ifthe established mechanism highlights the "big

market's" quantitative requirement for a "small government," it should be changed to highlight the "big market's" qualitative stipulations for "small government." If

there is no developed market to act as a base, the

transformation in government functions will almost

inevitably be like pasting a new label on old goods—the

change will be cosmetic rather than substantive. Even if

the change is made temporarily, nevertheless we may—

intentionally or unintentionally, directly or indirectly—

continue to follow the same old disastrous path and

resume our past behavior. Clearly, only if we develop a

strong "big market" can we have a "small government"

that preserves both quality and "quantity."

3. The Relationship Between "Small" Government and

"Greater" Society

Fundamentally speaking, "greater society" does not

come under the category of a system of organization. It

determines, with respect to the content and purpose of

social self-management and self-development, what the

carrier and rules ofthe actual system of organization will

be. As a result, "greater" society—that is, "socialized"

society—is both an orientation and a goal. "Small government," on the other hand, because it guarantees

social self-management and self-development, is a

system of organization—that is, it is one means of

securing the goal of a "greater society."

A "greater society" and a "big market" are important, of

course, but "small government" is absolutely indispensable: it is a "referee," a "traffic cop," and a "night

watchman." If the "big market" supplies a competitive

environment based on equal footing, then "small government" is the able keeper of this "equal environment."

Figuratively speaking, the relationship between "greater

society" and "small government, big market," is just like

the relationship between the giant and his two hands, one

of which is "visible," and the other "invisible." Therefore,

"small government" and "big market" are both very

important, indispensable in fact, to a "greater society."

From this it is obvious that the goal ofrestructuring is to

establish a "greater society," and that the substance and

course of restructuring lie in readjusting the power and

redistributing the functions of the "invisible hand" of

the "market" and the "visible hand" of "government."

That is, we must completely eradicate "deceit" in government and "idle hands" in the market, and establish a

harmonious new state ofintimate economic and political

coordination, with the "visible hand" subordinate to the

"invisible hand."

SOUTHWEST REGION

Yunnan Publicizes Offices for Reporting

Government Corruption

40050676a Kunming YUNNAN RIBAO in Chinese

21 Jul 89 p 1

[Text] In order to fully rely on the masses, truly establish

honest government, and effectively punish corruption, the

Yunnan leadership group for the establishment of honest

government has decided to publicly announce the names

of organizations and events about which complaints by the

people have been lodged with provincial leading bodies

and individuals such as supervisors, discipliners, and law

enforcement personnel, thereby facilitating the uncovering

and reporting by cadres and people at every level in society

of every kind of corrupt behavior among party and government workers. To address the problem of increased

lodging of complaints by the people, the individuals concerned will conscientiously deal with the problem in a

timely fashion, and furthermore will thoroughly protect

the legal rights and legitimate demands of the petitioner.

Each organization that receives complaints will keep the

signer's identity a strict secret.

1. Chinese Communist Party Yunnan Provincial Party

Committee General Office, Visitation Desk

Scope of complaints: Resistance and opposition among

party organizations and party cadres to the party Central

Committee's party line, plans, and policies, and other

serious infractions of party rules, economic violations of

the law, and impure behavior.
50 REGIONAL

JPRS-CAR-89-104

23 October 1989

Office address: Mile Temple, No 2, Provincial Party

Committee Compound

Reception address: The reception room on the south

side, outside the compound's main gate

Complaint line: 25606

2. Yunnan Province People's Governent General Office,

Visitation Desk

Scope of complaints: Government system subordinate

units and workers involved in malfeasance, dereliction

of duties, retaliation, and other violations of law and

discipline.

Office address: Mt Wuhua Provincial Government

Reception address: The east reception room at the

entrance to the Provincial Government

Complaint line: 24918

3. Chinese Communist Party Yunnan Provincial Disciplinary Committee, Office of Appeals and Complaints

Scope of complaints: Party department problems with

organization members and cadre leader party members

breaking party discipline, and party members of government departments and individuals involved in enterprises, and party affairs cadres with party discipline

problems. Of particular importance are problems of

discipline violations among party organizations and

cadres at the county level and above.

Office address: Mile Temple, No 2, Provincial Party

Committee Compound

Reception address: Provincial Disciplinary Committee

reception room outside the main gate on the south side.

Complaint line: 27047

4. Provincial Supervisory Office, Center for Complaints

Scope of complaints: Violations of government regulations by international companies, their employees, and

leading cadres appointed by executive departments of

government who are involved in enterprises. Of particular importance are violations of discipline by leading

cadres in every government office as well as cadres

appointed to government at the county level and above.

Office and reception address: Workers New Village No

118, Extension No 1

Complaint line: 42623. There are complaint boxes at the

provincial government, the provincial government consultative office, the provincial supervisory office, and the

provincial bureau of electricity, and more recently at

public parks and the Dongfeng department store.

5. The Provincial Procuratorate, Center for Complaints

Scope of complaints: Violations of criminal law such as

corruption, embezzlement of public funds, bribery, tax

evasion, dereliction of official duties, interrogation by

torture, false accusations and trumped up charges, illegal

arrests, retaliatory trumped up charges, serious accidents

arising from negligence, and economic and political

cases that constitute crimes.

Office and reception address: Shulin Street, Provincial

Procuratorate

Complaint line: 28678. There are complaint boxes at the

provincial party committee, the provincial government,

the Standing Committee of the provincial People's Congress, and the provincial procuratorate.

6. Provincial Auditing Office, Center for Complaints

Scope of complaints: Violations of financial laws and

regulations by individuals in every group, organization,

and in people's industrial enterprises, such as withholding payment of taxes, profits, and other income;

using false reports and claims and fraud to obtain

government financial allocations and allowances; misusing national property and changing budgeted funds to

unbudgeted funds; drawing on national treasury funds

and drawing on and squandering national assets; and

unauthorized increases in pay or allowance.

Office and reception address: Mt Wuhua Provincial

Government

Complaint line: 25880. There is a complaint box at the

main entrance to the provincial government

7. Provincial Bureau of Industry and Commerce, Center

for Complaints

Scope of complaints: Making profits buying and selling

important production materials and scarce commodities, selling inferior commodities under false pretexts,

cheating people, making profits renting or selling economic contracts, business permits, and bank accounts;

exceeding the scope of managerial duties and failing to

uphold commercial management policies; embezzlement

and accepting bribes; and blackmail and extortion.

Office and reception address: Dongfeng West Road,

Nanqiang Guesthouse, West Building, No 214

Complaint line: 34504

8. Provincial Tax Bureau, Center for Complaints

Scope of complaints: Tax evasion and other violations of

national tax policy, laws, and regulations; tax bureau

cadres using taxes for personal benefit; accepting gifts

and bribes; embezzlement of tax revenue, and any individual overstepping his authority or evading taxes.

Office and reception address: Xinminhang Road Provincial Tax Bureau

Complaint line: 29396, and request the supervisory

office
JPRS-CAR-89-104

23 October 1989 REGIONAL 51

9. Provincial Government Office of Tax Collection,

Financial Affairs, and Pricing Inspection, Center for

Complaints

Scope of complaints: Seizing, evading payment, and

holding back taxes and tax revenue owed to the national

government; making unauthorized purchases of illegal,

controlled, or not-for-sale commodities, indiscriminately issuing money, arbitrarily raising prices, arbitrarily collecting fees, passing on high prices and

engaging in profiteering, and other violations of national

tax collection, financial, and pricing policies, laws and

regulations.

Office and reception address: Mt Wuhua Provincial

Government New Building, Provincial Office of Finance

Complaint Line: 37750. There is a complaint box at the

provincial government main gate.

Public Announcement
52 TAIWAN

JPRS-CAR-89-104

23 October 1989

DPP Faces Intraparty Power Struggle

40050595a Hong Kong CHIUSHIH NIENTAI [THE

NINETIES] in Chinese No 234, I Jul 89 pp 59-61

[Article by Li San-wei 2621 0005 3956: "The Intraparty

Struggle of the Democratic Progressive Party"]

[Excerpt] [Passage omitted] The Democratic Progressive

Party [DPP] of Taiwan consists of two major factions:

one is "Pan-Formosa"; the other, "Pan-New Trend."

The formation ofthese two factions must be traced back

to the period of MEILI TAO TSA-CHIH SHE [FORMOSA MAGAZINE]. In 1979 the opposition in Taiwan

gathered for the first time under the auspices of MEILI

TAO TSA-CHIH SHE, but they were wiped out in the

"Kaohsiung Incident." After the "Kaohsiung Incident,"

a rift appeared in the opposition, and a group of lawyers

and young political activists who surfaced after the

"Kaohsiung Incident" began to rise. The only means of

propaganda for the opposition at the time was magazines, so these young political activists all worked outside of parties for opposition magazines. Some founded

a magazine called XIN CHAO LIU [NEW TREND], so

they are referred to as the "New Trend Faction."

The major characteristic ofthe New Trend Faction is its

style as a Leninist vanguard party. They believed in the

theory of Taiwan independence, contending that the

independence of Taiwan should be the highest goal of

democracy movements in Taiwan. They claim that Taiwanese are not afraid to die and that they want to drive

away the Kuomintang—the outside political power.

They have extremely strict demands on the purity of

members. According to their logic, "moral" equals

"Taiwan independence," and "Taiwan independence"

equals "pure opposition." According to such standards,

they waged "the movement to critize Kang" in 1982

when a certain important opposition figure was imprisoned. This later caused Kang Ning-hsiang [1660 1337

4382] to lose the election for Legislative Yuan. They also

criticized and denounced other public officials at the

time. In addition to using "purity" to criticize and

denounce others, this faction also took over opposition

organizations by first becoming a parasite. For instance,

in 1983 editors of opposition magazines organized the

Editors Association, which was taken over by this faction

in the following year. Since it displayed great power of

destruction, this faction became well known among

opposition circles, and public officials were terrified by

the sight of it.

In addition to its great killing power, the New Trend

faction was very effective in organizational development. Due to the support of the "Alliance for the

Independence of Taiwan in the United States" and the

Presbyterian Church of Taiwan, it did not lack basic

financial resources. Because of this, it vigorously developed organizations in all areas ofTaiwan, which became

its most solid foundation. So a "pararevolutionary"

political group for the independence of Taiwan began to

emerge officially.

At the end of 1986, the Democratic Progressive Party

was established. At the time, the DPP was disorganized

and divided. Since the New Trend Faction had many

followers, it took advantage of the situation and entered

the DPP Central Committee. With the power of the

party in hand and by maneuvering power, it managed to

win over Jiang Pengjian [3068 7720 1017] who became

the first chairman ofthe DPP. In the following year, Yao

Jiawen [1202 0857 2429] became chairman ofthe party.

Both Jiang and Yao are considered to be on the side of

the New Trend Faction. In other words, in the first 2

years after the founding of the DPP, the entire party

apparatus of the DPP was controlled by the New Trend

Faction. There are two advantages to controlling the

party apparatus: One is that the party's propaganda

machine, MINCHIN PAO [NEWSPAPER OF DEMOCRATIC PROGRESS] may be turned into a faction

resource and used to advocate the idea of Taiwan

independence. The other is that the power of the faction

may be expanded among the masses through this. It was

during this 2-year period that this faction expanded

rapidly. Other factions of the DPP, including the Kang

faction, had been reduced to minor factions.

As for other people involved in MEILI TAO TSA-CHIH

SHE, they could not make a stand against it because of

the absence of actual leaders. Taking advantage of this

power vacuum, the New Trend Faction tried many

times, but failed to change the original program of the

DPP and to make it a political party for the independence of Taiwan.

Since the New Trend Faction waged intraparty struggles

and deliberately suppressed other people within the

party, the situation suddenly changed after the DPP

elder Huang Hsin-chieh [7806 0207 0094] was released

from prison. Huang Hsin-chieh was the leader of the

Formosa period and was considered the actual leader of

the Pan-Formosa Faction. After he got out of prison, the

Formosa Faction, which was suddenly revived after 2

years of suppression, prepared to nominate him as

chairman of the party, thus causing a serious confrontation of two factions. In the second half of 1988, the

relationship between the two factions deteriorated

increasingly. In November, after fierce and explosive

competition, Huang Hsin-chieh was elected the third

chairman of the DPP. The New Trend Faction retreated

in defeat.

Since Huang Hsin-chieh became chairman ofthe party at

the end of 1988, there have been numerous cases in

which the two factions kicked each other under the table.

After it lost control of the party, the New Trend Faction

began to develop in two directions—social movements

and the movement for Taiwan independence. The Formosa Faction considered the all-round reelection of the

national assembly its basic stand. Since Chiang Chingkuo had died, there was nothing to be afraid of in

Taiwan. During this period, the only two things that

stood out in the political spectrum of Taiwan were the

movement for Taiwan independence and violent conflicts, which were both closely related to the New Trend
JPRS-CAR-89-104

23 October 1989 TAIWAN 53

Faction. The ties between the New Trend Faction and

the Presbyterian Church and the "Alliance for the Independence of Taiwan in the United States" are getting

closer and closer. Besides, this pararevolutionary faction

seems to believe in the "theory that conflict is above

everything." They are good at getting involved in mass

movements and causing confrontations between the

police and the people. They also think that the masses

can be mobilized only through violence. For instance,

"the 20 May agricultural transportation incident" in

1988 was a masterpiece of the New Trend Faction.

In addition to pushing politics in the two directions of a

Taiwan independence movement and violent conflict,

the New Trend Faction has changed its strategy since the

beginning of 1989. At the end of 1989 there will be the

first election since Chiang Ching-kuo's death. In the past,

this faction always attacked the people's representatives

of the DPP, saying that they were only scrambling for

"chicken bones." But now that it has realized that once

it lost control ofthe party it must go all out to get it back,

it has decided to officially enter the election. In other

words, the previous survival logic of "parasitic growth"

used by the New Trend Faction cannot be used continuously, for it has been seen through after many uses.

Besides, because its confrontation with the Pan-Formosa

Faction is getting increasingly serious, dependence is no

longer feasible. It must display its total factional strength

and march toward the election. Consequently, the relationship between the New Trend and the Pan-Formosa

Factions had become more intense since the beginning of

1989. In late May it finally exploded. It was detonated by

the following incidents:

1. The self-immolation of Cheng Nan-jung [6774 0589

2827]. Cheng Nan-jung was not a member of the DPP,

but was on the periphery of the New Trend Faction.

Cheng Nan-jung burned himself and became the first

martyr of Taiwan independence as well as a political

asset for the New Trend Faction. But as far as the

Pan-Formosa Faction is concerned, this person's death is

a knotty issue because neither was he a member of the

DPP nor was his idea ofTaiwan independence a belief of

the Pan-Formosa Faction. Therefore, on the day of

Cheng Nan-jung's death, Huang Hsin-chieh's expression

was indifferent when he was interviewed by reporters.

Huang Hsin-chieh's attitude made the New Trend Faction angry, which eventually evolved into an incident in

which Huang Hsin-chieh scolded a major figure of the

New Trend Faction and that person smashed a glass in

anger.

2. Some young theoreticians in the Pan-Formosa Faction

think that the simplified method of the New Trend

Faction, which discusses Taiwan's future in terms of

Taiwan independence, morals, and 100-percent purity,

reeks of rich fascism, but it has the instigating effect of

"simplicity is good" on the masses of the DPP who lack

political observation and introspection. Based on this,

these young theoreticians wrote and compiled a pamphlet, To the Road ofRuling Government and formed the

strategy of "surrounding the central government with

local governments." In other words, they think that the

DPP should seize local political power by focusing on the

elections of county and city mayors in Taiwan during the

election at the end of 1989. If they succeed, they will be

able to exert greater resistance against the central political power than the Legislative Yuan. The Pan-Formosa

Faction has made a relatively rational analysis ofits own

political views and strategies and has, for the first time,

made profound criticism of the stand of the New Trend

Faction. This has, of course, expanded the front of

struggle and intensified the relationship between the two

sides.

3. The complete break off ofthe relationship between the

New Trend Faction and Chu Kao-cheng [2612 7559

2973]. Chu Kao-cheng, who rose to stardom in recent

years in Taiwan, became Taiwan's "first battleship"

because he was brave to resist, his performance was

fearless, plus he has a PhD from West Germany. Chu

Kao-cheng in essence believes in the theory of "selfdetermination" and rejects both ideas of reunification

and independence. He thinks that a certain degree of

dialogue should be developed between Taiwan and the

mainland. His view is actually very "practical," but as

far as the people ofTaiwan independence are concerned,

he and his ilk belong to the "faction of reunification."

Chu Kao-cheng is the only one in the DPP who dares to

fight the Taiwan independence group. Some time ago at

a DPP meeting, Cheng Nan-jung slapped Chu Kaocheng in the face and said: "I slap you on behalf of

Taiwan people" which was the most typical way of

thinking for the New Trend Faction. Chu Kao-cheng was

furious and beat Cheng Nan-jung to a pulp on the spot.

Therefore, bitter and deep-rooted hatred began to appear

between Chu Kao-cheng and the New Trend Faction.

The New Trend Faction attacked Chu Kao-cheng on

many occasions. After Cheng Nan-jung burned himself,

one of the elegiac couplets they put out for him read, "a

martyr is born and a battleship is sinking." The word

battleship referred to Chu Kao-cheng, who is known as

the "first battleship."

To bring down the number-one enemy, Chu Kao-cheng,

who is very popular now, one must develop his territory—Yunlin County. So in recent years the New Trend

Faction used much energy to develop its own party

members in Yunlin County, hoping to eliminate Chu

Kao-cheng in the preliminary election within the party.

Chu Kao-cheng has always been an elitist who does not

take the masses seriously. He thinks that it is silly to drag

in more party members and that democratic politics

should be "competition for ideas" not "competition for

a larger number of people." Because of this, he has paid

no attention to the mass work in Yunlin County. But in

June 1989 Huang Er-Hsuan [7806 1422 3872] of the

New Trend Faction announced that he will run for the

Legislative Yuan in Yunlin County, obviously meaning

that he wants to compete with Chu Kao-cheng and is well

prepared. The chances that Chu Kao-cheng will win the

preliminary election within the DPP have been reduced

substantially due to the calculation of the New Trend
54 TAIWAN

JPRS-CAR-89-104

23 October 1989

Faction, so Chu Kao-cheng is beginning to get angry. He

has begun to openly denounce the New Trend Faction as

the "malignant tumor," "AIDS," "historical leftovers,"

and so on of the DPP.

There are reasons why the Pan-Formosa Faction must

support Chu Kao-cheng in his break with the New Trend

Faction: 1) Chu Kao-cheng is a brave warrior ofthe DPP

and the only one who is able and dares to criticize the

New Trend Faction. If Chu Kao-cheng is defeated by the

New Trend Faction, there will be one less line of defense

as far as the Pan-Formosa Faction is concerned. 2) Chu

Kao-cheng enjoys a high reputation in Taiwan society. If

he is defeated within the DPP, the reputation ofthe DPP

will be seriously affected. Since the New Trend Faction

is calculating, the Pan-Formosa Faction must provide

extra support. Because of this, the chairman of the DPP

called a meeting of 40-plus major figures of the PanFormosa Faction on 15 June to give open endorsement

to Chu Kao-cheng. This further worsened the confrontation between the two factions.

Huang Hsin-chieh openly supported Chu Kao-cheng and

mobilized the whole faction to do so, showing that the

entire faction of Pan-Formosa was really fed up after

being patient for such a long time. Since he became the

chairman of the DPP, Huang Hsin-chieh has been constantly attacked by the New Trend Faction. The relationship between the two factions has deteriorated to the

point that they are almost incompatible. At the central

Standing Committee meetings of the DPP, central

Standing Committee members of both sides always

attacked each other viciously and totally ignored party

affairs. If this continues, the possibility of the PanFormosa Faction in its parasitic existence being annexed

will increase each day, so Huang Hsin-chieh has decided

on "breaking off."

However, since the two factions of the DPP are enemies

under the same roof, they are always planning to force

the other side out. The one that is forced to get out must

suffer tremendously because it has to organize a new

party. This is why they always put pressure on the other

side when they are in control of the party, whereas the

other side can only put up with it. In the 2 years after the

founding of the DPP, the New Trend Faction tried their

best to suppress the Pan-Formosa Faction. Now that the

Pan-Formosa Faction is in control of the party, it no

longer tolerates the New Trend Faction and has begun to

launch attacks, whereas the New Trend Faction can only

begin to assume a low profile.

Since Chu Kao-cheng began to attack the New Trend

Faction, Pan-Formosa announced complete support and

Chu himself wrote a newspaper article openly

denouncing the New Trend Faction; the New Trend

Faction has also made announcements to fight back, but

most of them are in self-defense. However what is

noteworthy is that it seems that the Pan-Formosa Faction was prepared from the very beginning not to give in

this time and it will probably continue to press on. It is

very hard to tell how the New Trend Faction will react

from now on. Since the two factions were as incompatible as water and fire in the past 6 months or so, the split

between the two factions is inevitable as far as structure

is concerned. Time is probably the only variant that

must be considered. After all, 1989 is a year of general

election. Splitting before the election is bound to hurt

both factions, [passage omitted]

KMT Election Tension Leads To Unrest,

Withdrawal Threats

40050699a Taipei TZULI WANPAO in Chinese

15Aug89p2

[Article by Wang Geyi 3769 9459 5030]

[Text] "More than 300 KMT [Kuomintang] members in

Hualian County are handing in their party cards in

preparation for withdrawing from the party to protest

the party Central Executive Committee's unfair handling

of nominations!"

"Supporters ofJiayi County's Chen Shiyong [7115 6624

1661] have threatened to leave the party en masse if

central party headquarters does not nominate Chen, who

was the winner of the primary election, and hold free

elections. Chen is also considering leaving the party."

"Li Zongren [2621 1350 0088], KMT Central Policy

Committee Deputy Chairman and member, excitedly

declared yesterday that the party had forced him into an

impasse and that, if it did not nominate him to run for

the legislative committee, he would without hesitation

completely withdraw from the party elections."

"Yesterday over 1,000 Miaoli County party members,

bringing almost 10,000 party membership cards, gathered at the front door of central party headquarters to

protest publicly that Lin Zhengxiong [2651 2973 7160],

county party headquarters committee chairman, is the

specialist making up the ballot. They demanded that the

party Central Executive Committee investigate the real

situation concerning the primary election and postpone

public announcement of the nominees, otherwise, they

would all quit the party."

"Supporters of some of the nominees from Penghu,

Pingdong, and Taichong are reportedly dissatisfied with

the party Central Executive Committee's attitude toward

the nominating process and are mulling over their resignations from the party."

For the last few days, Taiwan has witnessed a wave of

unfriendly criticism ofits ruling party, resignations from

it, and opposition to it. In the wake of the KMT's list of

nominees, which is to be publicly announced tomorrow,

the clamor ofsome candidates' dissatisfaction has in the

last few days reached its zenith with regard to the results

of the primary elections and the arbitrary decisions

made by various party headquarters concerning the

nominating process. The vehement statements and

actions concerning withdrawing from the party, burning
JPRS-CAR-89-104

23 October 1989 TAIWAN 55

party cards, withdrawing from the election, and terminating the election have, according to a large number of

media reports, become a source of pressure for the KMT

central nomination, examination, and verification committee and for various staff units. In addition, some

candidates, attempting to take advantage of this latest

opportunity, are going on the offensive with threats and

psychological tactics in an effort to reverse their own

unfavorable standings.

According to disclosures by those within the KMT, the

primary elections, which were implemented for the first

time, have certain systemic problems that require urgent

review and improvement. However, party headquarters

is extremely perplexed by the eagerness of people in the

last few days to withdraw from the party. People concerned are convinced this is nothing more than an

understandable and normal reaction on the part ofsome

of the candidates. Nevertheless, the continuing occurrence of groups of party members turning in party cards

and withdrawing from the party is causing anxiety about

the cohesiveness and their reaction. Even Li Zongren,

who ordinarily has been devoted to the party and who in

the Legislative Yuan makes every effort to defend the

party, dares to turn against the party. This unusual

antiparty agitation certainly deserves close attention.

Actually, the antiparty agitation of the last few days on

the part of KMT candidates and their supporters is a

continuation of their residual dissatisfaction with the

primary election system. Especially since the primary

election balloting within the party was concluded, the

various levels of party headquarters and the central

nomination, examination, and verification committee

acted completely at their own discretion in deciding how

to handle a number of cases. They arbitrarily accepted or

rejected and made changes in nomination decisions

using various ways to justify themselves so that, when

the primary balloting took place, they were able to win a

high vote through these high-handed methods. Naturally, these motives created dissatisfaction and protest.

On the other hand, the current predicament is still not

clearly understood. Some candidates now know that it is

impossible to be saved from their plight, and this contributes to an unstable situation. Seeing the central

nomination, examination, and verification committee

about to publicly announce "the prizes" tomorrow, they

will not hesitate to seize this last opportunity and risk

breaking with the party or betraying it. They will use

intimidation and threats in their attempt to force the

party to give in. They are considering the opportunity

offered by the nominations and the election preparations

to launch a psychological offensive.

This succession of antiparty incidents is, in effect,

causing the ruling party repeatedly to confront new

losses and frustrations concerning internal party cohesiveness.

DPP Suggests 'IQ Test' for Aging Assemblymen

40050699b Taipei TZULI WANPAO in Chinese

10Aug89p2

[Article by Guo Shumin 6753 3219 2404]

[Text] Today in the National Assembly's constitutional

government deliberative committee, Democratic Progressive Party [DPP] assemblymen demanded that at

next year's presidential election only the 84 National

Assembly representatives elected for a fixed term from

Taiwan have the right to vote. At the same time, they

handed out copies of "1989 IQ Tests for Elderly Lawmakers" to be used to test their intelligence.

Today's announcement by the DPP assemblymen pointed

out that the "elderly lawmakers," who were elected more

than 40 years ago, have suffered serious mental and

physical deterioration and have long been out of touch

with public opinion. It declared that their refusal to retire

under the present regulations granting liberal benefits has

become a "national crisis" and that it is the major stumbling block to Taiwan's democratization.

The DPP assemblymen have therefore proposed that

only the 84 National Assembly representatives elected

from Taiwan for a fixed term have the right to vote in

next year's election for a new president and that the

remaining "elderly lawmakers" who were elected for

indefinite terms act only as nonvoting members. At the

same time, they appealed to President Li Denghui to

declare an end to the period of mobilization and rebel

suppression, to abolish the provisional articles, and

genuinely to resume constitutional government.

In addition, the DPP assemblymen outside the chamber

handed out a copy ofthe 1989 intelligence test for "elderly

lawmakers" which listed six questions it wanted the senior

assembly representatives to answer. These were: 1) What

does one plus two plus three equal? 2) If one frog has one

mouth, two eyes, four legs, and jumps into the water with

a splash, then two frogs have how many mouths, how many

eyes, how many legs, and splash how many times when

they jump into the water? 3) How many times can the

president be reelected according to the Constitution? 4)

What are the names of the presidents who have served

after the Constitution became effective? 5) What session of

the National Assembly is this? 6) When did you participate

in an election to the National Assembly and what votes did

you receive?

Schools Seen as Factor in Juvenile Delinquency

40050699c Taipei TZULI WANPAO in Chinese

14 Aug 89 p 5

[Article by Xie Ruizhi 6200 3843 2520, professor,

Department of Public Teaching, Taiwan Teachers College]

[Excerpt] According to statistics from the department of

judicial affairs, the number of those 11 years old and

below in the population declined from 1978 to 1987.
56 TAIWAN

JPRS-CAR-89-104

23 October 1989

However, their crime rate per 10,000 for the same period

rose from 0.62 to 2.2, a more than threefold increase.

Also in the same 10-year period the number of those

between 12 and 17 declined by about 210,000. However,

their crime rate per 10,000 for the period rose from 31.7

to 67.4, more than 100 percent. During this 10-year

period, criminals 12-18 years old numbered more than

104,000. Most of these people have now become adults.

But whether they are living normal lives gives cause for

concern.

There are truly a multitude of reasons for committing

crime. However, most criminal experts categorize these

reasons in three aspects: home, school, and society. It

can also be said that crime is the product of any one of

these factors or a combination of them. Considering the

factors involved in juvenile delinquency solely on the

basis of education, we can list the following points:

1. Examinations dominate education. This is the result

of the year-round uniform examinations. Of the five

forms of education, intellectual development is given

precedence. And within the area of intellectual development, it is not just the subjects required for the unified

examinations that must be pursued with great effort,

even greater effort must be focused on Chinese, English,

and mathematics for the unified college entrance examination. Students from childhood on use every means at

their disposal to achieve success in the examination hall,

while in their minds they are unaware ofthe existence of

values and concepts that distinguish good from evil.

2. Schools fail to divide students into classes that represent

a normal situation. Educational administrative organs

time and again have reiterated that students should be

divided this way and that schools should permit division

ofstudents only by groups and not by classes since they are

supposed to be taught according to their aptitudes. However, seeking to raise the proportion oftheir students going

on to higher-level schools, schools only pretend to comply

and actually divide their students into three or five sections. The first section is the superior qualifications class

for the highest achievers. Since officials and rich businessmen are often able to find ways to place their sons and

daughters in these classes, they are also called the "class of

favorites." The second is the "general class." And the last

is the "slow learners class," commonly known as the

"dummies class."

In setting up superior qualifications classes specially to win

achievement for the school, some schools provide the

classrooms for these sections with such things as electric

fans and controlled lighting. Even though this equipment

is donated by the parents, it creates morale problems for

the other students. In addition, schools are likely to assign

their very best teaching personnel to the superior qualifications class, and even though the same teacher might also

teach the other classes, he or she will be more diligent in

teaching the superior qualifications class.

If. in fact, students in the general class have the ability to

advance themselves, they still have some leeway to alter

their situations. However, the slow learners are totally

abandoned. If they happen to have rather strict instructors who at every turn hand out collective punishment,

then an indelible impression is made in the minds of

these children and their hostility toward society is easily

established. Unfortunately, if children are assigned to

the slow learners class, not only are their chances of

entering college cut off, their roles as losers are accentuated, because they are tainted by their associations, and

this crates social problems.

3. There is a lack of education for life. Because the

standard by which teaching is measured is the student's

promotion to a higher-level school, education naturally

is formalized. Regulations stipulate that within 1 month

after the end of the year each school should submit a

report for future reference on what has been done in

education for life and the checks made on the situation.

However, usually the forms are filled in, and that is all.

Some countries and towns stipulate that the schools

getting the highest marks in the examination must be

responsible for preparing the following year's education

conference on learning from each other. As a result,

many school principals prefer to come in second. If

education in life is not emphasized, the ethical norms for

propriety, justice, honesty, and a sense of shame will

naturally be impossible to be instilled in dailay life.

4. Citizenship and ethics are not emphasized in education. In scheduling the number of hours that teachers

have available to teach, schools commonly assign insufficient time to certain secondary subjects. This often

results in a lack of qualified teachers for these subjects. It

is generally thought that classes in citizenship and ethics

in particular can be taught by anyone. But how can we in

this way cultivate a respect for the law and habits of

sharing, especially at a time when we are stressing a

democratic rule of law?

5. Students' awareness of their rights is on the rise, and

the moral ties between teachers and students are on the

verge of rupturing. Under the influence of the social

climate, the teacher-student moral relationship of the

past is now slowly being replaced by a relationship of

rights and obligations. Students recognize that they have

the right to study, and teachers can no longer consider

themselves as wielding authority. If teachers cannot set

the example for students by examining both sides of an

issue, not only are the students likely to loudly curse

them, they might even beat them up.

6. There is a general lack of men in the teaching

profession. Currently, mostly women apply to be tested

in the main categories of teaching in the unified college

entrance examination, and the public teaching department at Taiwan's Teachers College has had very few men

students for the past several years. Moreover, in recent

years, public middle school students have generally been

so arrogant that women teachers cannot handle the

bigger male students. Schools have to make do the best

they can by asking large, husky men to come in to take

charge. A small number of teachers, because they have
JPRS-CAR-89-104

23 October 1989 TAIWAN 57

been strict, have been assaulted by students at night in

their homes. It is evident from this sort of thing how

difficult the work can be.

7. Teachers' pay is unreasonable. Normal school graduates taking up their first teaching position receive an

extremely meager salary. It usually cannot be compared

with that of those entering the business world, and even

the most senior university professor's salary is only half

what central-, provincial-, or municipal-level representatives make. Some teachers conduct after-hours classes to

supplement household expenses, which means they are

kept on the run each day just to make ends meet. How

can they then have time left to set the proper example for

the students in character development?

The issues described above are the result of an accumulation of factors over several decades. Society is now

reaping their harvest. Wise penal policies should be

devised to change these factors and to achieve effective

prevention, (passage omitted)
58 HONG KONG, MACAO

JPRS-CAR-89-104

23 October 1989

Acting Governor Interviewed on Hong Kong

Situation

90ON0043a Hong Kong MING PAO in Chinese

29Aug89p6

[Article by Wu Ai-i 0702 7224 0308: "Rebuilding Confidence: Hong Kong's Current Task—Special Interview

With Chief Secretary Sir David Ford"; date and place

not given]

[Text] In the period of the Beijing student movement,

the Hong Kong Government always, with regard to the

strong reaction of Hong Kong's people, took a low-key,

understanding attitude and did not interfere. The "June

4th Massacre" shattered the confidence of Hong Kong

residents, and many people came to feel that the attitude

of Hong Kong's government had changed. No longer

avoiding this sensitive topic, the Hong Kong Government has granted public interviews and its officials have

publicly spoken out on the "June 4th Massacre's" effect

on Hong Kong. They particularly emphasized that the

Hong Kong Government, in actively facing this issue,

definitely did not feel pessimistic.

This change in attitude is believed to mainly focus on the

fact that the June 4th Incident caused a sharp-edged

problem, namely, the so-called "leadership vacuum." To

rebuild their confidence, Hong Kong people must be able

to feel that the future is under control; that is to say, that

a leader whom Hong Kong people recognize as such will

come forward and take charge of the overall situation.

Now acting for the Hong Kong governor, Chief Secretary

Sir David Ford told this reporter: "A leader must emerge

from the masses in Hong Kong society, but this requires

time. At present, the responsibility for leadership still

falls on the Hong Kong Government."

In his interview, Ford said without the slightest hesistation that, after the June 4th Incident, the Hong Kong

Government's overall tactic was to rebuild the Hong

Kong people's confidence and international confidence

in Hong Kong. Ford, who personally experienced the

1967 insurrection and the 1982-84 Sino-British talks and

who recently faced the followup ofthe June 4th Incident,

may be said to be a battle-tested veteran. But will this

"man of iron," who is full of self-confidence, succeed in

the end?

[Wu Ai-i] Now that the dust has settled, how do you

evaluate the difficulties caused to Hong Kong by the

June 4th Incident?

[Ford] The Hong Kong people's strong emotional reaction of the time has gradually subsided, but more time

will be needed before the deeper effect of the June 4th

Incident can be judged. For example, there are the

problems of reestablishing trust between each other and

reestablishing confidence in the arrangements made in

the Sino-British Joint Declaration. In addition, Hong

Kong's international image has been damaged and hard

work will be needed to turn it around.

[Wu Ai-i] The June 4th Incident prodded the Hong Kong

people to hurriedly seek a way out by emigration. At this

time how much actual effect can talk about rebuilding

confidence have?

[Ford] No matter how many people leave, there will

certainly be more people who stay, say, more than 5

million, and it is highly likely that there will be even

more. We certainly must bear them in mind at all times

and seek guarantees for them to continue to enjoy their

habitual lifestyle and continue to feel that they have a

future and have hope. The Hong Kong Government will

enhance and promote policies that can strengthen their

confidence, like policies on education, housing, and

social services, so that they will have confidence in their

life in the future and have confidence that the life ofthe

next generation will be even better.

[Wu Ai-i] Will they be in a mood to pay attention to

these policies?

[Ford] They will. In the final analysis, what makes

society most stable is the continual improvement in the

people's lives; what gives people peace of mind is that

their lifestyle is guaranteed, society is concerned for

them, their children have a future, and the economy

continues to prosper.

[Wu Ai-i] What people most worry about is that all of

this will change, that the present fond dream will be

shattered.

[Ford] That's right. We must focus on the problem of

guaranteeing the future, and in particular after 1997 how

to keep Hong Kong and the interior separate. I still

firmly believe that the arrangements in the Sino-British

Joint Declaration will provide the best future for Hong

Kong. In addition, we must continue to make people see

that Hong Kong's economy remains powerful, and this

entails developing large basic facilities and vigorously

rebuilding Hong Kong's international image.

[Wu Ai-i] What effect did the June 4th Incident have on

Hong Kong's international image?

[Ford] The June 4th Incident was the focus of world

attention. Hong Kong and China have close connections,

and many people who are unfamiliar with Hong Kong

misconstrued the situation by associating Hong Kong

with Beijing, thinking that Hong Kong was also in danger

offalling into turmoil. We have a complete set of plans to

rebuild Hong Kong's image, beginning with the Hong

Kong governor's visit to the United States in October.

We have arranged for a series of high-level officials and

figures with status in industrial and commercial circles

to visit various countries, so that political and commercial circles in foreign countries will understand the true

situation in Hong Kong. We have also invited some

figures from other parts of the world to visit Hong Kong

and personally find out the actual situation.

[Wu Ai-i] As I see it, the most difficult problem is to

restore the Hong Kong people's confidence in the future.
JPRS-CAR-89-104

23 October 1989 HONG KONG, MACAO 59

Hong Kong residents always fear change, and after the

June 4th Incident they feared it even more. Do you have

any way to deal with this fear?

[Ford] I think that the most important thing is that in the

past days Hong Kong residents have learned to take the

highly practical attitude of coexisting peacefully with

China. At the same time, the Chinese Government fully

understands that keeping Hong Kong and the mainland

apart is really advantageous for both sides. The principle

of "one country, two systems" has not changed and, after

the June 4th Incident, the high-level Chinese leaders

gave this assurance.

[Wu Ai-i] It is a pity that the Chinese officials at the same

time stress that they will not allow Hong Kong to become

a "counterrevolutionary base." How can you take care of

this demand and at the same time ensure that freedom of

speech, which the Hong Kong people have had all along,

will not be harmed?

[Ford] This requires understanding by both sides. What

you said is correct. Freedom of thought and freedom of

speech are an important part of the lifestyle that Hong

Kong residents are used to, and cannot be destroyed, no

matter what. However, when the people exercise their

freedoms, they should consider the consequences and

understand that the Chinese Government is naturally

particularly sensitive about actions that attempt to shake

the authority of those in power, and should avoid

interfering in China's internal issues.

[Wu Ai-i] But how should "intervention" be defined?

[Ford] It is very difficult to define. I can only point out

that a practical attitude is advantageous for Hong Kong,

but I will leave each person to decide for himself how to

define it. I won't try to put forward a criterion to make

other people do things this way or that way.

[Wu Ai-i] What is the Hong Kong Government's own

definition? For example, didn't RENMIN RIBAO condemn the Hong Kong Government for winking at Chih

Lien Hui's support of the student movement by contributing money to the Beijing students and to the overseas

organizations of Yan Jiaqi [0917 1367 0366] and others,

thereby turning Hong Kong into a "counterrevolutionary

base"?

[Ford] This question is, on the contrary, simple to answer.

The Hong Kong Government's consistent position is that,

providing Hong Kong residents do not break Hong Kong's

laws, we do not interfere in how they exercise their

freedoms. In the past, under extremely difficult circumstances, the Hong Kong Government stuck to this position

and it will do the same hereafter. We must stand fast on the

expression of the freedom of speech, because the demarcation line between it and breaking the law must be

understood by every person. We do not think that Chih

Lien Hui's actions broke the law.

[Wu Ai-i] You just put forward the outline of tactics for

rebuilding confidence, but given the large talent drain

who will implement this plan?

[Ford] After the June 4th Incident, I had very, very many

good heart-to-heart talks with government employees. I

think that Hong Kong's government employees, as a

whole, have a deep sense of responsibility for Hong Kong.

I believe that, from now until 1997, and even after 1997,

Hong Kong will have a strong and sound government

employee system, that the government employees' attrition rate will be far lower than that of employees in

privately owned organizations. As for people in specialized

trades and professions, really, many of them will leave but

more will stay. Our countermeasure is, in one aspect, to

enhance the training of talented persons; for a time, when

there is an insufficient number of talented persons, such

people will be engaged from outside Hong Kong. We will

consider further relaxing immigration regulations, so that

the specialized skills and specialized talents that Hong

Kong needs can be made up from outside.

[Wu Ai-i] If this is done, won't the localization plans

retrogress?

[Ford] They will be postponed. However, I believe that

the Hong Kong residents will understand.

[Wu Ai-i] Many people are trying to get the right to

reside in Britain. How big a chance do you see for

lowering the talent drain?

[Ford] Information released by various quarters in Britain

shows that, because ofpolitical factors, it is not possible for

all Hong Kong residents to get this safe passage. One

possibility is to design a set of methods so that those trades

and professions important to Hong are identified, and

decisions on the important talents that can be kept and

important talents that can be lost are made. This practice

would have slightly divisive results, but ifthere is no other

good method then it should not be rejected.

[Wu Ai-i] Are these "important talents" mainly government employees?

[Ford] No, they should include all quarters of society:

industrial and commercial circles and figures in specialized trades and professions. Government employees

definitely should not be the great majority.

[Wu Ai-i] Besides government employees, many people

are concerned about the problem of the development of

the political system and of leadership talents. How do

you see the prospects for this?

[Ford] Hong Kong's future depends on competent political leaders who come from the masses of society. The

development of a democratic political system will help

these leaders emerge, but this process requires a period

oftime. At present, the responsibiities of leadership still

fall on the shoulders ofthe Hong Kong Government. We

hope to gradually establish a system in which officials

and leaders from the masses of society will, hand in

hand, take on these responsibilities, so that the leaders
60 HONG KONG, MACAO

JPRS-CAR-89-104

23 October 1989

from the masses of society will fully participate in

administration and in the two councils, taking on

heavier responsibilities for formulating policies.

[Wu Ai-i] Specifically speaking, do you mean establishment of a "ministerial system"? Or do you mean a

legislative council in which there is political party politics and in which popularly elected legislative seats are in

the majority?

[Ford] I think it is too early to decide on a blueprint. As

for how people are elected, I think that there will always

appear some political bodies, which will perhaps develop

into organized political parties with common convictions. However, it is not necessary to copy the tradition

ofthe West with a division between "conservatism" and

"socialism." It is highly likely that they will be formed

around some individual figures.

[Wu Ai-i] I feel that what is most important is how

people get elected and, after they get elected, how in the

legislative council they form camps and forces and use

these forces to attain certain political objectives.

[Ford] This touches upon the second factor in the development of a political system. I think that the members of

the legislative council will naturally coalesce into some

bodies in the future. From these bodies leaders will

emerge, and on different policies the scope of their actions

will be particularly concentrated, becoming the chairman

of various policy groups and policy committees (like the

Housing Committee). In the end, they will cross over into

the Executive Council and become the contacts between

the two organizations—legislative and executive. In the

future they will formulate policies. The present policy

officials will, at that time in the development of events, be

the government employees who provide the background

materials necessary for the formulation of policies.

[Wu Ai-i] Is this a "ministerial system without political

parties"?

[Ford] What it is called is unimportant, but I can say that

it will be impossible for the political party that holds the

majority of seats in the Legislative Council to form the

government.

[Wu Ai-i] But in the 1991 Legislative Council two-thirds

of the seats will be popularly elected. Will this proposal

be accomplished?

[Ford] The Hong Kong people's intention now is to accelerate democratization. For example, if city residents can

reach a common understanding, the government is bound

to react. As for how many more popularly elected seats

there will be, at present it is impossible to say with

certainty. However, as a practical government employee,

my view is that, with regard to the pace of democratization, not only must we consider political factors, namely,

the city residents' expectations, but also must consider the

factor of reality, which that it would be too great a change,

making it impossible for government departments to

adjust in good time. This would cause breakdowns when

the new system goes into actual operation.

[Wu Ai-i] From enhancing social policies, coping with

the talent drain, striving for international understanding,

and controlling Sino-Hong Kong relations, down to

developing the political system and bringing up political

leaders, the Hong Kong Government obviously has a set

of long-range plans. However, a crisis in the problem of

the Vietnamese boat people is drawing near. Once it

happens, the long-range plans will vanish into thin air.

What sound strategy do you have for this?

[Ford] I understand very well that in their hearts Hong

Kong's residents have strong feelings of dissatisfaction,

but I hope that they will exercise patience for a time. We

have made major progress. The policy of screening has

gained international admission for them. Of course,

repatriation will be the inevitable result, and it is what

we are working hard for. As a government, we must

consider what disastrous effect there would be on the

city's residents once Hong Kong's prestige is lost.

[Wu Ai-i] What, in essence, would the disastrous effect be?

[Ford] With the United States taking such a tough

attitude, a trade boycott is not impossible. In addition, in

too many places Hong Kong needs international support,

including the housing of refugees. Damage to Hong

Kong's prestige could even adversely affect immigration

policies.

[Wu Ai-i] If Singapore liquidates its position of being

first to take in Hong Kong people, why wouldn't we see

any disastrous effect?

[Ford] Unfortunately, the world uses fairly high humanitarian standards to criticize Hong Kong. A more realistic

factor is that the world does not necessarily pay attention to

anything that Singapore and Malaysia do. But Hong Kong is

an enormous international news center, and all the major

news organizations, radio stations, and television stations

have representatives here. The June 4th Incident taught us

the lesson that the television image has great power. Just

think, if there were global television relays of pictures of us

blocking the boat people from entering Hong Kong and

pictures of the boat people drowning at sea, would there be

any hope of restoring Hong Kong's prestige?

[Wu Ai-i] Hong Kong is in troubled times. As chief

secretary ofthe Hong Kong Government and also acting

governor of Hong Kong, what are your feelings?

[Ford] I am certainly not pessimistic about the future. I

and many Hong Kong people have gone through many

major crises. Particularly in 1967, the whole world said

that Hong Kong was finished. Many Hong Kong people

left, the Hong Kong dollar was devalued until it was

nearly worthless, and property values tumbled until they

couldn't go any lower. But we survived. I saw that the

Hong Kong people remained confident that year, and

after 1967 this confidence grew until today it is even

more firm and unshakable.