Bill Zhang

Wednesday, October 19, 2005

U.S. Offers Details of Plan for Open Markets in China

XIANGHE, China, Oct. 15 - The Bush administration is expected to present China's political leaders on Sunday with a sweeping plan to overhaul China's financial markets and open the country to foreign banks, investment firms and insurance companies.

Administration officials say the plan is part of an effort to put the yuan into a broader debate over China's lopsided reliance on exports as the main source of economic growth.

The plan, to be discussed in two days of talks here and in Beijing, calls for China to speed up the privatization of state-owned companies, including banks; to develop a Chicago-style futures market for currency trading; to establish an independent credit-rating agency; and to crack down on bailouts for banks left holding bad loans.

"What we tried to do is take a quantum leap in sophistication and scope," said Timothy D. Adams, undersecretary for international affairs at the Treasury Department. "It gives you a picture of the truly complex nature of what we are trying to do."

Though many of the ideas are familiar, and often supported by Chinese leaders in principle, the list reflects an increased effort to lecture China about internal financial issues.

That could backfire. Chinese leaders invariably bristle at pressure from American officials, and they could view the new American "priorities" as an unwelcome intrusion.

The new tack comes as Treasury Secretary John W. Snow continues to show little progress on the volatile economic dispute with China over exchange rates.

Republican and Democratic lawmakers in Congress have long complained that the yuan has been pegged at an artificially low value against the dollar, making Chinese exports to the United States cheaper than they would otherwise be.

China announced a 2 percent revaluation in July, but have yet to follow with any additional changes. Based on signals from senior Chinese officials on Friday and Saturday, Mr. Snow is unlikely to return to Washington next week with any evidence of new progress.

Mr. Snow has been arguing that China needs to get people to spend more and save less. Administration officials say that a financial overhaul would help make that happen.

Many economists agree with that assessment, but they caution that there are limits to what the United States can do to speed up change.

"They are doing a smart thing, because the exchange rate is a small part of the overall economic relationship," said Andrew Rothman, a Shanghai-based strategist at CLSA Asia-Pacific, a brokerage firm. But he added, "This is not the kind of thing where someone flips a switch and it happens overnight."

Mr. Rothman said that China had already embraced many of the ideas that Mr. Snow was promoting and that consumer spending has grown sharply in the past few years.

Retail sales in China have been climbing about 10 percent a year for the past several years, he said. Household credit, virtually nonexistent five years ago, now accounts for 16 percent of all outstanding credit.

But many of the Bush administration's proposals would encounter fierce political opposition from many quarters.

China's state-owned banks and far-flung rural credit cooperatives have many defenders in the ruling Communist party, and they are certain to oppose well-financed competition from Western banks.

Even without opposition from vested interests, many Chinese leaders are likely to fret over giving more freedom to foreign financial institutions to enter Chinese markets.

Under current laws, foreign investors are usually prohibited from owning more than 25 percent of a commercial bank, and no single foreign investor can own more than 20 percent.

According to a document that Treasury officials plan to circulate among Chinese leaders, the Bush administration would remove the limits on foreign ownership as well as a host of other restricitons.

Foreign financial institutions that want to buy Chinese securities would be freed from having to have at least $10 billion in assets and to have been in business at least five years.

Foreign-affiliated banks, brokerage firms and insurers would be freed from restrictions on setting up multiple branches at one time.

China issues 1st white paper on democracy

The Information Office of China's State Council issued Wednesday a white paper on China's political democracy, vowing to actively push forward the reforms of its political system although, it said, tremendous achievements had been scored in this regard.

The white paper, issued by the Information Office of China's State Council, or the cabinet, is the first of its kind in China, giving a detailed account of the inception, development and contents of the socialist political democracy and the principles the country will abide by.

The document, titled Building of Political Democracy in China, also points out the problems the country has to overcome and major steps to be taken in the reforms of its political system.

The socialist political democracy "is the apt choice suited to China's conditions and meeting the requirement of social progress," said the white paper.

Such democracy has enabled the Chinese people, who account for one fifth of the world's population, "to become masters of their own country and society, and enjoy extensive democratic rights, " the white paper says.

In building socialist political democracy, China has always adhered to the basic principle that the Marxist theory of democracy be combined with the reality of China, it says.

In the process, China has also borrowed from the useful achievements of the political civilization of mankind, including Western democracy, and assimilated the democratic elements of fromChina's traditional culture and institutional civilization.

"Therefore, China's socialist political democracy shows distinctive Chinese characteristics," says the white paper.

Such characteristics are as follows:

-- China's democracy is a people's democracy under the leadership of the Communist Party of China (CPC).

-- China's democracy is a democracy in which the overwhelming majority of the people act as masters of State affairs.

-- China's democracy is a democracy guaranteed by the people's democratic dictatorship.

-- China's democracy is a democracy with democratic centralism as the basic organizational principle and mode of operation.

The white paper says the CPC's leading status was established gradually in the protracted struggle and practice of the Chinese people in pursuing national independence, prosperity and a happy life.

"It was a choice made by history and by the people," the document notes.

Over the past 20 years and more, great progress has been made in China's practice in building a socialist democratic political system, the white paper says, providing a list of the achievements.

It points to the fact that the system of the people's congresses, the system of multi-party cooperation and political consultation under the leadership of the CPC, and the system of regional autonomy for ethnic minorities -- all important components of China's democratic system -- have been continuously improved and developed.

The democratic rights of people at the grassroots level in urban and rural areas have been constantly increased, and the citizens' basic rights are respected and guaranteed.

The CPC's capability to rule the country in a democratic manner has been enhanced further, while the government's capability to administer the country in a democratic manner has been strengthened noticeably.

"Major aspects of China's politics, economics, culture and social life are now within the purview of the rule of law," says the white paper.

"Despite the tremendous achievements scored in building a socialist political democracy, the CPC and the Chinese people are clearly aware of the many problems yet to be overcome," the document notes.

The major ones include: the democratic system is not yet perfect; the people's right to manage state and social affairs, economic and cultural undertakings as masters of the country in a socialist market economy are not yet fully realized; laws that have already been enacted are sometimes not fully observed or enforced, and violations of the law sometimes go unpunished.

The white paper also admits that "bureaucracy and corruption still exist and spread in some departments and localities."

It also points out that the mechanism of restraint and supervision over the use of power needs further improvement and the concept of democracy and legal awareness of the whole of Chinese society needs to be further enhanced.

"There is still a long way to go in China's building of political democracy, which will be a historical process of continuous improvement and development," says the white paper.

According to the document, at present, and for a period in the days to come, the CPC and the Chinese government "will actively and steadily push forward the reform of the political system."

They will also stick to and improve the socialist democratic system, strengthen and improve the socialist legal system, reform and improve the methods of leadership and rule of the CPC, reform and improve the government's decision-making mechanism.

The white paper also stresses the importance of the reform of the system of administrative management, the reform of the judicial system, the reform of the cadre and personnel system, and the restraint and supervision over the power.

According to the white paper, China's building of political democracy will abide by the following principles:

-- Upholding the unity of the leadership of the CPC, the people being the masters of the country and ruling the country by law.

-- Giving play to the characteristics and advantages of the socialist system.

-- Being conducive to social stability, economic development and continuous improvement of the people's life.

-- Facilitating the safeguarding of national sovereignty, territorial integrity and state dignity.

-- Being in accord with the objective law of progress step by step and in an orderly way.

The white paper consists of 12 parts, including the people's congress system, the system of ethnic regional autonomy, grassroots democracy in urban and rural areas, and respecting and safeguarding human rights.

China issues guiding proposal for 2006-2010 period

China Tuesday issued the full text of the proposal that will play a crucial role in shaping the country's development over the next five years.

The document, the Communist Party of China Central Committee's Proposal on the Eleventh Five-year Program on National Economy and Social Development, was adopted at the Fifth Session of the 16th CPC Central Committee which ended last Tuesday.

Divided into ten parts, the proposal provides the basis for drafting the 11th five-year program. It includes fully carrying out the scientific concept of development, coordinating regional development and making China an energy-efficient and environmentally-friendly society.

The first two decades of this century is of great importance in China's development, and the period from 2006 to 2010 is specially crucial, the document said.

In terms of the global environment, the proposal highlights several challenges China will face.

The global economy will develop in a more uneven manner and competition for natural resources, markets, technology and human resources will be stiffer, it said.

Trade protectionism is expected to take new forms, the document said.

domestic problems include the unbalanced development of urban and rural areas, extensive mode of economic growth, irrational economic structure, weak creativity on its own, great difficulty in solving problems relating to agriculture, rural areas and farmers, great employment pressure, among others, according to the document.

China will review the draft of the Eleventh Five-year Program on National Economy and Social Development at the Fourth Session of the Tenth National People's Congress next March.

Monday, October 17, 2005

Shenzhou-VI spacecraft returns home

The spacecraft, which has orbited the earth for five days, has accomplished planned experiments and accumulated valuable technical data and experiences for the development of China's manned space program since it was launched on Oct. 12, 2005.

China's Shenzhou-6 spacecraft lands safely after successful mission

The re-entry capsule of China's Shenzhou-6 spacecraft, carrying taikonauts Fei Junlong and Nie Haisheng, landed on earth safely at 4:33 a.m. Monday, marking a "complete success" of China's second manned space mission after it put the first Chinese national in space two years ago.

Chinese top legislator Wu Bangguo declared China's second manned space mission a "complete success," claiming it a "milestone" in China's space technology development and its space experiments with human participation.

"The successful mission is of great significance for elevating China's prestige in the world, promoting China's economic, scientific and national defense capabilities and consolidating the national cohesiveness," he said at the Beijing Aerospace Command and Control Center.

Both taikonauts are "in fine conditions," doctors said after physical checkup upon landing. They landed just 1 km away from the preset spot after a 115-hour-and-32-minute spaceflight, which was more than five times that of China's maiden manned spaceflight two years ago.

Fei and Nie stepped down a ladder from the capsule by themselves, and were seated for a bouquet of flowers and to get used to Earth's gravity.

"We feel fine," said all-smile Fei. Nie thanked all the Chinese people for their "concern and support." Both waved flowers to the excited welcoming crowd.

They were later fed with chocolate, Chinese herbal tea. Nie seemed in a very good appetite and took a bowl of instant noodle, before the two men were flown by two Super Puma helicopters to nearby airport where they will head for Beijing by a special plane.

The space mission have gripped the sight of the whole nation in the past five days.

"We can have a final laughter," beaming Liu Yu, commanding chief of the rocket system told Xinhua. "It was a mission perfectly fulfilled."

Television pictures showed parents of the two taikonauts burst into tears when they saw their sons emerging from the spacecraft early Monday morning.

Chinese president Hu Jintao were present at the Beijing Aerospace Command and Control Center to watch the lift-off on Wednesday and talked with taikonauts on Saturday. Chinese premier Wen Jiabao was at the launch site to see off the two men with best wishes before the launch.

Luckily, Nie spent his 41st birthday in space and received a phone call from his wife and daughter. The joyful daughter's sweet song "Happy Birthday to You" has warmed the hearts of millions of Chinese television viewers.

Fei and Nie blasted off Wednesday morning on China's second manned space mission. Before landing, Shenzhou-6 have been racing around the Earth one circle in every 90 minutes 343 km above the Earth at a speed of 7.9 km per second. It flew 3.25 million kilometers in space.

Fei and Nie have conducted a series of unprecedented experiments on the spacecraft, including the maneuvers between the orbital and re-entry capsules, taking on and off space suits, using space toilet and the self-test of blood pressure.

During China's maiden space flight in 2003, lone astronaut Yang Liwei never left his seat in the re-entry capsule nor take off his space suit. That space mission has made China the third country to put human into space following Russia and the United States.