From @ubvm.cc.buffalo.edu:owner-china-nt@UGA.CC.UGA.EDU Wed Dec 1 10:53:37 1993 Reply-To: yaxin wang Sender: China-Net Subject: CCF #9323, 12/01/93: "China Watch" Comments: To: china-nt@uga.cc.uga.edu To: Multiple recipients of list CHINA-NT ==+==+==+== C h i n e s e C o m m u n i t y F o r u m ==+==+==+=== Wednesday, December 1, 1993 (Issue No. 9323) +=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+= Chinese Community Forum (CCF) is a journal published on China-Net. CCF is dedicated to the discussion and debate on the issues related to the Chinese community. The opinions expressed here do not necessarily represent the views of the Editorial Board of CCF. Contributions to the discussions and suggestions of new topics are very much appreciated. +=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+= Table of Contents Author | # of Lines ============================================================================ 1. China Watch: a. On the Latest Wave of Tax and Financial Reforms in China ...................................... William Deng 56 2. Current News Review: a. What Happens Between the World's Two Most Populous Nations? ......... 30 b. Who Handles the Hot Potato Better: China or Britain? ............... 195 c. Nuclear Arsenal Threatening in Asia: Is North Korea the Only One Playing the Risky "Business" as China's Neighbor? ................... 93 ============================================================================ ===========***==========***==========**==========***==========***=========== From The Editor +--------------------------------------------------------------------------+ The theme of this issue of Chinese Community Forum is China watch. We carried one article regarding to the lastest wave of banking and tax system reform in China. We also compiled a group of China related news for future discussion through the coming issues of Chinese Community Forum. Please let us know your comments after reading. In the future issues, we also plan to carry the reviews of the IFCSS' operation during past years and the discussion of the importance to have an independent organization for Chinese students and scholars in this country. Your participation in the discussion is highly appreciated. ===========***==========***==========**==========***==========***=========== 1a. On the Latest Wave of Tax and Financial Reforms in China ...................................... William Deng 56 +--------------------------------------------------------------------------+ China recently announced a new wave of economic reforms which focus on banking system and tax system. Of the banking system, the bank of China as the central bank will be separated from other commercial banks; Of the tax system, two-tier taxes collected separately by the central government and local governments (like the federal tax and state tax system in the US) and progressive personal income tax are introduced. Both banking and tax reforms are trying to copy western, especially American banking and tax systems. Even the tax rates of the newly proposed Chinese tax system are quite similar to those of American. The two-tier system is a great step in the ongoing Chinese economic reform. It not only dramatically reduces the danger of Chinese segregation, but also sets up the crucial economic base for a federal form of future China; It not only avoid the economic uncertainty brought by the annual contracts between the central government and provincial governments, but also provide the central government predictable revenues to finance the much needed infrastructure such as education and social security system. On the other hand, since the new tax reform reduces provincial governments' economic interests in local firms, the economic gain brought about by the decentralization of power at earlier stage of reform may also be negatively affected. The biggest problem in the tax reform package may be the personal income tax scheme. There was no personal tax in the US until the per capita GNP was much higher than the current Chinese per capita GNP, about $400. Now personal income tax not only exists in China but also reach such a progressive rate that those whose income is above $17,000 will have to pay 45% tax. Most working class won't even meet the 800 yuan deductible amount. Domestic businessmen's real incomes are difficult to traced since they don't needed to be listed in payroll plus their skillful management for tax evasion. In addition, tax evasion is a traditional habit in China. Therefore the most likely affected group will be foreigners doing business or employed in China. But unfortunately this group should be the last target because China is now so eager to attract foreign investment and is providing tax breaks to foreign business. I don't know what causes this obvious contradiction. Maybe there are more redistribution (from rich to poor) concerns than economic ones in designers' minds when they came up this personal income tax plan. Besides, the high progressive rates distort economic incentives and subsequently retard economic growth. About the banking reform, of course, theoretically commercial banks should be separated from the central bank and only guided by market principals. But when commercial banks are still state-owned and state firms are in deep troubles, state commercial banks still will be forced to provide loans to loss-making state firms to avoid massive unemployment, at least before a well-functioning social security system is installed. Then what's the difference? But at least there is one thing good about making reforms in an authoritarian regime like China: when you find out one reform is not good, you can revise or even simply abandon it without much difficulty or risking being voted out of office as a reformer. Thence, I could hope that in this wave of reform those goods will prevail and those bads will be revised or abandoned, and China will be closer to a western-style economy and an American style federal country. ===========***==========***==========**==========***==========***=========== 2a. What Happens Between the World's Two Most Populous Nations? ......... 30 +--------------------------------------------------------------------------+ [Editor's note: China and India are the world's most populous nations. Total population of two countries is about one third of the world's population. What happens between these two countries will have great impact on the world affair. The following news reveal some recent development between two countries. Your comments are more than welcome.] --- --- --- Chinese leader heads for India KATMANDU (UPI) -- Li Ruihuan, the chairman of China's National Committee on the Peoples Political Consultative Conference, departed Tuesday for New Delhi on the second leg of his south Asian visit. --- --- --- China's military program said to threaten India NEW DELHI (UPI) -- China's military modernization program is upsetting the strategic balance in Asia and posing a major security challenge to India, the new chief of the Indian air force said Saturday. China is emerging as the "primary security challenge" to India in the long term despite a recent easing of Sino-Indian border tensions and a series of bilateral confidence-building measures, Air Chief Marshal Swaroop K. Kaul said. With sharply rising defense spending, a focus on developing power projection capabilities and a rapidly growing economy, China has emerged in recent years as the most powerful nation in Asia, Kaul said. "India is thus placed with twin contrasting security dilemmas. On the one hand, the probability of an armed conflict with China has been reduced in the short term, but in the long term, by 2005, the threat from China will be of a different magnitude altogether," the marshal told the New Delhi-based United Services Institution. China and India, the world's most populous nations, fought a Himalayan war more than three decades ago. +--------------------------------------------------------------------------+ 2b. Who Handles the Hot Potato Better: China or Britain? ............... 195 +--------------------------------------------------------------------------+ [Editor's note: 1997 is approaching. The future of Hong Kong is swinging in the middle of political negotiation. The crucial 17th round talk has been ended between China and Britain. Is the Hong Kong a hot potato now and to whom? Let us know your answer after reading following news.] --- --- --- China, Britain open 17th round of Hong Kong talks (UPI Nov.26) -- China opened the 17th round of marathon talks on the future of Hong Kong Friday by joining Britain's calls for their quick conclusion, suggesting the two sides have finally become serious about an agreement. Chief Chinese negotiator Jiang Enzhu held out hope that the negotiations on the 1994-95 elections, which have dragged on for seven months without any perceptible progress, would soon be successful. "Now the Sino-British talks face two choices, a successful conclusion and an unsuccessful conclusion. The Chinese side sincerely hopes to speed up the pace of the talks and reach an agreement as soon as possible," Jiang said. His British counterpart, Christopher Hum, said he shared Jiang's hopes, but declared that differences still remained despite an agreement to first discuss the less fractious municipal and district elections. "I'm not going to compare it with the last round, but the gap is still pretty wide," said Hum, the assistant undersecretary of state. But he dispelled reports that Britain would pull out of the talks if no agreement was reached by Saturday, the last day of the 17th round. British Foreign Secretary Douglas Hurd had summoned Chinese Ambassador to Britain Ma Yuzhen earlier this week to warn him that an agreement on at least the district elections must be reached soon. "We want to carry on discussing (all the issues). We attach the highest importance to working in cooperation with China over Hong Kong and the highest importance to reaching a successful conclusion," he said. The two sides have been wrangling over Hong Kong Governor Chris Patten's 1992 proposal to broaden democracy by lowering the voting age and opening up more seats to direct elections. China has argued that parts of the proposal, which would also allow legislators elected next year to serve after the colony reverts to Chinese rule in 1997, contravenes bilateral agreements and threatens to destabilize the prosperous territory. B In Hong Kong, critics of the talks held out little hope that the 17th round of negotiations would prove any more successful than previous failed attempts. A political advisor for Beijing based in Hong Kong said the talks would not resolve the question of reforms to make the British colony more democratic. "It's more likely that there will be no agreement on electoral reforms," the advisor said. "But I don't think there will be an immediate decision by the Hong Kong government to table the electoral reform bills," he said. Some lawmakers in Hong Kong's partially elected assembly have been calling for Patten to put his political reform package to a vote, regardless of whether he has Beijing's blessing. Beijing, however, has threatened to dissolve a legislature elected without its approval. --- --- --- China, Britain end another inconclusive round of Hong Kong talks (UPI, Nov.27) -- China and Britain finished another round of inconclusive talks on the future of Hong Kong Saturday without agreeing on anything -- not even when to hold the next round of talks. During the latest round, the 17th so far, negotiators had resorted to tackling only the very simplest disagreements over the 1994-95 Hong Kong elections, but even these proved impossible to solve. "I have to say we haven't got to an agreement on the first stage issues," British negotiator Christopher Hum told reporters after the conclusion of the two-day talks. The first-stage issues include municipal and district elections, the first step to a comprehensive solution that would allow legislators elected in 1994 and 1995 to serve past 1997, when the territory reverts to Chinese rule. Hum also acknowledged that in addition to these problems, the Chinese side had put off the discussion of his proposal for an 18th round of talks. "We have proposed a further round of talks and will be discussing in due course with the Chinese side the dates and arrangements for those," he said. Next round dates are usually agreed to and announced during current talks. After seven months of negotiations, the two sides are still wrangling over a British proposal to expand democracy in the territory by lowering the voting age and opening up more seats to direct elections. China says the proposal contravenes the post-1997 mini-constitution. --- --- --- Hong Kong lawmaker calls for electoral reforms HONG KONG (UPI, Nov.27)-- The governor of Hong Kong should push forward his plan to democratize the colony despite China's warning against the move, a lawmaker said Saturday. The vice chairman of Hong Kong's United Democrats party, Yeung Sum, called for electoral reforms as the British colony learned yet another round of negotiations between Beijing and London proved unsuccessful. For seven months the Sino-British talks have failed to develop an agreement on Hong Kong Governor Chris Patten's proposed electoral reforms. The reforms have been a sticking point with China which will resume control of Hong Kong in 1997 after more than 100 years of British colonial rule. With both British and Chinese representatives walking away from the negotiating table empty handed, legislatures in Hong Kong renewed their calls for democratic reforms ahead of 1997. "The government should table Patten's original deal to the assembly for legislation," the vice chairman of Hong Kong's United Democrats party, Yeung Sum said. Hong Kong's legislature is only partially elected, with a number of the seats appointed by the executive branch. British-appointed Governor Patten, as part of his push for democracy, has called for legislature- wide elections and reforms to voting laws. Beijing has repeatedly warned Patten against moving ahead with his plan without China's approval, or risk having the legislature dissolved after 1997. Hong Kong Liberal party member Allen Lee heeded Beijing's warning and Saturday urged Patten to delay his reforms package with the hope that another round of Sino-British negotiations could be arranged. "Both sides are in a political struggle," Lee said. "It's ridiculous, they should be thinking about the people of Hong Kong." The veteran legislator said pushing ahead with Patten's reforms would only drive a wedge between London and Beijing. "Tabling the bill now would not be helpful at all," he said. Another lawmaker, a member of Hong Kong's pro-Beijing party said an 18th round of talks could be in offing. But negotiators ended Saturday's session with neither side willing to commit to another round of talks. The Hong Kong Chinese-language newspaper Sing Tao Daily News, in an editorial, said another round of talks would be pointless unless both sides dropped their petty suspicions and were willing to be more flexible. The political stalemate has Hong Kong residents frustrated and looking for answers. The United Democrats' Yeung called on both Beijing and London to explain why, after so many rounds of talks, they could not agree on even the simplest issues. "I think they should come out and explain why there's no 18th round, does it mean the talks have come to and end or not," Yeung said. "If that is the case then why? I think they have to be accountable to the public." --- --- --- Stalled talks may flare into confrontation over Hong Kong reforms HONG KONG (Nov. 29) -- Stalled Sino-British talks on Hong Kong's future could deteriorate into direct confrontation if London unilaterally pursues democratic reforms in the colony, Chinese critics warned Monday. Any move to push political reforms would be a hostile act designed to pressure China, said Fan Hsu Lai-tai, an outspoken pro-Beijing advisor working in Hong Kong. "Agreements can only be reached when both sides show sincerity", Fan said. "The Chinese side has made great concessions, but the British side raised more and more demands." After 17 rounds of Sino-British negotiations on proposed political reforms for the colony, the only thing Beijing and London have reached agreement on is a revised voting age. Chris Patten, Hong Kong's British-appointed governor, indicated he may go ahead unilaterally with at least some of his proposals to expand democracy before the colony reverts to Chinese rule in 1997. He is to meet with lawmakers this week to discuss the move. Beijing has repeatedly warned it would reverse any political reforms in Hong Kong put in place without its consent. But lawmakers in the colony have been pressuring Patten to put his plan to a vote in the assembly in time for local elections next year. "We can't get bogged down with this incessant bickering," said Emily Lau, an independent Hong Kong lawmaker. "People are fed up to the teeth. Patten's got to ahead with his package like he said he would." Hong Kong's legislature is only partially elected, and Patten has proposed legislature-wide elections, combined with regional and municipal voting. Despite Beijing's warnings, Hong Kong's three largest political parties -- United Democrats, Liberals and Meeting Point -- support putting the measure before the legislature. Elsie Tu, an independent legislator, disagreed, saying the package would only force Beijing's hand. "Britain is playing a game which isn't doing Hong Kong any good at all," Tu said. "China will have little alternative but to reverse Patten's reforms in 1997." Pro-Beijing newspapers took Patten and London to task Monday, blaming them for the breakdown. "The British side should bear the responsibility for the failure," Chinese Communist Party newspaper, People's Daily said in a front page article. Wen Wei Po, a pro-China daily in Hong Kong, said Britain was trying to pressure China into making concessions by claiming time for the talks was running out. And Chang Kuo-sin, a columnist for the English-language Hong Kong Standard, called for Patten's resignation. "The time has perhaps come for Gov. Chris Patten to acknowledge the failure of his governorship and consider whether he should resign," the writer said. Investors -- thick-skinned after months of futile negotiations -- reacted cautiously to news the Sino-British talks seemed at a failed end. Shares on the Hong Kong Stock Exchange dropped 400 points in early trading, but recovered in the afternoon and closed down 261.65 points, or 2.8 percent. Analysts played down the effect of the political brinksmanship. "You must remember that we have had movements of 300 points in one day on just profit-taking or bargain-hunting over the past few weeks, so the fallout from this political development is really not very severe," said Howard Gorges, managing director of South China Securities. He added that a substantial part of the market's fall was due to worries over a sharp drop on the Tokyo Stock Market. +--------------------------------------------------------------------------+ 2c. Nuclear Arsenal Threatening in Asia: Is North Korea the Only One Playing the Risky "Business" as China's Neighbor? ................... 94 +--------------------------------------------------------------------------+ [Editor's note: Nuclear arsenal shall never be a naughty child's toy. Someone predicted that the world's hot spot would be the Korea peninsula since North Korea starts to develop nuclear arsenal. As China's neighbor, what do you think about it if North Korea owns nuclear weapons? How about other neighbors such as Pakistan? What's the role of Chinese government behind the door? Now, we provide following news to you.] --- --- --- North Korea threatens to withdraw from nuclear treaty TOKYO (Nov.29) -- North Korea warned the United States Monday that pressure will not break the impasse over the communist country's suspected nuclear development and threatened to withdraw from the Nuclear Non-Proliferation Treaty (NPT). A Foreign Ministry spokesman in Pyongyang told the official (North) KoreanCentral News Agency (KCNA) monitored in Tokyo recent moves in the United States present grave hurdles. U.S. President Bill Clinton warned North Korea last week it will face "increased opposition of the entire international community" if it does not resume compliance with treaty obligations to curb the spread of nuclear weapons. --- --- --- Bhutto says U.S. sanctions hurt South Asian nuclear pact effort ISLAMABAD (UPI, Nov. 20) -- Pakistan's Prime Minister Benazir Bhutto said Saturday U.S. economic and military sanctions against Pakistan are discouraging regional nuclear non-proliferation efforts. In her first policy statement on nuclear issues since she regained the prime minister's office last month, Bhutto said her government would welcome any initiative to create a nuclear non-proliferation zone in South Asia. She said the economic and military sanctions that Washington imposed against Pakistan in 1990 did not encourage nuclear non-proliferation. The sanctions, known as the Pressler Amendment, were imposed by the U.S. Congress to discourage growth of Pakistan's nuclear program. "The Pressler Amendment has discouraged regional non-proliferation efforts by giving India a veto against such efforts," Bhutto said. The law, she said, should not apply to Pakistan because it does not have a nuclear device. She said Pakistan has a peaceful nuclear program and it will continue its efforts to promote the peaceful use of nuclear energy. "Unfortunately Pakistan's peaceful nuclear program has been constantly pressurized and subjected to hostile and vicious propaganda and unjust discrimination," Bhutto said. She also said Pakistan would welcome and cooperate with any effort from India or a third country at establishing a nuclear non- proliferation regime in South Asia. --- --- --- Pakistan will not scale back nuclear program ISLAMABAD (Nov.28)--Pakistan's foreign minister said Sunday the country will not scale back its nuclear program and will retain its capability unless an acceptable non-proliferation regime is established in South Asia. In a policy statement before Parliament, Sardar Asseff said although Pakistan has no plans to build nuclear weapons, it could not sign a non- proliferation treaty unless India did the same. "Under no circumstances will Pakistan accept a roll back of its nuclear program," Asseff told a special parliamentary session. The session was called to discuss the opposition's allegation that the Bhutto government, elected a month ago, planned to close down Pakistan's nuclear program. Despite these assurances the opposition boycotted the session saying the government was not serious in discussing the issue. Asseff said it was Bhutto's diplomacy that brought about the U.S. State Department's recent acknowledgement that the extension of its sanctions against Pakistan did not advance the non-proliferation efforts in South Asia. Pakistan has made several offers since 1979 toward signing bilateral and regional non-proliferation treaties with India, but the offers have been rejected, Asseff said. "We believe that sanctions only aimed at Pakistan are counter- productive to non-proliferation and have created a strategic imbalance in the region," he said. Pakistan has acquired some technical capability in the nuclear field. But Asseff said, "a political decision has been taken at the highest level to use this capability for peaceful purposes only and not to produce nuclear weapons." --- --- --- Japan asks Pakistan to sign treaty ISLAMABAD (Nov.27)-- Japan has asked Pakistan to sign a nuclear non- proliferation treaty and open its nuclear facilities for international inspection, officials at the Pakistan foreign office said Saturday. The Japanese request was conveyed to Foreign Secretary Shaharyar Khan who is in Japan for bilateral talks. Pakistan, meanwhile, has informed the Japanese that it will sign the treaty only if arch rival India and another regional nuclear power sign the agreement, officials said. Khan arrived in Tokyo Nov. 24 for discussions on Japan's economic assistance to Pakistan. The two nations have regular talks on economic relations, but this time Japan raised the issue of nuclear non- proliferation. Pakistan is negotiating a $400 million aid package with Japan which has not made it conditional for Pakistan to sign the treaty in order to receive aid. But Prime Minister Benazir Bhutto assured the Japanese that her country had no nuclear weapons and said she hoped that the Japanese would continue their economic aid to Islamabad. Bhutto explained to the Japanese that Pakistan could not sign a non- proliferation treaty as its own security was linked to the Indian nuclear threat. However, she told them that Pakistan would welcome any proposal for regional non-proliferation. Reports in some Pakistani newspapers said Japan also was considering a proposal for convening a seven-nation conference in south Asia to resolve the nuclear issue. +=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=++ + Executive Editor: Yaxin Wang Executive Moderator: Yan Bai + +--------------------------------------------------------------------------+ + For subscription: mail "SUB CHINA-NT Your-First-Name Your-Last-Name" + + to LISTSERV@UGA (bitnet) or listserv@uga.cc.uga.edu (internet) + + For back issues of CCF: + + anonymous ftp to cnd.org[132.249.229.100]:pub/community/CCF + + For contribution and inquiry: mail to ccf-editor@ifcss.org + +=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=++