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NO.4 (February 15, 2004)

  • Forecast of China's Economic Development in 2004
  • Minister of Commerce On China's Foreign Trade and Economic Cooperation
  • Democracy Strikes Roots in Rural China
  • China's Legislation in 2003: Giving Priority to People's Interests
  • Why Do Japanese Politicians Repeatedly Visit the Yasukuni Shrine?

    Forecast of China's Economic Development in 2004

    By Hah Xiuyun

           China's economy will continue to draw world-wide attention in 2004. In the year, the country's economic reform and political restructuring will be carried out in depth and make great progress, which will bring about numerous opportunities in many fields and inject immense vitality into economic growth. The situation over the past years in which a proactive fiscal policy has been relied on to boost economic development, the commodity price has kept going down and the stock market has remained slack will be changed. Investors, entrepreneurs and citizens will all enjoy more opportunities.
           The trend of economic development may be forecasted by "six rates", namely economic growth, tax, unemployment, inflation, interest and exchange rates, as well as economic cycles.
           In 1993, when China experienced an overheated economy, the stock fever, development zone fever and real estate fever left many aftermaths for continuous economic development. In 1996, following the soft landing of the economy through strict economic rectification, an overcool economy appeared in the country. In 1998, the Chinese Government intensified macro-control over the economy and began to adopt a proactive fiscal policy, by such measures as increasing financial expenditure, stimulating investment, encouraging consumption and expanding exports. All these measures played an important role in driving up economic growth. This, plus the issuance of government loans and the construction of a large number of infrastructure facilities such as expressways and bridges have all helped quicken the pace of economic progress. Meanwhile, the government introduced a prudent monetary policy and lowered the interest rate continuously, with an eye to increase money supply and pull the Chinese economy out from an all-time low.
           To date, the Chinese economy has entered a stage of a new round of development after experiencing a decade of ups and downs.
           The following is an analysis of China's economic development in 2004 in terms of the aforementioned six economic indexes:
           --Economic growth will remain high, with the rate exceeding 8 percent.It is worth noting that various social forces will contribute more to the new round of economic growth, as state investment will gradually be reduced and replaced by social investment.
           --While the basic tax rate will see no major changes, government support to the development of certain economic sectors will be embodied in agricultural tax and other fields.In 2004, the government will intensify supervision over tax revenue, and the investigation and crackdown on tax evasion, so as to ensure the steady growth of financial revenue along with rapid economic growth, and the implementation of various measures to enhance the government's macro-economic control capacity, such as transfer payments.
           --The inflation rate will go up moderately, which will be accompanied with increases in the price index.Thanks to a continuous increase in both international and domestic investments, China saw a great demand for various means of production and a growing price of them in 2003. This will reverse the slipping of commodity prices and lead to a moderate increase in the price index of consumer goods.
           --The unemployment rate will remain stable in a dynamic way.As China's industrial restructuring will be accelerated in 2004, the strength of market selection will be displayed. Some new emerging industries, stimulated by market capital, will accelerate their development, thereby providing numerous employment opportunities. Meanwhile, more old and poor enterprises will be forced to close down or suspend production, which will aggravate the reemployment problem.
           --The interest rate may increase slightly.On the one hand, the country's basic money supply will increase owing to the influx of foreign capital; on the other hand, the government may raise the interest rate in a moderate way to control the growth of price index and inflation rate, so as to prevent an overheated economy.
           --With regard to the exchange rate', the Chinese Government will adhere to the principle of maintaining the stability of the Renminbi (RMB), and strive to prevent major fluctuations of the RMB exchange rate during rapid economic development.Meanwhile, the government may adopt a series of measures to relieve the pressure on the appreciation of the RMB, including the permission of an increased amount of foreign exchange carried by Chinese citizens when exiting the country and granting enterprises more decision-making power with regard to foreign exchange.
           At present, the global economy is in the middle stage of recovery. A notable rebound has appeared in the US economy, and the economic situation of many other countries has improved to different extent. All this has created a sound external environment for China's economic development in 2004.
           With regard to China's securities market, it is likely to take a favorable turn under the backdrop of an improved macro-economic situation following continuous decline over the past years through market rectification and the development of listed companies. The securities market may be invigorated again after some uncertain factors are clarified, such as the sell-off of state share.
           In a word, China is expected to see more capital influx and greater opportunities for economic development in 2004, if no major emergency risks occur.
                                                                                                       --The author is an associated professor with the Economic Management College of Tsinghua University and a senior research fellow with the China Economic Research Center of Tsinghua University.

    Trade and Economic Cooperation

    --Excerpts from a People's Daily reporter's interview with Chinese Minister of Commerce Lu Fuyuan

           Question:Global economy and trade experienced another eventful year in 2003. In contrast, what characteristics did China's foreign trade and economic cooperation sector display in the past year and what are the reasons behind them?
           Answer:In general, China's foreign trade and economic cooperation sector demonstrated a sound momentum of development last year.
           First, in spite of the impact of SARS, imports and exports maintained rapid and steady growth, with total import and export volume for the whole year reaching US$851.2 billion. The mix, quality and sales revenue of China's export products improved considerably, with electromechanical products making up more than 50 percent and new and high-tech products over 25 percent of total exports. This has effectively spurred the development of the national economy and structural upgrading.
           Second, The absorption of foreign direct investment continuously maintained a considerable scale, with paid-in foreign investment basically equaling the amount of 2002 to reach US$50 billion. Foreign businesses have quickened the pace to transfer R&D, marketing and other key links to China. Some multinationals have established purchasing centers in China, and service trade is developing into a new hot spot of overseas investment.
           Third, much progress has been made in implementing the "going out" strategy. In the first 11 months of last year, 400 non-financial Chinese-funded enterprises were established abroad, with committed Chinese investment totaling US$1.66 billion, a rise of 49 percent and 79 percent respectively over the same period of 2002. The business volume of overseas project contracting and labor service hit US$9.48 billion and US$2.52 billion respectively, up 33.7 percent and 5.9 percent. The development of projects involved in overseas resources development has been accelerated too.
           The aforementioned achievements are due to the following three motive forces and two guarantees. First, we have seized the opportunity of the optimization and reorganization of production factors and industrial transfer worldwide and relied on structural readjustment to promote foreign trade. Second, the effect of WTO accession has been further displayed, resulting in the formation of the pattern of relying on investment to boost foreign trade. Third, reform has invigorated various enterprises, and a mechanism of relying on the market force to stimulate the self-development of enterprises has initially taken shape. In addition, the rapid development of the national economy and the growing international demand have provided a market guarantee for the development of China's foreign trade, and the stable and ever-improving state policies and effective countermeasures have provided a sound environment guarantee for the development of the sector.
           Q:In 2003, China's foreign trade imports increased rapidly, with the growth rate exceeding that of exports. How do you explain this phenomenon?
           A:The accelerated development of the national economy, the rapid growth of investment, the steady increase in consumption demand and the expansion of domestic market capacity since the beginning of 2003 were the main reasons for the quickened development of imports. In particular, the import of investment and resources commodities that were in short supply in China increased by a large margin. In addition, the import of advanced technologies, key equipment and new consumer goods maintained sustained and rapid growth owing to industrial and consumption upgrading and structural readjustment. The import volume of electromechanical and high-tech products increased by 45.9 percent, that of auto parts by 116 percent, and that of motor vehicles and chassis by 66 percent. Moreover, China's fulfillment of the WTO entry commitment of further lowering import tariffs and gradually relaxing non-tariff restrictions also created favorable conditions for the rapid development of imports.
           China's economic progress calls for the even and coordinated development of imports and exports. With its status as a worldwide trading power further established, China will continue to expand the import of advanced technologies and equipment and strategic resources to meet the ever-growing demand of energy and raw materials in its economic development, and better give play to the irreplaceable role of imports in optimizing and upgrading the country's economic structure and improving the quality of the national economy. Hence, as long as it caters to the needs of the development and structural readjustment of the national economy, the rapid growth of imports is rational and necessary. Meanwhile, we must strengthen the work with regard to the supervision, the alarm system and the adoption of countermeasures in imports. We will timely apply WTO rules against excessive imports that will harm the development of some domestic industries and other dumping activities that violate WTO rules, so as to protect the safety and legitimate rights and interests of Chinese industries and enterprises.
           In 2003, China's import volume exceeded US$412.84 billion. Following this speed of growth, the total import volume during the 10th Five-Year Plan period (2001-05) is expected to exceed US$2 trillion, which will double that during the previous five-year plan period. Hence, the growth in China's foreign trade in 2003 and the following years will greatly influence the development of the global economy. Facts prove that China's endeavor to build an all-round well-off society will benefit not only the 1.3 billion Chinese people, but also all its trading partners.
           Q:How do you predict the development of China's foreign trade and economic cooperation in 2004?

           A:China's foreign trade and economic cooperation sector faces both development opportunities and a grim, changeable situation in 2004. In general, the global economy is improving and international trade will continue to pick up, with the growth rate expected to exceed last year's. Worldwide transnational direct investment is likely to recover in a moderate way and the trend of international industrial restructuring and transfer is in ascendant, which will provide China with more opportunities and bigger room to expand imports and exports and attract foreign investment. We should grasp and make full use of these opportunities to seek further development. This year, China will continue to implement the policy of expanding domestic demand, and the GDP is expected to grow by more than 7 percent. The all-round planning and deployment made by the Third Plenary Session of the 16th CPC Central Committee for improving the socialist market economic system has exerted great and positive influences on the country's foreign trade and economic development in 2004 and during the following period. According to my preliminary prediction, China's foreign trade and economic cooperation will maintain the momentum of steady growth in 2004, if no major fluctuations take place in domestic and international situations.  

    Democracy Strikes Roots in Rural China

    --Grass-roots elections have been carried out in China's 680,000 rural villages.

           Many Chinese farmers have become increasingly interested in running for village officials in recent years, and about 5 million of China's 900 million farmers have been elected as members of villagers' committees to take charge of village affairs.
           Yang Ming, who has served as the head of the villagers' committee of Fubao Village in Guandu District, Kunming City (capital of Yunnan Province), since he was elected to the post in 2000, finds it hard to be a village official. "The job is very challenging and demanding," he said.
           In the past, the head of a villagers' committee was appointed by the higher-level authorities, and his/her main responsibility was to fulfill the tasks assigned by township and town governments. Now, elected by his fellow villagers, Yang realizes he bears a great responsibility for them too.
           Since China's Organic Law on Villagers' Committees was promulgated and put into practice in 1998, grass-roots elections have been carried out step by step in China's 680,000 rural villages. The villages' committees, with their members directly nominated and elected by villagers, are subject to the supervision of villagers while taking responsibility for them.
           According to Yang, although his villagers' committee takes care of ordinary village affairs, the decision of major affairs should be adopted through discussions among villager representatives. The villagers' committee should canvass the opinions of all villagers for every issue concerning their interests, no matter how trivial it is, before a decision is made. In Fubao Village, the meetings of all villagers and of villager representatives are held regularly, and villager officials summarize their work and make a report on their work to all villagers every six months. The salaries of village officials are linked with the results of evaluations made by the villager congress.
           Since the end of 2000, Yunnan has been working in cooperation with related training institutions in the United States, Norway, Denmark and other countries to run training courses for grass-roots rural cadres and county- and township-level officials regarding the election of villagers' committees. In the first half of 2003, the province hosted six training courses on village affair management in accordance with a China-EU cooperative project, with 900 county and township officials trained.
           Yang Ni, an official with the Civil Affairs Department of Yunnan Province, said, "The exercise of the villagers' self-government system has enabled the 900 million Chinese farmers to participate in the management of their own affairs. This represents a huge progress in the building of China's grass-roots democracy."

           To date, the 31 provinces, autonomous regions and municipalities on China's mainland have all enacted local laws on the election of vi[lagers' committees, and more than 80 percent of Chinese farmers have participated in grass-roots elections.

    China's Legislation in 2003: Giving Priority to People's Interests

           Following the founding of the 10th National People's Congress (NPC) and its standing committee in March 2003, the general public paid great attention to their moves in legislation. By the end of October 2003, the 10th NPC Standing Committee had deliberated and adopted six laws, including those on the ID cards of residents, on the prevention of irradiative pollution, on ports, on administrative licenses, on road traffic safety and on the securities investment fund. These laws, which give priority to the people's interests, indicate that legislation for the people has become the prime pursuit of China's legislative body.
           Improving Service
           The Law on the ID Cards of Residents, promulgated on June 29, 2003, has replaced the Regulations on the ID Cards of Residents that had been in force for 17 years.

           According to the Regulations, ID cards were not issued to three categories of people--servicemen and armed policemen, people who lost personal freedom because of being subject to reform through labor or to criminal detention (the ID cards that had already been issued to this category of people should be taken back), and citizens under the age of 16.
           In modem society, all people, irrespective of their occupations, positions and age, are all citizens. With the understanding that it is a non-deprivable social right of each citizen to hold an ID card, the Law on the ID Cards of Residents has abolished the aforementioned restrictions.
           In the past, people had to wait for three months to acquire their ID cars. According to the new law, the time limit should not exceed 60 days. Those who have changed their home addresses no longer need to have their ID cards renewed and only need to report to relevant authorities to have the change made in the computer.
           The new law, with its various stipulations to the convenience of the people, represents the results of administrative reform that is geared to management and service instead of control, and shows changes in the guiding principle of legislation from maintaining social stability to safeguarding the rights and interests of citizens. The law, as the first law adopted by the 10th NPC Standing Committee, manifests China's top legislature's continuous pursuit of giving priority to the people's interests and making laws for the people.
           To the Convenience of the People
           The Law on Administrative License was adopted at the Fourth Meeting of the 10th NPC Standing Committee on August 27, 2003, after four rounds of deliberations. Administrative license, known as administrative examination and approval, has been extensively applied in China since reform and opening-up. Owing to incomplete legislation, many drawbacks have been exposed during this process in recent years, including an excessive amount, complicated procedures, low efficiency, extra-high charges, arbitrary decisions and low transparency involved in administrative examination and approval procedures. These drawbacks have not only stemmed economic development, but also led to corruption.
           According to Li Fei, deputy director of the Legal Affairs Committee of the NPC Standing Committee, who participated in the drafting of the law, one of the main principles for enacting the law is to provide convenience for the people and safeguard the legitimate rights and interests of all citizens, legal entities and other organizations. The law mainly regulates practices to facilitate the simplification of administrative examination and approval procedures and improvement of work efficiency and service quality, showing that the legislative body attaches great importance to public interests.
           The various procedure systems designed by the law follow the principle of rule by law and are characterized by convenience, efficiency, openness and transparency. To enhance efficiency and safeguard the legitimate rights and interests of applicants, the law stipulates that with the approval of the State Council, the provincial-level people's government may exercise the administrative permission power of several administrative departments in a relatively concentrated way, that "one-stop" service should be provided while administrative licensing procedures involve several administrative departments, that administrative departments should make public stipulations related to administrative licensing affairs, so as to prevent "black box" operation, that when administrative license is not granted, related administrative department should explain the reason and tell the applicants they enjoy the rights of administrative reconsideration and administrative appeal, and that with regard to issues concerning public interests and the major gains and losses of citizens, relevant administrative departments should organize hearings.
           Wang Yongqing, deputy director of the State Council Legal Affairs Office who also participated in the drafting of the law, said the basic idea to be followed during the drafting of the law was that the administrative departments would rather trouble themselves than trouble the citizens. Attention was paid to every specific issue, even including the way that administrative departments provide application forms. Clear stipulations on providing applicants with convenience are specified in the law, showing special concern for safeguarding the legitimate rights and interests of citizens.
           The Law on Administrative Licenses represents the most important results of legislation in 2003, in terms of the influence of legislation on political, economic and social lives. It embodies the government's concern of the citizens' rights and interests with regard to both macro-principles and detailed rules.
           Victory of Humanism
           The Law on the Safety of Road Traffic, promulgated on October 28, 2003, also embodies the principle of making law for the people. The law includes a series of reform measures to the convenience of the people, thus simplifying the complicated formalities in the registration and examination of motor vehicles and driving licenses. The law also shows concern for the victims of traffic accidents, bind people and other special groups of citizens, by stipulating that a social relief fund for road traffic accidents should be established and that paths for blind people should be built on major urban streets.
           The responsibility involved in traffic accidents evoked much controversy during the drafting of the law. In August 1999, the city of Shenyang in northeast China first made the stipulation that drivers were irresponsible for traffic accidents if pedestrians had violated traffic rules. Many other cities followed suit to make similar stipulations, including Shanghai, Jinan, Zhongshan, Shenzhen, Zhengzhou, Tianjin, Lanzhou, Wuhan and Chongqing.
           After the drafting of the law was initiated, the responsibility involved in traffic accidents became the focus of public concern. On December 24, 2001, when the draft was submitted to the NPC Standing Committee for initial examination, committee members found that the practice of Shenyang and other cities were confirmed in the draft and strongly opposed it. They challenged that it seemed fair that the pedestrians that had violated traffic rules bore full responsibility for traffic accidents, but a basic fact was neglected--compared with motor vehicles, pedestrians are vulnerable and, furthermore, the right of pedestrians to life is more important than motor vehicles' right to travel.
           Owing to the strong opposition of NPC Standing Committee members, the practice of letting traffic-rule-violating pedestrians bear full responsibility was voted down during the third-round examination, and stipulations embodying humanism were finally adopted.
           The new stipulation that drivers are also responsible for traffic accidents when pedestrians violate traffic rules shows the victory of humanism. The law marks a milestone in China's legislation by showing respect to human lives and embodies the legislative idea of giving priority to people's interests.
           Safeguarding People's Interests
           During the practice of legislation in recent years, particularly during the course of enacting administrative decrees, how to correctly handle the relationship between administrative power and the legitimate rights and interests of interested parties has become a focal issue. The 10th NPC and its standing committee faced the same question after their establishment.
           On the day when the Law on the Safety of Road Traffic was adopted at the Fifth Meeting of the 10th NPC Standing Committee, NPC Chairman Wu Bangguo noted that the Law on the ID Cards of Residents, the Law on Administrative license and the Law on the Safety of Road Traffic are all administrative decrees, which unavoidably involve the right and interest relationship between administrative power on the one hand and natural persons, legal entities and other organizations on the other. During the process of deliberation, NPC Standing Committee members attached importance to regulating, restricting and supervising administrative power while granting administrative departments necessary means to ensure the effective enforcement of administrative power in accordance with the law. This aims to urge administrative departments to correctly exercise their power in line with the power limit and procedures prescribed by the law, and ensure the legitimate rights and interests of natural persons, legal entities and other organizations are not encroached upon by illegal means. This is a main criterion to judge the quality of legislation.
           What should legislation be based on? What is the basic starting point of legislation? Yang Jingyu, a responsible member of the 10th NPC Legal Affairs Committee, stated that the people and the people alone are masters of the country and society. The socialist legal system, in essence, represents the institutionalization and legalization of the people's democracy. The starting point of a law or a rule to be made is whether it conforms to the fundamental interests of the masses of people.
           The six laws adopted by the 10th NPC Standing Committee in 2003 indicate that fundamental changes are taking place in China's legislation, which gives increasing priority to the people's interests. This declares publicly a truth: Legislation should be based on the people's interests, and the people's interests represent the supreme law.

    Why Do Japanese Politicians Repeatedly Visit the Yasukuni Shrine?

           On August 15, 2003, the 58th anniversary of Japan's unconditional surrender, some Japanese government officials and diet members again visited the Yasukuni Shrine, which houses the tablets of Hideki Tojo and other top World War II criminals, in defiance of the opposition of other Asian countries. Prior to it, Chinese Foreign Minister Li Zhaoxing, who was paying a visit to Japan, pointed out that it was well understood that ordinary Japanese people mourn their family members who died during the war, for these deceased were also victims of Japanese militarism. However, the top World War II criminals, who were different from the former, bore principal responsibilities for the war. Li stated that Japanese leaders should not visit the Yasukuni Shrine after the tablets of top World War II criminals were erected there. But, on January I this year, Japanese Prime Minister Junichiro Koizumi paid his fourth visit to the shrine since he assumed office. Why do leading Japanese political figures insist on visiting the shrine in defiance of the opposition of other countries? With this question, a Beijing Youth Daily reporter interviewed Tang Zhongnan, a research fellow with the World History Institute of the Chinese Academy of Social Sciences (CASS), and Jin Xide, a research fellow with the CASS Japanese Research Institute, a short time ago.
           Question:It seems that the annual visit to the Yasukuni Shrine by Japanese cabinet members has become a traditional festival of theirs. What's the reason behind it?
           Jin:First, in the latter period of occupation, the post-war US occupational authorities gave up the process of punishing Japanese aggressive crimes pursued in the early period. The practice enabled Japan's former war forces to return to the political field, with some becoming cabinet members and even the prime minister. Many of the current political figures are the second or the third generation of hereditary diet members. They harbor numerous wrong and distorted understandings of Japan's aggressive war. This is quite different from the case of Germany where anti-war forces have been consistently in power and the former war forces have been subject to thorough investigation and punishment.
           Second, owing to aforementioned reasons, Japan today still lacks a unified legal judgment and state will with regard to its history of aggression, This has resulted in the country's shortage of effective legal and administrative means to restrict the cabinet members' visit to the Yasukuni Shrine.
           Third, some cabinet members' visit to the shrine, which caters to the will of some forces and organizations that negate Japan's history of aggression, aims to attract ballots from them.
           Q:Why didn't the neighboring countries' opposition against leading Japanese political figures' visit to the Yasukuni Shrine yield any results?
           Jin:First, external causes only become operative through internal causes. The current internal causes in Japan, namely the domestic forces of peace and of self-examination of the history of aggression, have been greatly weakened.
           Second, in modern times, Japan has always looked down upon other Asian countries, considering itself to be one of Western powers. This mentality can only be changed after other Asian countries become powerful.
           Third, the opposition from neighboring countries is not totally fruitless. In fact, it does have exerted some impacts on Japan domestically and adversely affected its international image and status.
           Last, opposition will continue as long as Japanese leaders insist on having their own way. But this will only damage the state interests of Japan.
           Q:What's the Japanese public's response to the visit to the Yasukuni Shrine?
           Tang:In general, the Japanese are not concerned of the issue. But many with conscience are against the visit by the prime minister and cabinet members. The problem is that some Japanese political figures and forces that negate the history of the failure of war take the state leaders' visit to the shrine as a political goal to rewrite the history of the failure of war. Therefore, they persist in promoting the visit. How to response to the visit to the Yasukuni Shrine has become a focal issue of political dispute between Japan and victimized Asian countries. As for Japanese political leaders, the response to the visit to the shrine varies with each individual.
           Q:How should this problem be effectively resolved?
           Tang:The only way to solve this problem is that the Japanese prime minister gives up his plan to visit the Yasukuni Shrine. Meanwhile, China can follow the example of the United States to enact a law to forbid leading Japanese political figures who gravely hurt the Chinese people in the past and still insist on visiting the Yasukuni Shrine today to visit China.

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