|
|
|
|
The Australia-China Chamber of Commerce and Industry of New South
Wales Newsletter No. 16 10 March 2000 |
|
|
|
 CONTENTS Reviving the Western Provinces |
|
|
|
|
ACCCI ELECTRONIC NEWSLETTER NO. 16 This issue of the Chamber's E-Letter focuses on the
National People's Congress (NPC) that opened on 5 March. Details of
the legislation that emerges are normally made available after the final session.
This year, however, media reports began to circulate prior to the opening
session. We provide commentary on some of these reports. |
|
|
|
|
|
|
|
|
|
The Congress consists of 2,900 delegates who are selected
by the Party and meet in a relatively short annual session. The Standing
Committee of the NPC is a permanent body within the NPC that convenes
year-round. For a relatively long period, the NPC was regarded as a rubber
stamp of the Standing Committee and of the Party's Politburo, and, to a large
extent, still is. Mr Li Peng, Chairman of the NPC, announced at the 9 March
session that "all items of legislation and supervisory work undertaken
by the NPC completely and thoroughly follow the line and policies of the
Party." Nevertheless, beginning with the 8th NPC in March
of 1997, the views of the delegates receive greater weight in the way the
legislation is formed, and attention has been given to allowing certain laws
to be drafted by the NPC (rather than solely by the Standing Committee). Media reports indicate that ordinary Beijing people
remain somewhat cynical of the NPC. The city is spruced up prior to each
Congress, the delegates are accommodated in heavily guarded hotels, travel in
special cars and buses and hold many of their meetings in closed session.
Mark O'Neil reported in the South China Morning Post that
several jokes have circulating. For example: Why do NPC delegates have three hands? One is for
clapping, one is for shaking hands and one is to vote to approve the Party's
decisions. For economic and political observers, however, the
agenda of the NPC is of considerable importance in revealing priorities for
the current year. A major responsibility of the NPC is to oversee the central
government's budget and that generally reflects the "bottom line"
of government intentions. A wide range of issues is expected to be discussed
both formally and informally. Four groups of legislators are to be
established to oversee implementation of laws on the organisation of urban
neighbourhood committees, land administration, township enterprises and the
new Criminal Procedure Law. Some implications of the major priorities are
discussed briefly below. |
|
|
|
|
|
|
|
|
|
REVIVING THE WESTERN
PROVINCES Premier Zhu Rongji's plan to spend trillions of
renminbi to boost inland economies is said to be a major focus of the
two-week meeting of the NPC. Western provinces have been left behind in
China's economic growth during the past several decades, as compared to the
coastal provinces. Under the program, new investment funds will be
poured into improving infrastructure, such as highways, railways and other
projects. The 10 areas chosen for the program include Yunnan, Xinjiang, Tibet, Sichuan, Shaanxi,
Qinghai, Guizhou, Gansu, Ningxia and the Chongqing Municipality. Approximately RMB 80 billion (US$9.6 billion) will
be allocated this year to fund more than 175 projects. According to the
official media, Beijing will also offer tax holidays and other preferential
policies to lure foreign investment to inland areas. These will include a 50
per cent reduction in corporate tax rates (to a 15 per cent rate) for three
years following the end of the initial tax holiday. Chongqing and Xi'an have already announced plans
for large infrastructure projects and are attempting to attract increased
foreign investment, particularly in the higher-tech manufacturing and service
activities. Chongqing has been a centre of interest for the Australian
Government, mainly through AusAID work. The Chamber has focused heavily on
Xi'an as one of the "key cities" in China. In view of these
developments, and previously established contacts, the Chamber is preparing
special reports on these two cities and we hope to make them available near
the end of next month. The development projects are to be financed partly
through new issues of Treasury bonds, and much of these proceeds will be
passed on to provincial and municipal governments through grants and
subsidies. The allocation of funds is likely to be under the control of the
State Development Planning Commission. Central government supervision is believed to be
needed in order to ensure that the funds are not wasted on unnecessary
projects or "creamed" off by corrupt officials. It appears that
greater emphasis is to be placed on longer-term planning, together with
greater reliance upon feasibility studies and project management. Will these initiatives lift the economic
and social conditions for the western provinces? They will if attention is also
given to social infrastructure (rather than limited to physical
infrastructure such as transport and communications). Despite wage rates that
are substantially lower in the western provinces, unit labour costs tend to
be higher than in coastal provinces. This results from lower productivity per
worker. That, in turn, can be traced to less efficient machinery and, perhaps
more importantly, to poorer education and training. (Refer to a subsequent
section on education). President Jiang Zemin, joined a discussion group at
the Congress this week and emphasised the importance of innovations in
science and technology as a decisive factor for modernisation. On the
strategy of developing west, he urged China's east and west to follow the principle
of "complementing each other's advantages," by combining the
former's advantages in technology, talent, management and information and the
latter's advantages in natural resources and market potential. Although this
is a desirable objective, it will need careful planning. |
|
|
|
|
|
|
|
|
|
China's legal system has been a puzzle to most
Westerners, and it is most likely confusing to many Chinese. One would
presume that laws governing law making are fundamental to all governments,
but in China such laws emerged slowly after China's "open door"
policy was initiated in 1979. In 1982, the NPC expanded the powers granted to the
judiciary, state prosecutors and various central government departments to
interpret laws passed by the NPC. This obviously had practical motivations
since the Standing Committee of the NPC preferred to concentrate on new
legislation, rather than explain and implement the old legislation. The NPC made two resolutions in 1984 and 1985
allowing the State Council to enact laws, especially those related to the
economy. This was also motivated by expediency in adjusting to the rapid
economic changes. In addition, China's traditional legal system
permitted local legislators to interpret their own laws so long as the same
or similar laws had not been made by the NPC. It is this aspect of the system
that created difficulties. If provincial or municipal governments passed
enabling legislation before the NPC, then the coverage of such laws was more
or less pre-empted from central authority. Shenzhen's stock exchange is often quoted as an
example. Apparently the central government preferred the first stock exchange
to be located in Shanghai, but the legal machinery moved too slowly to
prevent Shenzhen from making an early "score". The Legislation Law is intended to codify the
law-making powers of the various bodies and therefore provides the first step
in a separation of legislative power that is generally available in most
federal systems of government through a constitution. However, as with many other areas of Sino-Western
comparison, the new law has definite Chinese characteristics. It gives
explicit recognition of the right of lower level government to enact laws that
are not available nationally, but must alter any such laws to conform to
those that are subsequently enacted as national laws. The Legislation Law also specifies that the power
to interpret laws is limited to the Supreme People's Court. If prosecutors
disagree with the court's interpretation, they may take their disputes to the
NPC for resolution. Foreign businesses therefore have greater assurance that
the sometimes-questionable interpretations of administrators will be more
limited in the future. Some observers suggest that the new law does not go
far enough to achieve the necessary separation of powers or to create checks
and balances that are needed to make the separation effective. The
Legislation Law is nevertheless an important step in that direction. We commented in an earlier E-Letter that Western
countries required several centuries after the signing of the Magna Carta
before the legal system replaced duelling pistols, swords, and mantraps as a
means for settling disputes. China is certain to achieve the result in less
time. |
|
|
|
|
|
|
|
|
|
In an early session of the NPC, Premier Zhu Rongji
highlighted public sector corruption, together with poor management and lax execution
of laws and decrees, as major concerns. He expressed a new commitment by the
leadership to hit at the ''tigers'', a reference to corrupt cadres with
strong political connections. Is corruption getting worse in China? It certainly appears so as a
result of increased media coverage, particularly in relation to the recent
smuggling scandal in Xiamen. Nearly 200 officials are said to be implicated,
including the wife of Jia Qinglin who is one of the 22 members of the Party's
Politburo and a close ally of President Jiang Zemin. Information given to the NPC stated that nearly
39,000 corruption cases were investigated last year and more than 2,200
ranking officials were charged. . This represents an increase of over 9 per
cent, compared to 1998. A report to the NPC by Procurator-General Han
Zhubin admitted that abuses by police and prosecutors, such as using torture
to extort confessions, extorting favours from suspects, and nepotism, remain
serious problems. Last year his department received 812,821 such complaints,
of which 342,017 were related to prosecutors. A similar report by Xiao Yang, President of the
Supreme People's Court, indicated that the judiciary sentenced 15,748
government officials and business people last year on corruption charges. Mr
Xiao said 540 court officials were fired last year, most of whom got their
jobs through connections. Earlier comments by Mr. Cao Siyuan, who is director
of the Beijing Siyuan Merger and Bankruptcy Consultancy and a leading
advocate of reform in Chinese society, are informative. The quotes are from
an article in the South China Morning Post (see references at the end
of the E-Letter): The party and government have done a great deal of
work in battling corruption," said Mr Cao. "Most of the offenders
now are in jail for economic crimes, not counter-revolution as they used to
be. "But the methods used are out of date and
cannot keep pace with the pace at which corruption is growing. As the saying
goes, while you arrest a man for stealing cattle, another person is doing the
same behind your back. "Most of the cases arise from letters from the
public. Of each 100 letters, 90 get lost, nine go from one department to
another and usually end up in the hands of the person being accused, who then
takes revenge on the person exposing him. Only one leads to a real
investigation, which usually takes two to three years. "What we need is the media to expose
corruption. If they published such cases, the impact would be immediate. Of
course, they must be subject to legal constraints and must do proper research
before they go public. The accused person must have the right to sue for
improper accusation. "It is the newspapers themselves that must
decide whether or not to publish. The case must not go first to the person or
the department accused, as often happens now. Of course, they do
nothing." Assessing progress in fighting corruption is
difficult, but the mere fact that it is a major item on the agenda for the
NPC is an indication that higher-level cover-ups are likely to be difficult
to arrange and to manage in the future. |
|
|
|
|
|
|
|
|
|
Deficiencies in the education system in China
recently became apparent after reports emerged that a 17-year-old school student
bludgeoned his mother to death with a hammer after she banned him from
playing football so he could concentrate on his studies. The authorities announced early in 1998 that
expenditure on education would be increased from 2.5 per cent of gross national
product to 4 per cent. The slowing of the economy later that year altered
these plans. Although the nature of the educational system in China needs to
changed to meet the needs of a more rapidly developing society (rote learning
of somewhat vague and insignificant facts continues to be emphasised), the
major problem is the cost of education in China. A brief statement in a recent article in Time
is worth noting: Already, some parents are losing faith in schooling
as a way out of gruelling poverty. Rising middle and high school fees mean
that even if poor students work hard, they still have little chance of
continuing past sixth grade, after which tuition generally soars. A shortage
in the number of university places also ensures that only 8.3 Chinese out of
10,000 possess college degrees, compared with levels of more than twice that
in India. And with the implosion of the state sector, even university
graduates aren't guaranteed jobs. Children who once dreamed of passing
crucial middle-school exams now count on get-rich-quick schemes in boomtowns
like Shenzhen. "There's a breakdown of the old Confucian order,"
says Maki Hayashikawa, education officer for UNESCO in Beijing. "People
are starting to believe that education just doesn't pay off. What's the point
of sending your child to primary school?" Corruption and opportunism occur in this area as
well. Also from the Time article: When Beijing began to phase out central government
education subsidies more than a decade ago, it turned fiscal responsibility over
to local authorities. Many village headmen took this as an irresistible
opportunity to line their own pockets and concocted a slew of school charges.
Semi-private education watchdogs estimate that more than one-quarter of such
fees are unwarranted, including everything from mandatory snacks and coloured
chalk to abacuses that never actually materialise. The miscellaneous costs
have forced millions of children from the classroom. The Chamber is convinced that China's lagging
educational commitment is likely to be a source of major difficulties in the
near future. We hope to provide more information on this in future issues of
the E-Letter. |
|
|
|
|
|
|
|
|
|
NPC "NPC a Laughing Matter for Cynical
Beijingers", South China Morning Post, 21 February, 2000. "Beijing Cleans Up Its Act for NPC
Delegates", South China Morning Post, 28 February, 2000. "China's Parliament Opens Sunday With Looming
Agenda", ChinaOnline, 3 March 2000. "City Maps Out Road to West, China Daily
Business Weekly, 5 March 2000. "Xi'an Area Zeros In on Foreign Capital, China
Daily Business Weekly, 5 March 2000. "China To Focus on Western Development,
Minister", ChinaOnline, 8 March 2000. "Jiang Joins NPC's Group Discussion", China
Daily, 8 March 2000 "West Warned Off Wasteful Projects, South
China Morning Post, 9 March 2000. "Party Leads, Congress Follows, Declares
Li", South China Morning Post, 10 March 2000. Legislative Law "New Law on Legislation May Be an Ass, or Is
It?" South China Morning Post, 10 March 2000. Fighting Corruption "A Maverick's Dreams For the Mainland", South
China Morning Post, 25 February 2000. "Zhu Attacks Bureaucracy", South China
Morning Post, 6 March 2000. "2,200 Senior Officials Charged Over
Graft", South China Morning Post, 10 March 2000 "'Swift Justice' in Xiamen Case", South
China Morning Post, 10 March 2000. "Face Up to Political Reform", Viewpoint
by Cao Siyuan in Asiaweek, 10 March 2000. Education "Education Overhaul Sought to Relieve Burden
On Pupils", South China Morning Post, 10 March 2000. "Lesson Unlearned", Time, 13 March
2000 (from Internet version released 10 March 2000). Send comments about this E-Letter to: j.zerby@unsw.edu.au |
|
