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---"Focused Coverage Informed Perspectives"---Thu, Jan 15, 1998 edition

Asia's Economics Tung tells it as it is, and China's leadership soberly faces problems ahead

Also in this edition . . . 1: Hang Seng drop 7.01 per cent 2: shares fall, but people keep faith in long-term strength 3: Tung speaks about crisis 4: mainland soberly faces economic juggernauts in the pipeline 5: 5 killed and 5 seriously wounded outside of railway ministry 6: relief efforts continue, housing to be completed by tomorrow 7: UN hires three inspectors from China to stymie criticism 8: more information on dissident who would not leave 9: re-employment efforts highlighted, success noted by ministry 10: Jiang rallies the troops, holds up high Deng Xiaoping thought 11: "web site provides perspective on China's Marxist development 12: (Op-ed) Burma: 'Honoring Those Who Fought For Freedom' by Daw Aung San Suu Kyi 13: (Op-ed) 'Mandela, I see as no one special anymore' by Ms TKG 14: KMT looks to win in upcoming elections after stunning loss in '97 15: labourers from Latin America expected to be given visas 16: government plans for cut-back on work permits for foreign nationals 17: navy demonstrates vigilance against submarines 18: Taiwan operative breaks silence, writes letter to paper 19: sixth victim reported in Hongkong 20: prison officers set to launch campaign for better wages 21: Anson confirms territory will keep the peg 22: cleanup of decades of pollution set at US$230 million 23: News Links on a passing in India and politics in Guangdong

ASIA'S ECONOMICS

Asia's economics: Hang Seng drop 7.01 per cent ( SCMP Internet Edition ) As the South China Morning Post reports, "Hong Kong share prices resumed their dismal form yesterday, falling 7.01 per cent amid rumours that the SAR's fifth-largest developer was in financial difficulties. . . " Asia's economics: shares fall, but people keep faith in long-term strength (source: Associated Press) They've watched shares go down, down, down. But investors keeping a careful eye on Hong Kong's volatile market said they still had faith in stocks as long-term investment. "I'll still invest in the stock market and I know most people will, too, because it is a part of their lives," said Carrie Kwok, a 42-year-old advertising executive. "They don't want to see the market suddenly jump and be left behind." In money-obsessed Hong Kong, the stock market is on many people's minds - especially when share prices veer widely, as they have this week. Hong Kong's key index plummeted 8.7 percent to a three-year low Monday, rebounded 7.4 percent Tuesday, and surged a further 5.8 percent Wednesday. But at 9,226 points, the Hang Seng Index is still far from its heavy heights of last August, when it peaked at a record 16,673 points. While financially stronger than most of its neighbors, Hong Kong has not escaped the financial turmoil and markets since last summer. And the Hong Kong economy has recently lost some of its shine. Asia's economics: Tung speaks about crisis ( No medicine to shield HK from region's ills: Tung ) At 'question time' with the Provisional Legislature Tung Chi-hwa admitted there was little his government could do to intercede to fix the market's woes. He said the government would have to guard against ripples in the market, but basically the problem would have to run its own course. Trying to accentuate the positive, he said the crisis has forced the territory to become more competitive. Overall, the government has huge reserve funds and was financially healthy, the Chief Executive sought to distance Hongkong from Southeast Asian markets where poorly monitored banks had been the cause economic malaise. He reaffirmed the currency's peg to the US dollar. "The frightening experience of neighbouring countries has led us to stand firm in defence of the pegged exchange rate." As the South China Morning Post reports, Mr Tung predicted Hongkong would be the first to recover, although 1998 would be a difficult year with growth hovering near 4 per cent. He said he did not want the crisis to suddenly or drastically affect the property market, reports the paper. "The public has placed their life savings in their property and property prices also have a stabilizing effect on the banking system. The Government will have to keep a close watch on the sector," he said. Asia's economics: mainland soberly faces economic juggernauts in the pipeline ( Chinese Economic Leaders Read a Warning in Asian Crisis ) As uncertainty in Asia's markets continues attention is turning to mainland China where transitions in the mammoth state-owned system require careful guidance to succeed. A successful plan will also require a growing and productive economy, and the country's leadership is watching Southeast Asia very carefully. After a series of private meetings, reports the New York Times, leaders responsible for economic matters, headed by Vice-Premier Zhu Rongji, stepped out from closed doors and onto television screens to instruct the nation's bankers. Mr Zhu said they need to avert the kind of panic which sent currencies tumbling in other territories, reports the paper. He said thy will need to face the challenges posed by regional currency problems. The remarks are quite telling because in many ways China has been insulated from the crisis. The renmnbi is not freely convertible and the country's stock markets are comparatively tiny. In recent weeks news reports in China's media have attempted to put a positive spin on the dilemma facing the country, asserting that its companies no longer need to compete on price alone but also can add value through higher quality products. Whether or not this true, Southeast Asian markets now are better able to compete on price, and such economic realities must be met soberly. Double-digit growth in the mainland has been framed around export-oriented production and intensive coaxing of foreign investment. A downturn in either source of revenue will slow the economy and put pressure on its currency. Another point to consider is this foreign investment itself, as much comes from sources within Asia---Southeast Asia, Taiwan, Hongkong and Japan. . . . Back to the banks . . . Mr Zhu's televised 'warning' to bankers must be seen as a wake-up call to an important, yet precariously positioned, sector of the country's financial system. Banks are over extended with bad debt and remain solvent because of high savings rates. If the bad debt should get worse, or if interest rates should fall further, any equilibrium between inflows and outflows could tip to the wrong way. . . . The paper says Mr Zhu has quietly ordered the closure of local financial trusts which provided capital to inflate bubbles in the property market. Anyone who has been to the Jiangnan region has certainly seen Shanghai's sky line, sky scrapers and all. It is said 40 per cent of these office building remain vacant. Finally . . . The New York Times article closes with Zhu Rongji forecasting 8 per cent growth in 1998 and predicting China. "China is politically stable," he said. "China will become a center for overseas investment in Asia." Links: Times of India ( 16 January 1998 : Soaring food prices spark riots in Indonesian towns ) "Food price increases due to Indonesia's economic crisis have triggered riots in three towns on the southeast Asian country's main island of Java, police said Thursday. . . ." Times of India ( 16 January 1998 : Suharto signs tough IMF deal; vows to end nepotism ) Writing for the Times of India, Harvey Stockwin offers an excellent re-cap of events unfolding in the region today: "President Suharto, in a dramatic and perhaps desperate effort to drag Indonesia back from the brink of economic chaos, and to promote his re-election prospects for a seventh term in office, on Thursday signed a new letter of intent with the International Monetary Fund pledging to demolish some of the special economic privileges accrued by his family. . . ." NYT ( Export, Asia's Key to Survival, Could Crash Into U.S. Barriers ) The Age ( Crisis calls for calm ) "What happens in Indonesia is of crucial importance to Australia and to South East Asia. It is the largest, most resource-rich and influential country in the region. Our interests in Indonesia are far wider than trade and investment. They are long-term and include our security, a range of shared political and strategic interests, education, tourism, civil aviation, and a growing network of people-to-people contacts. . . ."

CHINA

Suicide bomber: 5 killed and 5 seriously wounded outside of railway ministry (source: Agence France-Presse) A suicide bomber killed five other people and seriously wounded five more when he blew himself up outside the railway ministry in Beijing, hospital sources said Wednesday. Police identified the bomber as a peasant called Tian from central Henan province who had probably followed millions of other migrants workers and travelled to Beijing in search of work. "Inquiries are continuing to discover why he did it," said a security spokesman. Three people were killed instantly in Monday's blast and two died later from their injuries, a doctor from the general railways hospital said. "The five injured suffered serious injuries but are out of danger." Suicide bombings are not uncommon in mainland China where they are used as a form of protest against any injustices. On May 13, 1997 a man from Hunan, blew himself up with a home-made bomb in a public park close to the Forbidden City in the heart of the capital. Miraculously, no one else was hurt. There have also been accidental blasts. In May in the southern province of Guangdong, five people were killed when chemicals being carried on a bus exploded. Earthquake: relief efforts continue, housing to be completed by tomorrow ( SCMP Internet Edition ) Efforts to provide emergency housing to 44,000 people left homeless after Sunday's earthquake in Hebei province will be completed by tomorrow, officials said today. Victims and relief works alike have been battling snow and the cold since a snow storm blanketed the region on Wednesday. ( Quake shakes Tibet ) An earthquake of 5.1 on the Richter scale hit a sparsely populated section of Tibet today, reports the South China Morning Post "Its epicentre was in the northern Manyi area, near the border with Xinjiang. There were no casualties or damage reported," the paper writes. It is the second quake to hit the region in two days. Iraq: UN hires three inspectors from China to stymie criticism ( 16 January 1998 : Chinese join UN inspectors team ) Will Iraq's objections to an arms-control inspection team charged with investigating government ministries and other sites be thwarted by the addition of three experts from China? Richard Butler, the chief inspection officer for the UN, said he hired the three in order to deflect criticism from Iraq's government that his team was comprised of members from the US and UK. The Times of India notes that China has played a limited roll in the entire affair since its inception in 1991. See also ( China says dialogue can resolve Iraqi issue ) Qin Yongmin: more information on dissident who would not leave ( Chinese Dissident Refuses to Leave for Exile in U.S. ) Following up yesterday's piece in China Informed we receive additional information on Qin Yongmin, the 45 year-old dissident from Wuhan who has defied an order form Beijing to apply for a passport for immediate exile in the US. The New York Times reports: "Qin (pronounced chin) has been jailed several times since 1970, when he criticized Mao's Cultural Revolution in a diary. As a figure in the Democracy Wall movement of the late 1970s, he spent eight years in prison in the 1980s, then spent two more years in prison from 1993 to 1995 for pro-democracy activities." "Qin was principal author of a Dec. 20 manifesto calling on workers to organize unions outside Communist Party control, pointing to China's recent signing of a U.N. convention guaranteeing the right to free unions." In the interview, Qin said he plans to continue working for free labor unions and legalizing political dissent. As the paper reports, "He said he feels hopeful because President Jiang Zemin has promised more, and even done more, to promote political and economic reforms than any of his predecessors." NYT reporter Erik Eckholm suggests that Qin and other dissidents are testing the boundaries of permissibility, and many have made an issue of the wide-spread layoffs and restructuring in state-owned enterprises. Labour: re-employment efforts highlighted, success noted by ministry ( Projects to retrain workers speed up ) Today's China Daily provides more information on government efforts to handle an expected 10 million unemployed workers over the next three years. Schemes for handling the problem include re-training programs and the establishment of 're-employment funds' in local jurisdictions. The paper cites information from the Ministry of Labour which determined the unemployment rate in cities and towns to have been 3.6 per cent for the first nine months of 1997. "By the end of September, the country had registered 5.3 million unemployed people, down 3.6 per cent from the same period of 1996," the paper writes. The paper states that re-employment efforts in the same period were successful in placing some 2.3 million people back in jobs, and the efforts in Qingdao, Shandong province were singled out. Unfortunately the paper does not break down the numbers, so we do not know how many people are moving to different occupations altogether, or from one state-owned enterprise to another, or into lower paying jobs. Media: Jiang rallies the troops, holds up high Deng Xiaoping thought ( Jiang urges boost in CPC publicity work ) The function of media in mainland China is a fascinating subject; and although the China Daily article does not provide details, we do catch a glimpse of how the work of propaganda offices are used to set a tone and message. President Jiang Zemin visited those who help formulate opinion, praising them for their efforts and giving what sounds like a 'pep rally' of sorts. "Comrades working in the publicity sector should fully understand that yours is a highly glorious and very hard job," he told the audience. "You should specially value and love it because of its glory, and you should always work diligently because of its difficulties." As the China Daily explains, "CPC committees nationwide set up publicity departments to oversee the dissemination of the Party's basic line, aim and policies to Party members and the masses. Party committees also have organization departments and departments for the work of the united front." History: web site provides perspective on China's Marxist development China and Marxism ( China ) "The information provided on these pages is designed to provide an analysis of Chinese history and current affairs from a Marxist perspective. It includes news services, updated several times a week and rare historical reference material for students of both China and of Marxism. . . ." "Chen Duxiu and the Trotskyists" ( From the Moscow Group ) Introductory remarks to this article follow: "Zheng Chaolin's memoirs written in 1945, were republished in China in 1979 as reference material for party historians, and then officially released for privileged categories of officials and researchers in 1986. The article was republished by Gregor Benton in 1996 "Zheng spent a total of thirty four years in gaol seven under the Guomindang and for twenty seven under the CCP. His knowledge of the pre-revolutionary history of the CCP and in particular of the thought and life of its founder Chen Duxiu is second to none. We hope the Internet reproduction of his work will assist students of Chinese Communism better to understand Chen Duxiu, the course of the revolution, and the difference between Marxism and Maoism."

OP-ED

Burma: (14/1/98) ( Burma: 'Honoring Those Who Fought For Freedom' by Daw Aung San Suu Kyi) This month will mark Burma's Golden anniversary of her independence from British colonial rule. In a letter published by the Mainichi Daily in Japan, Daw Aung San Suu Kyi takes stock of this fifty year period, noting the sobering irony that Burma's citizens enjoyed more freedoms under colonialism than they do under the present regime. See also ( BurmaSong Home Page ) ( About Aung San Suu Kyi ) South Africa: (5/1/98) ( China Informed Op-Ed: 'Mandela, I see as no one special anymore' by Ms TKG) Ms TKG writes on Nelson Mandela, whose government switched formal recognition from Taiwan to the PRC. The author laments Mr Mandela's failure to maintain moral and ethical coherence---to maintain one's integrity---in discharging the affairs of government. . . . .

TAIWAN DESK

Election coverage: KMT looks to win in upcoming elections after stunning loss in '97 The campaign for township chief and county/city councilor elections formally kicked off on Wednesday, 10 days before the poling. The elections, scheduled for Jan. 24, are widely seen as portending yet another reshuffle of the country's political forces at the grassroots level following last November's mayoral and county commissioner elections. All major political parties are attaching great importance to the upcoming elections as the results are believed to have a bearing upon their performances in the year-end Legislative Yuan elections and even the next presidential election slated for the year 2000. The ruling Kuomintang is particularly keen to win the upcoming elections after suffering an embarrassing setback in last year's mayoral and county chief elections. The KMT captured only eight of the 23 seats up for grabs in those elections, while the opposition Democratic Progressive Party (DPP) won 12 seats, with the remaining three going to independents. A total of 812 candidates of different political stripes will vie for 309 township chief posts in various townships within 16 counties under the jurisdiction of the Taiwan Provincial Government. Meanwhile 1,891 hopefuls will compete for the 865 seats in county and city councils around the island, with the exception of Taipei and Kaohsiung municipalities. A further 22 contestants will vie for 10 township chief posts up for grabs in the offshore frontline islands of Kinmen and Matsu, and 61 candidates will run for the 25 county council seats available in the two constituencies. Wu Jung-ming, acting chairman of the Taiwan Provincial Election Commissioner, urged all candidates to campaign in a reasonable and courteous manner in order to ensure a clean, violence-free election. Wu also called on all eligible voters not to cast their ballots for candidates who resort to vote-buying, violent means and other illicit campaign gimmicks so as to help upgrade Taiwan's democratic standards and political culture. Foreign laborers: labourers from Latin America expected to be given visas (source: Central News Agency) Some 500 Nicaraguan workers are expected to be allowed into Taiwan this year, as the Executive Yuan has recently approved a proposal made by the Cabinet-level Council of Labor Affairs (CLA) in an effort to increase the quality of foreign labor, the Liberty Times newspaper reported on Wednesday. CLA Chairman Hsu Chieh-huei was quoted by the daily as saying on Tuesday that the government will for the first time consider importing foreign workers from South and Central America to assuage a local labor shortage. The report said Hsu has been negotiating with the Nicaraguan government on the signing of an agreement in this regard and that the first batch of about 500 workers from Nicaragua are expected to be allowed in later this year on a special package basis. According to the report, Hsu stressed that 500 Nicaraguans will be brought in specifically to meet the demands of the island's manufacturing sector. In a bid to improve the quality of foreign labor, the CLA proposed to the Executive Yuan the idea of bringing in foreign laborers from Latin American countries, in addition to the workers which are already currently recruited from the Philippines, Thailand, Indonesia and Malaysia. Hsu also confirmed that the quota on foreign maids will not be increased but will be maintained at the current level of 16,903 annually, the report said. Foreign laborers: government plans for cut-back on work permits for foreign nationals The government is planning an across-the-board cutback in the number of foreign nationals allowed to work in Taiwan, the Council of Labor Affairs said yesterday. Chang Chang-chi, a vice chairman of the Cabinet-level council, told Taiwan Television Enterprise that the cutbacks were ordered because the number of foreign workers had reached a level nearly equal to the amount of local people who are presently unemployed. He said the 250,000 plus foreign workers presently in Taiwan were taking work opportunities away from Taiwan people. To gradually reduce the number of foreign workers, the CLA presented a scale-back plan for Cabinet approval that would require manufacturing and construction firms to trim the number of foreign workers on their payrolls by 5 percent a year. Meanwhile, families who employ Filipina household helpers to watch after their children would automatically not be allowed to continue doing so after their children grow older than age six, he said. The proposal was expected to be approved at a weekly Cabinet meeting, either this Thursday or next Thursday, he said. Military: navy demonstrates vigilance against submarines (source: The China Post) The Navy yesterday demonstrated a high-level of combat readiness, staging a series of drills, including one simulating an anti-submarine action, off the southern coast of Taiwan. A total of 16 naval vessels, including one submarine and four helicopters participated in the drills off the Tsoying military port in Kaohsiung. The Navy held the drills mainly to demonstrate its enhanced combat readiness in the run-up to the Chinese New Year, a routine practice launched every year to enhance security during the holiday period. All the second-generation weapons of the Navy were deployed in the drills. They included the Dutch-made "Sword Dragon" submarine, French-built Lafayette-class frigate, domestically-made Chengkung-class frigate, and Knox-class frigate leased from the US The drills highlighted a simulation of an anti-submarine action, in which the Navy demonstrated coordination of its air/surface weapons in the detection and interception of an enemy submarine. The performance of the aging domestically-built missile boats also won much praise from journalists and other spectators of the drills. The "Seagull" missile boats were built over several decades ago by the Navy to meet potential invasion by mainland Chinese ships. The construction of the boats was inspired by the outstanding performance of Israeli missile boats during Israel's wars with its neighbors. The Seagulls were equipped with two locally-made Hsiung Feng I surface-to-surface missiles. The Navy plans to phase out the aging Seagull in the near future, replacing it with a faster and modern missile boat which will carry the more lethal Hsiung Feng II surface-to-surface missile. Jiandie: Taiwan operative breaks silence, writes letter to paper A Taiwan nuclear scientist who helped the US Central Intelligence Agency gather crucial information about Taipei's alleged efforts to develop nuclear weapon production capability has broken his silence in a letter written to Taiwan's United Daily News. The United Evening News, owned by the same publishing group that prints the United Daily News, said yesterday it had received the letter from Chang Hsien-yi. Chang, who allegedly fled the country in 1988 with help from CIA agents stationed here, was said to still be in hiding at an uncertain location in the United States. Recent reports in the New York Times cited CIA sources as saying Chang had given Washington information on the alleged nuclear weapons program that enabled the US government to pressure Taipei into abandoning the program. But in his letter to the United Daily News, set to be published in this morning's edition, Chang said his actions had resulted in a "win-win" situation for both Taiwan and the United States. He said the negative effects of developing nuclear weapons production capability were amply demonstrated by the fate of outlaw states such as Iraq. The letter, timed to coincide with the 10th anniversary of former President Chiang Ching-kuo's death, was said to have been penned "under Yellowstone Mountain," apparently referring to the popular US tourist destination, Yellowstone Park. Chang, who was a colonel in the ROC Army when he defected, said Taipei had only intended to acquire the capability to produce nuclear weapons, rather than actually make the weapons themselves. He said Taipei's success in developing the ability to produce nuclear weapons had already achieved the mission set out for the team of military scientists organized under the leadership of former presidents Chiang Kai-shek and Ching-kuo, for whom he still had great admiration. He said he still couldn't offer any information about how he was smuggled out of Taiwan 10 years ago, as the matter was still sensitive. But sources told the newspaper that intelligence authorities in Taiwan gave their "quiet consent" to Chang's departure with CIA help. Chang had initially lived in northern Virginia state, not far from the US capital Washington D.C., before a reporter for the newspaper discovered his whereabouts, prompting another move.

HONGKONG

Bird flu: sixth victim reported in Hongkong ( SCMP Internet Edition ) The South China Morning Post reports, "A 25-year-old woman has become the sixth person to die from complications sparked by the bird flu virus. Filipina Teresita Castulo, who slipped into a coma on Christmas Day, lost her fight for life on Wednesday night." Labour: prison officers set to launch campaign for better wages (source: Agence France-Presse) Hong Kong's prison officers are about to launch a campaign for better wages, a spokesman for the disciplinary force said Wednesday. Wong Wei-hong said at a press conference announcing the fight for "equal and fair treatment", that morale among officers had been badly affected by the government's decision to increase wages for rank and file policemen. "We believe that the government will treat this matter in a fair manner," Wong said. "We will take all kinds of action in order to get what we should have," he added. The prison force plans to raise the matter at the provisional legislature and will petition Hong Kong's Chief Executive Tung Chee-hwa following a signature campaign. Currency: Anson confirms territory will keep the peg (source: Agence France-Presse) Hong Kong Chief Secretary Anson Chan has reaffirmed that the territory would maintain the local currency's peg to the US dollar. Chan told business leaders in Los Angeles on Tuesday that the Hong Kong dollar would not be delinked from the US currency, saying "there is no question of Hong Kong's ability to maintain the value of its currency." "De-linking would damage Hong Kong and do further damage to the regional economy," Chan said in the speech, which was released here Wednesday. "It has been the stability of Hong Kong's currency since 1983" that has enabled Hong Kong to develop into "one of the world's leading financial centers," she said. The Hong Kong dollar is pegged at around 7.8 to the US dollar, and the territory's administration has repeatedly vowed to maintain the peg despite the sharp depreciation of several regional currencies. Airport: cleanup of decades of pollution set at US$230 million ( Bill to clear oil-soaked Kai Tak set at $230m ) Kai Tek airport will be transformed into housing estates, but the clean-up bill to remove decades of pollution will cost US$230 million, reports the South China Morning Post. According to the re-development time table, cleanup will be completed in 1999, permitting the completion of housing units for 122,000 people in 2003. An interesting note: "The decontamination process involves extracting highly volatile contaminated materials through the soil by blowing air into it, adding a catalyst to the treated pollutants and burning them on the site," said chief engineer James Chan Shiu-on.

NEWS LINKS

India and Korea Times of India ( 16 January 1998 : Gulzari Lal Nanda passes away ) Times of India ( 16 January 1998 : The last of the Gandhians ) ( Korean Studies Page ) China ( China ) SCMP ( Emergency housing teams on target ) "As Beijing's preferred candidates take over key positions in the Guangdong provincial government, Shenzhen officials reacted to the tightened leash with a hearty welcome . . . with coded reservations."

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