20.09.2006 - Source: Congressional-Executive Commission on China

Commercial rule of law and the impact of the WTO ("Annual Report 2006") [ID 17395]

see report for further details - Chapter VII(d)

"• The Chinese government has made progress in bringing its laws and regulations into compliance with its World Trade Organization (WTO) commitments. Although significant flaws remain, the new body of commercial laws has improved the business climate for foreign companies in China. With new, more transparent rules, the Chinese trade bureaucracy has reduced regulatory and licensing delays in many sectors.

• The Chinese commercial regulatory regime remains, however, largely opaque to both domestic and foreign businesses. When China joined the WTO in December 2001, the government committed to establishing an official journal that would publish drafts of trade-related measures for notice and comment, and to publishing trade-related measures no later than 90 days after they become effective. Although the government has acted to improve transparency, some central government agencies and many local governments are not consistent in publishing trade-related measures in the official journal.

• The Chinese government tolerates intellectual property rights (IPR) infringement rates that are among the highest in the world. The Chinese government has not introduced criminal penalties sufficient to deter IPR infringement, and steps taken by Chinese government agencies to improve the protection of foreign intellectual property have not produced any significant decrease in infringement activity. The Chinese government’s failure to provide effective criminal enforcement of IPR has led foreign companies to turn to civil litigation to obtain monetary damages or injunctive relief. Civil litigants continue to find, however, that most judges lack the necessary training and experience to handle IPR cases, and damage awards are too low to be an effective deterrent.

• Since acceding to the WTO, the Chinese government has used technical, regulatory, and industrial policies, some of which appear to conflict with its WTO commitments, to discriminate against foreign producers and investors and limit their access to the domestic market. U.S. rights holders and industry groups have complained that the government’s censorship regime serves as a barrier to entry and encourages IPR violations. In 2005, the American Chamber of Commerce in China wrote that censorship clearance procedures severely restrict the ability to distribute CD, VCD, and DVD products in China and provide an ‘‘unfair and unnecessary advantage to pirate producers who bring their products to market long before legitimate copies are available for sale.’’"

Document(s): Open document

02.03.2006 - Source: BBC News

Agricultural land is owned communally, each village owns the land around it; people from the countryside hardly socially accepted in cities ("China's rural millions left behind") [#47485],  [ID 17172]

Document(s): Open document

11.2005 - Source: UK Home Office

Country report of November 2005 ("Country Report - October 2005 (revised November 2005)") [#39234],  [ID 3531]

see chapter 3 on Economy

Document(s): Open document

11.10.2005 - Source: Congressional-Executive Commission on China

Commercial rule of law and impact of the WTO ("Annual Report 2005") [#37506],  [ID 3532]

see report for further details - chapter V(f)

"The Chinese government has made progress in bringing its laws and regulations into compliance with its WTO commitments. Though significant flaws remain, the new body of commercial laws has improved the business climate for foreign companies in China. With new, more transparent rules, the Chinese trade bureaucracy has reduced regulatory and licensing delays.
The Chinese government tolerates intellectual property infringement rates that are among the highest in the world. Steps taken by Chinese agencies in the past 12 months to improve the protection of foreign intellectual property have not produced any significant decrease in infringement activity. The Chinese government has not introduced criminal penalties sufficient to deter intellectual property infringement.
The Chinese government has not fully implemented the key WTO principles of national treatment, non-discrimination, and transparency in such areas as distribution and agriculture. To address these problems, the Chinese government must continue economic reforms, establish a more transparent and consistent regulatory and licensing system, implement and enforce distribution rights for foreign companies, and strengthen enforcement of intellectual property laws."

Document(s): Open document

10.2003 - Source: UK Home Office

China Coutry Report October 2003 - Economy ("Country Report - October 2003") [#49232],  [ID 3533]

"3. ECONOMY

General Overview

3.1. Since China's entry into the World Trade Organisation (WTO) in September 2001, the pace of economic restructuring that began in earnest a decade ago has quickened. The promise of new industrial development is starting to emerge, but mainly in the eastern coastal provinces, particularly around Shanghai. The old State Owned Enterprises (SOE's) are facing further problems as the State withdraws support and are increasingly seen to be unprofitable and in terminal decline. The disparity of decline and growth has lead many commentators to talk of "Two Chinas". The agricultural sector is also vulnerable as import tariffs are abandoned as part of WTO trade agreements.

Chinese Currency

3.2. The terms Yuan and Renmibi (RMB) for the Chinese currency are interchangeable and are of equal worth. The term “Kuai” is also used. Renmibi is the "official" currency that is pegged on foreign exchange rates; yuan means "cash in hand; notes" denoting money in circulation. The exchange rate (at time of publication) is about 14 yuan / RMB to the pound sterling. Concern is rising in the US that value of the yuan may be artificially low and the Chinese government is coming under pressure to consider devaluation.

Economic Restructuring

3.3. The 15th National Congress (12 -18 September 1997) authorised the sale and 'downsizing' of China's 300,000 State Owned Enterprises (SOE's). The consequent loss of jobs, plus the iron rice bowl welfare commitments linked to state sector employment have led to demonstrations, though these are generally localised in nature.

3.4. Failing SOE's have been accused of using underhand tactics to mask unemployment, such as reduced or minimal wages and forced early retirement.

Laid off State Workers

3.5. Laid off workers or Xiagang (translated literally as “off post”) are not always registered as unemployed as officially they remain contracted to their former SOE's and receive a livelihood allowance for up to three years, or until they find a new job. During this intervening period the SOE is supposed to pay their unemployment insurance but according to one source this rarely happens, leading to resentment and anger.

Re-employment Initiatives

3.6. Economic reforms are raising living standards for many, strengthening entrepreneurs, diminishing central control over the economy and creating new economic opportunities. With discontent running at about 300 strikes a day (figures from March 2002) the government is acutely aware that it must do more to tackle unemployment and corruption amongst officials.
Crime and Corruption

3.7. In terms of Chinese Central Government Policy, official corruption and general crime are approached in similar ways, basically with an overarching policy objective, constantly stated and reaffirmed, turned into periodic campaigns (e.g. 'strike hard' and 'strike harder') and police actions.



3.8. The Chinese authorities see public maladministration and corruption as undermining the Party's legitimacy. Three types of remedy are being deployed against it:

1. Managerial professionalism is being developed in public administration.

2. Legal restraints are reigning in 'street-level bureaucrats' such as police officers, increasing their accountability.

3. Politically there is increased governmental openness and responsiveness.

The most high profile case to date is that of Chen Keiji, the former Vice Chairman of the National People's Congress (NPC), who was executed in 2000.

Current Situation

3.9. On the 25 July 2002 the Chinese government published a programme outlining its approach to sustainable development Fears that power shortages and “excessive” water consumption may damage economic growth have lead to restrictions being imposed in some large cities during July and August 2003."

Document(s): Open document

01.08.2003 - Source:

World Fact Book 2003: Economy ("CIA World Fact Book 2003: China") [ID 3534]

"In late 1978 the Chinese leadership began moving the economy from a sluggish, Soviet-style centrally planned economy to a more market-oriented system. Whereas the system operates within a political framework of strict Communist control, the economic influence of non-state organizations and individual citizens has been steadily increasing. The authorities switched to a system of household and village responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprises in services and light manufacturing, and opened the economy to increased foreign trade and investment. The result has been a quadrupling of GDP since 1978. In 2002, with its 1.3 billion people but a GDP of just $4,400 per capita, China stood as the second-largest economy in the world after the US (measured on a purchasing power parity basis). Agriculture and industry have posted major gains, especially in coastal areas near Hong Kong and opposite Taiwan, where foreign investment has helped spur output of both domestic and export goods. The leadership, however, often has experienced - as a result of its hybrid system - the worst results of socialism (bureaucracy and lassitude) and of capitalism (windfall gains and growing income disparities). China thus has periodically backtracked, retightening central controls at intervals. The government has struggled to (a) collect revenues due from provinces, businesses, and individuals; (b) reduce corruption and other economic crimes; and (c) keep afloat the large state-owned enterprises, many of which had been shielded from competition by subsidies and had been losing the ability to pay full wages and pensions. From 80 to 120 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time low-paying jobs. Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China's population control program, which is essential to maintaining long-term growth in living standards. Another long-term threat to growth is the deterioration in the environment, notably air pollution, soil erosion, and the steady fall of the water table especially in the north. China continues to lose arable land because of erosion and economic development. Beijing says it will intensify efforts to stimulate growth through spending on infrastructure - such as water control and power grids - and poverty relief and through rural tax reform aimed at eliminating arbitrary local levies on farmers. Accession to the World Trade Organization helps strengthen China's ability to maintain strong growth rates but at the same time puts additional pressure on the hybrid system of strong political controls and growing market influences. Beijing has claimed 7%-8% annual growth in recent years, and while many observers believe the official figures over the past two decades overstated China's real economic growth by 2 to 3 percentage points, China's official national growth rates of the past two years are fairly close to actual GDP growth.

GDP: purchasing power parity - $5.7 trillion (2002 est.)
GDP - real growth rate: 8% (official data) (2002 est.)
GDP - per capita: purchasing power parity - $4,400 (2002 est.)"

Document(s): CIA World Fact Book 2003: China

09.04.2003 - Source: Freedom House

Freedom House: Overview - Economy ("The world`s most repressive regimes 2003") [#12683],  [ID 3535]

"CCP leaders appear now to have reached a consensus that continued economic reforms are needed in order to boost living standards and stave off broad calls for political reform. They fear, however, that freeing up the economy too fast— thereby giving people ever more freedom in their day-to-day lives—will create social unrest.

While the student activism of the late 1980s has largely died down, factory workers and farmers have in recent years held thousands of street protests over hardships associated with economic restructuring. Tens of thousands of workers demonstrated over mass layoffs, poor severance pay, low or unpaid wages or pensions, and other labor grievances in spring 2002 in the northeastern cities of Liaoyang and Daqing and in the eastern mining town of Fushun. These hardships are expected to increase as the government slashes tariffs and takes other measures to open up China’s economy to trade and foreign investment in line with its commitments as a World Trade Organization (WTO) member.

Already, the privatization of thousands of small- and medium-sized state-owned enterprises has thrown tens of millions out of work in a country that lacks a viable system of unemployment benefits, health insurance, and pensions. The government also faces the difficult choice of either cleaning up China’s ailing state banks, which would involve yet more painful job cuts at state firms, or allowing the billions of dollars in bad loans held by these banks to continue choking off lending to private firms while risking a financial crisis. Analysts suggest that, at least in the near term, China’s leadership will continue stoking the economy with massive public spending rather than take tough measures to clean up state banks or reform money-losing large state firms.

Meanwhile, in the countryside, home to 70 percent of the population— or roughly 900 million Chinese—thousands of riots and demonstrations by farmers in recent years have protested against high and often arbitrary local government fees and taxes. Rural China also has too many workers chasing too few farm and factory jobs. This has contributed to a “floating population” of some 80 million to 130 million people, by official count, who have left their rural homes in search of work in cities, where the migrants increasingly compete with locals for jobs. China’s WTO membership could make matters worse for many peasants if cheaper agricultural imports chip away at their incomes. Already, China has wide income gaps between the dynamic, export-oriented coastal and southern areas and the ailing rural and rust-belt interior.

[...]

The economic reforms launched in the late 1970s have freed millions of Chinese from party control of their day-to-day lives. Many now work for private firms, which account for around 30 percent of China’s economic output. In urban areas, however, many state workers still must belong to company-based, government-linked work units, which control many aspects of everyday life including housing, health care, permission to have children, and approval to apply for passports. All government offices, public schools, and state firms still have party committees that handle budgets, political education, and personnel decisions. The economic reforms have also lifted hundreds of millions of Chinese out of absolute poverty, although some 200 million still live on less than $1 per day, according to the World Bank."

Document(s): Open document

05.12.2001 - Source: Neue Zürcher Zeitung

Chinas KP wendet sich vom Proletariat ab ("Chinas KP wendet sich vom Proletariat ab") [#5044],  [ID 3538]

Document(s): Open document