Analyses - 42. page

On May 20, 2006, Mr. David Kilgour conducted an interview in the United States with the ex-wife of a Chinese surgeon who removed corneas of Falun Gong prisoners. The following transcript was abridged and edited to protect those who would otherwise be in danger due to publication of this interview.

W – Ex-wife of a Chinese surgeon who removed corneas of Falun Gong practitioners.

A – Another person who was also present at the interview and raised two questions.

Kilgour: … The closest person who saw this happen is "W." … In 2001, when did the procurement of food supplies for [Sujiatun Hospital] go up?

W: About July, in the summer.

Kilgour: July 2001. You were in the accounting department?

W: Statistics and Logistics Department.

Kilgour: Statistics and Logistics Department. What happened? The procurement of food went up first and then the surgical equipment?

W: In July 2001, there were many people working in the Statistics and Logistics Department. Some of them from procurement brought the receipts to me for signature after they made the purchase. On the receipts I noted sharp increases in the food supplies. Also, the people in charge of the logistics were delivering meals to the facilities where Falun Gong practitioners were detained. Other medical staff came to our department to report the purchase of the medical equipment. From the receipts, the medical equipment supplies also sharply increased.

Kilgour: By the way, the facilities to detain Falun Gong practitioners, was it the underground facilities?

W: In the backyard of the hospital, there were some one-story houses typically built for construction workers. After several months, the consumption of food and other supplies gradually decreased. At that time people guessed that maybe the detainees were sent to an underground facility.

Kilgour: When did the supply decrease? September? October?{mospagebreak}

W: After about 4 or 5 months.

Kilgour: End of 2001?

W: Yes.

Kilgour: How much of an increase did you estimate was from the food [receipts you saw]? How many people you estimated were there?

W: The person in charge of getting the food and in charge of sending food to Falun Gong practitioners detained told me that there were about 5,000 to 6,000 practitioners. At the time, a lot of public security bureaus and hospitals in many areas were detaining many Falun Gong practitioners. A lot of people working at the hospital, including me, were not Falun Gong practitioners. So we didn’t pay attention. If it were not for what happened in 2003, when I found my ex-husband was directly involved in it, I probably wouldn’t be interested in this at all. A lot of the staffers working in our department are family members of the officials in the government healthcare system. For some matters, we knew it in our hearts but none of us would discuss these things.

Kilgour: When they decreased the procurement, where did you think the practitioners went?

W: We thought they were released.

Kilgour: At the end of 2001, you thought they were released?

W: Yes.

Kilgour: All 5,000 had been released?

W: No, there were still Falun Gong practitioners detained in the hospital, but the number was gradually decreasing. Later, in 2003, I learned that Falun Gong practitioners had been transferred to the underground complex and other hospitals, because our hospital couldn’t hold so many people.

Kilgour: They left the houses or cabins in the backyard to go to underground?

W: Yes, I later got to know this in 2002.{mospagebreak}

Kilgour: Did you say that you were not the person to send food to them when practitioners were detained in the houses or cabins in the backyard?

W: No, I was not.

Kilgour: Did you know who supplied their meals after they left your jurisdiction?

W: I didn’t know.

Kilgour: I heard a lot of these people were killed for their organs. 2001 and 2002. Was it the correct understanding?

W: During the years of 2001-2002, I didn’t know anything about organ harvesting. I only knew the detention of these people.

Kilgour: So you didn’t discover this until you husband told you in 2003.

W: Right.

Kilgour: Did he tell you that in 2001-2002 he had already started doing these operations?

W: Yes, he started in 2002.

Kilgour: Your former husband began in 2002?

W: Yes.

Kilgour: Did you roughly know if there were [organ removal] operations since 2001?

W: The operations started in 2001. Some were done in our hospital, and some were done at other hospitals in the region. I found out in 2003.

At the beginning he also did the operations, but he did not know they were Falun Gong practitioners. He was a neurosurgeon. He removed corneas. Starting from 2002 he got to know those he operated on were Falun Gong practitioners. Because our hospital was not an organ transplant hospital-it was only in charge of removal-how these organs were transplanted, he didn’t know.{mospagebreak}

Kilgour: Your ex-husband started to take organs from Falun Gong practitioners starting from when?

W: At the end of 2001, he started to operate, but he didn’t know these live bodies were Falun Gong practitioners. He got to know that in 2002.

Kilgour: What kind of organs did he take out?

W: Corneas.

Kilgour: Just corneas?

W: Yes.

Kilgour: Were these people alive or dead?

W: Usually these Falun Gong practitioners were injected with a shot to cause heart failure. During the process these people would be pushed into operation rooms to have their organs removed. On the surface the heart stopped beating, but the brain was still functioning, because of that shot.

Kilgour: What was the injection called?

W: I don’t know the name of it but it caused heart failure. I was not a nurse or a doctor. I don’t know the names of the injections.

Kilgour: Causing heart failure, most, or all, or some cases?

W: For most people.

Kilgour: So he would take corneas of these people, then what happened to these people?

W: These people were pushed to other operation rooms for removals of heart, liver, kidneys, etc. During one operation when he collaborated with other doctors, he learned they were Falun Gong practitioners, that their organs were removed while alive, and that it was not just cornea removal-they were removing many organs.

Kilgour: They did it in different rooms, didn’t they?{mospagebreak}

W: In the later period of time, when these doctors cooperated together, they started doing the operations together. At the beginning, fearing information could leak out, different organs were removed by different doctors in different rooms. Later on, when they got money, they were no longer afraid anymore. They started to remove the organs together.

For other practitioners who were operated on in other hospitals, my ex-husband didn’t know what happened to them afterward. For the practitioners in our hospital, after their kidneys, liver, etc., and skin were removed, there were only bones and flesh, etc., left. The bodies were thrown into the boiler room at the hospital.

In the beginning, I did not fully believe this had happened. For some doctors who had operation accidents, they may form some illusions. So I checked with other doctors and other officials from the government healthcare system.

Kilgour: In 2003 or 2002?

W: 2003.

Kilgour: Your husband only did corneas?

W: Yes.

Kilgour: How many cornea operations did your ex-husband perform?

W: He said about 2,000.

Kilgour: Corneas of 2,000 people, or 2,000 corneas?

W: Corneas of around 2,000 people.

Kilgour: This is from 2001 to 2003?

W: From the end of 2001 to October 2003.

Kilgour: That was when he left?

W: It was the time that I got to know this and he stopped doing it.{mospagebreak}

Kilgour: Where did these corneas go?

W: They were usually collected by other hospitals. There was an existing system handling such business of the removal and sales of the organs to other hospitals or other areas.

Kilgour: Nearby or far away?

W: I don’t know.

Kilgour: All the hearts, livers, kidneys, and corneas go off to other hospitals?

W: Yes.

Kilgour: Did you know what prices they sold them for?

W: I don’t know at the time. However, in the year 2002, a neighbor had a liver transplant. It cost 200,000 yuan [US$25,000]. The hospital charged a little bit less for Chinese than foreigners.

Kilgour: Which year, 2001 or 2002?

W: 2002.

Kilgour: What was your husband told? How did they justify? These were perfectly healthy people…

W: In the beginning, he wasn’t told anything. He was asked to help out in other hospitals. However, every time when he did such a favor, or provided this kind of help, he got lots of money, and cash awards-several dozen times his normal salary.

Kilgour: What was the total amount of money he got out of the 2,000 cornea removals?

W: Hundreds of thousands of U.S. dollars.

Kilgour: Were they paid in U.S. dollars?

W: Paid in Chinese yuan. Equivalent to hundreds of thousands of U.S. dollars.{mospagebreak}

Kilgour: How many doctors were working on these organ removals in the hospital, and in which area? Are we talking about 100 doctors, or dozens, or 10?

W: I don’t know how many people were doing it specifically. But I know that about four or five doctors who were acquaintances of us at our hospital were doing it. And in other hospitals, doctors of general practice were also doing this.

Kilgour: Are there any records in the statistics department regarding how many people were operated upon?

W: There was no proper procedure or paperwork for this kind of operation. So there was no way to count the number of operations in the normal way.

Kilgour: After practitioners transferred underground at the end of 2001, did you know where their food supplies were from?

W: Food still came from our department; just the amount gradually decreased.

At the end of 2001 we thought they were released. In 2003, I learned that they were not released but were transferred underground or to other hospitals.

Kilgour: Was the underground facility run by the military army or by the hospital? You said food was still from the hospital.

W: We weren’t responsible for the procurement of the food for the people detained and kept underground. That is why there was so much difference in the procurement of food when people were transferred to the underground complex. But the food of some of the detainees was provided by the hospital, and for others it was not. The decrease in food was not proportional to the decrease in the number of detainees.

Kilgour: What did your husband tell you about the underground facility? 5,000 people killed, or more than 5,000?

W: He didn’t know how many people were detained underground. He only heard from some others that people were detained underground. If three operations were done every day, after several years of operation, for the 5,000-6,000 people, not many people would be left. This whole scheme and the trading of organs were organized by the government healthcare system. The doctors’ responsibility was simply to do what they were told to do.{mospagebreak}

Kilgour: He didn’t go down to the underground facility himself?

W: He didn’t.

Kilgour: Rudimentary operation in the underground facility?

W: He had never been there.

Kilgour: All of those people, were they dead when they were operated on? Or their hearts stopped? Did he know that they were killed afterwards? They weren’t yet dead.

W: At the beginning, he didn’t know these were Falun Gong practitioners. As time went by, he knew they were Falun Gong practitioners. When they did more of these removals of organs and became bold, these doctors started to do the removals together; this doctor extracted the cornea, another doctor removed the kidney, the third doctor took out the liver. At that time, this patient, or this Falun Gong practitioner, he knew what was the next step to treat the body. (Translator added the translation of the two missed sentences: Yes, the heart stopped beating, but they were still living.) If the victim’s skin was not peeled off and only internal organs were removed, the openings of the bodies would be sealed and an agent would sign the paperwork. The bodies would be sent to the crematorium near the Sujiatun area.

Kilgour: Only if the skin was removed, they would be sent to the boiler room?

W: Yes.

Kilgour: Usually what was the "supposed" cause of death given?

W: Usually no specific reason when the bodies were sent to the crematorium. Usually the reasons were "The heart stopped beating," "heart failure." When these people were rounded up and detained, nobody knew their names or where they were from. So when they were sent to the crematorium, nobody could claim their bodies.

Kilgour: Who administered the drug to cause the heart to stop beating?

W: Nurse.

Kilgour: Nurse working for the hospital? {mospagebreak}

W: Nurses brought over by these doctors. Doctors, including my ex-husband, came to this hospital in 1999 or 2000. He brought his nurse over. When organ harvesting first started, nurses were assigned to the doctors. Wherever the doctors go, their nurses go with them as far as the organ removal operations were concerned. These nurses were not like personal secretaries.

In the year 2003, government health authorities sent many doctors involved in organ removal operations to an area sealed by the government because of SARS. These doctors believed they were sent there to let them live or die over there. I mean the government already wanted to put to death secretively the first group involved in organ removal. So they sent them to a SARS-affected area in Beijing.

From that point on my husband realized that there was danger in doing this and that at any time, he could be killed and done away with as an accomplice. Later, when he wanted to quit, someone did try to kill him.

Kilgour: In the hospital?

W: Outside the hospital.

Kilgour: Can you give us more details?

W: At the end of 2003, after I learned about the issue, he came back from Beijing. He could no longer live a normal life. After I knew about it, he listened to my advice and decided to quit doing it. He submitted his resignation letter. It was around the new year of 2004.

In February 2004, after his resignation was granted, the last month of working in the hospital, he was tying up loose ends at his work. During that time we received phone threats at home. Someone said to him, "You watch out for your life."

One day we got off work in the afternoon. There were two people walking toward us trying to assassinate him. If you were a woman, I would show you my scar, because I pushed him aside and took the stab. Men do not have very good sixth senses, so he kept walking. When I realized the two people were going to pull the knife to stab him, I pushed him aside and took the stab for him. Many people came over and I was sent to the hospital. These two men ran away.

Kilgour: Which side? (Location of the scar)

W: Right side.{mospagebreak}

Kilgour: Do you know who these two people were?

W: I didn’t know in the beginning. Later I knew.

Kilgour: Who were they?

W: I learned that they were thugs hired by the government health authorities.

Kilgour: How did you find that out about these two?

W: Because my family was part of the government healthcare system. My mother used to be a doctor.

After these things happened, our friends suggested we get a divorce so it would separate our children and me from my husband. After all, our children and I didn’t participate in any of these things. So we divorced at the end of 2003, very close to the new year of 2004.

Kilgour: How many did you think were still alive?

W: Initially I estimated there were about 2,000 people left at the time I left China in 2004. But I cannot give a figure anymore, because China is still arresting Falun Gong practitioners and there have been people coming in and going out. So I cannot give a figure now anymore.

Kilgour: How did you come to this number 2,000 in 2004?

W: According to how many my ex-husband did and how many other doctors did. And how many sent to other hospitals. Good doctors are well connected within the healthcare system. Many of them used to be classmates in medical schools. The number was estimated by the few doctors involved. When we were together in private, they discussed how many people in total. At that time, these doctors did not want to continue. They wanted to go to other countries or transfer to other fields. So the total number of deaths was calculated and derived by these doctors involved.

Kilgour: What is their estimate of how many people were killed?

W: They estimated 3,000-4,000 people.

Kilgour: This is the estimate by all of the doctors?{mospagebreak}

W: No. By three doctors we were familiar with.

Kilgour: Do you have anything else you want to say?

W: Chinese or non-Chinese, they think it is impossible Sujiatun detained so many Falun Gong practitioners. They focused on just this Sujiatun hospital. Because most people do not know there are underground facilities. I want to say, even if things were over for Sujiatun, in other hospitals this issue continues. Because I worked in Sujiatun, I know about Sujiatun. Other hospitals and detention centers¡­ inspecting and putting control on these facilities will help reduce the deaths.

For Chinese people, one person comes out, there are still family members in China. They still dare not come out to speak the truth. They are afraid it could put their family members in danger. It doesn’t mean that they don’t know about it.

A: Does your mother know about what you are doing?

W: Yes.

A: Does she still work in the government healthcare system?

W: No. She retired a long time ago. She is almost 70 years old.

Reprint with permission from http://investigation.go.saveinter.net/report0701/report20070131.htm#_Toc158023111

On July 6, 2006, in Ottawa, Canada, international human rights lawyer David Matas and former Member of Parliament David Kilgour released an independent report following their two-month inquiry into allegations that vital organs are being harvested from live Falun Gong practitioners across China.

Mr. Matas has been the attorney for many cases heard before the Canadian Supreme Court, and a member of the Canadian delegation to the United Nations General Assembly. He has played a leading role in key human rights organizations, including Amnesty International, the Canadian Council for Refugees, and the International Commission of Jurists, and has received many outstanding achievement awards. The list of books and manuscripts he has written is no less impressive. Mr. Kilgour has served in the Canadian House of Commons, and was Secretary of State for Latin America and Africa from 1997 to 2002, and for Asia-Pacific from 2002 to 2003.

The report concludes:

"­the government of China and its agencies in numerous parts of the country, in particular hospitals but also detention centers and ‘people’s courts,’ since 1999, have put to death a large but unknown number of Falun Gong prisoners of conscience. Their vital organs, including hearts, kidneys, livers and corneas, were virtually simultaneously seized for sale at high prices, sometimes to foreigners, who normally face long waits for voluntary donations of such organs in their home countries."

During the two-month investigation, witnesses were interviewed in Canada, Australia, France and the United States.

Among the most significant incriminating evidence, however, were certified translations of recorded conversations in Mandarin with doctors and other officials at hospitals and detention centers located in various parts of China.

Another piece of significant evidence is the transcript of an interview during which the former wife of a Chinese surgeon recounted the admission of her husband who operated on and removed corneas from over 2,000 Falun Gong practitioners. One doctor gave the Falun Gong practitioners an injection that caused heart failure, then their corneas were removed, and then they were passed on to different doctors who removed other organs.

We have reprinted these transcripts in the following pages with permission of the authors of the report.

Other critical evidence included in the report:{mospagebreak}

• Translations of recent and continuing postings on numbers of websites of transplantation centers within China, which also played an important role in convincing the inquiry that the only fair conclusion was that the organ harvesting is widespread and ongoing.

• Testimony from Ms. Yuzhi Wang, now living in the Vancouver area, who stated she spent most of 2000 and 2001 in labor camps because of being a Falun Gong practitioner. She suffered internal damage from beatings, and is convinced that these injuries were the only reason she did not end up an unwilling "donor" and was able to leave China.

• Testimony from Xiaohua Wang, now living in Montreal, who reported that in 2002, because he practiced Falun Gong, he spent two years in a forced-labor camp working 16 hours a day with chemicals. During his incarceration, he and every other Falun Gong practitioner received a comprehensive forced medical exam, including electrocardiograms, whole-body X-rays, liver and kidney checks, and blood tests—none of which were administered to non-practitioners in the camp. Later, he was able to emigrate to Canada.

• Testimony from Ms. Na Gan, now living in Toronto, who stated that the police beat her when she unfurled a Falun Gong "Truthfulness-Compassion-Tolerance" banner in Tiananmen Square. As a result, her Chinese Communist Party membership and salary as a customs employee at the Beijing airport were revoked and she was sent to the local women’s labor camp. In mid-2001, she reported that only the Falun Gong members of the group had their blood, urine, and eyes examined at a nearby hospital. She too managed to leave China for Canada.

The following are some key recommendations made in the report:

1. As organ harvesting is a crime against humanity, the authorities in China should conduct a criminal investigation for possible prosecution.

2. Organizations—intergovernmental, governmental and voluntary—should take the allegations seriously and make their own determinations as to whether or not they are true.

3. As the United Nations Protocol to prevent trafficking in persons bans the removal of organs, the U.N. should investigate whether China is in violation.

4. Foreign governments should ban the entry of Chinese doctors seeking training in organ transplantation. Any doctor there, known to be engaged in such work, should be permanently barred from visiting foreign countries.{mospagebreak}

5. All countries should tighten their laws against organ trafficking and doctors should, for example, be required to report to their respective authorities any evidence that a patient has received an organ from a trafficked person abroad.

6. Governments should deny or revoke the passports of nationals who are traveling to China for organ transplants.

7. No governments should participate in any China-sponsored meeting or research on organ transplantation. No private company should provide goods or services to any Chinese transplant program.

Right after the release of the report on July 6, 2006, the Chinese communist government—through the website of the Chinese Embassy in Canada—issued a statement denying the findings of the report.

A full copy of the report can be obtained at: http://investigation.redirectme.net/

Xiao Tian is a correspondent for Chinascope.

Mr. Zheng Enchong was released on June 5, 2006, after having served three years in prison. Before his arrest, Mr. Zheng, a lawyer in Shanghai, had defended the economic and social rights of people who were displaced by Shanghai redevelopment projects. While working on those civil cases, he uncovered huge corruption scandals involving the Shanghai authorities and the most senior Chinese Communist Party (CCP) leaders in Shanghai. He was arrested and put into prison in an apparent effort by regime authorities to silence him.

"I am innocent," he told the Associated Press in a telephone interview the day after his release. "I am also going to report the corruption, irregularities in land-use approval, and violations of human rights in Shanghai redevelopment projects to the central government."

Mr. Zheng’s arrest and his recent release highlight not only the communist government’s corruption but also the struggle for power among the Party factions.

Three years ago, Attorney Zheng assisted displaced families in more than 500 cases, all of them relating to Shanghai’s urban redevelopment projects. On May 28, 2003, Mr. Zheng represented six displaced families in a lawsuit against the alleged corrupt collusion between Shanghai regime government officials and a wealthy property developer, Mr. Zhou Zhengyi. The case alleged that Mr. Zhou was able to obtain a 70-year land lease from the Jingan District Property Development Bureau only because the district government had given instructions for the Bureau to agree to the deal. The Shanghai authorities improperly allowed Zhou’s company to redevelop the 43,429-square-meter (52,000 square yd.) property without paying a land lease fee valued at about 300 million yuan (US$36.3 million). Under the conditions of that illegal land lease, Mr. Zhou was able to force 2,159 residents and original property owners on West Beijing Road to relocate to a fringe district.

After filing the civil lawsuit, Mr. Zheng wrote to CCP leader Hu Jintao and Premier Wen Jiabao, bringing the corruption case to light. In his letter, Mr. Zheng revealed the involvement of the so-called "Shanghai Cluster," a group of officials with a close relationship to the previous CCP leader, Jiang Zemin. He particularly criticized former Shanghai Mayor Huang Ju, who is now a politburo standing member.

At that time, property tycoon Zhou Zhengyi was also being sought after in the Hong Kong courts for his business dealings involving massive illegal loans from the Bank of China. The litigation dealing with Zhou’s illegal loans was reportedly the biggest case of financial fraud since the founding of the P.R.C. Facing mounting public pressure, the Shanghai authorities sentenced Zhou to three years in prison for falsely reporting his company’s holdings as well as manipulating stock prices. As for the civil case filed by the displaced families against Zhou, it hit a political wall and cost them their representing attorney.{mospagebreak}

Shanghai authorities arrested the plaintiffs’ lawyer, Zheng Enchong, and charged him with "illegally providing state secrets to entities outside of China." On October 28, 2003, the authorities sentenced him to three years in prison and deprived him of his political rights for one year.

By putting both Zhou (the defendant) and Zheng (the plaintiffs’ lawyer) in prison, the Shanghai authorities put a lid on the case and minimized the political damage to the Shanghai Cluster. Three years later, both Zhou and Zheng have been released after serving their terms. They may add new fuel to the Shanghai corruption scandal. Seeing that Huang Ju, the leading figure in the Shanghai Cluster, is also one of the nine standing members in the most powerful CCP politburo, repercussions from the Shanghai corruption scandal could be far reaching in China.

Mr. Zheng is well aware of who directed his arrest. "My case is related to Huang Ju," he told reporters recently. Mr. Zheng is also confident in his pursuit of the criminals: "I have direct evidence," he said. In his 500-plus civil cases since 1994, Mr. Zheng has documented more than 200 non-natural deaths and more than 2,000 physical injuries that occurred to Shanghai residents who fell victim to forced evictions.

The corruption case against Zhou Zhengyi involved over 300 million yuan (US$36.3 million) in an unpaid land lease, but that is only a small portion of all the land deals that the Shanghai government has engaged in. Their overall stake in the Shanghai corruption scandal is likely to be much larger.

For his legal work in representing the displaced Shanghai families, Mr. Zheng was seen as a threat to the Shanghai Cluster. He lost his freedom for three years and is currently under the watchful eye of State Security. Yet Mr. Zheng is determined to stand up for his clients and for his own rights and dignity.

After his release from prison, Mr. Zheng wrote letters to the United Nations, to the German government that had granted him a Human Rights Award, and to Chinese leader Hu Jiantao to expose the crimes of the Shanghai Cluster members. While the Shanghai Police have warned him several times not to accept interviews from foreign media, he publicly states, "I am organizing my documents, and I will continue to lodge accusations against them until I see justice is being done."

To achieve justice for all the displaced Shanghai families, Mr. Zheng declares, "It is time to bring to light the Shanghai Cluster."

On June 22, 2006, authorities in the southwest city of Chongqing arrested a 23-year-old student for marking the 17th anniversary of the 1989 Tiananmen Square Massacre by publicly flying the flags of the Republic of China (ROC), which was the pre-communist Chinese state, and the Chinese Nationalist Party (KMT), which ruled China before losing the mainland to the communists in a bloody civil war and retreating to the island of Taiwan in 1949. The student, named Zhang Qi, was detained for 20 days for "illegally organizing activities."

It is hardly surprising for China’s communist authorities to keep an unruly student behind bars for a few weeks. But unexpectedly, this incident caused an uproar in mainland’s cyberspace and attracted a lot of media attention in Hong Kong, Taiwan, and overseas Chinese communities.

Symbols from the Past

Though the detention itself was little more than a routine exercise of a repressive regime, the action that led to the detention was by no means ordinary. The symbolism and audacity of this rare act of flag-waving on the regime’s most sensitive date caught people’s attention and provoked imagination.

The detained student, Zhang Qi, is a member of an increasingly influential Internet-based community—China Pan-Blue Alliance—which brings together hundreds of young people who call themselves "spiritual members of the KMT" and aspire to restore the Republic of China to the mainland.

Before Chongqing, other members of the alliance had publicly shown the ROC and KMT flags in Wuhan. Digital pictures of both events were widely circulated on the Internet both in China and overseas.

Similar stunts had been performed before. Last year, when then Taiwan KMT Chairman Lien Chan visited Beijing University to give a speech, one person in the welcoming crowd unfurled a ROC flag and started waving it. He was quickly snatched and whisked away from the scene. It was unclear if he belonged to the same group.

Waving the flags from a past government was not just an act of open defiance against the one-party rule of the Chinese Communist Party (CCP) but also a bold challenge to the legitimacy of the People’s Republic of China (PRC), which the communists founded after overthrowing the ROC.

As discontent with the communist regime grows, the political and national symbols from a past era seem to have gotten a new lease on life. For many people, these old symbols can evoke nostalgia and intensify their yearnings for change.{mospagebreak}

Such symbolism could gain momentum and become a powerful influence, as the history of Eastern Europe testifies.

The Return of the Republic

Since the Republic of China government retreated to Taiwan in 1949, the PRC has ruled over the Chinese mainland without any serious challenge to its power. In the communists’ eyes, the ROC is just a historical term.

Indeed, even on the small island of Taiwan, the last patch of land under its name, the ROC is not faring well. Since the KMT lost the 2000 election to the pro-independence Democratic Progressive Party (DPP), the new administration has seen the national title, which includes the word "China," as an eyesore that should eventually be ditched to make way for an independent "Republic of Taiwan."

For many, the ROC is an anachronism left over from a confusing historical period, and has become a laughable misfit for what it actually represents. Surely, it can no longer pose any threat to Beijing, which controls vast territories with an iron hand.

But destiny works in mysterious ways. Now some unsettling signs have emerged that the ROC is coming back to haunt the CCP, not from across the Taiwan Strait, but from within people’s minds.

Ironically, it was the communist government itself that started it.

True History of the War Against Japan

In the CCP’s orthodox history textbooks, though the KMT’s founder Sun Yat-sen was credited with overthrowing the imperial Qing Dynasty, the KMT was demonized in almost every possible way, and its most important leader—Chiang Kai-shek—depicted as a stereotypical bad guy.

But in the mid-1980s, buoyed by the initial success of the economic reforms and improved ties with the West, a confident CCP decided to tackle its long-term rival-the KMT in Taiwan—with a new strategy. In a bid to lure the KMT administration into a political settlement toward reunification, the CCP, on the 40th anniversary of the end of World War II, recognized 85 KMT generals who were killed during the war as "martyrs," and admitted that the KMT did play a role in the war, even though not as important as that of the CCP itself.{mospagebreak}

The CCP had always held that it single-handedly defeated the Japanese. The role of the allied forces was deliberately downplayed, and any talk of the KMT’s war effort had been taboo. But Beijing’s new "united front" ploy opened a crack in the tight restrictions on studies of China’s contemporary history, and led to an explosion of academic and literary works on the KMT forces’ heroic resistance against Japanese aggression in the 1930s and 1940s.

It soon became clear to many Chinese people, especially intellectuals, that it was the KMT who did most of the fighting in the war, and that what the CCP did was not much more than hiding in a corner, preserving and developing its strength, and waiting for the Japanese to weaken the KMT so that it could overthrow the KMT government in the end.

These revelations were extremely damaging to the CCP. As the communist ideology became completely bankrupt after the Cultural Revolution, the CCP had to use nationalism to legitimize its continued rule and rally the population around it. However, when it was exposed that the CCP not only failed to defend the country during its most perilous times but also took advantage of the Japanese invasion to grab power, the very nationalistic feelings it had encouraged to its own advantage now turned against it.

Who Is the New China?

Throughout the late 1980s and the 1990s, many academic papers and novels about China’s Republican era were published. As more and more historical facts were revealed, veiled calls for a reassessment of the KMT and the ROC began to emerge.

Of course, a complete overhaul of the official version of history can never be allowed to happen as long as the CCP remains in power, as the KMT’s gain would unavoidably mean the CCP’s loss. A thorough reassessment of history could only be done from outside China.

And so it happened. In 1999, an important book entitled Who is the New China (in Chinese) was published in the United States. The author of the book, Mr. Xin Haonian, is a distinguished Chinese historian now living in the United States. He wrote the book after more than a decade of painstaking and risky research in China.

Mr. Xin rejects the CCP’s assertion that it founded a "New China." According to his book, the CCP was responsible for rebelling against the Republic of China at the instruction of the Soviet Union, refusing to defend the country against Japanese invasion in order to preserve its own strength, starting a civil war immediately after China’s victory over Japan to overthrow the Chinese government with Soviet support, and setting up a totalitarian regime in mainland China that led to an unprecedented calamity to the Chinese nation-costing 80 million Chinese lives.{mospagebreak}

So, if the PRC is not the "New China," then who is? According to Mr. Xin, it is none other than the Republic of China founded by the KMT, which replaced the imperial Manchu Court with a Chinese republic based on democratic institutions, brought the warlord-held provinces under central control, defended China against Japanese aggression, abolished all the unequal treaties imposed on China by Western imperialist powers, and won China a permanent seat on the U.N. Security Council. Even after its defeat in the civil war, the Republic of China thrived in Taiwan, resulting in a democratic and prosperous society unprecedented in Chinese history.

In Mr. Xin’s view, the way forward is to go back to Sun Yat-sen’s Three Principles of the People (which can be roughly translated as nationalism, democracy, and people’s welfare) and rebuild a democratic and unified Republic of China.

As Mr. Xin made clear in his book, he did his thinking on the back of a vast amount of research conducted by mainland scholars over the past decade. He simply built upon all the preceding work and said what many in China had wanted to say but could not.

Not surprisingly, Mr. Xin’s book had a ready readership. Though it cannot be published or sold in China, its electronic version is easily circulated over the Internet. Its impact cannot be overestimated.

Unexpected Change in Taiwan’s Political Landscape

Shortly after Mr. Xin published his book, the political situation in Taiwan took an abrupt turn. In the spring of 2000, the KMT lost the election to the pro-independence DPP, and Chen Shui-bian, a hardline advocate of "Taiwan independence," became the president. On the surface, it was a huge setback for the Republic of China, which appeared to be losing its last foothold.

But things are never as simple as they look. Worried that Taiwan was drifting away from the mainland, Beijing began courting Taiwan’s pro-unification opposition in a bid to curb the pro-independence Chen administration. As a result, the KMT and its sister parties, collectively known as the "Pan-Blue Coalition" (a name derived from the KMT’s party color), suddenly became the good guys in the CCP’s book. Even the "Republic of China" became less of a taboo because it was seen as a connection between the mainland and Taiwan, which the pro-independence forces wanted to sever.

In mainland China, most people genuinely dislike the idea of "Taiwan independence," mainly because of an inbred sense of national pride and patriotism. And their patriotic feelings naturally make them like the KMT and the "pan-blues" in general, who are on the front line fighting against the pro-independence forces.{mospagebreak}

But their patriotism is toward China, not necessarily the PRC, though the communists have been trying to mix the two different concepts for the last six decades. If the ROC means national unification and Taiwan-style prosperity and democracy, most mainlanders will probably find it hard to resist.

In other words, as a result of the rise of "Taiwan independence" forces, the KMT, the "pan-blues" and the ROC have not only become less unacceptable to the communist regime but have also gained popularity among many mainland Chinese people.

China Pan-Blue Alliance

It was against this background that the China Pan-Blue Alliance was established on the Internet in August 2004. It borrowed its name from the Pan-Blue Coalition in Taiwan. But, while the pan-blues in Taiwan seem to be falling into the CCP’s "united front" trap, the mainland Pan-Blue members, many of whom were inspired by Mr. Xin Haonian’s book, have stuck to the KMT’s traditional anti-communist principles.

On its homepage, the China Pan-Blue Alliance clearly states its agenda: "Oppose communism, agree with the Three Principles of the People, and work together with the Chinese Nationalist Party for national unification." In their view, a unified China will not be an enlarged PRC, but will have to be a revived Republic of China-which is democratic and free.

Recently, the China Pan-Blue Alliance has become increasingly active. At present, hundreds of people regularly go to the Alliance’s online forum for discussion. The Alliance also holds meetings in Beijing, Wuhan, Chongqing, and Chengdu.

Last year, immediately before the 60th anniversary of Japan’s surrender at the end of World War II, the group’s convener Sun Buer was detained for 15 days for organizing activities in honor of the KMT’s resistance during the war.

Apart from nationalism, the China Pan-Blue Alliance has also supported democracy and human rights. It took part in the labor rights movement of Chongqing Special Steel Group workers, and has published articles in support of the human rights of Falun Gong. It also lent its support to the spread of the book Nine Commentaries on the Communist Party published by an overseas media, The Epoch Times, and the movement to quit the CCP.{mospagebreak}

Although the China Pan-Blue Alliance still exists largely in cyberspace, the communist authorities have seen it as a grave threat. It was labeled an "illegal organization," and many members have been called by the police for interrogation.

These young people appear undaunted. Now, many members of the Alliance are planning to participate in the local elections in their personal capacities for seats in the "People’s Congress," in a bid to change these rubberstamps toward genuinely representative assemblies.

Different Shades of Blue

The mainland-based "spiritual KMT members" did try to get in touch with the "real" KMT in Taiwan. Chen Rongli, a member who fled from the mainland to Taiwan, even met with the current KMT leader Ma Ying-jeou in May. But the KMT, whose priority is understandably Taiwan’s domestic politics, has looked very much baffled by the whole thing and doesn’t seem to know how to deal with its eager "spiritual members" on the mainland.

Unlike his predecessor Lien Chan, Ma Ying-jeou seems to be genuinely concerned about democracy and human rights in mainland China. He attends memorials of the June 4th Tiananmen Massacre every year, and has repeatedly said that unification is not possible if the mainland fails to redress the Tiananmen Square tradegy.

Mr. Ma is also ambitious about the KMT’s future on the mainland. In a call-in program with the BBC’s Chinese Service in February, several callers from the mainland asked how they could join the KMT. Ma responded by saying, "If one day the mainland lifts its restrictions on political parties, the KMT will definitely go there."

However, as the KMT’s current political platform is based on making peace and developing economic ties with the mainland, Ma Ying-jeou’s attitude toward the mainland-based pan-blues is lukewarm at best.

When Chen Rongli, a mainland Pan-Blue member now living in Taiwan, applied for formal KMT membership in February, his application was politely turned down on the grounds of his not being a ROC citizen.

When Zhang Qi was detained, in spite of calls from pro-democracy and human rights activists for the Taiwan KMT to use its influence to rescue him, Ma Ying-jeou kept his silence. This greatly disappointed the mainland-based Pan-Blue members.{mospagebreak}

Taiwan’s ruling DPP seized this opportunity to score political points. Lai Yi-chung, director of the DPP’s Department of China Affairs, openly called on the CCP authorities to release Zhang Qi. Taiwan’s pro-independence media also used this incident to accuse Ma of being hypocritical.

Disproportionate Impact

Zhang Qi was released on July 13, after 20 days of detention. For a regime known for its merciless and brutal treatment of dissidents, this appeared to be a particularly feeble punishment for what it sees as an organized subversive act. In contrast, members of the China Democracy Party could be sentenced to 10 to 20 years in prison for a much lesser offense.

The mainland pan-blues, unlike traditional pro-democracy activists, have put the CCP in an awkward situation. As the CCP is actively developing its relations with the KMT, it probably fears that a severe crackdown on the mainland-based pan-blues could rattle the pan-blues in Taiwan, or at least provide ammunition to the pro-independence forces.

Though the pan-blues have not paid too high a price for their activities, they could potentially make a disproportionately big dent in the CCP’s armor.

Successive generations of Chinese pro-democracy activists have spent most of their time criticizing the regime, but have failed to come up with meaningful alternatives. As a result, their criticisms often sound as if they were targeting China, rather than just the CCP. Understandably, such "China-bashing" does not always go down well with the Chinese people. The regime has found it easy to simply dismiss them as "anti-China."

But the pan-blues are different. Proudly waving the ROC flag, they are at a vantage point from which they can show themselves as real patriots and real democrats at the same time. Also, the ROC and the KMT are old, tested brand names and can be presented as credible alternatives to the status quo.

On the key issue of Taiwan, few traditional activists have been consistently vocal in opposing "Taiwan independence," because most of them are sympathetic to democratic Taiwan and do not want to be seen as saying the same thing as the CCP. With most Chinese people favoring unification, such ambivalence cannot win them points.{mospagebreak}

But the pan-blues, again, are in a good position. Recognizing the ROC as the only legitimate government of China, they can easily be anti-communist and against "Taiwan independence" at the same time without sounding self-contradictory. Their opposition to Taiwan’s pro-independence forces is a matter of principle, but their criticisms have been rather polite and rational because they recognize the DPP as a force for democracy.

A "Pan-Blue Revolution"?

It is hard to estimate how strong this "Pan-Blue" movement on the mainland is at present. That is one of the reasons why the Taiwan KMT has been so cautious in its dealings with the mainland pan-blues.

However, recent happenings appear to suggest that more and more mainlanders are accepting the pan-blues’ ideas. When a large section of the society is looking for political alternatives, a relatively known quantity like the ROC could prevail over other proposals. And when one political alternative gains momentum, it could gradually evolve into a rallying point.

It is not hard to find precedents. After the fall of communism in Eastern Europe, most countries there reverted to their pre-communist national titles and national flags. For people living in communist countries, going forward seemed to mean going back and undoing what communism had done to their country.

Everyone knows China needs change, and most believe the country eventually will change. In the last few years, there have been a number of largely peaceful "revolutions" around the world, each associated with a specific color. When the moment inevitably comes for China, it could well turn out to be a "pan-blue revolution."

Yue Wei is a U.K.-based journalist.

[Editor’s Note: Hao Fengjun is a former secret agent with the Tianjin Public Security Bureau. After graduating from Nankai University in 1994, Hao worked in the Heping District Bureau of the Tianjin Public Security Bureau for two years as an anti-riot police officer and spent another two years as a safety patrol officer. In 2000, he went to work for the "610 Office," which was organized by former head of state Jiang Zemin on June 10, 1999, for carrying out the campaign to persecute Falun Gong adherents.

In February 2005, Hao fled China and applied for political asylum in Australia. On June 7, 2005, in Melbourne, he publicly denounced the Chinese Communist Party (CCP). Since then, Hao has been traveling around the world participating in forums and conferences on the Chinese Communist Party and the mass movement of resignations from the Party.

On December 17, 2005, Hao was invited to Taiwan to speak at a lecture and expose the strategies that China uses to frame Taiwanese businessmen in order to confiscate their investments and coerce them into spying. The Taiwan Hsinchu Science Industrial Park, located in the "silicon valley" of Taiwan, sponsored the lecture. It was one of a series of lectures to educate Taiwanese businessmen on how to stay safe when doing business in mainland China. Below is the summary based on the audio recording of Hao’s speech.]

In 2000, Hao was randomly picked by computer to work for the 610 Office in Tianjin. After witnessing several torture cases of Falun Gong adherents, he started to question the legitimacy and purpose of the 610 Office. He requested to be transferred back to the district office but was denied due to a staff shortage in the 610 Office.

In 2003, the 610 Office changed its name to the "Bureau for Handling and Taking Precautions Against Crimes Committed by Evil Cults." The main function has expanded to oversee 14 religions, such as Catholicism delegated by the Vatican and some Christian sects.

The CCP allows only the "patriotic" Catholic and Christian churches recognized by the Three-Self Patriot Churches, and considers the rest illegal "evil cults." The CCP takes religious belief as a major threat to its ideology, and people who participate in independent religious activities can be charged with "breaking the law by being involved in evil cult activities."

In 2003, Hao was transferred to the division that monitors the activities of Taiwan businessmen who hold religious beliefs. Whether Taiwanese nationals are businessmen or students, the CCP regards them as potential spies, and the CCP’s intelligence organization closely monitors them.

Citing a case from 2003 in which he was personally involved, Hao said, "We knew everything about him." The object of surveillance was a Taiwanese businessman, a Christian who had invested two million yuan (US$244,000) in Tianjin.{mospagebreak}

The minute that Taiwanese businessman set foot in China, he was closely monitored and followed. His hotel and business phones were tapped, and his daily contacts and activities were recorded. For instance, any activities such as contacting other Taiwanese, joining prayer congregations, or going to baptism ceremonies, as well as the location of the hotels where such ceremonies are held, how the ceremonies are performed, what songs are sung during the ceremonies, who sings the songs, who presides over the ceremonies, and who baptizes the babies are videotaped. In one instance, when this businessman intended to spread his religion to some local university students in a large park, all activities, including singing hymns and praying, were put under surveillance.

In October, the Ministry of Public Security formed the plan for his arrest. It was to be carried out by the offices of the Public Security Bureau of the 610 Office, the Commercial Bureau, the Bureau of Taxation, and the Commodity Pricing Bureau. The detailed plan was to have the Commercial Bureau confiscate his property, including manufacturing facilities and warehouses. The Bureau of Taxation would audit the company’s financial books for accounting fraud. The Pricing Bureau would find loopholes in the company’s exporting procedures. Lastly, the Public Security Bureau would complete his arrest.

The arrest was supposed to take place before his trip back home prior to the New Year. But when the businessman made a sudden decision to visit a different city to purchase a piece of land for a new manufacturing site, the arrest plan was then suspended under orders of the Ministry of Public Security in order to wait for all of his investments to come in before taking any action.

Hao Fengjun warned the businessmen to be on guard for any special treatment, including dinner parties, bath and massage services, and prostitution arranged by Chinese officials since their aim was to confiscate all the investments they could get from him. "They will do anything to make it happen," he said.

The most common ploy used for arrest is tax fraud. For example, one chooses to invest in Tianjin to build a factory and has paid all the taxes. The government tells him that if he chooses to build another site in the suburb of Tianjin, he won’t need to pay taxes since the new site will be under the same license permit. But later when the CCP officials are ready to take action against him, they can easily charge him with "tax evasion" on the piece of property for which he hasn’t paid taxes.

Prostitution is another common trap used to frame Taiwan businessmen. In China, engaging a prostitute is subject to a six-month to two-year detention and a fine of 5,000 yuan (US$600).{mospagebreak}

Hao illustrated a typical example, which is still being played out today. Besides being a special agent, Hao had another identity as a government official, which made it easy and legitimate for him to have personal contact with Taiwanese businessmen. He would introduce himself as an officer from a certain department of the municipal government with connections to the top of the chain of command. In the meantime, a few people would be assigned to contact the targeted businessman and take him to some nightclubs or Karaoke bars. The arrest could be easily arranged and a setup implemented in order to show evidence of prostitution.

The Taiwanese businessman would be asked whether he knew anyone in the government who could bail him out. Not knowing many people, he might think, "I know a high-ranking official in the municipal government. He may help me." Because the officers who made the arrest were from the same group as the official, he would be released "with the help of the high-ranking official."

After that, the businessman would be asked directly to offer some information about Christians and Falun Gong activities in Taiwan or else his investments will be in danger. "We can’t go to Taiwan, so we would like you to bring some information to us." Since the information is not related to Taiwan’s military intelligence or politics, most Taiwanese businessmen will quickly cooperate, Hao said.

Such schemes are also used to take over Taiwanese businessmen’s investments. Many businessmen who were entrapped often did not dare to speak up to expose the conspiracy for fear that their investments would be jeopardized. They were led to believe that they could still hope to recoup their investments. For example, the government might confiscate their assets in two provinces, while leaving the assets in the third province intact. Officials would then threaten that the third piece of property would also be taken away if they chose to disclose the entrapment scheme. Another game the government officials play is to convince the businessmen that the problem can be corrected in a year or two, so they should just wait and keep quiet.

Hao reminded the Taiwanese businessmen to use "self-discipline" because the CCP’s secret agents often use various means to frame, exploit, and coerce Taiwanese into spying for them while at the same time confiscating all their investments. He said that the CCP is not afraid of having its crimes exposed in Taiwan since most Chinese media organizations in Taiwan have been infiltrated by the CCP. However the Party is concerned about exposure by the Western media, and don’t want them reporting on its schemes.

Lukun Yu is a writer based in New York.

Eighty-seven million dollars of investment, approximately 82 acres of land, an "ancient tree garden," a man-made lake, a rockery, six stylish office buildings, a thousand-seat convention center… Could this be a palatial resort?

This is the office compound of the not-so-affluent district government of Huiji, on the outskirts of Henan Province’s capital city Zhengzhou.

Opulent District Government Compound

Surrounded by a moat, the compound sits on an 82-acre landscape filled with more than 3,700 trees. Nearly 900 of the trees are ancient; three of them are over 1,000 years old, and dozens are over 500 years old. You can find over 30 varieties, such as papaya, sweet osmanthus, Chinese tallow tree, ginkgo, American royal purple, silk tree, and magnolia in this small forest. Besides the man-made lake, the compound also has nine acres of lawn ornamented by two gigantic boulders weighing 60-80 tons that were shipped in. There are also a tennis court, a basketball court, and other recreational facilities.

Outside of the front entrance is a five-acre square, flanked by two rows of expensive trees shipped in from afar. Situated in the middle is a statue named "Children of the Great River." The square is big enough to build an elementary school on, but the white and black marble décor makes it a bit too extravagant for that purpose.

This resort-like compound is a perfect place to forget about the crowds and stress of the city.

Officials Say the Compound Was Built for the People

It is said that the U.S. White House sits on an 18-acre lot. It consists of the main building and the East and West Wings. The three-story building has 132 rooms, the biggest of which is the East Room, which can host more than 200 guests.

You could put almost five White Houses on the Huiji government compound.

When the compound got attention in the press, the owners of the compound downplayed its grandiose scale. The public relations director of the district propaganda office said, "We are hardly number 1. There is a municipal government compound that occupies more than 260 acres, much bigger than ours."{mospagebreak}

Although this statistic needs to be verified, it’s without a doubt that Huiji District is not the only local communist government that has built a luxurious office compound. Affluent local governments along China’s coastline have raced to erect luxurious office buildings. Some of them were modeled on the White House or Zhongnanhai, China’s central government compound. Inland regions with fewer resources have no intention of missing out on the fun and are following in the footsteps of their rich comrades.

So why are these local governments so keen on building opulent office compounds? The reason may be a mix of personal interest and business.

Construction has always been a hotbed for corruption in China. There is even this saying in China: "Buildings go up, officials fall." Recently the Tianjin Maritime Court Building scandal brought down a series of corrupt officials who were involved in graft and embezzlement during the construction of this $12 million building.

As for business, it’s all about power and authority. Thousands of years of feudalism did not disappear without leaving some deep marks in China’s officialdom. Historical government buildings—towering architecture, wide entrances, deep hallways, and huge office desks—spell "importance" and "authority." Such structures psychologically dwarf the commoners who dare to enter.

Obviously the ancient influence has left its mark in the minds of today’s Chinese officials, especially those from the rural areas. The more palatial the building, the more daring the leader; the more luxurious the decorations, the more accomplished the leader; the more magnificent the style, the higher the authority. Material objects, such as swanky office buildings and luxurious sedans, are symbols of power and authority.

Huiji government officials claim that it’s the people who are benefiting from the opulent office buildings. They’ve even gone out of their way to prove this by engraving the Mao-style slogan "Serve the People" on a stone in a prominent location on the compound. Yet, taking advantage of the power and spending taxpayers’ money to build these complexes is hardly a service the commoners are seeing.

This compound is so controversial that it has generated anger and debate. Local residents and TV pundits alike have raised pointed questions that have triggered an uproar over corruption and mismanagement in local government. Just how swanky does the local government office need to be? How can a district government that has just come under a budget deficit and with revenue of US$24 million, justify spending US$84 million to build this huge, extravagant headquarters next to the small, underdeveloped villages it governs?

Helen Chou is a writer based in New York.

Lao Zi was a great philosopher, thinker, educator, and the founder of the Daoist school of thought in ancient China.

Lao Zi was not his real name, but an honorific given the sage, meaning "Old Master." The specific date of Lao Zi’s birth is unknown. Legends vary, but scholars place his birth between 600 and 300 B.C.E. Lao Zi is attributed with the writing of the "Dao De Jing," the scripture for the Daoist school.

"Dao," frequently written as "Tao," literally means "The Way," "The Great Ultimate," or "The Secret of the Universe."

Lao Zi’s wise counsel attracted followers, but he refused to set his ideas down in writing. He believed that written words might solidify into formal dogma. Lao Zi wanted his philosophy to remain a natural way to live life with goodness, serenity, and respect. Lao Zi laid down no rigid code of behavior. He believed a person’s conduct should be governed by instinct and conscience.

Daoism holds that the universe, far from being a complex web of tangled events, is actually very, very simple. All forms of matter and being are merely manifestations of Yin (female cosmic element) and Yang (male cosmic element), surrounded by Qi (energy).

Lao Zi believed that human life, like everything else in the universe, is constantly influenced by outside forces. He believed "simplicity" to be the key to truth and freedom. Lao Zi encouraged his followers to observe and seek to understand the laws of nature, to develop intuition and build up personal power, and to use that power to lead life with compassion and without force.

Legend says that in the end, Lao Zi was saddened by the evil side of mankind and set off into the desert on a water buffalo, leaving civilization behind. When he arrived at the final gate at the great wall protecting the kingdom, he stopped for a cup of tea with the gatekeeper. The gatekeeper was so stunned at Lao Zi’s wisdom that he begged him to jot down a few revelations for posterity. Lao Zi grabbed a brush and dashed off a few ultimate truths before heading on his way. The result was the 5,000-word philosophical poem in the verses of the "Dao De Jing," in which Dao (The Way) is expounded. Next to the Bible, this ancient Chinese text is the world’s most translated classic.

As for the reclusive Lao Zi, he ended up in Heaven. Now deified as one of the San Qing (the supreme trinity of Chinese Daoism, known as The Three Pure Ones) under the name Lao Jun, he advises the Jade Emperor on do-nothing policy and spends eons refining doctrine.

Although Chinese college graduates have difficulty getting jobs these days, it is still quite shocking when the United Nations Development Program (UNDP) says in its research report published on June 29, 2006, that China is "facing a challenge of growth with high unemployment." The United Nations is not the first one to have found the coexistence of high growth and high unemployment in China. Several years ago, there were already debates among Chinese economists on whether high growth is incompatible with high unemployment. Apparently, such a phenomenon has already been recognized in mainland China.

In economic theory, it is believed that high economic growth accompanies high employment. Would China be an exceptional case that defies the conventional economic norm? Comparing China with the three other BRIC (Brazil, Russia, India, and China) countries, the economic growth in Brazil, Russia, and India has brought about a high growth of job opportunities. Among the BRICs, two are great powerhouses of natural resources, and the other two are countries with large populations. The economic boom in the four countries has not only given birth to a three-year-long bullish global commodities market, but has also become the major reason for the highest world economic performance in the past 10 years.

The comparison has also revealed three additional phenomena inconsistent with economic theory: divergence between the economic growth and the performance of the stock market, coexistence of low inflation and high housing prices, and coexistence of an overheated economy and extremely low interest rates.

Coexistence of High Growth and High Unemployment

It is no secret that China’s job opportunity growth rate is lower than its economic growth rate. We can just look at the annual college graduate’s job market. The State Statistic Bureau once estimated that in the 1980s every percent of GDP growth brought about 2.4 million jobs, while in the 1990s the number shrank to 0.70 million. The key to the problem lies in the large increase in the number of college graduates, which was 1.15 million in 2001, 1.45 million in 2002, 2.12 million in 2003, 2.80 million in 2004, and 3.38 million in 2005. This series of figures depicts a pattern: Ever since 2000, the faster the economy has grown the more difficult it has been for a college graduate to find a job. According to the UNDP report, "trade has deteriorated the inequalities. Behind the successful stories in East Asia, there lie the challenges of ‘jobless growth.’ Young people and women are experiencing ‘jobless growth,’ with the growth of the labor force being much faster than the growth of job opportunities." The Asia Pacific Human Development Report 2006 stated that in the 1990s China’s economy had been on a growth track as high as 10.1 percent boosted by a continuous climb in exports, while during the same period the growth rate of job opportunities was only 1.1 percent.{mospagebreak}

Economic Growth Has Not Been Reflected in the Stock Market

The stock market has always been called the barometer of macroeconomics. However, this barometer often does not work in China. Though there has been a noticeable increase in the price of stocks since last December, it is only minor compared with the huge downslide in the past four years. Therefore, the increase is only regarded as a technical bounce at best. It is, in fact, nothing to be proud of compared with the other three countries (Brazil, Russia, and India).

In the past four years, the stock markets in all of the BRIC countries, with the exception of China, had excellent returns. Last year alone, the Russian stock market increased by 100 percent, and Brazil’s and India’s by 50 percent. So far this year, the Brazilian and Russian stock markets have recorded another 10 percent increase, and India about an 8 percent increase. What is worth noticing is that the Indian stock market expanded three-fold in the past three years. Though it had a little correction recently, it still hovers near its all-time high. In June 2003, the SENSEX in Bombay was at about 3,000 points; it was over 10,000 points on February 17, 2006, rising at extraordinary speed.

Coexistence of High Growth and Low Inflation

In general, economic growth will be coupled with inflation-it is a commonplace and reasonable occurrence. However, China has been enjoying high growth in the past decades, yet it has no serious inflation. On the contrary, in the past two years, it has had some deflation, a phenomenon that is hard for economists to explain.

In comparison, the other three BRIC countries have all experienced inflation to different degrees. In June, the inflation for India was 5.24 percent, Russia 6.2 percent, and Brazil 8 percent—all far exceeding China. Mild inflation is one of the signs of a booming economy, and not something problematic. Strangely, China does not have inflation, but deflation, even with years of high growth. What’s more, the low inflation in China occurred when the real estate prices were shooting up. Is there a relationship?

Coexistence of Long-Lasting Overheating Economy and Very Low Interest Rate

This is something worthy of our attention. Many Chinese official media have talked about how the Chinese economy has been overheating for quite some time, yet its real interest rate is nearly zero. Generally speaking, this very low interest rate policy is only used as a tool to stimulate the economy when it sags, for example, Japan’s zero interest rate following the bursting of the bubble. However, when the economy is overheating or inflation is in sight, in order to keep the economy healthy, the interest rate should not be this low any longer. For example, the Fed in the United States increases the interest rate to curb the economy when it is overheating. For China to insist on a low interest rate while its economy is overheating sounds like a self-defeating paradox.{mospagebreak}

These are a few examples of how China’s economy differs from others. Since traditional economic theory cannot explain the phenomena, we temporarily use the term "the abnormalities of China’s economy."

Translated by CHINASCOPE from http://www.hinews.cn/news/system/2006/07/12/000114880.shtml