Report - 35. page

In the past, the term “hawks” is historically used as a synonym for militants, zealots and extremists. Thus the “hawks” have a poor image and sometimes are not welcome. However, some experts have pointed out that there is a misunderstanding of the “hawks.” Being “hawks” is not equal to irrational nationalism and we should give it its original meaning, which is taking strong position to safeguard the national interest. Experts have stressed that on its renaissance path, China will be involved in more and more international conflicts. In this case, China needs more “hawks.” Without these “hawks,” the country would be like a family without brave men.

Experts: “Hawks” Do Not Equate to Irrational Nationalism and China Needs More “Hawks”

There are always people labeled as “hawks” in the Western countries, such as the United States and Japan. For example, Mr. Donald Rumsfeld, former US Defense Secretary, Mr. Bolton, former US Ambassador to the United Nations, Mr. Shintaro Ishihara, the Tokyo Governor, and Pranab Mukherjee, Indian Foreign Minister, all belong to this type. Whether in the international political arena or at home, their brave and harsh style has demonstrated their firm stances and absolute attitude towards safeguarding their national interests and dramatically influences the foreign policies of their respective countries. More importantly, these hawks have played a critical role in shaping their countries’ policies on foreign relationships, military and national defense.

On the contrary, in China, hawks are the subjects of criticism. The author believes a main reason is the misunderstanding of the hawks’ words and actions. One obvious manifest of this misunderstanding is to treat hawks’ words and actions as irrational behaviors of narrow nationalism, which does not help to preserve national interests, and can harm the national security.

On this issue, researchers may follow this logic. First, the advocates of the “hawks” will lead the national policies going astray by stoking irrational extreme nationalism. Second, the overseas forces against China will use the voices of “hawks” to achieve their goals. Third, strong voice of the “hawks” doesn’t match the peaceful image of China. China is no longer the “old China” that was bullied and tramped by other countries. It is almost impossible for a foreign hostile force to invade China on a large scale. So it is unnecessary for Chinese people to over-react and become emotional on this issue.

Actually, these logics are debatable. What the author wants to emphasize first is that we should not treat the voice of hawks as completely violent, barbaric, irrational, impulsive, and illegal behaviors. If we do, we would be altering the idea of “hawks”. Hawks represent hard-line stance to defend one’s nation’s interests. There is no evidence that many hawks in Western countries will lead their countries astray, nor is there any example demonstrating that their voices collectively does not benefit their national interests. On the contrary, those hawks normally have large numbers of supporters. Hawks are backed up by powerful interest groups that sometimes are the most conservative forces protecting their national interests. Taking China as the example, if hard-line position by hawks on the issues of Diaoyu Island or Spratly Islands bring the opponents see the sentiments of Chinese and China’s determination to defend its core interests. What’s wrong with that?

There is no conflict between China’s peaceful development and justly debuting the Western forces’ slander against China. We must learn and adapt to the complex environment of international discourse, because the ideal, “you are good and I am good” kind of favorable development environment does not exist at all.

Hence, when China is proactively integrating, listening to and understand the Western developed countries, China should also ask them to face at the pains and sufferings that China went through in old times. As for misunderstandings and prejudices toward China, we should communicate and discuss with them amicably to increase the mutual trust and friendship with each other. For those who are obstinate hard-liners against China, we should have the courage to show them our strength, and fight them at the right time. From this perspective, we have too few “hawks” in China. Their stances are not tough enough. Being tough doesn’t mean irrational behavior. Instead, it is part of being reasonable. Reason consists of a variety of different voices. A single voice does not make up reason.

The existence and the rise of a hawk are inevitable in history. A nation without “hawks” is just like a family without any brave men: the widows and orphans will be bullied by wicked people and thus remain vulnerable at any time. The county that dare not say no to extortion and threats cannot achieve smooth and peaceful domestic development.

Therefore, it’s necessary for us to re-evaluate the critical role that the “hawks” play in China. We cannot simply ignore their role nor put an end to their existence. Instead, we should allow room for them to exist. After all, any country in the world needs diverse voices. (The author is from Beijing University of Post and Telecommunications)

Courage, Humor, Determination! The Well-Known Quotations From The "Hawks" in Resolutely Safeguarding Our National Interests

Iron Lady Wu Yi: We Are Negotiating With The Bandits!

Americans were the first one who experienced the "Wu Yi style." In 1991 during a Sino-US intellectual property rights talk, then Deputy Minister of Foreign Economic Relations and Trade Wu Yi led the Chinese delegation and launched a tit-for-tat negotiation with Americans. One example that most illustrated "Wu Yi style" is, when the U.S. representative said: “I am negotiating with a thief." Wu Yi responded: "I am negotiating with the bandits. Take a look at your museum, how many things were stolen from China?” The United States representative was speechless.

Surprisingly, with sharp words, and stick and carrot in hands, Wu Yi did not make Americans feel resentful, but rather she won their respect. Foreign media called Wu Yi a "woman capable dealing with the very arrogant American". Under Secretary of Commerce for International Trade Grant Aldonas said, "She deeply felt the responsibility for her country."

Aggressive Sha Zukang: Your Face Reminds Me of the Opium War!

(1) Your face reminds me of the Opium War!

Reporter: “When you were appointed as Ambassador Extraordinary and Plenipotentiary in Geneva, we know at that time each country’s Ambassador in Geneva paid you a courtesy visit, but you gave British Ambassador a different courtesy, wasn’t it?”

Sha Zukuang: “He said, ‘Your Excellency the Ambassador, the United Kingdom is concerned about the human rights situation in China.’ On my courtesy visit, he was impolite in the first place for raising a Substantive issue. I responded immediately, ‘Your Excellency the Ambassador, you know what I am thinking right now?’ He said he did not know. ‘Your face reminds me of the Opium War! You forced China to smoke opium. When Chinese people refused, you launched a war. Opium violated the right of Chinese people to be healthy. You illegally occupied Hong Kong for so many years until 1997. During the period of your occupation of Hong Kong, you never offered any democratic election. But today you suddenly care about the rights of the Chinese people. I feel that is very unnatural.”

Reporter: “When you decided to respond to him in this rather radical way, were you not worried that it may affect the bilateral relations?”

Sha Zukuang: “I was not worried, because he himself was hypocritical. Why should I need to consider endangering the bilateral relations? Why didn’t he consider that? I believe the rule of reciprocity. Since he made the mistake first with political motivation, he knew better than anyone else that he had a sinister plot. In my opinion, he got what he deserved. If I did not fight back, he would think me weak. If you acknowledge his accusation, he would be more and more arrogant, which was unacceptable to me.”

(2) We hope some countries look at themselves in the mirror before criticizing and accusing others.

Geneva has been the main battlefield for human rights. On March 24, 2004 at the 60th session of the Commission on Human Rights of the United Nations, when the United States brought out the anti-China motion, Sha Zukuang immediately responded in English, a wonderful speech in the conference: "Western countries are not the role model for protecting the human rights, developing countries do not lead the violations of the human rights. (United Nations) Human Rights Commission does not authorize any country or group to act as judge of human rights. Developing countries should not be forever a defendant in the human rights court. There is an old Chinese saying, ‘He who wants to fix others should fix himself first.’ We hope that some countries look at themselves in the mirror before criticizing and accusing others.”

Sha said, “American friends, we China are poor, a country still in development. But no matter how poor we are, we can afford a few mirrors. We want to buy some mirrors to give you for free to let you take a look at yourself. Because the White Paper you published has one thing missing. Our State Council Information Office wrote a report called ‘The United States Human Rights White Paper.’ That is a mirror. I hope you take a look at it. One more thing, I advise you not to read it before going to bed. Because the United States human rights record, if you read it, especially if you read before going to bed, will give you nightmares. You won’t sleep well.”

Sha Zukuang later told reporters during an interview: “I remember my four-minute reply, was interrupted five times by the applauses. Thunderous applause came from everyone. The United States delegation was also laughing, also felt it laughable. To tell the truth, he is not very serious about his anti-China motion. That’s how I felt. He was not really concerned about China’s human rights. He appeared to be more concerned about Chinese people than the Chinese government did. I felt that was bizarre. I think they are most concerned about themselves.”

Li Zhaoxing, Quick-Witted Yet Humorous: The Corruption of Provincial-Level Official Is Not Part of My Responsibility!

(1) Chen Shui-bian is a provincial-level official; corruption is a domestic affair!

After attending a joint reception for 3rd Ministerial Conference and Beijing Summit of the Forum on China-Africa Cooperation, Li Zhaoxing had a media interview. In the interview when being asked about Chen Shui-bian, he said Chen Shui-bian is a Taiwan Provincial level official. “Do you have questions about our work? The corruption is a domestic affair. I am the Minister for Foreign Affairs, OK?"

(2) Why should I talk to Chen Shui-bian face to face? Who is he?

During the 2006 National People’s Conference session and the session of the National Committee of the Chinese People’s Political Consultative Conference, a Taiwan reporter asked Li Zhaoxing, “If there was an opportunity for you to talk to Chen Shui-bian face to face, what do you want to talk about the most?” Li Zhaoxing immediately answered very angrily: "Why should I talk to him face to face? Who is he?” This quit-witted answer, put reporters amused.

Another reporter asked, “Japanese media says you are about to retire, is it true?” Li Zhaoxing, with his “swift and fierce” style, asked reporter, “Do you believe Japanese, or believe me? If you believe them, do not ask me.” Facing Li’s sharp words, the reporter had no choice but said, “I believe you, I believe you.”

(3) You Texas only joined the United States in 1845, but Tibet has been incorporated into Chinese territory since mid 13th century.

The then Chinese Ambassador to the United States Li Zhaoxing once gave a lecture at the University of Ohio. An elderly lady asked him: "Why did you invade Tibet?" Li Zhaoxing, changed his usual style, did not give a direct counter-attack. After learning that the old lady was from Texas, he said, “You Texas only joined the United States in 1845, but Tibet has been incorporated into Chinese territory since the middle of the 13th century. Look, your arms are part of your body. Can you say your body invades your arms?” The old lady laughed. Giving Li Zhaoxing a warm hug, she kept saying, “Thank you, thank you for letting me to see the truth of history."

Hard-Liner Chinese Generals: With The People’s Liberation Army, Those Who Want to Occupy The Nansha Islands Has No Hope to Succeed!

(1) Navy admirals are determined: with the People’s Liberation Army, those who want occupy the Nansha Islands has no hope to succeed!

Political Commissar of the South Sea Fleet Huang Jiaxiang: Some countries with illegal attempts to take over Nansha Island won’t be able to succeed. To certain extent they are doing some kind of propaganda. They can’t achieve their goal. We have full confidence and capability in safeguarding our interests in the South Sea.

(2) The son of Ma Benzhai, Naval Aviation deputy commissar: for Nansha issue, China will be gentleman first and soldier next!

Ma Benzhai’s son, Deputy Commissar of Naval Aviation Ma Guochao talked about the recent frequent harassments over China’s Xisha and Nansha islands. He said, “China will be gentleman first before resorting to force. We will try to avoid conflict as much as possible when patrolling. But if some country chooses to take over China’s land, China’s navy is fully capable of defending our waters and airspace.”

(3) East sea fleet commander: we must build aircraft carriers and be tit-for-tat with the ambitions of Japan.

East Sea Fleet Commander Zhao Guojun: Japanese Prime Minister Taro Aso said Diaoyu Island is Japan’s inherent territory. We must carry out our own tit-for-tat position.

Endnote:
[1] Global Times, March 9, 2009 reprinted by Qiaobao
http://www.usqiaobao.com/newscenter/2009-03/09/content_198164.htm

Outlook Weekly published an article on real estate policy set by the Ministry of Finance and the Central Bank on October 27, 2008 with the following major issues: 1) The Chinese government encourages people to purchase homes in a gloomy market; 2) Policies were set to stimulate the housing market; 3) Under the present policy, many people who have urgent needs for housing still cannot afford to purchase homes; 4) The real estate industry has agglomerated massive funds. The following is the translation. [1]

On October 22, the Ministry of Finance and the Central Bank announced the “Combined Fist” measure, which consists of deed tax, stamp duty, adjustment of the loan rate of individual buying homes, and adjustment of the first down payment for real estate. According to these measures, from November 1, 2008, for individuals who are first-time purchasers of an ordinary house of less than 90 square meters, the deed tax rate will be decreased to 1% uniformly; the stamp duty will be exempt temporarily for individuals selling or buying a house; and the land increment duty will be waived temporarily for individuals selling a house. At the same time, the Central Bank decided from October 27, the lower limit of a commercial individual mortgage interest rate will expand to 0.7 times of the loan datum rate, and the minimum down payment rate will be adjusted to 20%.

This response is the related departments’ more systematic, concrete, and overall deployment for the real estate market after the interest rate dropped twice and follows the the State Council Routine Conference’s proposal of “Enlarge the indemnificatory housing construction scale, reduce the housing transaction taxes and fees, and support the residents to buy homes.” The goal is to regulate macroeconomic regulation and control and to “guarantee growth”. 

This “Combined Fist” of real estate industry policy ended the previous argument of whether or not to rescue the market. However, some experts who were interviewed pointed out that loosing the real estate market policy by locking below 90-square-meters housing’s rigid demand is by no means the second spring for the ailing real estate industry.

Rescuing Plan Does Not Mean Maintaining Huge Profits for Real Estate Agencies

The “Golden September” and “Silver October” for the real estate market in previous years are much more subdued this year. Taking the four big cities of Beijing, Shanghai, Shenzhen and Guangzhou as examples, transactions since September number less than half compared to the previous year. In the “October 1” golden week, the four big cities’ transaction simultaneously decreased to a new lowest point in history.

The national situation is not optimistic either. The National Development and Planning Commission and State Statistical Bureau’s newest statistics revealed that from January to September in 2008, the increase scope of the house selling price in 70 big or mid-sized cities dropped month by month, to 11.3%, 10.9%, 10.7%, 10.1%, 9.2%, 8.2%, 7.0%, 5.3%, and 3.5%, respectively.

The downtrend of the real estate market leads to not only the shrinkage of new house sales, but also a weak existing house market. According to Guangzhou media reports, currently 40% of the real estate agencies in Shenzhen have already closed their doors. For the recent six months in Liaoning Province, more than 300 real estate agencies have closed their doors. From the end of the last year, Zhong-Da-Heng-Ji, the top real estate agency in China, has closed more than 200 branches.

Professor Zhao Xiao of Beijing University of Science and Technology, who argues that there are two economic engines for China’s economic growth, expressed his concerns: “Influenced by the factors of the global economic situation and Chinese currency appreciation, the export – the important engine for China’s economic growth has already been weak. If the other engine, real estate based, also shuts down, how do we to push our economy?” Researcher Li Kaifa from China’s Academy of Management Science belives the current situation of the house market might be exaggerated by house developers and media, even though he is not against a new policy to stabilize the house market.

Director Yang Jiacai from No 1 Bank-Monitor Department of China’s Banks Monitor Committee has confirmed Li Kaifa’s point, when he responded the concern regarding whether or not the price drop of the house sales endangers the security of financial institutions. Yang Jiacai points out that the key is “How much of the price drops”. From the current overall situation, the residential loans are 9% of the total loans.  Even if these loans are all risky, only 9% of the market is affected.

In Li Kaifa’s view, if the regulation and control can lead the real estate industry to a healthy development track, he will favor this kind of rescue plan, which is not rescuing the developers, nor maintaining the huge profits from the high house price and the real estate industry, but to let the real estate market return to the normal development track.

Bao Zonghua, Routine Vice Chairman of China Real Estate & Residence Research Society, pointed out that the “Combined Fist” and the Central Bank’s proposal, “Enlarge the indemnificatory housing construction scale, reduce the housing transaction taxes and fees, and support the residents to buy homes,” will stabilize the current real estate market, and will have favorable results for the middle or below the middle level income earners to buy houses, which will be helpful for the steady development of the real estate market.

The Economy Can Not Be Over-Reliance on Real Estate

It is noteworthy that, before the CCP central committee releases the combination plan for the real estate market, 18 cities nationwide have introduced measures to stimulate the real estate market. Some cities, such as Nanjing, Xi’an, Shenyang, Fuzhou etc. even released measures to subsidize for home buyers.

The experts interviewed pointed out that behind these measures are the local government’s financial thirst for land. As the trade volume declines, developers become more cautious about reserving land; and from time to time nobody bid for the land on the market. The situation makes the local government who is financially dependent on the land very uneasy.

On the adjustment of the real estate market, industry experts have pointed out that housing prices evoke too many issues regarding the demands for interests. The government decision-making must consider multiple issues. It should not only stimulate economic growth, protect local financial resources, but also consider the people’s livelihood and harmony. In our country, house price is not merely an issue of high and low price; but also should be on the way to restore the rational features of the market, to protect low-income people, to provide revenue guidance for the spending of the rich, to guide investment and commercial opportunities through the supply of products, and so on. If house price can not be integrated into the market system in the end, it will not be possible to construct an ideal market.

As early as the beginning of August, some large-scale real estate developers have been promoting multiple discounted real estate sales. While the consumers welcome these measures, the old owners are unsatisfied. Some experts said, "Whether the house price increase or decrease, there are always people who are not happy." Real estate industry affects a wide range of groups, and involves complicated interest relationships. Each expression of opinion is out of their own interests, while the methods to resolve multiple disputes of interests lie in the market’s "invisible hand."

"It is unhealthy that the local economy relies too much on the real estate industry," economist Wang Xiaoguang told reporters during an earlier interview. While Lee Kaifa says, "Even more worrisome is that currently the real estate industry has become the leading industry within the national economic system.” He says, "About 40% of the funds in the society are flowing into the real estate industry, and the percentage is even larger in some big cities."

According to Lee, a healthy economy should be that the total society liquidity is rationally distributed among varies industries, while the the proportion of the real estate industry should be stabilized at 10% to 15%. Moreover, the average profit return of the manufacturing industry should be more than or equal to the rate of return on real estate, otherwise it is not conducive to the healthy development of the national economy.

"Industry is the leader of the national economy, and the material basis for technological transformation of all sectors of the national economy," Lee Kaifa thinks, "a country’s level of industrial development directly determines the levels of the country’s technology and economic development. To achieve modernization in China, we must always maintain a prosperous industrial economic development, rather than depending on the real estate as such an important economic pillar. "

For this reason, Lee Kaifa thinks, "The adjustment of the real estate market should not only be reduced to a reasonable level based on the market demand, but also adjust its proportion in the national economic system." In his view, the rapid expansion of the real estate market has led to China’s macro-economic imbalances. It is now the opportunity to adjust the real estate market and house price so that to help ease inflationary pressure and that more people can afford for houses.

Aiming at Indemnificatory Housing

Moderate down-adjusting of surging house price is favorable for squeezing the bubble market and adjustment of industry structure. However, a number of experts interviewed also said that violent dropping of house price will be detrimental to the macro-economy and thereby affect people’s livelihood.

Official data show that real estate investments are facilitating the development of more than 50 industries with a ratio of 1:2.86. The impact of real estate industry on the national economy has reached 30%. In recent years, the rapid development of steel, cement, household, building materials and many other sectors is inextricably linked to the real estate industry. Under this backdrop, continuous cool down of real estate market will trigger a chain reaction of the other industries, which in turn will affect people’s income and employment, and make it difficult for low-income home buyers to buy houses and to repay their loans. These consequences will results in an unhealthy cycling of the real estate industry.

"In the past few years, direct contribution of real estate to the general annual economic growth is more than 1 point; the indirect contribution is up to 2 to 3 points." In Zhao Xiao’s view, the current round of economic growth started in the real estate industry. In fact, the real estate industry investment accounts for 30% of the fixed assets investment in recent years.

For these reasons, Bao Zonghua thinks that the Central Committee should have coordinated an overall strategy with scientific standards regarding the policy-making of real estate industry. For example, under what circumstances the market should be saved, what is the most effective way to save the market, where to focus, etc.  House problems have extensive impact and are directly regarded to the residents’ vital interests. Thus, policies must be consistent rather than “treating headache on head and treating the pain of foot on foot” (fixing local problems) or temporary solutions, let alone "treating the headache on foot”. These measures would result in a further round of the abnormal development of the industry.

"The house price regulation should essentially focus on the real interests of people besides safeguarding the healthy development of the real estate market. The people should be allowed to share the fruits of reform so that ordinary people can afford to buy or rent houses"

As to the direction of the real estate market development, Lee Kaifa thinks that we should still pay great efforts to develop indemnificatory housing. In his view, to improve the system of indemnificatory housing and establish "cost price housing" is still an effective way. Cost price housing has two advantages than commercial housing: no cost for the land and no windfall profits. In accordance with the principle of fair sharing of resources, urban residents resolve the issue of indemnificatory housing from the land policy. That is, house purchase based on the rights of residential land use should only include the costs of demolition, ancillary charges and construction costs, the same reason as the house land for farmers. "However,” Lee stressed, “one person can only enjoy once the right of indemnificatory housing in one’s life. If there is other demand, one may buy commercial houses according to its own conditions. Indemnificatory housing should only to be sold to the government."

Guo Kesha who works at the State Council Research Office thinks that the newly introduced policy combinations will help to attract buyers into the market out of their autonomous demand. These policies will not only benefit people’s livelihood, but also stabilize the real estate market, and will not allow return of unreasonable system.

Zhang Liqun from the Department of State Development Research Center agrees with the above-mentioned viewpoints. He thinks that the newly introduced policies can avoid a backlog of demand for house purchasing in the period of house price adjustment. After a long-term backlog of demands, an outbreak will lead to the lack of housing supply again and results in a new round of price fluctuation." In Zhang Liqun’s view, it is more important to maintain a stable house price based on the current price. "Stable house price can prevent demands of speculative buying and provide a benign environment for resolving rigid house demand."

Endnotes:
[1] Outlook Weekly, Oct. 27, 2008
http://news.sohu.com/20081027/n260262625.shtml

Huanqiu, a news portal under People’s Daily, published an article "American Band Issues Album that Viciously Attacks China" on November 24th, describing the "angers" from Chinese people on American rock band Guns and Roses’ release of a new album – "Chinese Democracy." [1]

On November 23, American rock band Guns and Roses plans to release its first new album in seventeen years. This album, entitled “Chinese Democracy,” surprisingly attacks China and immediately became a hot topic in many Western media outlets. This also drew anger from many Chinese and music fans. A web surfer commented that those scandalous, violence-sex-and-drug-bound Western stars seldom come to China, so they couldn’t have any understanding of Chinese democracy. This kind of show can only illustrate that the so-called “democracy” of some Westerners is nothing but their attempt to gain control of and influence the world.

A November 22 article on the Wall Street Journal website said that Guns and Roses’ new album ran into China’s wall. The subject title not only offended the Chinese government, it also drew rage from many Chinese music fans. The report said many Chinese people hope to have even greater freedom of speech, yet the majority of people believed that too much democracy too fast would result in chaos. They were also unsatisfied with the involvement of foreign forces. From the album title, it can be seen that “they don’t understand China,” said a Chinese music fan. It was just to stir up public feelings.

A Reuters report quipped in its title, “Guns and Roses will not Bring Democracy to China.” This report noted that the album couldn’t be released in China because the title song directly questions China’s leadership rights. The article quoted lyrics from the main song, saying that the banned “Falun Gong” “already saw the end and now you cannot hold on.” The album also stated, “Chinese people’s helplessness is governed under an iron fist.”

This album immediately caused rage among Chinese Internet users. One Internet user said that western rock bands often find some hot topics in order to show-off how esoteric they are. They are even a number of bands that go against Christianity and worship Satan, death and violence. In summary, there is a bird of every kind in a large forest. This time its is also creating a stir. Another Internet user said even this kind of people is starting to comment on China. In the West all you have to do to become popular is to criticize China. There is someone who brought a “Free Tibet” flag to protest in China and went back as a “hero.” The wallets of these anti-China buffoons are bulging with sponsorship money. “Democracy” as touted by Western countries was, after all, a pawn used by Western countries in recent times to control and influence the entire world.

In recent years, some foreign entertainers often express criticisms attacking China. For example, Sharon Stone said "the earthquake is China’s retribution," and Mia Farrow attacked China on the Darfur problem. Sometimes, comments from these people echo those China-slandering criticisms made by Western politicians and Western media, making waves. On November 23, British Broadcast Company reported that the last Hong Kong governor, Chris Patten (Peng Dingkang), also attacked China recently, saying that “China is promoting the idea that one could get rich without needing democracy, which in and by itself poses a threat to the West.”

In an interview with The World, research fellow Tao Wenzhao at the Institute of American Studies, Chinese Academy of Social Sciences, said that some foreign stars in Western entertainment circles don’t really understand China and some have never been to China. Based on only their inherent biases and deceptive propaganda, they make thoughtless comments. Although there has been great changes in China and many Westerners who have been to China were deeply impressed by China’s change, politicians’ propaganda and media reports still create bias in many people when it comes to China. As for these people, we hope that they will not be biased.  On the other hand, we need to strengthen and improve our propaganda abroad. This is very important in shaping our international image.

Endnote:
[1] Huanqiu, November 24, 2008
http://world.huanqiu.com/roll/2008-11/291372.html

This is an article from the 21st Century Business Herald on October 29, 2008. It reflects part of the Chinese scholars’ thinking on how to deal with the current international financial crisis. The full translation follows. [1]
China should establish its strategic goals based on its international political goals

The subprime lending crisis has become the largest economic crisis since the Great Depression of the 1930s that spread through all of the capitalist countries. Because the center of this crisis is the US and Europe, which control the world’s economic and politic hegemony, China is in a relatively good situation. Although the crisis is having a certain impact on our export-oriented economy, at the same time this is a rare opportunity that China won’t encounter in a hundred years. If China fully takes advantage of this opportunity, it may significantly improve its position in the international economic and political system. Thus taking a certain degree of pressure and paying a small price is worth it.

We need to bear in mind that the economic goal of an isolated country is just absolute growth alone. But in the international system, as the result of interest distribution, a country not only needs to pursue the absolute growth rate; it also needs to pursue a relative growth rate, because the latter decides the country’s position in the interest distribution pattern; it decides what role a country plays regarding cheap labor; or a country can obtain a reasonable share of international trade and economic growth. During development, a big country in the process of growth should be good at seizing the opportunities created by instability and disaster. In the face of turmoil, all countries will be affected, but only during instability can the country with the ability to sustain the risk show its superiority. A big power is not worried about itself being impacted. During global economic decline, it does not even worry if the nation’s economic absolute scale declines, as long as its decline is less than its competitors. Then its relative position in the structure of the world is in fact rising. In the future’s recovery it would obtain much more profits than previously. If it can obtain more profits in the future, then the impact it suffers today is rather an investment.

In the face of the subprime lending crisis, whether we deal with it, or take advantage of it, first we need to be clear on China’s goals. When facing any major incident, our effort should be directed to a series of goals, from the lowest to the highest goals. On this basis we can know clearly what choices we have. During this crisis, China’s goals are listed below from low to high in sequence:

Reduce and eliminate the losses from the subprime lending crisis, weaken the subprime lending crisis’ impact on China’s economy and society, and ensure that China’s economy will continue growing at a certain rate. This is the lowest goal that China must achieve.

Use the crisis to weaken the competitors’ opportunities, etc., establish and consolidate the dominant position of the country and the nation’s capital on the domestic market. This is the necessary precondition for a great power to rise in the outside world. It can also place us in an initiative situation, whether attacking or defending.

Improve to the greatest extent China’s right of discourse in the world economic system, including consolidating, and enhancing our economic impact on neighboring countries/regions and other major countries/territories, and improving as much as possible China’s influence in the whole international economic system.

Regarding making efforts surrounding the first level goals, from enhancing the export incentives, to stimulating the domestic market, we have seen it (the effort), now and what is needed is to put measures in a timely manner to implement them.

On the second level, the first thing we need to do is to use the opportunity of the subprime lending crisis impacting the headquarters of the foreign-funded enterprises, and selectively buy back the foreign enterprises with a fair option. It not only will weaken the impact of the foreign-funded enterprises on domestic bank credit, suppliers business accounts receivables, and employment, but it will also help to break the foreign investment’s monopoly, help to build and consolidate the dominant position of the country’s and the nation’s capital on the domestic market, to reduce the pressure on the country’s foreign exchange reserves’ continued high growth, and at the same time to develop investment channels consistent with the national public interest, for large quantities of domestic surplus capital. Of course, we need to be selective when we acquire domestic foreign-funded enterprises. With other things being equal, priority should be given to buying back those foreign enterprises in the domestic market. The foreign enterprises with overseas markets are the second priority; high-tech and strategic enterprises are the first priority; low-skill, everyday consumer goods enterprises are the second priority. If we cannot grasp the sales channels of the acquired business, the acquisition is no more than a pile of waste metal. It is much easier to grasp the domestic sales channels than the overseas sales channels. The acquisition of high-tech and strategic foreign-funded enterprises can help us to obtain at least some technology that we do not have, and to enhance control over the strategic business. The low skill, everyday consumer goods enterprises have a low entry barrier. Thus they may not offer the technology that we need.

On the third level, we can use the right conditions as an exchange in which we use the right format and scale to participate in the western financial crisis. This will also help to maintain China’s external demand from shrinking dramatically. The exchange condition should be across political and economic lines, etc. of which, in the economy, the possible choices include asking the other side to ensure market entry and the right of China’s goods, services and investments (thus opening a path for the growth of China’s investments); reduce or stop any interference to the trade relationship between China and the third country, thus improving China’s right of discourse in the international economy system; or taking China’s suggestions during multilateral trade and financial negotiations, and so on.

Any crisis can mean the reshuffling of the existing economic and political structure, meaning that all emerging great powers have obtained more rising opportunities. After the Opium War, China’s weakness and turmoil created an unprecedented opportunity for Japan to rise. The First World War allowed the United States to leap from a European economic colony not long ago to become a European creditor. The Great Depression in 1930s allowed the Soviet Union to quickly rise from a nation of poverty and underdevelopment, with the majority of the population illiterate. The Second World War destroyed the ruling status of the British Commonwealth and the French empire. The United States and the Soviet Union quickly replaced them. In view of this, as long as the leadership is strong, the goal is clear and appropriate, and the action is timely and strong, it is entirely possible for China to make full use of this opportunity to leap forward and upgrade its position in the international political and economic system.

Endnote:
[1] 21st Century Business Herald, October 29, 2008
http://www.nanfangdaily.com.cn/spqy/200810290106.asp

Chinese Premier Wen Jiabao and Russian Prime Minister Vladimir Putin met on October 28 in Moscow, Russia, for the thirteenth annual meeting between the premiers of the two countries. During the meeting, Wen and Putin exchanged their views on major issues regarding the pragmatic cooperation between the two countries. On the same day, the Xinhua News Agency published the background material on its website (Xinhuanet) about the system of the two premiers having regular meetings annually. Below is a translation to the background material. [1]

In April of 1996, Yeltsin, the Russian president at the time, visited China. He and Jiang Zemin, who was then the chairman of China, came to an agreement that there should be periodic meetings between China and Russia. They both agreed that it was very important that different branches of the two countries could communicate frequently in various ways and it was especially important for the leaders of the two countries to get in touch regularly. From December 26 to 28 of the same year, Li Peng, the premier of China at the time, went to Russia for a working visit. During the visit, the two sides agreed to a new system of having annual meetings between the two Premiers. Since the establishment of this system, the premiers from the two countries have met once every year.

There are three major regular meeting branches under this system: the meeting between premiers, the meeting for humanitarian affairs cooperation, and the meeting for energy negotiation among representatives. In all the foreign cooperation systems, this one [the meeting between the premiers] has the highest level, the most complete framework, and the widest area of discussion. The establishment of this system has pushed forward the good neighborliness and mutual beneficial cooperation, and has driven a healthy development of the strategic partnership of Russia and China. The major successes resulting from these meetings in recent years are as follows:

9/8/2001: Chinese Premier Zhu Rongji and Russian Premier Kasiyanov met in St. Petersburg for the Sixth Regular Meeting and signed a joint communiqué.

8/22/2002: Chinese Premier Zhu Rongji and Russian Premier Kasiyanov met in Shanghai for the Seventh Regular Meeting. The two parties thoroughly exchanged opinions on issues such as enhancing cooperation between the two nations, anti-terrorism, and easing tensions in hot spot regions.

9/24/2003: Chinese Premier Wen Jiabao and Russian Premier Kasiyanov met in Beijing for the Eighth Regular Meeting. The two parties both agreed that at the same time of making breakthroughs in the development of bilateral economic and trade relations, the two countries should extend humanitarian cooperation.

9/24/2004: Chinese Premier Wen Jiabao and Russian Premier Fradkov met in Moscow for the Ninth Regular Meeting. In a friendly and collaborative atmosphere, the two parties summarized the cooperative achievements between the two countries, worked over ways for solving existing problems, and determined the priorities of future works.

11/3/2005: Chinese Premier Wen Jiabao and Russian Premier Fradkov met in Beijing for the Tenth Regular Meeting. The two sides signed eight agreements in the fields of economics, education, health, banking, etc., and issued the “Joint Communiqué of the Tenth Regular Meeting Between Chinese and Russian Premiers.”

11/9/2006: Chinese Premier Wen Jiabao and Russian Premier Fradkov met in Beijing for the Eleventh Regular Meeting and both attended the closing ceremony of China’s “Year of Russia.” The two sides signed 17 agreements in the fields of energy cooperation, financial insurance cooperation, news exchange, etc.

11/6/2007: Premier Wen Jiabao and Russian Premier Zubkov met in Moscow for the Twelfth Regular Meeting. They signed a joint communiqué, and together attended the signing ceremony for signing the agreements on the cooperation between the two countries in the fields of trade, energy, technology, banking, border trade, etc.

Endnotes:
[1] Xinhuanet, October 28th, 2008
http://news.xinhuanet.com/world/2008-10/28/content_10267944.htm

The following is the translation of a series of interviews Radio Free Asia (RFA) conducted on the general election of village heads in China. [1]
BEIJING — On November 4, 2008, the U. S. elected an African-American, Barack Obama, as the next President of the United State of America. Yet, in China, some of the websites were still discussing the issues related to the election of village heads, and the people sighed over the struggling village elections in China.

Guang Ming Daily, an official Chinese News website published an article Xu Xun-Lei titled, "The U.S. Presidential Election Versus the Election of Village heads in China." The author disclosed that in recent years, there have been a lot of issues with the election of village heads in China, including bribery, the Village Committee and the Village Party Branch of the Chinese Communist Party (CCP) fighting for interests and power, and the lack of the judiciary playing its role that has caused corruption among village officials. The author quoted some of well-known experts within the Party, "Despite of existing issues, the direct election of the villages needs to be extended to the township level. In recent years, there are many people requesting that the general election of officials [be expanded] from the village to the township level, but the Central Government and many local government officials have opposed such requests." The author believes that this has been an obvious obstacle for moving one-step, or even half-a-step towards democracy. The general election of village heads in China was piloted in the mid-1990s [but] until now, it is still very hard to move forward. Cheng Xiao-Nong, the Editor-in-Chief of "Contemporary China Studies," a magazine in the U.S., has been working for the Chinese Reformation Committee. He is very familiar with the problems of Chinese farmers. He expressed that, in fact, the general election of village heads in China is deviated; it cannot be regarded, in a sense, as a genuine form of democratic election.

The CCP has used some clever ways to maintain its power; as a result, the Village Committee Organization Laws have been short-changed. In the end, they have gradually become the CCP’s former local appointed organizations who appoint officials for the villages; then, a fake voting system is used to pass the nomination. First, competition is not allowed; second, all candidates must be approved by the CCP beforehand. Therefore, the general election of village heads is much less meaningful; it has returned into the CCP’s local organization for appointing the village officials.

Mr. Cheng believes that the reason for the general elections of village officials running into difficulties is that the CCP does not want to give up its power in a "One-Party-Totalitarian System."

"The earlier elections of the villagers, generally, were relatively clean and normal. To the CCP, on the one hand, it was desirable to have the villagers’ general election form; however, it cannot allow the officials who are elected to be out of the control of the CCP. Therefore, along the way, the basic direction of the local governments has been to reinforce the leadership of the CCP, and there has been a gradual manipulation of the elections mainly through intervention from local CCP organizations.

Li Hong Kuan, the past Editor-in-Chief of a U.S.-based online magazine, "Big Reference," regards the general elections in Chinese villages as not comparable to general elections in democratic countries.

"They are incomparable because they are from systems of a different nature. In the United State, at the general elections, the Executive Head of a government is elected, but not the village heads. Frankly, in a village, the Village Secretary of the CCP, picks a running dog, or a gopher as the Village Head to carry out the CCP’s Central Birth Policy. It was like in World War II, the Japanese selecting a Committee Head to govern the villages by the same token. The Head of the Committee had no authority; the main power was in the hands of the Japanese. The real power over the land and the allocation of benefits belongs to the Village Branch Secretary of the CCP."

According to "the Village Committee Organization Law," the Village Heads are directly elected by the villagers expressed Cheng Xiao-Nong. Any organizations or individuals cannot appoint or replace [the village head]; however, local organizations of the CCP often intervene in the elections in the villages. In some areas, it happens all the time that the local governments appoint or replace the village heads. Cheng believes that the root of the culprit is "the One-Party-Totalitarian System," of the CCP that has caused difficulties for the general elections in the villages.

Endnote:
[1] Radio Free Asia, November 6, 2008,
http://www.rfa.org/mandarin/yataibaodao/xuanju-11062008110216.html

International Herald Leader under Xinhua published an article on October 6 on the U.S. economic policy under the situation of the world financial crisis. [1]
On October 3, the U.S. Congress passed the $850 billion financial rescue package. President Bush was relieved with a smile on his face, but led Chinese experts to worry.

US Assets Melting Down

 “The United States has always asked the whole world to bear the U.S. difficulties. It won’t be an exception for this time.” Zhou Shijian, Senior Research Analyst of the US-China Research Center of Qinghua University, told the reporter in an interview. Since the World War II, the United States has been issuing large amount of U.S. dollars (cash) and issuing national debt to resolve its economic crises. However, these methods, to certain extent, amount to transferring the risks to other countries including China.

Lu Qianjin, Associate Professor from Department of International Finance of Fudan University, said the main source of the rescue package issued by the United States was increasing national debts; it would make the financial deficit even worse, consequently, increasing the deficit in trade. It could hinder the growth of U.S. dollars and potentially force the dollar back to the depreciation track.

 “If the dollar depreciates, the price of the future oil products will remain high, and it poses the risk of asset melting down for the countries that hold U.S. assets.” Lu Qianjin said. At the same time, Lu said: “these countries will also face the same risk of asset melting down if the United States is to reduce its debt by depreciating the dollars.”

 “$850 billion rescue package is like purchasing medicines from the world to cure the U.S. disease.” Zhou Shijian told International Herald Leader. Currently, there is only one third of the U.S. dollars circulating within the United States. According to the report from the U.S. Treasury Department, China is the second largest holder of the U.S. debts.
   
Companies in China Are Suffering “US Default”

In reality, since the financial crisis started, the U.S. has been transferring its crisis to others. Zhou Shijian is using word of “killing buddies” to describe the U.S. behavior. “Europe has the best relationship with the United States, now Europe is in a crisis. The next is Japan, and then China” Zhou Shijian said.

Lu Qianjin said, China is not only facing the risk of dollar depreciation and bankruptcy of the U.S. financial institutes, it also faces the risk of the U.S. companies transferring their losses by defaulting on payments.

Currently, there are thousands of companies in Zhejiang Province facing default of the U.S. companies. The financial crisis has caused the decline in consumers’ spending in the United States.  Importers could not get their cash collected and the cash flow fell short. In addition, banks have tightened up their loans. Importers could not get their loans easily. Some importers announced bankruptcy after their cash flow broke, as a result, the companies in China could not get their payments for goods exported to the United States.

 “The U.S. companies have actually transferred their losses [to Chinese companies].” Lu Qianjin said.

Psychological Impact Could Not be Ignored

Tan Yaling, from the China financial research center of Beijing University, said in this financial crisis, through proactive adjustment, the U.S. has moved from reaction mode to pro-action mode and has transferred its loss to others.

 “The United States has a mature economy.  Many of its actions are strategic and foreseeing.  Sometimes, it uses the psychological factors to influence countries like China and to transfer its risks.” Tan Yaling said that  the U.S. stock market is going downward, however, the U.S. dollar index is going up.  “It is very abnormal. Therefore, you could see the U.S. strategies coordinate very well as planned.”

Tan Yaling said further that the dollar strengthening is to meet the need of inbound asset flow to the US. “It satisfies the market need in this special period,” at the same time, the U.S. is using the fluctuation of its stock market to throw the world into crisis. Even on the same day of the rescue package approval, the stock market dropped.

“Why it could be this way.  October 3 was Friday and the Chinese market closed for that week. On Monday before we open the market, we must check the U.S. market.” Tan Yaling said.

Tan Yaling told International Herald Leader, “by self-adjustment, the U.S. is using the psychological factors and policies to influence the market development in other countries.” The U.S. is not stronger than others, but rather behaved worse than others.

Or to Expand the Export of the Military Products

Because the rescue package costs $850 billion, the U.S. has to pay a huge amount of interest in the future. Lu Qianjin said that to make up this big hole, the U.S. could expand its export in military products.

 “There would be strong opposition if the U.S. government wants to tighten up the belt of its own people to solve the problem by increasing the taxes. One may have seen the opposition during the process of negotiating the rescue package.” Lu Qianjin said that another way of improving the economy and lessening the financial pressure would be to expand exports to increase income and tax revenue. “Especially expanding the export of military products is a fast and effective way of relieving the financial pressure in the US.”

Currently, the U.S. government has started to sell military products to Taiwan and the total amount will be $6.46 billion. “In the future, the United States may use future geo-political conflicts or the alleged potential military threats to expand exports of military products to certain countries and areas, hoping Exports of Munitions would alleviate domestic economic problems.” Lu Qianjin predicted.

Endnote:
[1] International Herald Leader, October 6, 2008  http://news.xinhuanet.com/herald/2008-10/06/content_10154827.htm

On October 6, 2008, the International Herald Leader, a subsidiary of Xinhua News Agency, published a respondent to the arrest and lawsuit against the Chinese-American physicist, Shu Quansheng, Ph.D., by the U.S. Federal Bureau of Investigation (FBI) [1]
LOS ANGELES, BEIJING — While the Chinese around the world joyfully celebrated the launching of Shenzhou VII, the news of "The Chinese Aerospace Spy Arrested," came out from the other side of the Pacific Ocean, the United States. On the early morning of September 24, 2008, the FBI arrested the Chinese-American physicist, Shu Quansheng, Ph.D., the President and CEO of the U.S. AMAC International Inc., in Norfolk, Virginia.

The FBI filed three indictments against Shu Quansheng: Illegally provided the defense service to the foreign agents in violation of the U.S. "Weapon Export Control Law," exported defense goods, and bribed or attempted to bribe foreign government officials in violation of the U.S. "Foreign Corruption Law, respectively." If all of these charges were convicted, Shu Quansheng would face up to a 25-year of imprisonments.

The Chinese-American Scientist Was Accused of Selling Technology

The FBI indictments indicated that Shu Quansheng provided professional technology to the aerospace plans; assisted the purchase of foreign technology, and the improvement of the aerospace and the satellite abilities of China. The FBI official stated that Shu Quansheng was suspicious of providing the technology that "will be used to implement the plans for future lunar landing and the new generation rocket fuel for its space station plans of China." The indictments indicated that since 2003, Shu Quansheng has sold the technology of developing the liquefaction hydrogen rockets to China, and provided the low-temperature pump, the low-temperature valve and the refrigeration equipment related to the liquefied hydrogen technologies for the construction of astronautics launch station in Hainan Province, China, all of them violated the "Weapon Export Control Law."

After the turmoil 1989-political movement, the U.S. implemented the weapon embargo against China, and it is prohibited to sell the high-tech products to the Chinese military departments. This prohibition is still effective and has become the prosecution legal basis for the law enforcement authority to investigate the Chinese-American espionage case.

At NASA, A Person of Great Merit, Earns High Prestige in the U.S.

The 68-years-old Shu Quansheng was born in Shanghai, China. He is a well-known scholar at the areas of accelerator, superconductivity and cryogenics, and has earned high prestige in the American scientific community. On October 5, 2008, the International Herald Leader called the office of AMAC Beijing branch, but nobody answered. According to the website of the AMAC Beijing branch, Shu Quansheng was the Chairman of the U.S. Applied Superconductivity Conference in 2001, and was a member of the Commerce Committee for President Bush

During the college years, Shu Quansheng majored in Physics. In 1970, after graduated and earned his Ph.D., he started teaching at Zhe Jiang University in China, and was engaged in the cryogenic technique research. In the mid-1980s, Shu Quansheng immigrated to the U.S. and was engaged in the scientific research at Washington University. In 1998, he became an American citizen. In the same year, he founded AMAC in Newport News, Virginia, and became the CEO of the company. 10

AMAC had been granted $4.7 million for research and renovation from the U.S. Department of Energy and NASA because of its outstanding achievements in the areas of superconductivity accelerating cavity, the radio frequency power coupler, the magnetic suspension cryogenic system and the astronautics low temperature. Shu Quansheng had led and completed six projects related to low temperature and superconductivity. According to the website of the AMAC Beijing branch, he developed the first prototype of Cryogenic Transfer Line with Magnetic Suspension in the world from 2001 to 2004. This magnetic suspension technology would improve the launch quality and lengthen the flight life span of the vehicle.

The U.S. Media Implicated the FBI Abused Its Power

The analysis of the aerospace plan of China from an American scholar may explain the intention of the FBI’s publicity of this so-called, "the Chinese Aerospace Spy Case," at the launch of Shenzhou VII. Charles Vick, a senior analyst for GlobalSecurity.org research group, a think tank in the defense information and aerospace research, which is headquartered in Washington, D.C., indicated during the interview that although the military power of China in outer space falls far behind the U.S., China possibly would threaten the leadership position of the U.S. in 15 years as a result of the its fast economy development and the support in aerospace plan of its government.

In fact, the U.S. Department of Justice launched the "The National Anti-Expansion Plan," in 2007, with the main purpose of prohibiting the export of sensitive military or military-civilian technology to China, Iran and so on. However, as early as in 2005, the FBI official publicly declared China as the biggest espionage threat. By now, the U.S. government has already filed at least 20 espionage cases that involved exporting sensitive technology to China. With incessant Chinese spy cases emerging, even the U.S. media, which always pursue sensation, started to suspect the authenticity. When "Forbes" magazine reported the Shu Quansheng case, it mentioned the Li Wen He case in 1999. It pointed out that Li Wen He finally sought the justice and obtained the compensation from the government and the media. It implied that the FBI abused its power during the investigation of the so-called Chinese spy cases.

An anonymous retired Chinese aerospace engineer told the International Herald Leader that the FBI and the other U.S. law enforcement agencies are still keeping the mindsets of the cold war. Their first impressions are that most Chinese technical personnel could be the Chinese spies of which made these Chinese-Americans impossible to protect themselves. The fundamental reason of these "the Chinese Espionage Cases" is the ideology conflicts between the different political systems of the U.S. and China, particularly the U.S. authorities still regard the rising China as the potential enemy. Under the present circumstance that both countries have close ties on economics and technologies, it could be predicted that more so-called "the Chinese Espionage Cases" would emerge.

Endnote:
[1] International Herald Leader, October 6, 2008
http://news.xinhuanet.com/herald/2008-10/06/content_10154808.htm