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China’s Economy Has Again Arrived at a Most Dangerous Time! (Part III)

The following article has been posted on many Chinese websites under different titles. The extensive posting on China’s heavily censored websites and blogs indicates a widespread public acceptance of the article; it also indicates that the ruling regime feels a real sense of political crisis. In this scholarly article, both nationalism and the anti-western sentiment found in traditional propaganda have been blended together. China is portrayed as a grief-stricken victim, not of its own regime, or of the breakdown of morality in China, but of lustful western exploitation that has expended all its natural and human resources to contribute to the welfare of the West and of the rest of the world. The West is cited as a scapegoat for all the current problems that China faces: the prevalence of tainted food, slave-labor wages, the prevalence of crime and prostitution, the outrageous environmental degradations, wanton corruption, the lack of occupational safety, the heavy losses in the financial sector, and even why China’s wealthy transfer their assets abroad. Below is an unabridged translation of the Chinese original. Chinascope has not been able to verify the authorship. [1]

Author: Professor Zhang Hongliang of Central University of Nationalities

The third step is the bargain purchase, that is, using a very low price or even a zero price to buy out the core industries or the leading companies in various sectors. Foreign investment in China has already caused the proportion of the local manufacturing industry to drop to 26.5% in added value. Also the purchase price is so low that it is far below the asset purchase price after the Great Depression. The purchase price is less than 5% of the value of the assets if purchased on the open market. For example, strong domestic banking networks support the fund management companies linked to banks. They sold 1/3 of their stock at the price of 1 yuan per share to the foreign investment companies. The foreign investment companies invested only tens of millions of yuan. After one year, without including the increase in capital, just the annual profit was over hundreds of millions of yuan.

As for handling the financial nonperforming assets, the gain that foreign companies have made is even more alarming. Take Morgan Stanley, which was mentioned previously. During the cooperation process with China Huarong Asset Management Co., one of four largest asset management companies in the nation, it made a 900% profit, and formed the world-famous “Huarong Model.” In fact, among the current 4,000 billon non-performing financial assets, a considerable number were created due to the foreign investment companies taking advantaging of the tax-emption policies to defeat the state-owned enterprises. This is what happens: the first to step is to beat the other’s husband to death, then to take over the other’s body. The sad thing is, in the end not only do our 4,000 billon non-performing financial assets fall into the foreign investment companies’ hands, but we also pay the bill for those 4,000 billon non-forming financial assets. The reason is very simple. Many non-performing assets are non-performing in our hands, but when they fall into the foreigners’ hands, they are no longer non-performing assets. The foreigners know very well that the Chinese government officials are afraid of foreigners in China. They will go through a lawsuit to force the local government to give them these non-performing financial assets.
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Thirdly, currently the foreign investments in China not only loot the country’s economic resources, but they have also started to disintegrate and destroy China’s political system resources. The raiding investors have created great GDP achievements for local governments. This, together with officials’ enormous personal interests, has caused the local governments to crazily seek foreign investors. The preferential terms they offer to the foreign investments have exceeded the economic sphere. They even give political and legal privileges that were used by the past imperialist concessions in China, at the expense of our national sovereignty, to attract these foreign investments. Due to the increasingly complex components of capital, now the local political and legal privileges have also been extended to all capital.

According to a news report from Legal Evening News last week, Qinyang City in Henan Province provided 12 various political and legal privileges to all those who invested over 50 million. These include the following: they do not need to conform to the traffic regulations, they enjoy half price for hospital care, their sons and daughters can freely choose a school, and they are not subject to police inspections in the entertainment area (gambling, prostitution), etc. It has also been said that every month from the 1st day to 25th it is “Quiet Day” for foreign businesses. No government unit including the judiciary is allowed to access the business. Whoever violates this will be immediately expelled from his job. Right until the time the reporter finished this write-up, 7 civil servants had been expelled from work because they entered a foreign business. A regulation similar to this one in Qinyang City of Henan Province has already been seen in the southeast coastal areas. A secretary in Guangdong Province directly said in front of CCTV’s video camera, when he was explaining why he asked the court to sentence migrant workers so they would lose the case, “Very simple. I have plenty of migrant workers here. But it is very hard to attract the foreign investments. If I do not speak for the foreign investors, who will speak for them? Development is the hard truth.” It was Comrade Xiaoping who said this. Many foreign investment companies in China have also changed from simply bribing the government officials, to gradually controlling them and giving them lessons. It was said of Beijing Vice Mayor Liu xx, that because he violated one foreign investment company’s interest, his corruption and a tape showing his promiscuity were immediately made public.

5. As for IPOs in the overseas markets, unlike the foreign capital’s predatory acts in China, our companies entering the developed western countries have brought surprisingly huge returns to the local investors. China Petroleum Corporation initially had only 2.9 billion US dollars when it went IPO in the United States. Four years later, the overseas dividends accumulated had reached 11.9 billion US dollars. For China Petroleum, China Petrochemical, China Mobile, and China Unicom, just the four companies, their overseas dividends have reached 100 billion US dollar. What is worth mentioning is that the above companies’ profits have completely come from looting domestic consumers, or from lucrative rate charges on calls for incoming and outgoing calls. This is the equivalent of collecting money from Chinese and giving it to foreigners. It is already terrible how the foreign companies loot China’s wealth; it is not justified that the state-owned companies in China also help the foreigners to collect China’s wealth.
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There are more than 100 companies similar to the above 4 companies. If the corporate dividends are paid in this way, not only developing countries like China cannot afford it, but developed counties such as the United States will be ripped down to a developing country.

Currently our national social security expenditure is a little over 300 billion yuan. The minimum amount for cost-of-living funds in 2004, and for the central government and local government’s finances, together were just over 20 billion yuan. This amount is equal to only 10% of the dividends that the above 4 companies gives overseas. The state-owned enterprises belong to the nation; they should serve the whole nation, and should not just consider the foreign investors’ interests. According to the 3rd health service survey by the Ministry of Health, currently over 50% of the urban population, and 87% of the rural population, do not have any medical insurance. About 80% of the population in the west-central area cannot afford medical care, over 50% of the rural, primary, and secondary schools hardly have enough operating expenses, over 40% of primary schools use dilapidated buildings, over 40% of primary schools lack desks and chairs, close to 40% of rural primary schools cannot pay electricity; some dare not turn on the lamps. In the western area some rural schoolteachers’ monthly salaries are only about 40 yuan. Some female teachers have to do prostitution after class in order to make a living. According to a joint investigation by Renmin University of China and Hong Kong University of Science and Technology, in 2004, China’s Gini coefficient was about 0.53. According to the National Bureau of Statistics’ survey of urban and rural households, the average gap between rich and poor in urban and rural areas has increased from 2.7 times in 1978 to 7.4 times in 2003. In 25 years the gap has gone up 4.7 times. After many years of sustained economic growth, it is shocking how rapidly the gap between rich and poor has been increasing. The root cause is no longer purely domestic factors, but rather the result of how international monopoly capital has colonized China.

6. Lastly looking from the economic developing zones, the hot trend of building economic zones across the nation for many years has already become a destructive force; it has become another way for foreign capital to loot China. According to the information provided by the Ministry of Land and Resources, from 1996 to 2003, the cultivated land in China decreased from 1.95 billion mu (note: mu is Chinese acre, 1 US acre = 6.07 mu) to 1.85 billion mu. It decreased by 100 million mu over 7 years; an average of 14.29 million mu each year has disappeared. This is larger than twice all of the cultivated land in Hainan Province. It is the equivalent of 2 of Hainan Province’s cultivated land disappearing per year. In China the cultivated land per person is only 1.43 mu, which is less than 40% of the world average. In 2003, there were 6 provinces whose average cultivated land per person was less than the 0.8 mu warning level. In 2004 the central government cleaned up close to 7,000 developing zones in the nation. The new projects in the developing zones occupy about 74 million mu of land. Among them 40% is not used for development. This has caused a large amount of land to remain idle. What’s even more sad is that a large amount of good fertile farmland has been completely destroyed.
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A Ministry of Land and Resources official said that the land occupied by the various developing zones has exceeded the total area of all of China’s cities and towns. More and more cities have embarked on the development of the “Suzhou City Mode,” i.e. using cheap land to attract foreign investment. According to a statistics report, in Suzhou City, every year when the GDP increases by 1%, it costs about 5,000 mu of cultivated land. With the speed of development being around 18%, cultivated land is disappearing at the speed of almost 100,000 mu per year. With cheap land used to attract foreign investment, we cannot count how much wealth has simply been given to foreign investment. However, it is reflected in the loss of farmers who have been deprived of their land. It is an amazing astronomical figure. According to some expert’s statistics, the farmers who are deprived of their land receive 5% to 10% of the value as compensation. In 10 years they have lost 10 trillion to 20 trillion yuan. Taking this land from the farmers who, for generations, have depended on the land to make a living, and giving the land to foreigners, this is a traitorous act. The foreign capital attracted by this cheap land, in turn, helps the real estate businesses by increasing the value of land. The increased value of land in China has become foreign investment’s profit. Pany Ming, director of the Department of Cultivated Land Protection, the Ministry of Land and Natural Resources, pointed out that from the situation in 2005, the land occupied by the new developing projects in the nation has resulted in a net income loss of 76.3 billion yuan, while the actual land use fees that the central and local governments have collected from the new developing projects, amounted to only 21.45 billion yuan. Of this money 55.0 billion flowed to the foreign investment real estate companies. That is, just in 2005, the land use fees in the new developing projects led to a loss of nearly 55.0 billion.

Let’s think about it. Our people’s wages have become the profit for foreign investments. Our future descendants’ resources have become the profit for the foreign investments. Our deteriorating environment has become the profit for the foreign investments. Our national land has become the profit for the foreign investments. In the end, what else do we have left for our nation?

Note: mu is Chinese acre, 1 US acre = 6.07 mu

Endnotes:
[1] Boxun, June 9, 2008
http://news.boxun.com/news/gb/china/2008/06/200806092153.shtml

Front Page Coverage: Media Publicity Campaign to Boost Hu

On July 10th, both the People’s Daily and Guangming Daily devoted the entire front page to an identical layout setting featuring the news, speech, and photos of Hu Jintao at the G8 Summit.  It was viewed as a media campaign effort to improve Hu’s image before the Olympics.

Source: Secret China, July 10, 2008
http://www.secretchina.com/news/253637.html

Five Celebrity Movie Stars Labeled Ugly Five for Criticizing Rights Record

An article posted by Xinhua named Richard Gere, Bjork, Mia Farrow, George Clooney and Ben Affleck as the "Ugly Five". It charged the five actors with criticizing China’s human rights.

In addition, Gere was blamed for his friendship with the Dalai Lama; Bjork for shouting loud “Tibet!” at a Shanghai concert in March; Farrow was singled out for her leading role in linking Darfur with China; Clooney was attacked for linking the Beijing Olympics with human rights; Affleck was listed for his comment: “be careful of communist China invading Taiwan.”

Source: Xinhua, July 11, 2008
http://news.xinhuanet.com/overseas/2008-07/11/content_8530584.htm

Flushing NY Residents Form Committee to Remove Pro-Communist Lawmakers

Early July local Flushing NY residents launched a campaign to remove two lawmakers from office for conduct unbecoming lawmakers.  Since mid May, pro-Communist thugs repeatedly assaulted Falun Gong on the streets of Flushing, NY.  Ms. Ellen Young, a New York State Assemblywoman, and Mr. John Liu, a New York City Council Member, both American Chinese, offered through pro-Communist Chinese language newspapers and in person assistance to the pro-Communist thugs involved in the violence.  The two had previously rejecting meeting requests from their constituents who are victims of the violence, including a mother who has two sons currently serving in Iraq.
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The Party Controls the Gun

Editor’s Note: This is an article published on Xinhuanet.com Website at the end of 2004. For the Chinese communist regime, giving up control over the army is equivalent to giving up its reign over the Chinese people. In the recent years, there have been different voices demanding for the nationalization of the Army from civilians, even from within the Army, but the Chinese Communist Party (CCP) would make no concession in this aspect. The following is the translation for the Xinhuanet.com news article. [1]

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“The [Chinese Communist] Party Controlling the Gun” is the Demarcation Line between Our Army and the Armies of Capitalist Countries

[Xinhuanet.com News Center, Beijing, December 25th, 2004]  The Resolution released at the 4th Plenary Session of the 16th CCP Central Committee mandates: “Adhere to the Party’s absolute leadership of the Army; always put the ideological and political education in the forefront as top priority in order to maintain forever the nature, the unique characteristics and the style of the People’s Army.” The Resolution provided guidance for us to improve the Party’s capability in managing the Army. The Party’s absolute leadership over the Army is the never ever-changing spirit of our army as well as a unique political advantage. It is also the demarcation line between our army and any other armies in capitalist countries.

People’s Liberation Army of China is the People’s Army established by and under the absolute leadership of the Chinese Communist Party; it is an armed force serving to carry out the political tasks of the Party. The principle of adhering to the Party’s absolute leadership, which was the foundation upon which the Army was created, had been formed and gradually been fully developed by the Party on the basis of its scientific understanding of the objective principles of China’s revolutionary struggles.

To adhere to the Party’s absolute leadership over the Army is, most fundamentally, to firmly uphold the banner [of the Party leadership], to support the core [of the Party], to keep consistent with the CCP Central Committee in ideology and political views, to strictly follow the instructions from the CCP Central Committee, and to firmly uphold the authority of the CCP Central Committee led by Comrade Hu Jintao as Secretary-General. This is the highest political discipline of our army, as well as the fundamental requirement to ensure the Party’s absolute leadership over the Army.

To adhere to the Party’s absolute leadership over the Army, we must firmly take Mao Zedong’s military ideology and Deng’s ideology of military development in the new era as our guidance, and fully implement the important ideology of the “three represents.” We must persevere in taking the ideology of the “three represents” as the important guiding ideology in leading and developing the military, making sure it is carried out in all aspects of the development of the Party Committees within the Army, and implementing it in all activities of the Army’s preparation for military battles. We must do so to truly resolve the two historical tasks: always winning the battles and never changing the nature of the Army. It is the basic ideological guarantee to ensure the Party’s absolute leadership of the Army.{mospagebreak}

To adhere to the Party’s absolute leadership over the Army, we must firmly resist the wrong ideological trends such as “Separating the Army from the Party,” “Depoliticize the Army” and “Nationalization of the Army.” We must further strengthen the Party’s absolute leadership and discipline ourselves in this respect.
 
To adhere to the Party’s absolute leadership over the Army, we must firmly uphold and improve the fundamental principle of the Party’s leadership over the Army, which mainly includes: (1) the ultimate leadership and chain of command is under the CCP Central Committee and the Central Military Committee. The CCP Central Committee is the top leadership and decision-making regime, and the Central Military Committee is the Party’s top leadership body inside the Army. (2) The Party establishes CCP committees at or above the regiment levels, and establishes the Party grass-root committees at the battalion level. The CCP committees at different levels are the core of leadership at each level. (3) According to the principle of democratic centralism, under the collective leadership of each CCP committee with committee members responsible for different portfolios and duties. (4) General Political Department is set up for the Army. At or above regiment levels, there are political commissar’s offices. (5) At the company level or equivalent, there are CCP branch committees which are the grass root regimes of the Party in the Army – the core of leadership at its level.

To adhere to the Party’s absolute leadership over the Army, we must stick to the practice of ideological and political education as top priority before any other agendas in the Army. It is the requirement to ensure that the Party will tightly control the Army in ideology and politics.

To adhere to the Party’s absolute leadership over the Army, we must continuously strengthen the development of CCP committees and cadres in the Army.

Endnote:
[1] Xinhua, December 25, 2004
http://news.xinhuanet.com/newscenter/2004-12/25/content_2379107.htm

Foreign Owned Enterprises Approaching 300,000

As of the end of June 2008, China had 8.6 million domestic enterprises, 280,000 foreign-owned enterprises and 27.28 million small businesses (“individual industrial and commercial households”), according to a recent release by the China State Administration of Industry and Commerce.

Source: Xinhua, July 10, 2008
http://news.xinhuanet.com/newscenter/2008-07/10/content_8524946.htm