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More Than Forty Thousand Injured Fingers

The Pearl River Delta is the pioneering area of China’s economic reform that started in the 1980s. It was the first area to reap the benefits of foreign investments and became the country’s manufacturing base and economic engine. For the millions of temporary workers who mostly come from the countryside and are the main contributors to the economic prosperity, however, the glittering neon lights and high-rise buildings are not part of their reality. Their best wish is very simple. At the end of the day, they hope that nothing has happened to them.

"Every time I operated the presser, I was afraid that something would happen to me. The big noise of the presser sometimes scares me," said Wang Fu, a 17-year-old worker who came to Guangdong Province from Henan Province to find work. In the afternoon of April 3, 2004, Wang Fu’s fear became true. His right palm got stuck in the presser, and all five fingers were cut off.

Wang recalled, "I screamed. The factory sent a security guard to escort me to the hospital. When we arrived at the hospital, the security guard didn’t want to go in. With excruciating pain, I had to walk to the doctor by myself. The factory manager told the doctor, "Don’t bother to re-connect the fingers; just wrap it up."

Wang had only joined the factory as a presser a little over a month earlier. The factory didn’t sign a contract with him, nor did it provide him with any safety training. Despite the manager’s remark, the doctor reconnected the four fingers that were still intact. However, Wang lost his thumb forever.

Wang said, "I heard that someone found my thumb, but the factory manager threw it away. Our manager is a tough guy. He has never paid any penalty for workplace accidents. In the same hospital, eight other injured coworkers were getting medical treatment. I heard from my coworkers that our boss is probably a Deputy to the People’s Congress. I’m scared. The factory didn’t give me a penny of food assistance. It didn’t send anyone to take care of me. My uncle had to spend time taking care of me, buying food for me with money he earned from selling recyclable items collected from the trash."

Zhang Hong, a 19-year-old boy from Hunan Province, is another example of the dark side of the economic boom. On September 9, 2003, he began working at a shoe factory in Huizhou City, Guangdong Province. The factory didn’t sign a contract with him. Nor did it provide any safety training. Assigned to operate pressers, Zhang had to work 11 hours a day, seven days a week. On September 29, the machine he was working on broke down and badly injured his right hand. Although he received medical care, his index and middle fingers could not function any more. The factory owed the hospital more than 4,000 yuan (about US$500).
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Zhang Hong’s father appealed to the Department of Labor in Huizhou City. The City government promised to urge the factory to pay the bill owed to the hospital. Zhang’s fingers became inflamed and swollen; however, the factory made no move to pay the medical bill. Finally a staff member in the factory office told Zhang’s parents that Zhang was injured because he had dozed off during work, and that the factory wouldn’t bear any responsibilities. It would only help with half of the medical bill.

Such stories happen on a daily basis but are rarely reported to the public. Only the growing numbers of hand surgery hospitals, which have also prospered along with the area’s industrialization, are witness to the miseries of the workers.

Dr. Xie, from the Fangshu Spring Hospital, in Dongguan City was asked whether hand surgery in Guangdong Province was the most advanced in China. He said, "It is not the best in terms of medical technology. However, it is truly advanced in the nation in terms of clinical skills. The number of injuries is huge. Doctors have plenty of clinical experience. You can also go to Shunde and Shenzhen cities. The hand surgery business there is also booming. There are even hospitals that specialize in hand surgery."

An online search in Chinese for "broken fingers hospital" rendered more than 1,000 results. Most of them are in the Pearl River Delta area. The website of the Guangzhou Peace Hand Surgery Hospital boasts that the hospital has processed more than 6,000 cases since it was established. Its success rate for re-connecting fingers is 95.5 percent.

Hengsheng Hand Surgery Hospital was established in 1993. It was the first privately owned hospital at that time. The hospital declined to disclose how many patients it has treated; however, its online introduction for its chairman, Huang Weidong, says that Dr. Huang has performed more than 3,000 hand surgeries.

Shunde Peace Hand Surgery Hospital is renowned in the Pearl River Delta area. Only two years ago, the hospital, formerly called San Zhou Hand Surgery, was still housed in a shabby three-story office building. In 2004, it completed the construction of two high rises. A hand surgery doctor there said that he has treated more than 4,000 hand surgery cases in 10 years, almost a case a day.

Every town in Guangdong Province has a department of hand surgery in its hospital. Dr. Song, in the hand surgery department of a hospital, estimates the total number to be over 100. In areas other than Guangdong and Zhejiang provinces, the hand surgery department is usually combined with the orthopedics department. Those areas rarely see specialized hand surgery hospitals. According to Dr. Song, "The hand surgery hospitals here are created by the market demand. More than 10 years ago, a lot of people in the orthopedics department didn’t want to handle hand surgeries. It takes at least two to three hours to reconnect a finger. The hospitals didn’t have the manpower. Some people saw the market demand and opened hand surgery hospitals. They made a great fortune. Think about ittens of thousands of fingers each year with the average price of 5,000 yuan (US$610) per finger. There are many other hand injuries as well. Think about the earning potential!"
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Starting in July 2003, Professor Xie Zexian, of the Guangdong Business School, and Professors Huang Qiaoyan and Zeng Feiyang, both of Zhongshan University Law School, conducted a survey on work injuries. They surveyed 582 patients who had suffered on-the-job injuries. The patients were from 39 hospitals and a career disease prevention hospital in the Pearl River Delta area. The geographic area included Shunde, Zhongshan, Dongguan, Huizhou, Guangzhou, and Shenzhen cities.

The survey showed that 71.8 percent of enterprises have had work injuries. Victims from rural areas, small towns, and urban areas constitute 70.2, 15.4, and 10 percent respectively. Most of the victims are young people. The average age is 26. The vast majority of the injured, 81.6 percent, are under 31 years old. The most common work injuries are machine cuts, 75.8 percent. The top area for injuries is fingers. The industries that see most of these injuries are hardware (32.3 percent), furniture (13.1 percent), electronics (8.1 percent), and construction (5.0 percent). Of the victims, 61.7 percent did not sign a contract with the factory. Only 11 percent of the enterprises have labor unions. Professor Zeng estimated that the number of broken fingers was over 40,000 per year.

Where have the victims gone? How are they able to survive now? The cell phone numbers listed on the survey forms are not working anymore. Student researchers at the Guangdong Business School did a one-time follow-up. They found that some victims had returned to their hometowns. Some had opened small stores, using the compensation they had been paid for their injuries. Some are still in Guangdong Province, waiting for a settlement in the lengthy legal process.

It is very costly for workers from rural areas to file a lawsuit in an urban area. A common work accident case normally takes 1,070 days to complete. Many people have to give up because of the time required and the high cost.

Zeng Feiyang said, "I want to build a monument to those injured on the job, right here at the Pearl River Delta area, where we see the most of them. We cannot let the poor workers bleed and cry at the same time." When asked why he hadn’t done so, he thought a moment and said, "This should be done by the government."

Methods Used in the CCP’s Campaign of Maintaining Advanced Nature

Indoctrinate the Party Line

The CCP has ordered its local organizations to form leader groups, allocate special budgets, and distribute campaign publications. The book Supplemental Materials for the Education of Maintaining the Advanced Nature of the Communist Party (shown on the right) is the primary campaign publication. It is priced at 400 yuan (about US$50). The book was written by the professors in the CCP Central Party School, and published by the National Administrative College Audio and Video Publisher. The following is its Table of Contents:

Chapter 1. The significance, background information, basic principles and high profile actions that are being taken to launch the "Maintaining the Advanced Nature of the Party" campaign, and the justification for this new round of indoctrination.

Chapter 2. How "Maintaining the Advanced Nature of the Party" must adopt the practice of the"Three Represents" as its core contents.

Chapter 3. "Maintaining the Advanced Nature of the Party" must include thorough study of the Party Charter and enhance the notions of the Party.

Chapter 4. "Maintaining the Advanced Nature of the Party" must solidify the ideal belief of Communism.

Chapter 5. "Maintaining the Advanced Nature of the Party" must stick to the mission of the Party and expand the traditions.

Retake the Party Oath, Wear the Party Pin

During this campaign, the CCP requires all its members to take the CCP oath again and wear the CCP pin. In the CCP oath, a member must pledge full loyalty and promise to sacrifice one’s own interesteven life to the Communist Party.

Organize Party Classes

At each local level, leaders and Party members are organized to take "Party classes" and to listen to Party theorists lecturing on the Party lines. Such study sessions span three months or more.
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Take Red-Tour

In December 2004, the"Summary of Development Plans for the 2004 to 2010 National Red Tour" was jointly released by the National Development and Reform Commission, the Ministry of Propaganda, the National Tourism Bureau, and other agencies. This plan was in time for the campaign to "Maintain the Advanced Nature of the Communist Party." Many tour activities are arranged for young people to visit the CCP "holy places" and to learn the glorified history of the CCP.

Strengthen Propaganda

The CCP has coordinated a propaganda campaign in China to go together with the Party’s campaign. Propaganda posters, art performances, and picture exhibitions of CCP history are widely used in this campaign.

Searching the Chinese word for "Party" and "Advancement" in the biggest online search engine in China, news.baidu.com, reveals a surge of the publications of the topic in March 2005. The chart below shows the number of articles found in each month from July 2004 to July 2005.

Christene Chen is a correspondent for Chinascope.

CCP’s Maintaining Advanced Nature Campaign Enters a Second Phase

When I first saw a webpage on Xinhuanet.com that was devoted to promoting the campaign of "Maintaining the Advanced Nature of the Communist Party," it reminded me of the "red sea" phenomenon in the Cultural Revolution era. The page was designed using red as the main theme. The communist symbol of "hammer and sickle" was put in the prominent place. Xinhuanet.com is not alone. On any homepage of the Chinese government or the state-controlled Chinese press media, you can find a link to such a similar, devoted webpage.

The push comes from the very top Chinese Communist Party (CCP) leaders. It is reported by Xinhuanet that in January this year, the Political Bureau of the CCP Central Committee spent its first three group study sessions of the year to study how to maintain the Communist Party’s "advanced nature." At one of the sessions, Party General Secretary Hu Jintao warned his comrades that this educational political movement "concerns the fundamental issues of Communist Party’s survival and growth."

This new political campaign has been the main propaganda theme for several months in China. The main purpose of the campaign is to continue brainwashing the Chinese, especially the Party members. It requires Party members to study and repeat the Marxist theory that socialism will eventually replace capitalism, and to remember the "superiority" of the CCP and socialism.

According to the Xinhua News Agency, the CCP has entered the second phase of the campaign. On June 23, 2005, the campaign "leadership group" held its working meeting in Beijing. The meeting summarized the previous activities of the campaign and completed the planning for the second phase. According to the requirements of "the Opinion of the Chinese Communist Party Central Committee regarding the use of the ‘Three Represents’ as the Core Contents of ‘Maintaining the Advancement of the Party,’" the second phase will start from July 2005 and end approximately in December 2005. It will involve 1.8 million grass-roots Party organizations and over 30 million members.

The central committee instructs that different levels of local Party commission and relevant agencies of Party and government organizations should further strengthen leadership and accountability. Enterprises in the second phase of "Maintaining the Advancement of the Party" should form core leadership organizations, and the Party head should be the group leader.

According to plans of the Party Central Committee, the Central Leadership Group of the "Maintaining the Advancement of the Party" campaign will conduct national tour checks to make sure the campaign has been carried out thoroughly.

Outside the CCP leadership circle, however, this political campaign was not well received by the people. Instead, Chinese people are more curious about censored news that many Chinese people are renouncing their membership in the CCP. (See photo on this page.)
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These days it’s easy to find people’s real opinions by just reading their anonymous online posts. The online post room of www.baidu.com, the largest search engine in China, shows thousands of such opinions from anonymous Chinese Internet users. Most are cynical and express discontent with the CCP campaign. The following are a few examples of such short, sometimes subtle posts regarding the CCP campaign to maintain advanced nature:

1. We are going through formalities with meticulous care; while, in truth, we are only cheating ourselves.

2. The apple is rotten to the core, how can it keep "fresh (advancement)?" [Note: the words for fresh and advancement pronounce the same in Chinese.]

3. From initial estimates, this campaign costs the nation more than 100 billion yuan. I’m sad. This campaign is cheating oneself and cheating others!

4. What has the "advancement" campaign advanced? Has it benefited the people? Has it changed anything? All paper and printing businesses are now revitalized (due to the campaign spending)!

5. This is the essence of unique Chinese politics. They want to cheat people with false, big, and hollow theories. Even though they themselves don’t believe it!

6. What is a Communist Party member? They are the ones eating, drinking, playing, and enjoying. The nation is sleeping. The Party is playing the society. People are weeping. It’s a pity that we Chinese people have such a strong slavery mentality, we won’t stand up until the final moment of life and death. I’m sad.

7. On the tree of the Party, there are so many corpses of dried rotten apples. They are still hanging on the tree. If there’s no determination to pick them off the tree, how can the "advancement" campaign win people’s hearts?

8. The formality of the Chinese Communist Party is murder.

9. Our leaders are lunatics. They should be sent to mental hospitals.

 
Christene Chen is a correspondent for Chinascope.

How Much Did Mao Zedong, Deng Xiaoping, and Jiang Zemin Get Paid for Their Publications?

Officially, the People’s Republic of China is an atheist country. From a different perspective, however, it appears to be a country where religion and government are one. China’s leaders are not only political leaders; they are also spiritual leaders. In Christianity, the supreme authority is God. In Islam, the top authority is Allah. In the Chinese government, the highest authorities are Mao Zedong, Deng Xiaoping, and Jiang Zemin. The Christians have the Bible, the Muslims have the Koran, but in China, Chairman Mao’s Quotations, Selected Works of Mao Zedong, Selected Articles of Deng Xiaoping, and various publications of Jiang Zemin’s speeches have attained the status of China’s "Bible." There is a difference, though: the Bible and the Koran are like Lunyu (Confucius’ teachings). No matter how many copies were published, Jesus, Mohammed and Confucius never made a penny from their books. Yet Mao, Deng and Jiang made a fortune from all of the publications that bear their names. And the Chinese government has paid for the bills.

According to independent research, during the ten years of the Cultural Revolution (1966-1976), China published 870 editions of Selected Works of Mao Zedong (Volume 1-4). The total published was 325 million paperbacks and 2.55 million hard covers. China also published the same book in 14 foreign different languages, including English and French for a total volume of 1.22 million. Over 500 million copies of another book, Selected Articles of Mao Zedong, were printed, for a total volume of 252.5 million. In addition, China also published many single-article books from Mao Zedong. There are over 6,000 editions. The total volume reached the astronomical figure of 2.886 billion!

The largest number of volumes so far is Chairman Mao’s Quotations. In the second half of 1966, in China, 200 to 300 printing factories printed this book. Most provinces printed enough books for the entire population, one per person. In October 1966, the Central Propaganda Ministry approved the export of Chairman Mao’s Quotations. By May of 1967, in only eight months, China International Book Trading Corporation exported over 800,000 copies to 117 countries and regions in 14 languages. Some researchers calculated that during the Cultural Revolution, the total volume of Chairman Mao’s Quotations published in China and abroad was over 5 billion. There are 500 editions in over 50 languages. The book was arguably the world’s "most popular book in the 20th century."

As for Deng Xiaoping’s books, according to the data in 1993, up until the end of 1992, China had published 56 of Deng’s works, totaling over 100 million copies. For Jiang Zemin, according to research, his book On the Three Representations "sold" more than 100 million copies. Each member of the 68 million Communist Party members has at least one copy. All the government employees, including teachers and doctors also have the book. There is no accurate number to indicate exactly how many books he had published during his 13 years in power.
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Such an astronomical number of copies represents a huge profit. According to reliable statistics, by the end of May 2001, Mao Zedong’s work had generated 131 million yuan (US$16 million). Deng Xiaoping’s publication Selected Articles of Deng Xiaoping (Volume 1,2,3) in 1993 had a price tag of 35.4 yuan (US$4.4). Assuming the remuneration was 15 percent and the volume was 50 million (each Party member has one), the one-time income was 265 million yuan (US$33 million). Also an independent researcher estimated that Jiang Zemin made a huge profit. His book On the Three Representations sells at 12 yuan per copy. With 80 million copies, at 15 percent of payment, his estimated profit is 144 million yuan (US$18 million). We should point out that it is primarily the government that buys Deng’s and Jiang’s books.

Consider the following. Mao met with President Nixon, Deng met with Prime Minister Thatcher, and Jiang Zemin met with President Clinton. They are all country leaders. But has the U.S. government ever published any of Nixon’s quotations? Has the U.K. government ever published any of Mrs. Thatcher’s works? Has the U.S. government ever published any of Clinton’s articles? How much profit did Nixon, Thatcher, and Clinton make from government spending on their books? China’s social system is so-called Socialism, but with a Chinese flavor. It has a strong Chinese flavor indeed.

 

Jiao Guobiao was an associate professor of journalism in Beijing University. His article "Declaration of the Campaign against The Central Propaganda Department" criticizes that the Central Propaganda Department is the largest and most powerful protective umbrella for the forces of evil and corruption in China. The article was well-liked by Chinese people but angered the authorities. He was later dismissed from his post by the university.

Why Is China So Interested in Offshore Mergers and Acquisitions?

Since March of 2005, the Chinese government has been proudly announcing that Chinese companies’ overseas mergers and acquisitions (M&As) have surged by 70 percent and that it anticipates the offshore M&As will be US$14 billion in 2005. It further predicts that China will become the most active country in the Asian Pacific region in terms of offshore M&As.

Nevertheless, China’s surge in offshore M&A activities faces two major problems.

Economic Issues with M&As

The first problem is economic. While China is celebrating its successful M&As, some of its buyers are experiencing significant losses. In 2004, TCL went through major restructuring after it acquired Thomson Color TV and Alta Cellular. While TCL’s size expanded rapidly, its revenue did not increase accordingly. The annual financial report showed the 2004 net income of TCL Group to be 245 million yuan (US$30 million), a drastic drop from the 570 million yuan (US$69.5 million) in the prior year. The profitability outlook for Lenovo Group, the biggest PC manufacturer in China, was very unclear after it acquired the PC division of IBM. As a matter of fact, Chinese companies are lacking adequate preparation for managing and counter measures for handling the risks involved in offshore M&As.

Political Problems with M&As

The second problem is political. Around July 21, the Chinese government announced its strategic change in its Renminbi exchange rate system. At the time, a few of its domestic companies were experiencing frustration in their attempts to make overseas acquisitions. The board of Unocal Corp. voted in favor of the lower Chevron offer of US$17.3 billion in both cash and stocks. The board announced that they wanted to "urge the shareholders to vote for the Chevron offer at the August 10 shareholder meeting." The positive progress of the Chevron offer indicated that CNOOC, the Chinese bidder, was actually out of the game. Almost at the same time, the Haier Group, another large Chinese corporation, announced that it gave up its plan to purchase Maytag Corp., its U.S. counterpart.

The obstacles that China’s CNOOC encountered in its Unocal acquisition originated from the M&A strategies of China’s corporations. While in general, the company being acquired is interested mainly in the sale price, the government of the country of the company being acquired pays more attention to issues of economic security. Since 2002, six Chinese firms have become the key players in offshore M&As. The motivation behind the Chinese companies’ offshore M&A activities can be categorized as follows.
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China’s Motivation for M&As

1. Guided by China’s national resource strategy, the first kind of offshore M&A targets companies abroad with irreplaceable natural resources. China Minmetals Corporation’s attempt to merge with Canada’s Noranda is one such example.

2. The second kind of offshore M&A aims at gaining key technologies that China’s corporations lack. Shanghai Automotive Industry Corporation’s acquisition of Korea’s Sang Yong Motor Co. and England’s MG Rover falls into this category.

3. The last category of offshore M&A aims at acquiring international brand names and sales networks in order to improve the image of Chinese companies in the global markets. Examples are the aforementioned overseas activities by China’s Haier, Lenovo, and TCL.

These three motivations behind China’s offshore M&As make strategic sense to China’s interests and will continue to be the fundamental consideration of China’s corporations in their future offshore M&A activities.

On the other hand, the above three strategic considerations do not necessarily match the national interests of the country of the acquired companies. Generally speaking, the third strategic consideration to acquire brand names and sales channels does not conflict with the economic security of the home nations. Yet the first kind of M&A, because it involves scarce resources, obviously affects the resource security of the targeted country. With regard to the second category, M&A by a foreign company does not pose much of a threat if only civil technologies are involved, while it will certainly face numerous obstacles if military technologies are involved.

Recently the Chinese Academy of International Trade and Economic Cooperation (CAITEC), under the Ministry of Commerce, published a study of China’s corporations’ foreign direct investment. The report indicates that in the past few years, among various types of foreign direct investments (FDI) by China’s corporations, the offshore M&A and the swapping of stock ownership have been increasing. Thus strategic investments abroad are gradually becoming a new way for China’s corporations to grow on the international stage.

Through discussions and surveys, CAITEC studied various corporations in 13 provinces. The feedback showed that with China’s surging foreign exchange reserves and the adjustment of Chinese corporations’ foreign investment strategies, that "M&As of overseas local companies" are becoming one of the major types of FDI by China’s corporations. Among various investment types, offshore M&As jumped to 34.4 percent, under the 69.8 percent of "setting up non-manufacturing branches such as offices and agencies," the 49 percent of "forming new joint ventures," and the 46.9 percent of "incorporating new companies." As is shown in the following table, the capital used for offshore M&As has been surging since 2003.
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The Surge of Offshore M&A Capital by Chinese Companies

Chinese Companies’ M&A Activities
 

Summary of Profit and Loss Staement for SOEs (in billions)

Year M&A Capital(in US$ billion) % Increase of M&As China’s Foreign Exchange Reserve (in US$ billion)
 2003  2085    403.25
 2004  7  50%  609.93
 2005  14  100%  711.00 (until June)
(Data source from Credit Lyonnais Securitie and from the published reports by the National Bureau of Statistics of China)

According to various sources, China’s offshore M&As are spared no cost. As soon as an interesting target is found, they are anxious to acquire it at any cost. As a result, they tend to overspend on M&As. While such behavior is ridiculed in China’s business circles as the "teenage phenomenon" and is considered economically immature, nothing can stop the acceleration of China’s overseas M&A activities. The total capital involved in the Lenovo acquisition of IBM’s PC division, the Haier deal, and the attempted Unocal acquisition by CNOOC, reached US$21.5 billion, which, according to some calculations, is equivalent to China’s profit from selling 100 million PCs, 100 million refrigerators or air conditioners, and 100 million clothing articles together with 100 million pairs of shoes. To these Chinese companies, such an astronomical amount is apparently beyond their financial reach. Who, then, is pushing China’s M&A activities overseas?

Why is the Chinese Government Pushing for More M&As?

The Chinese government is certainly behind these daring moves and has two considerations in pushing Chinese companies’ offshore M&A activities forward.

First, China’s economic growth shows signs of trouble. Because of the white-hot market competition, China’s businesses are facing tremendous challenges. For example, the net profit of Haier in 2004 approximated that of 2003, while its gross profit margin in the refrigerator business declined from 19.2 percent in 2003 to 16.5 percent in 2004. In the fourth quarter of 2004 before Lenovo’s purchase of IBM’s PC division, Lenovo’s net profit margin dropped 12 percent from the same period in 2003. It is natural that these companies try to lower cost and gain higher profit by expanding production—a phenomenon resembling Japanese businesses in the late 1980s when they chose to invest in foreign markets.
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China’s economic growth is currently facing a risk of slowdown. In May of 2005, foreign direct investments in China decreased 0.8 percent as compared with the same period of 2004. This was the first time since September 2000 that FDI in China shrank. This probably indicates significant changes in the foreign investors’ outlook on China’s economic prospects.

The second consideration by the Chinese government in supporting overseas M&As is the deterioration of the terms of foreign exchange reserves in China due to the "double surplus" in trade and capital. It is shown that as of the first half of this year, China’s total foreign exchange reserve reached as high as US$711 billion, a surge of 51.1 percent from the same period last year. Such a large reserve certainly results in a serious imbalance between supply and demand. The annual rate of return from China’s foreign reserve is calculated to be -5 percent.

There are several ways to alleviate this problem:

1. Spend the U.S. dollars that flow in from overseas

2. Lower the domestic demand

3. Adjust the exchange rate

Currently the Chinese government is employing both the first and the second approaches to release the pressure from the deterioration of the foreign currency reserve situation. To the Chinese government, it is a reasonable choice to spend U.S. dollars overseas by investing abroad and carrying out M&A overseas.

As a result, the Chinese government has been taking various measures to encourage its domestic enterprises to "go abroad." The special "2005 World Forum of ‘Going Abroad’ for Chinese Companies" held by CAITEC showed that the government will provide policy and fiscal support to Chinese companies. With such "fiscal support," who can blame U.S. Congress for questioning the (Chinese) government backing behind Chinese companies’ M&As in the United States.

He Qinglian is a renowned economist and jornalist from China. She is currently staying in the United States as a guest researcher.

The Battle Between the Chinese Government and Falun Gong An internal speech by the Chinese Deputy

[Editor’s note: Liu Jing, Deputy Minister of the Chinese Public Security Ministry, delivered a speech at a high-ranking Chinese Communist Party (CCP) meeting on June 30, 2005, about the battle between the Chinese government and Falun Gong. Liu Jing is also a member of the CCP Central Committee and Director of the Central Anti-Cult Office (initially named as the "610 Office" or "Office for Handling Falun Gong Issues").

Falun Gong is a kind of qigong practice, which became popular in China after it was introduced to the public in 1992. The principle of the practice"truthfulness, compassion, and forbearance"shares the core values of traditional Chinese culture and is therefore easily accepted by Chinese people. But the popularity of Falun Gong concerned the then Communist Party Chief Jiang Zemin. Jiang didn’t take well to the fact that so many people were out of his control and ordered to ban the practice in China on July 20, 1999. In order to justify the crackdown, Jiang personally claimed that Falun Gong was an evil cult when he was visiting France in October 1999. Despite the ruthless persecution over the past six years by the CCP, Falun Gong has never succumbed to the suppression and has persistently appealed to the government and the public to stop the persecution all over the world, a movement they call "clarifying the truth."

Below is a transcript of Liu Jing’s speech that describes how the CCP views the situation in regard to its battle against Falun Gong. In Liu’s speech, the CCP attributes its inability to eradicate Falun Gong to the support and financial aid by a Western anti-China force led by the United States.

In all subsequent instances, "anti-cult" is used in place of "anti-evil cult," and "cult" is used in place of "evil cult." Liu Jing used the word "evil" in front of each occurrence of "cult."

"Struggle" and "battle" are used interchangeably in English. In Chinese, it’s the same word.

The transcript is based on a voice recording and has not been reviewed by the author.

The speech contains vilifying statements toward the CCP’s perceived enemies, and one may need to construe those statements with caution. More information about the battle between the Chinese government and Falun Gong can also be found in the July issue of Chinascope:"Falun Gong: 1992 – 2005."]

I am reporting to comrades the situation of our struggle against Falun Gong. ….As internal information is involved, I request that comrades keep it secret, as the struggle is quite serious.
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Our struggle against the Falun Gong cult organization has spanned over six years. On April 25, six years ago, tens of thousands of people suddenly surrounded Zhongnanhai Compound without any prior indication, it was well-organized with strict enforcement of orders and prohibitions. They appeared suddenly, and left very suddenly. Hence started our battle with the Falun Gong organization. In the past six years, under the correct leadership of the CCP Central Committee, and supported by various departments and organizations, we have attained significant victories, and have taken control of this battle inside the country, but due to the complicated influence of numerous factors, both internationally and domestically, the battle is still very severe and complicated, especially after last November [in 2004]. The Falun Gong overseas headquarters has joined hands with other enemy forces and Taiwan independence forces, and dished out the series of reactionary articlesNine Commentaries on the Communist Party, which further complicated the situation.

Speaking of the current situation of the battle, we have to consider the current international backdrop at large. We have found, in our work, that two problems of great importance are worthy of our special attention.

The first one is, after the success of its anti-terrorism strategy, the United States is further pursuing its global hegemony. It has clearly strengthened its restraining tendency toward China, bringing increased external pressure on our safety and our political and social stability. As a pawn in the hands of Western anti-China forcesheaded by the United Statesthe reactionary role played by Falun Gong has been noted more obviously. In other words, the United States is now in a better position, and their hands are not as full as before the success of the anti-terrorism strategy. We all know that Western enemy forces have never given up their strategic scheme to westernize and/or split-off [Translator’s note: Chinese word leans toward the division of people, rather than land] our country’s population. The United States has never changed its fundamental policy of restraining the development of China. With the increasing strengthening of China’s overall national power, the United States has become increasingly worried about China’s rise. It regards China more and more as a potential opponent, or a potential enemy. Prior to 9/11, when [George W.] Bush took the office of presidency for the first term, he characterized the Sino-U.S. relationship as "strategic opponents," and adopted very apparent hostile policies toward us. After the war on terrorism started on 9/11, out of its anti-terrorism need, the United States expanded its cooperation with us. Bush changed his term to "constructive cooperation" for characterizing the Sino-U.S. relationship. Even so, he has never changed his dual approach to his policy of contact and constraint. During this period, under the excuse of anti-terrorism, the United States took the opportunity to accelerate its military besiege surrounding [China]. At present, after its success in Afghanistan and Iraq, the United States has expanded its influence of reach and its hegemonic ambition has become further inflated. In Bush’s second term, he changed his global strategy from anti-terrorism to "ending tyranny." Recently, Bush used "comprehensive and complicated" to characterize the Sino-U.S. relationship, which has gone backwards from "constructive cooperation" to "comprehensive and complicated." [Translator’s note: This exact term has been used by Colin Powell. See news title at http://usinfo.state.gov/eap/Archive/2004/Oct/25-129480.html] It is rather apparent that the policy of restraining China has been pushed to the forefront, and a series of actions have been taken to restrain [China].
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Through this brief review, it’s not hard to see that there has been a consistent guideline behind these actions. In February this year [2005], Japan and the United States confirmed that Taiwan was a beneficiary [Translator’s note: English literature used the word "common concern" to describe the Taiwan straight in light of the treaty; see: http://taiwansecurity.org/ST/2005/ST-260205.htm] under the U.S.-Japan Security Treaty. Meanwhile, the United States pressured the revaluation of the [Chinese] Renminbi [yuan], and set quotas on textile exports from China. It has increasingly blamed [China] for problems regarding intellectual property. From the end of last year [2004] to the beginning of this year, the United States resorted to all kinds of approaches and did everything it could think of to prevent the E.U. from lifting its ban on weapons sales to China. Recently, the rhetoric of "China threat" has caused a temporary clamor in the United States. The Pentagon is planning on publishing its evaluation report on China’s military power. Their VIPs have also been busy at spreading the words of "China threat," antagonizing the relationship between China and other Asian-Pacific nations. This has indicated that the Sino-U.S. relationship has entered a bumpy period, or a period of numerous problems.

Why do I want to review these things? We can recall that around November of last year [2004], it was then that Falun Gong brought out the series of the Nine Commentaries. It seemed to be accidental. In fact, it was an echo, and it was an act that was echoing to end this kind of rule and this kind of regime. In the U.S. strategy of restraining China, the Taiwan issue is an important chip, and Falun Gong is a pawn for sabotaging national security and political stability. The Western anti-China forces, headed by the United States, have determined that Falun Gong is a "resistance force" in China, and it is an organization that could possibly cause turmoil in China. The disruptive and sabotaging activities of Falun Gong, in fact, are a strategic component of the Western anti-China forces in their carrying out the scheme of westernizing and splitting off China. Some comrades have often asked me why the Falun Gong issue has not been resolved. I can surely say, without the U.S. support, this issue would have long been resolved. There were about two million people who practiced, not the 70 million they claimed. After these few years of hard and painstaking work, only about 40,000 people remain with problems that we have not fully resolved. That is to say that domestically, the political and social foundation of Falun Gong has been significantly weakened. Then why do we say that this problem is not resolved? Because the role of its being a pawn remains [to be played out], because there’s U.S. support, and it continues to be rather influential overseas, and remains to be the so-called "resistance force" to be used by Americans. It’s exactly because of U.S. support, which has increased the complexity and difficulty in our battle with Falun Gong. This is an issue, and as a pawn, its reactionary role is particularly outstanding.

First, from the perspective of the dramatic changes of the former Soviet Union and eastern European countries, to the "color revolutions" in Georgia, Ukraine, Kyrgyzstan, [Translator’s note: see rose revolution in Georgia, orange revolution in Ukraine, and tulip revolution at Kyrgyzstan at http://www.economist.com/agenda/displayStory.cfm?story_id=3785139], the "velvet" action brought up by Falun Gong should raise heightened alert among us. After dishing out the Nine Commentaries, in March, they brought up the "velvet" action, which is completely equivalent to "color revolution." In order to explain this issue, I think we should analyze the situations of these countries where "color revolution" took place. I think the following are some key factors of the "color revolutions":
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1. Opposing political factions had formed, and they played the backbone and leadership role in "color revolution." [Lech] Walesa in Poland and [Vaclav] Havel in Czech in the past, and present day’s [Viktor] Yushchenko in Ukraine, those in Kyrgyzstan, etc., all played such a role.

2. Media propaganda promoted the views of opposing political factions, attacking the current regime’s dictatorship, and corruption, which laid the legal foundation and prepared in media the taking over by the opposing factions.

3. Intervention by foreign forces, which brought about the situation of coordinated internal and external actions. From the situations of the "color revolution" in these countries, the necessary external condition for "color revolutions" to succeed was the all-out support from Western countries. These countries, through non-governmental organizations in particular, infiltrated ideologically into countries where "color revolution" took place, providing funding and technical guidance, and training key members of "street politics." On the one hand, it offered support via APO [Translator’s note: might stand for Administrative Protective Order], meanwhile the governments resorted to diplomatic pressure, economic sanctions, and other measures. These external factors caused the taking over of power in these "color revolution" countries through street politics.

4. There had to be timing, opportunity, and taking advantage of some accidental incidents, such as election, ballot, or a timing as such, when those in power were being forced to step down via street politics. What I call accidental events was, in fact, inevitable. It was simply an opening they had chosen for breakthrough. In going over the situations in this period, pushing forward a "color revolution," through street politics, to change the country’s polity for regime change, has become an important measure by the United States to topple other countries’ regimes. In regards to this, we have to take warning and attach importance to it.

We must stay alert and keep up strict guard against the "velvet" action brought up by Falun Gong. At the beginning of this year, a document forwarded by the Office of the CCP Central Committee pointed out that Falun Gong had totally exposed its anti-China, anti-CCP true nature, and had become a reactionary political organization funded and supported by the United States and the Taiwan independent forces, engaging in cult activities, with the goal of overthrowing the CCP. We can analyze Falun Gong activities based on the four elements of "color revolution." One, Falun Gong has turned into a political opposing faction from a cult organization, becoming the key player among various reactionary forces domestically and overseas.
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In November of last year, Li Hongzhi and Falun Gong headquarters, through secret planning with Taiwan independence activists and pro-democracy movement activists, dished out the series of the Nine Commentaries on the Communist Party, challenging the legality of the rule of our Party, challenging the legality of our Party’s leading Chinese revolution and construction, and challenging us in political and ideological fields. They openly shouted in the Nine Commentaries, "Only when there is no CCP, can China be saved." As thus indicated, Falun Gong stripped off their many years of boasted camouflage of not opposing the government, not engaging in politics, openly unfurling their anti-China, anti-CCP banner. In March of this year, they brought up China’s "velvet" action plan, established an action committee, declared the establishment of a transitory government and [nomination of] a "president pro tempore" overseas, and on this basis were to push for a nationwide election to generate a "legal government" in order to force the CCP to give up power. This development had taken a long time.

In October 2003, Falun Gong again adjusted their struggle strategy from bringing up troubles by themselves to helping others to bring up troubles, and then form the configuration that both were involved in bringing up troubles. They planned together on June 4th and other events. Falun Gong was the main force in Hong Kong’s July 1 grand parade in 2003. They have accelerated their cooperation with other forces, held over 70 Nine Commentaries forums in more than 30 countries and regions, and reached a consensus that "the CCP is our one and only enemy." Starting in January 2005, they initiated, in coordination with over 60 groups and organizations, the campaign of withdrawing from the CCP. Presently, with the common goal to overthrow the CCP, they have unified political stands, have taken the approach of joint resistance and coordinated work, have unified an organizational foundation, adopted the primary measure of engaging in street politics to seize power, unified their trouble-making strategy, and have established, preliminarily, an anti-China, anti-CCP federation. Just last month, they established the "Global Service Center for Quitting the CCP," and named July 1 as "the Day of All People Quitting the CCP" and July as "the Month of All People Quitting the CCP," in order to bring about a new wave of anti-CCP.

Among this anti-China, anti-CCP federation, Falun Gong is the core force and has established its bellwether position in trouble-making as a result of its strict organizational system, full-fledged propaganda machine, and abundant financial resources. After over a dozen years of painstaking buildup, Falun Gong has established organizations in more than 50 foreign countries and regions, and their activities have spread over to 70 countries and regions in each continent worldwide. There are over 50,000 people who frequently participated in trouble-making. There are more people overseas than in China. Key members total about 5,000. They have formed a multifunctional organization system, where orders are carried out smoothly. This includes the headquarters, regional coordination organizations, propaganda organizations, special trouble-making activity organizations, such as telephone activities team, educational and training organization, and peripheral supporting systems. Especially worth noting is that, after consolidation, The Epoch Times newspaper, almost matches our Guangming Daily in terms of weekly circulation. It is so-called "delivered" free. This paper has journalist stations in over 40 countries.
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"New Tang Dynasty TV" (NTDTV) rented four satellites broadcasting around the globe. Its coverage is very extensive among Chinese stations. The transmitters they rent from satellite companies are normally more than double the price of commercial use. Even the satellite companies say that this NTDTV is deep-pocketed. Normally renting of one transmitter costs US$500,000 to US$1 million, but they offer to pay US$2 million to start with. When Eutelsat tried to terminate their relationship with NTDTV, more than 40 U.S. congresspersons applied pressure, and a representative from the U.S. military applied pressure directly on the owner of Eutelsat. The representative made it clear that if the contract with NTDTV were cancelled, the U.S. military would cancel its contracts with Eutelsat worth over US$ 40 million.

Then there is the "Sound of Hope Radio Station." We all remember that there was a "Sound of Freedom Radio Station" around June 4, [1989], which only existed a brief few days. But "Sound of Hope" is of high capacity, and their headquarters and broadcasting towers are located in Taiwan. Additionally, there is a Broad Press Inc., plus over 200 websites coordinated by Clearwisdom.net. Thus forms their commanding, instigating and propaganda spreading network system, which is configured primarily around The Epoch Times, NTDTV, Sound of Hope Radio Station, and Clearwisdom net. Simply from the perspective of propaganda quantity and scale, this system exceeds the size of a regular organization. In some sense, it is equivalent to the configuration of a government’s propaganda system. This propaganda system has served as a platform, directing and coordinating various overseas and enemy forces. The facts have indicated that Falun Gong has become the core, trouble-making center of overseas anti-China and anti-CCP forces. It has become the political opposing faction, and it has become the core of overseas enemy forces.

Second, [it’s about] spreading sweeping reactionary propaganda and engaging in long-term operations and planning. We all remember that Mao Zedong said that to overthrow a power, one must carry out propaganda campaigns first. Revolutionary classes do it like this, and anti-revolutionary classes also do it like this. Falun Gong and its behind-the-scenes organizations know this principle as well. Prior to the publishing of the Nine Commentaries, the reactionary propaganda of Falun Gong concentrated on "persecution" situations. At the beginning of this year, we exposed the photos in the torture case in Huanggang, Hubei Province, as fabricated by Falun Gong. We have educated this person. He, himself, felt that he did something America wanted to do. Those torture photos were [brought out] at a time when international media were condemning the United States for abusing prisoners of [anti-terrorism] war. It brought about serious negative impact on folks who did not know the truth. [Many] condemned our state leaders, and called for sanctions against [China]. Since 1999, Falun Gong has been holding activities at each year’s U.N. Human Rights Conference. In 2001, Falun Gong gathered 1,500 practitioners in Geneva, and made a media splash in coordination with the anti-China resolution introduced by the United States. They even occupied the square in front of the U.N. headquarters for three days. The United States did not introduce anti-China resolutions this year, and about 100 Falun Gong people went there. They were in complete coordination with the United States.Until the end of last year, they were belittling and defaming our image, smearing our Party and country in coordination with [the United States].
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After the Nine Commentaries came out, Falun Gong mobilized all of their propaganda machines to spread the Nine Commentaries, to attack our CCP history, and to negate the success since the reform and opening up that has caught the attention of the world. Especially now they have mobilized all the propaganda machines to incite people to do the "three withdraws." That is, to withdraw from the CCP, withdraw from the Youth League, and even from the Young Pioneers. Their purpose is to prepare, media-wise, for the overthrow of the CCP and the socialist system. They resorted to various measures, with no options being ruled out, and especially notable is the deployment of modern technologies.

Falun Gong gathered a group of highly educated, new-generation elite, who mastered modern technology and media methods, and who formed various special technology task forces. From last December to the end of May this year, our relevant departments found a total of 248 websites about the Nine Commentaries, and had blocked 80 million attempted accesses to these sites, and blocked over 30 million e-mails. We must admit that there are weak links in our preventive measures in these technical fields. In other words, the Western [countries] are one step ahead of us in terms of technology measures and information security. For example, it is currently hard to calculate how many harassment calls were made. Based on our preliminary statistics, reports filed [by the authorities] alone amounted to tens of millions. Another example is tapping into satellites. Since June 23, 2002, we have been attacked by Falun Gong illegal signals 186 times, totaling 103 hours 37 minutes. Among these, 51 cases took place this year. On March 14, 17 and the evening of the 21st, six transmitters were attacked in three rounds. Each round lasted one and a half hour, resulting in interference of 18 Chinese Central Television (CCTV) and local channels. The reactionary Nine Commentaries footage appeared on TV for as long as one minute and 12 seconds, resulting in extremely negative influence. Many viewers called, "Why did images of overthrowing the CCP show up on state-run television?" Attacking satellites involves very complicated technology issues, which means that highly capable people are involved in planning and support, which makes it very hard to guard against.

We must understand, this is not only a severe threat to our national security and information security, it has also brought serious challenges to our ideological field. In fact, the Western enemy forces are taking advantage of their superior information technology to start an ideological war without any gunfire. In this regard, Falun Gong has done something the United States and Taiwan dare not to do. This is the second point.

Third, funded and supported by Western anti-China forces and Taiwan independence forces, [Falun Gong] actively acts as a pawn [serving the purpose] of being anti-China, anti-CCP. It is inevitable that Falun Gong has turned reactionary politically as they have been supported by the U.S. and Western anti-China forces. In the mid-90s of the last century, foreign intelligence agencies conducted careful research on Falun Gong, considered it a force that could be used, and suggested the organization to the U.S. government for "temporary exploit." After April 26 [1999], foreign forces increasingly saw the value of making use of Falun Gong, and further strengthened their support.
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Taking recent incidents as an example, they had frequent trouble-making activities overseas. The number of attendees easily exceeded 1,000, as they called for global campaigns, and held large-scale evening parties. This indicates that they are very sufficiently funded. As we have seen in some reports, some leading overseas democratic activists expressed their envy of Falun Gong’s source of never-ending funds. Comrades may all ask from whom do they receive the money? You can all make clear judgments, who is supporting them? Who is providing the money? Some comrades went overseas, and saw groups of old people standing by our embassies holding banners, and doing physical movements. After careful inquiry, we found that they mostly are living on social welfare. It’s this group of people, which indicates that [organizers] have lots of money [to hire these old people]!

We must especially point out that the Taiwan independence forces are even more in tune with Falun Gong, and they offer support from all perspectives. We have investigated and found that satellite-attacking equipment is installed in Taiwan. The "Sound of Hope Radio Station" is located in Taipei. The Taiwan independence forces were important in supporting this recent publishing of the Nine Commentaries overseas. The head of Falun Gong in Taiwan, Chang Ching-hsi, a professor at Taiwan National University, sent Nine Commentaries articles to Chen Shui-bian. Chen replied in his letter, praising that "the viewpoints are indeed unique." Chen ordered relevant departments to offer Falun Gong political and financial support. Annette Lu, [Translator’s note: Vice-President of Taiwan, whose name is also spelled as Lu Hsiu-lien] pretended that she had started practicing Falun Gong. Falun Gong has actively helped Taiwan independence forces. On March 26 of this year, the "opposing anti-secession law" parade was said to have over one million participants, but it was actually a parade of only 20,000 or so people. Falun Gong was an important organizer. They organized three tiers, each with 3,000-6,000 people, totaling at least 10,000 participants. They unfurled banners which read "Nine Commentaries on the Communist Party is the Best Remedy to Oppose Anti-Secession Law."

Fourth, conducting an all-out reactionary propaganda campaign targeting inside [China], in an attempt to re-establish teams, to intervene in domestic affairs, and to prepare for "velvet" action. After the publishing of the Nine Commentaries, our overall judgment was that the noise was loud overseas while there was little action domestically. As the infiltration has continued, there has been relatively significant negative impact domestically. The current propaganda calls for Falun Gong [followers] inside China to do "three things" well during the "Fa-rectification." That is to spread the Nine Commentaries, guide people to see clearly the CCP’s true nature, and to spread the three withdraws. On the other hand, they did everything possible to get involved in mass incidents, to try to direct various mass incidents toward the direction of dissatisfaction with the Party and government, and to intertwine Falun Gong activities with people’s demand based on their own interests, and to push forward a "velvet" action.
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Recently there have developed two tendencies in domestic Falun Gong activities. One is underground activities have turned apparently political. One province did a survey of 87 Falun Gong people who had exposure to the Nine Commentaries, and found that over 50 percent of them were in agreement of the opinion [of the Nine Commentaries], and only 13 percent opposed it. We have solved anti-CCP cases in Beijing, Tianjin, Liaoning Province, Shanghai, Henan Province, Jinan City [in Shandong Province], Heilongjiang Province, Hubei Province, Guangdong Province, and Chongqing. One employee of a water resources bureau openly persuaded people to quit the CCP on the bus and inside the bureau’s family quarters. May 13 [2005] was World Falun Gong Dafa Day, which was Li Hongzhi’s birthday. There appeared a huge 13 meter by 1.5 meter [43 feet by 5 feet] banner in the downtown of a province capital city, which read, "Stop the Persecution; Say Farewell to the CCP." Just last month, one teacher openly told her elementary school pupils, "The red ties you wear are soaked with the blood of those killed by the CCP." She tried to stir up emotions among these kids to quit the Young Pioneers. This is a political tendency.

The second tendency is that dissatisfied people in society are gradually gathering under the torn-up banner of Falun Gong. This tendency that develops among domestic liberalization activists and people who are dissatisfied with the Party and the society is worth our special attention.

Recently, Falun Gong has planned the "four withdraws/quits," which are ridiculous and, shameless. First is to withdraw from the stock marketcausing the stock market to collapse. Second is to withdraw money from banks and cause banks to bankrupt, resulting in social chaos. Third is to quit your job and cause "herd behavior," resulting in social turmoil. The fourth is to quit eating, instigating persons in the mainland to declare a group hunger strike, to be followed by overseas persons. If someone dies as a result, then the practitioner will be declared internally to have reached consummation. Publicly, the United States and U.N. will [be urged] to stop the CCP’s brutality.

Hence, comrades should pay serious attention to these two tendencies.

These are the two issues I communicate to comrades which should be worth our special attention. Overall, Falun Gong has become a political opposing faction, the core, key force joined by various overseas enemy forces confronting us. Hence, presently and in a rather lengthy period of time to come, Falun Gong has a realistic damage and threat potential to our national security. The battle with Falun Gong is a matter that is related to the Party’s ruling status, and it is an enduring, political battle that is related to maintaining societal stability.

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