[Editor’s note: China pays close attention to the general election in Germany. The article below is an analysis of what the result of the German presidential election may mean to China. The article was first published in China’s state-run media China Youth Daily and republished in Xinhuanet.com on September 29, 2005.]

It Is Not Good News to China If the Age of Schroeder Is Over

"Please hurry to find a solution!" The chaos after German election on September 18 made Mr. Barroso, President of the E.U. Commission, anxious. The headquarters of the European Union was expecting the deadlock between two German major political parties to end soon. It was because the German election not only has a huge impact on Germany itself, but also affects European Union’s nerves.

On September 28, two major German parties held a second round of negotiation. Various signs have indicated that, after a deadlock for ten days, to form a "grand coalition government" by Christian Democrats/Christian Social Union (CDU/CSU) and the Social Democratic Party (SPD) would be more practical and popular. However, the two parties have not reached a clear compromise.

Outsiders need not to worry about complicated election and political struggles in Germany. Nonetheless, one has to pay attention to the impact of German election both on Germany and on other major powers in the world.

Which Direction Is European Political Situation Turning To?

As early as in May/June this year, referendums on "The treaty of European Constitution" held in France and Netherlands have failed one after another. After the July bombing in London, some politicians and analysts around the world believed that, having experienced these events, European countries will make a "right" turn in the future elections.

Germany is one of the largest member states of the European Union and it is also one of the "twin engines" for this giant ship of European Union. Not only has the German election served as a "wind cone" for the European politics but also has had a solid influence on the European political direction.

Prior to the election, CDU/CSU led the poll by 20 percent. It was believed in a lot of analyses and comments that right-wing Merkel would be the new Chancellor of Germany and the political trend in Germany would lead European politics to turn "right" altogether. However, the result of the election indicated that the left-wing has unexpectedly gained support from a large number of people. It was too early to have a "right-turn" conclusion. Even though two parties would reach a compromise that Merkel would take the position as Chancellor for the "grand coalition government," SPD would not easily give up its power in the coalition government. Merkel will not be able to follow her own agenda during her administration.
{mospagebreak}
The Guardian in the United Kingdom even believed that the European political trend is not turning "right" but "left." It reported that the German election has caused a strong reaction in France. The popularity of French right-wing political star Sarkozy faded. The right-wing government in Norway stepped down after a recent election. The British conservative party is unable to recover after a decline. Italian right wing and pro-U.S. government continues to lose people’s support and faces a risk of failure in the next year election. "In fact, the European political trend is not unclear."

European Union’s Foreign Policy Faces an Adjustment

Over the past several years, Germany led by Schroeder, and France led by Chirac, have been European Union’s "motors" and they are also two advocates for European Union’s independence in foreign relations and defense. It may be said that these two "brothers" have caused the United States endless headaches when dealing with Europe.

Schroeder and Chirac ganged up on Bush on the 2003 Iraq war, causing relations between Europe and the United States to slide to a new low since the end of the World War II. After Bush was re-elected, although both the United States and Europe have expressed their "good will" of "reconciliation," and Bush has had several meeting with Schroeder and Chirac to reconcile, the United States has taken a firm stance. Bush would oppose anything that is advantageous to Schroeder and Chirac. A good example is the United States’ stance against Germany to be "a permanent member the Security Council" in the reform of U.N. Security Council.

But after the German election, no matter who takes Chancellor’s office, the hard-line policy adopted in the age of Schroeder toward the United States would be gone forever. Whether in Germany or other European countries, it is believed that in the "post-Schroeder age" it is very important for Germany to fix its relations with the United States. Germany should show a positive attitude (advantageous to the United States) on the Iraq issue. Germany’s attitude on other issues, such as the nuclear problem in Iran, Syria and so on, would be more "flexible."

Since there is little hope for French President Chirac to be re-elected, the European Union, led by Germany, France and the United Kingdom, would be more cooperative with the United States in military and political integration.
{mospagebreak}
China-E.U. Relationship Would Enter a Phase of Adjustment

In recent years, China-E.U. relations have been heated up rapidly. Both sides established a strategic partnership and published "policy documents" toward each other. On the one hand, it is a natural result of the peaceful rising of China and the change of international environment. On the other hand, the friendly attitude toward China by Schroeder and Chirac is also a very important factor.

In the past two years, almost all of motions proposed to strengthen relations between the European Union and China have been strongly supported by France and Germany. On the issue of arms embargo against China, Schroeder and Chirac are part of the determined group to lift the ban.

From the perspective of realistic interests of both sides, it is a main trend that China and the European Union will continue to maintain close relationship. However, on some important issues that would bother China-E.U. relations, such as the arms embargo against China and the "position in the market economy," Merkel and next French President will not be as positive as in the age of Schroeder and Chirac. China-E.U. relations might enter a new phase of adjustment. Germany will take turn to be the Chairman State of the E.U. Commission in the first half of 2007. Then, we will see how Germany will further develop relations between China and the European Union.

http://news.xinhuanet.com/world/2005-09/29/content_3560177.htm

[Editor’s note: The article below is translated from an article published on People’s Daily, official media of the Chinese Communist Party, on November 29, 2004, reflecting the views of the Chinese government on GPS technology.]

According to the October 24 [2004] issue of (American) Business Week, the U.S. military has drafted a detailed operation plan, "when necessary," to destroy satellites of the Galileo global satellite navigation system of European Union. After publication, it immediately drew high attention from all over the world. AFP, Reuters, the British Financial Times and the U.S. Washington Post re-published the news. The BBC even had a feature report on this issue, analyzing how the United States would handle the satellites of the Galileo system. Several media said that the act by the United States thickened the smell of the gunpowder in the air space.

Repeatedly Threatens to Attack

Business Week reported that after long time preparation, U.S. Air Force released a confidential document last August. Under Secretary of U.S. Air Force Peter Teets was one of its authors. In the document, he first asked: "What will we do ten years from now when American lives are put at risk because an adversary chooses the Galileo constellation, such a Global Positioning System, to attack American forces with precision?" He himself answered the question by saying that the "most wise" way for the United States is to attack satellites of the system.

This is not the first time that the United States threatened to attack satellites of the Galileo system. Business Week also revealed that previously U.S. and European officials held a special meeting in London to discuss the issue about the Galileo system. At the conference, U.S. officials requested the European side to make a concession of "not damaging American interests," but were refused. They had a heated argument. U.S. representatives threatened to destroy the Galileo satellite positioning system when necessary. Upon hearing these words, European representatives rebutted in anger that if the Galileo system will be used for the military or for a war against the United States by some countries, Europe will not turn off or jam satellite signals. A senior official who attended the meeting revealed that, after listening to European representatives’ hard-line position, U.S. representatives reacted "cool-headed," yet implied that the United States has made a plan to handle satellites that may pose a threat to U.S. interest in the future.

Our reporter interviewed Sanches, spokesperson for Galileo program of the European Commission about the report of the U. S. threats to satellites of the Galileo system. He stated that if there were people in the United States threatening such, it would be "unwise" and "such opinion would not be worthy of any comment by the European Union." Specifically he told the reporter that the United States always had reservations about the cooperation between Europe and China in this field. However, related parties have signed agreements. "It seemed to make no sense in further commenting."
{mospagebreak}
Why It Fears the Galileo

Why did the United States threaten to attack European satellites? The United States worried that, when the Galileo system starts to operate, the United States would lose its dominance of space.

In 1973, the United States started to develop the Global Positioning System (GPS). Having continuously improved the system for 20 years at the cost of US$20 billion, it finally was completed in 1994. The GPS consists of 24 satellites that orbit about 17,000 km above the earth. By using signals transmitted from the satellites, receivers on the ground may position their own locations and precisely discover a target. For military purposes, the GPS can navigate military aircraft, ships and missiles as well as locking up targets of attack. For civilian purposes, it can navigate airplanes, vessels, and motor vehicles. Today countries around the world use the GPS and the United States has made a huge profit. However, to prevent the military in "some countries" from utilizing the GPS to threaten the United States, it provides satellite signals of lower precision to other countries and the most precise satellite signals to its own military. In doing so, the United States is able to get the precise position of any object on earth while other countries can only have a "rough idea." Worse still, the United State can, if needed, disrupt signals transmitting to certain countries to paralyze the aircraft and vessels of these countries.

E.U.’s Galileo satellite positioning system poses a challenge to America’s "dominance of space." Europe proposed the Galileo program in 1999. It prepared to invest 3.6 billion euros and to launch 30 satellites into space at an altitude of 24,000 km as the Galileo satellite positioning system. E.U. pointed out that the said system would mostly be used for civilian purposes to provide precise positioning service with error range of 1 meter. In comparison with the American GPS, the Galileo system is more advanced and more reliable. The signals that the United States provides to other countries could discover an object of only about 10 meters long on the ground. However, Galileo could find an object of one meter long. A military expert made a vivid analogy that the GPS can find a street while the Galileo can find a door of a house. If Galileo is to be used for military purposes, it would mean that other countries would be equipped with a "far-sighted eye" that only the United States currently has it. The Business Week article believed the reason why the United States threatened to destroy the Galileo satellites is to a large extent "targeting China." Not long before the United States made the threat, China and European Union held a ceremony to sign the technology agreement for the Galileo program that allowed the cooperation of both parties to enter the critical operation stage. China is the first non-E.U. country that has participated in the Galileo program and China will have a 20 percent ownership of the system and full rights to use it. At a press conference held by Chinese Foreign Affairs Ministry on October 26, a reporter raised the Business Week article. Zhang Qiyue, Spokesperson of Foreign Ministry, said that Galileo cooperation between China and Europe is completely for the purposes of civilian navigation technology and industry. There is no intent to target a third party in the cooperation between China and Europe. It is absurd and ridiculous that some reports or some people said that this cooperation would be devoted to military uses. "I would like to advise certain people to give up this cold war ideology," Zhang added.
{mospagebreak}
The United States Does Not Just Talk

In the early morning on October 26, British Broadcast Company carried a complete report on the threat by the United States. An expert said that it is not totally impossible for the United States to "destroy the satellites" as it threatened. In fact, U.S. military has already started preparation for a real-time operation in order to "cope with a threat from outer space."

According to U.S. media, soon after U.S. Defense Secretary Rumsfeld took office, he received a report from a confidential committee in the Pentagon. This committee is specifically responsible for the study of "the threat from outer space." Not long ago, the U.S. Missile Defense Agency made a highly classified proposal for weapon development, which started the process of "weapons entering the space." In the proposal, the Missile Defense Agency requested Congress to allocate $ 68 million in 2005 for the development of a satellite with offensive capabilities.

Then, how does the United States deal with the Galileo satellites? A British military expert thought that the "direct attack" would be the most effective measure for the U.S. military. According to U.S. media, U.S. Air Force is developing various space weapons. The "space bomber" draws most attention. It can fly beyond the atmosphere and launch missiles from 96 km above ground to attack enemy satellites. Moreover, the U.S. military is also developing anti-satellite missiles and space laser weapons. At the same time, the U.S. military has built space war troops, established a new "star war school" under the Air Force Command and set up two new troops for the attack and defense in a space war, respectively. U.S. military "space war" exercise has been carried out frequently. As early as 3 years ago, the U.S. military had held a five-day space war exercise titled "Schriever 2001," which brought back memories of the demonic "star war project" in the cold war. Since then, the U.S. military has carried on such space war exercise several times.

European Countries Will Not Compromise

Most European media held that European Union would not give in to U.S. threats. Firstly, this is European Union’s own need. At the launch of the Galileo program, Prodi, President of European Union Commission remarked that this is a matter of the future of Europe, a struggle between monopoly and anti-monopoly and a diplomatic struggle involving political, economic, military, and national interests. It brought back to the Europeans the pride no less than that of Airbus and Ariane rocket. French President Chirac refuted the United States that to give up the Galileo program would mean "to accept the present pitiful situation of a subordinate to the United States in the space sector." Nowadays, not only did the original 15 member countries of European Union but also the 10 countries that recently joined European Union participate in the development of Galileo system.
{mospagebreak}
Secondly, this is also the need of a lot of non-E.U. countries. Business Week believed that it is also possible for countries like Russia, Israel and others to join this program after China. A European scholar said that, taking China as an example, the overwhelming majority of its satellite navigation application is set up on the U.S. GPS. Once there is a war, the United States would turn off the application to China and consequence would be beyond prediction. Therefore, a big country such as China must have multiple satellite navigation systems.

Regarding this issue, the Business Week editorial warned that competition between Galileo and the GPS would cause the international community to have a new political split just as the Iraqi war, which would divide the international political arena into two big camps of pro-U.S. and anti-U.S. "In front of the conflict, all countries cannot help express their stance," said Business Week.

http://www.people.com.cn/GB/jingji/8215/41174/41178/3020351.html

[Editor’s note: The article below is translated from a news report published on Xinhuanet.com, a website of the Chinese government official news agency, on July 28, 2005. China has been very eager to develop satellite GPS technology.]

For the First Time China Participates in Galileo Satellite Program

On July 28 in Beijing, the Chinese general contractor for the European Galileo program signed three contracts with Galileo Joint Undertaking. China is the first non-E.U. country that signed a contract that deals specifically with applications.

The Galileo Industry, with 3.5 billion euro investment, is an independent global satellite navigation system for civilian usage developed by European Union. The United States controls the use of the current Global Positioning System (GPS) developed by the United States. The deployment of Galileo’s 30 navigation satellites and the ground devices will be completed by 2008. The system’s ground target precision is one meter, while the non-military precision of GPS is 10 meters.

Vice Minister Ma Songde of China’s Ministry of Science and Technology said during the signing ceremony: "The signing of the three contracts by China and European Union marked a substantial step of Chinese companies and the Galileo Industry. In the near future, China and European Union will sign more comprehensive, multi-level and advanced cooperation contracts." Mr. Ma is in charge of new technology R&D in the Ministry.

According to news sources, the contracts in the near future will include construction of space and ground devices for the Galileo system. Galileo’s first navigation satellite will be launched later this year.

Galileo Joint Undertaking Executive Director Rainer Grohe told the reporters, "Our cooperation will generate mutual benefits for each other."

Under these newly signed contracts, China will participate in development of applications in fishery, position-based service standardization, and restoration of positioning signal in the ionosphere in global satellite navigation system.

China National Remote Sensing Center Deputy Director Zhang Guocheng said, "Fishery application system utilizes global satellite navigation system to manage fishing boats. This is very important to China’s Fishery Industry." He added, "Position-based service is an important part of the application in consumer market. Restoration of positioning signal in ionosphere can help the receiver to function in areas where there is no signal."
{mospagebreak}
Chairman Meng Bo of China Galileo Industries Ltd., the Chinese general contractor, said, "Application of GPS is primarily for military and civilian usage is secondary. The U.S. side gives no guarantee to its customers, and the signals can be turned off any time without advance notice. Galileo system is primarily for civilians; they guarantee their customers that the signals will not be turned off arbitrarily.

China is the first non-E.U. country that participates in the Galileo program and pledged to provide 200 million euros for R&D. China has invested 70 million euros for technology development, the remaining 130 million euros will be used to deploy space and ground devices.

Based on E.U. predictions, Galileo system will bring revenue of tens of billions of euros and tens of thousands of jobs before 2020. China’s Galileo satellite navigation application will generate economic benefits of 260 billion yuan (US$31.7 billion) before 2020.

http://news.xinhuanet.com/newscenter/ 2005-07/28/content_3280430.htm

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).
{mospagebreak}
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 it—tens 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!"
{mospagebreak}
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."

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 interest—even 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.
{mospagebreak}
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.

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.)
{mospagebreak}
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.

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.
{mospagebreak}
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.

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.
{mospagebreak}
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.
{mospagebreak}
The Surge of Offshore M&A Capital by Chinese Companies

Chinese Companies’ M&A Activities
 

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.
{mospagebreak}
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.