| China and the World |
China to allow visits to Taiwan
Mainland tourists may soon be visiting
beaches like this one in Taiwan after
Beijing relaxed rules.
BEIJING, China (Reuters) -- China will lift a decades-old ban on mainlanders visiting political rival Taiwan on Friday, state media reported, a move that could further ease tension after visits to China by two of the island's opposition leaders.
China has had tight restrictions on its people visiting Taiwan since 1949 when the Nationalists under Chiang Kai-shek fled to the island at the end of the Chinese civil war. A limited number of mainlanders have been able to travel there on business. Ultimately, it is up to the Taiwan government under independence-leaning President Chen Shui-bian to decide if the floodgates are opened. Taiwan has its own tough rules restricting mainland visitors. Beijing views the island as a breakaway province which must eventually be unified with the mainland, by force if necessary. Chinese tourists have proven a potent economic force. In the year or so since China relaxed rules on travel to Hong Kong, a tourism boom has boosted retail sales and been an important factor in the territory's economic recovery. Tourism-related stocks surged in Taipei on Friday morning in anticipation of China relaxing its rules, with the tourism sub index up 6.79 percent by 0433 GMT. China's National Tourism Bureau would allow mainlanders to join travel agency tours to Taiwan, including a seven-day package for less than 7,000 yuan ($845), the Beijing Morning Post said. Bureau officials declined to comment, but an announcement was expected later on Friday, media said. "Taiwan will definitely be an independent tourism destination," the Beijing Times quoted a manager with a travel agency as saying. Tourists from China's coastal province of Fujian were allowed to visit Taiwan's frontline island of Quemoy in December for the first time since 1949. Despite political tensions, Taiwan investors have poured up to $100 billion into China since detente first began in the late 1980s, lured by low land and labor costs and a common language and culture. They have clamored for Taipei to end a decades-old ban on direct trade, transport and mail links between Taiwan and the mainland. The ban remains in place due to national security considerations. There are no direct flights between the two sides and most travelers go through Hong Kong or Macau. China has said people from Taiwan made 3.7 million trips to the mainland in 2004, while only 145,000 mainlanders visited Taiwan. China this month offered to ease restrictions on contacts between the two sides after visits to China by Lien Chan, head of Taiwan's Nationalist Party, or Kuomintang, which once ruled all China, and James Soong, head of the island's second-biggest opposition party. 12:47 AM - May. 21, 2005 - comments {0} - post commentChina sets 2020 growth goalTuesday, May 17, 2005 Posted: 9:07 PM EDT (0107 GMT)
Hu, right, at the Fortune Global Forum
with Time Warner CEO Richard Parsons.
BEIJING, China (CNN) -- Chinese President Hu Jintao says China aims to lift the size of its economy to $4 trillion by 2020 -- effectively quadrupling its gross domestic product of five years ago. A $4 trillion economy would give China's 1.3 billion people a per capita income of $3000 by 2020, compared with about $1230 now. Hu, delivering the keynote address at the Fortune Global Forum in Beijing on Monday night, said the 2020 target was a "formidable challenge" that would require an uphill battle. But he told the forum China was committed to seizing the window of opportunity to build a prosperous society. He said economic development was China's central task and top priority. A 2020 gross domestic product of $4 trillion would put China in sight of Japan, which is now the world's second-largest economy ($4.1 trillion) behind the United States ($10 trillion). China, with a GDP of $1.65 trillion last year, now ranks fourth behind Germany, after overtaking the UK and France. "We are deeply aware that China, for a considerably long period of time to come, will remain a developing country," Hu told the forum, which was opened by Time Warner Chairman and CEO, Richard Parsons. Like Fortune magazine, CNN is part of the Time Warner group. "We must focus on economic development as our central task, making development our top priority and facilitating and all-round progress in economic, political and cultural aspects and in the building of a harmonious society," Hu said. After a stunning growth rate of 9.5 percent for the past 15 months and 9.3 percent for the year before that, most analysts expect China's government-induced cooldown finally will start to have an effect later this year. They expect growth this year will slow to about 8 percent -- still better than any other significant economy in Asia and more than enough to keep China's mantle as a global engine of expansion. Hu told the international business audience at the forum China would continue to work hard to open up to overseas investors. "China will unswervingly pursue a basic policy of opening up to the rest of the world and will further pursue our economic and technical cooperation with the rest of the world," Hu said. "We are certainly willing to create an even better climate for foreign businesses to make investment and trade with China," he told the business forum. But there is friction over China's currency exchange rate and its burgeoning textile exports to markets such as the United States and Europe. Critics claim China gets an unfair trade advantage by keeping the yuan pegged at 8.28 to the dollar, instead of letting it strengthen. Vice Premier Zeng Peiyan, addressing the Fortune Global Forum on Tuesday, said China would push forward steadily with reform of the yuan. His remarks followed those of Premier Wen Jiabao, who said on Monday that Beijing would not bow to outside pressure for a rise in the currency. Hu's forum speech on Monday night made no mention of the trade row over textiles. The United States said last week it may restrict imports of three kinds of clothing from China, and the EU is considering similar curbs. Here 10:49 AM - May. 18, 2005 - comments {0} - post commentMixed messages sent on yuan reformTuesday, May 17, 2005 Posted: 0341 GMT (1141 HKT) BEIJING, China (Reuters) -- China will push forward steadily with reform of the yuan, Vice Premier Zeng Peiyan said on Tuesday, a day after Premier Wen Jiabao insisted Beijing would not bow to foreign pressure for a rise in the currency. Zeng also vowed to speed up reform of China's state-owned enterprises and financial institutions. Market-orientated changes to China's system of setting interest rates were also on the agenda, he said in a speech to the Fortune Global Forum in Beijing on Monday. "We will steadily push forward reform of the renminbi exchange rate formation mechanism," Zeng said. The yuan, also known as the renminbi, has been pegged near 8.28 per U.S. dollar since the 1997/98 Asian financial crisis. But China's big balance-of-payments surplus, and in particular its growing trade surplus with the United States, is increasing pressure on Beijing to loosen the peg and let the currency rise. Washington blames what it sees as an unfairly cheap yuan for a surge in Chinese textile imports since a decades-old system of quotas on developing countries' clothing exports was scrapped on January 1. The Bush administration said last week it would reimpose curbs on imports of Chinese trousers, shirts and underwear, a move denounced by Beijing as flouting world trade rules. Wen told Washington on Monday not to politicize the textiles dispute, saying that doing so could throw up obstacles to China's long-standing plan to let the yuan trade more freely. "Reform of the renminbi's exchange rate is a matter of China's own sovereignty," Xinhua quoted Wen as saying. "Any pressure or media play-up, or politicizing an economic matter, will not help solve problems," he told a U.S. Chamber of Commerce delegation. Chinese Vice Commerce Minister Liao Xiaoqi summoned David Sedney, the deputy head of the U.S. embassy in China, to express China's "strong displeasure and firm opposition" to the United States' curbs on Chinese clothing sales, the People's Daily newspaper reported on Tuesday. 12:34 AM - May. 18, 2005 - comments {0} - post commentGiant aspires to superpower statusBy Joe Havely for CNN
(CNN) -- China is a sleeping giant, Napoleon once warned. "Let her sleep, for when she wakes she will shake the world."
China's increased economic power
and confidence is spreading to
the political arena.
Nearly two centuries later and China is well and truly awake. In the past, when Wall Street sneezed, the rest of the world caught a cold. While the United States still sets the pace for global markets, there is a growing awareness that, as China's economy expands rapidly, the balance of power is shifting in its direction. Take, for example, the impact China's rocketing demand for oil -- up by more than a third in 2004 alone -- is having on global energy prices. Or in clothing -- according to the World Trade Organization, China is expected to produce more than half the world's textiles by the end of the decade. Dr Linda Yueh of the London School of Economics (LSE), says the rising influence of the Chinese economy is causing a fundamental rethink of the implications for the world, and for China's neighbors. "We are living in a world where economic power matters and we have China growing at more than 9 percent a year, while Japan is barely even managing growth of 1 percent," she says. That rise in economic power and confidence is spreading to the political arena, she says, as has been seen with the recent war of words between China and Japan. In the space of just 25 years, China has transformed from an inward-looking, communist basket case, to a nation fast becoming one of the most influential in the world. "The very fact that China is now being invited to G7 meetings indicates just how important it has become to the global economy," says Yueh. So where is this rising power headed? Is China, as some suggest, set to become the next superpower? Certainly China already has several badges of superpowerdom stitched to its jersey. It has a permanent seat on the U.N. Security Council, it is an acknowledged nuclear power and it is one of only three nations capable of independently launching humans into space. On the economic front, China recently overtook the U.S. as the world's biggest consumer of agricultural and industrial staples such as grain, meat, coal and steel. Its companies have also begun to match, and in some cases take over, established "old world" giants. One recent example: the buy-up of IBM's PC business by Chinese computer maker Lenovo -- a purchase that ruffled more than a few feathers in the U.S. Congress. And sometime in the next two decades or so -- projections vary -- China is expected to overtake the United States as the world's largest economy. "China is certainly growing fast, but it also has a very long way still to go," says the LSE's Yueh. "In terms of GDP per capita, it still ranks as an early developing country. It only recently passed the $1000 per capita mark, and by its own forecasts it will be 2020 before it passes the level of $3000 per capita -- the mark of a mid-range developing economy." China is growing so fast, she says, because it can't afford not to. "China's overriding goal is to help its people develop and achieve a higher standard of living." Continued legitimacyFor the government and the communist party, that is seen as the key to its continued legitimacy. With a population the size of China's, it is a monumental task. Already the gaping disparity in wealth across the country -- between the booming east coast cities and the still largely underdeveloped interior -- is one of the many internal challenges that the government is now facing. But being an economic heavyweight does not a superpower make. "In terms of China's global impact, it is a significant player," says Elizabeth Economy, head of Asia Studies at the Council on Foreign Relations in New York. "But while we are seeing a far more activist China, in terms of its ability to actually lead, it is severely hampered." Part of the problem, she says, is that the Chinese political system lacks transparency and other traits of good governance needed to build trust. "Most of China's neighbors are happy for China to buy their produce and act as an engine of the region's growth," she says. "But I don't think anyone wants to see China supplant the U.S. as the regional power." One notable recent development though -- and an indication of its growing stature -- is China's hosting of the six-party talks on North Korea's nuclear program. "Never before has China been interested in playing this kind of role," says Economy, noting that Beijing took the role reluctantly under pressure from the United States. To date, however, the Korean nuclear talks have shown little sign of success -- and that, says Economy, will be the real measure of China's influence. "So far," she says, "there's been a lot of guts and not much glory." On the economic front, Dr Sheng Lijun of Singapore's Institute of Southeast Asian Studies argues that China is also lacking the mettle of superpowerdom. "China has certainly proved itself a great production platform," he says, "but not, so far, a platform for invention and creativity. "China does not create technology, and that's a large part of what defines a superpower." Given time, that may well change. This, after all, is the country that invented printing and gunpowder -- arguably two of the most influential inventions of all time. Dr Sheng argues the real issue is that it is not in China's interest to become a superpower. Reliant on the international economy and sharing borders with 14 other countries, it is more in China's interest to carve itself a position in a coalition of big powers, he says. "For China there are more risks than benefits to becoming a superpower." That is particularly the case in China's immediate neighborhood, says Dr Sheng, and its often-tense -- although increasingly interdependent -- relationship with Japan. "In this case it is very clear there are huge benefits if you work together and huge costs if you stab each other in the back," he says. Looking to relations with the United States, the case for cooperation is much the same. The problem, Dr Sheng says, is one of perception and the potential risk of miscalculation. "The U.S. tends to judge by capability, rather than intention -- and in the case of China, that could be a costly mistake." Elizabeth Economy of the Council on Foreign Relations agrees that the Washington-Beijing relationship is prone to flare ups and requires careful management. Take for example, the bombing of the Chinese embassy in Belgrade during the Kosovo war, or the stand-off that followed the mid-air collision between a U.S. spy plane and a Chinese fighter off the southern Chinese coast. "We see lots of bluster from the PLA (People's Liberation Army) and the Pentagon," says Economy. "But at the very top levels of government on both sides there is a consistent acknowledgement that this is one of the most important relationships for global stability." The sticking point, Economy says, is that the two countries have fundamentally different political systems -- and that will prove a constant irritant to the relationship. One thing is certain, she says. "China is definitely on an upward trajectory. There's a new player on the scene and it is going to be out there in ways we've never seen before." 12:26 AM - May. 18, 2005 - comments {0} - post commentMixed messages sent on yuan reform
Tuesday, May 17, 2005 Posted: 0341 GMT (1141 HKT) BEIJING, China (Reuters) -- China will push forward steadily with reform of the yuan, Vice Premier Zeng Peiyan said on Tuesday, a day after Premier Wen Jiabao insisted Beijing would not bow to foreign pressure for a rise in the currency. Zeng also vowed to speed up reform of China's state-owned enterprises and financial institutions. Market-orientated changes to China's system of setting interest rates were also on the agenda, he said in a speech to the Fortune Global Forum in Beijing on Monday. "We will steadily push forward reform of the renminbi exchange rate formation mechanism," Zeng said. The yuan, also known as the renminbi, has been pegged near 8.28 per U.S. dollar since the 1997/98 Asian financial crisis. But China's big balance-of-payments surplus, and in particular its growing trade surplus with the United States, is increasing pressure on Beijing to loosen the peg and let the currency rise. Washington blames what it sees as an unfairly cheap yuan for a surge in Chinese textile imports since a decades-old system of quotas on developing countries' clothing exports was scrapped on January 1. The Bush administration said last week it would reimpose curbs on imports of Chinese trousers, shirts and underwear, a move denounced by Beijing as flouting world trade rules. Wen told Washington on Monday not to politicize the textiles dispute, saying that doing so could throw up obstacles to China's long-standing plan to let the yuan trade more freely. "Reform of the renminbi's exchange rate is a matter of China's own sovereignty," Xinhua quoted Wen as saying. "Any pressure or media play-up, or politicizing an economic matter, will not help solve problems," he told a U.S. Chamber of Commerce delegation. Chinese Vice Commerce Minister Liao Xiaoqi summoned David Sedney, the deputy head of the U.S. embassy in China, to express China's "strong displeasure and firm opposition" to the United States' curbs on Chinese clothing sales, the People's Daily newspaper reported on Tuesday. 12:17 AM - May. 18, 2005 - comments {0} - post commentAmerica lost, capitalism wonApr 28th 2005 | HANOI AND HO CHI MINH CITY
From The Economist print edition
Thirty years after Saigon fell, the south has prospered while the north has lagged ON THE steps of the Reunification Palace in Ho Chi Minh City, a guide recounts the final, dramatic moments of the Vietnam war. On the morning of April 30th 1975, two tanks of the “liberation forces” crashed through the gates of what was then the presidential palace of South Vietnam, in what was then Saigon. One of the tank commanders raced to the roof to tear down the flag of the American-backed regime and raise a communist banner in its stead, symbolically reuniting the two halves of the country and putting an end to 30 years of conflict. The guide himself, however, does not seem very stirred by this story. He tells it only halfway through his tour, as one of a number of historical anecdotes. Like most Vietnamese, he was born after the war, so feels little personal connection to the events he recounts. He is from the north, he says, but has come to the south to improve his English and find a good job. From the rooftop, he gazes not at the famous tanks enshrined in the grounds below, but at the high-rises sprouting from the city's skyline, emblazoned with American brand names such as Citibank and Sheraton.
The 30th anniversary of the fall of Saigon may provide Vietnam's elderly leaders and the international media with an occasion to dwell on the legacy of the war. But for most Vietnamese, the country's critical fault-line no longer lies between north and south, or labour and capital, but between those who have embraced the government's recent economic reforms and those who are still dragging their feet. Little trace remains of any hostility towards America—just one, after all, of the many countries Vietnam fought during the past century. It went to war more recently (in 1979) with China, a perennial enemy over the last millennium, and the authorities still seem more suspicious of their northern neighbours and fellow communists than of anyone else. America and Vietnam restored diplomatic ties in 1995, and signed a trade pact in 2000. America is now Vietnam's largest export market. Disputes between the two countries hinge more on tariffs and market access than on war crimes or missing soldiers. Last year, United Airlines resumed flights to Ho Chi Minh City—which still bears the code SGN. A pilot who was lionised during the war for bombing the presidential palace in Saigon is now looking forward to captaining Vietnam Airlines' first commercial flight to America—on one of the firm's ten Boeing jets. Last month, Ho Chi Minh City received an American naval vessel for the second time in as many years. Locals scarcely batted an eyelid at the sight of uniformed American sailors wandering the streets. Tensions between north and south have proved harder to erase. The two regions have always been very different. The warm southern climate, for example, permits three rice crops every year in the Mekong delta, while farmers in the chillier Red River basin in the north can manage only two. In pre-colonial times, southern rulers were more hospitable to immigrants, leaving the south with a higher proportion of ethnic Chinese. Southerners and northerners speak different dialects, eat different food and even—according to popular belief—have different temperaments. Northerners are considered reserved and bookish, while southerners are thought to be friendly and flamboyant—much like the stereotypes of Scandinavians and Mediterraneans in Europe. The war exacerbated these differences. For one thing, the south suffered less from American bombing, leaving it with better infrastructure. What is more, northerners have lived under a communist regime since 1954, whereas southerners have much more recent experience of capitalism. The flight of well-to-do southerners in the face of the communist advance in 1975, and the subsequent exodus of boat people, has left the south with a bigger diaspora. These links to viet kieu, or overseas Vietnamese, give the south a more cosmopolitan outlook, and provide southern businessmen with capital and ideas.
All this helps to explain why the south has taken to the government's economic reforms so much more readily than the north. After 1975, the victorious communists abolished free enterprise throughout the country, and forced farmers into collectives. Following a brush with famine in the early 1980s, however, the authorities eased restrictions on private enterprise, first in agriculture, then for foreign investors, and, most recently, for local businessmen. On the whole, the reforms have proved a great success: Vietnam's economy has grown by an average of 7% for the past decade. But the progress has been very uneven (see chart). Ho Chi Minh City alone accounts for 17% of national output, 30% of foreign investment and 40% of exports—far in excess of its 9% share of the population. Local income per head is roughly four times the national average. Throw in the four adjacent provinces, and the share of output rises to 40%, and of exports to 70%. But to dwell on the enduring differences between north and south is to ignore several key points. First, regional variation in Vietnam is much more complicated than that. There are plenty of poor southern provinces and rich northern ones. The Central Highlands, a mountainous region of the south, has much more in common with Vietnam's rugged border provinces with China than with the prosperous Mekong delta. The central part of the country, encompassing provinces from either side of the former political divide, is as distinct as the north and south, with its own dialect, cuisine and climate. The government, at any rate, always takes pains to make sure senior offices are divided equally between north, south and centre. That is why the current prime minister comes from the south, while the head of the communist party is from the north, and the president from the centre. Moreover, northerners have no lack of entrepreneurial drive. The streets of Hanoi are so crowded with merchants that hawkers often take turns to occupy the same bit of pavement at different times of the day. Many northerners, such as the guide at the Reunification Palace, migrate south to improve their economic prospects. Many of the most successful businesses there are run by northerners.
Last year, a group of Vietnamese and foreign academics analysing the differences in investment and growth rates between north and south came to the conclusion that the attitude of local bureaucrats explained the disparities better than any other factor. In theory, the same investment law applies throughout Vietnam, but some provincial governments are more accommodating than others. Ho Chi Minh City, for example, has refurbished a beautiful colonial building as an investment-promotion office. English-speaking officials enumerate the city's many advantages with the help of PowerPoint displays and glossy brochures. The city government, explains one, can process applications for various business permits online. It is also starting up an “e-discussion” scheme to answer investors' queries, in both English and Vietnamese. By contrast, Pham Huy Dap, an investment-promotion officer in the northern province of Bac Giang, shows visitors to a dim, damp and cramped office, without a computer in sight. His sole promotional material is a poorly printed leaflet describing plans for a new industrial estate, in Vietnamese only. The local economy relies more on state-owned firms than on private enterprise, he explains. The biggest employer is a government fertiliser factory. No wonder that between 2000 and 2003 the province received no foreign investment at all, and only $24 per head in domestic private investment, compared with national averages of $88 and $105. But even Vietnam's most benighted provinces contain inklings of change. Bac Giang is setting up a “one-stop shop” for investment approvals, and creating an investment-promotion website. The new industrial estate has now attracted some private firms from China, just a few hours' drive away. Labour is cheaper than in Ho Chi Minh City, and the infrastructure less congested. All provinces, Mr Dap explains, are competing with one another to offer simpler procedures and more enticing incentives, in the hope of attracting more investment. The forward march of entrepreneurialism, it turns out, is proving just as infectious and irrepressible as the communist insurgency was during the war. 1:26 PM - May. 15, 2005 - comments {0} - post commentWhy Taiwan MattersThe global economy couldn't function without it. But can it really find peace with China?
Want to find the hidden center of the global economy? Take a drive along Taiwan's Sun Yat-sen Freeway. This stretch of road is how you reach the companies that connect the vast marketplaces and digital powerhouses of the U.S. with the enormous manufacturing centers of China.
The Sun Yat-sen is as bland as any U.S. interstate, but it's the highway of globalization. Though it snakes along the whole west coast of Taiwan, the key 70-km stretch starts in Taipei's booming new Neihu district of high-tech office buildings and ends in Hsinchu, home to two of Taiwan's best universities, its top research center, and a world-renowned science park. Along the way, the Sun Yat-sen leads to some of the most important but anonymous tech outfits in the world: Asustek Computer, whose China factories spit out iPods and Mini Macs for Apple (AAPL ); and Quanta Computer, the No. 1 global maker of notebook PCs and a key supplier to Dell (DELL ) and Hewlett-Packard. You'll also find Taiwan Semiconductor Manufacturing Co. (TSM ), the biggest chip foundry on the planet, an essential partner to U.S. companies such as Qualcomm and Nvidia (NVDA ). Dozens more companies dot the Neihu-Hsinchu corridor. There's AU Optronics (AUTO ), a big supplier of liquid-crystal display panels, and Hon Hai Precision Industry, which makes everything from PC components to Sony's (SNE ) PlayStation 2, and which is a fast-rising rival to Flextronics International (FLEX ), the world's biggest contract manufacturer. Taken together, the revenues of Taiwan's 25 key tech companies should hit $122 billion this year. Taiwan's success is also China's. No one knows for sure how much of China's exports in information and communications hardware are made in Taiwanese-owned factories, but the estimates run from 40% to 80%. As many as 1 million Taiwanese live and work on the mainland. "All the manufacturing capacity in China is overlaid with the management and marketing expertise of the Taiwanese, along with all their contacts in the world," observes Russell Craig, of tech consultants Vericors Inc. This is a BusinessWeek article 3:23 PM - May. 6, 2005 - comments {2} - post comment
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