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---"Focused Coverage Informed Perspectives"---Wed, Nov 5, 1997 edition

Taiwan's campaigns heat up Lee stands behind pension promise despite charges of vote buying, and more . . .

Also in this edition . . . 1: analysis and prospects for Asia's economies as the crisis goes on 2: Jiang tells Maoist critics to clam up 3: drought in northern province points to larger problem 4: chamber of commerce applies for permission to establish life insurance company 5: trade delegation departs on hints of spending spree 6: KMT chairman predicts big wins in county and city elections 7: party's video decries KMT corrupt practices 8: Premier says turn of century will see national pension scheme 9: failure of dragnet brings stinging political rebuke 10: US envoy exchanges views with Taipei Mayor Chen on PRC 11: conference starts in Taipei, where both sides can discuss cross-border capital flows 12: some notes about archeology

CHINA

Economics: analysis and prospects for Asia's economies as the crisis goes on Asia Week has devoted it cover to the Asian currency crisis, publishing a score of articles on various subjects, including China and Hong Kong. We have listed them here. ( November 7 - WHAT NEXT? ) Asia Week has a re-cap of the financial crisis in Asia and analysis from investors. ( November 7 - When Is Ignorance Bliss? ) China fared relatively well in the downturn due to restrictions on capital flows and, in many respects, a closed economy: ". . . stocks in Shanghai and Shenzhen fell Oct. 28 by just a third of what the Hang Seng Index did in Hong Kong, half as much as Jakarta, and less than Manila, Bangkok, Singapore or Taipei. And the following day, when most exchanges in Asia rallied, Shanghai and Shenzhen recorded comparatively small increases." "It all reflects the relative economic serenity in China these days. Reported inflation has fallen from nearly 30% at the end of 1994 to less than 2% today. Credit goes to economic czar Zhu Rongji, widely expected to replace Li Peng as Premier next March. Zhu has apparently brought China's rampaging growth under control without falling into a recession." The problem is that China needs foreign investment, and it wants to join the World Trade Organization, writes the magazine. Participation in both would require opening the economy to vicissitudes of global markets. ( November 7 - Help From Next Door ) "Singapore and Malaysia broaden the options" ( November 7 - The Cost of a Pegged Dollar ) "The Cost of a Pegged Dollar It will be painful, but there is a silver lining" discusses the downturn in Hong Kong and its differences in relation to other markets. ( November 7 - Virtues of the Long View ) "Virtues of the Long View Expect an upturn in Asia -- after 18 months": an interview with Roger Yates, chief investment officer and head of global equities for LGT Asset Management in London. ( November 7 - How to Play Asia's Crisis ) "Technology counters may be your best bets": hot picks include Acer and Taiwan's semiconductor foundries, United Microelectronics and TSMC. Of course it's your decision. Ideology: Jiang tells Maoist critics to clam up ( Maoists told to halt attacks on reform ) Jiang Zemin has reportedly told Maoist critics of his government's modernization program to quiet down, reports the South China Morning Post. "Beijing sources said yesterday the message was conveyed to the leftists by several party elders including Bo Yibo." One reason for the request was fear of internal discord within party ranks The article also gives us a glimpse into ongoing ideological battles as they are fought from the pages of intellectual journals. Water: drought in northern province points to larger problem ( Drought menaces grain production ) Drought is afflicting Hebei Province, reports the China Daily. The article quotes Zhang Chunyun, vice-minister of water resources, who was addressing a symposium of water officials. Zhang said new water-saving irrigation methods must be used in order to sustain xxx China's agriculture. "In North China this year, a record 33.3 million hectares of farmland, about 25 per cent of China's total sown areas, have suffered from the worst drought since 1972, Zhang said. As a result, some 4.7 million hectares of farmland have no harvest, or planting for the next harvest is impossible. Grain loss amounts to more than 42 million tons." "To date, water-saving irrigation has been successfully introduced to 19 million hectares of grain-producing land, but this only accounts for 37 per cent of China's total effectively irrigated grain-yielding land. This land is capable of producing over 75 per cent of China's total annual grain output." "Zhang said this year the waters of 91 northern rivers are 20 per cent below the corresponding period last year. The Yellow River, China's second longest waterway, has been dry for 188 days in a 700-kilometre section of the lower reaches, the longest dry period in its history. Only 36.7 billion cubic metres of water are stored in North China's 500 large reservoirs, 33 per cent less than that of the same period of last year. In the North China Plain, the groundwater level has dropped to 2.5 metres, reducing groundwater reserves by 24 billion cubic metres, Zhang said." Insurance: chamber of commerce applies for permission to establish life insurance company ( Private sector to set up life insurance firm ) The China Daily reports, the chamber of commerce for private entrepreneurs is applying for a license to establish a life insurance company. Shareholders of the company are expected to include some of China's strongest private firms, said Jing Shuping, chairman of the All-China Federation of Industry and Commerce (ACFIC)., reports the paper. Companies applying for insurance licenses are encouraged to form 'teams' in order to spread out risk and ensure adequate capitalization, reports the paper. The government established five insurance firms last year as state-owned enterprises. "Orient Group, a private company based in Harbin, obtained a 10-per-cent share in the New China Life Insurance Co, one of the five. Other private firms eying the country's promising insurance market were eager to follow suit," writes the paper. "The new insurance company, if established, will be the second financial institution launched by ACFIC. The China Minsheng Banking Corp, with investment mainly from private businesses, opened early last year." We should note that this effort is part of a broader one to shore up a cracking old-age pension system administered by work units. Integral to the functioning of the society, work units provide a broad spectrum of services, including subsidies housing, pensions, and health benefits. But with the ratio of old-age pensioners growing faster than the youth population, the government has been moving to a more 'sustainable' system based in part on establishing insurance companies. Insurance companies are but one aspect of the solution. Reforms have seen trial balloons being floated in the larger urban areas, such as Shanghai and Chongqing, establishing a host of retirement and mortgage funds designed to harness worker's contributions---something new---with matching government funds. The efforts have lacked cohesion, because municipal governments find themselves hobbled by restriction on where and how they can invest the monies. Another problem has been cash-strapped governments unable to match funds or accumulate enough for present needs, let alone future ones. The divestment scheme for state-owned enterprises, endorsed by the Party Congress in October, will see consolidations and closing of thousands of unprofitable firms. Such extensive social-engineering risks upsetting scores of people uprooted from the security of their work unit. We might watch for the introduction of some kind of social security system as the changes in state-owned enterprises progress. South Africa: trade delegation departs on hints of spending spree ( Mission heads to S. Africa ) A trade delegation has set out for South Africa yesterday, reports the China Daily. Led by Shi Guangsheng, vice-minister of foreign trade, it includes managers from 50 large Chinese companies, and "may end with several hundred million US dollars' worth of business contracts," reports the paper. With US$314 billion in accumulated foreign exchange reserves, China is looking to invest its monies. The effort, however, has diplomatic dimensions to it, as both countries will establish official ties by the end of the year. The delegation will stay until November 15. According to statistics cited by the paper, 42 enterprises and institutions had been established in South Africa, investing over US$100 million. "In the breakdown, 39 were joint ventures or Chinese wholly owned firms. . . . Chinese investment there involves industrial manufacturing, agriculture, trade and natural resource development." "China has substantial foreign exchange reserves, and our companies have both the need and the ability to invest overseas," Shi said. "Our economies complement each other. China can buy a large amount of mineral products, equipment and technology, as well as diamonds and gems from South Africa." China is looking to sell industrial equipment there. "Through the visit, we want to give a clear message to the South African Government and businesses that China is ready to develop the bilateral trade and investment co-operation on the basis on mutual benefit," the paper quotes Shi. The paper notes, "In the first nine months of this year, Chinese figures show, bilateral trade hit $1.1 billion, up 15 per cent over the 1996 figure for the corresponding period." This delegation comes on the heals of one sent to the United States in the immediate run-up to Jiang Zemin's visit. While in the US, the delegation signed contracts worth billions, underscoring the power of Beijing's economic power. See also ( Trade mission seeks deals in South Africa ) Energy: ( JV to construct power plant ) "The Songjiang Industrial Zone in Shanghai and the US-based Enetrgy Power Co Ltd have announced they are to establish a joint venture. The new company, the Songjiang Energy Heat and Power Co, will construct a $29.95 million heat and power plant. The plant will provide district heating for the Songjiang Industrial Zone and neighbouring areas," reports the China Daily.

ELECTION COVERAGE

Election coverage: KMT chairman predicts big wins in county and city elections The KMT's Taiwan Provincial Committee Chairman, Hung Teh-shuan, yesterday said his party is sure to win in at least six counties and cities in this month's elections: Keelung City, Taoyuan County, Hsinchu County, Hsinchu City, Taichung County, and Ilan County. Although the DPP has held Ilan County for more than 10 years, KMT candidate Liao Feng-teh has gained support by visiting voters household by household, Hung claimed. A KMT survey in the county indicated that 63 percent would vote for Liao while only 18 percent would vote for the DPP's Liu Shou-cheng, Hung said. In Taoyuan County, at least four townships--Luchu, Tayuan, Kuanying and Hsinwu--which originally supported Taoyuan County Chief Annette Lu have now shifted their support to KMT candidate Chen Keng-teh, said Hung. Although the KMT's candidate in Hsinchu City, Lin Chih-cheng, faces strong pressure from his DPP rival, Vice Premier John Chang's campaign efforts for him have apparently won Lin much support from veterans and independent voters. See also http://www.chinatimes.com/papers/ctimes/taiwan/86110502.htm (Chinese BIG 5 encoding) (Note: Access to China Times articles are limited to subscribers. As the paper's system is currently configured, to access an article listed here you must first go to the front-page at http://www.chinatimes.com and from there locate the article) DPP: party's video says KMT will continue corrupt practices The DPP yesterday made public its first campaign video tape which called on voters to refrain from voting for candidates recommended by the KMT unless they wish to see corruption prevail in the government. DPP Spokesperson Sisy Chen introduced her party's campaign video, which will be broadcast on major television networks from now until the Nov. 29 elections, at a news conference in Taipei. Referring to the KMT as a political party for corrupt officials, Chen urged voters to compare the performances of local government executives from the DPP and the KMT before deciding who to support in the coming elections for city mayors and county chiefs. Chen cited statistics to support her allegations, saying that the number of corruption cases implicating KMT city mayors and county chiefs totaled 24 over the past four years. In addition, more than 300 KMT town and township mayors as well as city and county council members have been indicted on charges of vote-buying and violations of other election regulations. See also http://www.chinatimes.com/papers/ctimes/taiwan/86110503.htm and http://www.chinatimes.com/papers/ctimes/taiwan/86110504.htm (Chinese BIG 5 encoding) (Note: Access to China Times articles are limited to subscribers. As the paper's system is currently configured, to access an article listed here you must first go to the front-page at http://www.chinatimes.com and from there locate the article) President Lee: Lee stands by commitment, rejecting claims of vote buying President Lee Teng-hui stood firm against a host of critics yesterday. He said through his spokesman that he intends to implement a monthly pension plan for Taipei County seniors if the KMT's candidate is elected later this month. In response to objections voiced by county officials and made in newspaper editorials, KMT Spokesman Tsai Pi-huang quoted Lee as saying the KMT has a responsibility to take care of seniors, and will stand by promises made last week to pay NT$5,000 per month to residents over the age of 65. Made last Saturday, the president's statement regarding the pension program sparked heated debate over whether the KMT was trying to buy off voters in Taipei County in exchange for support for candidate Shieh Shen-shan. Still, Tsai praised Lee as a head of state who practices what he preaches. Tsai said that President Lee still has a clear head and is open-minded to every statement he has made. He added that the president does not regret having made the promise, neither is he worried that his promise might cause controversy. Replying to questions as to why Lee had promised that the pension program in Taipei County could be implemented for under NT$100 million, Tsai said Lee was merely talking about the money that would have to be spent on those senior citizens who were listening to him at the campaign rally last Saturday. See also http://www.chinatimes.com/papers/ctimes/focus/86110504.htm Pensions: Premier says turn of century will see national pension scheme The government has targeted 2000 as the year to implement a national pension plan for the elderly, Premier Vincent Siew said yesterday during a question-and-question session at the Legislative Yuan. Siew said most people have mistaken social security for social assistance, and clarified that the national pension plan belongs in the former category. He said that the Council for Economic Planning and Development is now working on a plan to begin implementing a national old-age pension in 2000. See also http://www.chinatimes.com/papers/ctimes/focus/86110501.htm Crime: failure of dragnet brings stinging political rebuke Lawmakers had some harsh words for Cabinet ministers and Premier Vincent Siew yesterday, less than a day after a massive police mobilization was unable to catch two of Taiwan's most wanted criminals in a posh Taipei neighborhood. Taipei police, the city's SWAT team, helicopters and around 400 military police descended on Yangmingshan on Monday night in a huge show of force, but came away empty-handed after murder suspects Chen Chin-hsing and Kao Tien-min apparently slipped through the dragnet. The atmosphere in the legislature was grim yesterday as lawmakers took turns blasting Siew and his Cabinet for the embarrassing failure to catch the two men. The DPP's Chen Chi-mai started things off by calling for the resignation of Minister of the Interior Yeh Chin-fong. Chen reminded Yeh that not too long ago her predecessor Lin Feng-cheng and then-Premier Lien Chan were forced to resign following public outcry over the slow pace of the same murder investigation. Premier Siew was blamed specifically by the DPP's Peng Sao-ching for campaigning for KMT election candidates instead of concentrating on problems of national importance. Yeh stood behind the efforts of the police, and said their top priority was to catch Chen and Kao, both wanted for the April murder of 17-year-old Pai Hsiao-yen and various other violent crimes. She added that her ministry was looking into loosening restrictions governing when and where police could open fire in a dangerous situation. Premier Siew told the lawmakers that a recent task force meeting had decided to double the danger pay for police officers beginning July 1, 1998. He said that there were also plans to transfer at least 10,000 public security police to every county and city to help local officers combat violent crimes. See also http://www.chinatimes.com/papers/ctimes/social/86110511.htm (Chinese BIG 5 encoding) (Note: Access to China Times articles are limited to subscribers. As the paper's system is currently configured, to access an article listed here you must first go to the front-page at http://www.chinatimes.com and from there locate the article)

CROSS STRAIT RELATIONS

United States: US envoy exchanges views with Taipei Mayor Chen Richard Bush, chairman of the American Institute in Taiwan (AIT), met with Taipei Mayor Chen Shui- bian yesterday for wide-ranging talks. The two exchanged views on several issues, including the just-concluded summit meeting between US President Bill Clinton and Chinese President Jiang Zemin, as well as the possibility of the two sides of the Taiwan Strait resuming a regular dialogue next spring. However, neither Bush nor Chen would reveal further the substance of their 40-minute meeting. Bush, who arrived in Taipei last weekend for his first visit to Taiwan since assuming his current post in early September, praised Chen for his achievements in upgrading the efficiency of the Taipei City Government. But he would not elaborate on the meeting. Bush, an expert in Chinese affairs, said he will meet with all types of people while he is in Taiwan. Chen later told local media that Bush had briefed him on the background and content of the Nov.29 Clinton-Jiang summit meeting. He said the briefing helped him better understand the future of cross- strait links and Taiwan's attitude toward handling relations with China, as well as the delicate triangular relationship between Taipei, Washington, and Beijing. Chen said he also discussed with Bush whether high-level cross-strait talks would resume after China's rubber-stamp parliament, the National People's Congress, meets next spring or if they will be put off until President Clinton concludes his first state visit to China later next year. But Chen did not reveal his reply. Bush has met also with Premier Vincent Siew, Minister of Foreign Affairs Jason Hu and other senior Taiwanese officials during the past two days. In addition, he will meet with opposition political figures, including DPP Chairman Hsu Hsin-liang and New Party leaders during his nine-day stay in Taiwan. See also http://www.chinatimes.com/papers/ctimes/focus/86110508.htm Securities: conference starts in Taipei, where both sides can discuss cross-border capital flows ( Securities Meeting a Rare Brush for China, Taiwan ) The International Organization of Securities Commission opened its conference today in Taipei. Inside China has a Reuters dispatch on the event, noting Taiwan and mainland China will discuss cross-border capital flows. Though relations are still strained after the spring 1996 presidential elections, the extent of capital flows from Taiwan stands at $30 billion since the 1980s, despite Taipei's restrictions on direct investment. Most monies are funneled through Hong Kong or other intermediaries. Prime on the agenda, however, will be problems in Asia's markets, where downturns across the region have brought to the fore real problems in what has been seen as an unending dynamo of growth. As Reuters reports, "We will discuss the exchange of information in various markets and how to handle future market crisis," Lu Daung-wen, chairman of Taiwan's Securities and Futures Commission, told reporters on the eve of the meeting. "We will focus on how emerging markets and developing countries can learn from the regulatory practices of other countries," Lu said. For Taiwan the mere presence of the conference in its capital city attests to the strength of its economy, although most international bodies will not permit its presence. "The meeting is a plum for Taiwan, which will sign agreements with regulators in Sweden, Germany, Malaysia, Spain, Brazil and Italy, despite having no official diplomatic ties with those countries," writes the paper. Representatives from the US, France, Britain and Japan will also be attendance. Both Beijing and Hong Kong will send a delegation of their own. Beijing's 11-member one is headed by Chen Dongzheng, vice chairman of the China Securities Regulatory Commission.

CULTURE

Archeology: ( China abounds in ancient riches ) "Chinese archaeologists have made a number of important finds across the country recently, which provide valuable clues to the study of the early civilization of the Chinese nation. The new archaeological discoveries include a newly identified ancient capital, an ancient site of the famous Yangshao Culture, the discovery of rare dinosaur fossils dating back some 90 million years and a number of historic ruins," writes the China Daily. ( Note ( Page 9, Date: 11/05/97 ) ) An archeologist thinks he figured out how people managed to hang coffins on cliff walls in Gongxian County, Sichuan Province. "There are over 200 cliff-hanging coffins that date from the Jin Dynasty (1115-1234) to the middle of the Ming Dynasty (1368-1644). They were placed on a rock face or in caves from 50 to 150 metres high, and people have long wondered how people hung the coffins at such a height." Also noted in the news brief is discovery of a 1,600-year-old roadway built along a rock face on the Yellow River in Shanxi Province and used by boat trackers, who pulled boats upstream. Big Foot ( Zhang lives in wild for 'Bigfoot' ) A Chinese explorer braves the 'uncivilized' forests in Hubei Province, waiting to find Big Foot. . . .

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