China Brief
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January 15, 2011 - January 21, 2011

Political and Internal Development

In recent months the top leaders of China are giving thrust on good governance, the principle of “putting the people first” and “governing for the people”, building advanced grass root party organizations and good communist behavior. President Hu Jintao talked on these issues eight times and Vice President Xi Jinping clearly addressed them in more than twenty separate occasions. The propaganda departments are also getting engaged in popularizing the new concept of governance at the mass level. It appears that Chinese communist leadership are trying to bring the politics of mass mobilization back in a more sophisticated fashion and Xi Jinping would take the lead in the new age mass politics. The ideological content of the new generation leadership would be a combination of nationalism and good governance, which could be used to divert people’s attention in case the party-state fail to perform well in the economic front. Some of the legislative decisions have already begun to address people’s interest, social security and mitigate public resentment.

The fifth plenary session of the State Council deliberated over the government work report and draft outline of 12th FYP, and decided to place these documents for review at the next plenary session of the National People’s Congress (NPC), which will be held in March. It is decided that the draft will be sent to various departments of central government, local governments and other institutes for feedback. Premier Wen Jiabao, who presided the session told that the State Council would hold a series of seminars to listen to representatives of different sectors and senior leaders would visit villages and cities to seek feedback directly from the general public. It is supposed to improve democratic style of work and build consensus in the decision making process.

As he expressed satisfaction over social and economic achievements during the 11th FYP, Wen Jiabao talked about imbalanced, uncoordinated and unsustainable Chinese development pattern. He emphasized importance of stabilizing food prices and market in the housing sector in the first quarter and set work plans for various economic and social projects to be accomplished this year.

Wen also chaired a meeting of Standing Committee of the State Council which approved the draft of the State-owned Land on the Housing Levy and Compensation Ordinance. The Bill was first put forward by the above executive body in December 2007 and time to time it was revised on the basis of comments and suggestions from various forums, seminars, government departments, experts and general public. Many people in China are unhappy at the existing practice of expropriation without compensation. The Bill will be effective from January 21, 2011, which has the provision for expropriation compensation including housing value, relocation, temporary settlement and compensation for closing down of production or trade owing to expropriation. The government will be mainly responsible for the implementation of the new compensation law and private construction units would not be allowed participation in expropriation, or resettlement work. The law also prohibits government departments to carry out compulsory demolition in coercive means.

The State Council categorizes three coalmine accidents which occurred in 2010 as accidents due to negligence. The three accidents together caused death of 103 miners, wounded 145 along with a total financial loss of 121.93 million RMB. The State Council issued orders to the Inner Mongolian and Shandong governments to start legal proceedings for delivering exemplary punishment to five companies and 97 personnel responsible for these accidents.

Economic Highlights
According to the preliminary report of China’s economic performance in 2010 released by National Statistical Bureau (NSB), the GDP has touched 3.97983 trillion RMB in comparative price, and GDP grew by 10.3% from the previous year. It is estimated that economic development was faster than that of 2009. Primary, Secondary and Tertiary Sectors has grown at the rate of 4.3%, 12.2% and 9.5% respectively. It is also reported that China’s food grain production in 2010 reached 546.41 million tons which is 2.9% above the previous year. Last year China also experienced steady industrial growth and improvement of entrepreneurial efficiency. Total investment in fixed asset was estimated at 2.7814 trilion yuan which is 23.8% more than previous year. The date provided by the NSB shows that in real terms per capita income of urban household and per capita net income of rural household, both increased by 7.8% and 10.9% respectively.

The Consumer Price Index (CPI) i.e. inflation index has risen to 4.6% in December 2010. In fact, rising trend of inflation is evident in the last quarter of 2010. According to the Deputy Director of NSB Wang Xiaolu, an economic growth which is higher than what was estimated in the fourth quarter is responsible for the inflation.

Foreign Policy/Foreign Relations
Chinese President Hu Jintao’s four days visit to the USA from January 18 to 21 was aimed at carving a new equation with the USA as also to draw blue print for the new era. The visit was undertaken after a year of China’s muscle flexing and arm twisting of its neighbours. The neighbouring countries became painfully aware that China’s much flaunted “peaceful rise” would not allow a peaceful co-existence in the region. A series of issues in 2010 including America’s arm sales to Taiwan at the beginning of the year and artificially crafted large trade surplus in favour of China through undervalued yuan have seriously affected Sino-US bilateral ties.

Despite above, in Chinese perception America continues to be a “beautiful imperialist” (Meidi), a nation which it can emulate. The United States is the only country, in the Chinese thinking, that is resolutely located on the other side of the ideological cleavage which realized that the growth of China was inevitable. At the peak of the Cold War, the US President Richard Nixon took special interest to improve relations with PRC. The leaders of China and the US back then “viewed similar places of interest” and contours of bilateral relations between the countries were designed by none other than Henry Kissinger and Zhou Enlai.

The Chinese society is undergoing a lot of Changes. The leadership can no longer over look an increasingly pluralistic public opinion and many conflicting interest groups which are trying to influence government policies including the basic principles of foreign policy. Many of its neighbors felt the brunt of an assertive Chinese foreign policy which is increasingly echoing a jingoistic nationalist voice emanated from certain section of new generation hardliners in the party and military. Many scholars and foreign policy experts like to interpret that China possibly became confident enough to relinquish the policy of hiding capabilities and is ready to display its economic might and military prowess.

The Sino-US relations during the Bush administration failed to make any headway in resolving issues of trade, easing of tensions over North Korea and Iran’s nuclear ambitions. In addition, several unpleasant incidents took place during Hu Jintao’s first state visit to the USA in April 2006 such as disruptions during his speech in the White House lawns and huge anti-China demonstrations throughout USA. The US President Obama was also treated with disdain during his visit to China in November 2009.

In order to make the visit of Chinese President successful, for last few months the leaders of both US and China began to tone down their rhetoric. And a few days before the actual visit began, the leaders of both countries set the agenda for discussion. The US Secretary of State Hillary Clinton dismissed the Cold War style containment policy and described the relationship between the two countries as an increasingly complex global “engagement” which does not fit into the black and white categories like ‘friend’ or ‘rival’. On the other hand President Hu Jintao proposed four broad points to advance Sino-US relations that include open dialogue and trust building, need for abandoning the zero-sum Cold War mentality, importance of respecting each other’s sovereignty, territorial integrity, choice of development path, concerns, and a constant pursuit to expand converging interests.

So far as actual visit is concerned, the Chinese media has assessed it a successful major historical visit. This has not only helped towards better understanding of the two countries but has also proved that the two are highly interdependent. The China-US Joint Statement issued during the visit has outlined long-term framework for future ties which is expected to guide the development of Sino-US relations in the second decade of 21st Century. The Chinese media also claimed that the US President would get huge dividends towards improving his own image from a successful visit by Hu Jintao.

One international studies expert at the China Foreign Affairs University feels that America is now looking at China in the context of historic shift in the balance of power. In his understanding, Obama administration is giving an unprecedented attention towards China because the president and his Democratic Party are facing serious domestic pressure due to lackluster performance on the economic front. The Chinese analysts also said that the US would be increasingly dependent on China in managing international issues such as global economic crisis, piracy in the African coast and Iran’s nuclear program.

Another Chinese expert studying Sino-US relations at the Nanjing University considers that the significance of the visit is more symbolic in nature. To resolve some of the concrete issues the two sides, however would need to accommodate each other’s core interests. He identified sovereignty and territorial integrity, political stability, Taiwan and security in the Asia Pacific as the core areas of interests. On the other hand America’s core interests are maintaining global leadership role, nuclear non-proliferation, and military presence in the Pacific Ocean region. There is a clear indication, according to the above expert that the US and its leadership find it increasingly difficult to maintain its political clout in the international arena because of its sluggish economic growth. This would provide opportunity to China in protecting its core interests by using huge trade surplus as a leverage.

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