Some people will benefit from WTO membership first

Saul Thomas stthomas at SPAMmidway.uchicago.edu
Mon Nov 15 15:30:03 MST 1999



"Allow some people to get rich first"
---Deng Xiaoping on the principles of economic reform

------
China's Millionaires: A Product of
                   Economic Reforms
                   by Hong Mautz
                   Thursday, October 07, 1999

                   BEIJING -- On a cool September morning, Song Yun is
sipping espresso
                   in a Starbucks Cafe in downtown Beijing. His digital
mobile phone has
                   been ringing off the hook. "Yes, bring it to my office
at once, please," he
                   instructs one caller. "No, do not change anything on the
contract until I
                   see it," he tells the other. Dressed in an Armani shirt
and a pair of khaki
                   slacks, he throws 50 yuan on the table and hops in the
Mercedes that
                   has been waiting for him and disappears into the morning
rush hour.

                   Song, a multimillionaire, represents China's nouveau
rich. He is a
                   government employee who joined a Gongsi, or company, in
the early
                   '80s. Each government institution got several Gongsi to
shepherd in the
                   early stage of reforms. Gongsi enjoy more freedom and
operate under a
                   more flexible policy structure. People like Song who
were lucky enough
                   to get attached to a Gongsi have been able to make a
fortune.

                   A growing upper class

                   Song's new life represents a huge change from 20
                   years ago, when conformity and modesty were the
                   rule of the time. People were afraid of being the
                   best. Anyone who showed signs of excellence was
                   harassed. Being rich was condemned while being
                   poor was considered a virtue. That has changed:
                   The rich are now allowed to flourish. China now
                   boasts 3 million millionaires. They have become role
                   models to many throughout the country -- particularly
                   the young.

                   In his spare time, Song watches the latest Hollywood
movies via DVD at
                   his home-entertainment center. He has over 30 channels
and satellite TV
                   programs to choose from, a big leap forward from the
bleak half-dozen
                   channels offered by CCTV, China's central television
station. Several
                   dozen newspapers and magazines fill stands that line all
the major
                   streets; they cover everything from how to invest in the
stock market to
                   where to buy the latest model computer. Chinese novels
are more
                   thought-provoking these days. Formerly taboo subjects
such as the
                   Cultural Revolution, and the Anti-Rightists Movement of
the '50s, are
                   covered extensively. Sex, too, has become the topic of
many literary
                   discussions.

                   Writers can even delve into the previously taboo subject
of party leaders'
                   private lives. Leaders were once
regarded as deities, synonymous with
                   righteousness and power. Now they are portrayed as
ordinary human
                   beings that have sexual desires and emotions.

                   Fanfare for capitalism

                   Capitalism is changing the Chinese system -- and the
lives of Chinese
                   workers. The country is going through a painful
transition from planned
                   economy to market economy and is still coping with the
many problems
                   this transition generates. The "iron bowl" system -- the
security of a job
                   for life -- has been abandoned, and many state
enterprises have gone
                   through massive layoffs. Now workers are forced to live
on an
                   unemployment pension of 250 yuan and are encouraged to
make a living
                   on their own. After decades of government job security,
they feel at a
                   loss. They are struggling to cope with the downside of
the market
                   economy. Many go on the streets selling newspapers,
handy food,
                   stockings and vegetables; others join the janitors' team
to clean office
                   buildings, parks and streets. Few lucky ones are doing
what they were
                   trained to do.

                   Housing has gone through a big reform in China.
Commercial housing
                   was non-existent in the early '80s, today it is getting
increasingly
                   popular. People were allocated subsidized housing by the
government.
                   But today, the government encourages renters living in
subsidized
                   housing to pay a minimal fee to purchase them. For the
very rich, there
                   are U.S. style single houses and mansions for sale.

                   China celebrated its 50th birthday Oct. 1 with much
fanfare. Brilliant
                   fireworks lit Beijing's rarely seen clear sky, a result
of the closing a
                   chemical plant in the suburbs of Beijing, and forbidding
vehicles burning
                   diesel to enter the city. Beijing was decorated with
millions of flowerpots,
                   red lanterns and national flags. Newly seeded lawns also
lined recently
                   expanded avenues and streets. The government stimulated
consumer
                   spending by offering a seven-day holiday. It also raised
the salary of
                   government employees by 30%.

                   Since the economic reform in the late 1970s, the salary
of an average
                   Chinese has risen 10-fold. A government employee today
makes an
                   average of 1,000 yuan or $125 dollars a month. For those
working for
                   joint-venture or private companies, the number can go as
high as 20,000
                   yuan or $2,500 dollars a month. Today, computers, cars
and mobile
                   phones are in high demand, replacing color television
sets, washing
                   machines and refrigerators of the '80s as the hot
commodities.

                   The rule, or the exception?

                   For the latest business news and market trends, Song Yun
relies on the
                   Internet. He reads The New York Times and the Asian Wall
Street
                   Journal online. Although the Chinese press has improved
a great deal
                   from its heyday of propaganda, it is still
unsatisfactory to intellectuals who
                   demand more information and less party talk. Song
insists that he does
                   not care about politics as long as China maintains its
market economy.

                   It is safe to say that many Chinese feel proud and
confident that the
                   country is going in the right direction. But Song admits
he does feel
                   insecure sometimes about his fortune. For China is still
a socialist
                   country and the law to protect private assets is not
fully enforced. He
                   believes the political reform should start soon so that
he can rest assured
                   that no one will take away his wealth. But for now, his
main worry is how
                   to invest in the United States.

                   Hong Mautz is a Freelance producer for CBS.

                     Related Links
                   Learn details about Chinese economic reforms in the
1990s. Despite their growing
                   numbers, not all Chinese millionaires are respected.
Some entrepreneurs are trying
                   their hands at Internet start-ups. Read an article on
the evolution of business law in
                   China. Make yourself rich the Chinese way. Click here to
learn more about China's
                   culture and history. These Chinese Millionaires are a
bit different, and may be coming
                   your way soon. Visit the Economy channel and the World
channel at Voxcap.com to
                   explore this topic further.


http://www.intellectualcapital.com/issues/issue308/item6729.asp

-----------


BBC

              Monday, November 15, 1999 Published at 08:07 GMT



              Business: The Economy


              China drops trade barriers


              Smiles all round as US and Chinese negotiators reach a deal


              Chinese and American negotiators have signed a historic
              trade deal that paves the way for China to join the World
              Trade Organisation.


                             The deal, which will involve major
                             opening of China's markets, will
                             provide a significant boost to China's
                             economic reforms and to the
                             reformist politicians around Prime
                             Minister Zhu Rongji.


              It will also strengthen the legitimacy of the world trading
              system, which has been damaged by disputes between
              the United States and Europe.



                            The downside for China is that
                            unemployment may rise sharply as
                            its inefficient state industries face
                            increased competition.


                            "The China-WTO agreement is good
              for the United States, it's good for China, it's good for the
              world economy," US President Clinton said.
....
http://news.bbc.co.uk/hi/english/business/the_economy/newsid_520000/520749.stm










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