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NO.17 (September 1, 2004)
2004/09/01

Chinese People Hold Deng in High Esteem

Steadily Pressing Ahead Reform of Investment System

China to Boost Development of Non-Public Economic Sector

Working for the Interests of People, Guaranteeing People's Livelihood

Record High of Consumer Market Growth in the First Half of 2004

 

 

 

Chinese People Hold Deng in High Esteem

  

 "The Chinese people harbor a deep love for the late leader Deng Xiaoping," said Xu Zhigong, an expert on the study of Deng Xiaoping Theory and Vice President of National Defense University of China. Xu made this remark after seeing the result of a recent survey.

   

To commemorate the centenary of Deng's birth, which takes place on August 22, Xinhuanet.com, a website of Xinhua News Agency, launched an online survey, starting in late June. As of July 27, some 5,541 people had answered the questionnaire, and written to express their love for the late leader.

   

The survey tested people's knowledge of Deng's life and his theories.

    

Nearly 67.6 percent of the netizens surveyed said that they are familiar with Deng's life, and 76.4 percent said they know about Deng's theories--with 31.2 percent saying that they understand his theories well, and the remaining 45.2 per-cent claiming to be familiar only with the main contents. Many of them expressed the intention to further learn about this great man and his theories

   

The Chinese people still hold the leader Dong Xiaoping, the architect of China's modern reform and development, in high esteem, the survey indicates.

   

Xu said that it has been seven years since Comrade Deng Xiaoping passed away, and the reform and opening-up undertakings he initiated have progressed for more than 20 years.

 

The Chinese people feel proud of the achievements made during this period, and cherish Deng's memory with particularly deep affection.

   

People miss Deng because he himself held deep affection for the country and the people. To the question "Which remark of Deng's impressed you most?" 34 percent chose Deng's famous remark, "I am a son of the Chinese people, and I deeply love my country and people."

   

The Chinese people love Deng Xiaoping, because he deeply loved them and the motherland. Deng devoted him-self to China's modernization drive. He regarded the people's contentment, support and feelings as the utmost criteria for formulating policies.

   

People miss the great leader Deng Xiaoping also because at critical times for China he blazed a road of building socialism with Chinese characteristics, which injected unprecedented vitality into the country and society. To the question "Which part of Deng's theories are you concerned most about?" 48.2 percent chose his statement about combining theory with practice to promote the socialist modernization drive.

 

Two of Deng's best-known remarks give people a deep impression: "Development is a hard principle" and "No matter whether it is a white or a black cat, it is a good cat so long as it catches mice." This shows that people favor Deng's pragmatic working style and spirit of seeking truth from facts. Deng's famous remarks Were not numerous, but they were practical and easy to understand, said Xu.

   

The survey indicates that 34.7 percent of netizens want to know more about the "three ups and three downs" in Deng's political career. Between 1966 and 1976, Deng removed from three times, and then reinstated in important positions in the Party and Central Government. People respect Deng's firm perseverance in persisting in the truth under heavy pressure caused by adverse situations, Xu explained.

    

Numerous remarks expressing the people's love for Deng Xiaoping can be seen online, such as "Take care, Xiaoping," and "We miss you."

 

 

 

 

Steadily Pressing Ahead Reform of Investment System

   

On July 19, 2004, the State Council promulgated the Decision on Reform of Investment System. Recently an official with the National Development and Reform Commission (NDRC) accepted an interview and answered questions concerning the decision.

   

         Question: Could you please comment on the importance of pressing ahead reform of investment system?

   

Answer: Since the opening up a slew of reforms have been carded out in the investment field. However, some deep-level inconsistencies and problems have not been fundamentally solved. In particular the decision-making right of enterprises has not been fully put to effect; the basic resource allocating role of market has not been given full play; the scientific and democratization level of government investment decisions need to be further improved; the efficiency of macro-control and supervision in investment needs to be enhanced.

    

Pressing ahead reform of investment system is an important move in establishing and perfecting socialist market economy and currently is of great significance to strengthening and improving macro-control. First, deepening reform of investment system, establishing enterprises as the main body of investment and reducing the direct intervention of government in corporate production and management activities are conducive to the better exertion of the basic resource allocating role of market, optimization of investment structure, improvement of investment returns, the sustained, rapid, coordinated and sound development of national economy and comprehensive advancement of society.

    

Second, deepening reform on investment system, promoting reforms such as on administrative management, state-owned enterprises, financial revenue and financial credit are conducive to establishing corporate and banking self-inspiring and self-restraint mechanisms and promoting the further improvement of socialist market economy.

    

Third, deepening reform of investment system and improving the management of foreign investment are conducive to further expanding opening up, better utilizing international and domestic markets and resources and expanding more capacious space for economic development.

    

Fourth, deepening reform of investment system and speeding up the transform of government function favor the shift of governments' center work to economic regulation, market supervision, social management and public service.

   

Fifth, deepening reform of investment system is conducive to eliminating system roots that give rise to blindfold investment expansion and enhancing the internal vitality and drive of sound economic development.

   

As for now enhancing and improving macro-control have created favorable conditions for propelling reform on investment system. We can explore effective solutions by grasping the acute contradictions and problems in the investment and by practicing the macro-control; prevent stagnancy under tight policy and disorder under easy policy and get reform of investment system onto a positive and healthy track.

   

Q: What are the chief objectives of deepening reform of investment system?

   

A: The overall consideration of deepening reform on investment system is to give more play to the basic resource allocating role of market under the national macro-control according to the requirement of perfecting socialist market economy, and to finally establish a new investment system that features market-led investment, corporate independent decision, independent bank loan examination, diversified financing means, standardized intermediary service and effective macro-control. Speaking specifically we should reform the government management system corporate investment and allow enterprises greater independence in making investment decisions in line with the principle that "the investor makes the investment decisions, reaps the profits and bears the risks;" rationally define the government's investment functions, improve the scientific and democratization level of investment decisions and establish an accountability mechanism for investment decisions; further expand project financing channels and develop diversified financing means; nurture standardized investment intermediary service organizations, reinforce industry self-discipline and promote fair competition; perfect investment macro-control system, improve macro-control mode and perfect macro-control means; speed up legislation progress in the investment field; reinforce investment oversight, protect standardized investment and construct market order.

 

Q: What are the new major moves of the State Council's Decision on the Reform of Investment System?

   

A: Generally speaking, the new major moves of the decision are demonstrated in the following four aspects:

   

First, the examination and approval system of corporate investment project is changed into a substantive regulation system and a registration and recording system. The Decision requires that from now on nongovernmental-funded corporate projects no longer follow the examination and approval system. The government will only conduct substantive regulation on the major projects and projects of the restricted kinds. The other projects will follow the registration and recording system.

   

Second, the function of government investment is rationally defined. Government investment will mainly be used in economic and social areas which are of national security and where the market cannot efficiently allocate resources, in improving public welfare and public infrastructure construction, protecting and improving bio-environment, promoting the economic and social development of less developed regions and advancing scientific and technological progress and the industrialization of high technologies. Investment funds of various governments will be rationally utilized by means such as direct investment, capital funds injection, investment subsidies and on-lending and loan interest discount. As for non-operating government investment projects the implementation of the contractor system for construction will be accelerated.

   

Third, the macro-control system in the investment is improved and regulation means are bettered. Overall investment of the society will be effectively regulated with indirect control methods by comprehensively utilizing economic, legal and necessary administrative means.

   

Forth, the supervision and management of government investment will be perfected, accountability system will be established in government investment, balance mechanism of government investment will be improved and post-evaluation system and social supervision mechanism will be established in government investment projects; the supervision and management of nongovernmental investment will be strengthened and improved, coordinated corporate investment supervision system will be set up and perfected, supervision of corporate investment activities will be strengthened according to the law and corporate investment credibility system will be established; supervision of investment intermediary service institutions will be strengthened while intermediaries such as consultation and evaluation institutions and tendering and bidding agencies will be under qualification management.

    

          Q: What is the difference between substantive regulation system and examination and approval system?

   

A: The difference is demonstrated in the following three aspects:

   

First, the coverage is different. The examination and approval system is applicable only to government-funded projects and corporate investment projects that use governmental funds; whilst the substantive regulation system is applicable to major projects and restricted projects in which the enterprise does not use government funds as investment.

   

Second, the content of approval is different. Under the old examination and approval system the government examined a corporate investment project from both the perspectives of a social manager and of an investor; under the substantive regulation system the government considers a corporate investment project only from the perspective of social and economic public management. The content of examination is mainly focused on "maintaining economic security, rationally exploiting and utilizing resources, preserving bio-environment, optimizing major arrangement, protecting public interests and preventing monopolies," instead of examination of an investor on the project's market prospect, economic returns, fund source and product technological solution etc.

   

Third, the procedures are different. Under the examination and approval system there were usually three steps, that is, "project proposal," "feasibility study report" and "project starting report," whilst under the substantive regulation system there is only one "project application report" step.

    

To certain extent the implementation of substantive regulation system is a major innovation in China's management of investment in fixed assets. To ensure the smooth implementation of this system Investment Project List Ratified by the Government (2004 edition) was released as an appendix to the decision.

    

Q: The decision suggests to perfect the registration and recording system. What is the meaning and importance of the implementation of the registration and recording system?

   

A: The implementation of the system is an important content of deepening reform of investment system. After the implementation of the decision, the government no longer approves most corporate investment projects. Instead, enterprises make their independent decisions and put them on the records of the competent departments in charge of investment in the local governments. By the effective implementation of the registration and recording system the government can comprehensively grasp information on investment intent, duly and accurately monitor the investment operation situation, timely release investment information and guide the non-governmental investment. In accordance with the requirement of the decision the government will reinforce the direction and supervision of registration and recording work not only to faithfully implement the system but also to prevent disguised examination and approval in the name of registration and recording.

   

          Q: What kind of impact will this reform have on foreign investment?

   

A: The reform of investment system adheres to the basic national policy of opening up. It has not changed China's policies and measures to encourage foreign investment, but has created more favorable environment for overseas businessmen to invest in China. This reform further simplifies the substantive regulation procedure for investment projects, even for foreign investment projects which, too, only need to be ratified for the "project application report;" further expands the substantive regulation purview of provincial governments, which is raised from US$30 million to USS100 million for encouraged and permitted foreign investment projects and from US$30 million to US$50 million for restricted foreign investment projects.

 

 

 

 

China to Boost Development of Non-Public Economic Sector

    

Recently, the State Council, convened a symposium on the promotion of the development of non-public economic sector. Premier Wen Jiabao, also Standing Committee Member of the Political Bureau of the Central Committee of the Communist Party of China (CPC), made an important instruction at the symposium.

    

Premier Wen pointed out that the non-public economic sector, including individual economy and private economy, is a vital component pan of China's socialist market economy and an important propeller of social productive forces. It is playing a crucial role in economic growth, expanding employment, invigorating the market and increasing fiscal revenue.

    

Premier Wen urged adhering to the basic economic system of keeping public ownership as the mainstay while allowing diverse forms of ownership to develop side by side in line with the guidelines of the 16th National Congress of the CPC and the Chinese Constitution. Premier Wen acknowledged that while unswervingly consolidating and developing the public sector of the economy, there should also be unswerving efforts to encourage, support and guide the development of the non-public sector of the economy.

   

In his instructions, Premier Wen urged quickening work in the following aspects:

 

* Speeding up the formulation of polices and measures to encourage, support and guide the development of the non-public sector of the economy;

    

* Removing or revising provisions in laws, regulations and policies that restrict the growth of the sector and eliminating institutional barriers;

    

* Protecting private property rights; and

    

* Granting non-public enterprises with the equal treatment accorded to other types of enterprises so as to realize fair competition.

   

At present, the macro-economic control measures implementing by the state to solve outstanding contradictions and problems in the economic performance are not only conducive to the steady and rapid growth of the national economy, but also to the sound development of non-public economic sectors, the Premier added.

    

Since the reform and opening up, the basic economic system of keeping public ownership as the mainstay while allowing diverse forms of ownership to develop side by side has been constantly perfected and the development environment has been continuously improved. The rapid growth of non-public economic sector has become an important component of the socialist market economy with Chinese characteristics.

   

Non-Public Economy Becomes a Main Channel for Employment

    

The non-public economy has become a main channel for current employment in China, according to a survey made by the All-China Federation of Industry and Commerce.

    

Statistics show that, by the end of 2003, the number of employees in urban individual and private enterprises totaled over 80 million, or one-third of total urban employment, In particular, after 1992, individual and private enterprises freshly employed six million people on average annually, making up 80 percent of the newly increased employment.

   

In addition, 65 percent of workers laid-off from state-owned enterprises were re-employed by the private sector, amounting to 1.1 million in 2003. Of this figure, 100,000 started their own enterprises as investors. Overall, 471,000 investors were laid-off workers.

   

By the end of 2003, non-public township enterprises had created 136 million jobs, absorbing a great number of the surplus rural labor force and making an outstanding contribution to the country's industrial and urbanization process.

   

Individual Enterprises Make Greater Contributions to Society

 

A survey by the All-China Federation of Industry and Commerce shows that individual enterprises have made increasingly greater contributions to society and their economic performance and social efficiency are remarkable.

 

At least 99 percent of China's enterprises are medium and small-sized, and most of them are individual enterprises. They have created 55.6 percent of China's GDP, 74.7 percent of newly industrial added value, 58.9 percent of the social sales volume, 46.2 percent of taxation and 62.3 percent of exports. In addition, they have created more than 75 percent of all jobs.

    

At least 1,500 new individual enterprises are created on average every day, with 3 billion Yuan of registered capital. There are about 32 million individual laborers, one in every 40 people. The number of private enterprises has exceeded 3 million and investors account for approximately 7.72 million. In 2003 alone, the capital created by these enterprises was about 1 trillion Yuan. Experts predict the number of individual investors could reach 30-40 million by 2010.

         

          Scales of Individual Enterprises Expanding

    

The All-China Federation of Industry and Commerce data shows that the scale of individual enterprises is constantly expanding.

   

At the end of 2003, China had 23.532 million registered individual industrial and commercial businesses with the registered capital of 418.699 billion Yuan, up 40.464 billion Yuan from the year before.

   

The number of nationwide registered private enterprises amounted to more than 3 million, an increase of 570,200 compared with 2002, which was the fastest growth ever. Their registered capital was nearly 3.531 trillion Yuan, a rise of 42. 61 percent. The number of employees was 42.99 million, increasing by 8.9 million over 2002. Eight provinces have more than 100,000 private enterprises.

    

The development of the private economy has been constantly expanding into the fields of production, science and technology and export-oriented sectors. In addition to the traditional economy, they have also involved in culture, education, public health, sports and some newly rising industries such as E-commerce and software exploration.

 

 

 

 

Working for the Interests of People, Guaranteeing People's Livelihood

--Achievement of China's 10 Big Labor Security Legal System Constructions

    

The Labor Law of the People's Republic of China, promulgated 10 years ago, is a milestone of New China's legal system construction of labor security.

   

Over the past 10 years, the State Council and all localities have promulgated a series of coordinating laws and regulations, initially forming a legal security framework, with the Labor Law as the basic law, supplemented by related rules and regulations.

   

          Farmer Workers Reaching 98 Million

    

--Gradually defining the principle of "laborers finding jobs on their own, employment through market regulation and employment promoted by the government," establishing a proactive employment policy with Chinese characteristics. Currently the number of farmers working in the cities has reached 98 million. In addition, some 130 million farmers are engaged in secondary and tertiary industries in township enterprises. They have become an important force of industrial laborers.

   

--Establishing a professional training and professional qualification certificate system. Through a decade of efforts, China has basically set up a training system directed by the labor market, aimed at raising employability, targeting urban unemployed and laid-off workers and transferred laborers from rural areas. Since 1998, a total of 28 million laid-off workers have participated in the training, and more than 17.3 million of them have found jobs through various channels.

    

The implementation of the training system has greatly promoted the country's employment and reemployment work. From 1993 to the end of 2003, the number of urban employment personnel had increased by 100 million nationwide.

       

          Safeguarding Lawful Rights and Interests of Laborers

    

--Labor relationship coordinating system. The labor contract system has been universally enforced and more than 95 percent of state-owned, collective and foreign funded enterprises have signed such contracts. Currently, over 600,000 enterprises have signed collective contract involving more than 80 million workers, of which, 290,000 enterprises have conducted a salary collective consultation system on a trial basis. A tripartite labor consultation mechanism has thus initially formed.

    

--Labor dispute-handling system. The enterprise mediation organization, labor dispute arbitration committee and people's court have handled millions of disputes, 1.07 million of which have been handled by arbitration committees at all levels, involving 3.66 million people. Over the past 10 years the arbitration organs have directly settled about 80 percent of labor dispute cases, and around 20 percent of the cases have been handled by people's courts at all levels.

    

--Labor standard system. Working hours in China were reduced from 48 to 40 per week. Limitation and concentration of extra working hours and the vocations of employees have been prescribed in the law. Special protection for women and minors is prescribed and regular medical check ups and registration of volunteers are also defined for employers. A minimum wage standard has been determined.

   

--Labor security supervision system. Over the past 10 years, labor security supervision organs at all levels have examined 7 million work units and other main entities on their implementation of the labor security laws and regulations, and 1.5 million law violations have been handled. In 2003, the supervision organs urged 88,000 units to apply and register social insurance systems for 11.49 million employees, and urged 149,000 units to pay 3.72 billion Yuan in social insurance fees for their employees, ordered work units to sign labor contracts with 8.95 million laborers, and assisted farmer workers on construction sector to get back all their wage arrears totaling 25.84 billion Yuan.

          

          Establishing Multiple Social Insurance Systems

    

Reform of the old age insurance system has been constantly deepening and the mode of combining social coordination with the personal accounting system has been defined, involving employees working in various urban enterprises and in institutions with enterprise management, including individual laborers, free occupation workers. The proportion of taxation for units and individuals has been unified, insurance fee collection has been enhanced, and unified provincial level coordination has been promoted, while the socialized pension issuance system and socialized management of enterprise retirees have been practiced. By the end of May 2004, the number of people taking part in the old age insurance was 157 million throughout the country.

    

By the end of 2003, the number of people participating in the unemployment insurance program had reached 103 million. Revenue totaled 24.9 billion Yuan and expenditure 20 billion Yuan. About 7.42 million unemployed people were provided with unemployment insurance benefits. Unemployment insurance has become a main way of providing basic living guarantees for laid-off workers.

   

After the re-employment service centers were universally established in state-owned enterprises nationwide in 1998 until the end of 2003, most of the cities carried out a basic medical insurance system, with the number of participated people reaching 100 million. The annual income was 89 billion Yuan and expenditure was 65.4 billion Yuan. The system has ensured the basic medical needs of these people.

   

Industrial injury insurance system basically has been set up. At the end of 2003, 45.75 million workers were covered, and a total of 330,000 people enjoyed treatment in that year. The Regulations Concerning the Insurance of Industrial Injuries, effective as of January 1,2004, has expanded the coverage rate, improved various systems such as the confirmation of industrial injuries, the evaluation of labor ability and treatment.

   

The establishment of various social security systems has guaranteed the basic rights and interests of workers when they are retired, unemployed, iii, injured, disabled or infected with an occupational disease, and this has played an important role in safeguarding the reform and development and stabilization of the overall situation.

 

 

 

 

Record High of Consumer Market Growth in the First Half of 2004

 

According to a report issued recently by the Ministry of Commerce, the growth of China's consumer market in the first six months broke the record established in 1997, while the high growth of the sales of means of production declined, basic product prices started to drop and the market performance was generally good. In the second half of 2004, the commodity market will continue to develop, but the growth rate might be a little bit lower than the first half.

 

The report summarized the market operation in the first six months, showing four features as follows:

 

Consumer market grew steadily, with the grain and edible oil prices coming down. Social commodity retail sales totaled 2.525 trillion Yuan, an increase of 12.8 percent compared with the same period of last year.

   

Sales of catering sector grew rapidly, becoming a spotlight in social consumption. Sales in this field topped 337.3 billion Yuan, a rise of 24.5 percent year on year.

 

Demand for means of production declined, with the price rise slowing down.

 

According to the Ministry of Commerce and the Logistic Information Center, the sales of means of production from January to June aggregated 5.3 trillion Yuan, up 22.7 percent year on year.

 

Restructuring of the circulation industry accelerated and the proportion of chain operations increased dramatically. From January to June, sales of the country's top 10 chain enterprises increased by 29.7 percent, much more higher than that of social average level. The proportion of the sales made by the top 100 chain enterprises to the retail sales of consumer goods increased from last year's 7.8 percent to 10 percent or above. Goods and materials distribution developed rapidly, with the distribution volume growing by over 30 percent.

   

The report says that some problems are still existing in current market operation, such as relatively low end user consumption rate, weakening consumer confidence, more restrictions to farmers' consumption, low growth of rural market sales, weak competitiveness in the circulation industry and blockages at local level. These problems should be considered and resolved.

The report forecast that China's total retail sales of consumer goods in 2004 would exceed 5 trillion Yuan, increasing by 10.5 percent over last year. Sales of the means of production would exceed l0 trillion Yuan, 15 percent up on 2003.

 

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