China In-Depth

Sunday, July 09, 2006

Canadian Report and Reaction To The Statement Of Government Of China

  • Canadian Report and Reaction To The Statement Of Government of China (audio)

  • To read the report and reply, go to link below

    This is Catherine Hennessy reporting China In-Depth for Sound of Hope Radio. The following recording is made in a press conference held at Canada’s Parliament Hill with guest speakers David Matas and David Kilgour. David Matas is an immigration, refugee and international human rights lawyer in private practice in Winnigeg. David Kilgour is a former member of Parliament and former Secretary of State of the Government of Canada for the Asia Pacific region. Both of them are the authors of a 45-page report released on July 6, 2006 entitled “Report into Allegations of Organ Harvesting of Falun Gong Practitioners in China”. This independent investigation is result of weeks of research, evidence verification, and witness interviews. To read this report please visit web site address

    Right after the release of this report, David Matas and David Kilgour have noticed that the Government of China released a statement in response to this report on the same day. David Matas and David Kilgour have responded their reactions to this statement. To down load 45-page long report and the reponses to the statement, please visit the following links:

    This is Catherine Hennessy reporting China In-Depth for Sound Of Hope Radio.

    Response of David Kilgour and David Matas to the Chinese
    government statement

    July 7, 2006
    The Government of China released a statement in response to our report titled Report into
    Allegations of Organ Harvesting of Falun Gong Practitioners in China dated July 6, 2006. The
    statement can be found at . We have these reactions
    to this statement:

    1. The statement of the Government of China was released the same day as our Report. The
    statement of the Government of China dismisses our Report out of hand. We view this reaction
    is unconsidered. It means that the Government of China has engaged in no investigations to
    determine whether or not what the report contains is true.
    2. The statement of the Government of China begins with the phrase
    "In order to extricate itself from an awkward position after its lie about "Sujiatun
    Concentration Camp" has been laid bare, Falun Gong has shifted..."
    This phrase is incorrect in a number of different ways. First, it suggests that our Report is a
    Falun Gong report. Yet, it is not. We are not Falun Gong practitioners. We did this report as
    volunteers and were not paid for this report by Falun Gong or anyone. Our report represents
    our own judgment. We have not acted on the instructions of Falun Gong or anyone else in
    coming to the conclusions we did.

    3. The assertions about Sujiatun Concentration Camp to which the Chinese statement refers
    originated from the ex-wife of a surgeon at Sujiatun Hospital. This person is not a Falun Gong
    practitioner. This person has not changed or shifted her story at any time. David Kilgour
    interviewed her. An excerpt of the interview can be found at Appendix 13 of our report.
    4. It is our own opinion, expressed in our report, that this woman was not lying. We concluded
    David Kilgour:(613) 747-7854; David Matas:(204) 944-1831 - 1
    A full copy of the report can be obtained at:

    that she was credible.

    5. In our report we did not rely on this witness alone to come to our conclusions. In our
    report, this is what we said about the testimony of this witness:
    "The testimony of the wife of the surgeon allegedly complicit in Falun Gong organ
    harvesting seemed credible to us, partly because of its extreme detail. However, that
    detail also posed a problem for us, because it provided a good deal of information which
    it was impossible to corroborate independently. We were reluctant to base our findings
    on sole source information. So, in the end, we relied on the testimony of this witness
    only where it was corroborative and consistent with other evidence, rather than as sole
    source information."

    Our report is not a shift from what this witness says, but rather an expansion, with a larger
    focus than just Sujiatun Hospital.

    6. The Chinese statement then says:
    "It is obvious that their purpose is to smear China's image." We reply that we have no wish to
    smear China's image. Our sole concerns are respect for the truth and human rights.
    7. The Chinese statement then says:
    "China has consistently abided by the relevant guiding principles of the World Health
    Organization endorsed in 1991, prohibiting the sale of human organs and stipulating that
    donors' written consent must be obtained beforehand and donors are entitled to refuse
    the donation at last minute."
    This statement was belied by the facts. The China International Transplantation Network
    Assistance Centre Website until April of this year set out a price list for transplants. The price
    list was removed from the website in April, but is still archived. To see the web site now, go to
    . To see the archived site, go to

    David Kilgour:(613) 747-7854; David Matas:(204) 944-1831 - 2
    A full copy of the report can be obtained at:
    As well, many individuals can attest to paying for organ transplants in China.

    8. The statement that China has consistently abided by the principle stipulating that donors'
    written consent must be obtained beforehand is also belied by the facts. Human Rights Watch
    has reported that consent is obtained from executed prisoners in only a minority of cases. The
    organization writes that even in this minority of cases
    "the abusive circumstances of detention and incarceration in China, from the time a
    person is first accused of a capital offense until the moment of his or her execution, are
    such as to render absurd any notion of "free and voluntary consent."

    Organ Procurement and Judicial Execution in China, August 1994

    9. The China statement goes on to say:
    "China has issued a regulation on human organ transplants, explicitly banning the sale of
    organs and introducing a set of medical standards for organ transplants in an effort to
    guarantee medical safety and the health of patients. The regulation requires medical
    institution which is qualified for practising human organ transplant to register at
    provincial level health department. Unregistered medical institutions are forbidden to
    practice human organ transplant. If the government finds any registered institution
    violating the regulation, it will cancel the registration and punish the people responsible."
    We acknowledge that this is so, and wrote about it in our Report. We also noted that this
    legislation came into force only a few days ago on July 1st. It is not an answer to our findings
    about what happened before that date. Moreover, in China, there is a huge gap between
    enacting legislation and enforcing it.

    10. The Government of China then writes:
    David Kilgour:(613) 747-7854; David Matas:(204) 944-1831 - 3
    A full copy of the report can be obtained at:

    "It is very clear that Falun Gong's rumour has ulterior political motives."
    None of our findings are based on rumour. Every finding we make is sourced and
    independently verifiable.

    11. The China statement then says:
    "Therefore, the so-called "independent investigation report" made by a few Canadians
    based on rumours and false allegations is groundless and biased. We do believe that lies
    are always lame, and will never become the truth even if being repeated 1000 times. We
    hope that the Canadian people will not be deceived by the disguise of the Falun Gong,
    and more people will be aware of the nature of "Falun Gong" as an evil cult."
    This conclusion is an attack both on us and Falun Gong. The Report has to be judged on its
    merits. Attacking its authors is not an appropriate response.

    Second calling the Falun Gong an evil cult exemplifies the vilification heaped on the Falun
    Gong. It is this sort of slander which, in China, depersonalizes and dehumanizes the Falun
    Gong and makes possible the violation of their basic human rights.
    Calling a group of innocent civilians an "evil cult" is a form of incitement to hatred,
    unacceptable in Canada. It is an abuse of their diplomatic presence in Canada for China to
    engage in this form of incitement.

    For more information, please contact: David Kilgour: (613) 747-7854;
    David Matas: (204) 944-1831

    A full copy of the report can be obtained at:

    David Kilgour:(613) 747-7854; David Matas:(204) 944-1831 - 4
    A full copy of the report can be obtained at:

    Thursday, May 04, 2006

    PBS Interviews Three Falun Gong Practitioners On The Issues Of Internet Censorship In China

  • PBS Interviews Three Falun Gong Practitioners On The Issues of Internet Censorship In China (audio)

  • This is China In-Depth for Sound of Hope Radio, focusing on what’s going on today with its ruler Chinese Communist Party (CCP). On April 18, 2006, PBS NewsHour Correspondent Spencer Michaels interviewed with Falun Gong practitioners on the issue of Chinese Internet Censorship. Let’s take a glimpse at their conversation.

    In a cluttered apartment in Northern California, a Chinese-born computer scientist, who doesn’t want his identity revealed, is waging a technological war on the Chinese government. He is working to improve a software program he designed that people in China can use to get around their government’s Internet censorship. The technology, which masks the Web sites visited, is called Ultrareach. It uses both encryption and a constantly changing computer identification that allows access to banned Web sites. The founder says he is afraid Chinese agents could find him and try to silence him.
    “Yes, those Web sites are usually now blocked. We invented a technology that can breakthrough China’s great firewall so that it enables Internet users in China, can visit any Web sites from the United States or from other free world. I don’t think China government likes it. You know, they see the Internet as a threat in the freedom of the information expression.”

    Have they threatened you personally? Asked the PBS NewsHour Correspondent. “One of my partners Peter Yuan Li, actually, got beaten up at his home Atlanta, and computers were taken away. I don’t think they have found me yet.” Says the anonymous Chinese-born computer scientist.

    Reporter Spencer Michaels continue saying that in China itself, the Internet is booming. Even nightclubs boast Web connections. One hundred and fifteen million Chinese go online only to find that the government uses filters to block sites that provide information about democracy or the uprising in Tiananmen Square or dissident groups. In order to get around those restrictions, more than 100,000 Chinese use Ultrareach under other technologies every day, which in turn has led authorities to fight back, inventing new technologies and buying foreign programs to foil the anti-censorship software. On the Berkeley campus of the University of California, Xiao Qing directs the China Internet Project and advocates for a freer Internet policy. She says the Chinese government encourages the use of the Internet for its economic benefits in a global economy. Xiao Qing also says On the one hand, we see this very rapid development of the Internet infrastructure, the practices. And on the other hand, we also see these unprecedented, enormous resources being put into the control, the filtering, the monitoring, the censorship, surveillance, what we call altogether China’s great firewall.

    Frederick Wakeman, professor of history and Asian studies at Berkeley says the Chinese have a millennial tradition of censorship and of literary inquisition. The Chinese have long tried to limit information, and rebels have always tried to circumvent censorship. He thought the Internet might changes things. Fred has this to say “I think, when it first appeared, we thought, well, this is going to open up channels of communication that the Chinese themselves cannot control. I can remember, back in the days when the fax machine was first introduced, and I would send a fax from Peking, and there would be a Chinese security officer at my elbow to make sure the fax was secure. They had enough manpower to do that. Now, they obviously are trying to extend that into the area of the Internet, which is much more difficult. The Chinese will find ways to get around it.”

    PBS NewsHour Correspondent further commented on the following: For now, the Chinese are keeping the pressure on. They are requiring that Internet companies operating in China, like Google, Microsoft, Cisco and Yahoo, keep Chinese users from forbidden sites. Google’s announcement in January that it would play by the Chinese rules, eliminating offending Web sites on its Chinese service, provoked a storm of criticism, led by Republican Congressman Christopher Smith. Here is Christopher Smith’s statement: “ China’s search engine, is guaranteed to take you to the virtual land of deceit, disinformation and the big lie.” In Beijing last week, Google’s CEO Eric Schmidt defended his company by saying “We’ve made a decision that we have to respect their local law and culture. So it’s not an option for us to broadly make information available that’s illegal, or inappropriate, or immoral, or what have you.”

    Practitioners of Falun Gong, a Chinese spiritual exercise purporting to improve the body and spirit, are among those protesting the loudest. They say the Chinese government has banned the practice, jailed and allegedly tortured some members, and banished Falun Gong from the Internet. Conseqently, members have condemned American companies for complying with Chinese demands for self-censorship. California chemist and software developer Sherry Zhang, a Falun Gong practitioner, is helping Ultrareach in working to attack the Chinese firewall, which she says also blocks information coming out of China. Sherry Zhang says: “I’m a scientist, but I’m actually, because of a persecution in China, so I get involved in the Internet project, because the Chinese government is trying to block the internet, trying to block all this information the persecution of Falun Gong and et cetera, human rights abuse and et cetera, is trying to block it from coming out of China. “ Sherry Zhang also related what happened to an American friend of hers in China. “He went to an Internet bar, just typed in two words, “Falun Gong.” Instantly, the sirens went off. And then the police came in front of him within one minute. So that’s how bad it is. Because they have the ways to monitor what people are doing on the Internet, especially in the Internet bar.”

    PBS NewsHour Correspondent says that the Chinese employ at least 30,000 Internet police. And according to human rights groups, between 42 and 87 people have been jailed for Internet crimes. Berkeley’s Xiao Qiang says it is not just Falun Gong members who are benefiting from the new software. “Once people are using this software, they don’t just come to the Falun Gong sites. They see every other sites that they couldn’t see inside of China, which is really helping expending the scope of information in China.” Several dissidents, including Sherry Zhang, say a united front by American companies could force the Chinese to back down. “I think the solution for the whole business community, to really know that it’s not that they need China, but China needs them, too. They need to stick to all of us in the international business community, to stick to our principles, you know, the freedom and the democracy, and that way we can slowly force China to change, rather than China changing us.” Xiao Qiang says that high-tech, combined with high principles, should eventually prevail. “Most importantly is those companies also know, if they fight against the censorship mechanism, they are on the right side of history. They’re also on the right side of technologies. Ultimately, it’s the Chinese people wants to have a freer Internet, a freer society. And the great firewall, no matter how great it is, it just is like the Great Wall in China. It’s not going to stop the history going towards a freer, more human society in China.”

    Finally, PBS NewsHour Correspondent Spencer Michaels commented that While much of Great Wall remains standing after 2,000 years, parts have crumbled, Xiang Qiang expects much of the great firewall to crumble as well, in a country where repression has always been part of the landscape.

    This was China In-Depth for Sound of Hope Radio. I am Catherine Hennessy

    Thursday, April 20, 2006

    Congressional Hearing - Internet Censorship in China

  • We Can't Let China Off (audio)

  • To view the video please copy paste the link below onto IE.


    Google...China...and Us
    Moral challenges we face.

    NationalReview Online
    April 20, 2006

    On Wednesday, I conducted a hearing to examine China's human-rights record. Over the years, I have held more than 25 hearings on human-rights abuses in China and although some economic progress has been made, the human-rights situation remains abysmal.

    Among other things, this week's visit of President Hu Jintao to the United States provides an opportunity to expose the terrible human-rights situation in China today on a global stage. And it will, I hope, convey our unshakeable regard and commitment to press Beijing for serious, measurable, and desirable reform. Any relationship we have with China must begin with a fundamental respect for basic human rights. The people of China deserve no less. It is our moral duty to stand with the oppressed, not with the oppressor.
    State Department and other human-rights watchdogs indicate that Chinese government's repression of its citizens continues. In fact, the current regime is one of the worst violators of human rights in the world. The most recent State Department Human Rights Report for China is approximately 45,000 words and lists 22 major rights problems.

    Beijing views the information on the Internet as a potential threat to the party's control over the people and the monopolization of political power. And so, they restrict it. The freedom to publish information and read news on the web unfiltered does not exist and individuals who attempt to speak freely are frequently imprisoned and tortured. U.S. corporations should not be aiding in that process. Yet at a February hearing I chaired on global Internet freedom, some of the biggest corporations in America revealed how they have partnered with the Chinese secret police to find, apprehend, convict, and jail religious believers and pro-democracy advocates.

    Though Yahoo voiced their profound regret for the imprisonment of Shi Tao for 10 years, they couldn't say — and didn't seem to know — how many others were condemned to jail and torture because of their willingness to comply with the secret police. When asked under what conditions — court order, police demand, a fishing trip — Yahoo surrenders e-mails and files to authorities, their representative declined to reveal the information because it would break Chinese law. Sadly, it was revealed at our hearing that Yahoo's cooperation with the Chinese police has seemingly lead to the imprisonment of another democracy advocate, Jiang Lijun.

    Google, for its part, created a search engine tailored to the wishes of the People's Republic of China. Type in any number of searches, for "human rights," or "Tiananmen Square massacre," or "Falun Gong," and the site conveniently reroutes the web surfer to government propaganda — much of it heavily anti-American, anti-Bush, and full of hate. Google responded to concerns about enabling a dictatorship to expand its message of hate by hiring big-time lobbying firms like Podesta-Mattoon, and the DCI group to put a good face on it all — and presumably kill my pending legislation, the Global Online Freedom Act of 2006.

    Amazingly, Cisco showed no concern whatsoever that its "Policenet" technology — a tool for good in the hands of legitimate law enforcement, but a tool of repression in the hands of Chinese police — has now linked and expanded the capabilities of the Chinese police. Microsoft censors and shuts down blogs that the government objects to. (So I'm guessing Bill Gates kept human rights off the agenda when he hosted Hu on Tuesday.)

    A Stalinist Nightmare Revived for the 20th century
    China's continued repression of religion is among the most despotic in the world. Citizens practicing a faith other than officially sanctioned religions are often subject to torture, imprisonment, and death at which time prisoner organs are frequently harvested. Christians, Tibetan Buddhists, and Muslim Uighurs are all being persecuted for their faith. Today, numerous underground Roman Catholic priests and bishops and Protestant pastors languish in the infamous concentration camps of China for simply proclaiming the Gospel of Jesus Christ.

    Beijing reserves a special hatred for the Falun Gong. Nearly seven years ago, the government began its brutal campaign to eradicate Falun Gong after party members and Army officials had begun to practice the faith. Like all totalitarian governments, the PRC fears and hates what it cannot control. It is a Stalinist nightmare revived for the 21st century.

    China's one-child per couple policy, decreed in 1979, has killed hundreds of million babies by imposing Draconian fines — up to ten times annual salaries — on parents. Brothers and sisters are illegal and sex selection abortions have resulted in gendercide (100 million girls who should be alive today are not). One Chinese demographer has admitted that by 2020, forty million Chinese men won't be able to find wives because population control will have destroyed the girls.

    There is no recourse for millions of Chinese laborers trapped in poor working conditions. Those who protest unjust wage and labor practices outside of the government-controlled labor union are arrested and imprisoned. Citizens are often persecuted for seeking help from the court system to secure rights that the law, as restrictive as at is, guarantees them. Lawyers who seek to help them are threatened, harassed, beaten, disbarred, and jailed. They may join countless prisoners of conscience in their modern-day concentration camps.

    China admits to continuing a barbaric policy of harvesting human organs for sale and transplant. We are told that siince 1993, there have been over 65,000 transplant procedures performed in China and a deputy health minister recently stated that 95 percent of the organs are from executed prisoners. In an effort to boost profits, it is reported that some provincial or local officials have begun to allow mobile medical vans at execution sites to facilitate the harvesting of prisoners' organs. The State Department and the U.N. are investigating claims that China is targeting the thousands of innocent Falun Gong prisoners it holds for organ harvesting and perhaps not even waiting until they are dead.

    The Communist regime in the Soviet Union fell after the economy collapsed and voices of freedom and democracy were able to break through the walls of repression. The Communist regime in China today has learned from the mistakes of the former regime and seeks to build and consolidate economic power while quickly and harshly stifling dissent. Human rights are everyone's rights. Governments are instituted to secure, protect, and safeguard those rights. Human rights aren't privileges. Human rights are worth fighting for, even when inconvenient.

    — New Jersey Republican Chris Smith is chairman of the House Subcommittee on Africa, Global Human Rights, and International Operations.

    Tuesday, April 18, 2006

    Forum, Lien-Hu Talks Hide China's Evil Aims: Chen

    Forum, Lien-Hu talks hide China's evil aims: Chen

    The China Post Staff

    556 words

    15 April 2006

    The China Post


    (c) 2006 The China Post. All Rights Reserved

    President Chen Shui-bian yesterday lambasted China, saying it was using a Beijing economic cooperation forum attended by a former opposition leader to create a false impression of peace.

    His remarks came as former Kuomintang (KMT) chairman Lien Chan attended a two day seminar on economic relations between Taiwan and China. Lien is scheduled to meet Chinese President Hu Jintao tomorrow.

    Chen said Beijing was using Lien's visit to mislead the outside world. "Lien's meetings with Hu are only a cover for the Chinese government to hide its evil intentions," he said in a meeting with a U.S. delegation headed by the former American ambassador to China Winston Lord.

    The president said he believed Hu had timed the seminar just ahead of his trip to Washington next week to defuse eventual U.S. criticism of China's aggressive stance toward the island, which Beijing still claims as Chinese territory.

    "This is the Chinese leadership's deliberate attempt to mislead the international community," Chen said.

    "The Chinese leadership also wants to reduce pressure it is facing from Washington to hold talks with Taiwan's elected government and leader," Chen said.

    The KMT originally was a mainland Chinese political party. It fled to Taiwan after it lost a civil war in 1949.

    Last year Lien made history by becoming the first KMT leader in over half a century to visit the mainland and hold talks with a Communist leader, Chinese President Hu Jintao.During that time, Lien made a number of agreements, such as a six-point consensus, with the Beijing authorities.

    During his meeting, Chen angrily pointed to a cover story on the latest edition of a local magazine The Journalist. The magazine, reviewing Lien's historic visit to China with a year's hindsight, said Lien's agreements with Beijing -- including an agreement to resume stalled talks -- amounted to nothing more than empty promises.

    "Now, Hu and Lien are meeting again. Are they just going to issue another bad check?" the magazine said.

    Chen said the magazine's conclusions underscored the reasons why the U.S. government and American President George Bush felt it was so important for Beijing to talk directly to Taiwan's elected leaders.

    "Business leaders and political parties are good but they can never replace the government or public authority," Chen said.

    Chen said Beijing used the same tactics with its historic meeting with Lien last year. He said last Lien-Hu meeting came after Beijing passed a law authorizing the use of force if Taiwan moves towards independence and was intended to soften the impact of the law internationally.

    The KMT's director of its mainland affairs section Chang Jung-kung retorted that Chen was "flying into a rage out of shame".

    "In the entire six years of President Chen's administration, absolutely nothing has been achieved in the field of cross-strait relations," Chang said.

    "The KMT is working for the interests of the people of Taiwan... we hope that reconciliation between the KMT and CCP can promote cross-strait peace," he said.

    Beijing has threatened military action if Taiwan moves towards independence and has more than 700 missiles aimed at the island. However, the two sides have thriving trade and business ties.

    Martins Rubenis To Starve Himself At Chinese Embassy Unitl Easter Monday

    Martins Rubenis to starve himself at Chinese Embassy until Easter Monday

    Aila Вdamsone

    485 words

    15 April 2006

    06:46 AM

    Latvian News Agency


    (c) 2006 LETA .

    RIGA, April 15 (LETA) - Hunger strike, staged in front of the Chinese Embassy by practitioners of the Falun Gong movement in Latvia, among whom are also Latvian luger and Olympic bronze medal winner Martins Rubenis, will last 72 hours.

    The protesters want to attract the public's attention to the Chinese Communist regime's persecution against people.

    As Martins Rubenis informed reporters yesterday, his hunger strike would last 24 hours - until Easter Monday, while 9 other members would remain outside the Chinese Embassy until April 17.

    The Olympian said he is going to starve himself in protest of the suppression of religious movements, dissidents and people with different views in China. Facts about the scale of the brutal persecution in China are silenced and the Chinese government makes sure that no information reached media, as Rubenis told LETA earlier.

    The athlete pointed out that in China, opponents of its Communist regime, dissidents and religious people are imprisoned in labor camps where thousands of them face certain death. Rubenis said that he as athlete cannot accept a fact that this country intends to hold next Olympic games in 2008.

    The Falun Gong movement was founded in 1992 by Li Hongzhi who now lives in exile in New York. In his teachings, he combined Buddhist and Taoist concepts with practice of meditation and traditional Chinese qigong (breathing exercises).

    The Falun Gong movement is regarded as "an evil cult" by the Chinese government. As of 1999, the movement is officially prohibited in China and its members persecuted.

    Since then, almost 3,000 Falun Gong practitioners have died in police and government custody in mainland China, giving rise to allegations of torture and police brutality, but over 100,000 followers have been sentenced to forced-labor camps, the Falung Gong claims.

    The Chinese government does not deny detaining Falun Gong practitioners, but insists that they died from hunger strikes and refusals to seek medical treatments.

    Last month, American media brought up the issue of deaths at the Sujiatun detention compound - a labor camp and part of a hospital - located in Shenyang city. According to witnesses who managed to escape from China, about 6,000 Falun Gong practitioners have been held captive at the camp as of 2001, two thirds of whom have died. The witnesses also made allegations to organ harvesting and said that nobody was coming out of the camp alive.

    China has denied all accusations, but the United Nations (UN) torture investigator Manfred Nowak has expressed a wish to visit China and investigate into the Sujiatun case.

    UN human rights agencies regularly criticize China for its suppression of religious people - Buddhists, Catholics, Muslims and Falun Gong followers.

    Also, this is not the first time that Falun Gong practitioners in Latvia stage protests demanding that China stopped oppression and persecution of supporters of the movement.

    Executed Prisoners Feed China's Transplant Industry

    Executed prisoners feed China's transplant industry
    Tim Johnson
    Knight Ridder Newspapers
    565 words
    13 April 2006
    The Seattle Times
    © 2006 Seattle Times. Provided by ProQuest Information and Learning. All rights reserved.
    TIANJIN, China -- A few weeks after receiving a lifesaving liver transplant, Pakistani businessman Shaukat Javed shuffled slowly around a specialty hospital ward chatting with fellow organ recipients.

    Patients from around the globe mingled in the fourth-floor ward of the First Tianjin Central Hospital, some of them with nurses bracing their steps.

    In the last few years, several Chinese hospitals have done a soaring business in liver, heart and kidney transplants. They charge barely half as much as in the West, advertise through intermediaries abroad and pull in a steady stream of patients who are unable to find donors in their home countries.

    "About every nation is here," said Javed, who owns a soap factory not far from Lahore. "There are Korean, Japanese, Arabs, the whole [Persian] Gulf region. ... There are a few guys from Israel as well."

    Javed's mood turned sour only when he was asked about the donor of the liver that now was sewn firmly into his own abdomen. Did he know anything about the person?

    "It isn't nice to look into these matters," he said tersely.

    A variety of human-rights groups -- such as Amnesty International, Human Rights Watch and the Laogai Research Foundation -- say donated organs in China often come from executed prisoners, and there are concerns that prisoners' wishes aren't always respected.

    China's hospitals have a seemingly endless supply of organs because the country applies the death penalty more freely than any other nation. By harvesting from executed prisoners, hospitals receive a steady stream of organs and can match donors' compatibility with recipients ahead of time. China doesn't say how many prisoners it kills each year, but legal scholars say it's probably between 3,000 and 8,000.

    Authorities don't hide the fact that executed prisoners are a source for some organs, but they say it isn't a rampant practice.

    Organs come from executed prisoners "only after they or their family members voluntarily sign donation documents," said Mao Qun'an, a spokesman for the Health Ministry. "In reality, there are very few cases of organs taken from executed prisoners. Some overseas media purposely concocted the rumor that China takes organs from executed prisoners at will. It is a malicious attack on China's judicial system."

    A number of social and political issues intersect in the matter of China's organ transplants. First, there's a rising level of medical sophistication. The country is among the world leaders in the number of organ transplants each year. Secondly, as China veers toward a free-market economy, institutions such as hospitals are grasping at income-generating opportunities.

    Accusations about harvesting organs from prisoners in China have existed for several decades. But they revived in recent weeks with reports in The Epoch Times, an overseas newspaper linked to Falun Gong, a banned spiritual movement. The newspaper charged that a secret labor camp near Shenyang, in China's northeastern region, contained Falun Gong detainees who were to be executed for the purpose of providing organs that the state would sell.

    Deputy State Department spokesman Adam Ereli said March 31 that the Bush administration took the charges "very seriously."

    Such allegations can't be proved or disproved easily, and a spokesman for the Foreign Ministry in Beijing, Liu Jianchao, dismissed them roundly.

    China Aims To Annex Taiwan Economically Via 'Haixi Plan': Adviser

    (By Deborah Kuo)
    539 words
    16 April 2006
    Central News Agency English News
    (c) 2006 All materials contained on this site may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of the Central News Agency.
    Taipei, April 16 (CNA) Beijing's plan to develop China's Fujian Province into a "peaceful cooperation experimental district on the west side of the Taiwan Strait" -- known by its shortened name as the "Haixi district development plan " -- is aimed at annexing Taiwan economically, a Presidential Office adviser said Sunday.

    Ruan Ming, a national policy adviser to President Chen Shui-bian, warned at a press conference on the implications of the just-concluded economic forum between the opposition Kuomintang (KMT) and the Communist Party of China (CPC) held in Beijing that the Beijing leadership put forth a "tremendously dangerous" slogan at the forum, namely "district to district, enterprise to enterprise and private sector to private sector" in terms of cross-strait efforts to boost trade and business exchanges across the strait.

    This slogan fully underscores the strategic goal of Beijing's "Haixi district development plan, " which was put forward by Chinese Premier Wen Jiabao during the National People's Congress in early March aimed at persuading more Taiwan businesses and industries to relocate their operations to Fujian and further "dwarfing Taiwan into a local district of China," Ruan said.

    Ruan said that Beijing's according high-profile hospitality to KMT honorary Chairman Lien Chan and the offering of 15 incentive measures to Taiwan during the forum were mainly aimed at helping alleviate pressure that the United States is likely to exert on Beijing when U.S. President George W. Bush meets with President Hu Jintao in Washington, D.C. this week regarding economic, human rights and religious freedom issues.

    The adviser made the analysis during the press conference sponsored by the Taiwan Association of University Professors.

    Ruan invited his audience to view the politics and economies of the two sides of the Taiwan Strait separately, saying that politically, Taiwan is a free country with its own full sovereignty, while China is a totalitarian regime ruled by the Chinese communists.

    Economically, he said, Taiwan can talk with the Chinese government on economic issues if the principles of equality and reciprocity exist. If this is the case, he said, Taiwan doesn't need to take a hostile stance toward China, although Taiwan should by no means condone China's plot to strip Taiwan of its sovereignty.

    On Beijing's offering Taiwan the 15 incentive measures, Ruan said that despite China's rapid economic and industrial growth, the country is facing major problems in its agricultural sector, health system and educational reforms. China's opening of its doors to Taiwan medical professionals and larger-scale agricultural imports are part of its strategic scheming, he claimed.

    He reminded Taiwan that before engaging in cooperation in the establishment of an agricultural cooperation experimental district in China, which would unavoidably involve Taiwan's agricultural high-tech know-how, Taiwan should demand that China follow international norms and regulations in terms of patent rights and intellectual property rights protection.

    Ruan said Taiwan should work to prevent its hard-earned agricultural technology advances from being used by China for nothing. If it doesn't stop this from happening, he said, the Taiwan agricultural sector's international competitiveness will be compromised in the long run.

    China Reminds Domestic TV Outlets Of Ban On Foreign News Reports

    China reminds domestic TV outlets of ban on foreign news reports
    281 words
    13 April 2006
    06:39 AM
    Associated Press Newswires
    (c) 2006. The Associated Press. All Rights Reserved.
    BEIJING (AP) - China's television regulator has warned domestic television outlets not to use news footage from foreign news organizations unless provided by authorized agencies, saying such reports could be used to corrupt public opinion.

    The move is part of a campaign to tighten restrictions on television programming by Chinese officials worried about the social impact of imported news material.

    The State Administration of Radio, Film and Television said in a notice issued Tuesday that local broadcasters can only use international news reports provided by the state-run China Central Television and China Radio International, the official Xinhua News Agency reported Thursday.

    The notice was a reminder of rules first announced in 2002 that some broadcasters, in their enthusiasm for livelier, more appealing programming, have stopped heeding.

    The agency quoted the notice as saying that regulators have discovered that "some foreign news agencies and media have used a variety of methods to sell international news material to domestic local TV stations, which have clear political intentions."

    The report gave no specific examples.

    News in China is strictly censored by the central government, and television news has become the most watched-over area by official censors. Officials frequently ban coverage of sensitive domestic issues -- such as the Falun Gong spiritual movement, environmental disasters, health scares and rural unrest -- and make sure international reports hew to the government's line.

    The notice was issued to "ensure public opinion followed the correct direction," the administration said in a statement posted to its Web site.

    Broadcast administrators were told to review the operations of local broadcasters and "correct any wrong operations," Xinhua said

    China Issues Slew Of Regulations To Curb Media

    RPT-China issues slew of regulations to curb media
    By Lindsay Beck
    548 words
    17 April 2006
    06:02 AM
    Reuters News
    (c) 2006 Reuters Limited
    BEIJING, April 17 (Reuters) - China has issued a series of notices in the past week aimed at regulating media content in an attempt to control an increasingly free-wheeling news environment.

    But media watchers said that rather than signalling a new tightening, the rules simply follow a trend towards regulating a business whose myriad blogs, tabloids and television dramas present a challenge to the ruling Communist Party's desire the control the flow of information.

    The State Administration of Radio, Film and Television reissued notices restricting local broadcasters' use of foreign news footage and the General Administration of Press and Publications (GAPP) introduced restrictions on foreign magazines publishing Chinese versions.

    And in a twist, news Web sites collectively agreed to censor themselves to eradicate pornography and violence along with other "unhealthy content".

    "When they feel there is a problem they adopt measures to block or control," said Jiao Guobiao, a journalism professor who lost his job after denouncing China's propaganda controls.

    "This is their consistent thought. I don't think it has any new significance."

    The regulations follow a series of moves over the past year that included sacking editors of some of China's bolder publications and forcing bloggers and chat-room participants to use their real names.

    They have also attracted the attention of human rights groups, who say U.S. companies have been complicit in providing information that resulted in the detention of Internet writers and urged President George W. Bush to raise the issue with his Chinese counterpart, Hu Jintao, when they meet later this week.


    Several of the pronouncements were also aimed at foreign media in what analysts said was the latest of a wave of criticism of foreign investment.

    Earlier this month, GAPP introduced an "internal rule" that would mean sports, entertainment and fashion magazines could not expect immediate approval to enter China's market. GAPP said earlier U.S.-based Rolling Stone magazine, which was suspended in March after just one issue, had lacked the proper authority.

    "As part of a general environment that is questioning, on a sector by sector basis, the value of any kind of foreign investment, it's going to be doubly difficult for foreign media," said David Wolf, of Beijing media consultancy Wolf Group Asia.

    "A lot of these organisations believe that the benefits of their involvement are self-evident. They're not."

    Media watchdog Reporters Without Borders said the curbs on Chinese media violated World Trade Organisation principles.

    "The media sector should be included in the next session of Doha round negotiations," the group said, adding protectionism was aimed at controlling content and violated media freedoms.

    But the restrictions found favour in the Communist Party mouthpiece People's Daily, which praised the news Web sites' decision to self-censor and linked it to Hu's "eight honours, eight disgraces" campaign that seeks to promote a "socialist sense of honour and shame".

    The move shows the Web site editors "have ability and have confidence in resisting all types of unhealthy Internet information and are positively throwing themselves into building a socialist spiritual civilisation," the commentary said.

    Monday, April 17, 2006

    With China Calling, Is It Time To Say Goodbye To US And Europe? With China Calling, Is It Time to Say Goodbye to US And Europe? -->

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    With China Calling, Is It Time to Say Goodbye to US And Europe?

    The Nation (Nairobi)
    April 14, 2006
    Posted to the web April 13, 2006

    By Mark Sorbara

    By the turn of the century, China had transformed its foreign relations from one hinged on ideology to one governed by the pursuit of economic self-interest, and Africa has not been left out. Mark Sorbara explores Africa's place in China's new world

    What do the US, Saudi Arabia, Morocco, Nigeria and Kenya have in common? Not much really. But from next week they will share a common 'bond' as part of the itinerary of a high-powered Chinese delegation led by none other than Chinese President Hu Jintao, from April 18 to 29. What's the big deal about that, one may ask. Well, its simply because China is the place where big deals - of the mind-boggling type - are made these days.

    And there is quite some excitement about Hu's visit, at least in Washington, where he is expected to tour Microsoft and Boeing Co. before heading to the White House on April 20. Forget Washington's complaints over human rights violations, piracy, the value of China's currency and unfair trade practices, the importance of China as a trade partner to the United States is crystal clear.

    Figure this: "A multi-billion deal for Boeing aircraft has already been signed and Hu's first official trip to the United States as president has also brought into focus a groundbreaking bid by a Citigroup-led consortium to buy an 85 per cent stake in China's Guangdong Development Bank," Reuters reported this week.

    "Hu's trip and a trade delegation this month led by Chinese Vice Premier Wu Yi are yielding deals on everything from software to soybeans worth an expected total of about $16 billion." The report quoted Chinese aviation officials as saying that the Boeing deal signed on Tuesday involved the purchase of 80 Boeing 737 planes that have a list value of $4.6 billion.

    That's all very well for the US, and we can pretty well guess what the Saudi's will be buying and selling when they host Hu and his delegation. What about Africa? What's in it for the continent?

    The man who holds the answer is Li Zhaoxing, China's foreign minister. Li Zhaoxing is no stranger to Africa. From 1970 to 1977 Li served as an attaché in the Chinese Embassy in Kenya, from 1983 to 1985 he was first secretary in Maseru, Lesotho.

    From January 11 to 19 Li visited Cape Verde, Liberia, Mali, Senegal, Nigeria and Libya. China's increased role throughout Africa has demonstrated that Beijing's Africa policy will be an important aspect of its rapid economic growth. Hence, on January 12, Li officially unveiled an Africa Policy Paper which outlined the future relationship between Africa and China.

    As stated in its forward, the Policy Paper was created " with the view of promoting the steady growth of China-Africa relations in the long term and bringing the mutually beneficial co-operation to a new stage." It states, "the one China principle is the political foundation for the establishment and development of China's relations with African countries and regional organisations." If African countries choose to accept this prerequisite, China will "co-ordinate positions on major international and regional issues and stand for mutual support on major issues concerning state sovereignty, territorial integrity, national dignity and human rights."

    The focal point of China-Africa relations is resource based, as the policy states, "the Chinese government will adopt more effective measures to facilitate African commodities access to the Chinese market." Investing in African extractive industries is a risky business, but China is desperately in need of raw materials to feed its booming economy, hence the government is willing to shoulder most of the risk for Chinese companies looking to invest in Africa. Therefore, "the Chinese government encourages and supports Chinese enterprises' investment and business in Africa, and will continue to provide preferential loans and buyer credits to this end."

    Moreover, the policy states, "China will do its best to provide and gradually increase assistance to African countries with no political strings attached." On peace and security, "China will promote high-level military exchanges between the two states and actively carry out military related technological exchanges and co-operation. It will continue to help train African military personnel and support defence and army building of African countries for their own security."

    For not recognising Taiwan, African countries can get government-supported foreign direct investment, aid and military assistance "with no political strings attached." Goodbye US and Europe; Hello China!

    In the end, though, China's Africa policy today is largely driven by self-interest, mainly access to resources, therefore it has to work with African countries to make sure the resources increasingly flow towards Beijing and not Paris, London or Washington. But it will not get the resources without some competition.

    For example, the influential US-based Council on Foreign Relations published a report in December 2005 entitled More Than Humanitarianism: A Strategic US Approach Towards Africa and has opened the debate on changing the US-Africa relations. The year 2005 supposedly was the "year of Africa", but as the Foreign Relations report stated, "the point was missing - amid the music, communiqués, and the commitments -- that Africa is becoming steadily more central to the United States and the rest of the world in ways which transcend humanitarian interests."

    Notably, fifteen pages of the US Foreign Relations report are spent assessing the impact of China's increasing role in Africa and bluntly illustrate many of the issues which China's Africa Policy Paper dealt with. For example, the report states, "All across Africa today, China is acquiring control of natural resource assets, out-bidding Western contractors on major infrastructure projects, and providing soft loans and other incentives to bolster is competitive advantage."

    It continues, "Perhaps most disturbing to US political objectives is China's willingness to use its seat on the UN Security Council to protect some of Africa's most egregious regimes from international sanction China offers an alternative source of support, even to some of the United States' closest allies, when they chafe under Western pressure for economic or political reform."

    On the subject of investment and aid the Foreign Relations report states that "China is also investing and providing assistance in areas that Western aid agencies and private investors have long neglected: physical infrastructure, industry and agriculture." And " Chinese business practices, which serve state interests as much as a profit motive, create unfair competition to US firms bidding for contracts." The Chinese government and businesses see opportunity in Africa, where Westerners see poverty and despair, and they are actively working together to see that the opportunities are transformed into successful ventures.

    In 1960s to 1970s, when ideology was the main factor influencing China's foreign relations, almost 25,000 Chinese doctors and agricultural engineers were stationed all over the 'Third World'. By the turn of the century, China had transformed its foreign relations to one governed by the pursuit of economic self-interest. From the first meeting of the China-Africa Co-operation Forum held in Beijing in 2000 to its second meeting held in Addis Ababa in 2003, a lot has changed. Between 2002 and 2003 China-Africa trade jumped 50 per cent to $18.5 billion, and by the end of 2004, over 715 Chinese-funded companies were operating in Africa.

    On January 6, 2006, the BBC reported that Chinese trade with Africa jumped 39 per cent to $32.17 billion in 2005 and "in the first 10 months of 2005 alone, Chinese companies invested a total of $175 million in African countries." Moreover, in the next five years, China-Africa trade is expected to surpass $100 billion.

    China's thirst for raw materials has dramatically transformed its relations with many African countries. Take Nigeria; the trade between the two countries stood at $384 million in 1998, by 2001 it was $1 billion, by 2004 it was $2 billion and by the end of 2005 trade between Nigeria and China reached approximately $3 billion. In January 2006, the China National Offshore Oil Corporation paid $2.3 billion for a 45 per cent stake in the Akpo oil field, its largest overseas acquisition, which has a reserve of 600 million barrels and potential for an extra 500 million.

    China's trade and investment relationship with Nigeria is expanding rapidly outside the oil sector as well. In 2005, Nigeria earned over $500 million from non-oil product exports to China and in 2006 the Nigerian government signed a memorandum of understanding with Guangdong Xinguang International Group, a Chinese government-owned company, to enhance Nigeria's rail network. The $2 billion dollar MOU includes a fast rail system between Lagos and Abuja, a light rail system from Murtala Mohammed International Airport to Nnamdi Azikiwe International Airport in Lagos and Abuja city centre as well.

    China and Nigeria have also discussed the possibilities of further Chinese investments in power stations, low cost housing projects, cassava plantations, an agro-research centre, an Aids medicine factory and a medical equipment factory.

    Angola, Sub-Saharan Africa's second largest oil producer, is another important element in Beijing's Africa policy. According to state controlled Angola Press, "in 2005, bilateral trade between the two countries reached $6.95 billion, an increase of 41.6 per cent from the previous year." Most of the increase has been due to crude purchases by the China Petroleum and Chemical Corporation (Sinopec) as part of a 2004 agreement which saw the Chinese Eximbank approve a $2 billion (1.5 per cent over 17 years) infrastructure loan to the Angolan government.

    In March, CNN reported that " a new consortium jointly controlled by the Angolan government-run Sonangol oil company and Sinopec has been awarded a contract to build a 240,000 barrel per day refinery in Lobito." Angola now accounts for 13 per cent of China's crude oil imports and China's is the second largest consumer of Angolan crude oil after the United States. Hence, 20 leading Chinese firms operating in Angola, such as Sinosteel, China National Overseas Engineering Corporation and Sinopec have recently created a Chinese Chamber of Commerce in Luanda to enhance relations with Angola.

    When discussing Chinese resource extraction in Africa, Sudan is increasingly emerging as an important player. The China National Petroleum Corporation (CNPC) is the largest investor in the Sudanese oil industry. The decision of the US government to cut ties with Sudan in the mid-1990s pressured Western oil companies to withdraw and opened new opportunities for Chinese investment.

    CNPC, in a joint venture with the Greater Nile Petroleum Operating Company, of which CNPC has a 40 per cent stake, have been exploiting Sudanese oil deposits in the Muglad Basin. Together, the CNPC and the Greater Nile company have invested over $8 billion in Sudan, including the 1,500 km pipeline to transport oil to the Marsa al-Bashair harbour terminal near the Port of Sudan on the Red Sea. By 2005, China was purchasing between 50 and 60 per cent of Sudan crude production and Sudan alone accounts for 7 to 9 per cent of Chinese oil imports.

    China is also active in Africa's smaller oil exporting countries as well. In 2003, China imported one million tons of crude oil from Congo-Brazzaville, accounting for 1.5 per cent of Chinese oil imports. China is the third largest importer of oil from Equatorial Guinea after the US and Spain. Total-Gabon and Sinopec signed an agreement in 2004 to supply China with one million tons of crude oil a year, making China the third largest consumer of Gabonese crude after the US and France. The Chinese petroleum company Zhongyuan Exploration Bureau is even drilling on behalf of Petronas, the Malaysian state-owned oil company, in the Gambella Basin in Western Ethiopia.

    Non-oil resource extraction is also attracting Chinese investment in Africa as well. Over 60 per cent of Gabon's, and a large part of Equatorial Guinea's, timber production is purchased by China. China is the world's largest consumer of copper and has invested $170 million in the Zambian copper mining sector. The Chambezi copper mine, which was purchased in 1999, is now its largest Chinese mining operation in Africa. Moreover, China is increasingly involved the Democratic Republic of Congo, investing in cobalt and copper mines as well.

    Although resource extraction is the center-piece of China's new Africa push, non-resource based investments have not been ignored. In Ghana, Sino Hydro signed a memorandum of understanding with the Ghanaian Government to construct the Bui Dam. The $500 million project is expected to augment Ghanaian power supply from the Akosombo Dam and the Aboadze Thermal Plant.

    In Zimbabwe, a number of farms seized from white farmers by the government have been leased to the China State Farms and Agribusiness Corporation, which will revive and enhance production on the Fenemere and Dalkeith farms near the Mazvikadai Dam and the Clydedale and Liverdale farms near the Biri Dam. Chinese companies have also leased agricultural land in Zambia and Tanzania.

    Even in post-war Sierra Leone, Chinese investors see possibilities. Henon Guoji, a Chinese company, is starting construction of the $200 million Lumley Beach Hotel, which will include a conference centre, a sports facility, casino and night club. The Chinese state-owned company, Beijing Urban Construction Group, has purchased and restored The Bintumani, Sierra Leone's largest hotel, at a cost of $10 million and it is already up and running. Chinese companies in Sierra Leone have also invested in a sugar plant and a tractor factory, and the Chinese government has built a new office block, parliament buildings and a new military headquarters for the government of Sierra Leone.

    The list continues: the China Road and Bridge Corporation built the Tambach-Kabarnet road in Western Kenya and refurbished part of the Nairobi-Mombasa road. The Bata-Mongono road in Gabon was built with financial and technical assistance from China, while the Zhengxing Telecom is refurbishing Djibouti's telecom network.

    China is constructing one of Africa's largest dams in Ethiopia and is assisting in the construction and launch of a Nigerian communications satellite in 2007. Chinese firms have also entered into fish processing joint ventures in Gabon and Namibia and the Qingdao Municipal Government has invested in a textile factory in the new Mulungashi Industrial Estates near Kabwe in Zambia. China has also constructed a new Foreign Affairs Ministry building in Uganda and Djibouti and built a new stadium in Mali.

    Although France, the UK and the US still account for 70 per cent of Foreign Direct Investment inflows to Africa, all that will change with the emergence of China's Africa focus. So maybe Westerners should start to be more honest with themselves and Africans and stop all this useless armchair pitying.

    Mark J. Sorbara is a freelance writer and researcher on African issues.

    Copyright © 2006 The Nation. All rights reserved. Distributed by AllAfrica Global Media (

    The Dark Side of China's Rise

    The Washington Daybook - General News Events - Futures
    Federal Information & News Dispatch, Inc./Agence France-Presse
    80 words
    19 April 2006
    Washington Daybook
    Copyright (c) 2006 Federal Information & News Dispatch, Inc. All rights reserved
    10:30 a.m. Foreign Affairs - News conference

    SPONSOR: The Carnegie Endowment for International Peace (CEIP)

    TOPIC/SUBJECT: holds a news conference, "Mr. Hu Comes to Washington," to discuss U.S.-China relations and the impact of President Hu Jintao's upcoming visit.

    DATE: April 19, 2006

    LOCATION: CEIP, 1779 Massachusetts Avenue NW, Washington, D.C.

    CONTACT: 202-483-7600;


    Pei, Minxin
    4018 words
    1 March 2006
    Foreign Policy
    Issue 153; ISSN: 00157228
    Copyright (c) 2006 Bell & Howell Information and Learning Company. All rights reserved.
    China's economic boom has dazzled investors and captivated the world. But beyond the new high-rises and churning factories lie rampant corruption, vast waste, and an elite with little interest in making things better. Forget political reform. China's future will be decay, not democracy.

    The only thing rising faster than China is the hype about China. In January, the People's Republic's gross domestic product (GDP) exceeded that of Britain and France, making China the world's fourth-largest economy. In December, it was announced that China replaced the United States as the world's largest exporter of technology goods. Many experts predict that the Chinese economy will be second only to the United States by 2020, and possibly surpass it by 2050.

    Western investors hail China's strong economic fundamentals-notably a high savings rate, huge labor pool, and powerful work ethic-and willingly gloss over its imperfections. Businesspeople talk about China's being simultaneously the world's greatest manufacturer and its greatest market. Private equity firms are scouring the Middle Kingdom for acquisitions. Chinese Internet companies are fetching dot-com-era prices on the NASDAQ. Some of the world's leading financial institutions, including Bank of America, Citibank, and HSBC, have bet billions on the country's financial future by acquiring minority stakes in China's state-controlled banks, even though many of them are technically insolvent. Not to be left out, every global automobile giant has built or is planning new facilities in China, despite a flooded market and plunging profit margins.

    And why shouldn't they believe the hype? The record of China's growth over the past two decades has proved pessimists wrong and optimists not optimistic enough. But before we all start learning Chinese and marveling at the accomplishments of the Chinese Communist Party, we might want to pause for a moment. Upon close examination, China's record loses some of its luster. China's economic performance since 1979, for example, is actually less impressive than that of its East Asian neighbors, such as Japan, South Korea, and Taiwan, during comparable periods of growth. Its banking system, which costs Beijing about 30 percent of annual GDP in bailouts, is saddled with nonperforming loans and is probably the most fragile in Asia. The comparison with India is especially striking. In six major industrial sectors (ranging from autos to telecom), from 1999 to 2003, Indian companies delivered rates of return on investment that were 80 to 200 percent higher than their Chinese counterparts. The often breathless conventional wisdom on China's economic reform overlooks major flaws that render many predictions about China's trajectory misleading, if not downright hazardous.

    Behind the glowing headlines are fundamental frailties rooted in the Chinese neo-Leninist state. Unlike Maoism, neo-Leninism blends one-party rule and state control of key sectors of the economy with partial market reforms and an end to self-imposed isolation from the world economy. The Maoist state preached egalitarianism and relied on the loyalty of workers and peasants. The neo-Leninist state practices elitism, draws its support from technocrats, the military, and the police, and co-opts new social elites (professionals and private entrepreneurs) and foreign capital-all vilified under Maoism. Neo-Leninism has rendered the ruling Chinese Communist Party more resilient but has also generated self-destructive forces.

    To most Western observers, China's economic success obscures the predatory characteristics of its neo-Leninist state. But Beijing's brand of authoritarian politics is spawning a dangerous mix of crony capitalism, rampant corruption, and widening inequality. Dreams that the country's economic liberalization will someday lead to political reform remain distant. Indeed, if current trends continue, China's political system is more likely to experience decay than democracy. It's true that China's recent economic achievements have given the party a new vibrancy. Yet the very policies that the party adopted to generate high economic growth are compounding the political and social ills that threaten its long-term survival.


    After a quarter century of gradual economic reform, has China succeeded in transforming its old command economy into a genuine market economy? Not nearly as well as most people would guess. Although China was one of the earliest socialist economies to begin serious reform, recent data on the country's regulation, international trade, fiscal policy, and legal structure place China in the bottom third of 127 countries surveyed for economic freedom, below most Eastern European countries, India and Mexico, and all of its East Asian neighbors, save Burma and Vietnam.

    The Chinese state remains deeply entrenched in the economy. According to official data for 2003, the state directly accounted for 38 percent of the country's GDP and employed 85 million people (about one third of the urban workforce). For its part, the formal private sector in urban areas employed only 67 million people. A research report by the financial firm UBS argues that the private sector in China accounts for no more than 30 percent of the economy. These figures are startling even for Asia, where there is a tradition of heavy state involvement in the economy. State-owned enterprises in most Asian countries contribute about 5 percent of GDP. In India, traditionally considered a socialist economy, stateowned firms generate less than 7 percent of GDP.

    But China's tentacles are even more securely wrapped around the economy than these figures suggest. First, Beijing continues to own the bulk of capital. In 2003, the state controlled $1.2 trillion worth of capital stock, or 56 percent of the country's fixed industrial assets. second, the state remains, as befits a quintessentially Leninist regime, securely in control of the "commanding heights" of the economy: It is either a monopolist or a dominant player in the most important sectors, including financial services, banking, telecommunications, energy, steel, automobiles, natural resources, and transportation. It protects its monopoly profits in these sectors by blocking private domestic firms and foreign companies from entering the market (although in a few sectors, such as steel, telecom, and automobiles, there is competition among state firms). Third, the government maintains tight control over most investment projects through the power to issue long-term bank credit and grant land-use rights.

    China's business cycle is therefore driven by Beijing. Private sector firms have very limited access to finance or new markets. The state even dominates many ostensibly deregulated sectors, such as the brewing industry, the retail sector, and textiles. Of the 66 publicly traded retailers in the country, only one is private. There are only 40 private firms among the 1,520 Chinese companies listed on domestic and foreign exchanges.


    To many observers, Beijing's tight grip on the Chinese economy means only that its reform process is incomplete. As China continues to open itself, they predict, state control will ease and market forces will clear away inefficient industries and clean up state institutions. The strong belief in gradual but inexorable economic liberalization often has a political corollary: that market forces will eventually produce civil liberties and political pluralism.

    It's a comforting thought. Yet these optimistic visions tend to ignore the neo-Leninist regime's desperate need for unfettered access to economic spoils. Few authoritarian regimes can maintain power through coercion alone. Most mix coercion with patronage to secure support from key constituencies, such as the bureaucracy, the military, and business interests. In other words, an authoritarian regime imperils its capacity for political control if it embraces full economic liberalization. Most authoritarian regimes know that much, and none better than Beijing.

    Today, Beijing oversees a vast patronage system that secures the loyalty of supporters and allocates privileges to favored groups. The party appoints 81 percent of the chief executives of state-owned enterprises and 56 percent of all senior corporate executives. The corporate reforms implemented since the late 1990s-designed to turn wholly stateowned firms into shareholding companies-haven't made a dent in patronage. In large- and medium-sized state enterprises (ostensibly converted into shareholding companies, some of which are even traded on overseas stock markets), the Communist Party secretaries and the chairmen of the board were the same person about half the time. In 70 percent of the 6,275 large- and medium-sized state enterprises classified as "corporatized" as of 2001, the members of the party committee were members of the board of directors. All told, 5.3 million party officials-about 8 percent of its total membership and 16 percent of its urban members-held executive positions in state enterprises in 2003, the last year for which figures were available.

    An incestuous relationship between the state and major industries can doom developing countries, and China is more susceptible than most. The combination of authoritarian rule and the state's economic dominance has bred a virulent form of crony capitalism, as the ruling elites convert their political power into economic wealth and privilege at the expense of equity and efficiency. The state's economic dominance preserves systemic economic inefficiency as scarce resources are funneled to local elites and bureaucratic constituencies. The World Bank estimates that, between 1991 and 2000, almost a third of investment decisions in China were misguided. The Chinese central bank's research shows that politically directed lending was responsible for 60 percent of bad bank loans in 2001-02. The problem persists today. Chinese economic planners revealed in early 2006 that 11 major capital-intensive manufacturing industries were overproducing. For example, the country's steel industry, the world's largest, has 116 million tons (or about 30 percent) of excess capacity.

    State enterprises are also miserably unprofitable. In 2003, a boom year, their median rate of return on assets was a measly 1.5 percent. More than 35 percent of state enterprises lose money and 1 in 6 has more debts than assets. China is the only country in history to have simultaneously achieved record economic growth and a record number of nonperforming bank loans.

    Party membership and business acumen do not often go together. Because of the party's fixation with high growth, government officials are rewarded for delivering, or appearing to deliver, precisely that. This incentive structure fuels a massive misallocation of capital to "image projects" (such as new factories, luxury shopping malls, recreational facilities, and unnecessary infrastructure) that burnish local officials' records and strengthen their chances of promotion. The results of these mistakes-gleaming office complexes, industrial parks, landscaped highways, and public squares-tend to impress Western visitors, who view them as further proof of China's economic prowess.

    The Chinese economy is not merely inefficient; it has also fallen victim to crony capitalism with Chinese characteristics-the marriage between unchecked power and illicit wealth. And corruption is worst where the hand of the state is strongest. The most corrupt sectors in China, such as power generation, tobacco, banking, financial services, and infrastructure, are all state-controlled monopolies. None of that is unprecedented, of course. Tycoons in Russia, after all, have looted the state's natural resources. China, at least, boasts genuine private entrepreneurs who have built prosperous companies. But China's politically connected tycoons have cashed in on China's real estate boom; nearly half of Forbes' list of the 100 richest individuals in China in 2004 were real estate developers.

    Various indicators, pieced together from official sources, suggest endemic graft within the state. The number of "large-sum cases" (those involving monetary amounts greater than $6,000) nearly doubled between 1992 and 2002, indicating that more wealth is being looted by corrupt officials. The rot appears to be spreading up the ranks, as more and more senior officials have been ensnared. The number of officials at the county level and above prosecuted by the government rose from 1,386 in 1992 to 2,925 in 2002.

    An optimist might believe that these figures reveal stronger enforcement rather than metastasizing corruption, but the evidence suggests otherwise. Dishonest officials today face little risk of serious punishment. On average, 140,000 party officials and members were caught in corruption scandals each year in the 1990s, and 5.6 percent of these were criminally prosecuted. In 2004, 170,850 party officials and members were implicated, but only 4,915 (or 2.9 percent) were subject to criminal prosecution. The culture of official impunity is thriving in China.

    What's worse, corruption is now assuming forms normally associated with regime decay. Corruption involving large numbers of officials used to be rare. Now it's rampant. Regional data suggest that large-scale corruption rings account for 30 to 60 percent of all the cases of graft uncovered by authorities. In some of the worst instances, entire provincial, municipal, and county governments were found to be tainted. In Heilongjiang Province, a corruption scandal involved more than 400 local officials, including the former governor, the former organizational chief of the party's provincial committee, a vice governor, the chief prosecutor, the president of the provincial high court, and eight of the province's 13 party bosses. According to official reports, in Shenyang (the capital of Liaoning Province), Fuzhou (the capital of Fujian Province), and more than 30 other counties and prefectures, groups of senior local officials, including party chiefs and mayors, have been on the payroll of organized gangs involved in murder, extortion, gambling, and prostitution.

    As ominous as the corruption itself is what these scandals are beginning to reveal about the government's legitimacy. In their confessions, corrupt officials often blame their misdeeds on a loss of faith in communism. There is anecdotal evidence that senior party officials have taken to consulting fortune-tellers about their political careers. The ruling elite in China, it appears, is drifting and insecure. Fearful about what the future may hold, some officials do not want to wait even a few years to turn their power into wealth. In 2002, almost 20 percent of the officials prosecuted for bribery and nearly 30 percent of those punished for abuse of power were younger than 35. In Henan Province in 2003, 43 percent of local party bosses caught up in corruption were between 40 and 50 years old (as compared with 32 percent older than 50). China has seen its future leaders, and a disproportionate number of them are on the take.


    With elites cashing in quickly, ordinary Chinese are falling behind. Estimates from various sources, including the World Bank and the Chinese government, suggest that income inequality has increased at least 50 percent since the late 1970s, making China one of the most unequal societies in Asia. A recent study reports that less than 1 percent of Chinese households control more than 60 percent of the country's wealth (by comparison, 5 percent of the households in the United States own 60 percent of the wealth). Rising inequality, to be sure, is not unusual in countries moving toward a market economy, but China's neo-Leninist system, warped incentives, and elitist policies have amplified the trend.

    A generation ago, the offspring of the ruling elite took up positions in the government or military; today, they go into business. The social ramifications of their self-dealing are particularly evident in real estate, where peasants regularly earn less than 5 percent of the value of their land while developers pocket 60 percent, with the remainder going into local government coffers. Privatization, too, offers insiders a chance to hit it rich by gobbling up state assets on the cheap. A recent study showed that 60 percent of privatized state enterprises were sold to their managers. As a result, 30 percent of all private-firm owners are now party members.

    Meanwhile, basic services and good governance for ordinary Chinese are falling further behind. According to the World Bank, China's governance ranks in the bottom half of all the countries in the world. China underinvests in crucial social services, especially education and public health. Government expenditures on education fell nearly 20 percent as a share of total education spending in the 1990s. In rural areas, home of China's poorest citizens, 78 percent of the education budget must be raised from peasants through local taxation and fees, while Beijing provides only 1 percent of the funding for rural education.

    In public health, the consequences of misspending are even more severe. Government money, which accounted for 36 percent of all health expenditures in the 1980s, plunged to less than 15 percent by 2000. China has hospitals and equipment, and its per capita spending is higher than comparable developing countries. But these resources are among the most unequally distributed in the world. The World Health Organization rated the fairness of the Chinese healthcare system below all countries except Brazil and Burma. According to China's own Ministry of Health, two thirds of the population lacks any type of health insurance, and about half of the sick do not seek professional medical treatment at all.


    Rapid economic growth has not yet produced China's much-anticipated political pluralism. Perhaps, some observers speculate, China is still too poor to afford democracy. But with a per capita income of nearly $1,500 ($4,500 if you consider people's purchasing power), China is richer than many poor democracies. It's not poverty that is holding up democracy; it's a neo-Leninist state and the crony capitalism it fosters.

    In part, democracy itself has been a victim of the country's economic expansion. However flawed and mismanaged, the country's rapid growth has bolstered Beijing's legitimacy and reduced pressure on its ruling elites to liberalize. Democratic transitions in developing countries are often triggered by economic crises blamed on the incompetence and mismanagement of the ancien régime. China hasn't experienced that crisis yet. Meanwhile, the riches available to the ruling class tend to drown any movement for democratic reform from within the elite. Political power has become more valuable because it can be converted into wealth and privilege unimaginable in the past. At the moment, China's economic growth is having a perverse effect on democratization: It makes the ruling elite even more reluctant to part with power.

    Lavish government spending on law and order helps to ensure that power-sharing won't be necessary in the near future. Since the Tiananmen Square tragedy, the party has invested billions in beefing up the paramilitary police force (the People's Armed Police) that has been deployed in suppressing internal unrest. To counter the threat posed by the information revolution, and especially the Internet, the Chinese government has blended technological savvy with regulatory might. The Chinese "Internet police," officially known as the Ministry of Public Security's Internet and Security Supervision Bureau, is reportedly more than 30,000 strong. Its Beijing branch proudly claimed that, in 2002, it participated in a multi-agency exercise to see whether the government could rid the Internet of "harmful content" within 48 hours of the onset of an emergency. (During the exercise, all "harmful content" was removed in 19 hours.) The party's refined strategy of "selective repression" targets only those who openly challenge its authority while leaving the general public alone. China is one of the few authoritarian states where homosexuality and cross-dressing are permitted, but political dissent is not. Domestic opposition groups and individuals who might challenge the party's authority are left isolated and powerless.

    The emerging social elite, by contrast, is co-opted and coddled. The party showers the urban intelligentsia, professionals, and private entrepreneurs with economic perks, professional honors, and political access. For example, nationwide, 145,000 designated experts, or about 8 percent of senior professionals, received "special government stipends" (monthly salary supplements) in 2004; tens of thousands of former college professors have been recruited into the party and promoted to senior government positions. At least for now, the party's charm campaign is working: The social groups that are normally the forces of democratization have been politically neutralized.

    China's neo-Leninist regime has formidable resources-but much more serious defects. Statedirected investment, made to secure the political loyalty of key constituencies and advance personal careers, will prevent China from realizing its economic potential. The corruption of the state will likely deepen. The deterioration of the public health infrastructure and education systems will generate social tensions and mass alienation, thus eroding the party's base of support and increasing its vulnerability to the economic or political shocks that will inevitably come.

    China has already paid a heavy price for the flaws of its political system and the corruption it has spawned. Its new leaders, though aware of the depth of the decay, are taking only modest steps to correct it. For the moment, China's strong economic fundamentals and the boundless energy of its people have concealed and offset its poor governance, but they will carry China only so far. Someday soon, we will know whether such a flawed system can pass a stress test: a severe economic shock, political upheaval, a public health crisis, or an ecological catastrophe. China may be rising, but no one really knows whether it can fly.

    Want to Know More?

    Minxin Pei's forthcoming book, China's Trapped Transition: The Limits of Developmental Autocracy (Cambridge: Harvard University Press, 2006) provides a fuller analysis and extensive evidence of the costs of China's neo-Leninist, one-party rule in a semireformed economy. In Corruption and Market in Contemporary China (Ithaca: Cornell University Press, 2004), Yan Sun offers a vivid account of how partial economic reforms can spawn endemic corruption under an authoritarian regime.

    A good analysis of inequality in Chinese health services can be found in "China's Health Sector-Why Reform Is Needed" (World Bank Briefing Note Series, April 2005). Elizabeth C. Economy skeptically examines the regime's environmental record in The River Runs Black: The Environmental Challenge to China's Future (Ithaca: Cornell University Press, 2004).

    More sanguine assessments of China's rise can be found in Jonathan Anderson's six-part report, "How to Think About China" (UBS, 2005). The 2005 OECD Economic Survey of China offers data on China's strong growth, but also hints at the inefficiency and distortions in the current Chinese economic system. For differing assessments of China's strategic trajectory, see "Clash of the Titans," a debate between John J. Mearsheimer and Zbigniew Brzezinski (FOREIGN POLICY, January/February 2005).

    For links to relevant Web sites, access to the FP Archive, and a comprehensive index of related FOREIGN POLICY articles, go to .

    Western investors hail China's strong economic fundamentals -- notably a high savings rate, huge labor pool, and powerful work ethic -- and willingly gloss over its imperfections. To most Western observers, China's economic success obscures the predatory characteristics of its neo-Leninist state. But Beijing's brand of authoritarian politics is spawning a dangerous mix of crony capitalism, rampant corruption, and widening inequality. Dreams that the country's economic liberalization will someday lead to political reform remain distant. Indeed, if current trends continue, China's political system is more likely to experience decay than democracy. An incestuous relationship between the state and major industries can doom developing countries, and China is more susceptible than most. Someday soon, people will know whether such a flawed system can pass a stress test: a severe economic shock, political upheaval, a public health crisis, or an ecological catastrophe.

    Copyright Carnegie Endowment for International Peace Mar/Apr 2006 | Minxin Pei is senior associate and director of the China Program at the Carnegie Endowment for International Peace. He is the author of China's Trapped Transition: The Limits of Developmental Autocracy (Cambridge: Harvard University Press, 2006).