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APPROVED FOR RELEASE: 2047/02/09: CIA-RDP82-00850R000504020059-0 - FOR OFFICIAI. U~F. ONI,Y JPRS L/ 10290 29 January 1982 China Re ~rt p EC~DNOM~C AFFAIRS (FOUO 2/82) ; FBIS FOREIGN BROADCAST INFOl~MATIOfV SERVICE - FOR OFFICiAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 NOTE JPRS publications contain informati.on primarily from foreign newspapers, periodicals and books, but also from news agency transmissions and broadcasts. Materials from foreign-language sources are translated; those from English-language sources are transcribed or reprinted, with the original phrasing and - other characteristics retained. _ Headlines, editorial reports, and material enclosed in brackets are supplied by JPRS. Processing indicators such as [Text] or [Excerpt] in the first line of each izem, or following the last line of a brief, indicate how the original information was processed. Where no processing indicator is given, the infor- mation was summar'zed or extracted. Unfamiliar names rendered phonetically or transliterated are enclosed in parentheses. Words or names preceded by a ques- tion mark and enclosed in parentheses were not clear in the original but have been supplied as appropriate in context. Other unattributed parenthetical notes within the body of an item originate with the source. Times within items are as given by source. The contents of this publication in no way represent the poli- cies, views or at.titudes of the U.S. Government. COPYRIGHT LAWS AND REGULATIONS GOVERNING OWNERSHIP OF MATERIALS REPRODUCED HEREIN REQUIRE THAT DISSEMINATION OF THIS PUBLICATION BE RESTRICTED FOR OFFICIAL USE ONLY. APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 - JPRS L/10290 29 January 1982 _ CHINA REPOP.T ~ ECONOMI C AFFAI RS (~oUO 2/82~ CONT~NTS PEOPLE'S REPUBLIC OF CHINA FINANCE AND BANKING Foreign I~bney Key To Better Living _ (Yoshio Matsui; ~iE DAILY YOMIURI, 15 Dec 81) 1 Unattractive Loan Repayment Method (Yoshio Matsui; THE DAILY YOMIURZ, 29 Dec 81) 3 . INDUS T$Y Lack of Interest in Service Industry (Goro Tagawa; THE DAILY YOMIURI, 22 Dec 81) 5 FOREIC,d~T TRADE Briefs ~ Computer Import 7 LABOR AND WAGES Unemployment Becoming Serious Problem (Goro Tagawa; THE DAILY YOMIURI, 11 Dec 81)................... 8 GEDiERAL Finance Official on Economic Re~d~ustment (FAR EAS TERN ECONOMIC REVIEW, 25-31 Dec 81) 10 - a - [III - CC - 83 FOUO] FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2407/42/09: CIA-RDP82-40850R000500420059-0 FOR OFFICIAL USE ONLY ' FINANCE AND BANKING : E -f FOREIGN MONEY KEY TO BETTER LIVING I ~ I Tokyo THE DAILY YOMIURI in English 15 Dec 81 p 5 ~ , ' [Article by Yoshio Matsui] ; [Text] The Chinese , pec,ple's �poPular among th~ Chinese Th~ze ss another coupon eagerness for foreign cur- :people. in China. It is iasued ,.,to , I rencies is surprlaing.`Indeed Of course, ways of'obtain- :'forelgn�~ationala.'The.:ralue' ( they change color when ing foreign currency are of the ~Coupon, calIet! ~"'cori- ' they receive ioreign money limited. If a peraon fs lucky vPrtlble tickets," is the i such as the Japanese yen or he may get foreign money 8an4e as the yuan. the American dollar. directly irom ioreign tpur- Coupon As Pasaport This reporter was surprls- ists, although this practice cotxpon allows for- ' ed at the phenomenon be- is conaidered illegal. eigners to ahop . at stores cause there is no way a Main $o~trCe open only ~ tq i~oreign na- Chinese can use foreign Under the circumstances, t~onals where articlea of ~ moneq in the country. So I most foreign currencies well-ktlown brand names asked them about the rea- come into the country ei- attd oi higher quality are sons behind this. ther tl~rouBh remittances available. �The coupon is $ ecial Privile es from overseas Chinese ~ or extremely attractive to the p g lelt by the latter during Chinese people: -~,Thus thia Whenever a Chinese gces their stay in Chi~na. ' coupon~ 'together with the ~ to the Bank o2 China with The system of granti~g other , coupo~ 'Sor ~ supply ioreign moneq, the bank speciol ~rivileges to the materiala, ~ is coneidered �a not only converts the cur- Chinese pPople who ~eposit "Passport" ~ to ~~bett~r 1lving rency into the yuan but foreign currencies irito the in China. ' also o8ers special coupons gank of China !s of course, Consequently, the 1lving ~ called "tickets � to supply a desperate measure to gar- standard ~ of Chlnese who ~ anaterials.^ � ner all available foreign have well-to-Qo relatives If a person gces to a ~oney in the country. abroad or � who, have � con- store wlth the coupon, he or In fact, this is reflected in tacts with loreignexs in she is oSered an additional the Chinese (3overnment po- China diSers from, that of omount of rice, wheat or licy on foreign exchange ordinary Chinese. oll outside the framework control. Any attempt that In Peking, !or instance, oi rationing. may result in an outSux oi Chinese families 1lving next It appeared that there ioreign maney out of the to icreign residents own TV were other kinds o! special ~ountry always facea atrict sets, washing machlnes and coupons with which Chinese ~hecks by Chlnese authori- bicycles of latest models. 'could buy such artlcles as ties. On the other hand, On the other hand, Chinese television sets or bicycles, there are no restrictSona on people living next to the nll of well-known brand the inIIux of foreign , cur- above mentioned Chinese names, without waiting for ~ncy into Ch1na. have no choice but to use their turns as per long wait- Consequently, the Chinese outdated bicycles by carry- 1ng lists. people are ehcouraged to ing out necessary repairs. Tt~s means that speclal look !or foreign money in This has created an imbal- privileges are granted Lo the country. ance in the living pattern _ those wh~ turn over foreigi! ot the Chinese people. currency to the bank, a system which has become 1 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 r~rn v~~r....n.. .,..a. ..i.~,. When i visited a people's to curb the "independent" ~~~quality is an ideal commune in Shanghai, I import ,oi Snished prcducts form," .he , ss~ys, "but it is came across a farming by provincial and municipal something to be consldered household which was richly authorities irom early thls a1te: the liviug standard of furnished with furniture. A year. But it appears that ~he Chinese pc~ople has check revealed that the fa- the Chinese Government ;,Qen improved.a little more. mily had a rich and in- cannot easily retrieve de- Until that ~ time, we rieed to auential relative !n a tor- centralized power 2rom the $hut our eyes to a limited e16n Country. � local authorities once it has R age di8erential" . been granted. Certainly, China ~is an ~Rieh Provincea Furthermore, agluent pro- economically poor nation. By the same reason a ~nces and cities can aftord The current poHcy designed similar imbalance also ex- to invest according to their to make people wark 3~arder ists between provinces. own iree will. Naturally, ~ and to inspire them ~with - C3uangdong and Fu~ian the3~ become energettC..andl ~gher asptra~lons c~Sers provinces which historically spinted, and this ied `to g irom a policy to reaIlze have sent out a great anany gAp in wage scalea. equality. P~rhsps, China Chinese overseas naturally wiil Snd itaelf in this receive ioreign currency ~ap jri Wages dtlemma whlch may prevail from abroad. Thus they are For instance, the em- for a considerable period �of relatively richer ~han other Ployes of No 1 department time. provinces, and it appears store in Bhanghai are paid that land-locked provlnces an average of 7U yuan a are being left behtnd !n month. Similarly, the .wages '~poverty." of employea at a staS;e-run Thia trend has gathered department store ln Wu- momentum since last year han, Hubei Province, are when a trade llberalization 87�5 yuan, while erriployes poliey was e,dopted. Provin- at a, department store in cial and municipal autr.c~ri- Chongqing in Slchuan Pro- ttea were allowed tc+ keep vince earn only 53 yuan. aside for their own use part Indeed,~ �product prlces of proSts earned irom their diSer fro~ province to pro- traile with foreiQn coun- ~ce, but tfie quality of tries. R.icher provincea and Pl~ducts also difiers de- cities wasted ~no time in Peniiing on the province or ~eizing the opportunity, and region. After taking �ir.~o started trading with foreign account these iactc+rs, wages enterprises and countrleB. ~'e hlgheat in 3hanghai, Worth mentioning are followed by those in Wuhan their transactions involving and Chungqing !n . that order. - black-and-white telewision There had been a big pay sets. R.tcher provlnces and dlPferential b~tween urban cities impOrted them in a areas and farnaing commu- large quantity from Tatwan nitiea, betweea factory and Hong Kong. workers and farmere and The purchase price uf a~tween white-collar and 12-inct: set was 90 yuan blue-collar workers. At one (one yuan is equivalent to tlme the digerence waa nar- about ~130) and the rlch rowed, but it contlnued to provtnces and cities sold exist. But the new policy - them for 300 yuan each to for freer trade has reaulted other provinces, netting a in widening the wage gap, " proSt oY 210 yuan per set� and it may be safe to say This means that they earn- that it is widening even ed not only foreign cx_- iurther. change but domestic m~~ey Weng Qiquan, a professor too, depending on the type of ecor,omica at FUdan of transactions. tinlversity in Peking, stresses When the Chineae (~ov- that China ls currently .in - ernment became &ware , oi a tranaitional period. thls unfair practl~e, it tried COPYRIGHT: The Daily Yomiuri 1981 CSO: 4020/70 2 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 FOR OFFICIAL USE ONLY FINANCE AND BANKI'iJv UNATTRACTIVE LOA~1 REP~'~:*~NT METHOD Tokyo THE DAILY YOMIURI in English 29 Dec 81 p 5 [Article by Yoshio Matsui] [Text] At the outset of my muat use one-third of ita materials and techniques meeting with Huang (3uom- products as payment for for use at Chinese iactories, ing, vice-superintendent of the interest. Thls must be where the materials are the Xiangzhou wool-knitt- hard on the factory. prccessed into fln~shed ing factory in 3huha! City, ~~F'!ve years from now, products. The produets he said with a wry smile however, the factory and concerned are moatly tex- on hts face: "I had no ldea its machines wlll become tile goods such as sweat- - that the rates of interest our own property," Huang ters, gloves and �pajamas. on loans were so high." said: "So the factory's Hut tnis forumla is Brad- - The factory, which be- stagers, includin~; myseli, ually spreading into other gan operating last year, is are happy and eager to sectors, such as the elect- a Chinese establishment work:' Certainly, a keen ro~Gy p.~d watch industries. but China provided only sense of purpose Slled the ~ere are 300 cases of land manpower for the air in the factory. ~~Compensatlon trade" and factory. The factory's bu~lfl- Local V iewpaittt "P~cessing on a commis- ' ings and machinea were Hong Kong enterprlsea 81on" in Jhencho, which bought with loans totaltng like Shuhai, Sa loeated near about 7 million Hong Kong 61'anting loans to China to Hong Kong. There are ; dollars (one Hong Kong enable the country to build about 1,500 itema of goods dollar equaLs abouC "f40) a factory snd to buy involved in these cases. which were obtained from ~achines for the iactory enterprises in Hong Kong. do not consitltue "invest- Huang Shiming, muyor oi The loans are to be repaid ~ent of toreign capital" in ghencho, suid: "We cann~t over a period ot flve years. China. It is a sort of ex- belittle Lhe beneflts that we However, the 2actory port of. a~.achines and other Bain frora these pro~ects. must pay the loans includ- ~aterial:a to China. on a We can absorb excellent ing the interest, in terms deferred payment basis. ~chniques and the pro- of wool and woolen goods Seen irom Chlna's view- ~ects also give workers the that it prc~ucea. polnt, it !s the import of will to work, whlch is most Th~ ratea of� interest on flnished producte. needed st ~ Chinese iac- loar,s are very high theae It is called "compensa- tories." days. The factory musi tfon trade." The uae of thia Complex ~et~totjs puy an interest of 14 per- formula has become popu- ~ere is always a rlsk cent pcr unnum on ita lar in such provlnces as louns. The tctal amount (}uanddong and Fuiian, involved in large invest- - oi in;,erest thut the factory which have much dealings ~ent. Mqreover, the pro- is required to ~ay in the ~th foreign countries. cedures tor such inveat- Srst year of the flve-year ments are very complex, pcrfod is nesrly 1 million A simpler methor~ of ob- slthough the government ~ionF Kong dollar. ~e talning materials for goods, encourages large invest- compuny's production in a'nlch is called" processing ments. Many forelgn enter- the flrst year amounted to on a commission," is also prlses are troubled by new 3 million Hong Kong dol- being used. Foreign enter- demandg made by the Ch!- lars, which meuns Lhat it Prises bring their own nese side in cornectian ~ 3 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 rvK urri~~r+~, u~~ with the lnvestmenta. Eut very quict~y. But then are ~vanta. Thus, the "compen- there is little rlsk in "cotn- also times ~vhea we must ~~on trade" and "process- peneatlon trade" and �pm-, walt 1or s long time ior the ,~g on s commlasion� ior- cesging un a commfa~sion; ' producta Lo arrlve. This ie mulsa sre taklnQ root !n and the procedurea for partly due to the unavall- these pro~ects are quite ability oi ahipa. There ~vas a time ~vhen simple. Thls makea the pro- �~gut the main reeaon ls enterprlsea oi foreign coun- ~ects very attractive to ibr- that Chineae tranaportation triea, including Japan, aere elgn enterpriaes. agendes never let a ahip ~ubilant over big deala auch Besides, some foreign leave a port until it ia iully aa +,he ezport of induatriel enterprlses regard the pro- loaded. 6o goods which are planta to .that conntry. They jects as a prelude to full- loaded on a shlp just before were hit hard by the reduc- scale investments. The pro- it leaves the port are de- tlon of Chineae investmenta i ects are, so to speak, "a in the . conatructton P~~ects _ pair of lovers assodating uvered earlier than expect- ~~~y ~der the with each other before ed. But gooda ahich are ~~ernization pmgram. P'or loaded on a ship arst take some ttme. they did not The Sanyo Denki Com- s long ttme to reach us:' ~ow what to do. pany commissioned a Chi- Sudden C~tcttlgs But now they have found nese enterprise in Sheacho There ie yet another prob� ~~realfattc," though not al- to produce tranalator lem which gcea even deeper, waya, means of engaglnQ 1n radios. The pro~ect suc- It often happene in the caee trade ~vith C2~1ns. . � ceeded and thia became the of "compensation trade" - springboard for s~oint that a Chineae offlcial aud- venture; ior which the denly appeare and say8: funda were supplled on a ~~We want to aell the prod- 50-50 basla by Sanyo and ucts of our factorY in China. the Chlnese enterprlse. We want to give other goode 8anyo acted cautlowl~ in to repay the loan." carrying out the !lrst pro- For example, a Japaneee ~ect and launchiag the flshery companY a?aa nego- second one. The "procesaing tlating aith a ChlnCae en- on a commission" pro~ect terp:ise on a deal in which waa undertaken by Hong the company would lease Kong 3anyo, a aubsidfary flshery equipment to the of Sanyo, and the ~oint Chinese enterprlse and the venture was undertaken by . Cb:r~eae aide ~vould makr re- _ the head office of the com- ~ayment by aupplqing ms- ~ pany. rine producta to ;the cotn- ~ I.imttaftons pany. Suddenly, ths~ Chineee � aide beBan eayin6 that� !t But there are some would supply rew silk �!n- . limitations to auch pru- stead of marlne producta. - ~ecta. Firatly, there 1a L1ie Needleaa to say, the ilshery problem ~ of quallty of the company cannot uae ailk in products. .Many of the , anq way. gooda produced in these ~ere was alao a case of - pro~ects sre faulty and a Chineae enterpriae otier- quality of the Boods ls inB ~ Bive p~iamsa to a uneven. This createa head- ~apanese comDany to PaY aches tor the foreign enter- for the lesalag vf a iadlo prise concerned. There 1s pr~uction 1ine. The Japa- also the p:~blem of tran~- nese company waa satound- portation. ed. A ataff member of a Japa- Whole deal might be nese trading company sta- washed out, if the Chiaeae Lloned in Hon~ Kong said side makea auch a strange with a wry amlle on h1a ofier. Luckily, there are face: "There are timea when fewer such caaea recently. the products are delivered Chlnese enterprlaes snd for- eign companlea have begun to aee ' ~vhat each other COPYRIGHT: The Daily Yomiuri 1981 CSO: 4020/70 4 FOR OFFICIAL USE ONLY ~ APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2047/02/09: CIA-RDP82-00850R000504020059-0 FOR OFFIC'lAl, l1SF. ON1.Y INDUSTRY LACK OF INTEREST IN SERVICE INDUSTRY Tokyo THE DAILY YOMIURI in English 22 Dec 81 p 5 [Article by Goro Tagawa] [Text] One morning .this wrlter ~ei+ .her during my eeveral One time thia idend be- vyes . surpdsed to eome ex- vistte to China. MQst work- ocame . irritated at a restaur- tent ahen .a g~rl still wlth . ers were buay chstting .with 'snt . sa � nobody ~~came ta an ~innocent, face came to colleaguea~ even ~when cua- take his order for a lonB me , at a hotel . in Zheng- ~~ra come in ~ and they time. He then etarted to zhou, Sormally greeted me are eo unmannerly as � to write his observatlons in and asked ~ ior zny morning place ordered things on the the suggestion notebooks. order. .This . was becauae I desk rude4y as !i they were Whenever- he went bactc to had thought .that. i could throwing them. . ~ th~ same reataurant he was not expect good servlce .in a ~~8 n?Y ~~t ~P ~ served well. ' saeialist countrg.~ Chiaa, I� wanted my bath , The sudden.charige oi tlie Seeing her working like a to 1~e rePeired es ff .did no~ waiteis' attitvde apparent= beaver, made me comfort- 8upplq hot water but~I~ had lY lrom the~ fact that able and i felt like tipping ~~t three daY~ unt11; it reglstration o1 complalnts her generously it she ac- w~ ~py~d. ,A,t a~ statlon- against them would mean cepted it. " . gry 8hop in 8ha:ighal I wae a reductton in fiielr bonus. At Srst I thouBht of her. ur~d ~�~eclde in a~urry But phenomenon ~ of thls ss a high school student a,~t . to buy belore even I~d ~$e8 $ CO~OA who was wnrking at a part- had the chnnce to inapect slogan llke "1Setve ~ ior the time ~ob as she wore a tag ~ a~ .~~pletely: P~PIe" look empty. _ ~rith "trainee" written on got :the ~n- It seems that not ~ only it. But she was a student at .~hat , eervlqe _in �~itora but also Chineae _ , a hotel school in ~liengdu. other areaa 'must ' be ~rety themselves Snd poor.. ser�v- Rare Ea erners bad aince serv~ce 4n ehan- i~ ~1e ~'a"8~ g a troubleaome, experlence. Bhe eaid that ahe would hai, a reputed area, wae eo ~gn Zhihao,~~ �editot ~o! flnd a posltion thia autumn ~bad. ' ' the China ~Youth Annual after a lour-montti on-the- ' ~ _ spot training. Her explana- S~SSestto~t BoOki Bulletin, said: at takes us tion� satlsSed me about her . When I told oi my ~Fo~?- as long ss two~ months tc~ eagerness. � , plaint to a. irlend ete?Yln6 have . a people s suit made ~1 Her ei~eryday schedule, ~ r~+ -~B =or three yeara ~.~Pe::ing. We Snd !t not however, appeared very by sayir.g that Chine~ was long e ~en whe~t we are kept ttght. She stood at a booth stlll ~ as it ~ised be' or waitin~ for �three hours at selling souvenlra during in- ~id 'rather deterlo~ated, he a~?rber's ahop:' terv~ls between meal ~ t,~me satcl, "I w111 tell yoq a B~ M~Y Chinese people re ; _ and 'entertained foreign ~way. Use auBBeation . note- siding abroad have suc- customers at a bar at night. booka�~' _ , ceeded � i~ the serylce in- 8he usually went to bed ~~e sugBes~ion - notebobka duatry in their respective after 1 am. �But I don't are .hung at tt~e entrance countriea: Neverthele�a why mind thls as i wlll graduate ot restaura~a and shopa in 8e~~ in,' mainland China in two mantha," ehe eaid in order to allow cuatomera to been not improved? ` $uent Japanese. wri~e tt?elr. obeervations � or I rarelq 'met suCh a ser!- comPlalnts. ~ . ous aervice industry 'worter 5 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 FUR UM~M'IC;IAL U5~ UNLY ~ : . wro Nor~4~ ~ ~ ~ ~~t ~a ~ , ~tg." ~qlid"-~it+e.x~eagaged :~u z~LMs ~ Ia f peldng .~afte"r,: tlie~ ~rev category~ ~11' not ~be_ gblo ~to olutlon; ~emphaafa t~"vaa plac- have aa induceme~ `even ii ~tt � on !nd�~atrialieaticm �un- they ~anWt :to tlo ao. � der a alogan oi conyersion ,It ~.qm~� ~g ~�~g irom a consumptlon 1Cit9 ~ ~t 'th~.::eervloe indus~.ry an industral dty and ss a q~~y.. ~devalop'- if a result the category of eer- great nii~sber oL younB peo- . vioe aas eet aalde. Dle aeeldria: jobs' are put in- ��At the aame time a to .'thfa . category. 'Oi . Pri- wrong aottoa apread that mary importance 1s tliat thoee who . aeir?ve are low- thoee : who ~enter thls Seld clasa people and those who regala pride �;:aad respon- are eerved are higher-class aibility ior their ~.iobs. � ~eople. Tl~ia haa reaulted in ;:~;thls� ~ect the glrl aueh an atmoapherc ' that ~om i'met in Zhengzhou Yo~6 . DeoPle want to work Dt+avided' s.Proo1 th4t edu- at iactoriea instead oi ,~}~pn and traiaing conld working in the eervice in- help provlde a warm=hesrt- : dustry," C3uan explalned. ed aeryice to tr~velera even Thia phenomenon con- 1n a eocialtet country. trasta with that in Japan Although I ae?y thie out of where the tertlary, indus- u~y aomewhat middlesome .�try ia far more popular klndneas, . her servloe for than induatrial. . manufac- ~~Omera at the bar until :turere �among ~ob-seeking iau at night ia overaervice. studenta. ' ~ , .:;1: ; ~ ' A habitual maaner oi this IL seema t1~at M, iemart- ~d maq lead ta~n unYa- vorable reault. able trend o1 dieregarding tYie iervice''industr9 in Oh1- na ,caanot ' be .aeparated ' irom� the prevalent econom- ~ ic vlev~. peeullar to . Marziam which attaches ~ value o~ly - to ioba . directly conriected wlth ananuiacturing. ' ? In the ~capltaliat wdetY even waitressea in , reataur- anta sre evalnated for' their work aa membets reapona!-. ble for development . oi the national ecunozqy. � ' 'SocialOatcast But in aocialiat countries' perlormance in the tertiary iridustry (except for. trans- postation), which .does not produce. gooda, is not in- cluded in the gtoss national product' (C3NP). Under such clrcumatsn~ea, ' the servlce induatry � ia eomething flke COP'YRIGHT: The Daily Yomiuri 1981 . CSO: 4020/70 6 - FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 FOR OFFICIAL USE ONLY FOREICN TRADE BRIEFS COMPUTER IMPORT--Hitachi Ltd. has recently obtained the approval of the coordinating committee for the Control of Exports to Communist Countri~s (COCOM) for the export of a mec~itmm computer to China. An order for the computer, "M-150H," which is used for training technicians was sent in from the management modernization research institute of the Chinese Scientific and Technological Association. For Hitachi, which has exported more than 40 computer sets to China to date, this will be the first computer exported for tr~ining purposes. The Chinese Scientific and Technological Association is to use the "M-150H" computer to train computer technicians in computer technology and software. [OW120235 Tokyo NIHON KEIZAI SHIMBUN in Japanese 7 Dec 81 Morning Edition p 9 OW] CSO: 4020/77 _ 7 FOR OFFIC[AL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 r~~tc urr~uA~. ~~~c ~,~v~.~ LABOR AND WAGES UNEMPLOYMENT BECOMING SERIOUS PROBLEM Tokyo THE DAILY YOMIURI in English 11 Dec 81 p 5 [Article by Goro Tagawa] [TeXt] In Chlna, there are many "Daiye" young people are Covt Policy people who want to work declsively dlSerent irom ~oW so many "datye" but cannot lint! s~ob. For "shuahoku ronln 1n that people were created in Chi- some reaeon, thel~e people they , are hard preseed Wlth na where there are no are not called "ahlye" (un- everyday l~te and cannot ~~ehiye" people? employed) pereons but al- afford to look for a ~ob in most always~ refexred to as a letsurely ananner. ~n titutlon ati tulates that ~~dalye" (~ob-awaitingl per- If unemployed people are t~ Bovernment should take Snns, deSned a8 those who have the reapansibllit of helping ~ Asked abbut the difference the ability and will to work the people flnd employment. - between the two, An offlcial but cannot flnd a iob, China achieved the "feat" explained: Unemployed peo- dalye people belong to ple are thaae who have lost them. The word "daly~" has af almoat perfect employ- their ~obs because they recently �begun to be uaed ment !n the beginning, of were elther dlsmiased or in Chlnn, preaumably be- the 1980s. thetr companfea went bank- cause iob ehortage hsa be- Although the Chineae rnpt. People walting for ioba come a serioua eoclal prob- Ciovernment provided ioba are those young people who lem. ~ for nearly all the. people, have not yet found ? iob This repotter happened to every establfahment auSered ufter graduattng irom meet a"dalye" qounB man from an extreme surplua of schools. in ~hangha! and chatt~d labor because it hired work- ~~There are iob-awaiting with him ior a wh11e. He ers far more than actualiy � reople in our country~ but said: "I underatand that needed. never unem~aloyed people:' Japaneee newapapere allow Many Chlnese factoriea Coilti~ A Word ~uch apace for help-wsnted have three to flve times as g. sda every day, but why sre many employea aa correa- This repocter wea deeply there more than one m11IIon pondtng Japaneae com- impre9sed wlth the Chineae unemployed people !n Js- paniea. if auch fsctortee ablitty to coin auch a pgn7~~ Ttila reporter wae st ws~nt to rationallze their aenalble expreaeton as "dci- a lose for en aneaer. management by introductng ~ ye" aa might be' expected of The young man, who eald modern mach~nery~ they the peopie oi a country with he was loitering srounQ a cannot aftord to do ao be- a rlch culture. Sut it !s dif- p~rk every daq, aounded !n- esuae oi their exceantve flcult to *~nd its equivelent credible ~vhen he ea1d: "I menpower. in Japanese. A barelq coih- arould be willing to do anY Life Employr?~ent parable Japaneae expreasion aob , Once a worker Rnde em- mfKht be "shushoku ronin." young people wanting to he will not be "Shushoku ronin," how- flnd a~ob in a maior citq Rred unless there is some ever. refers to a rather numbers 300,000 Pin S~ang- exceptlonal reason, and an "cnretree" job neeker who hai, 23U,000 in Peking and enterprlse w111 never go is refralning from taking up 800,000 ln Sichuan Province. bankrupt how b16 a deficit a~ob until he can lind a The total numbe'r of euch it maY run. A worker has positlon that he likes. people 1n Ch1na is said to no rear of losing hls ~oo. amount to tens oi m1111on. � 8 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2447/02/09: CIA-RDP82-44850R444544424459-0 ~'OR OFFICIAI, USE OM .Y If a vacancy LS created ~~daiye" problem to atten- by a worker who retires un- tton. der the aRe 11mit system, it Some such qoung people will be fllled by his ofi- began to commit cri?nes or spring. Thus a aorker~ hold- other acts o! ~isdeec~ and ing a position has vested some others started under- rights to it. ground antigovernment ac- At the Wuhan steel com- tlvlties. Is it natural for plex, whose operat:on rate young people who have w~.s reduced by halt as a grad~iated frnm achools but result ot economic adiust- cannot flnd a way of e~rn- mer~t, 2,000 , vrorkers were ing a living to become 1Q1d oft and forced to stay desperate and act reckless- at home, but they received ly? their regular salarles. They j~ew MeasuPes were not adviaed to reslgr? China is now maWng ef- voluntarily, nor was there a forts to increase Job oppor- personnel reductton. tunttles by developtng pri- That may be the w:1y so- vately operated stores nnd cialism works, but in the ~he service inc~ustry. Ch1na eyes o[ a person ~vho has ~5 also exporting lubor been brouKht up in capital- _in cooperation with Jap- ism, China's perfPCt employ- ~ese companles. It has ment is only superflcial. in sent workers to construc- Uhina, so to speak, the tion proiects i~ other coun- whole natlor~ !s devoted to tries. employ~mei?t and weltare gut can sach measures projects. ThLs situatton Sa alone secure employment for aktn to the operation of all "dalye" young ~eople? Japanese National Rallways gome Chinese even have ~J~'~' begun to arBue that the em- Under the above clrcum- ployment of marrted women stances, it w111 be dlftlcult $h~uld be restricted for the for China to employ new p~lrpose ot gtving ~obs to workers unleas 1t lncreases young people. its economic growth rate The editor of a certafn sharpiy. newapaper sald: "If both nuring the Cultural H~- husband and wtfe continue volution, however, the em- to work !n China, which ployment problem did not hus a b!g populatfon, the surface very much because ~dalye' problem wlll never , young people 1lving 1n clties be solved. Pnrtly to make were aent to factoriea and ~omfortable homes, women were engaged 1n farmtng on ghould stay at home. It ts the pretext that they ahould not a good trend that elec- diftuse knowledge to iarm- trtc waahing machinea and _ 1nQ villaqes. refrlgeratora aell well be- But after the Cultural cause nobody wanta to do Revolution when a E~c~eat housework:' number uf such yoang peo- Th1s 1s ot course a rle returned to citles, the minorftq opinlon in China _ employment sltuutton was y~,here women's say has thrown lnto 1 Kreat confu- ~atned power slnce the ston, suctdenly brtnging the rPVOlutfon compured wlth thnt in Japan. iTo be continued~ COPYRIGHT: The Daily Yomiuri 1981 CSO: 4020/70 9 ~ FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 FOR OFFICIAL USE ONLY GENFRAL FINANCE OFFICIAL ON ECONOMIC READJUSTMENT HK290835 Hong Kong FAR EASTERN ECONOMIC REVIEW in English 25-31 Dec 81 pp 46-48 [Report from Beijing: Open to the World: A Top Beijing Finance Official Talks of the Problems and Opportunities in Economic Readjustment"~] [Text] In his report to the fourth session of the Fifth National People's Congress (NPC) Premier Zhao 7.iyang reaffirmed China's commitment to expanding ecanomic cooperation with foreign countries and further utilisation of foreign capital. ~ To gain further insights into what China's policies toward foreign investment will be in the period of readjustment now extended until the end of 1985, Robert DeTfs talked to Wei Yuming, vice chairnian of the Foreign Investment Control~~:Commission (FICC) and the .ImUOrt-Expart Coimnission (IEC), chaired by Vice: Premier Gu Mu. . - The FICC and IEC are one organisation, with identical staff, operating out of a single office complex in Beijing+. As the FICC, the organisation has the sole authority to approve foreign investments in China, and coordinates the related activities of ministries and loca.l goverr~ment agenc3es . As the IEC, it super- vises foreign trade and oversees the related work of ministries, foreign trade corporations and the general administration of exchange control. This interview took place prior to the conclusion of the NPC session. [t~uestion] How will the extens ion of the period of read~ustment affect foreign investment in China? (An~swer] At the thizd session of the NPC, it was decided that the policy of - opening up would be adopted in our economic affairs with foreign countries. At the same time, th e policy of readjustment was also adopted. A.s you know, after the 10 years of the Cultural Revolution, our national economg? suffered heavy losses and was out of proportion, so without read3ustment our national - economy cannot be further developed. The policy ef opening up to the outside world is not a temporary policy, it is a long-term strategy. Of course, China is such a large country, w3th such a _ large population, we must develop our economy relying on our own efforts. But ~ 10 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 - FOR OFFICIAL USE ONLY - at the same time, we should expand our foreign trade with various Only by introducing advanced technology from advanced countries and by ~bsorbing foreign funds can we solve the problem of lack of capital, and realise the four modernisations . Recently some foreign friends have been confused about the significance of our present readjustment. They thought that readjustment meant a slowing down of the modernisation process. But actually, the current readjustment doesn't mean slowing down. Progress will be made in some economic sectors. For example, our light industry and textile industry have been developing quite quickly: their growth rate this year will reach 12 percent. It is also true that the growth rate of heavy industry dropped a little, because some factories are under-utilised. This is only temporary. It is our hope that by readjust- ment internally--within heavy industry--the growth rate of heavy industry will catch up a little bit. The utilisation of foreign funds will not adversely affect our national economy, but will serve th e readjustment and expansion of our national economy. Just as Premier Zhao said, we will actively utilise foreign funds, and we will use forei~n funds from various sources. [Question] Will China maintain high levels of capital inflow during the extended period of readjustment? [Answer] Under the guidance of the policy of opening up to the outside world, we have been utilising foreign funds for the past 2 years, and we are going to use more. Here I can give you some f igures: over the past 2 years, loan agreements were concluded with various governments and organisations totalling $17.3 billion. In the past 2 years (1980-81) we have used up $1.2 billion. Besides this, we have also used foreign funds in the f.orm of processing imported materials and compensation trade, imported equipment and new technology. [Question] Does the $17.3 billion include loans from international organisations, that is, World Bank loans and International Monetary Fund (IlKF) credit? [Answer] Of the $17.3 billion, purchasers' credits account for $12 billion, but up to now we have not used a single penny of the buyers' credits. It does not include IMr credit, but it does include the World Bank loans. ~ We have utilised loans from Japan, both OECF (Overseas Economic Cooperation Fund) and E.`~IM (the Japanese Export-Import Bank), mostly relating to development of railways, port facilities and coal m3nes. We have also used certain amounts of loans from the World Banlc--$200 million for education and $200 million for agricultural development. In the Field of economic cooperation, we have approved 29 joint-venture projects and more than 400 coproduction projects as well as compensation trade and processing of imported materials. The coproduction projects represent a utilisation of funds equivalent to $1.5 billion, and the compEnsation trade repre- sents another $300 million. 11 FOR OFFIC[AL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00854R000540020059-0 FOR OFFICIAL USE ONLY These figures really are not very big, however. Actually, in relation to the size and population of our country, they are quite small. We have decided to use more foreign funds in the Sixth 5-Year Plan (1981-86). If you ask me how much, I cannot really tell you. But I can assure you we will use much more foreign funds. For example, in the field of coproduction, compensation trade, and processing of imported materials, we will approve not hundreds but thousands of projects in the years to come. [Question] According to Minister of Fina.nce Wang Bingqian's report on the budget at the NPC, government revenues this year include 8 billion yuan ($4.7 billion) in foreign loans. So there must be foraign loan receipts other than Il~' credit that are not included in your figures. [Answer] The figures we gave you do not include IMF funds, which are used for deficit purposes. They also do not include loans arranged in the 1978 contracts, for instance the Balgang (Baoshan Steel) Complex, and they do not include loans to th e goverrnnent from the Bank of China. Different government departments use different bases for calculating these fi`ures. We just calculate how much foreign funds have been utilised. For example, we would determine the value of equipment and technology used in a compensation trade - agreement or a joint-venture agreement, and then incorporate this into the figures. The budget is prepared by th e Ministry of Finance,.which has a different account- ing approach. The foreign loan receipts and loan repayments are recorded in the Ministry of Finance Accounts. But I do not have the figures for a breakdown of the 8 billion yuan in foreign loan receiPts in the budget for this year. [QuestionJ Why is it that only a small porti.on of the available credit has been - used so far? [Answer] Due to readjustment, the scale of capital construction has been reduced and curtailed. Because th e loans obtained from foreign governments were mos~ly in the form of purchasers' credits, we have not used most of them. [Words indistinct] have to confess that w e have very little experience 3n using foreign loans--this is also a reason we have not used up the entire amount of foreign - loans available. Another is the inadequacy of our economic legislation, the lack of relevant laws and regulations. Furthermore, poor organisation and manage- ment have delayed our use of these loans. [Question] The World Bank in its report on the Chinese economy of June 1981 basically urged higher levets of capital inflow, but cautioned that unless exports expanded quickly, China could face debt-service problems by 1990. - Could you discuss your strategies to avoid future debt-service problems? _ [Answer~ We have considered this problem very seriously. Our conclusion is that, up to now, th e problem is that (shortage of capital has) bound our hands. Some experts have suggested that deb t servicing and repayment of principal should not be allowed to exceed 20 percent of foreign-currency income. We have ~ FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 FOR OFFICIAL USE ONLY ~ decided that our debt servicing should not go beyond 15 percent. Also, we have coal, we have oil and we have non-ferrous metals. We can use these to pay our foreign debts. There will b e no debt-servicing problems. We have also determined that we will keep our reputation and credit standing. If we borrow from a foreign country, or from an international organisation, we will surely repay in full. - [Question] Zhao's report on the economy and future policy indicated that the Sixth 5-Year Plan is still not in its final form. Can you di~cuss the overall directions the plan will take, and perhaps some of the specific projects where foreign participation could play a major role? [Answer] In general, th e f irst priority will be given to transport and energy resources developmenty because these are the wea.kest links in our national economy. For example, we have large amounts of coal in Shanxi Province, at ieast 10 million tonnes (annual production), but there is a problem in rail - transport, That is why we want to expand railways and coal facilities in conjunction with coal-mining development. We also have abundant hydroelectric resources. Up to now, we have used at most S percent of the exploitable hydr~electric potential. So we want to bring our advantages in these fields to their full potential, by developing more hydroelectric and coal-fired power stations. Also, because of our abundant coal reserves, coal will be a good card to play in foreign trade. The second priority is technological transformation of the machine-building industry. The third priority comprises light industry, the textile industry, agriculture, forestry and animal husbandry. The emphasis is on the technical renovation of existing enterprises, but we will also be building some new factories. We have 370,000 existing (industrial) enterprises that urgently need technical transformation to raise the quality of their products and their competitiveness in infiernational markets. We haue decided that in the Sixth 5-Year Economic Development P1an we develop coal mines in Shanxi Province and in Guizhou Province. Reserves in Shanxi amotm t to 200 billion tonnes. In Guizhou, there are 12 billion tonnes of re- coverable reserves. In Guizhou we will develop not just the coal mines, but in an all-round way. There are suTphate and non-ferrous metals in Guizhou as well as coal. We will improve the railway between Guizhou and the port of Zhanjiang in Guangdong Province, and expand the port facilities in Zhanjiang. To develop Guizhou, the capital that will be needed is very large. Not hundreds ~ of millions of dollars, but billions of dollars. We also plan some major projects in the northeast plain, and we plan to develop one or two x~uclear power stations during this period. What I have discussed here are mainly large-scale proj.ects for which the capital needs wi11 be high and in all of them foreign capital will be used. We have contacted various foreign governments and consortia, which have shown very 13 FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 - HUR OF'N'1('IAL US~: UNLY strong interest in participating in joint-venture development projects (in these areas). We also plan to establish some medium and small projects (in these areas). We also plan tb convene an international conference. [Question] When will this take place and who will participate? [Answer] Next year, roughly in Jun~e. Approximately 200 foreign businessmen will b e invited. the conference, we will offer 100 medium- and small- sized projects. [Question] How wl.ll the new economic laws under consideration at the NPC affect foreign investment? There is some confusion about these laws among foreign businessmen, especially the income-tax regulations for foreign firms. [Answer] The principle is that economir_ cooperation should be based on equality and mutua.l benefit. So, we will create a legal environment for foreign business to make investments and to protect their interests. Some foreign businesses are concerned that our policies may suddenly change, or they fear expropriation. This fear is groundless. We will make more efforts to make more laws in this area to give very firm protection to the fore3:gn business interests. The income-tax law under coasideration at the current NPC session 3s one of these. As far as I know, the tax levels set forth in this law are not high, relative to developed countries and relative to some develop3ng countries. In order to _ provide more protection for the legit3mate interests of foreign businesses, the Chinese Government is negotiating b ilateral agreements for mutual investment insurance and pzotection. We have concluded such an agreemer~t with the United States, and an agree:nent will be concluded very soon with Swi.rzerland.' We are discussing and negotiating similar agreements with France, Sweden, Canada and West Germany. There have been serious shortcomi.ngs and wealmesses in our utilisation of forei~n funds. In many cases, both parties have noC clearly understood our position and policies. Maybe we have not publicised our policies, laws and regulations very effectively, or very efficier.tly. We have established four special economic zones (SEZ~. Later, we will also grant more autonomy to coastal provinces. Another way to encourage foreign investment is to try to do a good job with the existing joint ventures and coproduction pro~ects. Another measure 3.s to strengthen and expand the popularisation of economic laws and policies. We have decided to publish a booklet of guidelines for investment in China. [Question] When will this be ava3lable? [Answer] As early as the first quarter of 1982. [QuestionJ As a condition of joining the IMF, China has essentially agreed to take steps to abolish the present system of dual exchange rates for 3nternal and external foreign-currency transactions. When will this take place, and what will be the effects on domestic prices and prices of export articles? - 14 FOR OFFICIAL USE UNLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 ' FOR OFFICIAL USE ONLY ~Ai?:;werJ 1: assurc you, there is only one exchange rate. [Question] I'm referring to the internal settlement rate. As I understood it, this would constitute a dual exchange-rate system as far as the IMF is concerned. . [AnswerJ That is not an exchange rate. The internal settlement rate is used only to subsidise exports, and it cannot be called an ~~xchange rate. It is a means of subsidising our export industries--many countries adopt such means to encourage exports, and we still use this means. Whether or not tliis means will still be used in the future is a matter which will be considered. [QuestionJ As a condition of IMF membership, China will also eventually have to make public the method used to determine the official exchange rate, which we understand to be a weighted basket of other currencies. Will this happen soon? And have there been any recent changes in the composition or wei~hting of the basket? Will you move towards making the renminbi a freely-traded curr.ency? [Answer] For the present we cannot g3ve you a good answer to this question. _ The calculation method used to the exchange rate is very complicated. As for making the renminbi a freely-traded currency, this can only happen when materials (that we produce) are very abundant, otherwise the results could be catastrophic to other countries. [Question] China has recently puxsued a policy of decentralising economic decision-making to the provincial, municipal and enterprise levels. But _ excessive investment at the local levels was a major factor in the large budget deficits recorded in 1979 and 1980. Th3.s has induced a countervailing trend to reassert central control over local investment. Cou1d you discuss the issue of local autonomy versus centralised control over investment decisions? - [Answer] I think this is really a problem. You know, some Chinese provinces have populations reaching 100 million--so it is quite reasonable to grant more autonomy to the provincial authorities. The direction of reform and restructuring is to enlarge the power of decision-making of various entities. We are now considering the problem of centralised management and control over foreign = trade affairs. We will increasingly practise our control via the price and market - mechanisms.... I have to admit, we are quit~e inexperienced in this matter. How can we manage to grant greater autonomy to local levels but not (let the situation) run into disorder and chaos? [Question] How do you evaluate the experience of the SEZ so far, and will you _ establish new S~Z in the coastal provinces, for ~xample at Tianjin, or el.sewhere? [Answer] The four SEZ have only recently been established, so it is too early for us to be able to cite any remarkable results, but I think the progress has i~een fine. The SEZ have made good contrib utions to market prosperity in local areas, and have also contributed to th e utilisation of foreign funds. 75 FOR OFFiCIAL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0 APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00854R004500020059-0 - FOR OFFICIAL USE ONLY [Question] But SEZ cannot be established anywhP~a. They can be established only in certain geographical and economic conditions. Our SEZ are presently run on an experimental basis, and for the time being, we do not want to - est~blish any more. We must want Co wait to see the results. COPYRIGHT: FAR EASTERN ECONOMIC REVIEW 1981 CSO: 4020/77 END 16 ~ FOR OFF[C[AL USE ONLY APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000500020059-0