China Reform Monitor No. 336, October 16, 2000 American Foreign Policy Council, Washington, DC http://www.afpc.org
INVESTORS BEWARE: CHINA STOCK MARKET LISTS INSOLVENT COMPANIES; BEIJING BACKTRACKING ON PNTR AND WTO AGREEMENTS
Editor: Al Santoli
August 17: The Chinese government's stranglehold on information is hindering attempts at market reform, the Asian Wall Street Journal reports. Burgeoning government debt, loss-plagued state owned enterprises [SOEs] and increasing social unrest have caused the Chinese communists to seek an unlikely savior: the stock market. Chinese economic planners under Zhu Rongji seek to keep stock prices high to help ailing SOEs stay afloat, while relieving weak state banks with government loans. However, in an effort to maintain tight political control, China's leaders are resisting the key role of information in a free-market system. Even the Internet has been targeted with strict laws to prevent the leaking of "state secrets" -- including damaging information on listed companies that Beijing does not want made public. The biggest problem, the Journal observes, is the Communist Party's reluctance to allow the free flow of information about listed companies, some of which should have been de-listed or declared bankrupt long ago.
October 3: Beijing has tightened control of China's Internet industry by limiting foreign investment and imposing stringent surveillance of portal content, the South China Morning Post reports. The new comprehensive government regulations were published in Xinhua news agency. The rules require Chinese Internet content providers [ICPs] to seek government approval for joint ventures or any business cooperation with foreign investors. Analysts say the harshest regulation holds Chinese portals responsible for blocking "illegal content" and "subversive content" from spreading through their Web sites.
The state rules define "subversive" as any content that, "harms the reputation of China, spreads ideas that threaten the reunification of China or the stability of Communist party rule and social order." Licensed ICPs are responsible for blocking and reporting "subversive" content to the police, and are required to keep detailed records of the Internet users who spread "subversive" content.
October 10: The final round of international talks regarding China's bid to join the World Trade Organization have stalled, with China balking on previous promises and resisting demands by the United States and other countries that it undertake major legal reforms and explain in greater detail how it intends to open its market to foreign companies, the Washington Post reports. The disputed legal documents, the Post adds, combines the terms of the bilateral agreements China has reached individually with the US, the European Union and 135 other members of the WTO. Legal reform is especially important because less than 10 percent of China's judges, chosen by the Communist Party, have legal training. In addition, Chinese government ministries own many of the companies that may be involved in disputes with foreign partners and investors.
October 12: The day after President Clinton signed the documents granting Permanent Normal Trade Relations [PNTR] with China, US Trade Representative Charlene Barshevsky made an emergency visit to China to urge Beijing to stick to concessions that the US thought it had won over China's entry into the WTO, the Associated Press reports.
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