Mission Report

Report on the Mission to China and the Hong Kong SAR

The Council of American Ambassadors sponsored a mission to China and the Hong Kong Special Administrative Region (SAR) from September 4-19, 2001. The delegation, which included seven former United States (US) Ambassadors [See Annex 1], visited Beijing, Xi’an, Chengdu, Shanghai and Hong Kong.

The Chinese People’s Institute of Foreign Affairs (CPIFA), a quasi-governmental organization founded in December 1949 at the initiative of the late Chinese Premier Zhou En-lai to promote people-to-people diplomacy, served as the Council’s host and arranged for the delegation to meet with Mainland Chinese government officials and business and civic leaders at the national, provincial, district and village levels. Our interlocutors included: Vice Minister of Foreign Trade and Economic Cooperation, Yongtu Long; Assistant Minister of Foreign Affairs, Wenzhong Zhou; Vice Governor of the Sichuan People’s Government, Li Da Chang; Vice Mayor of Shanghai, Zhou Muyao; Deputy Director of the Wuiongquiao District of Leshan, Liao Chejun; and Executive Vice President of the Shanghai Stock Exchange, Dr. James Liu, among others.

Besides briefings by the US Ambassador to China Clark (“Sandy”) Randt, Consuls General David Bleyle (Chengdu), Henry Levine (Shanghai) and Michael Klosson (Hong Kong) and the Embassy and Consulate country teams, the delegation also met with officials from the Hong Kong government and private sector, including Deputy Secretary for Commerce and Industry, Raymond Young; Deputy Secretary of Constitutional Affairs, Robin Ip; Democratic Party Chairman, Martin Lee; Chairman of the Democratic Alliance for the Betterment of Hong Kong, Yok-sing Tsang; Chairman of the Securities and Futures Commission, Andrew L. T. Sheng; and, Labor Activist and Radio Free Asia host, Han Dongfang, to name a few. The complete list of briefing leaders is found in Annex 2.

The Council’s mission occurred at a key moment for China. The excitement over the International Olympic Committee’s July decision to award the 2008 games to Beijing—an action interpreted by many Chinese as international affirmation of China’s position on the world stage—coupled with the anticipation of President Bush’s visit to China in October and the country’s accession to the World Trade Organization (WTO) in November set an upbeat tone for our delegation’s substantive meetings and briefings on the Mainland and in Hong Kong.

Although we visited each city for a relatively short period of time (approximately three days per locale), members came away from their experience with several lasting impressions. 

First, China places a high priority on enhancing its trade and developing its economy. Its reform and opening policies have enabled the country to press ahead with the transition from a command economy to one that is more capitalist in orientation.

Second, Hong Kong is faring well since its return to Chinese sovereignty under the “One China, Two Systems” formula. It has a transparent and open economy and enjoys a high level of autonomy from the Chinese government.

Third, the Sino-American relationship has moved beyond the difficult period stemming from the EP-3 reconnaissance plane incident in April. The officials with whom the delegation met reiterated that China wishes to be a friend of the US and that our two countries have many common interests.

However, challenges remain. Taiwan is a sensitive subject especially at the Ministry of Foreign Affairs (MFA) in Beijing. China seeks a “peaceful reunification” with Taiwan using the “One China, Two Systems” formula. It views US weapons sales to Taiwan as “a violation” of the US commitment made in the three Joint Communiqués, the framework for US-China relations. 

Overall, officials acknowledge that both countries need to work together to iron out differences, eliminate misperceptions and enhance communication and exchange among their citizens. China and the US must build a greater awareness and understanding of their cultures in both countries. In this regard, we hope the pages that follow can help to shed light on the important activities and dramatic changes that are underway in this nation of 1.3 billion people.

Examples of China’s transformation, launched 22 years ago through the implementation of reform and opening policies, are found in various sectors, including political, economic, agricultural and environmental.

The National Political Scene

On the national political scene, the Chinese government initiated the process of moving away from a guanxi society, in which advancement is based on personal relationships, to one based on the rule of law. It also reduced the role of ideology in the pursuit of economic objectives; the Council delegation heard on more than one occasion that Marxism-Leninism is not as important as developing the country.

Third, the Chinese Communist Party marked its 80th anniversary on July 1 by announcing that for the first time it would accept private businessmen as members—a policy reversal acknowledging the important role of entrepreneurs in determining the country’s future and signaling the Party’s recognition that it needs to remain relevant at home and in the dynamic global environment.

In the face of self-examination and a political transition due next year (as the third generation of leaders yields to the fourth), the Party’s insistence on stability remains paramount. It has little tolerance for any organized social or political group that the Party feels it cannot control. Thus, to keep its own position secure, the Party represses organizations such as the exercise/meditation group, Falun Gong, and the unofficial Christian churches. It also arrests and jails individuals, including a number of US citizens of Chinese ethnic background, that the Party perceives as a threat.

The case of Mr. Han Dongfang, with whom the Council delegation met in Hong Kong, is illustrative. A railroad worker from Beijing, Mr. Han was elected the leader of the Beijing Autonomous Workers Organization and spoke out for workers’ rights during the 1989 Tiananmen Square incident. As a result of his actions, the Chinese government sought his arrest. Mr. Han, who turned himself in to the authorities, was held for two years without trial; he was never charged with any crime. Forced to share a jail cell with 20 people all of whom had tuberculosis, Mr. Han soon contracted the disease. The American Federation of Labor/Congress of Industrial Organizations (AFL/CIO) learned of Mr. Han’s case and arranged for him to seek medical treatment in the US. Mr. Han recovered from the illness. Although he is now barred from entry to the Chinese Mainland, he makes his home in Hong Kong where he hosts—apparently without interference from Mainland or other authorities—a Radio Free Asia program that promotes workers’ rights.

The Economic Arena

Changes in the economic arena also are evident. The Council delegation was struck by the number of new hotels, domestic and foreign businesses (Starbucks has 37 outlets in Beijing alone), modern skyscrapers and other infrastructure improve-ments that now exist, including a new road linking the Beijing airport and downtown, Shanghai’s elevated highway and Hong Kong’s new international airport built on the largest landfill area in the world. Even Council delegates who had visited China within the previous five to seven years were amazed at the visible changes that had occurred within a relatively short period of time.

A closer look at Shanghai’s development is instructive. The city’s Vice Mayor, Zhou Muyao, reported that Shanghai—once a sizeable industrial base—has transformed itself into the largest financial, trade and shipping center in China. In the 1980s, Shanghai closed many of its industrial factories for environmental reasons—an action that resulted in layoffs of 1.2 million workers. However, the city government provided retraining and job placement programs to help displaced workers find new jobs.

Embracing Deng Xiaoping’s 1992 call for “bolder reform and faster growth,” Shanghai, a metropolis of over 16 million people, continued to pursue its economic transformation and created a “momentum that is still being played out,” according to the US Department of State. The average economic growth rate of Shanghai (local gross domestic product, GDP) during the 1990s was 12 percent. In 1998, US$ 63.64 billion worth of goods transited Shanghai, China’s largest port, an eight percent increase over 1997, per the US Department of State.

In the area of finance, the Shanghai Stock Exchange (SSE) opened on December 19, 1990, and developed rapidly. According to Dr. James Liu, Executive Vice President, the SSE today has 30 million investors and almost 700 listed companies. In 2000, total market capitalization hit 2.69 trillion yuan or 30.12 percent of China’s gross national product (GNP). Talks now are underway for the SSE to merge with Shenzhen, China’s other exchange, thereby creating Asia’s second largest stock market (in terms of value). 

Another key element in Shanghai’s economic transformation is infrastructure development. Over the last decade and particularly in the last three to four years, the Shanghai municipal government has spent significant funds on infrastructure construction. Most of Shanghai’s sky-scrapers were built within the last decade. During the peak period, the Vice Mayor indicated that there were 10,000 construction sites in Shanghai. The Chart on the right provides further detail.

The pace of development in Shanghai and elsewhere throughout China most likely will be maintained and possibly increase as China accedes to the WTO before the end of this year.

World Trade Organization

WTO accession is a key priority for China. The country’s US$ 475 billion annual global trade means that it cannot ignore the importance of trade in furthering development.

To prepare for its WTO entry, China already reduced its import tariffs from 43 to 12 percent, with a further reduction to an average of 9.5 percent due to take place as part of WTO accession. It also launched several initiatives designed to help Chinese businesses meet the challenges of enhanced global competition and ease the disruptions—particularly unemployment as state-owned enterprises (SOEs) are forced to reduce workforces or shut down completely—that are anticipated. These include: the creation of a government-sponsored program to train managers and other professionals and retrain workers; the opening of an inquiry point within the Chinese government on WTO and trade issues; and the establishment of WTO Affairs Consultation Centers in China (including the one in Shanghai toured by the delegation) to provide customs, international law and other information to businesses and citizens. These efforts help to increase transparency and openness, which are necessary elements for success in the global economy.

Great West Development Policy

As China seeks to enhance its trade with the outside world via WTO, it also is promoting the development of its own central and western regions (namely the provinces of Sichuan, Gansu, Guizhou, Yunnan, Qinghai and Shaanxi, the municipality of Chongqing, the Ningxia autonomous zone and the autonomous regions of Xinjiang and Tibet), which traditionally have lagged behind the country’s eastern coastline where much of China’s economic progress is concentrated. Under this policy, the Chinese government provides incentives to foreign and domestic manufacturers and businesses that may be losing competitive advantage due to higher labor costs in the east to relocate operations in the central and western regions of the Mainland.

The Council delegation visited two cities in Sichuan province (Chengdu, the capital, and Leshan) to learn more. The Vice Governor of the province, Mr. Li Da Chang, reported that the US is the number one investor in Sichuan with a total investment of 900 million yuan (approximately US$ 112 million). Also, Motorola recently announced plans to open a research and development center in Chengdu.

Despite these positives, overall the “Great West” development policy has not achieved the level of success that the government had hoped. The Washington Post reported in June that a high-profile business delegation comprised of more than 200 of Hong Kong’s wealthiest men and women, visited China’s western regions to identify investment opportunities. After their ten-day visit, the group announced plans “for barely two dozen investment initiatives. All told, the value of the projects adds up to no more than US$ 30 million.”

Businesses and individuals may be cautious vis-à-vis the Great West because the region does not have a lot of existing companies in which one might invest. Also, if one were to locate a manufacturing facility in the Great West, he/she would find it difficult and costly to bring the product to market because the distances are great.

In addition, most of the people who live in these areas are rural. In Sichuan province, for example, 50-60 million people are peasants/subsistence farmers. They probably would require training to acquire the skills necessary for manufacturing jobs thereby increasing the costs to the potential investor.

These drawbacks notwithstanding, it appears that the Chinese government is committed to the Great West policy, at least in the short-term.

Agriculture

Besides the political and economic arenas, agriculture also has undergone reform. In the 1980s, the Chinese government dismantled collectived farming and introduced the “household responsibility system” that allows greater decision-making authority in agriculture. It also encouraged nonagricultural activities, such as village enterprises in rural areas. These reforms led to average annual rates of growth of ten percent in agricultural and industrial output in the 1980s.

Our Chinese host, CPIFA, arranged for the Council delegation to meet Mr. Wong, who lives in the Wuiongquiao district of Leshan. Like every Chinese citizen, he received one mu of land (equivalent of 1/15 of an acre) at birth. (Note: When a woman marries, her family loses her piece of land). Taking advantage of government reforms and incentives, Mr. Wong decided to abandon farming, rent his land to neighbors and open a nursery/ gardening business. Mr. Wong’s business is successful, and he is now in the process of developing a weekend resort (including a restaurant owned and operated by him and his wife) for local Chinese people. A road that is under construction and due to be completed next year will allow easier access to his site.

Challenges

Despite China’s impressive development during the past two decades, obstacles to continued progress exist. First, unemployment and income inequality are growing problems. The US Department of State reported that the average per capita disposable income of urban residents in 1999 was US$ 708 while rural per capita income was US$ 266. Rural incomes “were overstated” because the value of farm produce consumed at home was included; “actual cash held by farmers was much lower.” The World Bank estimates that as many as 200 million Chinese live below the poverty line.

Further, China’s chronic and growing labor surplus is not reflected in the official unemployment rate of 3.3 percent. The official data “do not account for approximately 23 million people laid off ‘temporarily’ in the state sector or the 80-120 million surplus rural workers who make up a ‘floating population’ that migrates between agriculture and construction jobs and that are at other times unemployed. A more accurate estimate of urban unemployment, cited by private researchers, would be ten to fifteen percent,” reported the US Department of State.

Reforming the state enterprise sector and modernizing the banking system remain major hurdles. Approximately 30-50 percent of Chinese bank loans are non-performing. The Chinese currency is not fully convertible. More than half of China’s large SOEs are inefficient and reporting losses. Pressure is on the government to reform/privatize the SOEs, particularly as China accedes to the WTO, and this sector faces increased competition and more workers lose their jobs.

To exacerbate the situation, the SOEs, in the past, have been responsible for their workers’ health care, education, pensions, etc. As these enterprises are closed and/or privatized, they no longer provide these benefits. Consequently, China finds that it must develop and construct an alternate social safety net for its people. This is a slow process. In the interim, the Council delegation was told that families, who cannot afford health care, for example, place advertisements in local newspapers asking neighbors for charity to help cover medical costs.

A third problem relates to taxation. Although the Chinese government initiated work on a unified tax system in 1998, implementation due to China’s weak trade performance during most of 1999, is delayed. Moreover, the Chinese government has not been effective in collecting tax revenues and enforcing compliance. In the absence of a rational and enforceable tax regime, corruption can exist. Kickbacks to government officials to secure a city contract or extra fees levied on businesses occur.

Environment

Increased pollution, a by-product of China’s rapid industrial development, is also a concern. The US Department of State cites a 1998 World Health Organization report on air quality in 272 cities worldwide that concluded that seven of the ten most polluted cities were in China. Further, almost all of China’s rivers are considered polluted to some degree, and half of the population lacks access to clean water. Ninety percent of urban water bodies are severely polluted. 

China’s leaders are increasingly paying attention to the country’s environmental problems. During the Tenth Five-Year Plan period (2001-2005), China aims to reduce total emissions by ten percent. Beijing, in particular, has invested heavily in pollution control as part of its successful campaign to host the 2008 Olympic games. Its streets—like those in the other cities visited by the Council delegation—are exceptionally clean. Shanghai’s Municipal Foreign Affairs Office indicated that in the year 2000, the city met its annual target to eliminate the black water and foul smell of Suzhou Creek and reported that the water quality of the Huangpu River generally improved.

In Chengdu, an area that covers 12,400 square kilometers and has a population over ten million (of which 3.4 million are city dwellers), the Council delegation saw first hand the efforts of the Chengdu municipality to address water pollution. Our group visited the Fu and Nan Rivers Project, a successful comprehensive urban environmental program to clean up these rivers that flow through the urban district of Chengdu. The Project’s comprehensive approach may provide useful lessons for other cities and therefore merits a further word here.

Fu and Nan Rivers Project

Part of the Dujiangyan Irrigation System—built by Li Bing, the Governor of the Shu Kingdom, in 256 BC to prevent water disasters—and the Yangtze River System, the Fu and Nan Rivers provide flood control, transportation and irrigation and supply fire fighting and drinking water to Chengdu. In the late 1970s, rapid industrialization, accelerated urbanization, population explosion and a sharp increase in water usage and environmental deterioration caused the Fu River to dry out each season while the Nan River dried up completely. Floods caused by silt sedimentation resulted in heavy economic losses.

In addition, over 650 wastewater outlets along both sides of the rivers discharged a large amount of wastewater into the rivers and turned the Fu and Nan Rivers into “dirty and smelly ditches,” according to the Project brochure. About 30,000 families representing 100,000 individuals had settled along the banks in damp, low-lying shelters with few sanitation facilities. Since most of these shanty residents were very poor, the area became a breeding ground for crime and disease. As a result, the rivers “not only restrained the social and economic development in Chengdu and the western areas of Sichuan but also heavily polluted the basins of the Min River and the upper reaches of the Yangtze River,” stated the Chengdu municipal government.

In 1985, the students in Long Jiang Lu Primary School, which is situated on the banks of the Nan River, wrote a letter petitioning the Chengdu municipal government to clean up both rivers. The government responded by developing a multi-faceted plan, initiated in 1993, and establishing public-private sector partnerships to secure funding for the Project. The key components of the plan, as presented in the Project brochure, are as follows:

 

  • Flood Prevention: Efforts were made to increase the flood diversion capacity of the Fu and Nan Rivers by dredging 16 kilometers of the river courses, removing 750,000 cubic meters of silt, erecting 42 kilometers of new embankments, building and/or renovating 18 bridges and constructing 12 docks. As a result, the rivers’ flood diversion capacity doubled, and flooding was eliminated in the urban area.
     
  • Pollution Control: Since the main pollutants of the rivers were non-treated industrial wastewater and household sewage, work focused on reducing and treating pollutants. With respect to pollution control, 488 factories were closed, 478 instituted technical improvements to reduce their pollution levels and 40 were relocated to suburban industrial parks. Over 100 public toilets along the rivers were redeveloped. As a result, the amount of industrial and domestic wastewater discharged into the rivers decreased by 85 and 19 percent respectively. In addition, a wastewater treatment plant was built with a daily treating capacity of 300,000 tons.
     
  • Greening Project: Green areas along rivers can help conserve water and purify the city environment. At the risk of losing short-term economic returns from land rental, the Chengdu municipality decided to tear down old buildings on the riverbanks and transform the resulting vacant lots into green spaces. Approximately 25 hectares of green space filled with trees and grass along the rivers formed 13 areas for recreation and relaxation. As a result, property located along the rivers’ periphery rose in value because of the increased green space and improved environment.
     
  • Housing Project: The relocation of 30,000 families representing more than 100,000 individuals was the most important part of the project. After consulting with the families and listening to their needs, the local government allocated land to create 24 well-equipped residential areas where new apartment buildings were constructed to house the relocated families. The resettlement was completed within 18 months without one judicial case.
     
  • Cultural Project: A cultural and scenic corridor—with historic buildings and newly created gardens, squares and public areas that reflect the history and culture of the city—was created along the rivers.

    The Council delegation toured one of these gardens built on the riverbanks. The Living Water Garden, co-designed by Chinese experts and Americans Betsy Damon, an environmental artist, and Margie Ruddick, a landscape gardener, is an inner-city ecological park with an advanced wetlands system that treats polluted river water. As dirty river water passes through the park’s natural cleansing system—consisting of an anaerobic settling pond, flow-form sculptures that break the water into droplets, a pond containing micro-organisms and plants that breakdown and purify the water, and a wetlands system of six deep plant pods and twelve shallow plant beds that makes the water suitable for plants and allows them to absorb and/or transform pollutants into nutrients—its quality improves with each step and eventually becomes clean.
     
  • Road and Underground Pipeline Project: Targeted at the central area of the city where the population is dense, this project addressed public facilities such as roads that had been neglected for years. Water and gas pipelines, electric cables and telecommunications lines were built underground at the same time as the embankment was under construction. A new 36 kilometer inner ring road was constructed to link Huang City, Da City and Shao City, formerly independent sections of Chengdu city.

The above elements contributed to the overall success of the Project. Instead of a single-targeted plan, the Fu and Nan Rivers Project was comprehensive in its approach; it not only addressed water pollution but also improved the city’s urban infrastructure through road construction, riverside environmental enhancements and urban renovation. The Project has won national and international recognition, including the 1998 Habitat Scroll of Honor Award, the Best Practices Award and the Local Initiative Award.

Chengdu Giant Panda Breeding Research Base

Another famous Chinese environmental effort—this one dealing with endangered species conservation and rescue—is the Chengdu Giant Panda Breeding Research Base. Supported by China’s Ministries of Construction and Forestry, the Base was established in 1987 to conduct comprehensive research on the giant panda with respect to reproduction, heredity, disease prevention and treatment.

The Base, located north of Chengdu city, is the largest panda-breeding center in the world. Its record is noteworthy. Over 80 ill and malnourished giant pandas have been rescued and treated by the Base and Chengdu Zoo. Some have returned to the wild. Also, 32 of 56 cubs from 36 litters born through captive breeding have survived to at least six months.

The Base has close collaborative research relationships with other institutions throughout China and in other countries, including the United States. In fact, during the Council’s visit to the Base, several delegates spoke with a researcher from the zoo in Atlanta, Georgia. She was observing a female giant panda that was expected to give birth later that day.

The United States-China Relationship

Giant panda research and other environmental issues represent just one area in which the United States and China cooperate. The maintenance of peace and stability in the Pacific region, anti-narcotics trafficking, counterterrorism* and other transnational concerns, and economics and trade are additional examples.

With respect to economics and trade, the US is one of China’s major trading partners. According to US statistics, China had a trade surplus with the US of US$ 68.7 billion in 1999. (Our interlocutors at the Ministry of Foreign Trade and Economic Cooperation insisted that the figure was smaller).

Moreover, American firms are major investors in China, and the US Department of State reports that in 1998 actual US investment in China rose to almost four US billion dollars. However, this amount is still less than US investments in the United Kingdom (US$ 4.6 billion) or Mexico (US$ 4.7 billion) and is only slightly more than what US firms invested in South Korea (US$ 3.1 billion).

Hong Kong

The United States also has substantial economic ties with Hong Kong (HK), a highly-developed area of seven million people. There are approximately 1,100 US firms, including more than 400 regional operations, and 50,000 US citizens in Hong Kong. Mr. Raymond Young, Deputy Secretary of Hong Kong’s Commerce and Industry Bureau, stated that the US is Hong Kong’s number two trading partner and that Hong Kong is the second largest destination of US investment in Asia (after Japan).

US and other firms are attracted to Hong Kong because of its openness, transparency and rule of law. These elements, part of the British legacy, continue to thrive since the reversion to Chinese sovereignty (the “Handover”) on July 1, 1997, under the “One China, Two Systems” formula. As a validation of its open economy—US$ 400 billion in merchandise trade in the year 2000—Hong Kong’s representative, Mr. Stuart Harbinson, was elected as the Chairman of the WTO General Council, the highest decision making body of the organization.

Consequently, Hong Kong has a key interest in the success of the WTO and views Mainland China’s membership as beneficial—not detrimental—to the island’s economic position. The reasons are threefold: (1) The vast expansion in the volume of trade between China and the rest of the world as a result of WTO means that everyone, including Hong Kong, will benefit; (2) As a WTO member, China’s very large domestic market will become more open, to Hong Kong traders and others; and, (3) As China integrates into the world trading system, its trade will increase greatly thereby enhancing Hong Kong’s role as “middleman” through re-exports from the Mainland.

Although Hong Kong plays this middleman role, it still enjoys a high degree of autonomy from the Mainland, as delineated in the Basic Law, Hong Kong’s mini-constitution. Hong Kong maintains a separate border with its own customs system and is free to enter into agreements with other nations regarding trade, sports and cultural activities. Hong Kong’s internal security and foreign affairs, however, are the responsibility of the Mainland Chinese government.

Per Hong Kong’s mini-constitution, a Chief Executive leads the Hong Kong SAR government. He is responsible for implementing the Basic Law, signing bills passed by the Legislative Council (Legco), a 60 member body, and promulgating laws. Although he does not have veto power, the Chief Executive may return a bill to the Legco without signing it. The Executive Council (ExCo) assists the Chief Executive in policy making. 

Mr. Tung Chee Hwa is the Chief Executive of Hong Kong SAR. He assumed office on July 1, 1997, following his selection by a 400-member committee appointed by Beijing. As the first Chief Executive since the Handover, Mr. Tung, whose term expires next year, is viewed as a transition figure. A former businessman, Mr. Tung feels more at home in the boardroom rather than the political arena. While some point to Mr. Tung’s effort to stand up to the Mainland government by declining to outlaw in Hong Kong the Falun Gong sect, others feel that he could come out even more strongly on a variety of issues vis-à-vis Beijing. 

Elections for the Chief Executive are due in March 2002 when the Election Committee will expand to 800 members. Mr. Martin Lee, Chairman of the Hong Kong Democratic Party (DP), indicated that for the foreseeable future he did not anticipate that any candidates would present themselves to run against Mr. Tung. To nominate a candidate, 100 out of the 800 Election Committee members are needed—a challenging task.

Both Mr. Lee and Mr. Yok-sing Tsang, Chairman of the Democratic Alliance for the Betterment of Hong Kong (DAB), the second largest HK party after the DP, raised some concerns about the current Hong Kong political system. For example, at present, career civil servants hold all government offices; there are no political appointees. This situation can promote bureaucracy and stymie action. Also, the Legco has severe constitutional limitations; it does not have a role to play vis-à-vis the executive branch.

In spite of these questions, overall, it is believed that Hong Kong is doing well since the Handover. The “One China, Two Systems” formula appears to be working. The rights and freedoms Hong Kong citizens enjoyed under the British are still in existence. The Hong Kong dollar is maintained as the unit of currency. While some may worry about enhanced competition from Mainland Chinese cities, such as Shanghai, Hong Kong’s transparency, its superior legal and accountancy services coupled with its potential market of 40 million (when combined with the nearby Pearl River Delta) ensures that the region remains an attractive business center and key Asian economic hub.

Taiwan

Chinese officials point to the good record of the “One China, Two Systems” formula in Hong Kong (and Macau, the former Portuguese colony which reverted to Chinese rule on December 20, 1999) when they speak of their aspirations for Taiwan.

However, the Taiwan question is more complex than Hong Kong. It is particularly sensitive at the MFA in Beijing where the delegation repeatedly heard that the Taiwan issue strikes at the heart of China’s “national pride” and “sovereignty.” China seeks a “peaceful reunification” with Taiwan under the “One China, Two Systems” formula, but “cannot rule out” the use of force to prevent the island from declaring independence.

Officials at the MFA also bluntly stated that US weapons sales are a “violation of US commitments” made in the three Joint Communiqués and serve to “strengthen the separatist/independence elements” on the island. The US, for its part, contends that the sale of appropriate defensive military equipment to Taiwan is in accord with the Taiwan Relations Act, which provides for such sales.

Interestingly, once outside Beijing, the stance on Taiwan is less dogmatic. Cross-straits scholars in Shanghai offered several fresh perspectives. For example, they explained that in 1979 when the “One China, Two Systems” formula was introduced, zero percent of the Taiwanese people supported reversion to Chinese sovereignty. Citing recent polls within Taiwan indicating that five percent of the people want to rejoin the Mainland, five percent want independence/separation while 85 percent of the Taiwanese people are neutral, the scholars felt that more dialogue with the Taiwanese about the future coupled with a longer time horizon—perhaps ten years—possibly could help to bring about a peaceful resolution.

The scholars also pointed out that if Taiwan were to accept the “One China, Two Systems” formula, the island would be able to maintain not only its own currency—similar to the Hong Kong model—but also its military forces, a detail omitted at the MFA briefing in Beijing. In light of this declaration, the Council delegation was interested to know why the US could not continue to sell defensive arms to Taiwan’s military—even if Taiwan reverted to Chinese rule—when it presumably could buy from anyone. This apparent conundrum elicited a chuckle from our interlocutors but not a definitive answer.

It is clear that both the US and China need to work together to seek a solution on Taiwan and other outstanding issues on their agenda. Total engagement on both sides is needed. More dialogue and exchanges are required. Students in the American Studies program of Fudan University in Shanghai echoed this assertion noting that the Chinese and American peoples do not understand each other or their cultures. Aggravating the circumstances, according to the Fudan group, is the apparently high number—in their view—of Chinese students who are denied visas to study in the US.

In addition, the US Consulates General that the Council delegation visited on the Mainland reported that funding for the US Foreign Commercial Service in China and for the international visitors and other cultural and educational exchange programs is declining. These activities can help to promote closer ties, enhance understanding and showcase values.

In fact, members of the Council delegation remarked that the opportunity to see first-hand the changes and initiatives underway in China was extremely useful. They appreciated the first-rate briefings and outstanding support provided by the American Embassy in Beijing and the Consulates in Chengdu, Shanghai and Hong Kong and felt that the mission provided them with a clearer sense of the current situation, the key issues and the future direction.

Thus, in light of our investigations, the Council delegation wishes to offer several recommendations:
 

 

  1. Actively promote increased US investment in and stronger economic ties with China. China’s WTO membership and vast market offer tremendous opportunities and US businesses would do well to follow through on these important prospects. 
     
  2. Advocate a comprehensive approach in US foreign policy towards China that moves beyond a focus on a single issue (human rights, religious freedom, etc.) to total engagement with the Chinese on many fronts.
     
  3. Continue to advance a constructive relationship between the US and China and to encourage the two nations to work together to seek peace and stability in the Asia/Pacific region and in the world at large.
     
  4. Support increased funding for the US Foreign Commercial Service in China and for cultural, educational and exchange programs to strengthen ties and enhance understanding and contact between the Chinese and American peoples.
     

    Annex 1

    Delegation List

    Hon. Julia Chang Bloch
    Ambassador to Nepal, 1989-1993
    Assistant Administrator, USAID Food for Peace Program, 1981-1987

    Hon. Keith L. Brown and Carol Brown
    President, Council of American Ambassadors
    Ambassador to Denmark, 1989-1992
    Ambassador to Lesotho, 1982-1983

    Mrs. Alan Green (Joan)
    Wife of the late Alan Green, Jr., Ambassador to Romania, 1989-1992

    Hon. Glen A. Holden and Gloria A. Holden
    Ambassador to Jamaica, 1989-1993

    Hon. Lester B. Korn and Carolbeth Korn
    Ambassador to the UN Economic and Social Council, 1987-1988

    Hon. Arthur Schechter
    Ambassador to the Bahamas, 1998-2001

    Hon. Timothy L. Towell
    Ambassador to Paraguay, 1988-1991

    Hon. Marvin Warner and Robyn F. Perlman
    Ambassador to Switzerland, 1977-1979

    * * *

    Mrs. Emma Magalen (Maggie) Bryant
    Chairman, The National Fish and Wildlife Foundation

    Miss Carolyn M. Gretzinger
    Executive Director, Council of American Ambassadors

    Annex 2
    List of Briefing Leaders


    BEIJING

    Government of the People’s Republic of China

    H.E. Yongtu Long, Vice Minister, Ministry of Foreign Trade and Economic Cooperation.
    H.E. Wenzhong Zhou, Assistant Minister in charge of American, Oceanian and Latin American Affairs, Ministry of Foreign Affairs.

    Others

    Ambassador Zhaorong Mei, President, Chinese People’s Institute of Foreign Affairs, CPIFA.
    Ambassador Pengxiang Zhang, Director, CPIFA.
    Ambassador Pingping Han, Director, Department of North America and Oceania, CPIFA.
    Mr. Leon Liu, Department of North America and Oceania, CPIFA.
    Mr. Vincent Mo, Deputy General Manager, Coca-Cola (China) Beverages Ltd., Beijing.


    CHENGDU

    Government

    H.E. Li Da Chang, Vice-Governor, Sichuan Provincial People’s Government.
    Mr. Liao Hong Wei, Deputy Director Foreign and Overseas Chinese Affairs Office, Leshan Municipal People’s Government.
    Mr. Liao Chejun, Deputy Director, Wuiongquiao District, Leshan, Sichuan Province.

    Others

    Mr. Wong, Businessman, Wuiongquiao District, Leshan, Sichuan Province.
    Mr. Wang Zhidong, Deputy General Mgr., Leshan SanJiu-LongMarch Pharmaceuticals Co., Ltd.
    Mr. Li Guanghan, Manager, Chengdu Giant Panda Breeding Research Foundation.
    Mr. Tian Jun, Spokesperson, The Managing Office of Chengdu Fu-Nan Rivers Comprehensive Revitalization Project.


    SHANGHAI

    Government

    H.E. Zhou Muyao, Vice-Mayor of Shanghai.

    Others

    James Liu, Ph.D., Executive Vice President, Shanghai Stock Exchange.
    Yao Weiqun, Ph.D., Chief Secretary, Board of Trustees, Shanghai WTO Affairs Consultation Center.
    President of Fudan University.
    Professors and Students in the American Studies Program at Fudan University.
    Jiang Xiuan, Ph.D., Senior Fellow, Shanghai Institute for International Studies.
    Mr. Zhang Nianchi, Director, Shanghai Institute for East Asian Studies.
    Mr. Yang Jian, Center for Taiwan Studies, Shanghai Academy of Social Sciences.


    HONG KONG

    Government

    Mr. Raymond Young, J.P., Deputy Secretary for Commerce and Industry.
    Mr. Robin Ip, Deputy Secretary for Constitutional Affairs.

    Others

    The Honorable Martin Lee, Chairman, Democratic Party.
    The Honorable James Kun-sun To, Member, Legislative Council.
    Mr. Han Dongfang, China Labour Bulletin, Radio Free Asia.
    Mr. Andrew L. T. Sheng, Chairman, Securities and Futures Commission.
    Eden Woon, Ph.D., Director, Hong Kong General Chamber of Commerce.
    Mr. Yok-sing Tsang, Chairman, Democratic Alliance for the Betterment of Hong Kong.


    US GOVERNMENT

    The Honorable Clark T. Randt, US Ambassador to China.
    The Honorable David Bleyle, Consul General - Chengdu.
    The Honorable Henry A. Levine, Consul General - Shanghai.
    The Honorable Michael Klosson, Consul General - Hong Kong.

Mission Date(s)

Sep 4, 2001 - Sep 19, 2001

Delegation Members

  • Julia Chang Bloch
    Ambassador to Nepal, 1989 - 1993
  • Carol Brown
  • Emma Magalen O. Bryant
  • Joan Green
  • Carolyn M. Gretzinger
    Executive Director, Council of American Ambassadors
  • Gloria Holden
  • Glen A. Holden
    Ambassador to Jamaica, 1989 - 1993
  • Carolbeth Korn
  • Lester B. Korn
    Ambassador to United Nations (UN), 1987 - 1988
    Ambassador to United Nations Educational, Scientific and Cultural Organization (UNESCO) , 1987 - 1988
    Ambassador to United Nations Educational, Scientific and Cultural Organization (UNESCO) , 1983 - 1984
  • Robyn F. Perlman
  • Arthur L. Schechter
    Ambassador to Bahamas, The, 1998 - 2001
  • Timothy L. Towell
    Ambassador to Paraguay, 1988 - 1991
  • Marvin Warner
    United States Ambassador to Switzerland, 1977-1979