DATE=4/1/99
TYPE=BACKGROUND REPORT
NUMBER=5-43001
TITLE=CHINA REFORMS
BYLINE=MIKE O'SULLIVAN
DATELINE=LOS ANGELES
CONTENT=
VOICED AT:
INTRO: CHINA IS ADDRESSING THE CHALLENGE OF ECONOMIC REFORM
WHILE TRYING TO MEET THE NEEDS OF DISPLACED WORKERS. SPECIALISTS
AT A RECENT CONFERENCE ON ASIAN BUSINESS PROSPECTS SAY CHINA'S
LONG-TERM OUTLOOK IS GOOD. BUT LOS ANGELES CORRESPONDENT MIKE
O'SULLIVAN REPORTS THE EXPERTS FORESEE SHORT-TERM DIFFICULTIES.
TEXT: MOST OF CHINA'S 58-THOUSAND STATE-OWNED ENTERPRISES ARE
NOTORIOUSLY INEFFICIENT -- COLLECTIVELY THEY LOSE 12-BILLION
DOLLARS A YEAR. THOSE FIGURES FROM A U-S COMMERCE DEPARTMENT
OFFICIAL WERE PART OF THE NEGATIVE SIDE OF THE PICTURE PAINTED
FOR INTERNATIONAL BUSINESS PEOPLE AT THE LOS ANGELES CONFERENCE.
OFFICIAL STATISTICS FOR CHINA SHOW THREE-POINT-ONE PERCENT
UNEMPLOYMENT. UNIVERSITY OF SOUTHERN CALIFORNIA POLITICAL
SCIENTIST STANLEY ROSEN SAYS THE FIGURES ARE MISLEADING.
/// ROSEN ACT ///
IN OFFICIAL STATISTICS, WHICH IS PERHAPS AROUND
THREE-PERCENT UNEMPLOYMENT, IT HAS TO DO WITH CERTAIN
AGE GROUPS. FOR WOMEN IT IS 16 TO 45, AND FOR MEN UP TO
50. BUT ALSO A LOT OF PEOPLE HAVE BEEN LAID OFF BY
THEIR FACTORIES, BUT THEY ARE NOT OFFICIALLY UNEMPLOYED.
SOMETIMES THEY (THE FACTORIES) GIVE THEM A SMALL STIPEND
FOR LIVING EXPENSES. BUT THEY ARE NOT CONSIDERED
UNEMPLOYED.
/// END ACT ///
IN ADDITION, UNEMPLOYMENT FIGURES TRACK URBAN, NOT RURAL,
WORKERS. ONE ANALYST AT THE CONFERENCE SAYS CHINA'S ACTUAL
UNEMPLOYMENT MAY APPROACH 30-PERCENT.
IN 1998, CHINESE PREMIER ZHU RONGJI ANNOUNCED A THREE-YEAR PLAN
TO REFORM STATE-OWNED ENTERPRISES. POLITICAL SCIENTIST ROSEN
SAYS CORRUPTION BY LOCAL OFFICIALS IMPEDED THE PROCESS. THAT
CORRUPTION AND THE THREAT OF RISING UNEMPLOYMENT HAVE SLOWED THE
PACE OF REFORM.
MOREOVER, PROFESSOR ROSEN NOTES THE PENSION AND WELFARE SYSTEMS
ARE LINKED TO THESE ENTERPRISES, OFTEN DRAINING THEIR MEAGER
PROFITS.
/// SECOND ROSEN ACT ///
UNTIL YOU HAVE A SOCIAL SECURITY SYSTEM, YOU ARE GOING
TO HAVE TO TAKE ON THE PAYMENTS OF RETIRED PEOPLE, THEIR
PENSIONS. YOU HAVE GOT TO TAKE ON EDUCATION OF
EMPLOYEES, A WHOLE LOT OF EXPENSES, AND EVEN A VERY
PROFITABLE STATE-OWNED ENTERPRISE WILL SOMETIME STILL
NOT BE ABLE TO MAKE ANY MONEY BECAUSE OF ALL THESE
SOCIAL EXPENSES.
/// END ACT ///
SPEAKERS AT THE CONFERENCE, HOSTED BY U-S-C'S MARSHALL BUSINESS
SCHOOL, NOTED CHINESE BANKS ARE TECHNICALLY INSOLVENT, AND ARE
KEPT AFLOAT ONLY BY PRIVATE SAVINGS ACCOUNTS.
BUT CHINESE OFFICIALS MUST BALANCE THE NEED FOR REFORM WITH THE
NEEDS OF UNEMPLOYED WORKERS. SCATTERED CASES OF UNREST BY
WORKERS AND RURAL PEASANTS ARE WORRYING TO OFFICIALS, BUT
PROFESSOR ROSEN BELIEVES IT WILL NOT LEAD TO WIDER INSTABILITY IN
THE COUNTRY.
HE SAYS THE REFORM PROCESS IS DIFFICULT, BUT NECESSARY.
/// THIRD ROSEN ACT ///
I THINK IN THE SHORT-TERM, THERE ARE A LOT OF
DISLOCATIONS, PARTICULARLY AS CHINA TRIES TO MOVE TO A
MARKET ECONOMY, AND TRIES TO SHUT DOWN INSOLVENT BANKS
OR STATE ENTERPRISES THAT HAVE VERY LOW PRODUCTIVITY.
IT IS GOING TO BE VERY DISLOCATING FOR WORKERS IN CHINA,
AS WELL AS FOR FOREIGN INVESTORS, FOR THAT MATTER. AND
THERE IS GOING TO BE A LOT OF PAIN. BUT THAT IS
ABSOLUTELY ESSENTIAL.
/// END ACT ///
CHINA SPECIALIST STANLEY ROSEN OBSERVES CHINESE STABILITY IS
IMPORTANT FOR EAST ASIA. WITH CHINA'S GROWING ROLE AS PART OF
THE GLOBAL ECONOMY, ITS PROSPERITY IS ALSO IMPORTANT TO OTHER
REGIONS.
/// OPT ///
FOR POTENTIAL FOREIGN INVESTORS, THERE ARE -- ON THE POSITIVE
SIDE -- OPPORTUNITIES IN A NUMBER OF BUSINESS SECTORS. U-S
COMMERCE DEPARTMENT OFFICIAL WILLIAM ZARIT SAYS GROWTH INDUSTRIES
INCLUDE TRANSPORTATION, ENVIRONMENTAL TECHNOLOGY,
TELECOMMUNICATIONS, AND PHARMACEUTICALS. HE NOTES CHINA'S
GROWING MIDDLE CLASS IS ALSO FUELING GROWTH OF THE RETAIL SECTOR,
PARTICULARLY IN FOOD SERVICES. (SIGNED)
NEB/MO'S/RAE
01-Apr-99 3:12 PM EST (2012 UTC)
NNNN
Source: Voice of America
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