(Excerpt) By Qinlian He, economist, via Epoch Times Staff, Nov 1, 2008 -

Chinese economist Ms. He Qinglian speaks about the “Global Financial Crisis and China’s Economic and Political Development.” (Zhong Tao/The Epoch Times)
( First part )
NEW YORK—A Chinese economist based in New York says that China is already amidst a deep economic crisis ahead of the global financial crisis.
Qinglian He was spoke at Saturday’s Flushing Forum, launched by local Chinese in Flushing, New York City to deal with issues of significance to the Chinese community.
This was the forum’s eighth seminar, “The global financial crisis and China’s political and economic development.”
Following is her second part of speech:
Develop Real Estate By Plundering Common Civilians
From the late 1990s, China’s wealth was mostly from four major industries, real estate, stock market, financial and resource-based enterprises.
To get land for real estate development, the Chinese Communist regime has forced a lot of urban residents to move out of their homes and farmers to give up their farmland.
Since the mid-1990s, 3.7 million families in urban areas have lost their homes and 80 million farmers have lost their farmland. With little or no compensated from provincial governments, these people have become victims of the real estate development and are the main body to rebel against the system. In turn, the government made a huge profit by selling the land to the real estate companies at a very high price. On average, around 60 percent of the local government revenue comes from the trade of the land.
Support the Central Government By Sacrificing the Environment
Another major revenue source comes from the resource-based enterprises.
More than half of China’s top 100 companies are involved in the oil and petrochemical industries which are well known for its contribution to environmental degradation. Chinese companies often choose to be located near rivers, to easily discharge pollutants in the surrounding lakes and seas.
China’s waterways are now at a breaking point.
The local residents are the most affected by the pollution, but because these companies are the major taxpayers and the financial pillars of the Chinese Communist regime, little is done to rectify the pollution. About 50 percent of the CCP’s revenue comes from 60 of these large companies, at the expense of the environment and the people.
Stock Market Bubble
The third source is the stock market. Qinglian He said the whole world should be aware that China’s stock market bubble is huge.
According to a joint survey by CCTV (the largest state-run TV station) and several newspapers, 97 percent of investors who entered the market after January 1 last year have lost more than half of their investment. Less than 1 percent of investors have managed to make a profit. The stock market is proving to be a big black hole that sucks money out of investors.
Can a Despotic Regime Save the Day?
The last part is about financial situation. This part is rather complicated, and I would only talk about it briefly. The bad debts incurred by Chinese banks are enormous, amounting to $900 billion according to Ernst & Young.
Beijing would not admit it, but they have failed to list these bad-debt loaded banks with Wall Street after years’ of efforts because they would not pass the rigid regulations of the U.S. stock market.
The banks were finally listed in the A-stock market in Hong Kong and mainland China. The total stock value of the eight major Chinese banks accounts for over 50 percent of China’s total stock market value. Before the listing, the rate of non-performing loans was 19 percent according to China’s official data. Within one year after the listing, the rate dropped to around 8 percent. The banks did not improve its management, but the rate was significantly lowered simply by entering the stock market.
During the recent financial crisis, critics against government bailout published a sarcastic article, saying that given the CCP’s rich experience in turning bad-debts to prize assets, and regarding the U.S. government’s decision to bailout, it’d be easier to sell the U.S. banks to China and let them manage the banks.
Distorted Economic Model
If a country’s growth relies solely on real estate, stock market, financial and resource-based enterprises, its economy is a distorted one. Sixty percent of China’s wealthiest people are real-estate developers and this composition is drastically deviated from world’s norm.
These four industries are where China’s money is concentrated, they are also where a lot of social conflicts occur, Qinglian He said. China’s industrial and social policies decided its economic growth model, which in turn directed China’s social conflict and resistance model.
Social Instability Is Inevitable
Every year in China there are tens of thousands of large-scale social conflicts. These events, which display public resistance, arise from four main causes; first, farmers who have had their land confiscated; second, urban residents forced out of their homes; third, rural residents protesting local pollution; and forth, other events that became a vent of public indignation due to loss of land, official corruption or unfair treatment.
The recent Weng An event is one example, where the death of a girl caused a massive anti-government protest where government buildings and vehicles were burnt by angry residents. Such incidents occur suddenly, and involve more participants than the government can handle. These types of protests have become more and more frequent in the past two years.
The CCP shifts the causes of its own economic crisis to the U.S., I believe the changes in CCP’s internal economic structure and social structure caused its crises.
So although the CCP managed to dump its responsibilities, if it doesn’t act and solve the root cause of the problems, China will be in much bigger trouble than the crisis in the U.S. Because in the U.S., the financial crisis did not cause social conflicts, while in China a trivial economic issue may cause social riots, and can be solved only by political means. This is typical of a despotic regime like China. (End)
Part 1 2
- The Epochtimes: In Depth Analysis of the Economic Crisis in China (Part 2)
Review: China in 2008– the CCP started to lose its stranglehold (2)
Posted by chinaview on December 29, 2008
The Diplomat, Australia, 24-Dec-2008 -
Government insider turned dissident writer Jennifer Zeng asks whether 2008 will be remembered as the year the CCP started to lose its stranglehold over China
(Cont’d)
Pollution, corruption, food adulteration
The Paralympics had barely drawn to a close when news of the poisoned milk powder broke. If the Sanlu Group had not been partly owned by New Zealand’s Fonterra and launched an investigation, thousands more babies might be dying from the results of melamine poisoning. The authorities had known there was a problem since December 2007, but it was all hushed up because of the Olympics.
Food and water contamination is a massive problem in China. Zhou Qing, award-winning author of What Kind of God – A Survey of the Current Safety of China’s Food, warned years ago that food security could ultimately spark the collapse of the CCP, and there are increasing signs that the people are less accepting of the situation. Certainly the statistics make sobering reading.
Over 40 per cent of drinking water in rural China falls short of government standards, animal feed is almost universally tainted with melamine, excessive pesticides and chemical fertilisers are used to boost yields, and harmful antibiotics are widely administered to control disease in seafood and livestock. Talcum powder is routinely added to flour and rice is chemically whitened. And yet, miraculously, the CCP is still able to ensure access to the best-quality organically grown produce for party officials.
Throughout 2008, the CCP has used the global financial crisis to reinforce the superiority of the country’s social system. In reality, though, China is far from immune. Its stock market has plunged by nearly two-thirds in the 11 months to September and the economy remains sluggish, with large numbers of factories going bankrupt as international demand for Chinese-made consumer goods slides. According to the State Planning and Development Commission, nearly 70,000 small- to medium-sized companies went out of business in the first half of 2008.
It is these factors and their associated social repercussions that most threaten the CCP’s monopoly on political power. As well as the poor and hungry, beneficiaries of Party patronage, who had grown extremely rich in previous years, are known to be unhappy that their worth has been cut by 50 per cent of late.
Meanwhile corruption, rampant throughout the financial markets, has reached epidemic levels among government officials, and people have finally had enough. In August, 28-year-old Yang Jia allegedly broke into the Zhabei Branch of Shanghai’s Bureau of Public Security, where 2700 police officers were working, and stabbed six policemen to death and wounded four more.
In any normal society, this would be horrific news. Yet 90 per cent of bloggers and Internet users in China showed sympathy and support for Yang after rumours spread that he had been badly treated by police in the past. At his second trial in October, in a display of public dissatisfaction with the regime, more than 1000 supporters gathered outside the court to support Yang. One man held a huge banner that read, The knight-errant will endure forever. Many others shouted, ‘Overthrow the fascist government! Overthrow the Chinese Communist Party! Yang Jia is a hero!’ A small group was even bold enough to wear T-shirts displaying Yang Jia’s photo. The protests were to no avail, however, as Yang was executed in November.
It is a measure of the level of anger at social injustice and the bias of the judicial system that so many people, including ‘Bird’s Nest’ Olympic Stadium designer Ai Weiwei, should publicly support a suspected cop-killer. And the prevailing mood of dissatisfaction is growing. Riots are now a daily occurrence, including in June when an attempted police cover-up over the assault and death of a teenage girl triggered large-scale violence in Guizhou Province. Up to 100,000 are reported to have participated in the riot, with 160 office buildings and 40 cars torched. (to be cont’d)
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