Supplementary memorandum submitted by
the Foreign and Commonwealth Office
CHINA
BACKGROUND
China's Internal Situation
1. Government policy continues to centre
around economic reform, with the communist party's legitimacy
depending not so much on ideology as on its ability to keep delivering
increased prosperity and, increasingly, good governance. There
has been a series of campaigns designed to recreate the ethic
of good governance among party cadres. There has also been a number
of show trials of senior figures accused of corruption. These
resulted recently in the execution of a former Vice Chairman of
the National People's Congress, the highest figure ever to have
been dealt with in this way. A trial involving a very large number
of senior figures from Fujian province is currently under way;
senior figures from the security apparatus are also implicated.
2. There is no appetite in the present leadership
for political reform. There is however considerable debate in
senior party circles on the subject, which may have been given
added impetus by recent events in Yugoslavia. But there is little
prospect of any serious policy change under the current leadership
which is still very nervous about any perceived threat to stability,
as illustrated by their continued efforts to suppress the Falungong
movement.
3. There has been little change to the human
rights situation since the last memorandum was submitted. The
crackdown on the Falun Gong movement has continued, notably on
1 October when demonstrators were roughly rounded up in Tiananmen
Square. The situation in Tibet continues to be a major concern:
repression of religious activity and "re-education"
of monks and nuns continue. On a more positive note, the spokesman
for the Chinese Ministry of Foreign Affairs said on 17 October
that "the time is now ripe" for the ratification of
the International Covenant on Economic, Social and Cultural Rights.
In addition, Mary Robinson, UN High Commissioner for Human Rights,
will travel to Beijing to sign an MOU on the provision of human
rights technical assistance.
China's Foreign Policy
4. China/US relations have improved a little
following President Clinton's decision not to proceed with the
deployment of a National Missile Defence (NMD) and the Senate's
approval in September of Permanent Normal Trade Relations (PNTR)
for China (see WTO accession below). Kim Jon-Il visited Beijing
at the end of May—significantly just two weeks prior to
the successful Korean North-South Summit. President Putin visited
China in July, when he and President Jiang issued a joint statement
condeming US ballistic missile defence proposals. Premier Zhu
visited Japan from 12-17 October before proceeding to Seoul for
the ASEM Summit. A large group of African Ministers were in Beijing
on 10-12 October for a Sino-African forum. However the major Chinese
foreign policy preoccupation remains the principle of the inviolability
of national sovereignty.
The Economy
5. There is little disagreement among the
Chinese leadership about the scope of reform, but considerable
argument about the pace of change which society can absorb. The
potential instability resulting from laying off large numbers
of workers in the State economic sector continues to be a major
worry, compounded by the slow progress being made towards the
provision of re-employment opportunities for those laid off and
the establishment of an effective social security system.
6. The position has been much improved by
a better than expected performance of the economy this year, with
growth in the third quarter estimated to be 8.2 per cent, and
signs that two years of deflation are coming to an end. China's
trade surplus to the end of September was US$ 19 billion.
7. Growth has been greatly helped by the
rapid recoveries in many Asian economies, but has also been fuelled
by increased infrastructure spending. This will continue under
the "Great Western Development" programme launched earlier
this year with the aim of reducing regional inequalities. This
has been billed as Jiang Zemin's great legacy to China, but it
is clear that there is a huge gap between the idea and the execution;
this is now the major concern of the State planning machinery.
China is now in the process of drafting its next five Year Plan.
8. Financial sector reform has proceeded
rather more rapidly, with steps recently towards liberalising
interest rates, increasing the use of IT in banks and preparing
for e-commerce. A series of new measures has tightened regulation
and begun to tackle difficult corporate finance issues.
WTO Accession
9. A bilateral WTO accession agreement for
China was concluded between China and the EU on 19 May. The US
bill on Permanent Normal Trade Relations for China was passed
by the House on 24 May, and by the Senate in September. However,
there are still some issues to be resolved before China can accede.
These are being dealt with by the China Working Party in Geneva.
UK REPRESENTATION
AND ACTIVITIES
IN CHINA
Bilateral Political Contacts
10. Chinese Vice-Premier Wen Jiabao visited
the UK in June. During the same month, the Secretary of State
for Education and Employment and the Secretary of State for Defence
visited China. Relations were temporarily affected by the decision
to grant the former Taiwanese President Lee Teng-hui a visa for
a purely private visit to the UK. Unfortunately during his visit
he undertook a number of engagements which the Chinese interpreted
as being of a political nature. The Chinese retaliated by cancelling
the planned visit to China in July by the Economic Secretary to
the Treasury.
11. The Deputy Prime Minister visited China
from 12-18 October, HRH The Duke of Kent from 12-20 October, and
the Attorney-General from 11-15 October. The Secretary of State
for International Development will visit China from 29 October
to 2 November, and the Minister for Trade early next year.
Sponsored Visits
12. Sponsored visitors from China since
mid-May have included the Mayor of Chongging, the Minister of
Labour and Social Security, the Minister for the State Environment
Protection Agency, the Vice-Minister of Construction, the Chairman
of the Standing Committee Congress of Guangdong Province, the
Director of the State Administration of Radio, Film and Television,
the Minister of Railways and the Vice-Minister of the Civil Aviation
Authority of China.
Other Bilateral Programmes
13. The Peacekeeping seminar mentioned in
our earlier Memorandum went ahead in June. (See "Defence
relations" paragraph 21 below.)
Cultural and Educational Links
14. The British Council opened its new office
in Chongging in July as planned, and has also expanded its office
in Beijing. The highlight of their cultural programme this year
is a Henry Moore exhibition comprising 118 sculptures, which was
opened by the Deputy Prime Minister on 16 October.
Economic and Financial Links
15. As mentioned in paragraph 10 above,
the planned visit to China in July by the Economic Secretary to
the Treasury, and hence the second round of the UK/China Financial
Dialogue, were postponed. It is hoped that they can be reinstated
for next year.
BBC
16. BBC World Television have now obtained
a licence to broadcast to hotels and foreign apartment blocks
in China.
UK/China Forum
17. The UK/China Forum held its second meeting
in Beijing on 16-18 October. A delegation of over 80 people on
the British side was led by the UK Chairman of the Forum, the
Rt Hon Michael Heseltine CH MP. The Deputy Prime Minister attended
the opening of the meeting.
UK/CHINA BILATERAL
DIALOGUES
Human Rights
18. Following up an invitation made by the
Chinese Government during the UK/China Human Rights Dialogue in
February 2000, three members of the Foreign Secretary's Death
Penalty Panel visited China in September. This was the first visit
of its kind to China. The team had a series of useful discussions
on the use of the death penalty and on working towards abolition.
The Chinese have agreed to a follow-up visit next year.
19. The latest round of our bilateral human
rights dialogue was held in London from 16-18 October. We raised
a wide range of issues of continuing concern including, for example,
the treatment by police of Falun Gong demonstrators in Tiananmen
Square on 1 October, and the situation in Tibet. The Chinese agreed
to a further visit by the Foreign Secretary's Death Penalty Panel
next year, to a meeting of the UK/China Expert Working Group on
the ratification of the UN Covenants early next year and to explore
new areas for technical assistance on the rule of law. In addition,
following a personal intervention from John Battle MP, the Chinese
side agreed to provide detailed information on individuals of
concern and to establish a more efficient channel for exchanging
such information.
Global Issues
Environmental Issues
20. The Deputy Prime Minister discussed
a number of environmental issues, including climate change, during
his visit to China on 12-18 October. Cooperation projects supported
by the UK now include projects to promote energy efficiency in
buildings and landfill waste management.
Corruption
21. The UK/China anti-corruption initiative
is being launched at the ASEM Summit in Seoul on 19-20 October.
It is designed to enable ASEM members to exchange experience and
develop new methods for combating corruption, drawing on useful
work done by the OECD, the Asian Development Bank and the UN.
Security Issues
Defence Relations
22. The Secretary of State for Defence visited
China in June. The centrepiece of his visit was a UK/China joint
peacekeeping seminar in which the two sides exchanged views on
the challenges involved in peacekeeping in the 21st century. The
two sides are now considering possible follow-up.
International and Regional Issues
23. The Prime Minister and President Jiang
Zemin both attended the first ever P5 Summit in New York on 7
September.
PROMOTING THE
UK'S COMMERCIAL
INTERESTS
Inward Investment
24. The Invest in Britain Bureau has been
renamed Invest UK. There are now over 110 Chinese companies registered
in the UK.
VISA MATTERS
AND IMMIGRATION
25. The tragic deaths of 58 Chinese immigrants
who were found in a lorry at Dover in June highlighted the problem
of illegal immigration from China to the UK. The Kent Police visited
China in September and, with the help of Chinese police in Beijing
and in Fujian province, succeeded in identifying all of the 58.
A team of Home Office officials will visit China on 22-26 October
for discussions about the problem of repatriation of illegal immigrants.
26. At last week's ASEM Summit in Seoul,
Premier Zhu Rongji proposed that China might host an ASEM workshop
on transnational crime (including human trafficking) for law enforcement
agencies, to further cooperation and implement practical initiatives.
This unexpected proposal received enthusiastic support.
Hong Kong
1. The Committee may also wish to refer
to the Foreign Secretary's latest report on Hong Kong, which was
presented to Parliament in July 2000 (Cm 4809).
THE ELECTORAL
SYSTEM AND
PROGRESS TO
DIRECT ELECTIONS
2. We reported in the May memorandum that
the next elections to the Hong Kong Legislative Council (LegCo)
were due to take place in September 2000. The elections were held
on 10 September as planned, and were free and fair. The largest
party in the previous LegCo, the Democratic Party, won 12 of the
60 seats, one fewer than at the last elections in 1998. The second
largest party in the last LegCo, the Democratic Alliance for the
Betterment of Hong Kong, won 11 seats, two more than last time
(although one of their legislators subsequently resigned following
a scandal). Nineteen legislators are non-affiliated. The turnout
rate was 43.6 per cent: a lower figure than the turnout at the
1998 elections (53.3 per cent) but higher than the turnout figures
in the last two pre-handover elections.
3. Following the elections, Mr Battle, FCO
Minister of State, issued a statement saying that he hoped the
SAR Government would be encouraged to work towards the goal of
a LegCo elected entirely on the basis of universal suffrage.
4. Meanwhile, debate on the development
of Hong Kong's political system has continued. The LegCo Panel
on Constitutional Affairs issued a report in June calling on the
SAR Government to conduct a review and carry out public consultation
as soon as possible. In his fourth Policy Address, delivered on
11 October, Chief Executive C H Tung said that the SAR Government
would look at certain issues of governance in Hong Kong, including
the accountability of senior officials, communication between
the executive and the legislature and the composition of the Executive
Council.
BASIS RIGHTS
AND FREEDOMS
5. We have not changed our overall assessment
that Hong Kong's essential freedoms remain intact. However, there
have been a few new controversies since we submiited our memorandum.
6. There has been controversy following
the arrest, in August and September, of a number of students who
had been involved in street demonstrations in April and June.
The arrests were made under the Public Order Ordinance, which
requires organisers of demonstrations to give the Police advance
notice of any proposed march of more than 30 people or of any
proposed assembly of more than 50. The SAR Government has decided
not to prosecute in respect of the April incident, but has yet
to decide on prosecution in respect of the June incident. All
the students were bailed after their arrest.
7. Critics of the students' arrest have
called for liberalisation of the provisions of the Public Order
Ordinance governing demonstrations. They have expressed concern
that, while the Police have allowed many demonstrations (of a
notifiable size) to go ahead without advance notification and
there have to date been no prosecutions, the SAR Government might
use its powers selectively to prosecute those it regards as troublemakers.
The Hong Kong Bar Association has questioned whether the Ordinance
complies with the Basic Law's
provisions on peaceful assembly and freedom of expression
and the International Covenant on Civil and Political Rights.
8. Another controversy arose following allegations
made in July by a Hong Kong University academic, Robert Chung,
that he was given a message that C H Tung wanted him to stop carrying
out opinion polls on his popularity. An independent University
inquiry has found that Chung had been given a message calculated
to inhibit his academic freedom at the behest of the Vice-Chancellor
of the Univesity; and that this was the result of a conversation
between the Vice-Chancellor and Mr Tung's aide Andrew Lo. The
Vice-Chancellor denied that he had acted in any improper way but
resigned on 6 September. Academic freedom is guaranteed under
the Joint Declaration, and any suggestion that it is being infringed
would be a cause for concern; however, we welcome the fact that
there was an independent inquiry into this incident.
BILATERAL RELATIONS
9. The Lord Chancellor visited Hong Kong
in September, and HRH the Duke of Kent is due to visit in the
second half of October. C H Tung is planning to visit London on
30-31 October.
TAIWAN
Economy
1. Growth of nearly 8 per cent, the fastest
in 10 years, was registered in the first quarter of 2000, though
much of this was attributable to the base figure from the previous
year when Taiwan was in the midst of the Asian economic crisis.
As this year has progressed, growth has slowed slightly and the
official forecast for the whole year has been cut from 6.73 per
cent to 6.5 per cent.
2. Though the headline figures remain impressive
there is growing concern at the lopsided nature of growth particularly
in manufacturing and investment; it is mainly the highly-cyclical
electronics and computer industry that are booming while more
traditional industries are facing decline and financial difficulty.
Since the Presidential election the true extent of bad loans and
malpractice in the financial system has also become more apparent.
3. These problems, along with a heavy budget
deficit and government borrowing requirement left behind by the
Kuomintang (KMT) administration, have stretched the limited expertise
of the new economics and finance ministers and led to a decline
in public confidence. Share prices have fallen by over 30 per
cent since the March election.
Politics
4. President Chen Shiu-bian's efforts to
form a cross-party alliance in both his Cabinet and in the Legislature
have met with little success. The KMT, which retains its slim
overall majority in parliament, has refused to cooperate, mainaining
that Chen should form a regular coalition, and has blocked or
distorted many of the key election policies of the Democratic
Progressive Party (DPP) particularly on welfare issues. This made
the position of Premier Tang Fei, a member of the KMT increasingly
untenable. This, together with persistent ill-health, finally
led to his resignation in early October. He has now been replaced
by a senior DPP member and there has been a minor Cabinet reshuffle
in an attempt to bolster public confidence in the economic and
financial team. The new government has also been leading an assault
on corruption, organised crime and political influence-peddling.
Cross straits relations
5. Since his inaugeration in May, President
Chen has continued to choose his words on Taiwan's status and
the relationship with China with care. This has been sufficient
to keep cross-straits political and military tension to a relatively
low level but not sufficient to induce Beijing to return to the
negotiating table. The key sticking point remains Beijing's demand
that Taipei explicitly accept the "one China principle",
something which Chen's DPP party, and indeed the overwhelming
majority of the public, do not seem content to permit him to do.
Earlier expectations of a breakthrough on direct trade and transport
links across the Taiwan Strait have been steadily lowered. However,
it does look as though Taipei will proceed before the year's end
with a limited opening of direct exchanges between residents on
Taiwanese-controlled outlying islands and the mainland. Though
a small step, amounting to little more than the legalisation of
a brisk smuggling trade, it is nonetheless a constructive confidence-building
measure on the part of the Taiwanese authorities. For their part,
the Chinese have toned down their bellicose rhetoric and refrained
from any large-scale military exercise since the election. We
judge that, despite their concerns, they will continue to play
it long so long as no real challenge to Chinese quote unity unquote
comes from across the straits.
Relations with the UK
6. Since the visit of Mr Caborn, the Minister
for Trade, in February there have been two further successful
private visits by senior UK officials: namely Ms Hewitt, Minister
for E-Commerce and the Lord Mayor of London. The Mayor of Taipei
has visited the UK. British exports have continued their strong
recovery, reaching £670 million between January and August
this year, up 17 per cent from the same period last year. Since
the signing in March of the Intellectual Property Rights Arrangement
by the British Trade and Cultural Office (BTCO) in Taipei and
its Taiwanese counterpart, there have been fruitful negotiations
on two other arrangements relating to avoidance of double taxation
and to cultural exchanges.
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