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ON RECENT DEVELOPMENTS Fifth Session of China’s
Ninth National People’s Congress 14 March 2002 CONTENTS Annex A: Functions and Powers of the NPC Annex B: Chinese People’s Political Consultative Conference Annex C: Tenth National People’s Congress Annex D: Summary Economic Data Since 1997 Related Documents |
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Nearly 3,000 carefully selected representatives congregate in Beijing’s Great Hall of the People, in the first quarter of the year, for a period of one to two weeks. It has ritualistic elements, inducing many observers to consider the NPC as a carryover from the immediate post-WW2 period (refer to Annex A and Annex B). Nevertheless, tradition has an important role in Chinese activities. NPC deputies and deputies to the Chinese People's Political Consultative Conference (CPPCC), which meets at the same time, are the nation’s leading officials. An appointment as a deputy indicates acceptance by higher-level authorities of lower-level selections, and conveys recognition for services rendered as a public official. The deputies are responsible for similar meetings at provincial and county/municipal levels in China, and this is soon to include township congresses (see Annex C). The overall process is an integral part of China’s top-down communications and consultation process through which authority is simultaneously conferred and widely recognised. Who are the deputies? With a population of 1.28 billion in a nation as diverse as China, using the word “typical” is always hazardous. Nevertheless, the South China Morning Post published a short account of one delegate – Cheng Andong -- to which we can assign some typical characteristics. Mr Cheng Andong originally came from Anhui Province and started his political career in the coal mining bureau of Pingxiang City in Jiangxi Province in 1955. He became mayor of Pingxiang in 1983. In April 1990, he became an assistant to the governor of Jiangxi Province and moved to Shaanxi Province five months later to become mayor of Xi’an. He was appointed as the governor of Shaanxi Province in 1995. Mr Cheng may be typical in relation to the cross-provincial shifts in his career path. He is unique, at the moment, in being the only person who is a deputy of both the NPC and the CPPCC. One appointment normally excludes the other. This dual appointment occurred for Mr Cheng as a result of a vacancy created by a former deputy who was expelled for corruption charges. Next year Mr Cheng will remain with the CPPCC and will not be readmitted to the NPC, a position he held for three terms. He is also approaching the compulsory retirement age and will then step down as provincial governor. Normally, he would then be appointed as the next chairman of the Shaanxi CPPCC, but other possibilities exist. The NPC and the CPPCC represent an important means of acquiring continuity with the crossing, and sometimes re-crossing, of career paths associated with the leading officials in China. This continuity benefits the province or municipality that a particular official left, as well as the one acquiring that official. Apart from this, the relevance of the NPC and CPPCC meetings can be assessed from what is reported by China’s leading officials, and the number of times the statements are repeated during the session. This year, the rural sector received the greatest amount of attention. The meetings can also be assessed in relation to what is not said, or said infrequently. The banking sector received relatively little direct attention this year. In 2003, a new NPC will be formed – the 10th since the
founding of the People’s Republic of China.
In addition, China’s top leaders, including President Jiang Zemin, Premier Zhu Rongji and
parliament chief Li Peng. are expected to step down from their government
posts after the 16th Communist Party Congress in October. This year’s NPC and CPPCC meetings are
therefore of interest in trying to anticipate policy changes that may to
occur next year. |
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It is generally recognised that the Chinese economy was a major bright spot in an otherwise, generally slow-moving global economy. Much of the credit is given to an expansionary fiscal policy that lifted China’s domestic demand during the past several years (Annex D). The policy resulted in an overall government deficit for 2001 of RMB 247.3 billion or about 13 per cent of total government expenditure (Table 1) and 2.7 per cent of GDP. Table 1: China’s Fiscal Accounts for 2001 (in RMB billion)
The debt was financed by the sale of bonds on China’s domestic market, so very little was added to the external debt. Moreover, the expansionary effect of the policy resulted in a sharper rise in revenue for 2001, compared to the increase in expenditure. Thus, the incremental debt incurred during 2001 was less than in 2000. The data nevertheless reveal growing imbalances in China’s fiscal system. The separate revenue and expenditure columns in Table 1 do not sum to the totals that are shown in the table. This is due to China’s method of reporting the fiscal position for the central government and for local governments (including both provincial and municipal/county fiscal accounts). Table 2 shows the net accounts for revenue and expenditure. The difference between the revenue figure of RMB 917.1 billion in Table 1 and RMB 857.8 billion in Table 2 is the RMB 59.3 billion collected by the central government but transferred directly to the local governments. Similarly, local governments are credited with RMB 1,380.8 billion in revenue, but RMB 601.5 billion of that consisted of subsidies and grants from the central government, leaving RMB 779.3 billion (Table 2) in locally sourced revenue. The expenditure figures are also adjusted in Table 2. Table 2: Net Fiscal Accounts for 2001 (in RMB billion)
Local governments in China operated with a substantial deficit in relation to their own sources of funds, thus requiring budgetary supplements from the central government. These transfers are made according to need, with the poorer provinces in the western region obtaining a proportionately greater share of the transfer. Nevertheless, the transfers from the central government comprise a substantial portion of available funds, resulting a net deficit for local governments (relative to their own sources of finance) of about 40 per cent of their net expenditure. This complicates that task of medium-term planning since the local governments are unsure of the amount that will be transferred in later years. Problems also arise with delays in the transfers, or in adjusting to instructions from the central authorities. For example, it was reported that some county-level governments and township administrative units failed to pay all of the wages owed to their employees on time, in accordance with the state policy of wage readjustment. By the end of 2001 a total of 6.5 billion yuan, or 1.8 percent of the wages payable during the year, as prescribed, had not been paid. The authorities in China recognise the problem and various references were made during the NPC to “optimise the structure of budgetary expenditure”. Although details were not provided, it probably includes the proposed income tax sharing arrangements and further work on the experiment initiated by Zhu Rongji two years ago in Anhui Province to replace many of the fees imposed on the rural sector with taxes (see next section). Budget
for 2002 The Finance Minister, Xiang Huaicheng,
reported that the expansionary fiscal policy would continue during 2002. Projected revenue from central and local
governments is RMB 1,801.5 billion, which is an increase of 10 per cent over
the 2001 figure. The estimates were
based on an economic growth rate of 7 per cent for 2002. Total expenditure (central plus local
governments) is expected to be RMB 2,111.3 billion, which is an increase of
12 per cent, compared to 2001. The
overall deficit is therefore estimated at RMB 309.8 billion or slightly more
than 3 per cent of the projected GDP.
Within this budget, the direct
expenditure by the central government is expected to represent a slightly
smaller proportion of the total, and transfers from the central government to
local governments are projected to increase in percentage terms, compared to
2001. Priorities for the expenditure remain
much the same as for 2001.
Development projects in the central and western regions will
continue. These include projects to
pump natural gas from the west to the east, to develop the Sebei Gas Field
and the Golmud
Airport, to transmit electricity from the west to the east from the northern
route and to build national trunk highways and important sections of
inter-provincial highways in the western region. Other priorities are described in the
subsequent sections. However, it is
worth noting in reference to the planned expansionary fiscal policy that
low-key opposition to a continuation, beyond 2002, of the same pace of large-scale
infrastructure development has already appeared. This is evident mainly in questioning whether the funds have
been effectively used or whether some have been wasted through mismanagement
and corruption. In addition, the Chinese Academy of
Sciences recently issued a report (summarised by the People’s
Daily at http://english.peopledaily.com.cn/200202/27/eng20020227_91064.shtml)
stating that infrastructure costs in China remain higher than in most other parts
of the world. This is due principally
to the “comparatively
inferior resources and environment and the backwardness in economy”. This suggests that allowing more time for
China to accumulate a greater stock of capital, both physical and human
capital, will reduce the cost of further infrastructure development. It is generally recognised that
infrastructure development in China’s central and western provinces was
urgently needed and that Zhu Rongji’s commitment to this was well timed and
generally well implemented. However,
the new infrastructure alone will not be sufficient to allow those provinces
to “catch up”. Further planning
efforts will be needed and infrastructure costs may remain high until this is
achieved. |
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v
growth of
farmers' income is slow in comparison with urban incomes, particularly in
some major grain producing areas and in areas seriously hit by natural disasters,
v
public
sector wage payment in arrears was serious in some areas, v
there were
still difficulties with rural enterprises in maintaining profitability and in
complying with China’s environmental laws, v
rural unemployment remains a
pressing problem, v
local
protectionism continues unabated despite repeated orders to ban it, and the
proper function of rural markets has not been achieved in some areas, and v
formalism
and bureaucratic inefficiency create problems in some rural areas, and
deception, extravagance and waste are serious in some localities. The Premier
expressed a strong commitment of the central government to seek solutions to
these problems and outlined a number of programs that are likely to provide
assistance. To alleviate concerns
of declining incomes as a result of a substantial reduction in tariffs for
agricultural products that was part of China’s WTO accession commitments, the
central government proposed the following: v
improve crop
strains and use advanced technology to lift the productivity of China’s
agricultural products and hence to reduce the competitive disadvantage that
certain crops are now facing, v
develop
livestock production and aquaculture as an alternative to crops for which
China is likely to retain a competitive disadvantage, v
encourage
farmers to earn more income by switching to cash crops, especially fruits,
vegetables and flowers, v
increase the
practice of regional comparative advantage in the agricultural sector and
reduce the desire for regional self-sufficiency in China, v
promote joint
operations between farmers and companies and encourage farmers to grow crops
on a contract basis so as to gradually integrate the production, processing
and marketing of agricultural products, v
deepen the
reform of the system of agricultural scientific research and dissemination of
agricultural technology, v
implement the
“Spark Program” to speed up the translation of scientific and technological
achievements in agriculture into productive forces and spread the use of
these achievements, and v
create a
favourable market environment with governments at all levels working together
to improve inputs in agriculture as well as quality standards and
certification system, the inspection and testing system, and the market
information system for agricultural products. For individual farmers, a more
controversial proposal related to the commitment of the central government to
accelerate the conversion of cropland into forests, or to pastures and
lakes. Zhu Rongji was careful to
point out, however, that all such changes would “follow market demand,
proceed from realities and respect farmer’s wishes. On no account must coercion and government commands be
allowed.” Another controversial proposal is to
replace the fees paid by farmers to local authorities with an income
tax. This was initiated in Anhui
Province several years ago and was generally not supported by farmers who
believed that the change would result in greater payments, rather than
less. The central government
apparently intends to press on with the proposal. One of the amendments to the Zhu
Rongji’s report that was proposed and supported by NPC deputies was the
commitment of the government to improve the available of banking finance to
the rural sector, especially to township and village enterprises. As can be seen,
the difficulties associated with China’s rural sector are substantial, and
are underscored by the fact that the sector includes about 700 million
people. The Chamber expects to issue
further reports on these issues in the near future. |
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v 34.9 billion yuan to subsidise the old-age
insurance fund, v 13.6 billion yuan for subsidies to provide basic
living allowances for laid-off workers from state-owned enterprises, v 2.3 billion yuan for subsistence allowances for
urban residents, v 31 billion yuan to replenish the national social
security fund and v 8.4 billion yuan for benefits for some disabled
servicemen and family members of revolutionary martyrs and for social welfare
and relief funds. In addition to
providing more funding for social security programs, a special social
security account was established in the 2001 budget to provide extra funding
for special purposes. A portion of
this fund was made available to Liaoning Province, and other provinces, for
experiments in ways to improve the provincial social security system. According to
statistics, as at the end of 2001, over 47 million persons received social
security subsidies from the central budget.
In addition, a fund of 13.5 billion yuan to subsidise the shutdown and
bankruptcy of enterprises was earmarked in the central budget for 2001. These programs
are to be continued and expanded during 2002, in an effort to reduce the
social welfare obligations of state-owned enterprises. For example, in the draft budget for this
year, a total of 51.2 billion yuan is allocated to subsidise pensions for
retirees of state-owned enterprises and for living allowances for their
laid-off workers. Zeng Peiyan, minister in charge of the State Development Planning Commission, announced that the central government would allocate 10.6 billion yuan for anti-poverty projects and to encourage more peasants to start co-operative ventures. Details were not provided. It is likely
that social welfare programs will account for a greater share of the central
government’s expenditure for the next several years. This is partly to accelerate the
restructuring of state-owned enterprises and partly to assist local
governments to achieve a social security system that contributes to, rather
than detracts from, the mobility of labour within China. |
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It was
nevertheless reported by China’s State Economic and Trade Commission that
state-owned enterprises (SOEs) generally performed better in 2001, despite a
small drop in profits. By
restructuring the enterprises, and removing much of their social welfare
obligations, there are now fewer loss-making enterprises, compared to three
years ago. As a result of the government's effort
to eliminate outdated enterprises, a total of 460 mergers and bankruptcies
were carried out in 2001. About 51.5
billion yuan of non-performing loans and bad debts in banks was written off
and nearly 700,000 laid-off workers were reemployed. China will set aside an additional 80
billion yuan this year to assist mergers and bankruptcies of enterprises that
are incurring losses and producing pollution. In addition, continued efforts will be made to relax controls over
small and medium-sized state-owned enterprises, and a new law is expected to
be enacted soon. It is nevertheless clear from Jiang
Zemin’s comments to a meeting with delegates from Heilongjiang Province and
Liaoning Province that continued reform of SOEs had a high priority. Regulating the “monopoly industries” is particularly
important. Although details on these planned
reforms were not announced, recent experience with the divestiture of China’s
State Power Corporation into separate generating and transmission entities
gives a clue as to how this may be managed. Earlier this year, an announcement was
made that the State Council approved a sweeping reform of the power
sector. Full privatisation, however,
was not mentioned and even partial privatisation (limited sales of shares to
the public) does not appear to be on the current agenda. Rather, the size of the power generating
authorities has been enlarged, thus allowing them to benefit from economies
of scale, and the new entities are to be more fully corporatised, in the sense
that managerial decisions will be more independent of government
authorities. Rate setting and the total supply of
electricity will nevertheless be regulated.
The operating authorities will be subject to government oversight to
ensure that enterprise behaviour is “fair and in good order”. Some observers have speculated that
corporatisation, rather than privatisation, is now preferred in the wake of
the Enron scandal in the USA.
Moreover, China’s large domestic saving rate, and the exceptionally
high liquidity of the banking system, would seem to allow ample opportunity
for the operating companies to secure sufficient finance without issuing
shares of stock to the public. Thus, the non-state sector in China is
likely to continue growing faster than the state sector, but not all of
China’s industries will be open to the non-state sector for some time to
come. Some of these SOEs will
probably continue to make losses, due to the community service obligations
that are placed upon them. Most SOEs
however, will cease to be a major drain on the banking sector. |
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South China Morning Post: http://www.scmp.com People’s Daily:
http://www.peopledaily.com.cn
and China Daily: http://www.chinadaily.com.cn All have special sections devoted to news of the NPC and CPPCC. Of these, the People’s
Daily, as the official newspaper of the Communist Party of China, is
the most complete. The South China Morning Post has generally superior
analysis and commentary by its reporters. The three sources combined have a considerable amount of text, only a
portion of which is brought out in this report. |
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FUNCTIONS AND POWERS OF
THE NPC The following is an edited and slightly condensed version of the
official statement published in The People’s Daily. The National People's
Congress is the highest organisation of state power of the People's Republic
of China. Its main functions and
powers include formulation of laws, delegating authority, policy formulation,
and supervision of other governing organisations. Legislative Power The NPC has the right to enact and amend the
Constitution of the People' s Republic of China, and to enact and amend basic
laws concerning criminal offences, civil affairs, state organisations, and
other matters. Delegating Authority The power to delegate authority allows the NPC to
select, empower, and remove leadership and members of the highest state
organisations The NPC has the right to select the members of the
Standing Committee of the NPC; to elect the president and vice-president of
the People's Republic of China; to appoint and approve premier,
vice-premiers, state councillors, ministers in charge of ministries and
commissions, auditor-general and secretary-general of the State Council; to
elect the chairman of the Central Military Commission and decide other
members of the Commission; and to elect the president of the Supreme People's
Court and the procurator-general of the Supreme People's Procuratorate. The NPC has the right to remove any or all
members it elects and decides, and is therefore the final authority among all
state organisations. Policy Formulation The NPC has the right to examine and approve
government reports; to examine and approve the plan for national economic and
social development and reports on its implementation; to examine and approve
the state budget and reports on its implementation; to approve the
establishment of provinces, autonomous regions and municipalities directly
under the Central Government; to decide on the establishment of special
administrative regions and the systems to be instituted within these regions;
and to declare war and sign treaties of peace. Supervision of Governing Bodies The NPC has the right to supervise the implementation of the Constitution. According to the Chinese Constitution, the State Council, the Supreme People' s Court and the Supreme People's Procuratorate are all invested by the NPC, are responsible to it, and supervised by it. The NPC's exercise of its supervisory role is to oversee the actions of the government and other state organisations on behalf of the people. Congresses and Sessions A single term of office of an NPC Deputy is five years and that term comprises a Congress. Under the current Constitution and related laws, the NPC holds a session on the first quarter of each year, convened by its Standing Committee. The NPC Standing Committee is the permanent supreme legislative body of the state and exercises the law-making capacity of the NPC when it is not in session. The Standing Committee is composed of 153 members, none of whom can assume an office in state administrative, judicial or procurator organisations, so as to maintain a separation of powers and to better supervise these bodies. The NPC Standing Committee has the right to interpret the Constitution and to supervise its implementation; to enact and amend laws, with the exception of laws relating to powers reserved for the NPC as a whole, to supplement and amend laws enacted by the NPC when that body is not in session, and to interpret laws. Since 1979, the NPC and its Standing Committee have enacted over 300 laws, and local people's congresses and their standing committees have drawn up more than 3,000 local rules and regulations. Special committees are formed within the NPC. When the NPC is in session, the main work of these committees is to study, examine and draw up related motions. When the NPC is not in session, these committees work under the direction of the NPC Standing Committee. Currently, there are eight permanent special committees as follows: v Ethnic Groups Committee, v Legal Committee, v Finance and Economics Committee, v Education, Science, Culture and Public Health Committee, v Foreign Affairs Committee, v Overseas Chinese Committee, v Committee for Internal and Judicial Affairs and the v Committee on Environmental and Resource Protection. Chairman and Vice Chairpersons The current Chairman of the Standing Committee is Li Peng and the Vice Chairpersons are as follows: Tian Jivun Short biographies of
these people are available at http://english.peopledaily.com.cn/data/organs/npc.shtml |
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THE PEOPLE’S POLITICAL
CONSULTATIVE CONGRESS The following is an edited and slightly condensed version of the
official statement published in The People’s Daily. The Chinese People's Political Consultative Conference (CPPCC) is a united front organisation led by the Communist Party of China (CPC). It is made up of deputies drawn from the CPC, eight democratic parties, non-party democrats and various people's organisations. Representation is obtained from various minority nationalities in China, as well as representation from Taiwan, Hong Kong and Macao. In accordance with the policy of "long-term coexistence and mutual supervision" between the CPC and the democratic parties and non-party persons, and the principle of "treating each other with all sincerity and sharing wealth or woe", the CPPCC participates in political consultations with regard to major state policies and important issues. The exercise of supervision of the CPPCC has no legal effect and is therefore advisory only. It is sometimes known as the state’s official "think tank" and its committees at all levels contain large numbers of activists and public figures from various walks of life as well as, experts and scholars in various fields. The 1st Plenary Session of the CPPCC was held in Beijing in September 1949. Exercising the functions and powers of the NPC, at that time, the CPPCC proclaimed the founding of the People's Republic of China. The CPPCC was named an organisation for the Party's united front work after the convening of the 1st National People's Congress in September 1954. The number of the CPPCC National Committee members was increased from 180 in 1949 to 2,196 for the 9th CPPCC National Committee in March 1998. The CPPCC local committees had a total of 461,000 members in 1996. The CPPCC National Committee is elected once every five years, and meets in session once a year. In order to participate in the consultations and discussions of government policies, the CPPCC session always convenes simultaneously with the NPC, and its members attend the NPC as non-voting deputies. The CPPCC is considered to be the Chinese people's key institution of multi-party cooperation and political consultations. The first conference was convened on 10 January 1946 and was attended by representatives of the Kuomintang, the CPC, the Democratic League, the Youth Party and noted public figures. It was dissolved in November of that year and then reconvened in September 1949 under the leadership of the CPC to function initially as the supreme state body. The first session of the CPPCC adopted a "Common Program of the Chinese People's Political Consultative Conference" which bore the nature of a temporary constitution, proclaimed the founding of the People's Republic of China (PRC), elected the committee of the Central People's Government of the PRC with Mao Zedong as its chairman, and elected the First National Committee of the CPPCC. It also designated the Chinese capital, national flag and national anthem. In September 1954, the National People's Congress became the supreme institution of state power in China and the CPPCC then ceased to function as a law-making body, but continued to exist as a united front organisation with a broad representation with a major consultative role in the nation’s political, economic, cultural and social affairs and international exchanges. The main functions of the CPPCC are political consultation, democratic supervision and participation in and deliberation of state affairs. Political consultation means conferring on major policies of central and local governments, key policy decisions concerning the country's political, economic, cultural and social affairs before the decisions are made, or main issues involved in the process of carrying them out. Democratic supervision means supervising, by means of offering suggestions and criticism over the implementation of the China's Constitution, relevant laws, regulations and major policies, over the work of state organs and their functionaries. The participation in and deliberation of state affairs means organising various parties, organisations, people from various ethnic groups and social sectors to take part in the country's political, economic, cultural and social life in various forms. The current chairman of the
9th National Committee of the CPPCC Li Ruihuan. A list of vice chairpersons is available at: http://english.peopledaily.com.cn/data/organs/ccpcc.shtml |
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TENTH NATIONAL PEOPLE’S
CONGRESS The
list of National People’s Congresses, are as follows, with dates of the first
session and names of the respective NPC chairmen: First
Congress: September 1954 - Liu Shaoqi The current NPC Chairman, Li Peng, reported that elections of
deputies for the Tenth NPC have already started and will be completed by the
end of January 2003. Of particular
importance for the next NPC, deputies to the new township-level people’s
congresses will be popularly elected.
Deputies to people’s congresses at the county level and above will continue
to be elected indirectly. The number of deputies to be elected to the Tenth National People
Congress will be one for every 960,000 people in rural areas, one for every
240,000 people in cities and no less than 15 for provinces and autonomous
regions with an extremely small population. The number of deputies to be elected by Hong Kong Special
Administrative Region to the Tenth National People's Congress is 36 and that
by Macao Special Administrative Region is 12. The way such elections proceed is to be determined by the
National People's Congress according to the electoral law. Representing Taiwan will be 13 deputies to be elected from among
Taiwan-born people in various provinces, autonomous regions and
municipalities and in the Chinese People's Liberation Army. The number of deputies to be elected by
the Chinese People's Liberation Army is 265. The proportion of deputies representing minorities should be about
12 percent of the total number of deputies, with at least one deputy for a
minority nationality that has an extremely small population. According to the draft decision, there should be 35 deputies
representing returned overseas Chinese and the proportion of women deputies
should be higher than that of the Ninth National People's Congress The NPC Standing Committee has to power
to reserve some seats to ensure that areas with the smallest number of people
will be adequately represented and also that additional seats are made
available to areas with a rapid population growth. |
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SUMMARY ECONOMIC DATA
SINCE 1997 The data are from the China National Bureau of Statistics and compiled
by People’s Daily http://english.peopledaily.com.cn/200201/03/eng20020103_87987.shtml GDP Growth
Trade
Foreign Exchange Reserves
Direct Foreign Investment
Fixed Assets Investment
Retail Sales of Consumer Goods
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