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Beijing Scene, Volume 5, Issue 20, August 6 - 12


Fortune Telling
As the fortune telling criminal case of the year unfolded in Handan City, Hebei Province, a number of opinions emerged on the hotly debated ! topic of whether or not a fortune teller is committing a crime of fraud or running a legitimate profession. Journalists interviewing a range of representatives of various social strata involved in the case revealed the following opinions:
The Vice Procreate told journalists, "This case is very difficult to determine whether it is a crime or not as this fortune teller used the I-Ching in telling fortunes, furthermore there is no plaintiff, it is not clear what kind of crime is involved and therefore it is hard to fix the crime on this act."

The Public Security Bureau told journalists, "The I-Ching has intrinsic scientific aspects and you can do research using it, but it is feudal superstition if used for fortune telling activities and this is a criminal violation and act of crime and fraud."

! The lawyer on the case told journalists, "Based on the criminal law there is no crime for telling fortunes, and if it is a civil case there must be a plaintiff and as nobody is suing the client then there could not be any crime."

The apprentice of the fortune teller, named Miss Wang, told journalists, "My master is not a cheat but a psychology doctor and when people come to him with problems, he always consoles them."

Other fortune tellers in this profession told journalists, "The fortune teller protects the stability of the society, for instance some lunatics want to kill people and then come to the fortune teller to ask for the result of such killing and the fortune teller can calm down the lunatic and therefore this is good for society."
(Yangcheng Evening News)

Taiwan Trade Sanctions
China may impose trade sanctions against Taiwan, targeting the textile industry, in retaliation for Mr. Lee Teng-hui’s claims to statehood, the Economic Daily News says.

According to Chinese customs statistics, Taiwan is the Mainland’s second largest supplier after Japan. Export figures here show that China is Taiwan’s third largest export market after the United States and Hong Kong.

Anti-dumping duties might be levied on imported Taiwanese textile and polyester items as punitive measures, Straits Exchange Foundation deputy secretary-general Wu Hsin-hsing was quoted by the paper as saying.

"We don’t rule out the possibility of China taking special actions, including trade sanctions, after President Lee redefined ties with the Ma! inland as "special state-to-state relationship," Wu told the paper.

"Information from the Mainland indicated that Beijing is likely to impose anti-dumping duties on the two products given their large amount of exports to the Mainland," Wu said, warning local businessmen to take heed.

Ten Mainland textile and chemical producers have lodged dumping complaints against several suppliers in Taiwan and South Korea, but the Chinese authorities have yet to decide whether to take any action, the paper says.

Lee’s statehood comments on July 10 enraged Beijing, which considers Taiwan as a renegade province, and fueled cross-strait tensions. Indirect trade between Taiwan and China rose 7.5 percent year-on-year to US$9.85 billion in the five months to May, accounting for 11 percent of ! the island’s total trade in the period.

Exports to the Mainland grew 9.8 percent to US$8.15 billion in the five months to May of this year.

Telecom Mavericks Wage war
A pair of scrappy Chinese entrepreneurs widely seen as crusaders against the state’s telephone monopoly have lost a key court case, but will appeal yet again, their lawyer says.

Chen Zhui and Chen Yan, brothers from coastal Fujian province, have been embroiled in a long legal battle with the government since police raided their private telephone business in late 1997, confiscating their equipment and money.

Their firm, which made use of Internet Protocol (IP) telephone technology, did brisk business by letting customers make long distance calls over ! the Internet for a fraction of the price charged by China Telecom - the sole significant telecoms service provider at the time.

Outraged that the police had apparently been sent by local telecoms officials, who act both as industry regulators and China Telecom executives, the brothers decided to sue.

Two years and three court cases later, their legal travails are still far from over, but sector analysts say their David vs Goliath story may have helped shape the future of competition in the sector and might even set new legal precedents.

In July 1998, a district court in Fujian ruled against the Chen brothers, saying the Public Security Bureau had the right to confiscate their equipment while it investigated them on suspicion of "illegally operating telecommunications.’’

! They appealed, and in January their doggedness seemed to pay off. An Intermediate Court judge dismissed the lower court ruling, saying telecoms fell under the jurisdiction of administrative offices, not criminal investigators. The judge ordered the lower court to hold a retrial.

Last week, the retrial ended and the verdict came in: The police can hold the brothers’ goods while investigating them for illegally operating telecommunications.

"Their ruling was exactly the same as the one that has been dismissed," the brothers’ lawyer, Yang Xinhua says. "There’s a problem with that, if you ask me," he says. The brothers will appeal yet again he adds.

The court saga has attracted the attention of the domestic media, where articles critical of China Telecom’s exorbitant fees and! poor service have become standard fare.

Analysts say the story symbolizes the changing landscape of China’s telecoms sector, already a vastly different world from when the Chen brothers were in business. Now, instead of just one telecoms service provider in China, there are two - not including other companies approved to provide value-added telecoms services along the lines of what the Chen brothers were providing. China Telecom is in the process of being broken up into at least four companies, industry officials say.

"Had they stamped it out at the Chen brothers’ level, maybe China wouldn’t have made it to the next step and issued trial licenses,’’ says Ted Dean, a Beijing-based Internet consultant with BDA, referring to IP telephony licenses handed to China Unicom and Jitong - China Telecom’s new! competitors.

While the Chen case may have served its purpose on the telecoms front, it is attracting fresh interest in China strictly on the legal merits.
"As far as I know, this has never happened before," says another lawyer.

University Expansion
Of more than three million students who sit China’s national entrance examinations every year, only an elite one-third win places in a university system that remains tiny compared to the population of nearly 1.3 billion.

Disappointment for the families of those who fail is intense. In a fast-growing economy starved of educated people, a university degree virtually guarantees an upwardly mobile career path.

Looking closely at this disappointment, government leaders believe the ! country’s increasingly wealthy households are willing to spend on their children’s education - and are moving fast to harness this spending as an economic growth engine.

The Ministry of Education at a national meeting last month mapped out a plan for a mass expansion of universities. A ministry spokesman says they decided to increase the number of new students admitted by 530,000 this year to 1.61 million - a whopping 51.8 percent rise from 1998.

Admissions had grown at an average rate of just 10 percent annually in recent years.

"Next year will also see a large-scale increase in matriculation," says Li Shouxin, a senior State Development Planning Commission official who is helping lead the reform.

The Ministry of Finance has already agreed to greater state investme! nt in universities to help cope with the influx, he says, adding that average tuition fees would also be increased from ¥3,000-4,000 (US$361-482) to ¥5,000 (US$602) per year.

Li told the Liberation Daily recently the expansion was aimed squarely at increasing private spending, which accounts for most of the economy’s domestic demand.

Each university student injects ¥10,000 (US$1,200) of spending into the economy each year in the form of tuition, living expenses and purchases, he says.

Hu Angang, a researcher at the Chinese Academy of Social Sciences, a key government think tank, says education only accounted for only 5.7 percent of urban residents’ per capita spending in 1997.

"If per capita educational spending can reach 10 percent of (families’) savings! in the future, it would amount to ¥600 billion (US$72.3 billion)," he says.

More students are also expected to mean a growth in book publishing, personal computers, the construction of educational buildings and student housing and infrastructure.

Hu says the universities clustered in Shanghai, Beijing and Xian will become "pole industries" for the cities. Oversupply in the economy has slowed growth and fostered retail inflation of more than three percent.

In an interview, Li cites this bleak consumption picture in saying: "Higher education is one of the only areas where the state can find a buyer’s market.

"An important aspect of parents’ future spending will be their children’s education," he adds.

Experts say that statement is becoming more tru! e than ever as the first Ôlittle emperors' - the pampered products of the one-child family planning policy introduced in 1980 - reach university age. Because family elders including not only parents but grandparents pin their aspirations and old-age financial security on these only children, they commit a huge proportion of discretionary spending to their success.

An important side-effect of the university expansion will be to relieve China’s serious shortage of graduates - a problem which experts say has created bottlenecks in all areas but particularly in the modernization of the financial sector and manufacturing industry.

Li says just three percent of Chinese aged 25 or over had received any higher education in 1995 - low compared not only to wealthy Western nations but fellow developing countries like India! . The figure is around 16 percent in countries like Canada.

William Fischer, the dean of Shanghai’s China-Europe International Business School, warned that the quality of education would undoubtedly suffer in the country’s rush to expand student bodies in the short term.

"Faculty is the scarcest commodity," he says, predicting that qualified instructors would be spread extremely thin.


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