• A CHINESE WEEKLY OF NEWS AND VIEWS Vol. 32 Nos. 7-8 February 13-26, 1989 China's Foreign Policy: Changes Through th^Os BEIJING REVIEW VOL. 32, NOs. 7-8 FEB. 13-26, 1989 CONTENTS Tibetan Independence'—Fact or Fiction? • Using first-hand accounts and historical documents, NOTES FROM THE EDITORS 4 the book 100 Questions About Tibet answers many of the Can Inflation Be Curbed? questions raised about Tibet in recent years. Extracts published here examine various issues of Tibetan history and claims to Tibetan independence (pp. 21 and 44). EVENTS/TRENDS 5-9 Bainqen Lama's Last Days Bhutto Elaborates Bilateral Relations Benazir Bhutto Visits China Sino-Soviet Summit in Sight • In an exclusive interview on February 11, visiting Bi-Weekly Chronicle Pakistani Prime Minister Benazir Bhutto told Beijing (Jan.29-Feb. 11) Review that her visit was an elegant expression of the Pak-Chinese friendship and she hoped for more visits in the future. She also expressed her views on Afghanis• INTERNATIONAL tan, Pak-Indian relations and Pakistan's domestic issues Exclusive Interview: Benazir (p. 10). Her three-day visit was covered in a short report Bhutto On Pak-Chinese Ties 10 (p. 6). China's Foreign Policy: A 198Crs Can Inflation Be Curbed? Tune-Up 12 Moscow Takes New Look at UN • The retail price index has risen every year since 1985. In 1988, it stood 18.5 points higher than in 1987. What can be done to curb it? China's anti-inflation strategy involves slowing economic growth, axing capital con• CHINA struction projects, and restricting the money supply in a 'Tibetan Independence'—Fact or bid to reduce demand. Already price rises have started Fiction? 21 to fall, but fully controlling inflation is a long-term project (p. 4). Unions of Management and Workforce 27 Expanding Role for China's Unions For Your Reference: China's Trade Unions 28 • As China's reform programme penetrates ever deeper, the country's trade unions have played an ever-greater A Journey Through Henan 32 role in improving enterprise management, defusing po• tential conflicts, safeguarding women's rights and prom• BUSINESS/TRADE 39-41 oting the development of foreign-funded enterprises. Beijing Review talked to several trade union leaders to FROM THE CHINESE PRESS 42-43 find out how their organizations operate (p. 27). BOOKS 44-45 Strong Growth for Pharmaceuticals TOURISM 46-47 • With its foreign trade volume expanding by an annual CULTURE/SCIENCE 48-50 average of 50 percent during the last few years, China's pharmaceutical industry has become one of the most COVER: On the fivst day of Tibetan vibrant sectors of the economy. Last year, exports earned New Year, a woman prays for a China US$1.2 billion, while just US$50 million was bumper harvest. Dai Jiming spent on imports (p. 39). Unless written by Beijing Review staff, the opinions expressed in signed articles do not necessarily reflect the view of the Beijing Review editorial board. Director/Editor-in-Chief; Wang Youfen Published every lyionday by Subscription rates (1 year): Tel: 893363 BEIJING REVIEW Australia JV.$29.00 TLX; 222374 FLPDACN 24 Baiwanzhuang Road, Beijing 100037 New Zealand NZ.$39.00 The People's Republic of China • FAX:8314318 UK 14.50 Distributed by China International Book e General Editorial Office Tel: 8314318 USA US$29.00 Trading Corporation (GUOJI SHUDIAN) English Dept Tel: 8315599 Ext. 546 P.O. Box 399, Beijing, China Canada Can.$25.00 Can Inflation Be Curbed? by Dai Yannian hina's retail price index Initially it was held that halted or postponed, cutting has risen annually since China's inflation was caused 33.4 billion yuan's worth of in• C 1985, culminating in by shortages of pork and veget• vestment. The work still con• 1988 with a figure 18.5 percent ables. Indeed, this has been tinues, and another 50 billion higher than in 1987. This has a factor contributing to price yuan is expected to be axed sparked severe public anxiety. rises. But it only affects a lim• this year. Fixed assets invest• To check inflation and solve ited number of commodities. ment this year is expected to other problems, China has set Furthermore, as prices of pork be cut by 20 percent compared forth on a policy of improving and vegetables have gone up, with that of last year. the economic environment, their quantities have increased Social consumption, an im• rectifying the economic order until their prices stabilized portant part of the excessive and comprehensively deepen• and even started to fall. There• j demand, will also be kept un• ing its reforms. The first target fore, this factor can only cause der strict control. Stiff mea• is ensuring price rises this year short-term and partial price sures will be adopted to reduce are lower than last year's. Na• rises; China's present price group purchasing which has turally, it has universal popu• hikes have gone far beyond expanded enormously over the lar support, but can it be real• this. past few years. All funds that ized? China has witnessed contin• can fuel consumption, other Curtailing inflation involves ued price rises across the than for wages and normal a series of complex and related board: in agricultural and in• bonuses, will also be severely problems. First, it has to dustrial products, consumer curbed. be understood why inflation goods and daily necessities. Since 1979, China's money needs controlling. Then its According to the State Statist• supply has grown at an average causes must be analysed, and ical Bureau, 60 percent of the annual rate of more than 20 finally effective measures tak• 1,500 commodities comprising percent, while the gross na• en to check it. the retail price index rose in tional product (GNP) has been Previously, some people cost during 1987, and 90 per• climbing at an average of just argued that a low inflation cent increase last year. The 9.4 percent. rate could stimulate and bene• main reasons for this were the Because of this, China's cen• fit economic growth. overheated economy, demand tral government is now pur• Some Western countries outpacing supply and the ex• suing an austerity policy. The have adopted such a policy cessive amount of money is• money issued this year will be and achieved successful re• sued. tangibly less than in 1988. sults in the short-term. Howev• Most prominent has been At the same time, greater at- er, they did so under con• the expansion in investment in : tention will be paid to absorb- ditions of over-production fixed assests. At present, for ing funds lying idle in socie- to stimulate demand. In example, state-owned units ' ty. At present, Chinese citi• China, the situation is rev• have committed themselves to zens have nearly 380 billion ersed: production is inade• investing 1,000 billion yuan in yuan deposited in bank sav• quate, and social demand outs• fixed assets—far beyond the ings' accounts, but they still trips supply. A slight inflation state's financial capacity. j hold 170 billion yuan in cash policy could only further sti• As a result, China is drast• I in their hands. To attract this mulate demand, aggravate ically pruning construction I money and offset the devalua- shortages and fuel inflation. projects, checking all of them I tion caused by inflation, banks Now, many Chinese people already underway, particular• i have gradually raised interest have realized the damage done ly auditoriums, hotels, guest rates. This measure will simul• by inflation, and the Party and houses and other large build• taneously increase their own government have taken a clear ings. By the end of last Nov• i resources and cut the amount and determined stand to ember, 10,220 projects across [ of money in circulation, so re• curb it. the country had been either ducing pressures on the mar- BL.1J1NC, REVIEW, I EBKLARV I'JSV ket. The state is also preparing reforms to channel surplus so• cial funds into property by commercializing housing and Bainqen Lama's Last Days selling off some small state- owned enterprises. Reducing the inordinate so• ainqen Erdini Qoigyi the Chinese Communist Par• cial demand is indeed a dras• Gyaincain (the tenth ty's policies on nationalities tic measure to curb inflation B Panchen Lama) died of a and religion, and a symbol of —like removing the firewood sudden heart attack in Xigaze, the unity of the Tibetan and from beneath a cauldron. But Tibet, on January 28, leaving Han people. "It also symboliz• it will be simultaneously com• behind a legacy for which he es the patriotism of religious bined with steps to increase worked very arduously during circles and the people at large production of farm and side• his final days. in Tibet," he said. line products, such as grain, Bainqen, vice-chairman of Bainqen pointed out in his cotton, edible oil, meat, poul• the Standing Committee of the speech that all former Bainqen try and eggs, as well as indus• National People's Congress Lamas loved their motherland trial goods, energy, and raw and honorary chairman of the and had made outstanding and semi-finished materials in Chinese Buddhists Associa• contributions to maintaining short supply. tion, left Beijing by a special the unity of the motherland In order to restrict prices, plane for Xigaze on January and the nationalities, as well market control is being tigh• 9 to preside over the opening as the internal unity among tened. Apart from state priced ceremony of the newly built the Tibetan people. commodities, the government Great Stupa,.which houses the He also spoke out on the will set ceilings for goods with remains of the fifth to the "cultural revolution," during floating prices.