Beiji A CHINESE WEEKLY OF NEWS AND VIEWS Vol. 31, No.l January 4-10,1988 ^^^^^^^JjUdJ^IU Deng on Hong Kong and Maintenance of Policy Beijing"^- HIGHLIGHTS OF THE WEEK Deng on Maintaining Hong Kong Policy VOL. JW.-NO.1.1 \M.IARY 4-tO. l^SS • At a meeting with members of the Hong Kong Special Administrative Region's Basic Law Drafting Committee last April, Deng Xiaoping stressed the consistency of China's policy CONTENTS on Hong Kong. We present the full text of this important policy statement (p. 14). Also printed is a review of the formation and NO- THE EDITORS development of the "one country, two systems" policy, which ( hina orm r.nicis lis lOih was applied in resolving the Hong Kong question and is equally applicable to Taiwan (p. 17). China's Reform Enters Its 10th Year Work.PJ:bgressing on HK • Encouraging progress has been made since China launched Basic-Law its economic reform programme. But there are still problems. Harbin Stamps Out CorfupU'on The one that worries the government and people most is rising HPC Condemns US Mcxldling prices. To remedy this, the government will seek to stabilize the Chijia Expels Reaclioiiary economy and extend the reforms in 1988. It will work out . Chin^.Ncws Highlights, 1987 measures to keep incomes in line with price changes so that Oasesjitound in Taklamakan Desert people's living standards do not fall (p. 4). Wecki Cluonideincc. 21-27) Controversy Over Tibet INTERH^TIONAI [sracU Palestinian Uprising • China protests against US interference in China's internal Br||^allv Suppressed affairs concerning Tibet (p. 6). A revealing book review which VVesl«rn I'.urope- INI- Treaty describes US involvement in Tibet since World War 11 helps RcjEei\es Tepid Praise explain China's anger from a historical perspective (p. 31). World Opens to Chinese Films Top 10 World News Events Of iB$7 12-13 • China's first major film festival demonstrated the rapid Current Policies & Prospects progress made by the country's film industry over the past few form 14 years. A wide variety of themes and styles were presented and 'One Country, Two Systems' both young and established directors made their mark. The Concept: Its Formation and festival showed that Chinese film making has come of age, and Development 17 Chinese, films are gaining appreciation abroad (p. 19). Chinese Films: Can They Go to the World? 19 Time Running Out for President Reagan Races Against Time Reagan 25 • With the Iran-contra scandal cooling down and the INF CULTURE/SCIENCE 29-30 treaty signed with Moscow, US President Ronald Reagan has BOOKS 31-34 regained some of his political prestige. But while he would like COV^R: Scenes from Chinese films. to completely restore or even improve his former image, his days in.the White House are numbered. It will be hard for him to attain all his goals in this election year (p.25). Published every Mondav* by Subscription rates (1 year) USA US$24.00 BEIJING REVIEW General Editorial Office Tel; 893860 English Dept Tel: 831.5599 Ext. 546 Australia A.$24.00 Canada Can.$23.00 24 Baiwanzhuang Road, Distributed by China International Book New Zealand NZ.$33.00 Belling 100037 Trading Corporation (GUOJI SHUDIAN) The People's Republic of China P.O. Box 399, Beijing, China UK £13.00 m NOTES FROM THE EDITORS China's Reform Enters Its 10th Year by Jin Qi hina's reform, oriented to• plete. still ineffective or as yet Invigorating enterprises, especi• Cwards market forces and a untried. ally the large key enterprises, in vigorous economy, is nine years This year, the Chinese govern• line with the prijfciple of old. Its development, though not ment will stabilize the economy separating ownership W6m man• all smooth, is still encouraging. In and deepen the reform. It will agement power, is the linchpin of the first eight years of reform, focus on strengthening macro- economic structural reform. Over GNP, state revenue and per-capita economic control, • establishing the last nine years, enterprises, as income all doubled, and more enterprise management mechan• independent • commodity pro• progress was made in 1987. Total isms and developing the socialist ducers, have been given auto• grain output is expected to reach market system. While controlling nomy. In the past two years, many 400 million tons, second only to demand, it will increase supply. It enterprises have implemented the the record year of 1984; total will ensure an appropriate and contract responsibility system and industrial output value is es• steady economic growth and strive an element of competition has timated to have grown by 14 to improve product cjuality and been introduced. Enterprises have percent; heavy and light industries economic returns. been allowed to keep more of any were kept in balance. Foreign This year the government will increased profits, and to reward trade and finances turned out curtail credit and keep the money hard work with more pay. better than expected. (Beijing supply under strict control. In co• Enterprises now have money and Revicn- will publish the Stale ordination with the reforms in a greater ability to develop and Statistical Bureau's estimated planning, finance, material supply renovate. 1987 figures in issue No. 2). and foreign trade, China will However, some problems have Inflation has become a pro• establish mechanisms for regulat• arisen. For example, many blem, however. Price rises have ing the macro-economy. It will enterprises failed to comply with continued at an annual rate of 6-8 first use funds and materials for the state's rule that enterprises percent for the last three years, the budgeted and key projects. It should spend 60 percent of their especially in the 29 large and w ill firmly cut down the number of operational funds on production medium-sized cities including non-budgeted and unnecessary and the rest on welfare and Beijing and Shanghai. For a while projects. The state will also bonuses, and have instead spent last July price rises moved into control the retail price index, keep most of the money on welfare and double digits (10 percent). People financial deficits at levels below bonuses, resulting in a further worry that unless price rises arc last year's, and ensure a better expansion of consuinption funds. checked, the benefit from the foreign exchange balance than last reform will be cancelled out. The year. Taking advantage of relaxed government has adopted some Meanwhile, according to the controls, some enterprises raised emergency measures to remedy 13th Party Congress" plan. China prices without authorization. this. Pork, eggs and sugar have will press ahead with political Some enterprises, which mono• been rationed in the state stores. restructuring, separate Party from polize the production of commod• Price rises point to economic government functions, and reform ities in short supply, joined lawless instability, resulting mainly from government organizations. The retailers in speculation to disrupt excessive demand. Inordinate State Council will submit the the market and harm the in\estment in capital construc• central government's plan for consumers' interests. tion, consimiplion outstripping reform to the Seventh National All this points to the urgency of production and excessive money People's Congress session to be establishing a mechanism for supply ha\ remained uncorrected held in March for approval. This enterprises to regulate themselves for a number of years. These move will change the and relevant legal apparatus. It is problems arose from inadequate government's economic manage• expected that such legislation will reform rather than from the ment functions: taking a step away be laid down in the Enterprise Law reform itself. That is. the from direct control of enterprises to be discussed and approved by economic regulator) mechanisms and towards indirect control the National People's Congress in which are to be established mainly through economic and March this year. Laws and through the reform are incom- legislative means. regulations on economic associ- 4 Bt;MlNC, RF^AinW. .lAMiARY 4-4(1. lySS EVENTS/TRENDS Work Progressing on HK Basic Law fter more than two years of Lu said the purpose of the basic A work, the Hong Kong Basic law is to ensure the prosperity and Law Drafting Committee has stability of Hong Kong. It will completed a preliminary first increase the region's autonomy, in draft. After adjustments and accordance with the principle of ations, private enterprise and improvements, the draft will be letting the Hong Kong people restrictions on and punishment of submitted to committee members administer Hong Kong. Under the jeopardizing monopoly are also for discussion at their next new law, for instance, the Hong being dratted. meeting. Kong legislative body will have Extending markets under the The 10-chapter law is described real power; currently, it is only a guidance of the state plan is as a mini-constitution for the consultative organ. Also, final essential for vitalizing the enterpr• future Hong Kong Special appeals in legal cases will be ises and developing the socialist Administrative Region, which is decided in Hong Kong, instead of commodity economy. In the past to be founded when China in London, as at present. few years, the consumer goods and officially reassumes its sovereignty "As far as I have heard," Lu capital goods market have ex• over the region in 1997. said, "the Hong Kong people panded and spread across the "We have finished drafting nine welcome Deng's speech to the country. Meanwhile, the capital, of those 10 chapters. Now what we committee last April." - Many labour, technology, information need to do is to put these chapter Hong Kong people have been and real estate markets are drafts together, and discuss and worried that China may change its quickened.