A CHINESE WEEKLY OF NEWS AND VIEWS Vol. 30, No. 11 March 16, 1987 Gorbachev's Economic Blueprint China's Stand on Narcotics Control I Want to be a Soldier When I grow up. Photo by Wang Wuyi After Class. Photo by Gao Jinlong BeijingRfvir HIGHLIGHTS OF THE WEEK VOL. 30, No. II MARCH 16, 1987 CONTENTS NOTES FROM THE EDITORS 4 P-5 p. 14 Income Tax Cms Down Disparilv EVEKtTS/TRENDS 5-9 Shuilz Finds an Unchanged China Goal Set to Ensure Agricultural Scientific Revolution and Reform Growth liniri^m l.rvalTccicd b\t • This speech by the Chinese scientist Qian Xuesen discusses Struggle the development of the scientific, technological and social Policy Guides Anti-l.ibcrali/ation revolutions in the world today and the tasks confronting Drive scientists. It is to be published in two instalments (p. 14). Classical Music in C rescendo Wc.-klv ChroniJc (March 2-«) Soviet Economic Reform: Theory and Practice INTERNATIONAL 10-13 Arms Control: Constructive Concessioni Prom Moscow • This overview of the current Soviet economic reform Pak-Alghanifitan: indirect Talk.s analyses changes in both theory and practice compared to End in Failure earlier reform campaigns. It also examines the obstacles and Korea: A Smccic Proposal lo Break opportunities Moscow is facing in this attempt to spur the Dc.idlock economic development (p. 18). The West: Unen-plcument Remains a Headache Sliultz in Beijing Scientific-Social Revolution and Reform 14 • Chinese officials told US Secretary of State George Shultz in Economic Reform in the USSR — Beijing that, despite speculation abroad, China will continue to An Overview 18 carry out reforms and its open policy. However, the struggle China's Attitude Towards Narcotics against bourgeois liberalization will last for a long time (p. 5). Control 21 Divorce: Traditional Ideas Receding 23-24 Avoiding Great Personal Income Disparity Facts & Figures: Income of Farmers on the Rise 25-26 • To reduce income disparity, China has published the provisional regulations on personal income regulatory tax, FROM THE CHINESE PRESS g7-28 under which a 20-60 percent progressive tax is levied on BUSINESS/TRADE 29-30 monthly income over and above 400 yuan. Because the tax only CULTURE/SCIENCE 31-34 applies to very high incomes and has numerous exemptions, Cover: Scieniist Qian .\iiesen only a small minority have found the tax increasing their Zhang Tongsheng burden (p. 4). General editorial Office Tel: 8*3860 US$22.00 Pwblished every Monday by Sub«riptinn prices (1 yeorji USA £^lish Oepnrtmeni Tel: 890951-S4d Con.$21.00 BEUiNG REVIEW Australia A.$33.00 Canado rjii'nhj'tcl ill Cliiiici Inlernatiofiol Book New Zealand NZ.$30.00 24 Boiwomhuang Rood, Beijing Trading Corporation (GOOJI SHUDIAN. The People's Repubtk of China f^.O. Sox 399, Beiiifig, Oiino UK £12.00 NOTES FROM THE EDITORS Income Tax Cuts Down Disparity by Liu Jianjun he provisional regulations on thusiasm, hindered the develop• and above 400 yuan. If someone's Tpersonal income regulatory tax ment of productive forces and thus overall monthly income is 1,000 went into effect January 1. It is made it impossible to eliminate yuan, the personal income tax he aimed at avoiding great disparity poverty. Under the new policy, pays should be 260 yuan, leaving in personal inconie. those who become prosperous his net earning at 740 yuan, still far Income structures have changed First can help those lagging behind higher than the current average. and incomes generally increased, to catch up and thus gradually At the same time, the tax mitigates with the economic structural attain the aim of common the personal income gap, and reform and the development of the helps uphold the principle of socialist commodity economy in common prosperity. the last few years. Before the With regard to personal income reform, city people relied on wages gained from writing, translations, for their expenses, now many have new personal income transfer of patent rights, licence incomes from other channels, tax seeks to reduce inordinate fees for patent implementation, including contracting businesses, gap between living standards supply and transfer of non-patent leasing, transferring patent rights among individuals while not technology, if that income is less and shares. This change eliminates than 4,000 yuan at a time, a 20 absolute egalitarianism and helps affecting people's percent tax is levied on everything break the "communal pot," motivations. Common over 800 yuan; if more than 4,000, motivating people, encouraging prosperity remains the final the tax is on 80 percent of the their creativity and boosting the goal. amount. With regard to interest, development of the economy. bonus and dividend, tax will be levied at a 20 percent rate in A small number of people, proportion to the amount of however, have incomes which are prosperity. This is one of the income each time. much too high, and a }arge income major tenets of the socialist No tax is levied on interest on gap has appeared. A survey of system, which also include the personal state treasury bonds, and 4,937 people in Xindu County in dominance of public ownership, other bonds issued by the state, southwest China's Sichuan Pro• the principle of distribution to interest on savings deposits in vince shows that only 82 people, or "each according to his work" and state banks, credit co-operatives 1.66 percent of the sampled, made the people being masters of the and post offices, welfare funds, more than 400 yuan a month, with state. Because China aims at pensions for the families of the the highest income being 2,080 common prosperity, it encourages deceased, relief funds, insurance yuan. The better-off people are some people to become well-off cash indemnities, settling-in al• mostly employees of village-run first, and needs to avoid an lowances, severance pay and enterprises and members of inordinate personal income gap. retirement pensions issued to specialized households. In 1986, There is no contradiction cadres and workers according to the average monthly wage for an between levying the personal unified state stipulations. urban worker was 111 yuan and income regulatory tax and allow• Chinese citizens residing within the average annual income of a ing a group of people to make a the territory of China are subject farmer was 424 yuan. fortune. According to the provi• to the personal income regulatory The policy of encouraging some sional regulations, regulatory tax tax. But because the tax only people to prosper through hard on overall personal income begins at a high rate of personal work which China has been (wages, bonuses, contracts, sub• income and tax exemption pursuing over the last few years contracts, services and property involves many items, very few has achieved good results. For• leasing) is progressive. For people people are within the scope of mulated on the basis of past working in Beijing, no tax is levied income taxation. The overwhelm• experience, it discarded the former on monthly income under 400 ing majority of Chinese citizens absolute egalitarian distribution yuan — a 20-60 percent progress• are not affected by the personal method which dampened en• ive tax is levied on the income over income regulatory tax. g BEIJING REVIEW. NO. 11 4 •i EVENTSARENDS ^••^—1 Shultz Finds an Unchanged China mission of the Central Committee of the CPC. At the top of the agenda of talks between Shultz and his counter• parts was China's openness to the West. In their meetings with Shultz, Zhao, Li, and Deng repeatedly assured the US Secre• tary of State that a shift from the present policies is out of the question. "We will never change our set policies. Why should we change the policies that have been so effective in recent years?" Deng told Shultz. Reform and opening to the outside world, however, do not mean abandoning the Party's leadership or the socialist road. "China's political line and policies implemented since 1978 have two aspects, upholding the four cardinal principles (adherence to the socialist road, the people's democratic dictatorship, the leadership of the Chinese Commu• nist Party, and Marxism-Leninism and Mao Zedong Thought); and carrying out reforms and opening the country to the rest of the world," Zhao said. "Some foreign friends have worries about the current situation in China mainly he visit to China by US which led to the complete because they have perceived the Secretary of State George normalization of diplomatic rel• T adherence to the four cardinal Shultz from March 1 to 6, his third ations between the United States principles as contradictory with visit during his term in office, and the People's Republic of China's reform and open policy," came at a time when some Western China in 1979. he continued, adding, "In fact, countries, particularly those that The importance both China and adherence to the four cardinal have direct interests in China, are the United States attached to principles and the reforms and beginning to worry about whether Shultz's visit can be seen in the open policy are one unified whole, China's open policy will change as composition of the US side, which with adherence to the four basic a result of the change in China's consisted of a large group of principles serving as a guarantee top leadership. Many Westerners journalists and such high-ranking for the continuation of China's are also concerned about the officials as State Department reforms and open poUcy." current struggle against bourgeois spokesman Charles Redman. The liberalization — a term frequently weight of the discussions can also Talking about China's internal used in Chinese press these days to be inferred from the list of Chinese situation, Deng said to Shultz, "It describe attempts to negate the Leaders Shultz met; Wu Xueqian, is impossible to accomplish leadership of the Communist state councillor and foreign socialist modernization and rid Party of China (CPC).