Chapter III PRINCIPAL REGIONAL CONDITIONS A. ASIA AND THE PACIFIC 1. China and Neighboring Countries and Regions (a) Overview uring 2001, China sought sustainable economic growth through active fiscal policy and continued to attach importance to social D stability in its domestic administration. Over the course of the year, China achieved major results on the international stage, including the July decision that awarded the games of XXIXth Olympiad Beijing 2008 to China, the successful hosting of the Asia–Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting in October in Shanghai, and the acces- sion to the World Trade Organization (WTO) in December. Given the fact that major government leadership personnel changes are expected at the 16th National Congress of the Communist Party of China scheduled for autumn 2002, China is expected to run its government even more cau- tiously, giving priority to domestic stability. 145 Chapter III: Principal Regional Conditions (b) Domestic Politics While China has maintained comparatively stable political administration, problems concerning the bribery and corruption of the Communist Party of China (CPC) and of government leaders accompanying the advance of the market economy remain severe. In response, along with harsh prosecution of offenders regardless of their rank, the government has developed “Three Emphases” education1 and the “Three Represents” study movement2 na- tionwide, tightening ideology within the CPC, and has worked to secure stability within and outside the CPC and the government. In particular, “Three Represents” was re-emphasized and was thereby established as key ideology for future party building by the General Secretary of the 15th Central Committee of the CPC Jiang Zemin at a grand gathering in July 2001 marking the 80th anniversary of the founding of the CPC. In his speech on that occasion, General Secretary Jiang also announced a new policy whereby private-sector entrepreneurs would become eligible for CPC membership. Meanwhile, the Chinese government intensified prosecution of the “Falun Gong,”3 which they branded as an “illegal organization” and a “cult” in July 1998, and of independence movements in the Xinjiang Uygur Autonomous Region, which they labeled as “terrorist forces” in October 2001. In other developments related to China’s policy toward minority peo- ples, in November 2001 the Information Office of China’s State Council issued its fourth Tibet white paper, Tibet’s March Toward Modernization. Emphasizing the need for dramatic regional development and for the preservation of traditional culture, the paper criticized the Dalai Lama. (c) The Chinese Economy In March 2000, the Chinese government officially approved a report concerning China’s 10th Five-Year Plan at the Fourth Session of the Ninth National People’s Congress. This plan aims at achieving annual economic growth on the order of 7 percent over the five-year period. Following the 8 percent economic growth realized during 2000, the 1. “Three Emphases” is the education about the importance of studying, being political- minded, and being honest and upright. This educational campaign has been vigorous- ly implemented nationwide since March 1999, with the goal of improving the quality and morality of party and government officials. 2. “Three Represents,” which was announced by General Secretary of the 15th Central Committee Jiang Zemin in February 2000, state that the CPC “must always represent the development trend of China’s advanced productive forces, the orientation of China’s advanced culture, and the fundamental interests of the overwhelming majori- ty of the people in China.” 3. Falun Gong is a qigong and religious promotion group which has been gaining strength by providing a psychological foundation to individuals who find it difficult to adjust to the new order, and the Falun Gong movement has been irritating the Chinese gov- ernment authorities. 146 Asia and the Pacific Chinese economy continued to achieve steady domestic-demand driven growth during the first half of 2001, expanding at an annualized rate of 7.9 percent. From the autumn of 2001, however, Chinese exports turned flat under the influence of the global slowdown centered around the U.S. economy, dropping the growth rate for the full year to 7.3 percent. At a December meeting, the Central Economic Working Conference con- firmed that the government would continue its economic administration centered around domestic-demand expansion policies. China is facing a number of difficult economic policy issues, including reforming State enterprises, rectifying the disparities between coastal and inland areas, addressing problems concerning agriculture and farm villages, and estab- lishing a social security system. China’s accession to the WTO was approved on November 11, 2001, at the Fourth WTO Ministerial Conference held in Doha, Qatar (Taiwan’s accession was approved the following day). China then promptly notified the WTO of its acceptance of the WTO Agreements, and formally became a WTO member on December 11. China’s accession to the WTO is expect- ed to promote its policy of openness and reform, and to enhance transparency, legal predictability, and stability in relation to the interna- tional economy surrounding the Chinese market. (d) Foreign Relations A peaceful international environment and favorable economic coopera- tion with individual countries are critical for China to maintain economic development, which is the country’s highest priority. In pursuit of those ends, China is vigorously pursuing an omni-directional foreign policy. Following the September 11 terrorist attacks in the United States, China expressed that it would support the U.S. in combating terrorism. China has also emphasized its position that it hopes to strengthen deliberations and cooperation at the United Nations Security Council. China’s relations with the United States worsened temporarily following the collision of a U.S. Navy patrol plane and a Chinese jet fighter over the South China Sea in April,4 but the relations improved following U.S. Secretary of State Colin Powell’s July visit to China, Foreign Minister Tang Jiaxuan’s September visit to the U.S., and the U.S.–China Summit meeting held in Shanghai in October. Nevertheless, there are various concerns between the U.S. and China. These include China’s opposition to the U.S. Missile Defense (MD) and to the U.S. selling arms to Taiwan, and U.S. apprehension regarding China’s human rights record and proliferation of missile technologies. 4. On April 1, 2001, a U.S. Navy patrol plane collided with a Chinese jet fighter over the South China Sea and then made an emergency landing on Hainan Island. The 24 crew members of the U.S. plane returned to the U.S. on April 12. The U.S. and China reached a basic agreement on the return of the U.S. plane on June 6, and the return was completed on July 3. 147 Chapter III: Principal Regional Conditions Relations between China and Russia are growing increasingly close. For example, at the “Shanghai Five” Summit meeting5 in June, the lead- ers of China and Russia expressed their joint opposition to the U.S. MD. Additionally, during President Jiang’s July visit to Russia, the two coun- tries signed the Treaty on Good-Neighborliness, Friendship and Cooperation and issued the Moscow Joint Statement. During the “Shanghai Five” Summit, the group admitted Uzbekistan as a sixth mem- ber, renamed itself the Shanghai Cooperation Organization (SCO), and deepened its wide-ranging regional cooperation in combating interna- tional terrorism. Bilateral relations between China and North Korea also advanced dur- ing 2001, as General Secretary of the Korean Workers’ Party Kim Jong Il made an unofficial visit to China in January (following a similar visit in May 2000), and Chinese President Jiang Zemin visited North Korea in September. China also played a major role as the host country for the Asia–Europe Meeting (ASEM) Foreign Ministers’ Meeting held in Beijing in May and for the APEC Economic Leaders’ Meeting held in Shanghai in October. On the whole, China continued to actively develop its multilateral diplo- macy, including the agreement reached, in principle, at the November ASEAN+3 (Association of Southeast Asian Nations and Japan, China, and the ROK) Summit meeting to conclude an ASEAN–China Free Trade Agreement within 10 years. (e) Hong Kong Hong Kong became a Special Administrative Region (SAR) of China fol- lowing its return to China on July 1, 1997, and it has basically been functioning smoothly under China’s “one country, two systems” principle.6 While the Hong Kong economy recovered from the downturn caused by the Asian currency and financial crisis, it was then affected by the U.S. economic slowdown and other factors, and it posted an economic growth rate of 0.1 percent during 2001. The present economic issues include reviv- ing the real estate market, countering the deflationary trend, and lowering the high unemployment rate. In March 2001, Chief Executive of the Hong Kong SAR Tung Chee Hwa visited Japan, paid a courtesy call on Prime Minister Yoshiro Mori, and held talks with Minister for Foreign Affairs Yohei Kono. In December 2001, Chief Executive Tung Chee Hwa visited Beijing and made the decision to start talks on Mainland/HK Closer Economic Partnership Arrangement. 5. The first “Shanghai Five” Summit meeting took place among the leaders of China, Russia, Kazakhstan, Kyrgyz Republic and Tajikistan in 1996 in Shanghai, and addi- tional Shanghai Five Summit meetings have been held annually ever since. The group was originally launched to advance military confidence-building measures for border areas, but from 1998 the Shanghai Five expanded its scope to encompass wide-rang- ing deliberations regarding political, security, economic, cultural and other issues. 6. The “one country, two systems” principle is a system providing Hong Kong with a high degree of autonomy, except in the areas of diplomacy and defense. 148 Asia and the Pacific (f) Taiwan Democratic Progressive Party (DPP) leader Chen Shuibian assumed office in May 2000 as the head of a minority government holding approximate- ly 30 percent of the seats in the Legislative Yuan (Taiwan’s parliament).