Full Text of Premier Zhu's Press Conference (II)

Q: Mr Premier, there is currently a hot debate in China about the stock market. Some people have warned against a market casino, others feel the risk of crush. Could you tell us about the Chinese Government's mid-term policy? Is there any timing regarding the merger of A shares and B shares and the merger of Shanghai and Shenzhen markets?

And there is another hot debate about the delisting of companies which are badly run. So far there has been no delisting. When will it happen? Are you ready to take harsh actions against such companies?

A: With regard to China's stock market, there are all sorts of comments and opinions. I think it is evident enough that people in China enjoy freedom of speech. I will refrain from making any comments on China's stock exchange, except I will tell you our set policy. Our policy is that we should strengthen the rule of law over the securities market, which will make them more standardized in their operation. We will strengthen regulation and ask them to enhance self-discipline.

Recently the CSRC has introduced some reform measures to the B-share market. This is a new attempt to reform China's stock market. The purpose is to open up an additional channel for investment for those Chinese citizens that own foreign exchange. The total amount of foreign exchange they own now stands at more than US$80 billion. We also hope that such a move will be able to attract more foreign investors to invest in the B-share market and promote the development of China's stock market.

Whether or not the A-share market and B-share market will merge -the CSRC has not talked about this yet. I have not ruled out such a possibility. So let's wait and see. But I think it will take a fairly long period of time.

With regard to the delisting of the poorly run enterprises, certainly this is a core issue that the CSRC is considering to strengthen regulations, and I am sure delisting would be one of the measures they would consider. It's on their minds.

Q: The general public feel very strongly about the income gap between different groups of people. In the 10th Five-Year Plan (2001-05), you have also called for the regulation of social distribution in order to avoid excessive discrepancies in income distribution.

What is your comment about the current gap in income distribution, and what forceful measures will the government adopt to solve the problem?

A: According to a survey done in 1999, the Gini co-efficient stood at 0.39, which was quite close to the international danger level. But for the following reasons, the situation is not as serious as it seems.

First, the income gap between urban and rural residents was something caused by historical reasons. At the moment, there is relative surplus in food supply and the price of grain has dropped, which has resulted in a decline in the increase of income for farmers in the grain producing areas. The CPC Central Committee and the State Council have attached great importance to this issue and we have taken it as our top priority to help increase the farmers' income. This has been given very prominent position in the report and we are going to adopt a series of measures to see their income increases.

Secondly, the income gap among urban residents. The reform of State-owned enterprises is not complete yet and there are still numerous workers who will be laid off or unemployed and the income gap between the working population on the one hand and laid-off workers on the other is widening. We are going to have these problems solved through the improvement and establishment of a standardized social security system and also through better work in helping them get re-employed.

Third, the monopoly has been formed because of historical reasons. Certain sectors and certain industries have been over paid. Let me quote a satirical poem to describe the industries that are pretty well-off in their salaries. They include the banking industry, securities industry, insurance industry, the power sector, telecommunication industry plus the tobacco industry. Those working in the oil and natural gas industry and the petrochemical industry are also pretty well paid.

And of course, we will resort to taxation as an approach to narrowing the income gap. For instance, the highest tax rate for personal income tax can be as high as 45 per cent. In other words, nearly half of the personal income will be turned over as tax. But the policy in taxation has not been adequately implemented. There is still room for improvement. So in the future, we will try to work hard and collect taxes in accordance with the law.

To sum up, with regard to the problem you have raised, it deserves careful attention, although it is not serious yet. We have already been working to resolve it.

Q: Do you genuinely believe that it was a lone madman with two bags of fireworks who destroyed a school?

A: I was really distressed when I learned the news of the explosion in the primary school in Jiangxi. I want to use this occasion to once again express my condolences to those who have lost their lives, also to the grieving families. I feel very sad because this incident occurred despite the fact that President Jiang made lots of important instructions on efforts to prevent explosions and accidents. The State Council has not performed its mission properly. I feel very sad and I carry a very heavy heart. I want to apologize and review and reflect on my own work.

After the incident occurred, the governor of Jiangxi hurried back from Beijing immediately to deal with the aftermath. The Ministry of Public Security also dispatched experts to investigate the causes of the incident, and they have submitted a formal report. The result was as I already told to the media a few days ago.

I know overseas media and media in Hong Kong did not agree with the explanation I gave them. They all chose to believe that the explosion was caused by production of fireworks by the students.

Therefore, I personally asked the Minister of Public Security Minister Jia Chunwang to send a six-member expert group to do an investigation on their own without wearing uniforms in Jiangxi.

They did report to me some clues. For instance, they said the school in 1999 did ask some students to mount fuse to fireworks in the name of work-for-study. But since an explosion incident in Pingxiang relating to the fireworks industry, the school had stopped such practices. At the scene of the explosion, no evidence has been found which would indicate the production of fireworks or the assemble of fireworks.

Today, there is no need for me to have a debate with those skeptical journalists, those from foreign countries and those from regions like Hong Kong and elsewhere in China. The fact is the State Council and myself in particular have not adequately implemented instructions of the CPC Central Committee and President Jiang in particular on avoiding those incidents. Having said that, I want to emphasize that I do believe no one is able to cover up historical truth, so investigation will continue until we get the full picture. But up to now there is no evidence that can be found to override the conclusion we already drew.

Here, I want to solemnly commit before the people of this country that we should learn lessons from this incident and I want to re-emphasize that we should formulate and reiterate regulations. That is, we will never allow anyone to ask students or minors to engage in activities and work that will pose danger to their lives. Should an incident occur that costs the loss of human life, then the head of the county, the village and the city would be sacked from office immediately; they will also be held criminally responsible for those incidents. With regard to the governor of the province, he will also be disciplined.

The State Council will certainly fulfil its commitments it has made to the Chinese people.

Q: Ever since 1998, people, including those from Taiwan, have had very high expectations about the press conferences that you give. The mainland has already listed national reunification as one of three major tasks, however, the two sides of the Taiwan Straits are still at stalemate. What measures can you come up with to break the deadlock? For instance, without setting any pre-condition, can you think of any measure to advance the "three direct links?" Or, could you explain and interpret the one-China principle more flexibly to bring about the breaking of the deadlock? For instance, in the latter half of last year, Vice-Premier Qian Qichen has stated that there is but one China in the world, mainland and Taiwan are parts of one China and China's sovereignty and integrity brook no division, could such moves help solve the problem?

A: With regard to the settlement of the question of Taiwan, all the statements made by the Chinese leaders are clear-cut and consistent. That is, this question should be resolved on the basis of the "one country, two systems" principle and the Eight-Point Proposal put forward by President Jiang.

The most essential issue is whether or not the one-China principle is recognized. If the one-China principle is not recognized, what can be discussed? If the one-China principle is recognized, any subject can be touched upon.

With regard to the "three links," we have made utmost efforts since 1979 in order to achieve "three direct links." The principles are clear: they are "one country, two systems," direct two-way and reciprocity.

We hope the Taiwan authorities will come back to the one-China principle. Under the one-China principle, any issue can be discussed. If they do not recognize the one-China principle, or even worse, they do not admit they are Chinese, then how can such talks get off?

Q: You gave a report on the outline of the 10th Five-Year Plan on March 5. By the year 2005, the Chinese people will have already completed the plan. May I ask at this time where you will be, the prime minister or a professor in a university or simply a retired man. In your opinion, when will you be too old to hold public office?

A: Indeed, recently I came across some reports, for instance a story carried in the Financial Times, which said that Premier Zhu is really old. In other words, I am already good for nothing. Some Hong Kong reports said that this will be the last time I deliver the report before Congress.

They are right in the sense that I am old, much older than perhaps all of you here. All I can say is that my term of office will last until 2003.

It is too early for me to declare who will succeed me as the next premier.

One thing is certain: I will be delivering the report on the work of the government next year and the year after next.

So I will be here again next year to host a press conference and will meet you all again.

As to what I am going to do after retirement, I have already answered very clearly in 1998 when I said I would press ahead without any hesitation and devote all I have to the country and the people until the last minute of my life. This is what I have been doing and this is what I am going to do.

Q: We know that last autumn some problems occurred with the funds in the Chinese securities markets, and there was a rectification effort that resulted in strengthened regulation. So my question is, in the next five years, what will be the focus of your regulation effort towards the securities market? Will you target your effort at listed companies, securities brokerages or the order of the market?

A: Beginning from this year, the primary task of the China Securities Regulatory Commission is to strengthen regulation through legal regime and to standardize the operation of the market to make sure the market is fair, equitable and open. Of course, the focus of the regulatory efforts will be the listed companies and investment funds. This will be a prolonged task, but we expect to achieve noticeable results this year.

Q: I've got a question concerning China's agriculture. The reform of taxation and fees in the countryside has been referred to as the third rural revolution following the land reform and the reform of the household responsibility system. Undoubtedly, this reform will fundamentally reduce the burden on Chinese farmers. But according to the results of the pilot project, some people have found that this might create new problems. For instance, organizations at the township level might not have adequate financial resources at their disposal, and education in rural areas will be underfunded as a result. What measures will the Chinese Government adopt to solve these problems?

A: You are very right in saying that the reform of taxation and fees in the countryside is a major revolution. We should never underestimate the importance, complexity and difficulty of this reform endeavour.

Every year we collect 30 billion yuan (US$3.6 billion) of agricultural tax from Chinese farmers, 60 billion yuan (US$7.2 billion) from township contributions and funds raised by villages, and money is also taken away from farmers in the form of unauthorized fees and the collection of funds. So perhaps totally in a year, 120 billion yuan (US$14.5 billion) or even a larger amount than that is taken away from farmers.

Indeed, as a result of the reform of taxation and fees, we will increase the 30 billion yuan (US$3.6 billion) of agricultural tax to 50 billion yuan (US$6 billion). That is, the rate of this type of tax will be increased from 5 per cent to 8.4 per cent. And with regard to the other fees, like township contributions and money retained by villages, that is 60 billion yuan as I explained earlier. All sorts of other unauthorized fees will no longer be collected. This will result in a big shortfall in financial resources. In the face of this problem, and in face of the shortfall, the central government will make available 20 to 30 billion yuan in subsidies to the countryside and to provinces and cities with difficulties. Nevertheless, maybe there will still be a shortfall of financial resources. So to solve this problem, we will have to reform the educational system in the countryside because most of the fees previously collected actually found their way to support education. So if the educational system is not reformed, there will not be enough money to support it. Generally speaking, we are determined to go forward with this reform. We want to reduce the burdens of Chinese farmers on the one hand and, on the other, we must ensure that compulsory education will be made universally available in the countryside. We are determined to have this done. We will first start with the pilot project in Anhui Province. After that, the experience will be spread to elsewhere throughout the country. This is regarded as a very important task for the State Council, but if this reform endeavour turns out to be a great success, then agriculture will have a solid foundation. The farmers, with their burdens reduced, will lead a happy life and the national economy can have a more solid foundation to continue to develop.

Q: I noticed in your work report that you included several elements of Jiang Zemin's theories, including the "Three Represents" and Rule by Virtue. Since you are famous for very plain and easy-understanding language, can you explain to us what the Three Represents means to the man on the street and also what Rule by Virtue means as you plan to practise it?

A: The theory of Three Represents and the philosophy of Rule by Virtue put forward by President Jiang Zemin is actually the extension and development of Marxism theory. This is not the work of President Jiang himself. The entire CPC Central Committee have agreed on those points. But I don't think today is the fitting occasion for me to give you a thorough elaboration. Perhaps it will need an international seminar for a thorough discussion about the question you have raised.

Q: Macao was returned to the motherland more than one year ago. Since then, fairly big progress has been made and all the endeavours in Macao have had a good beginning. But with the improvement of relations across the Taiwan Straits and with the entry into World Trade Organization (WTO) of both the mainland and Chinese Taipei, what kind of changes will occur in the status and role of Macao in the economy? What is your view on the prospect of development in Macao? This is an issue of great interest to residents in Macao.

A: Although Macao is quite small in terms of size of territory and modest in its scale of economy, Macao is highly open and plays a very big role in linking the mainland and the region of Taiwan economically. With China's entry into the WTO and with the entry into the WTO of Chinese Taipei as a separate customs territory, I'm sure Macao can play an even bigger role as the link between the Chinese mainland and Taiwan and will be able to develop its economy more rapidly.

Q: Today, March 15, happens to be the day for the protection of the rights and interests of consumers. We have seen numerous problems of counterfeit notes, and adulterated cotton and grain. The general public feel very strongly about those problems. What long-lasting and effective measures will the State Council adopt in order to strike at these problems and to protect the interests of consumers and also to enhance the reputation and competitiveness of Chinese products on the international market?

A: As we develop the socialist market economy, we have seen cases of fraudulent practice in the market. For instance, shoddy and fake goods with inferior quality and fraudulent practices to bilk people out of their money, etc. These instances have been exposed in such TV programmes as Focus and on other TV reports. Every time such instances come to my attention, I am filled with a strong sense of indignation and I cannot sleep well.

Earlier, I talked about the reform of the functions of government. The function of the government under the socialist market economy is to properly supervise market operations, strengthen regulations, fight against shoddy goods and fake products, and to protect the rights and interests of consumers. In these fields, there is still big room for improvement and we will intensify our efforts.

So we have to work harder in legislation to try to better regulate the market. At the same time, we should also improve the quality of law enforcement people. We should strengthen the position and role of the organizations that carry out regulatory functions. One example was actually given in my earlier remarks. The State Administration of Industry and Commerce will be upgraded to a full ministry level organization. We want to strengthen teams such as the organization responsible for the inspection of quality and technical standards, the organization responsible for quarantine and the inspection of imported and exported goods, and also the agency responsible for the quality control of medicine. We need to strengthen the regulatory authorities of those functions. So, this year, we will have a national conference to strengthen our work in these fields. In the beginning, we need to have a large scale meeting in order to have momentum to start the crusade, which will have a long-lasting impact on these problems.

Q: You mentioned earlier that there is going to be a reform of the taxation system in the countryside, but there will still be a shortfall in the amount of money that will be available and this will require the reform of the educational system in the rural areas. So if you actually lack money, how are you going to reform the educational system to give the very people who need it a chance to have the same education that everyone is getting in urban areas?

A: A very good question. One thing is very clear - we are determined to make sure that compulsory education is made available to every child in the countryside. If there is a shortfall of financial resources, then we can come up with more financial support. What is more, we should make more efficient use of the money. That is what I mean when I talk about the reform of the educational system in the countryside.

I will be prepared to give you a more detailed answer when I come back here to meet the press next year.

(People's Daily 03/16/2001)