Business and Technology in China The Understanding China Today series offers students and general readers the opportunity to thoroughly examine and better understand the key contemporary issues that continue to keep China in the news and sometimes at the center of global controversy These issues include business, technology, politics, government, civil liberties, family life, and gender concerns, among others Narrative chapters in each volume provide an introduction and brief history of the topic, followed by comprehensive discussions of the subject area as it pertains to China’s present and future With each volume, specialists and scholars present a solid, up-to-date foundation for learning about contemporary China, written in an accessible, engaging manner As the world moves into the second decade of the 21st century, China’s position on the global stage is more prominent than ever The Understanding China Today series provides vital insight into this international powerhouse for new generations of students, and others, seeking to understand a complex, ever-changing nation with a future as fascinating as its past Business and Technology in China JING LUO UNDERSTANDING CHINA TODAY Copyright 2010 by Jing Luo All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, except for the inclusion of brief quotations in a review, without prior permission in writing from the publisher Library of Congress Cataloging-in-Publication Data Luo, Jing Business and technology in China / Jing Luo p cm.—(Understanding China today) Includes bibliographical references and index ISBN 978-0-313-35732-9 (hard copy: alk paper)—ISBN 978-0-313-35733-6 (ebook) Business enterprises—China Technological innovations—Economic aspects—China China—Economic policy—21st century I Title HD2910.L85 2010 338.0951—dc22 2010000947 ISBN: 978-0-313-35732-9 EISBN: 978-0-313-35733-6 14 13 12 11 10 This book is also available on the World Wide Web as an eBook Visit www.abc-clio.com for details ABC-CLIO, LLC 130 Cremona Drive, P.O Box 1911 Santa Barbara, California 93116-1911 This book is printed on acid-free paper Manufactured in the United States of America Contents List of Figures and Tables vii Preface ix Chronology of Recent Events in the People’s Republic of China xiii Growth Handling the Global Financial Crisis 33 Growing Pains 49 Innovative Nation 85 Economic Reform 125 The China Model and Sustainability 161 Notes 193 Bibliography 217 Index 223 Photo essay follows page 84 This page intentionally left blank List of Figures and Tables Figure 1.1: China’s GDP Growth 1978–2008 Table 1.1: The U.S.-China Business Council Top 15 U.S exporters to China in 2008 14 Figure 1.2: Per Capita Annual Income (Yuan) 15 Table 1.2: Urban and Rural Incomes of Selected Regions 16 Table 2.1: Losses of Chinese Banks during the Global Financial Crisis 39 Table 2.2: Losses of Chinese Firms during the Global Financial Crisis 39 Figure 4.1: Technical School Graduates in 10,000s 113 Figure 4.2: Number of Students Abroad and Returned 121 Figure 4.3: Number of Postdoctoral Graduates (1985–2008) 123 This page intentionally left blank Preface In roughly three decades, China has grown from a povertystricken country into the third-largest economy in the world As we speak, China is making yet another leap: emerging from the global financial crisis, it is transforming from ‘‘world’s manufacturing center’’ into the world’s biggest buyer But the best part of the story is not yet heard: China’s next target is to build an ‘‘innovative nation’’ with a knowledge-based and energy-efficient economy Imagine that a blue sky will come back to the cities and that rural streams once again will be safe for women to wash clothes and children to swim In fact, that is exactly what the world depends on for a better future The question is what has fundamentally changed to make all this happen? An obvious answer is the adoption of the market mechanism in 1978 A less obvious but more profound answer is that Mao Zedong had created, unintentionally, through prolonged and ruthless class struggles, not only the reversing economic momentum, but also a mentality ready to reject ideological entanglement Thus, the China phenomenon is a fruit of the conjugation of push and pull, of which the pushing force, or the internal force, was decisive The result is overwhelming: once the ordinary Chinese were allowed to get Bibliography National Development and Reform Commission http://www.sdpc.gov.cn/ The National People’s Congress http://www.npc.gov.cn/ The People’s Daily http://english.peopledaily.com.cn/ People’s Bank of China http://www.pbc.gov.cn/english/ PRC Embassy in Washington, D.C http://www.china-embassy.org/eng/ State Administration of Foreign Exchange http://www.safe.gov.cn/model_safe/index.html State Administration of Radio, Film and Television http://www.sarft.gov.cn/ State Administration of Taxation http://www.chinatax.gov.cn/n8136506/index.html State Intellectual Property Office http://www.cpo.cn.net/ Thomas, U.S Legislative Information http://thomas.loc.gov/ U.S Department of Agriculture http://www.usda.gov/wps/portal/usdahome U.S Embassy in China http://beijing.usembassy-china.org.cn/ U.S Trade and Development Agency http://www.ustda.gov/ Xinhua News Agency http://www.xinhua.org/ 221 This page intentionally left blank Index *Note: t represents tables and f represents figures in index entries A share, 109, 146 accident insurance, 22, 23 Administrative Measures on the Control of Pollution Caused by Electronic Information Products, 2007, 57 Agricultural Bank of China (ABC), 140, 142, 143 Agricultural Development Bank of China (ADBC), 140, 142 agricultural modernization, 91 Association of Southeast Asian Nations (ASEAN), 31, 176, 177 automobiles export, 42 B share, 146 backpacking travelers, bad loans, 118, 130, 142 143, 144; Chinese banks limitation of, 141–42 Baidu.com, Inc., 105, 108–9 Balanced development, 160, 173 bank losses, 38, 39t Bank of China (BOC), 39t, 140, 142 banking reform, 139–48 banking systems: policy discrepancies of, 148 basic medical insurance schemes, 21 Beijing: annual per capita household, 16t; banking reform in, 142; ‘‘Drive One Day Less (per week),’’ 53; education in, 110; farmers’ migration, 78; as host of Olympics, 49–50; and migrant workers, 76; per capita living space in, 154; on pollution control, 52–53; relationship with neighboring countries, 30; relationship with U.S., 30; security in, 174–75; spending of residents, 18, 19; and technology venture, 89; as trillionaire province, 77 Beijing Consensus, 161, 169–72 Beijing Consensus (Ramo), 31 Bergius approach, 137 ‘‘brain drain,’’ 120 budgetary principles, uniformity in, 150 building socialism, with Chinese characteristics, 127 224 Index Bureau of Agricultural Administration, 12, 13 burning coal, energy, 135 Bush era: relationship with China, 30 business travelers, Cai Fang, director of Demographics and Labor Economics Research Center at the Academy of Social Sciences of China: in removing Hukou system, 82 Callick’s ‘‘Controlled Freedom,’’ 166–69 capital market, 92, 93, 109, 145 capitalism, 10, 51, 91, 134, 165, 166, 169, 179, 187, 191 car sales, 8, 43 carbon dioxide (CO2) emission, 52, 136 Central Party School (CPS), 64, 160, 161, 178, 182, 191; China Model, 178–84 Chen Jian, economist: explanation of multiple-wave theory, 45; six step sequence, 45–46 Chen Xitong, mayor of Beijing, in corruption case, 61–62 Cheng Kejie, former vice chairman of the National People’s Congress, in bribery case, 62 China-ASEAN FTA, 176–77 China Banking Regulatory Commission (CBRC), 139, 147, 148; and regulation of PBOC, 144 China Center for International Economic Exchange (CCIEE), 160 China Construction Bank (CCB), 140 China Import and Export Bank (CIEB), 140 China Insurance Regulatory Commission (CIRC), 147 China Model, 161; Beijing Consensus, 161, 171–74; Callick’s ‘‘Controlled Freedom,’’ 166–69; components of, 184; developmental perspective, 174–78; failure of, 189; Hutton’s ‘‘Halfway House,’’ 164–66; improvements of, 181; Shambaugh’s Model, 169–70; sustainability perspective, 184–92; viewed by Central Policy School, 178–84; and Washington Consensus, 162–64 China National Offshore Oil Corporation (CNOOC): and UNOCAL (Union Oil Company of California), 177 China National Petroleum Corp (CNPC), 31 ‘‘China opportunity’’ theory, 174 China Postdoctor, 122–123; comparison with American system, 123–24 China Securities Regulatory Commission (CSRC), 147 China Torch Program, 100, 106 See also Torch Program China’s economic model: Callick’s views on, 166–69 China’s GDP, versus U.S GDP, 33 China’s new procurement policies: with the WTO’s Government Procurement Agreement (GPA), 119 China’s S&T framework, limitations of, 109–10; competition, 113–14; education, 110–13; IPC protection, 114–17 Chinese Academy of Engineering (CAE), 89 Chinese Academy of Science (CAS), 89, 105, 160; ‘‘Hundred Talents Program,’’ 104; National Knowledge Innovation Experiment Program of, 101 Chinese Academy of Social Sciences (CASS), 160, 169 Chinese Communist Party (CCP), 3, 10, 160; and Confucianism, 170; against corruption, 71; toward diversity, 189; in economic prosperity, 9, 24 Index Chinese leaders: attitude during recession, 42; education of, 172 ‘‘Chinese renaissance,’’ 82 Chinese system, levels of, 151 Chongqing: annual per capita household, 16t; economic structural reform in, 131 Circular Economy Law, 2008, 58–59 civil service corruption, 59–65 Cold War: territory sector, rise of, Commercial Bank Law, 142 Communism, 3, 10, 24, 59, 125, 155, 166, 167, 173, 189, 191–92; and Western economies’ reliance on, 43–44 competitive corruption, 63 Confucian-Daoist ethics, 59 Confucianism, 59, 112, 191 Consumer Confidence Index, 184 Consumer Price Index (CPI), 48; and inflation, 139 Contract and Responsibility System (CRS), 25, 80, 129, 150 corruption, 58–59; civil service corruption, 59–65; factors for, 59; grassroots-level corruption, 65–68; gray areas, 68–70; and growth, 70–71 cost-sharing solution, 20–21 cultural traditions, for economic sustainability, 188–89 current development, for economic sustainability, 188–89 Daoism, 189 Daqing Oil Field, 136 The Decision of Accelerating S&T Progress, 95 The Decision of Reforming the S&T Framework, 94 The Decision of Strengthening S&T Innovations, Developing High-tech and Industrialization, 95–96 The Decision of the CCP Central Committee and the State Council 225 on Ramping up Tertiary Industry: Article 1, territory sector development of, 5; Article 4, on employment opportunities, 6; Article 5, on living conditions, The Decision on Issues Regarding the Improvement of the Socialist Market Economic System, 96–97 defense modernization, 91 defensive attitude: American attitude, 190–91; China’s, attitude, 190 Deng Xiaoping: and economic reform, 1, 16, 95–96, 129; and ‘‘Household Responsibility System,’’ 28; and Open Door Policy, 130–31; and relative comfort, 17; in rising economy, 29; and S&T, new era for, 91; and socialist market economy, 9; on urban housing, 154 ‘‘Developing the Northwest,’’ economic movement, 15 diplomatic adeptness, for economic growth, 31 direct investments, Chinese banks limitation of, 141 domestic stability, socialist market economy, 29 double-digit growth, 1, 12, 47, 48 ‘‘Drive One Day Less (per week),’’ 53 ‘‘Driven Businesspeople,’’ in middle class, 7, ‘‘Early Heavy Buyers,’’ in middle class, 7, economic crisis, 10–11, 12, 13, 39, 74, 186 economic polarization, 4–5 economic reform, 125–26; banking reform, 143–45; and China’s plan, 52; country’s productivity, 1; by Deng Xiaoping, 126; economic structural reforms, 127–33; energy industry, revamping of, 135–39; housing reform, 152–55; industrial 226 Index reform, 134–35; policymaking in reform, 159–60; rural reform, 155–59; securities market, transition of, 145–48; taxation reform, 149–51 economic structural change: reasons for, economic structural reforms, 127–33 economic structural shift, 5–6 education modernization, 110; communicative skill, 111; improving problem-solving skill, 110–11; increasing creative thinking, 111; understanding cultures, 112 education: and economic growth, 23, 27, 85 863 Program (1986), 92, 99–100, 101, 103 See also National High-Tech Development Program Einstein’s words, aptness for Beijing Consensus, 171 Energy Conservation Law, 1998 (amended 2008), 56 energy consumption, 98; and Circular Economy Law (2008), 57–58; and Energy Conservation Law, 1998 (amended 2008), 56; energy supply, shortage of, 137; structure of, 136 energy industry, revamping of, 135–39 energy saving, 133; 11th Five-Year Plan (2006–2010), 99; and Circular Economy Law (2008), 57–58; SOEs versus POEs, 86–87 energy source: annual fuel production, 138; coal into synthetic oil, 137–38; coal reliance of, 136; consumption categories, 136–37; consumption demand, 137; industrial water reuse of, 138–39; natural gas, for transportation, 136; and oil price, 138 Engel’s Coefficients (EC), 15; on food expenditures, 19; on living conditions, 17–18 ‘‘enlightened self-interest,’’ 187 entrepreneurs: rise of, 23–32; and CCP, 133; and competition, 113–14; encouraging of, through education, 96–97; as innovative system, 91–92, 105; in POE definition, 132; and Spark Program, 100; and urbanization, 81–82 environmental consequences, 49, 52 Environmental Protection Law, 1989, 53–54; Article 24, on pollution control, 53 equal distance diplomacy, 30 equality, 4–5; in Beijing Consensus, 172; fighting for, 26; Hutton’s view on, 165; in reformation, 188 erectile dysfunction (ED); sildenafil citrate, 115–16 export market: contributors to, 158; losses, 39 export sector, exposure to U.S submarine market, 34–35 fanzu daobao (reverse lease), 157 farming technology, expansion of: on rural China, first atomic bomb (1964), 126 first satellite (1969), 126 Fischer-Tropsch approach, 137 Five-Year Projections, 159–60 flipping stocks, 61, 92 floating population: and migrant population, 78 ‘‘forced rebalancing,’’ 47 foreign trade: to GDP, 131; government’s role, 185; growth of, 11; and international economic development, 42; negative growth, 185; and R&D, 114; and trade recovery, 186 foreign trade sector: growth of, 11 Fortune Global Forum, 2–3 Four Asian Dragons: and Shanghai’s export, 44 ‘‘four determinations,’’ 179 Index ‘‘Four Modernizations,’’ 91 See also agricultural modernization; defense modernization; industrial modernization; S&T modernization free-market economics, 29, 167, 169 Fujian: annual per capita household, 16t; ‘‘Minjiang River Scholar Program,’’ 104; as trillionaire province, 77 Funding for S&T Small and MediumSize Enterprises, 102–4 Gansu: annual per capita household, 16t; economic structural reform in, 131; and trillion mark, 77 Geely Corporation, 133 ‘‘gender-equal’’ sector, Germany, coal-liquefaction technology, 137 global economic crisis, 73–74, 184; on economy of, 10–11 global financial crisis, 1, 11, 32, 48; and Asian financial crisis, 33, 163–64; and banking system, 130; and China’s manufacturing firms, 44; and natural calamity, 71; transitional economic structures, 43 global recession, government’s role in, 186–87 ‘‘Google of China,’’ 108 See also Baidu.com, Inc Government Insurance Program (GIP), 20 government projects, priority fields, 40 grassroots-level corruption, 65–66 Great Cultural Revolution (1966–1976), 9, 28, 51, 90–91, 126, 129 Great Leap Forward, 19, 51, 128, 134, 155 Green GDP, 64–65, 183 gross domestic product (GDP): under Energy Conservation Law, 1998 (amended 2008), 56; and import 227 and export ratio, 11; and purchasing power parity (PPP), Guangdong: annual per capita household, 16t; banking reform in, 142; leader in GDP growth, 77; rural reform in, 157; ‘‘Zhujiang River Scholar Program,’’ 104 Guangzhou: invasion, from other countries, 75; and migrant workers, 76; and railway passengers, 35 guanxi (connection): and corruption, 68–69; in market competition, 113–14; in younger generation, 69–70 The Guideline of Mid- to Long-Term Development of Science and Technology 2006–2020, 97–98; goals of, 98 Guizhou: economic condition in, 131; education in, 110 H share, 109, 146 halfway house, 163, 164, 165 Han Dynasty (206 BCE–220 CE), on education, 112 health care system, 20; for retired population, 20 high-level corruption cases, 61–63 high-tech exports, rising of, 104–5 high-tech products, export of, 89 history, for economic sustainability, 188–89 home appliance sales, 43 hosing space, 19–20 Household Responsibility System (HRS), 156; shortfalls of, 156–57 housing reform, 152–55; home ownership, 154; new initiative of, 153–54; on urban housing, 153; urban housing reform, 153 Hu Angang, professor at Tsinghua University: on abolishing Hukou System, 80; views on China’s GDP, 182–83; views on urbanization, 73 228 Index Hu Jintao, President: next phase of development, 79 Hubei: as trillionaire province, 77 Hukou System, 79–80, 82, 175 Hunan: as trillionaire province, 77 ‘‘Hundred Talents Program’’ of the CAS, 104 Hutton’s ‘‘Halfway House,’’ 164–66 Hybrid Model of Quasi-State Capitalism and Semi-Democratic Authoritarianism, 169–70 income gaps, 15, 159; in eastern and western regions, 16t; and fast food business, 19; rural and urban life, comparison of, 18–19 Industrial and Commercial Bank of China (ICBC), 140 industrial modernization, 91 industrial reform, 134–35 inflation, 1, 9, 42, 48, 135; and consumer price index (CPI), 139; and SOEs, 167; signs of, 185 innovation: and government’s leadership structure, 172; and intellectual property, 87; Premier Wen Jiabao’s views on, 85–86; President Hu Jintao, 86 innovation nation, 83; education modernization, 110–13; market competition, 113–14 innovative companies, sprouting of, 105; Baidu.com, Inc., 108–9; Lenovo, 105–7; New Oriental Education and Technology Group, 107–8 intellectual property rights (IPR), 32, 88, 90; improving of, 96; protection of, 114–17; to protect registered products, 94 international business connections, 31 International Monetary Fund (IMF), 163 interpersonal relationships, 68 Jackson-Vanik Amendment (1974), 175 Japan, energy consumption, 136 Jason Chi, former president of Lucent China, in corruption case, 68–69 Jiangsu: annual per capita household, 16t; leader in GDP growth, 77 joint tax, 151 ‘‘jumping into the sea,’’ 91 Kevin Hassett, economic policy: Callick’s views on, 167 Key National S&T Industrial Program, 101 Korean War (1951–1953), 134 Labor Insurance Program (LIP), 20 Lao-zi (sixth century BCE), 189–90 Law on Prevention and Control of Atmospheric Pollution, 1995 (amended 2000), 54–55; Article 37, on control measures, 55 Law on Prevention and Control of Environmental Pollution by Solid Waste, 1995 (amended 2005), 54; Article 17, in recycling, 54 Law on Prevention and Control of Pollution from Environmental Noise, 1997, 55–56; Article 3, ambiguous, 56 Law on Prevention and Control of Water Pollution, 1996, 55; Article 14, on preventing pollutant discharge, 55; Article 15, on fee paying, 55 Law on Public Service: Article 53, prohibition from profit-sharing scheme, 60 Legend Group, 105–6 See also Lenovo Lehman’s Brothers: U.S mortgagebacked securities (MBS), 38 leisure travelers, Lenovo, 105–7 See also Legend Group Index Li Fuxiang, director of China’s State Administration of Foreign Exchange, in illegal trade, 62 Liaoning: annual per capita household, 16t; economic structural reforms in, 127–28 Liu Zhihua, former deputy mayor of Beijing, in bribery case, 62 loan-making decisions, Chinese banks limitation of, 141 local taxes, 151 Longkaikou Dam project, on Jinsha River, 34 low-cost housing, 47–48 Ludila Dam project, on Jinsha River, 34 Mao Zedong, 4; and China’s economy, 85; and Communism, 125–26; and education, 110; era (1949–1978), turmoil for S&T, 85, 90–91; hero worship of, 28; post-Mao era, 156, 165 market economy, with Chinese characteristics, 127 market mechanism: in economic take-off, MasterCard Worldwide, Asia Pacific: on middle class income, 6–7 middle class, 6–10: political tendencies on, migrant population: and floating population, 78 migrant workers, 35 mining industry, sustainability of, 187 Ministerial Policy Institutes, 160 Ministry of Agriculture (MOA), 89 Ministry of Commerce (MOC), 64, 65, 90 Ministry of Finance (MOF), 89, 146, 149 Ministry of Industry and Information Technology (MIIT), 89; in creating Internet policies, 90 229 Ministry of Personnel (MOP), 90 Ministry of Science and Technology (MOST), 89, 90, 92 ‘‘Minjiang River Scholar Program,’’ 104 modernization and urbanization, 76 Monitor Group, multiple-wave theory, 45, 46 National Bureau of Statistics (NBS), 2f, 3; data on S&T, 88; on gross domestic product (GDP), 1; on high-tech export, 104; on import and export, 11; on patent application, 87; per capita annual household, 16t; per capita annual income, 15f; on private car ownership, 8; on stock market, 145; on studying abroad, 121f; about technical school graduates, 113f; on tourists, 176; on urban areas, 72 National Development and Reform Commission (NDRC), 56–57, 94, 89, 90, 138 National Development Bank of China (NDBC), 140 ‘‘National Distinguished Young Scholars Program,’’ 104 National Essential Drug List (NEDL), 22 National High-Tech Development Program, 99–100 See also 863 Program National Key Basic Research Program, 100 See also 973 Program National Knowledge Innovation Experiment Program, 101–2 ‘‘National Natural Science Foundation’’ (1986), 92 National S&T Innovative Program, 101 national S&T program, system of, 99; China Torch Program, 100; Funding for S&T Small and Medium-Size 230 Index Enterprises, 102–4; Key National S&T Industrial Program, 101; key technology R&D program, 99; National High-Tech Development Program (863 Program), 99–100; National Key Basic Research Program (973 Program), 100; National Knowledge Innovation Experiment Program, 101–2; National S&T Innovative Program, 101; National S&T Program for Social Development, 101; Spark Program, 100 National S&T Program for Social Development, 101 National Science Foundation of China (NSFC), 89, 104; ‘‘National Distinguished Young Scholars Program,’’ 104 ‘‘neutral government,’’ 179; government’s flexibility, 179–80; in-depth SOE reform, 180; temporary dual-pricing system, 180 The New Asian Hemisphere (Mahbubani), 29 New Oriental Education and Technology Group, 107–8 New Rural Cooperative Medical Insurance (NRCMI), 21 973 Program, 100, 101 See also National Key Basic Research Program 1989 Tiananmen Event, 9, 107, 120 1997 Asian Financial Crisis, 34, 44, 149, 163–64, 173, 186 1997–1998 Asian Financial Crisis, 11, 33 Ningxia: annual per capita household, 16t; economic structural reform in, 131; and trillion mark, 77 nonperforming loans (NPLs), 38, 46, 130, 144, 145 nontradable shares, 146 Obama, Barack: mass ideological campaigns, 46; in saving China’s asset, 42; on wind turbines, 53 ‘‘oil diplomacy,’’ 136 oil price, 138 ‘‘one banner,’’ 178 ‘‘one country two systems,’’ 91 ‘‘one road,’’ 178 ‘‘one system,’’ 178 one-country-two-system structure, 167–68 one-party Communist rule: and ‘‘halfway house,’’ 165 Open-Door Policy: by Deng Xiaoping, 130–31 open mind, 189–90 ‘‘Opening the Great West,’’ 131 ‘‘Opinions on Deepening Healthcare System Reform,’’ 21 Opium War, 9, 125 out-going economy, rise of, 10–14 ‘‘patriotic bonds,’’ 146 peaceful rising: Deng’s view, 174; socialist market economy, 29 Peng Xizhe, director of the Institute of Social Development and Public Policy at Fudan University: views on urbanization, 81 pension, 20, 22, 72, 145 People’s Bank of China (PBOC): comparison with U.S Federal System, 139–40 people’s living conditions, rise of, 15–19; housing space, 19–20; social welfare, 20–23 ‘‘people-owned enterprises.’’ See stateowned enterprises (SOEs) personal property rights, power of, 163 Pfizer Inc.: and trademark cases, 115 policy-lending, 118 policymaking in reform, 159–60 political reforms: by Deng Xiaoping, 128 Index pollution, 49–53; Administrative Measures on the Control of Pollution Caused by Electronic Information Products, 2007, 57; Circular Economy Law, 2008, 58–59; Energy Conservation Law, 1998 (amended 2008), 56; Environmental Protection Law, 1989, 53–54; Law on Prevention and Control of Atmospheric Pollution, 1995 (amended 2000), 54–55; Law on Prevention and Control of Environmental Pollution by Solid Waste, 1995 (amended 2005), 54; Law on Prevention and Control of Pollution from Environmental Noise, 1997, 55–56; Law on Prevention and Control of Water Pollution, 1996, 55; Renewable Energy Law, 2006, 56–57 population growth: on economic growth, 16–17; and environment, 51–52 postdoctoral research centers, 122–23 poverty-stricken country, 191 power-money trade, 60–61; and high-level corruption cases, 61–64; improving transparency, 64 Premier Wen Jiabao: about Beijing’s recovery plan, 40; on domestic market, 41; views on innovation, 85–86 President Hu Jintao: on country’s goal, 2; views on economic growth, 31–32; views on innovation, 86 primary sector (agriculture), 3, 127, 130 private housing, 152 private owned companies (POEs), 23–24; definition of, 134; and Korean War (1951–1953), 134; and national projects, 87; and SOEs, 231 discrimination of, 132–33, 160; and SOEs, in urban areas, 127 property rights, for farmers, 188 Provisional Rules on Management of Corporate Bonds, 147 psychological trauma, and unemployment, 37–38 public rentals, 152 purchasing, power, parity (PPP) theory, Qinghai: annual per capita household, 16t; economic structural reform in, 131; education in, 110; and trillion mark, 77 Qiu Gengtian, a professor of the CPS; views on China’s growth, 182 ‘‘Quality-Oriented, the,’’ in middle class, 7, Ramo, Joshua Cooper, 171; theorems of Beijing Consensus, 172 rapid urbanization: on rural China, real estate development, 36, 46 ‘‘Red capitalists,’’ success stories, 24; of Chen Tianqiao, 25; of Lu Guanqiu, 24–25; of Lu Zhigang, 24; of Tang Ruiren, 27–29; of Wang Yuancheng, 25–27 Renewable Energy Law, 2006, 56–57 renminbi-dollar peg, 11 ‘‘Republic of Profits,’’ 24 retired population: health care system for, 20 rising price, impact on economy, Robert Solow: Total Factor Productivity (TFP), definition of, 172 Rural Credit Cooperatives (RCC): history of, 143; operation of, 143–44; reform of, 142; to rural cooperative banks, 144; and SOCBs, 143 rural industrialization, 157–58; factors of, 158 232 Index rural reform, 155–59; HRS, shortfalls of, 156–57; land rights inequality, 155 rural troubles, causes of, 13 rural-urban divide, 77, 78, 82 S&T framework transition, 93–94; Break-Ice (1985–1992), 94–95; Localization (1999–2003), 95–96; Market Integration (2003–2006), 96–97; Reassuming Direction (2006–2020), 97–98; Weighttrimming (1993–1998), 95 S&T modernization, 91 ‘‘safeguarding percent,’’ 47 safety net, 35, 41, 47, 188 ‘‘sage-emperor,’’ President Hu Jintao, 164–65 Scandal of Sanlu Milk Powder, 66–67 science and technology (S&T): for economic growth, 85–89; in economic take-off, 3; in human resource management, 119–24; national programs, 99–104; policies and innovative system, 87, 89–93; as productive force, 86 secondary sector (manufacture and construction industries), 3, 127, 130 securities market, transition of, 145–48 ‘‘seeking friends and avoiding troubles,’’ 174 self-determination, in China’s diplomacy, 173, 174 service sector dominance: in developed economies, Shambaugh’s Model, 169–70 Shandong: annual per capita household, 16t; leader in GDP growth, 77; migrant workforce in, 26 Shanghai, 78; annual per capita household, 16t; banking reform in, 142; education in, 110; farmers’ migration, 78; and Hukou System, 79; and migrant workers, 76; per capita living space in, 154; and rural reform, 159; stock market in, 147, 184 Shaanxi: annual per capita household, 16t; economic structural reform in, 131 Shenhua Group, 138 Shenyang Smelter and the Shenyang Cable Factory case, 127–28 Sichuan: annual per capita household, 16t; earthquake hit on, 13, 71; economic structural reform in, 133; ‘‘Sichuan Scholar Program,’’ 104; taxation reform in, 149; and trillion mark, 77 sildenafil citrate, 115–16 single-party ruling system, and corruption, 58–59 small and medium-size enterprises (SMEs): and bankruptcy, 35–36; new funding mechanisms, for banks, 118; S&T human resource management, 119–24; in securing loans, 117–18 ‘‘smart growth,’’ 64–65 See also Green GDP ‘‘Smarts, the,’’ in middle class, 7, Smith, Adam, ‘‘enlightened selfinterest,’’ 187 social discrimination, 4–5, 80 social welfare, 5, 20–21, 64, 80, 188 socialist market economy, 9, 29, 43–44, 91 Socialist Transformation Campaign, 134 socioeconomic equality, 188 Soviet model: and China’s industrial development, 134 Spark Program (1986), 92, 100 Special Economic Zones (SEZ), 173 State Administration of Foreign Exchange (SAFE), 148 Index State Automobile Emission Standards, 52; Green Sticker vehicles, 53 State Council Development Research Center (DRC), 160 State Intellectual Property Office (SIPO), 90 State Planning Commission, 127 state tax, 151 state-owned commercial banks (SOCBs): Construction Bank of China (CBC), 142; ICBC, 142 state-owned enterprises (SOEs), 128; Gross Value of Industrial Output (GVIO), 128–29; loans to, 141; and POEs, discrimination of, 133–34, 160; and POEs, in urban areas, 127; reform of, 4; restructuring of, 61 Statistics Bureau of Shandong: on gender equality, strategic investments, 41–42 Strike Hard Campaigns, anticorruption campaign, 61, 114 subsidized flats, 152 Sun Lijian, view on economic crisis, 44–45 Sun Zhongshan: founder of Republic of China, ‘‘sunset industry,’’ 135 Tang Dynasty (681 CE–960 CE), on education, 112 Tang Guoqiang, International Trade Research Center of the State Council: on international and national economic environment, 42 Tao Wang predictions: and economic growth, 48; and media observations, 35; on safety net, 47; on stimulus plan of work, 46 taxation reform, 149–51; first step changes in, 150; substituting tax for profits, 150; Tax-sharing System, 151 Technology Spreading Program (1990), 92 233 10 Things to Avoid, 37–38 tertiary sector (service industries), 127, 130; middle class, 6–10; rise of, 3–6 textiles export, 42 ‘‘think tanks,’’ 159–60 Three Gorgeous Project Corporation, 147 ‘‘three one’s’’ (san ge yi), 178 ‘‘Three Represents,’’ 173; Jiang Zemin’s theory of, 10 Tian Wenhua, former head of Sanlu, in adulteration case, 67–68 Tianjin: annual per capita household, 16t Tianjin Chemical Plant, and pollution, 52 Tibet: annual per capita household, 16t; economic structural reform in, 131; industrial output in, 159 ‘‘to be rich is glorious,’’ 91 Torch Program (1988), 92 See also China Torch Program Total Factor Productivity (TFP), 172 town and village enterprises (TVEs), 140, 142, 158; loans to, 144; and toy industry contract, 36 toy industry, 36 trade recovery, government’s role, 186 trade sector, growth of, 13–14 Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), 114 traditional planning economy, transforming of, 180 travelers class, See also middle class Treasury bonds (T-bonds), 146; to finance budget deficits, 149; and finance recovery programs, 147 ‘‘Trend Followers,’’ in middle class, 7, trillionaire provinces, 77 Troubled Asset Relief Program (TARP), 45 Tsung-Dao Lee, Nobel Prize laureate, 122 234 Index ‘‘two-bombs-and-one-star project,’’ 89 2006 Action Plan on IPR Protection, 114–15 uneasy coalition, 166 unemployment insurance, 22, 23 unemployment pressure: ease of, 12–13 Unger, Jonathan, views on: middles class political stance, 10 unpredictability, of China, 191 urban air quality, 50–51 Urban Employed Basic Medical Insurance (UEBMI), 21 urban industry, against rural industry, 159 Urban Resident Basic Medical Insurance (URBMI), 21, 22 urban water pollution, 51 urbanization, growth of, 72–83; and economic development, 83; and industrialization, 73; and migration, 72–73; quitting farming, reasons for, 76–77; ‘‘Village in the city’’ (VITC), 74–75; Wen Tiejun’s view on, 76 urban-rural gap, government’s role in, 186 U.S Declaration of Independence, 176 U.S.-China Business Council: exporters’ to China, list of, 14t Value Seekers, in middle class, 7, Viagra, 115 Wanfang Data Co., Ltd.: Dissertations of China, 116–17 Wang Guiping, cough syrup, 65–66 Wang Xuebing, former president of Bank of China, in fraudulence case, 62 Washington Consensus, 161; 10 principles of, 162, 173; Callick’s ‘‘Controlled Freedom,’’ 166–69; and China Model, 162–64; Hutton’s ‘‘Halfway House,’’ 164–66; Shambaugh’s Model, 169–70 Wen Tiejun, head of the Institute of Rural Development of the People’s University in Beijing; on slum deterioration, 75; on urbanization and ecological environment, 76 Williamson, John, fiscal policies, 162–63 World Bank, 163 world economy, China’s role in, 191 Xinjiang: annual per capita household, 16t; economic structural reform in, 131; ethnic tensions in, 188 Yan Sun, views on corruption, 59 Youngtze River Scholars Program (YRSP), 103–4 Yunnan: annual per capita household, 16t; economic structural reform in, 131; revamping energy industry in, 138 zero tolerance, 75 Zhejiang: annual per capita household, 16t; in trillion business, 77 Zheng Xiuyu, former chief of China Food and Drug Unit, in bribery case, 62 Zhou Chunshan, director of Urban and Regional Research Center of Sun Zhongshan University: in removing Hukou system, 82 Zhu Rongji, view on internal affair, 30–31 Zhu Xiaohua, vice governor of the People’s Bank of China, in fraudulence case, 62 Zhujiang River Scholar Program, 104 About the Author Jing Luo is a professor in the Department of Languages and Cultures at Bloomsburg University of Pennsylvania He received BA and MA degrees from Peking University and a PhD from The Pennsylvania State University Luo was chief editor and contributor of China Today—An Encyclopedia of Life in the People’s Republic, and author of Over a Cup of Tea—An Introduction to Chinese Life and Culture ... of students, and others, seeking to understand a complex, ever-changing nation with a future as fascinating as its past Business and Technology in China JING LUO UNDERSTANDING CHINA TODAY Copyright.. .Business and Technology in China The Understanding China Today series offers students and general readers the opportunity to thoroughly examine and better understand the key contemporary... Cataloging -in- Publication Data Luo, Jing Business and technology in China / Jing Luo p cm.—(Understanding China today) Includes bibliographical references and index ISBN 978-0-313-35732-9 (hard copy: