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A forward-looking nation always puts its attention on the young people and a forward-looking political party always considers the youth to be the most active power for promoting the social progress. Young people are the future and hope of the Party, which is the vivid reflection of history, the deep-felt call of reality and the ardent hope toward the prosperous motherland and national rejuvenation, said President Hu Jintao during his important speech on July. 1.

The great 90-year journey of the Party is the \”song of youth.\” The Communist Party of China always represents the youth, wins the support of the youth and relies on the youth. A total of 13 Marxist believers with average age of only 20 years old created an epoch-making event in Chinese history 90 years ago. Many outstanding young Party members, such as Liu Hulan, Lei Feng, Zhang Haidi and Li Xiangqun, advanced wave upon wave over the past 90 years to make contributions for the Party\’s progress.

Communists that have followed and struggled for Marxism since they were young inherited the Party\’s spirit from generation to generation. Currently, nearly a quarter of the more than 80 million Party members in China are under the age of 35 years, which shows the strong attraction and appeal of the Party\’s cause to the younger generation.

Winning the youth is vital to the Party\’s future. Mao Zedong once regarded the youth as the rising sun in the early morning. Deng Xiaoping made clear that the generation of young people is the Party\’s hope of ensuring the prosperity of its cause. Jiang Zemin reiterated that \”if the youth are prosperous, the country will be prosperous. If the youth are strong, the country will be strong.\”

Hu Jintao\’s remarks during a major speech on July 1 stressed that \”young people represent the future of both China and its people. They also represent the future and hope of the Party.\” As the Party has always paid great attention to the roles played by the youth in the periods of revolution, construction and reform and attached particular importance to work relating to the youth over the past 90 years, it has been able to continuously achieve glorious successes for its great cause like it did before.

History has proven that only the youth who link their own future with the destiny of their homeland can give full play to their talents. Generations of young Chinese people — patriotic youths marching toward Yan’an, socialist builders fully committed to the development of their homeland, the generation engaging in reform and opening-up in the 1980s as well as post-\’80s and post-\’90s generations embracing the Party\’s traditional revolutionary spirit — have proven through enthusiasm and practice that they have lived up to the high expectations of the Party and the people and will surely accomplish their mission in the future.

As the world, the country, and the Party have all undergone profound changes, people\’s interests and values are becoming increasingly diverse, making it more strategically important than ever before to emphasize and enhance the role of youth. The Party should make full use of its advanced and attractive theories, remarkable achievements and fine traditions to win the support of young people.

Party organizations at all levels must care about young people, listen to what they have to say, encourage their growth and promote entrepreneurship among them. At the same time, young people should cherish a lifelong love for the Party as well as their motherland and compatriots. They should cling to lofty ideals and firm convictions, acquire knowledge and skills, develop moral integrity and willpower and prepare themselves for hard work to become a useful person to the society and make contributions to the prosperity of the country and the well-being of the people.

The Party needs consistent youthfulness, vigor and courage to accomplish two grand goals. The first goal is to build a moderately prosperous society of a higher level to the benefit of more than 1 billion people by the centennial of the founding of the Party. The second goal is to realize basic modernization by the centennial of the founding of the People\’s Republic of China. The Party’s ultimate goal is to achieve the great rejuvenation of the Chinese nation.

Li Dazhao, one of the founders of the Party, called on young people to devote themselves to pushing forward the progress of human civilization and promoting the well-being and lasting youthfulness of humanity. Only when the Party keeps recruiting open-minded, ambitious, passionate and innovative young people who can keep up with the times and have the courage and determination to carry through reforms, will it maintain vitality forever and will China become more and more prosperous and powerful.

[i]By People\’s Daily Online[/i]

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[b]China changed its population development track[/b]

In less than 50 years, China, as world\’s most populous developing country, has completed a population transformation that took developed countries 100 years to complete. China was able to achieve this despite underdeveloped economic and social conditions through adhering to the comprehensive decision-making of population and development and implementing the basic national policy of family planning. China has successfully changed its population development track and taken the road of comprehensively addressing population issues with Chinese characteristics.

Reporters learned China\’s population had decreased in proportion to the world’s total from 22 percent at the beginning of the reform and opening-up to 19 percent in 2010. China\’s indices, such as infant mortality rate and maternal mortality rate, are all the best among the developing countries. The average life expectancy of China\’s population has risen from 68 to 73.5 years old, reaching the average level of moderately developed countries. China\’s human development index has risen from 0.53 to 0.66, making China one of the countries with the fastest HDI growth rate in the world. The number of Chinese living below the poverty line has decreased dramatically, and China has become a model for eliminating poverty.

According to a report of the United Nations, it is quite possible that China will achieve its millennium development goal ahead of schedule. Li said that the active exploring and successful practice made by China in the realm of population have greatly promoted the integrated development of the human and the sustainable development of the country, and also made important contribution to the global population and development.

\”The planned parenthood policy is an effective measure for controlling population. However, as the aging society is coming, the family planning policy should be further researched and adjusted according to the change of the situation,\” said Tewodros Melesse, general secretary of the International Planned Parenthood Federation.

Melesse said that in the world, there are still 17 million women whose demand for planned parenthood cannot be satisfied. They cannot get enough education and health resources, and they often suffer adverse health effects and or are even killed due to unsafe abortions. The planned parenthood federation is willing to keep carrying forward international cooperation in the realm of population and be a part in promoting the development of the cause.

[b]Promoting long-term, balanced population development [/b]

\”It is not that the smaller the population is, the better it is,\” said Zhao Baige, associate director of the National Population and Family Planning Commission of China.

Zhao said that promoting long-term and balanced population development is the key. China should change from a large population country to a powerful human resource country. In other words, China should control its \”population size\” and improve its \”population quality.\”

Li said generally, the population problems seen during different stages of the 200-year process of industrialization in developed countries have intensively emerged at China\’s current stage. The population issue will remain one of the key issues restraining China\’s economic and social development in the future.

Li said that given the new situation, the government has viewed the population work and balanced long-term population development as a strategic task, incorporated them into the overall arrangement of the national 12th Five-Year Plan, and drawn greater importance to them. China will adhere to and improve the existing population policy and take measures to keep the birthrate low; strive to enhance population quality and step up the efforts to develop China into a country rich in quality human resources; properly cope with the issue relating to sex ratio at birth and promote gender equity; guide orderly population migration, improve rational population distribution and strengthen migrant population management and service; perfect social security and pension systems and properly deal with population aging; establish sound family development policy and enhance well-being and harmony of households.
Furthermore, Nobuko Horibe, Asia-Pacific regional director for the UN Population Fund, also said that China is playing a growing role in dealing with the population issue. The UN Population Fund is willing to provide China with techniques to jointly meet the goals of ensuring reproductive health, sustainable development and gender equality for everyone.

[i]By Tian Yating from People\’s Daily and the article is translated by People\’s Daily Online.[/i]
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[b]Jointly developing resources mutually beneficial [/b]

Resources exploration complicates the issue. Teng said that China had put forward the principle of \”maintaining sovereignty, shelving disputes and co-developing resources.\” Now some countries agree to shelve the dispute but explore the resources individually.

Shen said that the aforementioned principles were in accordance with both the historical fact and theory of law. But countries like Vietnam and the Philippines took measures of nibbling at China\’s islands and reefs, taking exclusive possession of natural resources and making the issue international and more complicated by introducing a third party to discriminate against China. But ASEAN did not lose its mind.

China and ASEAN member nations adopted the guideline to implement the \”Declaration on the Conduct of Parties in the South China Sea\” at the recently concluded ASEAN-China (10+1) Foreign Ministers\’ meeting. The principle embodies China\’s stance of \”shelving disputes and co-developing resources.\”

According to the sixth clause, pending a comprehensive and durable settlement of the disputes, the parties concerned may explore or undertake cooperative activities. It is said that, with the guideline, all the countries concerned will enhance mutual trust, narrow disputes and pave the way for solving the conflict.

[b]Other countries\’ involvement shows ulterior motives [/b]

Teng said that the United States had been closely following the issue of the South China Sea since the Reagan years. The Clinton administration tended to have a clearer stance. However its high-profile involvement in the issue last year made it the patron for Vietnam and the Philippines.

The United States keeps a close eye on the marine and aerial navigation and its military presence in the South China Sea. It is not bad for the United States to remain vigilant, and it is an advantage for some countries to cling to its presence, which helps to contain China. The situation at present shows that the United States could not afford disputes or even conflict with China in politics, economy, military and diplomacy by helping to protect the rights of countries like Vietnam and the Philippines.

Shen said it embodied Obama administration\’s \”back to Asia\” program. As a matter of fact, the United States has never withdrawn from Asia in terms of economy and military — East Asia in particular.

There are two reasons behind U.S. \”return to Asia\” strategy: First, it wants to choke China\’s rapid growth. Second, the United States is afraid that ASEAN, Japan and South Korea will leave its side and cross over to China. The United States hopes to keep its interests and monopoly in East Asia and the issue of South China Sea is the best excuse to realize it.

However, U.S. involvement in South China Sea is limited because it wants to hold back China, but it does not want to confront China. U.S. Secretary of State Hillary Clinton, who also took part in the meeting in Bali, said that the United States understood how complicated the issue of South China Sea was and would not hold any stance on the matter. Her words showed the United States did not want to get involved at the expense of China-U.S. ties. The wishful thinking of some countries that hope to legalize their schemes to nibble away at Islands and reefs in the South China Sea with backing from the United States is doomed to fail.

[i]By Zhang Xinyi, People\’s Daily Online[/i]
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The People\’s Bank of China has raised interest rates by 25 basis points on Thursday, making one-year deposit rates go up to 3.5 percent, while one-year lending rates increase to 6.56 percent.

Raising the interest rates is conducive to managing inflation expectations, correcting the state of negative interest rates and easing the financing difficulties for small and medium-sized enterprises, said financial policy officials.

\”As the market widely predicted that China\’s CPI will hit a record high in June, raising the interest rates is conducive to managing inflation expectations and signifies that curbing inflation is still the primary target of the current macroeconomic policy,\” said Ba Shusong, deputy director of the Institute of Finance and Banking under the Development Research Center of the State Council and chief economist of the China Banking Association.

Raising the interest rates is conducive to correcting the state of negative interest rates. China\’s economy entered a sustained state of negative interest rates along with the rising CPI since February 2010. Household savings have withdrawn from the banking system because it is difficult for household savings to keep value and rise in value. This has further increased inflationary pressures.

Raising the interest rates is conducive to narrowing the gap between the official interest rates and the market interest rates. The People\’s Bank of China previously used more quantitative tools, such as the deposit-reserve ratio, to regulate and control the market. Because tightening the amount of capital promoted a rise in the cost of capital, raising interest rates is also the requirement to follow the interest rate trend on the market.

Raising the interest rates is also conducive to easing the financing difficulties for small and medium-sized enterprises. \”Raising the interest rates can curb the financial needs of large-scale enterprises, and squeeze part of the credit to expand supply for small and medium-sized and enterprises to reduce their pressures on financing,\” Ba said, \”In this sense, raising the interest rates is more conducive to small and medium-sized enterprises while raising the deposit reserve ratio is more conducive to large-scale enterprises.\”

The central bank chose to raise the interest rates now that it can clearly see the situation, indicating that it is cautious in attitude, and inflationary pressure will remain high in June and July.

Why did the central bank take no action in June when the market had strong expectations of interest rate hikes, but decidedly raised the interest rates in July?

The price situation for June and July has generally become clear. The off-season rise in pork prices has become a major force pushing up the CPI; a dramatic shift from drought to flood in the south and reduced vegetable output have stabilized the downward trend for vegetable prices; and the carryover effect will raise the CPI for June by about 4 percentage points, the highest in 2011. These factors will cause the CPI for June to set a new high.

\”It is expected that the CPI will exceed 6 percent for June and remain at the high level of around 6 percent for June, driven by the upward trend of domestic pork prices despite the drop in international commodity prices,\” Ba said.

Experts said that the year-on-year GDP growth rate from the first quarter of 2010 to the first quarter of 2011 stood at 11.9 percent, 10.3 percent, 9.6 percent, 9.8 percent and 9.7 percent respectively, showing a moderate downward trend. That the central bank did not raise the interest rates until it was aware of the price situation shows that the central bank has properly handled the relationship between maintaining stable and relatively economic growth and adjusting the economic structure as well as managing inflationary expectations, and has adopted a prudent attitude to use price-related monetary instruments. The interest rate hike before the release of the CPI data for July also implies that the inflationary pressure will remain at a high level in June and July.

Ba said that the CPI will remain at a high level for some time after falling back from a peak in the second half and remain above 5 percent in the third quarter.

\”To cope with a negative interest rate and consolidate the effects of anti-inflation efforts, the central bank will likely raise the interest rates one or two times in the future,\” Ba said.

[b]Interest rate hike likely to bolster stock market rally [/b]

\”Because the central bank finally increased interest rates again, the stock market may resume its rally,\” said a Beijing-based private investor surnamed Wang, who was glad to hear the news about the interest rate hike. He believes that improved market liquidity was a leading factor behind the stock market rally that started in late June.

However, as inter-bank lending rates rose sharply on July 5, the market expectations for a rise in interest rates soared immediately, and the stock market rally suspended accordingly. After learning that the central bank did raise interest rates again, investors must feel relieved, and the market rally may resume and last longer.

The central bank has raised interest rates several times since last year. There were mixed upward and downward trends in the stock market in the short to medium term almost every time after the increases in interest rates. It seems that the changes in interest rates did not produce any noticeable effects on the stock market.

Market analysts said that all kinds of information released since the beginning of June showed that the stock market pessimism has dissipated, and investor confidence has returned. After a comprehensive look at various factors, the conclusion can be drawn that the domestic stock market, which stayed in a period of low tide in the past few months, will soon resume its rally.

Liu Xianjun, chief strategy analyst at China Securities Company, said that interest rate increases do not matter much. What really affect the short- to mid-term trends of the stock market are people\’s expectations about whether the central bank will continue to raise interest rates this year.

The current domestic economic situation is that some industries and companies suffer fund shortages, while other industries and companies enjoy abundant capital. Therefore, China\’s monetary policy is likely to undergo only some minor fine-tuning rather than a major change for some time to come. However, many investors expect the monetary policy to undergo a major change. They should consider more to make more reasonable expectations.

Pessimistic investors believe that the current circumstance does not possess the foundation for getting out of the persistent trend. In the second half of 2011, it is possible that the CPI will drop from the high position, but it will still fluctuate at a certain high level. The situation of negative interest rate will continue, and the pressure on stock markets will not be fundamentally turned around. The factors that led to the decline of stock markets have not been fully eliminated, and therefore investors should not be too optimistic about the future trend of stock markets.

Interest rate rise will suppress demand for housing purchasing and the housing price will have a decreasing trend.

After the interest rate was raised, the base interest rate of above five-year terms has exceeded the historical high psychological level of 7 percent. Insiders believe that while the real estate market is going down, the interest rate rising of this round will have more obvious effects on the real estate market, and especially will further restrain the rigid demand for housing purchasing.

Zhang Dawei, a market analyst from Central Group, believes that the increased pressure from repaying the loans will further restrain the irrational purchasers with rigid demand for housing. For housing purchasers with tight budgets, renting a house is a more rational choice temporarily.

Regarding the current real estate market, where transactions are rare and the housing price is loosening, the combination of raising interest rate and launching adjustment and control policies will further show its strong power. Under the condition of strict housing-purchasing limitations, the major reason for some people to still purchase housing is the inflation and sufficient currency supply, and that they do not have better channels to invest in. The investigation on depositors carried out by the Central Bank in the second quarter of 2011 showed that the residents who chose real estate as their investment direction accounted for 22.2 percent, meaning that the real estate is still a major choice for residents to invest in. The interest rate hike will obviously increase the cost of investments and make it more difficult to get loans, and therefore will restrain investment demand.

In general, raising the interest rate will have more obvious effects on restraining the demand for housing purchasing, and in the current declining real estate market, housing prices will show a more obvious decreasing trend.

[i]By People\’s Daily Online[/i]

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The public expectations about the disclosure of the \”three public consumptions\” — the 2011 budget, expenditures of central government agencies for overseas trips and receptions, and the purchase and maintenance of official vehicles — goes past concerns about how much money is spent. Apart from disclosure, fairness and equity should also be taken into consideration.

The disclosure of \”three public consumptions\” is currently a hot topic of discussion. So far there are more than 80 percent of a total of 98 central government agencies that have disclosed how much has been spent in the past on such expenditure since the State Council urged the Party and government departments to make their financial information public.

Pubic disclosure doubtlessly means progress. It demonstrates the government\’s active initiative and stance on building a transparent and responsible government. More importantly, the interaction between supervision and response can enhance acknowledgement and trust and accelerate the development of China\’s socialist democracy.

So the query over disclose requires our attention. Is it necessary for officials of the National Population and Family Planning Commission to go abroad so frequently? Does the Ministry of Water Resources use a 100 million yuan expenditure on vehicle maintenance and purchase for work purposes? Where does the Chinese Academy of Sciences spend the daily average 270,000 yuan for reception? It is the original purpose of the disclosure and the responsibility of central government agencies to answer these questions.

The normal operation of Party and government departments needs funds. There is no problem with the administrative cost, but the account should be accurate and clear. It is reasonable to go abroad on official duties, but not acceptable to go abroad for fun. The public may understand a free meal while on the job but disapprove of \”drinking Maotai for work.\”

Please hold your applause if some departments report no public consumptions: Maybe the departments either neglect or evade their duties or they tend to make up internal losses with external money and find someone else to cover their bills of vehicle, overseas trips and meals. The former is negligence of duties and the latter corruption. The public want to see neither of them.

There are reasons behind the query on the disclosure of \”three public consumptions\”: some of the information disclosed is not well regulated and the public do not understand and make wild speculations. We should pay more attention to the unspoken words behind the query: The public care more about whether the money is reasonably and fairly spent.

The scope of the disclosure is limited so far. For instance, the fiscal budget released by the Ministry of Finance is not large enough to contain institutional and extra-budgetary revenue. The information disclosed so far is too general to satisfy the public query. As of the expenditure for the purchase and maintenance of vehicles, most of the departments only released some simple data, except for the National Audit Office, which disclosed the average spending on each vehicle. Disclosure lacks basic explanation. Some departments spent hundreds of millions of yuan on reception, but others only tens of thousands. The pubic found it hard to make comparison without staff number.

The purpose of disclosure is supervision, but disclosure with inconsistencies, different standards, unclear content and vague meanings goes against its original intention. The aforementioned problems need improvement. The departments should avoid generality when working out a budget. They must improve the supervision system and establish an accountability system.

The comparison of the \”three public consumptions\” can show whether some departments meddle in others’ businesses and whether they should transfer some of their functions to others so as to realize the fairness and equity of the \”three public consumptions.\” Supervision can be realized only through complete disclosure and thus helps evaluate the value and efficiency of administrative cost.

Disclosure marks the beginning of the \”three public consumptions.\” We hope relevant departments offer a timely response to the public query of their own initiative and government departments practice strict economy. We also hope central government agencies, with the disclosure of the \”three public consumptions\” as a turning point, make administrative cost more reasonable and the financial system more transparent.

[i]By Zhang Xinyi, People\’s Daily Online [/i]

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Democracy is a buzzword in today\’s China. After 30 years of reform and opening-up, the public wants to participate in public affairs more than ever. But the reality is, the interpretation of democracy has seemingly been dominated by a small number of elites.

Wang Yang, secretary of the CPC Guangdong Provincial Committee, recently emphasized in a speech the grass-roots\’ right to speak.

He said that the practice of democracy should not be confined to political, business, academic and Internet elites. The \”silent\” voice of the grass-roots must be heard.

Unfortunately, since those elites often claim that they represent the public, it is sometimes difficult to distinguish between their opinions and those truly held by the public.

For instance, the public\’s impression of the new high-speed rail services, as expressed on microblogs, which are dominated by elites, appears quite negative.

\”Being high-speeded\” is a popular expression. But does it really represent the grass-roots opinion of the service?

The elites\’ opinions are not necessarily wrong or incorrect. Generally, they don\’t want the country to spend money on big projects and they favor a great leap forward in China\’s political opening-up.

But as they strive to achieve their goals, the voice of the majority has been drowned out. The majority\’s opinion is either misinterpreted or misrepresented.

The masses, especially the underprivileged, have been unable to speak for themselves. There are not sufficient channels and very little mechanism for them to participate in dialogue with the government. As a result, they also rely on the elites to speak for them.

Therefore, opening up new channels of communication and creating mechanisms for the wider public to engage in dialogue with the government without interference is crucial.

The most direct way to achieve this is to create more opportunities for the public to speak their minds face to face with government officials.

The public would feel respected if officials listened to their words humbly, discussed their concerns with them fairly and tried to satisfy their demands. Officials would also be able to design policies that better satisfy the public\’s demands.

In fact, the public\’s rising political awareness and emerging new Internet technologies have created the perfect opportunity for officials to listen to and work with the public directly.

For example, in Guangzhou recently, a high school student has been standing in a subway station exit holding up a board displaying his suggestions for the development of the city\’s subway.

The elites are competing with the government for the right to claim that they speak on behalf of the public. But what they should really be doing is letting the public speak for themselves.

[i]Source: Global Times[/i]

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NATO Secretary-General Anders Fogh Rasmussen revealed on July 6 that NATO would hold talks with the Libyan opposition in Brussels on July 13. Mahmoud Jibril, head of Libya\’s opposition National Transitional Council, will take the opportunity to speak about a road map for a democratic transition. Future political arrangements of Libya have gradually become as important as the ongoing civil war.

It has been more than four months since the war began in Libya. With the military support of NATO, the opposition forces based in Benghazi have occupied nearly half of Libya\’s territory. Furthermore, more than 20 countries have officially recognized the National Transitional Council. By contrast, the Tripoli-based government of Muammar Gaddafi has suffered successive defeats not only in the war but also in diplomacy. At present, the armed confrontation between government forces and rebels still continues in Libya.

There are only two ways out of the Libya crisis: It either splits into two independent countries or completes the transfer of power and restores national unity as soon as possible. The United Nations General Assembly passed a resolution in 1949 leading to the establishment of a sovereign Libyan state comprising three historically diverse regions.

After the unrest started in Libya, certain Western scholars suggested splitting it into two countries, but both sides of the civil war stick to the principle of \”one Libya.\” The most realistic option at the moment is for all parties involved to make rational decisions to put an end to the civil war and restore Libya\’s unity as soon as possible.

In regard to Tripoli, Muammar Gaddafi needs to make a choice between fierce resistance and retirement with security on the premise that Benghazi can control its destiny. In regard to Benghazi, various parties need to reach a consensus on how to deal with Muammar Gaddafi and his family to avoid leaving tribal vendettas and producing more long-lasting civil strife. Various parties from Benghazi previously said that the opposition faction would not refuse to solve the crisis in Libya through political means.

They can ensure the security of Gaddafi\’s family if he can give up power and order government forces to withdraw from their fighting positions. However, objectors in Benghazi quickly denied this statement. Afterward, some media revealed that Gaddafi is willing to \”exchange power for security,\” which was also quickly refuted by the Libyan government spokesman.

It is not easy for the two sides to reach a compromise. However, ending the civil war through military means will inevitably cause more casualties and leave more hatred, thereby making a new political order a long-term stability in Libya more difficult. Both sides of the civil war should seriously attempt a mutually acceptable political solution through negotiations to rationally end the civil war for Libya\’s future. It is likely to bring catastrophic consequences if they determine to continue the war.

NATO has also not intended to use only military approaches to complete the regime change. It is not difficult to find through observation that the course of the civil war in Libya has always been under the reign of NATO: When the government forces approached the rebel forces\’ headquarters Benghazi, France rushed to launch an air attack after the U.N. Security Council passed a resolution. In doing so, it saved the headquarters and escalated a regional civil war into an all-out civil war.

Thereafter, whenever the government forces made some progress on the battlefield, heavy NATO air strikes would force them to retreat. When the rebel forces desperately needed air support from NATO after they advanced too fast and the distance between battlefront and home front was too long, NATO aircraft did not appear, causing the rebel forces to contract their battlefront.

The civil war in Libya is not a short-term war, and all parties involved in the war, including NATO, have been trapped. The United States has held back its moves since the outset and France, which took the lead in air attacks, is in a more difficult dilemma because if they make missteps in Libya, it will leave a tough deadlock facing all parties involved there like they did in Afghanistan.

Given the current war situation, all parties involved are aware that it is easy to launch a war, while it is difficult to reconstruct the country. The more escalated the war is, the more difficult the reconstruction will be. In fact, the U.N. Security Council Resolution 1973 not only authorized the use of arms but also made clear the direction of solving the Libya crisis through political means \”leading to the political reforms necessary to find a peaceful and sustainable solution.\”

Political negotiations are the only sound approach to solve the issue of Libya, and an ultimate answer as well.

[i]By Yin Gang from People\’s Daily and the article is translated by People\’s Daily Online.[/i]

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The high-speed train collision on the Ningbo-Wenzhou line on July 23 has captured the attention of the Chinese people over the past two days. As of 6:00 p.m. on July 25, the accident left 39 dead and 192 injured.

Wang Yongping, a spokesman for China\’s Ministry of Railways, said on July 24 that China\’s high-speed rail lines have been operating for a relatively short time and are faced with many new situations and problems.

\”Many challenges are still threatening the safety of high-speed railway lines,\” Wang said. \”The entire railway service sector must set safety as the top priority of their work and comprehensively enhance safety management. First, problems concerning high-speed rail safety must be rapidly tackled. Second, the safety control level of high-speed rail operations must be enhanced.\”

He also stressed that it is important to show society that China\’s high-speed rail technology is advanced and qualified.

\”We remain confident,\” He said.

The remarks of the railway authorities are pertinent: They show their attitude toward high-speed railway safety, which is a major concern of the masses. Second, they express confidence in China\’s high-speed railway technology and the sector\’s future development. It is critical for relevant departments to respond in a timely manner in the aftermath of major safety accidents.

Certainly, the confidence expressed by the railway authorities must come with the precondition of profoundly understanding and reviewing safety problems. This is the only way to enable the masses to step out of the shadow and restore confidence.

After the \”July 23\” accident, it is understandable that the safety of high-speed railways has become a hot topic. The railway department must seriously take the safety of high-speed railways as the priority of priorities in its post-accident work. A series of safety problems exposed by the accident must be answered by practical investigations, solved by subsequent measures and absolutely prevented in the future by effective systems.

Currently, the results of the investigation on the cause of the accident have not come out yet, but the problems are present in front of faces. Whatever the results will be, a drawn-out war for guaranteeing the safety of high-speed railways has already started.

The Minister of Railways of China Sheng Guangzu said in an emergency TV and telephone conference on national transportation safety held recently that China will carry out a large-scale two-month production safety inspection activity starting from now to the end of September, great efforts must be made to find out and solve the outstanding issues of production safety and a safe production situation must be achieved as soon as possible. The safety of high-speed railways and buses must be regarded as the priority and all the potential problems must be find out and solved.

Such a large-scale inspection and rectification activity is a necessary step after an accident and will achieve effective results. But the most important thing is that the railway department should seize this opportunity and change all the effective measures and systems on safety into daily routines so that they could be effective permanently.

The high-speed railway technologies are advanced technologies, but the more advanced the railways are, the higher the operation, management and service levels should be. Safety is the foundation for the operation of high-speed railway and the foundation for high-speed railways to gain trust. Without this foundation, the people will not get on the trains no matter how advanced the high-speed railway technologies will be.

[i]By Zhong Yiwei from Guangming Daily, translated by People\’s Daily Online[/i]

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Admiral Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, recently visited China. This visit is a response to top Chinese General Chen Bingde\’s visit to the United States in May 2011. China-U.S. relations have rebounded thanks to joint efforts from both sides. Both sides should cherish this hard-won situation.

\”China today is a different country than it was 10 years ago, and it certainly will continue to change over the next 10 years. It is no longer a rising power. It has, in fact, arrived as a world power,\” Mike Mullen said during his speed in the Renmin University, which aroused worldwide attention.

It is not a new topic to discuss whether China has become a world power. This issue has a very obvious implication regarding \”China\’s responsibilities\” in the world. It is not important what U.S. officials have said about China. What really matters is whether the United States can really treat China as an equal partner. This is especially important for the development of the military relations between the two countries.

Military exchanges often lag behind other aspects in the all-around and multi-level China-U.S. relations. The military relations between the two countries are also very weak, meaning they are often the first and the most affected when the China-U.S. relations experience ups and downs. In addition to the sensitivity of military exchanges, the fundamental reason is that military movements are often related to the core interests of both sides and have significant impact on the mentality of the people of both countries.

The United States should understand that the obstacles to exchanges between the Chinese and U.S. militaries over recent years are not the lack of transparency in China\’s military or the aggressive posture adopted by China. The root cause is the mentality of containment to which the United States has long clung, which lies behind its public statements. This has sometimes caused the nation to make moves threatening China\’s core interests. Only a country that respects other countries can win their respect.

The South China Sea issue has served as a mirror reflecting the complicated mentality and policies of the United States. When the South China Sea disputes escalated, the United States, which has the most powerful military presence in the region, just managed to show off its force and capitalize on the disputes instead of playing a role in cooling down them.

Some media agencies and scholars in the United States have publicly urged the U.S. military to intervene in the South China Sea issue. An editorial in the Washington Post even asked the Pentagon to provide the Philippines with military support. The United States, Vietnam and the Philippines held a joint drill before long, which the Philippines\’s media agencies interpreted as a \”consolation\” to the country. The moves made by the United States to artificially stir up trouble were terribly incorrect, making the situation in the South China Sea more complicated.

It is worth noting that another evil wind is brewing in Washington. Many Congress members are stepping up pressure on the Obama administration to sell more F-16C/D fighters to Taiwan. It is imaginable that if the United States continues arms sales to Taiwan, all the efforts that the United States and China have made to promote bilateral military ties will be wasted.

The issue of arms sales to Taiwan is a true test of whether the United States is able to keep pace with the times and manage its relations with China wisely. Unless the issue is completely solved, the two countries cannot develop stable military ties, which will inevitably affect their cooperation in other areas. Whether the United States has started to see China as a world power depends on its actions rather than on words. If the United States truly respects China, it should show some respect for China\’s core interests first.

In fact, the two countries are facing a rare opportunity to further their military ties, but it requires the joint efforts of both to turn the opportunity into reality. At present, the top priority for the United States is to show its respect for China through actions and develop bilateral relations on the basis of mutual trust, equality and mutual benefit. China deserves to be treated as such, no matter whether it is still a \”rising power\” or already a \”world power.\”

[i]By People\’s Daily Online[/i]

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Local government debt accumulated over the past few years is relatively heavy, and some risks loom as certain regions and industries are weak in repaying the debt, according to a statement released by China\’s State Council after a meeting held on July 6 in response to international concerns over the massive debt burden of China\’s local governments. The repayment of debt and follow-up financing for projects under construction should be properly conducted, according to the statement.

[b]Local governments\’ debt burden well below warning line[/b]

How heavy is the debt burden of China\’s local governments? According to a report released by the country\’s National Audit Office on June 27, local governments at the provincial, municipal, and county levels had amassed more than 10.7 trillion yuan of debt as of the end of 2010 and had repayment obligations for about 60 percent of the total sum. Only 54 county governments had zero debt.

The audit office has made great efforts to gain a clear picture of the debt load of local governments. In the first half of 2011, it deployed more than 40,000 auditors in the nationwide auditing of more than 79,000 local governmental agencies, 6,500 local government-backed financing vehicles, 370,000 projects and nearly 1.9 million lending agreements. It found that among the total local government debt, nearly 8.5 trillion yuan were bank loans. Certain regions had a debt ratio of more than 100 percent, and certain local governments were under heavy debt pressure from borrowing money to fund highways, hospitals, and colleges and universities,.

Will local governments be able to repay the debt exceeding 10 trillion yuan? Auditor-General Liu Jiayi said that local governments’ debt burden has not gone beyond their ability to pay off.

Jia Kang, director of the Research Institute for Fiscal Science under the Ministry of Science, said that according to the Maastricht Treaty, formally known as the Treaty on the European Union, the government debt-to-GDP ratio must not exceed 60 percent. Given China\’s huge GDP, the 10.7-trillion-yuan debt of local governments is well below the warning line.

China’s local government debt is made up of three types of debt: debt for which local governments have repayment obligations, contingent debt that local governments may need to pay and contingent debt for which local governments have obligations to render assistance. Local governments need to repay all of the first type of debt, and only part of the second and third types of debt, both of which are contingent debt. Even if local governments need to repay all of the 10.7 trillion yuan, the debt burden, which only accounts for over 20 percent of China\’s GDP, will still be below the warning line.

Related specialist agencies believe the 10.7 trillion yuan of local government debt has not exceeded the market expectations and is still controllable. Cao Honghui, director of the Department of Financial Markets under the Institute of Finance and Banking of Chinese Academy of Social Sciences, said that it will not cause systemic risk as long as China effectively deals with the non-standard and high-risk part.

[b]Some local governments bear excessive debts[/b]

Although the total amount of local government debt is in the security range, the government should not ignore potential risks of local government debt.

Jia said that there are at least two reasons caused the excessive debts of some local public sectors. First, the transparency of local government debt was obviously low in the past. A large number of hidden debts were formed under unspoken rules and it is difficult for related departments to obtain the statistical information on those debts in a timely fashion. Second, the social cost to pour oil on troubled waters is very high once contradictions could not be concealed.

Experts speculate that according to the current audit results, the debt ratio of 78 municipal and 99 county-level governments is more than 100 percent, accounting for nearly 20 percent and nearly 4 percent of the total number of municipal and county-level governments respectively, indicating relatively large potential risks. More than 70 percent of debts are used for railway investment and bridge and land purchase. This indicated that the assets of local governments would increase along with the increase in liabilities.

Large-scale debt is also a test to the banking industry. Bank loans accounted for nearly 80 percent of the total 10.7 trillion yuan of debt. Financial expert Ye Tan believes the default rate of the current local government debt may far exceed the previous size of banks\’ bad loans because banks mainly indirectly finance bad loans. Therefore, the negative impact on China\’s banking in the post-crisis era is far from over.

[b]Adopting multiple measures to reduce risk [/b]

Effectively reducing debt risks facing local governments has topped the agenda of the central government in its efforts to rectify last year’s auditing problems. The State Council said during an executive meeting that the problems relating to debt repayment and follow-up financing of local government projects under construction should be handled properly under the principle of making classification management and taking different approaches to different problems.

The central government will continue to strengthen local government financing unit management. Financial institutions should actually step up risk identification and management, strictly observe borrower admittance conditions and perform review and approval procedures according to commercial principles. Illegal loan guarantee practice of local governments should firmly be banned. Meanwhile, it is necessary to research and establish a standardized borrowing and financing mechanism for local governments.

In terms of the way to address the hidden local government debt issue, Jia said that the key is how to turn \”hidden rules\” for local government financing practice into \”transparent rules.\” Local government financing practice should become transparent so that it should properly dispose existing local government debt and move to avoid new ill local government financing practice.

He stressed the necessity of establishing a transparent local government financing system. The suggestions put forward by audit departments have already incorporated such contents, including the establishment of a local government bond system and the revisions to related laws and regulations. It is proposed that local governments may issue municipal government bonds that are matched with local projects so as to make local government debt transparent, under public supervision and subject to other types of supervisory systems.

In terms of local government debt management and repayment, Liu Shangxi, deputy director of the Research Institute for Fiscal Science under the Ministry of Finance, said that local governments should not only establish an overall local government debt management framework to classify, monitor and analyze various classes of local government debt but also clarify and define the relationship between financing platforms and local governments.

Ma Guangyuan, a member of the Chinese Academy of Social Sciences, said that to eliminate China\’s local government debt risk, it should resolve the institutional problems related to the tax sharing system as soon as possible and reduce local governments\’ reliance on land use rights sales. Local governments\’ excessive reliance on the revenue from land use rights sales exposes that local economies cannot generate enough revenue from their real economic sectors or small and medium-sized enterprises and can only live on land use rights sales. This evidently is a vicious circle.

[i]This article appears in print on Page 02 of the July 8, 2011 edition of People\’s Daily Overseas Edition, translated by People\’s Daily Online[/i]

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