According to newspapers, Chinese President Jiang Zemin (
To reassure the public, government agencies have repeatedly affirmed that they have measures in place for complete financial security. In fact, Tai-wan's worries about the rumor are unnecessary and only reveal the country's lack of understanding of China.
Even if Jiang has realized that playing hardball with Taiwan will achieve nothing and is therefore ready to wage an economic war instead of threatening Taiwan with military force, will he really be able to raise US$10 billion to destroy its economy?
On the surface, US$10 billion would seem to be nothing to Beijing, given China's tremendous economic strength and ample foreign exchange reserves. But an in-depth analysis of the Chinese government's financial condition reveals that China is actually in a financial hole, as the government does not have sufficient funds to cover its expenditures. It is just like the Jia (賈) family in the Chinese masterpiece, Dream of the Red Chamber (紅樓夢) -- while they appeared to be living an affluent and aristocratic life, they were actually "anticipating their income while eating next year's food" (寅吃卯糧).
China recently went as far as to ask Washington for US$1 million in compensation over the collision between a US surveillance plane and a Chinese jet fighter. That request revealed China to be haggling for every penny it can get.
China will have several huge bills to pay in the next five to 10 years. First, it has subsidies to pay to state-owned enterprises suffering from operating losses, as well as for the establishment of its social welfare system.
Second, it must continue to invest in large-scale infrastructure projects carried out to ensure speedy economic growth. China is expected to invest more than 700 billion Yuan on ecological and environmental protection alone in the next five years. Meanwhile, increased public housing will cost another 170 billion Yuan.
Third, China must finance an arms race resulting from the changing international situation. China has maintained two-digit growth in its military budget over the past 13 years, and that growth rate reached a new high of 17 percent this year. It is expected that the rate of growth will quicken after the US has established its National Missile Defense system.
Fourth, China faces heavy "stability and unity expenditures" -- expenses paid to stabilize society. According to the World Bank, the Chinese government has long been burdened by the huge cost of retirement pensions.
Fifth, China must shoulder the cost of changing its economic structure. After China's entry into the WTO, it will suffer huge financial losses at least in the first five to 10 years.
Apart from these problems, the government is also facing huge expenditures on government personnel and development costs in science, education, culture and public health. Other problems include corruption, tax evasion and capital outflows. It is not an exaggeration at all to say that China today faces serious financial difficulties.
With finances in such a parlous state, couldbJiang really find US$10 billion to meddle in Taiwan's economy? Not unless he orders all the corrupt officials to hand over their personal pocket money. Do you think that is likely?
Wang Dan is a Chinese pro-democracy activist.
Translated by Eddy Chang
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