SHANGHAI, June 29 (Xinhua) — China welcomed its second non-communist minister in just two months, a move highlighting that outstanding people without Communist identity are having more say in politics.

    Chen Zhu, former vice president of the Chinese Academy of Sciences (CAS), was appointed the minister of health by China’s top legislature on Friday, after the cabinet nomination of non-Communist Wan Gang as the minister of science and technology in April.

    ”The move indicates that non-communist elite are enjoying more opportunities to act as high-ranking officials in the Communist leadership,” said Hu Wei, professor of politics at Shanghai Jiao Tong University, adding that it would become a fundamental political system in China.

    Chen, 54, is the second non-Party figure to be given a ministerial position since late 1970s following the accession of Wan, a senior leader of Zhi Gong Party that comprises 15,600 returned overseas Chinese and others with overseas ties.

    ”It’s a significant move in the development of China’s political democracy,” Wan said after the appointment.

    Chen declined to make any comments Friday.

    More non-Communist and non-politically affiliated people are expected to become leaders of state-level or local governments, as the system of multi-party cooperation and political consultation under the leadership of the Communist Party of China is getting improved, said Hu.

    Chen and Wan share similar advantages in terms of their professional achievements and administrative experiences, which made them favored by the ruling Communist Party of China (CPC), according to Yin Jizuo, vice chairman with Shanghai Social Sciences Association.

    Chen, a French-trained scientist, was noted for his achievements in the clinical and molecular study of the treatment of acute promyelocytic leukemia. As CAS vice president, Chen has made great efforts to boost the development of China’s life sciences and biotechnology.

    Wan’s contributions to many technological innovations were said to have helped the German Audi Corporation achieve outstanding financial results during his employment in the company. After returned from Germany, he was in charge of a key national electric vehicle project. He later served as president of Tongji University in Shanghai.

    Moreover, they returned from overseas studying or working when China needed their expertise. “They are patriotic,” said Yin.

    The appointments show the trust of the CPC Central Committee in people from outside the Party, an unnamed official with the United Front Work Department (UFWD) of the CPC Central Committee said.

    President Hu Jintao, also general secretary of the CPC Central Committee, has called for other eight parties, which also share seats in the legislature, to play an active role in pushing China’s reforms and opening-up.

    Among a series of directives issued in recent years to promote non-Communist people, the CPC Central Committee has ordered the opening of top positions at or above county-level to non-CPC members and non-politically affiliated people.

    According to the order made in 2005, the State Council, China’s cabinet, should pay particular attention to appointing non-Communist candidates to ministerial positions or their equivalents.

    A latest article issued by the Study Times, run by the CPC Central Committee’s Party School, pointed out that more non-Party people will be promoted to senior positions in four particular categories of departments, including administrative and judicial supervision, those involved in the management of people’s life, intellectuals, and professional sectors.

    However, “the biggest challenge is how to adjust to new administrative functions from a pure scientist or an engineer,” said Wan.

    ”We don’t have experiences in government,” he admitted.

    ”Measures should be taken to ensure that these people have real administrative power,” Pu Xingzu, professor of politics at Fudan University, stressed.

Special Report: 10th Anniversary of HK’s Return to China

    SHENZHEN, June 29 (Xinhua) — A new customs office was unveiled in Shenzhen, south China’s Guangdong province on Friday. Mou Xinsheng, commissioner of the General Administration of Customs of China, attended the opening ceremony.

    It is the fourth such customs clearing facility in Shenzhen, a checkpoint on the western thoroughfare connecting Hong Kong and Shenzhen.

    Shenzhen Bay custom checkpoint is to begin operation Sunday together with the HK-Shenzhen western thoroughfare, also to be put into service on the same day, the 10th anniversary of Hong Kong’s return to China.

    The thoroughfare, the fourth route connecting Hong Kong and Shenzhen, which are separated by a local river, consists of a 5,545-meter-long, six-lane highway bridge spanning Shenzhen Bay.

    The customs checkpoint is situated on the side of Shenzhen, where customs officers from Hong Kong and Shenzhen will handle customs clearance procedures separately but in the same facility.

    The western HK-Shenzhen thoroughfare is designed to accommodate 58,600 motor vehicles daily, or 40 percent of the traffic between the two places.

    BEIJING, June 29 (Xinhua) — China’s legislature on Friday authorized the State Council to suspend or cut the 20-percent tax on interest earned on personal savings according to economic and social situations.

    The decision was made at the 28th session of the Standing Committee of the National People’s Congress.

    Experts say the move is aimed at making bank savings more attractive and reducing the amount of money flowing into the stock market.

    Chinese shares took another tumble on Friday as investors panicked at the government measures to rein in excess liquidity and cool down the stock markets.

    The benchmark Shanghai Composite Index closed 2.39 percent lower Friday, making the key index lose 6.62 percent for the week, the biggest weekly fall in months.

    In recent months, China has seen large sums of money flow from deposit accounts into stock trading accounts.

    China’s household deposits posted the largest monthly drop in May, decreasing by 278.4 billion yuan, according to central bank statistics.

    China began to tax interest earned on savings accounts in November 1999.

    ”Taxing the interest on savings accounts has encouraged consumption and investment and helped regulate personal incomes,” said Jin Renqing, Minister of Finance, on Wednesday to legislators.

    The benchmark one-year deposits carry an interest rate of 3.06 percent. However, given the 20 percent interest tax, the actual yield is just 2.45 percent.

    ”China’s savings interest remains at a low level,” said An Tifu, an economics professor with the Renmin University. “If interest tax continues to be levied, citizens’ savings deposit will further decrease in value as consumer price keeps rising.”

    The move to cut interest tax will benefit low and middle-income citizens most, said economist Wang Xiaoguang.

    BEIJING, June 29 (Xinhua) — China’s top legislature on Friday approved the cabinet nomination of Chen Zhu, who has no party affiliation, as the country’s new health minister.

    Chen, 54, is the second person who is not a member of the Communist Party of China (CPC) to be given such a key appointment since the late 1970s, following the appointment of Wan Gang as minister of Science and Technology in April this year.

    Wan is a member of the China Zhi Gong (Public Interest) Party. He used to be an automobile engineer at Audi Corporation in Germany.

    A Paris-trained scientist, Chen replaced 63-year-old Gao Qiang, who was assigned to the Health Ministry after former Health Minister Zhang Wenkang was sacked over the SARS crisis in 2003.

    Gao will serve as secretary of the ministry’s leading Party members’ group and vice minister, according to the document submitted by the State Council to the Standing Committee of National People’s Congress.

    Observers said that the appointments of Chen and Wan show China’s efforts to develop political democracy.

    ”The appointments show the trust of the CPC Central Committee in non-CPC members and people with no party affiliation,” an official with the United Front Work Department (UFWD) of the CPC Central Committee told Xinhua.

    In the 1950s, a number of non-Communist personages were appointed ministers in the country’s cabinet, but they were dismissed after the “anti-rightist” movement in 1957.

    In recent years, the CPC Central Committee has issued a series of directives and recommendations to promote non-CPC members to political positions.

    In 2005, the CPC Central Committee ordered all local governments and departments at and above the county level to open up top jobs to non-CPC members and non-politically affiliated people.

    The CPC leadership also stipulated that the State Council, the country’s highest administrative body, should pay particular attention to appointing non-CPC members and non-politically affiliated candidates to ministerial positions or their equivalents.

    The official with the UFWD said to appoint non-CPC member cabinet ministers is an important move in implementing and improving the system of the multi-party cooperation and political consultation under the leadership of the Communist Party.

    ”It is also a strategic step in pushing forward the development of socialist political democracy,” the official said.

    Chen, a Jiangsu native born in Shanghai, was sent to the countryside in Jiangxi Province for re-education in 1970 during the Cultural Revolution (1966-1976). During the five years in the countryside, Chen learnt medicine by himself and became a barefoot doctor.

    In 1975 he was selected to study at a medical school in Jiangxi, and in 1978 he went back to Shanghai for graduate studies.

    Chen obtained a master’s degree in medical science from Shanghai Second Medical University in 1981. He received his doctorate from the Institute of Hematology of Hospital Saint-Louis, connected to University Paris VII, in 1989. He was also involved in post-doctoral programs in the French institute.

    Back in China, he spent most of his time in Shanghai, working in hospitals and institutes on blood-related diseases and molecular immunology.

    Chen won international acclaim for his achievements in the clinical and molecular study of the treatment of acute promyelocytic leukemia.

    He got the State Scientific and Technological Award by the Chinese government and became the first non-French winner of “Prixde l’Qise” by “La Legue Nationale contre le Cancer” of France.

    He is an academician of the Chinese Academy of Sciences, the French Academy of Sciences and the United States National Academy of Sciences.

    His previous positions include director of the Chinese Human Genome Center in Shanghai and Shanghai Institute of Haematology at Ruijin Hospital.

    Before the latest appointment, Chen was vice president of the Chinese Academy of Sciences. He was said to have made great efforts to boost the development of China’s life sciences and biotechnology, and attract overseas Chinese scholars and scientists back to China.

¡¤Top legislature passed an interest tax cutting bill on Friday.¡¤Top legislature passed proposals on a massive sale of special T-bonds. 
¡¤The Ministry of Finance is to issue 1.55 trillion yuan of special T-bonds.

The Standing Committee of the National People’s Congress hold a meeting at the Great Hall of People in Beijing June 28, 2007.(Xinhua Photo)

    BEIJING, June 29 — China’s top legislature Friday passed proposals on authorizing the State Council to reduce or cancel tax on interest accrued from bank deposits and proposals on a massive sale of special T-bonds.

    The Standing Committee of the National People’s Congress voted in favor of an income tax law revision that gave the State Council the power to adjust the interest tax.

    ”The imposition, suspension or reduction of interest tax on bank savings, as well as specific methods thereon, are subject to the decision of the State Council,” said the amended law.

    Lawmakers also gave the go-ahead for the Ministry of Finance to issue 1.55 trillion yuan of special treasury bonds to finance the purchase of foreign exchange reserves for the yet-to-be-established State Forex Investment Company.

    Interest tax

    Analysts expect the State Council to initially halve the current interest tax rate to 10 percent. Should inflation continue to grow, then the cabinet could cancel the tax completely. However, there are also calls for the abolition of the tax altogether.

The tax adjustment will be the authorities’ latest attempt to make the real interest rate positive and discourage the diversion of bank deposits to the stock market.

    Currently, the benchmark one-year deposits carry an interest rate of 3.06 percent. However, given the 20 percent interest tax, the actual yield is just 2.45 percent.

    That return is well below the inflation rate as measured by the consumer price index, which hit a two-year high of 3.4 percent after rising 3.0 percent in April and 3.3 percent in March.

    If the real interest rate remains negative for a long time, it will do no good to the economy, said assistant central bank governor Yi Gang last weekend.

The negative interest rate is encouraging a massive diversion of bank deposits to the equity market, which has soared 50 percent so far this year after a 130 rally in 2006.

    China’s household deposits posted the largest monthly drop in May, decreasing by 278.4 billion yuan, according to central bank statistics.

    The central bank has raised interest rates twice this year and is widely expected to announce two more hikes before the end of year.

    China started to collect interest tax in November 1999 in the wake of the 1997 Asia financial crisis in a bid to boost domestic consumption. But that aim has largely failed due to the lack of an eligible social security network in the country.

Bond sales

    It is still unknown who will buy the special treasury bonds, a key point in determining the impact of such a large issuance on the domestic economy.

    The ministry could sell the bonds to the central bank in exchange for the foreign exchange reserves now held on its balance sheet, with few implications for the economy.

    But if the bonds are sold to the inter-bank market, it will take much longer to raise the funds and will have bigger economic implications.

    The latter case is more likely to happen, China Business News quoted sources as saying.

    Also unknown is the timing of the bond offer. Some predict that it will kick off in July as the State Forex Investment Company will complete registration in August and start operations the next month, according to the newspaper.

    On whether the bonds will be sold in one time or in several batches, the sources expect issuing the bonds in phases, which will have much smaller impact on the financial market.

    In a briefing to the lawmakers on Wednesday, finance minister Jin Renqing said the special bonds will be tradable and have maturities of at least 10 years. The market will decide the coupon rate.

    Finance professor Zhong Wei of Beijing Normal University foresaw a major fluctuation of the financial market caused by the sale, according to the China Business News report.

    The excess reserve rate in the country’s banks stands at just one percent after the central bank ordered the lenders to set aside more money as reserves, five times so far in 2007, he explained.

    Earlier this year, China decided to set up the State Forex Investment Company to make more profitable use of its huge forex reserves which hit US$1.2 trillion by the end of March.

    Stock market

    News on the possible interest tax adjustment and the bond sale has affected the stock market in the last few days.

    The benchmark Shanghai Composite Index tumbled more than four percent on Thursday, the biggest fall in a month, after a 3.68 percent fall on Monday and a 3.29 percent drop on last Friday.

    Analysts expected the market to remain weak for several days as the bond sales might soak up money that would otherwise have gone into stocks. Bank deposits will also become more attractive after the interest tax is reduced or cancelled.

    However, given the widening trade surplus and inflow of foreign direct investment, the market would continue to experience excess liquidity.

    In addition, even after the cancellation of the interest tax, the real interest rate is still in negative territory and far below the return from stocks and mutual funds. Thus the exodus of deposits is unlikely to stop, analysts said.

    (Source: Chinadaily.com)

    

China’s legislature approves 1.55 trillion yuan of treasury bonds to buy forex 
    
    BEIJING, June 29 (Xinhua) — China’s legislature on Friday ratified a motion that authorizes the Ministry of Finance to issue 1.55 trillion yuan of special treasury bonds for purchasing foreign exchange.

    The motion was approved at the ongoing 28th session of the Standing Committee of the National People’s Congress. Full story

    
China approves suspension or cutting of interest tax on bank savings

    BEIJING, June 29 (Xinhua) — China’s top legislature on Friday ratified the bill that would authorize the State Council to suspend or cut the 20-percent tax on interest earned on personal savings.

    It was approved at the ongoing 28th session of the Standing Committee of the National People’s Congress. Full story

    BEIJING, June 29 (Xinhua) — China’s top legislator Wu Bangguo on Friday urged local governments and trade unions to do their best to protect workers’ legal rights after lawmakers voted for a labor contract law.

    The Standing Committee of the National People’s Congress (NPC),China’s top legislature, on Friday adopted the labor contract law following the exposure of forced labor scandals in brick kilns in central and north China.

    The law, which will come into effect on Jan. 1, 2008, won 145 of the 146 votes. One vote wasn’t cast.

    Governments and trade unions at all levels should do their best to publicize the law among workers and employers to better safeguard the rights of employees, Wu, NPC Standing Committee chairman, said when the Committee concluded its weeklong legislative session.

    He said the law will regulate employers’ use of labors and help employees protect their legal rights.

    According to the law, officials will face administrative penalties or criminal prosecution for abusing their authority or neglecting their responsibilities that result in serious harm to the interests of workers.

    Lawmakers lambasted officials involved in the forced labor scandals in north Shanxi Province and central Henan Province during their deliberation of the draft.

    The forced labor scandals made headlines in China this month, sparking outrage among the Chinese public and arousing concern from national leaders. The workers were forced to work long hours without pay in brick kilns, mines and other small industries.

    The central government has sent a team of investigators to look into the scandals.

    Investigations reveal 2,036 brick kilns were operating without licenses and illegally used 53,036 migrant workers.

    Latest official statistics showed that a total of 576 workers have been rescued from illegal brick kilns in Shanxi and Henan and the investigation and rescue work is still continuing.

    By June 18, police have detained 168 people accused of holding workers in slavery under appalling conditions at small brick kilns and mines in Shanxi and Henan.

    Xin Chunying, deputy chairwoman of the NPC Law Committee, said there have already been relevant laws, including the Criminal Law and the labor law, which could be applied to punish the employers and officials involved in the forced labor scandals.

    ”The labor contract law makes detailed provision concerning this issue following the exposure of the forced labor scandals,” she told a press conference on Friday afternoon.

    The draft was first submitted to the top legislature for deliberation in 2005 and released for public suggestions from March 20 to April 20 last year, which was regarded as a major step in the country’s legislative transparency. More than 190,000 responses from the public were collected in a month.

    The new law is expected to help protect workers’ legal rights by demanding a written contract, Xin said.

    Under the new law, if employers don’t sign a written contract with their employees within a year after the employees start to work for them, it should be taken as that they have signed a labor contract of no fixed term.

    ”Employers should not force employees to work overtime and employees can terminate the contract without early notice to the employers if they are forced to work by violence, threat or restriction of personal freedom,” the law reads.

    Xin said such provisions will be useful when workers’ interests are harmed.

    However, some foreign companies worried the law would increase their cost when the draft was released for public suggestions, Xin said.

    ”But those who didn’t have a record of illegal employment don’t need to worry about the increase of cost at all,” she said.

    Xin also said it is unnecessary for foreign companies to worry over bias in the application of the law.

    ”If there were some bias, it would be in favor of foreign investors because local governments have great tolerance for them in order to attract and retain investment,” Xin said, adding that foreign companies must abide by the law just like their Chinese counterparts.

    NPC Standing Committee member Zheng Gongcheng, an expert on labor law, said the labor contract law itself favors neither employees nor employers.

    ”As a law that gives full protection to workers’ legal rights, it also stipulates that employees must shoulder equal duties, such as keeping confidential of the issues concerning employers’ intellectual property rights. This is crucial for foreign companies,” Zheng said.

    There have been 570,000 foreign enterprises in China since the country opened it’s door to foreign investors in 1980s, and some 25 million people have been working for them by the end of 2005, according to official statistics.

    Survey found that many foreign companies in coastal Jiangsu and Guangdong provinces overworked and underpaid their employees.

    It was reported earlier this year that McDonald’s, KFC and Pizza Hut in southern Chinese city Guangzhou paid their part-time Chinese employees four yuan (52 U.S. cents) per hour, more than 40percent less than local minimum wage of 7.5 yuan (97 U.S. cents).

    The fast food chains were also exposed for failing to sign labor contracts with employees and overworked staff.