Unclassified-FBIS Daily Report-China

China
Vol I No 052 18 March 1987
PRC INTERNATIONAL AFFAIRS
GENERAL
PRC To Host UN Regional Disarmament Conference 4A 1
Foreign Ministry Holds Weekly News Briefing 4A 1
On UN Disarmament Meeting Al
Swedish Prime Minister To Visit 4A 1
Journal on West Europe Defense, U. S. USSR Talks A 2
[GUOJI WENTI YANJIU 13 Jan]
UNITED STATES
Shultz Interviewed on PRC Policies, Progress B 1
[SHIJIE JINGJI DAOBAO 9 Mar]
NORTHEAST ASIA
XINHUA Reports DPRK Proposal on Talks With South 9 1
BEIJING REVIEW Discusses DPRK Proposal on Talks 9 1
116 Mar]
PRC Protests Japan Decision on Dormitory [KYODO] D 2
WESTERN EUROPE
Wu Xueqian Continues Visit to Italy, Meets Leaders G 1
Explains Reform G 1
Wu Meets Craxi 6 1
Italy, PRC Sign 3-Year Economic Cooperation Accord 6 1
[Rome ANSA]
Chen Pixian Meets Italian CP Delegation 13 Mar G 2
Song Ping Meets Turkish Minister of State G 2

Canadian Governor General Arrives on Visit
Li Xiannian Welcomes Sauve
Li, Sauve Hold Talks
Li Stresses Open Policy
Minister Awards Students

Costa Rican Trade Unionists Meet Luo Gan
Meet NPC Vice Chairman

Be Ge Ge Ge Ce Ce Ge
eer rnne =

I. 18 Mar 87 2

PRC NATIONAL AFFAIRS

State Council Decides To Set Up Tariff Committee

CPPCC National Committee Standing Committee Meets

JIEFANGJUN BAO Hails Army's Political Work Rules
127 Feb]

JIEFANGJUN BAO Prints PLA Audit Work Regulations
(3 Mar)

JIUFANGJUN BAO Commentary [3 Mar]
JIEFANGJUN BAO Assesses First Satellite Station
y (10 Mar]

PLA Applies Computer Software With Good Results
ZXS Views ‘New Thinking’ of Economics Professor
Roundup Covers Developing Shipbuilding Industry
RENMIN RIBAO on China's Industrial Policies
{2 Mar)
RENMIN RIBAO on Planting Trees in Coastal Areas
{13 Mar]
NONGMIN RIBAO on Scale of Land Operations
{7 Mar)
JIEFANGJUN BAO Article on Bourgeois Liberalism
[4 Mar]
JIEFANGJUN BAO Stresses Lei Feng Spirit
[5 Mar]
Xi Zhongxun Inspects Guangdong 11 Feb-11 Mar
Xi Zhongxun Gives Instructions to Hunan Cadres
Yu Qiuli Stresses Four Cardinal Principles
Song Rengiong Inspects Jilin City 9-14 Mar

PRC REGIONAL AFFAIRS

EAST REGION

Shanghai People's Congress Meeting Closes
(WEN HUI BAO 12 Mar]

Shanghai Leaders Inspect Disaster Areas
(WEN HUI BAO 8 Mar]

Secretary, Mayor Inspect Shanghai Militia
[JIEFANG RIBAO 13 Mar]

Zhejiang Appoints, Removes Provincial Officials
(ZHEJIANG RIBAO 6 Mar]

CENTRAL-SOUTH REGION

Guangdong Party Committee Holds Plenary Session
Lin Ruo's Report
[NANFANG RIBAO 13 Mar]
Main Tasks for 1987
[NANFANG RIBAO 14 Mar]
Shenzhen Official Reports Production Quotas
Guangxi To Increase Production, Economy Drive

SOUTHWEST REGION

Sichuan Cadre Rally To Promote Production
Wu Jinghua Favors Protecting Xizang Customs

I. 18 Mar 87 3

NORTHWEST REGION

Gansu Circular Urges Fighting ‘Serious’ Drought
Gansu Governor Reports Economic Plans

Zhang Boxing Elected Governor of Shaanxi

Shaanxi Congress Elects Zhang Governor, Concludes

HONG KONG & MACAO

*

MACAO

PRC-Portuguese Talks on Macao Open in Beijing
Accord Anticipated [AFP]

2

9 —

I. 18 Mar 87 PRC INTERNATIONAL AFFAiLRS Al
GENERAL

PRC TO HOST UN RECIONAL DISARMAMENT CONFERENCE

OW180138 Beijing XINHUA in English 0124 GMT 18 Kar 87

[Text] United Nations, March 17 (XINHUA) — The Asian and Pacific Regional Conference
on Disarmament will be held in Beijing from March 23 to 27. The conference, organized
by the United Nations Department for Disarmament Affairs, will discuss issues including
nuclear and conventional disarmament, international security, verification of
disarmament agreements and regional issues.
*

About 38 representatives from non-governmental organizations, research and educational
institutions and the mass media of 16 countries will participate in the conference.
Senior diplomats from 11 countries will address the conference as guest speakers. Some
countries have decided to send their representatives to the conference as observers.

To promote the world disarmament campaign and world peace cause, the UN Department for
Disarmament Affairs has organized seminars and conferences in various regions of the
world. The Beijing conference is the i4th of such regional meetings and the first to
be held in China.

FOREIGN MINISTRY HOLDS WEEKLY NEWS BRIEFING
On UN Disarmament Meeting

OW180920 Beijing XINHUA in English 0853 GMT 18 Mar 87

[Text] Beijing, March 18 (XINHUA) — “United Nations Regional Conference for the World
Disarmament Campaign” sponsored by the United Nations will be convened here ‘rom March
23 to 27, said a Chinese Foreign Ministry spokesman at a weekly news briefing here this
afternoon. The conference will be devoted to discussion on disarmament and its
relations with security and development, according to the spokesman. The spokesman
said that cfficials, well-known personages, experts and scholars from countries in the
Asian and Pacific region, Europe and America will attend the conference. Some Chinese
Government officials, experts and scholars will also be invited to the conference.
[Beijing XINHUA Domestic Service in Chinese at 0740 GMT on 18 March carries « similar
item, which states that "Vice Premier Wan Li will speak at this conference on behalf of
the Chinese Government" |

Swedish Prime Minister To Visit
OW180856 Beijing XINHUA in English 0847 GMT 15 Mar 87

[Text] Beijing, March 18 (XINHUA) — Prime Minister Ingvar Carlsson of the Government
of the Kingdom of Sweden will pay an official visit to China from April 3 to 9 at the
invitation of Premier Zhao Ziyang, a Chinese Foreign Ministry spokesman told a news
briefing here this afternoon. The spokesman said that Sweden was the first among the
Western countries to establish diplomatic relations with China in 1950. In the 37
years since then, the two countries have enjoyed friendly relations. The spokesman
believed that the forthcoming visit by Carlsson will further promote the mutual
understanding and friendship between the two countries, and bi ing about a greater
development of economic and trade cooperation on the basis of long-term stability and
mutual benefit.

I. 18 Mar #7 A 2 PRC INTERNATIONAL AFFAIRS
GENERAL

JOURNAL ON WEST EUROPE DEFENSE, U.S.-USSR T Us
HK140731 Beijing GUOJI WENTI YANJIU in Chinese No 1, 13 Jan 87 pp 44-49

[Article by Jiang Jianging (5592 1696 3237): “Western Europe's Defense and the
U.S.-Soviet Arms Control Talks“

{Text} Since the U.S.-Soviet summit in Iceland, Western Europe has been extremely
worried and anxious about the trend of developments in U.S.-Soviet arms control talks.
At present in the U.S.-Soviet arms control talks there is haggling going on and it is
still in doubt whether a “package agreement" can be worked out. The United States and
Western Zurope are frequently exchanging views in an attempt to gain Western Europe's
support for the U.S. talks program. Within Western Europe there is also intensified
consultation so that they can exert more influence on the U.S.-Scviet talks and plan
their own avenues. These various signs indicate that changes will occur in the
relationships between Western Europe and the United States and the Soviet Union. The
problems which have long been latent within NATO will thus be greatly exacerbated.

I. The Secret Concern of Western Europe [subhead)

The initial hopes of Western Europe for the Iceland summit were not realized. It
appears that prior to the summit the United States did not solicit the agreement of its
Western European allies. Thus, since the end of the Iceland summit, the positions of
the various countries in Western Europe have been both circumspect and quite
disoriented.

Until today, the major characteristic attitudes of the various countries in Western
Europe have been, on the one hand, to welcome “major progress in the U.S.-Soviet arms
control talks and hope that through continued efforts positive results will be
achieved; on the other hand, they are worried that the United States and the Soviet
Union are engaged in “over-the-head diplomacy” which will result in an agreement which
will harm Western Europe's interests. They have grave doubts and are very wary about
the true intentions of the United States and the Sovie: Union. They believe that the
reason the United States and the Soviet Union have been able to realize progress is
that, in the Soviet view, one of their aims is to bring about a collapse in the defense
bond between the United States and Western Europe and to strive for military
superiority in the European the. . “eimwhile, the United States, in order to realize
its long-term aim of global military strategic superiority, may not gay attention to
and hence harm Western Europe's curiest defense needs. The focus of Western Europe's
attention is the United States deployment of nuclear forces (especially medium
long-range [zhong yuan cheng 0022 6678 4453] nuclear forces) in Europe and the degree
and speed of U.S.-Soviet strategic arms reductions. They are worried that if the
United States and the Soviet Union suddenly realize an agreement, it may greatly weaken
the U.S. “nuclear umbrella.”

The above attitudes of Western Europe originate from their location and their basic
strategic ideologies.

For a long time, the strategic ideology of Western Europe was that “detente in deferse
matters equals security." In East-West and U.5.-Soviet arms control questions, Western
Europe advocate: the r“alization of a “low-level balance” and requires that both the
United States and the Soviet greatly reduce both nuclear and conventional arms. After
the arms ‘reductions, an overal) balance of military power will be achieved. Neither
side should use the arms talks to seek military superiority. If the arms control talks
deveiop in this direction, then in the international arena the Western Europeans will
be able to im rove their position, increase their independence, and increase their
maneuvering rouse between the two superpowers. [paragraph continues]

I. 18 Mar 87 Aj PRC INTERNATIONAL AFFAIRS
CENERAL

At the same time, they will be able to improve their domestic situation an“ be able to
avoid being squeezed between the two aspects of expanding arms production and
developing their economies. They will also be able to reduce the pressure of the peace
movement on various governments.

It is because of this that the results of the Iceland summit have put the governments
of various Western European countries in a dilemma. With respect to the intention of
the United States and the Soviet Union to greatly reduce medium-range and strategic
nuclear weapons, Western Europe can only express support. If it does not it will be
acting in contradiction to its long-advocated stand that there should be detente in
East-West relations and a great reduction in arms. However, Western Europe believes
that on the basis of the U.S.-Soviet plan, after both the United States and the Soviet
Union eliminate the deployment of medium long-range nuclear weapons in Europe the
pressure on Western Europe frow the Soviet Union's superiority in conventional weapons
will undoubted!’ _.2atly increase. Alsv, the medium short-range [zhong jin cheng 0022
6602 4453) and short-range [jin cheng 6602 4453] nuclear weaons which are not included
in the agreement will form new “gray weapons.” [hui se 3500 5331) Furthermore, the
Soviet Union has a great superiority in these types of weapons. in such a situation,
the threat of conventional warfare and limited nuclear war will be unprecedentedly
increased. Thus, after the United States greatly reduces its weapons, whether the
remaining weapons will be able to safeguard Western Europe becomes the question.
Western Europe shudders at the thought of this impossible scenario. It is for this
reason that the government leaders of many countries in Western Europe have recently
repeated!y claimed that “the security of Western Europe cannot be separated from the
security of the United States” and that “arms control talks must prevent nuclear war in
Europe and they gust also prevent conventional warfare.”

Ii. Arms Control Talks and the Crisis in the NATO Military Structure [subhead|]
The results of the Iceland summit have again sparked off a “structural crisis” in NATO.

Since NATO implemented the flexible response strategy in 1967, NATO has been required

to have an appropriate ratio of conventional forces, tactical nuclear forces, and
strategic nuclear forces. This is the so-called “three-in-one” miliiary capacity. The
guiding ideology in determining this strategy is that NATO relies on this force to
deter enemies and this force can be used to resist any invasion. The structure of the
“three-in-one" force has the following characteristics:

1. In theory, the position of conventional forces was increased, which required the
strengthening of conventional forces and the expansion of this role so that they covrld
resist limited-scale attack. Even if they were unable to rebuff the attack, they would
be able to gain the necessary time for an anticipated nuclear escalation.

2. The tactical nuclear force plays the key role in the “three-in-one” deterrent
force. Strategy determines that when conventional forces “cannot withstand a Warsaw
Pact attack, then in a “cautiously controlled escalation of the var tactical nuclear
forces will be used “in a selective and restricted manner.” The aim is to increase the
selective capacity to carry out limited nuclear warfare against the Warsaw Pact and
increase the determination to carry out flexible response strategies. This will allow
NATO to use tactical Me ear forces deployed in Europe tw engage in a limited nuclear
war with the Warsaw Pact without employing U.S. strategic nuclear forces. [paragraph
continues |

I. 18 Mar 87 As PRC INTERNATIONAL AFFAIRS
GENERAL

As to the scope of tactical nuclear forces, they include short-range (range under 500
kilometers), medium short-range (500 to 1,000 kilometers), and medium long-range (1,000
to 5,000 kilometers) missiles, fighter and bomber aircraft which carry auclear weapons
and other types of nuclear weapons and means of delivery. This is both a means of
deterring the enemy from using their weapons and also the link between Western Europe
and the U.S. strategic nuclear deterrent force.

3. If, im the end, there is no alternative, they should use strategic nuclear forces,
predominantly J. S. strategic nuclear forces to engage in all-out nuclear war.

The above shows that the flexible response strategy is, like the large-scale
retaliatory strategy in the cold war period following World War Ii, a “deterrent
strategy” with U.S. nuclear forces as its mainstay. In the 40 years since the war, the
military power of Western Europe has greatly increased, but the basic situation of
relying in defense matters on the U.S. “nuclear umbrella” has not changed.

Looking at things from the actual development, this NATO structure is increasingly less
suited to the changes in the balance of military forces between the United States and
the Soviet Union and the two major military blocs in Europe. An overall balance has
already been achieved in terms of U.S. and Soviet strategic nuclear forces. According
to estimates, the ratio of Warsaw Pact military personnel stationed in Europe compared
to NATO personnel at present it 1.2 to 1. However, because of the deployment and
composition of Soviet forces and the wide and broad geographical conditions, the actual
superiority of the Warsaw Pact countries in terms of troops and weapons exceeds this
figure. In terms of biological warfare capacity, the quantities of chemical weapons
stores which the United States and the Soviet Union have deployed in Europe differ
greatly, with the Soviet Union having a great superiority.

In terms of medium long-range guided missiles, because the U.S. Pershing II and cruise
missiles have been deployed in Western Europe, they are about a match for the Soviet
SS-20's and other guided missiles. In terms of medium short-range guided missiles,
since the Soviet Union deployed improved 88-21, 88-22 and 88-21 guided missiles in the
German Democratic Republic and Czechoslovakia in recent years. they (the USSR and the
Warsaw Pact) clearly lead NATO both quantitatively and qualitatively. As to the
nuclear capacity of the British and the French, although through several years of
development they have gained a certain strength, first, their strength is greatly
limited when compared to that of the United States and the Soviet Union, and second,
they are to differing degrees independent and it is difficult to simply include them in
the above comparison of forces.

Because of changes in the balance of forces, whether or not NATO's “three-in-one”
strategic structure has sufficient flexible response ability and is capable of
guaranteeing Western Europe's security has become the most basic problem for NATO.
Since the beginning of the 1980's some representative international study organizations
as well as well-known government and private individuals have repeatedly spoken of the
“historical and structural crises” within NATO and the Atlantic alliance. Of these,
the most influential was a joint report by the heads of four major international study
organizations and Kiss Inger s “Plan for the Transformation of NATO.” Their main points
were: At a time when there is a basic balance between the United States and the Soviet
Union in terms of nuclear capability, once Western Europe is subject to a serious
threat from the Soviet Union, the United States will find it difficult to make the
decision to use nuclear weapons and willingly risk a nuclear attack on its own
territory in order to protect Western Europe. The present military structure of NATO
has been inherited from the immediate post-war period when the United States
monopolized nuclear capability and Western Europe was unprecedentedly weak. However,
today Western Europe has become much more powerful economically and politically and has
the obl‘ration and ability to take on more of its defense responsibilities, esyecially
in ters, of conventional forces. [paragraph continues]

I. 18 Mar 87 AS PRC INTERNATIONAL AFFAIRS
GENERAL

In this way it »i 1 be possible within NATO to truly form “two mainstays” of the United
States and Western Europe. la both the United States and Western Europe, whether in
the public or private sector, m0 one is willing to differ on the above major points,
because the facts are clearly thus. The problem is how to divide the defense
responsibilities between the United States and Europe and how to form and strengthen
the “Western Lurope mainstay” to free NATO from its “crisis.” For various reasons
Western Europe will find it difficult to establish an independent defense force capable
of contending with the Soviet Union, particularly in terms of nuclear forces. Although
NATO has repeatedly passes resolutions on strengthening conventional defense and
Western Europe has made some efforts ia this, it is still far from being able te match
the conventional forces of the Warsaw Pact. Thus, to date there remains the basic
contradiction in which Europe's defense must rely on U.S. nuclear protection but the
U.S. nuclear umbrella is becoming increasingly less dependable. It is the same
situation as before.

In the last decade or so, this internal basic contradiction in NATO has been sometimes
hidden, sometiaes open. Some influential persons from the United States (such as
(Sonnenfeldt) [suo nan fei er de 4792 0589 6316 1422 1795], Kissinger and Reagan) have
stated that it should not be hoped, in the event a war breaks out in Europe, that the
United Stsces will employ strategic nuclear weapons to safeguard Western Europe. This
has without a doubt been a great irritation to Western Europe and it has provoked a
great response. It is only through the common needs of both the United States and
Western Europe that the U.S. nuclear umbrella still covers NATO and the past disputes
have not developed into real crises. The “balance of nuclear terror” has been the
objective maintainer of peace in Europe in the 40 years since the war.

However, the Iceland summit again caused this basic contradiction within NATO to
surface. Western Europe's concern is that since the United States, without first
soliciting agreement from the Western European allies before the summit, reached a
concensus {although an agreement was not reached) with the Soviet Union during the
summit on the reduction of medium-range nuclear weapons and strategic weapons, then in
the future the United States mighi not pay attention to Western Europe s interests and
conclude an agreement with the Soviet Union on these matters. If the United States and
the Soviet Union indeed reach an agreement based on the intentions at the summit, then
the contradictions in the military structure of NATO will become more serious than
before and the Soviet Union's superiority in conventional forces will be even more in
evidence. As to the fle tible response bonds, these will be further weakened by the
removal of U.S. medium-range nuclear missiles based in Europe and there will be no
guarantee after large-scale U.S. revuctions that the remaining strategic weapons will
be able to safeguard Europe. Not wnly have the FRG and the United Kingdom reacted
strongly o1 this, but even the French Foreign Minister Raimond has recently said that
the possibility of “the United St<ces withdrawing all its guided missiles from Europe”
in extremely “frightening.”

III. Western Europe's Efforts in Strengthening Defense and the Difficulties Faced
{subhead |

The Iceland summit exacerbated Western Europe's sense of crisis in the defense area.
Western Europe has made the following assessments on the development trends in the
strategic situation:

First, they believe that for quite a long period to come the major danger faced by
Western Europe will be the Soviet Union's conventional military threat. Seen from the
actual developments since the 1970's, although the European situation has for a time
been relaxed, the Soviet Union has not slowed its efforts in the conventional forces
area and in fact there have been continuous obvious improvements in conventional
forces’ tactics and technology. [paragraph continues]

I. 18 Mar 87 46 PRC INTERNATIONAL Lans
CEN: RAL

It is estimated that by the beginning of the next century its capacity to launch «
conventional attack on Western Europe will have greatly increased.

Second, once the United States removes its medium long-range suclear weapons from
Europe, Western Europe will have to “make up the deficiency” itself.

Third, the new round in the arms race which is centered on the United States and the
Soviet Union vying for superiority in space, may greatly weaken Western Europe's
strategic position. la the new arms race Western Europe Gust work out its own
long-term plans and seek its own avenues.

The above ideas did not just appear after the Iceland summit. At the end of the 1970's
they had already begun to appear. Reagan's proposal of the “Star Wars” plan and the
recent Iceland summit have caused these ideas to become more prominent daily. On the
basis of the above assessments, in recent years Western Europe has made a series of new
efforts, mainly in the following areas.

1. They have strengthened conventional forces, putting special efforts into
modernizing the equipment of their conventional forces. Western Europe knows that in
terms of the number of troops in active service and reserve troops, even if they put
more efforts into this, there is no way they will be able to match the Warsaw Pact
forces. Thus, they have put efforts into increasing the technical superiority of their
troops’ equipment. la order to increase their troops’ ability to engage in protracted
war against an enemy attack, the tanks and antitank weapons of the major Western
European countries have all been improved. For example, the FRG has 300 new improved
Panther II tanks and the United Kingdom, France, and Italy have completed or are in the
process of planning new replacement tanks. The FRG, Italy, and other countries have
already accepted the “Roger's Plan” battle prirciple on in-depth strikes and are now
developing in-depth strike capabilities, whereby there will be continuous strikes by
echelon formation after the enemy bas been obstructed. There have also been advances
in strengthening escort capabilities and antisubmarine capabilities. la order to
accord with the long-term challenge, the various major countries of Western Europe have
been successively setting about formulating plans for developing conventional weapons
prior to the year 2000. Also, within NATO, together with the United States, an
“in-principle military program” has been proposed which will be the guiding policy of
developing weapons after the year 2000. All of this shows that Western European
countries have further raised the position of conventional forces in their military

strategy.

2. The nuclear forces of the Unitcd Kingdom and France have been increased. in
November of 1986 the French cabinet meeting passed the “1987-1991 Military Program Act”
(it awaits passage by Parliament). la this, the modernization. of strategic nuclear
weapons and especially the modern zation of guided missile suclear submarines in the
maritime strategic forces is in prime position. At thy same time, it is adhering to
plans to develop new land-based guided missiles. The British Conservative Government
is persisting in using U.S. Trident missiles over the next few years to replace the
existing Polaris missiles, in order to strengthen the power of its nuclear submarines.
In the development of British and French nuclear forces great stress is being placed on
strengthening instantaneous defense and survival abilities of the nuclear weapons.

J. The, have explored the possibility of establishing an outer- space defense capacity
for Western Europe. The various major countries of Western Europe have already started
discussing their own space strateg:s> and some action has been taken. The United
Kindgom and France have already separately established leading organs for developing

space forces. [paragraph continues]

I. 18 Mer 87 A? PRC INTERNATIONAL AFFAIRS
GENERAL

From the information revealed it seems that the French, in developing space forces, are
going to concentrate on antisatellite systems, feeling that this is « simple and
effective way to counter the strategic defense systems. The British are more concerned
with developing a weapons system to counter the Soviet Union's anti-medium-range guided
missile systems. la this area, the FRC has quite great potent al and is secretly
developing space forces. Italy is also d.scussing relevant plans.

. They have strengthened defense alliances. Since the Western alliance was revived,
conferences have been held regularly in order to link and coordinate the defense
policies of relevant countries. In the concrete defense area Western Europe's
cooperation is developing from joint development in conventional arms to cooperation in
the strategic and high technology fields. In 1985 the United Kingdom, Italy, the FRC
and Spain concluded an agreement to invest $30 billion in the joint development of 800
“European fighters.” This is the first joint development agreement of major equipment
in Western Europe. At a conference of defense ministers from the European bloc of NATO
in the winter of 1985, the FRG proposed that Western Europe develop an
anti-short-range ies ile system mainly based on lasers and electromagnetically guided
guns. This geined general endorsement from the participating countries and sow
relevant concrete plans are being discussed. Recently France has also made known that
the long-discussed “Europe 2000 Spaceflight Plan” has already seen beginnings, since it
received strong financial support from France and the FRC. This is composed of major
projects including the development of the Arienne 5 rocket and the “Hermes” space
shuttle and the equipping and launching of the “Columbus” space station. After the
Iceland summit, foreign policy advisors of the government leaders of the United
Kingdom, France and the FRC formed a working group to coordinate the stand of the three
the U.S.-Goviet arms control issue. When the British and French heads met in Parise,

on
they also put forward the issue of cooperation in terms of the two countries’ suclear
forces. These trends have attracted intern.::onal attention. It is felt that the

tern European countries sitting together and having a coordinated stand
U.S.-Soviet arms control issue is “an unpri cedented action” and that cooperation
the United Kingdom and France in terms of nuclear forces is a forbidden sone”
ich has always been seen as difficult to enter.

i
:
f

8
if

above developments are of a sort rarely seen in the histo... of Western Europe since
war and show a sense of urgency in strongthening defense and defense cooperation in
tern Europe. They aleo show that there have been definite breakthrough in this
serious obstacles and difficulties remain in this area.

fir

situations and in defense policies have restricted the alliance
Europe. The FRG is situated in the NATO forward position, is
the greatest t from the Soviet Union, and has the greatest reliance on
wmbrellia. Added to thie are the remnant effects of being « defeated
Thus, even today there are still various restrictions in ite
one is that it cannot have nuclear arms). Alt\ough the
ited Kingdom in the European area is better then that of
th ir position as major nations in international politics and
ensure their epheres of power they have to make efforts which exceed the ability of
their economic strength in order to maintain and extend a military force g orally
commensurate with their positions. Thus, after France withdrew from the integral
military structure of NATO in the De Gaulle period, thev all along pursued an
independent defense policy. At the same time as paying attention to develops a
nuclear deterrent force, they put efforts inte the overa!i strengthening of nuclear and
conventional forces. [paragraph con. ‘nues)

ie |
tir
is j

1

17

!
21

I. 18 Mar 87 As PRC INTERNATIONAL AFFAIRS
CENERAL

Io strategic ideology they stressed “fortress France (they mainly stressed
safeguarding the security of France's territory), while France's foreign interests were
In second place. la recent years France has changed its “all-direction defense”
policy, adopted an “expanded protection” policy and stressed “putting France's
strategic focuses on those places in Europe and the Mediterranean area which are
subject to the most serious Soviet threat.” However, the core of the defense policy --
the independent policy which has as its main pert safeguarding French national
interests — will certainly mot change. The United Kingdom's policy is to maintain,
with U.S. assistance, a small strategic suclear force and, at the same time, to
maintain as strong as possible a conventional force composed of the three branches of
the Arey, Navy and Air Force in order ts mintain “super-regional influence.” The
FRG’s military stratezy and policies have been established on the basis of the NATO
systems and its entire armed forces are under the wnified command of the supreme
headquarters of the NATO allied forces. The core of its defense policies is detense
cooperation and coordination with the United States. Because of differences in the
and defense policies of these major Western European nations, and the many
fears on the political level, it is difficult to achieve full cooperation
and unity of purpose in coordinating the development of the various defense forms and
ing Western Europe's defense alliance. Therefore, both realizing
agreements and implementing thes are {wll of difficulties. Economic difficulties have
the way of defense plan implementation. Since the idle of the 1970's
Western has been in « slump. Although recently there has been an
easing, in the next few years it is unlikely that there will be a rapid improvement.
At present, the various countries are trying to control or redece their financial
budgets and cut down their financial deficits. The military expenditures of major West
m countries occupies quite a high proportion of the financial budget and, in a
situation where money is tight, it is wery difficult to further expand the proportion
of military expenditures. At the end of the 1970's, NATO passed « resolution on
increasing silitary expenditures (a real growth of 3 percent annually). However, in
the last few years virtually no country has been able to realize this. In the future,
regardless of whether we speak of conventional arms, nuclear arms, or space defense
lopment, because of the adoption of new technology and new equipment, expenditures
will be greatly in excess of past figures. Therefore, the economic ime-ciments will
become gore prominent. en if Western Europe is able to strengthe. the alliance to
reduce difficulties in this respect, when the responsibilities have been divided up, it
is not going to be easy to concretely implement then.

f

IV. Several Ideas on Future Trends [subhead!

1. In the b. S. -Soviet arms control talks, because of the restrictions of the various
contradictions and their great complexity it will certainly mot be easy to achieve a
“package agreemen:" the short ters. However, the two sides, in accordance with the
requirements of the new round of the arms race (improving and strengthening strategic
weapons and developing space weapons), have reduced the overload situation in their
economies produced by Se arms race and they have both greatly cut beck on their hopes
for existing outdaved nuclear forces. Thus after an intense round of haggling it is
quite possible that they will reach an agreement in several areas. in the future, in
arms control talks the United States and the Soviet Union iii have both dialogue and
confrvntation and it is possible that « new situation may emerge. On the one hand they
will be seeking an unprecedentedly large compromise and on the other hand they will be
developing a higher-level intense rivairy. This will lead to « more intense and
turbulent situation.

2. The conflicts betwee: Western Europe and the United States and the Soviet Union
will be exacerbated to different degrees. The Western Europeans are now planing
various countermeasures to incrensee their inflwence in .. Soviet arms control talks
and prevent agreements which will harm thes. [paragraph continues!

I. 18 Mar 87 A? PRC INTERNATIONAL AFFAIRS
CENERAL

The recent proposals by Western European countries that reductions by the United States
terms of strstegic weapons and medium-range weapons should be
of the medium long-range and medium-range suclear weapons and
amr initial «demonstration of these

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weapons, in the final analysis, all are in the
States and the Western Europeans dave only a limited right to
ef the United States and Europe in the arms cortro!
are not exactly the same, in the course of future discussion it will be
avo the exacerbation of conflicts. As far as the Soviet Union is
to allay Western Europe's fears, it will adopt some measures
and reduce its intervention and its attempts to divide the
United States and Europe. However, the Soviet Union will not make any substantial
concessions which will weaken its conventional superiority in the European theater.
Also, the restriction on British and French ouclear forces is an established policy
and, at a certain stage, it is certain to put this back on the agenda. Tous if we lor
at the essentials, a deepening in European-Soviet conflicts is inevitable.

3. Corresponding profound changes will occur in internal NATO relationships. in the
defense area, the United States and Europe need each other. It is difficult to see the
current situation of Western Europe relying on the U.S. nuclear umbrella changing in
the foresceable future. However, the hidden crisis in Mross flexible response
strategy are becoming deeper and more obvious daily. The United States is already
considering new strategic ideas, but Western Europe's worry that the United States will
eventually “unhook” itself from Western Europe in defense matters have become mre
intense 4sily. In the future a transitional period may occur when ole strategic ideas
change to new strategic ideas, and because it will be difficult to ascertain if Western
Europe, with regard to new strategic ideas, will be able to guarantee the stability of
the U.S.-European alliance and the security of Western Europe, the is .ernal NATO
contradictions will accordingly be exacerbated.

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if

difficult

* It is imperative that Western Europe strengthen its defense forces and defense
alliances. Seen from past history, the greatest achievements in Western European
alliances have been realized under strong external threats. Although there are all
sorts of serious difficulties in the Western European defense alliance’, it would be
very difficult to achieve the aim of defense independence. However, i). the present
grim situation it is possible some breakthroughs might appear. These will undoubtedly
be of benefit in strengthening Western Furope's independence anid improving its position
in international relationships.

5. The situation in Europe may, a6 „ consequence of ths above developments, become
more complex, and this will affect all sides. What sort of changes thie will bring to
the international relationships structure which has formed in Europe since the war is a
question worthy of attention and study.

I. 18 Mar 87 PRC INTERNATIONAL AFFAIRS Bl
UNITED STATES

SHULTZ INTERVIEWED ON PRC POLICIES, PROGRESS

HK180655 Shanghai SHIJiE JINGJI DAOBAO in Chinese 9 Mar 87 pp 1, 2

[Special Dispatch From Beijing on 3 March by reporter Pan Muping (3382 1970 1627):
"U.S. Secretary of State George Shultz Answers Reporter's Ouest ions

[Text! "China has irreversibly embarked on the road of modernization. As far as the
country is concerned, it has no other road for her to greet its future.” U.S Secretary
of State George Shultz made these remarks this evening in response to this reporter's
questions. Shultz had held talks with Chinese leaders for 7 hours.

This was Mr Shultz's first official visit to China since he accompanied President
Ronald Reagan on a visit to China in May of 1984.

[Reporter] Mr Secretary of State, after holding talks with senior Chinese leaders such
as Deng Xiaoping, Li Xiannian, and Zhao Ziyang, do you think American entrepreneurs and
investors should continue to take a step further in China, take a step backward, or
just cautiously mark time in place?

[Shultz] This question is really a question concerning the recent develepments in
China and how to explain them. This question was raised just this morning by
entrepreneurs outside China. Many other people, too — no doubt, from China itself --
closely watched these events and wanted to know how the problems would be explained.
Let me briefly give you the information I got on these problems. First of all, though,
no matter how outsiders like us approach these problems, we have to admit that China is
starting to solve problems of great significance to the state. Its determination is so
strong that it has left a deep impression on people. Now let me sum up my thoughts on
this question in seven points:

The first point is that I was informed during the talks that China had worked on these
issues for many years and the effort could be traced at least to the Sun Yat-sen
years. What is at issue now is how to carry cut modernization. To what extent should
foreign models be used as reference and should China explore its own path?

The second point is that I think everybody will agree that China has irreversibly
embarked on the road of modernization and I was repeatedly told of this point. As far
as this country is concerned, it has no other road for her to greet its future. As
George Allen, the former coach of the Washington Redskins very often liked to say:
"The future is at hand."

The third point is also the point they wanted to stress to me, that is, modernization
means opening up the country to the outside world. Those countries which can seize the
opportunity to open themselves to the outside world will be the most relaxed and
successful cowitries. Therefore, what I heard bere is that China must open its doors
in two ways: One is openness to the outside world, which has been repeatedly stressed,
and the other is openness inside, in other words, that means reform.

The fourth point is that of the question already raised on whether openness is
synonymous with total Westernization. With regard to (i ina, the reply I heard was an
unequivocal “no.” China has a long-standing, unique culture, one that is well
established. [paragraph continues]

I. 18 Mar 87 B2 PRC INTERNATIONAL AFFAIRS
UNITED STATES

It will not mechanically copy anything from the Soviet Union or other countries, no
more than it can or will copy anything from the West in an indiscriminate and
oversimplified way. What I have heard is that China will adopt good ideas from other
places as it takes the so-called socialist road and, moreover, a socialist road with
Chinese characteristics.

On my part, I came to the conclusion that openness is the key to future success. I
firmly believe that China is making a serious effort to explore a balance to correctly
use this key. This left a deep impression on people.

The fifth point is, as I heard here, a very sincere view — current events should not
be viewed as a retrogression to the past and not too distant years of restruction and
suppression. China said to its friends — and I am ome of them — that Chinese
nationals living abroad have not equated what is happening at present with the past
exceptional practices and have termed it persecution or a movement.

The source of the problem we are discussing today can be traced to the previous
generations of the Chinese people. However, as far as ‘ know, it does not represent a
turning point for a deviation from the developmental tre d over the last few years.

From this I derived ay sixth point, which was also repeatedly stressed. There are good
reasons to explain why the turning point will not occur. China has been condu-ting
reforms for meay years which are highly effective in practice and have brought an
improvement in the Chinese people's living standards. This shows that China will not
abandon its effective reforms. This is what the Chinese leaders have told me and I
must say this is reasonable. I have no reason to doubt the sincerity shown when they
made these remarks. I can say with certainty that this idea came from the highest
echelons of leadership.

The last point is one I think is irrefutable today, that is, greater openness is
necessary. A country with the most creative people's thinking which bans openness will
stagnate and the future will leave it behind at an astonishing speed. It will be
difficult for it to catch up. So I was told that China would continue to pursue its
Chinese-style openness. China will become modernized in the future. At present China
has unique problems and unique strength. I was informed that under the future
objective and real conditions, China would use its strength to solve its difficulties
on an irrefutably severe road.

At this point, it had already taken Mr Shultz 6 and 1/2 minutes to answer my question.
Taking up the thread of the conversation, he humorously told this reporter that I had
gotten more than I expected and that he believes such an issue is an important one. As
you have seen, he said, I have pondered the issue and worked hard to explain my
thoughts on this conscientiously and in greater detail.

With a little joke by the Secretary of State, the se ingly excessively severe
atmosphere resulting from the strict security checks prior to the meeting became
considerably relaxed all at once.

I. 18 Mar 87 PRC INTERNATIONAL AFFAIRS D 1
NORTHEAST ASIA

XINHUA REPORTS DPRK PROPOSAL ON TALKS WITH SOUTH

0061151 Beijing XINHUA in English 1059 GMT 4 Mar 87

("It's Time for South Korean Authorities To Show Sincerity for Reunification (by Gao
Haorong)" — XINHUA head) ine]

[Text] Pyongyang, March 4 (XINHUA) — The Government of the Democratic People's
Republic of Korea (DPRK) has in the past year made several moves for the reunification
of the country. But the South Korean authorities have so far failed to respond toward
this end.

President Kim Il-song proposed at the end of 1986 that the two sides hold high-level
political and military talks and the premier and the minister of the People's Armed
Forces also put forward concrete proposals in regard to the talks. However, the South
side differed by proposing that the two sides resume parliamentary, economic and Red
Cross dialogues and reiterated its demand for holding summit talks. To break the
deadlock, DPRK Premier Yi Kun-mo and Minister of the People's Armed Forces 0 Chin-u
wrote a joint letter yesterday to their counterparts No Sin-yong and Yi Ki-paek in the
South.

They compromised in the letter that the two sides can renew the parliamentary, economic
and Red Cross dialogues while holding the high-level political and military talks.

In addition, the DPRK leaders withdrew their demand that the two sides discuss the
controversial “Kumgangsan Power Station issue only on condition that the South
apologizes for their action in the past, saying they can discuss the issue in the
high-level talks.

The DPRK leaders also came to terms by proposing that after the successful resumption
of these talks and dialogues, the summit talks can be held as soon as possible.

It should be noted that these compromises by the DPRK were made against the background
that the United States and South Korea are engaged in their present large-scale “Team
Spirit 87" military maneuver.

The DPRK has gone further by proposing that the two sides hold the first high-level
political and military talks on March 26, breaking its traditional practise of refusing
to have dialogues with the South while the latter holds military exercises with the
United States. Observers here believe that the compromises by the DPRK show the
sincerity of the North for the reunification of Korea. In light of the DPRK's
generosity, South Korean authorities may show a bit of sincerity and be more flexible.

BEIJING REVIEW DISCUSSES DPRK PROPOSAL ON TALKS
OW170945 Beijing BEIJING REVIEW in English 16 Mar 87 p 12

[Article by Xu Baokang: A Sincere Proposal To Break the Deadlock")

[Text] On March 3, DPRK Premier Yi Kun-mo and Minister of [The] People's Armed Forces
0 Chin-u sent a letter to their South Korean counterparts No Sin-yong and Yi Ki-paek
proposing to hold a round of North-South, high-level, political and military
conferences. The letter also suggests resuming the dialogue between the two
parliaments, their economic leaders and Red Cross organizations.

I. 18 Mar 87 D2 PRC INTERNATIONAL AFFAIRS
NORTHEAST ASIA

The government of the DPRK has, in the past year, made several moves for the
reunification of the country. President Kim Il-song made a similar proposal at the end
of 1986. Then again on January 10 and 28 of this year, the DPRK premier and minister
of the People's Armed Forces sent separate letters, putting forward concrete proposals
with regard to the talks.

However, the South demurred, proposing that the two sides resume only the
parliamentary, economic and Red C-oss dialogues, and reiterated a demand to hold a
summit conference between the two top leaders of both sides.

To break the deadlock, DPRK Premier Yi Kun-mo and Minister of the People's Armed Forces
9 Chin-u wrote the January letters to their counterparts in se South in which they
agreed to reopen the gultichannel dialogues, but noted that for the summit talks to be
a success it would require more time for a full preparation and a more favourable

atmosphere were needed.

It should be noted that these proposals by the DPRK were made against the background of
joint U.S.-South Korea silitary manoeuvres in South Korea. The large-scale “Team
Spirit-87" military manoeuvre has been a major barrier to holding North-South talks.
In 1985, the North-South talks had to be suspended as a result of the "Team Spirit 85“
military manoeuvre. The present “Team Spirit 87" military manoeuvre has damaged the
atmopshere for holding any North-South talks, but the DPRK, taking the interest of the
whole Korean nation into account, made some concessions.

Meanwhile, in the latest letter, the DPRK also agreed to discuss the issue of the
construction of the Kumgangsan Power Station in future high-level political and
military talks. This project has been a major point of contention between the two
sides. South Korea strongly opposes the construction of the Kimgangsan Power Station,
believing that it would pose a grave threat to its security. The DPRK has reiterated
that the project is aimed at peaceful use and would not constitute a threat to the
South.

PRC PROTESTS JAPAN DECISION ON DORMITORY
OW111219 Tokyo KYODO in English 1211 GMT 11 Mar 87

[rent]! Beijing, March 11 KYODO — China issued its strongest protest yet against an
Osaka High Court ruling Wednesday, saying its national interest had been damaged.

Ihe ruling, last week, granted Taiwan the ownership of a dormitory used by Chinese
students in Japan.

The protest was made by the Foreign Ministry in response to an inquiry by KYODO NEWS
SERVICE over a Japanese representation sent to the Chinese Government over the issue.

The note delivered to the Foreign Ministry by Japanese Ambassador Yosuke Nakae Friday
said the government was unable to intervene over the ruling under the democratic

principle of the separation of powers.

The Foreign Ministry statement said the ruling concerned an important political
principle involving relations between Japan and China.

It said the ruling was designed to create two Chinas and caused damage to China's
national interests.

I. 18 Mar 87 PRC INTERNATIONAL AFFAIRS Gl
WESTERN EUROPE

WU _XUEQIAN CONTINUES VISIT TO ITALY, MEETS LEADERS
Explains Reform

OW171524 Beijing XINHUA in English 1516 GMT 17 Mar 87

[Text]! Rome, March 17 (XINHUA) — China's foreign minister explained his country's
domestic reforms and peaceful foreign policy during meetings with Italy's leaders this
morning on the second day of his visit.

Foreign Minister and State Councillor Wu Xueqian also expressed satisfaction with the
development of bilateral ties during talks with Italy's President Francesco Cossiga,
Senate President Amintore Fanfani and Chamber of Deputies President Lecnilde Jotti.

Cossiga said China's achievements would play an important part in world peace,
stability and development.

Italy and other Western countries considered China's economic restructuring important
and were willing to help China, Cossiga added.

Wu arrived here yesterday afternoon after visiting Bulgaria, the first visit by a
senior Chinese diplomat since 1949.

Wu Meets Craxi
0W180720 Beijing XINHUA in English 0711 GMT 18 Mar 87

[Text]! Rome, March 17 (XINHUA) — The Italian Prime Minister, Bettino Craxi, today met
with the visiting Chinese Foreign Minister, Wu Xueqian. During the meeting this
afternoon, Wu, also a state councillor, said that China will unswervingly adhere to its
reform and open policies.

Wu talked on China's domestic situation and conveyed greetings from Chinese leaders
Deng Xiaoping and Premier Zhao Ziyang on the second day of his visit.

Craxi said Italy and China should increase exchange visite and other bilateral contacts
to promote better understanding. Italy will strive to develop politial relations and
will also provide economic aid, he added.

This is the fourth stop on Wu's sever-nation European tour. He arrived Monday after
visiting Czechoslovakia, Poland and Bulgaria. After Italy, he will visit the tiny
republic of San Marino, Federal Germany and Switzerland.

ITALY IGN Mc COOPERATION ACCORD
AU241301 Rome ANSA in English 1250 GMT 24 Feb 87
[Text] Beijing, 24 Feb (ANSA) -- Italy and China signed a new three-year economic

cooperation agreement Monday which includes a package of Italian aid credits and grants
totalling 190 million dollars for industrial projects in China.

I. 18 Mar 87 G2 PRC INTERNATIONAL AFFAIRS
WESTERN EUROPE

Signing for Italy was the head of the Foreign Ministry's Department of Development
Cooperation, Patrizio Schmidlin.

Chinese Deputy Premier Yao Yilin, discussing the third Sino-Italian agreement of its
type signed since 1981 with the Italian delegation, said his country is satisfied with
the course of bilateral economic relations and intends to continue unchanged its policy

of opening abroad.

The new agreesent will provide funding for Italian participation in areas which China
has given priority to. These include energy, transport and chemicals. The two sides
will also explore prospects fox work civilian infrastructure and telecommunications.

Of the 190 million dollars allocated for the accord, forty million is in the form of
grants and the remaining 150 million in the form of aid credits. The grants will be
used to finance projects in the fields of public health, agriculture, and professional
training.

The aid credits will be extended at low interest rates.

CHEN PIXIAN MEETS ITALIAN CP DELEGATION 13 MAR

OW131302 Beijing XINHUA in English 1100 GMT 13 Mar 87

[Text] Beijing, March 13 (XINHUA) — Chen Pixian, member of the Secretariat of the
Chinese Communist Party Central Commitee, met here today a women's delegation from the
Italian Communist Party.

Chen welcomed the delegation on behalf of the Chinese Communist Party Central
Commitee. It is the first woman's delegation sent to China by the Italian Communist
Party, and is led by Paola Bottoni, member of the Central Committee, secretary of the
Emilia-Romagna Region of the Italian Communist Party and chairman of its women's
committee.

Chen briefed the guests on China's political and economic situation.

SONG PING MEETS TURKISH MINISTER OF STATE
OW171220 Beijing XINHUA in English 1212 GMT 17 Mar 87

[Text] Beijing, March 17 (XINHUA) -- Chinese State Councillor Song Ping met and had a
cordial conversation with Turkist Minister of State Vehbi Dincerler and his party here

tonight.

After meeting, Song, who is also minister in charge of the State Planning Commission,
gave a dinner for the Turkish visitors.

Turkish Ambassador to China Behic Hazer attended the meeting and dinner.

Earlier today, Chinese Minister in Charge of the State Economic Commission Lu Dong held
t Ike with Dincerler and his party.

I. 18 Mar 87 PRC INTERNATIONAL AFFAIRS 11
WESTERN HEMISPHERE

CANADIAN GOVERNOR GENERAL ARRIVES ON VISIT

OW160842 Beijing XINHUA in English 0816 GMT 16 Mar 87

[Text] Beijing, March 16 (XINHUA) — Jeanne Sauve, governor-general of Canada, and her
husband Maurice Sauve arrived here by special plane for a state visit to China at the
invitation of President Li Xiannian. Jeanne Sauve is the first Canadian
governor-general to visit China. It is a return visit to President Li's Canadian tour
in 1985.

She was greeted at the airport by Cui Naifu, chairman of the Chinese Government
reception committee and minister of civil affairs, and his wife and China's Vice
Foreign Minister Zhu Qizhen.

Accompanying her on the visit are Monique Landry, minister of external relations, and
her husband, as well as other high-ranking officials in the government. While in
Beijing Jeanne Sauve is expected to meet with Chinese leaders.

Tomorrow morning President Li Xiannian will give a welcoming ceremony for the
governor-general and her party at the plaza east to the Great Hall of the People.

Li Xiannian Welcomes Sauve
OW170302 Beijing XINHUA in English 0252 GMT 17 Mar 87

[Text] Beijing, March 17 (¥{NHUA) — Chinese President Li Xiannian presided over a
ceremony here this morning welcoming Canadian Governor-General Jeanne Sauve who arrived
here yesterday on a state visit to China with her husband Maurice Sauve.

The ceremony which was held at the plaza east to the Great Hall of the People began
with the playing of the national anthems of Canada and China amid the 21-gun salute.

At 10 a.m. when the Canadian governor-general arrived at the plaza in the company of
Cui Naifu, chairman of the Chinese Government reception committee and minister of civil
affairs, she was warmly greeted by President Li and his wife Lin Jiamei. President Li,
who visited Canada in 1985, said that he was very glad to wet her again.

Accompanied by President Li, Mrs Sauve reviewed a guard of honor made up of men of
three services of the Chinese People's Liberation Army. She met with 300 youngsters
waving bouquets and streamers and dancing.

Present on the occasion were State Councillor Ji Pengfei and his wife Xu Hanbing and
leading members of other government departments concerned.

Also present were Canadian Minister of External Relations Monique Landry and her
husband, as well as other high-ranking officials in the government who are accompanying
the governor-general on the visit.

After the ceremony Li Xiannian met Mrs Sauve and her party in the Great Hall of the
People.

I. 18 Mar 87 12 PRC INTERNATIONAL AFFAIRS
WESTERN HEMISPHERE

Li, Sauve Hold Talks
OW170832 Beijing XINHUA in English 0822 GMT 17 Mar 87

[rent]! Beijing, March 17 (XINHUA) — Chinese President Li Xiannian met with Canadian
Governor-General Jeanne Sauve and her party in the Great Hall of the People here this
morning. This is the second meeting betweer the two leaders in less than years.

In a nearly one-hour-long meeting, Li recalled the days when he first met Mrs Sauve
during his Canadian tour in 1985 and thanked Mrs and Mr Sauve for giving hia [a) ware

reception during the visit.

Mrs Sauve who visited China in 1973 in the capacity of minister of science and
technology said during her current visit to China she expects to see China's progress
since her last China tour and find out what the two countries can do in the field of
their friendly cooperation.

Li spoke highly of the fact that Mrs Sauve and the successive Canadian Governments have
consistently followed a friendly policy towards China and developed the Sino-Canadian
relations.

He expressed the belief that Mrs Sauve's visit will promote frivadship and exchanges
between the two countries and the further growth of the friendly re! ations.

On [the] domestic situation, Li said some people in foreign countries were worried
about a change in China's policy of opening to the outside world as a result of its
current struggle against bourgeois liberalization.

He said: “I'd like to tell the governor-general that China's political line and all
policies have been correct and remarkable progress achieved in its construction since
the Chinese Communist Party convened its Third Plenary Session of the IIth Central
Committee. So there are no reasons for us to change our political line and policies.”

Li reaffirmed: “The way to oppose bourgeois liberalization is to present facts and
reason things out with a view to maintaining a correct political orientation. In this
regard, we will never broaden the scope.”

On open policy, Li said: “It is our hope that China will be opened more widely to the
outside world and will further speed up its development.”

During the meeting the two sides also exchanged views on international issues of common
interest. Present were Li Xiannian's wife Lin Jiamei, State Councillor Ji Pengfei and
his wife Xu Hanbing.

Li Stresses Open Policy
OW171343 Beijing XINHUA in English 1338 GMT 17 Mar 87
[Text] Beijing, March 17 (XINHUA) — Chinese President Li Xiannian reiterated here

today that China will continue its reforms and open policy, and further its exchanges
and mutually beneficial cooperation with all friendly countries, including Carada.

1. 18 Mar 87 J 3 PRC INTERNAYIONAL AFFAIRS
WESTERN HEMISPHERE

The Chinese president made this remark at a banquet he gave to welcome visiting
Canadian Governor-General Jeanne Sauve and her party here this evening.

In his toast, Li said that China and Canada, both peace-loving countries, share many
ideatical or similar views on international issues and have the common desire to expand
mutually beneficial bilateral cooperation.

He said that Sivo-Canadian friendship has a solid foundation Since Prime Minister
Mulroney's visit to China last year, there have been fresh and substantial results
emerging from tb friendly bilateral cooperation in the political, economic, scientific
and technological, cultural, educational and other fields.

He noted that departments concerned of the two countries have deld discussions several
times on the use of various kinds of Canadian loans and assistance to China, and made
satisfactory progress in this connection.

He disclosed that during the governor- general e visit, officials of the two countries
will make friendly contacts to explore new channels for further enhancing the friendly
cooperation between the two countries.

He said that the Canadian governor-general is an outstanding stateswoman as well as an
old friend of the Chinese people.

He quoted the governor-general as saying: “Differences may exist in the principles and
methods adopted by the two countries to define their goals, but they do not hamper our
effective cooperation.”

He said that he agreed with such a view and expressed the belief that the visit of the
Canadian governor-general would further promote the friendly cooperation between the
two countries.

Recalling her visit to China in 1973, Sauve said that while the treasures of its
heritage have been retained, China now presents a new face to the world. She said that
she and her party had come to obtain a better understanding of New China.

“We have discovered common interests, and become aware of the advantages of maintaining
relations that can only benefit our two countries and contribute to the development of
our peoples,” she added.

She repeated that Canada would like to continue its exchanges with China, exch..1ges
that in the years to come will benefit both countries and will consolidate the

foundations the two countries have already laid.

She hoped that the two countries would examine other possibilities in every area of
business, industry, research, medicine, education and technology.

"We seek the means to help one another and the way toward achievements that will
contribute to improved conditions for our citizens. The undertakings that we have
begun together show that we can keep on working hand in hand,” she said.

I. 18 Mar 87 J4 PRC INTERNATIONAL AFFAIRS
WESTERN HEMISPHERE

Among those present at the banquet were President Li's wife Lin Jiamei, Chinese Sta
Councillor Ji Pengfei and the Canadian governor-general s husband, Maurice Sauve.

The governor-general gave a tea party earlier today for Chinese officials who have
visited or will visit Canada. Chinese Vice-Premier Li Peng and several ministers
attended.

Minister Awards Students
OW171632 Beijing XINHUA in English 1534 GMT 17 Mar 87

[Text] Beijing, March 17 (XINHUA), -- Monique Landry, Canadian minister of external
relations, today presented certificates to 29 Chinese students trained in Canada.

She made the presentatioin at the Beijing University of International Business and
E:onomics. The trainees were students of the China-Canada Human Development Training
rrogram sponsored by the Chinese Ministry of Foreign Economic Relations and Trade and
the Canadian International Development Agency.

The program was set up in 1983 for the purpose of improving the professional ability of
Chinese managerial staff and technicians in different fields. Since January 1985, some
178 trainees have completed their training in Canada and have returned to China.

Landry said that the training program adheres to the principles of cooperation and
mutual benefit.

Landry arrived in Beijing coday in the company of Governor-General of Canada Jeanne
Sauve.

Landry and her party also visited the China-Canada Language Training Center at Beijing
Teachers University.

COSTA RICAN TRADE UNIONISTS MEET LUO GAN
0051112 Beijing KINHUA in English 1327 GMT 5 Mar 87

[Text] Beijing, March 5 (XINHUA) — Vice-Preside:t of the All-China Federation of
Trade Unions Luo Gan, on behalf of President Ni Zhifu, met and feted a delegation from
the Confederation of the United Trade Unions of Costa Rica led by its General Secretary
Orlando Solano here this evening.

The visitors arrived here earlier today for a friendly visit to China at the invitation
of the host federation. Besides Beijing, they will also visit Shanghai, Suzhou,

Hangzhou and Guangzhou.
Meet NPC Vice Chairman

OWO70816 Beijing XINHUA in English 0646 GMT 7 Mar 87

[Text] Beijing, March 7 (XINHUA) — Liao Hansheng, vice-chairman of the Standing
Committee of the National People's Congress, met here today a delegation from the
Unitarian [as received] Confederation of Workers of Costa Rica, led by its General
Secretary Orlando Solano.

I. 18 Mar 87 2 114 Kl
PRC NATIONAL AFFAIRS

STATE COUNCIL DECIDES TO SET UP TARIFF COMMITTEE

OW171335 Beijing KINHUA Domestic Service in Chinese 0256 GT 17 Mar 87

[rent] Beijing, 17 Mar (XINHUA) -- To meet the needs arising from reform and opening
to the outside word, and to enable tariffs to play a more efficient role in regulating
imports and exports and in protecting and spurring domestic production, the State
Council has decided to set up a tariff and tax regulation committee.

The major responsibilities of the committee are: to propose policies and principles
for drawing up or revising “tariff regulations” and import and export tax regulations;”
to examine draft revisions of tax regulations; to draw temporary tariff rates
(including import regulatory tariff rates); and to decide on local regulatory tariff
rates.

The State Council has decided to appoint Wang Binggian, state councillor and minister
of finance, chairman of the comittec, and Dai Jie, director of the general
administration of customs; Tian Yinong, vice minister of finance; and Wang Pinging,
vice minister of foreign economic relations and trade, vice chairmen of the committee.
The office of the committee will be located at the General Administration of Customs
Building.

OW180521 Beijing XINHUA Domestic Service in Chinese 0742 GMT 17 Mar 87

[Trent Beijing, 17 Mar (XINHUA) — The second plenary session of the 14th meeting of
the Sixth CPPCC Standing Committee was held at the auditorium of the CPPCC National
Committee this morning.

Vice Chairman of the CPPCC National Committee Liu Lantao presided over today's meeting.

The meeting examinet the draft report on the work of the Standing Committee of the
Sixth CPPCC National Committee and the draft report on the handling of motions since
the fourth meeting of the Sixth CPPCC National Committee.

The meeting approved the decision electing 46 new members of the Sixth CPPCC National
Committee to fill the vacancies.

The meeting also examined a written report on visits to the Federal Republic of
Germany, Austria, Belgium, and Czechoslovakia by delegations of the CPPCC National
Committee, a written report on visiting and inspecting the Longyan old revolutionary
base areas in Fujian Province, Guangxi Zhuang Autonomous Region, and Hainan Dao, a
written report on speeding up the comprehensive development of the Panxi area, and a
written report on suggestions rc,arding the administration of traditional Chinese
medicine, and the import of technology.

Vice chairmen of the CPPCC National Committee attending the meeting were Yang Jingren,
La Dingyi, Cheng Zihua, Kang Keqing, Qian Changehao, Yang Chengwu, Lu Zhengcao, Zhou
Peiyuan, Burhan Shahidi, Dent Zhaoxiang, Fei Kiaotong, Zhao Puchu, Liu Jingji, and Wang
Enmao.

I. 18 Mar 87 * 2 CHINA
PRC NATIONAL AFFAIRS

JIEFANCIUN BAO BAILS ARMY'S POLITICAL WORK RULES
HKOG1440 Beijing JIEFANGJUN BAO in Chinese 27 Feb 87 p 1

{[Editorial: “Good Regulations on the Army's Political Work in the New terte“

[Text] “The regulations of the Military Commission of the CPC Central Committee on the
Army's political work in the mew period,” which were formulated at an enlarged weet ing
of the Military Commission of the CPC Central Committee in December last year after
holding full discussion, soliciting opinions from all parts, and making repeated
revision, have been officially promulgated with the approval of the CPC Central
Committee. Under the guidance of Marxism-Leninism, Mao Zedong Thought and on the basis
of the party's line, principles, and policies since the 34 Plenary Session of the Lith
CPC Central Committee, the “regulations” have blazed new trails on the basis of
inheriting the Army's good tradition in political work, and correctly expounded and
defined the guiding thought, main tasks, policies and basic methods of the Army's
political work under the new situation of reform, opening up, and a strategic change in
the guiding thought for Army building. The regulations play a very important and
long-ters guiding role in strengthening the work of building the Army into a
revolutionary, modernized, and regular Army and in fulfilling the glorious task of
defending and building the motherland. The regulations are good regulations for
strengthening the Army's political work in the new period and are a historic document.

Political work is our Army's lifeline. This is a truth that has been proved repeatedly
in the practice of the Army's struggle. Now that our Army has entered a new historical
period, we are confronted with many new situations and problems in Army building. We
must firmly seize the favorable opportunity provided by the relatively peaceful
environment and take full advantage of the good conditions created by reform, opening
up, and invigoration to strengthen the modernization drive and the building of
spiritual civilization in the Army. We must also guard against carelessness and
slackening, and resist the invasion of decadent capitalist and feudalist ideas. We
must not only arouse the enthusiasm of officers and soldiers for learning and mastering
scientific and cultural knowledge, but must also guide them to study earnestly
Marxism-Leninism, and Mao Zedong Thought, to raise their political consciousness, and
to temper themselves in struggle. We must not only make the vast number of commanders
and fighters have confidence in the future of the socialist motherland and the Army,
but must also guide them in fully understanding the complex and arduous nature of the
modernization drive, to correctly handle the relationship between the state, the Army,
and individuals, and to carry forward the spirit of working and struggling hard and
being ready to dedicate oneself. All these are closely related to effective political
work. At present, a struggle against bourgeois liberalization is being carried out
within our party, mainly in the political and ideological field. To make everyone
understand the nature and far-reaching significance of this struggle, raise their
consciousness in upholding the four cardinal principles, and resolutely and steadfastly
stand in the forefront of the struggle, we must also strengthen political and
ideological work. & large sumber of facts have prvved that we must not weaken
political work even a little in the new historical period, otherwise we will make
historic mistakes. To meet this demand in the new period, the “regulations” have
provided us with a basis for properly carrying out political work and a powerful
ideological weapon for fighting bourgeois liberalization.

To properly carry out political work in the new period, we must first have a cluar-cut
guiding thought. On the one hand, the “regulations” expounded our army's historical
responsibility and the role and position of political work. [paragraph continues!

1. 18 Mer 87 41 An
PRC NATICNAL AFFAIRS

Thesc qualities are evaluated from the high plane of fulfilling tree principal tasks,
namely, building socialist eodernization, reunifying the motherland, and fighting
hegemoniss and safeguarding world peace. On the other hand, the “regulations” made «
hictorical review of the Army's political work, and especially examined, in an-all
round way, the damage and inflwence caused by Lin Biao and the “gang of four” to
political work. On this basis, the “regulations” logically put forth the guiding
thought for the Army's political work in the new period, namely, to serve our country's
socialist modernization drive; to serve the purpose of building the Army into «a
modernized, regular, and revolutionary army; to ensure the army's be ute leadership
over the army, and its nature as a people's Army; to ensure the building of sucialist
spiritual civilization in the Army; to ensure unity within the Army and the unity
between the Army and government and between the Army and the people; and to ensure the
upgrading of the Army's combat strength end the fulfillment of various military tasks.
The “regulations” explicitly pointed owt: Political work is ovr Army's lifeline. This
is specifically reflected in the above efforts to serve and ensure things. This has
fundamentally pointed out the orientation of political work and correctly handled the
relationships between politics and political work; between political work and the
party's leadership; between political work organs and agilitary, logistical, and
scientific research organs. It has solved a vague and controversial problem during a
period of time and provided ample scope for carrying out political work. This is a
great achievrment in making order out of chaos in the field of political work and a
creative achievement in the theory of political work.

Blazing new trails on the basis of inheriting fine traditions is an important topic in
political work in the new period. Our Army has formed « good tradition of conducting
political work in its protracted practice of revolutionary struggle. We must treasure
these traditions, because they reflect the nature of our Army and are the most vital
principles and vzlements of our Army's political work. They are very useful in
strengthening Army building and upgradixg the Army's combat strength. We must adhere
to them at all times. However, these traditions must be developed continuously in
connection with new situations. We must sum up new experiences in practice so as to
give the traditions new substance. Without this inheritance, there will be no
foundation for blazing mew trails; without blazing new trails, there will be no genuine
inheritance. The “regulations” put forth the policy of “respecting history, basing our
work on reality, and having an eye on the future,” which has summarized in a scientific
way the basic principle and fine traditions of the Army's political work; seriously
summed up the new experiences proved as dynamic in the practice over the past few
years; greatly enriched our Army's political work treasure house; and made our Army's
political work more systematic, theoretical, scientific, and standardized. The
implementation of the “regulations” will certainly promote great development ir
political work.

How should politica, work be carried owt under the new situation? This is a question
everyone wishes to snewer urgently. la accordance with the spirit of the resolution
made by the CPC Cmtral Committee on the guiding principle for building spiritual
civilisation and the guiding thought for the Army's political work and in connection
with the Army's reality, the “regulations” proposed the following 8 tasks: to
strengthen ideological education with emphasis on ideals and discipline; to perfect and
develop the Army's democratic life; to foster the Army's fine style; to pay attention
to ecientific and cultural education and train qualified personnel for Army and
civilian purposes; to strengthen political work in military training, scientific
research, and logistics; to vigorously carry owt the activities of soldiers and
civilians jointly building spiritual civilizution; to properly carry out grass-roots
political work; and to strengthen the building of cadre ranks. The “regulations” also
stressed that party committees, at all levels, gust become a strong core in leading and
uniting all armed forces. [paragraph continues!

I. 18 Mer 87 x * CRINA
PRC NATIONAL AFFAIRS

The regulations have sot only put forth tasks, t have also defined the principle: and
policies that mest be adhered to. They sot only put forth specific demands and
geasures suited to the current situation, but have aleo summerized some basir
experiences with reguicrity. Provided that we act upon these and carry them out in +
down-to-earth manner, it is possible to bring inte full play the role of political wor«
in serving and ensuring the building of our /rmy into « modernized and revolutionary

Arey.

The “reg-lations™ have integrated theory with practice, and inheritance with
development, and have expounded « series of basic problems in the Army's political
work. With substantial contents, the regulations have strong theoretical and
ideological features and aim to solve practical problem. They are « programmatic
document for strengthening the Army's political work in the new period. All comrades
in the Army, especially party committees, political organs, and political work cadres
at all levels must earnestly study and fully understand the regulations and seriously
implement them in practical work. This is not an ene job and hard work is needed. We
should not study and im lement the regulations just for a short time, but gust often
study and constantly implement the regulations in connection with work and ideological
reality in the Army. Provided that e earnestly study wd properly isplement the
regulations, there will be « new situation in the Army's political work and Army
building.

JIETARCTUN BAO PRINTS PLA AUDIT WRK REGULATIONS
HK171040 Beijing JIEFANGJUN BAO in Chinese 3 Mar 87 » 2

[Report: “Regulations on Auditing Work of the Chinese People's Liberation Army (For
Trial Implementat n

{Text} With the approval of Central Military Commission Chairman Deng Kisoping, the
“Regulations on Auditing Work of the Chinese People's Liberation Army” were promulgated
and put into trial implementation throughout the Army on 20 February. The full text of
the regulations is as follows:

Chapter 1. General Provisions

Article 1. These regulations are formilated in light of the PRC Constitution and the
State Council's stipulation on setting up auditing organs in the Army and exercising
auditing supervision.

Article 2. The Army's audit work is 4 component of the state's auditing system. The
auditing organs in the Army are institutions to exercise auditing supervision on ene

of the Arey.

Article 3. The Army's Auditing Department exercises audit supervision over financial
income and expenditures; the management of equipment, materials, and other property;
and the economic results of various departments, enterprises, institutions, and other
production units at various levels to strictly enforce the Army's financial discipline,
achieve better economic results in the use of funds and materials, promote the
fulfillment of various tasks, and facilitate the Army's process of revol« ‘onelization,
modernization, and regularization.

Article 4. The Army's auditing organs should conduct auditing supervision in light of
state laws, the economic and financial laws and regulations, and the Army's unified
financial regulations and relevant rules.

I. 18 Mar 87 K 5 CHINA
PRC NATIONAL AFFAIRS

The Army's auditing organs independently exercise their audit supervision power without
being interfered in by any unit or individual.

Chapter 2: Auditing Organs

Article 5. Auditing organs at various levels in the Army are set up in light of the
relevant stipulations laid down by the Central Military Commission.

In units in which no auditing organs are set up or no auditing personnel are appointed,
the finance section of the Logistics Department is responsible for the audit work.

Auditing organs should be set up in all large and medium-sized enterprises and their
management departments at the upper level.

Article 6. The audit work of auditing organs at various levels is subject to the
leadership of the chief of the unit, and the auditing organs are subordinate to the
Logistics Department. Their work is organized and unfolded in light of the Army's
logistics and supply system.

The PLA Auditing Bureau is under the direct leadership of the leader of the Central
Military Commission. It is responsible for leading and organizing the whole Army's
auditing work. Its routine work is guided by the PRC Auditing Administration. It is
answerable to the leader of the Central Military Commission and the State Auditing
Administration.

The auditing bureaus of various military regions are under the leadership ot the
commanders of the military regions and are responsible for the audit work at the
military region level and in the subordinate units. Their routine work is subject to
the guidance of the PLA Auditing Bureau. They are answerable to the commanders of the
military regions and to the PLA Auditing Bureau.

The auditing offices of various Army units are under the leadership of the leaders of
the Army units and are responsible for the audit work at the same level and in the
subordinate units. Their routine work is subject to the guidance of the auditing
organs at the upper level. They are answerable to the unit leaders and the auditing
organs at the upper levels.

The auditing organs of the large and medium-sized enterprises and the management
departments concerned are under the leadership of the principal leaders of the
enterprises and departments and are responsible for auditing the financial income and
expenditures and economic results of their enterprises and departments. Their routine
auditing work is subject to the guidance of the auditing organs at the upper level.
They are answerable to the leaders of the enterprises and departments and to the
auditing organs at the upper level.

Chapter 4. The Main Tasks, Functions, and Powers of the Auditing Organs
Article 7. The main tasks of the auditing organs include:

1. To carry out audit supervision over the use of budgetary funds, implementation of
the budget, and the income and expenditure of extrabudgetary funds, other funds, and
foreign exchange funds, as well as their turning over to the upper level.

I. 18 Mar 87 K 6 CHINA
PRC NATIONAL AFFAIRS

2. To carry out audit supervision over the purchase of equipment and the use results
of important materials and Army property.

3. To carry out audit supervision over the plans, appropriations, and final accounts
for capital construction projects.

4. To carry out audit supervision over the business activities and economic results of
the enterprises and other production units.

5. To carry out audit supervision over the strictness and effectiveness of the
inter:.al control systes.

6. To set up special audit cases to investigate such lavw-breaking and
discipline-breaking actions as embezzling state funds or state property, causing
serious waste, and harming the interests of the state and the Army.

7. To execute various auditing regulations. To participate in the formulation of
auditing regulations and system and participate in the research of major economic and
financial policies and regulations. To fulfill the audit tasks assigned by the leader
of the unit or by the auditing organs at the upper level.

8. To organize the professional training of the auditing personnel, carry out academic
studies, and exchange information and audit work experience with each other.

Article 8. The main functions and powers of the auditing organs include:

1. To examine the plans, budgets, final accounts, routine accounts, vouchers,
statements, materials, property, and 11 relevant documents and data of the units
subject to the audit. The audited units must provide all such things for auditing and
must not refuse to do so or try to conceal anything. For projects that are required by
the auditing organs to be subject to audit in advance or to submit a financial report
for audit and approval, their annual statements must first be approved by the auditing
organ before they are submitted to the upper authorities. If the Finance Department
has any different opinion, they should consult with the auditing organ to reach

agreement.

2. To have the right to attend the relevant meeting of the unit or the audited unit.

3. To have the power to investigate and verify the problems discovered in the audit
process, to take proof materials, and to copy, reproduce, photograph, and take record
of the relevant documents, materials, and articles on the spot. The units,
departments, and individuals concerned must actively cooperate with auditing organs and
must not lay any obstacl to the investigation.

4. To have the power to order the audited units to correct their actions in violation
of the financial regulations of the state and the Army to check losses and waste, and
the audited units and departments concerned must not refuse to accept these orders.

I. 18 Mar 87 K 7 CHINA
PRC NATIONAL AFFAIRS

5. To have the power to make decisions on confiscating the illegal income of the
law-breaking or discipline-violating units, freeze their funds or property, deduct or
stop appropriations, and impose fines in light of the relevant state laws or the Army's
relevant regulations, and to notify and supervise the execution of these decisions by
the audite“ units and the departments concerned. The audited unit and the departments
concerned must not refuse to execute these decisions.

6. If a unit obstructs, rejects, or undermines audit work, the audit organ can, if
necessary, take such actions as sealing the account books, funds, and property, then
affix the responsibility of the direct responsible people and relevant leaders.

7. To issue circulars on major cases of violating economic and finance discipline and
commend units and individuals of outstanding performance in observing and maintaining
economic and financial discipline.

Chapter 4: The Procedures of Audit Work

Article 9. Working out the plan for audit work. The PLA Auditing Bureau will work out
the whole Army's annual audit work plan in light of the Army's central task and the
instructions of the leader of the Central Military Commission. The auditing organs at
the military region level or below will work out their annual audit work plans in light
of the annual plans of the upper auditing organs and the instructions of the leaders of
their units and in connection with their actual conditions. Their work plans will be
submitted to the unit leaders for approval and submitted to the upper auditing organ
for record.

Article 10. Determine the objects of audit and working out auditing schemes. The
auditing organs at all levels, in light of their annual work plan and the tasks
assigned by the upper leadership, will determine the concrete objects of audit and draw
up audit work schemes, which include the scope, content, form, and time of audit. The
work schemes will be submitted to the leadership for approval before they are executed.

Article 11. Determine audit forms. The auditing organs, in light of concrete
conditions, will take a variety of audit forms:

1. Submitting reports for audit. In light of the audit work plan, the audited units
and departments are required to regularly and irregularly submit their relevant
financial statements, vouchers, account books, and other materials to the auditing

organs for audit.

All departments should submit their financial budgets, accounts, and relevant
regulations and data in light of the stipulations to the audit organs.

2. On-the-spot audit. In Light of the established audit schemes, auditing groups are
sent to the audited units to conduct audit.

J. Entrusting audit. The auditing organs entrust some units to conduct audit.

4. Joint audit. The auditing organs join hands with other organs or departments in
conducting audit.

5. Other audit. Other audit forms are taken in light of different conditions.

I. 18 Mar 87 K 8 CHINA
PRC NATIONAL AFFAIRS

Article 12. Issue audit notices. In light of the audit work schemes, the audit organs
notify the audited unit about the scope, content, forms, requirements, and time of
audit.

Article 13. Put forth audit reports and make audit decisions. After completing the
audit, the auditing group will make a comprehensive study and write an audit report,
which includes the scope and content of the audit, the problems discovered through
audit, and the opinions and proposals for handling these problems. The audit report
should be attached with proof materials and relevant data. The audited unit's reaction
to the audit report should be learned, and the audited unit should submit its written
opinion on the audit report within a set time. The audit report should be reexamined
by the auditing organ that sent the auditing group and should be submitted to the
auditing organ at the higher level and to the leader of the unit. According to the
audit report, the auditing organ should make decisions on handling violations of the
financial discipline of the state and the Army, notify the audited unit and department
concerned, and supervise the implementation of this decision. For people who are
responsible for serious violation of the state finance discipline, the auditing organ
will put forth a proposal for disciplinary measures to the leading organ; those who
violate criminal law should be sent to the judicial organ for punishment.

Article 14. Double audii:. If the audited unit has any disagreement about the audit
conclusions and decisions, it should appeal to the auditing organ at the higher level
for double audit within 10 days. When receiving the double audit application, the
auditing organ at the higher level should conduct the double audit within 30 days.
This can be postponed in the case of special conditions. In the course of double
audit, if any concealment and audit mistakes are discovered, the audit conclusion
should be made again. The conclusions and decision of double audit should be conveyed
to the audited unit and to the original auditing organ. In the period of double audit,
the conclusion and decision of the first audit should be implemented. The auditing
organ at the higher level has the right to correct improper conclusions and decisions
made by the auditing organ at the lower level.

Article 15. Keep audit files. The auditing organs at all levels must keep audit files
for every audit item and case, and files should be kept regularly or on a long-term
basis for the purpose of reference. The files must not be destroyed without the
approval of the upper authorities.

Chapter 5: Auditing Personnel

Article 16. The auditing personnel must continuously improve their ideological and
moral standards and scientific and cultural attainment, must adhere to the four
cardinal principles, and should receive professional training. They should have
comparatively high political consciousness, a strong sense of policy and discipline,
and can serve the Army wholeheartedly.

Article 17. The auditing personnel should study and master the state's financial and
economic laws, regulations, and policies and the Army's financial affairs regulations
and systems. They should be familiar with finance and accounting theory, have economic
management and military knowledge, and have professional auditing knowledge.

Article 18. The auditing personnel must abide by law and discipline, be honest in
performing their public functions, be realistic and impartial, be keen on making
investigatons and studies, rely on the masses, be faithful to their public duties, and
tightly keep secrets.

Article 19. Auditing personnel who make remartable achievements in their work should
be commended and praised. [paragraph continues]

ee

I. 18 Mar 87 K 9 CHINA
PRC NATIONAL AFFAIRS

Those »ho neglect their duties and violate law and discipline should be strictly
punished; those who violate criminal law must be brought to court for trial and

sentence.

Article 20. The auditing personnel should remain relatively stable. The appointment
and removal of the responsible persons of the auditing organs should first be based on
the opinion of the auditing organ at the higher level.

Article 21. The auditing personnel are protected by law when they perform their
auditing duties, and no unit or individual is allowed to retaliate against them. Those
who so retaliate must be severely punished; and those who violate criminal law should
be brought to court for trial and sentence.

Article 22. The professional positions and titles of the auditing personnel are
determined in light of the relevant stipulations of the state and the Army.

Article 23. In light of the needs in auditing work, the auditing organs can hire
professional people through public advertisement. In the tenure, the hired
professionals enjoy the same powers and rights as the auditing personnel.

Chapter 6: Supplementary Provisions

Article 24. Units and individuals who violate these regulations will be punished and
be subject to economic or administrative disciplinary measures; those who violate
criminal law and who are directly responsible for the violation of criminal law will be
brought to the judicial organs for punishment according to law.

Article 25. These regulations are explained by the PLA Auditing Bureau. The auditing
system and procedures are promulgated and implemented by the General Staff
Headquarters, the General Political Department, and the General Logistics Department.

Article 26. These regulations shall go into effect on the same date they were
promulgated.

JIEFANGJUN BAO Commentary

HK171118 Beijing JIEFANGJUN BAO in Chinese 3 Mar 87 p 2

[Commentator's article: "Strengthen the Army's Auditing Work")

[Text] Central Military Commission Chairman Deng Xiaoping signed and issued an order to
implement the "PLA Regulations on Auditing Vork“ on a triai basis in the whole Army.
This is the first integrated and systematic set of regulations on auditing work in our
Army's history. Its promulgation is of great significance in promoting our Army's
revolutionalization, modernization, and regularization.

The construction of the Army must rely on certain economic strength, and all economic
activities of the Army should be subject to auditing supervision. [paragraph continues]

I. 18 Mar 87 K 10 CHINA
PRC NATIONAL AFFAIRS

If the Army's auditing work is handled properly, the limited funds and materials will
achieve better economic results, which is favorable to both the Army's construction and
the state's economic construction. If the dit ing work is neglected or relaxed and if
there is no necessary financial supervision, the Army's funds and materials would not
be used correctly and reasonably, which would add more econumic burdens to the state.
The irregularities in economic management would also corrupt some people. In recent
years, some 80 percent of the cases involving violation of law and discipline in the
Army were economic cases. This also shows from the negative aspect that strengthening
auditing supervision is not only a matter in the economic tield, but is also a
necessary step for setting right the party style, enforcing the Army's discipline, and
ensuring a correct ideological style among the troops.

Strengthening auditing supervision over the military economy is an indispensable part
of the Army's regularization. Our military economic work must be based on some
established laws and must strictly observe these laws, and any violation of these laws
must be checked. This is required by the need of the overall interests of the state
and the Army, and is also a common desire of our officers and soldiers. It is a task
in the fundamental construction that we must fulfill. Constant and regular auditing
work can gradually replace the annual and additional financial examinations in the Army.

In order to implement a law, we should first understand the law through serious study.
Auditing work is a new subject in our Army's work, and many people still do not
understand its task, significance, and role. We should, therefore, give publicity to
it. The study of the auditing regulations should be taken as a part of the legal
education among the officers and soldiers so that they will understand and support the
auditing work. As the auditing work has just begun in our Army, the system has yet to
be perfected, and the professional quality of the auditing personnel has yet to be
raised. Meanwhile, some relevant work should also be coordinated. All this needs the
full support of the party committees at all levels. The party committees should listen
to the opinions of the auditing personnel and help them resolve actual difficulties.
Cadres in charge of auditing work, at all levels, should diligently study professional
knowledge, boldly participate in practice, continuously improve their ideological and
p.ofessional quality, cooperate closely with the departments concerned, and open a good
situation through their successful work. With all people's joint efforts, we will
certainly open a road in handling the Army's auditing work.

JIEFANGJUN BAO ASSESSES FIRST SATELLITE STATION
HK180336 Beijing JIEFANGJUN BAO in Chinese 10 Mar 87 p 1

[Report: China Completes the Building of Her First Ground Satellite Communications
Station”)

[Text] China's first ground satellite communications station, which was built to ensure
China's astronautic communications, recently passed the test of being linked to the
international satellite communications network through the satellite launching center
in Jiuquan. On 5 March, China received a special letter from the International
Satellite Organization, which officially approved the connection of China's ground
station with the existing international network.

I. 18 Mar 87 K 11 CHINA
PRC NATIONAL AFFAIRS

In the past, China's astronautic communications mainly relied on wired and short-wave
radio communications facilities. With the rapid development of the astronautic
industry, it is urgently necessary for China to change the astronautic communications
conditions. Therefore, the authorities concerned have decided to set up ground
satellite communications stations in various launching centers, observation and
monitoring centers, and space survey stations. The relevant factories subordinate to
the Ministry of Astronautics Industry, relying on their own technical strength and
learning from absorbing advanced foreign technologies, have solved a series of
technical difficulties and problems for the building of our country's own astronautic
communications network. The ground satellite communications station in the Jiuquan
Satellite Launching Center is the first ground station of this kind in our country’s
astronautic communications network.

Satellite telecommunications will not only guarantee the unblocked conditions of
telephone, telegraph, telex, and digital communications links and improve the quality
of telecommunications, but can also immediately and clearly transmit data about the
working conditions of the rockets and satellites before launching and about their
flight orbits, parameters, and graphics to various observation and controlling
stations. This will raise the level of astronavigation organization, comraand,
observation, controlling, and automation. This technology will also enable our country
to more smoothly promote the business of launching satellites for foreign clients.

PLA APPLIES COMPUTER SOFTWARE WITH GOOD RESULTS

OW180343 Beijing XINHUA Domestic Service in Chinese 1140 GMT 17 Mar 87
[By reporters Jie Yanzhen and Wu Dongf eng

[Text] Nanjing, 17 Mar (XINHUA) -- Computer software, a rapidly developing science,
has been gradually applied to Chinese military affairs. Currently, over 100 software
programs and 1,000 subsystems are providing useful information for the Army, and
serving its modernization drive. According to a recent disclosure by an expert of a
relevant department, computer software has been extensively used by the Army in eight
areas, including quantitative military strategy research, simulated w apon research and
development, optimal battle plans, simulated educational training, scientific
management of logistic supply, systematic troop management, and information services.
For example, a group army under the Beijing Military Region has achieved marked results
in applying fuzzy mathematics to reform its combat command system. Meanwhile, the
headquarters of the Nanjing Military Region has successfully computerized its filing
system. The hundreds of computer software programs developed by the Army in recent
years are reasonably structured, functionally comprehensive, operationally steady and
reliable, and highly efficient in material collation. They have reached an advanced

world level.

ZXS VIEWS ‘NEW THINKING" OF ECONOMIL PROFESSOR

HK161526 Hong Kong ZHONGGUO XINWEN SHE in Chinese 0333 GMT 16 Mar 87
[Report by reporter Xu Hong [1776 3126]: “Professor Li Yining's New Think ing“

[Text] Beijing, 16 Mer (ZHONGGUO XINWEN SHE) -- At the beginning of the new school
term, Beijing University professor Li Yining put forth “the idea of a mixer."

I. 18 Mar 87 K 12 CHINA
PRC NATIONAL AFFAIRS

This is new thinking on China's economic reform theories put forth since his return
from lectures in Hong Kong in the first 10 days of January. In this idea, he links the
market graphically with a large-sized mixer and equates various resources with
ingredients to be mixed. He considers that after various resources are fed into the
market, they should be allowed to operate continuously. After a given period of being
“mixed,” they can possibly be deployed in a balanced and rational manner.

He says that the force behind the operation of the market mechanism lies in enterprises
and individuals involved in market activity. The more active they are, the smoother
the operation of the market, with various resources fed into the market being made up
more freely and effectively.

This is a way of thinking hitherto upheld by Li Lining. Based on his system of
economic theories, the market mechanism is often the starting point in a study of
problems. To solve the knotty problem of how to rationally deploy resources in
national economic management, drawing on the “idea of a mixer” once again, he stresses
that in China's economic reform, we must show full respect for, and give full play to,
the role »f the market mechanism.

This idea was put forth for the first time by Li Yining in giving the first lecture to
college students on “management of the national economy” on 18 February this year.
This course had to be switched to the largest classroom in the university because of an
unexpectedly large audience. Even so, those who come to listen to his lectures mu .
show up early to claim a seat. If they are late, they will find the classroom with a
seating capacity of 300 already fully packed.

Given new viewpoints, new ideas, and new theories being continuously put forward by him
and especially given his independent thinking on China's economic reform, courses
started by him have become very popular in the university. The works he has written
have also become the favorites of young students.

His latest published work, “Socialist Political Economy,” is a masterpiece. The first
edition has sold out. Book commentaries have judged “this work as one representing a
brand new Li Lining system.” “It marks a revolutionary change in the existing idea
guiding economic policy.” “It pioneers a new way of thinking in using modern
macroeconomic and microeconomic analytical methods to study socialist political
economy." The Commercial Press, which printed this work, and the Xinhua Book Store, as
its distributor, have received a total of several thousand letters from readers

requesting a reprint.

The theory of Li Yining as a representative of China's new school of econctic thinking
has been increasingly given attention and cherished by society. last year, he
successively put forward such theories as “the idea of second regulation,” “the idea of
a balance not being the goal, “the idea cf reforming the system of ownership,” and so
forth. He was also the first to desiga the blueprint for China's practice of the
stockholding system and the dual economic pattern.

Li Yining told this reporter: “In economic reform, experiences must be continuously
summed up and the results achieved must be continuously continuously consolidated and
digested. But domestic exploration of economic reform theories has never ceased. Nor
has it ever been interfered with.” This year, he will continue taking charge of an
important project in the state's Seventh 5-Year Plan, “The Study of the Mechanism for
the Operation of China's Socialist Commodity Economy." This is a new attempt at
exploration to quantify his economic reform theories.

I. 18 Mar 87 K 13 CHINA
PRC NATIONAL AFFAIRS

ROUNDUP COVERS DEVELOPING SHIPBUILDING INDUSTRY

HK171448 Hong Kong ZHONGGUO XINWEN SHE in Chinese 1333 GMT 13 Mar 87

{Roundup by reporter Jin Guolin [6855 2654 2651]: “China's Shipbuilding Industry Has
Become a Force To Be Reckoned With")

[Text] Beijing, 13 March (ZHONGGUO XINWEN SHE) — Today, when the world's shipbuilding
capacity is greatly excessive and the world's ship market is dwindling, China has
gradually gained a place in the international ship market and has displayed a
competitive power not to be belittled thanks to the high quality and low production
costs of its ships and its good reputation. The tonnage of ships built by the
shipbuilding enterprises under the China Shipbuilding Industry Corporation has grown
continuously in the past few years. The average annual growth during the period from
1980 to 1985 was 13.6 percent. In 1986, the tonnage reached 845,000 tons, more than 18
percent over the previous year. It is expected that the shipbuilding capacity of this
corporation will exceed 1.2 million tons in 1990. Since competition in the
international ship market tends to become increasingly more acute, China has
concentrated its efforts on developing first-rate modern ships according to
international standards, thus narrowing the gap between China and other countries with
a flourishing shipbuilding industry within just a few years. Last year, China built a
69,000-ton ship for chemicals and oil products and a 115,000-ton oil tanker for
transportation. The building of such ships indicates that the shipbuilding technology
of China s mainland has reached today's advanced world level.

A complete shipbulding system including scientific research, design, production, and
manufacture of matching parts and components has taken shape in China. This system has
more than 530 shipyards for building steel ships and more than 160 plants specialized
in manufacturing matching parts and components for ships. It can build ships according
to any international standard, for any navigation line, and for hoisting any national
flag. All the 13 ships built for export last year ured main engines made in China,
thus changing the situation of importing main engines. In addition, China has also
built large shipbuilding bases for the export of ships in Dalian, Shanghai, and
Guangzhou so that China has caught up with o*her countries in shipbuilding. Hu
Chuanzhi, general manager of the China Shipbuilding Industry Corporation, forecast that
in the 1990's, China's shipbuilding capacity will jump from seventh to third place in
the world.

Since its ships entered the international market in 1979, China has received foreign
orders for 158 ships amounting to nearly 1.61 million tons, of which 119 ships with a
total of 925,000 tons have been accepted and put into operation by their owners. It is
expected that China will undertake to build ships with a total of 30,000 tons for
export this year, 24 percent over last year.

China has a vast domestic market for its shipbuilding industry. it has to build 9%
million tons of ships either to meet increased needs or to replace old ships for ocean
going, coastal, and inland river transportation before 1990. Domestic orders for large
numbers of chips is a powerful guarantee for the development of China's shipbuilding
industry. China was one of the first countries in the world to use sea water to make
salt and to develop sea navigation, and its shipbuilding industry and navigation once
flourished. At present, China's shipbulding industry has again risen abruptly in the
world. Huskinson, chairman of the British Lloyd's Register of Shipping, said that
China will become one of the world's strongest countries in shipbuilding in the future.

I. 18 Mer 87 K 14 CHINA
PRC NATIONAL AFFAIRS

RI INA’ I
16029 Beijing RENMIN PIBAO in Chinese 2 Mar 87 p 5

[Article by Zhang Shuguang (1728 2962 0342): “Production Policy, Its Design and
Application”)

[Text] The Seventh 5-year Plan has an outstanding characteristic, that is, while
laying down a series of economic and social development targets, it includes a series
of development policies for the first time. It is gratifying to see that many
departments have started to work out their own development policies. la this article,
I would like to express my personal views on some questions concerning the design and
application of the industrial policies.

The Nature and Role of Industrial Policies [subhead)

Industrial policies are the summation of means and measures adopted for guiding
industrial development, planning industrial development targets, and readjusting the
mutual relations between different industrial fields and their structural changes.
They constitute an essential component part of the entire structure of economic
policies. With the shift of the operation and development of the national economy onto
indirect menagement, planning, and control, the design and planning of industrial
policies has become the essential means to guide industrial development and structural
transformation.

First, since they impact on the short term balance of economic operation, industrial
policies constitute a long-term policy dealing mainly with economic development. An
industry and a structure, once established and formed, are characterized by structural
rigidity. The fundamental transformation of the existing structure is possible only
through long-term efforts and through the reorganization of the existing industr’es and
establishment of new ones. For this reason, the impact and role of industrial policies
are manifested in affecting the long-term development of the economy.

Second, the role of industrial policies produces an impact on production through
promoting or restricting the development of certain industries and readjusting their
structures, thus affecting the total amount of social supply and its setup. If the
financial and monetary policies can readjust supply as well as demand, particularly
social demand, industrial policies can produce an impact on demand, particularly in
readjusting and producing an impact on social demand.

Third, as a macroeconomic policy, industrial policies can affect the development of the
microscopic economy. Industrial policies have different layers which include
industrial policy of the state as a whole and industrial policy of various regions,
departments, and trades. ir custrial policies of regions, departments, and trades play
a role of overall signiticance, to say nothing of the state's industrial policies.

The Main Contents of Industrial Policies [subhead)

Industrial policies constitute a complicated policy structure which include indy trial
policy of different layers and cover much ground. In light of the experience guiding
industrial development and structural transformation at home and abroad, they mainly
include: industrial setup policy, industrial organization policy, industrial promotion
policy, and industrial restriction policy.

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PRC NATIONAL AFFAIRS

1. Industrial setup policy.

In the past, China practiced the industrial setup policy of taking steel as the key
link and giving priority to the development of heavy industry. In order to readjust
the irrational industrial setup, China implemented the industrial setup policy of
giving priority to the development of energy and communications, scientific and
technological education, and speeding up the pace of agriculture and light and textile
industry in recent years and achieved marked results. la the years to come, we should
continue to focus on the development of energy, communications, agriculture, and light
and textile industry. To modernize China's industrial setup, however, it is necessary
to continue to revise and perfect this setup policy.

The key to the planning and design of industrial setup policy lies in selecting the
strategic industries, deciding on the target for structural policy, and planning the
basic pattern for industrial development. Such selection and decision should be based
or the long-term forecast of technological progress and economic development.
Strategic industries generally include leading and mainstay industries. Sometimes they
aiso include certain bottle-neck industries. Probably, the current conditions for
developing these industries are not yet favorable. However, it will be impossible to
funcamentally transform the basic pattern and development trend of China's industrial
setup and to modernize the industrial setup unless we concentrate our energy on
developing these industries.

Strategic industries generally possess the following characteristics: First, they are
usually the production departments of final social products which are elastic in
demand. Over a considerable period, society will have an increasing den ad of these
industries which cannot be fully satisfied. Second, as they have vital oc. ect tons
with enterprises, their development can lead to the common prosperity of a large ‘umber
of enterprises. Third, leading industries generally represent the direction of
structural transformation and industrial development, mainstay industries reflect the
development level of industrial modernization in an all-round way, and bottle-neck
industries produce an impact on industrial development and structural transformation.
In accordance with China's actual situation in which the task left over from the
previous revolution should be accomplished and where we are facing the challenge of the
new technological revolution, we should appropriately select the leading industries and
mainstay industries for our country and work out correct plans for China's industrial
development and structural transformation.

2. Industrial organization policy.

In the past, we did not understand the concept of industrial organization policy or
have an effective policy om it. We were used to masse movement, to rushing headlong
into mass action while developing projects, and to imposing wniformity on everything
while cutting down projects. in addition, all production activities were carried out
under direct, unified planning. To develop socialist commodity economy, our
macroeconomic management should change from direct management and contro! to indirect
management and control. Consequently, industrial organization policy becomes an
essential means of policy to readjust industrial development and realize structural
transformation.

Industrial organization policy includes the market competition and anti-monopol ization
policy, protection policy, and the policy for establishing lateral ties. To give full
play to the role of these industrial organization policies, the key lies in the
selection of an appropriate policy means and in the overall planning and coordination

of various policies.

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PRC NATIONAL AFFAIRS

The market competition policy removes the obstacles that hinder rational competition,
creates a fine environment for equal competition, and protects and develops fair market
competition. la this regard, it is necessary for China to adopt a series of policies
and means to eliminate the barriers erected between regions and departments. For
example, we must have a policy that permits and encourages free mobility of various
production factors, a policy that removes the barriers erected between regions and
departments, a policy that enables enterprises to freely enter or withdraw from «a
certain industrial field, and a policy that encourages enterprises to enter the
international market and enter into international competition (mote: not merely
stimulating exports and earning foreign exchange). Through competition within
Gepartments, between departments A with other countries, we can select the best,
eliminate the bacteard, and promote industrial development and structural
transformation.

The purpose of the anti-monopoly policy, which is closely related to the development of
industrial competition, is to preven. a all oumber of enterprises from rigging the
market, manipulating the prices, and obstructing structural transformation and the
rational flow of natural resources. It also ensures fair competition. Above all, it
is necessary to reduce state monopolization as much as possible. Regarding
monopolization by a smull number of enterprises, with the maturity of the market and
increasing strength of enterprises, certain policies will be necessary to effect
read justment.

The purpose of the industrial coordination policy is to promote rationalization of
industrial organizations, raise the organizational extent and level of industries, and
create new productive forces. Under the conditions un China, on the one hand, it is
necessary to enact the policy of establishing and developing enterprise groups and
clusters and promoting enterprise coordination, and on the other hand, it is necessary
to enact and implement the policy of protecting and supporting emall and medium size
enterprises. la addition, it is necessary to enact the policy of establishing and
developing the organizations of various trades. Through the implementation of these
policies, we should fundamentally change the overlapping and loose state of chinas
industrial organizations and set up a rational industrial organization network.

The industrial protection policy is a policy specially dealing with external affairs.
Both trade protectionism and industrial protectioniem are incorrect. Nevertheless, the
proper trade and industrial protection policies are necessary. Encouraging enterprises
to enter the international market and face international competition does not
contradict industrial protection. Exactly the reverse, since coordination between the
two is the effective means to establish and develop our own industry and nationa!
economy. However, industrial protection is not tantamount to protecting the backward.
The purpose of protection is not to keep our immature industry in its infancy forever,
but to foster ite growth and impel it to enter the international market and compete
with the enterprises of other countries. Consequently, an industrial protection policy
should clearly define the following: Which products need no protection and can be
imported and exported without restriction, which products should not be imported, and
the import of which products should be limited. Moreover, it is necessary to work out
specific measures and terms for protection. Although we have practiced an open policy
in recent years, we have not overdone it and the door is not yet widely open. However,
large oumbers of projects were imported blindly and some of our industries suffered
setbacks as a result of our negligence of industricl protection. Under the situation
of continuously opening up to the outside world, we should work owt an explicit,
specific, and effective industrial protection policy.

I. 18 Mar 87 K 17 CHINA
PRC NATIONAL AFFAIRS

3. The policy of industrial stimulation and restriction.

The policy of industrial stimulation and restriction covers much ground. Its purpose
is to stimulate and promote the establishment and development of necessary industries
and restrict and reduce the production of unnecessary industries and switch them to the
manufacture of other products. Here it is particularly necessary to mention the policy
of promoting research and development, the policy of upgrading products, and the policy
of restricting entry into certain industries.

Promoting research and development is the key to industrial development and structural
transformation. The state should establish a fund to subsidize research and
development. Taxation should be ¢uly reduced for the research and development pro jects
of various industries. These projects should be given preferential treatment in loans
and interest reduction in financial allocation. We should also provide these projects
with appropriate subsidies.

The establishment of an elimination system and an upgrading system for outdated and
backward products can promote the development and upgrading of products and
consequently raise the technological level of China's industries and improve our
industrial setup. For industries with relatively quick technological development, it
is all the more necessary to speed up this upgrading so as to promote and guide the
development of technology and products.

The policy of entry restriction is also complex. for example, the development of
certain industries requires a minimum economic scale. Enterprises that cannot meet the
minton requirements should be barred from entering these industries. Unless we have
the proper prot.ction measures, the industries that cause serious pollution should also
be restricted.

The Planning, Design, and Application of Industrial Policies [subhead]

In the course of planning, design, and application of industrial policies, the
following questions merit attention:

First, as industrial policies constitute a multi-layer and comprehensive policy system,
we must have an overall view and systematic ide, for the planning, design, and
application of the industrial policies which complement and coordinate each other. Our
current problems are in this area. The planning, design, and application of our
industrial policies lack overall consideration and long-term planning. The designed
and enacted policies are not yet integrated or systematic. They are not coordinated
and their applications are usually independent from each other. Instead of promoting
the long-term development and structural transformation of industries, the design and
application of some policies are merely confined to meeting immediate emergencies and
incur a great loss because of ll gains. Some policies are mutually contradictory
with one encouraging expansion while the other restricts development, thus leading to
errors and blindness in industrial dev: »pment.

Second, industrial policy is a branch of the economic policy system as a whole. It is
closely related to other econom policies, particularly the macroeconomic policies
including financial policy, monetary policy, investment policy, technological policy,
and distribution policy. Their planning, desig , and application should also cooperate
and coordinate with each other. It is quite obviows that financial policy and monetary
policy should cooperate and coordinate with industrial policy. Here we will only
discuss cooperation and coordination between investment policy and industrial policy.

I. 18 Mer 87 K 16 CHINA
PRC NATIONAL AFFAIRS

Industrial setup is mainly expressed in « stock structure and investment setup in «
flow structure. The different choice of investment setup can drastically change the
industrial setup through the stock structural change in fined assets. Investment
policy is the means indicating the direction for investment and readjusting the
investment setup and investment behavior. Its cooperation with industsial policy is
the fundamental means to realize industrial development and estructura! transformation.

To cooperate and coordinate investment policy with industrial policy, first, the
distribution setup of investment should meet the requirement of industrial setup policy
and second, the readjustment of investment behavior should be coordinated with the
industrial organization policy and the policy of industrial stimulation and
restriction. A prominent question at present is that invescment policy and industrial
policy are usually divorced from each other sad are qutually contradictory. The factor
restricting development in industrial policy actually becomes the target of developeent
in investment policy. The problems to be solved through establishing lateral ties
between industries in industrial development usually become the things to be newly
built in investment policy. This leads to duplication and blind construction as well
as an imbalanced situation in which there is a shortage of funds and resources on the
one hand, and some funds and resources lie idle on the other hand.

Third, China's current industrial policies are imperfect, mutually contradictory, and
mot systematic. They are abstract, sweeping, and vague and lack the secessary legal
basis. As there are no effective written policies, they can be implemented or sot and
can be implemented one way or the other. Those who violatge the policies and make
mistakes are not held responible. For this reason, it is necessary to strengthen the
legal system so that the planning, design, and application of industrial policies can
have reliable legal guarantees. Only by doing so can we smoothly realize the
structural trasformation and modernization of China's industries.

REXMIIN RIBAO ON PLANTING TREES IN COASTAL /*REAS
Miet ie Beijing RENMIN RIBAO in Chinese 13 Mar 87 p |
[(Commentator’s article: “Build Forest Belts Along the Coast line

[Text] Im order to create a good ecological environment, the state started a grand
project of building “three norths” shelter forest belts in the early years of the Sixth
S-Year Plan. Recently, the leading comrades of the State Council pointed owt: The
method of building “three northse” shelter forest belts should lee be used to build a
“green great wall” of 10,000 miles along the coastline. This will be another grand
project in our country’s forestry construction.

Our country has a coastline of over 18,000 km which extends across the tropi:el,
subtropical, and temperate tones: 10 provinces, aut ones regions, and
municipalities, or some i180 counties and cities, have coastlines. The coastal
localities have a total area of 370 million mu and a total population of nearly 100
million people. At present, these localities are economically developed and densely
populated in our country. They are out country’s doors to foreign links and are aleo
the outposts of national defense. With the development of reform, opening up, and
economic construction, the position of these locrlities in our country’s four
modernizations cause will become increasingly more important. On the other hand, the
coastal areas are raided by typhoons many times each year, and aleo frequently suffer
from euch natural disasters as tides, drought, and floods, which cause serious economic

losses. [paragraph continues!

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PRC NATIONAL AFFAIRS

The building of the coastal shelter forest belts will be a project of great
significance in protecting and promoting our socialist four modernizations process and
in bringing benefit to the people and our future generations.

Over the past 30 years and more, the party and state have paid close attention to the
building of coastal shelter forest belts and have led the people to build more than 64
million mu of forests in coastal areas and some 8,000 km of shelter forest belts along
the coastline. This has played a positive role in improving the natural conditions of
some localities and in resisting such natural disasters as typhoons, sea tide,
salinization, floods, and drought. However, we should also soberly notice that the
development of coastal afforestation is rather uneven, and the existing forests are
still fragmentary and scattered in some small areas, so their capacity of resisting
natural disasters remains weak and fragile. Last year alone, four typhoons landed in
Guangdong Province and caused more than 2 billion yuan of direct economic losses! The
harsh reality requires us to build an integrated system of shelter forest belts as soon
as possible in the coastal areas.

The close attention and effective measures of the local leadership are the key to the
success in the coastal afforestation project. Under the new situation of reform,
opening up, and economic invigoration, leading bodies at all levels in the coastal
areas should pay more attention to the building of shelter forest belts along the
coastline. They must have a stronger sense of responsibility, exercise more effective
leadership, and work in a down-to-earth manner, and take this afforestation project as
a key project that must be tightly and properly grasped. Thus, we will certainly be
able to build a grand and impregnable “green great wali” along the 10,000 miles of
coastline.

NONGMIN RIBAO ON SCALE OF LAND OPERATIONS

HK160926 Beijing NONGMIN RIBAO in Chinese 7 Mar 87 p |

[Commentator’s article: ‘Gradually Expand the Scale of Land Operations in Places Where
Conditions Permit -- Seventh Talk on Deepening the Rural Ref otras

[Text] Implementing the contracted household responsibility system is a long-term
policy pursued by our party in the rural areas. With the expansion of production, how
to promote extensive farming on a large scale and on the household basis is an
important problem to be settled in improving the contracted household responsibility

system.

The contracted household responsibility system, which keeps the features of
agricultural production and fully displays the superiority of household farming, is
welcomed by peasants. However, household farming is Limited because its scale is too
small. In an average estimation throughout the country, every peasant household
contracts only 7 to 8 mu of land, still less to every laborer. From a long-term point
of view, farming on too samll a scale adversely affects the accumulation and
technological progress of agriculture and hinders the development of agricultural
production. “Every household is small but complete, and everybody tills the land.”
This situation certainly bears a high production cost and brings about low labor
productivity. At the same time, peasants do not have much interest in fart because
of less income from land operations. This may eventually lead to decreases in
production and leave large stretches of land uncultivated. Such a situation is not
allowed to appear in our country.

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The inexorable trend of economic development s that agricultural population shifts to
other trades and the scale of land operations expands relatively. This was reflected
in recent years from the emergence of group-operated land and cooperative farms in some
economically develope? areas and places where cultivated land is more concentrated.
However, as far as the whole country is concerned, this change, which results from the
development of the entire economy, takes a fairly long time and needs some necessary
conditions. And this change can take place only when secondary and teritary industries
are relatively developed and can afford more jobs for laborers who no longer make a
living from land and only when socialized production can render services of
before-and-after production to farming. Many rural areas are not yet ripe for these
conditions. Therefore, we should not blindly call for expanding the scale of land
operations.

At present, improving the system of operating land by both collective and individual
effort and using all kinds of socialized services in most areas are effective steps to
expand the scale of land operations. This system can arouse the enthusiasm of the
collective and the individual in land operations and help individual households resolve
some problems arising due to a too small scale of land operations. On the premise of
mot changing the scale of household land operations, the collective can now offer
different kinds of services to farming such as mechanized ploughing, irrigation, crop
protection and seed supplying, which individual households cannot afford to do. This
is a feasible measure to expand the scale of land operations to a certain extent in
most areas of our country. We should make full use of the form of operating land by
both collective and individual effort to resolve some problems arising due to a too
small scale of land operations at the present stage.

The concept of expanding the scale of land operations is relative. It must be
proceeded from being helpful to the best combination of the key elements of production
and to the development of agricultural production. Forms of land concentration can
vary in different areas and under different conditions, as can the scale of land
operations. We must create favorable conditions for expanding the scale of land
operations and support peasants in recontracting their land or in operating land with
concerted efforts. At the same time, in some economically developed areas, especially
in the outskirts of Beijing, Tianjin, Shanghai, and other large cities as well as in
southern Jiangsu Province, we may run some relatively large household farms or
cooperative farms on a trial basis and in a planned way to probe ways of expanding the
scale of land operations for extensive farming.

JIEFANGJUN BAO ARTICLE ON BOURGEOIS LIBERALISM

HK150846 Beijing JIEFANGJUN BAO in Chinese 4 Mar 87, p 3
[Article by Li Xin [2621 2946]: “Reflection and Criticism")

[Text] An old comrade about my age wrote me a letter on New Year's Day. Starting on
the students demonstrations, he came up with a series of opinions: He said that he
felt that bourgeois liberal thinking had been simmering for many years now, that the
slogans proclaimed by the trouble-making students had been expressed earlier, in
another manner, in newspapers and in the speeches of famous people. With this
situation remaining unchanged, how could the young students not be affected? When some
people talk of the ten catastrophic years, they do not seek to derive historical
lessons from it but link the crimes of Lin Piao and the Gang of Four with the party.
When some of them discuss the 30 years since the founding of the PRC, it is as if no
achievements were made during the period. [paragraph continues]

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They are in no way reflecting on history or carrying out serious, conscientious
criticisms, but are actually slandering the party and villifying the party's leadership
as well as inciting and instigating the young people to violate the four cardinal
principles!

I agree with this viewpoint. For a while there were indeed people who used this and
that method and seans to instigate the young people. They picked at our wounds,
repudiated the overall situation, attacked minor points, and caused disruptions in an
attempt to push the party's leadership, the socialist system. the people's democratic
dictatorship, and Marxism to a position of “censure and concteuwpt" and thus achieve the
objective of “total Westernization” — the capitalist road. This is the crux of the
issue.

The socialist path was decided by the historical course of the last hundred years of
social development in China. Its trend or direction cannot be decided nor altered by
the feelings, likes and dislikes, or moves of a few progressive elements or a few
oppositionists. Naturally, through practice and sheer effort, man could effect a
certain role to promote or hinder the trend of social development. However, to think
that an individual's subjective willpower could change history and master the objective
is entirely wrong. Looking at all times and in all countries, not a few tragic
personalities have met with disastrous failure in this area!

The building of socialism with distinct Chinese characteristics is composed of the
policy of reform and opening up, the four cardinal principles, and the building of
socialist spiritual civilization — a fundamental task integrating three factors into
one. Under such a situation and task, some people set the guidelines of emancipation
of the mind, of reforms and opening up, and of letting a hundred flowers bloom and a
hundred schools of thought contend against the adherence to the four cardinal
principles. The majority of these people could have been confused, while certain
others had ulterior motives. Leaving those with ulterior motives aside, if those who
have muddled minds do not clear up their thinking, then it could be detrimental to the
adherence of the four cardinal principles and to the resistance of bourgeois
liberalism. For a big country with a population of 1 billion, the path of social
development established after explorations by several generations allows for no
ambiguity. It involves the fundamental interest of the Chinese nation, the People’s
Republic of China, as well as the people from various strata in society. On a matter
of principle concerning the fate of the country, no sober or responsible party member
will approve of wanton and rash actions.

Speaking of reflection, the evolution of bourgeois Liberalism into an ideological trend
did not occur overnight. Indeed, this calls for reflections on the part of our Chinese
Communist Party members, notably party leaders and cadres, as well as tor, in charge
of ideology and culture. Correct reflection and criticism could enhance understanding,
strengthen confidence, uphold the right and restore order. As long as one is adept at
summing up experiences, learning lessons, positively and conscientiously regarding the
various elements that brought about the proliferaticn of bourgeois liberal thinking,
the problem can be resolved gradually. Then, we can advance with more determined and
steadier strides along the highways of socialist modernization and construction.

Reflection and criticism are essential parts cf our party's three major excellent
styles and should be further passed on and promoted. I believe that it is even more

necessary today.

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JIEFANGCJUN BAO STRESSES LEI FENG SPIRIT

HK160551 Beijing JIEFANGJUN BAO in Chinese > Mar 87 p 1

(Commentator’s article: “Put Lofty Ideals Into Practice in the Course of Wholeheartely
Serving the People”)

[Text] The great name of Li Feng” became a household word 24 years ago when he was
commended in the inscriptions of the older generation of revolutionaries including Mao
Zedong. The image of Lei Feng sparkled with the brilliant thinking of communism, and
lighted the hearts of millions like a torch. His lofty character and style struck root
im the vast land of China, then, like a seed, it bloomed and bore fruit. The spirit of
Lei Feng has become a synonym for serving the people heart and soul over the past 2
decades and more, and a specific symbol for the communist style. It has played an
inestimable role in educating, encouraging, and inspiring the people, the PLA officers
and men in perticular.

History took a tortuous road. During the 10 years of turbulence, the image of Lei Feng
was distorted by the gang of four, again when the ideological trends of bourgeois
liberalization were rampant not so long ago, Lei Feng was played down and attacked by
some individuals. However, the immortality of the Lei Feng spirit is a fact that can
never be nullified. The people still cherish the memeory of Lei Feng, praise him, and
are learning from him. The investigation report on some units under the Jinan Military
Region carried in the 3 March issue of this newspaper has served as evidence. In
answering the question “who is the peacetime hero and model you most admire?" all
cadres and soldiers cast their “votes” for Lei Feng. When asked “which hero or Mae!
has affected you most in your growth and progress?" 90 percent of the comrades
mentioned Lei Feng. Among the advanced personalities emerging in recent years, the
overwhelming majority of them have followed in Lei Feng's footsteps. This
investigation, which is truly representative is not only a powerful repudiation of
those individuals who have negated Lei Feng, but serves as an irrefutable demonstration
that the Lei Feng spirit is more and more grasped and admired by the young people of
the new generation, and is becoming the criteria for their actions in life.

The spirit of serving the people heart and soul, and unswervingly striving for the
realization of lofty ideals ran through Lei Feng's brief lifetime, and was embodied in
his every speech and action. According to Lei Feng, a proletarian fighter must possess
the lofty ideals of striving for communism, “I have but one heart; this heart is
devoted to the party, socialism, and communism.” It was precisely this lofty ideal
that always set off his revolutionary enthusiasm, and guided his continuous striving
along a fixed direction. A common ideal and unanimous pursuit often make people of
different times come together in their thinking. This is why no “generation gap”
exists between the young people of the 1980s and Lei Feng of the 1960s. In following
Lei Feng's example, it is first necessary to acquire his lofty ideals, which are man's
spiritual support. With lofty ideals, we wil never lose the way in our progress. With
them in mind, no force whatever can shake our revolutionary will. Comrade Deng
Xiaoping says, in the cultivation of lofty ideals, moral integrity, cultural
accomplishments and discipline, lofty ideals and discipline are especially important
“why was it possible for us to wage struggle under the most extraordinarily difficult
conditions in the past, and win the victory of the revolution by overcoming all kinds
of difficulties and danger? That was precisely because we have lofty ideals and faith
in Marxism and communism." Today our party is leading the people throughout the nation
to build socialist modernization, which is a new phase in marching toward the great
ideal of communism. [paragraph continues]

I. 18 Mar 87 K 23 CHINA
PRC NATIONAL AFFAIRS

Only when our party adheres to its highest ideal will it be possible to become the
force at the core leading the cause of revolution and construction. Only when the
entire people in the nation share a common ideal will it be possible to build socialism
with Chinese characteristics with one accord. And only when the commanders and
soldiers of the entire army possess revolutionary ideals will it be possible to have
iron discipline as well as staunch and powerful combat effectiveness. “The Decision of
the Central Military Commission on Political Work in the Army During the New Period”
recently approved and relayed by the CPC Central Committee stresses the need to
strengthen education in lofty ideals in the army, “to make the officers and men grasp
the objective laws governing social development, understand that the highest ideal of
the party is to realize communism, understand the common ideals of the people of all
nationalities throughout the country, see the advantages of the socialist system and
the need for its self-perfection and development through reform, set up a correct world
outlook and outlook on life, and strengthen faith in victory.” This is the pressing
need in the struggle to oppose bourgeois liberalization as well as a vital link in
strengthening the army modernization. We should do a good job in grasping education in
lofty ideals by linking it with the activities of learning from Lei Feng in a
down-to-earth way.

Lei Feng's striving for the great ideal was always linked closely with every single
practical action in serving the people heart and soul, and embodied in his specific
actions in cherishing the nation and the people, observing discipline, attaching
importance to ethics, working diligently, studying assiduously to make progress, and
being always ready to help others. “The accomplishment of anything great and major is
bused on the ordinary and minor.” Lei Feng was a great commun’st fighter, and
simultaneously a commonplace “screw.” In a dialectic way, the great and the
commonplace were unified in Lei Feng. That is precisely where the great charm of the
Lei Feng spirit lies. The so-called “screw” means subjecting oneself to the needs of
revolution, to love and to do a good job at one’s post, no matter what trade one is in,
and to spare no efforts to contribute one s strength for the revolutionary cause. This
spirit of Lei Feng in serving the people heart and soul, and willingly becoming a
“screw” was the focal expression of his lofty ideals as well as the basic channel to
realize them. If realities are compared to one shore, and ideals the other, then
unremitting efforts in specific actions will be the bridge to span the two shores. The
road to lofty ideals is undoubtedly a long one; however, it is for us to make the
initial steps. Being without the persistent practice of serving the people heart and
soul and the spirit of willingly becoming a “screw,” while failing to do a good job at
one's post with the attitude of being masters of the country, talk about lofty ideals
can only be empty words. Some people believe that the Lei Feng spirit of willingly
serving as a screw should not be upheld on the ground that it is unfavorable to
developing the “sense of the individual.” We should make an analysis of this. Marxism
attaches great importance to the development of the individual, while believing that
the individual is inseparable from the collective. The individual and the collective
have a relation of supplementing each other. Just as a drop of water will be dried up
if it fails to get into the sea, likewise, it will be very difficult for the individual
to survive independently without merging himself with the collective. Stubbornly
laying conspicuous stress on “the sense of the individual,” and playing down or
negating “the sense of the collective“ run counter to dialectical materialism. In
building ethics, we do not generally oppose the development of the individual; however,
such development must be linked with the interests of the party, the state and the
people. The individual can accomplish development to perfection only through his
infinite service to the people. Developing the individual at the cost of the interests
of the party, the state, and the people will inevitably lead to extreme individualism

and anarchism.

I. 18 Mar 87 K 24 CHINA
PRC NATIONAL AFFAIRS

In our times, the name of Lei Feng is always a clarion call, and his spirit will
forever shine brilliantly. Thousands upon thousands of people like Lei Feng are needed
both in the undertakings of socialist modernization, and in strengthening the building
of a modernized revolutionary army. As in the Chang Jiang the waves behind drive on
those before, so each generation excels the last one. With the continuous improvement
of socialist material and spiritual civilization, and with the in-depth development of
the activities in following the example of Lei Feng, more advanced models rich in the
characteristics of the times will inevitably emerge in the new generation of the
1980s. It is the glory of the PLA that Lei Feng was one of its men; and the PLA should
do a better job in learning from Lei Feng. Let us follow his example, attach
importance to lofty ideals, put them into action, and strive to become a new generation
that cultivates lofty ideals, moral integrity, cultural accomplishments and discipline!

XI_ZHONGXUN INSPECTS GUANGDONG 11 FEB-11 MAR

HK131042 Guangzhou Guangdong Provincial Service in Mandarin 0400 GMT 13 Mar 87

[Text] Accompanied by responsible comrades of the provincial party committee and the
provinrial Advisory Commission, Xi Zhongxun, member of the Political Bureau of the CPC
Central Committee, inspected from 11 February to 11 March urban construction,
factories, schools, rural areas, and tourism areas in the Shenzhen and Zhuhai Special
Economic Zones and 23 cities and counties in Guangzhou, Jiangmen, Foshan, Huiyang,
Zhacqing and Shaoguang cities and prefectures, and the construction site of the
Dayaoshan Tunnel. He also met responsible comrades of all the cities and prefectures,
and some veteran comrades now in Guangdong, encouraging them to uphold the four
cardinal principles; to adhere to the policy of reform, opening up, and economic
invigoration; to strengthen ideological and political work; to grasp the building of
two civilizations simultaneously; to steadfastly fight bourgeois liberalization; to
safeguard the political situation of stability and unity; to bring into play their
strong points and avoid their weak points according to local conditions; and to push
forward the building of the four modernizations.

During his inspection tour of Guangdong, Comrade Xi Zhongxun also met well-known people
from Hong Kong and Macao, including Henry Fok, Ma Man Kei, and Gordon Wu.

Comrade Xi Zhongxun highly valued the achievements made by Guangdong over the past few
years. He expressed the hope that on the basis of the existing achievements, the
province would continue to be modest and prudent, constantly make explorations and sum
up experiences, and continuously forge ahead.

X ZHONGXUN GIVES INSTRUCTIONS T) HUNAN CADRES

HK170147 Changsha Hunan Provincial Service in Mandarin ©100 GMT 17 Mar 87

[Text] According to Hunan Ribao, CPC Central Committee Political Bureau member Xi
Zhongxun inspected Hunan Province from 12 to 16 March, accompanied by Xiong Qingquan,
and Liu Fusheng, deputy secretaries of the provincial party committee, and responsible
persons of the Changsha City party committee. He inspected factories and rural areas
at Changsha and made an important speech.

Comrade Xi Zhongxun listened to reports delivered by respnsible comrades of the
provincial party committee. Present at the ceport meeting were Mao Zhiyong, Xiong
Qingquan, Liu Zheng, Liu Fusheng, Sun Wensheng, Chen Bangzhu, Jiang Jinliu, Dong
Zhiwen, Shen Ruiting, and Li Jianguo.

I. 18 Mar 87 K 25 CHINA
PRC NATIONAL AFFAIRS

On behalf of the provincial party committee, Xiong Qingquan reported on the province's
economic development last year and the ideas on this year’s work, and on the situation
in implementing the intentions of the CPC Central Committee and State Council on
tackling the two major tasks.

After endorsing these efforts, Comrade Xi Zhongxun explicitly pointed out that there is
no example to follow or model to copy in carrying out socialist construction. We must
uphold the ideological line of seeking truth from facts. It is necessary to take full
advantage of Hunan’'s strong points in resources and vigorously promote
diversification. We must seriously investigate and study to find out what the cadres
and — are thinking now, and strengthen ideological and political work [words
indistinct].

Many veteran comrades are familiar with the history of yesterday and aiso understand
the present situation. They are most convincing in conducting education for young
people in revolutionary traditions.

On how to strengthen the party's democratic centralism, Comrade Xi Zhongxun said:
Comrade Deng Xiaoping’s speech at the enlarged central work conference in 1962 summed
up the partys experiences over several decades. This is a (historic)
Marxist-Leninist document, which we must seriously study. The party organizations at
all levels must uphold democratic centralism. We must strengthen the building of the
leadership groups themselves. If the party's democratic centralism is practiced well
and the leadership groups are well united, then everything can be accomplished with
ease.

He demanded that the party members, especially the party's responsible cadres,
continually strengthen their party spirit and set strict demands on themselves. He
said: Every party member must be up to the mark in party spirit. If a person's
awareness is high, it does not necessarily mean that he is very able. It is essential
to be modest and prudent and avoid getting too divorced from the masses. We must
constantly regard ourselves as elements of the masses. Party members must maintain and
carry forward the fine tradition of arduous struggle, and play a model 1 leading role
in reform, opening up, and invigoration. They must take the lead in wo :, in enduring
hardship, and in serving the people. They should be the first to suff: © hardship and
the last to enjoy comforts.

During his inspection, Xi Zhongxun paid « special visit to the No 2 hospital attached
to the Hunan Medical College to extend regards, on behalf of Comrade Wang Zhen, to Tao
Zhiyue, vice chairman of the CPPCC and vice chairman of the provincial People's
Congress Standing Committee, who is ill there. He also extended regards to Zhou Li

[words indistinct].

IULI IMA! PRINCIPLES
OW162343 Beijing XINHUA Domestic service in Chinese 1558 GMT 16 Mar 87

[Text] Beijing, 16 Mar (XINHUA) — Yu Qiuli, deputy secretary-general of the Military
Commission and director of the General Political Department, addressed the opening
ceremony of an advanced studies class at the National Defense University today. He
said: Adherence to the four cardinal principles is the foundation of our party and
state, as well as the most distinguishing feature of our Army. In order to uphold
Marxism, we must first study Marxist theory. We should train a contingent of Marxist
theorists with PLA characteristics.

I. 18 Mar 87 K 26 CHINA
PRC NATIONAL AFFAIRS

Yu Quili continued: The current struggle to uphold the four cardinal principles and
oppose bourgeois liberalization is designed to solve current questions of major
political principles, as well as questions arising from reality on the right and wrong
of major theories. A very important way to fundamentally solve problems once and for
all is to improve the knowledge of Marxist theory among comrades throughout the party,
particularly the leading comrades. Marxism-Leninism-Mao Zedong Thought is an
ideological weapon for opposing bourgeois liberalization. In order to stand in the van
of the struggle against bourgeois liberalization, leading cadres should first take the
lead in studying central documents and Marxist theory.

Yu Qiuli pointed out: Recently, many units have been running book-reading classes and
organizing their cadres to study Marxist theory. Studying theory has become a common
practice. Such a good practice should continue all the year round. The struggle
against bourgeois liberalization requires us to study Marxist theory, and it also
provides us both positive and negative materials. In the course of the struggle, our
cadres should study hard to acquire more knowledge of Marxist theory. Basic Marxist
principles are not out-moded, and still play an important role in guiding our socialist
modernization program and struggle against bourgeois liberalization. We should confirm
our faith in Marxism, strive to learn the Marxist stand, viewpoints and methods, have a
scientific world outlook and a correct outlook on life, enhance our understanding of
ideologies and policies, and sharpen our ability to analyze and solve problems.

SONG RENQIONG INSPECTS JILIN CITY 9-14 MAR
SK150536 Changchun Jilin Provincial Service in Mandarin 2200 GMT 14 Mar 87

{Excerpt} During his recent inspection tour in Jilin City, Song Renqiong, vice
chairman of the Advisory Commission of the CPC Central Committee, stressed that in
developing the economy, it is necessary to pay attention to afforestation, prevent
pollution, and safeguard the ecological balance. Twenty years ago when Comrade Song
Rengiong served as first secretary of the northeast China Bureau, he inspected Jiiin
City on two occasions. This is his third trip to Jilin City.

From 9 to 14 March, after attending the Sixth National Winter Games, he visited some
party and government cadres of Jilin Province and Jilin City. Accompanied by Comrade
Geo Di, secretary of the provincial party committee, he also visited some plants, shops
and (?restaurants), and an exhibition on (?light industrial goods). Comrade ‘Sang
Rengiong was much impressed by the appearance of Jilin City. Seeing the flourishing
trees along the Songhua Jiang and some streets, and the gardens built in many plants he
said happily that Jilin City is a place with its green hills and clear water, and it
has done a fairly good job in planting tries. He also pointed out that to protect the
existing forests, it is necessary to plant more trees and build Jilin into a still
better city.

Comrade Song Rengiong highly praised the Jilin Paper Mill for building forests for
commercial use. He urged that not only the rural areas, urban neighborhoods, and Army
barracks should pay attention to afforestation, but also the industrial and mining
enterprises which consume great amounts of timber should be farsighted and successfully
build forests for their own use.

Comrade Song Rengiong has talked about prevention of pollution on many occasions. He
said: Prevention of pollution and afforestation are two aspects of an issue. The more
developed the economy is, the more attention should be paid to protecting the
ecological balance.

He also wrote an inscription for Jilin City: “Protect the Environment and Develop the
Rural and Urban Areas.” [passage omitted)

I. 18 Mar 87 PRC REGIONAL AFFAIRS 0 1
EAST REGION

K MEETING
0W170047 Shanghai WEN HUI BAO in Chinese 12 Mar 87 p 1

[Excerpts] The 3-day, 27th Session of the 8th Shanghai Municipal People’s Congress
Standing Committee closed on 11 March. The meeting adopted “Interim Regulations on
Supervision Over Labor Protection of Shanghai Municipality” and decided to put the
regulations in force on 1 May 1987. [passage omitted]

Vice Chairman Wang Jian presided over the meeting. Vice Chairmen Pei Xianbai, Wu
Ruoman, Tan Jiazhen, and Shu Wen attended the meeting. Present as nonvoting delegates
were Vice Mayor Ye Gongqi, President of the municipal Higher People’s Court Hua
Liankui, and resporsible persons of the municipal people's procuratorate, departments
concerned under th» sumicipal government, and various district and county People's
Congress standing com :.ttees.

SHANGHAI LEADERS INSPECT DISASTER AREAS
OW160552 Shanghai WEN HUI BAO in Chinese 8 Mar 87 p 1

[By reporters Zhang Debao and Yu Peihua)

[Excerpts] At about 0900 hours on the evening of 6 March, Shanghai's Songjiang,
Jiangshan, Qingpu and other areas were hit by a severe storm with strong winds. Some
of the areas were also hit by hailstorms and tornadoes. Right now, proper arrangements
are being made to help disaster-stricken people find places to settle down in the
area. Telephone lines and closed-circuit cables for relaying radio programs as well as
lighting fixtures damaged by the storm have been repaired. On 6 March, leaders in
Shanghai including Rui Xingwen, secretary of the Shanghai Municipal CPC Committee, and
Mayor of Shanghai Jiang Zemin visited Songjiang County, which suffered most from the
storm, and discussed with the local cadres how to carry out relief work against the
natural disaster. [passage omitted]

Yesterday afternoon, Rui Xingwen, Jiang Zemin, and other comrades rushed to Songjiang
County, listened to a briefing on the natural disaster, and visited the county's
Zhongxin Hospital to cheer up those injured during the storm. Later, they visited the
Xinbang Township, which was hit hardest, to check the situation there and made plans to
do relief work against the natural disaster. Comrade Rui KXingwen said: It is
necessary to mobilize the masses to rebuild their hometown and resume production as
soon as possible. At the same time, efforts must be made to help the disaster-stricken
people find places to settle down. Comrade Jiang Zemin said: It is essential to bring
into full play the role of all organizations. The township must not ask the county to
do work that the township itself is able to handle, while the county must not ask the
municipality to do work that the county itself can handle. Efforts must be made to
help the masses resume production and lead normal lives. On the evening of 6 March and
on the morning of 7 March, Wang Liping, Standing Committee member and secretary general
of the municipal party committee; Vice Mayors Ni Tianzeng and Ye Gongqi; Hu Zhengchang,
deputy secretary general of the municipal party committee; and the leading comrades of
the municipal rural party committees and the municipal Agricultural Commission also
visited the storm-stricken areas on separate occasions to express sympathy and
solicitude for the people in the disaster areas.

I. 18 Mar 87 02 PRC REGIONAL AFFAIRS
EAST REGION

SECRETARY, MAYOR INSPECT SHANGHAI MILITIA
0W170627 Shanghai JIEFANG RIBAO in Chinese 13 Mar 87 p 1

[Excerpts] Rui Kingwen, secretary of the Shanghai Municipal CPC Committee, and Jiang
Zemin, deputy secretary of the Shanghai Municipal CPC Committee and mayor of Shanghai,
yesterday afternoon inspected militia work in Shanghai. They praised the achievements
of the work in both silitary training and playing a backbone and leading role in
economic construction and building socialist spiritual civilization.

Accompanied by Ba Zhongtan, commander of the PLA Shanghai Garrison Command, and Ping
Changxi, political commissar of the PLA Shanghai Garrison Command, Rui Kingwen, Jiang
Zemin, and Vice Mayor Qian Xuezhong first inspected the bustling Nanjing East Road to
see militiamen’'s activities of providing various services for the people on Nanjing
Road. [passage omitted)

After leaving Nanjing Road, leading members of the municipal party committee and
gunicipal people's government took a ride to the Shanghai Metallurgical Equipment
Manufacturing Plant in Jiading County and inspected the Changfeng Militia Antiaircraft
Artillery Regiment in Putuo District. [passage omitted)

After hearing a briefing, Rui Xingwen and Jiang Zemin gladly saw antiaircraft artillery
practice by militiamen and militiawomen despite the rain. At the regimental command
post, commanders and fighters of the militia unit conducted war exercises at regimental
and battalion level for the leading comrades. At the completion of the exercises, Rui
Kingwen congratulated the commanders and fighters of the militia wit for their
successful training and demonstration on behalf of the leading members of the municipal
party committee and the municipal people's government. Rui Kingwe: said: At present,
our country is in an excellent situation of stability and unity. However, we must be
prepared for danger in times of peace and always be on the alert. Doing a good job in
the building of militia units is extremely important. He expressed the hope that the
broad masses of militia units would continue their efforts and make still greater
achievements.

Yesterday afternoon, the leading members of the municipal party committee, the
municipal people's government, and the PIA Shanghai Garrison Command also inspected
armories of militia unite at the Putwo District People's Armed Forces Department and
the Shanghai No 5 cotton will in Changning District.

ZHEJIANG APPOINTS, REMOVES PROVINCIAL OFFICIALS
OW152328 Hangzhou ZHEJIANG RIBAO in Chinese 6 Mar 87 p |

[Text] Namelist of appointments and removals decided by the Zhejiang Provincial
People's Congress Standing Committee (adopted at the 24th Session of the 6th Zhejiang
Provincial People's Congress Standing Committee on 5 March 1987)

Appointments: Wu Minda to serve concurrently as chairman of the Zhejiang Provincial
Planning and Economic Commission; and Zhao Kiaodao [6392 1420 6670!) as director of the
Zhejiang Provincial Department of Agriculture.

Remova's: Chen Jingye from the post of chairman of the Zhejiang Provincial Planning
and Eccsomic Commission; and Sun Wanpeng from the post of director of the Zhejiang
Provincial Department of Agriculture.

I. 18 Mer 87 PRC REGIONAL AFFAIRS Pi
CENTRAL-—SOUTH RECION

GUANGDONG PARTY COMMITTEE BOLDS PLENARY SESSION
8K130244 Guangzhou Guangdong Provincial Service in Mandarin 1000 GHT 12 Mar 87

{Excerpts} The Fifth Guangdong Provincial CPC Committee convened its sixth enlarged
plenary session in Guangzhou today. A 3-day preparatory meeting was held first. The
session, which was attendees Sy 165 persons, examined and approved Comrade Lin Ruo's
work report delivered on behslf of the provincial party committee Standing Committee,
examined and approved in principle the provincial plan for building socialist spiritual
civilization, and discussed and approved the list of candidates for deputies to the

13th party congress.

Comrade Lin Ruo's work report analyzed the province's economic situation in 1986.
[passage omitted)

The report affirmed that the province did a great deal of work in building socialist
spiritual civilization during 1986. [passage omitted)

After pointing out the existing main problems in social and economic development, the
report proposed the main tasks to Lc tackled in 1987. [passage omitted)

The session demanded that the party organizations and the whole body of party members
throughout the province unswervingly implement the line, principles, and policies since
the 34 Plenary Session of the lith CPC Central Committee, and mobilize and lead the
people of the whole province to work in concert and strive to do still better in
building socialist material and spiritual civilization in Guangdong.

Lin Ruo’s Report
HK161050 Guangzhou NANFANG RIBAO in Chimese 13 Mar 87 pp 1, 3
[Report: “Guangdong Further Developed ite Good Situation Last Year!

[rent] Lin Ruo, Guangdong party committee secretary, delivered a work report on behalf
of the provincial party committee at the Sixth (Enlarged) Plenary Session of the Fifth
Guangdong Provincial CPC Committee. Regarding the 1986 work conditions, Comrade Lin
Ruo pointed out: Since the fifth plenary session of the fifth provincial committee,
party organizations at all levels and party members throughout the province have
implemented various instructions of the Central Committee, adhered to the four cardinal
principles, grasped the building of the two civilizations simultaneously, done their
work in a down-to-earth manner, and further developed the fine situation of the

province.

Comrade Lin Ruo stated: Money was tight in 1986, and Guangdong suffered from a series
of natural disasters: typhoon, flood, and drought. However, through the concerted
efforts of party organizations at all levels, a6 well as the party members and the
masses throughout the province, steady and coordinate progress was still made in the
economy. Compared with 1985, the social gross output value of the province grew by 12
percent, gross industrial and agricultural output value grew by 13.5 percent, national
income increased by percent, volume of social commodity retail increased by 12.8
percent, and GNP increased 9.6 percent; all were higher than the average national
growth level. With the steady development of production, financia’ revenues grew

synchronously with the GNP. [paragraph continues!

I. 18 Mar 67 P2 PRC RECIONAL AFFAIRS
CENTRAL-SOUTEH RECION

The people's living standards again improved, the province's urban and rural markets
were brisk, and prices were basically steady. The economic situation was fine.

According to Lin 4, the province s economic situation in 1986 can be summed up in the
following characteristics: 1) The national economy changed from excessive growth to
sustained, steady, and coordinated growth. This is very pleasing. 2) A new situation
of balanced development between different areas appeared. In 1986, we proposed the
principle of actively improving the Zhu Jiang Delta, stepping up the pace of
development in the coastal areas, and supporting the economic work of old and new
poverty-stricken gountainous and border areas. Viewing the present conditions, we find
such a situation has already emerged. 3) There was vigorous growth in developmental
agriculture. Afforestation, the building of orchards, mining in mountainous and hilly
areas, digging ponds to breed pawns, reclaiming sand buaches to develop fish breeding,
and poultry raising in the coastal areas, as well as farming exclusively for export in
the Zhu Jiang Delta, were all in vigorous development. This situation is very
pleasing. A cumber of developmental projects initiated in line with the principle of
suiting measures to the local conditions in all places will add great staying power to
agricultural growth. 4) Great development was recorded in foreign trade. That was a
pleasing step forward in building export-type economy. In 1986, the actual export
volume was $4.23 billion. Guangdong is a close neighbor of Hong Kong and Macao, in the
forefront of opening up to the world. The building of an export-style economy to
expand export trade is a strategic task for Guangdong’s economic construction.

The report also dealt with the situation of building spiritual civilization in 1986.
Lin Ruo affirmed that the province's party organizations and relevant departments at
all levels did a great deal of work in building socialist spiritual civilization
centered on bringing up socialist citizens with lofty ideals, moral integrity, cultural
accomplishments, and discipline. in order to do a good job in the building of the two
civilizations, we attached special importance to and grasped firmly the building of the

party.

The report cited some major accomplishments in the building of spiritual civilization,
namely: Rural party rectification work was earnestly conducted based on central
arrangements. 1986 was the third year since overall party rectification was unfolded,
and the year in which the phase of party rectification of rural grass-roots began. The
province's rural party rectification was conducted separately at the district and
township levels. It was basically concluded in January 1987. Although rural party
rectification involved a large scope, a great oumber of people, and voluminous work,
generally speaking, the development was healthy with rather good effects because party
committees at all levels attached great importance to it. The democratic
recommendataions of cadres in leading bodies at and above county level by appraisal
through democratic discussions and polls was unfolded toward the end of 1986. This has
played a positive role in strengthening democratic supervision and promoting the
building of leading bodies.

Launching education in party spirit, style and discipline, persistence in grasping
firmly major and important cases, and organizing masse examination in consolidating the
party style in the province promoted the marked turn for the better in party style and
further improvement of the party-masses and cadre-masses relations. Activities of
initiating civilised units and building spiritual civilization with joint efforts of
the Arey and the people were unfolded in a down-to-earth way in the province. More
than 17,000 mite in the province now participate in such activities. [paragraph
continues]

1. 18 Mar 87 P 3 PRC RECIONAL AFFAIRS
CENTRAL-SOUTH REGION

The province sumed up and spread the experiences of advanced its including the
Guangthou Hygienic Processing Factory, the Nanhuaxi Street seighborhood, as well as the
Guangzhou Institute of Traditional Chinese Medicine Malaria Research Center, with «a
oumber of advanced mgodels of collectives and individuals set up. All this has
forcefully promoted the work of building spiritual civilization in urban and rural
grass-roots units.

New accomplishments were scored in strengthening the building of socialist democracy,
the legal system was strengthened, and there was «a severe creckdown om serious criminal
activities acd serious economic criminal activities. A great deal of work «is done in
the compreheriive treatment of social order problems and the elimination of ugly
phenomena. Public order in the province was aleo further improved.

Lin Ruo said in his report: The provincial party committee adopted measures in many
aspects to spur the development in various undertakings of education, science and
technology, sports, and public health. The consolidation of sites for cultural and
recreational activities of the masses and publications was aleo strengthened.

Lin Ruo also pointed out the existing main problems in the province's work in 1986. He
said: We failed to study sufficiently and to have more profound understanding of some
documents and instructions from the Central Committee. In investigating, studying, and
dealing with some problems, we did not exert great enough efforts. Bureaucratic
phenczaena, characterized by too many meetings and documents isewed, and low work
efficiency still gravely exist. Viewing the work of the province, many weak links and
problems pressing for solution still exist.

The report pointed out the existing main problems in social and economic development:
1) The decision making powers of the enterprise have not been fully implemented and
some large and medium-sized enterprises still lack vitality; 2) the strained condition
of energy resources and transportation was still conspicuous, which affected the
development of production and construction as well as the daily life of the masses; })
the dispersion of financial resources; 4) not enough importance was attached to grain
production; 5) the phenomenon of arbitrary tree-felling was not checked; and 6) the
natural population growth rate showed an upward trend.

Lin Ruo also pointed owt: Many problems exist in the political ideological field, too,
mainly the emergence of the ideological trend of bourgeois liberalization. Lin ru
concluded: Although the above mentioned problems were minor aspects, they should not
be neglected and must be dealt with seriously and overcome in a 4own-to-earth way.
Only then will it be possible to make still greater progress in the mew year and do a
still better job in all items of work.

Main Taske For 1987

Arie ieh Guangzhou NANFANG R\BAO in Chinese 14 Mar 87 pp i, 3

{[Report: “Guangdong To Highlight Six Items of Work This Year”!

[Text] la his work report delivered at the Sixth Enlarged Plenary Session of the Fifth
Guangdong Provincial CPC Committee, Lin Ruo, Guangdong party committee secretary,
pointed out: In 1987, we must earnestly conduct education in adhering to the four
cardinal principle among the cadres and the masses; continue to spur ceforms, opening
up, and invigorating the domestic economy; and unfold the work of increasing production
and practicing economy in a big way. [paragraph continues!

I. 18 May 87 1 4 PRC RECIONAL AFFAIRS
CENTRAL-SOUTH RECION

These measures will allow us to do « still better job of all items of work and the
economic construction of the province and to further develop the fine situation in

Cusngdong.

Lin Ruo stated in his report: Based on the instructions of the Central Committee and
the ectual conditions of Guangdong, the following items of work must be highlighted
this year:

1. It Is Necessary To Adhere to the Four Cardinal Principles To Oppose Bourgeois
Liberalization im the Political and Ideological Reale [subhead)

According to Lin Buco, the gost important of 11 items of work in the province this year

is to do a good job in opposing bourgeois liberalization, based on the arrangements of
the Central Committee.

Lin Ruo pointed out in his report: Opposing bourgeois liberalization has a specific
implication. The core of the pursuit of bourgeois liberalization — namely, negating
the socialist system while upholding the capitalist system — is to negate the party
leadership. In waging the struggle against bourgeois liberalization, we must make
explicit the scope and policy of the struggle based on the central stipulations;
specifically speaking, the struggle should be strictly conducted inside the party,
mainly in the political and ideological reals, and not including the rural areas; it
should got be linked with the policies in connection with the economic reform, the
rural policies, research in science and technology, exploration in the style and skill
in literature and art, and people's daily life. Regarding the method, we must persist
in positive education and refrain from the pursuit of a political campaign. it is
necessary to earnestly propagate the central policy on opposing bourgeois
liberalization to dispel the anxieties of some people. We should further unfold
education in adhering to the four cardinal principles among the party members and
cadres of the province on the basis of our previous studies.

2. Resolutely Implement the Central Instruction on Increasing Production and

Practicing Economy, Compress the Overheated Atmosphere, and Make Guangdong's Economy
Developed in a Sustained Steady, and Coordinated way [subhead)

Lin due stated: Regarding the entire economic work of Guangdong this year, it is
primarily necessary to resolutely implement the central instruction to reduce the scope
of investment in fixed assets and to cut back expenditures, namely, the over-expanded
capital construction and financial expenditures. We should uphold the principle of
building the nation with diligence and thrift and repress the desire for high
consumption, while doing our best to increase production, improve economic results, and
base the economy on long-term steady ond coordinated growth. To grasp this work well,
it is primarily necessary to unify the understanding of party organizations and leading
cadres at all levels. We gust resolutely cut the over-expanded scope of capital
construction, and do our best to maintain a certain rate of growth. <A way out is to
strengthen management and operation as well as the technical transformation of

enterprises.

According to Lin Buco, regarding rural work, it is necessary to continue to grasp well
developmental agriculture and to develop commodity economy in a big way, while paying
attention to grasping well three weak links. 1) It is necessary to earnestly attach

importance to grain production; and vigorous measures must be adopted to check the
phenomenon of cutting back a large acreage of grain fields. [paragraph continues!

I. 18 Mar 87 r 5 PEC RXGIONAL AFFAIRS
CENTRA.-SOUTH REGION

At the same time, it is necessary to popularize the planting of high-quality hybrid
rice in a big way and to earnestly improve the level of farming to win a bumper grain
harvest this year. 2) It is necessary to strengthen the control over mountain forests
as well as the timber market. We must resolutely put a stop to the phenomenon of
arbitrarily felling of trees. 3) Umremitting efforts should be exerted to grasp well
the work of family planning and to reduce the natural growth rate of the population.

3. Further Deepen Reform and the Invigoration of the Economy [subhead]

In his report, Lin Ruo pointed out: From now on, it is imperative to continue to pay
attention to fully applying the central specific policies and flexible measures
exclusive to Guangdong and to further establish the idea of deepening reform to spur
economic development. We must rapidly unfold all items of reform stipulated in the
central arrangements. We should promptly sum up and make complete and perfect those
items undergoing reform. We should also be bold in conducting experiments and
exploration regarding items without specific requirements proposed by the central
authorities but belonging to the realm of power of the province.

Lin Ruo stated: The key issue of urban structural reform is to strengthen the vitality
of enterprises, turning them into genuine economic bodies that take the initiative in
their hands in operation, bear responsibility for their own profits and losses, and
possess the capability for their self-transformation and self-development. It is
necessary to earnestly implement the three regulations promulgated by the Central
Committee and the State Council and to put into practice the system of overall
leadership by the factory director (manager) in an all-round way and the responsibility
system of term targets for factories (managers). We should firmly grasp the key issue
of separating the ownership of enterprises from their power of operation, and spur
their internal reform. Under the premise of observing the law and policies of the
state, enterprises possess the power to reform the managerial and operational
structures and to pursue all kinds of effective economic responsibility systems linked
with wages. Regarding small enterprises, the system of management on lease can be
implemented. Active exploration should also be conducted in implementing the
enterprises bankruptcy law. The distribution system of enterprises should undergo
reform so that enterprises with different economic results in their management may have
genuine but appropriate differences in their grades of distribution. It is necessary
to further invigorate the market, including opening the monetary market, and to expand
the market of production materials. We should improve macrocontrol in a down-to-earth
way, and change the functions of government organs. Regarding the urban economic
structural reform, it is necessary to conduct it actively centering around several key
issues of Guangdong's economic construction, for example, doing a good job in
structural reform in the control of power supply and transportation, and active
exploration of the structural reform of foreign trade. Besides, it is necessary to
actively conduct experiment on turning residential buildings into commodities.

Regarding rural reform, Lin Ruo stated in his report: The basic starting point of
reform is to develop socialist commodity economy and to make the rural areas prosper.
This year, it is necessary to highlight the invigoration of rural finance and
circulation and to open up the market for production essentials on the basis of
consolidating and making complete and perfect the results of reform over past few
years. Long-term and steady policies are to be implemented regarding specialized
households and individual households of various categories, to protect their
appropriate operation and legitimate rights and interests.

I. 18 Mar 87 P 6 PRC REGIONAL AFFAIRS
CENTRAL-SOUTH REGION

He also mentioned: While increasing impact in economic structural reform, it is
necessary to continue in-depth structural reforms in education, science, and technology
based on central arrangements.

According to him, to deepen refors, it is imperative to carry forward among cadres in a
big way the spirit of reform and blazing new trails. Party organizations at all levels
in the province should emancipate their minds, become promoters of progress, and
encourage people to be bold in exploration and blazing new trails. It is necessary to
support comrades undertaking reform, to create conditions for them, and to accelerate
the process of reforms.

4. Continue to Promote Opening Up to the World [subhead]

Lin Ruo stated: There is still much for Guangdong to accomplish in opening up to the
outside world. Building export-oriented economy and engaging imports as well as
establishing ties with other provinces and regions in the hinterland, and playing a
role in these two aspects are the characteristics and advantages of Guangdong's
economy. To further give play to such advantages, we should grasp our work well in a
down-to-earth way in the following aspects: We should continue to implement the
principle of “grasping industry, agriculture, and trade simultaneously" and develop
agriculture for foreign exchange earnings, as well as export-oriented industry; all
places possessing such conditions should run well export commodity production bases.
We should further improve management and operation in foreign trade, earnestly
implement the policy of encouraging exports, consolidate and develop trade with Hong
Kong and Macao, work hard to open overseas markets, and promote still greater growth in
foreign exchange earned through export of the province. We should take measures in
such links as production and operation and work hard to cut the cost in foreign
exchange in the production of export products. We should resolutely implement the
“Regulations on Encouraging Foreign Investment" issued by the State Council and adopt
preferential policies to attract foreign investment and to strengthen the confidence of
foreign entrepreneurs. At the same time, we should stress the use of foreign capital
and the import of technology and equipment on export-oriented projects as well as those
involving advanced technologies. We should strengthen the work in absorbing and
digesting imported advanced technologies and equipment and do our best to reduce our
dependence on imported materials and parts. We should develop the export of labor
services and the tourist industry, to earn more non-trade revenues in foreign exchanges.

Lin Ruo pointed out: In order to promote the policy of opening up to the world, it is
necessary to further implement the united front policy and policy for Overseas Chinese
affairs and to actively expand our united front work overseas. We should work hard to
run well the special economic zones as well as other open zones of various categories.

5. Draw Up And Implement Plans for the Building of Socialist Spiritual Civilization
[ subhead }

In his report, Lin Ruo proposed: To implement the central “Resolution on the Guiding
Principles for Building Socialist Spiritual Civilization,” we have drafted the Plan of
Guangdong Province for Building Socialist Spiritual Civilization.” The fulfillment of
this plan will certainly promote the momentum the further development of the building
of socialist spiritual civilization in Guangdong.

I. 18 Mar 87 P 7 PRC REGIONAL AFFAIRS
CENTRAL-SOUTH REGION

According to Lin Ruo, the building of socialist spiritual civilization in the province
this year should focus on embodying the two basic points in party line since the 34
Plenary Session of the ilth CPC Central Committee, namely, adhering te the four
cardinal principles and adhering to reform, opening up, and invigorating the domestic
economy; we should exert efforts in bringing up socialist citizens in the cultivation
of lefty ideals, moral integrity, cultural accomplishments, and discipline; and
improving the qualities of the people in their ideology, ethics, as well as science and
culture. Long-term targets should be linked with immediate work. It is necessary to
adopt all forms in a vivid and lively manner to unfold ideological and political work
in depth. We should refrain from formalism in unfolding activities in building
socialist spiritual civilization, but pay attention to actual effects. It is necessary
to do work in a down-to-earth way and to do more practical work. We should further
unfold education in socialist democracy and the legal system and promote their
building. Leading cadres at all levels should strengthen their concept of the legal
system and sense of democracy. We should help departments of science and technology,
education, culture, and propaganda resolve certain practical problems. Recreational
activities of a mass nature and popularization of science and technology should be
unfolded. It is necessary to guide the masses to change prevailing habits and customs,
to resist feudal and superstitious activities, and to eliminate ugly social phenomena.
We should conduct education in professional ethics in all trades and professions and
promote civilized service. Effective measures should be adopted to cure the urban and
rural areas of dirtiness, disorder, and poor service. The building of spiritual
civilization should be implemented at the grass-roots. The activities of creating
civilized units and building spiritual civilization with the joint efforts of the Army
and civilians, as well as the activities of creating “five good" families have been
unfolded in various localities; they are good forms in strengthening the building of
spiritual civilization. We should continuously sum up and spread the experiences in
this respect to promote the implementation of the building of spiritual civilization in
grass-roots units. When the provincial plan for building spiritual civilization is
drawn up, all localities and departments should link with each of its own actual
conditions in putting forth the specific target and measures for building spiritual
civilization in their own locality or department, with every level guaranteeing its
implementation.

6. Further Strengthen Party Building [subhead)

Lin Ruo said, the strengthening and improvement of party leadership is the guarantee
for doing a good job of every item of work and for the smooth progress of socialist
construction. Therefore, party organizations at all levels should consciously
understand that the party must control the party, and it is imperative to grasp well
the building of the party itself. It is necessary to strengthen the ideological
building, organizational building, and the building of party style. We should further
do a good job of readjusting and assigning the leading bodies at all levels based on
the requirement for cadres to be more revolutionary, comparatively younger in age,
better educated, an professionally competent.

Lin Ruo concluded, under the correct leadership of the Central Committee, let us unite
as one, exert our efforts, bring forward gut merits, overcome our shortcomings, work
ceaselessly and persistently, and strive for better accomplishments in all items of
work as our gifts to the 13th CPC Nationyi Congress.

I. 18 Mar 87 P 8 PRC REGIONAL AFFAIRS
CENTRAL~SOUTH REGION

SHENZHEN OFFICIAL REPORTS PRODUCTION QUOTAS
OW131918 Beijing XINHUA in English 1602 GMT 13 Mar 87

[Text] Shenzhen, March 13 (XINHUA) -- The major targets of industrial production for
Shenzhen, Chinas largest special economic zone, were announced by Deputy Mayor Zhu
Yuening at a meeting here today.

Shenzhen, in Guangdong Province, will manufacture four billion yuan (about 1.08 billion
U.S. dollars)-worth of goods this year, up 12 percent from last year's figure, with a
26 percent rise as the goal.

The zone, where foreign investors enjoy tax cuts and other preferential terms, plans to
introduce 400 million U.S. dollars in foreign funds this year, three times as much as
in 1986, Zhu told the meeting.

This year will see 150 new industrial enterprises go into operation, he said, adding
that industrial products for export will be valued at 2.25 billion yuan — over half of
the zone's industrial output value.

He also listed the following figures for Shenzhen's industrial production this year:
— Profits will come to 400 million yuan, with the profit rate topping 10 percent;
— Per-capita productivity will amount to 30,000 yuan; and

— Spending on industrial capital construction will be worth 1.1 billion yuan, an
increase of 125 percent.

A new power plant will go into operation in the second half of this year to ease
electricity shortage, Zhu said.

GUANGXI TO INCREASE | I DRIVE
HK150343 Nanning Guangxi Regional Service in Mandarin 1030 GMT 14 Mar 87

{Excerpts} The regional party committee and government today issued a decision on
launching a regionwide drive to increase production and practice economy and increase
revenue and cut spending. [passage omitted] The decision made the following points:

1. Unify thinking and fully understand the great importance of launching this drive.
At present the situation in Guangxi is very good. There is political stability and
unity, and the economy is recording sustained and steady development. However, we must
also soberly realize that, as in the whole country, there are factors for instability
in our economic life. The main expressions of this are: There is a big contradiction
between the supply and demand of grain; we have been too quick to stert non-productive
construction projects; financial expenditure has grown too fast; the concept of arduous
struggle and building the country with hard work and thrift has weakened in some units
and among some of the masses; and there is serious extravagance and waste.

Hence, launching this drive is certainly not an expedient but an important guiding idea
and long-term principle for building sociaiism with Chinese characteristics. [passage
omitted]

I. 18 Mar 87 P 9 PRC REGIONAL AFFAIRS
CENTRAL-SOUTH REGION

2. Tap potentials and base efforts on increasing production and revenue. We must
continue to deepen the reforms, focusing on boosting the reserve strength of
agriculture and enlivening the enterprises, and promote increase of production and
revenue. In agriculture, we must put grain production in the first place and strive
for a relatively big increase in output. Without relaxing grain production in the
slightest, we must focus our vision on exploiting the mountain regions and actively
develop diversification and the township and town enterprises. We must continue to do
a good job in supporting poor areas and speed up the pace of extricating these areas
from poverty and making them rich.

Industrial production must be centered on improving economic results and maintaining
steady growth. We must unswervingly implement the central and regional regulations on
invigorating the enterprises, and tap production potentials. We must also pay
attention to protecting the enterprises legitimate interests. We must focus
increasing production on boosting output of products with a ready market. All
enterprises should further improve product quality, readjust the product mix, and
vigorously develop new and quality products, to raise their standards. The enterprises
should step up lateral economic ties, work hard at technological advance, and actively
launch ‘ emulation and a drive for soliciting rational suggestions. [passage
omitted

In economizing, we should focus on reducing material consumption, speeding up the
turnaround of capital, and economizing all expenditure. [passage omitted]

3. Rationally readjust the investment structure and cut non-productive construction.
[passage omitted] All capital construction projects must be included in the plans.
People are not allowed to build projects not covered by the plans. It is necessary to
step up feasibility studies for projects. [passage omitted]

4. Cut financial expenditure and build revenue and expenditure on a stable
foundation. We must resolutely fulfill the tasks of increasing revenue, cutting
spending, and raising capital set by the state and the regional authorities. This year
all expenditures must be reduced from the actual spending figures for last year in
accordance with the proportions set by the upper level, with the exception of
expenditure on price subsidies, pensions, social relief, and special subsidies. All
localities and departments must ensure the fulfillment of the targets set by the
regional authorities. In all financial expenditure, we must adhere to the pri ciple of
living within our means and must not set excessive demands that go beyond our financial

strength.

5. Build the country with hard work and thrift and practice strict economy. All
localities, departments, and units must oppose and ban extravagance and lavishness.
[passage omitted] We must display the spirit of saving every drop of water, every unit
of electricity, and every cent. We must seriously investigate and punish all
persistent waste and the practice of finding more pretexts for spending money.

6. Strengthen leadership and strictly observe discipline. The party committees and
government at all levels must strengthen leadership over this drive and translate all
tasks and measures into action. [passage omitted]

I. 18 Mar 87 PRC REGIONAL AFFAIRS Qi
SOUTHWEST REGION

SICHUAN CADRE RALLY TO PROMOTE PRODUCTION

HK120111 Chengdu Sichuan Provincial Service in Mandarin 2300 GMT 10 Mar 87

[Text] Yesterday afternoon, the Sichuan Provincial CPC Committee and the provincial
people's government held a mobilization meeting for organs at the provincial level on
the drive to increase production, practice economy, increase revenue, and reduce
expenditure. The meeting urged the people throughout the province to immediately
plunge themselves in a massive drive to increase production, practice economy, increase
revenue, and reduce expenditure, so as to do a better job on various fronts.

Responsible comrades of the provincial party committee, provincial People's Congress
Standing Committee, provincial government, and provincial CPPCC Committee who were
present at the mobilization meeting included Feng Yuanwei, He Haoju, Huang Qizao, Meng

Dongbo, Liu Haiquan, Kang Zhenhuang, and Yanling Doje.

The mobilization meeting was presided over by Gu Jinchi, member of the provincial party
committee Standing Committee and vice governor. Provincial party committee Deputy
Secretary Nie Ronggui and provincial party committee Deputy Secretary and Governor
Jiang Minkuan delivered speeches at the meeting.

In his speech Jiang Minkuan focused on three points:

1. The need to seek a common understanding, reorient our thinking, and keep up with
the new situation;

2. The main targets and measures of our province in launching the drive to increase
production, practice economy, increase revenue, and reduce expenditure;

3. The need to strengthen leadership over the drive to promote production, practice
economy, increase revenue, and reduce expenditure; and to exert our utmost to implement
the policies concerned.

Comrade Jiang Minkuan said: This year, in increasing production, practicing economy,
increasing revenue, reducing expenditure, and improving economic results in all
all-round way, our province's goal is to raise the total agricultural output by 6
percent over last year and the total industrial output by 6 percent over last year;
and, on this basis, we are to strive to raise production output and overfulfill the
production quota to the largest extent. In order to fufill this goal, we must
definitely concentrate our attention on the key links and devote our efforts to
carrying out the following measures, namely, ensuring a steady growth in grain output
and developing commodity production in an all-round way in rural areas; readjusting the
product mix, improving product quality, and raising production of marketable industrial
products; vigorously reducing material consumption and trying hard to turn deficits
into profits; keeping the scale of investment in fixed assets under strict control and
continuing to readjust the investment structure and improve the results of investments;
taking the whole situation into consideration and subordinating local interests to the
interests of the whole, so as to ensure the fulfillment of the financial and revenue
quota; vigorously promoting a hardworking and frugal work style and opposing waste and
extravagance; and keeping down the growing demand for funds, and making better use of
funds.

I. 18 Mar 87 Q2 PRC REGIONAL AFFAIRS
SOUTHWEST REGION

To conclude his speech, Comrade Jiang Minkuan said: We must firmly adhere to the four
cardinal principles; uphold the line of reform, opening up to the outside world, and
enlivening the economy; seek a common ground; adroitly guide action according to
circumstances; heighten our confidence; work hard in a down-to-earth manner, make a
sustained effort to carry out the drive on a massive scale and in a deep-going and
healthy way; and thus make new contributions to the success of the drive of increasing
production, practicing economy, increasing revenue, and reducing expenditure.

Present at yesterday's mobilization meeting were a total of more than 1,500 people,
including the responsible comrades of all departments, committees, bureaus, and offices
at the provincial level; and the responsible comrades of the Sichuan provincial Higher
People's Court, the provincial People’s Procuratorate, and some enterprises and service

units.
WU JINGHUA FAVORS PROTECTING XIZANG CUSTOMS

OW131435 Beijing XINHUA in English 1420 GMT 13 Mar 87

{Text} Lhasa, March 13 (XINHUA) — “Government officials must do as Tibetans do when
working in Tibet,” said Wu Jinghua, secretary of the regional party committee of the
Tibet Autonomous Region.

Wu, of the Yi minority nationality, always wears Tibetan costumes on Tibetan festivals
showing his respect for local customs. He has also proposed that roads in Lhasa regain
their old names that were changed during the “Cultural Revolution” (1966-76) for
carrying religious connotations.

These are all as part of the government's campaign to protect the local religion and
social customs, and the regional People's Congress is drafting laws for the purpose.

Since 1979, official policies have ensured that local residents can preserve their
traditional way of life.

Tibetans now celebrate more than 20 traditional festivals a year. The most important
relig ous ritual, the Lhasa prayer ceremony was revived last year.

The regional government also donated ten yuan (about 27 U.S. dollars) [figures as
received] to every one of the more than 1,800 lamas that attended it and sent medical
teams to the ceremony.

On other local holidays cadres of the Han nationality usually present hadas, pieces of
silk used as greeting gifts, to their colleagues.

Earlier this year, local government issued regulations to ban sightseers from “sky
burial” (open air disposal of corpses) sites, in order to protect the sensitivities of
the local people.

I. 18 Mar 87 PRC REGIONAL AFFAIRS 1 1
NORTHWEST REGION

GANSU CIRCULAR URGES FIGHTING ‘SERIOUS’ DROUGHT
8K121551 Lanzhou Gansu Provincial Service in Mandarin 1100 GMT 11 Mar 87

{Text} All areas in the province are now being hit by serious drought. To properly
carry out the work of fighting the drought and ensuring a bumper harvest in
agriculture, and to minimize the losses caused by the drought, the provincial party
committee and government today issued an urgent circular, urging all localities and
departments to carry out in depth the work of fighting the drought and ensuring «a
bumper harvest.

The circular reads: The current drought has seriously jeopardized spring farm work.
Therefore, party and government leaders at all levels must put fighting the drought and
ensuring a bumper harvest above all and firmly grasp it at present. They must
seriously solve practical problems in fighting the drought. All localities must act
according to local conditions. If it is possible to grow summer grain, they must grow
summer grain; if it is impossible to grow summer grain, they may grow autum grain or
autum vegetables. In the meantime, they must seize all favorable opportunities to
rush sowing and properly conduct field management of winter crops. The more crops they
sow and the more field work they do, the better. Areas where there are rivers must
bring into play their strong points, promptly carry out spring irrigation and other
farm work, readjust proportions of summer and autum crops according to the local
conditions, and make reasonable arrangements. All trades must treat fighting the
drought and ensuring a bumper harvest as their unshirkable duty, make early
preparations to supply more means of agricultural production, and give priority to
solving the problem of supply of urgently needed goods, in fighting the drought. Al!
departments must send cadres to the first line of spring farm work to solve practical
problems. According to the requirement of the provincial authorities, about one-third
of the cadres should be in charge of overall work, and one-third should go to the
grass-roots to carry out various service work in spring farming.

The provincial party committee and government called on all cadres and masses in the
province to take immediate action, to make concerted efforts to fight the drought and
develop spring farm work, and to minimize *he losses caused by the drought.

GANSU GOVERNOR REPORTS ECONOMIC PLANS
HK140243 Lanzhou Gansu Provincial Service in Mandarin 1100 GMT 13 Mar 87

[Excerpts! The 234 meeting of the 6th provincial People's Congress Standing Committee
held a fuli session today to listen to a report by Governor Jia Zhijie on launching the
movement to increase production and practice economy and increase revenue and cut
spending. la addition, provincial price commission Deputy Director (Liang Bin)
reported on price reforms, and provincial planning commission Deputy Director (Ke
Baoclin) reported on the situation in commodity circulation. Liu Bing, chairman of the
provincial People's Congress Standing Committee, attended. [passage omitted!

Governor Jia Zhijie said in his report that, to implement the spirit of the national
meeting of governors, the province made prompt arrangements to convey this spirit and
make arrangements for implementing it, and aleo proposed tapping potentials, increasing
revenue, controlling the scale of activities, ensuring the key points, economizing
expenditure, strengthening supervision, blocking loopholes, and strengthening
leadership, so as to translate the tasks of the movement into action.

1. 18 Mar 87 T2 PRC REGIONAL AFFAIRS
NORTHWEST REGION

The whole province is now swinging into action and the momentum of development is very
good. [passage omitted)

He said: After the stage of conducting propaganda and mobilization and making
arrangements and plans, we will enter the second stage of the movement, which calls for
further checking on and implementing the tasks and measures in increasing production
and practicing economy. la the third stage, we will convene a meeting to exchenge
experiences at the end of the second quarter to sum up and popularize typical
experiences and resolve new problems that arise.

Jia Thijie said in conclusion: Launching the movement to increase production and
practice economy and increase revenue and cut spending is of very great importance for

resolving existing problems in the economy and ensuring long-term stable development of
the national economy. We must get a really good grasp of this movement, translate it
into action, and ensure sustained, steady, and coordinated development of our economy.

TRANG BOKING ELECTED GOVERNOR OF SHAANXI
OW171558 Beijing XINHUA in English 1550 GMT 17 Mar 87

{Text} Kian, March 17 (XINHUA) — Zhang Boxing, the former acting governor of Shaanxi
Province, was elected governor at the fifth session of the province s sixth People's

Congress here today.

The 57-year-old Zhang is from Baxian County, Hebei Province. He joined the revolution
in October 1947, and the Communist Party in November 1950. His previous posts included
deputy director of the office of the Industrial Department of Shaanxi, and deputy
director and deputy party secretary of the provincial Petrochemical Bureau. Tang was
deputy director and then director of the provincial Organization Department in 1981 and
was elected deputy governor in May 1985. He became acting governor and deputy
secretary of the province's party committee last December

SHAANXI CONGRESS ELECTS ZHANG GOVERNOR, CONCLUDES
WK180125 Kian Shaanxi Provincial Service in Mandarin 0030 GMT 18 Mar 87

{Excerpts} The Fifth Session of the Sixth Shaanxi Provincial People's Congress
concluded in Kian on 17 March. [passage omitted) Present were responsible comrades of
the party, government, Army, and CPPCC in Shaanxi including Bai Jinian, Zhang Boxing,
Thang Ze, (Zhao Huanju), and Tan Weixu, together with Chang Lifu, member of the Central
Advisory Commission. Executive Chairman Li Lianbi presided at the closing ceremony.

[passage omitted]

The session elected Zhang Boxing governor of Shaanxi. Previously, Zhang Boxing held
the poste of leader of the coordination group of the provincial Industry and
Communications Office, deputy director of the provincial Petrochemical Bureau and
deputy secretary of the bureau's party group, deputy director and director of the
provincial party committee's Organization Department, vice governor, deputy secretary
of the provincial party and committee, and acting governor. [passage omitted]

The session unanimously passed resolutions on the provincial government work report,
the province's plan for economic and social development in 1987, the final accounts for
1986 and the draft budget for 1987, and the work reports of the provincial People's
Congress Standing Committee Higher People's Court, and People's Procuratorate. The
session adopted a resolution on improving environmental protection and preventing
pollution. [passage omitted)

BINA vi
MACAU

I. 18 Mar 87 C
HONG KONG &
MACAO
PRC-PORTUGUESE TALKS ON MACAO OPEN IN BEIJING

OW180218 Beijing XINHUA in English 0203 GMT 18 Mar 87

[rent]! Beijing, March 18 (XINHUA) — China and Portugal began their fourth round of
talks on the settlement of the Macao issue at the state guesthouse here this sorning.

Attending the talks were Chinese Government delegation headed by Vice-Minister of
Foreign Affairs Zhou Nan and the Portuguese Government delegation headed by Rui Medina
with Portuguese Ambassador to China Octavio N. Valerio as its advisor.

Accord Anticipated
HK180920 Hong Kong AFP in English 0900 GMT 18 Mar 87
[Excerpt] Beijing, March 18 (AFP) — China's chief negotiator to talks with Portugual
on the return of Macao to Chinese administration said Wednesday that he was
increasingly optimistic that an agreement would be reached shortly.

Portugal's ambassador to Beijing, Octavio Valerio, indicated that an accore could come
Thursday.

“Il am more and more optimistic,” Chinese Deputy Foreign Minister Zhou Nan said
following talks and a working lunch with the Portuguese delegation Wednesday.

The Chinese negotiator said that the two sides would hold further discussions leser
Wednesday and Thursday.

Asked if an agreement would be announced Thursday, Mr Valerio said: “Tomorrow, that
will be a nice day,” dding that he too was optimistic about the outcome of the talks.

“Look at our faces; we are very happy,” he said, declining to confirm or deny whether
the Portuguese-administered territory would return to Chinese rule in December 1999, as
informed sources have said.

“I haven't seen anything about that, Mr Valerio said.

Before this fourth round of negotiations began Wednesday, informed Chinese and
Portuguese sources said that dei, ing and Lisbon had agreed on turning Macao over to
China in 1999.

Britain has agreed to turn over nearby Hong Kong to China on July 1, 1997.

A source close to the Sino-Portuguese talks said Wednesday that this round of
discussions would be the last and that an agreement was near.

r Zheuw had said Tuesday that he hoped an agreement would be reached before China's
Natiouwsl People's Congress convenes next Wednesday. [passage omitted)