Experiencing China again for the first time
By Willis P. Whichard Special to the Smoky Mountain Sentinel

Editor's note--Willis (Bill) Whichard is a former member of the North Carolina State Senate; a former Justice of the North Carolina Supreme Court and has recently retired as Dean of the Law School at Campbell University. He and his wife, Leona, are part-time residents of Clay County. A report of his trip to China is being published as a 12-part series in the Sentinel. Part IV - China an economic revolution

On the afternoon of the second day we were briefed by the American Chamber of Commerce in China ("AmCham-China") at the Chamber office in Beijing. The presentation was one of the most comprehensive and factfilled of the trip.

AmCham-Chin a represents the interest of American companies and individuals dong business in China. It is an excellent source of current information for Americans who wish or intend , to do business in China. More than 3,100 individuals from more than 1,000 companies comprise its membership. Many of the companies have their headquarters in Beijing and a manufacturing plant in Shanghai. AmCham's focus is on advocacy for the industrial sector, information sharing and networking. It has issue-focused forums. One forum deals with intellectual property rights, which the government realizes is an issue.

Some highlights of a very thorough and informative presentation follow:

Over the past fifteen years there has been steady growth in Chinese exports and imports. The value has quadrupled in that time. this has caused China to become an extremely attractive market for foreign investment. Between 2001 and 2005 the number of foreign entities doing business in China has increased by 25% from 200,000 to more than 250,000. As of 2004, foreign investment in China totaled U.S. $60.6 billion.

The Chinese have just launched their eleventh fiveyear plan. Emphasis in the past has been on economic development in the costal provinces. Emphasis has now shifted to the central and western provinces ("spread the wealth"). Areas near Japan and Korea attract a lot of invest- ment from those countries. They are improving the infrastructure nationwide. Energy shortages are hitting the traditional manufacturing bases.

The government is privatizing some of the state-owned enterprises in order to create more opportunity for the Chinese people to develop and expand private sector businesses.

The Shanghai area is being transformed into a hightech/ web-based production center with an advanced service sector. The Pearl River Delta specializes in lower-tech household and electrical goods, fed by a continued influx of labor from neighboring provinces. The northeast is concentrating on heavy industry, taking advantage of abundant natural resources.

Looking ahead, the pace of growth is likely to slow in the larger cities as markets there reach maturity. The focus will be on higher land regions as the government diverts infrastructure expenditure to release the potential in these areas and redistribute income around the nation. The new generation of state-owned enterprises will increase the sophistication of the products they manufacture and help the service sector mature. issues and challenges the government will need to address in the encouragement of economic development include: (1) corruption and bureaucracy, (2) widespread tax evasion, (3) improvement of intellectual property rights,(4) ballooning land prices in major cities, (5) competition between provinces, (6) securing necessary energy to sustain the current expansion, (7) channeling capital into the correct sectors, and (8) encouraging increased domestic consumption.,

In sum, China is in the midst of a huge economic revolution that will continue for the foreseeable future. Social and legal developments have not kept pace and economic development. Urban planning and environmental protection, for example, are lacking. This is causing social upheaval which is being managed only at the macro-level.

The government has established\ shed laws and regulations governing the creation and operation of foreign businesses in China. Foreigners desiring to do business in China typically start by opening a Representative Office (RO). These are liaison offices with no in dependent legal personality. After using the RO to definitively evaluate whether it wishes to move forward with investment in a business in China,a foreign investor may create a limited liability business entity under Chinese law to conduct business in the country. Under Chinese law there are specific amounts of capital that must be invested within certain time periods. Careful due diligence is advised whenever a foreign investor considers the acquisition of an existing Chinese business.

Our last meeting of day two was at the United Nations Building in Beijing with the United Nations Development Program (UNDP) which provides lawyers to assist under-developed countries with the creation of constitutions, statutes, and legal system. The UNDP is the United Nations global development network dedicated to assisting 166 countries in finding solutions to global and national development challenges.

There are twenty-one UN agencies based in Beijing, employing 600 people. They are involved in numerous endeavors, most notably economic reform, the environment ,energy, human rights, and the rule of law. Khalid Malik, the UN Resident Coordinator in China explained that the Chinese are receptive to dialogue with the UNDP because China respects the UN's neutrality and lack of political agenda.

Malik described the process of legal or policy reform in China as slow and protracted in the planning phase; change is only implemented after lengthy debate. Once a decision has been made, however, Chinese officials move swiftly with pilot programs before the reform is implemented nationwide.

The UNDP is promoting democratic government in China, providing support for a civil society and improving human rights. It is working with key legal institutions to encourage :anticorruption" legal reform and the enforcement of Chinese laws within China's governmental departments.

participation of non-governmental organizations is also supported. The centralized party makes it difficult for civil society organization to move forward in China, but UNDP works to support their progress. One area where progress is occurring is that of public protests--the government is beginning to tolerate demonstrations by Chinese citizens, particularly those protesting the taking of their property by the government without fair compensation.

Dr. Edward Wu,the leader of the UNDP Rule of Law and Democracy Team, sees signs of progress in the 26 year-old Chinese legal system. He puts the number of Chinese lawyers at 150,000. China recently has implemented a Legal Aid System to provide representation to the poor. On the negative side, there are still instances of criminal law attorneys being persecuted by local authorities for representing a person charged with a crime.

The long-term goals of UNDP include reducing poverty in China, encouraging much more efficient energy resources,and promoting Rule of Law and governance issues.

Of the 1.3 billion people in China, 300-400 million have been lifted out of poverty, but 80-200 million should still be classified as "poor." At the moment China is experiencing such an economic boom that there is more construction work underway in Beijing alone than in all of Europe (much of it in preparation for the 2008 Olympic Games).

The UN has been here 36 years, and citizens of China are the most free they have ever been. Employees here believe the UN presence has had some effect in bringing this about.

In the evening we attended the play "The Legend of Kung Fu" at the Red Theater. It is he story of a boy's journey to manhood and spiritual maturity; of his ridding himself of earthly desires and becoming a monk.

Next week:Part VChina a look at it's legal system

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