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General Political and Economic Developments in China
Al.
The further boosting of Deng Xiaoping's status through
the publication of the 3rd Volume of his selected works, the adoption by a Party Plenum of a lengthy document on the "socialist market economic system", and the publication of a "peace charter" by dissidents in Peking, followed by the reported detention of some of them, were the principal domestic
events of the last few weeks. Deng's statements included
several comments on Hong Kong including warnings against
"turmoil" and a remark dismissing the idea of a general election in Hong Kong lest patriotic candidates should fail to win although he added that it might be possible eventually to hold general elections in China.
A2.
The document on the socialist market system strongly
reaffirmed the reform policies but contained fewer new elements than expected. The most important passage was the section devoted to changes in the taxation system. These include moving
from the current system of contracted payment by local
authorities to a tax apportionment system, which is intended to
give back more power (and more revenue) to the centre, while
local governments are expected to get additional revenue by taxing a wider range of goods and services. It appears that the intention is to increase taxes in aggregate, although the burden
on certain sectors, such as state-owned enterprises, and perhaps
on the most heavily taxed provinces, may be reduced.
A3.
Preparations for the plenum included provincial tours by virtually all top leaders, including a visit by Zhu Rongji to
Guangdong in mid-September, which went unremarked by the mainland press, although Hong Kong newspapers (Commercial Daily
22 September and WWP 9 November) reported that Zhu, together with a large group of officials, had held discussions on tax
matters in Guangdong (see B1).
Subsequently Jiang Zemin held
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