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YEARAHEAD-For China, globalisation brings power, scrutiny

YEARAHEAD-For China, globalisation brings power, scrutiny

China took a series of big strides on the international stage in 2000 that increased its economic and diplomatic profile and underscored a strong desire by Beijing to become a world player.

With amazing speed for a country that emerged from North Korea-like autarchy just over 20 years ago, China is embracing globalisation.

The fast growth of a huge market destined to become even more attractive when China enters the World Trade Organisation (WTO) enticed investors to take a major stake in economic reform, which will spur confidence in further openness.

"Chinese leaders like President Jiang Zemin and Premier Zhu Rongji have confidently cast their vote for globalisation as the best way to keep reform moving forward," said Cao Siyuan, China's leading bankruptcy consultant and a champion of bold reform.

At the same time, however, moves ranging from its WTO entry drive and big overseas share listings to diplomatic initiatives in Asia and Beijing's bid to host the 2008 Olympic Games, have exposed China to unprecedented outside scrutiny.

In 2001, the communist giant's embryonic legal system, opaque decision-making process and problematic human rights record could come under a microscope as its engagement with the outside world deepens while WTO-led economic dislocations intensify at home.

"China has to go from talking the talk of globalisation to being able to walk the walk," said a Beijing-based diplomat.

HEADY YEAR OF THE DRAGON

This year - the auspicious Year of the Dragon in the Chinese zodiac calendar - China slayed the dragon of deflation after a battle of more than two years, pushed its 14-year-long bid to join the WTO almost to the finishing line, and was set to record economic growth of at least 8.0 percent.

And 10 years after the government took a bold ideological jump and set up domestic stock markets, Chinese firms launched a number of large-scale IPOs in overseas markets, bringing foreign capital and expertise to bear on the problem of reforming an ailing state sector.

In 2000, three firms - oil giants PetroChina and China Petroleum and Chemical Corp (Sinopec) and China's number two mobile company China Unicom - raised US$12 billion through overseas listings. More mega-listings are expected in 2001.

In diplomacy, China helped coax secretive North Korean leader Kim Jong-il out onto the world stage with his secret visit to Beijing, rallied Central Asian neighbours and Russia to help fight ethnic separatism in western China and moved to halt a deepening chill in ties with Japan.

In a move which Yan Xuetong, a Tsinghua University-based international politics expert, called "China's natural response to globalisation", Beijing courted southeast Asian nations with calls for greater regional integration.

Premier Zhu dangled the idea of a free-trade zone with China's southern neighbours - a notion ripe for exploration as China hosts a series of Asia-Pacific Economic Cooperation meetings culminating in the Shanghai APEC summit next October.

TAIWAN, CORRUPTION, PROTESTS

The past year brought reminders of nagging problems that will still be there in the new millennium.

China's 51-year quest to reunite self-governing Taiwan with the mainland took a step backward when the island elected independence-leaning Chen Shui-bian as president in March.

Beijing's refusal to deal with Chen and threats to solve the dispute by military means continue to alienate Taiwan's people. China may soon face a George W. Bush administration with far stronger pro-Taiwan sympathies than its predecessor, Yan said.

The biggest corruption scandal in Communist China's history - the multi-billion dollar smuggling case centred in Fujian province - looks set to drag well into next year, challenging Beijing's efforts to keep a lid on the most damaging details.

China's claims that it is implementing rule of law - a strong pillar of its case for WTO entry and one of its main retorts to critics of its human rights record - suffered a blow with the mysterious downfall of Justice Minister Gao Changli.

Almost 18 months after China slapped a draconion ban on Falun Gong, the spiritual group continues to be able to mount public acts of civil disobedience, which Beijing worries could be followed by Chinese political dissidents.

Even the successes of 2000 - the high-profile overseas stock listings and the advancing bid to host the 2008 Games - have placed new burdens on China.

Tibetan activists have seized on the opening of oil firms to foreign investors to draw attention to their cause, while China's critics in the United States and Britain have said the Games should not go to Beijing unless it improves its rights record.

STILL A BULL STORY

Financial experts warn of regulatory risk and investors have punished the stock prices of Chinese telecoms and Internet players in the wake of confusing policy pronouncements. It is not clear how well or how quickly WTO entry can sort out the problems.

Experts say, however, that Chinese reform enjoys plenty of forward momentum and its high growth stands out in a region where Japan remains sluggish and the main 1997-98 financial crisis victims are back teetering on the brink of crisis.

Investors "should not doubt China's resolve to pursue globalisation, deregulation and privatisation", wrote Andy Xie, chief economist at Morgan Stanley Dean Witter in Homg Kong.

"China remains the only bull story in the region."


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