Seminar Programme, March 7, 1997
Wang Lian, Ambassador People's Republic of China: Opening speech
Ilkka Ristimäki, Ambassador, Finnish Embassy, Beijing: Prospects for the Future of China
Karin Holstius, Professor, Turku School of Economics and Business Administration: The Challenge of the Chinese Market
Marita Siika, Assistant, University of Turku, Dept. Political History: China's Foreign-Policy Traditions
Markus Pessa, Tampere University of Technology, Dept. Physics: Optoelectronics and New Semiconductor Technology
Jukka Lahtinen, Managing Director, Avaintulos Oy, University of Tampere, Marketing: Case: Avaintulos Oy and Ilkka Lipsanen (Danny) - Opening up Exports of Pop Music to China
Seminar Programme, March 11, 1997
Wang Yingfan, Vice Foreign Minister People's Republic of China: China and the World at the Advent of the 21st Century
Pertti Nikkilä, Lecturer, University of Helsinki: Reflections of Ancient Ideology in Today's China
Paula Tiihonen, Doctor of Administrative Sciences: What Will the State Do in the 21st Century?
As part of its work of monitoring change in the world, Parliament's Committee for the Future has arranged seminars - video and live - together with countries and regions that are of great importance from the perspective of our future. The Committee has been particularly interested in seeking models of success in various parts of the world.
The Committee began its search for and study of success factors with a series of video seminars focusing on East and South-East Asia. Next followed the USA, more specifically the state of Wisconsin, which resembles Finland in many ways. A comparative study of Finland and Wisconsin paid particular attention to such sub-factors in success as employment.
The latest country of focus has been China, the importance of which now and in the future can probably not be exaggerated.
PARLIAMENT OF FINLAND
Committee for the Future
China Seminar, Part 1 Auditorium of the Finnish Parliament Friday March 7, 1997 Chairpersons: Member of Parliament Sirpa Pietikäinen Ambassador Ilkka Ristimäki 9.00 Opening of the Seminar: M.P. Sirpa Pietikäinen 9.05 - 9.30 Ambassador Wang Lian 9.30 - 10.30 Ambassador Ilkka Ristimäki 10.30 - 11.00 President of the Supreme Administrative Court Pekka Hallberg 11.00 - 11.30 Professor Karin Holstius 11.30 - 11.45 Assistant Marita Siika 11.45 - 12.00 Assistant Tauno Olavi Huotari 12.00 - Discussion; Professor Markus Pessa Managing Director Jukka Laitinen
Mr. Wang Lian, Ambassador
People's Republic of China
OPENING SPEECH
Distinguished Member of Parliament Sirpa Pietikäinen,
Distinguished Ambassador Ristimäki,
Ladies and Gentlemen,
It gives me great pleasure to attend today's seminar arranged by the Finnish Parliament's Committee for the Future. I wish the seminar success and would also like to take this opportunity to report to you on development in China in recent years and on Chinese foreign policy.
China is one of the world's ancient civilizations, a country with a long history and a splendid culture. The Chinese people is known in the world for its industry and intelligence, through which it has made a significant contribution to the civilization and progress of humankind. However, from the middle of the last century to the middle of the present one, the Chinese people suffered from aggression and pillage on the part of colonialism, as a consequence of which the country's economy collapsed and the people lived in poverty. The establishment of the People's Republic of China in 1949 ushered in a new era in the county's history, Ancient China, full of dynamism, embarked on a path of independent development on her own terms. From the end of the 70s onwards, a new phase of renewal and opening up began under the guidance of Deng Xiaoping's theory concerning the construction of socialism with distinctive Chinese features. The Chinese economy has developed vigorously in the past 18 years. The GDP has quintupled, with the average annual growth rate at over 9 %. The people's standard of living has risen considerably and the foundation on which the economy stands has manifestly strengthened. Interaction and cooperation between China and the other countries of the world have been constantly expanding. The volume of China's foreign trade grew at an average of 16 % in each of those 18 years. In 1996 Chinese exports and imports together totaled nearly $290 billion and were almost in balance with each other. Our country now has foreign currency reserves of over $100 billion. China's vast economic potential and large market and her constantly improving investment environment have attracted numerous foreign interests to invest directly in the country. To date, foreign direct investment totals $172 billion, and is a positive factor in the modernization of our country. On the whole, the current situation in China is one in which political conditions are stable, the economy is developing dynamically, all groups of the people remain united, society continues to make progress, and citizens enjoy their lives and are optimistic about the future. China is proceeding with steady steps on the road of building a socialist market economy and a democratic policy.
At the beginning of last year, a development plan for the remaining five years of this century and the first ten of the next was drawn up in China. It envisages annual GDP growth of 8 % and GDP per capita quadrupling between 1980 and 2000 despite the fact that the population will increase by 300 million over the same period. It is expected that by then people will have reached a relatively good level of livelihood and the mechanism of a socialist market economy will be preliminarily in place. The goal for the first decade of the 21st century is to achieve further GDP growth of 7 % per year, so that a further doubling will be achieved between 2000 and 2010, by which time a relatively complete socialist market economy structure would have been created.
After the achievement of those goals, China's overall strength and the standard of living of her people would rise greatly, and this in turn would create a solid foundation for the accomplishment of preliminary modernization by the middle of the next century. As ambitious as this goal certainly is, it is possible to achieve through tenacious effort, because we have already succeeded in finding the right road to modernizing socialism, created a society with stable conditions and a relatively strong material basis. In addition to that, we have 1.2 billion hard-working citizens, a vast market and abundant natural resources.
China is striving for all-round modernization by paying attention to building up not only material culture, but also the immaterial kind. Material and immaterial civilization are both magnificent achievements of human progress. They complement and promote each other. We are working hard to build a state in which the rule of law prevails, intensely promoting two changes, i.e. a transition from the traditional planned economy to a socialist market economy and another from economic growth based on raw materials to intensive economic growth. We are pursuing two strategies: the first is progress with the aid of science and technology, an endeavor to develop the good traditions of the Chinese people whilst at the same time embracing all of the positive achievements of human civilization and developing science and education; the second is a strategy of sustainable development, by means of which we are striving to balance economic and social development in order to achieve progress in all sectors. We have the self-confidence and ability to be able over the next few decades, through indefatigable efforts, to build our country into a prosperous, democratic, cultured and modern state.
Ladies and Gentlemen,
The international situation today is, viewed on the whole, moving in the direction of détente. But several complex disputes still persist in the world. World peace and stability are still under threat, humankind faces the challenge of life and development. The preservation of world peace, a strengthening cooperation and promotion of collective development have already become the things that all peoples join in calling for. We are living in a colourful world, of which diversity is a characteristic feature. Among the couple of hundred countries of the world is one large state with over a billion inhabitants, there are rich countries with per capita GDP in tens of thousands of dollars, but there are also small countries with populations less than a million and poor ones whose GDP per capita is less than 100 dollars. It is an indisputable fact that diversity exists everywhere, in social systems, values, levels of development, historical traditions and cultural backgrounds. In any event, all countries are members, on a basis of equality, of the global family. Every country has the right to decide its own social system, road of development and what way of life suits its own circumstances. The history of humankind has shown that forcing one's own will on others and uniting the world under one system, in one form and with one ideology, failing to recognize the diversity of the world, would certainly be doomed to failure. In our view, the Five Principles of Peaceful Coexistence proclaimed on the initiative of the Asian countries already in the 50s, i.e. mutual respect for sovereignty and territorial integrity, non-aggression, non-interference in each other's internal affairs, equitability and mutual benefit, peaceful co-existence, should be not only international principles guiding relations between different countries, but also the fundamental principle for creating a new international political and economic order. The people of China love peace, want development. China consistently pursues an independent and peaceful foreign policy, and is one of the important forces protecting peace in the world. China is ready to develop ties of friendship and cooperation with all countries and regions on the basis of the Five Principles of Peaceful Coexistence. The people of China are willing to share efforts with other peoples to take a world of peace, security and prosperity into the next century.
China and the EU are important forces in the modern world's political and economic arena. We in China consider it very important to develop relations with the EU, which we hope will seek a significant role in international affairs. China and the EU share many interests in protecting world peace and stability and promoting development of the global economy. Mutual respect, seeking common ground whilst overlooking differences, equality and mutual benefit are the principles and foundations in the relationship between China and the EU. China is prepared to increase consultations and dialogue with the EU on international questions and to broaden cooperation in the economic and trade spheres. China welcomes and appreciates the fact that the EU has published a document covering long-term China-EU policy and that the Union has adopted a new strategy aimed at actively developing relations with China, in addition to which it emphasizes the comprehensive, independent and long-term character of its relations with China. We are very pleased that constant improvement and development has taken place in relations between China and the EU in recent times. High-level visits on both sides have taken place at a brisk rate, economic and commercial cooperation has progressed positively. In 1995 trade between China and the EU reached the $40 billion level for the first time in history, and the EU is already China's fourth-biggest trade partner. We hope that the EU countries will adopt a more open attitude to China's access to the EU market. We likewise welcome the EU countries to increase their investment in and trade with China.
Finland was one of the first countries to establish diplomatic relations with the People's republic of China. In the past more than forty years, relations between our countries have developed in an uncomplicated manner and have not been affected by the significant changes that have taken place in the world situation. Relations and interaction between China and Finland are nowadays strengthening in a variety of sectors. President Jiang Zemin's visit to Finland in 1995 and President Martti Ahtisaari's return visit to China last year have raised relations between the two countries to a new level. Trade between us is increasing steadily year after year and cooperation in the economic and technological spheres is expanding. By last year, Finland had already established 55 companies in China, invested a total of $40.5 million. Cooperation in the fields of culture, education, science and technology and also in legal affairs is thriving. Despite the geographical distance between us and the different conditions, social systems and cultural traditions in our countries, there are no conflicts of principle between us. On the contrary, we share interests in many matters. Industry and technology in Finland have reached an advanced stage of development and there are many sectors from which it would pay China to learn. For her part, China has an enormous market and abundant natural resources. In just that respect, China and Finland can complement each other economically. Our countries also share many views on international affairs, in relation to which we have been cooperating effectively. To sum up, there is still great potential to develop cooperation between China and Finland, and prospects for the future are good. China attaches importance to relations with Finland and is prepared to continue developing broad cooperation on a basis of mutual respect, equality and mutual benefit as we advance towards the new century.
Thank you!
Mr. Ilkka Ristimäki, Ambassador
Embassy of Finland, Beijing
PROSPECTS FOR THE FUTURE OF CHINA
1. China in transformation
The ascent of China in the past couple of decades is unparalleled in the post-Second World War era. In the economic sphere the country has undergone a transition that has taken it from collective production and a centrally-managed planned economy well on the way to a market economy. China has industrialised. Her borders have been thrown open for foreign trade and investment. In terms of aggregate output the country has become one of the world's biggest economies. This growth has brought the Chinese a higher standard of living. Although hundreds of millions in the rural areas still live in poverty, it is already possible to speak of some degree of prosperity in cities and their environs.
Dynamic change is continuing. Strong economic growth is the driving force for rapid and profound social transformation. But also the braking forces of inertia are strong in this country of such vast dimension.
2. Opportunities and threats
China's future development contains great opportunities, but on the other hand it has been seen by observers outside China as also posing major threats. What course social and political development will follow in China from now on is of great importance not only to that country, but also to the whole East Asia region and the rest of the world.
Formerly isolated, China is actively seeking to engage in international cooperation and the work of international organisations. That applies to security, non-proliferation of nuclear and other weapons, economics and trade, financial institutions and environmental protection. China is participating in regional integration and seeking to become a member of the WTO and through that to become integrated into the global economic system.
This very brief description of the country should suffice as an introduction to my presentation.
The Committee for the Future is especially interested in China in relation to the globalisation that is now in progress in the world, which is forecast to continue and is expected to have a substantial influence also on the framework within which Finland and the Finns will live and earn a livelihood in future decades.
I consider it a valuable thing that the Committee has in this way taken the role and effects of China under study. I am particularly pleased that it has invited Vice Foreign Minister Wang Yingfang to present China's views - and that he has agreed to do so during his brief visit.
It is wonderful that such thorough preparation can be made for the Tuesday seminar session in the form of a pre-seminar. I see that the keynote speakers are competent persons chosen from the experts on China that have developed in various fields in Finland. The existence of this pool of expertise is not very widely known in public and for example the media often seem to prefer resorting to foreign second-hand sources that to the expertise on Chinese affairs that we have right here in Finland.
What matters would it be good to take up at a pre-seminar of this kind, at which one has a role rather like that of a warm-up band? For my own part, I had thought of focusing my attention on a few basic trends in China's recent development rather than on those matters visible on the surface and questions of the near future that the media have capably dealt with, also in recent weeks; in other words, I am more concerned with the slower and heavier movements of the ocean currents beneath the waves.
A few observations on this basis:
1. China is still the world's most populous country, although population growth has been brought under control with the aid of the one child policy.
2. Now I would like to turn my attention to the major trends in economic development.
To find the roots of the present basic trend one has to go back to December 1978. Mao had died, the Gang of Four were in detention, a rehabilitated Deng was rising to a position of power. The words that would give rise to the economic growth that China has seen in recent years were spoken then.
The goals set in the three-step development strategy that was confirmed then were:
What progress has been made towards achieving the goals of the three-step strategy?
Progress within all three steps of growth has been ahead of timetable.
In aggregate output China has reached seventh place among the world's economies. If growth continues at the same pace as to date, China will achieve parity with the world's largest economies within a few decades.
Prosperity has also grown, even though there are many to share the cake. In terms of GDP per capita ($530 in 1994) the country is still one of the world's poor countries.
However, there are not many countries where GDP per capita has grown at the same pace as in China.
As we all know, international GDP comparisons are made difficult by the distortions arising from, among other things, exchange-rate fluctuations. In an effort to redress this problem, economists have developed the Purchasing Power Parity (PPP) method of calculating the "currency exchange-rate" on the basis of how many units of the local currency, for example in China renminbi-yuans, would be needed to buy the same amounts of goods and services as in the United Stated for one dollar.
Whereas China's GDP per capita calculated on the basis of exchange rates was only $530, it was$2,510 when the PPP method was used.
3. What about prospects for economic development from now on?
I would condense my assessment into five theses.
Rapid growth will continue; China is so poor that this is necessary
Threatening factors associated with growth:
I would like to continue with some thoughts about this stability and more broadly about the political perspectives from which these economic questions re examined.
The continuation of economic growth is a central and unifying political goal
What has been said above could be summed up as follows:
Opinions are divided on those matters and a debate is ongoing. Since Deng's passing, the debate has further intensified.
Those developments will be carefully watched. In addition to them, policies and solutions are now taking shape in another context that has been given less attention, i.e. the negotiations concerning Chinese membership of the WTO.
A very concrete question on the table in these negotiations concerns linking China into the global economy.
China will regain sovereignty over Hong Kong on 1.7.1997. This has significant historical and symbolic value for China.
Taiwan
Time factor
Autonomy for ethnic minorities
South China Sea
Korean Peninsula
Border issues with Russia
Relations with Central Asian CIS countries
Relations with India
Relations with Vietnam and other South-East Asian countries
The "Chinese threat" question
Russia
Karin Holstius, Professor
Turku School of Economics and Business Administration
THE CHALLENGE OF THE CHINESE MARKET
1. Introduction
As the world approaches the turn of the millennium it is becoming more and more obvious that economic power is shifting towards the Asia Pacific region. From a business point of view the most interesting and tempting market in this area is the People's Republic of China. It is commonplace now to state that China houses one-fifth of the world's consumers, that it is becoming, or already is, a major economic power, and that its GNP is likely to surpass that of the United States in 2010.
Since the initiation of China's open-door policy, almost two decades ago, a number of Western firms have been enthusiastic to capture this market. During recent years the flow of foreign capital to China has averaged USD 20-30 billion annually, and in 1996 foreign investors contributed nearly USD 40 billion. Private enterprises now make up 13.5% of the economy, and joint ventures account for 38% (Time 3.3.1997).
During the past fifteen years, Chinese GNP has grown at an average annual rate of 10% and the growth in foreign trade has been even quicker. On the other hand, inflation has been jumpy - and at times worrying - as it has varied between 2.2% and 24%. Manufacturing and marketing in China is tempting, but none too easy. The bureaucracy can be bewildering for Westerners, and the necessity to deal with numerous ministries and various levels of government can be quite frustrating (Shao & Herbig 1995, Holstius 1991).
The purpose of this paper is
2. Is China fever justified?
China has sometimes been called the powerhouse of the 21st century (e.g. Business Week, May 17, 1993). It seems that the use of this epithet is mainly based on the country's remarkable economic growth and the way in which the government has been able to achieve its development goals since 1978. Western firms are interested in the close to 1.2 billion consumers on the one hand, and on the other hand in transferring technology and know-how to a country extremely rich in resources, with the world's largest coal reserves and hydroelectric potential, as well as vast reserves of e. g. iron, tin, aluminium, zinc, uranium and petroleum.
The importance of China as a consumer goods market is growing in parallel with its increase in per capita income, which is now about USD 530 per year. The figure is much higher in large cities, and even averages USD 2,500 - 3,000 if adjusted for purchasing power. It has been calculated that there are some 250 million Chinese citizens with an income equal to the average prevailing in industrialized Western countries. Most of all, however, China - so rich in manpower and resources - is an attractive market for investors in production and for exporters of industrial goods and projects, as well as for participants in various kinds of infra structural projects.
The annual growth of China's exports has varied between 15% and 30% through 1992-95, and the country is already a formidable force in international trade, now ranking 11th in the world. Finnish exports to China and the corresponding import figures show a tenfold increase since the early 1980s (Fig. 1).
Figure 1. The development of Finnish exports to China compared with imports.
In its transition from a centrally planned economy to a socialist market economy, China has sparked national growth rates that are enviable by Western standards. The China fever prevalent in many industrialized countries also seems justified in view of the fact that China will need Western technology and know-how to accomplish its modernization program.
3. Is the Chinese market too difficult?
A fast-growing economy like the Chinese one also faces considerable challenges in its industrial and infra structural development. Many Western companies can offer solutions to support these growth strategies, but they in turn face the challenge of coping with both the increasing competition and the economic, political, legal and cultural dimensions of the environment. A survey made at the Euro-Asia Centre in Paris (Lasserre & Probert 1994) of Western business executives in the Asia Pacific region showed that doing business in China often differs radically from other international business activities.
Many examples exist of foreign firms being unable to develop their business without having good government contacts at national or local level. Lasserre & Probert's study (1994) confirmed the perceived importance of contacts and indicated a rather high level of government influence on business in China (Fig. 2 and 3). While new paradigms in marketing are emerging in Europe with the emphasis on networks and relationships, the Asia Pacific region, and particularly China, is where the need to build up relationships and trust - guanxi - is felt most strongly (Fig. 4 and 5). Since relationships are difficult and time-consuming to build, business success in the Chinese market can be achieved only through long-term commitment by the market actors as well by top management.
It has often been pointed out that the Chinese prefer not to do business with anyone unless a relationship is established first (see e.g. Schuster & Copeland 1996). Luo (1997) demonstrated in a study about the performance of foreign-invested enterprises in China that guanxi is the most effective and efficient marketing tool. He found that investors can gain a competitive edge by building and maintaining their own guanxi network, and it also turned out that the length of operation affected the profitability of foreign ventures.
The Chinese market is too difficult only for those who do not realize that differences in the economic, political, legal and cultural environments need to be tackled. A tool that can be used for understanding and coping with the differences is the matching model (Holstius 1990), according to which the preadaptation of transactions at three different levels enables successful realization of business initiatives.
Figure 2. There is a high level of government influence in business. (Lasserre and Probert, 1994)
Figure 3. Maintaining smooth and regular contacts with government is an essential part of doing business. (Lasserre - Probert 1994)
Figure 4. In order to be successful one needs to build up a network of "contacts". (Lasserre - Probert 1994)
Figure 5. Business relationships based on trust are essential for success but difficult and time-consuming to build. (Lasserre - Probert 1994)
Matching can be defined as consisting of all the steps taken at global, macro and micro levels to facilitate the development of business relationships between organizations in dissimilar countries (see Figure 6).
Figure 6. Matching in international business operations.
At the global level, matching includes international (multilateral) agreements, communications and relationships. Examples of institutions engaged in financial matching at this level are the World Bank and the Asian Development Bank.
At the macro level, matching refers to the measures taken bilaterally by governments in order to support business operations at company level. Financial matching includes soft and mixed loans, export credits and export guarantees. Examples of legal matching at this level are agreements to avoid double taxation and investment protection agreements. Even investment incentives and the improvement of legislation to create good preconditions for conducting business in the country are forms of macro-level matching. Such matching also includes trade delegations, visits at ministerial level, and seminars and symposiums organized by the authorities.
Whereas matching at global and macro levels creates preconditions for market entry, at the micro or company level it refers to the steps needed for the realization of a successful market entry. In production terms, for example, this means reducing the technology gap between joint-venture counterparts to meet quality requirements, or adapting production technology to suit the local conditions. Acquiring basic knowledge of the counterpart's culture and using native employees constitute personnel matching at the micro level. Developing mutual trust and good relationships, such as through reciprocal visits at the business level, also belongs to this category (Holstius 1990).
Ever since the first Special Economic Zones (SEZ) were instituted in 1980, China has taken a number of steps at the macro level to enhance foreign direct investment and collaboration with Western companies. Early matching activities included the opening up of 14 coastal cities, with a number of incentives for foreign and joint business enterprises. More recent initiatives include privileges for border cities and cities along the Yangtze River (Fig. 7), and these initiatives are also intended to equalize the differences between coastal and inland provinces.
Figure 7. Chinese Special Economic Zones and Open Cities.
(cf. Giese & Zeng 1993; Weng 1994)
4. How to approach the Chinese market
It is obvious from a number of studies and experiences reported by practitioners that long-term commitment is required in the Chinese market. Relationships and trust - guanxi - must be built up, and continuous contacts must be maintained. (See e.g. Davies et al. 1995 or Leung, Wong & Tam 1995). In this connection, it is good to remember, too, the opportunities for relationship building offered by the worldwide web of Chinese entrepreneurs that has sometimes been called the world's fourth economic power (Kao 1993). Fifty to sixty million in number, they constitute a global network that many Western companies might wish to tap into.
Universities can also assume an important role in collaboration and relationship building. This was realized by the Turku School of Economics and Business Administration as early as in 1985, when the first Sino-Finnish seminar was held in Beijing (Workshop in Futures Studies 1985). For some years now the school has contributed to smoothing the way of SMEs for collaboration and technology transfer with China: The China Research Program has been run since 1994 as a collaboration project between the International Business Program and the Finland Futures Research Centre (Appendix 1). The project produces information about China's environmental policies, investment programs, decision making and priorities, as well as about the evaluation of risks and effective demand for environmental technology.
The China Research Program at the Turku School of Economics and Business Administration has also initiated the Sino-Finnish Environment Program SIFE, which is a collaboration project with five Finnish universities, and which has established contacts with a number of Chinese universities and environmental centres (Appendix 2). The collaboration started in 1995 and the first joint seminar on environmental technologies was held in Beijing in April 1996. A seminar and conference on industrial waste waters is planned for October 1997 in Beijing.
The People's Republic of China is now the second biggest recipient of foreign direct investments in the world, surpassed only by the United States. By the end of 1996 the Chinese authorities had approved the establishment of some 280,000 joint ventures, and the export volume of these ventures accounts for 30% of the nation's total exports. Foreign exchange reserves amounted to USD 100.5 billion at the end of 1996, and China was second in this respect too, surpassed only by the United States. (Foreign Investment in China 1996; Finnish Foreign Trade Association: East Asian markets 8/96)
Irrespective of the kind of business, China will have an impact in the future. A good proportion of any company's suppliers, customers, competitors, owners and business partners will be Chinese, be they multinational companies or smaller actors in world markets. Therefore we should be prepared to meet the Chinese challenge.
References:
Business Week, May 17, 1993.
Davies, Howard et al. (1995) The benefits of guanxi. The value of relationships in developing the Chinese market. Industrial Marketing Management, Vol. 24, 1995, pp. 207-214.
Finnish Foreign Trade Association (1996) Foreign Investment in China 1996. East Asian markets 8/96.
Giese, Ernst and Zeng, Gang (1993) Regionale Aspekte der Öffnungspolitik der VR China. Geographische Zeitschrift, Vol. 81, No. 3, pp. 176-195.
Holstius, Karin (1990) The matching concept and its application to international joint ventures. Research Report 29. Lappeenranta University of Technology.
Holstius, Karin (1991) A matching concept for international business: The case of Finland and China. In: (Ed. Nigel Campbell) Advances in Chinese Industrial Studies, Vol. 2, pp. 177-185, Greenwich, Connecticut: JAI Press.
Kao, John (1993) The worldwide web of Chinese business. Harvard Business Review, March-April 1993, pp. 24-35.
Lasserre, Philippe and Probert, Jocelyn (1994) Competing on the Pacific Rim: High risks and high returns. Long Range Planning, Vol. 27, No. 2, 1994, pp. 12-35.
Leung, T. K. P., Wong, Y. H. and Tam, J. L. M. (1995) Adaptation and the relationship building process in the PRC. Journal of International Consumer Marketing, Vol. 8, No. 2, 1995, pp. 7-26.
Shao, Alan T. and Herbig, Paul (1995) Marketing inside the dragon, despite China's bureaucracy. International Marketing Review, Vol. 12, No. 1, 1995, pp. 65-76.
Time, March 3, 1997.
Weng, Shunying (1994) Special Economic Zones and Foreign Investments in China. Research Report 66. Lappeenranta University of Technology.
Workshop in Futures Studies in Beijing 4. - 5.9.1985. Finnish papers. Publication of the Finnish Society for Futures Studies, A 8, Turku 1985.
APPENDIX 3.
Finnish SIFE Partners
Chinese SIFE Partners
Marita Siika, Assistant
University of Turku, Department of Political History
CHINA'S FOREIGN-POLICY TRADITIONS
The foreign policy historically pursued by the People's Republic of China was similar to a rolled-up hedgehog. Today, however, that policy seems to belong to the remote past when one looks at the international bustle in China's modern cities. The Chinese themselves say they have embraced an "open doors" policy. The way outside observers put it is that "China is integrating into the global international system".
The zig-zag of recent history
China's foreign policy is forward-looking. The national leadership nowadays rarely justifies its actions by invoking concepts like "colonialism" or "imperialism", which were staples in its vocabulary as recently as the 70s. Indeed, viewing it from the short perspective, we can see the Chinese foreign policy line as a zig-zag one. The People's Republic's foreign relations have often been examined either as a division between East and West or along the axis introverted/extroverted. At core it has been revolutionary.
Annex 1 contains a brief description of the curve that the development of the People's Republic of China's foreign relations has followed along the East-West chronological axis from the late 40s to the present day. Already before the establishment of the People's Republic, Mao Tsetung has announced that the new China would cooperate closely with the Soviet Union, "lean to one side", as he put it. China has demonstratively joined the Soviet-led camp as the Cold War deepened from the division of Europe to the Korean War. China's famous "Five Principles of Peaceful Coexistence" characterised the relaxed spirit of Geneva as interpreted by Beijing after the very tense years of the Korean War. A particular feature of that period was the commencement of cooperation between Asian and African countries in what was called "the spirit of Bandung". The principles collectively adopted at Bandung were based on China's Five Principles.
The new voluntarist line, the Great Leap Forward, adopted in China's economic policy in 1958 differed radically from the policy pursued by the Soviet Union. Industrial output targets were over-optimistically set at unattainable levels, whilst the rural areas of the country, home to over 80 % of the population, were brought within the communist system through a rapid progress of collectivisation. China sought her own model and broke free of the Soviet Union's tutelage. In the course of 1958 China tightened her line on the Taiwan question and this led to the Quemoy crisis and the bombardment of the island. However, the Soviet Union, led by Khrushchev and having condemned Stalin's doctrines, was reluctant to support China's aggressive line.
The crisis that began smouldering between China and the Soviet Union was ignited by differences on both domestic and foreign policy questions. In the early 60s it grew into a broad ideological conflict, in which diverging interests were easy to fan into bigger and bigger flames. China fell further and further back from the Soviet Union's wake and in the early 60s had to resort to grain shipments from the West when the country suffered widespread famine as a result of the command policies of the Great Leap Forward. Estimates of the number of people who perished range from 20 to 40 million.
The weighty causes of the Cultural Revolution (1966-69) were rooted in that catastrophe. The scars that it left were to be covered up by means of a second, and even boarder campaign, which was argued for in the name of constant revolution: the revolution must not be allowed to come to a halt, but instead the class struggle had to be carried on in every organisation, including the Party. China closed in on herself so completely in the late 60s that she recalled all but one of her ambassadors (Huang Hua in Cairo) for supplementary training. At the same time, the escalating Vietnam War put China between threats coming from two directions, especially when border disputes on the Ussuri River erupted into violent clashes. Thus the understanding with Washington that was gradually beginning led to an important change in Beijing's international status, and to membership of the UN in 1971.
The Shanghai Communiqué drafted during President Richard Nixon's historic visit in February 1972 stated that the United States and China were striving to normalise their relations. It also mentioned the matters on which they were not in agreement - particularly Taiwan. The radical, disorderly phase of the Cultural Revolution ended in 1968 when Mao called in the army to put an end to the clashes between rival Red Guard cliques that has escalated to an unmanageable level. However, it must be remembered that most Western countries had established diplomatic relations with China very early in the 70s, although the ideological ferment of the Cultural Revolution continued until nearly the end of the decade.
China drew further and further away from the Soviet Union in the 70s and developed her own "Three Worlds theory", according to which the world should be seen as a hierarchy with three levels. First, there were two superpowers contending for hegemony everywhere on Earth. Below them were the developed industrial states of the "Second World", and below the developing countries. According to the theory, those "relations of exploitation" would inevitably lead to a world war. China retained the Three Worlds theory as her foreign-policy doctrine right up to the beginning of the 80s despite the fact that in the latter half of the 70s she was approaching the point of strategic cooperation with the United States. At the same time as China was continuing to exercise loud foreign-policy rhetoric with the vocabulary of revolution, she was already making tangible efforts to shape the pragmatic cornerstone of a new foreign policy strategy, "opening up to the world".
The definition "independent, peaceful foreign policy" was developed in 1982-84 to explicate China's foreign-policy endeavours in relation to implementing modernisation. Beijing takes the view that modernisation can be carried through only provided long-term peace prevails in China's immediate environs. "Independent" indicates that China no longer intends to draw close to any power grouping as she did in the early 50s or late 70s.
The foreign-policy curve shown in Annex 2 is drawn through the same period along an axis of which the extremes are China's line that is extroverted, towards both East and West, and the one that is turned inward. The zig-zags are even more pronounced than in Figure 1. One other bend could have been added to the pattern in the period 1989-92, when conservative groups in China pressured the reformists led by Deng Xiaoping to slow the pace of modernisation and even return to class struggle. The reasons they invoked included corruption, inequality between regions and individuals, nepotism, Western-style liberalism and "peaceful development", the latter being seen as now threatening China just as it had earlier led to the disintegration of the Soviet Union. However, the conservatives were not able to alter the course of the "open doors" policy.
These zig-zags have mainly been tactical moves on the chessboard of international relations, where People's Republic of China has had to seek to optimise its room for manoeuvre. They have been closely linked both to the internal situation in China and to the international political climate.
Modern ideologies, conservatism, liberalism, socialism or Marxist-Leninism, have not provided us with signposts that would facilitate a boarder examination of China's foreign-policy perspectives. Whether China is socialist or moving toward liberalism has not been a particularly interesting subject from the perspective of today's students of foreign policy.
The term "socialism" has already gained the company of "market economy", all of which the phrase "with Chinese character traits" sugars. Western Sinologists began talking of Sinocised Marxism at quite and early stage, by which they meant that China's strong culture had swallowed and digested Marxism and thereby gained a tool. That tool provided the cement and a set of instructions for mobilising China's enormous human masses and moulding them into a modern state. But China's old culture was the ideological super-ego of the new state on which Marxism left its stamp.
Historical models
At times when the "open doors" policy has been advancing at too rapid pace, the phrase "with Chinese character traits" has served as a reminder of the demands that culture sets. Culture has sustained and strengthened some foreign-policy action models in China's past. Those models are invoked either as cautionary examples or as sources of strength. The same discourse is conducted both on the street level and in small groups in the highest decision-making echelon of the Chinese foreign-policy elite. At least four operational models of this kind can be distinguished:
Player
ICosmopolitan
IIMiddle Kingdom
IV. Comprador
The features emphasised in the first - player - model are creativity, willingness to fight and arrogance. The model can be traced back to an era of warring states in Chinese history (403-221 BC) and the aspects highlighted in it are the factional fighting that accompanied the emergence of the Qin dynasty (221-207 BC) and the arrogance with which the eventual victor, China's first emperor, ruled during his time on the throne. Hegemonistic aspirations, raw military force, ruthless competition, coercion as well as internal and external disorder, chaos, are the keywords associated with this model. Novels passed on orally or in writing from generation to generation since those days have bolstered popular awareness of the model. The era of warlords who ruled various parts of China in the early years of the 20th century are likewise typical of this model. The same can be said for the chaotic period that the Cultural Revolution was.
The second model - the cosmopolitan - is associated with flourishing dynasties, during whose rule foreign influences were wholeheartedly embraced and absorbed into Chinese culture, of which they became permanent elements. The powerful Han (205 BC - 220 AD) and Tang (618-907) dynasties traded with Rome, Byzantium, Persia, India and various Arabian realms. The Silk Road mediated cultural influences, one of the most important of which was Buddhism from India. The later Ming (1368-1644) and Qing (1644-1911) dynasties can be added to the same group. Chinese seafarers traded with remote continents during the Ming dynasty. In this model an internally strong China was receptive to foreign cultural influences.
The third model - the Middle Kingdom - derives from the Chinese name for China, Zhongguo. Its characteristic features are self-sufficiency and introversion. However, its foundation likewise consists of strong dynasties, especially the Ming period and in particular the latter half of the Qing dynasty. From their Middle Kingdom, the Chinese looked disparagingly down on the surrounding international field, which they viewed in terms of a cultural scale: Japan, Korea and Vietnam, which has embraced Chinese culture, were more developed than the Barbarians who had not, for example those in 18th-century England. "Inferiors" were also expected to pay symbolic tribute in this hierarchic international system based on Chinese culture, in which respect for those in higher stations was an essential requirement.
Finally, the fourth - comprador - model reflects China's position of subjugation as a humble factotum in the service of an alien conqueror. In the bureaucracy that served the power group, which did not belong to the dominant (Han) culture, the task of Chinese officials was to serve as assistants, often as minions of foreigners and against their own civilisation. The Jin (265-420), Yuan (1271-1368) and later - especially from the 1840s onwards - Qing dynasties were periods when the comprador model was followed. Under this model, also the foreign relations of the realm were subordinated to foreign powers.
Those stereotypes used for describing ways in which Chinese culture interfaces with the outside world can be compared to our own present-day EU and NATO debates, in which some myths belonging to our own relatively brief history, such as the "War of the Cudgels", Sven Tuuva, the period of autonomy within the Russian Empire, the "driftwood theory" and Finlandisation, have once again acquired a new stimulus and meaning.
Within each of the four models outlined in the foregoing is an immeasurable number of chronological periods, stories, persons, sayings, etc., all of which symbolise some or other special feature of the stereotype in question. China's many millennia of written history has meant an enrichment and deepening of culture with analogues of this kind, which are used over and over again in new contexts.
Traditions to the fore
With socialist terminology having lost its carrying power in a China pursuing and "open doors" policy, traditions have taken its place. Bookstores in China are crammed with both scientific and popular volumes about the country's religions, philosophies, philosophers, popular historical stories and large novels. Those works are often presented also in comic-strip form. Television and film producers likewise support the government's clear policy of using old traditions to instil a new morality in citizens.
Party leader Jiang Zemin is also seeking a foreign-policy programme founded on tradition. Chine does not wish to "integrate into the global system" on the basis of the Western values that are dominant in that system. Instead, she wishes to bring the own strong cultural tradition to international arenas to support her own arguments.
One foreign-policy instrument of this kind has grown quite imperceptibly in the diplomatic practice of the People's Republic. It is Heping gongchu wuxiang yuanze, the Five Principles of Peaceful Coexistence mentioned in the beginning of this article.
THE FIVE PRINCIPLES OF PEACEFUL COEXISTENCE
Ever since they were formulated in 1953, even in the most radical years of the Cultural Revolution, these principles have featured in China's international agreements, communiqués, statements and articles and presentations concerning diplomacy. China has proposed that they be accepted as part of the norms of international law, because they are enshrined in scores and scores of international agreements.
Prime Minister Zhou Enlai led the group of experts that in the early 50s developed the Five Principles to guide Chinese diplomacy. With the advance of the "open doors" policy, they have been used more widely than earlier. The Chinese themselves have emphasised their importance in all of their writings on diplomacy. Western scholars, by contrast, regard them as undemonstrative, quiet diplomatic phraseology. Thus Western research has failed to analyse the Five Principles since they were expressed at the Bandung Conference in 1955.
Exerting influence patiently and quietly over a long period is a characteristic feature of Chinese culture. One waits until the time is ripe before making a move. Besides that, the symbolic value of the Five Principles to the Chinese themselves is important. That is because they echo something that is quintessentially Chinese. In a way, they have become a foreign-policy ritual, one that is known extensively also outside the foreign ministry - even on the street level. Today, they meet the needs of a growing nationalism.
There is very much about the Five Principles that is traditionally Chinese. That they are presented in terms of a number is typically Chinese, as is the non-specific last principle, which repeats the phrase used in the collective name given to all five. If, in addition to that, one studies the etymology of the terms used in the principles, one may encounter solid Chinese interpretations and models of thinking. The so-called 36 Stratagems of the Chinese Art of War are a good example. For centuries they have been respected as proverb-like wisdom, in addition to which they have served as guiding principles for Chinese diplomacy. They are all universal in application, but only Chinese culture has fashioned them into a totality that is mediated from generation to generation. Here are some examples:
We can see from how many different levels those who decide on Chinese foreign policy and the experts that create it derive the values that serve as the foundations for political lines. Since China's intrinsic weight in international relations is growing all the time, it will be interesting to see what kinds of combinations the Western countries will encounter. And how will we find common starting points when we negotiate on matters like territorial questions, security, economic interests, the environment and human rights? After all, it is certainly significant that businessmen eagerly read Sunzi's doctrines of the art of war and that of the 36 stratagems mentioned above half have been published with detailed explanations in at least eight languages. They are also read by heads of state.
Sources:
Michael H. Hunt: The Genesis of Chinese Communist Foreign Policy, Columbia University Press 1996
Harro von Senger: Strategeme, Lebens - und Überlebenslisten aus Drei Jahrtausenden, Scherz Verlag, Bern 1988
Marita Siika: The Five Principles of Peaceful Coexistence in Chinese Foreign Policy. Manuscript. Turku 1993
Markus Pessa
Tampere University of Technology, Department of Physics
OPTOELECTRONICS AND NEW SEMICONDUCTOR TECHNOLOGY
As Goethe tells us in "Faust", the path of knowledge is a long one, but our lives are short. He made that observation in the late 18th century, when no one could have had any inkling that there would ever be such a thing as the Information Superhighway; only many generations later would the work of constructing that great thoroughfare begin. Sand is a useful material when one is building highways of any kind. It contains silicon, the second most common element in the Earth's crust. Pure silicon has a perfect crystalline structure; every atom is exactly where it is supposed to be and there are no atoms of any other element. Silicon of that kind has an astonishing property: it is a semiconductor. What that means in practice is that silicon conducts electricity excellently at high temperatures, but at low temperatures is an insulator. Such fickle behaviour with respect to electrical conductivity had been expected in some solid materials, but physicists were less than excited. Wolfgang Pauli, Nobel laureate and "superstar" of science in his days, argued in 1931 that there was no point in studying semiconductors, which he dismissed as junk that no one could be sure even existed.
The rise and rise of the silicon chip
Fifteen year later, Bell Laboratory in the United States made the first transistor. It used germanium, which is also a semiconductor, although inferior to silicon in this respect. The New York Times published a brief item reporting the invention, but it attracted little attention. Yet the transistor proved to be probably the greatest invention in world history, one that powered the growth of IBM and several other giant corporations. It became a basic building block of integrated circuits, silicon chips. In 1961 the Americans integrated four transistors into a silicon chip. In the decades since then the number of transistors in a chip has grown in accordance with "Moore's Law", which states that the number will increase exponentially, doubling every 18 months. "Moore's Law" has parallels to the story about the king Purushottama, who promised that anyone who could beat him at chess could have any prize they cared to name. The wise Pandit who took him up on it and won asked for one grain of rice to be placed on the first square of the chessboard, two on the next, four on the next, eight on the one after that, and so on. The amount of rice that would have been due on the last square exceeded total world output. The number of transistors that can be packed into a silicon RAM memory chip is currently around a hundred million (in laboratory conditions). We have reached the 26th square of the chessboard. How much further can we go?
Integrated circuits and the Information Superhighway have irrevocably changed the world. The structures of industrial societies are creaking. A seething storm of bits and electronic impulses is destroying jobs and fortunes and interfering with nature. Peoples have been induced to covet advanced technological know-how, that immaterial property that can be bought and sold and from which tangible products flow. They believe that it can teach them to live and cope with the storm of bits.
Futurologists see knowledge as the most important constituent of wealth and power. Availability of cheap labour or raw material will not be an important factor in success.
Competition for possession of knowledge and the ability to apply it in various sectors of technology is leading to changes in power relations. High cultures that have taken millennia to develop are being ground to dust in the wheels of the global techno machine. They are being replaced by one that worships scientific knowledge, and which also contains much transitory junk culture in the forms of entertainment and consumption fever. For better or for worse, the technomachine is advancing towards a new digital world order, in which cultural differences are diminishing and where geographical location is of no noteworthy significance. However, not all belong to the new world order. The gulf between those who belong and those who do not will inevitably deepen.
Semiconductor technology will do everything in its power to remain, for as long as possible, the main tendency leading to integration. Microelectronics is developing in the direction of nanotechnology, molecule-sized elements. The smaller the components become, the bigger the company grows. Since it takes astronomical sums to develop complex microcircuits, production of silicon chips is becoming monopolised. That is the harsh law of microelectronics.
Taken to its extreme, minimisation of size means that we will eventually end up at quantum points, all of the dimensions of which are of the order of magnitude of an electron's wavelength. It can be shown that, in theory, a number of quantum points arranged in a regular pattern could make it possible to build processors that are more efficient than present-day supercomputers on a single piece of semiconducting material. The working of such a chip would be guided by the laws of quantum mechanics; the world that they regulate is weird and treacherous, and the predictions that are made in relation to it seem to conflict with our intuitive conceptions.
Laser - generator of light
The semiconductor laser or laser diode, here called laser for the sake of simplicity, is an invention in the same class of importance as the transistor. Unlike transistors and microprocessors, however, it can not be made of silicon, which is incapable of emitting light. Owing to the peculiar electron zone structure of silicon, transitions between electron states do not release energy as light. A laser has to be made of a compound semiconductor, usually gallium arsenide. This chemical compound has excellent electrical and optical properties. It can also be given additions of other elements, for example aluminium or indium, which alter the energy gap characteristic of a semiconductor in any desired way. This is called "tailoring" the semiconductor's properties. The most important property of a compound semiconductor is that the energy released in electron transitions within them manifests itself as electromagnetic radiation.
It was theoretically predicted in the late 50s that laser light could be ignited in the depletion region at the p-n junction in gallium arsenide. An inverse population of charge vectors, i.e. Einstein's condition for stimulated light, comes into being at such a junction. Another requirement for laser production is a cavity to resonate with the light. This is created by splitting the chip along the plane of the crystal, which turns the ends of the chip into mirrors that efficiently reflect light. The prediction that lasers could be made led to intense competition between scientists to demonstrate one experimentally. Four different laboratories in the United States managed to make lasers around the same time in 1962, i.e. when the first rudimentary microcircuits were appearing, 15 years after the invention of the transistor and 30 years after Wolfgang Pauli's forecast that got it so wrong. Unfortunately, the early lasers worked for only a few seconds in temperature of 200 degrees below zero Celsius. They had no practical application and for a long time attracted relatively little attention.
Despite the progress that has been accomplished in research, mass production of laser diodes has developed slowly. That is because the real benefits of lasers can be gained only when other applied technology, such as microelectronics or telecommunications, is sufficiently advanced. Thus the situation is different from what happened in the case of transistors, for which applications were found almost at once. Since there was no immediate demand for lasers, industry did not invest in them.
Now the era of laser diodes appears to have dawned. Data transmission is developing towards fibre optical telecommunications, in which the bandwidth is to all intents and purposes infinite. A telecoms network like that will never be congested. The globe - including the oceans - will be enveloped in a glass fibre network. Finland is a pioneer in telecoms technology, with a trunk optical cable network over 20,000 kilometres long and in which 90 % of all messages are relayed at the enormous transmission rate of 2.5 gigabytes per second. Transmission rates will increase to four times that in the near future. At least ten optical cables - with higher and higher transmission speeds - have been laid across the Atlantic, and more are planned. Large numbers of lasers are needed for the transmission and booster units belonging to those communications systems. Lasers also suit other applications, because they are easy to interface with traditional circuits. Those applications include CD players, text readers and printers, screen pens, metering devices, space technology, surgical instruments or even high-definition TV sets or computer terminals small enough to fit into a wristwatch.
R&D and industrial production in the field of lasers have now suddenly entered, as it were, the eye of the storm. A decisive step forward in research was accomplished at the turn of the 90s, when scientists learned to make very thin semiconducting layers, quantum wells, with artificial crystal lattices - contrary to nature. Semiconducting films had earlier been made on "proper" crystal structures, because it was feared that a crystal subject to grid voltage would be unstable. With the "wrong" lattice constants, however, the quantum well became an extremely efficient light generator when an electrical current flowed through it, and the structure was not at all unstable. When the charge carriers captured in the quantum well joined together, they produced a light with an intensity that could reach tens of watts. That effect is emitted from an almost point-like area on the end mirror of the laser and can even exceed the surface of the sun in brightness. A laser chip - a weightless nugget, the size of a piece of hair a millimetre long - is a revolutionary invension of a significance for humankind that may even prove to be much greater than is currently suspected.
The third lamp
Optoelectrical systems are central parts of the technology of the information society. Their important components, laser diodes, have been developed at a frantic pace in recent years, at the same time as lasers' less ingenious precursors, light-emitting diodes or LEDs, have been given little attention. That has happened despite the fact that the LED market is huge. They are used in optical communications, terminals, signal lamps that indicate effect, remote control units for various systems and also in the traffic lights of the future. All in all, some ten billion of them are manufactured each year. LEDs are durable and light. They are cheap and insensitive to temperature fluctuations, and they can cover a broad spectrum from blue to infrared. However, they do have serious shortcomings: the intensity of the light they emit is low, the spectrum broad, coupling times long. For that reason, LEDs do not lend themselves to demanding telecoms applications.
LEDs emit spontaneous light. Conventional wisdom has it that the quality of spontaneous light cannot be externally influenced, and that therefore the efficiency of LEDs must remain low. On both counts, however, conventional wisdom is wrong.
Spontaneous emission can be controlled. Its properties can be altered using electronic nanotechnology methods. It is possible to capture a photon in a small space in the same way as an electron. If mirrors are placed on both sides of a thin semiconducting film, the photon is trapped in this film, in a micro cavity. The mirrors must have high reflectivity and low absorption, and the cavity a flawless crystalline structure. Metal films would be good mirrors in terms of reflectivity, but they would absorb photons. For that reasons the mirrors are generally made of layered semiconducting or dielectric materials, which have an energy gap greater than the energy of photons. They reflect like metal, but do not absorb light. The thickness of the semiconductor between the mirrors should be the wavelength of a photon or a certain fraction of that wavelength. When this requirement is satisfied, the photons "recognise" the existence of the micro cavity. But where does one get the photons to go into the cavity? Answer: from the quantum well! A quantum well, a photon factory that emits radiation of the right size, is placed in the cavity. The result is a strong resonance between the quantum well and the cavity. Thanks to this resonance, the quantum well emits almost entirely against the mirrors in a vertical direction rather than isotopically, as with ordinary LEDs. In addition to that, the cavity filters out the peripheral parts of the spectrum, with the result that the spectrum becomes energetically narrow, almost monochromatic. Now the spontaneous emission resembles a stimulated one. Although it is incoherent, its intensity is an order of magnitude greater than the light emitted by an equivalent ordinary LED. The quantum efficiency is likewise many times greater. The wavelength of the emission, the colour of the light, depends on the depth and width of the quantum well, which can be tailored to whatever dimension is desired, just as is possible with lasers. The ray emitted forms a narrow shower and, because it is circular in cross section, it is easy to switch into an optical fibre.
Light emitters of this kind are called vertically-emitting microcavity or MC-LEDs or resonant cavity LEDs. They are astonishing components with performance values lying between those of lasers and ordinary LEDs. There is every justification for regarding them as the third type of semiconductor light source.
In the future, the range of applications for super-clear MC-LEDs will probably be enormous, covering everything from traffic light to telecoms. It is also conceivable that LEDs will be used, with the aid of optical fibres, for lighting purposes. By mixing colours, done at the press of a button, it would be possible to switch on a light resembling sunlight on one's home, or some more romantic alternative. The energy required would be only a tenth or perhaps one-hundredth of the amount used by present-day bulbs, in which most of the electricity is converted into heat. Nor do LEDs need maintenance. LED-based traffic lights, for example, would work for a decade without maintenance.
Close kin of MC-LEDs are VCSELs, or vertical-cavity surface-emitting lasers to give them their full title. They have been in mass production since 1995, whereas MC-LEDs are still at the laboratory trials stage. Thus vertical components have been developed in the opposite order to other lasers and LEDS. VCSELs are gallium arsenide-based and operate at wavelengths between 0.7 and 1.1 m. Since, however, most telecoms systems operate in the range 1.3 - 1.55 m, indium phosphide VCSELs are needed. Unfortunately, semiconductor mirrors in which the size of the micro cavity could be determined with sufficient accuracy are not available for the wavelengths dominated by indium phosphide. Therefore it is particularly difficult to manufacture a monolithic indium phosphide VCSEL or MC-LED.
"Million bucks epitaxy"
MBE stand for "molecular beam epitaxy" and has been dubbed "million bucks epitaxy" by some wags. It is a method used to manufacture layered semiconductor films and is based on vaporisation of solids in a high vacuum. The vapour forms a beam of molecules, which is aimed at the substrate. The substrate is a single-crystal semiconductor wafer made of gallium arsenide or indium phosphide. When two or more molecular beams simultaneously react with the surface of the substrate, a semiconductor film grows on the surface.
When the temperature of the substrate and the volume of material carried by the molecular beams are in a suitable ratio to each other, and when the crystal lattices of the substrate and the film are approximately the same, the crystal lattice of the substrate is flawlessly copied, atom-by-atom, onto the film. Film growth of this kind is called epitaxial. In MBE technology, the film typically grows at a rate of one layer of atoms per second. The molecular beams are mechanically interrupted by means of a metal plate placed in their path. The method is so exact that the thickness of the film can be determined digitally by counting the number of vaporised atom layers.
To improve their electrical conductivity, impurities can be added to the films. These atoms, which are vaporised and introduced into the film while it is growing, are either "donors" or "acceptors". The former are silicon, the latter beryllium or carbon. Film growing results in an epiwafer, from which components are processed.
The Finnish pioneering role
Molecular beam epitaxy has opened a road to new semiconductor technology. It is not the only way of growing layered film structures, but it can be precisely controlled and the film quality is the best possible. It is suitable for both experimental use and industrial production. In Finland, it is used at the universities of technology in Tampere and Helsinki. The Tampere University of Technology has four MBE reactors and is Europe's biggest university-based research centre in this field. Its capacity is supplemented by production MBE reactor belonging to a Finnish company. Since the research and production reactors are similar, manufacturing technology can be transferred from the research stage straight to production - a rare feature in advanced technology.
MBE technology is used at the Tampere University of Technology in research into three groups of optoelectronic components: lasers, MC-LEDS and solar cells.
So far, lasers have been developed in collaboration with industry for use as amplifiers in optical telecoms networks and for pumping yttrium aluminium garnet (YAG) lasers. The lasers are now on the world market and represent the highest power category. The manufacture of red lasers for use in mass-produced devices is likely to commence before the end of 1997. Also under development are blue-green lasers, using elements belonging to the second and sixth groups in the periodic table. However, those lasers are still in their early infancy. The shorter the wavelength one is aiming for, the more difficult it is to get a semiconductor to emit a laser beam. Europe lags clearly behind Japan in this area. Sony of Japan has a blue-green laser that works for 100 hours, whereas the best the Europeans have been able to achieve is a few minutes. The life span of those lasers has been increasing tenfold each year, so it will probably not be very long before the commercial goal of 10,000 hours is achieved.
The latest focus of research in Tampere is a super-clear MC-LED. This is pure basic research, semiconductor physics at its most interesting. The concentration is on indium phosphide LEDs for telecoms use and visible light gallium arsenide LEDs. Some of this research is under the umbrella of European ESPRIT projects, some belongs to programmes launched by the Academy of Finland and the Technology Development Centre (TEKES).
A third research object is a solar cell. Tandem solar cells of a new type are being developed. Their special feature is that they are capable of cutting two bandwidth strips out of the sunlight spectrum and converting the radiation into electrical energy. The cells are particularly suitable as a power source for satellites. Experts forecast that 50 - 70 % of the satellites of the future will be equipped with gallium arsenide-based solar cells. The tandem cells developed in Tampere are of high efficiency, over 20 %, which is the best achieved in Europe to date. A further advantage is that they can stand cosmic radiation better than the silicon cells now in use. This research into solar cells is part of a European Space Agency programme, in which all European manufacturers of solar cells for use in space are participating.
It is fascinating to study the world of light and electricity and the laws that govern the micro cosmos. Physics provides the opportunity, semiconductor technology the tools. Sometimes, however, pioneering research that requires a long-term commitment can seem useless, even frustrating, because the final outcome can never be predicted and there can be no certainty about the quality of the result. A lot of hard work and a little luck are prerequisites for success. On the other hand, it is completely obvious that a society can not do well in economic competition without profound basic research, experts, new ideas and international cooperation.
Jukka Lahtinen, Managing Director and Lecturer
Avaintulos Oy, University of Tampere
CASE: AVAINTULOS OY AND ILKKA LIPSANEN (DANNY) -
OPENING UP EXPORTS OF POP MUSIC TO CHINA
"Those who disparage Finland for poverty, know nothing about courage"
Sometimes the impossible can become possible. One such occasion will be in November 1997, when a 20-strong group of artistes watched by the 50 members of a Finnish delegation and a Chinese audience of a few thousand write a new chapter in the history of Finnish popular entertainment. It will be the first occasion on which Finnish pop musicians have had the opportunity to perform in a concert hall in the People's Republic of China.
Two small companies, the Tampere-based publishing and training firm Avaintulos Oy and the Helsinki-based entertainment productions company D-Tuotanto, have been working on the project for over a year. The work of a few optimists who believed in their cause will be rewarded on 4.11.1997.On that Tuesday evening, Ilkka Lipsanen or just "Danny", who has been entertaining the Finns for over 30 years will step onto the stage of the famous Friendship Theatre in Guangzhou.
When Danny has finished the opening number of his show, Kassu Halonen's Taikaa ("Magic"), the history book of Finnish light entertainment will require a new sub-chapter headed "Performances in China". A concert in Beijing's splendid Poly Plaza concert hall on 9.11 in turn will add Danny's name to the brief list of artistes who have performed in China's main political, administrative and cultural centre.
As the person responsible for planning and implementing Danny's concert tour of China, I have been given the enjoyable task of describing the background and goals of the project and the manner of its implementation. Danny and I are very grateful for the opportunity to be able to announce our project at the most prestigious forum possible, the Committee for the Future's China Seminar.
We have envisaged the China project as a gift by two small Finnish companies to Finland as she celebrates the 80th anniversary of her independence this year, to a country that has in many respects paved the way for both of us to fulfil our own dreams. It is our fervent hope that we will be able to develop a new Finnish export product out of this project. Thus we are not arranging a one-off concert in China, but rather embarking on a long-haul project with the aim of exporting Finnish musical entertainment to China and later to other Asia Pacific countries.
The goal of the project is to make Finland, Finnish products and the capabilities of Finnish institutions of learning known in China using the means that musical entertainment provides.
"Work has to be done in all weathers, no matter how cold it is, or dark"
The venue for Danny's group is China, a country of nearly 1.3 billion inhabitants and the cradle of the world's oldest-known civilisation. The economic upswing initiated by party leader Deng Xiaoping in 1978 is of such a magnitude that no country can afford to shrug it off. The Finns, too, should be constantly thinking up new ways of getting into this, the world's fastest-growing market.
Danny and his company D-Tuotanto ("D Productions") are an institution in Finland, the Academy of Light Finnish Music. A significant share of the influential figures in the Finnish entertainment world have worked for D-Tuotanto at some stage of their career and have learned their trade there.
D-Tuotanto has played a pioneering role in developing several new forms of variety-type entertainment in Finland and being the first to implement new ideas in this area. Danny and D-Tuotanto have had the boldness to take risks even at times when they could have done well enough by playing it safe. As soon as they have heard of the planned China tour, people have regarded it as self-evident that Danny will be the first to go there.
In his popular number Tämä Taivas, Tämä Maa ("This Heaven, This Earth"), Danny appositely describes the Finns' ability to carry out new projects. "Through the grey rock they punch a road, cope in even the difficult times." That is what we are like: hard workers, tenacious once we have started something. Fortunately we still retain many of the properties of those legendary figures who never shied away from a challenge, Jussi of Jukola and Akseli Koskela. Let us be pleased about that.
"The East wind calls me to the East now I'll either go or stay"
The theme of the Danny-Show in China concert is "Finland Celebrating 80 Years - Through the Grey Rock". The items included in the show have been chosen to reflect the Finns' desire to see the country carved out of the wilderness by our forefathers and preserved for this generation through the sacrifices of our war veterans as a vital one. In such a condition that our children will be able to inherit it from us and they too will feel it is a good place to live.
Modern Finland's most important resource is a "can do" person. The competitive advantage of Finnish products is generated by our ability to develop new technology and market our skills to other nations. Our success is based also on our ability to create functioning ties of friendship outside our country. Using the means that art places at our disposal, we shall give the Chinese a picture of friendly and peace-loving people in northern Europe, a nation that wants cooperation with all quarters.
Decide when others delay.
Begin when others postpone.
Go on when others give up."
On the political level, the Finns have managed their relations with China in a manner that is greatly esteemed in that country. One manifestation of that is the fact that President Martti Ahtisaari has made two - successful - visits to China since taking office.
For Finnish companies and many other bodies and individuals intending to go to China, the input that the state authorities have made into the matter has created exceptionally favourable conditions in which to operate. Thus the Finns' main requirement for entering the Chinese market is the determination and courage to take the first step.
There is never a shortage of voices that caution against going to China. There will always be people who constantly come up with better and better excuses for delaying things or leaving them undone altogether. This it is good that official Finland is, through its own example, sending a message that Asia is the most important growth centre in world trade.
The culture of China is naturally different from the cultures with the representatives of which the Finns have mainly traded. But then people are very similar irrespective of where in the world they live. And cultural differences are things that can be learned. No one is doomed to be a prisoner of cultural differences. Many third-level scientific and vocational institutions of learning in Finland provide China-related instruction of a high standard.
"It's permitted to care about others, it's not at anyone's expense"
Traditional conceptions of countries and nations change very slowly. The best way to promote a change in attitude about a country is to visit it. With the year 2000 drawing close, we must create - between our ears - a new image of China. It is a very important matter in a national sense, because we cannot afford to blind our eyes and deafen our ears to events in China.
Without exception, Finns who visit China for the first time return from the trip surprised at what a false image they had had before going there. That is, of course, consoling in a way; attitudes can be changed. Above all, we need well-organised business, study and cultural visits to China; all kinds of new cooperation always begins after them. Let us, therefore, carry coals to Newcastle.
As a person who has visited China 27 times, written textbooks about it and now lectures on Chinese economic affairs, I have often wondered what makes the threshold for us Finns to go to China so extraordinarily high. Alongside official visits by delegations, we obviously need new "low-threshold" ways of establishing contacts with China.
The delegation visit organised in conjunction with the Danny Show is carefully tailored to the needs of companies and institutions of learning and will follow a precise-to-the-minute timetable. It could be an uncomplicated way of going into a new market. That is the motive for going that many who have been part of the delegation have stated. More projects of this kind could be carried out, and it would make sense to support their planning and organisation - in the sense of morale and financially.
"They say the world loves an adventurer"
Today's Finnish heroes are those who, sparing no effort, clear the way for Finnish products, know-how and culture - all the way to China. Finnish export marketers are working for the benefit of all of us. They are making sure that our national success story continues and that Finnish work sells in the world. Their hard work deserves the support and respect of every citizen.
In fact, an export marketer's work is anything but adventure, and it is not always even appreciated sufficiently. Surveys in several countries have revealed that the work done by representatives of the arts can make export companies' efforts in strange markets significantly easier.
Danny's China concerts between 30 October and 10 November 1997 represent an alliance between art, science and business. The tour grew out of the meeting arranged for Danny as part of Avaintulos Oy's 10th-anniversary celebrations, initially in the assembly hall at the University of Tampere and later at a gala dinner at our home. In a way, it was all a coincidence. The parties involved happened to be among the group of friends that we had invited to speak at our function.
At our function Danny made the acquaintance of Professor Mrs. Xu Luodan, who heads the international trade and finance department at the renowned Zhongshan University in Guangzhou. In the course of the autumn last year, we developed, together with Professor Xu Luodan, the idea of Danny giving a concert in China.
When the Professor saw that it would be possible, I met Danny at his 30th- anniversary concert at the House of Culture in Helsinki and invited him to make a concert tour of China in 1997. Thus two celebrations set in train a much more significant sequence of events than the celebrants had originally intended.
" But get to work, and more work so that this job is not left unfinished."
Accompanying Danny's 20-strong team to China will be the more than 30 members of a delegation representing the scientific community and third-level institutions of learning. Leading the delegation will be the Chancellor of the University of Tampere and its Professor of Marketing Uolevi Lehtinen.
The delegation representing the education sector will have its own high-level conference in Beijing. This has been tailored in collaboration with China's State Education Commission. A similar conference is being arranged jointly with the Higher Education Commission in Guangzhou. In both cities the delegations will conduct negotiations with various institutions of learning and this will probably lead to the signing of a cooperation agreement.
For the company delegation with more than 10 members I have arranged, together with my Finnish and Chinese friends in Guangzhou and the Guangzhou Foreign Affairs Office, a seminar that we are calling Finland Business Day. This will give the Finnish companies taking part an opportunity to present their operations and products to a very distinguished group of Chinese visitors. The seminar will be opened by the mayor of Guangzhou. Also going to China is a delegation from the City of Tampere, which will negotiate the establishment of cooperation ties with Guangzhou.
Television and the press in both countries are giving the various stages of the trip and its planning a substantial amount of coverage. There is considerable media interest in the trip, also in China. One of the things that interest the Chinese is whether Danny perhaps intends to release an album in China. It is a good question, because this possibility has been allowed for.
Summa summarum. Danny's China tour is a good example of how chance, but on the other hand also creatively availing of the coincidences that it creates, can give rise to some little immortal thing, to something that those of us who stick to traditional planning methods might never even have thought of trying for. In a way, this project demonstrates that chaos theory works.
However: although our project may have conformed to chaos theory in its embryonic stage, its operational stage was very systematic activity that involved thousands of hours of work and attention to thousands of details. The project succeeded because two small companies were able to network in seamless cooperation that disregarded daily time limits and clocks, and in which both participated with a fiery passion.
The whole operation and the delegations that came into being in association with it were set in motion by the invitation extended to Danny to perform in Guangzhou and Beijing. Viewed from a Finnish perspective, the project is quite remarkable in that opportunities to negotiate on very important projects arose only because a concert tour in China was arranged for a pop music artiste. This model ought to be experimented with more often. If it leads to significant projects involving institutions of learning, municipal decision-makers and businesses, it is very useful. Das Ding an sich. As Danny sings on his album: "It could also have been the other way round."
PARLIAMENT OF FINLAND
Committee for the Future
PROGRAMME China Seminar, Part 2 Finlandia House, Tuesday March 11, 1997 Chairpersons: Vice Chairperson of the Committee for the Future Tarja Filatov Ambassador Ilkka Ristimäki 9.00 - Opening: Vice Chairperson of the Committee for the Future Tarja Filatov 9.10 - 10.00 Vice Foreign Minister Wang Yingfan 10.00 Discussion
Wang Yingfan, Vice Foreign Minister
People's Republic of China
CHINA AND THE WORLD AT THE ADVENT OF THE 21ST CENTURY
Mankind is at the threshold of a new century, but what kind of a new millennium are we going to embrace? This is the question that people throughout the world are pondering. It is of practical importance for the Finnish Parliament to set up the Committee for the Future recently to conduct in depth discussions and international exchanges on this issue. Today, I am very pleased to be here to brief our friends on how China is preparing for the 21st century and its relations with the rest of the world.
At the end of 1970s, the Chinese people began the great cause of reform and opening-up, striving to lead socialist China to national rejuvenation and prosperity through such a historic transformation. It was Comrade Deng Xiaoping who initiated China's reform and opening-up policies eighteen years ago.
Nearly 80 % of China's population live in rural areas whose constant development is the pre-requisite for the economic growth and social stability of the whole country. Our rural reforms have given the farmers incentives and agricultural output has been increasing steadily. The vigorous growth of township and village enterprises has opened a new path for development of the rural areas and even the entire country. Urban reforms designed to invigorate state-owned enterprises have also got underway and picked up speed. A new operational mechanism for running enterprises is taking shape and the quality and cost effectiveness of economic growth have improved.
At the outset of our reform, we began to open China to the outside world. Opening-up is part and parcel of the reform. Great emphasis has been laid on assimilating and emulating the achievements of other peoples in the economic, scientific, technological and cultural fields. As a result of exploration and practice over the last decade or more, we have developed an all-directional, multi-tiered and diversified pattern of opening up. Opening started in the primary and secondary industries and is now extending to the tertiary industry. Foreign businesses are finding constant improvement in China's investment environment as well as related services and legal protection. Thus, China is marching towards the world and towards the world market. At the same time, overseas and businessmen are flocking to China's market.
A big leap in our economic reform is the switch from ultra-centralized structure of planned economy and the definition of our goal to build a socialist market economy. Integrated with the underlying socialist system, the new economic structure allows the market to play a primary role in resource allocation under state macro-control so as to ensure that economic activities will conform to the law of value and respond to changes in supply and demand. Market economy has developed for several hundred years in western countries which have acquired a great deal of successful experience applicable to socialized mass production and in line with market laws. A socialist market economy, such as is now being built in China, is the very first and totally new experiment of its kind in the history of social and economic development of mankind. We are keen in learning form and assimilating the scientific achievements of foreign countries in developing market economy. More importantly, we must innovate and constantly acquire new knowledge through our own practice. In 1994, we launched a series of important reform measures in the fields of finance, taxation, banking, foreign exchange management, foreign trade, investment, pricing, circulation and enterprise systems. Our socialist market economy is on the track.
We have switched from an ownership pattern which sought a unitary form of public ownership. We have also rectified egalitarianism in wealth distribution. In its place a new pattern is taking shape with public ownership as the core but allowing simultaneous development of diverse economic sectors. The resulting distribution pattern which retains the core of "to each according to his work" but allowing diverse other modes of distribution has greatly enhanced the incentives of the people and all sectors of the society. Our policy is to allow and encourage some areas and some people to get rich until the whole country and population achieve common prosperity.
At the same time as we implement economic restructuring, we also steadily but prudently push ahead with reform in our political infrastructure in an effort to enhance socialist political democracy. Development of democracy in China must proceed from the country's prevailing condition.
The people's congress system and the system of multi-party cooperation and political consultation led by the Communist Party -- systems that essentially embody the basic features of China's socialist democracy -- are being further consolidated, developed and enhanced. We are striving to separate the functions of the government from those of the enterprises, streamline Party and government institutions and upgrade government operations by way of reforming the personnel system and enhancing supervision mechanisms. At the same time as we develop democracy, we have vigorously pushed forward the building of legal system by enacting a series of laws and statutes, which has ensured the smooth advance of our modernization programme. We constantly work for the enhancement of socialist culture and ethics by raising the moral and cultural standards of the population. This will ensure cultural and ethical progress in conjunction with material advancement.
In order to ensure that our modernization programme can proceed smoothly, we always take great care in handling the relationship between reform, development and stability. We regard development as the objective, reform as the driving force and stability as the precondition. Without political stability, we simply cannot undertake reform and opening-up, nor economic development. On the other hand, if we fail to make economic development our primary task, or if we do not undertake reform and opening-up, then there will be no economic development, and political or social stability will be put out of the question.
In the course of reform and opening-up, we have resolved or overcome numerous contradictions, problems or difficulties that cropped up now and then. Currently some vexing problems stand out in China's socio-economic domain, namely, lagging agricultural output and predicament of some state-owned enterprises. Besides, disparity between the coastal area and the central and western areas of the country tends to increase and unfair social distribution and corruption persist. However, we always have a sober evaluation of such problems. We will strive to resolve them as we press on with our reform, and by means of enhancing and strengthening macro-regulation and accelerating the building of socialist market economy. We have been increasing capital and technological input for agriculture and enhancing the guidance, organization and service for rural development. China can certainly count on our own resources to provide food for our 1.2 billion strong population. We are stepping up the efforts to overhaul the operating mechanism of state-owned enterprise and the rationalization of their management in order to put in place a modern enterprise system. We are further rationalizing the fiscal and taxation system and regulating market and distribution orders to ensure fair competition and distribution. At the same time, we are quickening the pace of developing a social security system. As regards the poorer, underdeveloped regions, the government will render them necessary support by way of finance, industrial policy and layout of new productive forces in order that they can stand on their own feet and gather strength to narrow the gap with more developed regions. We have taken resolute measures to fight corruption and other social evils. We firmly believe that, by relying on the wisdom and strength of the entire nation and as we build up our experience, we will surmount all obstacles in our way.
China is vast with a weak economic base, a big population and uneven development in different regions of the country. There are two improper tendencies in making assessment of China. Some people look at the achievements and think that everything is fine and that China will become a great economic power in no time. That would be an overestimation of China's strength. Other people scrutinize the problems and difficulties in China's development and think China has messed up with everything and cannot hope to maintain stability and unity. That would be a gross underestimation China's strength. Neither assessment -- overestimation or underestimation, blind optimism or pessimism -- correspond to reality.
China has a long way to go and it will not be easy. In China's modern history, the Chinese people sought national salvation for over a century before they finally won liberation and national independence and turned a new page in China's history. From the founding of new China to the middle of the next century, the Chinese people have to strive for another one hundred years before they can accomplish socialist modernization. That will be another great leap in China's history. According to the three-stage modernization strategy enunciated by Comrade Deng Xiaoping, the chief architect of China's reform and opening-up, we have achieved ahead of schedule the goal set for the first stage -- doubling the 1980 GNP in 1990. The GNP is to double again in the 1990s. This goal set for the second stage will also be reached ahead of schedule. By that time the standards of living will be relatively adequate. We will build on this and attain the goal set for the third stage of modernization after a few more decades of efforts.
Early in 1996, the Chinese Government formulated the Ninth Five-Year Plan -- the last live-year plan for this century -- and the Long-Range Objectives to the year 2010, in which it laid out a blueprint for China's development early in the next century. According to the blueprint, we will complete the second phase of the strategic plan for modernization during the period of the Ninth Five-year Plan and quadruple the per capita gross national product of 1980 under condition that the population in 2000 will have increased by 300 million over that in 1980; raise the people's living standards to that of a fairly comfortable life with poverty practically eradicated; and expedite the formulation of a modern enterprise system and establish preliminarily a socialist market economy. The gross national product in the year 2010 will be double that of the year 2000; the people will enjoy an even more comfortable life and a more or less ideal socialist market economy will have come into being. To realize these objectives, we will strive to fulfill the following major tasks:
First, ensure a sustained and stable growth in agriculture and the rural economy as a whole. This is very important and it is the most difficult task in our economic development over the next 15 years. Our arable land accounts for only 7 percent of the world's total, yet we must feed 22 percent of the world's population. This has made grain production especially important. We must ensure that the total grain output will reach 490 billion to 500 billion kilograms by the year 2000.
Second, actively promote readjustments in industrial structure. In the coming 15 years, the state will concentrate necessary resources on a number of large projects concerning water conservancy, energy, communications, telecommunications and major raw materials. We shall continue to invigorate such pillar industries as machinery, electronic, petrochemical, automobile and the construction industry, and we must do this according to market demand so as to stimulate the growth of the entire economy.
Third, promote a geographically well-coordinated economic development. The Chinese Government will pay more attention to the development of the central and western parts of the country and strive to narrow the regional gap. The state will step up resources survey in central and western China, give priority to resource development and infrastructure projects and gradually increase financial support and investment; adjust the distribution of the processing industries by guiding the transfer of resource-processing and labour-intensive industries to the central and western parts of the country; rationalize the prices of resources products so as to enhance the self-development capabilities of the central and western regions; improve the investment environment in the central and western parts of the country and direct more foreign investment towards these regions; strengthen economic association and cooperation between the eastern and the central and western parts of the country; encourage the eastern parts to invest more in the central and western parts and direct the flow well-educated human resources towards these regions.
Fourth, strive to maintain macro-economic stability. We have set the objectives of macro-economic control for the Ninth Five-Year Plan period as the following: about 8 percent average annual economic growth; a 30 percent rate of investment in fixed assets, and a marked drop in the margin of price rises, which we must, first of all, try to keep lower than the rate of economic growth.
Fifth, continuously raise the people's living standards. During the Ninth Five-Year Plan period, the urban residents' per capita income spent on living expenses after allowing for price rises is expected to increase by about 5 percent annually and the per capita net income of farmers is expected to increase by about 4 percent annually.
Sixth, further intensify the reform of the economic system and open wider to the outside world. We will basically put in place a uniform and well-regulated foreign economic system in accordance with the international economic rules. Last year, we reformed the foreign exchange system and allowed the free convertibility of Renminbi under current account. China's tariff level, moreover, has dropped from 36 % to 23 %, with the ultimate goal of reaching the average level of developing countries.
Seventh, strengthen socialist democracy and legal system and promote political restructuring. We will lose no time in drafting a number of important laws and regulations and will step up the execution of economic laws and the enforcement of administrative law. We will continue to implement the public law awareness program to enhance people's awareness of the importance of law and their obligation as citizens. Moreover, greater efforts will be made to keep government employees honest and industrious, to combat corruption, and to severely crackdown on various crimes.
Last year marked the beginning of China's Ninth Five-Year Plan period. Thanks to macro regulation and control measures, we maintained a rapid economic growth and put inflation under effective control at the same time. The economy grew by 9.7 % while the price rise index dropped to 6.1 %, which means that we have achieved a "soft landing" of the economy. The total output of grain exceeded 480 million tons, 13.5 million tons more than that of the previous year. Foreign trade volume increased by 3.2 %, totalling $289.9 billion. Foreign exchange reserve totalled $100 billion. These achievements have filled us with confidence that we will attain the goals of the Ninth Five-Year Plan and the Long-Range Objectives to the Year 2010.
On July 1 this year and December 20, 1999, China will resume the exercise of sovereignty over Hong Kong and Macao respectively. These will be milestones in our great cause of national reunification. Today, the return of Hong Kong is only 112 day away. The preparations for the establishment of the Hong Kong Special Administrative Region are going on smoothly. Now, more and more people in Hong Kong and the international community at large are convinced of the sincerity and determination of the Chinese Government in carrying out the policy of "one country, two systems" and ensuring Hong Kong "to be administrated by Honk Kong people" and "to enjoy a high degree of autonomy". At present, Hong Kong enjoys a favourable social and economic situation, with continued in-flow of foreign capital and massive return of emigrated Hong Kong residents. The latest opinion poll indicated that 73 % of the Hong Kong people are confident of the future of Hong Kong and themselves. Over 90 % of the business people from UK, US and France have confidence in post-1997 Hong Kong. The international political and economic situation is also conducive to the smooth return of Hong Kong. Let's say, the smooth transition in Hong Kong is irreversible. There does not exist any insurmountable difficulty or obstacle whatsoever.
After China's resumption of the exercise of sovereignty, Hong Kong's existing social and economic system and way of life will remain unchanged, and the laws previously in force basically unchanged. Hong Kong will maintain its status as an international financial, trade, shipping and information center, a free port and a separate customs territory. The legitimate economic interests of foreign countries in Hong Kong will be accommodated and protected. The above policies will remain unchanged for 50 years.
Returning to the embrace of the motherland toward the end of the 20th century, Hong Kong and Macao will maintain prosperity and stability, inject fresh vitality into China's economic prosperity and play an active role in forging closer economic and trade links between China and the rest of the world.
Ladies and Gentlemen,
The bell of the century will soon sound 21 chimes. The international situation is in general moving towards relaxation. We share a feeling that the pace of world history has quickened. Yet the anticipated universal peace did not come with the end of the Cold War. Local turmoil and armed conflicts have broken out and spread out. Hegemonism and power politics are far from demise. Many developing countries are still living in the grim shadow of poverty. The devastation of the two world wars in the first half of this century taught the people a profound lesson. Such tragedies must never be allowed to repeat. How to make the coming 21st century one of peace, security, constant development and prosperity? This is a momentous issue that the world's people and statesmen should seriously consider and tackle in common.
We are a peace-loving nation anxious to develop our country. A stable, prosperous China constitutes a positive factor and staunch force championing the cause of world peace and common development. China consistently pursues an independent foreign policy of peace. We refrain from forming alliance with any country or group of countries. We turn our back on any military bloc. We oppose all manifestations of hegemonism, power politics, and all acts of aggression or expansion. We will never seek hegemony or commit expansionism. In the future when we become economically developed, we will not deviate from our independent foreign policy of peace and will never pose any threat to any country. The Chinese Government pledges itself to untiringly promote friendly cooperation with all countries in the world on the basis of the Five Principles of mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other's internal affairs, equality and mutual benefit, and peaceful coexistence, and to work unremittingly with people of all countries for the establishment of a fair and rational new international political and economic order featuring peace and stability.
The Chinese Government and people care very much about the future of Asia, standing ready to work with other Asian countries for the stability and development in this region. The Chinese Government fully respects the diversity of Asia and the independent choices made by its people. We will endeavour to further exchanges and cooperation among Asian countries in the spirit of mutual respect and seeking common grounds while putting aside differences. It is a key component of China's independent foreign policy of peace to maintain stable, friendly and good-neighbourly relations with its surrounding countries. It is hardly avoidable for neighbouring countries to have some kind of differences or disputes. In our view, countries should bear in mind the long-term interests of all peoples, value the large interests of maintaining peace and stability and proceed to find practical solutions through friendly consultations and negotiations, taking into account the interests of all parties. Differences which cannot be settled for the time being may be shelved temporarily so as not to hamper normal state relations. The Five Principles of Peaceful Coexistence were initiated by the Asian countries as a full testimony to the farsightedness of Asian peoples and their statesmen. Now, they have become universally accepted norms in the international community and the basis underpinning a new type of state-to-state relations. I am convinced that the Asian countries are fully capable of living in amity with one another on the basis of the Five Principles of Peaceful Coexistence and of settling their differences or disputes by relying on their own wisdom and strength, so as to maintain peace and stability in Asia.
The development of Asia is impossible without the cooperation among its members or the cooperation between Asian countries and those in other regions of the world. Thanks to the joint efforts of Asian countries, economic cooperation of various kinds in this region has made further headway in recent years. This has not only invigorated the Asian economy, but also instilled fresh life into the world economy. The Chinese Government stands ready to further strengthen its economic cooperation and trade with other Asian countries on the basis of mutual benefit, mutual openness, long-term cooperation and common progress. Such a regional cooperation among Asian countries should be open and non-exclusive, which is consistent with the interest of global economic development, and should be pursued in a mutually complementary way.
The issue of regional security is a concern of any Asian countries desirous of a extended period of peace and development. The security mechanism in Europe must not be copied blindly since the situation in Asia is different. The issue of Asian security should be addressed and resolved by Asian countries and peoples. It does not tally with Asian reality nor conforms with the trend of our times for someone to attempt stronger regional security be beefing up bilateral military alliance introduced in the height of the Cold War. Such a practice is not advisable. The security in Asia should be jointly maintained through bilateral or multilateral peaceful consultations on an equal footing, better mutual understanding and mutual trust, and economic exchanges and cooperation in greater depth and scope.
Through millenniums of human history, the industrious and talented Asian peoples have created a spiritual treasure house. Today, the oriental civilization continues to enlighten people. Practices show that the rich cultural and ethical heritage of Asia is a positive factor conducive to social progress and human advancement. Working together, the Asian countries and peoples are fully capable of maintaining peace and stability in Asia.
Ladies and Gentlemen,
The international relations are undergoing profound changes as we move on towards the twenty-first century. Such changes have two highly visible features. First, the world is increasingly multipolar as it is impossible for one or two big powers to monopolize international affairs. Second, with dynamic expansion of international trade and investment and rapid progress of science and technology, economic links between various countries and regions have become increasingly close and the trend of increasing economic interdependence throughout the world has picked up momentum. The Asia-Europe cooperation and the ASEM process responds and adapts to these historical changes. The ancient civilization of Asia is brimming with renewed vitality as its economy grows with stunning speed. Europe, on the other hand, remains one of the world's leaders in economic strength and technological power. There is a great potential and broad prospect for them to establish a partnership of equality and mutual benefit and to enhance economic cooperation, political dialogue and cultural exchanges. These developments have given new impetus to economic growth of Asian and European countries, but also serve the formation of a more balanced structure of international relations and world order.
Both China and the United States are countries of significant influence in the world, and the state of relations between the two countries has an enormous impact on the overall international relations. It is gratifying to note that recently, thanks to the concerted efforts of the two sides, Sino-US relations have made positive progress and atmosphere of the relations has improved noticeably. In particular, President Jiang Zemin and President Clinton held an important and fruitful meeting in Manila last November, during which the two leaders reached agreement on a number of important issues, including the exchange of state visits between the two this year and next year. This has given an impetus to the improvement and development of Sino-US relations. The momentum of the relations has been good since the beginning of this year. US secretary of State Albright visited China and Vice President Gore is going to China soon. It is fair to say that there is a remarkable increase of the favourable conditions for developing Sino-US relations. We hope to work with the US side for continued improvement and development of Sino-US relations on the basis of the three Sino-US joint communiqué by seizing the present favourable opportunities and taking concrete steps.
Needless to say, there are still some problems in Sino-US relations that need to be handled prudently and appropriately. The Taiwan question remains the biggest obstacle to the steady progress of the bilateral relations. This is the most important and most sensitive question at the core of Sino-US relations, because it bears on China's sovereignty, territorial integrity and the grand cause of national reunification. The ups and downs in Sino-US relations in recent years have proved time and again that it would be difficult for the relations to develop steadily if this question is not handled well. The US leaders reiterated on many occasions that the United Stated adheres to the three Sino-US joint communiqué and the "one China" policy and opposes the idea of "two China's" or "one China, one Taiwan", Taiwan's attempt to join the United Nations and "Taiwan independence". We hope that the US side will observe the three Sino-US joint communiqué not only in words, but also in deeds, honour its serious commitment on the question of Taiwan, and cherish the improvement of relations that has not come by easily and make concrete efforts for the sound development of Sino-US relations.
China's relations with Russia have developed smoothly in recent years. Last April, President Jiang Zemin and President Yeltsin decided, during their meeting in Beijing, to establish between China and Russia a strategic coordinating partnership of equality and mutual trust geared to the 21st century -- a new type of state-to-state relationship characterized by non-alliance, no confrontation and not targeting against any