Cannes Controversy Continues
Eminent Chinese director Zhang Yimou’s decision to withdraw his two new films from the Cannes Film Festival was due to the fact that the festival had previously rejected both Not One Less and The Road Home from the competition.

Zhang, according to sources in Europe and China, submitted Not One Less, which concerns teachers and students in rural China, to the festival committee some time ago for consideration for the upcoming event.

However, festival representatives who saw the film reportedly felt it was not up to the level of most of the director’s previous work and were not forthcoming with an invitation to the competition, where Zhang has had films included in the past.

In hopes of better luck, Zhang subsequently sent along his follow-up picture, The Road Home, a 1950s-set drama, which similarly underwhelmed the committee.

Rather than wait, then, for the festival’s rejection to become obvious when the official lineup was announced, Zhang apparently decided to take matters into his own hands by announcing, "I have decided to withdraw the two films and will not participate in this year’s Cannes Film Festival."

Further deflecting attention from any consideration of the film’s artistic values, Zhang shifted the discussion to the political sphere, blasting festival directors in an open letter for their "serious misunderstanding about the movies," and attacking the West, which he suggested "has for a long time politicized Chinese films."

Zhang’s last film, Keep Cool, was kept out of Cannes in 1997 by Chinese authorities after the 1995 To Live was presented in competition without government permission.

Zhang may have been further motivated to make his pre-emptive move against Cannes upon learning that Assassin, the new picture by his mentor-turned-rival Chen Kaige, a film that was not well-received in China, was accepted into the competition.

Marxist Mistrial
In a closely watched case seen as a proxy war between communist conservatives and liberal reformers, a Beijing court rejected a Marxist ideologue’s copyright infringement suit against a pair of progressive writers.

Beijing’s No 2 Intermediate People’s Court ruled that Ma Licheng and Ling Zhijun, and their publisher, had a legitimate right to use excerpts of an unpublished essay by Duan Ruofei, editor of a journal of Marxist theory, to debate his views in their book, Crossing Swords.

Ma’s and Ling’s book became a standard-bearer of the liberal cause last year. In it, the authors argued that China needed freer, more creative thinking to keep developing.
By Ma’s own admission, they viciously attacked Duan’s essay which warned that creeping private ownership threatens to turn China into "a vassal of international capitalism".

Duan’s essay was one of four anonymous anti-capitalist tracts circulating in Beijing in the months before a pivotal Communist Party Congress in 1997 that decided the course of reforms for the next five years.
Duan argued that by using excerpts instead of the whole article, Ma and Ling distorted his theories.

At a one-day court hearing last November, Duan’s lawyers demanded an apology, a stop to further printing of Crossing Swords and compensation of US$24,000.
The court, in a written ruling issued to the lawyers without a hearing, found that Ma and Ling used excerpts to evaluate Duan’s theories as part of a legitimate academic debate. It ordered Duan to pay court costs of ¥5,510.

Macho Mummy
The contents of a 1900-year-old coffin startled archaeologists from the Xinjiang Archaeological Institute, Xinhua reports.

They discovered an ancient mummified man and dubbed him "the handsome Yingpan man," because his beard, eyebrows and eyelashes are still clearly distinguishable.

His coffin, along with five others, has been shipped to Urumqi, the regional capital, and has been kept at the Institute, unopened, awaiting further research and studies. The researchers say that the mummy, along with numerous artifacts, can be dated to the Eastern Han Dynasty (25-220 AD). The discovery was made at Yingpan near Lop Nur. The mummy is apparently the remains of a 25-year-old male who stood 180 centimeters high.

The Yingpan man is deemed roughly comparable to a previous discovery of the "beautiful Loulan woman," a 3,800-year-old female mummy. In 1980 her remains were unearthed in the Tiebanhe Delta, some 200 kilometers east of Yingpan.

Coming Crisis
China is an economic crisis waiting to happen unless the government lets loss-making state enterprises die and reforms the banks, a leading American expert on the Chinese financial system says.
"What’s going to happen if there’s a financial crisis which wipes out lifetime household savings? That’s the problem they’re facing," Nicholas Lardy told a Foreign Correspondents’ Club lunch.

"You can’t run this kind of banking system indefinitely. Some day, there’s going to be an event which causes a loss of confidence,’’ Lardy, of the Brookings Institution in Washington, D.C., says. "This kind of economy can turn on a dime.’’

He says the key problem is the failure to close loss-making state firms.
Beijing fears that mass unemployment will lead to social unrest and has shied away from cutting the lifelines of millions of workers.

By propping up industrial loss-makers, banks have little chance of moving from government funding agencies to becoming competitive and commercial.

"They’re not closing down money-losing state firms fast enough,’’ Lardy says. "Until they’re really willing to cut, to have these companies disappear, they are going to have continued problems in the banking sector.’’
Nor did this strategy, which Lardy calls "not very well formulated,’’ meet the government’s "underlying objective of increased efficiency of resource use and employment generation.’’

It is the growing private sector that is creating jobs, not the state sector, he says.
Compounding the problem is the strain that keeping these companies alive puts on government resources as Beijing pumps money into the economy to try to achieve its 7 percent growth target for this year.

Lardy says he does not believe the target will be met.
Nor, Lardy says, does he believe the official statistic of 7.8 percent economic growth last year. The reality was likely to be "several percentage points below the official figure.’’

Lardy says government statistics that show the budget deficit is low by world standards excludes much and obscures reality. He says China’s total liabilities amount to more than 100 percent of Gross Domestic Product, now at around US$1 trillion.

This sum includes non-performing loans among state banks, external debts that are certainly higher than the official figure of around US$140 billion, plus unfunded pension liabilities.

In addition, the rate at which the government has become dependent on debt for its spending has been one of the highest in the world, he says.

WTO Update
The head of the World Trade Organization says he believes China can join the body before November.

Director-General Renato Ruggiero says he has detected "encouraging signs" since a recent visit to Washington by Chinese premier Zhu Rongji.

"I think that since the visit by China’s prime minister there have been many encouraging signs and I believe we can have China in the WTO by November, when the WTO begins its next trade round in agriculture, services and electronic commerce,’’ he says.

Ruggiero’s comments were published as Chinese and European Union negotiators began talks in Beijing over China’s application to join the Geneva-based organization.
The Chinese premier failed to clinch a deal with the United States during talks with President Clinton earlier this month.

Ruggiero’s comments may cheer Chinese leaders but the Italian’s role in any entry process will probably soon be marginal at best. He is due to step down from the director-general’s position at the end of this month.

WTO member states have not yet agreed who should take over from Ruggiero in the post. The two remaining candidates are Mike Moore of New Zealand, a former prime minister, and Thai Deputy Prime Minister Supachai Panitchpakdi.

"Governments have to find a solution. It would be very damaging if a solution is not found. We need a new D-G as soon as possible,’’ Ruggiero comments, also stressing he would not agree to stay on any longer in the post.

Ruggiero did not specify what he saw as "encouraging signs" in China’s application to join the WTO.

Zhu made dramatic market-opening concessions in the hope of clinching a deal in Washington. The US said it hopes to find an agreement to get China into the WTO this year.

Though Zhu’s concessions in Washington were not enough to convince the United States immediately, analysts say they could at least be making gaining EU support easier.

EU Trade Commissioner Sir Leon Brittan is scheduled to arrive in Beijing on May 5 for a two-day visit to announce a deal that would pave China’s way into the world trade body, an EU diplomat has said.