Family Values

An old man named Mr. Chen lived in an apartment in Shanghai by himself after his wife passed away. After the funeral, his daughter was concerned and said, "Daddy, we are worried about you living alone. You should come to live with me and my family!"

Mr. Chen was very touched, and thought to himself, "In the past my daughter was very selfish. Now she is very concerned about me, her father. How nice!" Mr. Chen collected his possessions and moved into the home of his daughter.

After dinner one night, the daughter told her father, "Daddy, when we were kids we loved to eat the food you cooked. From now on, you can handle all of the cooking of this household for us! Oh, by the way you can see that we have decorated our home very nicely. So every day you can dust all the decorations. This is good for you because it is a form of exercise."

Mr. Chen was so upset at the realization that his daughter only wanted him to live in her home to be the family cook and maid that he insisted on returning to his own apartment.

"Oh," replied the daughter. "That is no longer possible. You see, I have already rented out your apartment. Don't worry, I used the initial rental deposit to purchase a computer for your grandson. You should be happy!" Mr. Chen fainted.

- Xinmin Evening News
www.chinawatcher.net

Taking a Bath

A "Sauna for Losing Weight" was recently opened close to Mr. Zhan's home in Shanghai. However, business was poor, largely because this was a low-trafficked district of Shanghai.

So the health palace issued an advertisement announcing a special promotion that for "only RMB 15 one can have a sauna." Mr. Zhan had never been to a sauna and thought to himself, "This is really great because for only RMB 15, I can really enjoy myself." Mr. Zhan quickly went to the bathhouse and paid RMB 15 to the man at the door.

However, in addition to the RMB 15 entry fee, Mr. Zhan was also charged for each of the separate services in the sauna. These services included: RMB 10 for each drink, RMB 25 to borrow underwear to wear inside the sauna, RMB 5 to borrow a toothbrush, RMB 10 for the stones used in the sauna room, RMB 10 for the sulphur used in the bath, RMB 15 for ginseng used in the bathtub, RMB 10 for charcoal used in the sauna, RMB 20 just to dip into the indoor swimming pool, RMB 10 for "ice steaming," RMB 15 for "hot steam"É the list continued on and on. Mr. Zhan ran out of the sauna claiming that by looking at the list he had already broken into a "hot sweat" sufficient to match any sauna service.

- Xinmin Evening News
www.chinawatcher.net

Done Deal

The U.S. and China agreed on a deal that could make China a full-fledged member of the global economic community, underscoring its emergence from communist backwater to trading powerhouse with a seat in the World Trade Organization.

After nearly a week of nonstop negotiations, U.S. Trade Representative Charlene Barshefsky and China's Foreign Trade Minister Shi Guangsheng signed an agreement that is remarkably similar to one that the U.S. rejected seven months ago. Chief among the differences is a key U.S. concession: The April agreement would have allowed foreign companies to own up to 51 percent, or a controlling stake, in certain kinds of Chinese telecommunications companies. The new agreement allows foreigners to hold only a 49 percent stake in those ventures for now, increasing to a 50 percent stake after two years. That's a clear victory for conservative Chinese officials who worry that foreigners will dominate what they see as a strategic industry.

The deal clarifies some areas: It allows foreign investment in Chinese Internet companies, for example. It makes clear progress in others by promising banks the freedom to do business in the local currency within a matter of years. And in signing the agreement, the U.S. gave its approval to China's bid to join the WTO, the body that sets the rules of global commerce.

The European Union and several other trading partners still must agree to China's application, and the deal must be approved in the U.S. Congress, where both anti-China and anti-Clinton sentiment run high. But the Clinton administration's backing makes it extremely likely that China will be able to participate in the WTO's new, crucial round of talks to liberalize world trade. Those talks begin Nov. 30.

That would make China, already one of the world's top 10 trading nations, a full participant in global commerce after centuries of being sealed off from the outside world and then riven by foreign conquest, internal strife and utopian disasters. It also promises a more stable bond between the U.S. and China, whose relationship has lurched from one crisis to the next in recent years.

"An agreement of this sort with its emphasis on rule of law can help to anchor the relationship in a most fundamental way," says Ms. Barshefsky.

Chinese officials also see the deal as a much-needed moment of accord between the two nations, with Mr. Shi, the trade minister, calling it a "win-win" situation. "This will help regularize trade between our two countries and assist us in the reform and opening up of China," he says.

The deal is also contingent on Congress revoking a law that requires an annual review of China's trade status with the U.S. - an evaluation mandated in the spring of 1989. The review, which ends with a congressional vote on whether to renew normal trade relations with China, has become a formality in recent years but remains an unpleasant exercise for Beijing.

President Bill Clinton rejected last April's agreement because he feared Congress wouldn't support the deal. But that was widely seen as a tactical error, which threatened to isolate China and dilute the WTO's relevance. U.S. officials now say Monday's agreement achieved all their goals and U.S. executives were quick to hail the deal.

Under the agreement, banks will be able to make local-currency loans to companies two years after China joins the WTO. They will be able to conduct local-currency business with individuals after five years and there will be no geographic restrictions on their business. While few foreign banks are expected to set up nationwide banking networks to target retail customers, the banks are expected to take advantage of the new rules to lend to big corporate clients, many of whom now have trouble getting loans in the local currency. "We want to be a major player here, and this will give us a big boost," says Tom Schick, Country Risk Manager for Citibank NA.

Foreigners will also be allowed to own 33 percent of fund-management companies, increasing to 49 percent in three years. And they will be allowed to own 33 percent of firms that underwrite stock and bond offerings. The deal doesn't allow majority ownership in such companies, reflecting the government's conviction that too much foreign involvement in Asia's stock markets contributed to the region's financial crisis in mid-1997.

Still, "the agreement takes an opaque situation and makes it clearer," says Peter Alexander, Chief Representative in China for Nationwide Global Holdings Ltd., a U.S. insurance firm that recently opened a Shanghai office.

U.S. auto makers will also benefit from the deal. Within six years of China joining the WTO, Chinese tariffs on imported cars will drop from 80 percent to 25 percent. While that is one year longer than what was agreed to in April's proposal, it will radically change the auto market in China, where imported cars are now so expensive that they are out of reach of most buyers.

The lower duties will extend to auto parts, helping auto manufacturers who have set up plants in the country. And rules allowing foreign companies to offer car loans will benefit all foreign car makers.