Relations With Hong Kong

On July 1, 1997, the land of Hong Kong was handed over to China after 156 years of British rule. The new Chief Executive of the land, Tung Chee-hwa was immediately burdened by problems within the land. Towards the end of 1997, Hong Kong suffered a wave of illness due to a strain of avian flu. Six people died from the epidemic, and critics blamed the deaths on Tung's inaction in government. Hong Kong has also suffered economic problems from the crisis in Asia. For example, when Asia's currency was lowered in value, Hong Kong's tourist agency was harmed, making it more expensive for people to visit the island. This economic crisis has merited little response from overseas investors, and layoffs throughout Hong Kong have soared. In January of 1998, Hong Kong's paramount investment bank, Peregrine Investments Holdings Ltd., filed for liquidation, which forced many out of jobs. For several months, the unemployment rate in Hong Kong increased, rising substantially from the previously reported .4 percent. In May of 1998, Hong Kong's first elections under Chinese rule commenced, with record breaking numbers of voters participating. Critics of the Mainland won all of the 20 seats up for election, but a pro-Beijing business will control a good portion of Hong Kong's 60-seat legislature.

Relations With Taiwan

Over recent years, Taiwan has relinquished its claim to the Mainland, though China continues to insist upon its rule over the island. Taiwan claims that it is a completely separate entity from China and has its own democratic government. At present, Taiwan is trying to become included in such organizations as the UN and the World Trade Organization. In January of 1998, China wanted to begin political talks with Taiwan about a reunification between the two countries. The island was very against this action, saying that the Mainland had not given up on its demand that Taiwan should submit to the "one China" principle. Nonetheless, in the fall of 1998, talks began and Chinese President Jiang Zemin met for the first time with the Taiwanese ruling party official Koo Chen-fu. This was the highest degree of contact between the two sides since 1949. In July 1999, Taiwan officially announced that it had abandoned its "one China" policy. President Lee claimed that the Beijing government was using the reconciliation as an aid to undermine the island's government. China reacted by denouncing the Taipei government and called for a halt to all activities aimed at dividing the Motherland.

China's Economy

While many Asian countries have experienced miserable economic conditions in recent years, China was able to avoid this depression. However, not all parts of China's economy have soared. In January of 1999, one of China's most prominent government-backed financial institutions, the Guangdong International Trust and Investment Corp. (GITIC), began to suffer and announced that it would file for bankruptcy. In March of 1999, China also continued at its attempt to join the World Trade Organization, and offered to lower barriers to foreign goods in its market in order to add to China's image. United States President William Clinton, however, decided that China's concessions were not enough. Negotiations between the United States and China continued into April.