Statement by Mr. Ku Cheng-kang, Chinese Chief Delegate, before the Chinhae Conference on June 16, 1954
Honorable representatives of the peoples of :
(1)
As the nations of Asia are suffering from Communist aggression and the Asian peoples are facing a critical moment of life and death, we, the free peoples of , are holding here today an Anti-Communist Conference. This conference, charged with a great mission, has indeed a great historical significance.
Honorable representatives! You come from the free nations of , representing those people of different races, localities, professions and religions, who refuse to become the slaves of Communist Imperialism. We gather here today for only one purpose, that is, to fight Communism. We gather here today with only one wish, that is, to struggle for peace, security, freedom and welfare of the Asian peoples. On behalf of the people of the Republic of China, my delegation wishes first of all to pay our respects to the great leader of the , President Syngman Rhee, and to ex press our good wishes to the gallant soldiers on the Korean battlefields who have been fighting for freedom against Communism and aggression.
My delegation also wishes to express its special concern for those peoples in the various parts of who have suffered immensely as a result of Communist tyranny behind the Iron Curtain and aggression.
My delegation is convinces that this gathering represents not only the will of the free peoples of Asia but also that of the great masses who have lost their freedom behind the Iron Curtain. The will to live and to remain free on the part of the Asian peoples cannot be subjugated by the brute forces of tyranny and aggression.
(2)
On the map of Lenin and Stalin, the shortest road to Europe is from Peiping through . According to the "Program for Asia," as worked out by Mao Tse-tung, Moscow's tool of aggression, Soviet Russia could take America without a fight, when the whole of Asia has fallen behind the Iron Curtain. is not only the major battlefield of the aggressors at the present time, but will also be the decisive front between the aggressor and anti-aggression camps. Should Soviet Russia be able to conquer , peace and security of the entire world would be lost. On the other hand, when the Asian peoples assume their responsibilities in the world-wide anti-Communist struggle, it means the beginning of the end of the aggressors.
The world can see that the brilliant anti-Communist banner has been raised in , Indo-China and Free China. It is the symbol of independence and freedom for the Asian peoples. It is the clarion call for peace and security of the whole world.
has only one arch enemy. It is Communist Imperialism. It is our sincere hope that in facing this enemy, all Asian nations, regardless of past differences, will stand and fight together.
The world has only one arch enemy. It is Communist Imperialism. In the face of this enemy, all those countries who respect the freedom and equality of the Asian peoples are their friends. We Asians are willing to cooperate with any other peoples on the basis of equality in the anti-Communist cause.
The sincere and ardent wish of the Asian peoples for independence and freedom will be realized. The Communists have utilized the slogan of national independence to infiltrate into the various countries and to split and destroy their nationalist movements so as to enslave the Asian peoples. We Asians must be on the alert and must, not let ourselves fall victim of such deceit. At the same time, Western nations must realize that only through fulfilling the wish of the Asian peoples for national independence and freedom and through struggling together on a basis of equality, can Communist aggression be resisted and peace and security of the world be guaranteed.
What the Soviet puppet, Chou En-lai, means by shouting "Asia for Asians" at the conference is to turn Asia into Soviet Russia's Asia and an behind the Iron Curtain. Asia to us is an Asia for national freedom and equality and an for world peace and security.
(3)
All the troubles in Asia originated from the Chinese Communists who have not only sold the Chinese nation to the Soviet imperialists, but have also offered the Chinese mainland as 's base, for her eastward and southward advances. The Republice of Korea suffered first and Indo-China came next. This fact proves that without an independent and integrated Republic of China, there cannot be any peace and security in .
The Chinese people is a peace-loving people. For five thousand years, we, as a nation on the East Asiatic Continent, have been on most friendly terms with our neighbors, with whom we have worked together for political cooperation, cultural exchange and the preservation of peace. Dr. Sun Yat-sen, father of the Republic of China, told us: "In founding the Republic of China, our purpose is to secure peace."
The overseas Chinese in the various countries in , numbering more than 10 million, serve as a bridge for cooperation among the various Asian peoples. In time of peace, they live on amicable terms with the local peoples. In the face of Communist aggression, they share the sufferings with the local peoples. Their spirit of industry and hard work and their sincere services are symbols of the peacefulness of the Chinese people.
The recovery of the Chinese mainland is the responsibility of the Chinese people and the common wish of the Asian peoples. It is the belief of the Chinese people that not only the Chinese Communists, who serve as tools of aggression for Soviet Russia, will be crushed, but after the crushing of the Chinese Communists, no aggressor will rise again in and peace and righteousness will prevail.
(4)
Under the leadership of President Chiang Kai-shek, the Chinese people have been fighting Communism for 30 years. We have gained painful experiences which have inspired us with a strong faith in our cause. In that faith, my delegation wishes to make the following proposals to the conference:
1. The Communist parties in all countries are the tools and espionage organs of the Soviet imperialists. They use all lawful organizations and democratic institutions as media for propaganda and organization so as to reach their ultimate objective of armed uprising and seizure of political power. As the Communist parties are not ordinary political parties, the Communists, therefore, cannot be regarded as the nationals of their own countries. We, therefore, call upon all free nations to outlaw the Communist parties and strictly prohibit Communist activities. We demand that the United Nations declare Soviet Russia as an aggressor and oust her from the world organization. We solemnly declare that should the United Nations allow the Chinese Communists, who have been condemned by the world organization as an aggressor, to enter its chambers, the United Nations would not only be encouraging aggression, but would be committing a suicidal act by tearing up its own Charter and destroying its own position.
2. We fully realize that in the minds of the Soviet imperialists and the Communist parties under their control throughout the world, "peace is just an extension of war." They utilize peace negotiations to smash the solidarity and morale among the anti-Communist countries. They utilize peace negotiations to camouflage their aggressive wars and to prepare for further and greater aggression. They utilize peace negotiations to gain whatever they can not gain by means of war. We have seen through and through these Communist tricks and know that their intention in participating in the conference is to split the democratic camp and to enslave the Asian peoples. We, therefore, hold that any conference which may encourage aggression and sell out must be stopped. We do not recognize that the conference has any right to determine anything relating to the rights and interests of the Asian nations.
3. We are opposed to the Communist plot in partitioning the territories of the Asian nations and creating puppet regimes. We are also opposed to any country accepting such terms under any disguise. We Asians must fully support in her strife for unification and , , and Loas in their struggle for territorial integrity. We must further unite ourselves with all the other Asian peoples who are facing Communist aggression or the threat of Communist aggression in the common struggle against the fifth columns of the Soviet imperialists and for the deliverance of the enslaved peoples behind the Iron Curtain.
4. We hold that the Asian and Pacific nations must hasten to set up an organization for collective security, but we sincerely believe that any organization for collective security with out the participation of the determinedly anti-Communist nations will not produce practical re-suits. We call upon all the peace and freedom-loving peoples of Asia to unite and struggle together first, so as to lay a foundation for security in and the Pacific regions.
It is the conviction of my delegation that the aforesaid four points should serve as the guiding principles for the common effort of the peoples of . My fellow delegates! I now have the honor to present them to you for your consideration.
(5)May I also express the views of my delegation on the formation of the united anti-Communist front of the Asian peoples. The anti-Communist struggle of the Asian peoples aims at the lifting of the Iron Curtain and the establishment of a free, peaceful, and prosperous which will constitute a stabilizing force in the world. We believe that a foundation for national independence and peaceful cooperation among the Asians must be laid in this most difficult period in our anti-Communist struggle. We, therefore, propose the following principles for observance by all the Asian peoples who join in the united anti-Communist front:
1. We believe that only democracy can triumph over totalitarianism. The people of must, under the principles of democracy and in accordance with their own historical background, geographical position, cultural tradition, and the wishes of the people, choose and develop a political system and a form of life which will meet the needs of the people.
2. We believe that in order to remain independent, all nations must seek the development of free economy and social security. Only in a free and secure society can Communism be uprooted and the totalitarian brute force be vanquished.
3. We believe that the anti-Communist struggle is not only a struggle by force but a cultural struggle. Cultural cooperation among the Asian peoples will be one of the most important links in the anti-Communist struggle. We will cooperate in the cultural field with all countries who respect Asian culture.
4. We believe that the anti-Communist struggle is not merely a struggle between military forces but a struggle between methods of organization. Our Asian peoples' united anti-Communist front must be a permanent organization. We must especially be engaged in the exchange of information and cooperate in waging psychological warfare against the Communists.
5. We believe that it is necessary in the winning of our anti-Communist struggle for the coordinated use of manpower and resources among the Asian nations. This is the foundation for economic cooperation in , and we must do our utmost in achieving it.
(6)
We Asians must not long remain half free and half enslaved. Not a single area in Free Asia today is free from the threat of the aggressive forces of the Soviet imperialists and their tool of aggression, the Chinese Communists. Freedom and slavery, democracy and totalitarianism cannot exist side by side. There is no middle-of-the-road or fence-sitting. The difference, in our opinion, is one between right and wrong, between good and evil, and between life and death. It is either right or wrong. There can be no confusion. There must be no compromise. It is our opinion that the most important function of this conference is to distinguish right from wrong, good from evil, friend from foe, and life from death. For us there is only one way out. That is: Only through unity and solidarity among the peoples of and through courageous advance can we hope for victory.
Finally, my delegation wishes to dedicate the following to the conference:
First, we wish to reaffirm the will and determination of the people and armed forces of the Republic of China as well as those of the overseas Chinese in the anti-Communist struggle.
Secondly, we wish to offer for your reference our painful experiences which the Chinese people have gained through tears and blood during 30 years of our anti-Communist struggle under the leadership of President Chiang Kai-shek.
Thirdly, we wish to express to you the tradition of the Chinese people in seeking friendly associations with their neighbors and our willingness to cooperate sincerely with all the anti-Communist peoples in .
Fourthly, we wish to call your attention to the call for help of millions of people on the Chinese mainland. We wish also to reaffirm our determination to rescue them who are suffering untold horrors. Honorable representatives, may I wish all of you good health! May I wish the Anti-Communist Conference of the peoples of every success.
Statement by Dr. C.L. Hsia, Chinese Representative to the UN Economic and Social Council, on Farced Labour April 23, 1954
Mr. President,
Before beginning my brief statement I wish to associate myself with the opening remarks made by the distinguished delegate from this morning. This is one of the important items before the Council-as it affects the life of tens of millions of people in many parts of the world-I share his regret that there is not much we can do about it. But the least we can and should do is to keep the problem alive in the conscience of mankind.
In the Third Committee of the eighth session of the General Assembly, the Chinese Delegation had an opportunity to comment generally on the work of the Ad Hoc Committee on Forced Labour. We wish now to express once again our appreciation to the Ad Hoc Committee for its excellent Report which has revealed in a careful and objective manner the existence in the world today of two principal systems of forced labour-one being employed as a means of political coercion, the other being employed for economic purposes.
It was pointed out by my delegation during the eighth session of the General Assembly that while appreciating the findings and, conclusions of the Committee, we deeply regreted that its Report did not contain any information concerning the situation in communist China, where forced labour has been employed to such a large extent that probably half of the forced labourers in the world is found in this region.
According to its Report, the Committee was unable to complete the study of the allegations relating to and communist , because “documentary material relating to these countries, particularly the laws and regulations, had not be cited or submitted and could not he obtained by the Committee". This is understandable in that, according to the limited terms of reference of the Committee laid down by the Council, the Committee was to study the nature and extent of the problem of forced labour only "by examining the texts of laws and regulations and their application". This, in our opinion, was one of the greatest handicaps encountered by the Committee in carrying out its function. The Council must have realized by now that in countries under communist control" laws and regulations, if any, do not mean very much. They are as a rule formulated in vague and broad terms, deliberately avoiding precise definitions in order to suit the purpose of arbitrary persecution. It is often in such absence of clear laws and regulations that forced labour exist, and because of such absence of laws and regulations, the Committee became powerless in its examination.
In order to fill in one of the gaps that are left in the Report, I shall present to the Council some recent information about the forced labour situation on the mainland of . But before doing so, I should remind the Council that forced labour is being practiced in communist China not in accordance with any specific laws and regulations, but through administrative practices under the general guidance of three things: 1. the so-called "Common Programme", 2. the "Statute on the Punishment of Counter-Revolutionaries" and 3. policies advocated by the communist leaders.
The so-called "Common Programme" was a document adopted by the so-called "People's Political Consultative Conference" held in September . It was, and still is, the declaration of basic policies of the communist regime which was inaugurated on 1 October of the same year. Article VII of the Common Programme provides, and I quote,
"Regarding the reactionary elements, feudalistic landlords, bureaucratic capitalists, after having disarmed them of their military equipment and eliminated their special influence, we still have to deprive them of their political rights whenever necessary in accordance with the law, but at the same time, we have to provide them with means of living, to compel them to reform by labour and to change them into new men. If they continue to pursue revolutionary activities, severe measures must then be taken."
This, Mr. President, is a frank and blunt Admission that labour is being employed as a means of political coercion and punishment.
The terms "in accordance with the law" contained in the "Common Programme" which I have just quoted refer undoubtedly to "the so-called "Statute on the Punishment of Counter Revolutionaries" which was promulgated on 20 February 1951. According to this statute, the so-called counter-revolutionary elements include "bandits, rascals, secret agents, reactionary parties or groups, and reactionary associations and clans". Judging, by the broad and arbitrary terms used in this statute, one can easily see that any person considered undesirable by the communists may become a victim.
As to the policies advocated by the communist leaders, permit me to quote one passage from the statement of Chou En-lai, the Chinese communist Premier, before the third session of the National Political Consultative Conference, convened on 23 October 1951, which runs as follows:
"In compliance with the directive of Chairman Mao (Tze-tung) in deciding the penalties, we have decided that to those who have 'blood debts' or those counter-revolutionary elements who have inflicted serious damages to national interests, we must hand down the death sentence and have them executed. To those who deserve the death sentence but who have no 'blood debt' or inflicted less serious damages to national interests, we would still hand down the death sentence but would have their execution deferred for a period of two years, during which they would do forced labour on probation."
Mr. President, these three factors, the Common Programme, the Statute on the Punishment of Counter-Revolutionaries, and the constant advocation of the communist leaders, constitute the basic policy under which forced labour is being widely practiced in communist .
During the eighth session of the General Assembly, my delegation pointed out that ac cording to information on hand at that time the total number of people serving forced labour in communist had been estimated at over 6,000,000. According to information compiled more recently by the Chinese Federation of Labour, in five public projects alone, the number of forced labourers employed stands at 7,150,000. The distributions of these labourers are as follows:
1. Huai River project-4,000,000 (70% are prisoners in the Southeast China region, 25 % flood victims along the Huai River in Kiangsu and Anhwei provinces, and 5 % are former Nationalist troops).
2. Chin River project-600,000 (50% are prisoners in Hupeh and Hunan provinces, 30% former Nationalist troops and 20% famine and flood victims).
3. Chengtu-Chungking railway-2,000,000 (70% prisoners in province, 20% landlords and their de pendents, and 10% civilian workers).
4. Tiensui-Chengtu railway-300,000.
5. Lunghai railway-250,000.
The above projects are well-known projects and the figures do not include forced labourers employed in less known projects such as Sikang Tibet highway, the Reclamation teams in the Northwest, and defense works along the mainland seaboard. Nor do they include slave labour in one form or another in the collective farms and coal mines. The total number of people involved in these projects is estimated by the Chinese Federation of Labour at 24,000,000.
Mr. President, I should not burden the Council by pointing out the innumerable instances of compulsory labour in different parts of communist . Suffice it to say that most of these labourers work from 12 to 14 hours a day and those in slave labour camps are mostly' known by their serial numbers instead of by their names. Labour unions ate under the control of communist secret agents and have become an integral part of the communist regime.
Communist China today is a vast slave labour camp. Forced labour is being employed so extensively that it constitutes not only a means of political coercion or for economic purposes, but also as a means to build up military strength for expansionism. It constitutes not only violation of human rights, but also a menace to peace. It may be said that the exploitation of human labour has made it possible for the communists to engage in aggression, first in , now in Indo-China.
With regard to our future work in dealing with the problem of forced labour, my delegation wishes to make the following suggestions.
First, systems of forced labour, in any of their forms, should be emphatically and openly condemned by the United Nations.
Secondly, governments, particularly communist regimes, of those countries where systems of forced labour exist should be requested to re-examine their laws and practices with a view to abolishing such systems.
Thirdly, a standing body should be establish ea to watch and examine constantly the forces labour situations in different parts of the world and to recommend concrete measures that might be taken by the United Nations to expedite the final abolition of such systems. It has been our belief that one of the effective ways to deal with this problem is to establish a standing committee of the General Assembly. Such a committee should, on the one hand, continue the work of the Ad Hoc Committee and collect additional information, especially concerning those countries which were not covered by the Report, and, on the other hand, recommend further actions which the United Nations might take in dealing with the forced labour problem. It should also be emphasized that, whatever machinery that may be established, its terms of reference should be broadened, so as to permit it to investigate not only laws and regulations, but also practices of forced labour, with or without legal basis.
Fourthly, co-operation of the specialized agencies and the non governmental organizations should be further strengthened. In this connection, I wish to express our sincere appreciation to the International Labour. Organization for the joint establishment with the United Nations of the Ad Hoc Committee, as well as for its continuing interest and special competence in the question of forced labour as shown by the decisions of its Governing Body in November last year. I should also draw the attention of the Council to the invaluable contributions made by the non-governmental organizations, such as the International Confederation of Free Trade Unions, the Nouvelles Equipes Internationales, and the International Com mission against Concentration Camps. Since these organizations have already shown their special competence in assisting the Council to deal with the question of forced labour, their cooperation in the future will certainly be welcomed.
These, Mr. President, are the few general observations that my delegation wishes to make at this stage of discussion. May I stress once again that the problem or forced labour is of utmost importance, not only because it involves fundamental human rights and the dignity and worth of human persons, but also because it endangers peace and security among nations. Peoples all over the world are looking at the United Nations with great expectations, and the Council has an obligation to see to it that the systems of forced labour, in any form, should be abolished.
Speech by Mr. Y. C. Liang, the Chinese Workers' Delegate, before the 37th Conference of the L.O.,
, June 14, 1954
The Report of the Director-General stresses the progress made in different parts of the world on the past year and indicates the important repercussions of 1. L. O. activities. One cannot fail to be impressed by the strong contrast reflected in the miserable conditions obtaining on the mainland of under the Communist puppet regime, where workers are divested of freedom and material wellbeing.
On 9 December 1953 the Chinese Communists in promulgated a set of regulations under which the Chinese people are compelled to subscribe to the so-called National Economic Reconstruction Bonds to the amount of about 250 million U.S. dollars, of which 70 per cent are borne by workers and salaried employees and the rest by farmers. Workers pay their subscriptions by compulsory periodic deductions from their monthly wages. This makes their already meagre income insufficient to cover their living expenses. Right at this moment, throughout mainland , innumerable people are arrested and put be hind prison bars every day, simply because they do not have enough money to pay for their share of the Reconstruction Bonds.
The Director-General dealt with agrarian reform in the fourth chapter of his Report. These two words “agrarian reform" have a special meaning to us in , because it was precisely these words that the Chinese Communists used to delude the Westerners by putting themselves forward as agrarian reformers. What they were trying to hide behind these two innocent words was the hideous fact that the landlords in my country were expropriated by them under the high-sounding name of agrarian reform. Not only were their properties confiscated but countless landlords also lost their lives because they happened to be property owners. From land reform, they have now come to land requisition. On 5 November 1953 the Chinese Communists promulgated the Land Requisition Regulations, which authorized the central, provincial and district puppet governments to requisition land at their own discretion. Land of an area under 160 acres or occupied by Jess than 50 families may be requisitioned at the local level. Many innocent peasants and landlords on the mainland have become homeless and without property as a result of the Communist land reform and land requisition programmes. Where do these people go when their homes are forcibly taken away from them? They are organised and regimented by the Communists and sent by truckloads to the collective farms in the frontier regions.
It is small wonder, therefore, that the Chinese peasants on the mainland stage spontaneous resistance movement that have far-reaching effects on agricultural production. It was reported by the Communists themselves that in the five-year period between 1949 and 1953 famine districts increased from 12 to 38 per cent of the total planted areas. Thirty-six per cent of the total population of the mainland suffered from malnutrition and hunger in 1953. The situation has gone from bad to worse. According to the issue dated 7 December 1953 of the People's Daily, published in , over 40 per cent or 125 million of the peas ants do not have sufficient food. In towns and cities over 100 million people are suffering from food shortages.
What are the Communists doing to alleviate the food situation on the mainland? Three methods have now been invoked. First, there is strict food rationing. Each adult is allowed to buy 12 ounces of rice per day; each child, six ounces. In some areas where food shortage is acute, the ration is halved. Please note that in Free China today there is no restriction on the amount of rice purchased by the civilian population, and a manual worker consumes about 28 ounces of rice per day. Secondly, the Communists have issued strict orders for the people to eat coarse rice and chaff, although it is not mentioned by them that first-grade white rice is exported to Soviet Russia and its satellite countries in exchange for munition and heavy industrial equipment. Thirdly, the Communists as usual, blame others for their own failures. They now tell the starving people that food merchants are responsible for food shortages in . Punishment in the form of expropriation and death is meted out to them to enrich the expropriators and to diver, the wrath of the hungry people.
On page 125 of the Director-General’s Report" it is stated that for nearly 25 years the I.L.O. has been striving to bring about the abolition of the slave labour system. In 1930 the Forced Labour Convention was adopted by the Conference. It goes without saying that the Convention is being applied in the democratic member States that have approved this Convention. On the mainland, however, the Communists have fell owed in the footsteps of the Russians in adopting the forced labour system as a part of their economy. It is reliably estimated that about one-tenth of the total population of Communist China is doing forced labour of one kind or another. There are 8 million inmates in the slave labour camps; 10 million doing irrigation and water conservancy work; 1 million building military railways and highways linking China with Soviet Russia and Viet Minh; 1 million in the collective farms; 20 million conscripted by local Communist authorities to build bridges, dams, airports, roads, and other local or military projects. Besides the 40 million or more basic slave workers on the mainland, about 3 million people have been transported to Siberian and other concentration camps in Eastern European countries.
We must never condone forced labour for the sake of obtaining universality in this Organisation. By admitting Soviet into the I.L.O., we shall be dealing face to face with the country that has already enslaved one-third of the human race. According to page 442 of the Report on Forced Labour of the Ad Hoc Committee, there are in the 20 million forced labourers, about one-tenth of the total population. It will be futile for us to toil and sweat in this Conference for the promotion of social justice if at the same time we admit the originator of the cancerous slave labour system into our group. If the is sincere in collaborating with other governments, as it promised in its communication to the I.L.O. on 4 November 1953, why doesn't it open the Iron Curtain and admit the representatives of the United Nations and the I.L.O. to investigate forced labour in its realm? If the U.S.S.R. is so keen about the raising of labour standards, why doesn't it abolish the slave labour system in in the first place? I dare the Soviet delegates here to answer these two simple challenges.
The Director-General mentions in his Report freedom of association. One must not for a moment forget that trade unions in Soviet Russia and its satellites are but agents of the State, and that the aim s of trade union organisations there are to enforce labour discipline, to follow party orders, and to conduct work contests for the sake of raising production norms. In attempting to achieve the above objectives Soviet trade unions are ever ready to sell the interests of workers down the river. I ask all of you to take great precautions against the Soviet instigators, lest the achievements and the objectives of the I.L.O. be shaken to the very foundations.
I wish now to discuss conditions in Free China. In the past year saw splendid success in the social and economic fields. The land reform programme which reached its final stage at the beginning of last year stands out as an, exemplary achievement of its kind in the Asiatic region. Land reform actually started in in March 1950, when the land rental was reduced to a maximum of 37.5 per cent of the annual crop yield. The second stage of the project began in July 1951 when public land was sold to tenant farmers. In January 1953 the "Land to the Tiller" Act was promulgated, under which the Government buys land from landowners for resale to tenants, to be paid for by instalments. Each landlord is permitted to retain from 3 to 6 hectares of land. By the end of 1953 the Government had purchased and resold 144,000 hectares to 202,000 tenant families under the land reform programme. Four Government owned industrial corporations are being sold to landowners to pay for the land purchases, thus releasing tied-up rural capital into industrial development channels.
Rice production in registered a 160 per cent increase, from 640,000 tons in 1945 to 1953. Only about 1,200,000 tons are needed for domestic consumption. This year the goal is 1,760,000 metric tons. In the industrial aspect, power production reached 1,500 million KW in 1953, an increase of 50 per cent. over the pre-war record. We produced last year 155,000 tons of chemical fertilizers, which is about five times our pre-war production peak.
The 150 dwelling-unit housing project for dockers in and , Free China's two leading ports, has already been completed. The tripartite housing project for coalminers will be responsible for the construction of 200 dwelling units before September this year. Salt workers in were given 200 new homes last year. Recently the Government has appropriated an equivalent of 5 million U.S. dollars for the construction of low-cost housing. The principle of self-help is applied; and workers participate in laying the foundations and piling the bricks of their own homes. Monthly instalment payments are being made by workers to amortise the houses which will be owned by them when full payment is made in about ten years. The money received on the instalment plan will be used as a revolving fund for building more houses for workers. Wages of salt workers increased from 36 to 48 dollars per ton on 1 November 1953. An industrial safety programme was initiated by the Factory and Mining Inspection Commission of the Provincial Government in June last year. The number of insured workers and fishermen now exceeds a quarter of a million; and last year over 1 million. U.S. dollars were paid out as insurance benefits. The number of organised workers increased by 24 per cent last year.
All these facts show that we in Free China are steadily implementing the standards set down in Chinese labour laws and in the international labour Conventions approved by my Government. We are determined to do our utmost in rescuing out brother workers on the, mainland at present under the yoke of Communist tyrants. With the combined effort of free workers, we shall succeed in tearing down the Iron Curtain and in emancipating the forced labourers. Only thus could we fulfil the ideals of the Organisation, as epitomised in the Constitution of the I.L.O.
Statement by Dr. C. S, Chen on the International Flow of Private Capital before the Economic Committee of the UN Economic and Social Council on April 19, 1954
Mr. Chairman:
My delegation wants to thank the Secretariat for its informative report on an elusive subject.
We are also indebted to Mr. Hotchkis, the distinguished delegate of the , for the important statement he made on April 7 on the subject of private foreign investments. Many of Mr. Hotchkis' admirable ideas have now been incorporated in draft resolution E/AC. 6/L. 79, now placed before the Committee under the joint sponsorship of Belgium, Pakistan, Turkey and the U. S. A.
According; to the Secretariat's report, the international flow of private long-term capital has been halved since the 1920's. The problem which the draft resolution L.79 seeks to solve is just this problem of how to increase the available volume of private foreign capital.
The problem is, I submit, an extremely complicated one. To handle such a complicated problem, the use of a few economic terms and principles may prove helpful and indeed unavoidable. With your permission, Sir, I shall begin by making explicit the economic principles I am going to use.
First of all, let me ask what are the factors determining the international flow of private capital.
In so far as domestic, as distingished from foreign, investment is concerned the factors determining the volume of investment are 1) the domestic rate of interest, and 2) the marginal efficiency of domestic capital. As we all know, the marginal efficiency of capital is roughly though not exactly the same as the rate of net profit on an additional quantity of investment. However, as the marginal efficiency of capital is the more precise term for our present purpose, we shall use it and say that the volume of domestic private investment is determined by the rate of interest and the marginal efficiency of capital at home.
Analogously we can say that the volume of private foreign investment is determined by the two factors of 1) the marginal efficency of domestic capital in the capital-exporting country; and 2) the marginal efficiency of foreign capital in the capital-importing country. Capital will flow abroad until these two marginal efficiencies have become equal.
The decline in the volume of private foreign capital since the 1920's is attributable, in the first place, to an upward movement of the marginal efficiency of capital in the capital exporting countries. Investments became more profitable at home, so less capital was going abroad. There is, however, very little we can do to influence profit levels in the capital-exporting countries. So we shall leave the aspect of the problem alone.
The second and more important factor responsible for the recent decline in the volume of private foreign capital is the down ward movement of the marginl efficiency of foreign capital in the capital-importing country. The most important determinants of this marginal efficiency are 1) the prospective net yield of foreign capital in the capital-importing country and 2) the probability that that prospective yield would be realized. Though the facts are not I known, it seems a plausible assumption to make that the prospective yield of foreign capital in the capital-importing country had not appreciably decreased since the 1920's and that the decline in the efficiency of capital was more due to the increase in various kinds of risks apart from the risk of capital loss, to which I shall return presently. The increase in risks will lead to a corresponding loss in the confidence that a certain prospective yield would be realized.
In any case, any measures that reduce costs and risks will increase net profits, push up the marginal efficiency of foreign capital, and increase the available volume of foreign capital.
This, I submit, is the theory underlying the draft resolution now before the Committee. I shall argue that the theory is not applicable to some countries in . But in relation to the world at large it is a. sound theory. As the schedule of marginal efficiency of foreign capital in the capital-importing countries in general can be assumed to be elastic, any decrease in costs and risks and the corresponding increase in net profits is likely to induce a more than proportional increase in the inflow of foreign capital.
My delegation supports, therefore, the measures listed in paragraphs 1 (a) and 2(d) of the operative part of the draft resolution, as measures contributing to the reduction of either costs or risks. My delegation not only supports this part of the draft resolution; as I shall presently indicate, my Government has already largely acted upon it.
Paragraphs 1(a), 1(b), 1(c) and paragraphs 2(a) and 2(b) (see note) constitute a brand new feature of the draft resolution. Together these paragraphs introduce what may be called salesmanship into the field of private foreign investment. To quote from Mr. Hotchkis' statement of April 7 already referred to "there is a selling job to be done by the capital importing countries in awakening interest, in dispelling ignorance and in inspiring confidence." Besides bringing together the buyer and seller of capital, salesmanship will serve to inspire confidence and reduce risks. This part of the resolution will, therefore, also have the support of my delegation. In our long dealing with the foreign investor, we know only too well how not being known could increase the cost of borrowing. An instance can be given, though this instance concerns foreign loans and not direct foreign investments. The Chinese Customs had, up to the turn of the century, served as the main collateral for foreign loans. When the Customs were subsequently fully mortgaged and the less known Salt Gabelle was substituted for it, the interest on foreign loans immediately rose.
To the draft resolution, there is the Australian amendment (E/AC. 6/L. 81), pointing out that "expanding international trade and continued progress towards wide convertibility of currencies will be conducive to greater flow of such investment."
Let us, however, see where trade and restrictions on trade enter the picture. In the first place, foreign investment will give rise to the flow of capital goods from the industrial to the under-developed countries. It is unlikely that the under-developed countries will put any obstacle to the flow of such capital goods. Therefore, this aspect of the problem need not concern us here.
But foreign investments will give rise to a second flow of goods, at a later stage, from the under-developed to the industrial countries in payment of interest and dividends or in repayment of capital. It has been charged that, during the 1920's, high tariffs and other restriction on imports imposed by the creditor countries had made it impossible for the debtor countries to meet services on their debts thus precipitating widespread defaults. The Australian amendment would serve as a useful reminder of this unhappy event. But if it were adopted, some clause should be added to paragraph 2 of the operative part of the draft resolution, calling upon the capital-exporting countries to freely admit exports from the capital-importing countries.
My delegation supports the draft resolution as a whole, because in our judgment, it may be effective in stimulating the flow of capital in the world at large. But I have also indicated that it may be less effective if not ineffective, when applied to some countries in .
The experience of is instructive in this respect. According to document E/2546 on the International Flow of Private Capital, 1946-1952, and the reports we heard in this Committee, India has given assurance that there will be no discrimination against foreign capital, that reasonable facilities will be given for the remittance of profits and repatriation of capital, and that in the event of nationalization fair and equitable compensation would be paid. But according to page 7 of document E/2531, during the post-war period, private long-term capital was, on balance, flowing out of instead of flowing into it.
My Government has also cline everything possible to meet the wishes of the foreign investor. The Principles Governing. 's Economic Development of 1944 accorded the foreign investor a status equal in every aspect to that enjoyed by the Chinese business men. It explicitly brushed aside earlier regulations limiting the foreign shares of capital in an enterprise to 49%. Another set of regulation passed in 1952 accorded very favourable terms to the importation of capital goods by foreign investors and permitted the annual repatriation of earnings to the extent of 10% of the capital brought in and the complete withdrawal of capital over a period of 12 years. Taxation is light in comparison with Western standards; and if there were discrimination in the sphere of taxation it was discrimination in favor of the foreign investor. Moreover, my Government has signed with the U. S. Government agreements whereby the latter guarantees investors against the risks of inconvertibility and nationalization.
The 1952 regulations, which are being under revision by my Government in the light of our experience, have succeeded in attracting a certain amount of foreign capital, mostly from Hongkong; but the amount is far from being satisfactory.
I have cited, Mr. Chairman, concrete examples to show that, in relation to certain parts of the world, the measures laid down in draft resolution L.79 provide only a feeble, even if effective, stimulant to flow of foreign capital. The most potent causes impeding the flow of foreign capital to these parts of the world might not have been the same as those impeding the flow of capital to other parts. Conditions differ, of course, from country to country. With regard to the majority of countries in the Far East and in , the overriding consideration is, as stated by my delegation on April the course of the general debate on Item (3), the sense of political insecurity born of war and the threat of war. The menace of war may be more pervasive than we realize or are ready to admit. To quote from a statement made by Vice-President Nixon as reported in the New York Times of April 18, 1954, "It should be emphasized that if Indo-China went Communist, Red pressure would increase on , , and other Asian nations". He further said that the main target of the Communists in Indo-China is . Mr. Hotchkis might have other parts of the world in mind when he said in his speech already referred to that t he most important of the factors adversely affecting individual investment decisions were the fear of war and political instability.
The threat of war and enemy infiltration give rise, on the economic side, the risk of capital loss. The prospect of capital loss lowers the marginal efficiency of capital in two ways. In the first place, it necessitates larger deduction for depreciation and to that extent reduces the prospective net yield. In the second place, it reduces the chances that even this reduced net yield can be realized.
The risk of capital loss is so great that so long as it exists, no measures designed to improve the investment climate can become effective as an encouragement to the inflow of foreign capital. It must be grappled with first of all. This does not mean, however, that all we need to do is to remove the risk of capital loss. But even if to remove it is not a sufficient condition for reviving the flow of private foreign capital to Asia and the , it is a necessary condition.
The risk of capital loss can be tackled in many ways. Some capital are more ready to take risks than others. Let us encourage by all means more risk capital to flow to the threatened areas. But the classical answer to risk is insurance. We therefore welcome the news, as mentioned by Mr. Hotchkis in his speech of April 7, that President Eisenhower has recently recommended the extension of U. S. Government guarantees to cover risks of war. revolution and insurrection.
The clause which occurs at the end of paragraph 1(a) and which reads "negotiate agreements, if consistent with national laws, providing for insurability of certain non-business risks" seems all inclusive in its scope, though when introducing draft resolution L.79 on Thursday morning, Mr. Hotchks interpreted it to mean only the risks of inconvertibility and nationalization. Since the; risks of war and insurrection constitute, the greatest impediment to the flow of capital to some countries, it may seem desirable that the insurance of these risks be mentioned explicitly in the resolution even only in general terms that do not commit the Governments concerned. At the same time as guarantees against non-business risks are to be mainly given by the capital-exporting countries, the right place for the matter is in paragraph 2 instead of paragraph one.
Note: Extract from the joint draft resolution of Belgium Pakistan, , which subsequently became the joint draft resolution of . , , , and . (E/AC. 6/L. 79)
1. Recommends continuing efforts by countries seeking to attract private foreign capital to:
(a) Negotiate appropriate treaties and agreements and re-examine domestic policies, legislation and administrative practice with a view to improving the investment climate; negotiate treaties on double taxation; avoid unduly burdensome taxation; protect all foreign investments against discrimination in any form; facilitate the import by investors of capital goods, machinery and component materials needed for new investment; make adequate provision for repatriation of earnings and withdrawal of capital; negotiate agreements, if consistent with national laws, providing for insurability of certain non-business risks;
(b) Develop domestic and foreign information services and other means for informing potential foreign investors of business opportunities in their countries and of the relevant laws and regulations governing foreign enterprise;
(c) Consider supplementing their efforts to attract foreign private investment by including in their requests for technical advice and assistance such matters as:
(i) Economic surveys to determine the sectors most likely to be of interest to private investors and to identify specific opportunities within those sectors;
(ii) The preparation of material regarding specific projects in a manner which will command the attention of private investors;
(iii) The revision of legislation and administrative practices affecting foreign investment;
(iv) The establishment of channels for the presentation or specific projects to potential investors in capital exporting countries;
2. Recommends continuing efforts by countries able to export capital to:
(a) Ensure to potential investor" the availability of the fullest possible information on foreign investment opportunities and on the conditions and outlook for investment in individual foreign countries;
(b) Ensure to capital-importing countries (including firms and individuals therein) the availability of information on the investment desires of firms and individuals in the capital-exporting, countries.