China Reform Monitor: No. 927

October 11:

China has denied India’s allegation that People’s Liberation Army (PLA) troops are stationed in the Northern Areas of Pakistan, calling the charge totally baseless. “Around 4,000 Chinese including troops of the People’s Liberation Army are present in Pakistan-Occupied Kashmir,” Indian Army Chief General VK Singh said last week in New Delhi. Indian military officials further allege that to protect its Karakoram Highway construction crews, China has deployed several thousand troops in the Khunjerab Pass on the Xinjiang boarder. At a meeting in Urumqi, Xinjiang, Zhang Xiaodi, the director general of Xinjiang’s foreign affairs office, told Pakistan’s The News that there was no truth to the Indian allegations. “There are only Chinese construction teams working in the Northern Areas of Pakistan on certain development projects being carried out by Pakistan and China jointly. But the presence of the Peoples Liberations Army’s troops there is out of question.” The News also reports that in August 2011 the PLA’s 101 Engineering Regiment took part in military exercises with their Pakistani counterparts along the border with Indian states of Punjab and Rajasthan.

October 13:

Next year China’s Ministry of Health will modify its essential drugs distribution system after a two-year trial found that it covers too few drugs and those covered were too cheap to incentivize production. The prescription drug program, introduced in 2009 as a cornerstone of China’s health care reform, was intended to bring down medical bills. To reduce the price, provincial governments identified a list of “essential” drugs, invited companies to bid to provide the medicines and prevented public medical institutions from imposing surcharges on them. For drugs not on the list, by contrast, hospitals can impose a 15 percent surcharge. The result has been a short supply of essential drugs due to little motivation from manufacturers to make the low-profit medicines. “We have received many complaints that listed drugs that are cheap, low-profit and not in mass demand could not find a bidder or supplier,” said Zheng Hong, director of medical policy and the essential medicine system. Another problem, according to Zheng, is that the program is only mandatory for institutions below the county level. “We require grassroots level medical institutes to adhere to the list entirely, and higher-level ones can partially use it.” At high-level hospitals, which will adopt the new expanded drug system by 2020, only about 5 to 10 percent of available medications are essential drugs and they account for less than 5 percent of total medical bills. “We hope the new list will meet the demands of both grass-roots level hospitals and higher-level hospitals,” Zheng said in comments carried by the South China Morning Post.

[Editor’s Note: Throughout China cheap drugs have seen shortages. In recent months, for example, there was a shortage of protamine, a protein used in heart surgery. Because of low profit margins only one out of three pharmaceutical companies that obtained production licenses is still manufacturing the drug. Surgeries were delayed and even halted in hospitals across the country because of the supply shortage.]

October 15:

There are growing concerns among civil society leaders in Taiwan about its government officials acting as double agents for the mainland. Last month, Wu Chang-yu, an associate professor at Central Police University, was arrested for gathering information on members of Falun Gong, Tibetan support groups and Chinese democracy activists in Taiwan and turning it over to Beijing. The Taipei Times reports that two police officers assisted Wu. Since 2002, a total of 13 people – including senior officers in Taiwan’s military, a Presidential Office official, as well as serving and retired intelligence officers – have been arrested for espionage.

October 16:

More than two years after President Hu Jintao and India’s Prime Minister Manmohan Singh agreed to install a hotline, China and India have yet to establish the link because the Indian side lacks suitable encryption technology. China has already delivered its decryption equipment to the Prime Minister's Office where it has been sitting idle for at least three months. Both sides agreed to establish the hotline within a month during the 2009 BRIC summit in Russia but technical negotiations took longer than expected and a formal pact was not signed until April 2011. The hotline actually has two links, one set up by India and the other by China. If New Delhi were to initiate a call, the Indian hotline would be used and if Beijing were to make the call, the Chinese line would be operational. The Indian Express reports both sides will use their own encryption and decryption technology to secure their respective lines. The delay occurred because India realized it would need more sophisticated encryption-decryption technology for its China hotline.