Taiwan Communiqué No. 75, April 1997

The China-connection

Chinese buying influence in Washington

On 13 February 1997, the Washington Post published an article by its reporters Bob Woodward (of Watergate-fame) and Brian Duffy, titled "Chinese embassy role in fund-raising probed." In the article, the writers gave a detailed report on how, during the 1996 Presidential and Congressional election campaign, the Chinese government through its embassy in Washington DC attempted to channel funds to the Democratic National Committee ("Chinese Embassy role in fund-raising probed", 13 February 1997).

Central figures in the scheme were John Huang, the former Commerce Department official, whose connections to the Indonesian/Chinese Lippo Group and to China itself caused the Clinton Campaign a great deal of anxiety in the Fall of 1996, and Charles Yan Lin Trie, the Arkansas restaurant owner, who brought a high Chinese arms merchant to the White House in 1996.

During his 18 months at the Commerce Department, Mr. Huang received 37 intelligence briefings on issues relating to China. There are strong indications he briefed Chinese officials on US negotiating positions. Mr. Huang also clearly used his position and influence to try to reduce contacts and activities relating to Taiwan. In an internal Commerce Department memo dated January 27th, 1995, Mr. Huang wrote: "anything we need to delay program with Taiwan (sic), we should do it (to protect what we have accomplished so far with China)."

On 28 February 1997, the same two Post reporters, Woodward and Duffy, wrote that the Federal Bureau of Investigation was investigating whether representatives of the PRC also attempted to buy influence in Congress ("FBI probes China-linked contributions", Washington Post, 28 February 1997).

Then, on 9 March 1997, the Washington Post reported that in the middle of 1996, the FBI had forewarned six members of Congress, including Senator Dianne Feinstein of California, that they had been targeted by China to receive illegal campaign contributions through foreign corporations. The plan reportedly involved spending nearly US$ 2 million to buy influence not only in Congress, but also within the Clinton Administration ("FBI warned six on Hill about China money", Washington Post, 9 March 1997).

The episode produced an embarrassing flap for the Clinton White House: in mid-1996, the FBI had also informed two middle-level National Security officials about the Chinese influence-buying attempts in Congress. However, the NSC officials didn't relay the information to their superiors, so Mr. Clinton and NSC-director Anthony Lake were not aware of it at that time. The matter contributed to Mr. Lake's withdrawal of his nomination for CIA Director.

In the beginning of April, the newsmedia unearthed further evidence of Mr. Charles Trie's connections to China: Wall Street Journal and the Associated Press reports indicated that Mr. Trie received large sums of money in wire transfers of $ 50 or $100 thousand from China through the Bank of China's New York Office. The bank is owned and operated by the Chinese government ("Key Democratic fund-raiser got funds from Bank of China", Wall Street Journal, 1 April 1997, and "DNC funds linked to China", Associated Press, 1 April 1997).

Business as usual ?

According to several recent newspaper articles, the Chinese actually don't have to buy influence in Washington at all: U.S. business organizations are doing it for them !!

In an article on 23 March 1997, the Associated Press / Dow Jones News Service described how major companies and famous names (see article below), combined to put pressure on Congress and the Administration on a range of China-related issues, from granting permanent MFN-status to China's admission into the World Trade organization ("China's best US lobbyists are US companies", 23 March 1997).

Another article, this time in the Washington Post, describes how some 1,000 multinational corporations and trade associations have set up a "Business Coalition for US-China Trade", which plans to visit every member of the House and Senate to push for expanding trade with China. The group even intends to push for an end to restrictions on the export of certain high-tech "dual use" products to China ("US companies lobby for more China trade", Washington Post, 18 March 1997).

Taiwan Communiqué comment: In their lobbying and in their position papers, the companies which are so eager to trade with China either do not mention human rights, China's repression in Tibet, or its virulent aggression against Taiwan, or attempt to downplay them.

These issues are treated as "minor irritants", which preferably should go away as soon as possible, so as not to disturb the profit margins, which the companies hope to reap in their trade with China.

These companies and CEO's should realize that a China which doesn't abide by a number of basic international rules and standards such as human rights and respect for neighboring countries will in the end also have little respect for the rights of companies trying to make money.

This point was made quite clearly in an excellent article by Thomas L. Friedman ("Wake up business: you too need rule of law in China", International Herald Tribune, 11 March 1997). Mr. Friedman wrote that there is already a sour mood in Congress that in the last few years, the US has "...so cravenly put profit ahead of principle with China..." Mr. Friedman suggests that the business community starts taking ... initiative to bridge the huge gap between the business community and the human rights community rather than always widen the gap."

We wholeheartedly agree.

Kissinger, Haig and Co.: profitable links to China

During the past few weeks, considerable evidence also surfaced in Washington that a number of former and present US government officials are benefiting greatly from dealing with China.

The first major source was the newly published book "The coming conflict with China" by former bureau chiefs Richard Bernstein and Ross Munro. In an extensive exposé in chapter 4, titled "The New China Lobby", they describe how Messrs. Kissinger, Eagleburger, Scowcroft, Cyrus Vance, Alexander Haig and other former high-level officials influence US policy towards China often at the expense of a democratic Taiwan and get paid large amounts of money to "advice" corporate clients interested in doing business in China. On page 16 of this Taiwan Communiqué we will further discuss this new book.

Another extensive exposé was published in the Washington Times on 25 March 1997. It was titled "Famous names well paid to support China" and again mentioned Messrs. Kissinger and Haig as key figures in the lobbying campaign to seek expanded U.S.-China relations.

The article stated: "Both former Cabinet secretaries have received lucrative fees as deal-makers for business-clients with ventures in China, and both have a large financial stake in expanding U.S.-China trade relations..."

However, according to the article, the two are not registered with the Justice Department as foreign agents, and the multi-million dollar business campaign to retain China's MFN-status and gain its entry into the WTO "...strains the limits of the lobbying disclosure law and possibly violates the Foreign Agents Registration Act."

The article mentions the $26 billion American International Group, Boeing, Motorola, General Motors, General Electric and IBM as major organizers and backers of the multi-million-dollar lobbying campaign by the newly-formed "Coalition for U.S.-Trade."

The article also mentions that Mr. Haig is "honorary senior adviser" to China's government-controlled maritime operation, COSCO, the shipping corporation which, in a shady deal (see article below), was intended to take over the closed U.S. naval facilities in Long Beach, California.

The article mentions that six major corporate backers also simultaneously launched a separate US$ 750,000-a-year public relations campaign to boost China's image through the Internet, schools and community organizations. The campaign is being set up by Washington-based Edelman Public Relations Worldwide.

Finally, the Washington Times article lists a number of large campaign donations by law firms hired to represent Beijing and Chinese companies to the campaigns of key people in the U.S. Congress.

Feinstein and Bennett Johnston:

China's voices in Congress

Voicing support for China and benefiting from business deals with China is not limited to big business and former government officials. It also occurs in the US Congress: two persons stand out in this respect: former Senator J. Bennett Johnston (LA) and present California Senator Dianne Feinstein.

Mr. Johnston stood out in 1995 as the only senator voting against the resolution to allow Taiwan President Lee Teng-hui to enter the US to attend a reunion at his alma mater, Cornell University.

It now becomes clear why: in the book "The coming conflict with China" writers Bernstein and Munro report that Mr. Johnston's two sons have extensive business deals with China. One, Hunter Johnston, is a consultant for Entergy Corp. as well as General Atomics, which wants to export nuclear power plant equipment to China. When the Louisiana Democrat, who was chairman of the Senate Energy Committee, went to China for a visit, he took his two sons with him, so they could conduct business deals.

Mr. Johnston also wrote to his colleagues on the Senate Foreign Relations Committee and asked them to muffle their support for Chinese-occupied Tibet. He offered his colleagues to arrange meetings with the Chinese ambassador in DC. Congressional staffers often referred to Johnston as the "appointment secretary" for the ambassador.

Another outspoken China-propagandist in the Senate is Dianne Feinstein. To her colleagues and Senate staffers she is known for her long, haranguing monologues, explaining her close ties with Jiang Zemin dating from the days she was mayor of San Francisco and the rosy perspective for U.S.-China relations, and a strong support for China's MFN-status. In doing this, she totally whitewashes China's repression in Tibet and the lack of human rights in China itself, as well as China's military threats and missiles campaigns against a free and democratic Taiwan.

Mrs. Feinstein's political positioning is also linked to financial benefits and profits from China trade: her husband is San Francisco investment banker Richard C. Blum, who in 1994 set up a US$ 150 million fund, named Newbridge Capital, to invest in companies in China. According to a 24 June 1994 article in the San Francisco Business Times, Mr. Blum was recruiting Chinese-Americans in San Francisco to form operational teams to watch over the funds' investments in China.

The article noted that besides Mr. Blum own (existing) investments in China which are reported by the San Francisco Chronicle to run between US$ 2 and 3 million , "...he has long-established contacts dating back to trade missions he took with his wife, then-Mayor Dianne Feinstein, in the late 1970s.

At the end of March 1997, several California newspapers published articles on the conflict of interest between Mrs. Feinstein's outspoken positions on relations with China and her husband's business dealings. On 28 March 1997, the Los Angeles Times published an article titled "Feinstein, husband hold strong China connections," while on 1 April 1997, the San Francisco Chronicle published an article, titled "Blum factor is a real one for Feinstein."

In the article, San Francisco Chronicle writer Debra Saunders wrote about Mr. Blum's attempt to whitewash the conflict of interest by saying that his donations to the American Himalayan Foundation "...remove any perception that I, in any way ... benefit from or influence my wife's position as a U.S. Senator."

Ms. Saunders rightly stated: "Sorry, it doesn't work that way. It would be amazingly naïve to believe that being the husband of the U.S. Senator most friendly to China has no effect on Blum's business dealing in China."

The Long Beach Naval Station caper

On 8 March 1997, Associated Press / Dow Jones News Service reported in an investigative article that the historic Naval Base at Long Beach, California was about to be leased to the Chinese government-controlled shipping company COSCO (China Ocean Shipping Co.) for ten years at US$ 14.5 million a year.

The deal is amazing, because the city of Long Beach is going to pay some $200 million to prepare the base, and also contribute $ 200,000 for the Chinese shipping company's moving costs. According to the article, the base is valued by the City at $65 million, but preservationist groups estimate its value at some $ 300 million.

The article detailed how Mr. Clinton's White House in 1995 and 1996 pushed to turn the Navy Base over to the Chinese firm. One of the key figures in the deal was Johnny Chung, a shady Chinese-American businessman, who last year gave $366,000 to the Democratic National Committee. The money was later returned on suspicion it illegally came from foreign sources. Last year, Chung brought six Chinese officials to the White House to watch Clinton make his weekly radio address. One of the six was an advisor to Cosco.

The AP / Dow Jones report details how COSCO was involved in a number of shady activities, including the scheme to smuggle some 2,000 AK-47 rifles into the United States, with the purpose of selling them to streetgangs in Los Angeles and San Francisco (see our Taiwan Communiqué no. 71, June 1996, pp. 18-19).

In 1993, a COSCO ship was stopped by U.S. Navy ships in the Persian Gulf after U.S. intelligence warned it might be carrying chemical weapons materials.

During the past year, COSCO ship were repeatedly detained for violating international safety regulations, and the US Coast Guard has put the company on a target list of shippers to monitor. It was also a COSCO ship which hit a crowded boardwalk in New Orleans in December 1996, injuring 116 people.

The New York Times ("Senators ask for inquiry on leasing of California base to Chinese", 13 March 1997) quoted U.S. federal officials as saying that COSCO ships are frequently the subject of surveillance, not only because of the weapons incident last year, but also because of concerns that China is evading export quotas on textiles and that its ships have been used to bring "all kinds of contraband" into the US.

According to the Wall Street Journal ("Blum Associate's link to China hinders plan to convert base", WSJ, 26 March 1997) Mr. Peter Kwok, a director of Dianne Feinstein husband's Newbridge Capital investment company (see above), is an advisor to COSCO's Hong Kong operation.

On 20 March 1997, several members of Congress, led by California Congressmen Hunter, Cunningham and Bono introduced legislation in the US House of Representatives prohibiting the transfer of the Long Beach Naval Station to foreign-owned shipping companies.

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