China's Agents of InfluenceBy J. Michael Waller

Communist China is using tiie weight and strength of U.S. business - including some ofthe nation's largest defense contractors - to promote its military and security goals.IIt used to be that in the China

debate the giants of the U.S. business community argued stronglyto separate national-securityissues from trade. Now big business is doing what it always

argued against bv opposing national-security legislation at Beijing's behest.

[ weight and strength of U.S.business —including some of the nation's largestdefense cnntrnrtnrg — to promote itsown military and security goals.

The shift, underway forbears, hasemerged during the last few monthsas big business and related interestgroups weighed in against legislationdesigned to cement the long-standingU.S. security relationship with theRepublic of China on Taiwan. LastOctober, when the House International Relations Committee voted alopsided 32-6 for the Taiwan SecurityEnhancement Act, or TSEA, the business lobbies that had focused almostpurely on Red China trade issuessprang into action. They pressed theHouse Republican leadership to pull

oiftllfijjouse and to postpone consid^eration"until later. The GOP leader-"shin cavftri^ -- "

"The American business community has crossed a Rubicon in pursuifof its deepening relationship witHlheQiinese ^nvftrnmpnt^ wrote liberal

Angeles Times cn'inmnisr ar^rTfespectea cmna watcher .Tim Mann"For the first time. American corporations have wagedVrTintensiye WasTi-

support of China on an issue that hasno direct connection to trade, investment or other economic matters inwhich the U.S. business community

! year it sailed through the House andis awaiting Senate consideration asthe U.S. Chamber of Commerce inHong Kong and other business groupslaiinoh another attack in .simnnrt nfRed China.

Seasoned security experts aredeeply concerned. A1Santoli, a senioradviser to Rep. Dana Rohrabacher,California Republican, and one of themost informed China expertsonCapi;^tol Hill, points to a recent joint CIA-

|TBI report to Confess on CommunistC!!hinese espionagethat says, "I'he Chinese government continues to seeK

influence in Congress through variousfneans, including inviting congressional members to the pkc li^eopie's

Republic of Chinal. lobbying ethnic^Chinese voters and prominent U.S. cit>izens and engaging U.S. business inter-

1eststo^igh in on issues of mutual

succeeded for now, but its troublingramifications may haunt the businesscommunity for years to come."

Now, the TSEA is back. Early this

14 • Insight

I[concern.''N:

Attention! The China lobbyon CapitolHill is helping to beefup the ranks ofthe People's Liberation Army.

The intelligence fppnri- apppgrc tnreferto elder statesmen with decades-long business ties to China's Communist leaders and to corporate giantssuch as the Boeing Co.. CliryslerCorp., General Motors and Motorolathat have maHp an inHp]jh1P rnark ohthe China-policy debate. "WhenAmerican business lobbied Congresson China policy in the past, one couldbelieve that corporate America wasnot doing China's bidding but ratherwas protecting its own interests,"writes Mann. With the lobby campaign against reaffirming the U.S..security relationship with ^wan, heargues, "this distinction is not so clear?nymnpfi"

Seduced bv visions of selling con-

May1,2000

Tpanv husinp';-; fi^nrpc;, ii

effict. agents of influence for the Beijing resume. One of the most prominent is Boeing, the civilian jetlinermanufacturer and Pentagon contractor. With potential 12-figure Chineseaircraft orders at stake, Boeing's concern is understandable, as some of itscritics admit.

Beijing has exploited that concernto the hilt. If the company doesn'tdeliver political influence for the Communist government, Boeing chiefinternational strategist LawrenceClarkson told the Seattle Times in1996, "we're toast." lb ensure its 70percent share of the Chinese airlinermarket, Boeing, in cooperation withother similarly motivated companies,pushed hard not only for Congressannually to renew "most favorednation," or MFN, status for China, butto change the way the people of theUnited States view the corrupt one-party regime.

In partnership with Chrysler. General Electric,Motorokandotherblue-chip companies. feoeing~launched~ a"China NormaliZfitinn Tnitiativp" inlate 1995 and early to influenceCongress from below bv "educating"gmss-root5"ArHefica.j^i5ut Congressaiia the American puBlic are not theonly groups Boeing has to influence,"the Seattle Times reported. "The company also must convince the Chinesethat it's working hard on China'sbeh^

Boeing and other companies seeking to sell their civilian and dual-useproducts to China are caught in a conflict with the parts of their businessdevoted to the national defense of the

United States—a sector that has

ed many of the defense and national-security tninK tanksand policygroupsin Washington and around the country.And those groups that don't toe the lineare getting punished.

"The China lobby used to be theTaiwan lobby," says an Asia expert fora Washington think tank who, like others interviewed for this article,requested anonymity for fear of retaliation. "Now it's swung solidly theother way, where you're almost awacko ifyou're not with Beiiing. You'retot^ly marginalized."

"The same companies will threaten to cut you off tor writing a singTepiece that the Chinese governmentfinds oDjectionaoie," an official of a

May1,2000

defense foundation tells Insight, say-iiig he speaks from personal experi-ence. Unlike Taiwan, which investsmost of its lobbying in traditional pub-fic-relations firms that register withthe Justice Department under the Foreign Agents Registration Act, orFARA, Beijing circumvents the lawand avoiQs oisciosure bv getting US-companies,, senior statesmen, acade-

Kissinger: "China is a minusculepart of my business."

mics gnd others to do its bidding."It'ssort of seamless, in part becausethey've been doing it since Nixon.^'says a China-watcher active on Capitol HiH^ •

The central figure in PresidentNixon's historic outreach to mainland"China,~former secretary of state

("Hgnrv kT'<;«;ir|£f>r. is considered one ofH^r^rv Ki<;<;ir|gpr. IS considered one otthe heaviest hitters in the China-poli-cv debate^ Critics, including formerTime magazine Asia bureau chiefsRichard Bernstein and Ross H.Munro, have questioned whetherKissinger'^dvlce onnational-securi-

tv strate^ for U.S. political leadersmight be tainted from possible con-flicEs or iiiLeresc with ms consultingbusiness concerning China.

Kissinger is sensitive to the suggestion. When Insight asked him toaddress suchcriticism,he haranguedthis reporter and would not directlyanswer (see "McCain's Senior Tbam,"Feb. 18). "What do vou think entitlpsVOU to ask snr,h an insulting niiPstinn?"

vyas his immediate response.Kissinger told Insight that he doesnotaccept money from China, that head^es corporate clientsabout situations in other countries ana that "mvChina views are well-known " Furthermore,"he added, "China is aminuscule part of my business."

Not content to place all its eggs inthe Clinton-Gore basket, Beijing isintensely interested in making sure ir

administration. Chinese officials care-fully monitor the"U.^. news media, asmuch to influence it as to use it"I^leads to collect detailed intelligence.Last October, Communist Partyescorts asked a visiting Republicandelegation probing questions aboutthe national-security team of the @Ppresidential front-runner. Texas Gov.George W. Bush. They seemed concerned that parts of the Bush camnwere quoted in a U.S. newsmagazine aswanting to help bring freedom"tomainland China as Ronald Reagan did

for the Soviet Union when he challenged the evil empirp

When a delegation member askedto see the article, he was shown atranslation in Chinese. It was Insight'sOctober 1999 cover story about Bush'snational-security team. The articlehad just gone up on Insight's Websiteand still was on the presses.

Beijing is demanding more andmore ihar lj.n nusines.ses accountwhattheyhavedonetoshape politiraldebate in Washington and how theirlobbyists are neutralizing supportersof democracy in TMwan or respondingto complaints about human rights nnthe mainlan(j. according to a seniornational-security analyst who worksclosely with defense contractors, thefederal government and Congress."Cross-straits [TMwanl. human rights.'trade, sanctio^^. missile defense —they get points for all of them. Ifyou'rea O.S. business leader trying to tradevAtft China, you nave to constantHTgoback and say. 'This iswhose head Icutpff;^we got rid of so-and-so? The c^panies always have to go' back andreport what they have done for Chinatoctay."

Nonsense, says Boeing. "I don't

Insight' 15

think it puts any pressure on us," saysBoeing spokesman Larry McCracken.Asked about the Seattle Times reportthat Boeing did pohtical work at Beijing's behest, McCracken said, "I wasn't here in 1995 so I don't know whatyou're talking about." He added thatBoeing supports China's entry into theWorld lY-ade Organization, "and webelieve that's good for America."

The recipients, or former recipients, of some corporate and foundationgrants disagree. One small think tai^klost a m^or technology firm and a

pBBldonors when it hired an analyst con-

of B

mumst system. "Thev quit giving, sonow they are not only not giving

morder to threaten people not to [hire

urce close to the ero

•iiaisinBigsrosmnTaEigCTn!

A stSf member of another nonprofit relates this story: "When theirguy came to us at a [fund-raising] dinner, the Boeing rep made a point ofmentioning afterward t

ship but would cut their contributionHiTaiaatgjKgggamffii

WDiiMeiCTSimsa

ll

The main lobbyists for Beijing are tiieChina Business Council, led by Boeing,

Motorola, Caterpillar, AT&T, and the American Industrial Group Business Coalition forU.S.-China Trade, spearheaded by Boeingfour years agoto work congressional districts nationwide to mobilize subcontractorsand othercompanies that benefit fromincreased trade with China.

IB • Insight

Red China. The U.S. imposes relatively low import duties on products fromcountries with such status. But th,ewords "most favored nation" were so

a's ambassado

recently hosted an event for about 5affan

awkward to a

term to "normal tr^e relations." Bei-jmg and U.S^ business long havefavored "permanent MFN," now calledpermanent normal trade relations, orPNTR.

Beijing is applyinggrass-rootspressure on

Wasiiington fromtiie American

iieartland to getpermanent normal

trade relations.

Beiiing is applying grass-rootspressure on Washington fr

one of the participajitsJellaJUisight."rvD one riinched "

The Clinton administration long

encouraged high-tech companies likeHughes Electronics Corp. and Loi^

ommunic

chieft were big campaign donors, torocKe

happened to rte^ for its nudesiift tnrnp The indebtedness was a

two-way street. Then, stung by thescandal, the administration filed criminal charges. In April, it accused thenation's largest defense contractor,Lockheed Martin, of export-controlviolations for helping Beijing perfecta satellite-launch device that also cancarry nuclear warheads. Lockheedsays it did so only after the ClintoiT

military-industriale lobbying campg

s

gave tne go^ead.iNowceymg nas taken a page from

the lobbying playbook of defense contractors, according to a defense analyst who dares not be named. "Chinais using the lobbying mndp] nf the TT .S.

congressional aide. "Their message tractors made sure that a B-1 nart'We're not going to place anv more was made in practically every con-

confirmed.'" I gressionai district. IId make sure the

RedChina Uililgnsts

Then thereare cultural groups. Pro-Bei-jing interests havetaken over Chinatowndistricts in U.S. cities. Festivals once featuredthe flag ofthe pre-Communist Chinesegovernmentthat fled in exile to Taiwan butnow sport the red-and-yellow bannerof thePeople'sRepublic. New Chinese-Americangroupswith a pro-Beijing tiltquickly canplacea spokesman on television in the

name of the "Chinese-American community" to denounce federal espionage investigations as "racist."

Beijing even sponsorsthe76-acre Splendid China theme park two miles from themain entrance toWalt Disney World, theentertainment giant that also is a partof the newChina lobby.

—JMW

May 1,2000

B-1 gotfundine. they made sure everylast manufacturer with 400 grommet-maKers in a aistrict would come in andtell ineir congressman now importantthe issue is; '

AS me battle Times reported in its1996 expose, "Boeing's stratp^ involves pressuring its vast network ofs^phers to lobby their congressionalrferesentatives." A Senate staffer whodealt with Boeing on trade issues says,"When it comes to China, nnt nutthe full-court oregs. Thev're evei;y-wlfere and they're smarj:. Thev do itthroughfrontorganizatioi^s.Thev publish studies on exports, fhey knowwhere their suppliers are and thevget nre.ssure on them."

Boeing says its critics exaggerateits influence. T^nttV|P pragg-rnntc rapi-paigns it has sponsored through tl^Business Coalition for China TVadeare state of the art. "Thpy have nntfi-books on every congressional district.inev Know every Diaver. evervone

wfio can host a dinnep everv localperson who can apppar nn TV anHthey just bombard you." says thedefense analyst. "And that's beforethey, get around to inviting you to

^China and getting you free suits" inKong.-^

The China lobby also pressures U.S.allies using U.S. recipients of corporate and foundation grants, (j^hinq-related business, such as the Ameri-can Industrial 6roup and its relatedStar Foundation, generously sunnnptfavored U.S. think tanks and universi-

t^njl'Om'aiiis LliclL work with leaders"elsewhere in Asia. "Use of the academic programs by the corporations is awell-worn track." the defense analvstsays. "They then use the programs topropagandize our alhes. Thev bringoyer ikiwanese. SQiitinfCnrpflr^fs.ipinos to these programs that most ofthe rest oi us aon t even tbliow. Theseare the dialogues between TRe alliesand us. between the foreign ministriesand the think tanks, that really matter.Thev're told what thev can expect,what the reasonable dialogue is "inArflerlca. The allies go home with thatmessage."

Our Asian allies are getting snnnnn

to have low expectations, savs the analyst. "ThP Asians thpn HpfiHpcan't coupt nn the what wp nnHpr.Stand trom the str^gic dialogue withthe u.a. IS that there is a condominiumto split the world with China, so wehave to go home and make nlansaccordingly.' The danger is that it cre-ates misperceptions. Because nn occa-

That's when the corporations reactivate to pressure Capitol Hill.

May 1,2000

Apolitical leader, congressional aide orjournalist targeted for cultivation likely

will receive an invitation to visit the Peo

ple's Republic of China. Hospitality is oneof Beijing's most effective v/ays to influence Americansand other foreigners. Chinese government officials are gracioushosts whose hospitality is leveraged bykeeping close tabs on what their guestssee, hear, say and think.

"Americans go there and are met bynice, personable,friendly people. Theguestsmightfeel a genuinenessabouttheir hosts.That'sthe face ofChina," says Herman Pirch-ner Jr., president of the American ForeignPolicyCouncil. "Theymight be genuine, butit masks a reality that no one sees."

They will be at least as professional asany high-priced Washington lobbyist.Theywill have a very strong command of allfacts and arguments. Ifa guest is veryhigh-level, someone will be assigned to him fora vigorous discussion. If the assigned person is not persuasive, the guest will beassigned a new argument with a new person in another city on the itinerary. Thehosts take notes in meetings and arebelievedto monitorwhich arguments workand which don't work.

They let you alone often, periodically inguest houses. Some frequent travelersreport that the authorities eavesdrop ontheir conversations once the governmentescorts leave. Even seasoned travelers have

a tendency to talkamong themselves abouttheir impressions. The purpose of eavesdropping is to assess how the official arguments work with each member of the visit

ing delegation.Visitors may or may not find that their

personal belongings, especially briefcasesand computers, have been rifled. "You don't

The Foreign Agents RegistrationAct, or FARA, is intended to requiresuch foreign-sponsored lobby activity to be registered with the JusticeDepartment so that Congress andother decision-makers will know the

origin of the political action. Violationof the law is punishable by up to a$10,000 fine — peanuts for big companies such as Boeing — and as manyas five years in prison. Rnrthp.Tii.sticpDenartment seldom pursues suchcases. "Fi^RA is iifst too tun ot loop-holes and not serious enough a lawfor the FBI to investigate or want tq^p'rosecute." an FBI source telif^sight. _

There are carrots and there aresticks. "Our developing will create

feel a police state at all," says Pirchner."You're always with yourhandler whohasagovernment ID, so you are not exposed tothe harsher aspects of the state. You can'thelp but notice the economic grov/th andenergy there."

Tips for Visitors to China:• Understand the issues and positions

that are the official party line. Knowing thepartylinecan be useful,and discussions canhelp to clarify official Chinese positions.Economic issues are somewhat akin to theway Americans understand them. Everything else isparty line. "There are acceptablearguments and nobody goes outside thebox. No one gives an unapproved answer,"says Pirchner.

• Resistthe urgeto kowtow. "You can betoughwith them ona protocol level andstillbe invited back, and disagree asmuch asyouwish,"says Pirchner. "Ifcomments are madein a serious, polite way that observes protocol, you can posit tough questions andlinesand get the same back.TheChinesewillgetmore emotional overstyle. If you are personally offensive, youwill getan argument.Serious arguments are answered seriouslywithin theconfines ofthe party line." Pirchneradds, "If you're a public official, you'rethere for Chinese-American relations. Itdoesn't mean that you have to cave in."

• Don't permit familiarity. Alwaysaddress official handlers as "Mr." or a similarly appropriate title. Visitors to China oftenbelieve that they have made great friends."The Chinese always want to help peoplewho interest them to make money. They willmake you think you're a greatbusinessmanbecause things will goso easily. Just abouteveryone in political life with contacts will begiven help in business."

— JMW

I^remier Li Lanqing warned Boeing'sCiarKson tlve vpars Accordin^nthe Seattle Times report, Li added."But because of the unstable relationship between the ITS, anrl Chir^. it wiUgoelspwhpTp" Sometimes the thr^tsFJP fiirthpy^ The People's LiberatjnnArmy, or PLA. is ratcheting up therhetoric in its interr^al —but piih^in —discussion. It recenrlv pnhlishpr^ abook, Unr^^trirtPfJ Wnrfnre. that advocates the assassination of U.S. investors and traders whose financialactivity harms Beijing's 'Vpd-rhTp"cgrapaaiesi^ee "FLA Revises the Art-of War," Feb. 28). A more recent PLApublication advocates seizing the S2.Sbillion in U.S. investmpnts in Phina inthe eventWashinptnn trips tnhpipwandefenditselfagainsta rnmnq^i|̂ igtinvasion. •

Insight-