Tags: America's | Strange | Financial | Ties | China

America's Strange Financial Ties to China

Friday, 17 November 2000 12:00 AM

Taking advantage of the uncertainty in the U.S. over the elections, America’s competitors are seeking to challenge the most important areas of America’s national security.

Communist China's infiltration of America is well known and dangerous. Chinese military and political intelligence agencies are working overtime in the U.S. and have already stolen many of America's most precious secrets, including hundreds and thousands of documents relevant to this country's security interests. At times Chinese intelligence operates so aggressively that it appears as if it already considers this country part of its own backyard.

Beijing continues to plant so-called agents of influence in most sectors of American life. These agents have succeeded in corrupting many U.S. politicians with campaign contributions from Chinese sources, most of which, directly or indirectly, trace back to the People's Liberation Army's (PLA) Intelligence Directorate and other special services.

We know that beyond the traditional ways of penetrating America, Red China is now is giving priority to infiltrating the U.S. capital markets, where a large number of American investors are now holding Chinese stocks and bonds, often without their knowledge.

Ordinary Americans have investments, in the form of pension funds, insurance portfolios and mutual funds, in Communist Chinese corporations, some of which are tied to the PLA and Chinese intelligence services.

With the silent concurrence of Washington, many U.S. public and private portfolios are now viewed by Beijing as crucial sources of "no-strings" cash with which it can contrive its military buildup for a future conflict with America.

Moreover, China, according to the Deutsch Commission, may be using American investors' proceeds to finance the proliferation of weapons of mass destruction and ballistic missile delivery systems.

As the Washington Times reported on Aug. 9, Beijing has increased its missile-related sales to Pakistan and is continuing to supply nuclear, chemical and biological weapons and missile components and technologies to North Korea, Libya and Iran.

Unfortunately, American politicians and many in the media are ignoring Red China's most recent penetration of U.S. capital markets.

They appear uninterested in evaluating this threat, much less in doing something about it. Fortunately, there are patriot non-governmental groups and some responsible politicians who understand the compromising nature of a massive run-up in U.S. investor exposure in China and are seeking to address it.

As NewsMax.com reported, in April an unprecedented broad-based coalition of non-governmental organizations from across the political spectrum opposed the Initial Public Offering (IPO) of China's largest state-controlled enterprise, PetroChina.

PetroChina’s IPO proved a fiasco and its financial target was downsized by over 70 percent, from the originally sought $10 billion to less than $2.9 billion.

After a hugely successful effort by this so-called PetroChina Coalition to stymie Red China's flagship effort to establish itself in the U.S. capital markets, Senators Fred Thompson, R-Tenn., and Robert Torricelli, D-N.J., the chairman and ranking Democrat on the Senate Governmental Affairs Committee, introduced legislation named the Thompson-Torricelli "China Non-Proliferation Act" last summer.

The bill – since side-tracked – was designed to "provide an annual review mechanism and escalating scale of the responses to future Chinese proliferation of weapons of mass destruction, missile technologies and advanced conventional weapons." This legislative initiative sought to impose immediate sanctions on proliferating Chinese entities as well as a series of graduated penalties on Chinese government.

There is little doubt that if such proposal ever becomes law, the U.S. could, for national security reasons, use its dominant capital markets as a foreign policy weapon. Foreign companies involved in the proliferation of weapons of mass destruction would be a good place to start. As usual, in matters relating to China, the position of the Clinton-Gore administration appears odd.

For example, Federal Reserve Chairman Alan Greenspan recently weighed in against the proposal of Senators Thompson and Torricelli to use access to the U.S. capital markets to discourage ongoing, egregious proliferation activities of select Chinese and other foreign companies and government- controlled entities.

According to Mr.Greenspan, "our gradual increase in engagement commercially with China is undermining many of the types of structures which I think lead to the problems we have. And I think that contrary to engaging them in less commercial activities, I think it's very much to our advantage to significantly increase involving them in free trade, open-market economics, and basically the type of dynamics which raise standards of living, and I think ultimately create significant changes in societies."

In his testimony before the Senate Banking Committee on July 20, Chairman Greenspan also said that he is "not even sure how such a law would be effectively implemented, because there is a huge amount of transfer of funds around the world. For example, if we were to block China, or anybody else, from borrowing in the United States, they could very readily borrow in London and be financed by American investors. Or if not in London – if London weren't financed by American investors, London could be financed, for example, by Paris investors, and we finance the Paris investors.

"In other words, there are all sorts of mechanisms that are involved here, and so the presumption that somehow we can block the capability of China or anybody else borrowing at essentially identical terms abroad as here, in my judgment, is a mistake," Greenspan added.

"So my most fundamental concern about this particular amendment is it doesn't have any capacity, of which I am aware, to work. But being put in effect, the only thing that strikes me as a reasonable expectation is it can harm us more than it would harm others."

First of all, the vast majority of Americans support "free trade" and "open-markets economics." To believe, however, that these mechanisms are solving – or can, by themselves, resolve – China's ongoing proliferation of weapons of mass destruction and their long-range ballistic missile delivery systems is not supported by the record.

Indeed, many mainstream press reports have established that Communist China's proliferation "dynamic" is proceeding, notwithstanding all the U.S. investment, trade and other economic assistance going to Beijing.

Second, the Federal Reserve Chairman is aware that the U.S. capital markets are, by far, the world's largest source of funds at the most competitive rates available for international bond and equity offering.

"Consequently, if foreign entities were to find themselves unable to access the American debt and equity markets, they would likely pay a premium for such funds as they can attract," according to Roger W. Robinson, Chairman of the William J.Casey Institute of the Center for Security Policy. The Casey Institute is playing a leading role in the disclosure-oriented efforts of the PetroChina Coalition.

Robinson continued, "These problems would only be exacerbated if the reason for such denial of access were on the grounds of national security or egregious human rights concerns. In all likelihood, such a stigma would also not go unnoticed by rating agencies."

"In sum," Mr.Robinson commented in an interview with NewsMax.com, "the picture painted by Chairman Greenspan neither recognizes the requirement for additional foreign policy tools to address the burgeoning threat posed by proliferation – not to mention other vital security and human rights concerns – nor properly portrays the utility of putting transgressors in this area on notice that their access to the U.S. capital markets could be jeopardized."

Robinson, who worked at the National Security Council and as Senior Director of International Economic Affairs, was, according to President Ronald Reagan, the "architect of a security-minded and cohesive U.S. East-West economic policy. Just now it's well known that this policy hastened the demise of the former Soviet Union.

In response to the dialogue that took place between Senator Phil Gramm, Chairman of the Senate Banking Committee and Greenspan, Roger Robinson remarked, "it was a disservice to the highly regarded Federal Reserve Board's chairman to put him in a position whereby he was obliged to expend valuable political capital and personal credibility in opposing a national security and foreign policy initiative that can work and is urgently needed."

NewsMax has learned that the next campaign of the PetroChina Coalition will likely be aimed at China's next sovereign bond offering in the amount of $1 billion to $2 billion. Such dollar-denominated bonds have been routinely issued by the PRC government over the past several years and now total about $4.2 billion.

However, those with a realistic view of Chinese military, human rights, environmental, labor and other abuses understand the advantages of coordinating their efforts in the U.S. capital markets. U.S. purchasers and holders of Chinese stocks and bonds should also ask themselves – and their fund managers – if their money might be used by Beijing to manufacture ICBMs targeted at their families or to advance proliferation efforts.

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Taking advantage of the uncertainty in the U.S. over the elections, America's competitors are seeking to challenge the most important areas of America's national security. Communist China's infiltration of America is well known and dangerous. Chinese military and political...
Friday, 17 November 2000 12:00 AM
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