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August 19, 2008
Exclusive: Olympics Highlights Beijing’s Corrupting Influence
On his way to China to attend the opening ceremonies at the 2008 Olympics, President George W. Bush was under pressure to justify his trip to the Communist dictatorship for an event being used to bolster the regime’s legitimacy as it shows off its rising power. The symbolism that attended the raising of the Olympic flag was most revealing and disturbing. The flag was turned over to an honor guard of People’s Liberation Army soldiers, who then goose-stepped past the crowd. The scene had to remind anyone with a sense of history of the 1936 Olympics held in Nazi Germany.
In Thailand, Bush defended his record, “I have spoken clearly and candidly and consistently with China's leaders about our deep concerns over religious freedom and human rights. I have met repeatedly with Chinese dissidents and religious believers. The United States believes the people of China deserve the fundamental liberty that is the natural right of all human beings. So America stands in firm opposition to China's detention of political dissidents and human rights advocates and religious activists.”
The Beijing regime rejects such discussions as interference in its internal affairs. But the problem with Chinese policy is not just at home. Beijing offers strong support to dictatorships in other parts of the world whose crimes destabilize entire regions. That support even clouded the Olympics. The Chinese government revoked a visa for U.S. Olympic gold medalist speed-skater Joey Cheek: This was not because Cheek protested Chinese human rights abuses or called for the independence of Tibet or Taiwan. It was because Cheek was a co-founder of Team Darfur, a group of more than 75 Olympic athletes who call attention to the genocide taking place in the Sudan. Beijing is the principle supporter of the Khartoum regime.
The Bush administration did not force Beijing to reinstate Cheek’s visa, despite calls from Congress to do so. However, the U.S. flag-bearer on opening day was Lopez Lomong, a refugee from Sudan who had been rescued from a Kenyan camp by the UN and sent to live with a family in upstate New York. He became an American citizen last year and his Olympic teammates elected him to carry their flag.
On June 5th, Luis Moreno-Ocampo, the Prosecutor of the International Criminal Court, briefed the UN Security Council on his Darfur investigation. He spoke of massive atrocities being committed there and warned, “The entire Darfur region is a crime scene.” Islamic militia groups, in league with the Sudan government, are raiding Darfur's African farmers. According to the Prosecutor's evidence, the militias commit mass rapes, killings, torture, and loot residences and shops. According to UN sources, at least 200,000 people have been killed and more than 2 million (half of Darfur’s population) have been displaced as result of the violence. On July 14th, the ICC charged Sudan's president, Omar al-Bashir, for ordering war crimes in Darfur.
Chinese Foreign Ministry Spokesperson Qin Gang commented on Moreno-Ocampo’s report the day after it was made, “China supports the proper resolution of the Darfur issue through dialogue and consultation based on respecting Sudan's sovereignty and territorial integrity. We have made proactive efforts to this end, including sending a peacekeeping engineering unit to the Darfur region.” The unit mentioned is from the People’s Liberation Army. Its mission is to confound the efforts of other peacekeeping units and protect the regime from outside intervention.
Beijing’s support for Khartoum is rooted in its trade and investment policies. Sudan’s large oil reserves are needed by Chinese industry. China has invested over $10 billion in Sudan. State-owned China National Petroleum Corp. (CNPC) owns the largest share (40%) in the Great Nile Petroleum Operating Co. (GNPOC). State-owned China Petroleum Engineering & Construction (CPEC) has built a pipeline from the GNPOC fields to the Red Sea, and a refinery complex outside Khartoum.
CNPC owns most of a field in Darfur and 41% of a field in the Melut Basin. Another Chinese state firm, Sinopec, is building a pipeline to Port Sudan on the Red Sea, where CPEC is building a tanker terminal. About 70% of Sudan’s oil exports go to China, and account for 10% of China’s oil imports. The oil facilities are staffed and operated by Chinese “guest workers” who assure Beijing’s control. David Blair, a reporter for the London Telegraph has reported seeing “Freshly painted billboards in Khartoum that carry pictures of smiling Chinese oil workers and the slogan: ‘CNPC - Your close friend and faithful partner.”
In exchange for oil, Beijing provides weapons and diplomatic support. China has supplied Sudan with tanks, artillery, helicopters, and combat aircraft. Darfur has been saturated with Chinese landmines. Beijing has helped Sudan build its own factories to manufacture small arms and ammunition, the real weapons of mass destruction in Khartoum’s campaign of ethnic cleansing. It is estimated that as much as 80% of Sudan’s oil revenue go to the purchase of weapons, while the general population remains one of the poorest in the world.
Unfortunately, before President Bush got to the part of his speech in Bangkok about Chinese human rights, he spent much more time talking about the U.S.-Chinese partnership, mainly in economic terms. This priority of investment and trade with China, much of it to replace American production, was carried over from the Clinton administration into the Bush era. Former Clinton Undersecretary of Commerce Jeffrey Garten recounts in his 1997 book The Big Ten how the transnational business community persuaded President Clinton to abandon his worries about the Chinese dictatorship, “I saw no issue which raised more concern and emotion in the business community than the tying of trade to human rights in China.”
Partnerships with China are always bad for the people in the subordinate country. Though not involving the overt violence used in Sudan, Beijing has inflicted losses on America as it has “reformed” its economic policy from Marxism to fascism. A study released July 30th by the Economic Policy Institute detailed the impact that the growing U.S. trade deficit with China is having on American jobs, wages and key industries. “Between 2001 and 2007, 2.3 million American jobs were lost due to the China trade gap, including 366,000 last year” reports EPI. Those displaced workers lost an average of $8,146 in wages last year, a total of $19.4 billion, as they were only able to find lower-paying jobs. Economic pressure can be just as unrelenting as militia groups in its ability to dislocate people and destroy communities.
Beyond the negative economic effects of the trade deficit with China ($256 billion last year), the flow of hard currency, investment capital and advanced technology is expanding Chinese industrial capacity and financial clout. Beijing’s new economic strength is used to support a military buildup and diplomatic initiatives aimed at undermining American influence and interests in every corner of the globe.
It is disconcerting how many people do not understand Samuel P. Huntington’s warning, “that economic activity is a source of power as well as well-being.” Consider reactions to a new forecast that China could overtake the United States as the world’s largest producer of manufactured goods next year. John Engler, president of the National Association of Manufacturers, told The Financial Times (August 10th) it was “inevitable” that China would take over on account of its size. “This should be a wholesome development for the U.S., for it promises both political stability for the world’s largest country and continuing opportunities for the U.S. to export to, and invest in, the world’s fastest-growing economy.” Yet, it is American corporate investment that is helping China grow, and U.S. exports are dwarfed by what China sells in the American market. The result is a shifting balance of power. Adam Smith in The Wealth of Nations noted that “The wealth of a neighboring nation, however, though dangerous in war and politics, is certainly advantageous in trade.” Engler’s group is dominated by transnational trading firms whose narrow focus is divorced from any regard for national life. His desire to gain private profit by helping China rise as a rival to the United States is disgraceful.
Whether it is in Khartoum or Washington, the Beijing regime corrupts everything it touches. It does no good to talk about China’s problematic behavior when American actions work to strengthen the Beijing regime. U.S. policy must change to redress the dangerous imbalance in economic relations with China that has been allowed to develop.
China’s export-led growth is not just based on cheap labor, especially as it expands into strategic and high-tech sectors of its economy. Subsidies, currency manipulation, and the theft of intellectual property are all part of Beijing’s game plan to dominate global industrial markets. These tactics are, however, all open to countermeasures by properly drafted and enforced domestic U.S. trade laws. While some of these Chinese offenses have been challenged by U.S. cases at the World Trade Organization, that route is long and uncertain. Congress has repeated passed bi-partisan resolutions defending the sovereign right to use American trade laws independent of any WTO action. The next president needs to enforce existing laws more forcefully and against a broader sweep of the economy than either the Clinton or Bush administrations have done. China cannot be allowed to take larger market shares away from American producers.
New laws will also have to enacted, especially against China’s manipulation of its currency to gain a competitive price advantage. The modest proposal of allowing American firms to petition for countervailing duties against Beijing for setting its currency value by fiat would be a start. There is a push by the China Currency Coalition, a an alliance of industry, agriculture, services, and worker organizations devoted to supporting the American economy, to add such legislative language to H.R. 6530, the Trade Enforcement Act of 2008.
Licensing of technology for use in China needs to be significantly tightened, and many more Federal resources need to be devoted to policing any licenses granted to prevent technology from reaching the Chinese military and defense industry. Indeed, with Chinese theft of intellectual property so pervasive, the general rule should be to allow nothing of value to reach China, as it is certain to end up in the wrong hands.
Finally, as a result of transferring over a $1 trillion to China via the trade deficit this decade, safeguards must be established to prevent Beijing from using this horde of cash to buy strategic American assets and spread its influence deeper into the U.S. economy and politics. The Committee on Foreign Investment in the United States should treat all Chinese investments as being under the control of the Beijing regime, and inherently a threat to national security if used to acquire access to manufacturing, technology, infrastructure, natural resources or financial institutions. CFIUS has the power to block all such acquisitions and should not hesitate to do so.
A dramatic scaling back of trade with China is only part of the program needed to maintain U.S. preeminence. Americans need to produce more, develop new technology, increase capital formation, and become less dependent on foreign sources for energy and other inputs vital to a growing economy. Contests at the Olympics are decided by competition, but so are contests in the international economy and the world at large.
FamilySecurityMatters.org Contributing Editor William Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council in Washington, DC. E-mail him at HawkinsUSA@aol.com.
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