USA Today Illuminates Case For Urgent Action To Halt Chinese ‘Bondage’

(Washington, D.C.): In a
thought-provoking op.ed. article
published in yesterday’s edition of USA
Today (see the
attached), Hoover Institute scholar
Peter Schweizer warned the American
people and their elected representatives
about the dangers of China’s penetration
of U.S. financial markets. As the author
of Victory: The Reagan
Administration’s Secret Strategy That
Hastened the Collapse of the Soviet Union
— the most authoritative analysis yet
published on the Reagan Administration’s
comprehensive strategy for challenging
and ultimately destroying Soviet
totalitarianism — Mr. Schweizer
has an impressive grasp of the pivotal
role security-minded economic and related
measures can have in contending with
hostile powers like China.

The Casey Institute takes great pride
in the recognition given in Mr.
Schweizer’s article to the work in this
field by Roger W. Robinson, Jr., the
first occupant of the Institute’s William
J. Casey Chair. Under Mr. Robinson’s
direction, the Casey Institute has urged
a greater awareness of the systematic
efforts being made by the Chinese
government and, in particular, by the
People’s Liberation Army (PLA) to secure
new sources of undisciplined and
unconditioned hard currency via bond
offerings on the Japanese, European and
American securities markets.⁽¹⁾
As the Schweizer op.ed. notes:

“Mr. Robinson…has
uncovered $6 billion in bonds
offered to investors in recent
years. These have been issued by
Chinese government banks and
state-owned enterprises closely
connected to the PLA and the
Chinese military-industrial
complex….

“Bonds are the perfect means
to acquire cash because they give
these military-related
institutions access to large sums
of relatively inexpensive,
general-purpose cash, which they
can use for any purpose. Bonds
provide real money (dollars) from
U.S. securities firms, pension
funds, insurance companies,
corporations and individuals
investing in them.

“The trouble is, this money
can be diverted to modernize the
armed forces, acquire
military-related technologies or
even serve as supplier credits
for missile sales to Iran and
Pakistan….[And] U.S. pension
funds and individuals who have
invested in [some of] these bonds
could wind up holding worthless
paper.”

As the debate on renewal of Most Favored
Nation status for China intensifies, the
Casey Institute believes that it is
imperative that other U.S. institutions
and arrangements being exploited by
Beijing to underwrite and enable its
malevolent agenda are also subjected to
close scrutiny. In particular, measures
should be taken at once to correct a
glaring vulnerability in America’s
financial marketplace: the absence of
what Mr. Robinson calls a “prudent,
non-disruptive and security-minded
screening mechanism for prospective
foreign borrower in the U.S. bond and
securities markets.”

– 30 –

1. See the
following Casey Institute products: Insight
Magazine Breaks the Code: Chinese
Penetration of U.S., Global Financial
Markets Has Strategic Implications
(No. 97-R 60, 3
May 1997) and Russian
‘Bondage’: Moscow’s Financial Breakout
Gets Underway With Wildly Oversubscribed
Eurobond Sale ( href=”index.jsp?section=papers&code=96-C_119″>No. 96-C 119,
26 November 1996).