Insight Magazine Breaks The Code: Chinese Penetration Of U.S., Global Financial Markets Has Strategic Implications

(Washington, D.C.): In a cover article
entitled “Rising Tide: U.S. is
Financing China’s War Plan,” the 12
May 1997 edition of Insight
Magazine opens with the stunning
revelation that: “China’s
People’s Liberation Army (PLA) is picking
up where the Soviets left off, moving to
create a military leviathan designed for
fighting in the South China Sea and built
to destroy U.S. ships and aircraft. The
Red Chinese are using the U.S. bond
market to finance their military
expansion.” (Emphasis
added.)

This article (excerpts
of which are attached) should be
considered required reading as Washington
heads into the maelstrom of debate over
the extension of Most Favored Nation
status for China. After all, it
underscores a largely overlooked
dimension of China’s agenda: By issuing
dollar-denominated bond offerings on the
U.S. and international financial markets,
Beijing is able at one stroke to:

• secure hundreds of millions —
  indeed, billions — of dollars
  which can, thanks to the
  unconditioned and undisciplined
  nature of the sources of these
  borrowings, be readily applied to
  such nefarious Chinese activities
  as: supplier credits for sales of
  weapons of mass destruction,
  ballistic missiles and other arms
  to rogue nations; the PLA’s
  strategic modernization program;
  gun-running to U.S. street gangs;
  corrupting the American political
  system; espionage; technology
  theft, etc.; and
• create politically powerful new
  constituencies with a vested
  financial interest in ensuring
  that Beijing is not subject to
  future economic sanctions,
  “containment
  strategies” or other
  penalties for its predations in
  the region (e.g., Hong Kong,
  Taiwan, the Spratly Islands,
  etc.) or other activities
  inimical to U.S. security
  interests. Such a step holds out
  the promise of exponentially
  expanding the “China
  Lobby” by recruiting
  hundreds of thousands of
  Americans who become, however
  unwittingly, pawns for China’s
  efforts to penetrate and
  otherwise influence — or
  undermine — this Nation’s
  policies.

The Insight article cites
Roger W. Robinson, Jr., the first
occupant of the Casey Institute’s William
J. Casey Chair and a leading authority on
the risks associated with totalitarians’
use of these sorts of financial
instruments, ⁽¹⁾
as having uncovered “$6.75 billion
in [dollar-denominated] Chinese
government-controlled bonds floated on
the U.S. and international securities
markets between September 1989 and
December 1996. China has also placed
$17.2 billion in bonds with Japan. About
65% of the U.S. money, or $4.4 billion,
was issued to the PRC, the Bank of China
and Wang [Jun]’s China International
Trust and Investment Corporation.”

The Casey Institute commends Insight
Magazine and its intrepid
investigative reporter, Tim Maier, for
calling urgent attention to the dangers
inherent in this and other aspects of
Beijing’s agenda — an agenda that is
setting the stage for what authors
Richard Bernstein and Ross Munro have
correctly warned is The Coming
Conflict with China.

– 30 –

1. See the
following Casey Institute Perspectives:
Dangerous Upshot of
Clinton-Gore’s China ‘Bonding’: Strategic
Penetration Of U.S. Investment Portfolios
(No. 97-C 47, 1
April 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).