Copyright 2003

A. Scott Piraino

China has grown from an agrarian backwater into the world’s third largest economy in the last twenty years. While our yearly trade deficits with China have risen from zero to over 100 billion dollars a year, their country has been the world’s fastest growing economy. China has become a colossus precisely because of these trade deficits.


The global economy has been very good to China, their country has been industrialized with someone else’s money, ours. Throughout the 1990s US corporations increased their factory investments in China, seeking an endless supply of cheap labor. Today over one third of our imports from China are produced for US corporations.

China is not our ally. Their trade policy has always served to advance Chinese industry and technology. With this new wealth China is seeking military parity with the United States. Since they could not modernize their armed forces without US expertise, the Chinese turned to a shadowy cast of characters that funneled millions of dollars into Democratic Party campaign coffers. These illegal donations were instrumental in re-electing Bill Clinton in 1996.

Bill Clinton took contributions he knew came from China, and played another angle as well. US companies wanted to sell weapons and technology to the Chinese, but the sales were prohibited by law. Economic sanctions for the Tiananmen Square massacre and restrictions on technology exports prevented these companies from selling China the armaments they wanted.

In return for campaign contributions, the Clinton administration relaxed export controls and allowed corporations to decide on their own if their technology transfers were legal or not. When easing restrictions wasn’t enough, Clinton signed waivers that simply circumvented the law. The President’s waivers allowed the export of machine tools, defense electronics, and even a communications system for the Chinese Air Force.

In one extraordinary case of corruption, the CEO’s of Loral and Hughes each donated over one million dollars to Clinton’s re-election campaign. These companies had an interest in seeing China develop reliable missiles to loft their satellites into orbit. Both companies were allowed to upgrade the launching and guidance of China’s missiles.

In June of 1995, the CIA learned that China had stolen the crown jewels of our nuclear arsenal, including the neutron bomb and the W-88 miniaturized warhead. Later that year National Security Advisor Anthony Lake was briefed on the thefts. He was quickly replaced on the Security Council by Sandy Berger, a former lobbyist for Chinese interests. In June of 1996, before Bill Clinton’s re-election, the FBI opened a formal investigation into the theft of US nuclear weapon designs.

When the press learned that China had stolen nuclear weapon designs from US research labs, the Clinton administration downplayed and even denied the reports. But this scandal was too big to ignore, and Congress began a formal investigation by forming the Cox committee. The administration was forced to reveal the extent of China’s nuclear espionage, while insisting that Clinton was not told about the thefts until 1998, three years after the fact.

The Cox Committee report was released early in 1999. It confirmed that China had stolen the neutron bomb design and the W-88 miniaturized warhead. The W-88 would allow China to field smaller, mobile missiles and carry multiple warheads on larger missiles. In addition, the Cox report proved that US corporations illegally transferred “missile design information and know-how”. Chief among the offenders were Loral and Hughes.

On October 1st, 1999, the fiftieth anniversary of China’s communist takeover, a new missile was paraded through the streets of Beijing. The DF-31 is a modern, mobile nuclear missile capable of hitting targets in the United States. The rocket motor and guidance systems were made possible by Loral and Hughes. The nuclear warhead is a copy of the W-88, stolen from the US.

The Chinese have not disguised their plans to use these weapons. In March of 1996, on the eve of Taiwan’s first democratic elections, China used the threat of force to intimidate the island nation into electing a pro-Beijing candidate. Military maneuvers included bombing runs and launching ballistic missiles that impacted within twenty miles of the island. When the United States sent an aircraft carrier into the Taiwan straits, a Chinese general threatened to “rain down nukes upon Los Angeles”.

In the summer of 1999 the pro-independence leadership of Taiwan called for talks with China on a state-to-state basis. The enraged Chinese demanded Taiwan enter unification talks or face attack. A communist Party approved newspaper published a plan to conquer Taiwan. It involved using neutron bombs against any Taiwanese resistance and a nuclear standoff with the United States.

Despite China’s saber rattling, repeated scandals, and even allegations of treason, the Clinton administration maintained a pro-China policy. The yearly renewal of China’s trade status was nothing more than political theater, where US politicians criticized China and they pretended to care. The Chinese laughed up their sleeves while our own corporations increased their wealth and military power.

The incoming Bush administration confronted this new China when a US Navy surveillance plane was damaged in a mid-air collision with a Chinese fighter. The US aircraft was forced to make an emergency landing on a Chinese island. 24 crewmen were held for eleven days and repeatedly interrogated by PLA soldiers.

President Bush initially threatened to withdraw China’s normal trade status and block entry into the WTO if the airmen were not released. Instead the Bush administration appeased China’s demands by apologizing for the dead fighter pilot that caused the collision, and for the recconaisance plane landing on Chinese soil without permission. Immediately after the crisis, the administration signaled that there would be no long term damage to US-China relations.

True to his word, President Bush granted China normal trade status after the spy plane incident. Nor has his administration investigated, or even mentioned, the China scandals of the Clinton era. While US warplanes were bombing Afghanistan, President Bush did not miss a chance to attend a summit in China, even appearing on national television wearing traditional Chinese robes.

Last week US Treasury Secretary John Snow visited China in an attempt to loosen that country’s currency peg to the dollar. By enforcing a lower exchange rate, Chinese factories enjoy an unfair advantage against US based companies. The Chinese Government bluntly refused Mr. Snow’s request to float their currency, and added that the US had no business in China’s monetary policy.

The fact is, the United States has very little leverage over China. In the event of an economic crisis or military confrontation, the Chinese could simply seize all US assets in their country. This would bankrupt many corporations that manufacture exclusively in China, including Fortune 500 companies.

The Bush administration maintains a pro-China policy because they are in hock to the same corporate interests that corrupted Bill Clinton. American corporations have spent hundreds of millions of dollars lobbying our elected officials to pass free trade agreements and legalize technology exports. China has not been industrialized by US presidents seeking “engagement”, but by our own corporations, seeking profits.

A few American stockholders have made fortunes modernizing China’s armed forces. Still more US companies have built factories in China. These factories and plenty of cheap, docile labor earn huge profits for these investors.

Protecting these profits is America’s China policy.