“30 years after the Berlin Wall's collapse, Americans don't understand communism's dangers,” wrote Marion Smith, executive director of the Victims of Communism Memorial Foundation, in USA Today on November 8, 2019. “There's a reason why after a great tragedy we are called to never forget. Humanity has a tendency to make the same mistakes over and over.”
Not many people paid much attention to Smith's warning at the time he wrote this. Weeks later, a ferocious coronavirus germinated in the central Chinese city of Wuhan. Although the virus was detected and reported by physicians, the Chinese Communist Party (CCP) initially covered it up, an act that eventually allowed the virus to spread to the rest of the world.
As of April 6, 2020, the United States had reported more than 360,000 infection cases, more than any other country in the world (although China's number has been widely considered underreported). New York City, a beacon of the free world, has more confirmed cases than any other city or state in the U.S.
In this report, we reflect on the U.S.-China relations over the years that may have enabled China's rise and its infiltration into the U.S. The CCP's ever-expanding clout in the world has facilitated the export of its disregard for human life. Its cover-up of the coronavirus outbreak has turned an epidemic into a global pandemic.
Not only Chinese people, but many in the rest of the world, including the U.S., have become victims of the CCP's cover-up in this unprecedented crisis. As we mourn the loss of lives lost to the pandemic and pray for the safety and health of everyone else, we hope that this report sheds light on the harm of the CCP and encourages people to sever ties with it.
This report is divided into six sections:
Section 1: The Chinese Communist Party’s Rising Power through U.S. Support
Section 2: The Chinese Communist Party's Expanding Clout in Manhattan
Section 3: The Chinese Communist Party's 24/7 Propaganda at Time Square
Section 4: The Chinese Communist Party's Heavy Influence in UN and Non-Governmental Organizations
Section 5: The Chinese Communist Party's Indoctrination Campaign on U.S. Campuses
Section 6: The Chinese Communist Party's Infiltration in U.S. Communities
Section 1: The Chinese Community Party (CCP)’s Rising Power through U.S. Support
“Communism is a false idea, and the answer to a false idea is truth, not ignorance,” said Richard Nixon during his election campaign on August 21, 1960, “Communism starts with the proposition that there are no universal truths or general truths of human nature.”
China’s Entry Into WTO
Twelve years later, Nixon bent his ideology and visited China in February 1972. The U.S. and China established full diplomatic relations on January 1, 1979. Since then the U.S. has recognized the People's Republic of China as the sole government of China and Taiwan as a part of China.
A bilateral trade agreement was signed by then-president Jimmy Carter, and China was given a most-favored-nation (MFN) status. With the Agreement on Cooperation in Science and Technology, also signed in 1979, hundreds of joint research projects and cooperative programs were launched between these two countries afterward.
Collaboration with the U.S. also greatly improved China’s international position. After becoming a member of the World Bank in 1980, China received its first loan in 1981. With help from the U.S. and Japan, China became a member of the Asian Development Bank, which later provided China with $40 billion in loans for transport, energy, water, agriculture, finance, and other projects.
After the CCP suppressed the Tiananmen democratic movement in 1989, legislation was introduced in the U.S. to cancel or reconsider China’s MFN status. President Bill Clinton announced in 1993 that China needed to meet certain human rights criteria to extend the MFN status. Under pressure from U.S. businesses, however, he extended China's MFN status unconditionally without consideration for its human rights issues.
The U.S.–China Relations Act of 2000 from the U.S. Congress was signed into law by Clinton on October 10 that year. It granted China permanent normal trade relations (NTR) status (previously called MFN) upon becoming a full member of the World Trade Organization (WTO).
China officially joined the WTO on December 11, 2001, and its MFN status was made permanent in December 2001 by then-president George W. Bush.
Unfulfilled U.S. Expectations
These series of events transformed communist China into a major player in the world economy. “Before 1978, China had a socialist-planned economy and was largely isolated; since then, it had been gradually opening up its economy to the rest of the world,” wrote an article from the Council on Foreign Relations.
China was already the sixth-largest economy in 2000 with a population of one billion people. Its entry into the WTO in 2001 further accelerated its rise in the world. Trade in goods between China and the U.S. increased more than thirty times, from less than $8 billion in 1986 to over $578 billion in 2016. By 2009 China had already surpassed Germany to become the world’s largest exporter of goods. China’s economy in 2009 was eight times larger than it was in 2001.
The rapprochement with China by Nixon greatly benefited China, but its political system of communism remained largely the same in the past few decades.
Two months after establishing a diplomatic relationship with the U.S. in January 1979, China had a brief border war with Vietnam in response to the latter's invasion and occupation of Cambodia in 1978 (which ended Chinese-backed Khmer Rouge).
When President Ronald Reagan visited Beijing in 1984, his speech criticizing the Soviet Union and praising capitalism, democracy, and freedom of religion was not aired on Chinese state TV.
Since China’s entry into the WTO in December 2001, the decline in the U.S. manufacturing jobs has accelerated. The Economic Policy Institute estimated that the trade deficit with China cost about 2.7 million jobs between 2001 and 2011, including manufacturing and other industries.
Misconception of Communism
Michael Pillsbury, a former government official who served in the Defence Department and currently the Director of the Center on Chinese Strategy, Hudson Institute, reviewed the relationship between the U.S. and China in his 2015 book: The Hundred-Year Marathon, China’s Secret Strategy to Replace America as the Global Superpower.
Like many other U.S. officials, Pillsbury used to believe that American aid would help China move towards a democratic and peaceful nation without ambitions of regional or even global dominance. “What’s shocking for Mr. Pillsbury is the discovery that China’s ambition to become the world’s dominant power has been there all along, virtually burned into the country’s cultural DNA and hiding, as he says, in plain sight,” wrote a review of the book from Wall Street Journal.
“We now know, from Henry Kissinger’s memoirs, that the decision to pursue an opening with the United States came not from China’s civilian leaders, but instead from a committee of four Chinese generals,” Pillsbury wrote in the book, adding that the generals were playing the U.S. card against the Soviet Union.
Beijing's Status Elevated Thanks to U.S. Support
David Stilwell, Assistant Secretary of State for East Asian and Pacific Affairs, gave a speech at the Center for Strategic & International Studies (CSIS) on December 13, 2019. He said that for decades, the U.S. government has provided comprehensive support for China, “We provided military and intelligence assistance, we made generous technology transfers, we ensured preferential trade and investment access, we sponsored and arranged for vast educational exchanges – and we still do – and we provided development financing and organized government-to-government capacity building, and much more.”
However, the CCP has shown increasing hostility in recent years “toward the United States, our interests, and our principles... It is by no means what American officials desired or expected 40 years ago when they initiated this multifaceted U.S. policy of intense support for Beijing’s modernization and its liberalization,” Stilwell explained.
Even after the Tiananmen Massacre in 1989, the U.S. government maintained largely the same approach with China. “Across decades, we accommodated the PRC’s (People's Republic of China) human rights abuses without significant protest. We mostly shrugged at the PRC’s proliferation of nuclear and missile technology to Pakistan, Iran, and North Korea, and others,” he continued, “We largely overlooked the PRC’s division of U.S.-origin dual-use technology to the military. We offered little opposition to the PRC’s theft of intellectual property, piracy of trademarked goods, and countless other unfair trade practices. Policy-making requires balancing interests, and we often had reasons to let this or that PRC offence go unanswered. But the consequences mounted.”
To make things worse, following the Tiananmen massacre in 1989, the CCP leaders introduced a patriotic education campaign into schools and culture. The aim of this campaign was to shore up support for the CCP by playing to nationalism and vilifying foreigners, especially Americans and Japanese.
Stilwell said in his speech, “But U.S. officials hardly took notice. Instead, we concentrated on producing the next chapter in our policy of support for the PRC. And this was probably the most favourable and consequential of all – PRC accession to the World Trade Organization.”
He also commented on recent presidents' dealing with China: “President Bill Clinton entered office highly critical of Beijing’s human rights record... However, by 1994 Clinton had dropped that insistence.” “Presidents George W. Bush and Barack Obama both had concerns about aspects of Beijing’s behaviour, just as their predecessors had... But both ensured that the United States engaged the PRC fundamentally as a partner and a supporter.”
“Even as Beijing cheated on the U.S. and trade – U.S. trade deficit with China soared to a cumulative $4 trillion,” Stilwell explained, “Both supported elevating Beijing’s status in important international organizations, even as Beijing often subverted the mission and spirit of these organizations.”
Section 2: The CCP's Expanding Clout in Manhattan
If China were a plant, the U.S. probably had hoped that it would eventually bear the fruits of democracy and freedom with the U.S continued support and nurturing. The CCP-ruled China, however, is no ordinary “plant.” The atheist CCP thrives on hatred and violence and is like a pathogen that would spread like cancerous cells to infect the entire world if left uncontrolled.
When communist leader Deng Xiaoping first visited the U.S. in January 1979, his foreign minister asked during the flight why he selected the United States for his first overseas visit as China’s leader. “Because America’s allies are all rich and strong, and if China wants to be rich and strong it needs America,” recalled historian John Pomfret.
Deng, a strong believer of Mao’s doctrine of “political power grows out of the barrel of a gun,” invaded Vietnam less than three weeks later. “The little child is getting naughty, it's time he gets spanked,” he said lightly to President Carter, 10 years before tanks crushed protesters across Tiananmen Square in 1989 under his order.
Even with its WTO status in place, communist China would not have been as strong as it is today had it not been for the continued capital infusion from the West, especially Wall Street. Nourished by financial magnates from the U.S. and other markets, the growth of the CCP reached an unprecedented, new level of becoming a full-blown cancerous entity.
Wall Street’s Influence on U.S. Policy for China
When visiting Beijing in 1994, Federal Reserve Chairman Alan Greenspan told Chinese leaders that both the U.S. and the rest of the world wanted China to succeed. “Therefore, we’re willing to provide as much assistance as we can to your central bank in those technical areas in which we have many years of experience.”
In the past 20 plus years, financial groups on Wall Street have been encouraging Americans to invest in Chinese businesses. Meanwhile, large financial firms underwrite transactions for Chinese firms to purchase or control U.S. companies, real estate, and other businesses.
Wall Street was also lobbying policy-makers for decisions that favor China. After then Chinese premier visited the U.S. in April 1999, business leaders played a critical role in persuading President Clinton to support China’s entry into WTO.
Under the 1988 Omnibus Foreign Trade and Competitiveness Act, the U.S. listed China as a currency manipulator between 1992 and 1994. Since then, however, no president, including Clinton, Bush, and Obama, listed China as a currency manipulator due to advocates from Wall Street.
Dancing with the Wolf: Wall Street & the CCP
As the largest city in the United States, New York City is the financial, business, cultural, and media center of American society. It is also the headquarters of the United Nations. With such significance, it has become a prime target of the CCP’s infiltration.
One example is the Thrift Savings Plan (TSP), a tax-deferred defined contribution plan with a value of nearly $600 billion for federal employees. The Federal Retirement Thrift Investment Board (FRTIB) that administers the plan announced in November 2019 to shift billions of dollars in retirement assets to “MSCI ACWI ex-U.S.,” despite calls from Congress to reverse course.
MSCI ACWI ex-U.S., the Morgan Stanley Capital International All Country World Index Ex-U.S., is a stock market index composed of non-U.S. Stocks from 23 developed markets and 26 emerging markets. Alibaba and Tencent, two Chinese companies, were the number one and number three holdings of the index, respectively, as of December 31, 2019.
The federal government’s investment of TSP in Chinese corporations could put retirees at risk, wrote Washington Post columnist Josh Rogin on March 12, 2020.
MSCI ACWI ex-U.S. is one of many equity indexes developed by MSCI (Morgan Stanley Capital International) Inc. The company announced in November 2019 to increase the weighting of China A shares in certain MSCI indexes to up to 20%. This move further boosted Chinese stocks’ global exposure.
FTSE Russell, the world's second-largest index company, announced on February 21, 2020, to increase Chinese stocks' weighting on equity indexes, echoing the move by MSCI.
Prior to the MSCI and FTSE Russell announcements, Bloomberg had decided to add 364 onshore Chinese bonds to the Barclays Global Aggregate Index over the next 20 months starting from April 1, 2019. Analysts estimate that full inclusion will attract around $150 billion of foreign inflows into China’s roughly $13 trillion bond market.
Financial Risks and National Security
The Wall Street’s practice of using passive index funds to insinuate problematic Chinese companies into the U.S. capital markets, such as federal employees' retirement plan, is “an even bigger financial threat” than the Wuhan virus, wrote Rogin.
Such a drastic increase in the Wall Street companies' holdings of Chinese companies gave Beijing massive leverage inside the United States and pose huge risks to U.S. investors and the U.S. economy. “America’s economic vulnerabilities are also national security vulnerabilities,” Rogin wrote.
U.S. National Security Advisor, Robert O’Brien, agrees, “I don’t see why we should be underwriting the Chinese defence industry.”
According to an article in Foreign Policy on January 14, 2020, 55 percent of Americans own stocks, mostly relying on professionally managed pension funds, mutual funds, and retirement accounts. “Global bond indexes that have started adding Chinese government bonds to their benchmarks... these major shifts in fund allocations could automatically grow U.S. portfolio investment in Chinese companies and government securities to more than $1 trillion by the end of 2021, without the active consent or knowledge of most Americans,” wrote the article.
“This dichotomy—of Americans investing more in Chinese companies even as U.S. policies aim to punish China for its trade practices—poses significant risks,” continued the article. This is because the Americans’ portfolios would be too heavily dependent on a single economy—one controlled by the CCP.
Given the CCP’s propaganda and misinformation as seen during the recent coronavirus pandemic, however, it is difficult for American investors to reach a clear understanding of what is inside their portfolios.
Two Examples
In April 2010, Goldman Sachs was charged with fraud by the U.S. Securities and Exchange Commission (SEC) over its marketing of a subprime mortgage product. To enter the Chinese market, Goldman Sachs agreed in 2003 to pay a $67 million “donation” to cover investor losses at a failed Chinese brokerage firm. In return, Goldman Sachs was allowed to set up its own joint-venture investment bank in Beijing, reported the New York Times in March 2005.
“What was so unusual about the Goldman deal is that a blueblood American firm was willing to pay $67 million to help the government dissolve an entirely unrelated state-owned enterprise, Hainan Securities, whose officials have been accused in lawsuits of embezzling millions of dollars from investor accounts,” the article wrote.
Another example is J.P. Morgan, which hired about 200 relatives or friends of executives at Asian companies between 2006 and 2013. They included close to 100 individuals who had been referred to the bank by officials at Chinese state-owned firms. Some of the hires were unqualified for the jobs they were given, reported Wall Street Journal in May 2019.
Hiring practices of this kind, known as the “Sons and Daughters” program, were the subject of a multiyear probe by the U.S. authorities. In 2016, J.P. Morgan admitted it violated the Foreign Corrupt Practices Act and agreed to pay $264 million to resolve civil and criminal charges stemming from its Asian hiring practices. More than two dozen employees of the bank were let go or disciplined in connection with the investigation.
Lessons Learned
After decades of missteps with the CCP, the U.S. officials have realized the consequences.
“After the fall of the Soviet Union, we assumed that a free China was inevitable. Heady with optimism, at the turn of the 21st Century, America agreed to give Beijing open access to our economy, and bring China into the World Trade Organization,” said Vice President Mike Pence at Hudson Institute on October 4, 2018, “The dream of freedom remains distant for the Chinese people. And while Beijing still pays lip service to 'reform and opening,' Deng Xiaoping’s famous policy now rings hollow.”
China’s GDP has grown 9-fold and it has become the second-largest economy in the world, added Pence, and much of this success was driven by American investment in China. “Through the ‘Made in China 2025’ plan, the Communist Party has set its sights on controlling 90% of the world’s most advanced industries, including robotics, biotechnology, and artificial intelligence... And using that stolen technology, the Chinese Communist Party is turning ploughshares into swords on a massive scale.”
Mike Pompeo, U.S. Secretary of State, agreed, “Look, we have a long-cherished tradition of friendship with the Chinese people. We continue to do so today. We have a Chinese American community here in America that we love and treasure. I’ve known them through business and personal ties; I’ve known many of them,” he said in a speech on October 30, 2019,
“But I must say that the communist government in China today is not the same as the people of China. They’re reaching for and using methods that have created challenges for the United States and for the world,” he continued.
He said the U.S. government had been too slow dealing with the risk of the CCP. To help China’s rise in the past several decades, the U.S. compromised American values by downgrading a relationship with Taiwan, avoiding human rights issues, turning a blind eye when China failed to follow the WTO rules, and allowing U.S. businesses to comply on “controversial” topics.
“Beijing’s intransigence creates a permanent class of China lobbyists in the United States. Their primary job is to sell access to Chinese leaders and connect business partners,” Pompeo explained, “Whenever there was a dispute or tension in the relationship, many of our scholars blamed the United States for misrepresenting the nature of the Chinese Communist Party.”
At the same time, Beijing controlled and limited access to U.S. diplomats, journalists, and academics. In Pompeo's words, “China’s state-run media and government spokespeople filled the gaps, routinely maligning American intentions and policy objectives.”
“And these aren’t just our problems. They’re problems for all nations that share our values,” he explained, adding he believed the current administration is able to correct these mistakes.
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