"Citing national-security concerns, two Democratic lawmakers are engaged in a last-ditch effort to halt plans for the transfer of an Indiana factory that produces critical technology used in the guidance systems of U.S. ‘smart bombs’ to the People’s Republic of China.

"The Department of Defense denies any impropriety, but some observers are asking: Is it a case of politics as usual, or a cover-up? The Magnequench factory (originally known as UGIMAG) was sold in August 2000 to a consortium that included Chinese interests. In 2001, it was announced the plant would be shut down.

"The factory is responsible for producing 80 percent of the rare-earth permanent magnets used in the guidance systems of U.S. ‘smart bombs,’ according to lawmakers.

"On Aug. 1, the office of Rep. Pete Visclosky, D-Ind., issued a statement indicating he and Sen. Evan Bayh, D-Ind., were mounting a ‘last-ditch’ effort to halt the factory move to China. Citing the loss of 225 northwest Indiana jobs, Visclosky also expressed concern over the ‘transfer of sensitive defense technology to the People’s Republic of China.’ …"

"The two lawmakers reportedly received no response from letters sent to President Bush on March 6 and May 1. Two letters sent to Treasury Secretary John Snow (on May 20 and June 5) received a response turning down a request from the congressman for a meeting. Several phone calls also have received no response. …

"Magnequench, a high-tech company created in 1986 by General Motors, pioneered the development and production of sintered neodymium-iron-boron (NdFeB) – magnets used in the guidance system of ‘smart bombs.’ Beijing San Huan New Materials High-Tech Inc. is a holding of the Chinese Academy of Science Business Group and was established in 1985. China National Non-Ferrous Metals – previously described by the Wall Street Journal as a ‘high-flying state company’ – operates under the control of the State Council, one of the major organs of the Chinese government.

"The 1995 sale required approval from the Committee on Foreign Investments in the U.S., or CFIUS. The CFIUS is an inter-agency committee chaired by the secretary of treasury, tasked with conducting reviews of foreign acquisitions that might threaten national security.

" ‘Concerns raised by American officials about what they considered a clear case of the PRC attempting to obtain control of vital U.S. weapons technology were shot down, and CFIUS permitted the buyout,’ reported Insight magazine and WND. …"

"The ministry oversees the ‘863 Program,’ an aggressive science and technology acquisition program first launched by Deng Xiaoping and funded and controlled by the Chinese government. It is formally known as the National High Technology Research and Development Program of China. Its name comes from the month (March) and year (1986) it was implemented.

"U.S. government reports indicate the ‘Super 863 Program’ (as it was called after 1996) calls for continued acquisition and development of technology in a number of areas of military concern, including machine tools, electronics, petrochemicals, electronic information, bioengineering, and nuclear research, aviation and space. …"

"About the 863 Program, the 1999 congressional Cox Report noted, ‘These projects could advance the PRC’s development of materials, such as composites, for military aircraft and other weapons.’ Potential dual-use of exotic materials acquisitions were said to be a key area of military concern.’ … According to Russia/China expert Dr. Alexandr V. [Nemetz], Chinese language explanations of 863 emphasize military goals above civilian goals. …"

"It is Nemetz’s opinions that since 1986, through its 863 Program, China has been developing post-nuclear superweapons using knowledge gained from the ‘dragnet’ of the eight fields of research.

"Nemetz, who refers to the West as ‘geostrategically lobotomized,’ has been highly critical of the Bush administration’s war on Iraq, faulting it for not focusing on what he considers to be the far greater threat of strategic developments in China.

" ‘Project 863 has at its disposal not only everything necessary for its development of non-machine post-nuclear superweapons, but also the scientific manpower of the entire world,’ said Nemetz. Nemetz is a consultant to the American Foreign Policy Council and co-author of ‘Chinese-Russian Military Relations, Fate of Taiwan and New Geopolitics.’ A former student of the Moscow Institute of Steel and Alloys, Nemetz worked at the Presidium of Academy of Sciences USSR as an expert on the economic and technological development of China and Japan, and published several dozen articles and booklets in the Soviet scientific media. …

"With China’s accession to the World Trade Organization (WTO) in December 2001, the country’s overall trade volume is expected to increase greatly over the next few years. However, in order for Chinese ports to more efficiently meet the demands of increased trade, information technology-based solutions and customs training programs must be implemented. These improvements will help Chinese ports to process a larger amount of goods in shorter time periods. In addition, increased efficiency at ports of entry will enable China to meet WTO international trading standards, lower customs duties, and minimize non-tariff barriers to trade.

"[T]he GOP House voted 270 to 156 for President Bush’s free-trade deal with Chile … consider what we got in this deal and what we gave up.

"Chile’s GDP of $70 billion is not even 1 percent of ours. Her per-capita GDP of $4,400 is one-eighth of ours. We have thus gained access to a tiny Latin market, while Chilean manufacturers just gained privileged access to the $10 trillion U.S. market, where consumers have a per-capita GDP of around $37,000.

"According to a Pentagon report this week, China last year deployed and targeted 100 new missiles on Taiwan for a total of 450 and has begun a crash program to build longer-range missiles to strike and paralyze U.S. bases on Okinawa, Guam and South Korea.

"Congress should consider the sobering fact that the Chinese hold billions of dollars of U.S. debt. The dollars the Chinese acquire by selling us goods and services eventually must be returned to the United States. Since the Chinese are not buying an equivalent amount of American goods and services, they use dollars to finance our extravagant spending.

"The collapse of world socialism and the rise of globalism have made U.S. capital, technology, and business know-how highly mobile. Today it is as easy – and far less expensive – for a U.S. firm to produce abroad for U.S. markets. Instead of locating its capital and technology in Ohio, California, or South Carolina, the company locates its facility in China, for example.

"By locating in China, the firm substitutes a work force that is paid less than a dollar an hour for U.S. labor that costs $26 an hour. By locating in China, the firm also avoids expensive regulations, torts, employment taxes, and discrimination lawsuits. …

"The loss of high productivity jobs takes away the ladders of upward mobility and wipes out human capital. A displaced U.S. software engineer cannot move to China or India to seek employment in his profession.

"Retraining is not an answer, because almost the entire range of knowledge jobs can be outsourced. …

"Economists mistake the free movement of factors of production for free trade. Raised on the theory of comparative advantage, economists know that free trade is mutually beneficial. They dismiss without thought any concerns that seem to call free trade into question. The case for free trade has been unassailable for so long that economists have overlooked that today’s circumstances do not comply with the assumptions of the theory. …

"The collapse of world socialism changed circumstances overnight. U.S. labor now faces direct competition in global labor markets. The excess supply of labor in these markets will drive down wages, salaries and employment in the U.S. As the dollar is likely to lose value under pressure from our growing trade deficit, the decline in wages will not be compensated by a decline in prices, and U.S. living standards will fall. …

"Forty-eight hours after Secretary of State Colin Powell left Beijing, the U.S. quietly signed a formal agreement with China. Here is why you didn’t hear much about it. When pro-democracy demonstrators were [massacred] in Tiananmen Square in 1989, the United States, in protest, suspended a trade development program we had with China. The program provided subsidies from U.S. taxpayers to China to help them develop their trade. In January, just before he left office, Bill Clinton renewed the agreement with Beijing. That’s not surprising since China and Clinton were very ‘close’ as we all know. What is sad and surprising is that the Bush Administration has let the Clinton agreement with China go forward.

HOUSE REPUBLICANS BACK CLINTON BY A MARGIN OF 164 TO 73

164 Republicans (CAPS) and 73 Democrats (lower case) voted to give permanent Most-Favored-Nation trade status to Red China (Roll Call no. 228, passed 237 to 197, 5/24/00):

The 57 Republicans (CAPS), 138 Democrats (lower case), and 2 Independents (italics) who voted against permanent MFN for Red China were:

Family Research Council reports (Washington Update, 5/25/00) that "Speaker Denny Hastert (R-Ill.) spoke for most Republican House members as he appealed for support for Permanent Most Favored Nation trade status for China when he said: 'We are going to send [China] a glimpse of freedom, and the idea of Illinois' favorite son, Abraham Lincoln, the great emancipator.' The Republicans delivered 164 of the 237 votes in favor of the measure. That was fully seventy percent of the majority vote The New York Times called 'a Clinton triumph.' But Georgia Republican Charlie Norwood said: 'This is not just cheap labor, my friends. This is slave labor.' Norwood was a leader among the 57 Republicans and 138 Democrats who opposed giving China permanent trading privileges. Speaker Hastert was awarded a giant fortune cookie by jubilant supporters after the vote."

Paul Sperry observes (WorldNetDaily.com, 5/24/00) that "Lost in all the glowing hype over China's 'market reforms,' 'miracle economy' and 'vast untapped' consumer base is a darker story -- one that Beijing, the White House and Washington's pro-China lobby don't want you to hear, says a prominent Chinese dissident in exile here.

"It's a secret tale of People's Liberation Army soldiers storming a depressed mining town to put down the worst industrial rioting in years. And angry jobless farmers staging a record 2,000 riots against local communist authorities.

"The unrest comes as China's unemployment rate hits a 30-year high and its economy nears collapse."

AMERICAN DOLLARS HELP SMASH ANTI-COMMUNIST PROTESTS

"Such internal pressures are the real reason Beijing wants to lock in trade favors with the U.S., says dissident Wei Jingsheng (pronounced: Way Gin-shun), the father of China's democracy movement. It desperately needs money for the PLA to retake Taiwan, but also to smash uprisings.

"'It's highly unstable over there,' Wei said in a recent interview."

FDR PROPPED UP STALIN -- GOP KEEPS ZIANG JEMIN IN POWER

"Speaking through an interpreter, Wei said the communist regime is losing control over the masses. Denied unemployment benefits, while seeing more and more butter diverted to guns (and the pockets of PLA princelings), the country's 800 million peasants are growing increasingly restless, he said. 'The economy is in very bad shape,' he said. 'There is a possibility of revolt.' ...

"High unemployment is not limited to the countryside. It's climbed to 20 percent in the cities, says economist Peter Brain of the National Institute for Economic and Industrial Research in Melbourne, Australia.

"Sources in Beijing report hordes of unemployed drifters being kept from Beijing (and Western eyes) through routine dragnets on the highway approaches to the capital. In Guangzhou, tens of thousands of unemployed are told to sit each day, like potted plants in a massive square."

FORCED MIGRATION OF 300 MILLION PEASANTS AIDED BY HUD

"To boost sagging consumer demand in the cities, communist leaders are planning to move 300 million peasants into cities and towns in what will be the world's largest forced human resettlement. (It looks like the Clinton administration is helping in the effort. HUD recently signed a deal with Beijing to help it build new public housing.) ...

"Last year's budget deficit hit a record. Some 70 percent of current borrowings are going to service existing debt, Brain says. At 21 percent of GDP, China's debt is five times higher than it was in 1995, says Brookings Institution economist Nicholas Lardy."

ANTI-U.S. MILITARY BUILD-UP IS SUBSIDIZED BY MFN

"How did it get in this mess? Through the biggest military buildup on the planet (though Japan's depression hasn't helped). The Chinese Communist Party, which funds the Central Military Commission, has ordered eight years of double-digit hikes in military spending.

"Modernizing the military is the Chinese Communist Party's real aim in cutting a trade deal with the U.S., Wei says."

GOVERNMENT-CONTROLLED BANKS REDIRECT THE $$

"'Since the Chinese government runs the banks, they will take Western loans and turn around and put them into the military,' he said. It will also apply U.S. technology to develop new weapons systems.

"The PLA controls some 15,000 companies. Though their sales total about $10 billion, most are poorly run and lose money. But without the PLA, there is no communist control. So the army must continue to be fed, Wei says. 'The Chinese government doesn't really care about investments,' he said. 'They just care about staying in power.'"

Larry Klayman and Chris Farrell point out in WorldNetDaily (3/14/00) that "Careful examination of the Chinese tycoon's [Li Ka-shing] growing empire and his cozy relationship with the Communist Chinese government reveals the potential for an insidious manipulation of Western ports, markets, utilities and telecommunications that could apply crippling pressure to the United States and her few remaining allies."

ECONOMIC BLACKMAIL CAN BE MORE EFFECTIVE THAN NUCLEAR ATTACK

"Indeed, through Li Ka-shing's empire -- a front for Communist Chinese expansion -- the Mainland does not need to invade Western democracies or launch missile attacks against them to flex its muscle. It can simply threaten to shut down public utilities and key industries which it now controls -- throwing Western markets into complete turmoil, if not disaster."

OIL, GAS, AND ELECTRICITY

"The frightening story begins in 1979, when Li Ka-shing purchased what became the controlling interest in one of the oldest 19th century British trading houses, or 'hongs' of Hong Kong, known as Hutchison-Whampoa. Already a millionaire from real estate and property management investments, Li launched a diversification program through HW that involved trading, cargo and container operations, logistics, warehousing, engineering and even retail sales. Today Li Ka-shing's net worth is estimated at a whopping $13 billion.

"Li expanded into the utility and energy fields in 1985 by acquiring a 33 percent interest in Hong Kong Electric Holdings Ltd. Two years later in 1987, Li expanded overseas again, this time by taking a 43 percent interest in Husky Oil, an oil and gas company based in Canada. Since then, Husky Oil ownership has shifted to 46 percent ownership by Li and his family, 49 percent-owned by HW and 5 percent by the Canadian Imperial Bank of Commerce. Husky ranks among Canada's top producers of crude oil, natural gas and recovered sulfur."

HUTCHISON CONTROLS 10% OF GLOBAL CONTAINER TRAFFIC

"The 1990s brought continued diversification and expansion to Li's holdings. In 1993, Li became involved in a bidding war over Hong Kong's Miramar Hotel & Investment Company. Interestingly, Li's partner in the bid was CITIC Pacific, the Hong Kong-listed arm of the China International Trust and Investment Corporation that is controlled by the Communist Chinese government. His 'opponent' (to whom he 'lost') in the Miramar bidding was Mr. Lee Shau-kee -- Li's partner in many other joint ventures. Li's partnerships with CITIC and Lee in various investment and development initiatives are frequent and diverse. ...

"HW has done well as the operator of Hong Kong International Terminals, the world's largest independently owned container terminal, and, profits from HW port and related services totaled $3,097 million in Hong Kong dollars. As the world's biggest independent port operator, Hutchison Port Holdings has invested in 17 ports, operates 79 berths and handles about 10 percent of global container traffic. Operating ports include Shanghai in China; Felixstowe, Thamesport, Harwich in the UK; Freeport Container Port on Grand Bahama Island; and a 50 percent interest in the Grand Bahama Airport Company, which comprises an 11,000-foot long runway capable of handling the world's biggest aircraft. This investment also includes a 780-acre tract of land between the airport and container port. Plans are being prepared to develop this into an industrial park, which will also contain a sea/air business center. Other investments in the Bahamas include three hotels and two golf courses."

LI KA-SHING GIVES RED CHINA A PRESENCE AT KEY PORTS IN EUROPE AND WESTERN HEMISPHERE

"Not satisfied with controlling Britain's three principal seaports and the Panama Canal, Li's European expansion includes a $357 million plan to acquire the continent's largest container handler, Europe Combined Terminals in Rotterdam, Holland. The European Commission launched a four-month investigation into the proposed deal, ending with a determination to allow HW to negotiate a 35 percent stake in ECT.

"In further bids to 'diversify,' Li has purchased all of South Australia's electricity distribution and retail assets, also pledging to acquire a 25 percent stake in the Bangkok Transit Systems Company's 'Skytrain' project -- costing Mr. Li between $100 and 200 million."

COMMUNICATIONS INFLUENCE IS TARGET OF LI'S SON

"Following in his father's footsteps, Richard Li, at 35 years old, the second son of the patriarch, has made his own mark in the business world, wheeling and dealing with the likes of the ubiquitous Intel Corporation and telecommunications giant Global Crossing. Richard Li has an affinity for high-tech ventures and has expanded the family's business accordingly. He launched, developed, and then sold the Asia-wide Star TV satellite television network, thanks to mutually supportive network infrastructure contracts let by his father's HW conglomerate.

"However, Richard Li's high-tech corporate incubator is the Pacific Century Group, a company which has been granted a seaside 'campus' on scarce Hong Kong real estate by the Beijing government, valued at $775 million to create 'Cyperport.' The $1.74 billion project is backed by campus tenants Hewlett-Packard, IBM, Softbank and Pacific Convergence Corporation (a joint venture between Pacific Century Group and Intel). Interestingly, a similar high-tech campus called 'The City of Knowledge' has been proposed by Panama's quasi-governmental 'Inter-oceanic Regional Authority' (ARI) for the former U.S. Southern Command's Fort Clayton. ARI representatives suggest that 'Chinese entities' conceived of and are interested in bidding on the project this summer.

"Richard Li's subsequent acquisition of the telecommunications firm Tricom Holdings Ltd. has been rolled into the Pacific Century Group operation to create Pacific Century CyberWorks PCCW. In an effort to bring high-speed Internet access to Asia, Intel has invested an additional $50 million into Richard Li's PCCW, giving the American firm a 13 percent stake. In a bit of seemingly 'circular promotion,' PCCW's participation in Cyberport is being touted as a reason for additional outside investors to join the project."

CABLE AND WIRELESS ACQUISITION

"The Li family's continued business conquest of shipping, utilities and communications infrastructure recently continued with yet another acquisition. In a move that some say highlights the wholly integrated relationship between the Li family and Communist China, Richard Li's nine-month-old PCCW strangely outbid communications leviathan Singapore Telecommunications to acquire Cable and Wireless HKT. ...

"Meanwhile, the elder Li has joined with U.S. telecom company Global Crossing in a $1.2 billion dollar joint venture to link Hong Kong to the United States by submarine fiber-optic cable to offer high-speed trans-Pacific network service for corporations. Within the last two weeks, Li announced the formation of a 50-50 joint venture with Donaldson, Lufkin & Jenrette Inc. ('DLJdirect') to launch and manage an online investment service. He has also forged a new alliance with Web travel discounter Priceline.com."

Bill Gill of the American Coalition for Competitive Trade, Inc. asks in his March, 2000 newsletter: "Was the big fastener screw that controlled the horizontal stabilizer on the McDonnell-Douglas 83 Alaskan Airlines jet that crashed and killed all 88 Americans on board made in Communist China? The National Transportation Safety Board investigators believe a break in the fastener caused the crash but I had not seen or heard any media reports that it had been manufactured in China as I suspected. Tommy Grant [president of the Grant Fastener Company and chairman of the Fastener Quality Association of America] gave it to me straight...."

WAS ALASKA AIRLINES CRASH "MADE IN COMMUNIST CHINA"?

"'It was made by the Shanghai Aviation Industrial Corporation which has been making stabilizer fasteners for all MD-80 and MD-90 planes for years,' he said. 'It was part of a deal McDonnell-Douglas made with the Chinese so they could sell their aircraft to China.'"

BOEING AND McDONNELL-DOUGLAS ARE LOBBYISTS FOR BEIJING

"McDonnell-Douglas is now part of Boeing, which also has plants in China and is one of the multinational corps beating the drums for passage of the permanent MFN/NTR for their Beijing customer, i.e. the government of the 'Peoples Republic' of China."

CONGRESS AND CLINTON PLACE U.S. CITIZENS IN JEOPARDY TO PLACATE IMPORTERS

"How many other fatal air crashes have been caused by fastener failure or other parts made in China is not known yet. But several other crashes, including the one in Pittsburgh, are now suspected.

"Tommy Grant, who has been studying the growing problem of faulty foreign-made fasteners for years, says the problem is much bigger than the fatalities suffered in airliner crashes. 'It extends to automobiles, building construction, machinery -- virtually all industrial production and literally thousands of products used by consumers,' he states. ...

"The serious threat of unsafe foreign fasteners is being exacerbated by a new law, the Fastener Quality Act, which went into effect December 6, 1999. It replaced a much more stringent quality control act signed into law by then-President George Bush in 1990.

"It is not surprising that Bill Clinton had no compunctions about signing the new law that lightens up fastener inspections of imports. But it is indicative of how tightly fused our two major parties have become on trade that Republicans led the way in getting the law through Congress."

On Monday, November 29, I was in Seattle to challenge pro-WTO assertions made by former Christian Coalition Executive Director Randy Tate (previously a member of Congress from Washington state) and leaders of the Washington State GOP, operating under the auspices of an entity called "Working Families for Free Trade".

This ad hoc organization seeks to "demonstrate that Christians and conservatives are pragmatic and understand the relationship between trade and missions opportunities in foreign countries. Fostering trade is good for Seattle and it's also the right thing to do."

WTO UNDERMINES POLITICAL ACCOUNTABILITY AND LOCAL SELF-GOVERNMENT

In personal conversation with Mr. Tate, and in interviews with several Seattle-based television and radio stations, I offered the following counter-argument: "America's Founding Fathers risked their lives to advance the principle of self-determination and to secure the right to local self-government.

SUPPORTERS OF WTO REJECT "CONSENT OF THE GOVERNED"

"Their Declaration of Independence acknowledged that we are endowed by our Creator with certain inalienable rights. They proclaimed that government derives its just powers from the consent of the governed, because each of us has an obligation to our Creator and a duty of stewardship to His sovereignty.

WTO IS UNCONSTITUTIONAL

"That's why the very first sentence of the U.S. Constitution, after the preamble, asserts clearly that all legislative powers shall be vested in a Congress of the United States. Article I, Section 8 requires that Congress shall regulate commerce with foreign nations.

TO WHOM DOES CONGRESS REPORT: GLOBAL BUREAUCRATS OR THEIR OWN CONSTITUENCIES?

"It is Biblically and morally wrong for members of Congress to abandon their oaths to the Constitution and surrender their responsibility for trade policy to a global bureaucracy. Congress must be accountable to the American people and to the sovereign Lord whom we are all bound to serve."

Supporting me in opposition to U.S. membership in the WTO and permanent MFN status for Red China were Pat Choate, Co-Chairman of the Buchanan for President Campaign; Eric Licht, President, Coalition for America; and Kevin Kearns, President, United States Business and Industry Council.

The news conference in behalf of The Conservative Caucus and other WTO foes was emceed by Stan Emert of the Hope Heart Institute, and featured Brian Derdowski, a Metropolitan King County Councilman, as well as by Kathy Radamaker and Karl Sturz of the Reform Party.

The American Coalition for Competitive Trade (216 Georgetown Court, 3220 N Street N.W., Washington, D.C. 20007) points out (Vol. XI, No. 12, December 1999) that "At the WTO super trade summit in Seattle the first week of the last month of the 20th Century the stage was all pre-set for honoring China by welcoming the belligerent moloch [moloch: something demanding great sacrifices] into this increasingly powerful world body marching toward control of the global economy.

"The primary prop for this dangerous charade was the agreement the U.S. and China reached in Beijing in mid-November on the 'conditions' for WTO membership. Actually there were no conditions as such. Only a massive sell-out by U.S. Trade Representative Charlene Barshefsky and her team.

"Billed as a great boon for American farmers, China will only lower its tariffs on agricultural products by a [minuscule] one-half percent -- from 15% to 14.5%! But U.S. banks will be able to pour their American depositors money into China's bottomless pit via 'services' in local currency. And our auto companies will be graciously permitted to make car loans to Chinese customers.

"Foreign investment companies will be allowed minority stakes up to 49% in Chinese firms. This includes foreign phone companies which will now go in and build modern telecommunications systems in China. In short, the U.S. and other Western countries, plus Japan and other developed nations, will have the great [privilege] of building China into a superpower."

By a margin of 150 to 71 (Roll Call no. 338, 260-170, 7/27/99) House Republicans voted to support Bill Clinton's extension of Most-Favored-Nation (MFN) status for Red China, which status results in a transfer of wealth from the American economy to the Chinese economy amounting to more than $60 billion per year.

The U.S.-derived resources secured to Communist China's command economy redound, directly and indirectly, to the advantage of Beijing's People's Liberation Army (PLA) and to the disadvantage of the national security of the United States.

GOP LEADERS TURN A BLIND EYE TO COMMUNIST THREAT

Ninety-eight Democrats opposed MFN for Red China, as against 110 who supported it. The lone independent, Bernard Sanders, voted against MFN.

HASTERT, ARMEY, DAVIS, DeLAY, LARGENT, McCULLOM, WATTS BUY INTO "FREE TRADE" FANTASY

The 150 Republicans who voted with Clinton and against America's best interests were: