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The Force Behind China's Strategy

March 16, 1997|Tad Szulc | Tad Szulc is the author of John Paul II: The Biography (Scribners) and Fidel: A Critical Portrait (Avon)

WASHINGTON — Possibly since the early '90s, the Chinese government has sought to acquire intelligence about U.S. policy toward Beijing by illegally contributing money to the campaigns of certain American politicians. Simultaneously, the Chinese were moving to secure control of Hong Kong's economy before the British colony formally reverts to China on July 1. Although there is no established connection between these two endeavors, their most notable and intriguing common element is that they appear to have been orchestrated by the same man in Beijing, virtually unknown to outsiders but a central figure in formulating China's worldwide political-economic strategy.

He is Wang Jun, chairman of the two most powerful Chinese government conglomerates. One is China Poly Group, the investment vehicle of the Peoples Liberation Army (PLA), and its subsidiary, Poly Technologies, Inc., which specializes in the manufacture and international sale of weapons ranging from tanks and missiles to AK-47 assault rifles. The other is China International Trust & Investment Corp. (CITIC), Beijing's principal investment organization whose subsidiary, CITIC Pacific, is Hong Kong's most important investment and financial company.

Wang Jun was also a guest at a coffee hosted by President Bill Clinton. He was there at the request of "Charlie" Trie, a former restaurateur and now an international businessman who is a central figure in the White House and Democratic Party fund-raising scandals. After Wang Jun was received at the White House, he was identified in various newspaper accounts as the head of a Chinese arms-trading company suspected of smuggling a shipment of AK-47s into the United States. At the time, a spokesman for the Democratic National Committee explained that Wang Jun had been invited as "a favor to 'Charlie' Trie," but the president later said it had been "inappropriate" to bring an arms trader to the White House.

When news of possible Beijing-inspired campaign contributions first broke, the general assumption was that China simply wanted to influence presidential and congressional elections in the hope of winning this or that policy concession. Last spring, however, the FBI began to suspect that the Chinese were really after classified foreign- and trade-policy information, and that the best route to this data was through selected administration officials and members of Congress. Such access could be facilitated by campaign contributions that, in turn, could lead to personal acquaintanceships and conversations with officials privy to policymaking.

Intelligence points to Wang Jun as the man behind this strategy, with China's Ministry of Public Security, its Foreign Ministry and the specially created "Central Working Group" implementing it. It remains unclear whether the FBI was aware of Wang Jun's standing in the Beijing hierarchy. Nor is it clear why, given the sensitivity of his posts, he chose to seek an invitation to a White House coffee. It is similarly unknown what else he did during his visit to the United States during February 1996, and who he met in Washington.

One explanation may be that the PLA, working through the China Poly Group and other organizations it controls, has become, in the words of one China expert, "a money-making machine," running between 15,000 and 20,000 companies in China and abroad and reportedly making a profit of at least $1 billion in 1993. In recent years, Wang Jun's China Poly Group has been expanding overseas, establishing special interests in Hong Kong, Canada and the former Soviet Union. It is believed to have opened offices in the United States. Wang Jun may have overseen these activities as well.

In Hong Kong, its subsidiary, Continental Mariner Investment, is one of the hottest stocks on the local stock exchange, having doubled in value since last December. It works with CITIC Pacific, the subsidiary of Wang Jun's main CITIC, and with the Lippo Group, a $12-billion Indonesian conglomerate owned by an ethnic Chinese family closely associated with China. Wang Jun became CITIC chairman when its founder, Rong Yiren, resigned in 1993 to become vice president of China. Rong Yiren's son, Larry Yung, is chairman of CITIC Pacific.

All these conglomerates have played a key role in acquiring Hong Kong assets--from its main airline, Cathay Pacific, to the city's major power and communications companies--during the last year or so. Control was obtained either through stock purchases at deep discounts or in cases where the original owners could not refuse for political reasons tied to the transfer of Hong Kong back to China.

Washington and Hong Kong are, of course, entirely different targets and environments. But both constitute major strategic objectives for China as it enters its world-power stage. It is estimated, for example, that mainland interests own about 25% of all Hong Kong assets; China's direct investment there, according to Beijing, is $25 billion.

In Hong Kong, Wang Jun and his network have clearly accomplished their objectives. The intelligence-gathering operation targeting the United States seems to have floundered. Wang Jun may try again but, for now, his efforts have severely damaged U.S.-China relations.

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