Journal of Political Risk, Vol. 7, No. 10, October 2018
Anders Corr, Ph.D.
Publisher of the Journal of Political Risk
China is powerfully influencing U.S. elections, as President Donald Trump alleged, but one will not necessarily find a Chinese intelligence agent stuffing ballot boxes in the local City Hall, or tampering with a voting booth. Facebook and Twitter claim they found no coordinated messages from the Chinese government. Bloomberg news and three digital security firms all claimed they found no evidence of digital or web-based misinformation campaigns. They apparently don’t count China’s ongoing anti-Trump propaganda, available through state-run media like China Daily and radio stations in the U.S. Nor do they count a new China-linked propaganda film advertised on Facebook, called “Better Angels“.
Plus, China’s immense wealth gives it more sophisticated and effective means to influence the general public, districts that voted for Republicans, the candidates themselves, the businesses that fund candidate elections, the universities and think tanks that hire politicians after they leave office, and the news media that voters will rely upon to choose their representatives on November 6, 2018. That is a far more powerful set of tools than anything the Russians used in 2016.
Vice President Mike Pence had it right when he said, “There can be no doubt: China is meddling in America’s democracy.” He said that Beijing was involved in “an unprecedented effort to influence American public opinion, the 2018 elections, and the environment leading into the 2020 presidential elections.”
Perhaps the most powerful influence that China wields over the U.S. public is the leverage that its $8.59 billion in box office sales provides to its “Propaganda Department” in Hollywood. American movie producers and directors actively self-censor in order not to alienate Chinese censors who could cut millions of dollars of ticket sales by denying access to the Chinese market. This leads Russians or terrorists to be the main villains in most Hollywood films, rather than China. Perhaps in part for this reason, 53% of Americans view China favorably according to a February 2018 poll, despite China’s human rights abuse at home, and ongoing economic and military transgression against the U.S. and our allies. That latent pro-China sentiment will make elections more difficult for Mr. Trump and the Republicans on November 6. This is China’s growing soft power, and is only infrequently commented upon in the media.
China’s sharper power to interfere with elections was demonstrated by the country’s recent attempt to use targeted tariffs to cause economic pain in districts that voted for Trump in 2016. In two rounds of tariffs, including over the summer, China hurt states and congressional districts that voted for Trump and other influential Republicans with $110 billion of targeted tariffs, focusing on commodities like soybeans, sorghum and pork that are overwhelmingly produced in rural pro-Trump districts. China also hit whisky, produced in Kentucky, and cranberries, produced in Wisconsin. Senate Majority leader Mitch McConnell represents Kentucky, and House Speaker Paul Ryan represents Wisconsin. “Mapping the counties that voted for Mr. Trump in 2016 and those affected by China’s tariffs shows the extent to which Trump voters’ jobs rely on the products being targeted,” according to the New York Times. “Beijing hopes it can convince those voters — and their elected representatives — that the president’s trade war could hurt them.” China’s counter-tariffs threaten more than double the jobs in districts Trump won in 2016, compared with those that Clinton won.
But China has many other ways to influence voter opinions in the U.S., and thereby interfere with how voters vote. China also does an end-run around voters by influencing the political choices provided at the voting booth, in that most politicians of both parties are influenced to be soft on China by an environment conditioned by Chinese money and giveaways, including to U.S. students, the media, professors, congressmen, businessmen, and even U.S. military officers.
China’s Soft Spot for the Democrats, and a Few Republicans
Allegations of Chinese election interference date back to at least 1996, when Chinese officials sought to implement a plan to funnel $2 million in donations to political campaigns. Convicted Bill Clinton fundraiser Johnny Chung admitted on a video in 2000, that only surfaced in 2017, to fronting for Chinese intelligence. Chinese donations to the Clinton family continued thereafter.
Billionaire Wang Wenliang, a Chinese national with ties to the Chinese government, donated $2 million to the Clinton Foundation in 2013. A company he controls gave $120,000 to Democratic Virginia Governor Terry McAuliffe starting the same year. The FBI subsequently investigated Mr. McAuliffe over allegations of foreign income, lobbying for foreign interests, and failure to register as a foreign agent. Mr. Wang’s permanent residency in the U.S. allows him to legally make campaign donations, and corporations in Virginia can make direct donations to candidates.
Mr. Wang’s donations go beyond election campaigns, to supporting the golden parachutes that politicians use after they leave office. Harvard, New York University and the influential Washington think tank, the Center for Strategic and International Studies (CSIS), have all received donations from Mr. Wang or his company, Rilin Enterprises, and all serve as way-stations for former politicians. Mr. Wang is a member of the Chinese Communist Party (CCP), and sufficiently trusted by Chinese authorities to contract with Rilin for construction on the Chinese Consulate and U.N. offices in New York.
Think tanks aren’t just for thinking, of course. They seek to please donors by providing metrics of their influence, for example the number of op-eds placed in leading news media, and the amount of congressional testimony given on the Hill.
CSIS used a donation from Rilin Enterprises to found the Brzezinski Institute of Geostrategy in 2014. Former Australian Prime Minister Kevin Rudd, then a Senior Fellow at Harvard’s Belfer Center at the Kennedy School of Government, spoke at the launch of the institute. He gave a companion speech at Fudan University in China a week later. Harvard’s Belfer Center is part of the Kennedy School of Government and was at the time led by Professor Graham Allison. Professors at the Kennedy School have given paid speeches in China, and are not required by Harvard to disclose their foreign earnings to the public. Professor Allison has argued for appeasing China, including by mooting the idea, in a New York Times editorial, of a pro-China unified Korea.
Yale Law School’s China Center received a donation of $30 million from the Paul Tsai family in 2016. Mr. Tsai is a native of mainland China, who moved to Taiwan in 1948. His billionaire son, Joe Tsai, moved to Hong Kong and co-founded Alibaba with Jack Ma in approximately 1999. In October, former Acting Assistant Secretary of State for East Asian and Pacific Affairs Susan Thornton was awarded a prestigious position as Senior Fellow at the center. Ms. Thornton was seen by many in Washington, including Republican Senator Marco Rubio, as too soft on China during her government tenure, including as a holdover from the Obama Administration under Rex Tillerson’s State Department.
On Ms. Thornton’s watch in January 2018, the State Department’s Bureau of Consular Affairs removed the Taiwan flag from its website. Ms. Thornton defended the move under questioning by Senator Rubio in February. She claimed not to be a “panda-hugger” in a September interview, citing her cyber-hacking agreement with China. But the insufficiently enforced agreement was ineffectual and provided China with cover when the press was focused on the issue ahead of a state visit by Xi Jinping. Because of this and other resistance in Washington, especially due to her allegedly soft positions on trade with China, she consequently announced her resignation from the State Department on June 30. The new Yale position provides Ms. Thornton with a prestigious platform to influence future policy on China, as well as a soft landing that will help her network and eventually re-enter government.
Republicans have historic connections to China too, including through megadonor Sheldon Adelson, who gave $100,000 to George W. Bush’s campaign in 2004, and $5 million to President Trump’s inauguration in 2016. This was the biggest donation ever to a presidential inauguration. Mr. Adelson has done extensive casino business in Macau, China.
Like Mr. Adelson, most pro-China Republican interests gave to the Bush family during the primaries. Mr. Trump’s nomination, and then election, was a surprise to China and its U.S. business allies. Chinese businesses scrambled, immediately after Mr. Trump’s election, to ink business deals and giveaways to the Trump family, including real estate deals in Manhattan and New Jersey, and the granting of Trump family trademarks in China. The Chinese were hoping that by giving to Trump, he would go easy on China. He hasn’t.
China Races American Voters to the Elites, and Wins
China’s attempts to influence the top dynasties in U.S. politics is the tip of the iceberg. China also seeks to influence Senators, Congressmen, Secretary-level officials, professors, military officers, journalists, and even students from elite universities, by providing them with free travel and easy visas to China, tens of thousands of dollars in speaking fees, and hundreds of millions of dollars worth of consulting and business deals after, and in some cases while, they are in their positions of power and influence.
Kurt Campbell, Assistant Secretary of State for East Asian and Pacific Affairs from 2009 to 2013, practically gave away Scarborough Shoal in the South China Sea during negotiations with China’s Fu Ying in 2012, according to a source. He is also rumored to have negotiated a start to his Asia Group while still in office. Asia Group now has an office in Hong Kong, and Mr. Campbell is a frequent speaker with the pro-Beijing National Committee on U.S.-China Relations (NCUSCR).
If the Scarborough giveaway is true, how much is being such a good friend to China worth? One deal alone, in which former Treasury Secretary Timothy Geithner and Goldman Sachs invested in a Chinese state-owned bank, was for over $700 million. Not all of that was profit, but it had significant upside potential at the time and likely led to additional assets put under management by Mr. Geithner’s private equity firm, Warburg Pincus. But Huarong’s former chairman, Lai Xiaomin, was expelled from the CCP this month, and is to be prosecuted for corruption. Mr. Geithner’s family has long been friends with Wang Qishan, China’s anti-corruption czar and arguably the second most powerful individual in China after Xi Jinping.
Other secretary-level officials have had business with China. Former U.S. Secretary of Homeland Security Tom Ridge told me in 2016 that not only he, but “everyone” of note in D.C., has a Chinese client. Just a few months earlier, Mr. Ridge had attended a China Energy Fund Committee (CEFC) conference in Beijing. The co-host, China Institute of International Studies (CIIS), is likely used by the Chinese Communist Party (CCP) to surveil and court foreigners for intelligence purposes. In addition to Mr. Ridge, former U.S. National Security Advisor Robert McFarlane, and former Director of the Central Intelligence Agency James Woolsey, attended. It is not known whether they were compensated with free travel, speaking fees, or potential business. But by attending, they put themselves, any technology they brought with them, and any conversations they might have had with each other, at risk of surveillance by the Chinese.
Secretary General of the CEFC, Patrick Ho, delivered the opening remarks at the CIIS conference. His involvement with these luminaries of the U.S. political establishment suggests that the Chinese “clients” to whom Mr. Ridge refers are more likely CCP fixers seeking to dole out cash, jobs, and prestige in exchange for connections or favors of the political or economic variety. This month, Mr. Ho was accused by U.S. prosecutors of illegally selling arms to Qatar and Libya in 2015. Mr. Ho was arrested in November 2017, and charged with three counts of money laundering and five counts of bribery connected to bribes of $2.9 million that prosecutors allege were offered to officials in Chad and Uganda, to advance oil and development rights to the CEFC.
Companies like CEFC can exert powerful influence among U.S. elites through purchasing, sometimes paying more than market rates, large personal assets like luxury real estate. Companies linked to Ye Jianming, Chairman of CEFC, purchased approximately $83 million of luxury real estate in Manhattan, with plans to purchase $80 million more, according to the October 25 issue of the Wall Street Journal. Mr. Ye has links to China’s military and intelligence, and purchased real estate from Barclay’s Chief Executive Bob Diamond and Vincent Viola, a billionaire close to Mr. Trump. Mr. Viola was briefly nominee for Secretary of the Army. Mr. Ye went missing in early 2018, and in March was under investigation in China.
Former secretary-level officials like Henry Kissinger and Hank Paulson are leaders in guiding major business transactions in China, as are Wall Street financiers and businessmen like Steve Schwarzman of Blackstone Group, Maurice Greenberg formerly of American International Group, and Jamie Dimon of JP Morgan Chase.
Close relations with CCP officials help their businesses and Chinese investments, and so they are incentivized to help the CCP with improved US-China relations. American businesses want China to see them as “friends” so China sweetens their business arrangements.
Mr. Schwarzman, Dimon, and Paulson reportedly sought to assist the Chinese government in its dealings with the Trump administration. NCUSCR hosted Mr. Kissinger and former Secretary of State Madeleine Albright to provide public advice to incoming President Trump in December 2016. Mr. Kissinger and Mr. Greenberg are NCUSCR executive vice chairs.
Mr. Schwarzman, and his Millions of Campaign Donations
The Chinese government reportedly focuses its influence operations against Mr. Trump through Mr. Schwarzman and Steve Wynn, both of whom China thinks Mr. Trump trusts. Mr. Schwarzman declined to donate to Mr. Trump’s presidential campaign but after the primaries, he became a generous supporter. Blackstone lent $312 million to Kushner Cos and its Brooklyn partner at approximately the time of the Republican National Convention. Kushner Cos is Mr. Trump’s son-in-law’s company. Mr. Schwarzman gave $250,000 to Mr. Trump’s inauguration. In December 2017, Mr. Schwarzman donated $344,400 to Mr. Trump’s reelection campaign and the Republican National Committee. He raised another approximately $2.4 million from friends at a house party on Park Avenue in Manhattan.
Perhaps consequently, he now has regular access to the President, including as head of multiple Whitehouse groups of business advisers, including the President’s Strategic and Policy Forum. The group is heavy with leaders of corporations that do business in China, including General Motors, Boeing, JPMorgan Chase, IBM, Ernst & Young, and Walt Disney. Many of these businesses also donate to the NCUSCR and Asia Society. Both organizations are relatively soft on China, avoiding controversial topics like Taiwan, Tibet, and China’s human rights abuse, or presenting them in the best possible light. Like these organizations, Mr. Schwarzman’s Forum attempted to soften Mr. Trump’s economic views on China, arguing that China is not a currency manipulator, and seeking to turn him away from tough tariffs meant to increase U.S. bargaining leverage.
After the Forum, Mr. Schwarzman headed with Mr. Trump on Air Force One to Mr. Schwarzman’s Florida home, just 1.5 miles from Mar-a-Lago, where he held a 70th birthday party with a Chinese “Silk Road” theme, replete with three-story temples and “Oriental ribbon dancers.” Ivanka Trump, Jared Kushner, and several Cabinet secretaries joined the party. In July 2017, Mr. Schwarzman again held a business roundtable, but this time invited Chinese businesses as well. Commerce Secretary Wilbur Ross co-convened the roundtable, which included 20 American and Chinese business leaders.
The Washington Post has called Mr. Schwarzman a “China whisperer” and “go-between” for President Xi Jinping. Mr. Schwarzman has “one of the closest relationships to Beijing of any American executive.” Mr. Kissinger and Mr. Rudd are both friends of Mr. Schwarzman, who touts his own reputation as an “unofficial ambassador” between the two countries. He has publicly praised Xi Jinping.
According to the Post, “The relationship is rooted in business: Until recently, the Chinese government had a significant stake in Blackstone, which does billions of dollars in business in China.” In 2007 when Blackstone went public, Chinese interests purchased 9.9% of the company for $3 billion. It was the first Chinese government purchase of a foreign company stake since World War II, according to Mr. Schwarzman, and had to be approved by the Premier of China. The Chinese unwound their stake in Blackstone starting in 2017, and had sold all their shares by early 2018. Blackstone is now the world’s largest private equity firm, employing 412,000 people through its ownership of multiple other firms.
Mr. Schwarzman’s net worth is $13 billion, and he gave $4.7 million to committees supporting Republican congressional candidates in 2016, and $100,000 to a committee supporting Jeb Bush for President. The Bush family, including Jeb, have taken a much softer line on China than did Mr. Trump during his Republican primary campaign. Mr. Schwarzman’s donations give him tremendous influence among Republican politicians, and he is using that influence on behalf of China. He reportedly tried to convince Mr. Trump not to label China a currency manipulator. When Mr. Trump was considering but had not yet embarked on his trade war, Mr. Schwarzman repeatedly messaged him over a period of 14 months, according to his associates, to keep in mind the broader importance of the U.S.-China relationship.
When Mr. Trump met Xi Jinping in Mar-a-Lago, he followed Mr. Schwarzman’s advice and avoided contentious issues. Mr. Schwarzman was on hand to join the meeting informally. At Mar-a-Lago, Mr. Schwarzman arguably had a conflict of interest in that he was doing significant business with China. In June 2017, Blackstone sold a logistics firm called Logicor to a Chinese government-controlled company for $13.8 billion.
Mr. Schwarzman is the lead example of how influential individuals who seek to appear as China’s friends, can serve China as powerful tools of influence in U.S. politics. Thus China seeks to court them with lucrative investment opportunities, revolving doors and golden parachutes. This includes lower-level politicians and businessmen who may or may not make it back into electoral politics, though still wield influence because they frequently appear in academia, think tanks, and the opinion pages of high-circulation news media.
Mr. Chan, and his Millions for Academics
A Hong Kong billionaire with extensive CCP links and business interests on the mainland, Ronnie Chan, is another example of someone who uses his money to buy political influence. Mr. Chan was instrumental in a Chan family donation of $350 million to Harvard in 2014, through what appear to be front companies in Monaco and the British Virgin Islands. It was the biggest donation in Harvard’s history. The same year of the Chan family donation to Harvard, the university’s Kennedy School of Government accepted another $10 million from a Chinese military-linked company to fund Chinese military officers as academic fellows.
Mr. Chan punches above his weight in Hong Kong because of his political connections, including to Xi Jinping through CPPCC Vice-Chair Tung Chee-hwa. China Daily cited Chan positively as early as 2004 for having pro-Beijing views. Mr. Chan co-founded the pro-Beijing Paradigm Foundation in 2007, the same year he boosted Donald Tang, then chair of the Asia Society, and politically influential in Los Angeles. In 2014 the CCP summoned Mr. Tung, Mr. Chan, and other influential Hong Kong personalities to meet Mr. Xi in Beijing. Mr. Chan is co-chair of Beijing’s Center for China and Globalization (CCG). He is member of the Our Hong Kong Foundation, which is close to the Chinese Liaison Office to execute funding, communication with Beijing, and Hong Kong electioneering.
According to multiple sources, Mr. Chan regularly makes the rounds of U.S. academia and think tanks with his pro-China messages, thereby encouraging silence on China’s human rights abuse for those seeking his access and future largesse. One professor at Harvard told me that “of course” he knew Mr. Chan, as “everyone” at the Kennedy School of Government knows Mr. Chan. Another source told me that Mr. Chan once offered a leadership position at the Asia Society, a New York think tank, to former Ambassador Nicholas Burns, a fellow at Harvard. But when Mr. Chan told Mr. Burns that if Mr. Burns said anything against China, “it wasn’t going to work out,” Mr. Burns declined the position. Mr. Burns has not responded to my repeated and public attempts to confirm this account.
Mr. Chan’s access to think tanks and academia, and his revenues on mainland China, arguably depend at least in part on his public support for China’s global ambitions. According to China Daily in 2017, “Ronnie Chan Chi-chung said the council [CCG] will serve as a platform to help mainland enterprises, policies and the yuan [Chinese currency] go global.” In 2012 as co-chair of the Asia Society in New York, Mr. Chan hosted Yuan Ming, a member of the Chinese People’s Political Consultative Conference (CPPCC).
Ms. Yuan is a former Trustee of the Asia Society, and an International Advisory Board member of the influential Council on Foreign Relations in New York. Mr. Schwarzman and Mr. Rudd are board members of the Asia Society. Maurice Greenberg is a former chair of the Asia Society, from 1995-2002.
China General Chamber of Commerce, and Mr. Bloomberg for President
China seeks to shape U.S. voter preferences through think tanks, but also with U.S. media coverage written and produced by journalists, who themselves have gone on all-expenses-paid junkets to China, and that is published by news outlets that get significant revenue streams from Chinese sources. China purchases expensive advertising and even inserts, disguised to appear as regular news articles, in outlets like the Wall Street Journal, Washington Post, New York Times, and now famously, the Des Moines Register of Iowa.
Mr. Trump won Iowa, a battleground state, in 2016. Battleground states are not only targeted by Chinese state media advertising. The China General Chamber of Commerce USA (CGCC) published a slick pro-China trade video in 2017 and placed it on Youtube. The content specifically targets midwest states (Minnesota, Wisconsin, Michigan, Iowa, Illinois, Indiana, Colorado, Kansas, and Missouri), claiming that Chinese trade and investment increases American jobs in the heartland. Most of these states were identified by Politico as swing states in the 2016 Presidential election, and Mr. Trump won all but three of them.
In addition to CGCC, China’s Ministry of Commerce, ZTE (the Chinese telecommunications firm that allegedly corrupted the presidential family in the Philippines), and AVIC, China’s biggest aerospace-defense contractor, sponsored the Chicago branch’s video, or gala at which the video was apparently shown. AVIC International Holding (Hong Kong) Ltd., a foreign company (not the U.S. subsidiary) donated to a U.S. political action committee (PAC) at least once between 2000 and 2012.
China gets help in the media, not just through buying ads and sending journalists on junkets, but through millions of dollars in non-media purchases from companies that have their own U.S. media outlet. Bloomberg L.P. profits from its financial services in China, especially its Bloomberg terminal for Wall Street (and Shanghai) bankers, far more than its near profitless news media business, according to a source within Bloomberg.
Former New York Mayor and potential 2020 U.S. Democratic presidential candidate Michael Bloomberg is himself friendly with China, and the CGCC. The editorial policies at Bloomberg have likely been affected by Mr. Bloomberg’s pro-China positions, and Bloomberg L.P.’s China business. In one case, a Bloomberg story on Xi Jinping family wealth in 2013 was spiked, and the reporter suspended. The New York Times picked up the story, and China cancelled new visas for reporters from both organizations.
Mr. Bloomberg hosted the CGCC at Bloomberg headquarters in New York for conferences in 2015, 2017 and 2018. The CGCC represents Chinese businesses in the U.S., including China’s state-owned enterprises. It boasts a membership of 1,500 Chinese enterprises that are established in the U.S., of which approximately 58 are Fortune-500 companies, claims $120 billion of cumulative investments, and over 1 million jobs indirectly supported. The CGCC has satellite offices in Chicago, Houston, Los Angeles, San Francisco and Washington DC.
Mr. Bloomberg criticized the U.S. government at the CGCC conference in April, saying “This forum comes at a critical juncture in the U.S. as leaders in Washington are considering new trade policies that would hamper economic growth and strain ties with nations around the world, including China.” Anthony Foxx, United States Secretary of Transportation from 2013 to 2017, delivered the keynote address.
There is no U.S. law stopping Mr. Bloomberg from utilizing the profits he derives from China to “self-fund” his 2020 U.S. presidential campaign should he decide to run. He would not be required to report those funds as at least partially sourced through China.
The CGCC and a China-linked company called “Perfect World” funded multiple studies by the NCUSCR that publicize Chinese investments in the U.S., all broken down by congressional district. The NCUSCR reports started in 2015. The CGCC is a U.S. nonprofit founded in 2005 and based in New York City. Unlike 501(c)(3) nonprofits, the CGCC is a 501(c)(6) nonprofit according to its 2016 Form 990, a federally-mandated public document. CGCC also runs a foundation that is a 501(c)(3), an exempt status that it prominently displays on its website.
As a section-6 nonprofit, like other business leagues, the CGCC has near unlimited legal rights to engage in political lobbying. This is a legal loophole through which Chinese state-owned enterprises can utilize the tool of a business league to lobby U.S. politicians at any level, including federal, state, and local, to advance not only their own business priorities, but the priorities of the CCP.
The chairman of the CGCC, Xu Chen, is also the President of the Bank of China USA, a Chinese state-owned enterprise. Yi Luping, President of China Communications Construction Company USA, is Executive Board Director of CGCC. The Honorary Chairman of CGCC is Tung Chee-hwa, the Vice Chairman of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC).
The CPPCC is the key body of China’s United Front work, which seeks to surveil and influence non-CCP entities, namely, the rest of the world outside the CCP. Scholars like Anne-Marie Brady, James To, Gerry Groot, and Clive Hamilton have done extensive work to uncover such Chinese influence, and paid a very personal price. Mr. Hamilton’s book, Silent Invasion, was cancelled just prior to publication, and then published by a smaller press that specializes in censored work. Ms. Brady endured threats and the theft of her computer from her home. Mr. To has moved onto other subjects.
National Committee on U.S.-China Relations, and 100 Town Halls
Peng Binge of Perfect World Company and China Daily International, along with the CGCC, helped fund the annual NCUSCR studies that publicize Chinese investments in the U.S. by congressional district. The donations are suspect in part because of links to apparent Chinese influence operations. Perfect World donated $100,000 to UNESCO in 2014, and gold stamps to former United Nations Secretary-General Ban Ki-moon in 2015. Perfect World group is reportedly the largest gaming and film production company in China, having been granted a very lucrative permission to release Xbox to the country in 2014. The CCP had banned such games starting in 2000. Robert Hong Xiao is Vice Chairman of Perfect World, and in 2015 was invited to the 12th CPPCC National Committee.
The NCUSCR studies of Chinese investments by congressional district have been cited broadly and positively by the press and politicians as proof of how Chinese investment provides jobs for Americans, which is the single most important election issue for voters. The NCUSCR data has been cited, for example, by the BBC, Bloomberg, CNBC, CNN, the Financial Times, The Hill, the Los Angeles Times, the New York Times, and the Wall Street Journal. This is a clear case of China-linked organizations that significantly influence the media that in turn, influences U.S. voters, congressmen, senators, and political candidates, including at the presidential level. The NCUSCR study and resulting publicity amounted to a highly effective influence campaign, apparently designed to convince the American voter that China is good for American jobs.
U.S. corporations that operate in China are the biggest funders of the NCUSCR, which thereby has an incentive to promote engagement and stability with China to expand trade flows and keep its business partners profitable. The President of NCUSCR is Stephen Orlins, a very nice fellow with whom I have spoken and corresponded. Mr. Orlins received a law degree from Harvard University and served as Managing Director of Carlyle, a major investment company with $201 billion in assets under management. Mr. Orlins focused on Asia at Carlyle, including on its China investments. He previously worked for the State Department from 1976 to 1979, where he helped establish US-China diplomatic relations.
While Mr. Orlins seeks to present himself as unbiased at the NCUSCR events he moderates, he is the type of individual who, because of his history and the predispositions of his donors, is apparently likely to advocate more engagement, trade and investment with China, no matter the circumstances. Mr. Orlins imprints his pro-Beijing outlook into the NCUSCR events his organization executes, and there are plenty. One annual event alone, the “China Town Hall” has been going since 2007. The most recent one on October 9, less than a month prior to the 2018 election, showcased an impressive performance by former U.S. Secretary of State and National Security Adviser Condoleezza Rice, who perhaps not coincidentally, participated in an NCUSCR study group that traveled to China and the Soviet Union in 1988.
To his credit, Mr. Orlins raises the issue of the Uyghurs with Ms. Rice, approximately one million of whom are detained in “reeducation camps” in China. But he does not raise other sensitive topics like the occupation of Tibet in 1950, the Tiananmen massacre of 1989, or more recent issues of alleged organ harvesting from detained political and religious dissidents. He prefers to focus on current trade relations as a way to “understand” China.
In general, Mr. Orlins’ questions to Ms. Rice are tendentious in favor of China and against Trump. Ms. Rice must in response repeatedly detail the recent transgressions of China (she herself focuses on U.S. trade and investment with China, rather than topics like jobs and human rights), and repeatedly defend Mr. Trump’s strategy to brand China as a competitor. Mr. Orlins was able to get Ms. Rice to advocate that the U.S. join China’s Asia Infrastructure Investment Bank (AIIB), and to predict that Trump would not “drift” from the One China policy on Taiwan, a policy that both discussants assumed throughout the discussion to be an unvarnished good. When Ms. Rice defends President Trump and Vice President Pence by listing China’s transgressions against U.S businesses, Mr. Orlins asks her, but “What do we do about the U.S. companies that are making tens of billions of dollars of profit in China, and don’t we have to … doesn’t [the] Vice President’s speech not focus at all on that?”
At one point, Mr. Orlins makes a misleading statement in favor of China. “As you said, the United States is not perfect, and China’s use of force since ’79 has been pretty minimal,” he tells Ms. Rice. “In fact they don’t use force. They may act in violation of international law, but they don’t take over islands where there are people and kill them and stuff.” China has the world’s largest military by active personnel, frequently threatens the use of force, including nuclear-armed bomber flights near the Philippines, and in 1988 killed 64 Vietnamese soldiers on Johnson South Reef in the South China Sea. China then built a bunker there, expanded it into a permanent artificial island with a helipad and radomes, and still occupies it today.
NCUSCR partnered with “a wide range of institutions and community groups, including colleges and universities, world affairs councils, and trade and business associations” for the 2018 town hall, and webcast it to over 100 venues in 44 states across the U.S. So perhaps by design, it had some impact on U.S. elections, and does so every year. But it showed in only 3 venues in China, which in any case has no elections to influence. The work of NCUSCR thereby does far more to not only foster understanding in the U.S. of China, but to influence U.S. politics, than vice versa.
The NCUSCR’s influence on U.S. electoral politics should appeal to the CCP, and therefore to U.S. corporate donors seeking to curry favor with the CCP. This makes NCUSCR an effective tool of influence for U.S. businesses seeking business in China, and for the CCP seeking political influence in the U.S. Recently, the NCUSCR has even been a platform to push negative views of the Trump administration. The NCUSCR, under its current leadership, may be acting more as a business league for U.S. businesses in China, or as unregistered foreign agent, than truly as a U.S. nonprofit 501(c)(3) organization.
The Starr Foundation and United Airlines sponsored the NCUSCR’s 2018 town hall. Maurice Greenberg is Chairman of the Starr Foundation, Chairman and CEO of C.V. Starr & Co., Inc., and former Chairman and CEO of American International Group (AIG). The Starr companies were founded in Shanghai, China, in 1919, and in 2014 became majority owner of Shanghai-based Dazhong Insurance Company Limited of China.
NCUSCR activities closely map onto what apparent Chinese intelligence officers hold out as incentives for those it recruits. Jonas Parello-Plesner has detailed a Chinese honey-trap set for him in Beijing that started with his getting contacted by a “handsome Chinese woman” on LinkedIn. He accepted the invitation to meet at the St. Regis, where foreign diplomats congregate, but she stood him up. Instead, three nondescript Chinese men arrived and failed to present business cards. This is rarely done in China. They said they were from a Chinese state-sponsored think tank, a classic espionage recruiting ground and listening gallery for foreign governments. They then tried to recruit him to assist the Chinese government. He wrote,
The meeting was circumspect and meandering, with my interlocutors adopting a careful tone, but its purpose was unmistakable. First, they tried to tempt me by appealing to idealism: “You could help ensure that there is no conflict between the United States and China.” They also tempted me with ambition: “You could have access to any top Chinese official.” (Since hearing that offer, I have become suspicious of Western China experts with too-good-to-be-true contacts in the Chinese system.) Finally, they tempted me with simple greed: “We could finance your research.” Their suggested next step was an all-inclusive trip to Hangzhou to build our relationship.
These are all activities that the NCUSCR conducts on a regular basis. Mr. Orlin’s office in New York is according to a source bedecked with photos of him, and various Chinese officials all the way up to President Xi Jinping. The NCUSCR seeks to recruit people to the cause of ensuring a lack of conflict between the U.S. and China, even under present circumstances of China’s continual revision of the status quo at the expense of the U.S. They provide access to top Chinese officials, including up to and including Presidents Hu Jintao and Xi Jinping, for whom they have hosted dinners of up to 800 people. They finance and promote research that puts China in a positive light. They sponsor all-inclusive trips to China for students, professors, journalists, and politicians. If the NCUSCR is not an an agent of China, the organization is nevertheless doing a very good job of it. And, U.S. corporations who want to appear as friends of China, are paying the tab.
The “Better Angels” Documentary, and Facebook
The CGCC is involved in additional media, event, and film projects that promote a positive view of China. One such project is a “documentary film” called “Better Angels”, produced by William Mundell. Mr. Mundell had a company called Vidyah in 2003 that reportedly had a contract with the Chinese government to provide e-learning to 630,000 schools in China over five years. The film highlights regular Americans and Chinese who “build bridges” between the two countries, but it is undeniably political in contrasting these likable people with clips of Mr. Trump, who “growls” and is shown “railing against China” according to a film review in the South China Morning Post. The SCMP is owned by China’s Alibaba Group. Jack Ma, the co-founder of Alibaba, was the first Chinese billionaire to show up at Mr. Trump’s Manhattan apartment after his surprise win. He publicly promised millions of jobs for Americans, that never materialized.
“Better Angels” features the usual cast of pro-China personalities, including Prime Minister Rudd, who is now reportedly at the University of Oxford working on a Ph.D. dissertation on Xi Jinping thought. A post of his on China’s Weibo social media showing a photo of him, pen in hand and notepad on the table, attentively reading a report by Xi Jinping, has caused some amusement among China watchers. “[R]ecent attempts to ingratiate himself with his Chinese audience have fallen flat,” according to one commentator. “On October 29 2017, Rudd, in full school prefect mode, posted a photo of himself studiously examining Chairman Xi Jinping’s report to 19th CPC National Congress. ‘China has entered a new age,’ he wrote, only to have the [Chinese] censors throttle any space for discussion under the post.”
The former head of the Hong Kong government, Tung Chee-hwa, also makes an appearance in “Better Angels”, as do former US secretaries of state Henry Kissinger, James Baker and Madeleine Albright. Ronnie Chan, former co-chair of the Asia Society in New York, and current chairman of the Asia Society’s Hong Kong Centre, shows up as well. Individuals from this group often appear in Chinese state media and pro-Beijing events in the U.S., Hong Kong, U.K., and elsewhere. Mr. Chan has donated significant sums, including to the Asia Society and the University of Southern California (USC), to which he gave $20 million in 2014. NCUSCR, Asia Society, and the US-China Institute at USC are planning to show the film around the U.S. The USC institute is publicizing “Better Angels” on Facebook, and there are reportedly Facebook ads as well.
“Today my fb account was bombarded with sponsored ad of this documentary movie ‘Better Angels'”, according to one professor who wrote me an email on October 24, and asked to remain anonymous. “Made by an apparently respectable director, but sounds like a Chinese propaganda film,” he wrote. The professor said that the trailer “reiterates the false information that China is doing much better than the US on all counts, asking the question ‘can America survive the rise of China?'”
As many as 2,000 screens will show the film in China. The film’s negative depiction of Mr. Trump, ongoing U.S. advertising including on social media, and release date on November 2, just four days prior to the 2018 U.S. midterm elections, appears to be designed to hurt Republicans at the polls.
The CGCC, along with China’s state-owned media, is playing a coordinating role. CGCC satellites around the country are showing “Better Angels”. On September 25, six weeks prior to the elections, China’s state-owned media published an editorial by CGCC chairman Xu Chen that blamed Mr. Trump’s “anti-free market policies” and “confrontational approach toward China.” This Chinese propaganda will not only tar Mr. Trump, but will hurt electoral candidates associated with the Republican Party on November 6.
According to Mr. Xu in the China Daily editorial, “Trump should look to the future and make responsible decisions that benefit the people of both countries and stabilize the world economy. The CGCC strongly urges the Trump administration to de-escalate the trade conflict and return to a principled policy of cooperation and development.” Mr. Xu paints Chinese companies as bringing jobs to locals in the U.S. “Such initiatives by Chinese companies have been warmly welcomed and embraced by the local governments, communities, employees and their families in the US, creating a win-win situation for all stakeholders, which is in stark contrast to Trump’s strident rhetoric against China,” wrote Mr. Xu.
The CGCC did not report political campaign activities on its 2016 Form 990. More recent forms are unavailable. All nonprofit organizations in the U.S. are required to complete this form annually. To the question, “Did the organization engage in direct or indirect political campaign activities on behalf of or in opposition to candidates for public office?”, the CGCC answered “No”.
But the CGCC has created a platform for Mr. Bloomberg, who says positive things about China. Conversely, it denigrates Mr. Trump for his assertive bargaining. Had the CGCC answered “Yes”, it would have been required to fill out Schedule C, Part I, which would give us more information on its political activities. To the question, “Is the organization a section … 501(c)(6) organization that receives membership dues, assessments, or similar amounts as defined in Revenue Procedure 98-19?”, it again answered “No”. The CGCC did not provide detailed information on the origin of its 2016 gross receipts of over $1 million.
China Jumps on the Republican Bandwagon, and Gets Dragged Along
Given the impressive flow of Chinese money that influences U.S. public opinion so close to an election, it is perhaps understandable that even the Trump administration is occasionally solicitous of pro-China nonprofit and business interests. In 2017, Mr. Trump sent a note of congratulations to NCUSCR on its 50th anniversary, as did Mr. Xi. And in June, Commerce Secretary Wilbur Ross spoke at a CGCC-sponsored event in Washington. That same month, a Forbes investigation found that Mr. Ross failed to divest fully of his holdings in China, owned jointly with the Chinese government, after entering office and while doing official business with China. This should probably count as a conflict of interest.
Another member of Mr. Trump’s cabinet, Transportation Secretary Elaine Chao, has family business in China that expanded significantly following her appointment. Her father, James Chao, is the founder and chairman of the Foremost Group shipping company, which does extensive business with China. He has given Ms. Chao and her husband between $5 and $25 million over the past ten years, and $40 million to Harvard Business School. China’s Ambassador to the U.S., Cui Tiankai, and Mr. Rudd, attended the Harvard ceremony.
James Chao was originally from Shanghai but migrated to Taiwan in 1949. Ms. Chao was Labor Secretary under George W. Bush, and her husband is Senate Majority Leader Mitch McConnell of Kentucky. After the 2016 election, Mr. Chao joined Secretary Chao on Air Force One, where he got the chance to discuss business with Mr. Trump. The Foremost Group fleet increased from 23 to 33 registered ships after Mr. Trump’s inauguration. It transports 15 million tons of goods per year. Ms. Chao’s financial disclosure form makes no mention of current, or a possible future, ownership stake in Foremost Group though she in the past worked there. Secretary Chao avoids the U.S. media, but generously grants interviews to China’s state media. Ms. Chao’s sister, Angela, joined the Bank of China’s Board of Directors in 2017. She was a fellow with NCUSCR in 2004.
The Foremost Group handles a small fraction of China’s $635 billion in annual trade with the U.S. But along with other politically influential businesses like Apple, Boeing, Wall Street banks, and U.S. soybean farmers, the Foremost Group gives the CCP financial leverage to try and use American corporate lobbying power for CCP purposes in Washington. Apple, Boeing, Wall Street banks, and U.S. farmers all have their lobbyists, campaign donations, revolving doors, and golden parachutes, for both Democrats and Republicans. These influence networks assist not only the companies’ interests, but those of the CCP, when U.S. lobbyists seek to win favors from Beijing by greasing the skids for more U.S.-China trade, and its necessary corollary, stable U.S.-China relations.
In the face of China’s persistent economic, military and diplomatic transgressions against the U.S. and our allies, it is rarely recognized that stable US-China relations require American policies of military and economic appeasement. These are the policies of engagement, understanding, and ultimately non-confrontation for which American business lobbyists, CGCC, and NCUSCR argue, and that are hard to argue against before an American electorate that naturally prefers peace to the risk of military or economic conflict.
So, if one restricts one’s search for “election interference” to Chinese intelligence agents stuffing ballot boxes in City Hall, or digital misinformation campaigns à la the Russians, one might by design find nothing. But if one looks at the bigger picture of China’s influence operations against politicians, the media, think tanks, academia, and businesses to get pro-China policies heard, enacted and executed, including the production of full-length documentaries promoted on Facebook, you’ll find it in spades. The Russians, formidable as is their authoritarian influence, are nevertheless not as regularly closing hundreds of millions of dollars worth of deals at elite levels of U.S. politics, business, and academia. Russia is not providing as much of the revenues for U.S. companies that give millions of dollars in campaign donations.
Money buys political influence, and vice versa. The Chinese have plenty of both, and their resources and access only appear to be growing.
Anders Corr is the publisher of the Journal of Political Risk. JPR Status: Opinion.