Chinese-American partnerships

Chinese-American partnerships

Ralph L. DeFalco III

Peter Schweizer is no stranger to the sea-my side of American life and politics.
Beginning with his 2011 book Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of us to Prison, Schweizer has routinely uncovered instances not just of malfeasance and self-dealing, but of deeply rooted, seemingly endemic corruption among America’s political class and ruling elites. Extortion (2013), Clinton Cash (2016), Secret Empires (2018), and Profiles in Corruption (2020) are more than one-off exposés. In the great tradition of American muckraker journalists, Schweizer’s diligently researched and detailed works caused a furor when they were released. Clinton Cash provided enough convincing evidence of “pay-to-play” dealings to prompt an FBI investigation that later roiled the 2020 Presidential Campaign. The Stop Trading on Congressional Knowledge (STOCK) Act was passed in 2012 after Schweizer appeared on the television program 60 Minutes to talk about his findings in Throw Them All Out.
Readers of Schweizer’s newest book, Red-Handed: How American Elites Get Rich Helping China Win, will come away with the conviction that even more needs to be done to root out corruption and self-dealing, not only on Capitol Hill, but in Silicon Valley, on Wall Street, and in the halls of the Ivy League. Schweizer and a team of forensic investigators spent more than a year combing through corporate records, legal filings, financial transactions, FBI and Congressional reports, and other documents to research this book. Their findings are the jaw-dropping story of how leading Americans have become unwitting and, more often, witting collaborators with the repressive Chinese government for personal gain. This is a book that reveals the Machiavellian design and the broad reach of Beijing’s long-term strategy of courting and buying influence in the corridors of power in the United States.
China’s Strategy
The Chinese Communist Party (CCP) has, since the days of Mao with his Leninist visions, insisted that the profligacy and degeneracy of western culture would be its undoing and that the greed and naivety of developed western nations would also ensure that strategic and economic benefits would always flow to China. The yang wei Zhong yong, or “make the foreign serve China” strategy is fully exposed in Red-Handed. Schweizer describes how “Beijing offers deals, inducements, praise, and access to seduce foreign elites into serving their interests.”
But Beijing is not looking to make American elites slavish devotees of the Party; there are enough of those in China. American collaborators, according to Schweizer, are permitted “some level of public criticism,” to preserve their credibility and especially so when they influence decisions that benefit the regime of China’s President Xi Jinping. It’s a shrewd tactic described as “big help with a little badmouth.”
The big help Beijing seeks from highly placed officials in government, including sitting members of the House and Senate, is needed to kill legislation inimical to China’s interests, forestall investigations and inquiries into the CCP’s abuses, and burnish the regime’s image. Schweizer details how members of Congress “have profited greatly from the financial largesse of Beijing,” and “pursued policies beneficial to the regime and verbally supported some of its most brutal actions.”
Senator Diane Feinstein, for example, was an early and aggressive supporter of China’s entry into the World Trade Organization. At the same time her husband, Richard Blum, was investing hundreds of thousands of dollars in Chinese companies and building the foundation for a multi-million dollar fortune. In 1994, when the US Senate considered sanctions on China for its continued human rights violations, Feinstein argued vigorously against taking action that would “inflame Beijing’s insecurities.” As she made these arguments, her husband was raising tens of millions of dollars for his Newbridge Asia fund to invest in Chinese companies. Feinstein has always maintained there was no connection between her political position and her husband’s business in China. “I don’t know how I can prove it to people like you,” she once said to reporters, “maybe I get divorced.”
Feinstein is not alone. Schweizer describes how politicians rely on family members to insulate them from charges of direct collusion for gain. Red-Handed delves into the myriad business dealings of Hunter Biden that leveraged the family name and political connections to amass $31 million in assets and hundreds of thousands of dollars in interest-free loans from Chinese companies and foundations. What separates Schweizer’s reporting from titillating hearsay are the sources he relied upon that include US Treasury Department Suspicious Activity Reports, the US Senate Oversight Committee Report, thousands of e-mails from Biden business associates, and nearly twenty-five thousand e-mails from Hunter Biden’s laptop.
Red-Handed also describes the business dealings in China of the families of Senator Mitch McConnell (a disappointing reprise of the reporting in Secret Empires), Speaker Nancy Pelosi, and both Presidents Bush. In every case these dealings are not investments in Beijing boutiques; these are multi-million dollar stakes in financial institutions, investment firms, and large Chinese corporations and industries.
The China Lobby
Schweizer also describes the ways China is getting big help from Washington lobbyists and consultants—firms that are packed with retired politicians and officials from past administrations—all of whom are skilled at working their networks inside Congress, in various federal agencies, and in leveraging their connections in China. These are firms that “advise and help the Beijing government navigate issues that will threaten their interests,” and steer both the Chinese government and corporate clients through the labyrinthine ways of Washington. Consultants—senior American diplomats, secretaries of state, ambassadors—trade on their Chinese connections to grease the skids for western countries seeking to do business in China.
What is especially disturbing about these registered and unregistered lobbyists is the work they do on behalf of Chinese companies wedded in what Beijing calls “civil-military fusion.” ZTE Corporation (military telecom support), Huawei (linked to Chinese intelligence operations), COSCO (often called the fifth arm of the PLA Navy), and others with solid links to China’s government-controlled defense industries and Chinese intelligence are all well-monied clients of K Street lobbyists. Consultants seem wholly indifferent to the deal-making that brings priceless intellectual property and dual-use technologies to companies that grow both China’s hotly competitive industrial and commercial base and its increasingly capable military forces.
Chinese-American Partnerships
Even more alarming is the support Beijing has received for both its military and the surveillance state from the tech giants in Silicon Valley. Here Schweizer describes Americans who are fueled by their technological ambition and achievements, “well-known for their wealth and the hubris that comes with it,” and who see themselves as enlightened “citizens of the world.” They also are strangely enamored of Chinese leaders (Facebook founder Mark Zuckerberg asked Xi to name his first child), the power of one-party rule to “get things done,” and of authoritarianism to make by fiat sweeping changes to Chinese society.
Schweizer, for example, describes how a hopelessly naïve Bill Gates, lured by China’s lucrative and massive market for tech, repeatedly claimed that Chinese efforts to censor the web would fail. That was in 1995. By 2005, Microsoft had launched new software, MSN Spaces, in China, that included sophisticated algorithms to automatically censor blogs, searches, and websites. The resulting controversy over state-orchestrated web censorship boiled over in 2010 when Google famously began its battle over search engine restrictions—blacklisted websites and search terms about religion, human rights, peaceful protest, and democracy— and eventually abandoned the Chinese market.
But there was more to the Google saga in China. Red-Handed describes how in 2017, the once uncompromising tech giant founded the Google AI (Artificial Intelligence) China Center, in Shanghai, supported by hundreds of Chinese engineers. Their mission was to research “machine learning that would classify, perceive, and predict outcomes based on massive amounts of data . . . the sort of work that military and intelligence officials would want from AI.” Other Google AI research partnerships were established with two Chinese universities in 2018. The help Beijing seeks from Silicon Valley’s tech industry giants is inextricably linked to dual-use technologies. The military-industrial complex in China is entwined with hundreds of Chinese companies and even with those that represent significant investments by US corporations. Intel, Cisco Systems, Twitter, and Tesla have invested heavily in China and in Chinese organizations with deep ties to the military.
Red-Handed is a book that exposes how both Republicans and Democrats, liberals and conservatives, those on the far right and the far left, are all engaged in sometimes naïve and often heinous self-dealing with China.
The author also argues that China’s spectacular rise as a world economic power would not have been possible without significant investment capital from the West. But the source of that capital counts for more than lucrative investments in China.
Beijing has benefited enormously from its close relationship to Wall Street, in ways that are similar but also different from the ties it enjoys in Washington and Silicon Valley. Wall Street titans clamoring for opportunities in China have been seduced with financial riches, accolades, and appeals to their self-importance. It has worked fabulously well for Beijing, leading America’s top capitalists to praise the dictatorial regime, help finance its operations, and even fund some of its propaganda efforts. Over the years, whenever Congress or any administration would threaten to take a tough stance on China’s trade protectionism, currency manipulation or technology theft, “Wall Street chiefs used their influence to persuade them to back-off.”
Some Omissions
Red-Handed is a fine piece of investigative journalism marked by solid research, good reporting, and clear writing. That said, some of the research draws on secondary sources, and Schweizer also leans here on his previous works. In addition, there are in this book odd digressions in the narrative and curious omissions. In the chapter, “Higher Education,” for example, Schweizer describes the $30 million donation Chinese billionaire Joe Tsai made to Yale and probes the implications of unreported Chinese donations to US colleges. Then the author launches an odd segue to discuss Tsai’s ownership of the Brooklyn Nets, the National Basketball Association’s growing dependence on its market in China, and how the league now genuflects in the direction of Beijing.
Schweizer also omits any discussion of the Beijing-funded Confucius Institutes on American campuses. A discussion of the ways in which China uses that soft power approach would have been illuminating even if the number of Institutes has dwindled from a high of 103 in 2017 to just 21 today. That decline came in the wake of the 2017 study by the National Association of Scholars that laid bare Beijing’s goals to indoctrinate American students, disseminate propaganda, conduct espionage, and monitor the activities of Chinese students and Americans of Chinese heritage. Except for a brief mention of Alibaba’s purchase of the South China Daily News and the resulting censorship of its editorial content, Red-Handed is surprisingly silent about America’s media elites and the power they exercise in American society and on social media to shape views of China.
Leveling the Playing Field
But there is more to this book than its eye-opening record of greed and hypocrisy on college campuses, Capitol Hill, Wall Street, and in Silicon Valley. Schweizer argues that Americans, since the days of the founders, understood foreign money, influence, and corruption were a danger to the Republic. He also argues that existing laws—the Foreign Agents Registration Act (FARA) that requires individuals in the United States who act on behalf of foreign entities to register and describe their work to the Justice Department, and the Federal Election Campaign Act (1974) that bans foreign nationals from making political contributions to US elections—need to be strengthened.
In Red-Handed, Schweizer sensibly calls for an outright ban on lobbying for companies linked to the Chinese military and intelligence. He also recommends delisting those companies and China investment funds from the American stock exchanges, in effect closing off market capital to a sizeable sector of the Chinese economy. Schweizer is also asking to level the playing field with his recommendations that Wall Street firms and shareholder activists demand more transparency and apply the same environmental, social, and governance standards to Chinese companies as are demanded of those in the West. American colleges and universities, investors, and corporations should also be banned from joint research on Chinese military and intelligence projects.
These are draconian measures by any standard, but they are also rooted in a hard-headed appraisal of the decades-long policy of engagement with China. That policy has failed, Schweizer argues, and instead it has only enriched a corrupt class of elitists and emboldened a wholly authoritarian, repressive, and aggressive regime in Beijing. It has given that regime economic muscle and increasing military might and fueled the ambitions of its leaders to amass power and mount a serious challenge to the liberal, democratic world order.
Red-Handed currently sits atop the New York Times best-seller list and is likely to remain there for some time as the book attracts readers on both sides of the ideological spectrum. The author has been skewered by some critics as a mouthpiece for the right wing of the American political scene. Schweizer has even described himself as a conservative libertarian and has earned the enmity of voices in the media and on the political left. But there is no conservative bias that can color the work of exposing corruption in high places. Red-Handed is a book that exposes how both Republicans and Democrats, liberals and conservatives, those on the far right and the far left, are all engaged in sometimes naïve and often heinous self-dealing with China.

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