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Wall Street's panda-huggers

Christopher Holton
SPECIAL TO WORLD TRIBUNE.COM
Tuesday, October 10, 2000

The following passage from the Morgan Stanley Dean Witter (MSDW) Global Economic Forum is representative of the view of China from many of today's Wall Street analysts:

"At the heart of the debate in Taiwan is the familiar issue of sovereignty. After several weeks of unexpectedly accommodative gestures toward Beijing, President Chen surprised the world by stating that "reunification is not the only option." It is obvious to us that, to maintain peace across the Taiwan Strait, the most viable solution is for the two sides to revert to the 1992 "One-China Consensus" -- whereby the two sides would adhere to the one China principle but with different interpretations of what "one China" means. However, it seems President Chen has been deliberately vague about his intentions regarding his China policy. It is not clear to us if President Chen is trying to sound out the people in Taiwan and the politicians in Beijing before making a more explicit declaration. But his insistence in referring to the One-China "Consensus" as the One China "spirit" is worrisome to us. It is also feared that he may be waiting until after the US presidential election in November to make his next move, given that presidential candidate George W. Bush has already indicated his sympathy toward the cause of Taiwan's independence. Further complicating the matter was the announcement by the Pentagon last month of its decision to sell Taiwan an arms package worth US$1.3 billion, including 200 supersonic air-to-air missiles and military communications equipment. In short, we think that the China-Taiwan situation remains delicate, and still poses a potential geopolitical threat if not handled carefully by Beijing, Taipei, and Washington, D.C."

This passage came from an article posted on the MSDW web site on October 4 entitled "Understanding the Tensions in Taiwan." The article may as well have been written by members of the People's Liberation Army in China (who, by the way, are often employed in the financial sector of China's state-run economy). The tone of the article seems to say:

"How dare Taiwan's freely-elected President assert Taiwan's status as an independent nation! And boy, that bad old George W. Bush, how could he support such a belligerent nation like Taiwan and offend our Red Chinese friends? And worst of all, how dare the United States Congress allow a freely-elected Democracy to purchase defensive weaponry and communications equipment to protect themselves from our friends in Beijing!"

What this article plainly demonstrates is that Wall Street just does not "get it." Many Wall Street analysts have their heads buried firmly in the sand. They see [still Red] China only as an opportunity, not as a threat. The analysts who wrote "Understanding the Tensions in Taiwan" are certainly not alone. Here are some other examples of the thought coming out of Wall Street about China these days:

  • "We expect the U.S. service sector to benefit from China's liberalization...Owning a piece of China fits perfectly into the U.S. globalization strategy." — Morgan Stanley Dean Witter

  • "An MSDW-led investor delegation to Shanghai found that China is embracing the "new economy" as an effective development model to enhance its competitiveness after it joins the WTO. The cost of technology has fallen sufficiently so that China can afford to pay for the latest IT systems. Shanghai is likely to become one of the most advanced information network-based cities in the world, with broadband access for most companies and households by 2005 .... If China can create 20 municipal governments like Shanghai's, the country could become one of the richest in the world .... What we saw in Shanghai left us all optimistic about China's future." — Morgan Stanley Dean Witter

  • "China's communist leaders are running their economy the way that capitalist business managers are running their companies in the West." — Deutsche Morgan Grenfell

Were Red China to become "one of the richest in the world," as Morgan Stanley Dean Witter's analysts pronounce with glee, it would be a catastrophe with global implications. Do you really want the richest country in the future world to be the only major power that is currently in the midst of a huge military build-up? Do you really want to reward a regime that has killed 35,000,000 of its own people?

Wall Street analysts make Communist China look like a swell place don't they? Perhaps those of us who are concerned about national security have it all wrong? Maybe Jiang Zemin and Zhu Rongji are nice, regular blokes like you and me? Not even close.

Here are just a few things that our Red friends in Beijing have cooked up over the past few years in the midst of all the euphoria over China, Inc.:

  • In their domestic state-run media and in professional journals of both the People's Liberation Army and the Chinese Communist Party, the Chinese unfailingly refer to America as the "enemy" and routinely express their desire to dominate Asia politically, economically and socially.

  • China is the world's leader in ballistic missile blackmail, twice firing ballistic missiles near Taiwan to influence democratic elections.

  • China is also one of the world's leading proliferators of ballistic missile technology. We have learned that China has shared missile technology with such nations as Libya, North Korea, Syria, Iran and Pakistan.

  • China also dabbles in things nuclear. It is now known that they have helped Pakistan, Iran and North Korea with their nuclear programs, at least indirectly, if not directly, helping those rogue nations on the path to the nuclear weapons club.

  • Did you know that China has threatened to use nuclear weapons against the United States three times in the last five years? In 1996, the deputy chief of China's general staff alluded to China's nuclear arsenal in talks with U.S. Assistant Secretary of Defense Charles W. Freeman, Jr. when he asked if America was willing to sacrifice Los Angeles. Earlier this year, in February, China's Liberation Army Daily newspaper overtly threatened the U.S. with a long-range nuclear strike. Later, another PLA publication threatened the U.S. 7th Fleet with neutron bombs. (Ironically, technology transfers, both authorized and unauthorized, have greatly aided China's weapons build-up. I wonder if the analysts at Morgan Stanley Dean Witter who seem so euphoric over Shanghai's technological revolution are aware of this?)
  • Almost on a monthly basis, China has threatened to invade or attack Taiwan.
  • In February, the Clinton Administration State Department had this to say about the political/human rights climate in China today: "The People's Republic of China is an authoritarian state in which the Chinese Communist Party is the paramount source of power. The government's poor human rights record deteriorated markedly throughout the year."

  • Religious and political persecution in China has become worse during the past few years of market "reform," not better. China's communist leaders are well aware of what happened to the Soviet Union and the Warsaw Pact and they have no intention of allowing the same thing to happen in China. (Can't let little things like totalitarianism and human rights get in the way of commerce can we?)

  • China continues the unbelievably gruesome and evil practices of forced abortion and forced sterilization in an effort to control their population. Nice folks, huh?

  • Chinese military periodicals have published several articles calling for a "dirty war" against the United States, including the use of terrorism, cyberwarfare and financial market disruption (China is the world's 3rd largest holder of U.S. Treasuries) to cripple America's key infrastructures.

  • China has built military installations in the Spratly Island chain in the South China Sea, despite the fact that the islands are also claimed by several other Asian nations who all agreed not to build such installations and to settle their disputes peacefully. It is common practice in China to completely ignore other Asian nations on official maps in China; Thailand, Burma, Vietnam, Taiwan and even Malaysia and Indonesia are all shown as part of China. Sort of reminds you of a German map of Germany in 1939, doesn't it?

Perhaps none of this matters to Wall Street? Maybe it shouldn't matter to any of us. After all, the so-called Panda-huggers are quick to point out that as long as we're doing so much business with China, they wouldn't dare make trouble.

Maybe so. Then again, Nazi Germany's number one trading partner in 1939 was France.


Christopher Holton is the president of Blanchard and Company and has been writing about geo-political issues, economics, and defense topics for more than 10 years. He can be reached at theholtons@bellsouth.net.


Tuesday, October 10, 2000


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