Still Open for Business?
By David Phinney
National Correspondent -
W A S H I N G T O N - A year ago, Congress directed the Clinton administration to draft a report on how many front companies may be working for the Chinese military on U.S. soil.
Eight months past deadline, the list remains undone.
The unfinished work has triggered outrage among Republican leaders who believe that as many as 3,000 businesses in the United States may be engaged in trying to acquire advanced military technology for the Chinese military.
Last week, 10 of them sent the White House a scathing letter demanding action.
"The law requires the executive branch to publish a listing of Chinese People's Liberation Army-controlled firms," notes the letter. "You are now in violation of the law and have been throughout the year."
The 3,000 estimate was first cited in a congressional report released last spring by a House investigative committee chaired by Rep. Christopher Cox, R-Calif. The report ignited a storm of criticism with findings of Chinese espionage at U.S. nuclear labs and the theft of highly classified secrets regarding the nation's nuclear arsenal.
But the chore of identifying PLA businesses in the United States may be a lot tougher than originally anticipated.
Pig Farms and Brothels
China's People's Liberation Army began sponsoring commercial operations more than 50 years ago. Those ventures originally provided clothing, food and arms to the revolutionary army, but over the years, they grew into a multibillion-dollar worldwide empire.
The entrepreneurial reach of the PLA became so vast that it reached into all facets of commerce, including hotel chains, pharmaceutical manufacturers, toy production, telecommunications, pig farms and brothels.
It also led to international arms trading and commercial espionage, something of growing concern to U.S. lawmakers after a series of incidents made headlines reporting on arrests of Chinese businesspeople for allegedly moving sensitive technology into the hands of China's military.
At the same time, China's own political leaders began raising a skeptical eye at PLA Inc., when they realized that mixing military and business for decades had led to widespread corruption and smuggling within China. Last year, around the same time that Congress began eyeing PLA businesses as sponsors of espionage, the PLA was finally ordered by President Jiang Zemin to get out of business and to privatize its estimated 20,000 ventures.
But the transition in China is slow going. Many of the companies were left with their cupboards empty once the military moved on. Others are so unwieldy and bureaucratic that China is finding it difficult to place a value on them.
But Where Are They?
Meanwhile, the extent of the business activity that the PLA launched in the United States remains unknown. Some are believed to be simply small restaurants, others are engaged in toy sales, lighting, electronics and food distribution.
Despite China's official line of privatization, "many Chinese commercial entities, some formerly associated with the People's Liberation Army, continue to operate in the United States," Secretary of Defense William Cohen acknowledged in a letter to the House Republican leaders last summer.
Tracking that activity is much more problematic. Cohen said he would look into the matter further and get back to them. The GOP leaders are still waiting.
Analyst James Mulvenon of the Rand Corporation views national security concerns about PLA businesses operating in the country as being far overblown. There have never been more than 30 PLA companies in the United States and most of them have already gone out of business, he estimates. "They didn't even speak English or have business experience."
Others disagree. "I haven't noticed any changes in the companies," offers Jeff Fiedler, a noted AFL/CIO researcher who has closely monitored PLA businesses for years.
A more important issue is whether businesses once operated by the PLA continue to serve the Chinese military despite paper shuffling of ownership, says James Lilley, who served as U.S. ambassador to China under President Bush and is now with the American Enterprise Institute. "There's no question that the PLA put people with companies to collect technical information. That's what they have done and continue to do," he says. "They are still in business, even it it's through a front man."
Front man or not, Cox, the Republican policy chairman who continues to fan the flames of suspicion of Chinese espionage on U.S. soil, says it's time for the administration to deliver.
"Eight months after the deadline in the law, it is essential that the president comply," says Cox. "By violating this statutory obligation, the president shows contempt not only for the law but for congressional oversight and the national security."
Copyright 1999 ABC News Internet Ventures