NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 1999 (Senate - May 14, 1998)

[Page: S4864]

AMENDMENT NO. 2387

(PURPOSE: RELATING TO COMMERCIAL ACTIVITIES IN THE UNITED STATES OF THE PEOPLE'S LIBERATION ARMY AND OTHER COMMUNIST CHINESE MILITARY COMPANIES)

Mr. HUTCHINSON. Mr. President, I have an amendment No. 2387 which I call up at this time.

The PRESIDING OFFICER. The clerk will report the amendment.

The legislative clerk read as follows:

The Senator from Arkansas (Mr. Hutchinson), for himself and Mr. Abraham, proposes an amendment numbered 2387.

Mr. HUTCHINSON. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

The PRESIDING OFFICER. Without objection, it is so ordered.

The amendment is as follows:
Add at the end the following new title:

TITLE XX--COMMERCIAL ACTIVITIES OF PEOPLE'S LIBERATION ARMY

SEC. XX. FINDINGS.
Congress makes the following findings:

(1) The People's Liberation Army is the principal instrument of repression within the People's Republic of China, responsible for occupying Tibet since 1950, massacring hundreds of students and demonstrators for democracy in Tiananmen Square on June 4, 1989, and running the Laogai (`reform through labor') slave labor camps.

(2) The People's Liberation Army is engaged in a massive military buildup, which has involved a doubling since 1992 of announced official figures for military spending by the People's Republic of China.

(3) The People's Liberation Army is engaging in a major ballistic missile modernization program which could undermine peace and stability in East Asia, including 2 new intercontinental missile programs, 1 submarine-launched missile program, a new class of compact but long-range cruise missiles, and an upgrading of medium- and short-range ballistic missiles.

(4) The People's Liberation Army is working to coproduce the SU-27 fighter with Russia, and is in the process of purchasing several substantial weapons systems from Russia, including the 633 model of the Kilo-class submarine and the SS-N-22 Sunburn missile system specifically designed to incapacitate United States aircraft carriers and Aegis cruisers.

(5) The People's Liberation Army has carried out acts of aggression in the South China Sea, including the February 1995 seizure of the Mischief Reef in the Spratley Islands, which is claimed by the Philippines.

(6) In July 1995 and in March 1996, the People's Liberation Army conducted missile tests to intimidate Taiwan when Taiwan held historic free elections, and those tests effectively blockaded Taiwan's 2 principal ports of Keelung and Kaohsiung.

(7) The People's Liberation Army has contributed to the proliferation of technologies relevant to the refinement of weapons-grade nuclear material, including transferring ring magnets to Pakistan.

(8) The People's Liberation Army and associated defense companies have provided ballistic missile components, cruise missiles, and chemical weapons ingredients to Iran, a country that the executive branch has repeatedly reported to Congress is the greatest sponsor of terrorism in the world.

(9) In May 1996, United States authorities caught the People's Liberation Army enterprise Poly Technologies and the civilian defense industrial company Norinco attempting to smuggle 2,000 AK-47s into Oakland, California, and offering to sell urban gangs shoulder-held missile launchers capable of `taking out a 747' (which the affidavit of the United States Customs Service of May 21, 1996, indicated that the representative of Poly Technologies and Norinco claimed), and Communist Chinese authorities punished only 4 low-level arms merchants by sentencing them on May 17, 1997, to brief prison terms.

(10) The People's Liberation Army contributes to the People's Republic of China's failure to meet the standards of the 1995 Memorandum of Understanding with the United States on intellectual property rights by running factories which pirate videos, compact discs, and computer software that are products of the United States.

(11) The People's Liberation Army contributes to the People's Republic of China's failing to meet the standards of the February 1997 Memorandum of Understanding with the United States on textiles by operating enterprises engaged in the transshipment of textile products to the United States through third countries.

(12) The estimated $2,000,0000,000 to $3,000,000,000 in annual earnings of People's Liberation Army enterprises subsidize the expansion and activities of the People's Liberation Army described in this subsection.

(13) The commercial activities of the People's Liberation Army are frequently conducted on noncommercial terms, or for noncommercial purposes such as military or foreign policy considerations.

SEC. XX. APPLICATION OF AUTHORITIES UNDER THE INTERNATIONAL EMERGENCY ECONOMIC POWERS ACT TO CHINESE MILITARY COMPANIES.
(a) Determination of Communist Chinese Military Companies:

(1) In general: Subject to paragraphs (2) and (3), not later than 90 days after the date of the enactment of this Act, the Secretary of Defense, in consultation with the Attorney General, the Director of Central Intelligence, and the Director of the Federal Bureau of Investigation, shall compile a list of persons who are Communist Chinese military companies and who are operating directly or indirectly in the United States or any of its territories and possessions, and shall publish the list of such persons in the Federal Register. On an ongoing basis, the Secretary of Defense, in consultation with the Attorney General, the Director of Central Intelligence, and the Director of the Federal Bureau of Investigation, shall make additions or deletions to the list based on the latest information available.

(2) Communist chinese military company: For purposes of making the determination required by paragraph (1), the term `Communist Chinese military company'--

(A) means a person that is--

(i) engaged in providing commercial services, manufacturing, producing, or exporting, and

(ii) owned or controlled by the People's Liberation Army, and

(B) includes, but is not limited to, any person identified in the United States Defense Intelligence Agency publication numbered VP-1920-271-90, dated September 1990, or PC-1921-57-95, dated October 1995, and any update of such reports for the purposes of this title.
(b) Presidential Authority:

(1) Authority: The President may exercise the authorities set forth in section 203(a) of the International Emergency Economic Powers Act (50 U.S.C. 1702(a)) with respect to any commercial activity in the United States by a Communist Chinese military company (except with respect to authorities relating to importation), without regard to section 202 of that Act.

(2) Penalties: The penalties set forth in section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705) shall apply to violations of any license, order, or regulation issued under paragraph (1).

SEC. XX. DEFINITION.
For purposes of this title, the term `People's Liberation Army' means the land, naval, and air military services, the police, and the intelligence services of the Communist Government of the People's Republic of China, and any member of any such service or of such police.

Mr. HUTCHINSON. Mr. President, I ask unanimous consent that my good friend and colleague, Senator Abraham of Michigan, be added as an original cosponsor of the amendment.

The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. HUTCHINSON. Mr. President, today's debate is about the security of the United States. The underlying question in the debate today on the Defense Department authorization bill concerns the safety and security of the citizens of the United States, and that is why I am offering an amendment that will give the President increased powers to confront America's greatest threat, or certainly America's greatest external threat, and that is the People's Liberation Army of the People's Republic of China.

My amendment mirrors exactly the language that passed overwhelmingly on the floor of the House of Representatives last November. This language, in bill form, in the House passed by a vote of 405 to 10.

The amendment would do two things: First, it would require the Secretary of Defense, in consultation with the Attorney General, the Director of the Central Intelligence and the Director of the FBI, to maintain a current list of Chinese military firms operating directly or indirectly in the United States. This list, consisting strictly of PLA-owned companies, would be updated regularly in the Federal Register.

Secondly, the amendment would give the President enhanced authority under the International Emergency Economic Powers Act to take action against Chinese military-owned firms if circumstances warrant, including the President would have the authority to freeze assets or otherwise regulate these firms' activities. Thus, if a PLA-owned firm is found to be shipping missile-guidance components to a rogue state like Iran, the President would have the authority to take immediate action against a United States subsidiary of that firm which might, for example, be selling sporting goods in the United States.

I should note that this amendment would not require the President to take any action whatsoever. It would simply enhance his ability to do so should he believe that the circumstances warrant that action.

Let me explain the reasoning behind this amendment and why it is so critical, I believe, that the Senate adopt this amendment.

Mr. President, last week I came to this floor to discuss the growing threat that the People's Republic of China poses to the citizens of the United States. I discussed the recent CIA report covered in the Washington Times on May 4, 1998, under the headline, `China Targets Nukes At U.S.' This article and this CIA report noted that 13 of China's 18 long-range strategic missiles, with ranges exceeding 8,000 miles, have single nuclear warheads aimed at the United States of America.

These missiles, which are under the control of the PLA, with PLA officers manning their nuclear buttons, are in addition to China's 25 CSS-3 missiles, with ranges of more than 3,400 miles; its 18 CSS-4 missiles, with ranges exceeding 8,000 miles; and its planned DF-31, with a range exceeding 7,000 miles.

Until last year, China lacked the military intelligence necessary to manufacturer boosters that could reliably strike at such long distances.

Unfortunately, the Pentagon has reported that two U.S. companies--Loral Space and Communications and Hughes Electronics--illegally gave China space expertise during cooperation on a commercial satellite launch which could be used to develop an accurate launch and guidance system for ICBMs. This issue is still under investigation. But while it was still under investigation, in February, Loral launched another satellite on a Chinese rocket and provided the Chinese with the same expertise that is at issue in the criminal case.

The chairman of the House Science Subcommittee on Space and Technology has received word from an unnamed official at Motorola that they, too, have been involved in `upgrading' China's missile capability. Interestingly, this executive claims that the work is being done under a waiver from this administration, thus circumventing all bans and restrictions on such technology transfers.

The People's Liberation Army is engaged in a massive military buildup which has involved a doubling since 1992 of announced official figures for military spending by the PRC. We do not know how much may be spent, how much investment there may be in their military establishment that is not released for official consumption, but the official public figures indicate a doubling of that expenditure since 1992.

The PLA is working to coproduce the SU-27 fighter with Russia and is in the process of purchasing several substantial weapons systems from Russia, including the 633 model of the Kilo-class submarine and the SS-N-22 Sunburn missile system specifically designed to incapacitate U.S. aircraft carriers and Aegis cruisers.

So the question arises, Mr. President, how does the People's Liberation Army fund the ongoing arms race? By selling its technology to rogue states is one means by which they do it, selling arms, or at least attempting to sell arms, to U.S. gangs in our inner cities and selling CDs, socks, consumer electronics, and scores of other commercial items to U.S. consumers.

For example, the People's Liberation Army has contributed to the proliferation of technologies relevant to the refinement of weapons-grade nuclear material, including transferring ring magnets to Pakistan. Additionally, the PLA and its associated defense companies have provided ballistic missile components, cruise missiles, chemical weapons ingredients, to Iran, a country that the executive branch has repeatedly reported to this Congress is the greatest sponsor of terrorism in the world today.

I point to this chart. The source is the Office of Naval Intelligence, March of 1997. They reported:

[Page: S4865]

Discoveries after the Gulf War clearly indicate that Iraq maintained an aggressive (W)eapons of (M)ass (D)estruction procurement program.

And then they point out:

A similar situation exists today in Iran with a steady flow of materials and technologies from China to Iran. This exchange is one of the most active weapons of mass destruction programs in the Third World, and is taking place in a region of

great strategic interest to the United States.

So we have, I think, very clear, overwhelming evidence that China continues to export technology, nuclear technology as well, and in so doing places at risk the national security of the United States.

They also are funding the arms buildup in China, not only by selling weapons to rogue states like Iraq and Iran, but also there is evidence that they are trying to actually sell weapons produced in the People's Republic of China to gangs in the United States.

In May 1996, the U.S. authorities caught the People's Liberation Army enterprise entitled Poly Technologies--a PLA-owned and operated enterprise--they were caught by U.S. authorities, and the civilian defense industrial company, Norinco, that is also involved, the U.S. authorities caught these two companies attempting to smuggle 2,000 AK-47s into Oakland, CA, and offering to sell urban gangs shoulder-held missile launchers capable of taking out a 747.

Communist authorities, upon capture of these individuals, punished only four of them--four low-level arms merchants--and they did so, sentencing them May 17, 1997, to brief prison terms.

I would suggest and I suspect that the prison terms given to these merchants of arms to the young people of this country were far less than the prison terms that have been exacted upon those prisoners of conscience, those who dared to speak up against the oppressive regime that controls the largest nation in the world. Eight years was given to Wang Dan for his support of the demonstrations in Tiananmen Square almost 9 years ago in addition to the 12 years that he was recently serving for supporting democracy in China.

It is estimated that the PLA earns $2 billion to $4 billion a year in earnings through the many enterprises that it operates that deal in nonmilitary commodities and that these enterprises profit handsomely from their activities in the United States. A report released earlier this year indicated that vast quantities of goods, as varied as toys, skis, garlic, iron weight sets, men's pants, car radiators, glassware, swimming suits, and many more such commercial domestic items are being sold to U.S. consumers by PLA-owned firms.

This chart indicates--and I will quote from this chart regarding the PLA-affiliated companies and their operation in the United States. This comes from the Institutional Investor, July of 1996: `And we find that military-affiliated companies can be found in virtually every part of the Chinese economy with the most rapid expansion occurring in the lucrative service industries. Though the PLA enterprises are scattered throughout the economy, they have carved out niches in the eight areas to the right'--including transportation, vehicle production, pharmaceuticals, hotels, real estate development, garment production, mining and communications.

Some of these products are being exported--which becomes a rich source of revenue for the People's Liberation Army. Even those products and those services that are sold domestically to the Chinese people become an unaccounted for subsidy, if you will, for the arms race, in the development of the PLA military strength and might. So I believe this should be of great concern to us as we continue to see the PLA fund the arms race.

I point out that the Chinese defense industrial trade organizations have a broad, broad interrelationship with the industries in China. This chart shows the web of PLA-owned enterprises that operate in the United States and around the world.

All of the companies on the left, in the peach color, are companies that have been documented by our Defense Intelligence Agency as being directly owned by the People's Liberation Army. The ones to the other side, in the yellow, are their defense industrial base. Some of them have indirect connections also, but they are not directly owned by the People's Liberation Army.

This next chart I believe shows the chain of command for companies like China Poly Group, China Carrie Corp., and other well-known Chinese companies and their interrelationship with the government and the PLA and the Communist Party. In fact, the Communist Party Central Military Commission is right at the top of the chain of command--going down to these various companies, including the China Poly Group, and the 999 Enterprise Group, and so forth.

I think the American people would be shocked to see the companies listed on this chart. This, I might add, is a very incomplete list, which is why I emphasize again the need for this amendment which would require a listing to be published of all PLA-owned enterprises that are buying and selling and doing business in the United States.

It is well documented that the PLA violates international intellectual property rights by running factories which pirate videos, compact discs, and computer software that are products of the United States. This is the main reason the People's Republic of China failed to meet the standards of the 1995 memorandum of understanding with the United States on the protection of intellectual property rights. During my trip to China in January, I saw firsthand the evidence of the pirating of videos and CDs and the selling of those pirated products on the market, on the streets of Shanghai and Beijing.

In violation of a February 1997 agreement with the United States, the People's Liberation Army continued to operate enterprises which engaged in the transshipment of textile products through third countries, thus thwarting tariffs and restrictions on illegally produced items from China.

With all but five of China's long-range nuclear missiles pointed at the citizens of the United States, it is obvious that the increasingly aggressive People's Liberation Army views the United States as its most serious adversary. My colleagues have said they would like China as an ally. We would all like to have China as an ally. But let us not fool ourselves. When our Central Intelligence Agency tells us their missiles--13 of 18 of their long-range nuclear missiles--are pointed at the citizens of the United States, it is clear they view us as an adversary. It is a sad paradox that U.S. consumers, American consumers, purchasers of products in retail stores across this country, are the unwitting supporters of and funders of the military that has their hand on the nuclear button that threatens cities in the United States.

Now, as we talk about the response of this amendment, of letting the American people know what companies are owned directly and indirectly by the military of the Chinese communist government, it seems to me to be a very basic freedom-of-information kind of issue, the right-to-know kind of issue.

We talk about the response of the President, having the enhanced authority to deal with those PLA-owned companies that might be subsidizing the military buildup in China. It is important for us to remember the ongoing human rights violations that are occurring in China. Not only are they increasing their threat internationally, but within their own borders they continue to oppress their own people. This is not some human rights watchdog group that I am going to cite. It is our own State Department which each year issues a report from various countries around the world on human rights conditions. The latest State Department report on human rights in China shows that China is still one of the major offenders of internationally recognized human rights standards. This report notes that China is continuing to engage in `torture, extrajudicial killings, arbitrary arrest and detention, forced abortion and sterilization, crackdowns on independent Catholic and Protestant bishops and believers, brutal oppression of ethnic minorities and religions in Tibet and Xinjiang, and absolute intolerance of free political speech or free press.'

To visit Shanghai, to visit Beijing, some of the largest cities in the world, the most populous cities in the world, and to realize there is not one free newspaper in those cities--in northwest Arkansas, in a two-county area, population of 200,000, we have half a dozen competing newspapers. These are free voices--free to criticize me, free to criticize this U.S. Senate, free to criticize our President--and in the largest cities in the world in China, not one voice of freedom, not one voice to reflect the values of democracy.

So let us in this China debate, and as we look at amendments

to the Department of Defense authorization bill, remember the ongoing human rights abuses that are taking place. Furthermore, that the current policy that we have pursued has so dismally failed.

According to a recent report in the Washington Post entitled `U.S.-China Talks Make Little Progress on Summit Agenda,' the United States is getting very few concessions from China relating to the inspection of the technology we share with them, concessions on limiting proliferation of technology to third parties like Iran, or concessions on human rights conditions, particularly in Tibet.

So our President is preparing to go to China next month, negotiations going on. We would hope they would be positive in light of our so-called policy of constructive engagement, yet we find our policy is one of give and give and give. We are not seeing corresponding concessions on the part of the Chinese Government. In fact, we are continuing to see these horrible human rights abuses taking place.

We have provided key technology that puts our own country at risk. We have set up a hotline that reaches from the White House to China. We have begun assisting China on its efforts to gain membership in the World Trade Organization. We dropped, to the consternation of many Members of this body, we dropped our annual push for a resolution condemning China's human rights record at the United Nations, something this country has done year after year as part of our foreign policy. We dropped that resolution so as not to offend the Chinese Government. We continue to allow PLA-owned companies to operate unregulated in the United States, and we continue to provide China most-favored-nation status. In return, we have witnessed the release of four, in return for all of these concessions that we have granted, we have seen the Chinese Communist government release four prominent prisoners out of the thousands upon thousands of political and religious dissidents being held today in Chinese prisons.

So I say to my colleagues, the American people have a right to know they are funding the People's Liberation Army. I believe the American consumers ought to know whether the products they are buying--including things like toys, sweaters and porcelain that they might purchase for the upcoming holidays--are supporting the People's Liberation Army and the kind of activities that I have identified today. The American people have a right to know. It may not be possible for American consumers to go into a Wal-Mart or Kmart or Target store and to identify all of the Chinese-produced products and to decide voluntarily they are not going to support that. But at least they ought to know which of those companies are controlled, directly or indirectly, by a military establishment in China that has targeted American cities with its missiles.

This amendment will help to do just that. It is needed both to shed light on the PLA's activities in the United States and to ensure that the President has the latitude and has the authority he needs to take appropriate actions when the evidence of wrongdoing arises. I hope my colleagues will support this amendment.

Again, this amendment merely requires the Secretary of Defense to document and list PLA-owned companies operating in the United States and provides the President with the power, authority, and discretion to take action against these companies, should circumstances so warrant. It does not require the President to do anything. I believe it is a commonsense amendment that, once again, passed by an overwhelming margin in the U.S. House of Representatives. I ask for my colleagues' support.

I ask for the yeas and nays.

The PRESIDING OFFICER (Ms. Snowe). Is there a sufficient second? There is a sufficient second.

The yeas and nays were ordered.

[Page: S4866]

Mr. WARNER. Madam President, the Senator brings to the attention of the Senate through this amendment a very important subject, one which is currently before the Senate in a number of committees--Foreign Relations Committee, Banking Committee, and in all probability the Commerce Committee has an interest in it. I say to my colleague that the Armed Services Committee, indeed, would have an interest, of course, because it goes to the fundamental proposition of national security.

But I have to say in total candor that this amendment would require consideration by at least the three enumerated committees as well as ours. What I am asking of my colleague, and I want to ask a few questions about it, is that I hope the Senator would be agreeable to laying this amendment aside so that the Senate would proceed with other amendments, and within that period of time it would be the pending amendment, within that period of time, we will get the expression and the views of colleagues serving on those other committees.

[Page: S4867]

Mr. HUTCHINSON. I thank the chairman for his consideration, and I would not object to laying it aside so long as I will be assured there will be a rollcall vote if I so request it.

Mr. WARNER. Madam President, he has requested and gotten his rollcall vote.

Mr. HUTCHINSON. Madam President, I only point out that I think it would be very appropriate to consult with and visit with the appropriate chairman. I remind my distinguished colleague that this is the exact language that passed by a 405-10 vote in the House, and I would regard that as pretty bipartisan and noncontroversial. That language passed out of the House last November and has been referred to the appropriate committees, where it has--if I might use the word--`languished' for several months without any action. So it is for that reason I think it is imperative that the Senate have an opportunity to express its will on something the House expressed its opinion on months ago.

Mr. WARNER. I thank my colleague.

At this time, Madam President, I ask unanimous consent that this amendment be laid aside but that it remain as the pending business on this bill.

The PRESIDING OFFICER. Is there objection?

Without objection, it is so ordered.

Mr. WARNER. Madam President, I see other colleagues here who may wish to continue with opening statements on the bill.

Mr. LEVIN. I wonder if my friend from Virginia would yield to me so I could ask the Senator from Arkansas a question?

Mr. WARNER. Yes, I yield the floor.

Mr. LEVIN. Madam President, on the matter that was set aside, I wonder if the Senator could tell us whether or not there have been any discussions between you and those committees that we have now asked their reaction from relative to holding hearings on that amendment. Could he give us a little background on that?

Mr. HUTCHINSON. I think there were 10 bills that passed out of the House regarding China policy as a block, separate bills, but that was last November. Two of those have passed, in various forms, in the Senate. Six of those bills were referred to the Foreign Relations Committee. The other two--the two I am now offering--one was referred to Banking and the other to Finance. I have had ongoing discussions with Senator Helms of the Foreign Relations Committee. It is my understanding that they will address these bills this coming week. Therefore, I defer taking any action upon those because of the committee's anticipation of looking at these next week.

The ones in Banking and Finance I thought were important to move ahead on. This was the most appropriate vehicle before us. I am not aware that there were any plans for hearings. Since so much time had elapsed since they were referred to the Senate, it would seem to be the appropriate time to move them.

Mr. LEVIN. If I could ask the Senator an additional question. I am not familiar with his amendment. Is this particular amendment--has this been introduced as a bill in the Senate separately, or was it a House bill that came over and was referred? And, if so, was it referred to Banking or Foreign Relations?

Mr. HUTCHINSON. This particular bill was referred to Banking.

Mr. LEVIN. Has the Banking Committee indicated that they are likely to hold a hearing and have a markup on this bill?

Mr. HUTCHINSON. They have not indicated to me their intent to hold hearings or move on this bill.

Mr. LEVIN. Have there been discussions between you and the chairman?

Mr. HUTCHINSON. I have not talked to Senator D'Amato about the bill.

Mr. LEVIN. I thank my friend.

Mr. THOMAS addressed the Chair.

The PRESIDING OFFICER. The Senator from Wyoming is recognized.

Mr. THOMAS. Madam President, I rise to talk not so much about this bill but the bills that have been talked about here that passed in the House last year. Many of them were referred to the Foreign Relations Committee, of which I happen to be chairman of the Subcommittee on Asia and the Pacific Rim. These were not heard because the committee did not choose to hear them. Now we find ourselves having a hearing this morning on China. We find the President preparing to go to China.

So this bill, of course, as the Senator pointed out, was referred to Banking. I am not familiar with that one. I am here to tell you that I don't think this is the appropriate procedural place to deal with these bills. There are committees that have jurisdiction over them. They have been referred to those committees. They can be referred to those committees, and, in my view, they should be referred to those committees. So if we are going to extend the length of this debate by having each of 10 bills discussed here and voted on, then I think we need to prepare ourselves for a rather long time.

Furthermore, I think we talked at great length this morning about China and about these kinds of issues. The point of the matter is that nobody disagrees with some of the issues that are to be done here; the disagreement is how they should be handled. To send the President off to China with language of this kind doesn't seem to be a proper thing to do. They were talking about it when Jiang Zemin came here last time.

So I am prepared to talk about these bills if that is what we are going to do. But, procedurally, it doesn't seem to me that this is the appropriate place to deal with the bills. We can go on for a very long time if that is what is going to take place on this authorization bill.

I yield the floor.

Mr. ABRAHAM. Mr. President, I rise to support the amendment to the National Defense Authorization bill offered by the Senator from Arkansas to address what is clearly a national defense issue--the conduct of Chinese companies, owned and operated by the People's Liberation Army, in the United States. It is based on a provision in a comprehensive bill I introduced last year, the China Policy Act.

I believe that this bill is not only an appropriate place to consider this issue, it is the most appropriate, and is indeed an issue of supreme national security interest. Furthermore, Mr. President, if I thought the original bill that was passed by the House by a vote of 405-10 would actually be considered by the Banking Committee, it may be appropriate to wait. But it has been over six months, Mr. President, and no action has been taken. Given this is a national security issue, we need to discuss this here and now.

Therefore, Mr. President, I wish to outline some of my specific national security concerns regarding these People's Liberation Army companies. First, we are all familiar with the well publicized examples of Polytech and Norinco, two companies caught trying to smuggle fully automatic AK-47 assault rifles, along with 4,000 clips of ammunition, valued at over $4 million, to supply street gangs and drug runners in the United States. During the course of this undercover sting operation, U.S. agents were offered a slew of other heavy ordinance, including shoulder-fired surface-to-air missiles.

Now Mr. President, these two companies are effectively controlled by the People's Liberation Army. In fact, the head of the Polytech parent company, Poly Group, is Major General He Ping, the son-in-law of Deng Xiao-ping. He heads Poly Group, a company that reports directly to the Central Military Commission of the People's Liberation Army. At the same time, Norinco is the parent company of 150 businesses, including the largest motorcycle maker in China and one of the country's most successful automakers.

As state-owned enterprises, PLA companies frequently operate on non-commercial terms, conducting their affairs for such non-market reasons as military espionage and prestige considerations. Critics have also contended that the China Ocean Shipping Company, otherwise known as COSCO, have offered transoceanic shipping at well below market rates because of state subsidization and extremely low crew costs, in order to penetrate markets and further develop a strategic lift capability.

Last, Mr. President, the profits from these companies will end up financing the Chinese military. Karl Schoenberger, writing in Fortune Magazine, estimated that the profits from these PLA activities is conservatively estimated at $2 to $3 billion. Based in part on this purchasing power and the Chinese military establishment's considerable use of off-budget financing, the Arms Control and Disarmament Agency estimated that Chinese military spending is nine times what it announced.

The question therefore becomes, Mr. President, do we want to know which companies in the United States are financing Chinese military expansion? Do we want to know which companies are financing the arm of repression in the PRC that has been extensively detailed on this floor over the past year? Do we want to give the American consumer the opportunity to know whether the product they are buying will help finance the oppression in Tibet? I believe that is our responsibility, Mr. President, and that this amendment will provide that vital information for our national security, by mandating that the Director of Central Intelligence and the Director of the FBI compile a list of these PLA companies operating in the United States.

Finally, Mr. President, the President of the United States needs the additional authority to take decisive action against those companies that do threaten our national security. This amendment provides that economic authority to stop the operation of these front companies, and provides the only effective tools in this economic warfare--the prohibition of economic activity.

Therefore, Mr. President, I urge my colleagues to support this amendment as necessary, germane to the Defense Authorization bill, and vital to our national security.

[Page: S4868]