The Rushford Report Archives

In Search of an Enemy

August, 2002: The Yankee Trader

By Greg Rushford

Published in the Rushford Report


Panda huggers, beware: The Blue Team has struck again.

            According to a 200-plus page report released on July 15 by the congressionally mandated US-China Security Review Commission, the strongmen in Beijing believe that the United States is “a superpower in decline.” The Chinese communists believe that America is their “long term competitor for regional and global military and economic influence.” And if it comes to a fight over Taiwan , China ’s rulers believe that the American military “can be defeated,” the commission reported, darkly.

            Looking to that day, China continues to develop its arsenal of advanced weaponry. China‘s growing military prowess, the commission declared, is thanks in large part to U.S. direct investments on the mainland, and also because of a massive trade imbalance against Washington that runs to more than $80 billion annually. “ U.S. policies have played an important role in helping the Chinese leadership achieve stunning economic growth and the modernization of their military industrial complex,” the commission concluded. “ China ’s leaders view the United States as a partner of convenience, useful for its capital, technology, know-how and market.”  

            And while China schemes, Washington sleeps. “U.S. Government officials know woefully little about prevailing Chinese perceptions and strategic thinking,” the 12-member panel asserted. Uncle Sam should get serious about wielding its trade laws, it urged.

            The American economic arsenal recommended for deployment by the commission includes unilateral retaliation under the Super 301 provision of U.S. trade law (which is still on the books but is widely considered to be of dubious legal value against fellow WTO members). The commission also recommended “full and active use of various trade tools including special safeguards provisions.” Translation: To keep China in line, the US should throw up high tariff walls of the sort that President George W. Bush has erected against foreign steel pursuant to section 201 of U.S. trade law.

            The commission also recommended that the “U.S. should improve enforcement against imports of Chinese goods made from prison labor by shifting the burden of proof to U.S. importers and by more stringent requirements relating to visits to Chinese facilities suspected of producing and exporting prison-made goods to the United States.” In addition, American importers should also be forced to participate in “a federally mandated corporate reporting system” including documenting “the impact on job relocation and production capacity from the United States or U.S. firms overseas resulting from any investment in China .” There’s more, including urging special protection for the U.S. steel industry. A lot more.

            The warnings, reported Glenn Kessler in the Washington Post, were “bipartisan.”

            Enough already.

            Like many Chinese characters, the word “bipartisan” isn’t necessarily what it seems to be.


Enter the Blue Team. The US-China Security Review Commission is bipartisan

only in the sense that its membership is evenly split: six Republicans and six Democrats. But it would be a mistake to draw the inference that the commission’s members are unselfish statesmen who have put aside party differences to make recommendations solely in the public interest. The panel and the consultants it has hired reflect the views of a highly partisan loose network of a few dozen congressional aides, lawmakers, journalists, and think-tank types. The name of the network is the Blue Team. The name is taken from the code that China assigns enemy forces in war games, Time correspondent Jay Branegan has reported.

            The Blue Team is important, even though it does not reflect the views of President George W. Bush, Secretary of State Colin Powell, or Secretary of Defense Donald Rumsfeld. China is not included in the president’s “Axis of Evil.” Still, the network plays a significant role in setting the tone for the perennial Washington debate over US-China relations.

            The Blue Team has strong connections on Capitol Hill, which range from influential Democrats like Nancy Pelosi ( Calif. ) to Republican leaders like Tom DeLay (Tx.). In 1999 DeLay rounded up more than 70 cosponsors for the Taiwan Security Enhancement Act, which would strengthen U.S.-Taiwanese military ties even more than some Taiwanese independence advocates consider prudent. While the measure hasn’t passed, it’s still alive. And it is entirely possible that a powerful Blue Team supporter like West Virginia ’s Sen. Robert Byrd (D), who chairs the appropriations committee, will attempt to attach some of the recommendations in the security review commission as a rider to a spending bill.

            Blue Team members basically look at today’s China the way that Winston Churchill viewed Hitler in the 1930s. Commission members like Vice Chairman Michael Ledeen and Stephen Bryen — two of the most prominent Blue Team advocates — are among the most well known hawks in Washington policy circles, whatever the issue. 

            Above all, the Blue Team’s members are united in their unremitting hostility to China . As Rep. Dana Rohrabacher (R-Calif), a Blue Team member in excellent standing, has freely explained, China ’s unelected leaders have “no legitimacy.” They must be brought down, like the Soviet Union was, Rohrabacher believes.

            The Blue team is not at all sympathetic to nuanced arguments that China — however awkwardly, however difficult, however infuriating at times — is at least moving in the right direction: towards free markets and, eventually, the rule of law in the human-rights sphere as well as commerce. China can never do anything right, as judged in Blue Team circles. China watchers who don’t toe the hard line are regarded as Neville Chamberlains.

            The Blue Team’s favorite books have titles like The Coming Conflict with China (Richard Bernstein and Ross H. Munro), and The China Threat: How the People’s Republic Targets America (Bill Gertz).

            Gertz is the Washington Times reporter who is celebrated by the Blue Team for being a conduit for classified leaks from disgruntled defense intelligence officials who want to influence the policy debate. The CIA is usually portrayed in unflattering terms. This is a favorite theme of the Blue Team: that the CIA is “soft” on China , just as it used to be soft on Vietnam and soft on the Soviet threat. The enemy shifts over the years, but the line remains the same.


Economic nationalism. The line on the Blue Team’s economic thinking is basically defined by economic nationalism that rails against China ’s non-transparent economy, where even basic government spending figures are kept secret. One of the key economic consultants that the security review commission hired was Charles McMillion, who runs MBG Information Services, a D.C.-based forecasting firm. Pat Buchanan fondly calls McMillan “the keeper of the stats of U.S. industrial decline.”

            Commission spokesman Eric London declined to respond to repeated questions on how much money the panel had spent on consultants, or even what the commission’s overall budget is. London also would not respond to an invitation to make someone on the commission available to respond to criticisms that the report had been overly influenced by economic nationalist arguments offered by protectionist lobbies.

            The United Steelworkers of America’s recent president, George Becker, is a member of the security review commission. What are Becker’s credentials as an authority on China ? In April 1999, when Premier Zhu Rongii came to Washington expecting to strike the deal for China ’s accession to the WTO, pressures from Becker’s steelworkers inspired President Bill Clinton to put domestic politics ahead of China policy. Clinton said that he wouldn’t sign off on the deal until special protectionist deals were cut to protect domestic steelworkers (and also the U.S. textile lobby).

            Clinton had made a big mistake. The snub that Zhu Rongii — China ’s leading advocate of market reforms — received at the White House that April severely undercut the premier’s political position in China . George Becker’s steelworkers had helped strengthen the more repressive, anti-market elements in Chinese ruling circles. 

            Last month, the security review commission’s report cited one of Becker’s favorite arguments: that while U.S. exports are estimated to create American jobs, “each $1 billion in imports may also cost 11,000 to 20,00 jobs.” Crunch the numbers of China ’s estimated $83 billion trade surplus with the United States , and it seems that every year between 913,000 and 1.6 million American jobs are lost to Chinese “unfair” competition. (Note to students who read this publication: If you want a passing grade, don’t try to impress your economics professor with such absurd reasoning.)


Networking. Frank Gaffney, president of the hard-line Center for Security Policy and a Washington Times’ columnist, is another prominent member of the Blue Team. In his column on July 16, Gaffney touted the commission’s analysis. The Chinese are preparing “for what they consider to be an ‘inevitable’ conflict with the United States ,” Gaffney opined.

            Gaffney was praising his friends and colleagues, although he did not put it that way in his column. For example, Roger W. Robinson, Jr. — a Washington consultant who sits on the Center for Security Policy’s board — is a security review commission member. Robinson is also affiliated with the William J. Casey Institute, which is an affiliate of Gaffney‘s security policy outfit. A former banker with Chase Manhattan who also served on Ronald Reagan’s National Security Council staff, Robinson worries that American investors have been funneling billions of dollars into the hands of unsavory elements on mainland China and elsewhere.

            Robinson’s associate Adam Pener, a senior analyst at the Casey Institute, was hired by the US-China commission to write a study to look at “the extent to which global ‘bad actors’ have already penetrated the U.S. capital markets.” Pener called for “particular attention” to be paid “to Hong Kong ‘red chips’ and other listing vehicles for Chinese state-owned enterprises as well as the relationships between mainland companies and their Hong Kong subsidiaries or affiliates.”

            To the Blue Team, Hong Kong is suspicious. The idea that Hong Kong is a bastion of the rule of law and hence a model for a modernizing mainland China does not carry great weight in analyses written by Blue Team members. And don’t try explaining that Hong Kong has stricter banking regulations than does the United States .

            The National Defense University ’s Michael Pillsbury — another familiar inside-the-beltway hardliner — was also hired on the a security review commission’s staff as a senior adviser.


It’s the tone, stupid. Because China really is a difficult customer, the point isn’t that Blue Team members don’t have anything to contribute to the debate. Pillsbury, for example, has gleaned much valuable information by studying translated Chinese documents that otherwise would not be available in the English language to researchers. And Blue Team members like Rep. Rohrabacher, a senior member of the International Relations Committee, raised appropriate alarm bells in the mid-1990s about China ’s moves to assert military and diplomatic influence in the South China Sea .

            Commission member Larry Wortzel, who directs the Heritage Foundation’s Asian Studies Center , served in the U.S. armed forces for 32 years. In the 1970s he watched Chinese military communications in Vietnam and Laos from an Army Security Agency post in Thailand . In 1989, as assistant Army attaché in Beijing , Wortzel saw the Tiananmen Square massacre. Wortzel was later the director of the Strategic Studies Institute of the U.S. Army War College. He’s a man worth talking to.

            While Wortzel did not dissent from any of the commission’s recommendations, he acknowledged that “free trade creates jobs” in “additional” remarks that were appended to the report. “I find some of the recommendations in this Report to be protectionist for the wrong reasons,” Wortzel wrote.       

            Protectionist — and with a strident tone. The Blue Team’s idea of diplomacy is basically sticking Uncle Sam’s finger in the dragon’s eyes.

            Even the commission’s July 15 report acknowledged that “ Beijing has perceived Washington ’s ‘anti-China’ streak” with concern. “Persistent efforts by some members of the U.S. Congress to deny China most-favored nation (MFN) status for much of the 1990s, and to block Chinese accession to the WTO based on labor, human rights and economic grounds, were viewed by the Chinese as a blatant intervention in China ’s internal affairs and a convenient excuse to prolong and protect U.S. hegemony.”

            Sounds like the commission was describing itself, the Blue Team’s critics retort.    

            “I’m concerned that the commission’s report is so tilted in the anti-China direction,” says Ralph Cossa, the president of the Honolulu-based Pacific Forum CSIS. “There are very few references to the benefits of dealing with China , and then they are dismissed or ignored.” To the Blue Team, references to the benefits of dealing with China mark China watchers like Cossa as romantics.

            But Cossa, a retired Air Force colonel with more than two decades of experience dealing with security policies in Asia , is no patsy on national security affairs. He is fully aware that China can be a difficult customer. In the mid-1990s, Cossa raised the early alarm bells about China’s disturbing actions in the South China Sea that were aimed at intimidating smaller regional countries like the Philippines.

            But mainstream China watchers like Cossa have little sympathy for economic nationalist policies aimed at China . “If we believe our own ideology we should be trying to interact with the Chinese and make them into good capitalists, which is their natural inclination anyway,” he reasons.


Protectionist connections. Espousing mainstream capitalist principles, it turns out, are hardly the US-China Security Review Commission’s thing. Protectionism is.           Commission Chairman C. Richard D’Amato is a Maryland House of Delegates member and a former foreign policy counsel to Sen. Robert Byrd (D-WVA,) one of the leading congressional figures who helped launch the commission two years ago.

            Commission member Patrick Mulloy, who served as an assistant secretary (market access and compliance) in the Clinton Commerce Department, established his political connections as general counsel of the Senate Banking Committee. Mulloy sings from the same songbook as Senate Banking Committee Chairman Paul Sarbanes (D-MD), who did not support granting China the so-called Permanent Normal Trade Relations status. “It is difficult to escape the conclusion that the large bilateral trade surpluses that China runs with the United States are used at least in part to support China ’s military establishment,” Sarbanes testified to the commission in June 2001.

            Commission member Kenneth Lewis, a retired president of Lasco Shipping Co., is from Portland , Oregon . Rep. Richard Gephardt tapped Lewis for the commission at the request of Rep. Peter DeFazio, an Oregon

Democrat. “It’s well known that I’ve been critical of our current trade policy with China because of the trade deficit, abuse of labored and environment in that country and the transfer of sensitive technologies between nations,” DeFazio declared when Lewis was appointed in March 2001. “I’m hopeful this commission will provide a critical analysis, important to policy makers, as we continue to evaluate our evolving trade and security relationship with China .” DeFazio has opposed Nafta, granting the president fast-track trade negotiating authority, and Permanent Normal Trade Relations status for China . During the WTO’s stormy 1999 ministerial meetings in Seattle , the congressman was on the streets with the protestors. 

            From 1978-1998 commission member Michael Wessel helped Rep. Richard Gephardt and the House Democratic leadership fight for (protectionist) trade policies. Wessel wrote Gephardt’s 1999 book, An Even Better Place, in which the House’s top Democrat lamented that “[t]he day NAFTA passed was one of my darkest in Congress.” Wessel is now a lobbyist with Downey McGrath Group, Inc., another “bipartisan” money-making operation headed by two former New York congressmen: Democrat Tom Downey, and Republican Raymond McGrath.

            Considering how lawmakers stacked the deck with the anti-China, anti-free trade Blue Team crowd, the commission’s harsh tone in its July report is hardly surprising.

            The only commissioner who dissented was William Reinsch, a Clinton Commerce Department official who now heads the National Foreign Trade Council. The NFTC’s blue-chip corporate members support trade with China , and have led the effort against unilateral U.S. sanctions.

             “It is ironic that the Report implicitly criticizes the Chinese for viewing the U.S. as a hegemon at the same time it presents a view of U.S. interests in Asia that can only be described as hegemonic,” Reinsch wrote.

            In his Washington Times column last month, Gaffney identified Reinsch only as a member of “the China lobby.”