[Congressional Record Volume 144, Number 139 (Wednesday, October 7, 1998)]
[Senate]
[Pages S11704-S11706]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WELLSTONE:
  S. 2567. A bill to ensure that any entity owned, operated, or 
controlled by the People's Liberation Army or the People's Armed Police 
of the People's Republic of China does not conduct certain business 
with United States persons, and for other purposes; to the Committee on 
Finance.


    trading with the people's republic of china military act of 1998

 Mr. WELLSTONE. Mr. President, today I'm introducing a bill 
that would bar firms owned by China's People's Liberation Army and 
People's Armed Police from operating in the United States and prohibit 
the import into the United States of products made by these firms or 
the export of products to these firms. It would also prohibit extension 
of credit to or ownership interest in Chinese military companies. The 
bill contains an exemption for humanitarian aid, waiving these 
prohibitions if the President determines that a transaction involves 
items intended to relieve human suffering such as food, medicine or 
emergency supplies.
  My bill is based in part on H.R. 4433 introduced in the House on 
August 6, 1998 by Representatives Gephardt, Bonior, and Pelosi, who I 
want to commend for taking this bold and important human rights 
initiative.
  Before I get into the key question of why I'm introducing this bill, 
I would like to touch on the question of the extent of PLA and People's 
Armed Police commercial relations with the United States. To begin 
with, I should stress that there is uncertainty about the extent and 
nature of activities of companies linked to Chinese military and 
security forces in the United States. For example, a Rand study last 
year estimated that there are ``between 20-30 PLA-affiliated companies 
operating in the United States, although there are certainly more that 
have not yet been identified.'' It added that one of the major 
obstacles to identifying these companies is that they ``often 
consciously disguise their military background by using offshore 
holding companies and unfamiliar names.''
  Nevertheless, while there is much we don't know, there is some hard 
data available on PLA and People's Armed Police business dealings with 
the United States. In June, 1997 the AFL-CIO's Food and Allied Services 
Trades Department issued a report providing a wealth of detailed 
information on these business dealings. The report, based on extensive 
research, found twelve companies incorporated in the United States 
owned by the People's Armed Police and various elements of the PLA, 
including the General Staff Department and the Navy. In addition, the 
report cited seven PLA companies that had been dissolved after their 
officials had been accused of smuggling AK-47's into the United States 
in 1996--an episode I will discuss later. For each company, the report 
provided addresses and dates of incorporation, and for some companies 
the names of registered agents, officers, and directors.
  The AFL-CIO report also provided detailed data on the exports to the 
United States of twenty-five People's Armed Police and PLA companies 
during 1996. The companies included not only major PLA components such 
as the General Staff and General Logistics Departments, but also some 
owned by various PLA military regions. All told, these companies 
exported 34 million pounds of products to the United States, including 
furniture, chemicals, rain gear, toys, sport rifles, aircraft engines, 
and fish. According to an AFL-CIO official, PLA companies were the 
largest exporters of fish for U.S. fast-food restaurants. Finally, the 
report contained a listing of U.S. companies that had purchased these 
products. In testimony before the Senate Foreign Relations Committee 
last November, an AFL-CIO official pointed out that several well-known 
U.S. concerns had purchased products directly from PLA companies.
  While it is not illegal for the People's Armed Police and PLA 
companies to operate in the United States, on at least one occasion a 
major PLA company participated in a clearly illegal activity. In May, 
1996, federal law enforcement agencies carried out a sting operation 
connected with seizure of 2,000 fully automatic AK-47 weapons from 
China. Since 1994 Chinese gun exports to the United States have been 
illegal and this was the largest seizure of fully automatic weapons in 
U.S. history. One of the two Chinese companies involved, Poly 
Technologies, is the most successful PLA-controlled company. Poly is 
run by China's princelings, family members of top Chinese civilian and 
military leaders. Poly's president is the late Deng Xiaoping's son-in-
law and a retired PLA Major General. The Chairman of Poly is the son of 
the late Wang Zhen, who was China's vice-president and a retired 
General. While China experts doubt there was high-level collusion in 
the smuggling of AK-47's, a federal law enforcement officer noted that 
those involved were ``in a position to deliver substantial arms and are 
not low-level flunkies.''
  Mr. President, I now want to turn to the key question of why I 
decided to introduce this bill. Why is there a need for such 
legislation? Because companies owned by the PLA--the Chinese 
Government's main and indispensable instrument of repression--are 
permitted to operate in the United States. Because the American people 
are unwittingly purchasing products exported to the United States by 
companies owned by the PLA and the People's Armed Police. Because the 
American people would be outraged--as deeply outraged as I am--if they 
knew they were subsidizing those responsible for massacring students, 
workers, and other demonstrators for democracy in Tiananmen Square on 
June 4, 1989, those who have occupied Tibet for almost 50 years, 
brutally oppressing its people and seeking to erase their unique, 
cultural, linguistic, and religious heritage. And because they would be 
outraged--as deeply outraged as I am, that their government is not only 
doing nothing to stop this, but is opposing efforts to end PLA and 
People's Armed Police profit-making in the United States.
  Mr. President, you may well ask what is the People's Armed Police. 
The People's Armed Police, who are under the operational control of the 
PLA, are an internal security force of over 1 million troops, one of 
whose main purposes is to suppress the legitimate protests of the 
Chinese people. For example, the People's Armed Police is often used to 
quash the peaceful protests of Chinese workers.
  Last year the People's Armed Police was used to brutally break up 
protests by thousands of laid-off state enterprise workers in Sichuan 
province. Hundreds of these workers, who took to the streets because 
company officials embezzled their unemployment compensation, were 
reportedly beaten by the People's Armed Police and several 
``instigators'' were arrested. Chinese officials were said to have 
ordered hospitals not to treat wounded demonstrators, comparing them to 
``counterrevolutionary thugs'' who ``rioted'' at Tiananmen in June 
1989. What were the laid-off workers seeking that provoked such a 
vicious crackdown by the People's Armed Police? Just that the 
government provide them with the subsistence they are entitled to and 
that corrupt company officials be punished.

[[Page S11705]]

  How can we continue to subsidize the thugs who repress Chinese 
workers?
  The People's Armed Police also man the guard towers of the Laogai, 
China's massive forced labor camp system--the largest in the world. The 
Laogai is China's version of the Soviet gulag. The Laogai is comprised 
of more than 1,100 forced labor camps, with an estimated population of 
6 to 8 million prisoners. Prisoners are overworked, denied medical 
treatment and tortured.
  How can we continue to subsidize those who guard slave laborers?
  The People's Armed Police and the PLA are the key agents of 
repression in Tibet. The People's Armed Police have been filmed in 
Lhasa, the capital of Tibet, beating monks and nuns peacefully 
demonstrating for their rights. This past May, the People's Armed 
Police and PLA soldiers reportedly fired on 150 Tibetan political 
prisoners who staged a demonstration in Tibet's main prison and the 
police later stormed the prison and arrested the demonstrators. Chinese 
officials were apparently offended when the political prisoners flew a 
Tibetan national flag during the demonstration.
  How can we continue to subsidize those who deny Tibetans fundamental 
freedoms, beat and torture them, and seek to destroy their unique 
culture and religion?
  Mr. President, this is shameful and it must be stopped. Would we have 
allowed Stalin's NKVD or Hitler's SS to subsidize their heinous 
activities by running profit-making entities in the United States and 
exporting goods to us and buying goods from us? Of course not. Why then 
do we allow the likes of the PLA and the People's Armed Police to 
profit from commercial relations with us and why does the 
Administration oppose efforts to put an end to this?
  Mr. President, the Administration in the past has justified the 
unjustifiable by arguing that imposing sanctions on PLA and People's 
Armed Police companies would be an ``impossible task'' for U.S. law 
enforcement agencies, risk retaliation against major U.S. exporters, 
and harm our efforts to develop a military-to-military dialog and 
relationship with China.
  While I believe these arguments don't hold water, they have been 
overtaken by events. In July, President Jiang Zemin ordered the PLA and 
the People's Armed Police to end the ``commercial activities'' of their 
subordinate units. There are some questions about the extent to which 
Jiang's orders will be carried out and over what time-frame. Tai Ming 
Cheung, a noted expert on China's military, foresees some shrinkage of 
the military-business complex, but predicts that it will ``remain 
powerful and more focused.'' Some China experts estimate that as much 
as one-third of total defense spending derive from profits from PLA 
businesses and it would obviously be difficult for the government to 
compensate the military for loss of this funding stream.
  Be this as it may, the fact remains that it is now Chinese government 
policy to end the commercial activities of the PLA and the People's 
Armed Police. I believe that the Senate should do all we can to help 
Beijing by passing my bill, which seeks to cut U.S. commercial ties 
with the PLA and the People's Armed Police and to end their business 
activities in the United States. Since we would be cooperating with 
Jiang's policies, the Administration can no longer point to alleged 
harmful effects on our military-to-military dialog or Chinese 
retaliation against U.S. exporters. Moreover, we would have reason to 
expect that the ability of U.S. law enforcement agencies to implement 
the sanctions contained in this bill would be enhanced since PLA and 
People's Armed Police business activities would be illegal both in 
China and the United States. Jiang Zemin presumably would have 
incentives to end or at least circumscribe Chinese military and police 
business dealings with and in the United States and, perhaps, even 
cooperate with U.S. law enforcement agencies.
  While no one can predict how successful Jiang will be in eliminating 
or even in cutting back China's military-business complex, we must act 
to end U.S. subsidies to those who beat, torture, and imprison those 
who bravely fight for freedom and democracy. By contributing to PLA and 
People's Armed Police coffers we act in complicity with those who 
repress workers, run slave labor camps, crush religious freedom, quash 
Tibetans and other minorities seeking to preserve their identity 
culture and religion. We betray those who laid down their lives at 
Tiananmen Square, inspired by American principles of democracy and 
individual rights and we betray those brave dissidents who rot in 
Chinese jails or toil in forced labor camps, whose only crime was to 
fight for the ideals all Americans hold dear. It is time to end this 
complicity, end these betrayals of our friends.
  I urge my colleagues to support this bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2567

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Trading With the People's 
     Republic of China Military Act of 1998''.

     SEC. 2. FINDINGS AND POLICY.

       (a) 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 and is responsible for massacring an unknown number of 
     students, workers, and other demonstrators for democracy in 
     Tiananmen Square on June 4, 1989.
       (2) The People's Liberation Army is responsible for 
     occupying Tibet since 1950 and implementing the official 
     policy of the People's Republic of China to eliminate the 
     unique cultural, linguistic, and religious heritage of the 
     Tibetan people.
       (3) The People's Liberation Army has operational control of 
     the People's Armed Police, an internal security force of over 
     1,000,000 troops, whose primary purpose is to suppress the 
     legitimate protests of the Chinese people.
       (4) The People's Liberation Army is engaged in a massive 
     effort to modernize its military capabilities.
       (5) The People's Liberation Army owns and operates hundreds 
     of companies and thousands of factories the profits from 
     which in some measure are used to support military 
     activities.
       (6) Companies owned by the People's Liberation Army and the 
     People's Armed Police export to the United States such 
     products as toys, clothing, frozen fish, lighting fixtures, 
     garlic, glassware, yarn, footwear, chemicals, machinery, 
     metal products, furniture, decorations, gloves, tents, and 
     tools.
       (7) Companies owned by the People's Liberation Army and the 
     People's Armed Police regularly solicit investment in joint 
     ventures with United States companies.
       (8) The People's Liberation Army and the People's Armed 
     Police have established at least 23 different companies in 
     the United States over the past decade.
       (9) The people of the United States are unaware that 
     certain products they purchase in retail stores are produced 
     by companies owned and operated by the People's Liberation 
     Army or the People's Armed Police.
       (10) The purchase of these products by United States 
     consumers places them in the position of unwittingly 
     subsidizing the operations of the People's Liberation Army 
     and the People's Armed Police.
       (11) The Government of the People's Republic of China, with 
     the assistance of the People's Liberation Army and the 
     People's Armed Police, continues to deny its citizens basic 
     human rights enumerated in the Universal Declaration of Human 
     Rights, persecutes those who seek to freely practice their 
     religion, and denies workers the right to establish free and 
     independent trade unions.
       (b) Policy.--It is the policy of the United States to 
     prohibit any entity owned, operated, or controlled by the 
     People's Liberation Army or the People's Armed Police from 
     operating in the United States or from conducting certain 
     business with persons subject to the jurisdiction of the 
     United States.

     SEC. 3. COMPILATION AND PUBLICATION OF LIST OF PEOPLE'S 
                   REPUBLIC OF CHINA MILITARY COMPANIES.

       (a) Compilation and Publication.--
       (1) In general.--Not later than 90 days after the date of 
     enactment of this Act, the Secretary of Defense, in 
     consultation with the Secretary of the Treasury, the Attorney 
     General, the Director of Central Intelligence, and the 
     Director of the Federal Bureau of Investigation, shall--
       (A) compile a list of persons who are People's Republic of 
     China military companies and who are operating directly or 
     indirectly in the United States or any of its territories and 
     possessions; and
       (B) publish the list of such persons in the Federal 
     Register.
       (2) Periodic updates.--Every 6 months after the date of the 
     publication of the list under paragraph (1), the Secretary of 
     Defense, in consultation with the officials referred to in 
     that paragraph, shall make such additions to or deletions 
     from the list as the

[[Page S11706]]

     Secretary considers appropriate based on the latest 
     information available.
       (b) People's Republic of China Military Company.--For 
     purposes of making the determination required by subsection 
     (a), the term ``People's Republic of China military 
     company''--
       (1) means a person that is--
       (A) engaged in providing commercial services, 
     manufacturing, producing, or exporting; and
       (B) owned, operated, or controlled by the People's 
     Liberation Army or the People's Armed Police; and
       (2) includes any person identified in Defense Intelligence 
     Agency publication numbered VP-1920-271-90, dated September 
     1990, or PC-1921-57-95, dated October 1995, or any updates of 
     such publications under subsection (c).
       (c) Updating of Publications.--Not later than 90 days after 
     the date of enactment of this Act, and every 6 months 
     thereafter, the Defense Intelligence Agency shall update the 
     publications referred to in subsection (b)(2) for purposes of 
     determining People's Republic of China military companies 
     under this section.

     SEC. 4. PROHIBITIONS.

       (a) Officers, Directors, Etc.--It shall be unlawful for any 
     person to serve as an officer, director, or other manager of 
     any office or business anywhere in the United States or its 
     territories or possessions that is owned, operated, or 
     controlled by a People's Republic of China military company.
       (b) Divestiture.--The President shall by regulation require 
     the closing and divestiture of any office or business in the 
     United States or its territories or possessions that is 
     owned, operated, or controlled by a People's Republic of 
     China military company.
       (c) Importation.--No goods or services that are the growth, 
     product, or manufacture of a People's Republic of China 
     military company may enter the customs territory of the 
     United States.
       (d) Contracts, Loans, Ownership Interests.--It shall be 
     unlawful for any person subject to the jurisdiction of the 
     United States--
       (1) to make any loan or other extension of credit to any 
     People's Republic of China military company; or
       (2) to acquire an ownership interest in any People's 
     Republic of China military company.
       (e) Exports.--It shall be unlawful for any person subject 
     to the jurisdiction of the United States to export goods, 
     technology, or services to, or for any person to export 
     goods, technology, or services that are subject to the 
     jurisdiction of the United States to, a People's Republic of 
     China military company.
       (f) Exception for Humanitarian Items.--Subsections (a) 
     through (e) shall not apply with respect to a transaction if 
     the President--
       (1) determines that the transaction involves the transfer 
     of food, clothing, medicine, or emergency supplies intended 
     to relieve human suffering; and
       (2) transmits notice of that determination to Congress.

     SEC. 5. REGULATORY AUTHORITY.

       The President shall prescribe such regulations as are 
     necessary to carry out this Act.

     SEC. 6. PENALTIES.

       Any person who knowingly violates section 4 or any 
     regulation issued thereunder--
       (1) in the case of the first offense, shall be fined not 
     more than $100,000, imprisoned not more than 1 year, or both; 
     and
       (2) in the case of any subsequent offense, shall be fined 
     not more than $1,000,000, imprisoned not more than 4 years, 
     or both.

     SEC. 7. DEFINITIONS.

       For purposes of this Act:
       (1) People's Armed Police.--The term ``People's Armed 
     Police'' means the paramilitary service of the People's 
     Republic of China, whether or not such service is subject to 
     the control of the People's Liberation Army, the Public 
     Security Bureau of that government, or any other governmental 
     entity of the People's Republic of China.
       (2) People's Liberation Army.--The term ``People's 
     Liberation Army'' means the land, naval, and air military 
     services and the military intelligence services of the 
     People's Republic of China, and any member of any such 
     service.
                                 ______