Week of March 29, 2002

SUMMARY: (4/2-4/5) - Li Peng is in Japan this week to celebrate warming relations between China and Japan, and to mark the 30th anniversary of the normalization of diplomatic ties. After several years of worsening ties, marred by various disputes, the two countries are now looking to improve relations. Commentators have cautioned that little substantial progress is likely to be achieved during the visit, but nonetheless applaud the visit, the first from a high level Chinese leader since 2000. Li's trip is one of several currently planned for this year.

The trip has allowed Li to engage in constructive dialogue with Japan's Prime Minister Junichiro Koizumi. On Thursday the two leaders discussed China's economic reform and entry into the WTO. The meeting comes amid growing unease by some in Tokyo over China's growing economic clout. Diffusing the tension somewhat, Koizumi was quoted in the Japan Times as saying he does not agree with those who view China's rapid economic growth as a threat to Japan. The two leaders also discussed Japan's sinking of a ship in Chinese economic waters last year. Responding to Japanese allegations that the ship was a North Korean vessel involved in a spying or drug smuggling mission, Pyongyang wants to raise the ship to prove its innocence. Thus far, China has been reluctant to upset its ally, North Korea, and has been critical of Japan's actions. At their meeting, Li suggested that China could cooperate with Japan's salvage operations, and would like to find a diplomatic solution, acceptable to both sides.

SUMMARY: (4/2) - Chinese police have arrested over 20 Falun Gong members for hijacking a state television broadcast last month. A cable television broadcast in Changchun was interrupted this March to show a Falun Gong film protesting against the government's crackdown on the group. After an initial investigation, officials are now declaring the hijacking an organized, premeditated crime. According to China News Service, the Falun Gong members have violated the criminal code and will be punished severely by the law. The mastermind behind the incident, Liang Zhenxing, bought broadcast equipment, and was responsible for training around 20 other Falun Gong members to show the film, the report explained. According to a Changchun police officer, most of the accomplices will be sent to labor camps for re-education. Liang Zhenxing will probably be charged of a much more severe crime- "using an evil cult to damage law enforcement." This crime carries a maximum penalty of 15 years in prison.

SUMMARY: (4/5) - China has asked the White House to explain comments made earlier by President Bush in which he referred to Taiwan as the "Republic of Taiwan." President Bush made the comments at the State Department on Thursday while addressing China and Taiwan's ascension to the WTO. Specifically, Bush was quoted as saying, "It's important to recognize and to welcome both countries, both the Republic of Taiwan, and of course China, into the World Trade Organization." Beijing called for an explanation after Bush's comments were picked up in a Voice of America report by the Chinese media.

In related developments, relations were further strained after President Bush expressed his support for Taiwan's bid to gain observer status at the World Health Assembly. Bush signed a bill authorizing the State Department to take action in support of Taiwan's participation in the WHA. The bill requires the State Department to submit, within the next two weeks, a plan for helping Taipei in this regard. Beijing has yet to formally react to the bill, however it has reiterated its belief that support for Taiwan's observer status at the WHA would be equivalent to endorsing a "two China" or "one China, one Taiwan" policy.

SUMMARY (4/5)- Chinese President Jiang Zemin has coined a one-word slogan to sum up the party's new top priority: "weiwen," or safeguarding stability. Jiang met with his aides following last month's outbreak of labor unrest in northeast China to discuss their implications and prevent their escalation. He has expressed concern that these demonstrations may lead to a nation-wide crisis and wants to ensure that the unrest will not disrupt the 16th Communist Party Congress this autumn.

Jiang has discussed with his advisors how to handle the protests, and is sending word down to provincial and municipal leaders on what the correct actions should be. Cadres are urged first to use conciliatory tactics to prevent unrest, and then to use tougher tactics, such as calling on the People's Armed Police, if the placatory measures are not successful. Jiang and his Politburo colleagues are also asking police to keep tighter tabs on underground labor organizations, and are conducting an investigation into reports that foreign labor organizations have provided support to domestic Chinese labor movements.

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US-CHINA RELATIONS: TAIWAN USED SECRET FUND TO BUY INFLUENCE

SUMMARY: (4/5)- A secret fund, established in Taiwan under former president Lee Teng-hui, was used to buy influence with foreign governments, institutions, and individuals. According to senior Taiwanese official and government reports, the $100 million fund was used to make payments to leaders in Nicaragua, South Africa, and Panama. It was also used to provide financial support for certain US think tanks and Washington lobbyists. The fund, under the direction of the National Security Bureau from 1994 until 2000, was closed by President Chen Shuibian after the disappearance of one of its senior accountants, Colonel Liu Kuan-chun. Liu's whereabouts are unknown, and Taiwanese officials fear he may have fled to the mainland.

Reports published in Taiwan and Hong Kong over the last two weeks have revealed details about the scandal, and interviews with current and former Taiwanese officials have confirmed the reports. Su Chi, a former Taiwanese official said that the Bureau sought to identify individuals in America and Japan who were sympathetic to Taiwan. Taiwan regularly funded research by US academics in Taiwan, supported conferences by think tanks such as the American Enterprise Institute and the Heritage Foundation, and developed relationships in Congress, offering free trips and other perks to employees of influential legislators, Su said. Several individuals who now occupy senior positions in the Bush administration have been identified as beneficiaries. Carl W. Ford Jr., Assistant Secretary of State for Intelligence and Research, and James Kelly, Assistant Secretary of State for East Asian and Pacific affairs have both been indicated.

Taiwan's lobbying machine has been extremely effective over the years, regularly outclassing its rivals in Beijing. Officials in Taiwan now worry that Taiwan will have lost its advantage in this regard, and that their ability to influence Congress will have diminished. Tsai Chao-ming, head of the National Security Bureau, also worries that due to the information leak, Taiwan's ability to collect intelligence has been damaged, and current operations and lives are at stake.

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