China-Taiwan Rivalry Fuels Donor Scandal

WASHINGTON —  With each new revelation of a questionable political contribution from an Asian, particularly one connected to China, the line between campaign financing, government and foreign policy gets murkier. Not least affected is U.S. China policy--and perhaps Al Gore’s presidential prospects. The vice president was dogged by the fund-raising scandal at every turn during his China visit last week.

First, there were revelations of Indonesian money ending up in Democratic Party coffers. The FBI suggested that the Chinese Embassy was involved in channeling money into the 1996 campaign. Now it turns out that the FBI had evidence that China planned to steer donations from overseas Chinese businesspeople, with interests on the mainland, to certain U.S. politicians. Chinese government officials told Gore they were not involved in any such scheme.

The most intriguing question in this strange, evolving tale is to what end all this reputed influence-peddling was directed. By far the most compelling explanation is heightened China-Taiwan political competition, intensified by the controversy over granting Taiwanese President Lee Teng-hui a U.S. visa in 1995. China claims sovereignty over Taiwan, which was taken over by fleeing Nationalist forces in 1949. Since then, Taiwan has enjoyed de facto autonomy even though China claims, and the United States “acknowledges,” that Chinese on Robert A. Manning, a senior fellow at the Progressive Foundation and the Progressive Policy Institute, is former State Department advisor on Asia policy (1989-93).

both sides of the Taiwan Strait believe “that there is but one China, and Taiwan is part of China.”

But with Taiwan becoming a democracy and native Taiwanese now dominating its political system, the “one China” principle is growing increasingly thin. Taiwan is waging a vigorous campaign for international political recognition, which Beijing fears is a step toward formal independence. Taipei has built a highly effective lobby in Washington, second perhaps only to Israel’s. Obtaining a visa for Lee so he could attend the 50th reunion of his graduating class at Cornell University was a top Taipei priority. Toward that end, the Taiwan lobby launched a full-court press in Congress, hiring Cassady & Associates, a lobbying firm, for $4.5 million.

To Beijing, the Lee visit was the equivalent of waving a red flag at a bull, a provocation and an enormous humiliation. No Taiwanese president had visited America since the United States normalized ties to Beijing in 1972. No Chinese government would accept a Taiwanese declaration of independence, a position underscored by Beijing’s military show of force in the Taiwan Strait following Lee’s visit.

Soon after that visit, China geared up to match Taiwan in the Washington influence game. Beijing purged its embassy and created a beefed-up section to deal with Congress, headed by Shao Wenguang, a suave, Oxford-educated diplomat. China’s State Council then created a “Central Leading Working Group on the U.S. Congress,” which reported directly to President Jiang Zemin. Chinese government-owned companies and institutions were given a mandate to improve China’s image in the United States. More than 100 members of Congress and staff have since visited Beijing. Electronic intercepts obtained by U.S. intelligence agencies suggest that China was prepared to take another step: channeling political contributions to U.S. politicians.

Beijing may well have indicated to diaspora Chinese that help in improving China’s image in Washington would be appreciated. All the central figures in the fund-raising scandal--former Lippo official and Democratic National Committee fund-raiser John Huang, Yah Lin “Charlie” Trie, Johnny Chien Chuen Chung and Pauline Kanchanalak--have direct or indirect business interests in China. The Lippo Group, run by the Riady family and which funneled large donations to the DNC, has an especially large web of interests in China including joint ventures with state-run Chinese firms. While all likely had their own agendas, furthering China’s cause in the United States would certainly not hurt their future business prospects in China.

All this has created a kind of “rooster and the dawn” problem for an already besieged China policy. As the rooster takes credit for the sunrise, every China-policy decision is tinged with suspicion. Gore’s trip to China last week, for example, was to have heralded a new, more mature policy concerning the biggest challenge facing the international system--the emergence of China as a great power. But the administration lowered the trip’s profile and scaled back its scope of events. More troubling still is that all this is coming to a head amid an already overheated China debate and what promises to be an especially nasty fight over whether or not to renew China’s MFN trade status.

Would granting MFN now be interpreted as a “payoff”? Is granting the same tariffs to China as the United States grants to other trading partners the right thing to do, regardless of what, if any, role China played in the ’96 U.S. elections? And what about entry into the World Trade Organization--would any bargain be acceptable? If the investigations prove that the Chinese tired to influence U.S. elections, which Gore said would be “a very serious matter,” what then becomes of U.S. China policy?

Clearly, whatever the truth of the campaign-finance scandal, its consequences are rippling through both China-Taiwan competition and Sino-American relations, with no winners in sight.