China Reform Monitor No. 506

China Reform Monitor

Editor: Al Santoli

US-based Chinese students arrested for hi-tech military espionage; Secret trial of dissident Yang Jianli

July 30:

A bipartisan group of U.S. Senators have co-signed a letter asking U.S. Treasury Secretary John Snow to investigate whether China is manipulating its currency to gain a trade advantage in the U.S. market, writes William Hawkins in the Washington Times. This followed a warning on the same issue by Federal Reserve Chairman Alan Greenspan. Based on the first half of this year, the 2003 U.S. trade deficit with China will reach $120 billion, the largest and most lop-sided deficit in history.

In June, Chinese exports rose 33 percent from a year earlier to $34.5 billion, while production increased 17 percent, according to Beijing. China devalued its currency in 1994, giving it a decided advantage over its trade rivals on the Pacific Rim. Ernest H. Preeg of the Manufacturers Alliance and the Hudson Institute has estimated that the Chinese Yuan is as much as 40 percent below market value. Beijing has intervened on a massive scale to keep the Yuan from being valued by the market. Its trade surplus gives it the dollar reserves it needs for financial intervention.

The unfair trade advantages that Beijing holds over its neighbors poses dangers to regional stability that are not just commercial, Hawkins warns. Beijing’s strategy to undermine American industry, while building up its own manufacturing base, works to shift the balance of power in Asia.

August 4:

An espionage trial of a U.S.-based democracy activist Yang Jianli, charged with spying and entering China illegally, was held behind closed doors with a verdict pending, reports Agence France-Presse. Boston-based Yang Jianli was detained in April 2002 after entering China using a false passport in an attempt to observe ongoing labor unrest. Mr. Yang’s lawyer, Mo Shaoping, said the court would not announce a verdict immediately, but under normal circumstances it should be expected within six weeks. “The case might provide some perspective on new President Hu Jintao and the approach his administration will take towards dissidents,” said Jared Genser, Yang’s U.S.-based legal adviser and leader of rights group Freedom Now.

The evidence, so far as the defense has been told, consists overwhelmingly of statements extracted from Mr. Yang during his long incommunicado detention. As usual in such cases, these statements are characterized as the "confession" of the accused. However, Mr. Yang vigorously expressed his determination to challenge the charges in the three brief meetings he has recently been allowed with his counsel. Legal experts say the accuracy of the statements made by Mr. Yang during more than a year in detention must be open to question.

The conviction rate for political cases that go to trial in China is close to one hundred percent, according to the Asian Wall Street Journal. An espionage conviction can carry the death penalty in China, although it is unlikely to be used in Yang's case due to the high level of foreign interest. Mr. Yang's case came to trial despite high-level diplomatic pressure from the United States, reported ABC Radio News Australia. Last week, the U.S. Senate unanimously passed a resolution warning that cases like Yang's could harm relations between Beijing and Washington.

August 5:

According to a Pentagon report cited by Bill Gertz in the Washington Times, two Chinese students studying in the United States supplied China’s military with American defense technology that allowed Beijing to produce a special metal used in sensors and weapons. “This is a classic example of how the Chinese collect dual-use military technology,” an FBI official said. The current espionage case – now subject of an ongoing investigation – allowed China’s military to develop a version of the substance Terfenol-D, which cost the U.S. Navy millions of dollars to create and has applications for advanced air planes and spacecraft. U.S. officials said Terfenol-D could be used by the Chinese in a multiple warhead missile. One of the Chinese students attended Iowa State University where he worked closely with the Department of Energy’s Ames Laboratory located on the school’s campus. The other student attended Pennsylvania State University.

The Australian Broadcasting Company reports that China has jailed Zhao Changqing, an advocate of democratic reform, to a five-year sentence for “attempting to subvert state power.” Zhao was arrested for drafting an open letter urging democratic reforms and the release of prisoners of conscience.

Copyright (c) 2003, American Foreign Policy Council

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Source: "yangjianli.com".