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WASHINGTON — Lost in all the glowing hype over China’s “market
reforms,” “miracle economy” and “vast untapped” consumer base is a
darker story — one that Beijing, the White House and Washington’s
pro-China lobby don’t want you to hear, says a prominent Chinese
dissident in exile here.

It’s a secret tale of People’s Liberation Army soldiers storming a
depressed mining town to put down the worst industrial rioting in years.
And angry jobless farmers staging a record 2,000 riots against local
communist authorities.

The unrest comes as China’s unemployment rate hits a 30-year high and
its economy nears collapse.

Such internal pressures are the real reason Beijing wants to lock in
trade favors with the U.S., says dissident Wei Jingsheng (pronounced:
Way Gin-shun), the father of China’s democracy movement. It desperately
needs money for the PLA to retake Taiwan, but also to smash uprisings.

Chinese dissident Wei Jingsheng

“It’s highly unstable over there,” Wei said in a recent interview.

Speaking through an interpreter, Wei said the communist regime is
losing control over the masses. Denied unemployment benefits, while
seeing more and more butter diverted to guns (and the pockets of PLA
princelings), the country’s 800 million peasants are growing
increasingly restless, he said.

“The economy is in very bad shape,” he said. “There is a possibility
of revolt.”

Wishful thinking on his part? Not really.

High unemployment is not limited to the countryside. It’s climbed to
20 percent in the cities, says economist Peter Brain of the National
Institute for Economic and Industrial Research in Melbourne, Australia.

Sources in Beijing report hordes of unemployed drifters being kept
from Beijing (and Western eyes) through routine dragnets on the highway
approaches to the capital. In Guangzhou, tens of thousands of unemployed
are told to sit each day, like potted plants, in a massive square.

To boost sagging consumer demand in the cities, communist leaders are
planning to move 300 million peasants into cities and towns in what will
be the world’s largest forced human resettlement. (It looks like the
Clinton administration is helping in the effort. HUD recently signed a
deal with Beijing to help it build new public housing.)

Miracle or mirage?

Consumer spending is so soft that Beijing has ordered all foreign
market-research firms to register with the State Statistical Bureau,
says a U.S. business consultant in Beijing. Their survey questions must
now be pre-approved and their results turned in for review. And it’s now
illegal to ask about consumer confidence in any form.

China’s so-called miracle economy is actually a mirage.

State-owned banks are failing. Foreign investment is drying up.
Exports have flagged. The economy — despite the claim of 7 percent GDP
growth — is stagnant.

Beijing’s central planners have kept the economy afloat through
fiscal pump-priming — that is, by printing money.

But now the government is taking on so much debt that economists are
comparing its budget woes to Russia’s.

Last year’s budget deficit hit a record. Some 70 percent of current
borrowings are going to service existing debt, Brain says. At 21 percent
of GDP, China’s debt is five times higher than it was in 1995, says
Brookings Institution economist Nicholas Lardy.

How did it get in this mess? Through the biggest military buildup on
the planet (though Japan’s depression hasn’t helped). The Chinese
Communist Party, which funds the Central Military Commission, has
ordered eight years of double-digit hikes in military spending.

Modernizing the military is the Chinese Communist Party’s real aim in
cutting a trade deal with the U.S., Wei says.

“Since the Chinese government runs the banks, they will take Western
loans and turn around and put them into the military,” he said. It will
also apply U.S. technology to develop new weapons systems.

The PLA controls some 15,000 companies. Though their sales total
about $10 billion, most are poorly run and lose money.

But without the PLA, there is no communist control. So the army must
continue to be fed, Wei says.

Barrel of a gun

“The Chinese government doesn’t really care about investments,” he
said. “They just care about staying in power.”

And it does that through the barrel of a gun, he says.

In February, for example, several hundred PLA soldiers had to be
brought in to crush rioting in a blighted mining town in northeastern
China.

Denied unemployment benefits, some 20,000 Chinese laborers smashed
windows, blocked traffic, burned cars and fought with armed police for
days before the PLA marched in.

Last year, local authorities had to deal with a record number of
riots in the countryside, where an estimated 200 million farm hands are
out of work. Protests filed to Beijing, mostly about excessive taxes and
corruption, reached several million in 1999 alone.

Beijing is still sticking to the Stalinist tactic of squeezing
farmers and laborers to free up funds for the army.

But the unstable peasantry is a time bomb ticking away, Wei says.

“Right now the government is very harsh on people, almost like in the
early years of the Cultural Revolution,” he said, which lasted from 1966
to 1976.

He claims that at least 90 percent of the Chinese population
disapproves of the current leadership.

To survive, Wei says, President Jiang Zemin must keep the economy
moving and the military loyal.

But Jiang has control of neither, Wei says. The government is
“weakening, and weakening quickly,” he said.

Yet just as the communist regime is dying, the White House is trying
to prop it up by lobbying Congress to open up the U.S. market to China
permanently and allow unfettered trade, regardless of human-rights
violations and PLA threats to U.S. security.

To better coordinate the lobbying effort, the White House even set up
a “war room” staffed with Commerce Department officials.

“President Clinton is trying to save President Jiang’s government,”
Wei said. “It’s very obvious he owes them something.”

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