Chinese Espionage Against the U.S.: No Better Tool

Not that anyone likes having their asses handed to them, but since China claims to be peaceful... I wonder if they would give us ours on a silver platter. We're so caught up with news about dead models and fear that the intelligence agencies are looking into our purchasing behavior that, as Americans, we have lost sight of the enemy. They are here my friends: among us!

Chinese espionage directed against the United States has met with "total success for China" and "total failure" for America's own intelligence operations, said an author and reporter on national security issues.

Counter-intelligence operations have allowed the Chinese to block and manipulate U.S. electronic eavesdropping operations while the theft of U.S. technology has helped accelerate Beijing's military ambitions, Bill Gertz said Friday at a gathering of the Defense Forum Foundation on Capitol Hill.

Chinese operatives now have the ability to feed false information about the true nature and strategic aims of the communist regime, Gertz said in his talk. For that reason it is now easier for the Beijing government to circulate misinformation about a "peaceful rise" that belies potential hostility toward the United States, he added.

Why Bobby Fletcher Is Off His Rocker

Why Fletcher Is Off His Rocker. Below is a post from Fletcher to an article on the Chi Mak news. My comments follow his post.

----------------------------------------

Bobby Fletcher's Post

Original charges against Chi Mak et al have been dropped. Government's petition to hold without bail has been denied.

It seems the prosecution have lied on so many things, it's beginning to smell like another Wen Ho Lee.

- no classified document; not about weapons at all
- files were not encripted in music; It's zipped for size
- no such list from China asking for data
- map of Knolls Atomic Lab turned out to be a hotel map from an old visit
- wiretap showed Chi Mak had no interested in the broken down Mak ancestrial home in Hong Kong

With no charge to nail the sister in-law, prosecution have trumped up a "fake marriage" charge, insinuating she whored herself out. Shame on us America:

Posted by bobby fletcher | February 14, 2006 6:52 PM
------------------------------------------------
Info below from the credible CI Centre.

Authorities say Mak and his wife copied the information onto CDs and then delivered them to Tai Wang Mak who encrypted the disks then was scheduled to fly to Hong Kong on Oct. 28 with Li. From there, Mak allegedly planned to travel to Guangzhou in China to meet a contact.

According to the 42-page affidavit, agents combing through the trash at Chi's residence found a number of documents torn into small pieces.

One document was machine-printed in China and instructed Chi to "join more [professional] associations and participate in more seminars with special subject matters" and then compile the special conference material on a disk. The document also lists the military technologies that were being sought including:

• Space-based electromagnetic intercept system
• Space-launched magnetic levitational platform
• Electromagnetic artillery system
• Submarine torpedoes
• Electromagnetic launch system
• Aircraft carrier electronic systems

A second document, hand-printed in Chinese, contained another list of technologies sought:

• Water jet propulsion
• Ship submarine propulsion technology, non-air reliant
• Power system configuration technology, weapons standardization, modularization
• Early warning technologies, command and control systems technology, defense against nuclear attack technology
• Permanent electromagnetic motor, overall solution for shipboard power system
• Shipboard internal and external communications systems
• Establishment of high frequency, self-linking, satellite communications
• Submarine HF transient launch technology
• DDX (next generation destroyer)

OTHER INFO ON MAK

- Gaylord testified that the FBI found letters written by a Chinese aviation official to a Boeing engineer named Greg Chung, who worked on the space shuttle program. The official, a representative of China's ministry of aviation, identified Mak as a relative in the letters and sought design information for the “development of the space shuttle,” Gaylord said.

The official, identified as Gu Wei Hao, wrote he would find a way to pay Chung cash in person for expenses incurred while collecting or purchasing information and said he could channel information through Chi Mak.

China Prepares To Take Back Taiwan By Force

I just returned from a trip to China, so I'm sorry I have not been able to post. Anyway, I'm back for few months before I travel again.

China will go to any lengths to take back Taiwan, even send covert operatives into the U.S., penetrate sensitive defense contractors, and steal U.S. technology. The trial of Chi Mak begins and for the first time we get to see the inside of Mak's CCP intelligence operation.

SANTA ANA, Calif. — The career of a Chinese-born electrical engineer, Chi Mak, over four decades is a textbook example of how China's spy services encourage their agents to burrow into American society in order to steal America's defense secrets, federal prosecutors said yesterday.

The naval technologies Mr. Mak worked on for a defense contractor, Power Paragon, were of interest to China because of its ambition to gain control over a democratically governed island off the mainland, Taiwan. "Their no. 1 goal is to support the retaking of Taiwan, if it comes to that," the prosecutor said. He said the main obstacle to the Chinese effort is the presence in the area of the American 7th Fleet. "The Chinese Navy has determined that it cannot fight the 7th Fleet face to face, but the way to attack the 7th.

Mr. Staples said the high-grade encryption was the hallmark of an espionage operation. "It's not an encryption program that you can go to Fry's or Office Depot and buy. It was a custom-made encryption program and its author was a Chinese man," the prosecutor said. He alleged that American investigators would have been unable to break the encryption if a search of the home of Mr. Mak's brother hadn't turned up a key to the code.

China Says It's Creating Its Own Democracy

China claims to be creating it's own form of democracy, one not like the U.S. One has to wonder what this will be... I think I know where the Chinese are going with this one. Here's what I mean.

Webster's on-line definition of a democracy:
A system of government in which there is free and equal participation by the people in the political decision-making process.

And Webster's definition of communism:
A totalitarian system of government in which a single authoritarian party controls state-owned means of production with the professed aim of establishing a classless society.

Now, it's pretty clear the distinction here. China definitely fits into the communism definition, which makes sense because that's what they are. But, rather than create a new form of democracy, what the Chinese are doing is their normal propaganda... they are changing the definition of democracy not their way of governance. Below is how the Chinese will define democracy:

China's Definition of their new democracy:
A totalitarian system of government in which a single authoritarian party controls state-owned means of production with the professed aim of establishing a classless society.

Sound familiar? Let me ask this question. Do you think China will ever allow free speech, freedom of expression, freedom to assemble etc. etc.? That will be the true test as to a "new China". As long as they continue to cut out the organs of Falun Gong, Kill those practicing a different religion, and run tanks over protester's... they will continue to be simple COMMUNISTS!!!

Chinese Hackers Break In U.S. Military and Government Systems: Is This War?

China's action on U.S. soil can be construed as warfare....not the kind we think of from the movies. Rather, China is practicing a new kind of warfare, and soft, covert, and unrestricted warfare. While America sleeps to news of drug ridden supermodels, Chinese Black Operations are rendering the U.S. Defenseless. When will the U.S. Respond?

News Factor
The fact that hackers are directly breaking into military and government computers spotlights the soft underbelly in U.S. cybersecurity. The attacks also underline the need for the federal government to develop policies that define responsibilities between the public and private sectors to fend off hackers and terrorists, say military officials.

Chinese hackers were most likely behind an intrusion in November that disabled the Naval War College's network, forcing it to disconnect from the Internet for several weeks, says Lt. Cmdr. Doug Gabos, a spokesman for the Navy Cyber Defense Operations Command in Norfolk, Va.

Forensic analysis indicates the hackers may have sought information on war games in development at the naval college, he said. The college was vulnerable because it did not have the latest security protections, Gabos said.

The November attack was part of an ongoing campaign by Chinese hackers to penetrate government computers.

Bloggers Hacked at the Knees While the Falun Gong Fight to Keep Their Organs

Image

While news of CCP and PLA harvesting Falun Gong organs breaks world wide, average Chinese citizens are clueless. Why? Not only are sensitive media articles black listed, but China is also blocking entire blog sites like this one: Blogspot..... as well as, Typepad. The citizens of China are living in a artificial world, while their government kills their neighbor for in order to get top dollar on a liver.

Confirmed: All Typepad blogs blocked in China
Asiapundit first sounded the alarm. Now it's confirmed. All Typepad blogs, including this one, cannot be seen in China. (Note that Blogger has been blocked in China for some time.) I asked some people in China to attempt accessing this blog and a long list of other random Typepad blogs (including ones that never discuss China), without using a proxy. None could be accessed. Now all Typepad blogs wanting to be seen in China will have to migrate to another blog hosting service or onto an independent server

Expert calls for end to Chinese regime's spying

Amazingly many of the stories we hear from overseas mimic those that Congress states are going on in the U.S. Two recent bits of interest are reported in the EPOCH Times.


EPOCH TIMES

On Sept. 12, 2006, the regime's National Security officials kidnapped Wang on his trip to Zhuhai City, China. After 3 days of intense brainwashing and torture, the communist regime forced him to work as a spy in order to "destroy the HKET from the inside."

EPOCH TIMES

Under the threat of death and threats against his family, Dr. Wang Lian, an assistant professor at the Macau University of Science and Technology, spied for the Chinese Security Bureau on The Epoch Times from September to December last year.

Chinese Agents Target Falun Gong on U.S. Soil

The other day while looking over the blog I was again taken back by several posts which went up a few weeks ago. I wanted to highlight some of them again.

What should be important to readers of "Cover For Action" are the statements made by Congress which outline Chinese Agents operating in the U.S. Here's what I mean:

* Chinese Agents assault U.S. citizens in the U.S.
* Chinese Agents wire-tap U.S. citizens in the U.S.
* Chinese Agent harass and and intimidate U.S. citizens in the U.S.

The U.S. Government is acknowledging that Chinese operatives have infiltrated the U.S., and are assaulting and wire-taping U.S. citizens. This should be alarming to readers. How can foreign operatives do this in the U.S. to U.S. citizens, and it not be considered an act of war.

WAKE UP AMERICA!!!!!!!!!!!!

Resolution 304 also specifically mentioned section 401(a)(1)(B) of the International Religious Freedom Act of 1998 (22 U.S.C. 6401(a)(1)(B)):

Agents of China’s Communist Party Operating in the USResolution 304 calls on China’s agents in the United States to halt all operations being carried out against practitioners of Falun Gong on United States soil.The resolution makes reference to China’s agents carrying out acts of violence and assault, property theft and destruction, illegal wire-tapping, harassment, intimidation, and persecution against practitioners of Falun Gong in the United States.

HU's Chinese Hackers Attack the U.S.

In the never ending saga of Chinese Hackers attacking the U.S. we get another news story. Yet, for all the concern over what the Chinese are doing to our infrastructure, the popular media is more likely to cover stories on who Fathered Anna Nicole's baby. Why this would be more important than a foreign government attack the U.S. is beyond me. I can see it now, once the Chinese take over the U.S. they will import their brand of law... how many Americans will get their livers harvested for being Christians? Unbelievable!!!!!!

Security News
20 February 2007

Attacks by Chinese hackers on US military computer infrastructure have reached the level of sustained cyber-warfare, and are likely to be government-backed, a senior US Navy official said last week.

"They will exploit anything and everything," the official said, according to the report. The attacks are so deliberate that "it's hard to believe it's not government-driven".

Earlier this month, the Ministry of Defence admitted its systems have been penetrated at least nine times since 2002, with five of the successful attacks taking place last year.

Beginning in 2003, US defence agencies have been the target of a series of intrusions, code-named Titan Rain, that was traced to a team of researchers in Guangdong Province. Titan Rain was first reported publicly in 2005

Chinese Penetration of American National Assets

China continues it's covert operations against American interests; America Sleeps, Hands tied.

Chinas Secret Weapon
February 16, 2007:

The U.S. government has a growing problem with China's covert Cyber War against the United States. ...the action out of China is looking for military and technological secrets, data on how American military networks operate.

There are also attempts to plant special "time bomb" software that could be used in wartime. China is quite open about its intention to use surprise and deception in any future war with the United States.

So what does the U.S. government do, as the evidence against the Chinese builds up? No public statements are being made, but it is known that American Cyber War forces are studying the Chinese attacks carefully, nosing around in China as well, and preparing new Cyber War weapons.

At the same time, current laws prohibit many Cyber War techniques needed to thoroughly track enemy attacks (wiretaps, privacy and all that). So the Chinese move forward with their not-so-secret secret plan for making war via the Internet.

Chinese Assassin's Mace

Another surprisingly quite fact about the Chinese Military and Chinese Intelligence: They are knee deep in the U.S. critical infrastructure and electronic backbone. The threat may no longer be from outside, but what they have left inside. Think of it as a front company within the U.S. electronic system. There is sits, working fine...seemingly a normal bit of software until the Mother-ship calls upon it to begin destroying U.S. networks. You can almost hear the clock ticking...tic..tic..tic.

Published on Feb. 13, 2007

NORFOLK, Va. -- At the Naval Network Warfare Command here, U.S. cyber defenders track and investigate hundreds of suspicious events each day. But the predominant threat comes from Chinese hackers, who are constantly waging all-out warfare against Defense Department networks, Netwarcom officials said.

Attacks coming from China, probably with government support, far outstrip other attackers in terms of volume, proficiency and sophistication, said a senior Netwarcom official, who spoke to reporters on background Feb 12. The conflict has reached the level of a campaign-style, force-on-force engagement, he said.

The motives of Chinese hackers run the gamut, including technology theft, intelligence gathering, exfiltration, research on DOD operations and the creation of dormant presences in DOD networks for future action, the official said.

Chinese hackers were responsible for an intrusion in November 2006 that disabled the Naval War College’s network, forcing the college to shut down its e-mail and computer systems for several weeks, the official said. Forensic analysis showed that the Chinese were seeking information on war games in development at NWC, the official said.

China's New War

While American diplomats express concern over Chinese military build-up, spying, and human rights record China presses forward. It's as if the U.S. were talking to herself. As the old saying goes... it's mind over matter. China does not mind what the U.S. says, because the U.S. does not matter to the Chinese. The U.S. position has become irrelevant to the hidden Chinese agenda.


Experts: US Should Worry About Chinese Anti-Satellite Device
By Stephanie Ho
Washington, 13 February 2007

China's destruction of one of its own satellites last month marks a turning point for the United States, in terms of the potential for military confrontation in space.

"It appears that the test in January was the fourth time it had been tested, the first time that it successfully conducted an intercept," he noted.

U.S. space strategists are especially concerned about China's development of radio frequency weapons that could jam transmission signals, as well as its development of ground-based lasers, which could in effect temporarily blind U.S. spy satellites.

"U.S. space planners are most concerned about the launching of small Chinese satellites into orbits that are very close to key U.S. intelligence, reconnaissance and communications satellites," he added. "Such parasite micro-satellites are presumed to be time bombs that could blind or cripple American military operations, not to mention communications and even U.S. financial communications, any communications, civilian communications."

Hu killed the U?

Image for effect only.

In China, the cure for practicing a religion outside the norm is a small dose of: round em up, and shoot em in the head.

Is this a country that ought to host the Olympics, a symbol of all things free and tolerant? What a joke... China and the Olympics.

Uighur activist put to death by China

`WIDELY DISPROPORTIONATE': A Human Rights Watch spokesman said that the execution of Ismail Semed was inappropriate and not based upon 'sufficient evidence'

Ismail Semed, who was deported to China from Pakistan in 2003, had told the court his confession had been coerced, but he was executed nevertheless on Thursday in Urumqi, the capital of the predominantly Muslim region of Xinjiang...

"When the body was transferred to us at the cemetery I saw only one bullet hole in his heart," Buhejer told the radio station...

Semed had previously served two prison sentences for taking part in an uprising in 1990. He fled to Pakistan after participating in demonstrations for religious freedom in 1997 that ended in the Gulja Massacre when government troops were sent in to stop the protest.

Chinese Harrassment: Telephone Blast

Sometime ago I read an article about the Falun Gong receiving harassing phone calls from suspected CHICOM numbers deep within Bejing. I have to tell you, it sounded kinda odd. After posting a few articles on the Falun Gong, Cover For Action was contacted by concerned Falun Gong members who told a simlar story: being harrassed by phone.

I asked practitioners if they could provide me a copy of the phone message, so that I could hear it for myself. My initial plan was to post it for all readers to hear. But after some thought and discussion, it came to pass that posting the audio file would simply propagate what the CCP was trying to do: push out hate propaganda.

So readers, you'll have to take my word. I heard the file... it's a spooky automated bit of propaganda. For the most part, it's a demoralizing bit of wasted air canted at poking fun of the Falun Gong. In my grown up world, the calls seemed like school yard antics. But hey, whoever said the Chinese Communist Party was mature and responsible.

I should also note, many of the people who emailed me commented they felt intimated, scared, and harassed by the calls. The volume, duration, and frequency of the calls also seemed to serve as a telephonic Denial of Services too.

Discrimination, Hate Messages among Chinese Exports to U.S

Beginning Feb. 6, repeated calls were made to hundreds of people in more than 20 countries in a well-coordinated fashion. Friends whose mobile phones rang at the same time picked up and heard the same pre-recorded messages in Chinese or English.

Speakers at the Tuesday press conference described unlisted numbers in the U.S. being bombarded with calls and a feeling of invasion of privacy. They said that no group besides the
CCP has the ability and the motive to track down and call so many people in another country so systematically.

The pre-recorded messages were all against the practice of Falun Gong, and some also included Chinese nationalist messages. “My husband and daughter received calls, which disturbed us greatly,” said Ma Lili, a New York businesswoman who was forced to leave China after
Falun Gong began to be persecuted in 1999. Her friends in China were invited in to have a “conversation” with Chinese national security at the same time that the calls were being made.
Many recipients of the phone calls reported them to local police and intelligence agencies, such as the FBI.

The U.S. House of Representatives took note of CCP activities against Falun Gong practitioners on U.S. soil in its 2004 concurrent resolution 304, which calls for reporting and investigation
of such activities.

Exposed: Chinese Black Operations On U.S. Soil - Part III

I've been conducting more research on the matter of Chinese Operatives working against U.S. interests on U.S. Soil. What better source to understand the problem than the U.S. Congress.

Every day we read or hear about U.S. authorities attempting to identify sleeper cells and black operatives on U.S. soil. Nearly all of this relates to terrorism. Yet, the halls of Congress are dressed with testimony that reads like a spy novel... and the enemy is China. I encourage everyone to Google search "Congressional Testimony" and "Falun Gong". You'll be amazed at what is known about Chinese covert operations within the U.S. Yet, we never see these reports in the media. Why?

Below I provide a few snippets of what is known about Chinese Covert Operations in the U.S., and what's worse, it's often directed against U.S. citizens.

Resolution 304 also specifically mentioned section 401(a)(1)(B) of the International Religious Freedom Act of 1998 (22 U.S.C. 6401(a)(1)(B)):

Agents of China’s Communist Party Operating in the US

Resolution 304 calls on China’s agents in the United States to halt all operations being carried out against practitioners of Falun Gong on United States soil.

The resolution makes reference to China’s agents carrying out acts of violence and assault, property theft and destruction, illegal wire-tapping, harassment, intimidation, and persecution against practitioners of Falun Gong in the United States.

Exposed: Chinese Black Operations On U.S. Soil - Part II

Last year a Chinese Diplomat who defected to Australia appeared before the U.S. Congress to share the horror that caused him to defect. One always must question his motivation. At the time he appeared, he had already received asylum from Australia. Inflating stories and providing a fantasy tale to the U.S. gave him no benefit. Therefore, Cover For Action assumes his sworn testimony to be factual. Moreover, his statement is in line with other reports, giving it additional credence.

In his testimony he said there are thousands of informants working covertly, against the Falun Gong. He also indicated that Embassy's (missions...consulates etc.) have "at least" one official overseeing these operations.

This is nothing short of a BOMBSHELL! What he essentially said here is that Chinese Diplomatic missions within U.S. territory are launching black operations on U.S. citizens. This is powerful on many fronts: a. Chinese Covert operations are present on U.S. soil, operating out of Embassy's. and b. Chinese Covert operatives are targeting U.S. citizens (Falun Gong).

This is like saying that KGB operatives are targeting U.S. citizens. POWERFUL. Somehow though, I think if were the KGB, the story would get more play. We treat China with such Kid Gloves.

In doing a little research for this post, I was shocked and amazed at the the vast amount of congressional testimony which exists on this topic. Since the early 2000's Congress has been discussing how Chinese Covert operatives are working on U.S. soil: Covert Break-ins, Phone Intercepts, Assaults, etc. etc. again... VERY VERY SPOOKY. I'm spooked just writing this blog.


FAIRFAX DIGITAL

Mr Chen repeated claims that more than 1000 Chinese secret agents and informants were tracking and persecuting Falun Gong members. "In each Chinese mission overseas, there must be at least one official in charge of Falun Gong affairs, he said.

By Jonathon Browde WASHINGTON, DC

Mr. Chen described the organization of Chinese missions worldwide, saying they are divided into two categories: diplomatic and intelligence gathering. Those working to gather intelligence, Mr. Chen said, report directly back to Beijing and not their local mission, allowing Beijing to
use missions worldwide as a vast spy network.

The US House passed a resolution in September 2004 condemning the CCP for spying on and harassing Americans who practise Falun Gong. The resolution listed instances of breaking and entering as well as assault and battery. Mr. Chen also told the committee that the CCP
controls most Chinese-language media in the West, including the U.S., largely through dictating advertisement revenue through Chinese-owned businesses. With this control, the CCP can re-iterate the Party line in Chinese communities throughout the US.

Exposed: Chinese Black Operations On U.S. Soil

Sounds like the stuff movies are made out of. Spend a little time reading the headlines and it wont take you long to understand there is a greater chance that not that Chinese operatives are working their MOJO on U.S. soil.

For now, their hostile operations seem to be directed at dissidents such as the Uigurs and Falun Gong. Of course, read through my previous posts and you'll get a good history of their U.S. based operations respective of Front Companies, Economic Espionage, Political Influence, and Theft of Sensitive U.S. Technology.

In an interesting article, Forbes outlines a number of Chinese black operations. With black operations comes, sleeper cells, safe houses, and spys..... the stuff spy movies are made of. Sexy stuff huh?

FORBES

Overseas Falun Gong practitioners are, for example, leading an underground campaign to hack China's Internet firewalls to counter the Chinese Communist Party's news blackout and propaganda in the Middle Kingdom. But there are many skirmishes between Chinese communism and Chinese spiritualism taking place on U.S. soil.

Last year, however, Falun Gong practitioners worldwide were themselves barraged with harassing phone calls, including death threats. Some of these campaigns involved hours of continuous and simultaneous ringing of work and home phones and private cell phones.

A few days before the July 1999 crackdown in China, Falun Gong Web sites in Canada and the U.S. began to crash. According to Ethan Gutmann, author of Losing the New China, a Falun Gong practitioner in Washington traced the "denial of service" hacker attacks through an Asia-Pacific Internet registry, to No. 14 East Chang'an Street, Beijing, where China's Ministry of Public Security is located.

The Chinese government's persecution of Falun Gong followers is allegedly run by the notorious Office 6-10, a specially created unit that has overseen a terror campaign, which survivors say includes mass arrests, imprisonment in labor camps, brainwashing, torture and, in some cases, murder, for all those who failed to renounce their allegiance to Falun Gong.

Falun Gong pay for Chinese Military

In a recent report by the honorable David Kilgour, Canadian Secretary of State, there is clear indication that the Chinese Military is using profits from harvested Falun Gong organs to supplement it's bulging budget.

Kilgour has also suggested the International Olympic Committee (OIC) leverage China to discontinue their attack on the Falun Gong and the organ harvesting practice. And he warns... thousands of people will show up at the Beijing Olympics wearing badges saying "stop persecuting Falun Gong" or "stop organ snatching." Does anyone expect China to listen to the OIC?

You know what that means right? Thousands of people wearing egg a la face pins. What a sight, people with anti-China pins, reeking of free speech, advertised at every Olympic event, on every news network and in thousands of international homes. The CHICOM's will be rushing to fix the problem. What will they do? Take the pins, remove them forcefully from patrons?

Ah, perhaps countries ought to warn travelers the risk of having their liver cut out...unwillingly.

The EPOCH Times

"We believe that there has been and continues today to be large-scale organ seizures from unwilling Falun Gong practitioners," conclude the Canadian authors of a groundbreaking report on organ harvesting in China, in its revised version introduced in Ottawa on Jan. 31.

The new report sheds light on the state of health and military financing in China. Both rely on money made from illegal organ transplants to make up for budget shortfalls, says the report.

The Olympics should be used "as a lever to get [Chinese authorities] to stop this terrible practice," Kilgour told The Epoch Times."The reason it is happening is that we have a totalitarian government combined with what I call 'carnivore capitalism' where anything goes, and it shouldn't surprise people to know that this unimaginable practice is happening," he said.

Kilgour believes the International Olympic Committee should "start to make some very stiff demands on China," starting with stopping organ harvesting immediately. He added that if the organ harvesting does not stop, thousands and thousands of people will arrive in Beijing in 2008 with badges saying "stop persecuting Falun Gong" or "stop organ snatching."

"Their reputation will be in complete disgrace."

Chinese Corruption and Collapse

Chinese Corruption and Collapse

China's banking system is in a sad state of affairs. After years of high dollar rolling for their military build-up, Chinese banking and financial infrastructure, largely state owned, is on the verge of burning up. Plagued by massive corruption, greed, and narrow sightedness, the government has failed to understand the basic principals of new world finance. Then again, no one ever said it was easy to teach an old communist dog, a new democratic trick. It's hard to be a forward thinker when a line item on your annual budget is labeled: organs cut out of prisoners and sold. Ya, it's in the black too.

SEEKING ALPHA

The Inevitable Collapse of China's Banks

Chinese megabanks aren't even banks -- at least not the way we understand them. Carved out of the old Communist banking system just over 10 years ago, the state-owned banks' role has been to bankroll the government's massive infrastructure projects and to keep otherwise bankrupt state-owned enterprises [SOEs] afloat. As arms of the Communist government, Chinese banks have had no incentive to learn the disciplines of basic banking. Conversely, loan applicants never had to cobble together a business plan to get a loan -- or suffer the negative consequences of failure.

That's why it's no surprise that Chinese state-owned banks are a commercial disaster. The Chinese government has pumped over $434 billion to bail them out -- just since 1998. That's more than the GDP of banking giant Switzerland

Peek behind the Wizard of Oz's (or Shanghai's) curtain, and you'll see that China's double-digit percentage growth rates are an economic sleight of hand that have come at a price of escalating bad debt and non-performing loans. At the end of 2004, bank debt in China stood at $3.7 trillion -- about twice the size of its GDP. That's the highest proportion of any economy in the world. And that debt is lent almost entirely by state-owned banks -- and over half of it by the Big Four. Today, Chinese state-owned enterprises [SOEs] owe banks over $2 trillion -- about the size of the entire Chinese economy. And the amount of outstanding loans is growing by $500 billion each year.

Throw in China's cheap labor and you see why the Chinese are selling Honda knock-off motorcycles at the price of their weight in scrap metal in Vietnam. This may lead to impressive rates of "top-line" economic growth in the medium term. But it also leads to the kind of massive misallocation of resources that eventually brought the Soviet Empire to its knees.

This makes the coming collapse of Chinese banks inevitable. And it won't be the first time it will have happened. In the Asian crisis of 1997, two Guandong banks went belly up -- exposing the massive non-performing loans given to the Chinese red chips floated in Hong Kong.

Indeed, when Ernst & Young suggested in 2005 that banks' bad debts in China might amount to as much as $911 billion, the Chinese government quickly suppressed the report. That should be no surprise. Repressing the truth is what Communist governments are best at. But the next time you hear about China's $1 trillion of foreign reserves, remember that this world record stash is barely enough to pay off its bad banking debts. And with cheap loans financing a big chunk of China's 10%+ annual economic expansion, bad debts may approach $2 trillion before the bubble bursts.

Think of the Chinese economy like the bus in the movie "Speed." The Chinese economy is like the bus that has been rigged with explosives. If its speed drops to below 50 mph, it will explode. The Chinese authorities' challenge is to keep the bus going above 50 mph until the bomb can be (somehow) defused. If economic growth does slow, SOEs won't be able to service their debts and the entire banking system will collapse on itself. And even $1 trillion won't be enough to save it.

Here's what's worrisome. The Chinese bus will eventually run out of gas. And the Chinese economy plays a much bigger role in the global economy than it did during the Asian Crisis of 1997. China's troubles will have a much greater impact on the U.S. economy than the collapse of the Soviet Union -- an economy that accounted for less than 1% of U.S. trade in 1991.

Is Chinese Intelligence Intelligent?

Come on now. Who conducts an ASAT test, blows billions of bits of material into a satellite debilitating debris field, and then says: we are peaceful and did not mean to harm relations. That's like the kid with his hand in the cookie jar who says: I was not going to eat any of these cookies, only inspect them for defects. Pleeeaase!

Times Recorder Zanesville, OH

Just as everyone is watching Iran and North Korea, China is quietly, but rapidly, developing its anti-satellite (ASAT) capability to shoot down U.S. satellites.

This is the other face of China, the hard power side that they usually keep well hidden," says Chong-Pin Lin, an expert on China's military in Taiwan and the author of China's Nuclear Weapons Strategy, "they talk more about peace and diplomacy, but the push to develop lethal, high-tech capabilities has not slowed down at all."

"This is a wake-up call," warns Robert Joseph, the under secretary of state for arms control and international security, that China is "pursuing capabilities to exploit our vulnerabilities." The question is: how should the United States respond to such worrisome Chinese moves?