Don't Forget About
China's Dissidents

By ELLEN BORK

In the 1970s, the People's Republic of China held out appeal for American intellectuals disillusioned with Soviet Communism. Journalists, academics, artists and religious leaders made the journey. Their admiring accounts reveal, as Paul Hollander described in his book "Political Pilgrims," that most of the visitors saw what they wanted to see, and in any case only as much as their Chinese hosts allowed.

Visitors to China these days are not looking for a successful communist model. After all, no less a cold warrior than Ronald Reagan called China a "so-called communist country." In most foreign policy circles, dwelling on China's communist character is considered slightly gauche.

David Klein

Indeed, Western newspapers generally do not identify Hu Jintao as the general secretary of the Chinese Communist Party, even though it is this post and not the state presidency from which he derives his authority and power. The passing of the mass totalitarian campaigns of the Mao era, and the economic and minor political reforms of the late 1970s and '80s under Deng Xiaoping, convinced many observers that economic growth will take the country inexorably toward a freer political system.

However, like the "pilgrims" of the earlier era, today's visitors are not seeing the full picture either. In the late 1990s, when she was U.S. secretary of state, Madeleine Albright visited a judicial training center in Beijing. At a photo session, she beamed as she held up a copy of the China Daily. The headline touted China's commitment to the rule of law. Buried deep in the text were what the paper identified as the rule of law's key elements. One of these was the supremacy of the Communist Party.

Secretary Albright fell into a common trap. The China Daily is the English language propaganda organ of the Chinese Communist Party. Its content is carefully managed and aimed at prominent foreign visitors. While the photographs and coverage of the recent Sichuan earthquake gave the impression of a relaxation in press control, it was only temporary and soon reined in. During the Tibetan protests in March and April, the carefully modulated language that China's leaders use on the world stage was abandoned in favor of harsh "Cultural Revolution" era denunciations of the Dalai Lama and Tibetans.

The PRC's leaders still control what Chinese people read and watch on television on any topic where they perceive their interests to be at stake. All publications and broadcast media are licensed by the government. Journalists are required to undergo Marxist indoctrination and can be singled out to perform self-criticism. Unsatisfactory political attitudes or behavior can lead to prosecution and surveillance. The party's Central Propaganda Department also dictates content through texted and faxed directives telling journalists how to handle sensitive issues like the outbreak of SARS and anniversaries of the Tiananmen Square massacre.

The directives and blacklists are kept secret, perhaps to keep their targets off balance, or to maintain the façade of openness that Chinese authorities wish to present to the rest of the world. A journalist, Shi Tao, who relayed the content of such a directive to an overseas Chinese Web site, is in jail on a 10-year sentence for leaking such "state secrets."

The Internet -- through which some Chinese citizens can access overseas Web sites -- has not significantly eroded control of information. The Chinese government has a formidable firewall to block sites it doesn't want its citizenry to view. It's manned by thousands of censors who monitor sites and recommend them for blocking. Although a persistent citizen can evade the technology that blocks foreign sites, the authorities compensate by making the system slow and cumbersome.

Self-censorship and intimidation also play a significant role in keeping the Internet safe for consumption. Many Internet companies voluntarily remove content that the authorities consider politically problematic. American companies like Google, which tailors its search engine to Chinese demands, and Yahoo, which cooperated in the investigation of the journalist Shi Tao, also perform this censorship function. The party may rely heavily on such indirect pressures to contain the Internet's influence, but it doesn't skimp on policing, coercion and repression.

Estimates of the number of people employed to monitor the Internet run into the tens of thousands. According to Reporters Without Borders, at least 50 Internet dissidents are in jail. Of course, none of this will be visible to a foreign visitor.

Pollution, skyscrapers and development reflect China's rapid economic growth, not political change. There have been no significant political reforms in China since the 1980s. Meanwhile, economic growth has enabled more intense but sophisticated approach to political repression.

Since the 1989 Tiananmen massacre, anything that suggests a degree of organization, or coordination across provinces, is stamped out as quickly as possible and as ruthlessly as necessary. Examples include the religious organization Falun Gong and the China Democracy Party, whose members experienced the most brutal treatment a communist-party system has to dole out, including rape, beatings, shackling and electric shocks, according to Amnesty International and other human rights organizations. While China touts its commitment to the rule of law, lawyers who dare to defend victims of political or religious persecution are increasingly the targets of repression themselves.

The Olympics and their preparations are not leading to a liberalized China. In fact, the opposite is true. Dissidents have been sequestered, detained or sent out of town for the duration of the games. The construction of Olympic venues has led to the eviction of more than one million people. Activists who persist in pointing out the connection between the Olympics and the increase in human rights abuses -- such as Hu Jia, Ye Guozhu and Yang Chunlin -- have been jailed.

There are hundreds if not thousands of other prisoners visitors to the Olympics Games should remember. They include veterans of the China Democracy Party, like Zha Jianguo; petitioners advocate Liu Jie, imprisoned for gathering thousands of names on an open letter seeking political reforms; and Internet essayists like Lü Gengsong who have written about corruption and the CCP. The group China Human Rights Defenders lists eight people in the Beijing area alone still imprisoned for participating in the Tiananmen democracy protests of 1989.

And then, of course, there are the dead victims of Tiananmen. Their exact number is unknown. Despite harassment, threats and frequent detentions, Ding Zilin, the mother of a teenaged victim, and other parents have gathered 188 names over the past 19 years. Not surprisingly, Ms. Ding has been pressured to leave Beijing for the duration of the Games.

When the Olympics are over and the crowds go home, China will have no incentive to relax control. Worse, the party's capacity for surveillance and repression will be enhanced by hosting the Games.

The world isn't just sending athletes to the Olympics, but surveillance technology that will help the government keep tabs on its people for years to come. American companies alone have sold China technology that invisibly copies computer hard drives, reads encrypted text and performs facial recognition analysis on surveillance video.

No one purports any longer to be a fan of Chinese, or any other brand of communism. The problem arises when visitors fail to understand what they are seeing -- and what has been hidden -- and form a mistaken impression of the kind of government the People's Republic of China still has.

Bush Favors Tex-Mex: Presidential Picks for Dining Out in D.C.

Aug. 6 (Bloomberg) -- Near a Chinese restaurant in a dingy strip mall in Falls Church, Virginia, two men wearing suits and grim expressions stand guard next to a pair of shiny black SUVs.

Groups of Hispanic men idling outside the nearby check- cashing store barely take note of the show of force -- bodyguards of government officials frequently wait in this same spot.

Washington's political elite have been making their way to the inauspicious-looking Peking Gourmet Inn since George H.W. Bush was vice president in the 1980s.

Presidents don't eat out often, and when they do, it's not always at the most fashionable or trendy places. Bill Clinton had a soft spot for McDonald's. George W. Bush, for his rare dinners outside the White House, favors Tex-Mex.

Even so, dozens of Washington-area restaurants boast of brushes with the commander-in-chief.

1,000 Ducks a Week

On a recent Saturday evening, Defense Secretary Robert Gates dined at Peking Gourmet, though he couldn't be seen among the crush of people inside the large, main dining area. The restaurant has a warren of smaller rooms as well. Still, odds are he had the duck.

The restaurant sells about 1,000 ducks a week, requiring a small army of white-aproned servers to conduct the tableside carving. They slice medallions of golden skin and dark meat, strip off the fat and fan the pieces across a serving platter. A whole duck ($38) is served with pancakes, spring onions and hoisin sauce, and it shouldn't be missed.

While the elder Bush tended to order the beef dishes, the ginger shrimp with asparagus is fit for political royalty too.

Peking Gourmet Inn is at 6029 Leesburg Pike, Falls Church, Virginia; 1+703-671-8088; http://www.pekinggourmet.com.

Bush's Chair

The El Paso Cafe in nearby Arlington, Virginia, shares a parking lot with a bodega in a largely Hispanic neighborhood. One night seven years ago, the current president ate here.

Indeed, the restaurant commemorates the occasion with the chair Bush sat on hanging from the ceiling.

Bush favors cheese enchiladas, and he was probably right to stick to the traditional favorites here, based on a recent visit. A corn tamale appetizer with Salvadoran sour cream ($2.50) is studded with yellow kernels and almost as tender as corn pudding. A trio of enchiladas ($9.75) hits all the right notes; the chicken, slathered in cheese, is a standout with a spicy bite.

But a breaded shrimp dish seems ill-conceived. It's softened and undone by a mild sauce poured on top. Though it's accompanied by rice and pico de gallo, there is little of interest on the plate.

El Paso keeps dozens of tequilas, including a smooth Corralejo that boasts hints of cocoa and honey ($11.95).

El Paso Cafe is at 4235 N. Pershing Drive, Arlington, Virginia; 1+703-243-9811; http://www.elpasocafe.net.

Endorsement

Any presidential visit will boost a restaurant's profile, but few can claim an outright endorsement from two world leaders, like those Filomena Ristorante in Georgetown got from Clinton and German Chancellor Helmut Kohl.

In 1994, Clinton told White House reporters that Kohl had recommended the restaurant, ``so I took my family and some friends and we had a wonderful dinner there.''

Almost 15 years later, Filomena remains at the top of its game. Visitors are welcomed by the sight of ``pasta mamas,'' women who hand craft the pasta inside a street-level picture window.

Homey Touches

Downstairs, tuxedoed waiters guide patrons to tables that are annoyingly close together. But the place remains homey, with handmade lace placemats, lighted sparklers stuck into desserts to celebrate special occasions, and bottles of amaretto and sambuca delivered to each table with the dessert in a gesture of hospitality. Though the food isn't especially innovative, it is uniformly terrific.

The arancini appetizers ($9.95) -- balls of rice dusted with bread crumbs -- come stuffed with beef and cheese. They are irresistible.

The chicken parmigiana ($23.95) is as good as this old favorite gets. The nicely breaded and crispy chicken is enhanced, not overwhelmed, by the mozzarella and parmesan cheeses and a light tomato sauce. It's accompanied by a mound of linguini that could be described as mammoth. If portion control is the latest trend, it has not been whispered about here.

The ``Linguini Cardinale'' is studded with lobster meat in a cream sauce that somehow avoids being too rich. The menu says it is a Clinton favorite, and that's easy to believe.

Despite the gargantuan portions, skipping dessert would be a shame, especially the heavenly tiramisu. It is light as a cloud, with distinct flavors of mascarpone cheese, espresso and liquor.

Japan Economy Probably Contracted, Bringing a Recession Closer

Aug. 8 (Bloomberg) -- Japan's economy probably contracted last quarter, bringing the country to the brink of its first recession in six years, as exports fell and consumers spent less.

Gross domestic product shrank an annualized 2.3 percent in the three months ended June 30, according to the median estimate of 25 economists surveyed by Bloomberg News. The Cabinet Office will release the report on Aug. 13 at 8:50 a.m. in Tokyo.

Prime Minister Yasuo Fukuda, who last week replaced his economic ministers in a bid to boost his popularity, is planning relief measures to help companies and consumers cope with record energy costs. Toyota Motor Corp. yesterday reported the biggest drop in earnings in five years as U.S. sales slumped.

``What you're going to see is a long, slow, modestly painful recession,'' said Robert Feldman, head of economic research at Morgan Stanley in Tokyo. ``It's going to fall heavily on both workers and stock holders who are suffering lower returns as profits come down.''

Exports probably fell 2.4 percent last quarter, robbing Japan of the engine that drove growth over the past six years, according to economists surveyed. Shipments abroad increased every quarter except one since the most recent recession in 2001.

The economy probably shrank 0.6 percent from the first quarter. Net exports -- the difference between exports and imports -- subtracted 0.1 percentage point from growth, economists said.

Toyota, Japan's biggest company, yesterday cut its sales forecast for the year ending March 2009 by 3.5 percent to 8.7 million vehicles. Since June, Toyota has fired 800 workers at a Kyushu-based subsidiary, where the company is cutting production of sport-utility vehicles and Lexus sedans bound for the U.S.

Shedding Workers

``The Toyota story is totally consistent with the macro data,'' said Kiichi Murashima, chief economist at Nikko Citigroup Ltd. in Tokyo. ``Companies have been quick to get rid of workers in response to slowdowns in some sectors.''

The unemployment rate jumped to 4.1 percent in June from 3.8 percent three months earlier. Wage growth is also slowing.

Summer bonuses at the country's biggest companies, which tend to pay more than their smaller counterparts, dropped this year for the first time since 2002, according to a survey by the Keidanren business lobby.

Domestic demand, which includes company and consumer spending, probably accounted for 0.5 percentage point of the economy's quarter-on-quarter contraction. The figures for household spending will probably exaggerate the decline from the first quarter, when the leap year gave consumers an extra shopping day in February, economists said.

Bank of Japan

The government yesterday said the economy is ``weakening'' for the first time since 2001. The worsening economy and the fastest inflation in a decade will compel the Bank of Japan to keep its benchmark interest rate at 0.5 percent for the rest of the year at least, according to economists surveyed last month.

Still, economists say the current slowdown is unlikely to be as severe as past recessions because the corporate sector is better able to handle higher costs and weakening U.S. demand. Businesses have trimmed excess debt, workers and capacity, Economic and Fiscal Policy Minister Kaoru Yosano said yesterday.

``Most of the measures suggest that things aren't as good as they were 12 months ago, but it's nothing like 2001, 1998, or 1993,'' said Richard Jerram, chief Japan economist at Macquarie Securities Ltd. in Tokyo.

Companies plan to increase capital investment by 4.1 percent in the year ending March, according to a survey released this week by the Tokyo-based Development Bank of Japan. While that's slower than last fiscal year's 7.7 percent, it's better than the 10 percent decline recorded during the 2001 recession.

The Bank of Japan's most recent business survey showed that labor demand is close to a 16-year high. The jobs-to-applicants ratio was at 0.91 in June, meaning almost every person who wants a job can get one. During the previous recession seven years ago, there were two applicants competing for every position.

``When you say recession, it triggers images of 1998 or 1993,'' Jerram said. ``You're having a period of sub-par growth, but it's not the sort of downturn we saw three times during the previous 15 years.''

AIG Plummets as Insurer Won't Rule Out Capital Raise (Update3)

Aug. 7 (Bloomberg) -- American International Group Inc., the biggest U.S. insurer by assets, fell the most in at least 28 years of New York trading after writing down more than $11 billion of holdings and saying it won't rule out raising capital.

``It's very hard to predict right now when and if we'll need more capital,'' Chief Executive Officer Robert Willumstad said today in a conference call with analysts. ``Future losses can change that assumption and we're obviously dependent on the condition of the U.S. housing market.''

Willumstad faces increasing pressure to turn around AIG after the insurer posted more than $18 billion in losses over the past three quarters. The second quarter's $5.36 billion loss, reported yesterday, was worse than analysts predicted and renewed concern that AIG may need to raise cash by selling shares. Willumstad called current capital ``satisfactory.''

AIG slid as much as 18 percent in New York Stock Exchange composite trading, its biggest one-day drop since at least July 1980. The stock declined $5.04 to $24.05 at 12:15 p.m., leaving the shares down almost 60 percent this year. AIG's quarterly loss was driven by $5.56 billion in pretax writedowns tied to credit- default swaps.

Willumstad, 62, took over at New York-based AIG in June after investors including former CEO Maurice ``Hank'' Greenberg called for the ouster of Martin Sullivan. Willumstad, who said AIG made too many bets on the U.S. housing market, has promised to deliver a turnaround plan by late September.

AIG held $112.2 billion in capital at June 30, the insurer said in a slide presentation, more than the $102.7 billion at the end of the first quarter. The company raised $20.3 billion in May by selling debt and equity.

New Questions

The losses, tied mostly to the worst U.S. housing slump since the Great Depression, ``suggest that despite $20 billion of recently raised fresh capital, AIG's financial position and the company's ratings may be questionable,'' Bijan Moazami, analyst at Friedman Billings Ramsey Group Inc., said today in a research note cutting AIG to ``market perform'' from ``outperform.''

Credit-default swap contracts, which are guarantees AIG sold to protect fixed-income investors, caused record losses in the two previous periods and accounted for about $25 billion in writedowns over nine months.

The financial products unit responsible for the swaps guaranteed $441 billion of assets at the end of June including $57.8 billion in securities tied to subprime mortgages, compared with $469.5 billion and $60.6 billion on March 31.

Forecast Worsens

AIG tripled its forecast of possible payments on the swaps to $8.5 billion, according to a presentation on its Web site. The insurer said it hasn't made any payments on the contracts and has posted $16.5 billion of collateral as of July 31 demanded by investors who purchased protection through the swaps.

``When counterparties start requiring that you post collateral, the best-case scenario is you don't have use of the cash for quite some time,'' said Donn Vickrey, analyst at research firm Gradient Analytics Inc., who has the equivalent of a ``sell'' rating on AIG. ``In the worst-case scenario, this is probably a pretty good estimate'' of what the insurer will have to pay on the contracts.

Investors may demand an additional $13.3 billion in collateral if the insurer's credit rating is downgraded again, AIG said yesterday in the filing.

Most of the capital raised in May has been used as collateral by the financial products unit and not all of the assets have been allocated, Vice Chairman Steven Bensinger said today. ``There's a large sum of it left,'' he said.

`No Quick Fixes'

Standard & Poor's, Moody's Corp. and Fitch Ratings all downgraded AIG in May after the first-quarter loss. The firms give AIG their fourth-highest of 10 investment-grade scores.

AIG is unable to determine the effect ``that recent transactions involving sales of large portfolios of CDOs will have on collateral posting requirements,'' the filing said.

AIG marked down investments including fixed-income assets in the second quarter by $6.08 billion after ``severe, rapid'' drops in the value of securities backed by home loans. The company has units that originate, insure and invest in mortgages.

``There are no quick fixes,'' Willumstad said today. ``In uncertain times like these we will continue to make every effort to protect our capital, reduce risk and strengthen our balance sheet.''

Private equity and hedge fund profits fell to $91 million from $992 million. Hedge funds returned $207 million while private equity resulted in a $116 million loss.

Mortgage Insurance

AIG's mortgage insurer, which reimburses lenders when borrowers don't pay, may be unprofitable through the middle of next year, the company said. The insurer's American General Finance mortgage lender lost $40 million, compared with profit of $43 million a year earlier.

Allianz SE, Axa SA and Aegon NV, three of Europe's biggest insurers, reported lower profit as the subprime contagion and slumping stock markets ate into the value of their holdings.

Allianz, based in Munich, scrapped its earnings growth forecast after debt writedowns at its Dresdner Bank unit drove second-quarter profit down 29 percent. Paris-based Axa said first-half earnings tumbled 32 percent as falling stock markets curbed sales of savings plans. Aegon of the Netherlands posted a 58 percent decline in net income on investment losses.

Sullivan, 54, had replaced Greenberg, who ran AIG for almost four decades, in March 2005, two months before then-New York Attorney General Eliot Spitzer sued Greenberg and AIG for allegedly misleading investors.

Greenberg, 83, denies any wrongdoing in the case, which is still pending. Spitzer dropped portions of the lawsuit in 2006 that included four other allegations tied to the investigation. AIG agreed in 2006 to a $1.64 billion settlement of state and federal probes. Greenberg controls the biggest stake of AIG shares, according to Bloomberg data.