China Confidential

The dominant faction in China's ruling Communist Party is waging a phony war on corruption as a cover for its efforts to consolidate power and continue capitalist-style economic reforms in the face of a growing leftwing opposition.

China's President and "Paramount Leader" Hu Jintao heads the dominant faction, which is known as the Qinghua clique.

In a nationally televised speech Friday marking the 85th anniversary of the founding of the party, Hu referred to fighting corruption and efforts to create a clean government as a "strategic mission."

"If a ruling party cannot maintain flesh and blood ties with the people, if it loses the people's support, it will lose its vitality," Hu said.

His latest victim: a top-level Chinese military official, sacked for corruption after his mistress informed on him to the authorities. The official Xinhua news agency reported that Wang Shouye was dismissed as deputy commander of the navy and expelled from the national legislature. Xinhua said the investigation into Wang began in January.

The news agency didn't offer details of the case against Wang or say what criminal charges he faced; but other commanders have been accused of embezzlement, smuggling or taking bribes from contractors or officers seeking promotion.

Although thousands of government and Communist Party officials have been punished in recent years for corruption offenses--and some have even been executed--a case against a senior member of the politically powerful military is rare.

Earlier this month, in an unrelated case, Xinhua reported that Liu Xiaoguang, the head of a Chinese state-owned real estate company, Beijing Capital Group, was being investigated for corruption. The case is most probably linked to the recent arrest of former Beijing Vice Mayor Liu Zhihua, who is being investigated for corruption in connection with his control of a $42 billion construction project to upgrade infrastructure for the 2008 Beijing Olympic Games.

Chinese media reported that Liu kept a "pleasure palace" populated by young concubines.

There's more: China's National Audit office has disclosed $1.1 billion worth of fraud at the Agricultural Bank of China, one of four state-owned giants. The state audit supposedly also found evidence of $1.8 billion in improperly handled deposits and $3.5 billion in illegal loans.

The National Audit Office also reported that Chinese government officials lost more than $1.5 billion last year through corruption and poor tax collection, including $685 million looted from the central budget by 48 government departments.

Widespread, worsening corruption is causing tremendous resentment among the population at large, especially in depressed rural areas.

Left-leaning party leaders and officials blame the country's capitalist-style reforms for the corruption. They advocate a return to Mao-era "socialist principles."

In this context, the anti-corruption campaign is partly an attempt by Hu and his clique to steal the thunder of the Left. But the crackdown is also aimed at people tied to the "Shanghai clique" headed by Hu's predecessor, Jiang Zemin, who still wields considerable influence in the party. Five or six of the nine members of the Politburo Standing Committee are considered members of the clique, whose members rose to prominence in the Shanghai city administration under Jiang.

Ahead of next year's party congress, Hu is seeking to isolate and diminish the power of the faction, many of whose members are known for their lavish lifestyles.

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Again, China disappoints.

Beijing is signaling Washington that North Korea could be close to test-firing an intercontinental ballistic missile capable of reaching parts of the United States.

Chinese Prime Minister Wen Jiabao said Wednesday that China was paying close attention to reports that North Korea may be preparing a launch. Wen urged the reclusive Stalinist state to avoid any actions that would aggravate regional tensions and further derail long-stalled negotiations on its nuclear development programs.

"We hope that the various parties will proceed from the greater interest of maintaining stability on the Korean Peninsula and refrain from taking measures that will worsen the situation," the premier told reporters.

Wen's remarks represented the first public expressions of concern by China's Communist Party rulers about a possible missile launch in the two weeks since intelligence reports detected North Korean preparations.

North Korean missiles are based on Chinese technology; and China is North Korea's closest ally and a critical provider of fuel and other forms of economic assistance.

Though some Chinese policymakers reportedly view Kim as a dangerous liability, the prevailing Chinese view seems to be that North Korea is still an important buffer between China and the US and its South Korean ally (though South Korea is increasingly inclined to appease the North). China also wants to avoid a collapse of the North because it would send thousands of refugees across the border into China.

A North Korean missile launch would complicate efforts to restart negotiations on ending the regime's nuclear weapons programs. Pyongyang has refused to return to talks with the US, China, Russia, Japan and South Korea.

There are likely to be clues indicating a launch is imminent. The framework supporting the missile would first be removed, for example, allowing the missile to stand on its own.

There could also be other signals, such as an increase in radio traffic from a North Korean ship monitoring the launch.

The suspect ICBM is a Taepodong-2 multi-stage rocket that sheds empty sections as fuel is depleted. It is designed to exit the atmosphere quickly before descending in a gradual curve back to earth.

The launch would be Pyongyang's first firing of a Taepondong missile since 1998, when it launched one that flew over Japan before dropping in the Pacific.

North Korea boasts that it has developed nuclear weapons; and American analysts say Pyongyang has produced a small but growing atomic arsenal, including, possibly, nuclear warheads for its ICBMs.

A failed state, North Korea developed its nuclear and missile programs while starving its people. According to the most conservative estimates, at least a million people have died as a result of Kim's policies. Untold numbers have also been killed, starved and tortured to death in North Korean concentration camps called "control zones." Atrocities reminiscent of Auschwitz are commonplace, including public executions, baby killings, gruesome medical experiments--and gas chambers.

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BRIC by BRIC, a new world is being built.

BRIC, for the uninitiated, stands for Brazil, Russia, India, and China, the countries destined to dominate the global economy by 2050, according to Wall Street investment banking firms. Goldman Sachs is credited with developing the BRIC thesis, which also argues that the component countries will increasingly cooperate in the coming years.

China is the crucial player. And cooperation is a key feature of Chinese diplomacy, as the world's fastest growing and most populous nation steps up efforts to lock up energy supplies, capture markets, and counter the power, prestige and influence of its superpower adversary, the United States.

BRIC by BRIC....

Relations between China and India, as we recently reported, are at the highest level ever. Same for China and Russia, which are reporting massive increases in trade and energy cooperation.

And arms. Russia has become one of the most important suppliers of arms and military technology to its former rival for control of the world Communist movement.

The two countries are the main members of the once obscure Shanghai Cooperation Organization (SCO)--China loves that word, cooperation--an increasingly effective tool of Chinese diplomacy that groups the Central Asian nations of Uzbekistan, Tajikistan, Krygystan, and oil-rich Kazakhistan in opposition to the US, which has established an arc of bases in the region.

India is an SCO observer (like Pakistan, Mongolia, and Iran). With India, too, China's relations are at an all-time high, to the dismay of the US, which had high hopes of employing India in its China containment strategy.

Then there is Brazil, the BRIC country in America's backyard. With a population of 186 million, a highly developed industrial sector and a number of world-class companies, Brazil is South America's dominant power and China's main partner in Latin America, apart from oil-rich Venezuela. China's trade with the South American giant--currently estimated at $10 billion--is booming. Energy-starved China is investing around $5 billion in the construction of a gas pipeline in Brazil; and Beijing has also shown interest in Brazil's large uranium reserves while inviting Brazilian companies to participate in the construction of nuclear power plants in China.

China and Brazil have also cooperated in developing and launching satellites, and the two countries have formed a Space Technology Cooperation Commission to coordinate their activities, and are reported to be cooperating in the development of an aircraft.

The only negative news in the China-Brazil relationship: Brazilian company CVRD, one of the so-called Big Three mining companies that constitute the secretive cartel controlling over 70 percent of the world's reserves of iron ore, the key component of steel. China is the world's largest producer and consumer of steel. Last year, it was forced to accept a massive 70 percent price hike in the price of iron ore. This year's price rise of 19 percent has spurred Chinese efforts to crack the cartel by accelerating domestic production and overseas investment--for example, in Gabon's giant, untapped iron ore deposits and mining operations in Western Australia.

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AN IRON HEEL: China is determined to break the cartel that controls over 70 percent of the world's supply of iron ore--the key component in the production of steel. Having been forced this year to accept a 19 percent iron ore price rise, following last year's punishing 71.5 percent price hike, Beijing will accelerate and intensify efforts to acquire its own iron ore reserves--for example, in Gabon--while trying to drive a wedge between Brazil's CVRD and Australia's BHP Billiton, which, together with multinational Rio Tinto, are the Big Three mining companies comprising the cartel. While boosting domestic iron ore output, China is investing in new Australian projects, including a 250 million ton deposit in Western Australia, where 95 percent of the country's iron ore deposits occur. Australia is the world's largest producer and exporter of iron ore. As the world's largest producer and consumer of steel, China relies heavily on iron ore imports. And imports have been steadily rising--to roughly 276 million tons in 2005 from 208 million tons in 2004 and 140 million tons in 2003, according to Chinese state media reports....

CONGO CORRUPTION: A shadowy Congolese opposition group calling itself the Coalition for Congo Democracy has been selectively circulating a "Dossier of Corruption" among European and American journalists. The document describes a number of allegedly corrupt transactions between Chinese companies and well-placed officials and relatives of Republic of Congo President Denis Sassou-Nguesso, a former Marxist. China buys oil from the Central African country, which is home to some of the planet's poorest people. The average life expectancy is 48 years. AIDS, malaria and other dread diseases are rampant; and the government shows almost no interest in improving conditions for the masses. While Congo exports an estimated $4 billion of oil annually, per capita income for its 3.8 million people is less than $700, according to the World Bank. The bank, which is now headed by former US deputy defense secretary Paul Wolfowitz, who is a leading Congo critic, ranks the country as one of the most corrupt on earth--right below Albania....

MEDIA CRACKDOWN: Chinese media outlets that report on disasters and social unrest without government permission will soon be subject to stiff fines. State-owned newspapers say a proposed law--practically certain to pass--means that Chinese media that dare to report on "sudden incidents" affecting "social safety" could be fined up to $12,000. The law is clearly aimed at suppressing news of China's rising rural unrest. Around 800 million of China's total 1.3 billion people live in the countryside, and the growing wealth gap between the depressed rural areas and the booming cities is fueling discontent. The earnings of peasants have either stayed put or plummeted during decades of capitalist-style reform. Corrupt land deals--land grabs, really, by crooked officials and greedy developers--have left many farmers propertyless and penniless. And a fragile social safety net has basically been dismantled. Beijing admitted to 87,000 uprisings and protests in 2005, most of them in rural areas. Three years ago, the official number was 58,000 incidents, involving three million people.

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Call it the politics of the past.

Chinese Communist Party propagandists and hacks apparently think they have discovered a powerful, new weapon in their drive for domestic control, regional domination, and international influence and prestige: archaeology.

As if acting out a premise for an Indiana Jones film, the party is calling on two of the country's most important institutions, the Chinese Academy of Sciences (CAS) and the Chinese Academy of Social Sciences (CASS), to mount expeditions designed to unearth evidence in support of contemporary claims and notions of ancient Chinese greatness. Both institutions are controlled by China's chief administrative authority, the State Council, a 50-member body charged with implementing policies and decisions of the ruling Communist Party.

Not too surprisingly, Tibet is an area of special interest. A CAS research team working with the Qinghai Provincial Archaeological Institute recently reported finding stone implements near the "strategic" Qinghai-Tibet Railway that prove that human beings lived there at least 30,000 years ago.

Called the "roof of the world," the 2.5 million-square kilometer Qinghai-Tibetan Plateau covers most of the Tibet Autonomous Region and Qinghai Province. The world's highest railway runs through the area; and a Chinese archaeologist made a point of alluding to the political significance of the discovery.

According to Chinese state media, he said: "If we can find relics dating back to the same period at the stratum of the region, that will further prove that our ancestors lived on the Qinghai-Tibet Plateau 30,000 years ago and that the Kunlun Mountains is one of the cradles of the Chinese civilization."

Beijing is also turning to archaeology in an attempt to achieve an advantage in China's so-called history war with South Korea--a complex dispute over an area that the Koreans call Koguryo and the Chinese refer to as Gaogouli. Both countries claim Koguryo/Gaogouli as exclusively theirs. But the Chinese have a key advantage; two-thirds of the territory is controlled by China. The only point the Chinese and Koreans seem ready to agree on is that the area encompassed a vast kingdom in the period between 37 BC and 668 AD.

Chinese officials representing the five-year "Northeast Project," which CASS launched in 2002 under the Center for the Study of Borderland History and Geography, describe Gaogouli as an ethnic regime in an ancient Chinese province. Korean archaeologists and historians say Koguryo was an ancestral state ruled by 26 wise kings, one of three ancient Korean kingdoms--in fact, the kingdom that gave birth to the modern name Korea--and is therefore a foundation of Korean national unity.

Backed by their respective governments, Chinese and Korean archaeologists are scrambling for ancient relics to support their national claims.

Of course, there is nothing new nor particularly Chinese about politically influenced or motivated archaeology (or history or sociology). In neighboring India, excavations sponsored by Hindu nationalists are being used to try to prove that the Indo-Aryan culture originated there and that the Indus Valley region supported a Vedic Hindu culture.

In the Middle East, many competing claims to territory are based on interpretations of archeological finds. Since Israel became independent in 1948, its archaeologists have used the Bible as a guide to make discoveries supporting the Jewish people's historic and religious claims to Palestine.

In contrast, Islamist regimes have favored destruction over discovery. After the Ayatollah Khomeini came to power in Iran, some of his more fanatic Shiite Muslim followers came close to destroying the magnificent ancient ruins of Persepolis in an attempt to erase evidence of their country's pre-Islamic, Persian past. Similarly, the Sunni Muslim Taliban blew up of priceless ancient Buddhist statues when they ruled Afghanistan.

Some aspects of Chinese political archaeology border on the totalitarian, recalling efforts by Nazi Germany and Fascist Italy to use the past as foundations for imperial aspirations. In 1940, after Germany invaded Poland, Nazi archaeologists were assigned to prove that German communities had lived there before the Poles. In Italy, Benito Mussolini mined ancient Roman civilization for propaganda purposes.

The Nazis naturally went to extremes, sponsoring pseudoarchaeological centers and institutes to find evidence of ancient Aryan glory. The Ahnenebe, or Ancestral Heritage Society, for example, was organized by the notorious SS. Inspired by Nazi occult beliefs, the society sent missions to Tibet to research the origins of the swastika, and also, according to some bizarre but credible accounts, to try to make contact with a mythical, subterranean society in the Himalayas, known as Shambhala or Agharta.

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China's Communist Party rulers are determined to significantly reduce the growing influence of nongovernment organizations (NGOs) operating in China, especially groups that are funded by the United States.

As the San Francisco Chronicle reported today, Beijing has begun to crack down on the NGOs, including George Soros' New York-based Open Society Institute and the Washington-based United States Institute of Peace (USIP) and National Endowment of Democracy (NED).

China Confidential has learned that the USIP and NED are special targets, as shown by the regime's recent raid of the local NED offices. Both groups promote themselves abroad as private, nonprofit organizations. In fact, they are mainly funded by the US national (federal) government. China's hypersensitive, authoritarian rulers will probably play up the groups' government connections--calling into question the N in their NGO status--while trying to avoid inflammatory, anti-US rhetoric.

But USIP and NED naturally lend themselves to criticism--even in the US.

Set up by the US Congress during the Reagan years with the help of Oliver North and other conservative operatives and ideologues--essentially, to do the kind of pro-democracy, political agitation conducted by the CIA during the Cold War--USIP and NED are controversial outposts of the neo-conservative movement, long criticized by Congressional Republicans and Democrats alike as costly, counterproductive boondoggles.

NED president Carl Gershman, a veteran China critic who is regarded by many Washington insiders as a brilliant political polemicist and theoretician and an extremely effective activist and organizer, is a onetime social democrat-turned-conservative-Democrat-turned-neocon Bush backer. He is particularly unpopular with moderate and old-line Republicans, as well as liberal Democrats eager to end federal funding for NED and the less effective USIP, which has at times strayed from the narrow, neocon path.

So, whereas an outpouring of overseas support can be expected for NGOs focused on AIDS and the environment, among other issues, few allies are likely to rally around NED and USIP in the face of a continuing crackdown.

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Marxist study groups are mushrooming in China, as increasing inequality and injustice fuels discontent and dissatisfaction with those who feel left behind by the country's economic expansion.

Not all the groups are underground. Many of the disparate groups, ranging from workers who long for the relative economic security and egalitarianism of the Maoist era to students drawn to the ideals and traditions of Marxist humanism and democratic socialism, have the support of left-leaning leaders of China's ruling Communist Party, who contend that the country has gone too far, too fast down the capitalist road.

What could be considered a Left opposition within the party basically consists of three factions: an older Left made up of officials who are primarily concerned with preserving the power of the party and central bureaucracy; Maoists--though the term is not formally used in China--who are popular with workers and peasants nostalgic for the revolutionary period, despite the bloody chaos and disasters of the Cultural Revolution and the Great Leap Forward; and a new or neo-Left that appeals mainly to students and intellectuals who are searching for solutions to the country's pressing problems and are open to different currents and tendencies in Marxist thought. The lines separating these camps are far from clear; for example, many neo-Left thinkers are admirers of Mao.

China's president, Hun Jintao, is assumed by many informed observers to be broadly sympathetic to the Left. Analysts have noted Hu's public praise for Mao (in keeping with the official view that 70 percent of what he did was good and 30 percent was bad) and call for increased study of Marxism (in accord with the official ideological mix of Marx, Mao, Lenin, and Deng Xiaoping Thought).

Aside from their shared antipathy to free-market reforms, the leftwing factions share a common concern that conditions are being created for class conflict in China, and that the party could be swept from power if it is identified with a privileged caste that is growing rich--and ruining the environment--at the expense of the overwhelming majority.

In this context, the Marxist study groups serve several purposes. Some act as unofficial, micro-sized think tanks; others, as safety-valve-style outlets for discontent; and still others, as false flag operations for luring and monitoring potentially dangerous dissidents. State spies and agents provocateurs have surely infiltrated the groups; and in some instances, they may even outnumber and out-perform legitimate members (recalling the way Polish and East German secret policemen steered some dissident groups during the Cold War and American FBI agents and informers influenced smaller radical Left groups during the turbulent 1960s).

Should the need arise for an orchestrated mass movement, the study groups--like the groups and websites extolling Chinese nationalism and hatred of Japan--could at some future date prove particularly useful to a leadership seeking to switch gears and change or reverse direction.

Given the regime's obsessive need to control ideas and information ... and continuing crackdown on the Internet and domestic and foreign media ... some developments are downright puzzling. For example, there have been two international conferences on the life and work of the innovative German Marxist theorist and revolutionary activist Rosa Luxemburg, who was killed by rightwing militia members during a failed socialist uprising in Germany in 1919. Together with her fellow revolutionary Karl Liebknecht, who was also murdered by the notorious Freikorps, Luxemburg led a Left that enjoyed great popularity among young people and put its trust in the "spontaneity" of the workers while exalting the "creativity of the revolutionary day."

A conference on "Rosa Luxemburg's Thought and its Contemporary Value" was held at Wuhan University on March 12-14. The gathering, attended by over 100 Chinese and foreign students and academicians, was a kind of follow-up to a conference held in Guangzhou two years ago. The 2004 event was sponsored by the International Rosa Luxemburg Society and the Institute of World Socialism in Beijing. Whereas the earlier conference emphasized Luxemburg's philosophical writings, the conference in March focused on her views concerning spontaneous mass struggles--including her concept of the "mass strike"--distribution of wealth--she was extremely critical of capitalist-leaning socialist reformers--and the rights of workers, as well as her disputes with Lenin, from who she had received praise, and other Marxists over the meaning of socialism.

Which could be an intriguing key to understanding why the conference was allowed to take place. The conference could be seen as one of many attempts to create more space for intellectuals to debate the direction of economic reforms without appearing to abandon socialist principles. Several Chinese speakers tellingly cited Lenin's praise for Luxemburg and her steadfast resistance to "imperialist" tendencies.

Not noted by these speakers, however, was Luxemburg's firm conviction until her dying day that socialism without democracy and democracy without socialism are impossible goals. She argued--against the Left and the Right--that democracy and socialism were intrinsic ideals. In this respect, it is hard to reconcile the realities of today's China--not to mention the China of the Mao era--with the lines she famously penned in opposition to the Bolsheviks: "Freedom only for the supporters of the government, only for the members of one party--however numerous they may be--is no freedom at all."

Much more typical and revealing of party thinking than Luxemburg's work is this textual gem from the Institute of Contemporary Socialism of Shandung University. The state-owned center says it is dedicated to researching the (official) theory of "Socialism with Chinese Characteristics," which it describes as "the most resplendent reality in the contemporary world."

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While China's North Korean vassal menaced the United States and Japan with a threatened missile launch this week, China's Prime Minister Wen Jiabao conducted a five-day, seven-nation tour of Africa that showcased his country's competitive advantages over the United States and other Western countries.

The trip was a model of modern-day mercantilism--with Chinese characteristics. It followed the three-nation African tour of Chinese President Hu Jintao in April and Beijing's release in January of a paper proposing a "strategic relationship" with Africa, and proclamation of 2006 as the "Year of Africa."

A reporter needed a scorecard to keep up with the deals emanating from Wen's whirlwind safari, including: natural gas and telecommunications agreements in Egypt; telcom and hydroelectric loans to Ghana; an array of economic and commercial cooperation arrangements with the Republic of Congo (Brazzaville); tantalizing new credit lines for Tanzania and Uganda; 14 accords with South Africa, covering textiles, trade, mining, and civilian nuclear technology; and fresh loans and expanded technical assistance for Angola--one of the continent's most corrupt countries--which recently overtook Saudi Arabia as China's biggest oil supplier. The Angola stopover cemented last month's $1.4 billion deal between China's giant, state-owned Sinopec and Angola's Sonangol to develop new oil fields.

Key words: state owned. In contrast with Western countries, booming China is using state-owned companies in its global pursuit of raw materials--especially oil--and markets. The companies answer to China's ruling Communist Party, not stockholders, even if some of the firms have sold minority stakes to investors in order to float and list shares in Hong Kong or New York.

Like Chinese capitalism--or Chinese socialism, for that matter--the state-owned behemoths that have gone public only resemble the real thing. Commissar-style spies and executives are assigned to every company to watch over senior management; and the State-Owned Assets Supervision and Administration Commission of the State Council, which holds controlling interests in roughly 200 large Chinese companies, monitors performance.

Even to talk in terms of competition between Chinese and US companies is to miss the point. China's state-owned companies are tools of the state. The companies do not invest overseas simply to make money; rather, they invest to augment the power of the state and support state policies. In Africa, this mainly means investing (a) to lock in longterm access to oil and minerals, and (b) to open up and expand markets for cheap Chinese goods.

China's investment, trade--and flag--are all wrapped up in a single package; one does not follow the other. Economic aid, including grants, loans and credits, and various forms of technical assistance, go hand in hand with commitments to develop oil fields and build refineries, roads, and railroads. Prestige projects--a presidential palace here, a football stadium there--are also offered, along with no-strings arms deals--apart from promising to support China's position on Taiwan--regardless of a given country's human rights record or transparency rating.

All told, Africa is now home to nearly 1,000 Chinese investment projects. Several were only recently announced, including investment of $4 billion in oil refinery and power generation projects in Nigeria--in exchange for four oil exploration licenses--and an agreement to develop a huge, untapped iron ore deposit in the Congo.

And the Year of Africa is only half-over.

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Foreigners investing in Chinese land deals and companies connected to powerful regional and local officials might want to reflect on a piece of vintage American advice: "Make hay while the sun shines."

Reason: China's central government is about to reassert itself and move in unexpected ways against out-of-control officials whose greed and corruption has helped fuel rising unrest and discontent in the depressed countryside. Reducing foreign investment in the rural areas--while dramatically boosting assistance from the central government--is reportedly a measure under consideration because it would deny local leaders access to overseas capital and thus help to cut them down to size.

Which is an important objective, because Beijing, in addition to being haunted by the specter of a massive rural uprising, increasingly fears the possible carving up of the country into economic ministates by a new class of moneyed officials.

This largely explains the regime's unusual candor regarding rural unrest and the related issue of massive environmental degradation, as shown by (a) this year's rubber-stamp National People's Congress meeting, which opened a rare window on internal debate over capitalist-style economic reforms, property rights, and the plight of the peasants, and (b) the steady flow of seemingly frank statements and articles by officials, think-tank researchers and Communist Party propagandists, complete with dire warnings and shocking statistics.

The ongoing discussion is apparently a setup for a policy shift and power play. In order to narrow the rural-urban wealth gap, the party leadership is said to be planning another revolution from above--but without the chaos and bloodshed of Mao's Cultural Revolution, which mobilized students to smash the party bureaucracy. This time around, the peasants will be used to pressure and rein in regional and local officials, who have grown too rich and too powerful in the eyes of the central government. Uprisings and protests by farmers and villagers will be tolerated--even encouraged to a degree--as long as the manifestations remain isolated and small enough to crush if they threaten to spin out of control. As a precaution, beefed-up security forces are being assigned to rural areas.

In short, managed peasant anger is perceived to be the key to creating a new "socialist countryside," without which, the regime reasons, the rural areas are certain to eventually explode; and refocusing resources on rural areas is seen as a way of strengthening the power of the central bureaucracy.

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At this moment, the criminally insane, nuclear armed regime ruling North Korea has apparently fueled an intercontinental ballistic missile capable of hitting the United States. The US and Japan have warned the North Koreans not to test-fire their ICBM; but the lunatics in charge of the failed Stalinist state, led by the Hitlerian tyrant Kim Jong-il, have insisted on their right to fire away.

As we see it, apart from Kim and his henchmen, two other parties are primarily responsible for the crisis: China, which helped the North Koreans develop their long-range missiles, and the Clinton administration, which consistently appeased Pyongyang and downplayed disclosure of China's covert role in the North Korean missile program.

These are inconvenient truths, as Al Gore might say, because they get in the way of a good story--namely, that the Bush administration is mainly, if not solely, to blame for the current crisis because it has refused to talk directly to North Korea and has imposed sanctions on the regime for alleged counterfeiting and money laundering. US policy toward North Korea, according to this view, has been too tough.

In fact, the US has not been tough enough on North Korea. Choosing not to isolate the North Korean regime early on in order to try to bring about its collapse, the Bush administration, like the Clinton administration before it, trusted China, Russia, and Pakistan to keep Kim in line. Instead, they actively helped him to develop nuclear weapons in violation of a 1994 agreement with the US.

Another inconvenient truth: North Korea's holocaust. Apologists and appeasers can't deal with the mass death, gulags and gas chambers--yes, gas chambers--that have made the Stalinist state a true hell on earth.

For nearly a decade, the world has known that as many as 800,000 people were dying in North Korea each year from man-made famine.

For several years, the world has known about the North Korean concentration camps--called "control zones"--housing some 200,000 men, women and children at any given time. At least 20 percent of the prisoners die from torture or arbitrary killing each year. Atrocities reminiscent of Auschwitz and other Nazi death camps are commonplace, including public executions, baby killings, gruesome medical experiments--and gas chambers. Prisoners are starved, beaten and worked to death. Sometimes, entire families are gassed at once while researchers take notes.

These things are not secret. Escaped prisoners have given graphic personal testimonies of the North Korean horrors. Guards who have defected to the West have described the gas chambers and sadism, including stomping newborn infants to death in front of their mothers.

There are at least six large camps. They have names--numbers, rather--like Camp 22, reportedly the largest, where thousands of prisoners are held and many are gassed to death or used as guinea pigs in biochemical experiments.

And now ... the perpetrators of this holocaust have nuclear weapons and the means to deliver them across great distances.

Clearly, the time for denial is long gone.

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If North Korea persists in test-firing a multi-stage missile capable of hitting parts of the United States, the resulting crisis is certain to refocus attention on China's assistance to Pyongyang's missile program and the Clinton administration's appeasement of North Korea and downplaying of its covert Chinese ties.

The North Korean regime's readiness to provoke the US and its ally Japan is also certain to strengthen the position of Bush administration hardliners--including Secretary of Defense Donald Rumsfeld, Vice President Dick Cheney and United Nations envoy and former Undersecretary of State John Bolton--who have opposed negotiations with North Korea in favor of diplomatic and economic isolation aimed at bringing about its collapse.

In contrast, the State Department has consistently supported talks with the country that is ruled by one of history's more notorious tyrants--a mass murderer and certifiable lunatic in the true Hitler-Stalin tradition.

Back to the past. The North Korean missiles are based on technology transferred to Pyongyang by China. The US has known about China's instrumental involvement in the North Korean missile program since the early-to-mid 1990s. In 1999, just one year after North Korea shocked Washington by testing a missile that flew over Japan before dropping down in the Pacific, the Clinton administration was fully briefed on Beijing's use of a Hong Kong front company to supply North Korea with missile technology.

Between 1998 and '99, we now know, China provided North Korea's missile program with fiber-optic gyroscopes, specialty steel, and special high-tech machinery.

In 2000, the CIA told Congress that China had helped the regime develop its long-range missile technology.

The CIA report upset the Clinton administration because it felt that disclosure of China's role in the North Korean missile program (a) undermined Chinese diplomatic assistance in supposedly moderating North Korean behavior, and (b) bolstered the arguments of US hawks advocating a preemptive strike to stop North Korea's nuclear weapons development.

The Clinton administration's response to the CIA reports was, well, Clintonian. The White House mobilized one of America's weakest presidents--but greatest ex-presidents in the eyes of the media. Incredibly, Jimmy Carter--the man who tried in vain to win over the Ayatollah Khomeini by dumping the Shah of Iran in the final days of his long rule--was dispatched to Pyongyang to meet with the criminally insane butcher Kim Jong-il. Carter returned to the US claiming Kim had agreed to stop his nuclear weapons development--a dramatic development that the Clinton administration apparently accepted at face value.

The US then provided North Korea with hundreds of millions of dollars in food and oil aid, which enabled Kim to continue his missile and nuclear weapons programs while also continuing to starve his people. At least a million people died as a result of Kim's crimes.

But that didn't stop China. In 2002, it sold North Korea a large shipment of tributyl phosphate--a key chemical used to extract plutonium and uranium from spent fuel rods for nuclear weapons.

North Korea boasts that it has developed the weapons; and American analysts say the regime has produced a small but growing atomic arsenal, including, possibly, nuclear warheads for its long-range missiles.

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A North Korean propaganda poster is pictured on the left.

The link to the official North Korean government website appears below.

http://www.korea-dpr.com/index.htm

As of this writing, North Korea is reportedly close to test-firing a long-range missile capable of reaching the United States, despite US and Japanese warnings not to go ahead with the launch.

North Korea has not commented on the reports. Instead, the regime ominously vowed Sunday to bolster its "military deterrent."

We urge our readers to explore the North Korean website, such as it is, while considering that the regime it represents is in possession of nuclear weapons and the means to deliver them across great distances.

Enough said.

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If North Korea test fires a missile capable of hitting the United States, it will be a major blow to Chinese policymakers, officials and advisers who have seen the reclusive, Stalinist state as a useful buffer zone separating China and the United States.

Fearful of initiating or cooperating with any moves that might change the status quo, Beijing's buffer school advocates have counted on a combination of Chinese economic support and diplomacy to keep North Korea's lunatic leader, Kim Jong-il, from provoking a conflict with the US that could send large numbers of refugees streaming across the border into China's Northeast.

Detractors of the prevailing buffer policy have argued that the very notion that Kim can be managed is fundamentally flawed. Sooner or later, these officials and intellectuals have argued, the erratic despot will do something really crazy, and the crisis China has sought to avoid by playing for time will happen anyway. Regarding North Korea's leader as a dangerous liability, the contrarians have been more inclined than their buffer school comrades to cooperate with the US in the interest of finding a mutually acceptable way out of the Korean mess.

Any day, or moment, now, the liability school advocates, as analysts have called them, could be proven right, and a war-weary world could find itself confronting yet a new crisis involving an atomically armed, rogue country.

According to Japanese media reports, North Korea is preparing to test-fire an intercontinental, Taepodong-2 missile, despite stiff warnings from Washington and Tokyo. The multi-stage missile has a range of 3,500 to 6,000 kilometers.

In 1998, North Korea shocked Japan by launching a 2,000-kilometer-range Taepodong-1 missile, over Japan and into the Pacific. North Korea claimed it was trying to place a satellite in orbit.

After four years of quit diplomacy, supported by Beijing, North Korea agreed not to test long-range missiles in a declaration with Tokyo that the way for the normalization of bilateral relations.

More recently, China was involved with the US, Russia, Japan, and South Korea in talks with North Korea to disband its nuclear arms program in return for security and diplomatic guarantees as well as energy aid. The six-party talks hit a high point in September 2005 when North Korea agreed in principle to end its nuclear weapons program. But the talks later collapsed after Washington imposed financial sanctions on Pyongyang for alleged US dollar counterfeiting and money laundering activities.

Tokyo-based North Korean propagandists acting as unofficial spokesmen for the regime have in the past warned Washington that their government has the ability send a missile splashing off the coasts of California and New York. Though this may be an exaggeration, the US intelligence community has apparently been divided in its assessment of the North Korean missile threat, with some analysts conceding that Pyongyang may actually be in a position to make good on its threat.

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China's relations with its ascending Asian rival, India, are steadily improving--to the apparent dismay of the United States, which had high hopes of using India to help balance, or contain, China's regional rise.

One sign of the times: China's refusal to support a bid by India's traditional adversary, Pakistan, for full membership in the Shanghai Cooperation Organization (SCO), an increasingly effective tool of Chinese diplomacy, which held its fifth annual summit meeting on Thursday. Pakistan attended as an observer. India, Iran, and Mongolia also attended as observers; and oil producing Iran, which is also rich in large, untapped natural gas deposits, is also seeking full membership status.

China and Russia are the main players in the SCO, which includes Uzbekistan, Tajikistan, Krygystan and Kazakhistan. Initially regarded as a joke by Washington, the once obscure group is emerging as an effective counterweight to US power and influence in Central Asia, though Moscow and Beijing bristle at the suggestion that this is the group's purpose.

Another indication of strengthening ties between Beijing and New Delhi: Chinese silence on Pakistan's repeated requests for Chinese help in building up the country's civilian nuclear power infrastructure.

And still another sign of warming relations: China allowed an Indian Air Force aircraft across its territory for the first time in over 40 years. The plane carrying Indian Petroleum and Natural Gas Minister Murli Deora to the SCO summit was allowed to fly into and out of China.

China-Indian relations have entered a "new phase," Chinese President Hu Jintao said in Shanghai on Friday. The official Xinhua News Agency said Hu described the emerging relationship between former adversaries as a "strategic cooperative partnership."

Xinhua noted that China has proclaimed 2006 a "Year of Friendship between China and India." The two countries will stage a series of activities to enhance "bilateral friendship and reciprocal cooperation," Hu said, according to Xinhua. The agency also quoted the Chinese president as saying: "I believe, with the joint efforts of our two sides, the relations between China and India will keep upgrading."

India would like China's cooperation in containing their mutual neighbor, Nepal, which ironically could come under Maoist control. The Hindu nation is in the grip of a dramatic political transformation that has seen its unpopular, corrupt monarch stripped of all power following massive pro-democracy demonstrations sponsored by a broad coalition of parties.

Nepal's powerful Maoist revolutionaries have ended their insurgency pursuant to a power sharing arrangement with the new government. The ultraleft movement, which China long ago abandoned--and in fact opposed with secret arms supplies to the monarchy's security forces, as recently reported by Amnesty International--maintains cross-border ties to Maoist insurgents in India known as Naxalites.

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No rest for the weary--or the wicked.

Chinese diplomats are surely working overtime this weekend.

Just as Beijing seemed to be making progress on the Iranian nuclear enrichment front, North Korea's lunatic leader acted up, apparently determined to draw attention to his own atomic standoff with the West.

As reported by Japanese news organizations and confirmed by the United States State Department on Friday, the Stalinist despot is reportedly ready to test-fire a long-range ballistic missile that could theoretically hit parts of the US.

A North Korean intercontinental missile launch would represent a diplomatic nightmare for China, which has helped to sustain the failed North Korean state, and a sudden and serious security threat for the US.

In case anyone thought otherwise, the US made its concern quite clear Friday, serving notice on Pyongyang that Washington would regard an inter-continental missile launch as a provocative act.

"In recent days, we have been consulting with friends and allies in the region and elsewhere," US State Department spokesman Mark McCormack told reporters at a briefing. "Together, our diplomacy and that of our allies has made clear to North Korea that a missile launch would be a provocative act that is not in their interests and will further isolate them from the world. A North Korean missile launch would be inconsistent with the 1999 moratorium declared by [North Korean leader]Kim Jong-Il, which he reaffirmed in 2002."

Quoting a senior Bush administration official," The New York Times today reports that US Secretary of State Condoleezza Rice telephoned her Chinese counterpart on Tuesday and asked Beijing to use its influence to stop the test, and that US President George Bush made a similar appeal two weeks ago in a telephone call to Chinese President Hu Jintao.

Japanese media, which broke the missile story, have been reporting signs of preparations for a test-firing since early May. But our Tokyo correspondent says some local analysts suspect a US hand in the scoop--specifically, strategic leaks to select Japanese journalists by US defense sources.

According to the Japanese reports, the North Koreans could be preparing to test a three-stage version of the Taepodong long-range missile. It would be Pyongyang's first firing of a Taepondong missile since 1998, when it launched one that flew over Japan and landed in the Pacific.

McCormack said the United States has the technical means to monitor any North Korean missile and "protect ourselves."

So much for North Korea. Fortunately for energy-starved China, oil-rich Iran is showing some signs of moderation with respect to its nuclear activities. The Islamic Republic's president, Mahmoud Ahmadinejad, ended his visit to Shanghai Friday saying he would carefully consider the package of incentives offered his country by Western powers seeking an end to the Iranian nuclear program.

Ahmadinejad referred to the package as "a step forward."

Iran insists its enrichment program is peaceful. But the US and its allies allege a military purpose--production of the so-called Persian bomb, which Iran could use against Israel or its ally, the US, or European countries.

Speaking to reporters, the Iranian leader also confirmed what China Confidential has been saying---namely, that China, Russia, and Iran are closely consulting on the matter of Iran's nuclear program. Ahmadinejad asserted that his meetings with China's president and Russian President Vladimir Putin on the sidelines of the fifth annual Shanghai Cooperation Organization (SCO) summit meeting proved to him that Iran's views on many international issues are close or even identical to those of China and Russia.

The Iranian leader was an observer at the SCO summit. The increasingly important organization--a tool of Chinese diplomacy--brings Beijing and Moscow together with the four Central Asian states of Kazakhstan, Krygystan, Tajikistan, and Uzbekistan in an alliance aimed at squeezing the US out of the strategically located, oil-rich region. India, Pakistan, and Mongolia also attended as observers.

China supports Iran's bid for full-member status in SCO; but Russia, as we said yesterday, wants Iran to first agree to suspend or at least severely restrict its nuclear program.

Both countries oppose sanctions should the current round of negotiations fail to resolve the crisis. It is possible that Tehran will try to divide the West--with Chinese and Russian support--by basically agreeing to end most but not all enrichment activities with tight foreign supervision. The US and its closest allies are against this.

China and Russia would also like to see the Iranian president tone down his neo-Nazi-like rhetoric--there is really no other way of describing it--regarding Israel, a country he has said he would like to see wiped off the face of the earth. To the embarrassment of China's leaders, Ahmadinejad on Friday repeated his Holocaust denial remarks, saying "historical events" should be investigated by "independent parties."

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1. IRAN. Russian opposition was the key obstacle to Iran's quest for full membership in the Shanghai Cooperation Organization (SCO), which held its fifth annual summit meeting in China's commercial capital on Thursday.

The little-known SCO is basically a tool of Chinese diplomacy, bringing Beijing and Moscow together with the four Central Asian states of Kazakhstan, Krygystan, Tjikistan, and Uzbekistan in an alliance aimed at squeezing the United States out of the strategically located, oil-rich region.

Iran attended as an observer (along with observers India, Pakistan, and Mongolia), thanks to energy-starved China, which would like to see Tehran graduate to full-member status.

China Confidential has learned that Iranian President Mahmoud Ahmadinejad, who is engaged in a standoff with the US and European Union over the country's nuclear enrichment program, pushed his pet, "powerful square" concept in sideline talks with the SCO's two giants--that Iran and India, which also seeks full membership, can join Russia and China in forming a powerful square, or energy club, in Asia to challenge US power and influence.

In contrast with China, which is a major customer of Iranian oil, Russia is reluctant to enhance Iran's legitimacy until it at least agrees to suspend most of its nuclear enrichment activities.


2. TAIWAN. China's supposedly softening position on the Taiwan Question--reported as fact by The Washington Post on Thursday--is two parts diplomacy and one part propaganda. With the 2008 Beijing Summer Olympic Games in sight and their military at least four to five years away from being in a position to conquer the self-ruled island while projecting power sufficient to block possible US intervention, China's rulers have nothing to lose and much to gain from their new statesmanlike stance toward Taipei.

Brushing off criticism of its missile buildup and recently enacted law that authorizes use of military force against Taiwan if it moves to formalize its de facto independence--or if efforts to peacefully reunite fail--Beijing will support the so-called status quo in the Taiwan Strait, in keeping with US policy, while reaching out to the island's business leaders with economic and trade incentives.

Our sources say China's embrace of the status quo concept--which it has in the past rejected as contrary to the "One China" principle--follows discussions between Chinese President Hu Jintao and former Secretary of State Henry Kissinger. The preeminent master of the art of diplomacy and architect of America's opening to China during the Cold War, Kissinger reportedly stressed the peace-preserving and public relations (in the US) benefits of avoiding seemingly provocative gestures and statements concerning Taiwan.

In trying to influence Taiwanese opinion by emphasizing economic and trade deals, including agreeing Thursday to direct flights between the mainland and Taiwan during holiday periods, China could be said to be following the advice of an ancient authority on diplomacy--as a tool of warfare. In "The Art of War," sixth century BC author Sun-tsu stressed the importance of achieving victory trough diplomatic coercion, explaining that "warfare is the way of deception" and that "subjugating the enemy's army without fighting is the true pinnacle of excellence." Said Sun-tsu: "Display profits to entice them."


3. CUBA. Bilateral trade between Beijing and Havana is booming. Officially estimated at around $750 million in 2005, the total should exceed $1 billion this year. China is also increasing direct investment, especially in natural resources. Cuba has huge nickel reserves; and China is said to be spending some $500 million to double the island's annual production. Beijing is also pumping money into oil exploration projects and increasing financial aid.

Though Communist Cuba has stuck to its economic system and resisted the capitalist reforms that have made China's economic expansion possible, the two countries have surprisingly close political ties. Chinese and Cuban officials meet often. China's president has praised Cuba's commitment to Marxist ideology in statements interpreted by some Chinese intellectuals and officials as evidence of a left-leaning stance; and Cuban leader Fidel Castro has been quoted as saying that his country can "draw on China's successful experience." Many analysts believe that Castro's brother and heir-apparent Raul is inclined to move in the Chinese direction.

Cuba has an added value to China. Without provoking Washington, Beijing's presence serves as a kind of in-your-face response to US support for Taiwan.

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China's Communist Party rulers have a new security headache: persistent rumors that small groups of overseas Maoists, probably posing as tourists, plan to infiltrate Beijing this September to stage lightning-like protests around the 30th anniversary of their hero's death.

Analysts expect beefed-up security details, including extra-large detachments of plain-clothes officers, to be assigned to Tiananmen Square and other likely locations for protest on September 9 and in the days preceding and immediately following that date. Additional measures are likely to include stepped-up screening procedures for visitors entering the country around this politically potent period.

Given the anticipated security precautions, European, Asian and Latin American Maoists--whose ideology is anathema to China's current leadership--are not likely to have much of a chance to unfurl a banner or distribute leaflets. Chinese security forces are skilled at striking hard and fast at the first signs of trouble.

But the regime's real concern is more telling. China Confidential has learned that what Beijing most fears is possible participation by its own people--Chinese admirers of Mao--including aging workers, lower-level officials, and intellectually inclined students seeking a return to what they regard as truly socialist policies and principles.

For China's hypersensitive leaders, any public outpouring of neo-Left opposition to the established order would be an embarrassing and potentially dangerous event. The thought of still and video images of Chinese cops cracking Communist heads flashing around the world and over the Internet is fundamentally frightening. Reason: while Western business executives, investors, and investment bankers could be expected to see such pictures as further encouraging proof that China is Communist in name only (which is true), many Chinese would react quite differently.

Economically expanding China is in the grip of serious, seemingly insurmountable social and economic problems, including increasing poverty and inequality among the left-behind rural masses and growing urban underclass.

Many Chinese, from ordinary citizens to left-leaning party officials, are questioning the country's capitalist direction. Discontent is rising; and nostalgia for Mao and his era, despite the bloodshed and chaos of the Great Leap Forward and the Cultural Revolution, is on the rise.

The sentiment manifests itself in different ways. In Zhengzhou, for example, an industrial city of nearly four million people amid central Chinese farmlands, hundreds of people at a time have reportedly gathered in a park to sing old revolutionary songs. Some officials and students have been seen sporting Mao buttons. Middle-aged and elderly citizens protesting forced evictions from their homes to make way for residential and industrial developments have shouted fiery slogans from the Cultural Revolution, such as, "To rebel is just!"

Zhengzhou is said to be a center of pro-Mao, neo-Left agitation. In recent years, militant workers have clashed with police on the anniversary of Mao's death; on the 28th anniversary, four protestors were arrested for handing out leaflets entitled "Mao Forever Our Leader." On December 24, 2004, they were sentenced to three years in prison.

The leaflets attacked the country's current leadership as "imperialist revisionists" and corrupt "capitalist roaders."

Many students are attracted to the disparate neo-Left tendency, which includes nationalist currents as well as people for whom Mao Zedong Thought is more than a hoary official doctrine.

Marxist study groups have been popping up on campuses for some time now; and informed observers say the initially isolated groups have mushroomed into a network of indigenous neo-Left, campus-based organizations. There are reliable reports of students sending small delegations to restive rural areas, which have experienced a dramatic upsurge in violent uprisings and protests in recent years.

A cohesive protest movement has yet to emerge, however, which is why the prospect of student-peasant-worker ties is so subversive and potentially dangerous in the eyes of the leadership. More than anything, China's ruling elite fears a widespread rural revolt capable of reaching the cities.

Like a prairie fire, as Mao put it.

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China is maneuvering to admit Iran to the Shanghai Cooperation Organization (SCO), which includes Russia and four central Asian nations. The group will convene its fifth annual summit meeting in Shanghai tomorrow. Energy will be the main focus, with China stepping up efforts to secure stable supplies of oil and gas from member nations and Iran. The oil-rich Islamist nation, which is engaged in a nuclear standoff with the West, will attend this year's gathering as an observer, thanks to China's invitation. The United States is convinced that China and Russia are using the increasingly important SCO, which Washington initially dismissed as an ineffective letterhead organization, as an anti-American front....

China-India relations are approaching an all-time high, despite Indian defense ministry reservations about Beijing's arms trade with India's traditional adversary, Pakistan, and its efforts to acquire civilian nuclear technology from Beijing. The rapprochement between the rival Asian giants concerns the US, which had hoped to use India as a regional counterweight to Chinese military expansion....

Maoist insurgents in Nepal and India are increasing cross-border contacts. Both groups feel abandoned and betrayed by Beijing, which stopped supporting them years ago. The Maoists of Nepal, which include about 15,000 active fighters, have good reason to feel betrayed. Though their protracted armed struggle has helped reduce Indian influence in the predominantly Hindu nation, China, as Amnesty International reported this week, secretly sold weapons to Nepal's security forces before the fall of the country's corrupt, autocratic king. The extremely lucrative arms deals were arranged by middlemen close to the palace....

China's double-dealing in Nepal could call attention to Beijing's deepening ties to Nigeria, where attacks on foreign oil installations and individuals by shadowy Niger Delta militants have cut crude output by more than 20 percent. As China Confidential has reported, many analysts assert that China is making protection payments to the militants; and some suspect that China has even provided the rebels with assistance, while stepping up arms sales to the Nigerian military....

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China's arms sales to Nepalese security forces ironically battling Maoist rebels, which Amnesty International reported yesterday, were undertaken with the tacit approval of neighboring India, which is battling its own protracted Maoist insurgency, informally known as Naxalism.

China has in the past provided both Maoist movements with covert assistance--including arms--in order to make trouble for its giant Asian rival. In Nepal, a landlocked, Himalayan nation sandwiched between China and India--with which overwhelmingly Hindu Nepal has traditionally felt a natural affinity--Beijing secretly supported the Maoists in an attempt to eliminate Indian influence in the country and ultimately bring it into the Chinese sphere.

But Beijing's backing for both the Nepalese and Naxalite revolutionaries--groups with whom China's ruling Communist Party long ago stopped identifying ideologically and never completely trusted--has been sacrificed in the interest of rapprochement with New Delhi. China is doing everything it can to reach out to India in the hope of preventing it from joining with the United States (and Japan) in a strategy of containment toward China.

The Chinese arms sales to Nepal, arranged through brokers with close palace ties, took place during the regime of the country's unpopular king, known for his corruption and inclination to play the China card against India. Now that he has been stripped of all political power following massive street protests organized by a broad coaliton of parties, it could be said that both the monarch and the Maoists have outlived their usefulness (though there have been some bumps in Beijing's dealings with the new government). Revolutionary ties could be terribly embarrassing to China's present-day, peace-professing leaders, whose "socialism with Chinese characteristics" bears no resemblance to any recognizable Maoist--or Marxist--doctrine, despite the regime's refusal to formally renounce the hoary ideology that is officially known as Mao Zedong Thought.

The same could be said for the Naxalites: like Peru's Shining Path and so many other overseas ultraleft groups, the Indian insurgents are probably no longer important to Beijing--at least, for the time being. Besides, they can always be assisted in the future should the need arise, because the movement is not likely to disappear.

Though largely ignored by the US and other Western countries, the Naxalites are much more than a nuisance. The movement traces its origins to a 1948 uprising by the Communist Party of India (CPI) in desperately poor Telangana, in southern India's Andhra Pradesh state, on the occasion of the 100th anniversary of the formation of the Paris Commune. The uprising was inspired by Mao's successful armed struggle in China.

In 1964, the CPI split. Three years later, the Mao-admiring leader of a far-left faction of a CPI offshoot, called the Communist Party of India(Marxism), or CPI(M), led an insurrection in Naxalbari, a small village in West Bengal that gave birth to the movement's popular name.

The uprising was praised in China. The party's official organ, People's Daily, editorialized: "A peal of spring thunder has crashed over the land of India," adding that the "revolutionary group of the Indian Communist Party has done the absolutely correct thing" by following Mao's revolutionary line, which involved "relying on the peasants, establishing base area in the countryside, persisting in protracted armed struggle and using the countryside to encircle and finally capture the cities."

The CPI(M) faction became known as the Communist Party of India(Marxist-Leninist), or CPI(M-L). In 2004, the Maoist Communist Center, or MCC--a Naxalite group with the longest Maoist roots and oldest Chinese military and intelligence ties--joined with another underground Naxalite organization, People's War, to form the Communist Party of India(Maoist). It and the armed wing of the rival CPI(M-L) are currently the main Naxalite organizations challenging the machinery of the Indian state, such as it is.

So much for arcane political history. In India's heartland, the politicians who matter are armed, in keeping with Mao's famous dictum: "Political power grows out of the barrel of a gun." Since inception, the Naxalites have waged an on-again-off-again armed struggle on behalf of the poorest of the poor--landless laborers and tribal people--who have historically been exploited by rich, upper caste landlords. Like China's peasants and urban underclass, the rural poor constitute India's always-left-behind population, except their plight is even worse than that of China's impoverished masses. Human and civil rights are virtually non-existent. Social justice is a fantasy. Child labor, farmer suicide, malnutrition, illiteracy, and disease are everyday problems, with no solutions in sight.

Given these conditions, it is little wonder that Naxalites enjoyed immense popularity in the 1960s and '70s. But they lost ground as a result of alleged human rights abuses against local villagers and gangster-like tactics, including allowing the richest and most powerful landlords--many of whom operate their own private armies and death squads--to buy immunity from attacks while continuing to target those who can't afford to pay for protection.

In recent years, however, the Naxalites--especially the Maoist party that claims to be fighting for a classless society--have gained in strength, as the benefits of India's economic expansion have failed to trickle down to the poor.

In short, there is more to Rising India--and Rising China--than meets the eye.

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What would Mao Zedong have said about this?

According to Amnesty International , China has sold tens of thousands of rifles and grenades to Nepal's security forces--for use against Maoist guerrillas.

The human rights group says Chinese weapons sales to Nepal helped prolong and aggravate the conflict there, where the country's despised absolute monarch was recently stripped of his powers after huge anti-government demonstrations by unarmed protesters and government officials have begun peace talks with the rebels.

China's weapons sales to Sudan and Burma have also encouraged repressive rule in those countries, Amnesty says.

In Sudan, China has helped fuel fighting and atrocities in the Darfur region, according to Amnesty, which released a report Monday saying China is fast emerging as one of the world's "biggest, most secretive and irresponsible arms exporters."

But not irrational. The London-based group says China's arms exports, estimated to exceed $1 billion a year, often involve the exchange of weapons for raw materials to fuel the country's rapid economic growth while increasing its diplomatic influence.

"It is a trade shrouded in secrecy," says an Amnesty representative. "Beijing does not publish any information about arms transfers abroad and hasn't submitted any data to the United Nations Register on Conventional Arms in the last eight years."

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China will increase direct investment in overseas iron ore projects--including a huge project in Gabon--in order to expand supply options and strengthen Beijing's hand in future negotiations with the cartel that currently controls 70 percent of the world's iron ore production.

The cartel's "Big Three"--Brazil's Companhia Vale do Rio Doce (CVRD), and multinationals Rio Tinto and BHP Billiton--are hardly household names; but they are powerful enough to set world market prices for the mineral, which is the major component in steel.

They are also skilled corporate propagandists, who have managed to blame booming China for the recent iron ore price increases.

Iron ore rose in price by a record 71.5 percent last year, after talks with Japanese steel makers failed to include China. This year, Japanese and German steel companies caved in to a 19 percent price hike--and China again had to go along.

Adding insult to injury, the manager of CVRD's iron ore division, Jose Carlos Martins, told reporters that China deserves to be the world's iron ore price-setter. But Beijing is too internally focused and slow in its decision-making process to rise to the challenge, according to the corporate chief.

Internally focused? Tell that to the China National Machinery and Equipment Import and Export Corporation. The state-owend company heads a consortium that this month edged out CVRD to obtain exclusive rights to a huge, untapped iron ore reserves in Gabon, a resource-rich country in west central Africa. Under the terms of the Gabon concession, China will build expensive rail links to the iron ore reserves, which are located in a remote tropical forest about 500 kilometers (300 miles) east of Gabon's capital, Libreville.

The Chinese are expected to start work next year in order to begin production in 2010--exactly 55 years after discovery of the reserves, estimated at over a billion tons of ore in place.

The total cost of the project is approximately $590 million.

Not too shabby for an internally focused country.

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China is assisting and advising Iran in its nuclear standoff with the West; and the United States is ignoring China's intrigue in the hope that if push comes to shove, and talks fail to resolve the crisis, Beijing will support sanctions against the Islamist, terrorism-sponsoring nation.

Lots of luck. Energy-starved China has no intention of siding with the US and Europe against oil-rich Iran--which can be expected to play for time as it proceeds with plans to build the so-called Persian bomb.

In fact, China is running circles around the US. Having helped maneuver Washington (a) into dropping its demand that Iran stop its uranium enrichment activities as a precondition for negotiations with the international community, and (b) into entertaining a Chinese-Russian proposal to allow Iran to engage in limited enrichment activity, Beijing is now lobbying for a direct role in the discussions--while still signaling staunch opposition to sanctions.

Which is far from surprising. Except for upward pressure on record-high world oil prices--which China is apparently prepared to pay as a part of its longterm strategy to strengthen ties with Arab and Muslim countries and ultimately deny the US preferred access to energy supplies--Beijing has little to lose from backing Iran.

And Tehran, from its point of view, has even less to lose from sticking with its brinkmanship policy, which seems to have worked well for another rogue state and Chinese ally, North Korea. Analysts say Iran has studied how North Korea won concessions from the West by pushing ahead with its nuclear program and using it as a powerful bargaining chip. (Tehran is also known to have dusted off histories of the Cuban missile crisis, concluding that Fidel Castro would have been toppled decades ago if not for his incredibly dangerous and daring deployment of Soviet nuclear arms to effectively secure a permanent truce with Washington.)

Bazaar-style haggling comes naturally to Iran's belligerent leaders. But our sources say that in response to a Western incentive package aimed at persuading it to suspend uranium enrichment--a key step toward possible production of nuclear weapons--Iran is closely coordinating its counteroffer with China, which has significant economic interests in Iran, including a $100 billion liquefied natural gas investment project.

The Western package reportedly drops the demand that Iran commit to a long-term moratorium on uranium enrichment, asking instead only for a suspension during talks.

Even that may be too much for Iran's hardline clerics to swallow. A senior ayatollah on Friday criticized the package, in which President Mahmoud Ahmadinejad has shown interest--at Beijing's urging.

Our sources say China assured Ahmadinejad that it wouldl stand by him, diplomatically, should negotiations break down following suspension of enrichment.

Iran claims its nuclear research is "civilian," meaning, for peaceful energy purposes. The United States and other countries say Iran is trying to produce nuclear weapons.

The United Nations Security Council told Tehran to suspend uranium enrichment efforts by the end of April, a deadline Iran ignored. It has also refused to allow IAEA inspectors access to all requested nuclear sites.

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Friday's United States embassy warning of possible terrorist attacks against Americans in China was based on intelligence reports about foreign and indigenous Muslim extremist activity, according to some Israeli and American analysts. These experts say Al Qaeda terrorists have successfully infiltrated the restive, predominantly Muslim Xinjiang region and linked up with local Uighur separatist cells in order to plan attacks against American tourists and companies operating in China. An embassy statement said the US government has received unconfirmed information of possible threats, especially in Beijing--which has a few Uighur neighborhoods--and Shanghai and Guangzhou. Places where Americans congregate, such as clubs, restaurants, schools or outdoor recreation events, could be targets. The warning made no mention of Muslim extremism or Al Qaeda. Since 9/11, the US has disputed Chinese assertions of Uighur-Qaeda connections as attempts to justify repressive treatment of the local population in the name of fighting terrorism....

The Chinese government views Japan's upcoming elections the way most middle class and rich Peruvians looked at last Sunday's second and final round of their presidential elections--as "a choice between cancer and AIDS," in the words of one Lima resident. Peruvians had to choose between former president Alan Garcia and ultranationalist former army officer and failed coup plotter Ollanta Humala. Though he ruined Peru the first time he was in office, social democrat Garcia was at least regarded as reasonably rational. In contrast, Humala, a populist demagogue and protege of Venezuelan president Hugo Chavez, was widely seen as a wannabe tropical Mussolini. China's Communist Party rulers see Japan's foreign minister Taro Aso and chief cabinet secretary Shinzo Abe (whose photo appears above) as foreign policy hardliners, though Aso is generally considered more hawkish toward Beijing. Both men are expected to run to succeed Japanese Prime Minister Junichiro Koizumi when his term ends in September; but Aso on Friday became the first candidate to publicly announce his intention to run. Japan's governing Liberal Democratic Party will vote internally for the next prime minister; and the race is expected to be closely contested.

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Why did China pull The Da Vinci Code?

Like the plot of the controversial film and the bestselling novel on which the film is based, Beijing's unprecedented decision to command Chinese cinemas to stop showing the American blockbuster is more than mysterious. It's baffling.

Nobody believes the official explanation--to make way for domestic films. The Da Vinci Code was given the widest-ever release of a foreign film in China; and it was well on its way to becoming one of the biggest box office hits in the country's history.

No, observers say, there must be other explanations for why the government withdrew The Da Vinci Code after approving its distribution--the first time this has happened to a foreign film.

They're right: there are other reasons, of which, the least important is a wilingness to placate the Vatican, which strongly objects to the film's by now well known premise that there exists a centuries-old secret society, called the Priory of Sion, which is dedicated to safeguarding Christ's sacred bloodline. Relations between Beijing and the Holy See are chilly, and efforts to restore formal diplomatic ties, which were cut in 1951, have been seriously set back by China's determination to tighten its control over the state-sanctioned Catholic church that claims some four million followers. (Millions of Chinese belong to an underground church that the government regards as subversive. In all, there are approximately 20 million Christians in China, out of a total population of 1.3 billion people.)

Ironically, our correspondent reports, it is not China's Christians that Beijing had in mind when it pulled the plug on The Da Vinci Code, but its Muslims. China does not want to risk setting in motion a chain of events that could lead to real or perceived insults to Islam and its prophet Muhammad.

Beijing's decision was influenced by its longtime ally Pakistan, which last Saturday also banned The Da Vinci Code--both the film and the book--as "blasphemous," even though Christians only make up three percent of Pakistan's 150 million people. Islamist organizations, which opposed allowing the film to be distributed in Pakistan, constitute a serious threat to stability; and authorities are keenly aware that "a blasphemous film about Jesus today could be followed by a blasphemous film--or cartoon--about Mohammed tomorrow," as an analyst familiar with Pakistan's political picture puts it.

"Better to ban everything before something spins out of control," he says, recalling that a 1993 cartoon ridiculing Muslims led to an uprising in China's northwestern Xinjiang autonomous region. Paramilitary police had to be called in to storm an occupied mosque.

There are between 20 million and 100 million Muslims in China--estimates vary widely--including a significant segment that is increasingly influenced by fundamentalist and Islamist teachings. In predominantly Muslim Xinjiang, authorities are engaged in a bloody struggle with separatists and religious and ethnic activists.

Setting aside the potential for religious unrest, there is another possible explanation for Beijing's move against The Da Vinci Code. China's ruling Communist Party is only comfortable with conspiracy theories of its own making--for example, that the United States created SARS as part of an effort to contain China's rise. Government-run rumor mills regularly use the censored, filtered Internet to test and promote conspiracy theories in order to explain anything bad that happens in China.

The ideas in The Da Vinci Code are way beyond Beijing's control; in fact, they have taken on a life of their own. A worldwide publishing phenomenon, the novel has spawned a series of successful nonfiction books and television programs about the sacred bloodline theory, including at least one volume, The Sion Revelation, which argues that the Priory of Sion was a hoax created by a secular secret society to divert attention from its sinister plans for world domination. The supposed achievements of this powerful, international group, known as "synarchists," include installing Charles de Gaulle as president of France and the step-by-step formation of a "United States of Europe," more commonly known as the European Union.

None of which has anything whatsoever to do with China ... except ... possibly ... for our recent report about a Hollywood producer's efforts to pitch a feature film that somehow connects synarchy with China's capitalist embrace and economic expansion. The screenplay's story line is said to revolve around an Ivy League professor-blogger who unearths an international conspiracy to orchestrate a Chinese economic crash in order to first destroy and then rebuild the global financial system. And the hero reportedly bears a striking resemblance to the actor Richard Gere, whose activism on behalf of Tibet has earned him prominent placement on China's celebrity enemies list.

Could this story have made the difference? Could an article in our little blog--which is blocked on the mainland--have come to the attention of the powers that be in Beijing and prompted them to also ban The Da Vinci Code?

The idea is absurd, of course, ridiculous, preposterous....

We'll start writing the novel tomorrow.

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China has suffered its worst-ever military aviation accident--and a serious setback to its military modernization program.

The Chinese military plane that crashed Saturday, killing all 40 people on board, was a surveillance aircraft carrying almost three dozen electronics experts.

The government says the crash is being investigated under direct orders from Chinese President Hu Jintao. The Official Xinhua News Agency said General Guo Boxiong, vice chairman of the ruling Communist Party's commission that oversees the military, is heading up the investigation.

Hu memorialized the victims as having made important contributions to national defense and the modernization of the army.

Two Hong Kong newspapers, Ta Kung Pao and Wen Wei Po, have reported that the crash was the People's Liberation Army's worst-ever aviation disaster, that 35 of those killed were electronics experts and that the five other victims were the plane's crew.

The plane, a KJ-2000, was a Chinese-made, early warning aircraft built on the frame of a Russian IL-76 transport plane--one of four indidengous conversions.

It crashed in Anhui province, about 150 kilometers south of Nanjing, where it was being tested.

The crash--which may have resulted from a midair explosion--is a major blow to China's attempts to develop greater self-sufficiency in high-technology weapons, for which it is now heavily dependent on Russian and Israeli suppliers.

Surveillance planes could play an important role in a war with Taiwan, helping China to project power beyond its borders and challenge American attempts to intervene on the side of the breakaway island that it has promised to help defend.

Disclosure of military accidents in China is rare. In 2003, however, the government reported the deaths of 70 sailors in a submarine accident; and senior officers were punished after an investigation.

China has a history of mysterious military plane crashes, including the 1971 crash that killed defense minister Lin Biao and the 1946 crash that killed the notorious Dai Li, who headed the Koumintang intelligence service during the civil war with the Communists.

Both crashes are believed by many to have been engineered by the legendary spymaster Kang Sheng, seen in the above photo, who ran China's secret service for half a century until his death in 1975.

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If it's Tuesday, the issue must be North Korea.

Like the title of the 1969 comedy film about American vacationers on a whirlwind European tour ("If It's Tuesday, This Must Be Belgium"), China's high-gear diplomacy paused yesterday to deal with its seemingly insane, nuclear-armed neighbor.

The Chinese foreign ministry said that China and North Korea will jointly explore for oil in the Yellow Sea bordering both the countries, and....

... a senior Chinese Government official urged North Korea to help restart stalled six-nation nuclear disarmament talks as....

... North Korea's foreign minister wrapped up an eight-day visit to China.

Whew!

Clearly, this is not your father's Red China.

Welcome to the new, Rising China, where hardly a day goes by without an important, newsworthy development involving a foreign country.

On Tuesday, it was North Korea's turn.

First, China and North Korea agreed on the joint development of oil resources in the border sea and signed a joint development agreement between the governments, Chinese foreign ministry spokesman Liu Jianchao told reporters.

Then, the official Xinhua News Agency reported that State Councilor Tang Jiaxuan, a Cabinet official, told North Korean Foreign Minister Paek Nam Sun that "the Korean Peninsula nuclear issue concerns the peace and stability of the peninsula as well as the northeast Asia."

Back to oil. The North Koreans have reportedly discovered large reserves of recoverable oil and gas reserves in the Yellow Sea; and the deal, which covers an area of the sea near North Korea, underscores China's need to find new sources of oil to fuel its expanding economy.

But the agreement will also benefit impoverished North Korea, which lacks the resources, technology, and know-how to conduct major oil exploration projects.

China has supplied a significant amount of fuel and food to North Korea; and Beijing appears eager to prevent a total collapse of its longtime ally, which could result in a destabilizing flow of refugees into China.

For this reason, Beijing has joined the United States, Japan, South Korea and Russia in trying to persuade Pyongyang to give up its nuclear weapons programs. But three years of talks have made little progress--perhaps because China is in no hurry to change the status quo, according to some experts.

These analysts argue that the continued existence of North Korea's rogue regime remains strategically important to China. Reason: Beijing's worst security nightmare is another Korean war. And regime change in the DPRK, which could occur as a result of war, could bring the deployment of American troops to positions close to the Chinese-Korean borders.

Which is the last thing Beijing wants as it plans for a possible showdown with its number one nemesis--Taiwan.

No cakewalk, this 21st century.

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Announcing publication of an unusually frank white paper on the environment Monday, a top Chinese government official said pollution costs China more than $200 billion a year--approximately 10 percent of country's $2.26 trillion gross domestic product in 2005.

Zhu Guangyao, who is deputy chief of the State Environmental Protection Agency, also called for better legal protection for grassroots groups so they can help clean up the environment.

China's environmental situation is "grave" and worsening and "allows for no optimism," Zhu said.

The white paper, which can be found here, deserves serious study--for what it does and does not say.

On the one hand, the report confirms what critics have been saying for years: industrialization and urbanization are destroying China's environment.

China is now at a stage of "accelerated industrialization and urbanization," says the paper entitled, "Environmental Protection in China (1996-2005)."

As a result, in some regions, "The discharge of major pollutants has surpassed the sustaining capacity of the environment. Water, land and soil pollution is serious, and pollution caused by solid wastes, motor vehicle emission and not easily degradable organic matter is increasing."

It gets worse. According to the report, 60 percent of the country's territory is considered ecologically fragile; about 90 percent of the country's grasslands are facing degradation and desertification; and vast wetlands are withering and shrinking because of farming and industrialization.

But the white paper, which also focuses on China's environmental achievements, fails to mention that 70 percent of China's rivers remain poisoned and a third of the country suffers acid rain. However, the paper does say that China's longest river, the Yangtze, is "cancerous" with pollution and rapidly dying, threatening drinking water supplies in 186 cities along its banks.

(The report, released on World Environment Day, also neglects a totally taboo topic--China's threat to the whole earth--which was the subject of a recent China Confidential bloggertorial .)

Chinese officials have been unusually candid in commenting on the worsening environmental picture; and there is reason to believe that the white paper, despite its obvious omissions and spin, is intended to set the stage for a decisive internal debate on the conflict between economic development and environmental protection. The discussion could be used by left-leaning elements in the party who want to apply the brakes on breakneck development accompanied by free-market reforms.

Moreover, party officials could be poised to address the viability of essentially emptying the countryside as a means of curing its poverty--i.e. transferring some 300 million rural residents to urban areas, including cities yet to be planned. There may be more to the "Socialist Countryside" initiative than party propaganda.

Though most experts disagree, we believe that a radical re-think is not out of the question. The potential implications of a change in direction--for the health of the planet in the long run and commodity markets in the near-term--are profound, to say the least.

A possible clue to a things to come can be found in the concluding paragraphs of the white paper: "The Chinese government will mobilize all forces available to solve the pollution problems that are causing serious harm to people's health. Its overriding task in the control and prevention of environmental pollution is to ensure that people have access to safe drinking water. It will take the most stringent measures to dispel potential risks of pollution of the sources of drinking water.

"To achieve this goal, the Chinese government will actively speed up 'three changes': First, change from emphasizing economic growth but ignoring environmental protection to emphasizing both environmental protection and economic growth; second, change from environmental protection lagging behind economic growth to synchronizing environmental protection and economic growth; and third, change from mainly employing administrative measures in environmental protection to comprehensive use of legal, economic, technical and necessary administrative measures to solve environmental problems. Economic, social and cultural systems will be established featuring stable economic growth, minimal cost to environmental resources and high awareness of the environment."

It will be interesting to see how Beijing goes about "synchronizing" the environment and the economy.

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China dropped the other shoe Monday. Less than a month after it rejected a United Stated defense department report that criticized its massive military buildup, Beijing signaled that it intends to invest even more money in its armed forces because of the "possible danger" of Taiwan declaring independence. State media quoted the director of a government think tank, the Center for China Studies, as saying "China should further increase the percentage of national defense spending, given the fact that China has not been truly unified." Our sources say the statement by Hu Angang is significant, reflecting the regime's decision to deliberately inflame nationalist sentiment among intellectuals, students and other members of the middle class. In addition to threatening Taiwan, think tanks and state media will increasingly accuse the US and Japan of conspiring to contain China's emergence as a regional and world power....

A left-leaning faction of China's ruling Communist Party is rumored to be circulating a specially produced DVD documentary about the plight of the country's rural poor. The project's purpose is to pressure party officials into energetically supporting the so-called Socialist Countryside initiative that aims to address growing rural unrest. The hard-hitting DVD recalls a confidential video made by the official Xinhua News Agency in 1978, which documented rural squalor and misery in those days. That video, which was shown to Politburo members at a special screening, was used by China's de facto ruler, Deng Xiaoping, to embarrass his rival, Hua Guofeng (Mao's anointed successor). Deng pioneered capitalist reform under the banner of "Socialism With Chinese Characteristics." One could say the producers of today's video are of the opinion that the reforms begun by Deng have worked too well....

China is increasing protection payments to Niger Delta militants whose attacks on foreign oil workers and installations have cut Nigerian oil output by more than 20 percent. Abductions are an especially common tactic by disgruntled groups in the delta, a vast, impoverished wetland that produces the bulk of Nigeria's 2.4 million barrels per day of crude oil. On Sunday, youths freed eight foreign oil workers they held for three days, warning they may strike again if their agreement with the victims' employer, Nigerian owned Peak Oil Company, is not implemented....

China has implemented new regulations to discourage real estate speculation and cool soaring property prices. But the measures--including higher minimum down payments, tighter lending standards and bans on building new luxury villas--are actually aimed at easing public discontent. Housing has become one of the most visible signs of the growing gap between rising China's rich and poor. One indication of the cosmetic character of the new rules: no legal definition for the "luxury" term....

Now that Alan Garcia has defeated ultranationalist Ollanta Humala and won the second and final round of Peru's presidential elections, China is planning to dispatch a high-level delegation to the mineral-rich South American country. From Beijing to Wall Street, investors agree that social democrat Garcia is a man with whom it is possible to do business....

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Did a perceived threat of an American attack on China's nuclear weapons facilities prompt Mao Zedong to abandon attempts to rejuvenate the country's stagnant economy and refocus on a massive defensive buildup that included moving factories and military bases to remote, hidden locations?

At least one European government finds the story, which we reported last week, quite credible. In fact, this government's analysts assert that Mao was so convinced that the United States was planning to launch a surprise attack on China in 1966 that he ordered his generals to come up with a plan for an atomic counterattack, even though Beijing lacked a delivery system for its recently tested nuclear weapon. They are said to have placated the Great Helmsman by hatching a bizarre bombing scheme that sounds more like a work of popular fiction than an actual military plan.

Which, inexplicably, is where it may have ended up--in a novel. The alleged attack plan is described as strikingly similar to the plot of a long forgotten French novel, Trente Secondes sur New York, which was published in 1969. The English edition, Thirty Seconds Over New York, appeared a year later.

In the fast-paced thriller by Robert Buchard, a French journalist with a military background, a fanatically nationalistic Chinese general masterminds the midair destruction of a Boston-bound Air France jetliner, which is replaced with a Chinese knock-off carrying an atomic bomb. The novel's Chinese operative sacrifices his own life, but succeeds in flying the counterfeit plane to New York City (after approaching Boston in keeping with the downed jet's flight plan) and dropping his devastating payload over "the symbol of imperialism," using the Empire State Building as a landmark and target.

Buchard's book quickly came and went, except, sources say, for its unexpected attraction to a small but dangerous audience. Palestinian terrorists were allegedly attracted to the theme of an attack on Israel's main ally and protector. More specifically, the Popular Front for the Liberation of Palestine (PFLP), a Marxist-oriented group that pioneered airline hijackings, experimented with hang-glider attacks against Israel, and worked closely with violent, ultra-Left groups in France and Germany, is said to have studied the fictional plan with a view toward mounting an aerial assault against the US homeland--minus the novel's "under-the-doormat" nuke that was virtually impossible to obtain in the 1970s.

The PFLP's interest in using a hijacked plane as a weapon reportedly never went beyond the talking stage; and there is no evidence that Islamist Al Qaeda leader Osama Binladen and the 9/11 hijackers ever read or heard of the French or English versions of Thirty Seconds Over New York.

Partly in response to US threats to use nuclear weapons during the Korean war, China began developing nuclear weapons in 1954. It successfully tested its first atomic bomb in '64 and its first hydrogen bomb in '67.

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Who rules China? Who threatens it? Does China's President believe in Communism? These are just three of 20 questions we wish we could ask Hu Jintao. Since China Confidential is blocked by Beijing's Internet police, our chances of interviewing Hu, even by email, are clearly close to zero. So, on the 17th anniversary of Tiananmen, we thought we would publish the questions in the hope that they would somehow find their way to his office--and newsrooms around the world. Who knows? Maybe Bill Gates will email the queries to Hu's Hotmail account.

Twenty Questions for China's President:

1. Who rules China?

2. Will China ever allow multiparty elections?

3. Do you believe in Communism?

4. Is Mao Zedong Thought still important in China?

5. This September will mark the 30th anniversary of Mao's death. Chinese officials and academicians have described Mao's works as 70 percent good and 30 percent bad. Do you agree with this assessment?

6. Many people believe that booming China is fast becoming the number one threat to the global environment, that China's pollution and demand for raw materials will eventually ruin the planet. How would you address their concerns and fears?

7. What are the chances of a widespread rural uprising in China?

8. Could China's economy collapse?

9. Why does China censor and filter the Internet--and block blogs like this one?

10. If China can control the Internet, why can't it put an end to rampant intellectual property piracy?

11. Why is it illegal for workers to organize independent unions and strike in China?

12. How many political and religious prisoners are there in China?

13. Are labor camp prisoners in China subjected to physical and psychological torture?

14. Who threatens China?

15. Do you believe the United States seeks to contain China?

16. Does China see the US as a declining power?

17. If China is peacefully rising, why is it spending so much money to modernize and build up its military, including expanding its arsenal of nuclear weapons capable of hitting the US?

18. The US defense department asserts that China has deployed approximately 800 short-range ballistic missiles opposite Taiwan and is adding as many as 100 missiles a year to this deployment, which, according to the Pentagon, has already tipped the balance of power in the Taiwan Strait toward China. Is China preparing to attack Taiwan?

19. Given that Taiwan has been a de facto independent state since 1949 and has developed its own political and economic system that is radically different from the Chinese system, wouldn't it make sense for a great power such as China to let this small island live in peace, even if it insists on moving toward formal independence?

20. Japan--is it China's friend or enemy?

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A curious thing happened to Republic of Congo President Denis Sassou-Nguesso on his way to Washington: he got a free diplomatic upgrade, courtesy of an increasingly sensitive State Department and aggressive Internet-based niche media. As China Confidential reported, US President George Bush was going to welcome Sassou--in his capacity as current chairman of the African Union--to the White House Monday for a run-of-the-mill photo opportunity. But extensive media coverage (for example, here and here) calling attention to contrasting treatment of the African leader by the US and China seems to have stimulated a change of heart on the part of the Bush administration. The White House announced Friday that Bush would meet Sassou as president of Congo and also as AU chairman to discuss the Darfur peace agreement and "ways to strengthen democracy and improve the lives of the Congolese people." Whereas Washington has largely shunned Sassou because of Congo's atrocious human rights record and absence of democratic reform, oil-thirsty China has honored him with five state visits....

Big Brother: made in China, exported to Africa. As reported by Afrique Centrale, Hong Kong-based ITF Group is installing a state-of-the-art closed circuit television surveillance system in the capital of one of the continent's most miserable countries--Equatorial Guinea--which is also sub-Saharan Africa's third largest oil producer. A former Spanish colony, and the only African country where Spanish is the national language, Equatorial Guinea is a horror show even by African standards. The capital, Malabo, lacks clean water, has only an hour a day of electricity, and does not even boast a single legitimate newspaper. The country's dictator, Teodoro Obiang Nguema, came to power in 1979 by staging a violent coup with the help of foreign mercenaries, after which, he executed the former ruler--his uncle. Obiang's bloodlust and criminality--including killing or exiling nearly a third of the population and wantonly plundering the nation's oil revenues--is the stuff of legend. As if determined to go down in history with the likes of Uganda's mass murdering lunatic Idi Amin, Obiang (who has made five working visits to China) is said to be spending a fortune on the ubiquitous Chinese snooping system, which will allow authorities to observe and eavesdrop on Malabo's pathetically poor inhabitants as they go about their business of trying to survive his tyranny....

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One of China's most powerful institutions is planning a major, multifaceted propaganda campaign to discredit the United States in the eyes of the Chinese public and people around the world.

The campaign by the Chinese Academy of Social Sciences (CASS) will use books, essays and articles, and television and home video documentaries to hammer home a number of core messages and themes, including: America's arrogance, insensitivity, and inevitable decline; the right of China to develop according to its needs and historical and cultural circumstances; the negative consequences of US efforts to contain, threaten, or pressure China; and the national obligation to "reunify the motherland," as Chinese officials and spinmeisters are prone to say, or, in plain English, take back Taiwan by any means necessary, including invasion and conquest.

CASS, which this week published a nonfiction book that blames the US for setting back China's economic development in the 1960s, is an arm of China's chief administrative authority, the State Council, which is responsible for implementing policies of the ruling Communist Party. Better known for its academic exchanges (which have constituted a useful vehicle for intelligence gathering activities since its inception nearly 30 years ago), CASS combines the functions of an academic research center, government think tank, and Communist Party propaganda factory.

The planned propaganda campaign--which will harness creative and production units of China Central Television (CCTV), among other state-owned behemoths--will fall under the prescribed activities of "countermeasures and applied research." Organizationally, the campaign will involve personnel from four key CASS institutes: the Institute of Journalism and Media; the Institute of American Studies; the Institute of World Economics and Politics; and the Institute of Taiwan Studies.

This week's release, "The Research Report on China's 10 Five-Year Plans," is the opening salvo in the CASS campaign. As reported yesterday, the book claims that the threat of a planned US military attack compelled Mao Zedong to abandon plans to reinvigorate China's economy and instead allocate resources to preparing for "all-out war with the imperialists."

CASS is also the brain behind a CCTV documentary series around the theme of America in decline, reported here on May 6. Unlike the crude state-sponsored videos that glorified the September 11 terrorist attacks as a humiliating strike against an arrogant superpower, the planned multipart production promises to be a slick dissection of American economic and military might, playing on the theme of America as ancient Rome--a dying hegemon, in Chinese political parlance.

The CASS campaign in part reflects the leitmotif of modern China--nationalism. Aside from the financial benefits of working for one of the country's most powerful and prestigious institutions, Chinese intellectuals are attracted to CASS because they find the work gratifying--specifically, the opportunity (a) to research and promote policies of reform in harmony with notions of Chinese identify, culture, and tradition, and (b) to play an important role in resisting US pressures to both contain China and force it to conform to US ideas about political and economic reform.

Reform is a far more sensitive and controversial question than most Americans and Europeans appreciate. Whereas Chinese intellectuals in the 1980s typically sought to learn from the West, many contemporary intellectuals, including those working for CASS and other government agencies and state-sponsored think tanks, argue that recent reforms have, in a sense, worked too well. For them, the issue is how to restrain and refocus the spirit of reform before it rips the country apart.

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In at least two capitals, the byword is cautious optimism.

Officials in Washington and Jerusalem are cautiously optimistic that China's deepening ties to the Arab world--and friendship with Muslim but non-Arab Iran--will do some good in the near-term.

Or, at a bare minimum, not make matters worse.

Regarding Iran, the United States State Department (America's answer to a foreign ministry) is letting journalists know that China has quietly agreed to support United Nations sanctions against the Shiite Islamist regime if it persists in rejecting diplomatic overtures to resolve its nuclear standoff with the West. The price for Chinese support, sources say, was the Bush administration's offer to engage in direct talks with Tehran if it stops enriching uranium--a process that can produce weapons-grade material.

Oil-rich Iran, which broke off diplomatic relations with the US in 1980, rejected Washington's offer Thursday, reaffirming its right to develop nuclear power for civilian purposes.

The US is expected to wait a few weeks before proceeding with efforts to impose sanctions, allowing time for world powers to persuade Iran to modify its position in return for a package of incentives that is believed to include a light-water nuclear reactor and a supply of foreign fuel that will make enrichment unnecessary.

Israeli foreign ministry officials, meanwhile, are viewing China's increased involvement in the Arab world as an extension of China's so-called energy diplomacy, which seeks secure supplies of oil for the country's booming economy. As the world's second largest consumer of oil, China has experienced a 15 percent annual increase in demand for the fuel.

While less than comfortable with China's strengthening relations with oil-producing Arab nations--and Iran--Israel is hopeful the trend will not interfere with the Jewish State's trade ties with China, whose armed forces have benefited significantly from the purchase of sophisticated Israeli military technology.

Some Israeli analysts agree with China that its strategy of engagement could eventually encourage greater moderation on the part of Arab governments and the Palestinian Authority--now dominated by Israel's arch-enemy, the (Sunni) Islamist organization Hamas. But others in Israel are concerned that it could lose out over the long run as China tries to be pro-Arab without being anti-Israel.

In Beijing Thursday, foreign ministers and representatives of 22 Arab nations agreed to boost energy cooperation and increase trade with China at the end of the Sino-Arab Cooperation Forum ministerial meeting.

The delegates were welcomed by President Hu Jintao at the Great Hall of the People before the official start of the two-day gathering.

“This year marks the 50th anniversary of relations between China and the Arab region,” Hu told delegates, including Arab League chief Amr Mussa and Mahmud al-Zahar, the senior Hamas figure who is the Palestinian Authority's foreign minister.

Zahar's participation was a diplomatic coup for Hamas, which has conducted a campaign of suicide bombings against Israel. The US and the European Union regard Hamas as a terrorist organization, and have cut contacts with the Palestinian Authority since the Gaza-based group won the Palestinian elections in January. In contrast, China, which has never considered Hamas a terrorist organization, has reached out to it, while trying to strike a statesmanlike stance in the eyes of the international community.

Ahead of the Arab ministerial meeting, for example, China called on Hamas to renounce violence and recognize Israel's right to exist. But Beijing pointedly stopped short of setting preconditions for dialogue with or direct aid to the cash-starved Palestinian Authority. At a briefing Thursday, Chinese foreign ministry spokesman Liu Jianchao stressed that China is willing to keep providing aid to the Palestinians.

"The Chinese government has always paid close attention to Palestine's humanitarian situation," Liu said. "We will continue to provide humanitarian aid to the Palestinian people within our capacity."

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