Wedded to free trade in China

October 20, 2006 

When Sen. Mitch McConnell married Elaine Chao in 1993, he got more than a wife — he got a river of campaign donations from her family and friends in the Chinese-American business community.

Some people think that might affect his views on China, the world’s other superpower.

Eight days after the Tiananmen Square massacre in 1989, where China’s communist regime crushed a nascent democracy movement, McConnell collected his first $8,000 from the Taiwanese-born Chao, then just a friend, and her family.

The Chao family is headed by James Chao, founder of Foremost Maritime Corp., a shipping company in New York that benefits from Chinese trade. It buys cargo vessels from China.

As others in Washington reacted with outrage to the bloodshed in Tiananmen Square, it fell to McConnell to defend normal trade relations with China and help kill a bill that would have granted amnesty to 40,000 Chinese students in the United States, which Beijing opposed.

Since then, McConnell, R-Ky., has received more than $200,000 from Chinese-Americans outside Kentucky, not all of it legal, most of it originating with Chao’s connections. After their wedding, McConnell joked about his campaign donors: “Get used to difficult names.”

“Obviously, Elaine — with the possible exception of (broadcaster) Connie Chung — is the most prominent Chinese-American in the country, and a lot of her friends and acquaintances want to help her husband,” McConnell said recently. “I don’t find that in any way unusual.”

Some conservatives find China an awkward dance, a target of scorn for its brutal communist regime, but also a target of capitalist opportunity for its booming economy and cheap labor.

But few shuffle quite like McConnell, who as a Senate leader calls for freedom in Asia and warns about the menace of “Red China” in fund-raising letters, while consistently defending Chinese business ties treasured by the Chao family and other China-interested donors.

Ideological contradiction

Nowhere is this contradiction more glaring than McConnell’s vocal opposition to the military dictatorship in Burma, in Southeast Asia, which persecutes its citizens and has Nobel Peace Prize recipient Daw Aung San Suu Kyi under house arrest. McConnell frequently calls for economic sanctions against Burma to isolate its regime.

“The Burmese people want these sanctions because they want democracy, justice and freedom, and we stand with them,” McConnell said on the Senate floor in July.

McConnell’s rhetoric rings hollow to Chinese human-rights activists. Like Burma, they said, China is run by a dictatorship that has butchered its own people; that denies citizens the freedom to speak, read, publish, pray or travel; and that jails political dissidents without trial.

Yet McConnell pushes for more lucrative trade relations with China. He and Chao meet privately with Chinese officials, including Jiang Zemin in 1997, then general secretary of the Communist Party of China. (Chao’s father and Jiang were schoolmates in China.)

Chao and her father declined to be interviewed for this story. McConnell helped block attempts to link U.S. trade with China to human rights, religious freedom or a ban on prison labor, even splitting with fellow Sen. Jim Bunning, R-Ky., who warned about “putting profits ahead of people.”

McConnell is no idealist, said John Stempel, senior professor at the University of Kentucky’s Patterson School of Diplomacy and International Commerce.

“He’s not terribly sensitive to things like human rights. He looks at things like politics and business,” Stempel said. “He’s very pragmatic that way.”

In 1999, McConnell invited Li Zhaoxing, the Chinese ambassador to the U.S., to speak at the McConnell Center for Political Leadership at the University of Louisville. Li used his speech to blast Congress for what he called its “malicious attacks” in demanding that China allow its people religious freedom.

A few years later, as China’s foreign affairs minister, Li traveled to McConnell’s loathed Burma to promote stronger ties between his regime and theirs.

Harry Wu, who spent about 20 years in Chinese prisons as a political dissident, said McConnell’s friendship with Beijing is motivated by one thing.

“No mystery. It’s the money,” said Wu, a fellow at the Hoover Institution, a conservative think tank.

“Elaine Chao’s family has a tight relationship with the Chinese government through their business,” Wu said. “And the big companies that give money to McConnell, like Boeing, they want an open door to China so they can do business there. McConnell accommodates them.”

Added Minxin Pei, director of the China Program at the Carnegie Endowment for International Peace: “Burma is a tin-pot dictatorship. You can be tough on Burma and not pay any kind of price.”

Donor questions

McConnell said Chinese-American money has no effect on his foreign policy.

“I was a free-trader long before I met Elaine, and I think I’ve been on the free-trade side of virtually every issue, not just related to China,” he said. Asked why he calls for sanctions only on Burma, he said, chuckling, “You can’t treat China — a major trading partner — you couldn’t have trade sanctions against China.”

Still, he said, he occasionally is willing to irritate Chinese leaders, such as in his sponsorship of a law that recognized Hong Kong as its own territory, even after China took it back from the British in 1997.

Ho Tsu Kwok, chairman of Global China Group Holdings and the Hong Kong Tobacco Co. and member of the Standing Committee of the Chinese People’s Political Consultative Conference, is one of McConnell’s larger individual donors. Ho and his family have given more than $80,000 in the last decade to McConnell, the Kentucky Republican Party and Senate Republican candidates for whom McConnell held a 2004 fund-raiser. Ho declined to be interviewed.

McConnell said he met Ho many years ago, when Ho called himself “Charles Ho” and worked in Louisville on assignment with tobacco company Brown & Williamson. At the time, McConnell said, Ho claimed dual Chinese and U.S. citizenship, although he’s apparently back in China now.

Toward the end of President Bill Clinton’s administration, Congress investigated illegal donations to Clinton’s 1996 campaign that apparently were funneled from China. Seizing on the scandal, McConnell launched a blistering attack in a Republican fundraising letter. He invoked the threat of “Red China.”

“The Clinton-Gore team has … put the presidency up for sale to the slimiest crooks and low-lifes of our society,” McConnell wrote. “This is a direct slap in the face to those brave, young American soldiers who spilled their blood defending freedom and democracy in the world.”

Then congressional investigators learned that McConnell took a few thousand dollars from two of those “crooks” — Maria Hsia, whom McConnell helped with an immigration bill friendly to China, and John Huang, who forwarded illegal donations from The Lippo Group, an Indonesian financial conglomerate with ties to Chinese intelligence agencies.

Testifying to Congress and in a deposition, Huang said Elaine Chao approached him and other Chinese- American businessmen. They sought influence in Congress. Chao urged them to give money to McConnell, Huang said.

“She was a very distinguished, you know, Chinese-American community leader then,” Huang told a House committee in 1999.

Two years after Huang’s testimony, McConnell returned the money and said he had been unaware of its source. More recently, McConnell said his aides cannot determine whether his donors are U.S. citizens or have green cards. They expect that all donors are legally able to give, he said.

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