(RON PAUL opposes) Administration Plan to Subsidize China’s Nuclear Industry

Administration Poised to Subsidize China’s Nuclear Industry
by Timothy P. Carney

A Japanese-owned company is building nuclear power plants for Communist China, and the Bush administration is ready to use U.S. taxpayer dollars to subsidize the deal to the tune of $5 billion. Although China’s government-owned nuclear industry has a long record of illegal nuclear deals with Iran and Pakistan, administration officials say the technology is not transferable to nuclear weapons, and that the subsidy will create 5,000 jobs in Pennsylvania.

The Export-Import Bank of the United States (Ex-Im) is a federal agency that subsidizes U.S. exports by lending taxpayer money to foreign buyers (such as the Chinese government), or guaranteeing private loans, so that the foreign buyer can purchase U.S. goods.

Westinghouse Electric is a wholly owned subsidiary of the Japanese company Toshiba. Westinghouse manufactures the AP 1000 -- a new model of nuclear power generator -- in Monroeville, Pa.

In February 2005, Ex-Im’s board of directors granted preliminary approval for a $5 billion subsidy -- an unspecified combination of loans and guarantees -- to the China National Nuclear Corporation (CNNC) as a way of aiding Westinghouse’s bid for the contract (a French company and a Russian company were also competing for the contract.)

This year, the Chinese government awarded the contract to Westinghouse, bringing the record subsidy closer to reality, although the preliminary approval does not guarantee Ex-Im will provide financing. A Westinghouse spokesman told HUMAN EVENTS the company was in the process of applying for Ex-Im financing. Ex-Im spokesman Phil Cogan told HUMAN EVENTS that while a preliminary commitment is by no means a promise by Ex-Im, it indicates that “this is the kind of thing” Ex-Im would subsidize.

Congressional critics from both ends of the spectrum, including Senator Bernie Sanders (I.-Vt.) and Republican Representatives Ron Paul (Tex.), Jeff Fortenberry (Neb.), and Ed Royce (Calif.), have resisted this deal.

For the critics, the deal is problematic on at least three fronts. First, China’s state-owned nuclear industry has a long history of illegal nuclear weapons proliferation, and this subsidy enriches that very industry. Second, some of the jobs generated by this record subsidy deal will not be in the U.S. Finally, aiding China’s nuclear power industry could boost its military capabilities including its nuclear submarine programs.

The CNNC is the branch of the Chinese government that manages both nuclear weapons and nuclear power. In recent months, CNNC and other state agencies founded the State Nuclear Power Technology Company (SNPTC). SNPTC, entirely owned by the Chinese government, is now the official purchaser of the nuclear reactors from Westinghouse.

CNNC is a known serial proliferator of nuclear weapons materials. In the late 1990s, U.S. intelligence agencies found that the CNNC had sold 5,000 ring magnets to Pakistan’s A.Q. Khan Research Laboratory. Later, the CIA found that the CNNC sold Pakistan high-temperature furnaces. Both the furnaces and the ring magnets are crucial tools used in enriching uranium to produce fissionable -- i.e., weapons grade -- uranium. Shortly after these sales, Pakistan tested its first nuclear weapon.

In 2004, A.Q. Khan, the Pakistani scientist on the buying end of the CNNC’s sales, was arrested for selling centrifuge materials to Libya. Khan is also known to have aided the nuclear weapons programs of North Korea and Iran. CNNC has, on at least two occasions, had dealings with Iran’s nuclear weapons program, but it is not clear if China has ever actually executed a sale of nuclear weapons materials to Iran.

Westinghouse and Ex-Im officials have defended this subsidy by pointing out that without it, China would still build the nuclear power plants, but in collaboration with the Russians or the French. By greasing the skids for the Westinghouse contract with its preliminary commitment in 2005, Ex-Im has helped make work for 5,000 manufacturing workers in Monroeville, Pa. In April, however, Westinghouse announced that portions of the power plants would be built in South Korea and other parts in China. Ex-Im cannot finance an export unless most of the goods are made in the U.S.

Westinghouse and the Bush administration point out, however, that if these cutting-edge reactors do well in China, it would spur domestic and world-wide business for Westinghouse, making more jobs in Pennsylvania.

In late May, Representatives Christopher Smith (R.-N.J.), Diane Watson (D.-Calif.), Fortenberry, and Royce, asked Secretary of Defense Robert Gates in a letter whether the sale could boost China’s military capabilities.

Henry Sokolski, executive director of the Nonproliferation Policy Education Center said that there are reasons to worry about providing China with this technology. “You’re building an infrastructure that can be used and retooled to help out in [China’s] naval reactor sector -- and they do want this for nuclear subs,” the Christian Science Monitor quoted Sokolski.

Last year, during the debate on reauthorizing Ex-Im, the House passed by a 331-to-114 vote an amendment by Representatives Paul and Sanders that would have blocked a subsidy for this deal. The measure, however, was not in the final bill.

As of Tuesday morning, Ex-Im had not yet received an application from Westinghouse or any of its partners with regard to the sale. Sanders, Paul, or Fortenberry will likely act once Ex-Im receives the application, and possibly hold hearings on the deal, which would be the largest subsidy in Ex-Im history.

Sanders, Paul, or Fortenberry will likely act once Ex-Im receives the application, and possibly hold hearings on the deal, which would be the largest subsidy in Ex-Im history.

The U.S. subsidizing Red China's acquisition of advanced nuclear technology is an astonishingly silly waste of taxpayer money. We have to borrow money every year to run our government as it is; thinking part of that money that is borrowed is going to the PRC acquiring more nuclear technology is bad enough, but when you consider that Red China is currently lending money to our government, that really takes the cake.

We will be paying the Red Chinese to take the reactors; the money that we are using to pay is borrowed in part from Red China; and we are going to pay interest on that money forever!

Red China has plenty enough dollars to finance this technology. My goodness, they are trying out to figure out how to invest the $1.2 trillion that they have sitting around presently, and have used a small fraction of that to buy into the Blackstone Group (a Carlyle enterprise, by the by; I have left an accompanying Japanese translation in):

China to invest in U.S. private equity group
（中国、米プライベート・エクイティ・グループに投資）
by Andrew Ross Sorkin and David Barboza
IH：May 20, 2007

NEW YORK: The Chinese government said Sunday that it would acquire a $3 billion stake in Blackstone Group, the private equity firm, in the first effort by Beijing to diversify its $1.2 trillion in foreign exchange reserves beyond U.S. Treasury bills and into commercial enterprise.
アメリカ短期国債以外に、そして営利事業に、$1.2兆に上る外貨準備を多様化する為の、中国政府による初めての努力の中、中国政府は日曜日、プライベート・エクイティ会社のブラックストーン・グループ株、$30億相当を取得すると語った。
The deal, set to coincide with Blackstone's $4 billion initial public offering this year, will give China a roughly 8 percent stake in Blackstone, which owns companies with 375,000 employees and $83 billion in annual sales.
ブラックストーンが今年予定している$40億相当のIPOと同時に行われるこの取引は、従業員375,000人、年間売り上げ$830億の企業を所有するブラックストーンの株式約8%を、中国に与える事になる。
It would also represent a watershed for the booming private equity industry as it attempts to gain a foothold in China.
また、成長著しいプライベート・エクイティ産業が中国に足場を得ようとする中で、それらの企業にとって重大な転機を現す事になるだろう。
"It's a historic change," Stephen Schwarzman, co-founder of Blackstone, said during an interview. "It's a paradigm shift in global capital flows."
「歴史的変化だ」とブラックストーンの共同創立者スティーヴン・シュワルツマンがインタビューの中で言った。「グローバル・キャピタル・フローのパラダイム・シフトだ」。
He called the Chinese government's decision "huge" and even "surprising."
彼は中国政府の決断を「非常に巨大」、そして「驚き」とすら呼んだ。
China has been grappling with how to invest its foreign reserves more aggressively. In March, China said that it would set up a special investment vehicle - the State Foreign Exchange Investment Company - to handle a portion of those reserves, which are now held by the central bank, in the hopes of earning a higher return for the country.
中国はより積極的な外貨準備投資方法に取り組んできた。中国は3月、国家の為により高い利回りを稼いでくれる事を願って、現在は中央銀行が保有している外貨準備の一部を取り扱うべく、特別投資手段（国家外貨投資公司、SFEIC）を設立する、と述べた。
The agency is not yet operating, but the Blackstone deal suggests that the Chinese government is eager to put its vast reserves to work outside of China. Still, as Blackstone begins to invest in emerging markets like China, the deal offers the prospect that at least some of the money could find its way back to China. Indeed, Blackstone is planning to open offices in Hong Kong and Beijing this year.
この期間は未だ稼動していないが、ブラックストーンとの合意は、中国政府は莫大な外貨準備に中国国外で稼がせたがっている事を示唆している。しかし、ブラックストーンが中国のような新興市場で投資を開始する中、この取り決めは、少なくともこの資金の一部は中国へ還流出来る、という可能性を提供している。確かに、ブラックストーンは今年、香港と北京事務所の開設を計画している。
For years, China has invested in foreign currency, particularly U.S. Treasury bonds, which have earned a safe but modest return. But now, with the dollar in decline and the Chinese government willing to take on more risk to earn higher returns, the new agency is being modeled, in part, on Temasek Holdings, the state-owned investment vehicle in Singapore, which has invested billions of dollars around the world, particularly in China.
何年もの間中国は、手堅いながらも大した利回りも稼いでいない、外貨、特にアメリカ財務省債権に投資してきた。だが現在、ドルは下がり、中国政府は高リターンの為に高リスクを取る事に前向きになる中、世界中で、特に中国で数十億ドルを投資してきた、シンガポールの国営投資機関テマセク・ホールディングスを、新しい機関は一部手本とした。
A similar investment agency in China would effectively create the world's largest hedge fund. Some analysts say that the China fund's investment of billions of dollars in the global financial markets could push global asset prices higher, affecting U.S. and European stocks, bonds and interest rates, as well as the value of energy and natural resources in Africa and the Middle East.
中国の同様の投資機関は、事実上世界最大のヘッジファンドを作り出すだろう。一部のアナリスト達は、中国ファンド数十億ドルが国際金融市場で投資されれば、アフリカと中東のエネルギーおよび天然資源の価値と同じく、アメリカとヨーロッパの株式、債権、そして金利に影響し、国際資産価格を押し上げるだろう、と言っている。
Meanwhile, the Blackstone Group, which is based in New York, has been moving aggressively in recent months to find investments in China. Blackstone is trying to catch up to the Carlyle Group, which has a large operation in China.
一方、ブラックストーン・グループは、この数ヶ月間、中国で投資を発見すべく積極的に動き回っている。ブラックストーンは中国で大規模なオペレーションを敷いている、カーライル・グループに追いつこうとしているのだ。
In January, Blackstone hired Anthony Leung, the former Hong Kong financial secretary, to run its business in China, Hong Kong and Taiwan. And last month, Reuters reported that Blackstone was seeking to acquire a stake in the Guofeng Group, one of the largest Chinese makers of plastic products.
1月、ブラックストーンは中国、香港、台湾でのビジネス運営用に、Anthony Leung元香港財務長官を採用した。そして先月、ブラックストーンは、中国最大のプラスティック・メーカーの一つであるGuofengグループの株式を取得しようとしている、とロイター通信が伝えた。
Under the terms of the Chinese government investment in Blackstone, it will buy nonvoting shares as part of the firm's initial public offering at 95.5 percent of the public-offering price. It has agreed to keep its stake for at least four years.
ブラックストーンへの中国政府の投資条件の下、同社の公募価格の95.5%で、IPOの一部として無議決権株を購入する。この株式は少なくとも4年間保有する事で合意された。
China may reduce its stake after the public offering so that it holds fewer than 10 percent of Blackstone shares. The public offering is expected to value Blackstone at as much as $40 billion.
ブラックストーン株を10%以下に出来るので、公募の後株式を中国は減らすかもしれない。公募はブラックストーンに最大で$400億の価格をつけると予想されている。
While the investment may presage further Chinese investment in private equity firms in the future, China has promised not to invest in a competing private equity firm for a year.
この投資は中国が将来更にプライベート・エクイティ会社に投資する事の前兆となるかもしれないが、その一方で、競合プライベート・エクイティ会社には1年間投資しない、と中国は約束している。
Blackstone - which has led multibillion-dollar buyouts of Equity Office Properties, Freescale Semiconductor and Michaels Stores - manages a $15.6 billion buyout fund. In its prospectus, it reported $2.3 billion in profit in 2006.
Equity Office Properties、Freescale Semiconductor、そしてMichaels Storesの、数十億ドル規模の乗っ取りを率いたブラックストーンは、$156億相当の乗っ取りファンドを管理している。目論見書によれば、2006年の利益は$23億との事。

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