Dianne Feinstein Used Her Senate Power to Push Most-Favored-Nation Status for the CCP

In November of last year, a glittering array of world statesmen gathered in Beijing for Bloomberg’s New Economy Forum. At the top of the list was former U.S. Secretary of State Henry Kissinger. He was worried. With China skeptic President Donald Trump imposing huge tariffs on Chinese goods, the most famous living diplomat was concerned about the future of the United States’ relationship with China’s Communist government. Trump’s actions, said Kissinger, had landed the two sides in “the foothills of a Cold War.”

That seemed unlikely, according to former U.S. Treasury Secretary Henry Paulson. “China will be a big part of the global financial picture in decades to come,” said the former George W. Bush cabinet member. And then, Paulson made an off-handed remark that may turn out to be the most unintentionally prescient observation of the 21st century: “Unless something goes terribly wrong in China,” said Paulson, “no other nation will wish to decouple from its financial markets.”

Five months later, the wisdom of exporting millions of American manufacturing jobs and large parts of critical supply chains for everything from medication to ventilators to a hostile overseas power is looking ever more questionable, as a novel pathogen of Chinese origin has wreaked havoc on the American economy and locked the entire country indoors. In retrospect, Richard M. Nixon’s 1972 meeting with Mao Zedong marked not only the opening of China, but also a nearly 50-year delusion about the nature of the Chinese Communist Party (CCP) and its compatibility with America’s own economy and society.

For Kissinger, as for others, there was money at stake as well. “Kissinger was completely ‘played’ by the party,” says one experienced D.C. China hand. “His consulting enterprise, Kissinger Associates, built their ‘business’ around enabling the Chinese Communist Party and convincing Western business leaders that they needed to leave their ‘business judgment’ at the border and simply accept the party’s conditions as the price of entry into the China market.”

The links between leading American politicians and companies and the Chinese leadership are now likely to come under increased scrutiny.

First on that list of those deserving of close attention is the senior z—who briefly made headlines a few years ago when reports surfaced that she had been forced to fire a longtime aide after learning from the FBI that he had been recruited on behalf of the People’s Republic of China (PRC).

No one represents the marriage of American policy toward China and doing business with the PRC better than Feinstein. Her promotion of trade with China to advance the interests of her constituents turned into apologetics on behalf of the Communist Party, as it aided her political ascent and augmented her husband’s portfolio. In October, USA Today listed Feinstein as the sixth-richest member of Congress, with a net worth of $58.5 million—a sum that vastly understates her actual wealth. Richard Blum, her husband, is himself worth at least another $1 billion.

When Feinstein was first elected to the Senate in 1992, Blum’s interests in China amounted to less than $500,000. She was named to the Senate Foreign Relations Committee in 1995 and by 1997, according to the Los Angeles Times, “Blum’s interest had grown to between $500,001 and $1 million.”

In 1994, Blum’s company, Blum Capital, had entered a joint venture to found Newbridge Capital, specializing in emerging markets, including Asia. Blum said in 1997 that less than 2% of the approximately $1.5 billion that his firm managed was committed to China. He held a $300 million stake in Northwest Airlines when it operated the only nonstop service from the United States to cities in China. In 2002, Newbridge was negotiating to acquire 20% of Shenzhen Development Bank. After some rough seas, it paid $145 million for an 18% share two years later, marking the first time a Chinese bank came under control of a foreign entity.

Feinstein says that Blum’s business in China had no effect on her foreign policy or trade positions regarding the country. “We have built a firewall,” she said of her relationship with her husband. “That firewall has stood us in good stead.”

Yet the record shows that the marriage between Blum’s business and Feinstein’s political career is a very close one. Journalists from Feinstein’s home state’s two largest media markets, Los Angeles and San Francisco, covered that relationship thoroughly and often quite skeptically throughout the 1990s and early 2000s. The fact that relationships that should have come under serious scrutiny have rarely been portrayed in anything other than a favorable light—the New Yorker breathlessly reported in a 2015 profile that China’s former President Jiang Zemin had spent Thanksgiving as a guest at the Blum-Feinstein home in San Francisco—reveals the extent to which the American elite has subscribed wholesale to the unproven theory that business with the Chinese Communist Party was good for America.

What began as faith in the inherent goodness of relations between the United States and China eventually transformed into something dark, crude, and cynical. As Benjamin Weingarten recently reported, Feinstein has repeatedly criticized Trump’s tariffs on China, turning her advocacy for the Communist Chinese government into an instrument of domestic political warfare—and cementing a pro-China policy as a foreign policy touchstone to rival support for the JCPOA, President Obama’s Iran deal, within the Democratic Party.

Dianne Feinstein first visited Shanghai in 1978, shortly after the United States and China opened diplomatic ties. San Francisco’s newly elected first woman mayor struck up a friendship with her counterpart, Jiang Zemin, who was mayor of Shanghai at the time. Under their guidance, Shanghai, China’s leading industrial city, and San Francisco, home to one of America’s largest Chinese immigrant communities, struck up a sister-city relationship. The two siblings did well by each other.

“China made friends first,” Feinstein told the New Yorker in 2015, “and then they did business with their friends.” Feinstein considers Jiang a “good friend.” Feinstein also spoke about how she and Jiang danced together. Then they started to make money. In the mid-’80s, a firm in which Blum invested struck a $17 million deal with a state-owned business for a retail and residential complex outside Shanghai.

In 1989, Jiang became general secretary of the Chinese Communist Party. Three years later Feinstein was first elected to the Senate. Serving two of the largest Chinese diasporas in the United States—the San Francisco/Oakland/San Jose area (629,243) and the greater Los Angeles area (566,968)—Feinstein respected the wishes of many, but hardly all, of the Golden State’s Chinese Americans who wanted warm ties with their ancestral homeland. More importantly, her longstanding ties to senior Chinese Communist Party officials advanced the financial interests of her constituents. It is because of California’s trade relationship with China that the state is the world’s fifth-largest economy.

In 2015, China accounted for 35.1% of all imports to California. In 2017 California exported $15.6 billion in goods and another $9.1 billion in services to China. The top exported goods were motor vehicles, scrap products, industrial machinery, navigational and measuring instruments, and semiconductors and components. The top exported services included travel, education, royalties from industrial processes, film and TV distribution, and computer software. In 2018, total California trade with China topped $175 billion, with California exporting $16.3 billion worth of goods and services, and importing $161.2 billion, leaving it with a $144.9 billion trade deficit with China. From January to April of 2019 alone, China exported $39 billion, or more than twice what California exported the entire year, at $15.85 billion.

And the relationship benefited Feinstein personally. In 1993, Jiang became president of China and invited Feinstein and Blum to Beijing to meet with party leadership. According to a 1994 Los Angeles Times story, Blum was planning to bundle $2 million to $3 million of his own with another $150 million from other investors to invest in state-owned enterprises, including telecommunications equipment.

Feinstein said at the time that Blum’s economic interest in China was “news to me.” The couple denied that his business in China profited from her then 15-year friendship with the president of China. “He is in San Francisco running his business, I am in Washington being a United States senator, and they are two separate things,” Feinstein told reporters. “I don’t know how I can prove it to people like you. Maybe I get divorced. Maybe that is what you want.”

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