The General Speaks, II

The formation of the company. The Central Military Commission at the top, CMC, and below that box the general staff, and below that box, Poly Technologies or Bao Li.

Individuals in the company were in the army and are still in the army. It is part of the department, the supply department, these individuals are no longer in uniform. But they appreciate individuals with a military background. The founders were all individuals in the military.

The founders were He Peng Fei, Wang Jun, He Ping. Who was the fourth individual? Where is a fourth individual founder. But who is he.

The Chief of Staff of the Army at that time was the fourth founder. They always have the support of the chief of staff. These are individuals who are sent there to form a company. It is easy to do. They buy an office in the Beijing Hotel and one year later it shifted to Citric. The original money for the founding came from the PLA. As soon as the company enlarged, after they hired more and more individuals, the military individuals retreated and they wanted to make it a purely civilian organization, because that made it easier to do business. There is a secret charter that founded the organization. It never involved the name of the personnel. It never described them, but only their functions. So in the initial development stage, the number one people in the company changes often, depending who is busy and who is not, and a small circle. outside. Then the children of the important people, the founders were already those individuals. Then Poly was an organization that chooses people on a strict selective basis according to their background as well as their qualifications.

How large was the Central Office of the company. The army took care of all of the connections and associations of the company. The tasks and functions were detailed, and the army smoothed all of the channels. It was a problem of reallocation. It is not a company in the sense of a western company, it was a shift of the working desks and offices from the army to another group. And they opened their bank accounts and funds. According to China's laws, any company needed to be registered under another group, and so it was registered under Citic and it is still today. But what is the relationship between the two? The relationship is only to say hello during the Christmas holidays. That is what the relationship is. Reports never go back and forth unless it is on building maintenance, use of the elevator and hygiene. And you need your guests to sign their names in the lobby. There are around 70 people in the main office. They have branches, real branches, are important branches of the military. Actually, I was involved in one of the branches. Some of them who worked with us, they wore civilian dress, but they had uniforms in their cabinets and they could put them on when the occasion required. They were in the military when they wished. We supervised the military activity when they were involved in the foreign field. Like when you are involved in technical or official meeting with men from foreign firms. We must be there to supervise the negotiations and do the translations. When the military is not familiar with official jargon or the official line, and I would have to tell someone, all right, you shut your mouth.
What is the structure beneath Poly. At one level is imports and exports. Those are two departments. Who are the heads of thee departments. Other branches, but how are these two branches broken up.
Literally, who handles the money. We have bank accounts in international banks. Sometimes under Citic, and sometimes under Poly. We have our operational money in a bank on the first floor, the Citic bank, that is where the operational money is. When I go to France, I write request, get signature and they provide me with the money. Then there are foreign banks in Hong Kong and in the US, there is BCCI where some of our money is. It is spread around. BCCI was heavily involved with Poly but under a different name. We never worry about this kind of thing, we have too many friends to help us. Even if there is a collapse of the communist party in Russia, many people still have faith in China and still have faith in Communism. They trust, in other words, at last, what we are doing. They are then extremely helpful to the PLA; modernization program. Extremely help. The goal is to be number one in the world, to defeat the USA, to defeat you politically, economically. By using Japan. They are not happy with the way that America performs They are not happy. The believe you are too arrogant and they want to do something about that. They foresee the gradual decline of the US, that is why they are so confident, the PLA. The top priority of the state leaders, the PLA is the tool to perform that function. Now you see why the PLA was called in at Tiananmen. All else collapsed, the police and the armed police. The PLA is the last resort of the leadership. Some believed the PLA should have been sent in earlier. But there was some hesitation. Yet in the end it saved the state, or the leaders. They believe that American will collapse and there will be a new world order. They fear an American dominance of the world, after the collapse of the Soviets. Now China they believe will be the number one enemy of America rather than the friend, now they do not need us. Look at Gates saying that we should aim our activities more toward China. China knows what he is doing. That is why when you look at a Chinese newspaper today, they are talking of preventing China from a peaceful revolution. All of the people in...all of the leaders in the company are in the Party. It is a requirement but it is not always done. Presumably, they are all in the party. Unless you are a returning overseas Chinese. Then you are better than a party member, you are as loyal as party members. A lot of people come to us wanting to help. The party in strengthening the PLA does not need to invest in the US to weaken you. The Japanese can do. They can invade you economically, abut China cannot do that. That is not the goal. Poly (Bao Li) can make use of its own profits, when it wishes.
The deal with Thailand was not to help Thailand alone but to undermine the US. And the goal of helping the Audis was to help them and to hurt America. You convince the Saudis that China, in order the help you, will take great risks and pay great costs.
The students at Tiananmen had it all wrong. Rally. They had a grievance, but they were wrong as far as the PLA went and what it was. They didn't know. That is why when Zhao Ziyang came to the square holding the loudspeaker, crying, and he said, in Chinese, "There are a lot of things you don't understand. It is much more complicated than you imagine. Retreat from the square. I beg you." That was as far as he could go at the time. Of course, he was the official number one person at the time, we had his signature every day, he was not consulted every day and didn't make the decisions, but he approved them, generally. He knew all that was s going on. He knew there were rotten things in the state.
Poly performs the duties that the General Staff cannot perform. It is not stronger than the General Staff it is the well camouflaged right hand of the general staff, that is why we carry a dagger, too. Cloak and dagger. The iron fist in the velvet glove, that is us.
The Life styles of the individuals in Poly. They have their own cars. But you never know where they got their cars from. Mercedes or Rolls, they are imported from Hong Kong. There are a lot of cars registered with the Army, the license plates are all white.
The life styles of the individuals. It is not related. What are the pers. How many girl friends they have. They can have as many as they want. They have money and power. They don't live like westerners. They behave themselves in China. They have orderly families. Personally I didn't visit their families We never formed close friendships. The friendships were based on consent and understanding.
Apartments were quite luxurious, even by western standards, and when they come to the US they also have good quarters. They have their friends buy homes for them in the US, they are taken care of by friends here in America, under the friends names. But they make a point of not showing these things off in China. They are in control there.
The scholarship to the French university. That is a trivial matter. That happened every day. The admiral asked my opinion. He said, what do you think. Is this god. His son, then left for France. This was not of great importance. It was how business was done. As to what the money would be done with, that is up to your imagination.
One thing, they are well educated and culture individuals. I consider myself one of them. But they are more civilized than I am. They know how to behave themselves. They are discreet. They are image conscious. But at the same time they know how to have a good time without taking risks. If they want to enjoy themselves, then they go to the west. The dangers. Say, if you own three cars in Beijing, or you commit a lot of crimes, and say you assault or rape a lot of girls. Then someone is going to bring charges. Your enemies will make use of that information, especially when they have evidence. Unless you are extremely powerful you will be vulnerable to one degree. So whenever there is a trial, against misbehavior of the company, not an individual. If you are the boss, and there is a trial, then the influential individual disappears for a time, and another individual is put in that post, and this is the individual who is blamed for all the misbehavior. Once that is over, than then the son returns. This is a practical case.
Basically, what is important in China, if you have a mistress or two or three, there is no problem. Some of the officers have a telephone list. And we would be a dinner and they would bring a young beautiful woman. Nobody bothers about that. You may not accept this. As long as you are in a good position, we never look into your private life. These women may have children. They may have husbands also. They are simply service people. They make use of each other. I will open a bank account in Hong Kong if you sleep with me, for example.
Clothes, suits, that is not important. I wear certain things that are not expensive. In the high position, of course, it is required that you have a good suit, and shirts and shoes. But who bothers about this, who is envious or surprised. They don't have inexpensive things, let me put it that way. Everything for these individuals is guaranteed by the state. We go to the Army hospital if we are ill. The best medical care. We are not interested in the opera, that is for westerners. That is for tourists. We are interested in naked women, belly dancing. That is the sort of thing we are interested in. This would occur at some of the hotels in Beijing or Guangzhou. These would be Chinese women, I realize the taste of these individuals. They are interested in Mainland girls, not Taiwan, Thailand, Singapore. That is bullshit. We Chinese, think ourselves, from the Northern part, we are the genuine Chinese, the Hans. And we get what we want. There are skirmishes over some women that is what we call them. Skirmishes. Once in the office we are in business and that does not intrude there.
The only thing that could cause you to resign would be an economic scandal. Then a deal exposed to the public would mean that an individual would have to be punished. If an individual womanized too much or drank too much then you would have to step down. But that has never happened. Once in power you know how to control yourself. I know how to control myself also.
There are some powerful women in the company, too. They the women enjoy the power of their husband. They enjoy the conveniences, the travel, and the money.
Disagreements within the company? Of course, many individuals struggling for the same power, what we call the strategic turnover, individuals try to undercut your influence. Within the company, everything is pretty clean, you are not going to change much. But everywhere else we see corruption, bribery, whatever. Why not?
I’m not talking about people from Poly. Private companies, other organizations, these are the places that are dirty. But the higher you are, the more purified you are. Purity is there at the top. The more methodical you are. The more in a position you are that is advantageous, and you form another perspective toward the whole world.
In China people develop in several stages. Lowest class, could be enlightened, agriculture class. Once they are enlightened they become educated. Then they become civilized and then they become cynical. Then there is something beyond that, and that is your break through cynicism, and you develop into responsibility people, beyond cynicism. Nixon and Kissinger were these individuals. That is why they were accepted in China. After you are too cynical, you become more realistic, you want to do something for the world, get things done. These are the people we recruit. These are the people who can look at things philosophically. Then you transcend politics. Then you can form understandings and relationships with individuals no matter what their politics. You share a perception with people who are the same as you. Mao, Zhou and Nixon and Kissinger, talking in private. They had so much in common. They were beyond cynicism. Cynics complain. Those beyond it do things and deal in the realms of pure power. That is what these leaders do. Beyond politics and beyond ideology.
I was chosen by individuals in the company. File evaluated. Interviewed. Hired. There is no family succession in the company. Family employment is there, but not succession. Most important people in the company are still in 50s and 60xs. Their children are not in company but are educated. They do not want to make it too obvious. It is like in the army, when it is not obvious. You take care of my children and I take care of yours. If I am the Beijing Commander and you are the Nanjing Commander, we watch over and take care of each other’s children. That is how it is in the company. Like the Chinese military, that is how poly is. You send your son to me and we take care of each other's families. You promote my son and I promote yours. So people working under me never know exactly where the power threads go. You don't want people to complain about this or know about this every day.
I never questioned what they did for their children. They could provide chances for foreign study for their children. but you never find out how they did this. The son may perform extremely well academically, of course.
It is young and so it is still a two generation business, fathers and sons, and so the two generations stay in the business. But we never know the relationship of individuals. They never in the office question your family background. They know where you are from, somewhere, but they never question it. It is like 1984 with the Inner and the Outer party. This is the Inner Party. We have our own private library, and that is where we keep all the information books publishes in the West, Time and Newsweek and Janes Fighting ships. But not Playboy. We are a socialist country. These things are not encouraged openly. But everyone has them at home, under the pillow. They like the Hong Kong version, in Chinese with Chinese women. That is there taste. They do not have western tastes in women.
Saudi Arabia was the perfect deal, the biggest deal that China every signed. France was a tiny company, deal, spending money does not make you feel glorious. But when you generate revenue, you are a hero. That is the distinction that we always make. Making money is glorious
We keep the commission, officially. And we have the right to that. But the major revenue goes back to the PLA. They use that for the payment of American arms and technology. Like the $500 million deal we signed with Grumman. That is where the F8 is modernized. We bought 50 modification kits. So don't worry we have money to spend in America and we get it in the Middle East. It is also important that the whole PLA delegation went to Grumman. We send delegations back and forth to the defense universities.
China sends military men to the UAS and you send individual to us to study to see how we work. You are here and you are welcome and we have guys in your country doing the same thing.
The listening post in Northwestern China. The geographical location. It is jointly controlled by the US and China. The jurisdiction is China's of course. The technological knowhow is provided by the US. The Chinese officers fluent in English are assigned to the post, and in Russian, too, of course, since the post monitors the Russian. The Chinese built the base, of course. This is a perfect example of the two countries having a common enemy, after the fall of the Shah of Iran, the post was built in China, the only alternative for the US. A perfect location and a common enemy. They say that we will provide the hardware and you provide the software. It uses American satellite transmission and high resolution photographs are provided. Dozens of Americans are employed there on a rotation basis. These are Americans who are mostly from the NSA, civilians and they dress in civilian clothes. Then there are military personnel, also, but they were civilian clothing, too. The people in the area know that they are there and that they are Americans. But they are very isolated and heavily guarded. Then like American tourists they go to town shipping. They go out to travel. Families can visit them, presumably, they can stay in barracks with them but never inside the compound. The advantages to us is that we know what is happening in the soviet union. The agreement is that all information gathered will be shared by the two countries. China now got something that it never got before.

The Shangri La I think is our greatest failure. Actually. A major disappointment. It was supposed to be for scrapping purposes. At that time, in 1986 and early 1987. We wanted to design our own aircraft carrier. We wanted to learn some of the landing and maintenance techniques that the Us had. This was a medium sized aircraft carrier from World War II, and this as a medium sized carrier and that is what we wanted. The technology was modern on the carrier. At that time the situation in the South China sea was sc critical. We had naval skirmishes with Taiwan and with Malaysia over the Spratley Islands sovereignty. At that time, China became to think, or was reminded of the seriousness of having long range protection force capability, an aircraft carrier was the ideal solution for the Chinese navy, since a lot of areas in the Spratly islands were simply out of the range of the shore based fighter bombers. And so China needed an aircraft carrier. Therefore, they wanted to buy one. Actually, in 1980, China purchased one carrier, the old World War II model, from Australia, the Melbourne, the city in the southern part of Australia, We bought that and disassembled it. Every part was taken off with extreme care, it was disassembled in a shipyard near Guangzhou. And it was studied and the contract originally was for scrapping purposes. But every part was evaluated. Then we found that it was not enough. We needed to buy one from the US and evaluate it. The US was more advanced. That one was from Britain, but we needed one from the US. Of course we could never buy something like the Kennedy or your modern carriers, but we needed to buy a medium sized not to old ship. For scrapping purposes. So there was an argument in China. Some wanted to keep the Shangri La and to use it as it was. But the Shangri La they had something else in mind. It was put up by sale in Philadelphia. So we immediately jumped into the bidding for the ship. And we almost got it.
They obtained assistance from Am friends who are extremely well connected here in Am. They had access to information having to do with the bidding from Taiwan. So they went through a lot of activity, and they carried on covert surveillance and observations, and they concluded that they knew what Taiwan would offer. So China didn't want to spend too much, so having information on the bidding was crucial. This was a scrapping company making the bid, a company in the North, situated on the Northern coast of China, this is still secret today. This was not an open bid, people had to know who the bidder was. The bidder was only from Taiwan, as far as I know. The bidder was a ship scrapping company on the North Coast. We know who it was. The only competitor was from Taiwan, they were willing to offer more money, and we knew exactly how much. The bidding procedures were extremely confidential. I know that China offered a slightly higher price. So theoretically, we should have had the deal. But, unfortunately, your CIA found out that we wanted to use this carrier for something. Due to influence from the government, without opening the bid from China, the ship was sold to Taiwan. Chinese personnel from the security ministry went on board and videotaped the ship. They identified themselves as from the salvage company and Poly people identified themselves as salvagers. Then a small handful of friends from the circle also came with us on the ship. Genuine blue-eyed, blonde haired Americans took us aboard the ship and helped us greatly. Not Chinese Americans
They were satisfied on the Shangri La and found that the catapult was still intact and the large caliber cylinder was still intact, that drove the catapult, and this is what we wanted. Poly wanted that ship. We would get it from the salvage company and individuals involved in the intelligence services were involved in the deal also.
Now, they were so sure that they would get the ship, and they were extremely experienced people, and when they believe they will get something they will get it. But this time the US government intervened. So money was no longer the issue, but politics was. So they lost the deal.
And the State security people then had their friends buy cars in Philadelphia and Seattle. They knew it was going to China, and they wanted direct access to clearance in customs in China. Everyone would make a profit. Cars would be a solution to the problem. So they bought hundreds of cars in the US, new cars, ordered them. On both coasts. Not in concentrated areas. These were National Security people and their friends.
They had to resell the cars. They lost money. Some had agreements with car dealers, and returned them to friends at car dealers. But they had to eat the discount. That company generated a profit, but China lost money. The car dealers didn't have to be friends of China. The dealers arranged everything. They ordered the cars and told where to have them delivered for export, that was all legal. That was all legal, so long as you have the clearance documents, customs, tariffs and so on. Who cares that this was going on. But once the deal was lost they had to resell the cars. The government agency would have owned the cars in China, and then resell them. That is extremely profitable. The government, of course, was not informed of the deal. The security ministry was informed of the deal, but it was a profitable venture and who cares, as long as you generate a huge profit. The security ministry was not going to buy this car, others, in the provincial governments, or in the agricultural ministry and so on. The Chinese would pay eventually, and then they could be sold to a third country, in the middle east or so on, in a third country and generate a profit there. Everyone was after a profit, of course. It could have been a collective profit, of course. A little bit of profit, of course, would have meant an awful lot of money.