World Bank Loans Finance Chinese Army

Article excerpt

Newly declassified documents, forced from the U.S. Commerce Department by a federal lawsuit, show that $200 million in World Bank loans for a "technology development project" actually went to weapons-research labs and businesses wholly owned by the Chinese People's Liberation Army, or PLA. The documents reveal that World Bank loans were used to modernize the Chinese defense industry.

"The objective of the project is to support the [Chinese] Government's continuing reforms in technology policy and institutions so as to promote the development of clear, productivity-enhancing technologies in China's industries" states a 1995 report written by the Industry and Energy Operations Division of the World Bank.

According to the World Bank report, "The [Chinese] Government will pass on US $194.3 million of the loan proceeds through SPC [State Planning Commission] to eligible sub-borrowers in the form of sub-loans, with the Golden China Corporation acting on its behalf as a financial agent."

However, according to the Defense Department, "Golden China Corporation" and many of the so-called "engineering research centers" supported by the World Bank loans actually were owned and operated by the Chinese military's COSTIND, which stands for the Chinese Commission for Science, Technology and Industry for National Defense.

For example, the World Bank provided:

* $5 million to the Northwest Institute for Nonferrous Metal Research for "rare earth materials" used in chemical, aviation and nuclear power stations. The Northwest Institute for Nonferrous Metal Research is part of the China National Nuclear Corp., or CNNC, producer of all nuclear weapons for the Chinese military.

* More than $5 million to the Harbin Research Institute for "welded steel products" used in aviation and shipbuilding. Harbin was identified by the Department of Defense as a Chinese Army front used to purchase Allied Signal turbo-fan engines for the People's Liberation Army Air Force, or PLAAF, in 1996.

* More than $4 million to the Marine Design and Research Institute of China for "ship-design software and services." The Marine Design and Research Institute is part of the China National Ship Building Corp. and the primary design facility for all Chinese warships, including nuclear-powered submarines.

The loans to the Chinese military from the World Bank also financed several moneymaking ventures for the PLA. For example, the World Bank provided $5.5 million to the China Textile Academy for "productivity enhancement."

According to a 1997 Rand Corp. report on the Chinese defense industry, the profits from People's Liberation Army business ventures such as textile exports are split between the PLA generals and the Chinese military. …