Monday, December 27, 1999

Bill Richardson and Asian Americans, the Saga Continues

Since the summary dismissal of physicist Wen Ho Lee from the Los Alamos National Laboratories last March, Energy Secretary Bill Richardson has had to repeatedly assure the Asian Americans that he will not tolerate racial profiling in the national laboratories. The latest assurance took place just before Christmas.

On the day Lee’s friends and supporters gathered to celebrate his birthday with a fund raiser for his legal defense, Richardson visited the Lawrence Livermore National Laboratories to once again pledge “zero tolerance” for discrimination against Asian Americans working in government labs. Two days later, nine Asian Americans employed at Lawrence filed claims of racial bias in their treatment at the Labs.

“Without Richardson’s statement against discrimination, there certainly would be nothing, no claims filed today. But he said he’s committed to zero tolerance. Now he needs to do something about it. So far it’s all talk,” said Kalina Wong, one of the nine filing suit. According to the San Jose Mercury News report, the harassing of Asian Americans after the arrest of Lee has angered her and Richardson’s highly publicized pledge emboldened her to file the complaint.

Given Richardson’s own Hispanic heritage, it seems particularly ironic that he should be if not at the center at least the catalyst for Asian American ire at racial profiling stemming from the Wen Ho Lee case. It seems instructive during this holiday lull to retrospectively review the developments that led to this debacle, a scandal that promises to blot the entry of the new millennium.

Almost exactly a year ago, Americans spent their holiday season watching the President Clinton’s impeachment hearings unfold on national TV. He did not topple but was severely wounded. In early January, the House Select Committee headed by Congressman Christopher Cox began to rumble about rampant Chinese spying on the leaky national labs. By then the exhausted administration was too tired to fight the allegations of wrongdoing.

In March the New York Times broke the news of suspected spy in Los Alamos Laboratories and Richardson promptly fired Lee. The media, led by New York Times, then rushed to label Lee the Chinese spy and pronounced him guilty. Lee and his family became targets of round the clock FBI surveillance. At this critical juncture, if a California major law firm had not come to Lee’s defense and if national Asian American organizations had not protest the lack of fairness and due process in this case, Lee would have been put on the express train to prison and the case would have been over.

In latter part of May, the Cox report became public. Once in the public domain, it quickly became evident that the sound and fury preceding its publication could not be supported by the actual contents of the report. The general reaction was best summarized by the assessment of the report released by Stanford University Center for International Security and Cooperation, “[the report] lacks scholarly rigor, and exhibits too many examples of sloppy research, factual errors and weakly justified inferences.” Even members of the conservative Republican camp agreed with this assessment, in particular members of the faction headed by former Congressman Jack Kemp.

Once the Cox report turned into a dud and no longer pose as a threat to the Clinton administration, it should have been possible for Richardson to call for a review of the Wen Ho Lee case and a halt to the proceedings. But he didn’t do so.

When Robert Vrooman’s internal memo became public, the whole world then knew that FBI failed to conduct an objective investigation but zeroed in on Lee because of his ethnic background. Vrooman is the former head of internal security at Los Alamos. This would have been another good time to review the case against Lee. Richardson didn’t.

By the time Lee appeared in a Mike Wallace interview on CBS 60 Minutes in August, this case may have already suffered from overexposure. While Richardson found it necessary to continue to reassure Asian American scientists in the labs, he could not find a way to resolve the Lee case out of the limelight. Not even when it was demonstrated that Lee could not have been the source of alleged leak on nuclear warhead design. Not even after Attorney General Janet Reno instructed the FBI to restart their investigation and cast a considerably wider net in search of spies, spies that may yet turned out to be mere figments of overactive, right wing imagination.

After another tortuous four months, just two weeks before Christmas, Lee was finally arrested and jailed on charges of mishandling information from secured computer files. He was not charged with espionage. To justify holding Lee in jail without bail and threatening him with life imprisonment, the prosecution charged Lee under certain obscured statues in the Atomic Energy Act. He became the first to be charged under those statues, a dubious distinction indeed.

The public reaction has been swift and unambiguous. Editorials from coast to coast criticized the government’s heavy-handed treatment towards Lee. Selective prosecution, harassment with intent to intimidate the defendant and prosecution overkill without due process are some of the criticism leveled at the U.S. government. National Asian American organizations gathered via conference calls to draft a public statement condemning the government action. Fourteen organizations initiated the action. Many more has sign on since the statement was disclosed one week before Christmas.

The question at hand is why the persistence on the part of Richardson. While only he knows for sure, his actions appear tied to politics. He may no longer be a viable vice presidential candidate but he may still run for governor of New Mexico in the coming election. If he were to drop charges against Lee, his opponents could attack him for bungling the duties of his office. By keeping the Lee trial pending, his opponents would be deprived of a useful issue against him.

While Lee is paying a heavy price as the sacrificial lamb in the battle between the Clinton Administration and the detractors, he is not entirely without blame. His mistake is to assume that as a citizen of the United States, he is guaranteed certain “inalienable” rights. He naively assumes that right is might and he is presumed innocent until proven guilty and does not need to engage attorneys to defend him. He did not appreciate the adversarial nature of American law and how politics can tilt justice way out of balance.

The one good thing that may yet come out of this affair, other than eventual exoneration of Lee, is that Asian Americans are rallying together and realizing they are not exempt from racial profiling. They are now visibly protesting the treatment of Lee and they are taking Richardson’s promise at face value by challenging to overturn the racial discrimination that exists in the national laboratories. So the saga continues.

Friday, November 19, 1999

UNITY 99 Address, Seattle

Ladies & gentlemen,

It's an honor for me to join this distinguished panel and to have this opportunity to address you, representatives of the mainstream media.

An uninterrupted monologue to members of the mainstream is a prospect I have been looking forward to with relish. Over the years, I have become increasingly frustrated by the mainstream coverage of the U.S.-China relationship and I view this as an opportunity to help set the record straight, so to speak.

I have been asked to talk about the positive and negative aspects of the bilateral US China relationship and I certainly hope that we will get to that during this panel discussion. For my opening remarks, however, I want to address a matter of more serious concern and closer to home.

First let me state unequivocally that the origin of the up and down rockiness of the US China relationship is rooted in domestic politics and squabble. There are factions in this country that demonize China for real or perceived political advantages. In the process, whether by design or otherwise, Chinese Americans have become victims of racial profiling.

We may not get pulled off the highway for no good reason, but the form of racial profiling that we are subject to is just as if not more insidious and harder to combat. As the brutal murder of Vincent Chin has shown, if Chinese Americans are affected, then all Asian Americans are affected because [quote] we all look alike [unquote].

While China is the ostensible target, I would like to explain how we have been victimized by the Cox report, the Los Alamos case and the campaign finance scandal.

By now, the Cox report has been so widely discredited that I don't need to go over the gory details on why this report heaps more scorn on Congress, a place where integrity rarely visits. For anyone that missed the salient points of this report, I have done a careful analysis of this 900 page tome that I would be happy to share. In fact, I have with me today a list of websites with information that supplement my remarks for anyone interested in looking into it further.

For today's discussion, I will just focus on the racial profiling aspects of this report. A couple of examples should suffice.

The report indicates that the State Department has identified 2 Chinese companies in the U.S. as having connections with the PLA, that is, People's Liberation Army. AFL-CIO can identify "no less than 12." This report categorically claims that there are more than 3000 such companies operating in the U.S. If there is any justification of the Select Committee's conclusion, I am sure Congressman Cox will tell you that it's classified.

On top of this, the report says that there are more than 100,000 nationals from PRC studying, working and living in this country. Thus the stage is set for the mosaic theory of espionage. This theory has been further elaborated by the likes of Senator Shelby of Alabama and appeared as a commentary in LA Times written by a former counter intelligence officer of FBI.

According to the commentary, the Beijing government does not spy along traditional lines. They don't pay a lot of money for professional spies. Instead they make friends with the ethnic Chinese Americans, cater to their cultural affinity, and turn them into an army of collectors of tidbits of information from public and private sources, which Beijing then painstakingly reassembles and, voila, they have captured the crown jewel secrets of America.

In one fell swoop, China becomes the demon and all Asian Americans part time spies.

This particular FBI analyst, by the way, spent twenty years in counterintelligence and did not catch a single spy from China. Doesn't take much to conclude that his chagrin for wasting 20 years of his life leads to this fanciful theory. I wonder if "counter" in this case isn't equivalent to "negative." You know, negative intelligence as in dumb and dumber?

This mosaic theory is also a convenient way out for the Cox report. For all the rampaging spying China is accused of committing, the only culprit the Cox report can point to is someone sentenced to 12 months in a halfway house, fined $20,000 and made to do 3000 hours of community service. Now I ask you, ladies and gentlemen, how does that stack up against a Jonathan Pollard serving life sentence for spying? For which there has been no Select Committee and no Cox report?

A prelude to the release of the Cox report is the Los Alamos case. This case broke open when the Secretary of Energy, Bill Richardson, reached down from Washington to dismiss one researcher working at Los Alamos and the media went wild. From the media response that ensued, it would appear that to members of Congress and the media, Wen Ho Lee's guilt was a foregone conclusion.

Twice in April I was part of two different groups of Asian Americans that met with Secretary Richardson to voice our concerns and to listen to his explanations on this case. He went to great lengths to explain that one individual case is no cause for profiling all members of the same ethnic group. I am satisfied that he is sincere, but he never could provide a response when it was pointed out to him that the dismissal of Wen Ho Lee came just two days after New York Times broke the news.

In fact I'll go further. There isn't much doubt in my mind that the firing is politically motivated and Lee is the convenient scapegoat and sacrificial lamb rolled into one. The dismissal was to anticipate and placate in advance certain Republicans out to get the President. Indeed shortly after the news broke, there was an orchestrated clamor for the dismissal of Attorney General Janet Reno by the Republicans in Congress.

Then when it didn't look as if there will be a case against Lee, the FBI had a ready explanation. They claim the premature disclosure of Lee being under suspicion forecloses on any chance of finding the goods to convict him. Conveniently forgotten is that FBI has been talking to Lee for three years and he even passed an earlier lie detector test.

It's hard to know what if anything Wen Ho Lee is guilty of, but one thing is certain. He did not get anything that comes close to the due process, something that is supposed to be the sacred right of every American citizen.

Of course when the campaign scandal hit about two years ago, due process was the last thing anyone had in mind. Innuendoes flew thick and fast unimpeded by any hard facts or evidence. Senator Thompson among others was outraged supposedly over the Chinese trying to influence Washington with money. Imagine that, somebody trying to influence Washington with money.

Asian Americans who thought they were joining the mainstream political process by becoming active fundraisers for political campaigns were suddenly pariahs in America. The Democratic National Committee couldn't return checks with Asian surnames fast enough. As for coming to the defense of loyal Asian Americans, are you kidding?

Republicans were busy accusing every Asian American they could find of being foreign agents funneling money for the purpose of corrupting the American political process. Unless, of course, the Asian American happens to be raising funds for their side.

When billions are spent in the federal elections, an alleged two million attributed to China surely generated outrage out of all proportion. I guess hypocrisy has a way of magnifying things. Two years later, what have we found out?

For one thing, Johnny Chung was one heck of an intermediary. He found that certain Chinese were willing to pay $300,000 for a photo op in the White House with the President. Since he only needed to contribute about 10% of that amount to the DNC to make it happen, he got to pocket one huge commission. He is some broker.

We are still waiting to hear what John Huang has to say, but here is what the Cox report said about him:

While at the Department of Commerce, he could have upgraded his clearance to a higher level, which he didn't do. He was entitled to weekly briefings, but he had significantly fewer. He asked few questions and never tried to expand the scope of the briefings. He could have upgraded the level of cable traffic he could review but he never did so. Observers of the Office of Intelligence Liaison found no instance in which Huang mishandled or divulged classified information.

There must be some twisted logic I am missing that makes this set of credentials sound like that of a suspicious character.

An economist who served on the staff of Council of Economic Affairs under both Bush and Clinton administrations co-authored a paper pointing out that the U.S. trade deficit with China is overstated. Some other economist publicly questioned not his thesis but his nationality and his status in the U.S. His name happens to be Fung.

In March, I participated on a New California Media TV panel discussion on China bashing, a program telecast on the West Coast, and made an observation that much of the accusations about China are not based on fact but originate from petty domestic politics in Washington. Some irate viewer emailed the producer and wanted to know if I am a communist and where I am from.

Ladies and gentlemen, this sort of racial profiling has to stop. You can do something about it. You can help raise the sensitivity of your mainstream colleagues and you can help introduce the Asian American perspective to the American public. What makes America unique and America strong among all nations is its diversity. This is worthy of your attention and your diligent efforts to protect. Thank you very much.

Relevant Websites
compliments of George Koo

National Imaging and Mapping Agency (NIMA) refuse to take the blame.
Visit their website for an accurate map of Belgrade

James Oberg article on errors in the Cox Report

For translation of award winning, in-depth investigative piece on China’s prison system by Jean Shao that appeared in American edition of SingTao Daily:

For translation of a 6-day series of articles entitled “Breaking Harry Wu’s Funhouse Mirror” by dissident Fan Shidong, go to

For The Committee of 100 position on “Seek Common Grounds, while Respecting Differences as a way of building a strong U.S.-China relations, go to

Monday, October 11, 1999

Is Racial Profiling Necessary in U.S. China Relations?

Text of a speech given at the Commonwealth Club, October 11, 1999.

I am grateful for this opportunity to present to you some serious concerns of mine which I also believe should be serious concerns for anyone that cares about the future of this country. When Mr. Shepler asked me to speak a few months ago, we came up with a deliberately provocative title. Is Racial Profiling Necessary in U.S. China Relations? I want to thank you for coming and I hope to convince you that the title is not merely a rhetorical question.

First I would like to establish beyond any doubt that racial profiling of Chinese Americans and by extension all Asian Americans still run deep in this country. Then I hope we can engage in a discussion on what can be done about this matter. I sincerely believe that if this prejudice is not overcome, what makes this country so strong and unique will erode away and the future of this nation will be in peril.

I would like to review some events with you in reverse chronological order. Now that I work for Deloitte & Touche, I have learned to say "LIFO," that is last in, first out.

I came back recently from Beijing and Shanghai where I attended the national day celebration. China has not had a celebration on this grand a scale since their 35th anniversary in 1984. Somehow I became
part of a Taiwan group of guests attending the celebration on Tiananmen Square. We all stayed at Minzu Hotel on the main drag and there were ten busloads of us, slightly fewer than 300 in numbers. Half came directly from Taiwan and the other half came from all over the world but lived at one time in Taiwan-except me and perhaps a handful of others.

As tanks, armor vehicles, missile launchers and intercontinental ballistic missiles rumbled by on national day parade, the common murmur among this crowd was "look at that, all made in China." There was obvious pride among these overseas Chinese in a strong China able to defend itself. This brings up the dual loyalty question, which I hope to come back to later.

The point I want to make now is that this is single most watched event in China and a headliner event in rest of Asia. At the lobby of Minzu Hotel, I bumped into a couple checking out after the parade was over. The husband approached me to find out where I was from and I asked him in turn. He said he is a local citizen and just spent a month salary to spend one night at the Minzu just so that he can watch the parade. It was worth it, he said, because there is only one 50th anniversary. He also said somewhat ruefully that he wished he had gotten a higher floor so as to get an unobstructed view. I felt bad because overseas guests took all the higher floors.

CNN in Asia ran a "Visions of China" program for 30 days leading up to October 1. The visions program related China's history and explained how today's China came to be, and included interviews of academicians, historians, businessmen in and outside of China, officials, dissidents, and just persons on the street. I did not see all of them, but the ones I saw were balanced, informative and interesting. I understand the program did not run in the West. This is an unfortunate catch 22. Where the audience is most ignorant and needs to be informed most, is where there is not enough viewing interest to justify commercial support needed to run the program.

The print media in the West by and large gave cursory coverage to China's national day celebration. A few days later, the front page of San Jose Mercury News ran an article on how officials in Beijing swept away all the undesirables and made them go away in preparation for the celebration. I don't understand why this is front page news except that it fits with the image we have of China in the West. As my friend, Professor Norm Matloff commented, has any newspaper ever investigated as to how many prostitutes and panhandlers are permitted to ply their trade on Pennsylvania Avenue during the presidential inauguration?

Now a few words about the Cox Report, the best seller of the right wing press. The outlandish claims and exaggerations contained in what has to be the most disgraceful document ever produced by Congress have been pretty thoroughly reviewed and dismissed by many from the left, middle and the right. I won't get into them here today, though I would be glad to send an email on my detailed analysis of the report upon request. The report makes a big deal about rampant espionage conducted in the U.S. by China. Yet the only culprit the report can cite is some Chinese American sentenced to 12 months in a halfway house, paid a fine and made to perform certain hours of community service. Does this sound like a dastardly spy that sold out his country?

Congressman Cox has repeatedly assured his Asian American constituent that racial profiling of Asian Americans is the last thing on his mind. (If in his efforts to topple the Clinton Administration, a few Chinese Americans get tarred, well so sorry.) Yet his report suggests this spying is so pervasive that the only explanation, as offered by Senator Shelby of Alabama among many others, is mosaic espionage, whereby every Chinese American by virtue of his/her cultural affinity is a potential intelligence gatherer for China. This, by the way, is the explanation being offered by a retired FBI official who spent 20 fruitless years in counter-espionage and did not catch one single spy for China. I find it infuriating that he should make up for his incompetence by broad brushing the entire population of Chinese Americans. I find it even more appalling that he can actually find an outlet for this stuff by appearing in various talk shows and in the printed media.

Now we come to the case of Dr. Wen Ho Lee, heretofore an American making important contribution to national defense--our American national defense by the way--who’s only known infraction is to download computer files onto his unsecured desktop computer. This happens to be a common albeit not sanctioned practice for the sake of higher productivity. Former CIA Director, John Deutsch, even downloaded secret files into his laptop so that he can take them home. None have been accused of disloyalty and summarily dismissed until Dr. Lee. FBI investigating Dr. Lee calls their investigation as "Operation Kindred Spirit" which should tell you volumes about where this case is coming from.

What about the question of cultural affinity, does it lead to dual loyalty? I have met a young author in Los Angeles who has written several books. Looking at her red hair and pale freckled face, you would never guess that her great grandfather is Chinese. But she thinks of herself as Chinese and her first book is about the Chinese side of her family tree. Some of you may know her, Lisa See, and her book, Return to Gold Mountain. I have not had the opportunity to ask her why she identifies so strongly with her Chinese heritage. My guess is that the attraction is in the richness of the enduring Chinese culture.

Of course the Chinese culture has fascinated the West for centuries. For such people as John Fairbanks, Jonathan Spence, Michel Oksenberg, Douglas Paal, Winston Lord, Ken Lieberthal and many others that are not ethnic Chinese, this fascination has translated into jobs as professors, pundits, ambassadors, spooks and as presidential advisors. Never, to my knowledge, has any of these gentlemen ever been suspected or accused of disloyalty because of their "cultural affinity." Conversely, any ethnic Chinese, even if they are born in America with little or no empathy for China, are still suspects.

So Mr. FBI and Senator Shelby and all the others out there, I say stop hiding behind this hypocrisy and start calling a spade a spade. Cultural affinity has nothing to do with your accusations. In your mind, if the person looks Chinese, he or she is a possible suspect. Period.

We have seen this mentality before when Japanese Americans were interred for suspected disloyalty for no other grounds than their ethnicity. It took decades to overturn this gross injustice and we thought never again. But this attitude is flaring up again. In some ways, this time around the discrimination is even worse because of its subtlety. Then Japan was the clear aggressor and one can at least claim panic under siege for the error in judgment, though that's hardly an appropriate excuse. Now China is cast as the demon offshore even though China has made no aggressive act--unless putting their embassy in harm's way is considered a hostile act.

There are forces in this country determined to turn China into a target for venom and hate. Each group has their own agenda for targeting China. Those on the right disapprove of China's population control policies, the left on supposed human rights violations, and the organized labor on illusory threats to American jobs and still others thrive on bilateral friction as a means of livelihood. This is a vast subject for another day. Suffice it to say that the critics have one common ground. They make no attempt to understand where China is today; they insist on measuring China by their own comfortable frame of reference which may be totally irrelevant; and, they have no interest in being objective.

I will simply mention one example. The Cox Report would have you believe that every significant piece of military technology owned by China has been stolen from the U.S. Let me simply mentioned these historical facts. China successfully fired their first guided missile on June 29, 1964. Exploded their first atomic bomb on October 16, 1964 and less than three years later on June 17, 1967 detonated their first hydrogen bomb. On April 24, 1970, China lofted its first man-made satellite. The time China took to develop the H-bomb from the A-bomb was less than half the time of any other member nations of the nuclear club. The time for them to send the first satellite aloft from concept to launch was five years.

Do I need to remind the audience that these events took place long before ping-pong diplomacy and Nixon's historic meeting with Mao in 1972? They took place while China was a hermit kingdom sealed not only from the West but had severed relations with the Soviet Union. What are we to conclude from the Cox Report? That the Chinese became dazzled by the superiority of the West, stop thinking for themselves and steal their way to the next level of military might? Recently a book called "OSS in China" came to my attention. Thoroughly researched and taking advantage of recently declassified material about the U.S. intelligence efforts in China during WWII, I am struck by one permeating theme. The bumbling efforts of OSS in China were due to the ignorance of Chinese culture and patronizing condescension of the Americans in charge. Parenthetically, I should mention that they were also hampered by internal politics and bitter infighting. I don't think things have changed much since that time.

The demonizing of China and consequent broad brush tarring of all Chinese Americans has a serious consequence for America. At any one time, there are approximately 150,000 Chinese Americans working in universities, national and private laboratories advancing America's scientific and technological edge. Senator Shelby thinks it would be a good thing to get rid of them and open up some vacancies for "real" Americans. What do you think? A Chinese American invented the Apollo space suit. A Chinese American developed the atomic clock necessary for the global positioning system. A team of Chinese Americans developed the principles of hypersonic flow, which pave the way for easing entry of ICBMs and spacecraft into the atmosphere. The list goes on. Anybody think Senator Shelby is on the right track?

During the hysteria of the Joe McCarthy era, a founder of Caltech's Jet Propulsion Lab and a pioneer of America's missile technology was accused of disloyalty and put under house arrest for five years. He, Qian Xue Sen, was allowed to go to China in 1955 where a year later he headed China's missile development program. On June 29, 1964, China successfully launched their first guided missile. Is this the direction we want to go?

I was in Beijing on December 16, 1978 when normalization of the relations with the U.S. was announced in an extra edition of the People's Daily, printed in red ink instead of the usual black. The only other time the People's Daily ever ran an extra edition was when China detonated their first atomic bomb. That was an indication of the importance China attached to the bilateral relations. As a Chinese American I was ecstatic. I bought a copy of the extra and had it framed, as what I thought would be a historic document. Unfortunately, if you read Patrick Tyler's recently released book, A Great Wall, the U.S. side has always subject the relationship to petty domestic squabbles rather treating it with statesman-like respect and linking it to the long term interest of the U.S.

Ladies and gentlemen, I hope I have made a case that the title of my talk is not simply a rhetorical question. Now I would like to open the floor for discussion on where do we go from here, because frankly, I don't have very good answers. Thank you very much.

Wednesday, September 22, 1999

China’s New Market Economy Spawns Savvy New Generation

The future of China, as with any nation, rests with its youth. If the young people I met on a recent business trip is any way typical, China is on the way to becoming a great power.

The tragic Cultural Revolution of the mid ‘60s and early ‘70s created a lost and uneducated generation. After 1979, when China embarked on a reform program, the young people emerged from a state constructed cocoon to seek their way in a system evolving from strict command economy towards a market economy. Many of the best and brightest ended up in the West.

The latest generation I just met seems to be putting everything. They are confident, knowledgeable and motivated and do not necessarily look for opportunities elsewhere.

In Dafeng, a sleepy coastal township some 120 miles north of the mighty Yangtze, a smiling young woman followed us with a camcorder as we inspected the local plant making compressors for export. Seeing foreigners at this out of the way place must still be a noteworthy event, we thought.

Then came the business discussion and Wendy, the young videographer, became the interpreter speaking nearly flawless English and handling all the terminology with aplomb. One would expect this capability in Shanghai over 200 miles to the south, but finding this in a remote, nearly rural area was impressive.

Cherry, an engineer working for an American company in Shanghai, calls her parents regularly since they immigrated to the U. S. She avoids the onerous toll charges by Internet access cards which charge about 12 cents per minute and uses her home PC rather than the traditional telephone.

The head of a major state-owned corporation in Beijing showed me his son has set up a live video camera feed from his living room in San Francisco. On his last visit, he downloaded necessary software into his father’s desktop PC and showed him how to use the Internet. Now, the executive can, at any time, dial into the Internet and see if his son is at home across the ocean and keypunch a conversation with each other in real time.

The daughter of one of Beijing’s most powerful ministers, just home from London with a MBA rejected a cushy post with the Asian Development Bank, taking instead a position with Internetional Finance Corporation, a private investment arm of the World Bank, because it offered greater challenges and opportunity to learn.

The most complete glimpse of where China could be heading came from a meeting with Holly and his management team. After graduating from Wuhan Automotive Polytechnic, Holly went to work for a state-owned trading company, but within a year he saw an opportunity to export certain automotive components from China. He promptly quit his job and recruited a team among his classmates to form a private company.

Holly found a township enterprise making bicycle components willing to learn to make the auto parts. When the town leaders suggested forming a joint venture, Holly agreed on the condition that they divide the ownership into 55% for his company, 30% for the town and remaining 15% for two “senior” persons in the late 40’s and early 50’s. The two senior persons have no operating responsibilities. Their job is to interface with government officials and represent the venture when problems arise with material suppliers and to handle other situations where executives in the 20’s may not be taken seriously.

Holly is confident of success because, “The Chinese people are hard working and will follow orders, and Chinese made machinery is cheap and versatile and works well along side of plentiful labor.”

Workers at this plant will not be paid by the hour but will be paid for all the good parts they produce, and they will “buy” back every bad part they are responsible for. If several workers share responsibility for not meeting specification, then the charge is also shared proportionally. If the plant only makes good parts, the workers can be assured of earning an income higher than their peers can earn in the Shanghai area.

To entice his best friend and classmate to join his company, Holly offered Charles 30% stake to be the general manager. Last year, Holly got a visa to go to the U.S. to attend a trade show but sent Charles instead, because, he said, Charles is better at interfacing with customers.

Virtually all of Holly’s management team has adopted a western first name and all speak English to varying degree of proficiency. This company seems to have combined the best of local practices with western management techniques.

Amalgamating proper education with international business perspective and strong personal motivation seems to represent the new generation in China. Given the opportunity, they will lead the way in China’s future.

Thanks to misinformed or misguided leaders, America devotes a great deal of energy and resources to worrying about espionage and a military threat from China. What they should be concerned about is whether America’s future generation can compete economically and be equivalently well educated and motivated.