Tape 99

Tape 99

How profit oriented China is. Really. Including the military. The overseas Friends.

Tobacco making factory in Yuxi, where they produce cigarettes from tobacco, a well known plant. They produce different brands of cigarettes there. It is the most famous one in Yunnan province, and it is famous for tobacco because of the weather there.

After the civil war, in the late 1949, the troops marched toward the Southwest to conquer the so-called leftovers from the KMT. And these troops dispatched a force, and this was a force that marched into Tibet. This is the second Field Army, that belongs to Deng Xiaoping. They occupied three provinces, and later on they invaded Tibet That was in 1950. They had a collision at that time with the Dali Lama, who fled Tibet, in 1955. Ya Dong county, this belongs to China, and this is a military path over here.(showing me on the map). It is here where the biggest concentration of listening posts is, northeast of Sikkim. So they this is the big place, geographical location.

The American listening post in the mountains near Turfan, in a suburb of Urumchi, that is in the mountains, not in the desert. So, the Kunming military region was the command post for the overall operations then, while all the military, Long Wu and Dao Shan, these are military district, what we call Fen Chu, these two were heavily engaged in heroine processing and logistical support purposes. And for the people inside here. So we had a policy toward individuals in the Golden Triangle who were still in the mainland. And so we began giving them special treatment. Before that time, after 1970, everyone knew before that time that they were relatives of the former KMT, during the Cultural Revolution. The turning point for them became 1976, when the Cultural Revolution had come to an end, Mao died, and the Gang of Four was arrested. China was from that time implementing a new policy. It was a prelude to economic reform. So, we gave them special treatment, and we let it be known to people in the Golden Triangle, and so they knew that the communist party had a new policy. Some of them dared enough now to approach the border. So the border guards because they had received orders, arranged everything. The communicated with them, said, all right, we are not going to harm you. YOu will be all right. Take it easy. We provided transportation and whatever was needed for these people to return home to visit their relatives. All means but air, land and river transportation. Later on, with the implementation of these policies, more and more people began being lured to return to the mainland. And this is to visit their families. And what is so funny is that their families had a strange policy, too. They were allowed then to visit them. Later on, because there were some very famous big guys over here, Khun Sa being the big one, he personally was lured into China, but he did not go so far. But we did arrange a meeting with him. This is where, in these towns, where the border discussions were held, in Meng Hai and Jing Gian and Su Mau. These meetings were held then, people from the army in civilian clothing, to make them look like the represented the government, and in a sense this was true, too. If you belong to the army then you represent the government. So they assured these people that whatever you want to do, whatever you need, we are going to provide you free of charge. But they, according to my brother, this policy went on for one or two years. So these people really saw some benefits in that period of time. So later on the army people sent some special individuals spies, but, you know, they penetrated into the triangle and mingled with these people, they could do that, they spoke the same dialect, if you were a former officer, it was Mandarin, but if you are from the local area, you speake the local dialects. So they infiltrated. And the top people knew they were infiltrated. And they knew. They didn't care. Because they had received support from the army. Logistical support, medical supplies, arms I don't know. All I know is that the Army, there is a chance that they were getting arms, they had a secret agreement with the Burmese government. In the 1950s there was a fierce battle going on in the area and the government forces were defeated by the KMT. They said that the KMT forces were the best in the world, after the Communist forces in China. So they had no problems resisting the local forces, the Burmese and the Thais. And so this was all done according to an arrangement. They had their secret border. And they negotiated a hands off and non-interference policy between the Burmese government and the KMT forces in the region. Everything was done in secret, a sort of Gentlemen's agreement between the drug growers and the local government in Burma. But until 1975, the people growing poppies in the area, their relatives suffered a lot, they didn't accumulate a lot of money as today, and their living conditions were harsh and their medical circumstances were primitive, and living conditions were poor, because transportation was blocked, in reality, from all sides. And the Chinese army in the region knew that. And they knew the only logical way for the people to receive some outside support. From Mainland china. So we talked with these people. And we sent people over for family visiting purposes, and visitors were welcomed here. They were shown touring spots of attraction and later on they formed an arrangement. China agreed to send certain supplies to them, food, medical materials, logistical supplies, free of charge to the people here. Arms were to be included, also, along with information. If arms were not included, of course, it would not make much sense. That would be just AK47s, B40 rockets. But no planes or tanks. In that region anyway they would make no sense. But in return they provided to provide the products of their agriculture and have them shipped back to China, and in the process China became a major heroin refining country, along the border, and only under the control of the border. The name they used to refer to the business was "tobacco and affiliated processing plant." Munghai and Xumau were the biggest plants, and the biggest one is Yusi. These plants did receive some tobacco from the big tobacco plants and they did produce cigarettes, too. But, actually, what they did most, was process heroine. They also grew poppies in the region. The army of course had its own plantation in the region. In Chinese they call it Military Cultivated Plantations(Chinese Name). This was at the battalion level. But they had trucks, bulldozers, and machinery. They were secretly engaging in a marijuana and poppy growing. They make profits in this. But of course, the things that grow here are not as high quality a products as those that grow further south, because of the weather difference. Marijuana is such a crop that it is heavily affected by the weather conditions. So they helped these individuals in the Golden Trangle and they had them shipped both on the road or on the Mekong River. Actually, this part of the Mekong River, because of the arrangements between the people here was not very heavily controlled by the Burmese government. But still the Burmese government consented to it. So the army did pay a fee to Burma to use that area.
We also began to send technical experts into the area, technicians and construction workers. They supervised the use of fertilizers, temperature control and upgrading for solar energy purposes. And we provided them with solar energy, too, because electricity was a major problem in the area. We provided them with whatever you can imagine. Whatever you need, imagine yourself situated in the mountains there. You need technology and you need outside supply. Because they were facing enemies on three sides. But now they have their friends back at home, so they feel very much relieved. And they have their own processing plants, too, in that region. They built it for themselves. Once China built its own, we let these people come back for a visit, to see how advanced we were in this. And these guys made up their minds. They agreed with the army to ship part of their products into China to have it processed. At first, once we processed this kind of thing we shipped it back to let them see how we did it. They had their own strict traffic routes, of course. They did not use the mainland much. But after 1976, because of the agreement, they thought the army represented the communists, and they said, all right, it is very difficult for us, to ship these kinds of materials out, because it you want to ship in the past and get their materials to the sea, they have to pay a high price to people controlling the local area, the local landlords, the black societies. So in the past, these people growing the material were not the people actually exporting it. But since things were moving toward a change. They did not export them to Burma or Thailand. So they shipped it more and more back to China. Once you process this stuff you can ship it back to China. We sent people to them and found out more how their business worked, how much it weighed and what it cost to ship. We provided them with experts and they provided their marketing information to the army, then the army made sure that this material was shipped to Hong Kong and to Taiwan, to Fujou, they used to have a former military region over in that area. So the military region of Kunming, the business totally belongs to the logistical department. There are three departments, commands in each military region. Political, operational, logistical. Logistical department directly contacted the logistical department of this area, because once you have an outlet on the coastal area, you must have the support of the military. The logistical looks after the general welfare of the military region, the plantations, food supply, medical and this sort of thing. Fujou had their own military region, their own logistical department, her father, used to be the commander of the logistical department of the region, only a one star general, major general. They were over here, and they secretly, according to the arrangement, and they then made contact with Taiwan and shipped it there. They used sea route transportation. They sent their ships here, and they had no problem having them loaded on board ships eventually, ships from foreign countries. They just moored at sea and we used small ships that belonged to the army, and directly transported the materials to the big ship, that was registered to a foreign country and then the big ship headed to an unknown destination.
It was very easy for them to get to Taiwan, after they got to Guangzhou. Very easily. They go down the Pearl River, easily, since this is heavily controlled by the military. I believe these guys, working for the army, have their own domestic connections in Guangzhou and in Hong Kong. The CMC, all it would see would be the annual report on how much profit is generated. Nobody cares where the profit is made from. The only thing they care about is that now you are able to take care of yourself. Fine.
The government officially, of course, is against drugs. And they execute publicly drug dealers every month. These, though, are the small dealers, the civilian dealers who sometimes steal from the army, and they run a small business. After all, there is some heroin production done privately. And some is shipped through other routes, too. And they have their own plantations. So a lot of leaks have to be plugged, so to speak. And when drugs get into the hands of the local people, something has to be done. There have to be prosecutions of what they call "hooligans." And once these guys are caught and put on trial, the Chinese government looks good. So China looks clean to the world while the traffic prospers. The US cannot figure it out, it seems, they think the Chinese government is clean. So if something is coming out of China, they seem to think that the Chinese government cannot control it. And in one sense they are correct. The government is indeed unable to control it. In a sense they are correct. They don't want to stop it. And it is controlled on a regional basis.
Huyge profits, naturally, are not reported. These go directly to the local area officials and to the army How they spend it, I can't tell you. Once you have the money, then how are you going to invest it. You can count on one thing, individuals don't profit from the business. They do it purely for the support of the army. So theoretically individuals do not profit. The army retains the profits. The army is clean, and they don't use the drugs. Because China is not so advanced in the area. But the people who are able to lay their hands on the drugs, I can't guarantee it.
The object of the profits in the end is to modernize the army. And part of the modernization is to upgrade it with systems from America. But the army from this military region is not so advanced in weaponry since they are regarded as a sort of rear defense, unlike the air force and the navy. And so they are neglected in a way by the Central Military Commission, but still they are able to take care of themselves.
What is so funny is that later on the Burmese government intervened, in 1979 and 1980, after the war with Vietnam, and China showed a lot of strength, to this sort of government. Before they carried a lot of grievances. They wanted to protect their sovereignty and their integrity. And so the army secretly negotiated through these people, approached the Burmese government, starting in 1980, and supplied arms to the Burmese government, to the Burmese regime, to get them to shut up. And they were then able to use arms from China to clamp down on their own people and maintain their own regime. Due to the secret understanding, there was nothing on paper and no signatures, and so we will just do it. This is all handled through the Kunming military region, and supplied the Burma government, with pieces of large artillery, giving it to them.
So now, for many years, the Kunming military region secretly supplied arms, but they did it with the understanding from the Central military command, because supplying the Burma government suited Chinese national policy. In 1976, actually, the China government supplied the resistance groups of the Burmese, but since 1978 China began to normalize its relationship with the government but not the resistance groups, in order the change its image in the world. What happened was that the military air command, must have had the acknowledgement of the CMC, began supplying arms to the Burmese government in Yung Guang. Why should anyone care about this, the Burmese. They allowed the Chinese to operate on their soil and they could not do anything about it. Their government forces were not strong enough to conquer the land. The people in the Golden Triangle have secret agreements with the governments of Thailand, Burma and Laos. They annually pay tributes to those government. The only reason they could operate in the area without military interference from three governments was because militarily the people in that area were too strong because they were Chinese. And secondly, they didn't want to fight too much, they wanted to carry on business. And so the agreement was this, all right, if you allow us to operate on your land, annually, we will pay you a tribute. The heroin was going, of course, primarily to the US. Part of the heroin may be shipped to Taiwan and consumed there, maybe, but all that I know for sure is that the Chinese military is heavily engaged in that process. Huge profits are involved in this. You can imagine. The army agreed with the people growing heroin in the golden triangle, and they agreed in sharing of the international market price. See, the production costs of that kind of heroine is very cheap. Like growing tobacco, but once you sell the product,(footnote here) this is a very profitable business. Very low production costs, low utility of the land. So the people in the Golden Triangle did not pay the army a tribute, they just cooperated with each other. If you can find this published anywhere I would be pretty much amazed.
So they were, later on, the people were happy too. They did not have to worry too much about finding efficient and safe traffic routes. In the past, they used to pay a high price. This local landlord, he would say, if you want to use our traffic route, we are going to help yo ship this material overseas, but we must maintain a commission, like ten percent. But ten percent is really a lot of money. So these people are squeezed. But once they ship their cocaine to China, the army can make a profit too, they don't have to rig so many things. Because the army takes care of the traffic route. That explains why the business goes on so smoothly, and expands, as the years pass, despite the strict measures applied by the US government and police -- against drugs in Latin America and in Europe. In fact, the US has even sought cooperation with the Chinese government. And the Chinese police agreed that each year they would arrest ten guys, which is very easy to do. My God, to pick up ten guys from the street and then shoot them all is simple. Who knows who they are. But in the meantime the traffic goes on. And as far as I knew, the Navy, in the South China Sea fleet was involved also in the shipping of the heroin from the port of Jenzhiang. So the Navy was involved also. They did not go so far as to use their own ships, but they did allow foreign freighters to use their own ports. These were Taiwanese and Hong Kong ships, among others. You now what, to understand this you must understand that anything that comes out of China, to be reloaded on foreign ships, the ship cannot be too close to China's coast.
They cannot, never. They cannot come into port. If you stand in the port you can see the ship, with the binoculars. So you need the support, absolutely, of the local military. They use their own small ships. And the local customs officials cannot stop army military vehicles. They can't. They don't have the power to check military transportation. So the local government does not have to be aware of what's going on, since the military takes care of that. The local officials don't even know what is going on. There is no profit for them, of course not.
The only guys that were involved were the local air force and military in the region. Later they dispatched their engineering personnel to this area. Helicopter landing pads, later on they helped these people build one or two helicopter landing pads, and they used helicopters too.(What is he talking about here).
They are loaded at JenZhiang by ship to ship, not by helicopters. Even if you informed, and told someone what was going on, who in the world would care. Nobody there can supervise the military. When someone is arrested it is for political purposes. This is simply to show that the government is really serious. The individuals arrested and executed, it is said that they are drug dealers. But who can tell. China always makes a big story by saying that someone was arrested at the airport for carrying as much as, two kilograms of heroin. That's funny. That is considered they say a big amount. The public security agents arrest the local guys and put them on trail.
Any leakage from this. The people working at the processing plant. They know what is going on. But they don't know where the heroin is from or where it is going. And they didn't care. Of course, they might be some people with connections who would know what is going on. But they don't tell the story to a journalist.
The new road that they are building in the area, as to exactly where they are going to build it, I don't know. Do they really need a new road in that area. I don't think so.
These individuals don't have new expensive cars in Yunnan. The army profits and generates huge profits for themselves, and they use that sort of thing, not just to import arms for themselves, and they didn't care about high tech arms there, they can just put the soldiers and offices on better living quarters and on a better social welfare system. Each month they give their soldiers a bonus, and they distribute the profits equally among some people. It is a remote and underdeveloped are with a lot of minorities. It is in the only province in China with so numerous minorities. So the guys in the military are primarily Han, and they supervise everything. Once they generate the profit I don't know where they are going to spending it. We are talking about millions and millions of dollars over the years. And the problem with me is I don't know where they spend the money.
Some of the profits of course make it to Beijing. But these individual s also have their own bank, in Chinese they call it Xiao Jingquo. Small golden devil. That means your little golden container, that means this money is solely yours and nobody else is even supposed to know the existence of it. You report 60 percent of the profit annually and the turnover, the profit is in US dollars, and Swiss francs. The money goes overseas and so the money paid is in foreign currency. It can be converted then into renmenbi.
I believe that these individuals also have bank accounts abroad, but I am not sure about that, I have no first hand information. But I can tell you this, what if you had hundreds of millions of dollars in profits and you could not spend it in your country. What would you do? Where would you put it.
What if you are the general commander and I am your deputy. Right, and we have a general political commissar and one day in the afternoon the three of us go out and we have dinner and we talk about business. Once we retain ten percent of the profits this year and distribute it between the three of us. This conversation is off the record, no one has a tape recorder, do you agree or not. And if you don't, lets forget about it and turn over all the profits. And of course, these individuals make that agreement of consent. Nobody says no.
JenZhiang, is headquarters of the Southern Sea Fleet, it is a deep water port, ocean going freighters come in there and so there are no problems. But of course for heroin you don't need an ocean going freighter. If you just have a thousand ton ship, there is no problem. How much heroin do you ship on one ship.
Some goes out to Hainan, of course. Hainan, all parts are controlled from Jenzhiang and the southern Sea fleet, and they use this port for foreign transportation too. Actually they were caught, not with heroin, but transporting foreign vehicles, cars. The army was caught once in this. By the local customs officials and they reported what they did. The navy was caught once And the local naval commander was sacked for that. But that was part of the Chinese house cleaning effort. And once you are caught you are in trouble. God knows how many times they were caught. But as far as I can recall this is the only time they wer caught.
That was in 1986, when China started its house cleaning. These guys were taught because they were stupid. They were too obvious. They used LSTs to transport Japanese cars, and they put them on deck uncovered, people could see them. And so of course they were caught. The market for the cars was all over China. Like the Shangri la business. All the local governments have money, and they are willing to pay because they want foreign luxurious cars to show off. They don't have to worry about paying for it. They have money. The central government puts strict quotas on importations of foreign cars. Tht means if you are going to import one car from Japan you are going to pay a high duty on it when you bring it in legally.
This reveals how profit minded people are all over China, particularly the military.