Cynthia Chung
How China Escaped Shock Therapy: Zhao Ziyang’s Controlled Opposition, the CIA’s Operation Yellowbird, George Soros and Tiananmen Square Part III
This is the third instalment to the Tiananmen series, for the first and second instalments refer here and here, which are essential reading in order to fully follow this story.
As already discussed in this Tiananmen series, Chinese Premier Zhao Ziyang’s think tank the System Reform Institute (SRI) served as the official Chinese partner, administrator, and political shield of George Soros’ operations in China during the 1980s.
It was Zhao Ziyang with support and backing from the System Reform Institute that was responsible for the introduction of economic policies that unleashed hyperinflation and corruption that reached a peak between the periods of 1986 and 1989 resulting in protests over this crisis, including the Tiananmen Square debacle in June 1989. In both the cases of the 1986 and 1989 student demonstrations, Fang Lizhi was a lead organiser and influencer, as already discussed in the second instalment.
Fang Lizhi had direct ties to the NED, as do his lead student disciples who were involved in the 1989 protests, and was at the top of China’s list as a “black hand” behind the Tiananmen Square debacle. His safe passage out of China was directly facilitated by the CIA along with British and American diplomatic channels. This can be seen as a branch of Operation Yellowbird which will be the focus of the fourth instalment.
During the period of May until mid-June 1986 a Chinese delegation under the leadership of the Program Office (which was formed by pro-shock therapists) along with the System Reform Institute held 111 meetings with George Soros and co. in Hungary and Yugoslavia discussing the matter of China’s economic reform, that is, how to proceed in “opening up” what Soros called a “closed society.”
There is no official record of the details discussed in these meetings, only a record that the meetings took place.[1] However, what is clear is its attempt to hijack the Chinese government’s role in deciding its own economic policy, where crucial economic matters were discussed by select Chinese representatives (who happen to all be pro-shock therapy at the end of the day) and representatives of the World Bank and Soros all together in one room thousands of miles away from China’s capital.
Because Soros’ Open Society could not legally operate as a foreign foundation in China without a high-level government sponsor, the SRI agreed to co-found the “Reform and Opening of China” (aka the “China Fund”) in 1986. This included a $1 million endowment to foster “emerging civil society and sponsor research.”
This was accomplished with Bao Tong’s direct political backing, what was effectively a direct backing from Zhao Ziyang. Thus, the Soros “China Fund” had effectively received direct backing to operate in China via the then Premier of China. Bao Tong was Zhao Ziyang’s Policy Secretary throughout his entire career in the 1980s’, from when Zhao was Premier of China, from 1980-1987, to his transition to General Secretary, from 1987-1989.
Bao Tong was also Director of the Drafting Committee for the CCP 13th Party Congresses, known for its strong support of market reform and opening up under Deng Xiaoping. Prior to this, he was a committee member and then deputy director of the Chinese State Commission for Economic Reform. During the 1989 Tiananmen Square protests, he was one of the very few Chinese senior officials to express understanding with the demonstrating students.
Bao Tong was also the writer of Zhao’s speeches and editorials supporting a democratic approach to the student movement.
Thus, Bao Tong can be viewed as Zhao’s most loyal ally and a direct representation of Zhao Ziyang. Bao Tong remained loyal to Zhao throughout his entire life and was responsible for publishing Zhao’s memoirs.
It should also be noted that Adi Ignatius helped to translate and edit Zhao’s memoirs “Prisoner of the State” in English, in cooperation with Bao Tong and his son Bao Pu. Adi’s brother is David Ignatius, a well-known Washington Post writer who wrote the widely cited September 1991 column “Innocence Abroad: The New World of Spyless Coups” which announced the rise of the NED as a vehicle for overt political action. In the piece is included a landmark quote from the NED’s co-founder and former president Allen Weinstein where he told Ignatius “A lot of what we do today was done covertly 25 years ago by the CIA.” Referring to the newly created NED.[2]
Adi Ignatius is also a member of the Council on Foreign Relations and the Asia Society.[3] As we will see the Asia Society is directly connected to the NED.
Other Chinese backers to this union between Soros and Zhao’s think tank the System Reform Institute (SRI) were Li Xianglu, Zhao Ziyang’s former personal secretary, and Zhu Jiaming a member of the SRI,[4] who was also the lead organiser of the South American tour where the SRI studied the cases of Chile and Brazil’s economic “successes” which also happened to coincide with the formation of military dictatorships, and in Chile’s case a direct outcome of shock therapy. This tour was funded and recommended by George Soros and was discussed in the first instalment. Zhu Jiaming was a supporter of shock therapy despite being a member of the SRI.
In 1988 Zhu Jiaming joined China’s International Trust Investment Corporation (CITIC) where he worked closely with Li Xianglu where both were directly involved with Soros’ China Fund. Because CITIC overlapped with Chinese intelligence, it appears that this is the link that revealed details of the true nature of the SRI’s relationship with Soros’ China Fund which was effectively a foreign led economic/political coup.
Soros appointed Chen Yizi (director of the SRI) as the Chinese co-chairman of his “China Fund.” Chen Yizi would also receive safe passage out of China through Operation Yellowbird. Chen Yizi was also a direct supporter of shock therapy and publicly expressed his admiration for Pinochet.
Mainstream accounts of this history deny Soros’s implication in the Tiananmen Square debacle, especially Soros’s ties to the CIA. However, as we will see in this paper, Soros does have close overlap and joint ventures with the NED which is a branch of the CIA. Thus, attempts to dismiss China’s accusations of Soros organizing an economic and political coup via Zhao Ziyang’s network as part of a broader CIA operation, as we will see, do not hold water. Rather, there is a great deal of evidence to showcase these accusations as quite accurate.
We will resume the story here and discuss how all of the major players leading up to the Tiananmen Square debacle discussed thus far in this series have direct ties to the NED, CIA, New School, MI6 as well as British and American diplomatic channels. We will also see how these channels, including North American Baptist Churches and the Triads facilitated their safe passage out of China.[5]
Zhao Ziyang: an Anti-Hero of the People
At the Politburo Standing Committee’s meetings on May 16 and 19, 1988, Zhao Ziyang once again joined Deng Xiaoping’s call for price reform.
In his 1988 address, Zhao made it clear that to ensure political stability, a new public security law was required that the State Council could invoke in an emergency.
Isabella Weber writes in How China Escaped Shock Therapy:
Zhao argued that Poland’s experience of social uprisings had shown such a law to be necessary (Fang, 2014, 339). Just eleven days before this Standing Committee meeting, on May 5, special troops of the Polish Interior Ministry had cracked down on a major strike wave that was sweeping the country in reaction to falling real incomes. This, in my eyes, erases any doubts about whether Zhao anticipated that inflation would be harmless. He recognized the possibly explosive consequences of rising prices. But in the spring of 1988, he seems to have been prepared to use force, if necessary, to finally make marketization happen.
…The justification for the 1988 price-reform push was rooted in the logic of package reform – even though Wu Jinglian, Liu Guoguang, and other package reformers criticized that it did not include sufficiently strict austerity measures…[8]
Thus, contrary to the mainstream western narrative, that promoted Zhao as a “conscientious objector” and concerned about the students’ safety during the Tiananmen Square debacle, the truth is that Zhao was not only aware that military force was likely needed to push through the price reform package, but he was the one who in fact prepared the very groundwork for a military crackdown against the predictable protests that would ensue from his and Deng’s push for radical price reform in 1988.
It was Zhao’s “new public security law” that had established the apparatus and protocol that culminated in the disorganized mayhem of the June 3-4, 1989 events.
Interestingly, and quite tellingly of how the game is truly played in various formations of controlled opposition in the so-called debate between Zhao’s think tank, the System Reform Institute (SRI), and pro-package reformers (aka shock therapists) on how China should economically reform – during this tense period of the 1988 radical price reform led by Zhao Ziyang, the SRI meets with the Mont Pelerin Society in 1988.
On June 12, 1988, leading members of the SRI Chen Yizi and Wang Xiaoqiang left for West Germany once again around the matter of China’s price reform.[9] Just like in 1986 when the SRI met a delegation organised by George Soros, they now met with a delegation in West Germany to discuss the matter of China’s “opening up.” Among this delegation was Herbert Giersch, the then-president of ‘the global neoliberal thought collective the Mont Pelerin Society and of the Kiel Institute for the World Economy.’[10]
‘Giersch counted among his credentials relating to the West German postwar economic reconstruction that he had received his PhD under Alfred Müller-Armack’s supervision. Müller-Armack is considered to be one of the intellectual fathers of the ordoliberal idea of a social market economy.’[11]
In 1933, Alfred Müller-Armack published a book with some praise of Nazism entitled Ideas of the State and Economy Order in the New Reich. He worked as an advisor to the Nazi regime and the German army and contributed to discussions about the post-war economic order.
Müller-Armack was also a member of the Mont Pelerin Society, founded by Friedrich Hayek in 1947.[12]
After the war, he joined the Christian Democratic Union and he coined the phrase “Social Market Economy” in his book Economic Steering and Market Economy, written in 1946 and published in 1947.
Recall what I wrote in the first instalment to this Tiananmen series:
[…]
One could say that this is the true intention of shock therapy – political instability that opens the doors to a foreign led corporate regime change with a great deal of similarity to Mussolini’s Corporatism. Mussolini’s Corporatism had spawned out of Sorel’s National Socialism. In fact, Neo-Conservatism in the United States finds its origins in this as well, as I discuss in the above cited paper. It is for this reason that there was a great deal of support within the American financier class for Italian fascism. It is important here to remember not to get too caught up in “isms,” but rather to look more at the specifics in economic policy, for as we can see in just this short paragraph we find the words “corporatism”, “neo-conservatism” and “nation book
[…]
I bring this up here to showcase that there is a great deal of similarity to what Milton Friedman and the World Bank were proposing in their “shock therapy” to China, to that of Mussolini’s Corporatism and I don’t think this was a coincidence.
[…]
Viahttps://cynthiachung.substack.com/p/the-black-hands-that-casted-a-shadow
