Feinstein’s Close China Ties Under Scrutiny After Chinese Spy Discovery

Zachary Stieber
By Zachary Stieber
August 4, 2018US News
Feinstein’s Close China Ties Under Scrutiny After Chinese Spy Discovery
U.S. Sen. Dianne Feinstein (D-Calif.) speaks during a Senate Intelligence Committee confirmation hearing on Capitol Hill in Washington, DC, on July 25, 2018. (NICHOLAS KAMM/AFP/Getty Images)

News of a Chinese spy working for U.S. Senator Dianne Feinstein broke recently, revealing the spy was employed by Feinstein for 20 years.

Initially reported as part of a larger story about spies in Silicon Valley, a former intelligence official later revealed that the staffer was Feinstein’s driver for many years.

The source told the San Francisco Chronicle that the driver passed information to Chinese officials based at the local Chinese Consulate. Part of the staffer’s role was acting as a liaison between Feinstein’s San Francisco office and the local consulate.

The staffer was recruited to spy after visiting China.

The staffer, who has not been named, worked for Feinstein for 20 years.

Senator Feinstein was alerted to the spy about five years ago. The FBI alerted Feinstein after investigating and finding the staffer shared nothing of substance.

“They interviewed him, and Dianne forced him to retire, and that was the end of it,” the source said. “None of her staff ever knew what was going on. They just kept it quiet.”

Feinstein wouldn’t comment on the spy but her office told CBS that none of the staffers in San Francisco have ever had security clearances.

Noting the oddness of the discovery, President Donald Trump said via Twitter on August 3: “Dianne is the person leading our Nation on ‘Collusion’ with Russia (only done by Dems). Will she now investigate herself?”

Feinstein’s Relationship With China

Some details of Feinstein’s past are now being examined anew, centered on her close relationship with China, beginning with her service as mayor of San Francisco from 1978 to 1988.

Feinstein has long been linked to China. For instance, she hosted former president of China Jiang Zemin at her home for dinner when she was mayor of San Francisco, and celebrated the resumption of air service from China to the United States (starting with San Francisco International Airport) after a 32-year hiatus.

San Francisco and Shanghai have been sister cities for 38 years, after the agreement was put into place by Feinstein and Jiang, who was then Shanghai’s mayor. Feinstein was cited as having a “close relationship” with Jiang and ties between the two continued for many years later.

Jiang is infamous for cracking down on human rights, most notoriously by banning the peaceful meditation practice of Falun Gong and throwing many of its estimated 100 million adherents into jail.

NTD Photo
A re-enactment of organ harvesting in China on Falun Gong practitioners, during a rally in Ottawa, Canada, 2008. (The Epoch Times)

Under Jiang, torture, rape, murder, and even organ harvesting from detained practitioners became common.

To help facilitate the relationship between the U.S. and China, Feinstein asked organizers of the city’s popular Chinese New Year Parade to stop displaying the flag of the Nationalist Chinese government, which ruled in exile in Taiwan after 1949.

Feinstein also defended China, despite its communist policies, insisting that it was merely “socialist.”

“There was originally this kind of anti-communist view of China,” Feinstein told the Washington Post. “That’s changing. . . . China is a socialist country but one that is increasingly becoming capitalistic.”

Husband Becomes Prominent Investor in China

Several articles from the 90s explore the development of not only Feinstein’s developing relationship with China while she was mayor, but her husband’s burgeoning investments there.

According to the Los Angeles Times, in 1997 Feinstein’s husband Richard Blum, who invests his own and clients’ money into undervalued firms, expanded his business investments into the communist nation to the point that “his firm is now a prominent investor” there.

In 1992, the investments amounted to one project worth less than $500,000. Two years later he was planning to invest up to $150 million and two years after that a Blum investment firm paid $23 million for a stake in a Chinese government-owned steel company.

Another investment by Blum’s firm was helped by the International Finance Corp., an arm of the World Bank, which invested $10 million in the leading producers of soybean milk and candy in China.

“It seems to be going quite well,” Rashad Kaldan—who in 1994 managed the IFC’s capital markets investments in Asia—told the Times of the project. He added: “There also was some comfort in that Mr. Blum had some contacts with the Chinese.”

Blum said that his interest in China went back many years, predating political connections. He won permission from the Chinese in 1981 to climb the east face of Mt. Everest and called himself a close friend of the Dalai Lama, the exiled Tibetan leader who the Chinese government opposes.

In dispatches written for the San Francisco Examiner, according to the San Francisco Chronicle, Blum said that a goodwill visit to China by Feinstein in 1979 helped him win permission to climb Everest.

“We had come to build goodwill, promote trade and to make new friends,” Blum wrote in one story, adding, “but I asked for and received permission to have another kind of meeting—one with the Chinese Mountaineering Association.”

Trips to China

Feinstein took three trips between 1995 and 1997 to China, in addition to trips earlier in her mayoral service, to meet with top communist officials, including Jiang. Blum often attended the meetings with her, an arrangement the Times described as “unusual.”

At one time, the couple had dinner at Zhongnanhai, the enclave reserved for the president and other top officials in China.

“We had dinner in Zhongnanhai in Mao Tse-tung’s old residence in the room where he died. We were told that we were the first foreigners to see his bedroom and the swimming pool. It was a very historic moment to see some of these things,” told the Los Angeles Times. Mao was the communist leader of China whose policies led to the deaths of tens of millions of Chinese people.

Feinstein insisted that Blum had never spoken to officials during meetings about business.

“I am open to any suggestion as to how I can even make a firewall more fireproof,” she said. “I don’t know what else I can do. . . . Either he retires or I suppose we end our marriage.”

Dianne Feinstein, U.S.Senator and Richard Blum arrive at the State Dinner for China's President Xi and Madame Peng Liyuan at the White House for an official State Visit in Washington on Sept. 25, 2015. (Photo by Chris Kleponis-Pool/Getty Images)
Dianne Feinstein, U.S.Senator and Richard Blum arrive at the State Dinner for China’s President Xi and Madame Peng Liyuan at the White House for an official State Visit in Washington on Sept. 25, 2015. (Photo by Chris Kleponis-Pool/Getty Images)

Experts noted that even attending the meetings and being so visible conferred a certain benefit to Blum, in addition to Feinstein’s pro-China record.

“There is no doubt in my mind that, if Dianne Feinstein had a pattern of taking positions on U.S.-China policy that Chinese officials disliked, Mr. Blum would have a great deal more difficulty doing business in China and probably would find it impossible to do,” said Ross Munro, co-author of “The Coming Conflict with China.”

By 2000, Blum pledged not to invest in China or Hong Kong as long as his wife remained a senator.

The Los Angeles Times noted that Feinstein has sometimes taken on issues that seemed to coincide with those of her husband, such as calling in a speech on the Senate floor in 1994 for President Bill Clinton to increase favorable trade relations with China. At the same time, Blum was planning to invest up to $150 million there.

Feinstein was elected to the U.S. Senate in 1992.

China Attempts Illegal Contributions

A widespread campaign of making potentially illegal donations stemmed from a 1996 vote on whether to bestow permanent most-favored-nation trading status on China, an effort Feinstein led.

According to Slate and the Washington Post, Feinstein was alerted in the early 90s by the FBI that the Chinese government was working to illegally contribute money to various campaigns, including hers. Though no donations could be definitively linked to the government, Feinstein returned a $12,000 check to businessman and Democratic National Committee Vice-chair John Huang.

“We have reason to believe that the government of China may try to make contributions to members of Congress through Asian donors,” a statement in the FBI briefing materials to elected officials read.

A Justice Department task force said Feinstein nor any other member of Congress knowingly received illegal payments from the Chinese government.

However, authorities said that the Democratic National Committee returned $3 million in campaign contributions because the money came from questionable or improper sources. Officials believed the potentially illegal campaigns were an attempt to influence votes on the trading status.

Feinstein has received awards and recognition from some groups for promoting U.S.-China ties, accepting the California-Asia Business Council’s New Silk Road award in 2005.

“The rise of China is one of the most remarkable transformations the world has ever seen,” she told the crowd.

“For many of us who watch China, there is both a sense of awe at what China has accomplished, as well as a sense that it could all unravel overnight.”

“Rather than just pinning the blame on China, we need to better understand the costs that lead to outsourcing abroad and take action to remediate them,” she added.

“I strongly believe that the US-China relationship is and will be America’s most important bilateral relationship. We must not let differences, economic or otherwise, derail the progress that has already been achieved over the past three decades.”

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