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[orig to <[email protected]>] STRATFOR.COM's Global Intelligence Update - 05 April 2000 By The Internet's Most Intelligent Source of International News & Analysis http://www.stratfor.com/ __________________________________________ Know the every move of your competitors -- even before they do. Stratfor Intelligence Services http://www.stratfor.com/services/ __________________________________________ WHAT'S GOING ON IN YOUR WORLD Have you visited our web site recently? We've made some new changes that make using the site more efficient, allowing greater access to thousands of reports. Visit http://www.stratfor.com today. __________________________________________ STRATFOR.COM Global Intelligence Update 05 April 2000 China Moves to Eliminate Direct Sales Schemes Summary China's State Administration for Industry and Commerce issued a circular on April 3 banning direct sales activities in China. As with the ongoing crackdown on the Falun Gong, the banning of direct sales programs demonstrates the seriousness with which the Communist Party views any potential organized network. However, the current order resembles one issued in March 1998. It apparently has been ineffective in stopping the proliferation of such organized networks, emphasizing the limited ability of the party to deal with such organizations. Analysis China's State Administration for Industry and Commerce issued an April 3 circular banning direct sales schemes, according to the Xinhua News Agency. The circular calls for a crackdown by local law enforcement on various direct sales programs, warning that all those who confront the government or try to shift responsibility for participation will be punished. Beijing's attack on direct marketing schemes shows the seriousness with which China's Communist Party regards the level of threat posed by such ostensibly non-political organizations. More importantly, it demonstrates the inability of Beijing to control the formation of widespread yet tightly knit networks that have the potential for political exploitation. Direct sales schemes present China with two major problems. First, Eastern Europe, Russia - and particularly Albania in the spring of 1997 - set a precedent for such programs to be viewed as possible sources of economic and social instability. As well, several demonstrations and protests in major cities in China have been triggered over illegal investment schemes. (http://www.stratfor.com/asia/specialreports/special96.htm) Second, and more important, direct marketing organizations create tight-knit yet far-reaching networks with similar economic interests. By organizing around a common economic interest, the group also becomes a self-motivated political force, particularly when personal economic interests are challenged. This commonality of interest, revolving around the members' economic livelihood, also makes the groups susceptible to outside political manipulation. While the Chinese Democracy Party and other underground or dissident political organizations have an overt anti-Beijing agenda, direct marketing programs, unregistered religious organizations and groups like the Falun Gong can attract a more extensive network of participants from all levels of society. Membership does not require confrontation with the Chinese Communist Party, just a common desire for economic, spiritual or physical health. However, such innocuous groups, promoting tight bonds among members and encouraging group contact, can be easily persuaded to oppose Beijing when challenged. The ability of these groups to organize and act as a unit outside the scope of the Beijing's intelligence was vividly demonstrated by the Falun Gong's mass gathering outside the Communist Party headquarters in Beijing on April 25, 1999. (http://www.stratfor.com/asia/commentary/c9907201810.htm) Spurred by the public demonstration, Beijing has since embarked on an extensive, though not entirely effective, anti-Falun Gong campaign. Even during the heightened security of China's annual meeting of the National People's Congress in March, Falun Gong demonstrators continued to appear in Tiananmen Square. Beijing has been as unsuccessful in its attempts to block the formation of direct marketing schemes as it has been with the elimination of the Falun Gong. In May 1998, the State Administration for Industry and Commerce issued a similar order to ban direct marketing activities within a six-month period. The order triggered riots and demonstrations that left at least 10 dead, according to Hong Kong reports at the time. That such an order needs to be re-issued after two years is troubling for the Chinese government, as it reveals the inadequacy of its previous efforts to stop such activities. (http://www.stratfor.com/services/giu/050498.asp) Beijing's inability to block the proliferation of direct marketing schemes and the activities of the Falun Gong exposes a weakness in the Chinese Communist Party. Rifts within the Chinese leadership have been growing over China's economic policy, making groups like the Falun Gong and direct marketing schemes increasingly dangerous to China's leaders. While in themselves these groups appear to offer little threat to Beijing, they become more dangerous when challenged. For Beijing, to directly counter the organizations suggests that the short-term repercussions from a government crackdown are less of a threat than allowing the group to continue unchecked. In the case of Falun Gong, the organization's membership spread to all levels of the government and military, undermining the authority of the Communist Party. In the case of the direct marketing groups, Beijing's motivation is economic stability. China's economic reforms exposed the extent of the underlying weakness in the economy. The reforms exacerbated the social effects of that weakness by attempting to split state bodies from their business empires and rapidly increasing the ranks of unemployed. Under such conditions, direct marketing schemes can accelerate the collapse of the already strained economy - as they did in Albania - leading to widespread social upheaval. Shutting down the direct marketing schemes, while likely triggering a short-term backlash, pre-empts the potentially devastating economic meltdown. Already dealing with internal splits, Beijing is also trying to ensure that these groups, and others like the Falun Gong, are not exploitable by factions within, or without, the Chinese government. (c) 2000, Stratfor, Inc. http://www.stratfor.com/ __________________________________________________ SUBSCRIBE to FREE, DAILY GLOBAL INTELLIGENCE UPDATES by clicking on http://www.stratfor.com/services/giu/subscribe.asp UNSUBSCRIBE FROM THE GLOBAL INTELLIGENCE UPDATES (GIU) http://www.stratfor.com/services/giu/subscribe.asp or send your name, title, organization, address, phone number, and e-mail to [email protected] ___________________________________________________ STRATFOR.COM 504 Lavaca, Suite 1100 Austin, TX 78701 Phone: 512-583-5000 Fax: 512-583-5025 Internet: http://www.stratfor.com/ Email: [email protected] ___________________________________________________ # distributed via <nettime>: no commercial use without permission # <nettime> is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: [email protected] and "info nettime-l" in the msg body # archive: http://www.nettime.org contact: [email protected]