- The Washington Times - Friday, June 30, 2000

China has abandoned plans to move its state-run news agency into an apartment building overlooking the Pentagon in the face of stiff opposition from members of Congress, who say the location is a national security threat.

National security analysts say Xinhua is part of China's extensive intelligence collection network an assessment Beijing denies, and noted that the building has direct sight lines into the outer ring of offices at the Pentagon, which could give it electronic eavesdropping ability.

The Xinhua News Agency, in a letter to the State Department, said it will put the Pentagon Ridge Apartments on the market two weeks after it purchased the building for $4.6 million.

The State Department on Monday had presented the Chinese Embassy with a written warning, telling it either to explain why it did not comply with U.S. law in buying the building or to sell it, according to an administration official.

Xinhua referred to what it called State's "diplomatic note" in saying it had decided to sell.

"We do wish to undertake to return the Arlington apartment to the market for sale and hereby request your authorization to do so," said a three-page letter from Xinhua bureau chief Liu Jiang to Theodore Strickler, a deputy assistant secretary of state who heads the Office of Foreign Missions.

The State Department, which this week ordered Xinhua not to use the building's 32 apartments pending a security review, said it will approve the sale.

The Washington Times last week broke the news of the sale.

Xinhua, which translates to "New China News Agency," planned Pentagon Ridge as its new Washington bureau and staff quarters. But the agency did not seek approval from State, as required by the U.S. Foreign Missions Act.

Mr. Liu wrote that Xinhua was reserving the right to ask the State Department to approve the June 15 purchase at a later time. This option, he said, was only to avoid having to sell the apartment complex at "fire sale prices," the letter said.

Mr. Liu denied that Xinhua spies on host countries, calling the state-run service a "law-abiding organization engaged solely in the gathering of news."

"It is the policy of the worldwide Xinhua organization that all its correspondents strictly abide by the laws of the nations in which they are stationed, and that they are only to carry on normal news reporting and may not conduct activities not consistent with their capacities as accredited correspondents."

Rep. David Vitter, Louisiana Republican, sponsored an amendment Monday night to block Xinhua's purchase of the Pentagon Ridge, which he called China's "spy tower." The House passed the measure, 367-34.

"I am very happy over the decision," Mr. Vitter said in an interview. "I think it's a very good resolution of this threat. I'd like to think they saw the handwriting on the wall."

The congressman said Xinhua changed course because "there was enormous pressure from us to block the transaction, which the U.S. government had the power to do. I don't think they wanted a protracted, ongoing story that drew attention to the way the agency is used as a front for spying activity and that has been documented in terms of activity in several countries."

At the State Department, spokesman Philip Reeker said the department will authorize Xinhua to sell the building.

Under the Foreign Missions Act, embassies must have administration approval to buy or sell U.S. property. The State Department treats Xinhua as an arm of the Chinese government.

"We're going to work with Xinhua News Agency and the Chinese Embassy to bring this whole matter to a conclusion," he said.

The Xinhua bureau chief, who earlier had said his correspondents were "laughing" at the dispute, declined comment last night.

Xinhua's retreat heads off a growing diplomatic dispute that threatened to hold up China's plan to buy a new embassy site in Washington and could have soured Washington-Beijing relations. The embassy is housed now in the old Windsor Park Hotel on Connecticut Avenue NW at Kalorama Road, overlooking Rock Creek Park. Xinhua also avoided what all signs said was an impending decision by State to force the global news service to liquidate the building.

On Wednesday, the department barred Xinhua from moving in while it, the Pentagon and FBI conducted a review to see if the location presented a national security threat. Mr. Reeker said Xinhua has agreed not to use the building while it is on the market.

State officials told some lawmakers they would to reject the sale to Xinhau after the 60-day review. In addition, the Senate was poised to duplicate the lopsided House vote and urge Secretary of State Madeleine K. Albright to block Xinhua occupancy.

Sen. Richard C. Shelby, Alabama Republican and chairman of the Senate Intelligence Committee, introduced a bill to block moving the embassy until Mrs. Albright nullified the Pentagon Ridge purchase.

Originally, the Chinese Embassy said it did not need permission, contending that Xinhua was a private business. This week, the mission produced what it said was a copy of a May 22 notification letter to State. State officials said they had no record of receiving the letter. Xinhua again contended in Wednesday's letter that it sent a notification 24 days beforehand.

"We want to assure you that we have at all times desired and attempted to act in complete good faith in connection with the purchase of the Arlington apartment," Mr. Liu wrote.

• Bill Gertz contributed to this article.

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