THB, Banditos, Wayward and more confirmed for Cosmic Cocktail!

Chinese premier dishes out threats on trade status


BEIJING -- When Thomas E. Lane showed up for a dinner for foreign businessmen here last night, he was surprised to find out that he was to be seated at the head table right next to Chinese Premier Li Peng.

Before Premier Li gave his after-dinner speech, Mr. Lane figured that he had been so honored because he is the chief representative to China for the Boeing Co., the aircraft manufacturer that has been the largest American exporter to China.

But as Mr. Li's speech unfolded, the Boeing representative realized that the apparent purpose behind his proximity to the premier was so that he could be used as a handy prop in an unusually bald appeal for renewal of China's most-favored nation (MFN) trading status with the United States.

"If the MFN status should be revoked for China," Mr. Li warned several hundred foreign businessmen and reporters at the dinner, "China's policy of reform and opening to the outside world will suffer tremendously. . . . Because the MFN status is a two-way street, . . . it is also in the interest of the United States."

Then, noting that he was seated next to Boeing's Mr. Lang, the Chinese premier claimed (inaccurately) that, "This year alone we have placed orders for 15 Boeing 737s and 757s," the company's jet airplanes.

"So the reason therefore is very simple: With the MFN status revoked, they will have no more orders," Mr. Li threatened. "And if the MFN status is returned, they will have more orders coming."

Premier Li's blunt warning that Boeing's sales in China were at stake in the long-running MFN controversy caused a small stir at the dinner.

However surprised, Mr. Lang appeared to take Premier Li's threat in stride.

Mr. Lang said that China or companies leasing planes to China have ordered three airplanes -- not 15 -- from Boeing this year and about $4 billion worth of Boeing planes last year. But he called the premier's rhetorical use of Boeing's sales to China "a very logical example" of the kind of economic retaliation that China might take if its MFN status were revoked.

Mr. Li's speech was only the latest salvo in the Sino-American dispute over MFN, an annually renewed status that allows Chinese imports to enter the United States under the same low tariffs as most nations.

President Bush has recommended renewal of the favorable trading status for one more year. But there is a mounting move in Congress to reject the president's recommendation and instead tie MFN renewal to signs of improvement by China on human rights, arms sales, copyright protection and its mounting trade surplus with the United States.

America is now China's largest overseas market, with its exports to the United States topping $15 billion last year. The figure is expected to grow this year.

China has previously warned in strong terms that its MFN status is the cornerstone of its overall relationship with the United States.

And many U.S. companies doing business with China, including Boeing, have been publicly favoring MFN renewal, arguing that revoking it would not produce desired reforms in China, would hurt U.S. consumers and companies, and would undermine Hong Kong's economy.

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