Buying Technology and Clout

THE BALTIMORE SUN

Honolulu.-- For auto workers in Baltimore, lathe operators in Louisiana and aeronautical engineers in Seattle, the Chinese are offering visions of Christmas in May. With a checkbook fattened by its booming economy, China is negotiating mega-deals across America, agreements that would provide a welcome boost to businesses banged around by the slow economy.

What kind of deals? How about an order for 4,600 cars from each of America's Big Three auto makers, worth a cool $160 million? How about an order for $200 million in oil drilling equipment from companies in Louisiana, Texas and Washington? How about contracts for a whopping $800 million for 21 Boeing jetliners, the largest foreign order for U.S. aircraft this year, and as much as $800 million more for satellite equipment built by Hughes Aerospace?

But although the ink on the contracts says the Chinese are shopping for technological improvements, it is political clout that they are really after. They are hoping to pressure the Clinton administration into extending China's most-favored-nation (MFN) status, which allows China to sell goods in the United States more competitively than it could without the friendly trade arrangement.

They are trying to overcome opponents in the United States, who say that the favorable arrangement should be withdrawn until China stops its human rights abuses at home and halts its sale of weapons to unstable areas such as the Middle East.

To insulate MFN from attack, Beijing is acting like a pork-barrel politician, hoping that grain deals in the Midwest and auto and technology purchases from around the country will knit together a broad coalition of support from businesses and labor in cities and rural areas.

The deals are contingent on the continuation of China's trade status, meaning millions in profits, labor contracts and tax revenues would be lost if MFN is withdrawn. Trade with China is responsible for 150,000 jobs in the United States, according to trade experts.

Should the United States withhold China's favored status in order to pressure China on domestic and foreign policy?

For Mr. Clinton, who has until June 3 to decide, this is no easy decision. Mr. Clinton is already being viewed as anti-business for moving too quickly to raise taxes and too slowly to cut the deficit. He cannot relish turning down business in an already weakened U.S. economy.

But to extend the trade agreement, President Clinton would have to disown Candidate Clinton, who during last year's presidential race delighted in accusing George Bush of turning a blind eye to the rights issue. Weakened by his loss in Congress over his job stimulus package, Mr. Clinton would not like to appear to be waffling.

Some congressional leaders are pressing legislation that would end China's favorable trade status in June, 1994 unless Beijing agrees to release its political prisoners, to halt its efforts to

suppress Tibetan independence, to stop selling products made by prison labor and to comply with international restrictions on missiles and on nuclear and chemical weapons.

Loss of MFN would jeopardize China's $19 billion trade surplus with the United States, a key source of hard currency China has depended on for its modernization.

"The Chinese have a long way to go toward living up to human rights standards," said Rep. Nancy Pelosi, D-Calif., a sponsor of legislation that would limit China's MFN status.

Michel Oksenberg, a China specialist and president of the East-West Center in Honolulu, said the Clinton administration is still making foreign policy decisions regarding China on an ad hoc basis, rather than from within an overall policy structure which would make subordinate decisions more predictable and consistent.

Nonetheless, experts at the center believe that Mr. Clinton -- who during the campaign characterized Mr. Bush's decision to extend MFN as "yet another sad chapter in this administration's history of putting America on the wrong side of human rights and democracy" -- will leave the trade pact intact.

China is guilty of human rights violations on a massive scale. China, which occupied independent Tibet in 1950, has more recently increased its efforts to wipe out Tibetan culture by mass relocations of Han Chinese, China's predominant ethnic group, into eastern Tibet. Human rights organizations report hundreds of incidents of the torture of Tibetans for speaking with foreigners and "spreading counterrevolutionary propaganda."

Chinese political dissidents are still harassed and hundreds or thousands remain jailed following the 1989 Tiananmen uprising. Prison labor is exploited to produce goods for commercial sale.

Analysts in the United States and leaders in Asia say China's determination to keep MFN has brought it deeper into the world community, providing a useful incentive in goading the Chinese to improve its human rights record.

Travel restrictions on foreigners have been relaxed, and Chinese citizens increasingly feel free to speak their mind with journalists, particularly in areas away from Beijing. And China has been helpful in supporting United Nations actions in Bosnia, Somalia and Cambodia and is acting as a vital intermediary in dealings between the United States and North Korea.

Cancellaton of MFN would allow Beijing hard-liners to accuse the United States of trying to run China's affairs, and play into the hands of old-school communist leaders unhappy with reform.

"The fact is it has been a goad," said Paul H. Kreisberg, an East-West Center foreign policy analyst. "The security people have been under pressure from the economic people, who have been able to use MFN as a club."

Indeed, trade with the United States is a big reason for China's booming economy, which at 12 percent per year is the fastest growing in the world. Toys, telephones, shoes and silk shirts sold by China are pumping wealth into the country, raising living standards dramatically. Since China was granted MFN status in 1980 its trade to the United States has skyrocketed to 24 times its 1980 level, rising to $26.5 billion last year, more than three times the amount the U.S. sells in China.

This sudden prosperity is spawning a new middle class, one that is less willing to blindly follow dictates from Beijing and which increasingly is sending its children for study -- and for exposure to democratic ideals -- in the United States.

Opponents to a harder line against the Chinese say this improved standard of living will do more to improve lives and advance democracy than any outside pressure could hope to accomplish. To threaten these improved standards by withdrawing trade benefits is the kind of political showmanship that wins votes in the United States, they argue, but would

punish China's 1.1 billion residents unfairly.

Further, the collapse of the Soviet Union has left China, Japan and the United States as the key factors in stability in the Far East. This stability has served to ease talks between Taiwan and China, calm tensions over disputed territorial claims, raise the possibility of the reunification of Korea and open the possibility that the United States might someday be able to reduce its military presence in the Far East. That stability could be compromised if the United States lost its influence in Beijing through a more confrontational trade policy.

Asian leaders concerned with economic stability in the region also have made it known in Washington that they would not like to see the United States end the trade pact. Earlier this month, Governor Chris Patten of Hong Kong, which depends on China trade for much of its own economic vitality, made a public plea to President Clinton to maintain China's trade advantages.

China experts believe that pushing the Chinese on human rights issues can help reformists within China -- but only up to a point. No amount of pressure is likely to get Beijing to give up its claims to sovereignty over Tibet.

"If you go far enough you help them, but if you go too far, you undermine them," Mr. Kreisberg said. "I think anything dealing with Tibet is going too far, but I don't think any Chinese is going

to fight in favor of torture or prison labor."

Martin Evans, a former Sun reporter, is now studying Asia at the University of Hawaii under a Freedom Forum Fellowship.

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