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China And The U.S. Turn A Tempest Into A Tea Party


International Outlook

CHINA AND THE U.S. TURN A TEMPEST INTO A TEA PARTY

Acting U.S. Trade Representative Charlene Barshefsky got a special audience after striking an 11th-hour accord on intellectual property rights with officials in Beijing on June 17. She and a few aides were summoned to Zhongnanhai, the official residence of Beijing's party and government leaders.

There, President Jiang Zemin escorted the Clinton negotiator to a quiet room in a traditional Chinese building. Sitting on carved rosewood chairs with pink silk cushions, the two sipped tea and chatted cordially for 40 minutes. To the American delegation, the symbolism was clear. "The Chinese were sending a powerful signal that they want to find common ground," suggests a U.S. official.

Indeed, after a gloomy, yearlong string of diplomatic confrontations, both the U.S. and China seem to be rethinking their strategies. Clinton aides have come to see that their China policy was accomplishing little. At the same time, it's clear Beijing's senior leaders realize that without stable ties with the U.S.--China's biggest export market--their economy will be in trouble.

EAGER FOR SUMMITS. Moreover, with Clinton's reelection appearing likely, the Chinese have concluded that a modus vivendi with him is better than four more years of miscues and mistrust. "Both sides have reconfirmed the need for a healthy economic relationship," says Su Ge, a professor of international studies at Beijing's Foreign Affairs College.

Besides patching up differences over intellectual piracy, the two sides also have resolved a dispute over China's sale of nuclear technology to Pakistan. A bid by China's critics on Capitol Hill to yank most-favored-nation trade status for the Middle Kingdom has fizzled. And Beijing is expected to roll out the red carpet for National Security Adviser Anthony Lake, who arrives on July 6 for wide-ranging talks on security and economic issues. China's Trade Minister, Wu Yi, may be heading to the U.S. in the fall to order jet airliners and other big-ticket items. If the two missions succeed, a new era of cooperation on issues ranging from Taiwan to Korean reunification to arms-trafficking could follow. Marginal improvements in China's human-rights record might even be possible. Both leaders are eager to hold regular summit meetings, perhaps starting next year.

In Washington, Clinton aides say they are quietly shifting from their fuzzy "engagement" approach to Realpolitik in China. The Administration says its goal is to work together on common agendas, and that it now intends to deal with China according to "a hard, cold calculus of what our interests are and what their interests are," says a senior U.S. official.

"GRAND BARGAIN." With Lake taking over the lead on China from the State Dept., the Clintonites hope eventually to strike a "grand bargain" with Beijing. The U.S. wants firm commitments from China on such issues as curbing proliferation of nuclear technology and improving human rights. China wants membership in the World Trade Organization and high-profile summits that enhance Beijing's prestige on the world stage.

But improving U.S.-China relations will take time. Renewed tensions over Taiwan or Hong Kong, which returns to Beijing's control on July 1, 1997, are possible. And further showdowns in trade disputes probably are inevitable.

On both sides, though, there seems to be a strong desire not to repeat the past year's confrontations. Barshefsky, Lake & Co. may find themselves sipping more tea in the days ahead.EDITED BY STANLEY REED $by By Amy Borrus in Washington, with Dexter Roberts in BeijingReturn to top

TURKEY GETS A GOVERNMENT

An Islamic government is on the verge of taking power in Turkey, a NATO member. But the business community, fed up with months of squabbling, is saying that's better than no government at all. The Istanbul Stock Exchange gained almost 6% in the first three days after the Islamist Refah party formed a coalition with the center-right True Path Party. Should the odd-couple alliance win a July 7 vote of confidence, True Path leaders will control most of the economic ministries. That, as well as signs that Refah leader Necmettin Erbakan may have moderated his anti-Western economic policies, has calmed investors.

There are signs that foreigners are still bullish on Turkey. Honda Motor announced recently that it will invest $50 million in a joint venture to manufacture cars.EDITED BY STANLEY REEDReturn to top


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