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The U.S. And China: Will The Big Thaw Last?


International Outlook

THE U.S. AND CHINA: WILL THE BIG THAW LAST?

A year ago, confrontations over Taiwan, trade, and transfers of arms pushed U.S.-China relations into a deep freeze. But when President Clinton meets Chinese President Jiang Zemin at an Asia-Pacific economic summit in Manila on Nov. 24, the atmosphere is likely to be as warm as the tropical setting. Both countries have spent several months groping toward a rapprochement. As a result, U.S. and Chinese officials say, relations are steadier than at any time since the 1989 Tiananmen Square massacre. If all goes well, a series of high-level exchanges could lead to a Clinton-Jiang summit next summer.

And yet China and the U.S. remain far apart on some thorny issues. The prospects are slim that the two will close the gap soon. The reason: Domestic politics will limit both Jiang's and Clinton's ability to maneuver, heightening the potential for dashed hopes if breakthroughs don't materialize. "Both sides have raised the ante," warns Kenneth Lieberthal, a political science professor at the University of Michigan.

FALSE LABELS. Beijing leaders increasingly are preoccupied with local concerns. They're girding for Hong Kong's reversion to Chinese control on July 1 and for next fall's Communist Party Congress, which is held every five years to choose national leaders. They may be unwilling to make concessions that imply they've buckled under to foreign pressure. And Clinton must contend with a new Congress that's no more inclined to favor China than its predecessor was.

Already, new tensions have emerged. On Nov. 10, Beijing blasted the U.S. for cutting textile quotas after U.S. officials found false country-of-origin labels on Chinese-made goods. Now, China is threatening to suspend imports of selected U.S. products on Dec. 10. Such moves will only stoke congressional ire at the near $40 billion U.S. trade gap with China, which continues to grow even as Japan's deficit shrinks.

Even so, top Clinton advisers are sanguine. They counter that China has made conciliatory gestures, including releasing dissident Chen Ziming from jail on Nov. 6. China has signaled its intent to tighten control over exports of nuclear technology. And negotiations over China's entry to the World Trade Organization have been cordial. Clintonites also are encouraged by Beijing's recent "standstill" agreement, in which it pledges not to adopt trade regulations that contradict global rules.

Ultimately, U.S. trade warriors hope to cut a deal with China: permanent most-favored-nation trade status in exchange for prompt access to Chinese markets and equal treatment for foreign companies wishing to operate there. The politics will be tricky. Chinese officials will be jockeying for key posts at the party congress. And Clinton will need congressional approval for permanent MFN. Lawmakers won't bite if they think China is getting an easy deal.

In the end, though, both sides will likely continue on the path to better relations. Jiang needs to safeguard China's access to the U.S., its biggest export market. A warm welcome in Washington would enhance his stature as an intense power struggle plays out at home.

Clinton, too, craves a diplomatic success. And he now understands that stable relations with China will make other goals, such as a nuclear-free North Korea, easier to achieve. "America cannot have a successful foreign policy without cultivating the relationship with China," says David J. Rothkopf, managing director of Kissinger Associates Inc. The challenge for Washington and Beijing will be to keep the momentum going, even as the going gets rough.EDITED BY PAULA DWYER By Amy Borrus in Washington and Joyce Barnathan in Hong Kong, with Dexter Roberts in BeijingReturn to top

WOOING THE WEST

Not long ago, Australia was proclaiming itself an Asian country. But the new government of Prime Minister John Howard thinks integration with the Asia-Pacific region is coming at the expense of ties with Western allies. While Australia's trade with Asia has been rising, its exports to the U.S. have slumped 10% since 1992. European foreign investment in Australia has been flat. To put things right, Howard has dispatched diplomats to the West to drum up investment--and correct any misperceptions that Australia has tilted too far toward Asia.EDITED BY PAULA DWYERReturn to top


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