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Suddenly, Beijing Is Betting on Pragmatism

Beijing has prompted some head-scratching among China-watchers recently. First, the leadership toned down its usually shrill rhetoric even as the Bush Administration was talking increasingly tough on China, and Taiwan President Chen Shui-bian embarked on high-profile stopovers in the U.S. Then came another surprise on June 8. After months of backsliding in negotiations on its terms for entry to the World Trade Organization, Beijing made last-minute concessions to U.S. negotiators, winning their support in its bid to join the international body.

A new pragmatism seems to be taking hold among China's leaders. It is becoming increasingly clear that they have decided that now more than ever, the fate of their economic reforms, stability, and their own political futures are tied to continued engagement with the outside world and the investment that brings in. Following the U.S. spy-plane incident, when a hard-line approach to the Bush Administration was momentarily ascendant, top Chinese leaders seem determined to grit their teeth and avoid friction with the West as they pursue long-term reform goals. "They've decided to keep their heads down," says a Western diplomat in Beijing. "They want to develop their economy and focus on internal problems so eventually China can take its place in the sun."

COUNTRYSIDE WOES. Beijing also hopes this pragmatism will help it win the right to hold the 2008 Olympics and pave the way for visits by foreign leaders, including Bush, for an Asia-Pacific Economic Cooperation summit in October. But there are also domestic issues behind the restraint. These include a looming crisis in the countryside, troubled reforms, and succession changes coming at next year's 16th Party Congress. "The problems are too serious to hide. [And] Zhu has not been able to find new solutions," says an editor with an influential Beijing policy journal.

The Communist Party's recent publication of a 308-page book, entitled 2000-2001 China Investigation Report: Research Into Contradictions Among the People Under New Conditions underscores just how seriously the leadership is taking domestic problems. The book warns frankly of growing protests by farmers and laid-off workers as China gears up to enter the WTO. It seems intended to put party members on notice about tough times ahead--and serves as a warning that China must not jeopardize the $40 billion in foreign investment it gets each year.

Similarly, Premier Zhu Rongji's speech on June 7 was notable for its pessimistic assessment of China's situation. Western analysts were surprised at the Premier's statement that China will have to wait until it is stronger to defend its national interests more aggressively. That was seen as an attempt by Zhu to protect himself and the rest of the leadership against accusations of being too soft with the West. Zhu also stressed the need to slow reforms--apparently an effort to win more leniency from trading partners as China adjusts to meet WTO requirements.

It's hard to say how far Beijing's leaders will push their newly pragmatic approach. China continues to jail domestic political opponents and alleged spies and crack down on religious groups. The hope in the West would be that Beijing would gradually become more cooperative on issues such as the environment, arms proliferation, or even human rights. At next year's Party Congress, where virtually all top leaders will be replaced, Jiang and Zhu are expected to push for reform-minded pragmatists to follow in their footsteps. As the challenges pile up at home, China's leaders seem keenly aware they need better relations with the world at large. Peace in Northern Ireland is once again in trouble following the June 7 British elections. First Minister David Trimble's Ulster Unionist Party saw its parliamentary seats drop from nine to six. Trimble could face a party leadership challenge soon. The Democratic Unionist Party, a Protestant group opposed to the peace process, picked up two seats. So did Sinn Fein, which is linked to the Irish Republican Army. With his conciliatory approach under fire, Trimble is hardening his position--threatening to resign on July 1 unless the IRA convincingly disarms. Trimble's departure could well scupper the regional government, possibly forcing London to reimpose direct rule. Almost 12 years after the fall of the Berlin Wall, the successor party to East Germany's communists looks set to regain a share of power in Germany's capital. Chancellor Gerhard Schroder may have little choice but to allow his Social Democratic Party (SPD) to form a coalition with the Party of Democratic Socialism (PDS) following municipal elections this fall. Polls show that the PDS, a reincarnation of East Germany's Socialist Unity Party, may well emerge as the No. 3 in the city, still home to former communist functionaries. Up to now, the PDS has been kept out of power by a "grand coalition" of the center-right Christian Democratic Union and SPD. But that alliance, led by Christian Democratic Mayor Eberhard Diepgen, fell apart in June in a dispute over the near-collapse of city-controlled Bankgesellschaft Berlin. Losing power in Berlin is another blow to the troubled CDU.

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