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For China's Economic Reformers, the 2008 Olympics Are Gold

The mid-July decision to award Beijing the 2008 Olympic Games was cause for patriotic celebration for hundreds of thousands of ecstatic, flag-waving Chinese who poured into the streets of China's capital. The vote for Beijing also marked a major victory for China's more reformist leaders, President Jiang Zemin and Premier Zhu Rongji. The win is certain to bolster their popularity as they prepare to face domestic challenges and as China gears up for entry to the World Trade Organization by early next year.

Jiang and Zhu will have their first big opportunity to exploit Beijing's Olympic victory during August's Beidaihe policy confab, an annual event at a seaside resort where top Communist Party leaders make key decisions for the year ahead. Jiang and Zhu are now likely to hold sway in a battle expected to erupt over their controversial proposals to modernize the Party. Following Jiang's recent bold call to welcome private entrepreneurs into the cadres' ranks, he had faced stiff resistance from such conservatives as National Party Congress Chairman Li Peng, who considers Jiang's proposal ideological heresy.

RED CAPITALISTS. But now the effort by Jiang and Zhu to shore up the Party's declining legitimacy and enlist private capital to support economic reforms looks unstoppable. These leaders realize that they must bolster support for the Party by bringing in new groups such as entrepreneurs, even while the regime continues to block substantial political reforms like allowing real opposition parties. "Jiang has recognized the need for red capitalists," says one Western diplomat in Beijing.

The Olympic win also strengthens the hands of Jiang and Zhu as they try to influence the Party debate over who will succeed them. That's another important decision that will be discussed at Beidaihe and approved at next year's 16th Party Congress. Vice-President Hu Jintao, a technocrat with ties to Jiang, is now almost certain to take over as both President and Chairman of the Communist Party. And reformist candidate Vice-Premier Wen Jiabao, who is in charge of China's hard-pressed agricultural sector and is strongly supported by Zhu, looks set to become the next Premier. He would be expected to keep economic reforms moving.

The newly emboldened Jiang looks poised to fulfill his goal of keeping a grip on the reins of power beyond next year. Although Jiang, 74, is certain to give up both the presidency and chairmanship of the Party, he will probably maintain his position as Central Military Commission Chairman. That will give him a role in managing China's delicate relationships, including those with Taiwan and the U.S., and in acting as a buffer to the Chinese military's often antagonistic stance toward the West.

For Jiang and Zhu, the Olympic win is sweet justification for their advocacy of a strengthened relationship with the U.S. The Bush Administration's decision not to oppose Beijing's Olympic bid eased strains that had developed in the wake of the U.S. spy plane incident in April. Soon, Beijing is expected to release several U.S. citizens charged with spying, possibly before Secretary of State Colin L. Powell's planned visit to Beijing on July 28-29. That trip will set the stage for a summit between Bush and Jiang in China in September.

Of course, even as Beijing and Washington move cautiously closer, U.S. plans for a missile defense system and Beijing's policy toward Taiwan will remain sore spots. But whatever happens, Beijing's Olympic victory will influence China's political game. The friendship pact signed by Russia and China on July 16 may have been designed as a roadblock for President Bush's plans for a missile defense system to repel nukes from rogue states. But it's unlikely to dissuade Washington from its ambitions. The Pentagon plans more than a dozen tests by the end of 2002. Some will violate the 1972 Anti-Ballistic Missile (ABM) Treaty, which both Russia and China claim to hold sacred. Deployment of the defense system seems inevitable: Completing the legacy of President Ronald Reagan, who first proposed a "Star Wars" system, is an irresistible political goal for any Republican President.

The drive for deployment may pressure Moscow to come to the table to negotiate changes in the ABM accord. Bush and Russian President Vladimir V. Putin are expected to address the issue at the meeting of the Group of Eight industrial nations in Genoa in late July. The China-Russia agreement is clearly an effort to give Putin some cards to play in talks with Bush. Putin may also try to up the ante by continuing to block new sanctions on Iraq or by boosting sales of sophisticated arms to China.

But Washington could be holding the aces. If Putin continues to oppose Bush's missile defense initiative, that could hurt the prospect of increased U.S. investment in Russia or prompt Bush to delay slashing America's nuclear arsenal. In the end, the Russia-China accord may show that the two nations have fewer options for thwarting the U.S. than they had hoped.

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