The Best Way To Change China Is From The Inside

It's not easy for a nation of more than a billion people to fade from Washington's radar screen. Seen mostly as a counterweight to Moscow for 20 years, China seemed a giant irrelevancy after the demise of the Soviet Union. Now, China's economic boom will make it a power in its own right. That means Americans must cast aside their old cold war notions and learn to manage a much more complicated--and important--relationship.

That implies Americans have to look at relations with China as more than a test of human rights alone. Working for enhanced individual freedom in China is a basic goal that will be best served by broader political and economic engagement with China. Attacking China's trading status, a decision that President Clinton faces by June 3, is not the way. There's a lot more at stake. With billions of dollars worth of telecommunications, power, and transport projects in the works, China is becoming a critical market for such U.S. companies as Motorola, Boeing, and American Telephone & Telegraph. Unlike Japan, China isn't likely to pose a competitive threat to U.S. technology for a decade or two. Instead, China will be more driven to team up with foreign companies. So long as Beijing doesn't view these partnerships as a one-way street, the alliances will help American companies to lower costs and to become more formidable global competitors.

Political benefits may also flow from closer economic ties. A robust American corporate presence in China shores up U.S. political influence in Asia just as many Asians worry that scaling back U.S. military forces in the region will lead to a political abandonment.

LEVERAGE. Establishing new terms for relations with China serves U.S. interests, but it also puts Americans and their ideals on the ground, encouraging political change. Thanks to economic reform, China is more outward-looking than ever before. Beijing's hunger for investment has made it possible for foreign companies, once restricted to coastal cities, to enter the interior. And China is eager to join the General Agreement on Tariffs & Trade, which will force it to meet global trade rules. Through trade, China is encountering Western ideas from entrepreneurialism to religious tolerance.

It's time for President Clinton to capitalize on those favorable trends to break the stalemate in relations that followed China's brutal repression of demonstrators in Tiananmen Square in 1989. George Bush's timid response prompted an outraged Congress to mount annual, ultimately unsuccessful, attacks on China's most-favored-nation (MFN) trading status. These showdowns inside the Beltway had little impact where it counted--in China.

Simply put, MFN is becoming a trade tool of the past. Clobbering Beijing for human rights and other abuses with heavy-handed conditions on renewal of its trade status would be a mistake. In reality, the threat of withdrawing MFN has always been little more than a bluff: China needs the U.S., but to be an influential player in Asia, the U.S. needs a major role in China, too.

That doesn't mean Washington can in any way ignore China's dismal human-rights record. Certainly Clinton, who vowed to make support for democracy a pillar of foreign policy, shouldn't look the other way. Despite Beijing's openness to the West, thousands languish in China's gulag, and efforts to eradicate Tibet's culture grind on. Stepped-up public and private diplomatic pressure might wring more concessions from China. China's leaders will howl, but their occasional release of political prisoners shows they will make concessions when their interests are at stake.

TRADE-OFFS. That's why engagement makes more sense than isolation. It allows the U.S. to make hardheaded trade-offs that have impact. One such tactic would be to swap resumption of U.S. military contacts with China for release of more political prisoners. China, which is pouring a fortune into advanced weaponry, craves the legitimacy that would confer. For the U.S., closer contacts could give the Pentagon a clearer sense of China's military intentions and nuclear arsenal. "It's easier to influence a friend than to influence an enemy," argues Boeing Co. President Philip M. Condit.

Not all the challenges are political. Beijing's mercantilist trade policies make its markets tough for some exporters to crack. China's trade surplus of $18 billion with the U.S. is bound to soar. And China's furious growth is spawning pollution problems that could set off alarms among Administration environmentalists.

Old China hand George Bush never figured out just where the Washington-Beijing relationship fit in the post-Soviet world. Clinton didn't serve in China, but his penchant for viewing international relations in economic terms laced with a dose of morality may now be the right touch for dealing with the emerging Chinese colossus.

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