A Firestorm On The Hill Could Sear Clinton's China Policy

Vice-President Al Gore walked a fine line during his recent visit to Beijing. Despite the Donorgate campaign-finance scandal that has cast a harsh light on Asian business deals, Gore joined Chinese Premier Li Peng at a Mar. 25 signing of car and plane contracts worth $2 billion for General Motors Corp. and Boeing Co. But while reassuring China of the Clinton Administration's commitment to stable ties, Gore also hinted of a possible rupture if allegations of illegal Chinese campaign contributions prove true.

Gore's balancing act reflects trouble back home in Congress. A broad backlash against China is in full swing. Emboldened by Donorgate, critics on the GOP right and Democratic left are stepping up efforts to punish China for human rights, trade, and security abuses.

"BACKING AWAY?" The "demonization of China," as a top Clinton Administration official despairingly puts it, threatens to undo a year of diplomatic fence-mending. "It's beginning to have an effect on policy," concedes an Administration Asia hand. "There's a concern that we are watering down, backing away."

Examples: The Clintonites have shelved plans to lift restraints on U.S. high-tech exports and likely will postpone until 1998 plans to ask Congress for permanent most-favored-nation trade status for China, despite lobbying efforts by business. And U.S. negotiators will be under intense pressure to wring tough terms from Beijing in exchange for membership in the World Trade Organization. Says one Washington consultant with close ties to the White House: "You can smell the Administration's fear." Beijing's anxiety over the firestorm won't be eased by House Speaker Newt Gingrich's decision, under pressure from GOP conservatives, to add Taipei to his Mar. 24-Apr. 2 trip to Asia. Meanwhile, House Minority Leader Richard A. Gephardt (D-Mo.), a likely Presidential contender in 2000, has introduced a bill to require congressional approval of China's WTO membership.

Lawmakers aren't stopping there. The House has passed a bill that would put pressure on the President to sanction Beijing if it bullies Hong Kong after taking control on July 1. And Representative Duncan Hunter (R-Calif.) is pushing a bill to bar a shipping company partly owned by the Chinese military from leasing a terminal at Long Beach, Calif.

U.S. executives in Asia are appalled. "We're frightened at the prospect of a new cold war initiated over an ideological frenzy and domestic political concerns," says William H. Overholt, managing director of Banker's Trust Asia Ltd. in Hong Kong. So U.S. business is girding for a fierce battle over President Clinton's annual review of China's MFN, due June 3. It was supposed to be a cakewalk because of warming U.S.-China ties. But now, the political calculus has changed. The religious right and economic nationalists such as former GOP Presidential contender Patrick J. Buchanan vow to make the MFN vote a litmus test of conservative virtue. And China's alleged influence-buying has normally pro-MFN lawmakers wary of taking stands that could be construed as pro-Beijing. "Everyone's on tenterhooks," says a corporate lobbyist in Washington.

The upshot, says one pro-MFN Democratic House member: "20 to 30 members have changed their positions against MFN or are considering doing so." Among them: Representative Bill Paxon (R-N.Y.), a House Republican leader. There won't be enough anti-MFN votes to override a certain Clinton veto, but the Administration doesn't relish defending a strong pro-China position on the eve of Donorgate hearings. That's why business is going all out to ensure Clinton resists pressure to hit the brakes on U.S. engagement with China.

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