What China Must Understand

At the dawn of the 21st century, Chinese President Jiang Zemin's state visit with President Bill Clinton marks an opportunity to establish a long-term strategic relationship between the fastest-rising global power and the world's undisputed superpower. There is nothing more important to either Washington or Beijing than managing this relationship to a peaceful and prosperous end.

To date, the Clinton Administration's China policy has been inarticulate at best. It has failed to make any attempt at forging the kind of bipartisan foreign policy toward China that existed vis-a-vis the Soviet Union. It foolishly capitulated to congressional conservatives by undermining the bedrock "one-China" policy established under President Richard M. Nixon. It deliberately irritated Beijing by broadening a military alliance with Japan to include Taiwan. Finally, the Administration has allowed a revolving chorus of special-interest groups to substitute for strategic vision, confusing not only Beijing's policymakers but the American public.

The summit should be a time when American strategy toward China is firmly focused on developing political and economic security for the U.S. and the world into the next century. Surprisingly, the Administration has done a good job in the past year accomplishing the first goal. Under strong U.S. pressure, and thanks to an accommodating Jiang Zemin, China has signed treaties banning chemical weapons, nuclear weapons testing, and arms proliferation. Beijing is playing a big role in the four-party talks on North Korea and is the major supplier of food to Pyongyang. In Cambodia, it no longer supports the Khmer Rouge. Perhaps because it is becoming a major importer of Middle East oil and thus wants stability, not turmoil, in the Gulf, it appears ready to agree to American demands to cut missile sales to Iran. These are major accomplishments for the Clinton Administration. Under U.S. pressure, and following its own interests, China is clearly shifting from a position of outsider willing to challenge the international system to a responsible participant.

This is less true on the economic front. China wants "in" but only on its terms. Its political and military elites see economic growth as a means toward global power. Beijing has deliberately run up nearly $200 billion in foreign reserves by exporting madly while controlling access to domestic markets. This cannot continue. China is simply too gigantic to duplicate the Japanese or Korean export model of growth. It will totally unsettle the international economic order. The world got a taste of China's power this summer when Chinese exports overwhelmed the economies of Southeast Asia. In 1994, Beijing devalued the yuan and generated $65 billion in new exports over the next three years--more than all of the Southeast nations' combined, and a lot cheaper. As for the U.S., it cannot continue to indefinitely absorb Chinese exports at the current double-digit rate of increase.

What to do? The U.S. is increasingly successful in getting China to play by the international political rules of the game. It must strive to do so on the economic front as well. Balanced growth, with domestic demand contributing as much as exports, is critical for China to avoid seriously disturbing the global economy in the future. Negotiating China's entry into the World Trade Organization is the process through which this balance can be forged. The Administration should not back away from the right kind of deal permitting China's entry. It is perhaps the most critical negotiation of this era. Nor should it shirk the hard work of explaining to Congress and the American people the need for long-term, serious relations with China.

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