By Jim Lobe
WASHINGTON, Jul 2 1996 (IPS)

Three months ago, the United States and China seemed headed for major clashes over trade, Taiwan, nuclear proliferation, and human rights.

Three months later, China is off the front pages, and the House of Representatives — a stronghold of anti-Beijing sentiment — has just endorsed by a two-to-one margin the extension of preferential treatment for China in what could be the last of a perennial trade debate since the Jun. 1989 ‘Tienanmen Massacre’.

President Bill Clinton is also preparing to dispatch his National Security Advisor Anthony Lake to Beijing to lay the groundwork for a bilateral summit meeting next year if Clinton is re-elected in November. Lake will be the highest-ranking U.S. official to visit the Chinese capital since an ill-fated secret trip by former President George Bush’s national security advisor in late 1989.

“There’s still a lot of potential volatility in the relationship,” says Robert Manning, an Asia specialist at the Progressive Policy Institute (PPI), a centrist thinktank here. “But I think there are some significant things happening.”

Business interests with substantial investments in China are hoping that last week’s 286-141 vote — combined with the successful, if last-minute, negotiation last month of a new trade pact on intellectual property — presages a period of stability in bilateral ties.

“Nobody’s predicting a sudden return to the days of the early 1980’s” when Washington forged a strategic alliance with Beijing, says Robert Kapp, director of the Washington-based U.S.-China Business Council.

“But I think there is a tentative sense that the progressive elimination of a series of highly visible irritations — coupled with the apparent lowering of the temperature between Taiwan and the mainland — has created a set of circumstances which, with great care, will enable the U.S. and China to address longer-term issues,” according to Kapp.

U.S. officials say they have reached a new level of understanding with Beijing during the last three months. And they say the turning point came when Clinton sent an aircraft carrier task force off Taiwan during unprecedented Chinese missile tests in the Taiwan Straits.

“They took notice,” said one senior official. “It dispelled their assumptions that they could do anything, and the U.S. would just roll over.”

Washington’s move was followed by the negotiation of a new agreement committing Beijing to a policy of restraint in supplying Pakistan and other aspiring regional powers with missile and nuclear technology.

In May, Secretary of State Warren Christopher delivered a major policy address in which he pledged not to “hector” China and called for regular high-level talks, including summit meetings, between the two countries.

He also explicitly rejected a policy of “containment” against China, as urged by a number of Republican leaders and others, warning that such a “course would harm our national interests, not protect them. Demonising China is as dangerously misleading as romanticising it would be,” he said.

At the same time, some analysts credit the easing of tensions to a Chinese decision to back Clinton’s re-election in November. “They don’t want to deal with anyone new,” according to one business lobbyist who helped orchestrate the campaign to extend ‘Most Favoured Nation’ (MFN) trading status on Capitol Hill. “They see Clinton as broadly supportive of the relationship, and they don’t want to create any problems for him.”

While the all-but-certain Republican challenger, Robert Dole, also backed MFN for China, he has also proposed including Taiwan in a multilateral project to develop a ballistic-missile defence system that would protect Washington’s Asian allies. China strongly opposes any move that would enhance Taiwan’s international stature.

Still others credit quiet but effective pressure on both the administration and Congress by key U.S. industries which take part in what has become a 60-billion-dollar-a-year bilateral trade relationship.

Big corporations — including Boeing Co.; General Motors, which just announced a huge investment in China; United Technologies; and Nike, which manufactures about one third of its well- advertised shoes in China, came together to form the Business Coalition for U.S.-China Trade.

The Coalition targeted key Congressional districts where their business is important to the local economy but whose representatives have either opposed MFN extension in the past or straddled the fence.

“If the business lobby is energised and united, it acts as a huge steamroller,” said one key Congressional aide.

The principal lesson, he said, is that, “if you put human rights up against trade nowadays — if any volume of trade is at stake — trade wins. The human rights card only works when you don’t have a significant economic stake.”

The United States is currently running a 34-billion-dollar trade deficit with China, but the 12 billion dollars in goods and services U.S. companies sold Beijing last year are in key industries which pack a lot of power in Washington. They include hi-tech industries, like airplane and computer companies, and grain exporters which see in China the world’s biggest and fastest- growing market.

China itself has appealed directly to these interests. Just last month, Chinese premier Li Peng told the Financial Times of London that Beijing will favour European companies over their U.S. competition as a reward for their governments’ “more lenient” policies towards China. “In a geo-economic world, that’s a serious threat,” says one official.

Still, analysts here warn that the relationship is not yet out of the woods. “Taiwan is still a wild card,” says Manning, who served as an Asia expert in the Bush administration.

A senior administration official agrees. “We’re still going to have a lot of problems, some of which we control and some of which we don’t. But we think the relationship is now on a sounder footing.”

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