From: hua@engin.umich.edu (CHONGYU HUA)
Subject: [WSJ] Clinton and China's MFN
Date: Mon, 09 Nov 92 17:44:12 EST
Organization: University of Michigan Engineering, Ann Arbor
Distribution: usa

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Clinton Faces Difficult Decisions on Trade With China .................. 85
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Source: The Wall Street Journal (WSJ), 11/6/92
By: Robert Keatley, Staff Reporter of WSJ

WASHINGTON -- When Bill Clinton enters the White House and attempts to 
revive the sluggish U.S. economy, he seems destined to clash with China.

Both economies could suffer, to the advantage of U.S. trade rivals in Europe
and Asia.

At issue is the contradictory mix of morality and mammon that has marked 
relations between the U.S. and China since their earliest encounters. For
more than a century, Americans have trudged across China to dispense the 
Bible and high-minded principles in what they called a heathen culture. 
Others were driven by more secular visions of vast wealth from pedding
everything from opium to autos in a nation of boundless consumer needs.

These days the form is different but the contradiction remains. Many
Americans, including some Democratic politicians, want China's hard-line
rulers to ease off, especially on human rights issues, as the price of
continued good relations. Others, notably the U.S. business community,
contend that such pressure on Beijing would fail - and cost them money.

President Bush regularly vetoed congressional efforts to put conditions on
the China trade. Mr. Clinton seems unlikely to do the same.

"We want to use our relationship and influence to work with the Chinese for
a peaceful transition to democracy and the spread of free markets," he vowed
last month. "Our nation has a higher purpose than to coddle dictators."

If a Clinton administration demands that political prisoners be released, or 
other conditions be met, in return for smooth trade relations, the Chinese
promise to say no and retaliate. "There is no doubt about it," vows Tong
Zhiguang, vice minister of foreign economic relations.

Beijing suggests it might buy the European Airbus rather than more Boeing
Co. jets, Canadian or Australian grain rather than U.S., or shut U.S.
companies out of its exploding telecommunications markets. If that 
jeopardized the $34 billion U.S.-China trade, both sides would suffer.

For China, serious disputes could endanger its amazing growth rate - near 12% 
this year and averaging 8% a year since 1978. During that span, the total 
value of goods and services produced in China has risen 250% and will double
again by the year 2000, giving China the world's third-largest economy, the 
World Bank says. Exports are a driving force and the U.S. is the main market, 
taking 26% of the total. China provides 60% of U.S. shoes plus, among other 
things, many of its toys, textiles and simple appliances.         

But China's industry consists mainly of clunky state factories that survive 
by subsidy, plus small private ones that assemble imported parts for 
re-export. Though their products last year helped create trade surpluses of 
$16 billion with the U.S., $13 billion with the European Community and $6 
billion with Japan, only 5% to 20% of the added value actually occurs inside 
China. And most profits go to foreign investors, notably from Hong Kong and
Taiwan, who have global distribution links.

Losing the U.S. market would stall China's economy and create one of Beijing's
worst nightmares: jobless, disgruntled workers creating instability in its
cities. If so, Beijing is more likely to crack down than to loosen controls,
the opposite of the professed Clinton goal.

Americans, too, would lose. They would have to pay more for consumer goods
from jogging gear to hair dryers to Barbie dolls. And American exporters
could see sales dwindle even as China seeks more items like computers, 
vehicles and machine tools in its drive to modernize. For example, the French
telecommunication giant, Alcatel, says China will soon surpass the U.S. as
a market for switching gear.

Yet memories linger in the U.S. of the 1989 Tiananmen shootings, and Beijing
often maltreats those who challenge the Communist Party's right to rule; 
forced labor and torture are common. Thus, many lawmakers insist the U.S.
must use trade penalties to force change.

"A tougher policy toward China is appropriate," says William Reinsch, a Senate
staffer and trade specialist with ties to the Clinton camp, because the U.S.
"needs to deal with strength."

How tough Mr. Clinton will be remains unclear. He hasn't committed himself to
specifics and a Democratic Congress may be more flexible if he asks. Indeed,
much previous debate involved Bush-bashing. One theory is that Congress will
vote mild restrictions by June, when action is due about extending
most-favored-nation tariff treatment, then wait a year before deciding whether
to apply them.

Totally unacceptable, responds a Chinese official, who promises to match any
U.S. actions. If these are tough, one casualty could be Motorola Inc. This
year it hopes to sell 200,000 cellular phones in China, next year 700,000
and in five years, nine million. A trade war could derail that.

Newsgroups: talk.politics.china,soc.culture.china