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Business in China

WITH the grinding of tanks still echoing in the Beijing air, and the saga of student arrests and dissident executions continuing, it's unclear how American business and exchange in China should be conducted. Corporations with large investments in China are playing down the ``disruption,'' hoping to minimize damage to themselves and stockholders. Those looking to invest in China are holding back.

Whatever develops, it is important for Americans conducting business in China to demonstrate that US free enterprise is rooted in a system of moral principles and human rights. Americans should be democrats first, and business people second.

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That means business as usual will not do. Moderate policies, however, may be wise. The White House has taken that route, suspending high-level talks and military sales. Sanctions on high-tech sales are under discussion.

Too many quick get-tough demands may actually hurt the position of Chinese intellectuals, business people, and other democratic sympathizers - by playing into the hands of hardliners who want to eliminate the winds of change.

It's in China's interest to get American business back on board as soon as possible. One-third of China's national income is now based on foreign trade. Chinese officials are offering both a lure and a threat - offering perks and favorable deals for US corporations that begin to return to business as usual, and saying they may sue for breach of contract with companies such as IBM that are backing away.

Companies taking perks need to be careful they aren't used as tools of propaganda. That China would sue anybody, however, is hypocritical given the constant frustrations of American business with Chinese corruption and bribery - including an increase in verbal and written contracts broken in Beijing.

The sacrifice of the Chinese students cries out for those representing freedom to do better than act from expedient or profit motives.

Reports to the contrary have been disturbing. At one major school of management this week it was said the crackdown in China would be good for business: Labor would be cheaper, workers would be less prone to excess.

One gung-ho businessman in the Wall Street Journal suggests Chinese officials undertake a ``Promote China'' campaign aimed at tourists. But then whom should they hire - Fang Lizhi?

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Business people ought to think twice about fraternizing in public with Chinese leaders. And appropriate freedoms should be sought for native employees of American firms in China.

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