How US Can Advance Reform in China

US-CHINESE relations have been unsettled ever since Beijing cracked down on pro-democracy demonstrators in 1989. The United States Congress has twice tried to bring about human rights improvements by legislating conditions on China's "most favored nation" (MFN) trading privileges. But President Bush successfully vetoed the bills.

Once more, China's MFN status is at issue. President Clinton must decide before June 3 whether to extend MFN for another year. A changed political climate, the result of Democratic control of Congress and the White House, offers a chance for a productive debate.

China is not at the top of our foreign policy agenda, but key US interests are at stake. The economic ties alone are significant: We exported $8 billion worth of goods and services to China last year and imported $25 billion worth. But our interests go beyond trade. We care about China because of the role it can play in the world, for good or harm. We care about the Chinese government's treatment of its people.

China's internal scene presents a mixed picture. Political liberties are severely restricted. Some churches and ethnic minorities are tightly controlled. The legal system lacks due process, and torture is common in prisons. China lacks the foundation for a pluralistic and democratic system.

On the other hand, private enterprise continues to expand. Half of China's output is produced outside the state sector. Millions of Chinese are testing their skills against the requirements of the market. As the private sector expands, demands are likely to grow for a law to prevent arbitrary state interventions. Economic freedom may bring political freedom.

Chinese foreign policy also presents a mixed picture. China has supported US efforts to bring peace and stability to Korea and Cambodia. So far, it has not used its veto in the UN Security Council to frustrate American objectives. It is our fastest growing export market. Yet some of China's external actions threaten our interests. Beijing has transferred missile and other weapons technology to international outlaws. It has created barriers to imports. And the Chinese military is arming to a worrisome lev el.

As China prepares for the eventual transfer of power to the next generation, its leaders face fundamental questions about China's future. We face choices about how to promote our interests.

Our policy toward China has to be grounded on a balanced assessment of China and a recognition that China is modernizing. Our assumption should be that the forces in China supporting reform and a constructive global role are strong. Further, we need cooperation between the president and Congress and consultation with our allies.

Our objective is to bring China further into the global community. We want China to:

* Play a constructive role in promoting international peace and stability.

* Continue to liberalize its economy and open its markets to US business.

* Respect and guarantee the political and civil liberties of its citizens.

* Respect the autonomy of peoples in Taiwan, Hong Kong, and Tibet.

We could promote our objectives by threatening to remove China's MFN status, which would lead to increased tariffs on Chinese exports to the US. Rather than bend, Beijing would probably retaliate. US importers, exporters, consumers, and retailers would suffer. Chinese hard-liners might roll back political and economic freedoms. Because most Chinese exports to the US pass through Hong Kong, its people also would be hurt.

A second option is for Congress to place human rights and other conditions on China's MFN status. Yet this would rob the president of the flexibility to adjust policy to the fluid political climate in China. Also, MFN is an unwieldy tool.

A third alternative is for the Clinton administration to voice strong, public rhetoric on human rights but otherwise pursue normal relations.

We have too many concerns about Chinese policies to choose this route. The US is most likely to achieve its goals if we apply strong diplomatic pressure, but set aside MFN legislation at this time. The Clinton administration should secure China's compliance with the commitments it has already made to open its markets; press China to adhere to international norms on nonproliferation; and seek to end human rights abuses.

Our leverage is considerable. We can apply controls on technology transfers, initiate trade sanctions, invoke sanctions under nonproliferation regimes, and single out China for criticism at the UN Commission on Human Rights. We also have leverage over China's admission to GATT.

Soon members of Congress will want reassurance from the new administration that their concerns on human rights, trade, and weapons proliferation are being adequately addressed. The president needs to show he takes a personal interest in China policy and will work with Congress. He should explain his policy to the American public and spell it out to China as well.

Since 1989, policymaking on China has been handicapped by division in the government and differences over objectives. With a new administration, we have a chance to restore a consensus between Congress and the White House and to develop a more credible policy. We should seize this opportunity. Our efforts will produce better policy, one more likely to bring change in China.