In Slap at US, China Rewards France for Downplaying Rights

IN the 1970s, American diplomats referred to "playing the China card" in their dealings with the Soviet Union. This week, Chinese Premier Li Peng is playing the French card in his nation's disputes with the United States over human rights, trade, and Taiwan.

China announced a contract on Wednesday for 33 Airbus aircraft worth some $1.89 billion. The deal could not be more timely for France's state-owned aircraft company and Airbus Industrie partner, Aerospatiale, which lost $196 million last year. Also, Chinese officials yesterday agreed to work with Aerospatiale on a 100-seat passenger jet.

But the news is bad for the Seattle-based Boeing Corp., which was competing for the Airbus contract, and raises fresh questions about the role politics play in international trade. While President Clinton in 1994 formally delinked human rights concerns from the decision to grant China most-favored-nation trade status, the US has angered China by continuing to criticize Chinese rights abuses and by deploying American warships near the Taiwan Strait during Chinese missile tests there last month.

France, in contrast, has avoided criticism of China's human rights record and played down the Chinese war games near Taiwan. While the US "condemned" the Chinese missile launches and the European Union "denounced" them, France expressed "regrets."

Such distinctions are not lost on Chinese leaders, especially Premier Li Peng. He delayed an official dinner Wednesday because French Prime Minister Alain Juppe planned to make a muted reference to human rights during that evening's toast. After an hour and a half of negotiations, the toasts were dropped.

The Chinese visit comes at a critical period for French President Jacques Chirac, who is grappling with persistent unemployment and an oversized, debt-ridden defense establishment at home. In addition to the Airbus and Aerospatiale deals, France stands to gain contracts worth billions in power plants, subway systems, auto manufacturing, electric cables, medical equipment, and grain sales.

French officials are well aware of the politics involved. A 1993 sale of 60 French Mirage-2000 fighters to Taiwan by French aircraft firm Dassault Aviation resulted in a commercial chill from China that France is still trying to reverse.

In January 1995, Beijing awarded a nuclear-reactor contract to France in a public slap at the US for blocking Chinese membership in the World Trade Organization a month earlier. And Airbus rival Boeing sees this week's aircraft order in the same spirit.

"The Chinese order this week underscores the need to move beyond an annual debate on human rights and China's trading status," says Cindy Smith, a spokesman for Boeing. "Boeing aircraft orders from China will be more forthcoming in the context of a more stable trading relationship."

US officials play down this week's high-profile contracts, which thus far amount to $2 billion. "When [former] Commerce Secretary Ron Brown visited China two years ago, he came back with $9 billion in deals, but less than 20 percent were acted on," says an American diplomat. It remains to be seen whether the US will alter its criticism of China to improve prospects against European rivals.

French officials say that discretion on human rights may be the price to break into the important Chinese market. "China is a great nation, a strategic partner for France, a nation that counts in the world," says Foreign Ministry spokesman Jacques Rummelhardt. "Our objective is jobs. If business is concluded between China and France, the first beneficiary will be jobs in France."

Nowhere are those jobs more critical than in the aerospace industry, which has lost 27,000 jobs since 1990. Aerospatiale plans to cut another 10 percent of its work force in the next two years.

Tomorrow, the Chinese premier visits Airbus Industrie headquarters in Toulouse, a gesture that further dramatizes China's new ties with the European consortium. Until now, US aircraft have represented 92 percent of China's market. "This order represents Airbus Industrie's penetration into the last US-controlled zone," says an Airbus Industrie spokesman. "Playing Europe against the US gives the Chinese more flexibility."

But some are harsh in their assessment of this week's contracts. High-level French officials in Asia wrote a widely cited anonymous letter to the daily Le Monde. They called France's stance on China "a moral lapse."

"Instead of grand principles, must we be satisfied with grand contracts? Is there no limit to this sad bargain," they write. "Today, Mr. Li finds his lost honor. Do those who govern us know that they have lost their own? And ours as well?"