TIME: Almanac 1993/TIME Almanac 1993.iso/time/061989/06198900.036

Text File | 1992-09-23 | 10.1 KB | 192 lines

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                                                              NATION, Page 30

Saving the Connection


George Bush responds judiciously as the troops in Tiananmen
Square trample a carefully cultivated relationship with the U.S.

By George J. Church


    The dilemma has become as familiar as it is painful. The
U.S., as George Bush put it last week, "must stand wherever, in
whatever country, universally for human rights." But it also has
an interest in maintaining ties to regimes that occupy vital
strategic positions. Never, though, has the U.S. faced that
dilemma on the scale posed by today's China: the world's most
populous nation, an important counterweight to the Soviet Union,
until recently a force for stability in Asia and now a regime
guilty of a massacre of its own people that has enraged
Americans far more than anything ever done by Ferdinand Marcos
in the Philippines or Chun Doo Hwan in South Korea.

    Should the U.S. turn its back on the martyred students who
rallied around a sculpture resembling the Statue of Liberty? Or
break its ties with the Chinese government and risk a
devastating setback to both strategic and commercial interests?
Neither, said the President, who is something of an old China
hand, having headed the U.S. mission to Beijing in 1974-75. Bush
tried, as he put it, "to find a proper, prudent balance" -- to
toe-dance between the horns of the dilemma.

    At the start of the week, the President suspended all
military sales to China. That froze in the pipeline some $500
million of undelivered equipment, mainly electronics gear to
improve the performance of F-8 fighter planes. Bush also
authorized the Immigration and Naturalization Service to extend
the visas of Chinese students in the U.S., many of whom are
afraid to go home. Later in the week, as outright civil war
seemed to threaten, the State Department urged all Americans in
China to get out, and made that an order for families and
dependents of its diplomats. By week's end some 7,300 of the
roughly 8,800 U.S. citizens in China had been evacuated, many
by hastily arranged charter flights.

    That did not satisfy some critics. In Congress the unlikely
alliance of New York Representative Stephen Solarz, a highly
liberal Democrat, and North Carolina Senator Jesse Helms, the
curmudgeon of the Republican right, is pushing a bill that
would compel the Administration, if the situation worsens, to
stop all transfers of high-technology goods to China, suspend
all investment and trade, recall Ambassador James Lilley and try
to persuade international bodies such as the World Bank to cease
making loans to China. Administration officials gloomily
acknowledge that they may be driven to such steps if hard-line
rulers in Beijing launch a purge of all who oppose them, further
inflaming American opinion. But for the moment at least, the
Administration is resisting.

    At his Thursday-night news conference, Bush explained why.
"The situation is still very, very murky," he stressed.
Washington is simply unable to discover who is in and who is out
among the Chinese leadership, let alone predict what actions
they may take. The President disclosed that he personally
attempted to telephone "a Chinese leader" (Deng Xiaoping, whom
Bush got to know in his Beijing days), but "I couldn't get
through."

    While the situation is that fluid, it makes sense for the
Administration to try to maintain strategic and commercial ties
in hopes that a government will emerge that Washington can
continue to get along with. The U.S., said Bush, "can't have
totally normal relations unless there's a recognition (by
Beijing) of the validity of the students' aspirations." On the
other hand, he insisted, "there's a relationship over there that
is fundamentally important to the United States, that I want to
see preserved."

    It is possible, though, that China, in the grip of either
continuing chaos or harsh repression, may relapse into the
hostile isolationism it maintained until the early 1970s. That
would be a disaster for American interests. The value for the
U.S. of "playing the China card" against the Soviet Union is not
quite what it was in the days before Mikhail Gorbachev began
lowering the level of hostility between Washington and Moscow
-- as well as restoring correct Soviet relations with Beijing.
But the presence of a huge Chinese army along a disputed border
with the U.S.S.R. is still a useful check against any renewal
of Kremlin adventurism. Beijing and Washington also share
intelligence on Soviet missile tests and other military
maneuvers picked up by two U.S.-built listening posts along the
Chinese-Soviet border. The devices are described as valuable
though not irreplaceable and are said to have continued
functioning through all the turmoil last week.

    More broadly, the U.S. has come to rely on China to help
preserve peace in Asia. That faith has not always been
rewarded; for example, Beijing has sold Iran Silkworm missiles
that have been fired at ships plying the Persian Gulf. But on
the whole, China has played the role Washington wanted it to:
it has been expanding contacts with America's friends Taiwan and
South Korea, it has assisted U.S. ally Pakistan, and it
participated with the U.S. in aiding the rebels who defeated the
Soviet invasion of Afghanistan. Currently, Washington is
counting on Beijing to play a part in mediating a settlement
among the factions in Cambodia that will compete for power as
the Vietnamese withdraw. A Chinese retreat into isolation would
open a huge and dangerous power vacuum in Asia and the Pacific.

    The U.S. commercial stake in China cannot easily be
separated from the military-diplomatic interest. China's
political opening to the U.S. in the early '70s probably
accelerated the free-market economic reforms that Deng launched
later in the decade. Those reforms attracted U.S. trade and
investment; the economic loosening then contributed to pressures
for a corresponding political liberalization. Even after the
Tiananmen Square massacre, Bush and his aides still hope that
continued American trade and investment will help maintain
economic freedom and that the dynamic force  of a liberalized
economy may yet renew the pressure for political reform.

    Corporate executives would like nothing better. Western
businessmen have dreamed of immense markets in China since the
days of Marco Polo; for American corporations in the past few
years, the dream started to come true. From a mere $1.2 billion
ten years earlier, U.S. trade with China rocketed to $13.4
billion last year, including almost $5 billion of U.S. exports,
such as farm goods, aircraft and oil-drilling equipment, and
more than $8.5 billion of imports from China, such as clothing,
toys and sporting goods. In addition, American corporations
poured into China some $3.5 billion of direct investment.
Everything from gelatin capsules to computers is churned out in
more than 600 joint ventures or wholly owned U.S. subsidiaries
(China, Viet Nam, Poland and Hungary are the only Communist
countries that permit 100% foreign ownership of businesses
operating on their soil).

    American executives were too preoccupied last week with
spiriting their non-Chinese employees to safety in Hong Kong,
Japan or South Korea to make long-term decisions. Besides, like
the Bush Administration, they had trouble finding out what was
going on; several were unable to discover whether their Chinese
offices and factories were still open and working. The bloodshed
and chaos were known to have stopped some operations. Work
ceased at Shanghai factories owned partly by Massachusetts-based
Foxboro, an electronics company, and aircraft-making McDonnell
Douglas. Chemical Bank suspended its efforts to organize a
syndicate of U.S. and Japanese banks that would share in a $120
million loan to Sinopec, China's national oil company.

    Out of the confusion, a strategy of sorts emerged.
Corporations will continue running their present operations in
China as long as they can, and will carry through deals that are
already under way as long as that is permitted. The dream of
satisfying the demand of a billion or more new customers is too
alluring to surrender easily. "You can't afford to just opt out
of any world market, particularly one the size and potential of
China," says Roger Sullivan, president of the U.S.-China
Business Council. "For us to do that would be to just turn it
over to the Japanese."

    Simultaneously, however, U.S. executives are putting ideas
of new investments on hold until they can see what sort of
political and business climate emerges from the present turmoil.
The wait may be a long one, and even when it ends, Western
involvement will depend on whether the eventual winners are
receptive to foreign influence or are isolationist hard-liners.
Thermo Electron, a Waltham, Mass., company, is negotiating to
build in China a $110 million co-generation plant that would
turn out electric power and ferrosilicon metal by reusing the
same fuel (coal). But, says chief executive George Hatsopoulos,
"if the situation reverted to anything like the (1960s) Cultural
Revolution, we wouldn't want to have anything to do with China."

    The worst prospect for both U.S. business and strategic
interests would be for hard-liners to win the power struggle
and launch a massive crackdown, rounding up dissident students
and workers by the tens of thousands and shipping them off to
the Chinese Gulag, a little-known but long-established system
of political prisons. "Then all the linkages will snap," says
a State Department official. That is exactly what some
policymakers fear is about to happen, and they see little that
the U.S. can do to head it off. Says a White House official:
"The U.S. has no influence over the Chinese government's
behavior. Zero. None." A presidential adviser explains, "For the
Chinese leaders this is a battle to the death, and they're not
particularly interested in what we think of them."


-- Robert Ajemian/Boston, William McWhirter/Chicago and
Christopher Ogden/Washington