Bush Hints Renewal of China Trade Role : Diplomacy: President believed ready to grant one-year extension of tariff benefits.

President Bush strongly hinted to Republican leaders today that he is ready to grant China a one-year extension of trade benefits. Administration sources said announcement of such a move will come this week.

Republican lawmakers who met with Bush at the White House said the President left the clear impression that he is ready to grant China the extension.

“He indicated he would present that while Congress is still in session this week,” said Sen. Alan K. Simpson (R-Wyo.).

Simpson and other GOP leaders said Bush made a strong case for extending most-favored-nation treatment, arguing that to withdraw preferential trade status would severely damage the free-market economy of Hong Kong.

Although he did not say exactly what he planned to do, Bush demonstrated “a tilt toward granting it. But he was seeking our views,” said Sen. John H. Chafee (R-R.I.).

Sen. William L. Armstrong (R-Colo.) said: “He gave us the impression he would do it.”

Bush is to meet with Democratic leaders on the subject Wednesday.

White House spokesman Roman Popadiuk said a decision on the issue will not be announced today.

“As far as I know, no decision has been taken” on whether to continue most-favored-nation trading status for China, he said.

House Speaker Thomas S. Foley (D-Wash.) said he will withhold comment on Bush’s decision until one is actually announced. Foley said he understands that there are conditions attached to the status and that he wants to find out what those conditions are. “I think it’s better to see what he recommends,” he said.

Bush is planning to make the extension provisional, based on China’s human-rights performance over the coming months, said the officials.

Sen. Pete Wilson (R-Calif.) said he does not expect Congress to react as negatively to the move as it did last winter when Bush vetoed legislation extending the visas of Chinese students.

“It’s not as emotional an issue,” Wilson said. “Most people in the nation don’t even know what MFN is.”

Most-favored-nation trading status guarantees China the same treatment as this nation’s best trading partners, including the lowest possible tariffs. This benefit has provided preferential tariffs for about $12 billion in Chinese products shipped to the United States each year, mostly textiles and toys.

Bush is required under law to act one way or another by June 3. But sources said he would rather deal with the issue now than wait until the deadline, one day before the first anniversary of China’s bloody repression of pro-democracy demonstrators in Beijing’s Tian An Men Square.

Although Bush has recently voiced disappointment with China’s failure to ease restrictions on dissidents, he considers depriving China of most-favored-nation status a drastic step that could have widespread trade implications, Administration officials said.