U.S. Won’t Balk at More Japan Aid for China

The Bush Administration signaled Saturday that it will not object if Japan resumes billions of dollars worth of lending to China, even though Washington technically still favors continuing the economic sanctions that the allies imposed on Beijing in 1989.

The modified U.S. position, disclosed by President Bush in a meeting with Japanese Prime Minister Toshiki Kaifu, was designed to give Japan the green light that it has been seeking to resume some lending to China while still keeping the allied sanctions intact.

Tokyo initially had hoped to persuade leaders at the annual seven-nation economic summit beginning here Monday to relax the allied restrictions, which were put into force at last year’s summit parley after Beijing’s crackdown on dissidents at Tian An Men Square in June, 1989.

But U.S. officials said the White House was fearful of angering Congress, which still has not approved the Administration’s proposal to renew most-favored-nation trade benefits that the United States has been granting Beijing since 1980.

Bush’s seeming willingness to look the other way while Japan resumes lending to China appeared to pave the way for the summit to give its collective blessing to such a compromise during deliberations Monday and Tuesday.

Strapped by the drying up of foreign capital, Beijing has been pressing Japan and other rich industrialized countries to resume their earlier lending so it can spur its economy out of a slump. Tokyo is especially sensitive to such pressure because it is seeking to maintain good political relations with its Chinese neighbor.

Some officials have suggested that the allies may use a similar formula to work around their differences over aid to the Soviet Union, which West Germany and France want to step up, but which Washington opposes. Under a China-like compromise, the leaders could approve a “common framework” that would allow individual countries broad leeway to do as they wish on the issue.

Treasury Secretary Nicholas F. Brady hinted Saturday at such an approach. “We understand nations have different interests, different points of view,” Brady told reporters in a discussion of the Soviet and China aid issues. “There isn’t necessarily one overarching principle that governs how different nations should conduct themselves.”

Besides Bush and Kaifu, the summit participants include West German Chancellor Helmut Kohl, British Prime Minister Margaret Thatcher, French President Francois Mitterrand, Italian Prime Minister Giulio Andreotti and Canadian Prime Minister Brian Mulroney.

Jacques Delors, president of the Europe Commission, the European Community’s executive branch, also is attending the parley.

The softened attitude signaled Saturday on the part of the United States appeared to be partly a response to Japan’s recent concessions in broad U.S.-Japanese economic talks that the two sides recently completed in Tokyo. Bush praised Kaifu profusely Saturday for his “outstanding leadership” in that effort.

At the same time, however, the President reiterated in no uncertain terms the Administration’s opposition to providing massive Western aid to the Soviet Union, as proposed by France and West Germany, repeating earlier assertions that the money would only be wasted unless Moscow first makes needed economic reforms.

It was not immediately clear what impact Bush’s stand Saturday would have on Congress’ consideration of the proposal to continue previous U.S. trade preferences for China. Many lawmakers already are angry over Bush’s reluctance to take a harder line toward Beijing.

Critics have assailed the Administration for maintaining a “double standard” for economic aid to China and the Soviet Union, taking a hard line on loans and trade benefits for Moscow while continuing them relatively freely for Beijing.

Bush told reporters during a brief break in the proceedings Saturday that Washington still believes that the allies should maintain the multilateral sanctions that they imposed on Beijing last year, which include a partial freeze on World Bank lending.

But he said Japan is a sovereign nation that “can make up its own mind on a lot of questions,” including the one of whether to resume bilateral aid to Beijing. “They work very cooperatively with the U.S.,” he said of the Japanese, “but sometimes they have interests (of their own) that prevail.”

White House Press Secretary Marlin Fitzwater told reporters that while Bush and other U.S. officials “do have concerns about multilateral lending to China . . . there are other kinds of activities, other kinds of lending that might be undertaken by individual countries, and we’re willing to hear what their arguments are.”

Meanwhile, Japan left no doubt that it plans to resume lending to China almost as soon as it can find an excuse.

Taizo Watanabe, Kaifu’s spokesman, told journalists Saturday that Tokyo already had been encouraged by Beijing’s recent lifting of martial law in Beijing and Lhasa, Tibet, and allowing Fang Lizhi to leave China for exile in Britain.

“When there is further improvement, we could be inclined to proceed” with resumption of a multimillion-dollar regional development loan to China, Watanabe said.

Watanabe also reaffirmed that Japan shares the U.S. view that the allies should not begin massive international lending programs for the Soviet Union, at least until Moscow makes needed economic reforms, such as providing for private property and private ownership of corporations.

Tokyo is particularly incensed because Moscow still has not shown any willingness to open talks on returning four islands in the southern Kuriles off Japan’s northernmost main island of Hokkaido that were seized by the Soviets in 1945 at the end of World War II. The Northern Territories, as they are called by Japanese, have been occupied by the Soviets since then, but Tokyo regards them as Japanese territory.

On the China issue, Tokyo already has begun moving toward a break from the allied position. Earlier this month, Mitsubishi Trust & Banking Corp. announced that it had signed a contract to lend China’s state-owned airline $126 million to buy a new Boeing 747-400 aircraft--a move that analysts said showed that Japan’s Finance Ministry already had lifted its ban on China loans by Japanese banks.

The World Bank, bowing to allied demands, has limited its lending to China to so-called “human needs” loans for earthquake relief and the like. However, apparently with U.S. blessing, the kinds of loans counted in this category have expanded steadily over the months. In May, the bank approved a $150-million loan to China to improve farm output.