SHOWDOWN ON TRADE : The U.S. vs. China

The U.S. and China are on the brink of a potentially bruising collision over trade. But the issue’s contentiousness also reflects deeper frictions between Washington and Beijing. Just what are the flash points and who are the key players?

From Washington’s View

China’s huge population offers a giant potential market for U.S. products including grain, machinery, chemicals and high technology. But trade policy cannot be separated from other issues in U.S.-China relations. Some matters souring U.S.-China relations:

* Beijing’s recent sentences for protesters in 1989 Tian An Men Square pro-democracy uprising

* China’s continued crackdown on Tibet, whose Nobel Peace Prize-winning religious leader, the Dalai Lama, enjoys wide international influence

* Allegations that China exports to U.S., in violation of American law, goods manufactured by prisoners.

* Suspicion that China may be covertly supplying arms and nuclear aid to nations such as Algeria, Iran and Pakistan.

Hot Spots to Watch

* ARMS ANGER: U.S. this week expressed displeasure with China arms sales, blocking export of American-manufactured satellite parts.

* PATENT DISPUTE: U.S. last week notified China that it has begun procedures that could lead to sanctions against Beijing for refusing to respect U.S. copyrights and patents; Chinese insist they are working to remedy such problems. Move was first Administration use of authority under 3-year-old trade law.

* TRADE STATUS: White House must decide by June 3 whether to renew China’s most-favored-nation status, a legal designation that lets Beijing benefit from trade concessions granted to other countries. Congress then has three months to block renewal. Status has been cornerstone of trade relations between two countries for a decade.

Beijing’s View

Trade with the U.S. is important to China. With its lower-cost labor, China can provide a range of goods, especially garments, shoes and toys. In return, China gets badly needed hard currency, and, in some cases, sorely needed access to modern equipment and technologies. Some issues clouding the picture:

* China demands that U.S. and other nations respect its sovereignty, its right to govern its people without outside interference in internal matters.

* China considers its Tian An Men Square sentences as necessary, fair, just, perhaps even mild.

* It sees Tibet as part of its territory and not an occupied nation, as others contend.

* China has denied that exports are made with prison labor.

* Beijing disputes the U.S. calculation of trade imbalance, arguing that Chinese goods shipped via Hong Kong should be counted as U.S. imports from British colony rather than from China.

* Beijing says it reduced trade with U.S., in part, because of recession in China. It also faults U.S. for lessened trade, noting that Americans, in wake of Tian An Men Square, imposed economic sanctions and tightened high-tech exports.

Key Players

Chinese Premier Li Peng: “We expect the United States to maintain the present . . . position, thus enabling Sino-U.S. relations to develop healthily,” he said recently, warning of dire consequences if there are changes in U.S.-China trade relations.

President Bush: A former special envoy to Beijing who many see as having gone out on limb before to preserve U.S.-China relations, he renewed China’s most-favored-nation status in 1989 and 1990, receiving much congressional criticism.

THE U.S. TRADE DEFICIT WITH CHINA

(in billions U.S. dollars)

1983: -.071

1984: -.061

1985: -.006

1986: -1.665

1987: -2.796

1988: -3.490

1989: -6.235

1990: -10.417

Sources: U.S. Commerce Dept.