Bush Moves to Renew China’s Trade Benefits : Commerce: The action sets up an election-year battle with Congress on Beijing policy.

President Bush moved Tuesday to renew China’s trade benefits in the United States, once again rejecting suggestions that he make the one-year extension conditional on improvements in Chinese policies on human rights, arms sales and trade.

The Bush Administration formally sent Congress its decision to grant China most-favored-nation status for another year. A country with MFN benefits has the right to sell its goods in the United States under the same low tariff rates enjoyed by most other countries.

The action sets up a new election-year battle in Congress over the Administration’s policy of preserving a working relationship with the Chinese government, despite its bloody 1989 crackdown on pro-democracy demonstrations in Beijing and its arms-export policies and suppression of human rights since then.

As an indication of the Administration’s sensitivity on the China issue, the White House, which had gotten the State Department’s paperwork for the renewal more than a week ago, held up its announcement until the evening of a busy news day dominated by the California primaries.

While acknowledging that “this (the California primary) may have been a factor in someone’s mind,” one senior Administration official said the delay was prompted by other factors, such as unhappiness with some of China’s recent actions and the need to take care of a series of other nations’ trade benefits.

White House spokesman Marlin Fitzwater indicated Tuesday that the Administration is unhappy with China’s human rights record but does not think the United States should retaliate by restricting its trade privileges.

“Although we have seen positive, if limited, developments in our human rights dialogue, the President has made clear to the Chinese that their respect for internationally recognized human rights is insufficient,” Fitzwater said in a statement. Nevertheless, he went on, “. . . withdrawal of MFN would inflict severe costs on American business people, investors and consumers.”

Congress has the power to overrule the President’s decision and deny China the trade benefits if it chooses. In the past two years, it has failed several times to strip China of the benefits outright. But it has come extremely close to enacting new legislation that would attach a series of conditions that Beijing would have to meet to obtain further renewals.

Last March, after the President vetoed such a bill, the House voted overwhelmingly to override him. But the Senate vote in favor of an override was 60 to 38, six votes short of the two-thirds margin needed to enact the legislation over Bush’s opposition.

Democratic leaders in Congress indicated immediately that they plan a new effort in coming months to restrict China’s trade benefits.

“The President’s policy toward China has failed,” said Senate Majority Leader George J. Mitchell (D-Me.). “That is clear to nearly everyone except the President.”

Sen. Claiborne Pell (D-R.I.), chairman of the Senate Foreign Relations Committee, also said he disagrees with Bush’s decision.

The human rights group Asiawatch and some Democrats in Congress are now talking of a new approach toward restricting China’s trade benefits. If China failed to meet U.S. conditions, its MFN benefits would not be cut off entirely. Instead, tariff rates would be increased gradually on goods made by socialist state enterprises. Goods exported by private industries or entrepreneurs would keep their low-tariff privileges.

The White House statement issued by Fitzwater on Tuesday night defended Bush’s general approach to China.

“Our direct engagement with the Chinese is on the whole a successful policy,” Fitzwater said.

As an example, he cited China’s agreement to ratify the Nuclear Non-Proliferation Treaty and to abide by the guidelines of the Missile Technology Control Regime, which limits the export of dangerous missiles.

Over the last several months, Chinese authorities have taken several actions that analysts say might make it harder to win another renewal of China’s MFN benefits in Congress.

Saying that the timing was inconvenient, the Chinese government turned down a request by two prominent Democratic senators, Pell and Senate Intelligence Committee Chairman David L. Boren of Oklahoma, to visit China in April. And last month, China carried out the largest underground nuclear test that it has ever conducted, a blast more than six times larger than any American or Soviet nuclear test since the early 1970s.