China Issue: Early Test for Clinton : Linkage: The new President faces plenty of opposition to his promised restrictions on Beijing. Powerful forces are against any trade status change.

It was one of the regular staples of President Clinton’s campaign for the White House: attacking the Bush Administration for “coddling the dictators of Beijing.”

Along with that denunciation came Clinton’s oft-proclaimed endorsement of congressional efforts to make the annual extensions of China’s trade benefits in this country conditional on improvements in Beijing’s human rights, trade and arms-export policies.

When Bush vacated the White House last week, it deprived the Democrats of their principal target for complaints about America’s over-willingness to do business with an often repressive communist regime.

It is Clinton’s China policy now, and he will soon have to wrestle with some of the same difficult choices and powerful economic forces that so bedeviled Bush in his dealings with Beijing.

Already, some influential business interests and foreign governments are trying to head off a potential shift in U.S.-China policy under Clinton. U.S. corporations and industries that rely on import or export trade with China fear they will be hurt if Clinton and Congress link China’s trade benefits with human rights and other touchy diplomatic issues.

On the face of it, the political outlook for U.S.-China policy would seem to be obvious.

The arithmetic is simple: Over the last three years, measures to impose some conditions on China’s trade benefits in this country have repeatedly garnered more than 300 votes in the 435-member House and about 60 votes in the 100-member Senate. And some of the Republicans who voted against those bills did so only because of appeals to their loyalty and some healthy arm-twisting by Bush.

The measures failed only because of Bush’s vetoes. And with Bush gone, advocates of a tougher policy toward Beijing, such as Senate Majority Leader George Mitchell (D-Me.), now have the votes to restrict China’s trade benefits. “We’re not going away,” an aide to Mitchell said recently. “We can’t back away from where we’ve been (on China) for the past four years.”

Yet that’s not the whole story.

In 1990, after Mitchell endorsed the idea of restricting China’s most-favored-nation trade status unless Beijing eased its political repression, one Mitchell aide recalled that influential interest groups “came in like a ton of bricks” against it. And these same forces are already descending on the Clinton White House.

It was no accident that, at Clinton’s economic conference in Little Rock, the first participant to raise the question of China policy was an executive of Mattel, the El Segundo-based toy company and a major importer of goods manufactured in China. Importers such as Mattel fear that any change in China’s trade status could jeopardize their access to low-priced Chinese supplies.

“Duties on toy products would increase from 12% to 70% if (China’s) MFN status is not renewed,” Jill E. Barad, Mattel’s president and chief operating officer, told Clinton in Little Rock. “It wasn’t until we went to lower-cost sources that in fact we were able to dominate the worldwide toy market, which in fact we do today.”

Leading American exporters to China, such as the aircraft and wheat industries, are urging Clinton to ease the stance he took during his campaign. They fear that Beijing might retaliate by curbing purchases of American goods.

And the governments of Japan, other Asian countries and the British rulers of Hong Kong are making known to Clinton their jitters about the potential economic and political fallout from any major change in America’s China policy.

On the other side of the debate, human rights and arms-control advocates seeking a tougher China policy also have support from some powerful economic forces. Organized labor and some U.S. manufacturers, such as the textile industry, view low-cost Chinese imports as a threat to their companies and Americans’ jobs.

So what will Clinton do about China?

In his post-election statements, he has stuck largely to repeating broad campaign themes while seeming to avoid more specific commitments. “They seem to be trying to buy themselves a little space and time,” said one knowledgeable Democratic source.

Many China experts say that, despite some misinterpretations in the press, Clinton does not appear to have backed away from his campaign positions on China policy. In general, that would mean making renewal of China’s trade benefits conditional, at least in some way, on improvements in its policies--though Clinton hasn’t said exactly how or when he will do this.

For example, during one session on Capitol Hill last November, Clinton said that while the United States has a big stake in the development of trade with China, “we also have to insist, I believe, on progress in human rights and human decency.”

And when Mattel’s Barad made her plea in Little Rock for continuing China’s MFN status, Clinton responded: “I don’t favor the revocation of the state-owned industries’ MFN status, if we can achieve continued progress” on human rights and trade issues.

That answer suggested that the new President might back legislation along the lines proposed last year by Rep. Nancy Pelosi (D-San Francisco). Pelosi’s bill would have penalized China for its lack of progress on human rights by raising the penalties on goods produced by China’s state sector, while leaving alone goods made by private companies. Critics called this approach unworkable.

Richard Bush, a China specialist for the House Foreign Affairs Committee, wrote recently that Clinton’s comments on China since his election suggest “not a retreat from campaign rhetoric, but a policy that is directed more at human rights and confident of the possibility of success.”

Secretary of State Warren Christopher, at his confirmation hearings, also seemed to signal that the United States will press further for democratic reforms in China.

In remarks likely to irk Beijing’s aging Communist leaders, Christopher said that “our policy will seek to facilitate a peaceful evolution of China from communism to democracy.” As Christopher undoubtedly realized, the words peaceful evolution are code words in Beijing, used by hard-liners to describe a long-term American plot to subvert and overthrow communism.

Christopher’s remarks produced a quick and icy retort from Beijing: Foreign Ministry spokesman Wu Jianmin said the United States should not try to meddle in China’s internal affairs. “The business of the United States should be addressed by the American people, and the business of the Chinese people should be handled by the Chinese people,” he said.

Clinton’s appointment of former U.S. Ambassador to China Winston Lord to take charge of Asia policy at the State Department is yet another sign of the new Administration’s intentions. Lord was the one candidate for the post most strongly supportive of congressional efforts to link extending China’s MFN benefits to improvements in its human rights policies.

Over the last few months, some of the groups closely involved in China policy have deluged Clinton and the new Administration with position papers and requests for quick action.

“Clinton should make a public statement soon after his inauguration reiterating his commitment to human rights improvements,” the human rights organization Asiawatch told the Clinton transition team.

The group said Clinton should tell Chinese leaders in private exactly which “human rights conditions he would attach in June, 1993, when he extends MFN for another year.”

By contrast, the U.S. China Business Council, which says it represents nearly 200 American companies and more than 153,000 American workers, sent the Clinton transition team a memo arguing: “We believe it is unwise to use MFN status as the ‘stick’ in U.S.-China relations.”

Even if he plays for time in his early weeks in office, Clinton will have to decide on his China policy fairly soon. By late spring he must recommend to Congress what restrictions he wants to place on the annual renewal of China’s trade status, which expires in July.

If the President were to recommend unconditional renewal of China’s MFN benefits, it would mark a dramatic reversal from his promises during the presidential campaign. And if the Democratic Congress were to go along with him, it would mark a complete turnabout from its voting as an opposition party during the Bush Administration.

On the other hand, should Clinton recommend making the extension of China’s trade benefits conditional on some progress in human rights, some U.S. officials fear a major new confrontation between Washington and Beijing, which has fought hard to avoid any such linkage.

“The Chinese hard-liners would likely respond as negatively to conditions as they would to revocation,” Sen. Max Baucus (D-Mont.) said earlier this month. It is not clear, however, whether China would oppose loosely worded or vague conditions that would enable Clinton and Congress to meet their commitments, but would also make it relatively easy for China to keep its trade benefits.

Clinton’s transition team is said to have been exploring another option: The President could impose his own conditions on renewal of China’s trade benefits, rather than having Congress write them into law. “It makes sense that the White House would want to maintain control over this,” said one congressional Democrat.

Whatever Clinton does, one thing is clear: The pre-Tian An Men Square days of a bipartisan China policy are not likely to return any time soon.

Shortly before Bush left office last week, one of his aides confided that the outgoing President was looking forward to the day when, as a private citizen, he can attack Clinton as failing to make sufficient headway on human rights in China: “We’ll say, ‘You call that progress? We did more in a week than you did in a year.’ ”