Bentsen Cautions China on Rights : Diplomacy: Treasury secretary tells Beijing trade status hangs in balance. But he adds that its human rights record is improved.

Treasury Secretary Lloyd Bentsen told China’s senior leadership Wednesday that while Beijing has improved its human rights record, the progress is still insufficient.

But that message, suggesting that China cannot yet count on renewal of its favorable trade benefits, was countered early today by a Treasury official who said that some progress is being made in negotiations.

The official said the Administration is optimistic that agreement on the sensitive issue of prison labor can be reached before Bentsen leaves Beijing on Friday.

That issue is once again coming to a head in the cyclical relationship between China and the United States, particularly in the area of human rights, because President Clinton must decide by July 3 whether to continue preferential trade treatment.

Under an executive order he issued last May 28, Clinton said the renewal will not be granted in 1994 unless China complies with a 2-year-old agreement with the United States limiting the export of products made by prisoners and allows freer emigration, particularly of dissidents and their families.

Under the Clinton order, China must also make “overall significant progress” on human rights and meet a number of conditions.

It must release political and religious prisoners, treat other prisoners humanely, permit international radio and television broadcasts to reach the country and protect “Tibet’s distinctive religious and cultural heritage” in the wake of Chinese repression there.

“What we’re looking for is concrete progress. Some of that has been made,” Bentsen said at a news conference after meeting with Chinese Premier Li Peng and with Finance Minister Liu Zhongli. “We expect and anticipate more.”

Bentsen appeared to go out of his way to give a nod to the progress China has made in reducing its infant mortality rate and educating its people. Some within the Administration have argued that these developments should also be considered in the trade decision.

At the heart of current talks, officials said, is an effort to gain access to prisons suspected of being work camps where a variety of export goods, including diesel engines, socks, sheepskin and leather, are manufactured or processed. U.S. Customs Commissioner George J. Weise told Congress in September that only one of five requests to inspect such sites had been granted, in violation of a U.S.-Chinese accord reached in 1992.

A Treasury official said the Administration is negotiating over how many sites can be visited, as well as over additional steps to ensure compliance with the 1992 agreement.

Importing the products of prison labor is a violation of U.S. law.

But other issues remain, and it was unclear whether resolution of the prison question would itself guarantee for China the preferential trade status.

The focus on human rights during Bentsen’s four-day visit to China masks key economic goals.

A senior Treasury official said Bentsen is pressing China to allow such U.S. financial service operators as banks and investment companies to conduct business freely, and he wants enforcement of rules against copyright violations. Bentsen is also urging China to move ahead with economic reform, with U.S. assistance.

The prominence of the human rights issue on a visit by the Clinton Administration’s chief economic spokesman reflects the melding of politics, diplomacy and economics that is occurring in the post-Cold War world. And the matter was given added weight because it was presented not by a State Department official but by a senior Cabinet member whose brief does not normally encompass such issues.

Some have argued that human rights and economic matters, particularly trade issues, should be kept apart--or that economic growth will lead to improved living standards and a more relaxed political atmosphere that will bring limits on repression.

The Administration, with some dissent from senior officials, has persisted in linking the two.

China has been host in recent weeks to a series of U.S. political figures, whose approaches to the human rights issue reflect the divisions of opinion over it back home.

Sen. J. Bennett Johnston (D-La.) said on a visit here two weeks ago that it would be “unthinkable” for the United States to remove China from the list of countries given “most favored nation” status, which makes their U.S.-bound exports taxable at the lowest levels.

House Majority Leader Richard A. Gephardt (D-Mo.) arrived shortly afterward, representing those closely linking adherence to universal human rights standards with renewal of the preferred trade status. And in recent days, former President George Bush, who repeatedly resisted congressional attempts to force him to take a harder line toward Beijing, was also here, renewing his longstanding friendship with China’s officialdom.

The flurry of interest in human rights problems here demonstrates the cycle of political attention paid to the subject and to the flow of U.S.-Chinese relations, as well as a realization within the Administration that it ignored China during the first half of 1993 and that it needs to develop its policy options.

The relationship soured last summer shortly after the conditional one-year trade status extension was granted, but it has been improving in recent weeks--a textile dispute was just settled--and is being capped with the first visit by a Cabinet member of Bentsen’s status during the Clinton Administration.

Bentsen said in his news conference that he emphasized to the Chinese leadership that U.S. concerns over human rights reflect the thinking of the American people, the President and the Congress.

A senior Treasury official said later that the secretary reminded his hosts that he served 22 years in Congress--he was a senator from Texas and chairman of the Senate Finance Committee when Clinton picked him for the Treasury post--and consulted with members of Congress before making the trip.

The message was this: China should not hold out hope that the Administration is isolated on this issue, or that it lacks the will to resist Johnston and other influential members of Congress who seek increased trade with China and who cite examples of progress in arguing for a more relaxed approach.

Among the examples was one cited by Bentsen: the release from prison of two Tibetans, including a tour guide who had frequent contact with Westerners who criticized Beijing.

Premier Li was said by the Treasury aide to have replied that he understands the role of Congress but that it is the executive branch that will make the decision--suggesting that the secretary’s message had not immediately taken hold or was being ignored.

In its account of Bentsen’s meeting with Li, the official New China News Agency hinted that Beijing may be ready to make concessions, saying that Li said the two nations should take “practical steps” to put the relationship on a more normal footing.

Similarly, the Chinese account said, Li called for emphasizing the points of agreement while putting aside “differences in ideologies and concepts of values,” code words for human rights.

Li also dangled in front of Bentsen the prospect of opening to U.S. exports the vast Chinese nation, with 1.2 billion people--”a huge potential market (that) takes interest in American technology and equipment,” the news agency said.

Times staff writer Rone Tempest contributed to this report.