China Emerges as Clinton's Knottiest Foreign Problem

By JIM MANN

Sept. 8, 1996 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

A few days after Bill Clinton was elected president in 1992, a team of top CIA officials set up shop in Little Rock’s Comfort Inn, a 10-minute drive from the governor’s mansion in Arkansas. The mission: to prepare the president-elect for the main foreign policy problems he was about to inherit.

As Clinton sipped Diet Coke, struggled with his neckties and prepared for news conferences, he and his CIA briefers ran through the top items of what is perhaps the world’s most secret newsletter, the President’s Daily Brief.

Their main preoccupation was Russia, according to a recent memoir by one of the CIA briefers. Next were Somalia and the former Yugoslav federation, followed by Iraq, world trade talks, Haiti, Israel and Lebanon.

Nowhere in the top ranks was the world’s most populous country (1.2 billion people), whose standing armed forces (nearly 3 million strong) are the world’s largest and whose annual economic growth rate in the past five years (approaching or exceeding 10%) is the envy of the world’s rich countries.

That nation is China, and its absence provided a fitting introduction to what has become the Clinton administration’s most intractable foreign policy problem: its inability to cope with China’s gradual emergence as the world’s newest superpower. In June, China surged past Japan to become the country that has the largest trade surplus with the United States, underscoring the fact that for trade, as for many other areas of foreign policy, China has become No. 1.

The administration took office talking tough about fomenting peaceful revolution in China. But once it was in power, its policies were marked by flip-flops and embarrassing retreats in response to pressure from several sources--the American business community, the U.S. Congress, Taiwan and China itself.

As one major consequence, China has learned that it has considerable power to defy or resist U.S. policy. On issues such as human rights and trade, China is no longer as conciliatory in dealing with the United States as it was four years ago.

At one time, China was willing to release dissidents or offer outside access to its prisons when it was afraid of U.S. retaliation. But no more. Dissidents such as Wei Jingsheng, China’s leading advocate of democracy, have been thrown back into jail, yet they are rarely mentioned by the Clinton administration.

Another result of the administration’s inconsistency has been Taiwan’s reappearance as a flash point, one that could set off a shooting war.

From the administration’s point of view, the fault lies mainly with the Chinese leadership, which U.S. officials portray as touchy, nationalistic and insecure as officials jockey for power and position in anticipation of the death of ailing 92-year-old paramount leader Deng Xiaoping.

In private, top-level U.S. officials repeat a line one of them devised for dealing with China: “You can’t look like Fred Astaire when you’re dancing with an elephant.” In public, Defense Secretary William J. Perry has offered a more polite version of the same line: “It takes two to tango.”

“I would not claim--no one would claim--that our policy on China the last 3 1/2 years has been absolutely perfect and absolutely steady,” Assistant Secretary of State Winston Lord, the administration’s point man for Asia policy, said in an interview. “I would claim that even if it were, we’d still be having great difficulty with China.

“There are some in this country who seem to have a belief that if we have problems with China, then it’s all our fault. I have dealt with the Chinese for 25 years, and this is the most difficult regime we’ve ever had to deal with.”

In 1992, candidate Clinton expressed a more simplistic view of the world’s most populous country.

In his speech accepting the Democratic presidential nomination, Clinton seemed to equate China with Iraq. He accused the George Bush administration of coddling dictators “from Beijing to Baghdad,” a phrase that failed to recognize China’s vastly greater economic importance to the United States.

In January 1993, Warren Christopher, then Clinton’s nominee for secretary of state, suggested to the Senate Foreign Relations Committee that the administration might try to overthrow or undermine the Chinese government.

“Our policy will be to seek to facilitate a broad, peaceful revolution in China, from communism to democracy, by encouraging the forces of economic and political liberalization in that great and highly important country,” Christopher said.

No one in the administration talks that way anymore. National Security Advisor Anthony Lake said in a recent interview that the administration did not want U.S. dealings with China’s leaders to become “so confrontational that in effect they cannot afford to make a compromise.”

How could the administration have switched course so sharply? How could it have underestimated China’s importance?

One reason, according to present and former administration officials, was that when Clinton took office his top aides were too distracted by other events to pay much attention to China.

“The prominence of those regional crises [Bosnia-Herzegovina, Somalia and Haiti] would crowd other matters, even sometimes Russia and China, off the agenda,” said former CIA Director R. James Woolsey.

As recently as the summer of 1995, officials privately complained that a top-level discussion about China policy was delayed for two weeks because senior officials were preoccupied with Bosnia.

Equally important, Clinton’s main early goal was not so much to make new policy toward China as to make peace with Congress. “In all of the [internal administration] debates, it wasn’t ‘What can we do with China?’ but ‘What can we do with Congress?’ ” said another former administration official.

Clinton’s initial China policy had two elements. On human rights, he would require China to make tangible progress if it wanted to preserve its most-favored-nation trade benefits with the United States. On Taiwan, which mainland China considers its territory, he would preserve the status quo, avoiding any action that might unsettle the uneasy peace across the Taiwan Strait.

Within three years, Clinton reversed course in both areas. In 1994, he dropped efforts to link trade and human rights. And in 1995, his administration’s unsteady handling of Taiwanese President Lee Teng-hui’s visit to this country helped touch off the first military crisis in the Taiwan Strait in more than 30 years.

On the economic side, both the administration and the U.S. intelligence community were slow to grasp the changes in China.

For several years after the bloody crackdown against Tiananmen Square pro-democracy protesters in 1989, China was mired in one of its cyclical periods of slow growth. But in 1992 and 1993, just as Clinton was taking office, the Chinese economy took off once again, with annual growth rates topping 14% and 13% respectively. Moreover, for the first time, China was keeping inflation in check without shutting down the high economic growth.

The new Chinese boom registered on the U.S. business community much more quickly than on the U.S. government. A senior official at the U.S. Embassy in Beijing said that at the beginning of 1993, he noticed a surge in the number of U.S. corporate executives flocking to Beijing to scout for business.

The result: China came to have far more economic leverage with the Clinton administration than it had over previous U.S. presidents.

U.S. intelligence officials acknowledge that China’s economy is performing extremely well, particularly in its efforts to develop higher-technology exports. One intelligence analyst, who asked not to be identified, said China could easily meet its targets of 8-10% economic growth a year with single-digit inflation through this decade.

But skeptics point out that the Chinese economy is starting from an extremely low base. Nicholas Lardy, a Brookings Institution specialist, said China’s economy could grow twice as fast as that of the United States for 150 years before its per-capita income caught up.

“What we are seeing in China may be a dazzling and misleading incandescence, which will burn itself out,” Paul Monk, an Australian specialist on China, wrote last year. “China, unlike America and Russia before it, is starting not with huge resource abundance and wilderness areas to settle and develop, but with very, very grave problems of overload, strain and near exhaustion.”

China may also have difficulty finding enough oil and other energy to fuel its growth--a factor that could produce international competition for resources.

Although China once produced enough oil not only for its own factories but for export, it became a net importer of oil in late 1993. Within two decades, by some industry estimates, China will need to import 7 million barrels of oil a day, nearly the same amount as the United States currently imports.

That, according to some analysts, helps explain China’s expansive territorial claims in the South China Sea.

“Whatever energy reserves lie beneath the South China Sea, the strategic importance of the area and the value of any oil and gas adjacent to the booming southeastern coast are undeniable,” Princeton University professor Kent E. Calder wrote last March in Foreign Affairs magazine.

In military terms, China is far from achieving the status of a global superpower, although its growth as a regional military power has been striking.

Over the past few years, China has been seeking to update its People’s Liberation Army with more advanced fighter planes and warships. It has bought important elements, including 72 Sukhoi Su-27 warplanes and Kilo-class combat ships from Russia, and U.S. specialists said that Russian President Boris N. Yeltsin’s visit to China in April opened the way for further military sales.

“China’s recent embrace of Russia confirms Russia’s role as the Toys ‘R’ Us for Chinese military supply,” observed former Defense Department official Chas W. Freeman Jr.

U.S. intelligence specialists said they were impressed with the Chinese army’s performance during military exercises in March in Fujian province opposite Taiwan.

“They’ve come a long way in two years,” said a U.S. intelligence official who keeps track of the army. “They operated at a pretty high, sustained rate for a long time. The weapons pretty much worked as advertised, as far as we can tell.”

Nevertheless, Clinton administration officials regularly caution that the U.S. does not and should not view China as a military threat. “If you treat China as an enemy, China will become an enemy,” then-Assistant Defense Secretary Joseph S. Nye Jr. said last year.

Outside experts say China’s armed forces still lack the ability to mount large-scale, modern operations outside China’s borders.

The army “is 15 years away from being able to sustain military operations at any distance from its shores,” said Ronald N. Montaperto, a former Defense Department specialist on China.

While China’s military power is not seen as much of a threat in Washington, it is enough to give the rest of Asia the jitters. University of Arizona professor Allen S. Whiting, who has visited Southeast Asian countries over the past year, wrote of “rising concern” about the possible use of force by China.

“The bulk of opinion saw a growing Chinese challenge to stability in East Asia, unless Beijing’s claims in the East China and South China seas were somehow resolved by Japan and the relevant Southeast Asian states,” Whiting said.

Since its earliest days in office, the administration has been forced to adjust its China policy to take into account Beijing’s increasing power in Asia.

The first shift came within months of Clinton’s arrival in the White House with a policy aimed at easing political repression in China. In March 1993, North Korea publicly threatened to withdraw from the Nuclear Non-Proliferation Treaty and to move full speed ahead with its nuclear weapons program.

In the ensuing crisis, senior Pentagon officials were in quiet revolt against the new administration’s China policy. They argued that China had the power to help--or hurt--U.S. efforts to stop the North Korean nuclear program and that the U.S. had to begin talking to top Chinese leaders about it.

“The initial reaction from the National Security Council and Lake was: ‘We can’t talk to the Chinese about Korea. They’re human rights violators, and we can’t be seen with them,’ ” recalled one former administration official.

Lake denied that in a recent interview, saying that even in early 1993 there was no rule against talking to Chinese officials about North Korea. The record shows, however, that there were no such talks at high levels.

Stanley Roth, a Defense Department official in the administration’s first year who is now working at the U.S. Institute of Peace, said his Pentagon colleagues “felt that we somehow had to get a dialogue started again [with China] after Tiananmen.”

“We were in suspended animation. The post-Tiananmen period wasn’t getting us anything by not talking to these people. And we needed a better overall policy toward China.”

After a series of internal policy debates sparked by the Pentagon, the administration in September 1993 launched a new policy of “engagement” toward China and then dispatched a series of high-level officials to Beijing.

For the following year, obtaining China’s help on North Korea became an increasingly important goal of Clinton’s policy toward Beijing.

In May 1994, Clinton announced that he would reverse the policy that had been at the core of his initial approach and extend China’s most-favored-nation trade privileges without requiring improvements in human rights.

Within a few weeks, North Korea took the first steps toward reining in its nuclear program. No one knows for sure how much pressure China put on North Korea, but administration officials said afterward that actions by Beijing had been an important factor.

Over the past two years, however, the administration has learned that China can use its gathering strength not just to help U.S. policy but to thwart it.

After Taiwanese President Lee made his unprecedented visit to the United States last year, China countered by firing a series of its advanced, newly developed missiles into the waters near Taiwan.

At first, in the fall of 1995, the administration did nothing to counteract the Chinese actions. But in March, on the eve of Taiwan’s elections, China began a new round of missile tests, this time targeting waters much closer to Taiwan.

The U.S. dispatched two aircraft carriers--the Nimitz and the Independence--complete with their battle groups, scores of warplanes, nuclear submarines and Tomahawk missiles. It was the largest show of U.S. military force in the area since the end of the Vietnam War.

Christopher denounced China’s missile firings as “reckless” and “irresponsible.” Lake warned that any Chinese attack on Taiwan would have “grave consequences.”

For Clinton and his foreign policy team, China had finally made it to the top of the problem list.

NEXT: Taiwan.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Booming Along

Annual economic growth in China, compared with U.S. growth rate:

*--*

China U.S. 1988 11.3% 3.8% 1989 4.1 3.4 1990 3.8 1.3 1991 9.3 -1.0 1992 14.2 2.7 1993 13.5 2.2 1994 11.8 3.5 1995 10.2* --

*--*

THE GAP GROWS

China’s mounting surplus in trade with the United States (in billions):

1988: $3.5

1989: 6.2