China Puts on Its Diplomacy Face

There’s no denying it. Beijing has scored a diplomatic coup on the eve of President Clinton’s first trip to China. By publicly and successfully leaning on Washington to put a floor under the value of the yen before that sinking currency sucked everyone down, Beijing is setting the tone in Asia--and for the Sino-U.S. summit. China will lead.

Beijing is showing a defter touch these days. In recent weeks, it had put out messages about abandoning its superficially saintly “we won’t devalue our currency” line, a move that could undermine recovery in other Asian countries. But my guess is that Chinese Premier Zhu Rongji was bluffing; lowering the value of the yuan would have torpedoed China’s comparative diplomatic advantage over rival Japan, which in recent months has been made to look weak, selfish and indecisive.

In a comprehensive analysis, Stanford University Prof. Lawrence J. Lau found little economic uptick for China in a cheaper currency, but considerable benefits to reap diplomatically for refusing to devalue. Agrees analyst Kenneth S. Courtis of Deutsche Bank Group-Asia: “We will someday look back on this last week as a moment when China first started to play a key, top-of-the-table role in shaping the international financial and economic agenda.”

There’s no reason to be overly cynical about what China did in pushing Uncle Sam to the yen dance. It was probably the right move for Washington as well as for Beijing. And it’s a top-drawer move if the one-two step actually gets the Hashimoto government off the dime and into serious reform of Japanese banking and economic ways. Veteran Asia-watcher Charles E. Morrison, newly named president of the weather vane East-West Center in Hawaii, is hopeful: “The yen intervention is a major step. I think the degree of Asian economic retraction, in general, has bottomed out.”

Observers like Morrison, who is a former U.S. Senate staffer, have wondered if East Coast decision-makers ever really appreciated the full danger to the U.S. economy. He argues that the U.S. policy overemphasis on the International Monetary Fund, a necessary but imperfect and incomplete instrument, runs the risk of alienating Asia for years to come: “Many Asians, neglecting the very great dangers to the United States and its economic interests in the Asian meltdown, believe the Americans secretly welcomed the crisis to cut upstart Asian economies down to size. America’s benign neglect increasingly was being perceived as malign. If the crisis does get worse, people in Asia will remember what America didn’t do.”

By contrast, China had repeatedly stated that its tough, disciplined currency policy was conceived out of concern for its effect on other Asian economies. Let’s hope the Chinese gamble, the U.S. yen intervention and the putative Japanese reform work out. For if the Asian flu spreads past Hawaii and the West Coast to the American heartland, the finger-pointing will travel in the other direction as well: Americans will start blaming Asia, especially Japan, for any troubles. “From the Asian political-security point of view alone,” worries Morrison, “this crisis is the worst thing to come down the pike in 50 years.”

There is much to discuss at the Sino-U.S. summit this week, but Beijing would surely be content to celebrate its little diplomatic coup with a grand, feel-good media extravaganza: Let’s bury our differences over human rights, let’s forget about Tiananmen, let’s aim for a more businesslike relationship. Make no mistake: China deserves credit for using its brain and carving out a big diplomatic role for itself, but America needs to use its brain too and not get too far ahead of the reality of where China is today. Despite markedly improved leadership at the top, it’s still a developing country with mammoth problems and an unpredictable future.

In his just released study “Between Friendship and Rivalry,” former Reagan foreign policy advisor Peter W. Rodman, now with the Washington-based Nixon Center, correctly warns that China’s true military-strategic personality is not yet fully formed. It makes no sense to try to isolate China, he agrees, or “to prejudge now whether Chinese ambitions are incorrigibly hegemonic--for Chinese themselves probably do not know the answer yet or are divided on the question.” But he advises strongly against downplaying China’s growing military capabilities simply because the Beijing party line is to coo captivatingly at the capitalists. That could change overnight. Because China’s capabilities will get more scary, not less, “the U.S. must maintain its military primacy in the Asia/Pacific region, and its alliances and commitments,” Rodman writes.

Even if the event proves a triumph, tough issues will remain: the rocky U.S.-Japan relationship, unsettling nuclear proliferation on the Indian subcontinent and frightening political deterioration in strategically pivotal Indonesia. This summit won’t even solve many of the problems in the Sino-U.S. relationship. So while I’d urge Americans to cut out the carping and support President Clinton while he’s over there, do beware of the coming hype. Or, as the media-hype master Ronald Reagan himself used to say: Trust, but verify. On that, the Gipper had it exactly right.