China’s Response to U.S.: Slow, Slow, Slow

In the four months since President Clinton’s trip to Beijing, China has vanished as a top-level foreign policy issue in Washington. On the surface, everything seems to be humming along nicely.

Appearances are deceiving. Look closely and you can already detect new disputes bubbling up between the United States and China. These are not at the moment matters of intense controversy, but they could easily become so when a new Congress convenes in Washington next year.

The Chinese love numerology. They often reduce policy issues to numbers and slogans. For example, the assurances Clinton gave in June about the future of Taiwan (that the United States would not support a two-China policy, Taiwan’s independence or Taiwan’s admission to organizations such as the United Nations) were dubbed the Three No’s.

And so, in the Chinese fashion, let’s call these new points of contention between Washington and Beijing the Three Slows--three areas where China is moving either slowly or not at all in bringing about policy changes that the Clinton administration would like.

1) TRADE: China has been extremely slow to open its markets to American products, even as it has been speeding up its own sales to the United States.

The latest trade figures, made public last week, show that the American trade deficit with China reached $6 billion in August--more than the deficit with Japan or any other country.

Why? Because American exports to China have been dropping. China is not buying as many Boeings or other American products as it did a couple of years ago. And Clinton administration officials have become increasingly irked at China’s efforts to protect its markets for items such as pharmaceuticals. Meanwhile, China has been selling ever more goods in this country.

“Worried about declines in China’s terms of trade with Asian countries, Beijing has focused all the more on exporting goods to the U.S. market,” a study by Robert G. Sutter for the Congressional Research Service concluded last month.

When Clinton took office in 1993, the American trade deficit with China was running at a level of $15 billion a year. Since then it has grown to more than $30 billion in 1995, nearly $50 billion last year and an estimated $60 billion this year.

If recent trends continue, the deficit with China could reach a stunning $70 billion in 1999--just on the eve of the next presidential election.

2) NORTH KOREA: At best, China has been slow to help the United States in dealing with North Korea.

In recent months, the North Koreans have fired a new kind of missile over Japan. There have been new signs that North Korea may be secretly continuing its nuclear program, despite the agreement it reached with the United States in 1994.

Yet whenever the United States asks Chinese officials to help restrain North Korea, they reply that they have little clout in Pyongyang. That line is beginning to wear thin in Washington--even in the Clinton administration, which is far more inclined than China’s congressional critics to sympathize with Beijing’s point of view.

China, after all, remains North Korea’s most powerful neighbor and is the only major government that has any significant ties with Pyongyang. The Chinese are also North Korea’s main outside source of food and energy. Sure, maybe the North Koreans don’t like China very much, but that doesn’t mean China has no influence.

Last week the administration sent Undersecretary of Defense Walter P. Slocombe to Beijing for what were officially described as consultations. One of Slocombe’s unannounced tasks was to urge China to work more closely with the United States on North Korea and to weigh in more heavily with Pyongyang.

3) ECONOMIC REFORM: China has been slowing down or putting off its plans for economic reforms.

Seeking to ward off the impact of the Asian financial crisis, China has been trying to keep to its target of 8% economic growth this year. Nicholas Lardy, a specialist on the Chinese economy at the Brookings Institution, points out that Beijing has sought to keep up growth mostly by increasing lending by state-owned banks to state enterprises.

This approach may help China’s economy in the short run but damage it in the long run. The loans are bad deals for both partners: They deepen the bad debt already held by China’s banks and prop up the very state-owned industries and factories that are the least successful parts of the nation’s economy.

Clinton administration officials have begun to voice unhappiness with the way China has been retreating from economic liberalization. One U.S. official suggested that Premier Zhu Rongji’s obsession with economic-growth targets is reminiscent of the way Chinese cadres used to demand that targets for output must be met in the old days of centralized state planning.

While Beijing has pursued the Three Slows, the Clinton administration has not exactly been moving with great alacrity on the China front, either.

U.S. Ambassador to Beijing James Sasser was supposed to be replaced after Clinton’s trip, but the White House has yet to name a successor. Among the candidates mentioned for the job are former Arkansas Sen. David Pryor and Adm. Joseph Prueher, commander-in-chief of American forces in the Pacific.

China is out of the news from Washington now. But the calm won’t last, particularly if the trade problems deepen. Wait till next year.

Jim Mann’s column appears in this space every Wednesday.