Trade Accord Eludes Clinton, China’s Zhu

In a sharp disappointment to both governments, President Clinton and visiting Chinese Premier Zhu Rongji failed to reach an agreement Thursday that would pave the way for China’s long-awaited entry into the World Trade Organization, but they pledged to conclude a comprehensive trade package by the end of this year.

At a news conference after a morning of talks at the White House, Zhu also said that Beijing will cooperate with U.S. investigations into alleged Chinese espionage of nuclear weapon secrets from American laboratories during the 1980s and 1990s, and into allegations that China’s chief of military intelligence secretly funneled money to subsidize contributions to help Clinton’s 1996 reelection campaign.

“I agree to cooperate with your side in [the] investigations,” Zhu said, turning to Clinton at a joint news conference. “So long as you can provide some clues, and, no matter who it may involve, we will investigate.”

Zhu said that neither he nor Chinese President Jiang Zemin had any personal knowledge of the alleged spying or illicit campaign contributions. “I don’t believe such stories,” he said.

With no major news to announce, Clinton and Zhu bantered good-naturedly through their translators during the news conference in an auditorium across from the White House. Zhu, whose jet-black hair and impish smile belie his 70 years, largely dominated the session, sometimes speaking as statesman and sometimes seeming to perform as stand-up comic.

Peppering his comments with English phrases, he pleaded for leniency from the White House press, saying, “Maybe God did not welcome me” in Los Angeles because it rained during his visit earlier this week. He also noted that American microphone technology is “not that advanced,” given the squeaks and squeals in the room. He ended nearly every answer with a self-deprecating joke.

Zhu confessed, for example, that he was “really reluctant” to visit the United States because of anti-Chinese headlines here about espionage, security, human rights and other issues. He said that several visiting congressmen urged him to come because he is a “new face.”

“I told them I really lack the guts to go,” adding in English that he feared he would become a “bloody face.”

Clinton finally closed the nearly 90-minute session by looking at his watch and rolling his eyes, provoking laughter.

The two leaders’ inability to reach agreement on China’s 13-year bid to join the global trade regime, despite nearly nonstop negotiations in recent days, is a setback to both governments. Officials on both sides had hoped that a broad-based trade package to open Chinese markets would provide political as well as economic benefits at a time of increasingly rocky relations.

Aides said that Clinton and Zhu instructed their chief trade negotiators to complete a deal as soon as possible with the goal of getting China, which does $300 billion in trade annually, into the WTO by the end of the year. The Geneva-based organization sets and arbitrates global trading rules.

A Clinton administration official said that the frenzied talks had produced “98% of a market-access package, which we are locking in.” He said that the chief remaining differences are over U.S. demands for greater access to Chinese markets for banking, securities and audiovisual materials.

The two men announced several interim trade agreements to help open China’s vast markets to U.S. goods and services. Among them is a pledge that China’s government will use only licensed computer software. Piracy of computer software is rampant in China, with some experts estimating that 98% of all software used is either copied or bootlegged.

When asked if he would visit Taiwan, which China considers a breakaway province, Zhu said that he has not been invited. Clinton urged him to go, however. “I think if the premier is as humorous and clever in Taiwan as he is here, I think it would be a good thing for him to go.”

As he has in the past, Zhu acknowledged that “there is room for improvement” in human rights in China and said that he is eager for reform.

“One should not be too impatient,” Zhu said. “But to tell you the truth, I am more impatient than you are in how to further constantly improve the human rights in China.”

Zhu blamed China’s long feudal history, widespread illiteracy and poverty as much as government policy, however, and did not explain a recent government crackdown that has led to arrests and harsh prison terms for political activists who sought to create a legal opposition to the ruling Communist Party.

The question of China’s role in the 1996 U.S. presidential campaign arose after disclosure last Sunday in The Times that former Democratic contributor Johnny Chung has told federal investigators that the chief of Chinese military intelligence ordered $300,000 deposited in Chung’s Hong Kong bank account so that he could pass money secretly to support Clinton’s reelection. Contributions from foreign governments are illegal.

Chung, a Torrance businessman, has pleaded guilty to campaign finance and other violations and is cooperating with the Justice Department’s task force on campaign financing.

Clinton said that he raised the matter when the two men met informally at the White House on Wednesday night, shortly after Zhu arrived. He called it “important that we continue the investigation and do our best to find out what happened, and I asked for his cooperation.”

Rep. Dan Burton (R-Ind.), chairman of the House Government Reform and Oversight Committee, said that he would immediately take Zhu up on his offer of cooperation. Burton’s committee, which is investigating allegations of campaign irregularities, has been stymied in efforts to obtain interviews and bank records in China.

*

Times staff writer Alan C. Miller contributed to this story.

*

* CLINTON THE BELIEVER: When it comes to China, President Clinton is a believer. A22

* GLOOMY OUTLOOK: China’s prospects dim for joining the WTO this year. C1