Remark May Stall U.S., China Fence-Mending

Earlier this month, the Clinton administration quietly settled upon a strategy for smoothing over frictions with China caused by the NATO air war against Yugoslavia and the U.S. bombing of the Chinese Embassy in Belgrade.

According to senior officials, the strategy went like this: Don’t hope for much until China’s top leaders conclude a series of meetings next month at the Chinese seaside retreat of Beidaihe. Then, move quickly to cut a deal that would pave the way for China’s entry into the World Trade Organization, or WTO.

“I don’t think there’s going to be any change in China’s policy before Beidaihe . . . and then we’ll see,” Trade Representative Charlene Barshefsky said in an interview last week, reflecting the common view voiced privately by several other administration officials.

But now, these calculations have been thrown into doubt. Last weekend, Taiwanese President Lee Teng-hui redefined the relationship between his government and the People’s Republic of China as “state-to-state” relations--irritating the Beijing leadership, which considers Taiwan a province of China.

Clinton administration officials worry that Chinese leaders blame the United States, Taiwan’s main arms supplier, for Lee’s initiative--and that, as a result, it will be harder for President Jiang Zemin to forge a consensus within the Chinese leadership for repairing relations with the U.S.

“This [Lee’s remarks] could conceivably throw Beijing off its timetable,” an administration official said this week. “Things were starting to pick up. . . . Absent the Taiwan factor, one could project, with better than a 50-50 chance, that they would be able to find a way at Beidaihe to move forward and move to a WTO agreement.”

The Clinton administration’s careful strategizing demonstrates how eager it is to restore a working accommodation with China, where a wave of anti-American demonstrations erupted in May after U.S. warplanes hit the Chinese Embassy while bombing Belgrade, the Yugoslav capital.

Yet the jitters over Taiwan also underscore the fragility and uncertainty of the administration’s China policy.

The Clinton administration’s approach to Beijing is based upon the belief that there are fairly strong disagreements within the Communist Party leadership over policy toward both the United States and domestic economic reforms.

Administration officials think that Jiang and Premier Zhu Rongji have run into opposition from a coalition of forces: state ministries and enterprises opposed to economic reform, tough-minded leaders of the People’s Liberation Army, and traditionalists within the Communist Party leadership, such as former Premier Li Peng, now the chairman of China’s legislature.

“Ties with the United States have become a foil for all sorts of internal tensions,” a senior administration official said. He theorized that Jiang and Zhu want to repair ties with the United States but that so far “they can’t figure out how to get their way out of this.”

After the embassy bombing, China broke off talks with the United States on a number of issues, including arms control and trade. In its first effort to mend fences, the Clinton administration sent Undersecretary of State Thomas R. Pickering to Beijing last month to offer a detailed account of what it called the mistakes that had led to the airstrike.

Pickering’s mission seemed at first to solve nothing. China said it regarded his explanation to be insufficient. U.S. officials answered that they had provided the truth and had nothing more to say.

In the weeks since then, U.S. officials said they thought the trip at least had helped clear the air. “The Pickering mission certainly stopped the precipitous slide that we were in,” Barshefsky said.

U.S. officials said they believe that China, without saying it is satisfied with the U.S. account of the Belgrade bombing, will move on to more concrete issues, such as payment for damages. An administration team wrapped up two days of talks in Beijing on Friday without reaching a settlement on compensation, and plans further talks later in the month.

Every August, Chinese leaders, including Politburo members, People’s Liberation Army leaders and elderly but influential Communist Party veterans, gather for informal meetings in Beidaihe, a seaside resort town about 170 miles east of Beijing.

Under the scenario originally envisioned by U.S. officials, Jiang and Zhu would forge a new consensus at Beidaihe to start dealing with the United States again.

“They need to give people time to vent,” said Robert L. Suettinger, a China scholar for the Brookings Institution in Washington who formerly worked for the CIA and the Clinton administration.

Part of the new consensus, the Americans have hoped, would be a willingness to move ahead in negotiations for China’s entry into the WTO. Membership in the organization would give China a voice in setting global trading rules and freer access to export markets, in exchange for phasing out tariffs and other restrictions on foreign companies’ ability to sell in China’s markets.

Administration officials acknowledge that working out a deal for WTO membership is one of the highest priorities for U.S. foreign policy during Clinton’s last 18 months in office.

U.S. officials say they won’t be put into the position of begging China to reopen the WTO talks. But they also believe that a deal could be worked out in only a week or two.

“Once they make the political decision, then I think an agreement can be reached very quickly,” Barshefsky said. Clinton is scheduled to meet Jiang in September at an Asian economic summit in New Zealand, and this summit meeting could provide the impetus for a trade agreement.

Late last month, some of the Chinese officials responsible for dealing with the United States--including Vice Foreign Minister Yang Jiechi, army Deputy Chief of Staff Xiong Guangkai and ministerial advisor Liu Huaqiu--suggested to two groups of visiting Americans that China will improve ties with Washington.

“They are trying at the top levels to prepare their people to work again with America,” Harvard University professor Ezra Vogel said after a series of meetings in Beijing. “There’s still an opportunity, if the United States is cooperative and wants to work with China.”

However, Lee’s recent remarks in Taiwan raised anxiety within the Clinton administration that the planned accommodation it seeks with Beijing may be stillborn.

Privately, some Clinton administration officials were furious with the Taiwanese leader for disturbing the status quo relations among Taiwan, China and the United States.

In their public remarks, administration officials emphasized their commitment to a “one-China” policy. “We hope the Chinese will see that the United States is not to blame for [Lee’s remarks],” an administration official said.

Still, even with the new complications over Taiwan, some American specialists argue that China will eventually do business again with the United States.

“They [Chinese leaders] don’t have many alternatives to what they’ve been doing, either economically or in foreign policy,” Suettinger said. “It’s nice for them to complain about the nasty, hegemonist United States, but when people in China ask what they’re going to do about it, the options narrow fairly sharply.”

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* TAIWAN’S STOCKS SHAKEN

Rumors of military preparations in China caused Taiwan’s main index to fall 6.4%. C1