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China's loss may prove a winner

 More by Willy Wo-Lap Lam

(CNN) -- "Turn a bad thing into a good thing." This is President Jiang Zemin's latest instruction on the sorry state of relations with the United States.

Beijing was alarmed by the package of sophisticated weapons that Washington decided to sell Taiwan last week.

The Jiang leadership was particularly disturbed by President George W. Bush's pledge to do "whatever it takes" to defend Taiwan in the face of a mainland attack.

Three top party organs -- the Politburo Standing Committee, the Leading Group on Foreign Affairs (LGFA), and the Central Military Commission (CMC) -- last week held special sessions to to discuss counter-strategies.

According to Beijing sources familiar with the deliberations, Jiang has recommended the following measures to beat back what is perceived as Bush's hawkish, anti-China policies.

First, the president and his aides have indicated China must decrease its dependence on the U.S. market and on American investment. China now enjoys a trade surplus with the U.S. of more than US$80 billion a year.

This is in response to the fear that, should relations with the U.S. deteriorate further, Washington might adopt measures to block Chinese exports.

Departments including the Ministry of Foreign Economic Relations and Trade have been asked to come up with ways to boost Chinese exports to areas including the European Union and the Asia-Pacific region.

At one of the meetings, Premier Zhu pointed out China had relied too much on foreign factors -- including trade and overseas investment -- to sustain its relatively fast economic growth.

Domestic spending encouraged

"We must work harder on increasing domestic demand and consumption," Zhu reportedly said.

The premier underscored the importance of the develop-the-west program, saying outlays on infrastructure in the western provinces will amount to a big fillip to growth.

Zhu also cited other attempts to encourage domestic spending, such as the 30 percent rise in civil-service salaries, which will likely be repeated next year.

Second, Jiang indicated China must speed up its hi-tech development, particularly the modernization of the arsenal of the People's Liberation Army (PLA).

The CMC presented the leadership with its recommendations on two areas: how to counteract the expected increase in American spying activities; and how best to "neutralize" the new weapons that Taiwan will soon be acquiring.

If only as a show of force to American "hawks," the CMC is in the process of deploying more of the PLA's most advanced hardware -- including jetfighters, submarines and missiles -- to frontline, coastal areas.

Jiang, who is CMC chairman, said speeding up research and development of weapons would also benefit the domestic economy as China had a long tradition of turning military technology to civilian use.

The third prong of Beijing's strategy to combat Washington's "anti-China containment policy" is to consolidate ties with neighbors including erstwhile foes such as Russia, Japan and Vietnam.

Beijing is hoping that Jiang's meeting with Russian President Vladimir Putin in July would result in further defense cooperation with Moscow.

Some diplomatic analysts said Beijing's anxiety to secure a safe backyard might have accounted for its surprisingly mild response to provocative statements recently made by Japanese and Vietnamese leaders.

Full-fledged army

For example, new Japanese premier Junichiro Koizumi has indicated he favors the conversion of the country's self-defense forces into a full-fledged army.

When Vice President Hu Jintao was in Hanoi recently, Vietnamese officials made it clear they would consolidate their hold on several islets in the disputed Spratlys archipelago through means including human settlement.

A source close to the Jiang camp said the president had at least temporarily given up the goal, reached with former president Bill Clinton, that both countries should forge a "constructive, strategic partnership geared toward the 21st century."

Jiang reportedly indicated that throughout the Bush administration, bilateral ties in many aspects would be difficult and adversarial.

Referring to himself as the prime formulator of China's U.S. policy since the mid-1990s, Jiang said at the LGFA meeting that he felt very unhappy about the recent deterioration of relations.

"But as Chairman Mao said, we must turn a bad thing into a good thing," Jiang said.

He said Bush's "cowboy behavior" had taught Chinese they must always raise their guard and work harder at hi-tech development and national defense.

"Many countries in Asia, including Japan, are slipping because their people have become complacent and lost the fighting spirit," Jiang added.

In high-level deliberations over the past week, however, Jiang urged his colleagues to remain calm and take a low-key approach when publicly responding to Bush's apparent abandonment of Washington's theory of "strategic ambiguity" on helping defend Taiwan.

On the issue of Taiwan, the president indicated that particularly given the sharp rise of Taiwan investment in the mainland, it was unlikely the pro-independence forces would make much progress in the near term.

Tougher stance espoused

A couple of Jiang aides also referred to the high likelihood that Taiwan President Chen Shui-bian, deemed a pro-independence stalwart, would be replaced by a more moderate politician at polls scheduled for 2004.

It is understood, however, that during the sessions called by the Politburo Standing Committee, the LFGA and the CMC, hardliners including quite a few generals, espoused a much tougher stance.

On Taiwan, several civilian and military cadres said Beijing should speed up its "war preparations" against the island.

They claimed that given the possibility that Washington might sell even more sophisticated arms to Taiwan the rest of the decade, it was better to make a move sooner rather than later.

These hawks were unperturbed by the possibility of American military intervention.

"China was not cowed by the U.S. during the Korean and the Vietnamese wars, when the American army was much stronger than us," one general reportedly said.

"Why should we be afraid now when the gap between the two armies has narrowed?"

The general also asserted that even if China and America were to go to war over Taiwan, no country in Asia would dare provide bases for China-bound U.S. jetfighters.

Another PLA officer indicated despite Bush's bravado, it was inconceivable for Washington to go against public opinion -- and risk substantial numbers of American lives in defense of Taiwan.

Other hardliners were flaunting perhaps the most effective card Beijing could muster against Washington: selling sophisticated arms to Pakistan, Iran and even Iraq.

A member of Jiang's personal think tank, who is usually identified as a liberal, even proposed that Beijing immediately send delegations to Iran and Iraq to explore further military cooperation.

Belligerent approach

Western diplomats said it was significant that Sha Zukang, head of the Foreign Ministry's Department on Disarmament, said last weekend that Beijing might curtail cooperation with the U.S. on non-proliferation of advanced weapons, including nuclear hardware.

Analysts in Beijing said moderate cadres such as Jiang and Zhu had expressed reservations about the belligerent approach.

However, the analysts said the leadership also had to contend with a marked rise in nationalistic and anti-U.S. sentiments among the populace.

They said should Chinese public opinion continue to turn against the U.S., the chances of tough tactics being employed might increase.

After the announcement of the arms sales to Taiwan, some firebrands have posted remarks on Internet forums comparing Bush to Hitler.

"A handful of ultra-nationalistic intellectuals have likened Bush's efforts to erect an America-dominated world order to a form of neo-Nazism," said a Guangdong-based politics professor.

"Academics and cadres with a 'pro-U.S.' reputation have expressed fears that a vicious cycle in bilateral ties has set in. And they see no way out of it."

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