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JUNE 5, 2000 VOL. 156 NO. 22


Peter Rogers/Newsmakers.
The U.S. Congress voted to accept China as a normal business partner, paving the way for Beijing's entry to the WTO.

Who Won China?
America's dramatic debate over commercial ties with Beijing was about far more than just trade
By BARRY HILLENBRAND Washington

It was easy to forget that the issue generating so much heat on the floor of the House of Representatives last week was a trade bill. During two days of deliberation, Congressmen hurled passionate broadsides at one another but rarely touched on the question at hand: whether Washington should treat Beijing as a normal trade partner. Instead, they engaged in a raucous foreign-policy debate, seizing the opportunity to assert for the record what they think China is really all about. But when the smoke finally cleared, the bill that the House approved by a vote of 237 to 197 was indeed a piece of trade legislation - and one that passed, in the words of Bill Archer, the Republican chairman of the Ways and Means Committee, with "the most historic votes cast in our congressional careers." The bill, which grants "permanent normal trade relations" to China, means that the breakthrough agreement U.S. Trade Representative Charlene Barshefsky painstakingly negotiated last November with Chinese counterpart Shi Guangsheng will take effect once Beijing finally takes a seat at the World Trade Organization, probably by the end of the year.

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The Congressional debate showcased how sharply divided Americans are about China. On one side stands an unlikely coalition of right-wing Republicans and old-style liberal Democrats who were cheered on by labor unions, environmental groups, human-rights advocates and that new coterie of activists convinced that globalism is a life-destroying conspiracy fostered by the WTO, the International Monetary Fund and gnomes from Silicon Valley. For this group, China is the new Evil Empire and must be isolated. "Communist Chinese will never be our friends," thundered Lindsey Graham, a Republican Congressman from South Carolina. "You can never be America's friend if you murder people as they do in China. These people are the enemy of every freedom-loving people of the world."

Beijing, in this view, forces people to sell their kidneys for transplant, steals America's military secrets to build nuclear-tipped missiles aimed at Taiwan and Seattle, holds 10 million people in slave-labor camps to make athletic shoes for Western markets and persecutes Christians and other religious adherents. Trading with China only rewards this rogue behavior. "Our trade dollars," said Dana Rohrabacher, "allow them to build up the capability to murder millions of Americans." The California Republican and his colleagues argued that granting Beijing permanent normal trading rights as opposed to reviewing the status annually as the U.S. has done for the past 20 years weakens American leverage for bringing change to China. Until Beijing repents, they argue, it should be isolated, even punished.

The bill's supporters mostly free-trade Republicans and new Democrats fashioned in the Bill Clinton mold did not deny that China is, at best, an authoritarian state with a shabby human-rights record. "There is little the Chinese regime does on human rights that endears itself to the West," said Barshefsky in a speech in Baltimore one of hundreds of recent forays by senior Administration officials and their allies eager to give President Clinton an important foreign-policy victory before he leaves office. Nonetheless, this side argues, China is evolving for the better. "Twenty years ago, China was a closed society: no private enterprise, no phones, no hope, no future," said New York Congressman John J. LaFalce. "But when China normalized relations with the United States, things began to change." The bill's proponents cited testimony from a long list of luminaries in an attempt to show that deeper trade links would push China in the right direction. Hong Kong opposition leader Martin Lee was quoted as saying that 1.3 billion people should not be punished economically for the sins of the regime. The son of American evangelist Bill Graham testified that 4 million Bibles were distributed in China last year. And the Dalai Lama, no softy on human rights, was cited as saying that it would be a good thing for China to be in the WTO.

When the vote finally came last Wednesday, faith in American trade, technology and exports as proselytizing agents won the day. Of course, the victory was greatly aided by an extensive and very expensive advertising and lobbying campaign mounted by U.S. corporations in key congressional districts. Normal trade ties not only would benefit China, said TV ads sponsored by major companies and trade groups, but would bring jobs to Americans who would sell more soybeans, computers, mobile phones and Tom Cruise movies in markets newly opened by the agreement and by Beijing's accession to the WTO.

The battle is won. But it remains to be seen whether this faith in American enterprise is well-placed, whether it can actually promote change. And will Americans even sell more in China? Maybe, but only with a great deal of effort by U.S. companies. Barshefsky characterizes the present level of American exports to China, at $13 billion (about equal to what the U.S. exports to Brazil), as "anemic." America's $69 billion trade deficit with China its second largest after Japan can't be speedily reduced, even under ideal conditions. At best, the U.S. might be able to double its exports to China in the next five years.

Still, American corporations are huffing and puffing with excitement at what they view as the huge potential of the Chinese market. Motorola, which generated $3 billion in revenue from its China operations last year, lobbied hard for the bill, certain that the opening of China's telecommunications market to foreign ownership will allow Motorola to expand its sales of equipment in what has become the world's second-largest mobile-phone market. Motorola will also invest more than $1 billion in China to expand its semiconductor-manufacturing facilities to meet growing demand worldwide. But the Europeans and Japanese won't be far behind the Americans in trying to take advantage of China's wto entry. As for the Chinese themselves, trade liberalization is likely to involve a great deal of pain, at least initially. Says Hu Angang, a researcher at the Chinese Academy of Sciences in Beijing: "The number of laid-off workers is bound to surge." Inefficient state-owned companies, in particular, will feel the pressure of freer competition.

For all the elation in the American business community and the White House, the war is not quite over. The normal-trade bill moves next to the U.S. Senate. It should pass, but Clinton and his trade allies in the Republican Party are leaving little to chance. They are gearing up for another heated debate not on trade, of course, but about China.

With reporting by Jaime A. FlorCruz/Beijing

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