By John Gershman

With the smell of tear gas from Seattle still lingering, China is returning to center stage in both the trade and security areas, and U.S. relations with it promise to be a central foreign policy issue in the 2000 election. Some U.S. activists central to the protests in Seattle have targeted the vote on granting China permanent Normal Trading Relations (NTR) status as their next target for mobilization, with AFL-CIO spokeswoman Denise Mitchell noting that "The China vote is going to become a proxy for all of our concerns about globalization."

Recent developments on the security front are also increasing China’s profile in U.S. foreign policy. Five days after the trade agreement was signed, the U.S. and China held their first military-to-military contact since NATO's May, 1999, bombing of the Chinese Embassy in Yugoslavia. The Clinton administration agreed in July to pay $4.5 million in what it termed "humanitarian payments" to those injured in the embassy bombing and to the families of those who died. Still unresolved issues include U.S compensation to China for the physical damage to the embassy and Chinese compensation to the U.S. for damage to its embassy and consulates from the demonstrations following the bombing. Lingering Chinese suspicions about U.S. antimissile defense systems, the Cox report on Chinese spying, the Kosovo war and embassy bombing, as well as U.S. concern on human rights, the spy scandal, labor issues, and Taiwan, have turned even low-level military contact into a controversial proposition. Furthermore, new conditions in the Defense Authorization Act passed by Congress in October require detailed reports on any military contacts with the People's Liberation Army, including who participated, how much was spent, and what was disclosed. Even some within the Pentagon criticize these rules as overkill. High-level military contacts are unlikely to begin until mid-2000.

The spy scandal took a new turn on December 10, as Wen Ho Lee was indicted on 59 counts of illegally removing highly classified design, construction, and testing data from the Los Alamos weapons laboratory where he was employed. The indictment accused Dr. Lee of transferring classified information into unclassified computer files at the Los Alamos laboratory and downloading other material onto portable tapes. The indictment said that seven of the tapes that Dr. Lee had made, containing critical nuclear secrets, could not be found. The most serious offenses in the indictment, removing classified nuclear weapons data, are punishable by a maximum sentence of life in prison. The indictment accused Dr. Lee of mishandling nuclear data but did not accuse him of spying or of any espionage offenses related to a foreign government. China has steadfastly denied such espionage.

The permanent NTR vote is the next step following the November 15 agreement between the U.S. and China on specific issues regarding China’s accession to the WTO. China has also completed such negotiations with Canada and Japan and only needs to complete one with the European Union to cover the fourth of the Quad countries--the dominant players within the WTO. The agreement signed on November 15 included some special benefits for United States companies to the exclusion of other WTO members, such as a delayed reduction of U.S. quotas for Chinese textile exports, safeguards for import surges, and access to parts of China’s financial sector. (For more details see Progressive Response, Volume 3, no. 44, available at <http://www.foreignpolicy-infocus.org/progresp/vol3/prog3n44.html>).

It is ironic that China's ability to play a key role in preventing the Asian and global economic crisis from worsening is because its economy is not an open, liberalized one in the image the U.S. has been trying to export elsewhere. China's lack of foreign exchange convertibility has prevented extensive speculative attacks on its currency. The November 15 agreement represents commitments by the Chinese government to significantly open sectors of its economy (especially in finance) that sheltered China from some of the contagion effects of the Asian crisis. If implemented, the agreement will also deepen the internal divisions that have emerged since China’s economic opening to the international economy.

The social and ecological costs of China's transformation since 1979 have been immense. Growing inequality within urban areas and between urban and rural areas suggests that significant grievances and unrest lie just below the surface. There are regular reports of demonstrations, particularly in rural areas, relating to corrupt local officials, floods, and high taxes. After the flooding of the Yangtze in mid-1998, there were 130 reports of rural rebellion in four provinces, including attacking and occupying government offices.

China has allowed the first bank to fail since 1949 and is in the process of privatizing large sections of its economy, including enterprises previously managed by the military. The financial sector, both state banks and the provincial and municipal fund-raising and investment institutions known as ITICs, are also in serious trouble. China has also begun a restructuring of non-bank financial institutions. Managing this transformation—especially at a time when overall and export growth rates are slowing and the political effects of the dramatic inequality that has accompanied rapid growth are becoming more salient--presents massive challenges.

The Clinton administration is now facing the results of allowing commercial interests to dominate other concerns in shaping policy toward China. In the five years since the Clinton administration formally delinked progress on human rights from the annual vote on granting China temporary NTR (formerly Most Favored Nation or MFN) status, the number of congressional representatives voting in favor of NTR has slowly but steadily increased. The vote for permanent NTR status may be different, both because it is an election year and because at least some of the forces mobilized at Seattle have targeted China as their next issue.

Opponents and supporters of permanent NTR status (which is framed as support or opposition of China’s entry into the WTO) span a spectrum from outright opposition, support with conditions, and outright support, and, for lack of a better term, none of the above.

Outright supporters include the business community with interests in expanded trade and investment opportunities in China--primarily, but not exclusively, larger transnational corporations. Opponents include some of the labor, consumer, environmental, and human rights groups demonstrating in Seattle, but also right-wingers trying to isolate what they perceive as an aggressive China, businesses in sectors like textiles and garments that will be threatened by low-cost imports from China, and Christian fundamentalists concerned about China’s persecution of Christians. Some labor and other groups see opposing China’s entry into the WTO as a tactical move because reforming the WTO to add a social clause and/or environmental conditions would be more difficult with China inside the WTO, and they see China strengthening the largely Southern opposition to the inclusion of labor and environmental conditions on trade within the WTO.

This odd alliance leads to occasionally incoherent analyses. For example, Robert Scott of the U.S. labor-associated Economic Policy Institute presents arguments that combine many of the above positions in a way that is more identifiably nationalist than progressive, arguing that "China can wait" in its entry to the WTO because the government violates labor rights, is a non-market economy, and pursues economic policies that regulate foreign investment in a manner that serves the developmental objectives of the Chinese state. These regulations have been important to the relatively successful development strategies of several Asian countries and were a major target of the failed Multilateral Agreement on Investment. Furthermore, such regulations can be used to force the transfer of greener production technologies, a major objective of sustainable development advocates. While the criticism of labor and human rights violations in China is on target, it seems ironic for a pro-labor think tank to argue that the Chinese economy should restructure itself in a more laissez-faire fashion.

The position of support with conditions is reflected by Human Rights Watch, which argues that Congress should exchange human rights conditions for permanent NTR status. They argue, for example, that within one year of receiving permanent NTR, China should be required to ratify at least one of the two UN human rights treaties it has signed. It should begin a process of dismantling the huge system of "reeducation through labor" which allows officials to sentence thousands of citizens to labor camps annually for up to three years without judicial review. And it should be required to open up Tibet and Xinjiang to regular, unhindered access by UN human rights and humanitarian agencies, foreign press, and independent monitors.

The "none of the above" group argues that focusing on China’s entry into the WTO diverts progressives from the very real issues for which the China vote is a proxy: peace and security, labor and human rights, and environmental sustainability. They point out that permanent NTR and WTO membership do not increase the access of goods produced in China to U.S. markets, but will increase the access of U.S. goods, services, and capital in China. Furthermore, they argue that focusing on China’s membership in the WTO as a defining issue runs the risk of stigmatizing China as the source of U.S. economic problems, reinforces the interests of the most reactionary and racist members of the opposition camp, holds China to a double standard, and diverts attention away from the practices of corporations in the global economy.

What might this debate mean for human rights? China's record on human rights is clearly mixed and uneven. At the national level, explicit challenges to the Communist Party's monopoly of power are met with repression. Yet some spaces in civil society, albeit closely watched, have been carved out for organizations (other than independent labor unions) that are not explicitly political, and there is a not insignificant process of fairly competitive elections in China's rural villages. More than 75% of China's total population lives in rural areas and votes for their village committees every three years. However, on the national level, the recent crackdown on the Falun Gong religious organization highlights the extent to which the government continues to fear the creation of large-scale public organizations outside of Party control.

China signed the International Covenant on Economic, Social, and Cultural Rights (ICESCR) in 1997 and the International Covenant on Civil and Political Rights (ICCPR) in 1998. It is unclear when either will be ratified. (The U.S. has only ratified the ICCPR). In 1999, the U.S. sponsored a resolution critical of China at the UN Commission on Human Rights, but did so in a somewhat unenthusiastic manner, waiting until shortly before the Commission met to announce its intention to do so, rather than trying to build support earlier.

In contrast to China's foreign policy stance on military and economic issues, it has been much less eager to embrace multilateral institutions in the human rights field. The September 1998 visit by UN Human Rights Commissioner Mary Robinson received mixed reviews, but it set the stage for the United States to advance its agenda as part of a multilateral rather than merely a unilateral agenda. Some human rights organizations gave Clinton high marks for his comments during his visit in June 1998 that the Tiananmen crackdown was wrong and for arguing that "stability in the twenty-first century will require high levels of freedom" in China. But, in contrast to its commercial agenda, summitry has mainly been a missed opportunity for the U.S. human rights agenda.

The two major areas relating to self-determination and human rights regarding China are Hong Kong and Tibet. (Taiwan is discussed below under security). The transfer of sovereignty over Hong Kong from Great Britain to China on July 1, 1997, and the installation of the new Special Administrative Region (SAR) government were arguably the most important events in the territory's history. The political transition produced no dramatic crackdowns, no arrests, and no bans on demonstrations. The U.S. should monitor the human rights situation to insure that China maintains its commitments to respecting democracy and human rights.

The Clinton administration has continued a long-time U.S. government policy of ambivalence about Tibet. The United States should pressure the Chinese government to respect human rights in the region. In the near term, at least three issues of particular importance surrounding Tibet should be pursued: release of Tibetan prisoners who have not used violence; securing verifiable information on the whereabouts and current status of the nine-year-old Panchen Lama, the second highest figure in Tibetan Buddhism; and securing improved access to Tibet for the international press and human rights organizations.

China's impact on the global as well as regional environment points to a positive role for the United States to support the transfer of sustainable transportation, energy, and ozone-safe technologies in a rapid fashion. This should be done through the Export-Import Bank and OPIC, as well as through other bilateral and multilateral efforts.

China remains the major issue in U.S. security policy in Asia. The currently dominant security policy in the Clinton administration holds that China has essentially replaced the former Soviet Union as the chief strategic threat to the United States in the region, and the U.S. should essentially retain its containment strategy, with China as the new target. The basis of this strategy includes a strengthening of cold war-era bilateral military alliances with the development of a Theater-based Missile Defense system that would cover South Korea, Japan, and Taiwan. Revelations in early-to-mid 1999 indicating a pattern of Chinese nuclear weapons and missile technology espionage dating from the 1970s to the mid-1990s has raised fears of China as an enemy to the highest level in 20 years. China's defense budget has grown by more than 50% in real terms over the course of the 1990s and is to increase 15% in 1999. China's occupation of 11 islands and reefs in the Spratlys, including Mischief Reef, 378 kilometers from the Philippines, is also used as evidence of China's expansionist nature (virtually all habitable portions of the Spratlys have now been taken by various claimants, including Vietnam, Taiwan, the Philippines, Malaysia, and Brunei).

But the view of China as an expansionist power needing to be contained ignores several facts. First is that China has the largest number of bordering countries of any country in the world, including long-time adversaries Russia, Vietnam, and India. The new Central Asian states carved out of the former Soviet Union are seen as potential threats, in part because they may ally with minority groups within China. In China's nuclear arsenal of roughly 400 warheads, only about 20 are capable of reaching the United States (which has more than 8,300 operational warheads, nearly all of which could be targeted against China). China's long-range ballistic missiles number fewer than two dozen, carry a single warhead, and are liquid-fueled. All 982 U.S. ballistic missiles, including 432 aboard invulnerable Trident submarines, carry multiple warheads (MIRVs) and are solid-fueled, and thus can be launched on short notice.

Much of the military budget increase in 1999 represents compensation to the Chinese armed forces for divesting themselves of their many business operations, which sapped China's military readiness. Even with these increases, China's announced defense budget will still only total about $12 billion, less than 5% of the U.S. figure. However, it should be noted that the $12 billion figure does not capture all Chinese military spending. It does not include spending on foreign arms purchases, nuclear weapons development, most of China's military research, and local militias. Neither does it account for subsidies to China's ailing defense industries, nor for administrative costs such as demobilization and pensions. Taking these additions into account, and adjusting for purchasing-power parity effects--a notoriously imprecise process--China's actual defense expenditures are generally estimated at somewhere between $35 billion and $65 billion a year. Even at the higher estimates, China spends less than 25% of what the United States spends on defense, while supporting a force twice as large.

China's expansion into the islands of the South China Sea are of concern, but they do not seem to reflect new expansionist designs, as China has claimed them as part of its territory for years. The U.S. should support the ASEAN position that competing claims in the Spratly's should be settled through a multilateral forum.

The accusations of espionage are more telling of the weaknesses in U.S. security than of providing any significant evidence that the Chinese have used this data to gain a qualitative strategic advantage relative to the United States. A more balanced conclusion would be that the espionage reveals that the privatization of the management of the nuclear weapons labs did not adequately take into account national security concerns. A report by Clinton’s Foreign Intelligence Advisory concluded that a "culture of arrogance" at the weapons labs had "conspired to create an espionage scandal waiting to happen" while another report by the General Accounting Office said the Los Alamos and Livermore laboratories had ignored warnings about their lax security for years.

As none of the counts against Wen Ho Lee include accusations of espionage, it may be that the indictment is actually an attempt to demonstrate progress in the investigation so as to defuse Republican attacks during the 2000 election campaign. Since the furor over alleged Chinese espionage waned over the summer, U.S. intelligence and law enforcement officials narrowed the list of nuclear secrets that Beijing most likely stole while expanding the pool of potential suspects. After three years of a narrow focus on the Los Alamos nuclear weapons lab in New Mexico and Wen Ho Lee, officials now acknowledge that the classified information China most likely stole was accessible to hundreds of people at several federal facilities.

A primary piece of evidence continues to be a 1988 Chinese document that suggests China stole valuable information about nearly every major weapon in the current U.S. nuclear arsenal, including the W-88 miniaturized submarine warhead that is one of America's most sophisticated weapons. This document was a key element of the report issued by a congressional committee chaired by Rep. Christopher Cox on Chinese nuclear espionage earlier this year. The Cox Report pointed to that document as evidence of the extent of China's spying at U.S. nuclear labs.

More recent assessments by U.S. intelligence agencies, however, conclude that a large portion of the information in that document most likely came from publicly available documents, some of which contained misinformation about American weapons. In the case of the W-88, intelligence officials now believe the 1988 Chinese document, which U.S. officials obtained in 1995, contains only a couple of pieces of classified information that could have been stolen only from secure facilities.

The growing dominance of commercial over security issues (as evident in the cases of the missile launches by Loral and Hughes) points to the dangers of having U.S. business interests shape peace and security issues toward China. Within the Clinton administration, a faction led by the Treasury and Commerce departments and promoted by transnational corporations opposed and continues to oppose security-based restrictions on trade and commerce, arguing that China's partial liberalizations make it a land of enormous trade and investment opportunity.

The London-based International Institute for Strategic Studies concludes that "China does not have the resources to project a major conventional force beyond its territory," and points to China's engagement with multilateral institutions and conventions as a reflection that China is willing, if it can participate as a full partner, to participate in multilateral security institutions. The commander-in-chief of U.S. Pacific forces, Admiral Dennis Blair, has declared that "China will not represent a serious strategic threat to the United States for at least twenty years."

China has demonstrated an increasing willingness to participate in efforts to control the proliferation of weapons of mass destruction by subscribing to or signing since 1992: the Nuclear Non-Proliferation Treaty (NPT), Comprehensive Test Ban Treaty (CTBT), Chemical and Biological Weapons Conventions, and the Missile Technology Control Regime (MTCR). In addition, China has placed what the U.S. views as the most objectionable portion of its peaceful nuclear technology agreement with Iran on hold.

In the Taiwan Straits, more than three years after China's military exercises opposite Taiwan on the eve of that island's first popular presidential election, the security situation shows "no threat of imminent hostilities" according to the Pentagon. Both China and Taiwan have pursued low-key military maneuvers, with China focusing upon routine training while Taiwan has reduced the size and scope of its military exercises and played down other activities that Beijing might misconstrue as provocative and destabilizing. What of China's recent missile build-up along the Straits? Reportedly, China had deployed 30 to 50 short-range missiles on the Straits by 1996, has about 200 deployed there today, and may triple this package within five years. From their current positions, the M-9 and M-11 missiles, both of which are nuclear-capable, can reach Taiwan. But neither possesses sufficient accuracy to strike ports, airfields, or ships to great effect. Senior officials from the two quasi-official organizations responsible for managing cross-Strait relations (Taiwan's Straits Exchange Foundation and China's Association for Relations Across the Taiwan Strait) met in mid-October 1998 and resumed direct contacts that had been suspended since 1995. While there was no significant movement on substantive political issues, agreements were reached on less dramatic issues of ongoing dialogue, cooperation, and visits. None of the three front-running candidates for Taiwan’s second direct presidential election to be held in March 2000 have called for independence, and all have called for continued dialogue and discussion with China.

Today, China's major concerns are dealing with massive economic and political transformations--transformations that will only become more dramatic if China enters the WTO and meets its commitments under the various agreements it signs with the Quad powers. In such a context, an aggressive U.S. military posture strengthens the realpolitik advocates within China's security apparatus. A better strategy would recognize the longer-term strategic benefits of enmeshing the U.S., China, and Japan within multilateral security frameworks that provide the opportunity for confidence-building measures, mutually verifiable force reduction and disarmament commitments, and that address the multiple nonmilitary threats to security in the region.

China will be an important foreign policy issue in the coming year. Stigmatizing China as a threat to U.S. economic and military security may win sound-bites and even votes. But such a position deters a more progressive agenda.

It is understandable that some progressives would hang their agenda on the legislative hook of China’s permanent NTR status and WTO membership. But there are dangers in such an approach, and it is not true that other legislative hooks do not exist. Under the legislation that approved U.S. entry into the WTO, the executive branch must prepare a report on U.S. gains and losses from its membership in the WTO and deliver it to the Congress on January 1, 2000. For up to 90 days after that date, any senator or representative can request a vote on maintaining U.S. membership in the WTO. If the WTO is the problem, then push for reform or abolition of the WTO, or push for the U.S. to withdraw from the WTO--don’t make China the referendum on the WTO.

By using China as a proxy, progressives risk promoting self-righteous double standards and sacrificing a distinctly progressive internationalism that differs from both the internationalism of free traders and the nationalism of populists. U.S. unilateralism in foreign policy has been more often an instrument of anti-progressive forces than progressive ones, and progressives must beware its pitfalls and superficial appeal.

Instead a more long-term view, not to mention a more humble and less self-righteous approach, might include:

• On labor and human rights violations, also look at home, where the U.S. still has not ratified the ICESCR or many of the ILO conventions whose standards it wants China (and other members of the WTO) to observe. Encourage the implementation of an independently monitored business code of conduct (see below) that highlights the roles of corporations. In terms of dialogues with China, engage the government on social and economic rights, not only civil and political ones. Such issues, like environmental protection, health care, and women’s rights, will, by their nature, contain a significant element of citizen participation in them. Finally, focus on results, not just on the policy instruments.

• If environmental sustainability is a concern, insure that the U.S. ratifies and implements commitments under the Kyoto Protocol and supports the transfer of green technology to China. 

John Gershman of the Institute for Development Research is the author of an FPIF policy brief on the Asia Pacific Economic Cooperation forum.