US Talks, China Listens

CHINA knows clouds are ahead in relations with the US. What Beijing hopes for now is a silver lining.

In the next three weeks, President Clinton, who criticized China during his campaign for human rights abuses, must decide whether to extend China's most favored nation (MFN) trade status for another year.

A Clinton emissary told Beijing May 12 that MFN conditions loom: Renewal will be pegged to an improved Chinese track record in human rights, trade, and arms sale reductions.

Still unknown is how the president will juggle human rights activists' demands for sanctions with US businesses' pleas to preserve access to China's booming market.

Chinese officials hope Clinton will tread carefully and act by executive order. That would take the issue out of congressional hands and hopefully end the yearly tussle over the China's MFN status that began when the Army crushed a peaceful pro-democracy movement in 1989, Chinese and Western analysts believe.

One face-saving move that would buy time for China would be for Clinton to renew China's trade status without conditions this year, but peg next year's extension to progress on human rights, arms control, and trade. Another scenario viewed here as less damaging would be to impose human rights conditions while handling trade and weapons sales separately.

"The US Congress and administration have started to take a relatively realistic approach toward China instead of solely taking the ideological orientation," said an editorial in Shanghai's Liberation Daily, which is considered the mouthpiece of paramount leader Deng Xiaoping. "The Congress and administration have been trying to create a favorable and predictable policy framework for Sino-US trade and will adopt a more flexible policy on the MFN issue," the newspaper said.

China has been on its better behavior recently. Anxious to soothe US critics and impress Olympic officials who will decide whether to locate the 2000 Summer games in Beijing, China has released several prominent dissidents and cut hefty US trade deals.

Even after last week's message that a conditional trade status is likely, Foreign Ministry spokesman Wu Jianmin stopped short of past shrill charges of bullying by Washington and hints that China might impose its own sanctions.

"The US government has not made an official decision on the question of China's MFN status," he said.

Chinese officials and analysts, even some critics of the government, worry that trade limitations imposed by the United States will endanger the first prosperity China has enjoyed in years and trigger new tensions.

Deftly, diplomats say, China is trying to exploit the dilemma facing Clinton. On one hand, the president must respond to outrage over the 1989 massacre of pro-democracy demonstrators, the use of prison labor to make exports, religious persecution, repression in Tibet, and a free-wheeling arms trade.

On the other hand, he faces domestic pressure to boost the sagging economy and US competitiveness overseas. With an eye on reducing its huge trade surplus with the US, Chinese delegations have been criss-crossing the States recently, buying aircraft, cars, fertilizer, and grain.

"The United States is the only country where human rights in China is still an issue," says a Middle Eastern diplomat in Beijing. "But China knows the US must improve its economy and is shrewdly trying to exploit these problems."