Washington Weighs `Weapons' for Use Against Beijing

THE United States has at its disposal a number of economic and political weapons that it could employ against China's government to protest the brutal crackdown on pro-democracy activists there. The Bush administration has slapped some sanctions on Beijing. But, experts say, the level of official US disapproval could be raised much higher. And Congress is working on legislation to do just that. It could vote on the package this week.

The President is being whipsawed by critics on both the right and the left. But he is hewing to the view that moving too strongly against China's government could do more harm than good, causing a long-term rupture in Sino-American relations without necessarily halting the crackdown on dissent under way there.

Still, the strategy has won the President little political capital. The frustration of many critics was summed up in the Senate late last week by the Democratic majority leader George Mitchell of Maine:

``I understand and appreciate the delicate situation in which the President finds himself, and I support his stated desire to maintain, if possible, some relationship with the Chinese government.

``But, I ask - I urge - the President to condemn these actions personally and in the strongest possible terms, to give voice to the feelings of the overwhelming majority of the American people who are outraged and revolted by these executions in China.''

There are, it turns out, quite a number of moves the President could make, ranging from largely symbolic acts - a wreath-laying at a public memorial service - to a trade embargo and an outright break in diplomatic relations.

In between are many measures that could inflict varying degrees of damage on the Chinese government, its economy, and, perhaps, even its people.

Mr. Bush himself has wide latitude to enact many of the measures against China; he is not required to gain congressional consent or approval of US allies.

``Most [moves that could be taken against China] are presidential actions,'' says Ed King, a staff member of the Democratic Policy Committee. ``Lots of people are thinking about legislation, but there's not a lot that can be legislatively done.''

Bush has many more options in 1989 than, for example, President Carter had in 1979 to protest the Soviet invasion of Afghanistan.

Lawmakers, public-interest groups, and others have put forth long lists of suggestions.

One idea that appears on many of the lists is repeal of most-favored-nation (MFN) trade status. A bill ending China's MFN status was introduced last week by Rep. Tom Lantos (D) of California.

With MFN status, China is essentially being treated much like a noncommunist country. In 1988, China enjoyed a trade surplus with the US of over $3 billion.

But to keep MFN status, the President must certify that China complies with a key piece of US legislation - or waive the restrictions that law applies to China. The legislation, known as the Jackson-Vanik amendment, says China must allow people to emigrate in numbers roughly equal to the demand.

Bush could find that that is not taking place, or he could refuse to waive the provisions. Chinese goods would then face heavier import restrictions, and much of the trade surplus might evaporate.

Bush has already withdrawn US support for $1.3 billion in international bank loans to China. But he could take further steps.

For example, a US government agency, the Overseas Private Investment Corporation (OPIC), provides insurance to US companies investing in China. OPIC calculates its present liability in China at a maximum of $94.5 million, according to spokesman Robert Jordan.

Either Congress or the President could halt further underwriting. ``We couldn't negate any contracts that are current, but we could stop writing new policies,'' Mr. Jordan explains.

That would clearly discourage new US investment, since it essentially signals a lack of confidence in the country. New foreign investment is vital to China's modernization. Rep. Ted Weiss (D) of New York has introduced a bill that would halt the issuance of new policies for projects in China.

There are many other economic measures that the US could take against China. The US Export-Import Bank provides financing or guarantees covering $400 million in various projects. A number of US banks are involved in loan arrangements totaling several billion dollars. Other multinational bodies, including the International Monetary Fund and the World Bank, provide some $10 billion in loans. And China's application to participate in the General Agreement on Trade and Tariffs is pending. If China is accepted into the organization, its worldwide trade would be made easier.

The Bush administration could, either by administrative act or atmospherics, make any of these economic arrangements problematic. Of course, that runs the risk of Chinese retaliation. At the extreme, the US could call for a total trade boycott with China - and China could confiscate US assets. Then, US taxpayers would foot the insurance bills, and Chinese citizens would lose out on the economic benefits that come from modernization. For example, some of the bank loans for which China has applied are for new power plants, agricultural projects, and mass transit systems.

The two-edged nature of economic sanctions presents a dilemma for the administration.

``Do we really want to push China back to 1974 ... [to] the isolation and xenophobia?'' asks a senior administration official, who asked not to be identified.

``I think we are as far out as we can safely get,'' the official says.

The official says the administration does not want a conflict with Congress over China sanctions.

``It's easy for them [Congress] to take shots. It's a free ride. You can stand up for motherhood and the Statue of Liberty and all those wonderful things.''

But, he concludes, ``They don't have the responsibility to balance these other interests that the President has.''

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