Each year about this time, the US president must decide whether to punish China - or not - for failing to meet US standards of behavior. This year, more than ever, President Clinton's choices were as difficult as the Chinese game of finger handcuffs.
Pushed by greater economic dependency on China for American jobs and cheap imports such as Disney toys, Mr. Clinton decided not to end Beijing's trade privileges despite its ongoing arrests of dissidents.
But to appear tough on China while still under suspicion that his party accepted campaign donation from China, Clinton yesterday slapped sanctions on eight Chinese government-run companies accused of exporting chemical-weapons materials to Iran.
Critics of Clinton's China policy say he speaks loudly but swings a small stick when it comes to Chinese misconduct. They are certain to see his decisions as fresh proof that he defers to US investors in China.
Administration officials say eight firms and five middlemen in China and Hong Kong are being hit with sanctions for supplying a secret Iranian military program, which is now producing large amounts of chemical agents.
Using a 1991 law designed to curb the spread of chemical and biological weapons, Clinton is banning the exporters from doing business in the US or with American firms.
Still, the development raises troubling new questions about whether Clinton's policy of expanding Sino-US relations will succeed in its goal of changing Chinese conduct at odds with US interests. Iran's alleged Chinese-supplied chemical-warfare stockpile in combination with its arsenal of Chinese-made missiles represents a serious threat to the 20,000 American troops in the Persian Gulf.
The fiery debate over Clinton's policy of "constructive engagement" with China is being fanned by his decision this week to renew its most-favored nation trade status. Under MFN status, which can be blocked by Congress, Chinese imports into the US are subject to low tariffs. And while renewal is expected again this year, it will not be easy.
Backed by human rights, religious, labor, and some business groups, a growing number of lawmakers are vowing to fight MFN renewal. Fueling the opposition are allegations that China tried to funnel illegal contributions to 1996 presidential and congressional campaigns.
Contending that Clinton is only concerned with ensuring access to the huge Chinese market for US corporations, opponents charge that he has deliberately declined to confront Beijing over its human rights policies or military sales.
"By following a policy which bolsters the Chinese government, the US is actually supporting the containing of the Chinese people," contends Rep. Nancy Pelosi (D) of California.
Clinton concedes that China's human rights record has worsened. But, he says, confrontation with the emerging economic and military giant will destabilize the region and cost US jobs. Only through cooperation and dialogue can the US press China to observe global norms of conduct, he asserts.
Imposing sanctions on the firms and individuals that sold chemical warfare technologies to Iran fits with Clinton's assertions that, while pursuing improvements in overall Sino-US relations, he will get tough on acts that jeopardize US security.
"We have been pursuing these concerns with the Chinese for a number of years now," says the US official. "They certainly have been aware all along that sanctions were a potential result of these activities."
He says that Beijing has not been unresponsive to US concerns. It ratified the 1993 Chemical Weapons Convention, which went into effect last month, and instituted controls on chemical exports in 1995. But he concedes that the Chinese have not enforced those controls, and that the US hopes it will begin doing so as a result of the sanctions.
Critics say they have little faith that Beijing will abide by its nonproliferation undertakings. And they blame what they contend has been the administration's history of overlooking its misconduct.
"It's not enough to jawbone when you have proliferation," says Henry Sokolski, head of the Washington-based Non-Proliferation Policy Education Center. "Your policy needs teeth, and there has to be some bite." The administration is now reviewing China's compliance with US nuclear nonproliferation laws.