Investment in China Taking Center Stage

In months leading to summit, China and dozens of US companies discuss deals, partnerships, and human rights.

Just two months before President Clinton's China visit - the first by a president since the 1989 Tiananmen Square crackdown - deals between American and Chinese businesses are flowing.

This week in Beijing, Westinghouse Electric Corp. landed an agreement to sell equipment for a Chinese power plant, and IBM announced an accord to bring online commerce to China.

China is discussing billions of dollars in potential pre-summit deals with US firms, as well as market-opening measures needed to cut a mounting $50-billion US trade deficit and create "a positive environment" for Clinton's June trip, says US Undersecretary of Commerce David Aaron.

The large trade gap, which grew by 25 percent last year, will be an "overriding issue" at the summit, stresses Mr. Aaron, who is leading a delegation of 18 US executives currently in China. "The deficit ... is unsustainable," he says.

The high-profile commercial mission underscores how business rather than human rights is driving US policy.

"Human rights remains a factor, but the relationship is not hostage to any one factor," says a senior administration official. Following years of tension after China's army killed hundreds of Beijing protesters in June 1989, Washington hopes the summit will "renormalize the US-China relationship," the official said.

Profitable marketplace

The lure of huge markets for US firms is a powerful force behind Washington's decisions to lift or consider lifting sanctions - on nuclear cooperation, high-technology exports, and trade - imposed after the Tiananmen bloodshed, US officials say.

Moreover, Washington's preconditions for lifting the sanctions increasingly target weapons nonproliferation and other broad-ranging behavior by Beijing, instead of narrowly on human rights.

For example, amid heavy lobbying by US nuclear firms, Washington has finalized a 1985 US-China nuclear-energy cooperation accord after Clinton certified that Beijing would not spread nuclear technology, specifically to Iran. Critics in Congress opposed the pact, and intelligence reports show ongoing efforts by Chinese firms to sell nuclear equipment and missile components to Iran.

Nevertheless, US nuclear firms such as Westinghouse, General Electric Co., and ABB Combustion Engineering are now vying to sell equipment for as many as 30 reactors that Chinese localities seek to install over the next 10 to 20 years.

In another move with major implications for US business, Washington recently indicated it may lift a ban on American satellite launchings by China if Beijing meets US conditions for joining the Missile Technology Control Regime. The offer was detailed in a recently leaked National Security Council memo, the accuracy of which was confirmed by administration officials.

Already, Clinton has authorized Chinese launchings for several individual US satellites, including one in February owned by Loral Space and Communications. That decision was politically sensitive, because Loral is under investigation by the Justice Department for illegally transferring rocket-guidance information to the Chinese - charges Loral and China denied this week.

US firms such as Loral and Hughes Space and Communications of Los Angeles, which has an executive traveling with Aaron, are pressing for a permanent waiver of the US satellite sanction to grant them unhindered access to the relatively low-cost Chinese launchings.

Other trade issues

American companies are also eager for Washington to back China's entry to the World Trade Organization (WTO) and end post-Tiananmen restrictions on trade and investment financing for US firms by the Trade Development Administration (TDA) and Overseas Private Investment Corp. (OPIC). US officials doubt an agreement on WTO is within reach by June. But lifting the TDA and OPIC sanctions may be possible if China "makes it a politically bearable step," such as by the anticipated release of prominent dissident Wang Dan, one US official said.

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