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Week of July 23, 1999

Week of July 23, 1999

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On July 13, 1999 the National Committee on U.S.-China Relations sponsored a briefing on U.S.-China relations. Speakers of this event were Michael Armacost (Brookings Institution), Douglas Paal (Asia Pacific Policy Center), and Harry Harding (Dean, Elliott School of International Affairs). The speakers, having recently participated in high level talks in Beijing, returned home to report on the status of the U.S.-China relationship.

Among all the speakers, a common concern was the stalemate ensuing between the U.S. and China that may not be easily broken. Each country is waiting for the other to make the next move. China is waiting for the U.S. to provide a better explanation for the Belgrade embassy bombing, and the U.S. is expecting China to re-open WTO talks prior to fulfilling China’s demands regarding full settlement of the bombing issue. Dr. Harding noted that in similar past troublesome instances, there were always other issues that were relatively easy for each side to work out, which could be used as a means of getting both sides back tot he negotiating table. At present, all of the ‘easy?work in the relationship has been finished, and only hard-core negotiating on WTO remains.

Of all the speakers, Dr. Harding stated that he was cautiously pessimistic about U.S.-China relations right now. Harry sited some reasons for this pessimism. The bombing incident added insult to injury just after Clinton walked away from Premier Zhu’s WTO deal in April. The U.S. keeps expecting the Chinese government to move past this issue, which they simply may not. It is possible that Beijing will hold a grudge on the bombing incident to the same extent that America remains outraged by the 1989 Tiananmen incident. In fact, China has stated that, while WTO negotiations may resume before the end of this year, it will not re-engage in discussions on human rights and military issues in the near future. Further, in light of recent events, politics on both sides, not just one, have lost a significant amount of domestic credibility that prevents each side from being the first to admit to transgressions in the relationship.

During the question and answer session, the issue of Taiwan’s recent statement abandoning the ‘One China?term and adopting a ‘state to state?approach to dealing with the mainland was discussed. Academic experts said that they were not necessarily surprised with Taiwan’s move, as some people expected it to happen sooner or later as the next Taiwanese election approaches. Panelists did suggest, though, that this appears to be bad timing on the part of the Taiwanese, as the U.S. wants very much to mend ties with the mainland and is thereby unlikely to support Taiwan’s move. Owing to U.S. and mainland pressure, on July 22 Taiwan withdrew its renouncement of the ‘One China?policy.

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Clinton Postpones Defense Visit


Hours before the scheduled departure, President Clinton postponed a trip to Taiwan for a team of ballistic missile experts from the Pentagon ready to assess Taiwan’s current defense needs against the perceived increasing threat from mainland China. His decision is based on two factors. First, the U.S.-China relationship has yet to recover from its severe downturn after failing to sign a WTO agreement during Chinese Premier Zhu Rongji’s visit in April, and the subsequent accidental May bombing of China’s embassy in Belgrade. Second, Taiwanese President Lee Teng-hui recently called for ‘state to state?relations with Beijing and repudiated the ‘one China?policy, the ambiguous definition of which has been the foundation of Beijing-Taipei unification talks. Taiwan’s move severely upset its relations with Beijing, who has reiterated that it reserves the right to use force against Taiwan, if it should declare independence.

The Clinton administration fears another escalation in the Taiwan Straits, and wants to see a peaceful resolution of the situation. If a defense visit to Taiwan were to be carried out now, the move would further damage the U.S.-China relationship, and the island would view it as U.S. support for recent Taiwanese statements. Clinton’s move clearly puts the U.S. in favor of mainland China over Taiwan, a position that may alter if peace in the region is threatened by military action from either side of the Straits.

As of July 22 Taiwan has returned to the ‘One China?policy, but not first without insisting that Taiwan be treated as Beijing’s equal during future political discussions, and reiterating that China must begin to democratize before unification can occur. This back-tracking occurred in tandem with losing another political battle, as Papua New Guinea reverted its recognition back to mainland China after only 16 days of relations with Taiwan.

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China Discloses Neutron Bomb Capability


In the aftermath of the Cox Report on alleged Chinese espionage and Taiwan’s announcement that it was abandoning the "One-China" policy, Beijing countered with the news that it had the capability to launch a neutron weapon that could be used in a relatively small area, such as the region around Taiwan. Such a weapon would leave buildings and infrastructure intact while killing people with high levels of radiation. Western analysts have suspected that China has had neutron technology since the late 1980s. While the announcement was made in an official Chinese report written to rebut the findings of the Cox committee report, the timing of the announcement, however, is more clearly related to Taiwan President Lee Teng-hui’s July 9 statement on Taiwan-China relations. Chinese leaders in Beijing allowed the report to be published in order to quell moves toward independence in Taiwan, which Beijing finds unacceptable.

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S & P Credit Downgrade


Due to the recent political tensions flaring between mainland China and Taiwan, the S & P index lowered China’s debt rating back to the second -lowest investment grade rating before ‘junk status,?which is where China stood in 1992. Foreign investors have been cautioned that government spending to prop growth outlooks is hiding the truth behind China’s economic slowdown and the real weakness in the private sector. These warnings bring renewed fear that China may need to devalue its currency, which would boost exports on the one hand, and lower the government’s purchasing power on the other. Nonetheless, because the government approved a registered increase of capital for Great Wall Securities, domestic trading activity is still pushing many share prices upward.

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Police Arrest of Religious Movement Leaders Produces Protest


The members of a Buddhist movement in China known as Falun Gong staged protests on July 21 in over 30 cities across the country in response to the arrest of at least 70 of its leaders over the past month. The police crackdown was spurred by a large-scale and clandestine protest staged outside of the leadership’s compound in Beijing in April. At that time over 10,000 members of the religious movement spontaneously converged on the compound demanding that the government recognize their organization, which it considers a cult, as an official religion. Their ability in April to organize without the knowledge of the government’s security forces caught the attention the leadership and prompted the arrests. In contrast to the peaceful protest in April, the current protests were met by police in riot gear who rounded up the protesters in many cities and bused them to holding areas generally outside of city limits. A Hong Kong-based human rights group reported that the whereabouts of some of the protesters was unknown.

While Falun Gong members deny any political agenda, analysts have speculated that its large membership of middle-aged retired citizens with average incomes, including members of the Chinese Communist Party, pose a threat to the power of the Communist Party. Since its inception in 1992 it has dramatically grown in size, attracting members with its emphasis on meditation and tenets drawn from a variety of Chinese traditions. Estimates of its size range from the official figure of 10 million to the group’s estimate of over 100 million members worldwide.

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