E-Notes

The Inscrutable Americans, Zhu Rongji, and The Deal That Wasn’t

by Harvey Sicherman

April 30, 1999

Harvey Sicherman, Ph.D., is President of FPRI and a former aide to three U.S. secretaries of state. He is co-editor, with Murray Weidenbaum, of The Chinese Economy: A New Scenario (FPRI Report, March 1999) and co-author, with Alexander M. Haig, Jr., of New Directions in U.S.-China Relations (FPRI Report, March 1997).

As PRC Premier Zhu Rongji departed for Canada on April 14, 1999, the official Chinese media were pronouncing his U.S. visit a success. One expert, quoted in Beijing, opined that expectations had been low. Actually, expectations had been very high. That was why Beijing dispatched its best man to Washington to sort out a potentially disastrous situation. But the China that at last could say yes collided with the America that at last could say no. The result was a model of muddle, a case study of confusion worthy of review for years to come on how not to manage a relationship.

The roots of the trouble could be symbolized by the phrase “strategic partnership” which was applied to the U.S.-PRC relationship during Jiang Zemin’s visit to Washington from October 26-November 3, 1997. This was a palpable exaggeration. Ever since the demise of the USSR, the U.S. and China have been trying to find their way on a series of troublesome issues. The emergence of the PRC as a traditional great power, exposing an authoritarian nationalism as it sheds its communist skin, did not make things easier, but then neither government could succeed if they proceeded on the basis of mutual illusions. “Strategic partnership” with its implied march in lockstep could only foster such illusions.

Clinton’s visit to Beijing from June 25-July 3 of 1998 pumped further air into the balloon. He and Jiang made mutual political sacrifice: Clinton came despite the objections of the human rightists and the Chinese leader allowed him a televised appeal for greater freedom. The Chinese were rewarded with American praise for Beijing’s economic virtue—amid criticism of Japan. Clinton also pronounced the “three nos” on Taiwan, a formula devised by Beijing to shift America subtly to its side of the dispute over the island’s future.

The Japanese, however, soon pricked the balloon. When Jiang Zemin visited Tokyo in November expecting to dominate the scene, the Japanese refused a formal written apology over World War II atrocities (even Korea got this); refused to exclude the Taiwan Strait from its security agreement with the U.S.; and refused to utter the three nos on the Taiwan issue. Hardly had Jiang returned to Beijing then the U.S.- China channel began to overflow with fresh and not so fresh sewage: a new Chinese suppression of dissidents; charges of nuclear spying and political payoffs; a Congressional report detailing careless handling of U.S. technology transfer, the product of Clinton’s disastrous 1994 decision to give Commerce rather than State the management of export approvals; reports of new Chinese import obstacles as the Chinese economy slowed. The Chinese sounded their own alarm over suddenly announced American plans for ballistic missile defense following a surprise North Korean rocket test. This threatened to negate what a Pentagon report described as a missile buildup along the Taiwan Strait clearly intended to raise the cost of defending the island.

Then there was the “titting for tatting” between Beijing and Taipei. Even as Cross-Strait talks resumed, the unrelenting contest for recognition and legitimacy between the island and the mainland continued. Inevitably, this reached the new international "badlands," the Balkans; when Taipei secured recognition from the needy government of Macedonia (reportedly at the cost of $1 billion), Beijing retaliated by vetoing a renewal of the UN force protecting the country’s border with Kosovo just as that crisis broke open, to the open irritation of the Untied States.

The Chinese were also beset by new evidence of economic slowdown which Zhu Rongji himself confirmed in his report to the National People’s Assembly, inevitably raising doubt about the PRC’s ability to sustain a growth rate that could accommodate both rising expectations and a reform effort of state-owned industries bound to increase unemployment. The bankruptcy of several provincial investment companies, while signs of Beijing’s courage, unnerved foreign investors with their revelation of previously concealed exposures and doubts over repayment terms.

Then came Kosovo. The Chinese saw a U.S.-dominated military alliance attacking a sovereign state without reference to the UN Security Council because of ethnic troubles in a province of emotional and historical value to the Serbs. This stimulated the already overstimulated Chinese imagination that the U.S. might be bent not only on “containment” of states offensive to Washington but even their partial dismemberment on the grounds of “human rights.” Tibet, Taiwan, and Tiananmen were three names that seemingly put the PRC itself in the crosshairs of the “hegemonists” in Washington.

Zhu Rongji, by his own admission, thought the trip might be untimely. In several press interviews before his visit, he lowered expectations, advertised his willingness to take criticism, and portrayed U.S.-China relations as virtually deadlocked in disagreements across the spectrum, even in trade. In fact, as we know now, this was mostly careful stage preparation for an expected major triumph, a U.S.-PRC agreement on Beijing’s entrance into the World Trade

Organization. The PRC’s exclusion from this global rule-setting body had been delayed for years by China’s insistence that it be given the weight due a world economic power but special market protections available to less developed countries. This would have continued Beijing’s winning formula of exporting lower-end technology goods while restricting imports of higher-end goods where China could not compete. Indeed, as the Asian economic crisis deepened over the past two years, Beijing seemed to have lost interest in joining the WTO.

Several developments seem to have changed the Chinese mind. One was certainly a desire to find an area of common interest with the U.S. while the relationship seemed under attack in so many other areas: a reaffirmation of “partnership.” Another was a desire to stimulate foreign investment in new areas (such as financial services) where the Chinese lagged and to give further impetus to reform. A third was surely Taiwan; the island had completed its arrangements with the other WTO members. While the WTO consensus, supported by the U.S., was not to admit Taipei before Beijing, WTO membership would allow the PRC to hammer away at the ROC’s security inspired restrictions on direct trade and communication. Finally, the WTO itself was planning a round of negotiations on agriculture in November 1999 of great importance to China but where China had as yet no seat.

Thus, the Chinese Premier arrived in the surreal atmosphere of wartime Washington prepared to deal. Part of the trip was clearly designed to duplicate the symbols of his predecessors, Deng Xiaoping and Jiang Zemin. Zhu’s speeches contained western cultural references; he joked naturally and his language was refreshingly free of cant. Inevitably, there was the funny hat, a ten gallon Texan given him in Denver. But the photographs showed the hat somewhat askew, an inadvertent metaphor for what had happened to him at the White House. Zhu Rongji had reason to believe that a deal was in hand. Beijing’s most potent American adversaries—supporters of Taiwan—would be disarmed because Taipei also wanted the PRC in the WTO. Side agreements available on wheat and citrus fruit would bring to his side American legislators from California, Florida, and the Pacific Northwest. The dea itself on WTO offered major opportunities for U.S. financial service and telecommunications companies in restricted areas of China’s market. But the China that at last could say yes to American demands encountered an America that at last could say no to Chinese deals. Expecting to find in Clinton a resolute warlord reinvigorated by his escape from the Lewinsky scandal, the supremely confident Zhu Rongji found instead battle-beleaguered Bill, not the comeback kid but a man cornered by the miscalculations of his diplomats and generals. The President’s unreadiness for the Chinese concessions was reinforced by a political team that sensed he was not in shape to open a new front with Congress, an impression no doubt increased by opposition from his own supporters, such as the unions and human rightists. Republican Senate Leader Trent Lott’s opposition to WTO for China regardless of the details indicated that the Republicans would be difficult. Having signalled for months what was needed for a deal, the President then abruptly turned it down. To the Chinese, the Americans had become inscrutable.

Feeling set up and fed up, Zhu Rongji could not return to Beijing with such soiled hands. Familiar with the ups and downs of politics himself, having been purged at least once, the Chinese leader seemed to recognize in the President a politician with a bad case of weak knees. He decided on a course that combined surprising rudeness with sheer pressure. The Administration’s attempt to pocket the concessions publicly while promising a deal later he refuted publicly as erroneous, forcing a hasty weekend negotiation on some side issues so there would be at least some deals to announce. Describing the President as lacking “courage” (later amended to the less harsh “he did not dare”), Zhu Rongji stirred up the astonished business onstituency, which was reinforced by various Congressmen who saw in the WTO an obvious boon for U.S. commerce even if it meant giving up the annual rhetorical roast of the Chinese before renewing MFN status. In short, seeing that Clinton had been cornered by one set of pressures, producing a no, Zhu Rongji created a second set of pressures in the hope of inducing a yes.

By Wednesday, April 14, he had succeeded. The President called the Premier in New York, scene of another surreal event. Zhu Rongji, the leader of an officially Marxist-Leninist, Mao, Deng, Jiang thought-dominated government, had just presented a large red bull, made of wood, to a cheering stock exchange. The Chinese leader cooly turned aside Clinton’s invitation to finish the negotiation in Washington, suggesting instead that the U.S. team go to Beijing. The deal that wasn’t had now become the deal that as… almost.

What does this episode tell us about U.S.-PRC relations and those in charge of them? Zhu Rongji’s derring-do has certainly reaffirmed his reputation for direct and effective action. And the story will surely supply the legions of Clinton critics with yet another example of the resident’s uniquely haphazard foreign policy style. Yet it should not disguise that both of the protagonists are embattled: Zhu’s leading reform effort breeds enemies by the day across a broad spectrum of ideologues, corruptionists, and displaced workers; Clinton got nothing from Zhu that would ease security problems with the Chinese.

Zhu’s performance will leave Washington feeling that Chinese problems are perhaps deeper than suspected; otherwise why the sudden concessions? And Clinton’s behavior will leave Beijing wondering about his ability to deliver while reinforcing the view of those who think the American President defines the national interest by the pressure du jour. Under these circumstances, we can anticipate the circus atmosphere in U.S.-Chinese relations to continue, full of daredevil passages, plenty of clowning, and the occasional very serious fall from the tightrope.

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