For a dividend beyond trade

THE CLINTON ADMINISTRATION is obviously banking on the anticipated political-diplomatic spin-off effect of the latest vote by the U.S. Senate in favour of a trade bill concerning China. Prima facie, the bill extending to China the facility of `Permanent Normal Trade Relations' (PNTR) is replete with economic consequences, conceivably positive, for both Washington and Beijing. As the updated version of an old-style practice of granting the Most Favoured Nation (MFN) status to a partner- country in bilateral trade relations, the PNTR facility can prove beneficial to China in some symbolic ways too. However, it is the U.S. administration which raised the stakes over this measure much more than the Chinese by incorporating trade as an essential ingredient of a policy of ``engagement'' with Beijing. With this bill having already received the approval of the House of Representatives, the U.S. President, Mr. Bill Clinton, feels vindicated that an issue with acute contentious connotations on Capitol Hill has finally been clinched in a manner that could augment the legacy of his leadership. He has argued for long that the best way to change the international profile of China, seen in the West as a hold-out communist state despite its reformatory zeal, is to engage Beijing by offering it a mixture of economic inducements and political disincentives. This diplomatic balance- sheet will now come under scrutiny with an eye to the future.

Piecing together a maze of statistics about the new economic opportunities for the U.S. in China - a subject not of much direct interest to the larger international community except in the case of countries such as Japan exercising some competitive say over matters of trade with Beijing - Mr. Clinton has now taken the line that Americans ``will be far more able to sell goods'' to the Chinese without having to move factories. With the latest U.S. nod for PNTR status expected to clear the way for Beijing's entry into the World Trade Organisation (WTO), Washington's calculation is that a political chain reaction could be set in motion in China. The U.S.' expectation is that the ``demise'' of China's state industries may be accelerated and the role of the Government itself in the daily lives of the Chinese can be scaled down. The punchline in the Clinton-speak on this theme is that the U.S. will soon command ``more influence'' in China with ``an outstretched hand than with a clenched fist''. The wish-list is long on the eventual transformation of China as a U.S.-friendly state, but the view from Beijing is devoid of any dream merchandise of the political kind.

China, arguably ranking fourth among global exporters after the return of Hong Kong, recognises that its overall trade with the U.S. can still rise. Beijing, according to an estimate, may account for about $90 billion in exports to Washington this year against the latter's anticipated bilateral tally of $15 billion. China will no doubt keep this in focus ahead of a WTO-entry in the context of some cumbersome bilateral trade deals it had worked out with several key countries including the U.S. But Beijing's biggest gain in the short run is that it will no longer be placed in the dock, albeit over political issues concerning human rights, by U.S. law-makers year after year during their deliberations over bilateral trade issues. Knowing this, the U.S. is keen to package the latest trade vote as a carrot for the Chinese in ``becoming more responsible members of the international community'' so as to encourage more countries to trade under the WTO norms. However, in looking for such political dividends, Mr. Clinton is convinced that a ``constructive'' role by China, as seen from Washington, on issues of peace and non- proliferation would still need to be supplemented by a sustainable U.S. military presence around the world.

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