Jiang, Clinton seek to heal old wounds

Business Asia, Sept 13, 1999

Visit to aid Australian trade

Mending soured relations with the United States and an increase in bilateral trade between Beijing and Canberra are two of the major outcomes likely to flow on from President Jiang Zemin's historic visit to Australasia.

Jiang's visit last week to Australia was the first by a Chinese head of state.

Trade and investment discussions between Jiang and Australian Prime Minister John Howard centred on minerals, energy and resource exports.

Two-way trade between China and Australia has grown from US$120 million in 1972 when diplomatic links were established to US$5.5 billion in 1998.

Australian trade with China grew by more than 20 per cent last year, but China still maintains a slight trade surplus with Australia.

The Chinese leader stopped off in Australia on his way to attend this year's Asia Pacific Economic Cooperation (APEC) leaders' summit in New Zealand, which ended today.

As Business Asia went to press, the region's leaders were meeting to discuss further trade liberalisation.

However, the main interest in APEC surrounded the relationship between Jiang and US President Bill Clinton.

The meeting was their first since mid-1998 and was an opportunity to mend wounds opened by the failure to reach a World Trade Organisation agreement in April and the May bombing of the Chinese embassy in Belgrade.

Both leaders recognise that dangerously frayed ties must be mended, yet their room for compromise was likely to be limited by political hawks at home.

"It will be less than a kiss-and-make-up," said one Beijing-based diplomat. "Perhaps make-up without the kissing."

At best, said another envoy, the summit would seek to avoid open conflict over the more explosive issues -- most importantly Taiwan, but also human rights and trade -- and produce an ambiguous "fuzzy atmosphere".

"It's an attempt to get the relationship back on an even keel," he said.

Beijing froze WTO talks in May in fury at the US bombing of its embassy in Belgrade.

Washington has since apologised for the embassy attack and agreed to pay US$4.5 million in compensation to families of three Chinese journalists killed.

New Zealand officials hoped APEC would be used as a breakthrough between the US and China on the WTO.

However, most political analysts suggested Clinton was determined to delay an announcement on China's WTO admission until the millennium round of trade talks beginning in November in Seattle.

The feeling was that APEC would be used as the warm-up act for Jiang and Clinton before the main event in Seattle.

"The Clinton administration wants to launch the millennium round at Seattle -- they want something big for his last term (as President) to be remembered by," a European diplomat said.

That scenario is disappointing for New Zealand's APEC organisers, who were hoping a major announcement at this year's summit would add lustre to the event and help promote Auckland's status as a world city.

APEC has been in need of a boost following the region's economic crisis and criticism of the alliance after last year's widely ridiculed talks in Malaysia.