What Price Will China Pay?

0 Comments | Insight on the News, May 7, 2001 | by Jamie Dettmer, | John Berlau

The dispute between the United States and China over the midair collision between a U.S. spy plane and a Chinese jet fighter still is likely to take its toll on relations between the two countries, say U.S. lawmakers and analysts.

Beijing's release of the American aircrew has not lessened the hardened attitudes toward Beijing on Capitol Hill or within the Bush administration. That increases the chances the White House will decide later in April to punish China by selling Taiwan an array of military equipment, including submarines and the precursor of the Aegis missile-defense system.

Administration officials are discussing how to make sure China pays a price for holding two dozen U.S. Navy personnel for 11 days. Possible punitive action apart from the controversial arms sale to Taiwan includes blocking China from securing the 2008 Summer Olympics, adding conditions to the renewal this summer of China's trade-relations status and granting a transit visa to Taiwan's president, Chen Shui-bian.

The debate on trade-relations renewal likely will be fraught, but administration officials behind the scenes make it clear that the pro-trade White House does not favor any withdrawing of trading status. The United States has a huge business stake in China, with more than $115 billion in annual bilateral trade.

But the business lobby likely will find its clout on Capitol Hill and in the White House diminished by the dispute and discover that some blood will be drown from China. The biggest cost for Beijing likely will be forcing a public mood change toward China in the United States. When George W. Bush described China as a "strategic competitor" rather than a partner during the election campaign, there was no national consensus behind his words. Now there is, and opinion polls suggest Americans view China far more warily now than before the standoff.

Despite China's wish to divorce commercial matters from its political relationship with the United States, that likely will prove harder in the coming months and years. The administration will have more congressional backing in the wake of the standoff to cast a far more skeptical eye on the activities of Chinese companies owned or controlled by the People's Liberation Army. And U.S. firms that do business with them probably will have to tread more carefully. This includes Qualcomm Inc. and Loral Space and Communications, the latter a U.S. satellite company anxiously awaiting results of a grand-jury investigation into possible export-control violations.

A newly formed U.S.-China security review commission, which is due to report to Congress early next year, also will provide ammunition for lawmakers who are hawkish toward Beijing, Capitol Hill insiders say. Conservatives dominate the commission, which includes Roger Robinson, the former Reagan economic-warfare aide. Some analysts believe, though, the administration will have to be surefooted if it is not to fuel a Republican feud that pits hawks against those who argue that maintaining a fruitful business environment will prompt political change in China.