THE WORLD : CHINA : Beijing Can’t Have Its International Trade and Own Set of Rules, Too

WASHINGTON —  It must have left the heads of China’s ruling gerontocracy spinning: The United States first slaps China with tough trade sanctions for pirating U.S. “intellectual property,” blasts it on human-rights violations, then announces a high-level visit by Energy Secretary Hazel R. O’Leary and top American CEOs, followed by the U.S. sale of subsidized wheat at bargain prices. And for good measure, House Speaker Newt Gingrich chimes in with caustic comments about Taiwan’s “right to self-determination.” In the middle of all this, with a trade war brewing and paramount leader Deng Xiaoping on his deathbed, China blinks and offers to resume negotiations before the sanctions take effect.

Do all these pieces somehow fit together, or do they point to a policy in disarray?

The Clinton Administration calls its policy toward China “comprehensive engagement.” Comprehensive? Maybe. But it is not exactly the prioritized, constructive new U.S.-China relationship many hoped would result from President Bill Clinton’s abrupt abandonment of the link between most-favored-nation trade status and good human-rights behavior.

As it turns out, the price of Clinton’s flip-flop is lost U.S. credibility. This was a factor in China’s miscalculation in pushing the trade dispute over the brink in the mistaken belief that the same “business-first” venality that scuttled the human-rights link would compel Clinton to retreat on pirating.

But the same U.S. business community that pressed the White House to delink trade from human rights also firmly supports applying the heat to China for its failure to stop the pirating of 75 million CDs, videos, software and other copyrights. The Europeans and Japanese quietly cheer us on. China has simply not lived up to its responsibilities under international agreements it pledged to honor. The issue is bigger than the estimated $1 billion a year in lost revenues to U.S. firms. It goes to China’s reliability and predictability as an economic partner.

China, with some $200 billion in annual global trade, is the 11th-largest trading nation in the world. Yet, its partly privatized, partly statist economy is not fully governed by the rule of law. A Byzantine, secretive system of import restrictions, regulations, quotas, personal connections, or guanxi , governs commerce. Many of the 29 factories Washington has identified as “pirates” are run either by associates of the Communist Party or the Chinese military.

But China cannot be both an acceptable player in the global economy and still play by its own rules. This dilemma has held up Beijing’s efforts to become a founding member of the World Trade Organization. It’s also encouraging many foreign companies to rethink investment in China until its economic reforms mature and political stability is more certain.

While the Administration is right to go to the mat over copyright piracy, the dispute is emblematic of a volatile and uncertain Sino-American relationship. There is a laundry list of issues--China’s missile exports, nuclear matters, political repression, U.S. relations with an increasingly assertive Taiwan and Beijing’s assertiveness in the South China Sea--that could unravel relations. The danger signs were evident enough to the Administration that it held a high-level White House meeting on China last week.

The tension, in part, is a product of the political paralysis in Beijing as the Chinese elite jockeys for position in the post-Deng era. But it is also a consequence of the lack of follow-through, clear sense of priorities and strategic direction in U.S. China policy.

Clinton’s shift on human rights and trade freed up the various departments and agencies to pursue their own causes without putting the overall relationship at risk. Thus, the State Department blasted Beijing in its human-rights report, Defense Secretary William J. Perry conducts a military-to-military dialogue, the Commerce Department cuts business deals, and so on.

But engagement is not a policy; it is a means. The lack of coordination, focus and consistent leadership in defining priorities impede the effectiveness of U.S. policy toward China. In some measure, this results from a lack of China expertise among senior Administration officials.

Whatever the larger explanation, there is compelling need to remedy the defects and tie together the disparate strands of U.S. policy. We are entering a critical period during which the future of China’s half-completed and now frozen economic reforms, its political liberalization and its still unclear role in the world will be determined. The next two to five years will be marked by some degree of turmoil, as a post-Deng political order slowly emerges. In 1997, Hong Kong reverts to Chinese sovereignty. With 21% of the human race, its nuclear weapons, U.N. Security Council veto, third largest economy and growing military capabilities, which way China goes is clearly of global consequence.

Add to this geopolitical situation a Republican Congress with its own China agenda. The one-China policy begun by Richard M. Nixon, may, ironically, be challenged by his fellow Republicans.

Clinton has an opportunity to display his resolve to recast his China policy: Ambassador J. Stapleton Roy, a veteran China hand, is scheduled for reassignment. He should pick a tough-minded pro, who knows the country and the issues, to reduce his Asia-expertise deficit. Yet, his leading choice is former Tennessee Sen. Jim Sasser, who has no such background to recommend him.

The question of whose rules prevail, China’s or the international community’s, is the thread that runs through all U.S.-China tensions, from trade to human rights, from nuclear weapons to South China Sea hegemony. The aim of U.S. policy must be to show China it simply can’t continue to play by its own set of rules.