U.S. trade vote boosts China reforms

By Paul Eckert

BEIJING (Reuters): China's reformist, outward looking leadership emerges as a big winner in the historic U.S. vote granting Beijing permanent normal trade relations.

The vote in the House of Representatives smoothes the way for China's entry into the World Trade Organization (WTO) and helps President Jiang Zemin and Premier Zhu Rongji by giving them more leverage over what President Bill Clinton called "more reactionary, communist elements" in China.

"It goes a long way toward easing pressure from those within the leadership who would clearly like an excuse to harken back to a more party-in-command economy," said a western diplomat.

A European diplomat agreed.

"This is certainly a victory for the reformists, not only for Zhu Rongji, but for Jiang Zemin himself because he invested a great deal of political capital in the success of the talks with the U.S. and in entering the WTO."

Jiang struggled to keep China-U.S. ties on course during a year that included a humiliating U.S. rebuff of Zhu's WTO market- opening offer, the NATO bombing of the Chinese embassy in Yugoslavia and flare-ups over human rights and Taiwan.

Entrenching China's economic transformation in the rules-based WTO will bring widespread changes that go far beyond trade in goods and services.

However, while Clinton's argument that trading with China is the best way to change the Communist state may have helped carry the day in the House -- the Senate has yet to vote on the issue but is expected to pass it by mid June -- any political transformation will take years, if not decades.

Jiang and Zhu are political hardliners, who would have dismissed as political maneuvering Clinton's pronouncements that freer trade would bring political freedom.

"The Chinese simply don't accept the premise that economic liberalization necessarily leads to the import of Western democratic values," said the European diplomat.

"They believe that they can guide economic development and it will not have a knock-on effect on political freedoms or other democratic developments," he said.

Beijing displayed confidence in its ability to manage change by opening to free trade the traditional economic base of Communist power -- the food grain and heavy industry sectors.

"If they were worried about a collapse, or being thrown out of office, then they would be very unwilling to do anything to create problems in the next year or two," said Yukon Huang, head of the World Bank's mission in China.

Politically, China has taken plodding steps toward more representative government through tightly-controlled village elections, but its timetable for implementing even "socialist democracy" stretches well into the middle of the century.

Beijing has embraced the Internet, but has sought to keep content politically correct.

China's WTO-driven rush to harmonize its nascent legal system with global standards is expected bring transparency to government administration and business practices, but that may fall far short of true "rule of law" in the Communist state.

"We don't subscribe to the view that, by doing business and letting things take their course, human rights will improve," said Sophia Woodman, research director at Human Rights in China.

Countries like Myanmar are already WTO members, which gives reason to "question the effects of the WTO regime on the rule of law", she said.

Ren Wanding, a veteran of Chinese pro-democracy campaigns since 1976 and one of few activists not in jail or in exile, said he welcomed PNTR as a way to "speed up the modernization of Chinese society in every aspect".

"There were many valid arguments on either side and much speculation about every aspect of PNTR, but the key is to take the broad, macro, long-term view," he told Reuters.

He said 20 years of reform and opening before WTO had increased popular demands for political openness but at the same time had boosted state and Communist Party power to suppress it.

"With regard to human rights and democracy, the Communists become even tougher as pressure for change grows," he said.

"This will be a sensitive issue in the short and long term as forces for good and forces for bad battle it out, but I am an optimist and think the positive forces will win," Ren said.