Building Democracy In China: The US Role

Introduction:

The June 4th "Bloody Sunday" massacre in Tiananmen Square and subsequent repressive actions by Chinese leadership have tragically exposed the limits of political reform in China. They have also illustrated the risks of basing Western security policies vis-a-vis communist regimes on the notion that such regimes will necessarily be moderated and transformed through commercial linkages.

The events in China should send a painfully clear message to all who advocate these linkages on such grounds: Despite a decade of growing U.S.-PRC detente and considerable access to the West’s high technology, credits, capital investment, and export markets, the most doctrinaire leaders of the People’s Republic of China (PRC) were willing to risk sacrificing that country’s increasingly benign image in — and growing economic ties with — the West in order to maintain absolute political, and as necessary, military control over its population.

Incredibly, the Western reaction to this brutal turn of events has been exceedingly tempered. President Bush and other Western leaders have condemned the actions of the Chinese leadership. In tangible — as opposed to rhetorical — terms, however, the U.S. response has been confined to two retaliatory measures and two humanitarian actions. These measures entail:

suspending U.S. government and commercial sales of weapons;
suspending visits between U.S. and PRC military officials;
extending the visas of Chinese nationals currently in the United States; and
offering through the Red Cross humanitarian and medical assistance to the victims of the Chinese government’s repression.

Unless the United States is willing to be clear in its support of reformist and democratic forces and to impose meaningful penalties in response to unacceptable conduct, the hard-line communists in Beijing will have established that they can act with impunity against the Chinese people and fear no serious economic and financial repercussions from the West.

As Sanctions Go, the Bush Initiatives Go Nowhere:

Unfortunately, the President’s limited response to date fails adequately to express the outrage felt by the American people at the brutal disregard by Chinese authorities of basic human rights and the popular demand for democratic institutions with which the United States has long been associated. What is more, it fails utterly to provide real disincentives to further repression in China.

Even Administration officials acknowledge that the temporary suspension of military sales has more symbolic purpose than real effect. Most of the munitions targeted are not scheduled for delivery until at least 1991, according to the Office of Technology Assessment.

China became eligible to make arms purchases from the United States in 1981. A general framework for U.S.-China military cooperation was established in 1983. Although the Chinese have made four major government-to-government arms purchases since then (totaling $600 million), less than $100 million worth of equipment has actually been delivered to date. Those purchases include:

$502 million procurement from Grumman Corporation (May 1986) of 55 avionics kits (roughly $10 million per unit) to modernize electronic systems on the Chinese Air Force F-8 fighter, including radar gauges, computers and sensing items. The bulk of the items purchased under this sale is scheduled for delivery in 1990.

$28.5 million sale by Mason & Hanger-Silas Mason Company and Hamilton Technology, Inc. (October 1985) of technology and know-how needed to build an artillery ammunition plant. The required equipment has been shipped; however, production lines are not yet operational.

$8.5 million buy from Honeywell Corporation (February 1986) of four Mk-46 torpedoes, which have not yet been delivered.

$62.5 million sale of four artillery-locating radar sets by Hughes Aircraft Corporation. Two were delivered in March 1989; the remaining two are scheduled for delivery next year.

The State Department Office of Munitions Control has granted export licenses (which are generally valid for two years) for commercial military sales to China valued at $85 million. Any munitions that have not yet been shipped under an export license will be temporarily halted.

Where the Impact of Sanctions Would Assuredly Be Felt —
Western Commercial Ties to China:

By contrast to the military sector, the West enjoys vastly greater leverage with the Chinese in terms of joint commercial interests. Such interests, particularly those of the United States, have grown substantially in the PRC in recent years:

U.S. direct foreign investment in the PRC is an estimated $3.4 billion, comprising 13 percent of total foreign investment in China — the largest of any Western nation.

Last year alone, 269 American projects, valued at $370 million, were undertaken in China.

Bilateral trade between the United States and the PRC topped $14 billion in 1988, with U.S. imports from China ($9.2 billion) almost double U.S. exports to that market ($5 billion). While U.S. exports to China have increased by slightly over $1 billion since 1985, U.S. imports from China have doubled.

U.S. technology transfer policies vis-a-vis the PRC have been substantially liberalized in recent years both through executive action and in accordance with the requirements of the omnibus trade bill.

$400 million in projects are currently covered by the U.S. Export-Import Bank.

$8.2 billion in international syndicated loans to China have been arranged since 1985.

$10 billion in multilateral lending has been provided by the IMF, World Bank, and the Asian Development Bank.

The Value of External Commercial Relations is Often Oversold:

Despite massive infusions into China of Western capital, technology, equipment, and management and marketing skills, events there have demonstrated that increased commercial relations do not necessarily contribute to the transformation of one-party totalitarian rule to true pluralism and individual freedoms. For that matter, at least in the Soviet bloc, it is evident that expanded economic ties — or "commercial bridge-building" as it was termed during the failed period of U.S.-Soviet detente in the 1970s — do not ensure either that internal repression is mitigated or that the foreign adventurism of communist states will be attenuated.

Acknowledging the contribution made to the current foment in China brought on by increasing popular exposure to Western values and liberties and by the Chinese tradition of student leadership in reforming society, it is modern communications, not commercial relations, that have been the largest single influence on and enabler for the popular demonstrations in Beijing.

The rapid dissemination of information through facsimiles, video, audio, and print media coverage has proven to be extremely effective in highlighting the glaring contrasts between the democratic and totalitarian worlds. These devices have also proven enormously helpful in facilitating the efforts of those who would move their regime from the latter toward the former. The contrast between the reaction — both domestic and international — to Chinese repression of dissidents and that of the Soviet Union, for example in Uzbekistan and Tiblisi, testifies to the difference modern communications technology makes where it is present and where it is not.

In light of these realities, the United States cannot afford to make "stability" — a code-word for the maintenance of the status quo and "business as usual" — its over-arching policy goal. Instead, it must seize the initiative offered by developments like those in China to promote the opportunities for greater freedom, even where doing so may appear to involve taking some risks. The possibilities of great strategic benefits that would accrue from the emergence, wherever they are now denied, of basic human rights and democratic institutions warrant a bolder vision. The fundamental moral values of American society dictate that U.S. foreign policy be framed in a manner designed to nourish and support those who long for genuine democracy and free enterprise.

Proposed Economic, Technology and Financial Measures:

In the face of escalating violence in China under martial law, and the growing prospects for civil war, the Bush Administration’s initial response must be augmented. The slaughter of an estimated 3,000 unarmed civilians, accompanied by the image of tanks in Tiananmen Square crushing a hand-made replica of the Statue of Liberty, demands a more forceful expression of moral outrage by the leader of the Free World and a different vision of American policy on behalf of those struggling for freedom.

Such a vision requires in the Chinese context a melding of promises of improved economic ties in exchange for the demonstrated expansion of democratic institutions and free enterprise on the one hand and powerful disincentives to further totalitarian control and denial of popular aspirations for individual freedoms on the other. Accordingly, the United States should signal its willingness, in principle, to provide significant levels of economic and financial assistance — in coordination with its allies — to a fundamentally reformed China.

At the same time, it must make clear the unacceptability of present Chinese behavior. Specifically, unless and until martial law is ended and a clearly reformist government is established, the United States must lead its Western allies in adopting meaningful responses such as the following:

Suspending the Most-Favored Nation status enjoyed by the PRC since 1980;

Suspending preferential U.S.-PRC trading arrangements on textiles;

Suspending PRC access to U.S. Export-Import Bank loans and credit guarantees and all other U.S. government loan and insurance programs;

Seeking to secure cooperation from all other OECD countries to suspend official credits and credit guarantees to the PRC;
- The Secretary of State should be required to report to Congress on the specific responses and level of cooperation of each OECD country within two weeks.

Reversing the liberalization of export controls of dual-use technology;
- In this connection, it is especially important to obtain the cooperation of COCOM countries in order to ensure that this policy change is uniformly observed.
- A report to Congress should be required on the level of cooperation obtained from COCOM members.

Suspending PRC eligibility for the Overseas Private Investment Corporation;

Suspending use of Trade and Development Program funds for project feasibility studies in the PRC;

Seeking alliance cooperation in downgrading PRC membership in international financial and trade institutions for the duration of the present strife; specifically:

Suspending PRC "observer status" at the General agreement on Tariffs and Trade (GATT);

Conditionally downgrading PRC membership status to "observer status" at the International Monetary Fund, the World Bank, and the Asian Development Bank (ADB);

Requiring the U.S. executive directors of the IMF, World Bank and ADB to oppose any multilateral assistance so long as present Chinese behavior continues;

Urging the withdrawal of U.S. and alliance bank participation in any syndicated loans to China, PRC bond offerings, or bank-to-bank credits currently underway or contemplated;

Beginning to compile information on Chinese assets in the West (e.g., deposits, real estate holdings, etc.) to guide policy-makers;

Suspending or withdrawing the participation of U.S. companies in ventures involving Chinese commercial space launch vehicles (i.e., Long March);
- The United States should simultaneously seek to obtain similar restraints from other participating countries.

Urging the United Kingdom to conduct a review of the Sino-Joint Declaration on Hong Kong in light of obvious Chinese contempt for human rights — the respect for which is a central ingredient in that accord;

Postponing upcoming U.S.-PRC economic bilaterals such as the July meeting of the U.S.-China Joint Commission on Commerce and Trade;

Suspending appropriate U.S.-PRC trade, scientific, and technical agreements (e.g., the umbrella agreement for science and technology exchanges — the U.S.-China Agreement on Cooperation in Science and Technology of 1979);

Initiating a United Nations resolution condemning the Chinese massacre; and

Providing financial, technical and, as appropriate, other support to the pro-democratic movement — including identifying means whereby assistance can be selectively supplied in the event the situation deteriorates further into full-scale civil war.

The Soviet Dimensions:

A key lesson the West would be well advised to draw from recent events in China involves the capacity of communist leaders to undergo dramatic and speedy changes in their public personas. For the past decade or more, Deng Xiaoping has been viewed almost universally as a "visionary reformer" who was devoted to the liberalization of China through dramatic economic change. Throughout the West, Deng was reputed to be a man who appreciated his country’s vital need for Western technology, capital, and export markets and, therefore, one who would do nothing to jeopardize its access to such resources. Deng’s reported direct role in the imposition of bloody martial law to suppress popular dissent should not only explode this "cult of personality" in China but also send a chilling signal to those currently ascribing parallel, benign qualities to Mikhail Gorbachev.

It would be a similarly grave mistake to assume, as some observers are now doing, that Gorbachev can succeed where Deng has failed by providing limited political forums for venting public frustrations in the USSR. The audacity with which such frustrations are being publicly exhibited has, if anything, increased thanks to the provocative complaints televised from the Chamber of People’s Deputies and elsewhere. Events in Azerbaijan and Georgia over the past few months have, moreover, shown that violent measures remain valued instruments for the Soviet authorities when they believe political control is being jeopardized by dissident forces.

Neither should the West be under any illusions about the risks to its security interests should the mending of the Sino-Soviet rift, begun prior to martial law, continue under more hard-line communist leaders in Beijing. In fact, it should be borne in mind that the repressive elements within China’s leadership, notably Li Peng, have long been influenced by the Soviet Union. (Li received some 15 years of political education and training in the Soviet Union.) Should the anti-democratic forces in China prevail, the USSR could realize a long-sought foreign policy realignment that would trivialize the strategic significance of its recent reverses in Afghanistan, Poland and elsewhere. In this regard, Gorbachev’s depiction of the pro-democracy student demonstrators in the PRC as "hot-heads" and the absence of vigorous Soviet denunciations of the bloody efforts to destroy the Chinese reform movement are particularly illuminating.

Finally, it should be apparent that the West erred in making numerous, largely irreversible economic concessions to the Chinese in terms of access to the Free World’s economic, financial and technology resources in the mistaken belief that economic and political reform had likewise reached an "irreversible" point. Particularly noteworthy in this regard have been decisions to grant the Chinese unconditional entry into the International Monetary Fund, the World Bank, and the Asian Development Bank. With the Soviet Union clamoring for observer status or membership in these same institutions, U.S. and allied decision-makers must not fall prey to the same error once more.

Conclusion:

It is imperative that, as the United States fashions its response to events in the PRC, it does so in support of reformist elements and mindful that other totalitarian nations — most notably the Soviet Union — will be watching closely. The proposed actions in the economic, technology, and financial fields are measured ones. They are designed not to do irreparable harm to the United States’ important strategic relationship with China, but calculated to bring maximum pressure to bear for the restoration of positive trends toward economic and political liberalization in the PRC. If adopted, they can also serve to move China forward on the road to systemic reform and respect for individual liberties.