Center For Security Policy Critical Of Administration’s Continued Weak Response On China

(Washington, D.C.): The Center for Security Policy today criticized as wholly inadequate the Administration’s response to dozens of executions of pro-democracy demonstrators in China. "The Bush Administration’s determination to maintain the supremacy of commercial relations over human rights in China marks a particularly tragic chapter in U.S. political history," said Frank J. Gaffney, director of the Center. "Fortunately, Senator George Mitchell had it right when he said: ‘There are times when our ideals must be vindicated…when what America stands for and believes in is more important than an economic benefit to be derived from a trade relationship.’"

The Center for Security Policy judges the measures announced by the White House to date against China as totally inadequate and feckless. "To try to pass off these ‘new’ sanctions as meaningful actions — when in fact they are either manifestly unavoidable or have already been initiated by others — is an insult to the intelligence of the American people and the Congress," said Gaffney. "For example, pocketing measures that were, for all intents and purposes, already underway by the World Bank and the Asian Development Bank, demonstrates the Administration’s determination to avoid its own economic and financial measures," Gaffney added.

Although the Administration has temporarily suspended high-level exchanges of government officials between the United States and China, the Administration had, as a practical matter, no alternative in light of recent events in the PRC. It is inconceivable, for example, that the Secretary of Commerce would have proceeded with a trade mission to China in July in the wake of the Tiananmen Square massacre and ensuing crackdown on civilian protestors.

Similarly, the Administration’s pronouncement that it will "seek to postpone consideration of new international financial institution loans to China," simply piggybacks on World Bank and Asian Development Bank decisions made over the last two weeks to postpone loan considerations for China. (The World Bank had already postponed consideration of $450 million in loan applications prior to the President’s announcement.)

"Were it not for the Administration being bludgeoned into action by an outraged Congress and American public, even official recognition of a suspension of multilateral lending to China would not have occurred. If we look beneath the thin veneer of this second round of measures toward China, one can only conclude that this Administration is dedicated to maintaining a firebreak against the use of economic and financial sanctions to avoid precedents for similar responses to domestic repression elsewhere by communist regimes," said Roger W. Robinson, Jr., former senior director for international economic affairs at the National Security Council and member of the Center’s Board of Advisors.

"The Administration has strenuously tried to downgrade the significance of Western capital, technology, joint ventures and management in the context of China’s ability to revitalize its economy. The same misleading argument is being used in relation to the Soviet Union. In both cases, this assertion is simply false. Western capital, technology and other forms of assistance are of fundamental importance to salvaging the economies of the USSR and China," said Robinson.

"It is clear that Li Peng and others are using China’s continued associations with Western businesses and financial institutions to bolster their authority and as propaganda tools to convey to the Chinese people a sense of calm and business-as-usual," Robinson noted.

The appropriate response by the U.S. government — especially in light of the public execution of pro-democracy demonstrators — would include additional measures outlined in the Center’s report entitled Building Democracy in China: The U.S. Role, dated June 8th. That report recommends 17 measures including the suspension of China’s (1) most-favored-nation status, (2) preferential access to the U.S. textile market, (3) access to U.S. Export-Import Bank credits and loan guarantees, (4) eligibility for Overseas Private Investment Corporation programs, (5) access to dual-use American high-technology and (6) ability to recruit U.S. companies in ventures involving Chinese commercial space launch vehicles (i.e., Long March).

The Center further urges the withdrawal of U.S. and alliance bank participation in any private syndicated loans to China, bond offerings, inter-bank deposit relationships, or bank-to-bank credits. Congress may wish to consider urging the withdrawal of deposits maintained by U.S. and Western banks with the Bank of China and other Chinese banking entities worldwide. It is hard to imagine an international financial measure which would be as potent a reminder to Beijing of China’s dependency on Western capital to modernize its economy.

President Bush should immediately secure Japan’s agreement to coordinated sanctions in the areas discussed prior to the Paris Economic Summit (July 14-16). In so doing, he can better leverage the cooperation of the European Community during the summit so that a formal announcement of alliance-wide sanctions can be made at the conclusion of the sessions in Paris.