Crisis Forces Bush to Balance Clashing China-Policy Camps By NEIL KING JR., MICHAEL PHILLIPS, GREG JAFFE and CHARLES HUTZLER Staff Reporters of THE WALL STREET JOURNAL, April 4, 2001 As tension between the U.S. and China mounts, President Bush finds himself in the awkward position of leading a party divided over how best to deal with China: In one corner stand the national security hard-liners, and in the other, the pro-business camp. With a battered American spy plane sitting disabled on a Chinese runway, he may soon be forced to choose one over the other. The standoff between Beijing and Washington that began with the collision of an American reconnaissance plane and a Chinese jet fighter intensified Tuesday. The Chinese government allowed U.S. officials to visit the 24 crew members who made an emergency landing on a Chinese airfield after the incident, but made no move toward releasing them or the EP-3 plane. That prompted President Bush to appear at the White House late Tuesday and declare bluntly: "We have allowed the Chinese government time to do the right thing. But now it is time for our service men and women to return home. It is time for the Chinese government to return our plane." To the Beijing-bashing hard-liners, China is an expansionist power with a growing military and a resolve to eclipse American influence. To the Beijing-friendly business lobby, China is a lucrative market and manufacturing site, and just as important, a country where economic progress is making old security worries obsolete. Throughout a long presidential campaign and his first 11 weeks in office, Mr. Bush has succeeded in papering over the differences between the two camps. But the current standoff between Washington and Beijing is pushing the argument to the fore. And the longer the impasse drags on, the greater the pressure will be on Mr. Bush to incline toward the hard-liners' more skeptical view of China's intentions. That would push the supposedly pro-business Republican president in the opposite direction of his Democratic predecessor, President Clinton, who sided consistently with the business world on China issues. "We need to realize that China is not our strategic partner," argued Sen. Richard Shelby, an Alabama Republican and chairman of the Senate Intelligence Committee. "China is a competitor, economically and militarily." A speedy resolution of the impasse obviously would ease the pressure on Mr. Bush. But the cumbersome, consensus-driven nature of China's political system makes that difficult. What's more, the Chinese political landscape features factional splits over relations with the U.S. that in many ways mirror those seen in Washington. Those splits may only grow on both sides, since events Tuesday didn't suggest the impasse over the spy plane is heading toward a rapid conclusion. The U.S. got one of its wishes when the Chinese government allowed U.S. representatives to meet the plane's crew members three days after their emergency landing on Hainan Island. A U.S. defense attache later reported that the crew members were in good health. That small breakthrough was immediately overshadowed by demands for a U.S. apology -- a possible Chinese condition for the crew's departure from the island. Through a spokesman, Chinese President Jiang Zemin said responsibility for the midair collision, which caused the Chinese fighter to crash into the sea, "fully lies with the American side." He also insisted that Washington end its aerial surveillance operations along the Chinese coast, a practice in place since the early days of the Cold War. U.S. officials said they had strong evidence that the Chinese had not only spent hours scrutinizing the inside of the high-tech surveillance aircraft, but that they also had carried off some of its equipment. "The Chinese have been scouring the inside of the plane," said one U.S. official. "They have their mitts on everything." Administration officials have insisted that the airplane has sovereign immunity similar to an embassy. International law, they said, prohibited the Chinese from entering the aircraft without permission. But reports that Chinese officials were examining the plane drew little response from the administration Tuesday. One congressman who received an intelligence briefing on the subject said, "I think we've already pretty much written off the hardware on the plane. Right now, it's the crew we care about." Even before the standoff, a host of important questions were hanging over the bilateral relationship. For one, the Bush administration is edging toward a decision on which arms to sell Taiwan, and China has warned that a sale of sophisticated seaborne radar would only raise tension. At the same time, China's pending entry into the World Trade Organization hasn't been completed, and a delay could force a politically explosive vote in the U.S. Congress in June over trade relations. Moreover, U.S. relations with both Koreas and with Japan are sure to be affected by the tenor of Sino-American ties. But Mr. Bush's fundamental problem is that there is no political consensus on China -- least of all within his own party. Some Republicans argue that China's Communist government is intent on challenging U.S. power in Asia however it can. Any appearance of friendly relations, they contend, is an illusion. They point to a series of belligerent moves in recent months, ranging from detentions of U.S. scholars in China to allegations that Chinese companies have helped Iraq improve its air-defense systems. On Wednesday, a human rights group said a U.S.-based political scientist whose detention caused a diplomatic uproar with Washington has been formally arrested on spying charges. Gao Zhan's arrest sheet, given to her parents Tuesday by security agents, accuses her of "accepting money from a foreign intelligence agency and participating in espionage activities inChina," New York based Human Rights in China said. Extreme Measures Now, these hard-liners contend that the administration should pull away from China, ending longstanding military-to-military contacts and reviewing its policy toward approving multilateral loans to China through the World Bank or the Asian Development Bank. Some go further. One influential Republican think tank, the Project for the New American Century, urges Mr. Bush to respond to the current standoff by recalling the U.S. ambassador to Beijing, Joseph Prueher, and dropping all pretense of "normal relations" with China. The national-security concerns are supplemented within the Republican party by anti-China sentiments in the GOP's social-conservative wing, where China is blasted for human-rights violations and crackdowns on religious freedom. A "soft policy" toward China would cause "profound alienation" between the Republican party's leaders and their own base, argued Gary Bauer, who opposed Mr. Bush in last year's Republican primaries. "I don't believe there is any issue where there is a bigger disconnect between the party's grassroots and its elite than on China," he said. "China is an emerging power, and they are feeling their oats. They feel we are in decline. ... Somewhere we have to disabuse them of that notion, and I don't see, ultimately, how you finesse it." By contrast, business representatives are actively playing down the risks that the plane episode could undermine relations. "China isn't our enemy," said Neil H. Offen, president of the Direct Selling Association, a trade group that represents such companies as Avon Products Inc. and Tupperware Corp. "We're somewhat behaving as if it were. That's an old way of thinking." Business executives prescribe an approach significantly different from that of the national security hard-liners. "What we're hoping is that the U.S. takes a low-key approach in some respects," said David M. Bowers, senior vice president of Apollo Industries (Holdings) Co. The wire and cable maker, with its business-development headquarters in Orlando, Fla., does about $300 million in manufacturing business in China. 'Business Is Business' Mr. Bowers was in China when the U.S. bombed the Beijing Embassy in Belgrade, and he remembers a Chinese official assuring him: "Business is business, politics is politics." Scott Reed, a GOP consultant who works with businesses, noted that business representatives already have been asked to take a "back seat" in the debate over tax cuts while Mr. Bush pushes individual rate cuts rather than corporate tax breaks. A mounting crisis with China, Mr. Reed argued, could put at risk cooperation within the GOP over tax cuts, and thus the entire Bush economic-growth package. More immediately, the standoff is adding to pressure on Mr. Bush as he contemplates the Taiwan arms sale. "Clearly the president has to consider arms sales to Taiwan much more seriously than otherwise might have been the case," said Sen. Jon Kyl, a Republican member of the intelligence committee. The Bush administration must make a decision on the annual weapons sale before a Taiwanese delegation arrives in Washington on April 24. Already, there appears to be some spillover between the spy plane and the arms-sale question. Tuesday, 82 members of Congress -- about two-thirds of them Republicans -- sent President Bush a letter calling on him to agree to sell to Taiwan destroyers equipped with the sophisticated Aegis air-defense and battle-management system, which can simultaneously track more than 100 incoming targets. A Polarizing Question China has angrily warned the U.S. not to sell Taiwan the Aegis-equipped destroyers, which cost more than $1 billion each, saying that the sale would only increase the chances of hostilities in the region. In the U.S. the question of whether to sell the radars to Taiwan has been almost as polarizing. But Mr. Bush may have more room to maneuver than is commonly realized. The Taiwanese have requested more than 30 separate weapons systems, giving the administration a wide range of options if it wants to bolster Taiwan's defense without provoking Beijing. One option is to sell Kidd-class destroyers to Taiwan. These were developed for the Shah of Iran in 1979 but never shipped because the Shah fell from power. The ships could be upgraded with a new fleet air-defense system that is less robust -- and cheaper -- than the Aegis system. The Kidd-class destroyers cannot repel as high a volume of incoming cruise missiles as the Aegis destroyers, but they can be available to Taiwan in two to three years, compared with the eight years it would take to equip an Aegis destroyer for Taiwan. At the same time he deals with that problem, Mr. Bush also faces hurdles that still have to be cleared to improve trade ties with China. China is still engaged in multilateral negotiations to cement its entry into the WTO, without which a heralded 1999 U.S.-China trade deal won't take effect. The talks have been difficult, and some Western negotiators sense that the Chinese are balking at commitments they made on trade in services and other issues. If those negotiations finish soon, China will secure permanent normal trading privileges from the U.S., and the U.S. will get the market access the Chinese promised in 1999, plus any other benefits that Beijing negotiated with other WTO members. But if the talks drag out, as seems likely, Congress will have until June 3 to vote on whether to extend normal trading privileges for another year -- giving anti-China forces another chance to air their concerns about human rights, national security and Taiwan. "There's a fair amount of momentum for getting the trade deal done," said Sherman Katz, an expert on international business at the Center for Strategic and International Studies in Washington. But he also noted that the debate would give China's critics in both parties a chance to argue that "we've heard all kinds of promises from the Clinton administration that democracy follows markets. It doesn't seem that way." To further complicate the picture, Washington's inner divisions over China are matched and perhaps surpassed by the internecine struggles in Beijing between reformers and hard-liners. In one corner, on the political side, there's Chinese Premier Zhu Rongji, a pragmatic liberal compared with his occasional rival, the conservative legislative chairman Li Peng. Then there's President Jiang, who has held top billing for more than a decade, thanks in large part to his ability to swing between the two camps. Mr. Jiang must also work to keep in check the People's Liberation Army, whose commanders have intervened in politics when they feel China's interests -- or their own -- are at stake. In 1995, after Taiwan rebuffed President Jiang's overtures for reunification talks, the military took charge and within months launched test missiles in the Taiwan Strait, provoking a tense standoff with the U.S. Throughout, the military has been rewarded with heftier budgets, including a nearly 18% increase this year. Added to the mix is a generational change in the party leadership next year, when most current leaders are expected to lose their titles, even as they try to wield power from behind the scenes through proteges. For the moment, China's military appears to be gaining the upper hand in guiding Beijing's actions on the issue of the spy plane, according to U.S. diplomats following the situation. On Hainan Island, the Chinese navy is calling the shots, then presenting its views to the leadership for a decision. Washington's main interlocutor, the Foreign Ministry, has no role in the process beyond passing messages back and forth, these diplomats said.