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Eight Principles to Guide US Policy on China

EIGHT PRINCIPLES TO GUIDE US POLICY ON CHINA

OBJECTIVES AND STRATEGY

Objectives

We take as our starting point for the formulation of US policy on China the proposition that US interests are best served by the emergence of China as a responsible member of the world community. In very broad terms, such acceptance by the world community is also China's goal. At the most general level, therefore, we see a happy congruence between US and China objectives.

Specific US objectives relating to security, trade and investment, human rights and the general furtherance of US influence and values we would see as more attainable if part of an overall strategy to facilitate China's integration into the structures and practices of the developed world.

Strategy

In China affairs, policy goals can rarely be achieved by direct means. In most areas, therefore, we therefore recommend a twin-track strategy. Such a strategy would involve adopting an open stance on one issue to encourage progress while maintaining a closed or even aggressive stance on another related issue to deter negative tendencies. Thus, in very broad terms, the current US strategy of renewing MFN annually while threatening to withdraw it if there is no progress on human rights is in the right spirit. However, this particular strategy has the defect that it is not twin-track. The same instrument - MFN privileges - is used for both the human rights and the business tracks of policy. It would be preferable for human rights to be dealt with using separate instruments from those used for trade. Further, as explained below, the current strategy is too crude, and too loaded with risks and costs for the US, to be optimal.

To achieve the overall objective of integrating China into the world community, we would recommend that US policy be guided by the following eight principles.

EIGHT PRINCIPLES OF POLICY

(1) Let trade work its magic

Trade and investment are having the most powerful liberalising effects on Chinese society. Trade enriches businesses and employees, it empowers consumers, and generally benefits the more liberal sectors of Chinese society. Conversely, trade undermines the position of the state-owned enterprises where the natural constituency of the repressive elements in Chinese society lies. Trade is gradually helping to foster a middle class within China who have property and will press for the rule of law to protect such property from arbitrary confiscation by the state. But more important even than these effects is the fact that US goods and services come bundled with US ideas and values. These ideas and values are absorbed by individual Chinese in their millions, weakening adherence to the official ideology.

It may be argued that, despite China's economic progress in recent years, the position on human rights has become worse. We grant that at the official level this is probably the case. Dissidents have been imprisoned and dissenting ideas have been suppressed. However, these developments at the official level must be balanced against the enormous improvements in general economic freedom, the waning influence of official ideology, the growing responsiveness of the central government to popular concerns, and the growing freedom of the regions from central control. We believe that the overall trend is strongly towards liberalisation, notwithstanding the grave human rights and other concerns that remain.

For these reasons we would recommend that all reasonable measures be taken to promote trade and investment with China. To this end, MFN should be renewed unconditionally and indefinitely.

(2) Separate politics from trade

It is a characteristic of developed free societies that there is separation of powers between the executive, legislative and judicial arms of government and between these and the other elements of society such as business and academia. It is conversely a characteristic of undeveloped and unfree societies that all powers and elements are controlled by a small elite. Following this principle, US policy on China should aim to separate business from politics. China's MFN status should be delinked from human rights; these two issues should be pursued separately through channels and forums appropriate to each. US politicians should not take a leading role in negotiating investment contracts for their companies in China. US business is perfectly capable of negotiating for itself.

Not only is the separation of business from politics right in principle for a free developed society like the US, but failure to observe such separation will also put the US at a disadvantage. In any competition to manage trade and investment for political ends, the Chinese Government, which still has far greater direct control over its economy and people than the US Administration, will surely win. This is not in overall US interests, nor is it in China's ultimate interests as it reinforces the tendency of the Chinese Government to central planning, for example by directing enterprises to sign contracts with companies from approved foreign countries. We recommend that the US Administration step outside this lose-lose situation and pursue business and political goals by separate means.

(3) Seek multilateral solutions

The US Administration has shown an unfortunate predilection for bilateral action, particularly in the matter of trade sanctions. While the US clearly has greater power than any other country to take such action, the increasing readiness of other important countries to take an independent line undermines its effectiveness. The European Union has recently stressed that on the matter of trade with China it is a competitor rather than a cooperator with the US. Bilateral action also has significant costs, since it bypasses multilateral institutions, so weakening their role, and in many cases alienates third party countries who fear they may be next on the US action list. Further, it creates direct confrontation which alienates not only the Chinese Government but also, and perhaps more importantly, the people of China.

The US Administration should seek where possible to bring its disputes with China to multilateral forums such as the WTO and the International Court of Justice. This has the benefit of elevating what would otherwise be seen as bullying to the status of legal principle, and de-nationalises the issue. It should be remembered - and it has been frequently stated by the Chinese Government - that it is in China's interests to abide by the rules of international trade. A multilateral approach would also empower third countries, who are stakeholders in multilateral organs like the WTO, and coopts them into the resolution process.

(4) Multiply channels of contact

There have been times in US-China relations when, because of disputes in progress, there was virtually no direct contact between the two governments for perhaps months. This is a highly undesirable state of affairs that compounds existent difficulties and heightens the risk of serious miscalculation on either side. It also negatively affects third countries.

Every effort should be taken to open more channels for communication. This will come as a result of greater use of multilateral forums (as proposed in (3) above). Non-governmental organisations (NGOs) can be effective ambassadors, if not for the US itself then at least for US ideas and values, and their activity also empowers counterpart elements within Chinese society. The US Administration could make greater efforts to facilitate the China activities of NGOs. In addition to contact with the Central Government in Beijing, the US Administration should also establish contacts with provincial and local governments, many of which take an increasingly independent line (see (5) below). Technical level forums at which experts from the respective countries meet to exchange views should also be encouraged.

(5) Reach to the regions

While formerly most significant decisions in China were taken in Beijing, with the increasing liberalisation of Chinese society, real decision-making power is moving more and more to the regional and even local level. This is not immediately apparent because the central authorities enact laws and issue edicts which should apply to the whole nation. However, in practice, when such edicts filter down to the regional authorities they are often not obeyed. This is shown, for example, by the difficulty the Central Government has had in enforcing its own anti-piracy laws on the factories in Guangdong.

We find that US policy has not adjusted sufficiently to this new reality in China. The focus of the US Administration is still too much on the Central Government of China, into whose statements and actions too much is read. This leads on the US side to unrealistic expectations, and on the Chinese side to embarrassment and irritation. We recommend that instead the US Administration respect the reality within China, and its vastness and diversity, and make efforts to build links with regional authorities. The Administration's direct approach to the Guangdong authorities over intellectual piracy is an example of action of this kind, although we would hope that regional contacts could also be made over happier issues.

(6) Promote the rule of law

We noted in (5) above the drift of power away from the centre to the regions and localities of China. To a certain extent, this trend reflects rising economic development and the concommitant liberalisation of Chinese society, and to that extent it is to be welcomed. However, control of certain kinds is necessary for the Chinese nation to hold together. The weakening of central control thus also reflects the imperfect adjustment of Chinese society to the post-Communist era. Central control was previously exercised through totalitarian means, which though brutal were effective. But now the rationale and instruments of totalitarian control are weakening, and they are not being replaced by the mechanisms of a civil society. Chief among these mechanisms is the rule of law. The absence of the effective rule of law in China is a major source of difficulty for a foreign power such as the US in dealing with China - despite the best intentions of the Chinese Central Government, agreements reached for example over intellectual property may never be enforceable. But more than this, without the rule of law, Chinese society as a whole is unstable and subject to fracture into myriad fiefdoms. Between totalitarianism and the rule of law we see no stable resting place for Chinese society. The establishment of the rule of law in China is therefore vital for its internal stability. The rule of law is also conducive to the protection of human and property rights.

The US can help China and help itself by acting on all fronts to promote the rule of law in China's affairs. As recommended above, legal channels to resolve disputes, such as the WTO and the World Court, are to be preferred to bilateral negotiations. Issues that are of a different nature - such as trade and human rights - should be disentangled from one another and pursued through separate channels so that non-political issues can be dealt with in a legalistic manner. While the US Administration cannot directly promote the rule of law within China, there may be opportunity for indirect measures, for example technical assistance or help with the training of lawyers.

(7) Promote human rights indirectly

We appreciate US concerns over human rights in China. Indeed, with the impending transition to Chinese sovereignty in 1997, the Hong Kong community has a special stake in this issue. Yet we believe that too direct an approach may be counter productive. In particular, the linking of MFN to human rights improvements is particularly damaging. The yearly ritual of token concessions from the Chinese side, followed almost inevitably by MFN renewal, leads the Chinese authorities to regard US human rights concerns as insincerely held and subordinate to economic considerations. This in turn leads to an actual worsening of the human rights situation in China, at least at the official level. It also leads the Chinese Government into miscalculations in its dealings with foreign powers, which is not in China's interests either.

We recommend that the US Administration drop its direct approach to the human rights question, and proceed as follows.

• Firstly, the US Administration should state its human rights concerns clearly to the Chinese authorities. However, these concerns should not be linked to other issues such as MFN privileges: they should be stated as concerns in themselves.
  
  
• Secondly, US statements and actions should emphasise the universality of human rights. It is not the case, as argued by some Asian Governments, that human rights are a western concept. Torture, false imprisonment, and detention without trial are as unwelcome to a citizen of China as they would be to a citizen of the US. Following this principle, US expressions of human rights concern should be linked to international law - for example the two UN convenants on human rights - and delinked from the US national situation.
  
  
• Thirdly, where China in turn criticise the human rights situation in the US, this should be taken positively by the US Administration. For example, invitation could be issued to a China expert team to inspect US prisons. An effective dialogue on human rights must be two-way.
  
  
• Fourthly, the US Administration should bear in mind that the human rights agenda is in fact a subset of a larger humanitarian agenda. On non-political humanitarian issues, the Chinese authorities are often more amenable to foreign influence and accept the principle of universality. For example, following the recent earthquake in Yunnan, the Chinese authorities appealed for foreign aid. The US Administration should respond to such requests where it can, in order to establish a broader engagement with China on humanitarian issues.
  
  
• Fifthly, the power of trade and investment, and of the establishment of the rule of law within China, to create an environment conducive to human rights, should be recognised. The US Administration should consider actions that will promote the emergence of such an environment, such as technical assistance and grants in appropriate cases.

(8) Share the security burden

China's internal and external situation has many elements of instability. Internally, the Central Government does not have adequate civil mechanisms to control the regions and localities of China, while its continuing reluctance to reform may itself lead to crisis. Externally, there are numerous points of tension along China's borders, while the Chinese Government wishes to show the world that it has overcome its historical weakness. These stresses may lead to ill-considered demonstrations of military power.

The US Administration should employ a twin track approach. On the one hand, firm action should be taken to deter miscalculation, such as could have been close during the recent elections in Taiwan. On the other, efforts should be made to integrate China into regional and international security arrangements, and to encourage mutual transparency of military intentions. While the Asia-Pacific region is currently heavily dependent on a US presence for its security, we recommend that the US Administration aim to share its burden with regional powers. This will mean Japan taking on a larger role. Overtly military arrangements should be part of a broader spectrum of dispute resolution arrangements that wherever possible utilise legal and multilateral forums.

Hong Kong Democratic Foundation
June 1996