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James R. Sasser U.S. Ambassador to China Address to the Asia Society Washington, DC, March 4, 1997

Engaging China

Thank you for that very eloquent introduction. It is far superior to many of the introductions I've had in the past. I recall one newspaper publisher who asked me how I wanted him to introduce me and, being modest, I said that there really wasn't much to say. So he said, "Here's Jim Sasser, about whom the less said the better."

I see many old friends here today, including former Ambassador to China Jim Lilley. So it might be prudent for me to stop right here and call on Jim or one of the other eminent members of the audience to brief us today. But, the toughest thing for any politician to do, especially a former Senator, is to sit down and keep quiet. I suppose I'm no exception, so let me take a few minutes to sketch the enormous stakes we have in making sure that China and America better understand and work with one another -- even when we have considerable disagreements.

China commands our attention. Its development and emergence onto the world stage is one of the major foreign policy challenges -- and opportunities -- confronting the United States in the remaining years of this century -- and into the next.

To meet this challenge -- and take advantage of this opportunity -- we must develop a consistent, credible and constructive policy toward China. A policy which recognizes that China's integration into the Asia-Pacific region and the international community is in our own self interest. A policy which recognizes that there will be bumps and rough patches in the relationship along the way. And a policy built on American values which advances the cause of peace and freedom around the world.

China's current leadership has, in the space of the past 15 years, reconstructed the foundations of the People's Republic. China may have "stood up" as Chairman Mao proclaimed in Tiananmen square in 1949, but the breathtaking modernization programs were the vision of Deng Xiaoping. However else history may judge him, he was a pragmatist and a Chinese patriot who put in place the policies that will propel China into the 21st century. With his death, China's future officially passes to a new generation of leaders who have already shown themselves, for a number of years, intent on continuing Deng's quest for economic prosperity, territorial integrity and international acceptance.

Engaging China, as its leaders continue this quest, has major implications for American policy. It means:

• First, there is no good alternative to the emergence of a strong, stable, open and prosperous China.
• Second, there is no good alternative to ensuring -- as the President and Secretary of State have said -- that no single issue holds the entire relationship captive.
• Third, there is no good alternative to a comprehensive dialogue between our two governments, in bad times, as well as good. Even in the most difficult days of the Cold War, we frankly discussed our differences with the leaders of the former soviet union. We should do no less with China's leaders today.
• Fourth, there is no good alternative to an increased number of exchanges at all levels. Exchanges of senior leaders, in particular, "drive" the relationship. The Vice President's visit later this month -- and the President's commitment to travel to Beijing -- are concrete demonstrations that China looms very large on Washington's radar scope. We have also had a dramatic and welcome increase in the number of substantive, working visits from all government agencies -- including Secretary Albright at the end of February; the Congress; and the private sector. Ten percent of the Congress was in Beijing in January and we are delighted to have them visit and see for themselves the dramatic changes that are taking place. Through these exchanges, we not only find common ground where we can agree, but we can also convey the constraints that might limit our ability to accommodate one another.
• Fifth and finally, there is no good alternative to China's integration into the international community. China should have a prominent stake in our rules-based world. A strong case can be made that when the government of China has participated in making the rules, it will have a strong incentive in abiding by them as well.

Integration means visits to the United States by China's senior leaders. I think that they need to observe first-hand what makes America unique -- just as we need to observe first-hand the changes transforming China. I was delighted a few months ago to travel with Minister of Defense Chi Haotian during his ten day visit to the U.S. It was a good experience, one which should have a positive effect in enhancing the transparency in our military-to-military relationship. In light of the success of that visit, I believe that President Jiang Zemin's trip to the U.S. in the late fall of this year should also be an occasion for further improving our overall relationship. I look forward to welcoming President Jiang here.

Our official engagement has centered on the expanding political relationship. But, the urgency of moving toward a constructive dialogue also comes from the increased trade and investment between our two countries. American companies -- whether high tech suppliers or innovative small enterprises -- are all encouraging China to travel faster along the road to a market-oriented economy.

On this trip back to the United States, I saw how readily U.S. products are accepted: Chinese citizens flying on Boeing aircraft, with Motorola cell phones in their jackets, IBM computers on their laps, watching Hollywood videos and drinking Budweiser beer and Coca Cola. A few even enjoyed some Tennessee sippin' whiskey. Speaking of Boeing aircraft, one of China's senior leaders once told me that "if it ain't Boeing, I ain't going."

We have made some progress in ensuring our stake in this emerging economic powerhouse. A month ago, the United States and China concluded a bilateral agreement on textiles which -- for the first time -- provided meaningful access for U.S. producers in the China market and which improved procedures for dealing with illegal transshipments.

The success of that negotiation -- and the collaborative spirit in which it was conducted -- helps set the tone for future discussions on trade policy matters, especially with regard to the World Trade Organization and intellectual property rights.

President Clinton has said that the United States supports China's application for a seat at the international trade table. However, any WTO agreement must be commercially-meaningful -- with open markets and a level playing field -- for all American companies.

• We will want to ensure that our companies have the right to import and export -- and ultimately distribute and service -- their products and will not have to go through Chinese state-run corporations.
• We will want to ensure that non-tariff barriers do not deny us the opportunities that tariff schedule concessions are supposed to provide.
• We will want to ensure that our agricultural products -- whether wheat from the Pacific northwest, citrus from California, poultry from the south, pork from the Midwest or processed foods prepared by leading companies -- are not subject to unreasonable non-scientific compliance standards.

Without progress on market opening, our bilateral deficit with China -- already $39.5 billion in 1996 according to U.S. statistics -- will continue to be an irritant in our relationship. China will be perceived as willing to accept the rights, but neither the responsibilities, nor the obligations of a fair trader.

As for intellectual property rights, an issue on which we have witnessed considerable progress since the February 1995 agreement and the June 1996 report, I am pleased to tell you that China has beefed up its enforcement efforts -- especially in the south. There has been progress, but much needs to be done. We are working closely with Chinese trade, customs and police officials to try and protect the work of those whose ideas, innovations and inventions will guide our societies into the 21st century.

What about MFN? Maintenance of China's MFN status is critical to maintaining a constructive relationship with China. Many in Congress and elsewhere have voiced support for permanent MFN. They have noted that this normal trading status will allow American businesses to make decisions relating to jobs and investment with a degree of certainty that -- at times -- has been constrained by our annual MFN debate. And, conversely, the annual debate has a also prevented Chinese buyers from purchasing American products as well.

There is a constellation of other issues -- human rights, Hong Kong, Taiwan and non-proliferation -- which command attention from the Administration, the Congress and the American public. Here again, there is no good alternative to the kind of credible, consistent and constructive dialogue I discussed earlier.

On the question of human rights -- clearly, this is one of the most vexing issues confronting us. Whenever and wherever we can, we will speak out in support of those who have been deprived of their political freedoms. Secretary Albright said that she will "tell it as it is." And, she did that on her recent Beijing trip. I will do so as well. We have, moreover, placed our views on China's human rights situation on public record in our most recent human rights report.

Simply put, we can and will encourage China to respect and uphold internationally-recognized human rights standards. We focus on the troubling suppression of political freedoms because it is right and because we believe these freedoms are the key to prosperity and long-term stability.

However, let's not be blind to important trends developing in China. The expansion of personal liberties and the creation of a legal system to provide protections in civil, commercial and criminal cases -- while far from complete -- are unprecedented in recent Chinese history.

• Chinese have more of a say in choosing where they work, where they live and where they go to school than at any time in the past fifty years.
• Courts, lawyers and appeal processes have begun to curb the closed exercise of state power.
• Experiments in village elections and the exercise of democracy -- though rudimentary -- are also taking place. They are encouraged by the central government.

Those of us who look for change in China applaud these trends because they are crucial steps in transforming the human rights situation in the PRC.

Hong Kong is the big international story of 1997. Reversion of Hong Kong will be a defining moment for China this year. China's leaders are smart enough to know that the world will be watching and that China's self-interest is well served by preserving intact Hong Kong's economic system, civil service and legal and judicial institutions. They need the entrepreneurial genius and financial markets that have made Hong Kong the world's eighth largest trading nation with just 6.3 million people. I have also told my Chinese friends that while they may be able to make a case for some of the changes they plan in a court of law, they must also consider the court of international public opinion in dealing with this dynamic place after July first.

I personally believe that China's leaders recognize that a successful transition -- a stable and prosperous Hong Kong -- will have a positive impact on their image internationally.

We in the United States have a considerable stake in this transition: 37,000 American citizens live in Hong Kong. About 800 American firms have corporate headquarters there. Two-way trade between the United States and Hong Kong amounts to nearly $24 billion and this makes Hong Kong our 11th largest trading partner. Americans have invested $15 billion there. To sustain this U.S. presence requires a society governed by the rule of law.

We have raised our interest in post-reversion Hong Kong with key Chinese decision makers at every single recent high-level meeting. We have noted that maintaining a high degree of local autonomy -- to which China committed itself in the 1984 joint declaration with the United Kingdom -- will give the people of Hong Kong confidence in their future.

Taiwan. Few issues have generated as much heat in the bilateral relationship. Chinese leaders never fail to remind us of the unfinished business of the civil war of a half century ago. For China, Taiwan is an issue of sovereignty, unity and national security. The views of others -- to put it mildly -- have not been welcome.

The United States and China have had a few disagreements recently about Taiwan, stemming from Lee Teng-hui's visit to his alma mater in June, 1995, and China's missile firings in the Taiwan strait last year. But, these disagreements -- while they may have delayed the arrival of a new U.S. ambassador to Beijing last year (that's me) -- have never altered our basic policy, as set out in the Taiwan relations act and the three communiqués:

• We recognize the Chinese position that there is only one China. Both sides on the Taiwan strait take this position;
• America has a strong interest in the peace and stability of the region;
• We have and will continue to maintain an unofficial relationship with Taiwan; and
• Outstanding differences between Beijing and Taipei must be resolved, peacefully, by the parties involved.

The Chinese on both sides of the strait recognize that their historic destiny lies in building bridges to one another. We, as Americans, urge them to resume the peaceful cross-strait dialogue which was suspended in July 1995.

How we deal with non-proliferation is very much in the vital interests of the American people. We have had in-depth consultations and good cooperation with China in a number of areas -- including the indefinite extension of the non-proliferation treaty, the conclusion of a comprehensive nuclear test ban treaty, the denuclearization of the Korean peninsula and ways to secure the early implementation of the 1985 agreement for peaceful nuclear cooperation. The Chinese have also ratified the Chemical Weapons Convention. These are substantial achievements. They demonstrate the value of the Clinton Administration's policy of engagement.

But, we need to go further. We must cooperate to ensure that our activities do not contribute to the development of unsafeguarded nuclear facilities. And, we must cooperate to prevent the spread of weapons of destruction -- conventional or otherwise.

There are other areas where our interests overlap: Korea, Indochina, South Asia and the Middle East. In each, we need to have the same kind of credible, consistent and constructive policy which will allow us to work with China to promote stability and achieve our respective interests.

If you look back at China-U.S. relations in the past half century, you are struck by the fact that misunderstandings, missed opportunities and different views about the post-war world made Americans and Chinese unnatural adversaries. The Shanghai Communiqué -- whose 25th anniversary we celebrated last month -- provided the foundation to end that period of isolation. The communiqué was built on a simple recognition that we had much to gain by peacefully resolving the conflicts of that time. That remains as true today as it was 25 years ago.

The basis for the understanding we reached 25 years ago is still sound. The jury may be out on whether this will lead a partnership of two of the world's great powers in the 21st century, but it is already in on the need to expand the dialogue.

The President understands that how he meets the challenge of formulating a strategic engagement with China will be one of the legacies by which history will judge him. As he said in his State of the Union Address: "Engaging China is the best way to work on our common challenges like ending nuclear testing and to deal frankly with our fundamental differences like human rights."

I look forward to working with all of you to help build the foundations for a genuine, substantive engagement with China which will help usher in the coming Pacific century. And, Mary and I look forward to welcoming you to China.

Our slogan is visit China in 1997. Come see us. Our door is already open.

Thank you.

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