China’s Cynical Calculation

 The New York Times
April 24, 1995, p. A17

Secretary of State Warren Christopher could hardly have been surprised when China announced that it would sell Iran a nuclear reactor over his protests.

After all, the United States has sniffed out a series of secret shipments of Chinese poison-gas ingredients to Iran over the last three years but has declined to impose sanctions on Beijing. In addition, China’s missile exports to Pakistan have continued.

“We haven’t really been tough on the Chinese,” one senior official told us. “They pay lip service to the rules, but they still violate them — sometimes blatantly. The reason we are looking the other way is market potential.”

In March, the State Department announced that three companies, Asian Ways Ltd., WorldCo Ltd. and Mainway International, are barred from selling goods in the U.S. or to our Government for at least a year. U.S. officials told us that the three companies, with offices in Hong Kong, have sent poison-gas ingredients from China to Iran.

Hong Kong cooperated with the investigation and stopped the companies from trading there. But since the companies exist only on paper and do no business with America, the U.S. trade ban amounts to no punishment at all. Because the poisonous materials are made in China, the flow of chemicals will stop only if Washington forces Beijing to stop exporting them.

The three companies sanctioned this year were only the latest in a series of penalties. In a related case, the U.S. imposed personal sanctions on an Austrian, a German and an Australian in November for shipping Chinese chemicals to Iran. And in July 1994 the U.S. sanctioned an Israeli for using front companies in Britain and Poland to supply what U.S. officials strongly suspect were Chinese chemicals to Iran. Most of the shipments involved chemicals that are used to produce mustard or nerve gas.

China has evidently made a cynical calculation. It presumably thinks that the Clinton Administration is so committed to American high-tech jobs that it will never jeopardize high-tech exports, even to slow the spread of weapons of mass destruction. If this is the case, China has been right.

In 1993, President Clinton decided not to link U.S. trade restrictions to China’s export policies. This removed the main barrier to Beijing’s missile exports to Pakistan and Syria and its nuclear help to Pakistan and Iran. And last year, Mr. Clinton refused to punish China for human rights abuses, removing a crucial barrier to prison labor.

Only when China started pirating intellectual properties like software made by Microsoft (owned by Bill Gates, well-known Friend of Bill) and blockbuster movies (made in Hollywood, home to many more Friends) did the President take a stand.

The U.S. Trade Representative, Mickey Kantor, threatened to impose 100 percent tariffs on more than a billion dollars’ worth of Chinese imports, and Beijing quickly backed down.

Putting a higher priority on Hollywood videos than on sales of Chinese poison gas and missiles has a price. Last month, Secretary of Defense William Perry warned that Iran was installing chemical weapon batteries near the mouth of the Persian Gulf, a sea lane that the U.S. Navy must defend. And unless Mr. Christopher does something more than complain belatedly about China’s nuclear reactor deal with Iran, U.S. forces in the gulf could soon be faced with the threat of an Iranian nuclear bomb.

China is unbending on human rights because it sees dissidents as a political threat. But we could more easily coerce it on exports, which are only about money. China’s $30 billion surplus in U.S. trade far exceeds the money it gets from secret chemical and missile deals. President Clinton’s victory on intellectual property shows that if China is forced to choose between arms proliferation and U.S. trade, it will probably choose trade.