- The Washington Times - Friday, March 10, 2000

Chinese Foreign Ministry spokesman Zhu Bangzao Thursday signaled in Beijing that American firms will be hit hard if Congress does not extend unconditional and permanent normal trade relations (NTR) to China.

"If this issue cannot be thoroughly resolved, it will be detrimental to the interest of U.S. enterprises in China," Mr. Zhu said.

The threats directed at American businesses highlighted the unusual political dynamic in the debate over NTR. The Chinese government has made little effort to be heard in Washington.

Instead, the American business community, along with the Clinton administration, is doing the heavy lifting. Given the prize at stake access to a market of 1.2 billion people business needs little prodding, but the Chinese government does let U.S. companies know their lobbying services are appreciated.

President Clinton formally kicked off the administration's campaign to secure permanent NTR for China in a major policy address on Tuesday. The White House wants Congress to abolish the annual review of China's NTR status, a move that would allow the United States to support Chinese membership in the World Trade Organization under the terms of a November agreement.

By most estimates, U.S. companies are plowing $10 million into the campaign, and just this week, the Business Roundtable, the leading industry group on trade policy, announced a $1.5 million advertising campaign in support of NTR.

"The bulk of the effort [to secure NTR] has always been undertaken by the companies that do business in China," said Nicholas Lardy, a specialist on China at the Brook-ings Institution.

The Chinese have shown little appreciation for the role that Congress plays in formulating U.S. foreign policy, Mr. Lardy said. The congressional relations department in the Chinese Embassy has typically been "short on staff and talent," he said.

However, Chinese outreach efforts on Capitol Hill have steadily increased in recent years, according to congressional and industry sources. About five years ago, the Chinese beefed up their congressional relations department.

"There are more and more issues in Sino-American relations that need discussion," said Shuning Yu, spokesman for the Chinese Embassy.

But China makes little, if any, use of the typical tools of foreign governments that want their views known in Washington, according to those familiar with Sino-American relations. China retains the services of at least two Washington law firms, but their work for the Chinese is limited to technical advice, according to lawyers managing the accounts.

"They don't send us up to the Hill to lobby for them," said Brenda Jacobs of Powell, Goldstein, Frazier and Murphy. Ms. Jacobs is part of a team that advises the Chinese commercial office, an entity physically separate from the embassy, on textile trade issues.

The law firm of Jones, Day, Reavis and Pogue also does advisory work for the Chinese government, according to Herbert Hansell, who manages the account.

The muted Chinese presence in Washington stands in stark contrast to that of the Taiwanese, who employ a small army of public relations firms to make their case for close relations with the United States, Mr. Lardy said.

There are few complaints that the Chinese are not more active, since the presence of Chinese diplomats in the halls of Congress can hurt causes more than help them, business sources said.

"The hard-core lobbying on [permanent NTR for China] is not up to the Chinese, it's up to the administration and the American business community," said Myron Brilliant of the U.S. Chamber of Commerce.

Apart from public statements such as those by Mr. Zhu Thursday, Chinese officials tend to push U.S. firms in a subtle but unmistakable manner, according to industry sources.

One lobbyist compared the Chinese behavior to the White House. By law, executive branch officials cannot ask business to lobby Congress. But by emphasizing the importance they place on an issue, administration officials can send a clear signal to even the most politically tone-deaf lobbyist.

The Chinese work in a similar manner, business representatives said. For example, in early 1995, then-House Speaker Newt Gingrich, Georgia Republican, publicly deviated from the strict "One China" policy.

This policy, a staple of Sino-American relations, dictates that the United States will recognize only mainland China as the true representative of the Chinese people. China has consistently threatened the United States against any deviation from this policy.

Following Mr. Gingrich's remarks, "the seriousness of the issue was conveyed to the business community" by Chinese officials, one lobbyist said.

Business representatives, along with his staff and former Secretary of State Henry Kissinger, subsequently urged Mr. Gingrich to clarify his remarks, which he did.

Though cases of foreign government pressure on U.S. businesses get little attention, industry sources said other countries employ similar tactics.

But even U.S. business is not an unconditional backer of policies that might please the Chinese government. What is good for China, American firms seldom fail to forget, is not necessarily good for their business in China.

Even before the World Trade Organization came into existence on Jan. 1, 1995, American businesses took a hard line in favor of WTO membership for China, but only on a basis that would lead to new opportunities in China, industry lobbyists point out.

The distinction is not academic. Through 1997, China mounted a concerted effort to get into the WTO without substantially opening its market to foreign competition, observers of Sino-American relations point out.

The business-backed U.S. position that China's WTO membership had to be "on a commercially acceptable basis" won substantial concessions with the Chinese last year, lobbyists point out.

"The Chinese are potential competitors, and we wanted access to their market," said Joel Johnson, who handles trade policy for the Aerospace Industries Association. "We could not afford to go weak."

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