- The Washington Times - Friday, April 6, 2001

Business lobbyists are nervously eyeing the standoff between the United States and China, but so far there is little evidence that the matter has spilled over into the commercial realm.

The corps of Washington industry advocates that push open trade with Beijing hope the incident will die down before the Bush administration has to decide on the sale of advanced weaponry to Taiwan later this month, and before Congress makes its annual decision on China's trade status.

The incident is entering its fifth day with an American plane on Chinese soil and the 24-member crew detained despite American protests. But for now, corporate America is lying low.

Lobbyists said they were worried their involvement in the issue would create the impression that business puts commerce before national security, an indefensible position on Capitol Hill.

"It's not appropriate to be lobbying this one," said Dave McCurdy, president of the Electronic Industries Alliance, a trade association. "It's in the hands of the diplomats and soldiers."

The Chinese reaction toward business stands in stark contrast to the situation two years ago, when an errant bomb struck Beijing's embassy in Belgrade during a NATO bombing campaign and unleashed widespread retaliation against U.S. commercial interests.

Then, Chinese government officials at the provincial and national level cut off contact with American companies while pointedly cultivating contacts with European and Japanese firms, said Robert Kapp, president of the U.S.-China Business Council.

"We are not hearing squeals and howls from China," said Mr. Kapp, who declined to comment on whether his group was lobbying on the spy plane issue, though it has on other security-related matters. "There are no signs of access denied."

Absent open conflict between the United States and China, trade flows in both directions are unlikely to be affected. The most immediate effect would be on businesses that have invested in China, because they have to deal regularly with Chinese authorities. But top officials in Beijing have apparently not ordered a freeze on contacts with Americans.

"That switch from the top has not been pulled," Mr. Kapp said.

Even in Washington, business lobbyists in contact with the Chinese Embassy say the current tension has not interfered with planned activities.

"We're pleased that there has been no ranting and raving at us," said one industry official, who requested anonymity.

The difference this year seems to be that the embassy bombing created an immediate nationalist backlash in China among individual Chinese even without prompting from the official media, said Nicholas Lardy, a China scholar at the Brookings Institution.

"The Belgrade bombing was a far more serious issue, though I'm not sure how much permanent damage was done to business," Mr. Lardy said.

Still, a weeks-long standoff could trigger headaches for business, industry sources said.

For starters, President Bush must make a decision by April 23 on whether to sell Taiwan advanced weaponry, a move Beijing has always vociferously opposed. If the current dispute over the spy plane drags on, it could force the administration to take a tough stand on the issue, and draw a hostile response from China with major commercial implications.

"This can get bigger and bigger," said Tim Bennett, a senior vice president at AeA, a high-tech trade association. "That's why we need a diplomatic solution."

Into June, industry lobbyists face the annual debate in Congress over renewal of China's regular trading privileges with the United States, an annual ritual business had hoped to eliminate last year.

Congress last year approved permanent normal trading relations with China, but that status only takes effect after China's official accession to the World Trade Organization. Those negotiations have since bogged down.

Mr. Bush said he remained a firm believer in the need for China to join the Geneva-based body. But he stressed the need for cooperation in the current imbroglio.

"I'm an advocate of China's entering into the WTO," the president told a group of newspaper editors yesterday. "And I'm hopeful that the current situation ends quickly, and our people come home."

Mr. Bush must decide whether to extend China's trade status by June 3. White House spokesman Ari Fleischer declined to specify yesterday whether the current crisis would affect that decision.

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