-APRIL, 1999-

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04/30/1999 China Looks Toward October
04/30/1999 A WAY OUT OF NATO'S WAR
The raids must stop, and Milosevic accept mediation
At the eleventh hour, domestic U.S. politics scuppered a heralded WTO deal with China
04/20/1999 China's PM warns force an option in Taiwan
A promising step toward healing the wounds of war
Can Zhu's trip salvage flagging U.S.-China ties?
Despite its hamfisted intervention, NATO has no choice but to win
04/12/1999 Zhu Rongji's Year of Living Dangerously
Although he thrives in times of crisis, China's no-nonsense Premier faces two of his toughest challenges: keeping the economy afloat and mending ties with the U.S.
04/12/1999 Why Are We Unloved?
 Sin-Ming Shaw: Beijing would do well to admit its wrongs.
 Until China comes clean on past horrors, it won't win the respect it craves
04/12/1999 Is This Cold War II?
As China's Zhu Rongji prepares for a high-profile visit to the U.S., the two nations find they have depressingly little to talk about
An Asiaweek-World Bank Roundtable ponders political, economic and social reform amid the Crisis
 Openness, participation and accountability can become the new "Asian values"
04/05/1999 I.T. Takes a Village
Hong Kong's plan for a new cyber-tech center looks to many like an old-fashioned, cozy property deal
04/04/1999 Buchanan charges Clinton ignores Chinese threats to Taiwan


China Looks Toward October

IT'S NO SECRET THAT security in Beijing has been increased in the run-up to the 80th anniversary of the May 4th Movement - the intellectual drive for national reform named after the Beijing student protests of 1919 - and the 10th anniversary of the Tiananmen incident on June 4. And citywide, prior to October's 50th anniversary of the founding of the People's Republic, authorities are moving groups of potentially volatile migrant workers out of the wider metropolitan area. But at Beijing universities, special steps have been taken: Student organizations' rentals of facilities like auditoriums and canteens are being closely monitored, as are discussions on the http://bbs.tsinghua.edu website. A student who posted a message to organize a demonstration in front of the U.S. embassy to protest NATO bombings in Yugoslavia was asked to retract his call, ostensibly for the sake of schoolmates applying for American student visas. Students and faculty have been discouraged from giving interviews, especially to foreign journalists. If making a comment is unavoidable, interviewees are encouraged to offer "responsible" remarks. Needless to say, there is a ban on commemorating the Tiananmen events in any public forum and on lobbying for a reversal of the official verdict, but even talking about the 10th anniversary as a special date is discouraged.

Chuan Looks Toward the East

IT'S NOT JUST SINGAPORE that is interested in building South American ties. PM Goh Chok Tong was quoted in Japanese papers as ready to propose a 30-nation Asian-Latin American summit next year to confront the global financial crisis. Thai Prime Minister Chuan Leekpai has rearranged his trip to South America: from June 2-8 he will visit Peru and Chile (omitting Argentina and Brazil). The main reason: both Peru and Chile are APEC members and he will have plenty to discuss in advance of the Auckland summit in September. Peruvian President Alberto Fujimori and PM Victor Joy Way are both of Asian descent - the former Japanese, the latter Chinese. But for Chuan perhaps the most important leg of his journey will be a stopover in Los Angeles, en route to Lima. California's Thai community, the largest and wealthiest of the Thai diaspora, is an important ally to have in the general elections due within 18 months but expected sooner. Opposition leader Chavalit Yongchaiyudh made his obligatory pilgrimage there last October.

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AND WHAT ABOUT ISHIHARA'S BEIJING COUNTERPART, recently appointed mayor Li Qui? He's playing on the national stage, and clearly in tune with the men at the top. Several big dates are looming for the capital: May 4th, the 80th anniversary of the May Fourth Movement (the intellectual foment that influenced China's pre-1949 history); June 4's 10th anniversary of the crackdown on Tiananmen anti-government demonstrations; and of course October's 50th anniversary of the founding of the PRC. Li has been busy. For starters, repairs have conveniently closed the square for months. Itinerant workers are being rounded up at an increasing rate and shipped out of the metropolitan area, and would-be 50th anniversary celebrants are being told to stay away. So far, foreign dignitaries have not been invited to the celebrations.

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At the eleventh hour, domestic U.S. politics scuppered a heralded WTO deal with China

By Alejandro Reyes

"THE EXUBERANCE OF SPRING." That was the special theme Hillary Clinton chose for a White House state dinner in honor of China's visiting premier, Zhu Rongji, and his wife. To decorate the tables, the American First Lady arranged fiery-yellow "parrot" tulips with red streaks, orchids and roses on bamboo centerpieces. The menu included roasted Oregon salmon on caramelized fennel and endive; Zhu had specifically requested fish and vegetables. The after-dinner entertainment also played to the music-loving guest. Accompanied by a pianist and pipa-player, celebrated cellist Yo-Yo Ma performed a piece by Shanghai-born composer Bright Sheng. The recital, Ma reckoned, shows "what fabulous results can happen when you have the influence of one place and another working together."

That may have rung true to the audience in the East Room. But earlier in the day, no intricate staging and diplomatic courtesies could conceal the discord. Zhu had come to America bearing a basketful of major concessions to win U.S. approval for China's 13-year bid to enter the World Trade Organization (WTO). It looked like the premier would have a deal. But the initial optimism proved premature. During an unofficial meeting on the eve of their formal talks, President Bill Clinton told Zhu the U.S. could not accept the agreement.

Both sides had been counting on a pact to boost badly flagging bilateral ties. Chief irritants include allegations of Chinese nuclear espionage and illegal campaign donations, a deepening dispute over human rights, China's $57-billion-and-growing trade surplus, and Beijing's firm opposition to U.S.-led strikes against Yugoslavia. The troubles have bolstered anti-China sentiment among congressmen and Americans in general. In turn, anti-U.S. feelings among Chinese have risen.

Into this mire walked Zhu, perhaps China's most zealous reformer. He had considered canceling his trip, but received last-minute Politburo backing to go ahead. The crowning prize of the nine-day, six-city tour would have been a WTO deal. In a key address just before Zhu's arrival in Washington, Clinton said that "if China is willing to play by the global rules of trade, it would be an inexplicable mistake for the United States to say no." That suggested the president was on board. But the same night, he broke the bad news to Zhu.

The plain-dealing premier was thwarted by U.S. domestic politics: Clinton had to play to his deep gallery of critics. Never mind that the unprecedented commitment package his trade envoy Charlene Barshefsky squeezed out of the Chinese has been widely hailed in business circles. "The gap between the two sides is really not very significant," said a disappointed Zhu when he and Clinton hosted the press after their April 8 meeting. "The problem now lies with the political atmosphere."

The American leader "is afraid he'll encounter too much resistance from Congress," says Jin Junhui, senior U.S. expert at the China Institute of International Studies in Beijing. Clinton's prestige and clout took a bruising when he was impeached in January over the Monica Lewinsky sex scandal, though he was later acquitted in a Senate trial. Now that he is managing the NATO war against Yugoslavia, he has to tread even more carefully in his relations with Congress.

With China, Clinton balked at accepting an accord that did not provide five extra years of protection for the U.S. textile industry beyond the 2005 WTO deadline for the elimination of all quotas. He also wanted Beijing to accept long-term waivers to some of its WTO rights after accession. To satisfy union concerns, Clinton pushed for measures that would allow the U.S. to stop import surges from China of products like steel. "The WTO membership might be the last real bargaining chip the U.S. has with China," says Thai political scientist Pranee Thiparath.

Other factors influenced Clinton's decision to overrule the recommendations of his own cabinet officials. One is his strategy to win public approval for the package. With the imminent release of the Cox Report, a congressional survey on how China has been acquiring security-sensitive U.S. technology over 20 years, the president figures distrust of Beijing in Congress will get worse. His foes have also been attacking him over the alleged theft of nuclear technology from the Los Alamos National Laboratory by ethnic-Chinese engineer Lee Wen-ho. Last week, investigators searched Lee's home. Though dismissed from his job, he has not been charged.

Congress will not have a direct vote on a WTO deal, but it has to approve most-favored-nation trading status (now called "normal trade relations") for China. And legislators are not likely to do so unless they like the terms of the WTO pact. To win, Clinton will need to mobilize the business lobby behind the accord. By holding back on signing, the White House can play up its tough bargaining stance to deflect charges that it is "soft" on China or failed to look after American jobs. Clinton knows well that he is dealing with an increasingly protection-minded legislature.

All this makes the premature release by the U.S. of an 17-page statement outlining China's market-opening commitments interesting. The Chinese disowned the document, insisting the issues were still under discussion. Only a deal to lift curbs on U.S. wheat, citrus and meat products had been concluded, they said. Zhu himself railed against the tough American stance. "We should be able to reach agreement on market access but the U.S. side wants still more," he said. "If you want too much too soon, you may end up with nothing."

But by unveiling details of a deal yet unsealed, the Clinton administration set off a flurry of support from the U.S. business community. Corporations and trade associations voiced backing for such an accord and vowed to lobby for it. In Denver and later in Chicago, Zhu was already reaping acclaim from Midwestern politicians and businesspeople impressed by China's commitments on agriculture. Though noisy protesters pursued him at every stop, the premier continued to display flashes of wit that have become as much of a trademark as his temper and stony face.

The U.S. and China have agreed to resume their WTO talks late this month. If Clinton's endgame strategy works, an agreement could be in place by the WTO ministerial meeting in Seattle on Nov. 30. That session will open a new round of global trade talks. China's eagerness to be a leading player in those negotiations is one reason it is so eager to win WTO membership. Zhu has other considerations. He is pushing a huge reform drive at home. WTO accession may help him by forcing domestic industries to become more efficient and competitive. Under WTO rules, many business subsidies would have to end. An expected flood of new foreign investment would help soak up unemployment resulting from the restructuring of the state enterprises. WTO accession would defuse tension with the Americans over their trade deficit with China and protect it from unilateral U.S. trade sanctions.

Zhu's push for WTO membership is not without risks to his own domestic position. Many vested interests would be happy to see him fail. A recent survey indicates anti-U.S. attitudes are growing among Chinese. "President Jiang Zemin is the biggest flag-waver for [the Sino-U.S.] relationship so he and Zhu can withstand [any backlash] together," says Pei Minxin of the Carnegie Endowment for International Peace in Washington. "The influence of hardliners in China is much less than that of hardliners in the U.S."

Pei rates Zhu's American journey as mixed. "At least the two sides succeeded in halting the downward slide in ties." But tough times lie ahead. June 4 marks the 10th anniversary of the Tiananmen crackdown. China's foes will surely seize upon any ugly incident that might occur then. And campaigning for next year's U.S. presidential election will heat up later this year. Domestic politics is set to play an even bigger role in Clinton's foreign-policy calculations. The Chinese will need more than a charm offensive to sail through such treacherous waters. And if the political mood changes in Beijing, China itself may backtrack on its commitments. In that event, the exuberance of spring would have been fleeting indeed.

- With reporting by Samuel Gilston/Washington and David Hsieh/BeijinG

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China's PM warns force an option in Taiwan

April 20, 1999 Web posted at: 11:40 p.m. EDT (0340 GMT)

VANCOUVER, British Columbia (CNN) -- Chinese Premier Zhu Rongji rebuked Taiwan independence supporters Tuesday and warned that China has never ruled out force in regaining the island.

Zhu, on the final stop of a six-city Canadian tour, encountered about 300 demonstrators Tuesday as he entered a lunch banquet in his honor.

While some of the protesters belonged to the Free Tibet movement that has dogged Zhu throughout the trip, he noted most were advocating independence for Taiwan.

But Zhu departed from the expected platitudes about Canada-China goodwill and mutual prosperity to give a history lesson on Taiwan, and a candid warning.

He rejected suggestions, also raised during the U.S. leg of his North American visit, that the island was never part of China.

"I think these people have betrayed or have forgotten their ancestors," Zhu said through an interpreter.

"We have all along been saying that we will do our best to achieve a peaceful reunification, but we have not undertaken to renounce the use of force, and I think the aim of that is to achieve a peaceful reunification," Zhu said.

Successive emperors fought to regain or maintain control of Taiwan, he said.

It was Zhu's last public stop before he returned to China after a barnstorming-style trip across Canada and the United States to promote trade and China's inclusion in the World Trade Organization.

The premier has been increasingly outspoken about the protests that have dogged him on issues ranging from human rights to Taiwan and Tibet throughout his two-week visit to North America.

Diplomatic difficulties

Zhu surprised an audience in Victoria, British Columbia, on Monday evening with a pointed complaint that pro-Tibetan independence protesters outside that event were "Canadian white people" who might not know where Tibet is.

In a reference to complaints about China's human rights policies, Zhu reminded Tuesday's audience Canada did not end discriminatory laws against Chinese until 1947 or formally guarantee them equal civil rights until 1967.

"This is what I learned from the textbooks of history in middle school and I'll never forget that because I am Chinese," he told an applauding audience of about 1,000 at the banquet.

But Taiwan is expected to be an ongoing problem for Zhu and his government. Taiwan became the island stronghold of China's Nationalist government after it was defeated by the Communists in 1949.

Both governments claimed to represent China. But the mainland government, which considers Taiwan a breakaway province, is recognized worldwide.

Many in Taiwan want reunification with China under a democratic government. But support for independence has grown, especially among younger generations who've grown up on the island.

Zhu suggested reunification would bring little interference in Taiwan's interests from the mainland government.

"On the contrary, the mainland of China will provide a larger market for the Taiwan people and for the business community," he said.

The Associated Press and Reuters contributed to this report.

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A promising step toward healing the wounds of war

WITTINGLY OR OTHERWISE, HISTORIANS tend to give their own countries the benefit of the doubt, sometimes at the expense of facts. In the history-conscious cultures of East Asia, the practice has helped perpetuate troublesome myths. For instance, thanks largely to their education, many Japanese still believe that Tokyo's World War II aggression aimed chiefly to "liberate" Asian countries from Western colonialism and bring them the benefits of civilization and industry. The notion that Imperial Japan might have sought to replace Asia's subjugation by the West with its own is not seriously entertained, at least not in public. Such an attitude is a root cause of the country's continuing problems with Korea and China, the chief victims of Japanese expansionism in the first half of the century. It also helped entrench equally one-sided views among Koreans and Chinese.

After an international flap in the 1980s over its schoolbook presentations of the war, Japan assured its neighbors that it would be more sensitive in the future and reassess the texts. In what could be a seminal step, Japanese and Korean historians recently proposed to jointly produce a supplementary textbook for schoolchildren aimed at plugging holes in their nations' official histories. The groundwork for the "Japan-Korea History Joint Study Project" was laid last September, when scholars from both sides met at a Tokyo symposium and studied each other's textbooks. They exchanged frank critiques. The Koreans said that Japanese curriculums fail to accurately depict the Imperial Army's wartime atrocities in colonized Korea. The Japanese bemoaned what they saw as the exaggeration of the impact of Korea's cultural and economic achievements on Japan.

Such discussions are an essential first step toward healthier relations between the two nations. The scholars' talks - a second symposium is scheduled in Seoul this summer - were given additional impetus by a thaw in diplomatic ties, initiated by a landmark trip to Tokyo by South Korean President Kim Dae Jung last October. Kim's meeting with Obuchi Keizo cut through clogged official channels, prompting the Japanese prime minister to offer the most forthright apology to date for Japan's transgressions in Korea.

But the words of politicians alone are not enough to heal the deep wounds. The key is education - an earnest facing-up to the full, tragic truth by both populations. Only then can the trauma be finally purged. Freed of that immense emotional burden, the two nations can truly open a new chapter in their relationship.

The same applies to Japan's equally troubled ties with China. The issue was dramatically underscored when President Jiang Zemin's heralded visit to Japan last November was clouded by differences over the war. Obuchi's reluctance to offer a full apology sparked public - and highly undiplomatic - anger by the Chinese leader. Many younger Japanese were puzzled by the turn of events. They would not have been, had they learned in classrooms about one of the darkest chapters in their nation's modern history. Japanese and Chinese academics should consider launching a joint initiative of their own, similar to the Japan-Korea project. The neighbors need to move beyond diametrically opposed, black-and-white versions of history. It is by squaring the accounts of the past that they can begin to build a common future.

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Can Zhu's trip salvage flagging U.S.-China ties?

By Alejandro Reyes

BEFORE LEAVING FOR THE U.S., Zhu Rongji sought the advice of American envoy to China James Sasser. The premier wanted to know how he should handle himself on his nine-day, six-city tour. Keep smiling, Sasser counseled the PM known for his poker face and short temper. That may be tough even for the charismatic Chinese leader. As he and his wife stepped off their jumbo jet in Los Angeles on April 6, Zhu wasn't exactly beaming as aides used umbrellas to shield them from the light rain. Outside his hotel, demonstrators gathered, promising to dog the premier throughout his stay in America. (He goes to Canada for six days after he leaves the U.S.) Bad weather and protests are the least of Zhu's worries. Ties with Washington are at a low, sunk by allegations of illegal campaign donations by the Chinese military and espionage to obtain secret nuclear technology, continuing differences over human rights, China's growing trade surplus with the U.S., and Beijing's strong opposition to U.S.-led NATO strikes against Yugoslavia.

Zhu's mission is so tricky that the Chinese leadership considered calling it off. Approval came only at an emergency Politburo meeting days before the premier's departure. "The political climate [in the U.S.] is so hostile to China that he's walking into a snakepit," reckons mainland-watcher David Shambaugh of George Washington University in the U.S. capital. "This isn't just another trough that's going to swing up again. [Zhu] must find a floor for the rapidly spiraling relationship." He may be aiming to do just that. Since last month, Chinese and American negotiators have been meeting almost daily to hammer out an agreement on China's entry into the World Trade Organization (WTO). Beijing needs to sign pacts with each of its major trading partners, before it can win membership. Both Washington and Beijing hope that sealing a deal while Zhu is visiting would salvage ties between them.

China's WTO quest is now at the top of the Sino-U.S. agenda. In a March press conference at the end of the annual sitting of the National People's Congress, the mainland's legislature, Zhu signaled that he had personally taken charge of the sensitive matter. "The black hair has turned to gray so now it's time to conclude such negotiations," he said, referring to the 13 years of talks so far. A string of visits to Beijing in recent weeks by U.S. officials including Secretary of State Madeleine Albright and U.S. Trade Representative Charlene Barshefsky (who came twice) prompted speculation that an agreement might be concluded in time for Zhu and President Bill Clinton to announce it when both men meet in Washington on April 8. That hope has faded, though the two may outline the broad terms of a deal.

Both sides are locked in a classic face-off, each careful not to upset the other lest the whole deal unravel. Down to the wire, the U.S. insists it will settle for nothing less than what Barshefsky calls "a commercially meaningful package." After meeting Zhu on March 30, she vowed that the U.S. "will set no artificial deadlines in these negotiations."

For its part, China seems to be going the extra mile. Beijing has agreed to allow access to its market for U.S. wheat and citrus products. Agriculture has been one of the most difficult issues between the two sides. On the eve of Zhu's departure, China announced that it had granted licenses to four foreign insurance firms - including two from the U.S. - bringing to 14 the total number of foreign insurers allowed to operate. In the last month, Beijing has made other major concessions. It agreed to license the U.S. mobile-phone standard, CDMA, for trials in certain cities and provinces. China has also agreed to permit foreign investors to take up to 30% stakes in local telecom companies, with the limit rising in later years.

Still, Washington is pushing for more. The U.S. would like China to "front load" its WTO commitments to ensure early market opening, instead of leaving key measures to the end of an implementation period. And Washington is also seeking to open domestic distribution networks to U.S. exports. In an interview with The Wall Street Journal before his trip, Zhu insisted that China had done enough. "I know better than anyone else how big the concessions are that China has made, and in fact, all of these are to the United States' advantage," he said. Asked if he meant to say that Beijing would not yield further, Zhu replied: "Pretty much."

That may be last-minute brinkmanship, but Zhu is adamant that China is not prepared to beg to become a WTO member. Yet the premier must certainly be aware that, however much Clinton might want to conclude an agreement, the U.S. president cannot afford to sign a deal which does not receive widespread domestic backing. China has many enemies on Capitol Hill, and so does Clinton, following his bitter impeachment battle earlier this year. While Congress will not have a direct vote on the approval of a WTO accession agreement, the legislature will have to grant China permanent most-favored-nation trading status, now referred to as "normal trade relations" (NTR) status, as part of a deal.

Clinton - and Beijing - will be counting on friends in business. "We have no desire whatsoever to come up with an agreement that will fail politically," says Kenneth Lieberthal, Clinton's special adviser on Asian affairs. He warns that if NTR is not granted, Beijing would have the right to withhold its trade commitments from the U.S. "We would be faced with a situation where every country but the U.S. would get the market access we negotiated."

Support from U.S. business is by no means guaranteed. Many are waiting to see the small print. "A lot of businesses don't want China in the WTO," says Robert Kapp, head of the U.S.-China Business Council. Neither do many American politicians. The ranks of China's adversaries have grown following recent allegations that China stole nuclear secrets from the U.S. The release in February of portions of the 700-page Cox report outlining a 20-year effort by the Chinese to obtain U.S. technology and equipment through legal and illegal means also harmed Beijing's image among Americans. So has China's criticism of the Yugoslavia bombing. Beijing opposes the use of force against nations with restive minorities or independence-minded regions. These concerns have hardened China's stand against U.S. moves to include Taiwan under a regional defense umbrella.

Ironically, it is China's most reformist premier ever walking into the political snakepit. If Zhu keeps smiling, he could stem the rot in Sino-U.S. relations. But if the WTO stalemate is not broken, the bitterness on both sides may get worse. And instead of confirming an era of good feelings between the two nations that came to the fore when Zhu's boss Jiang Zemin visited the U.S. in 1997 and Clinton went to China last year, the premier's trip may end up cementing the view of a growing number of Americans and Chinese that they are enemies, not friends.

-With reporting by David Hsieh/Beijing and Samuel Gilston/Washington

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Despite its hamfisted intervention, NATO has no choice but to win

YUGOSLAV PRESIDENT SLOBODAN MILOSEVIC is not the only one with his back to the wall in Kosovo. The United States-led NATO forces arrayed against him are also painted into a corner. After laying its diplomatic and military credibility on the line and helping trigger a humanitarian catastrophe in the process, the world's mightiest armed alliance is scrambling to pull something presentable out of the Balkan quagmire. Its options are limited. NATO must create conditions that will allow the Kosovar refugees expelled by Serb forces to go back home and curb the ability of Milosevic, or any future imitator, to commit genocide and destabilize entire regions. In the current, ugly situation, there seems to be no viable substitute for a military victory by the Western alliance. That would mean sending ground troops into the Serbian province if air strikes fail to drive out Milosevic's soldiers.

NATO's performance so far inspires little confidence. Yes, Milosevic's atrocious behavior toward the ethnic-Albanian residents of Kosovo before the bombing began was crying out to be stopped. But the plan that Washington and its allies devised - the Rambouillet accord - was flawed from the start. Besides autonomy for Kosovo, the withdrawal of most Yugoslav security forces and the stationing of foreign troops as monitors, the blueprint left wide open the possibility of independence for the province - something no national leader, especially a staunch nationalist like Milosevic, was likely to swallow. Then, when NATO launched its bombing campaign, it expected, in the words of its military committee chief Gen. Klaus Naumann, "that Milosevic would blink and give in." That hope now seems naive or downright foolish.

Worst of all, the Western alliance was caught off guard when Serb forces began herding ethnic-Albanian civilians, who make up 90% of Kosovo's two-million population, out of their homes and into reluctant neighboring countries at a terrible cost in misery and lives. Yet once the air strikes started, Milosevic's only logical option was to alter the realities on the ground - that is, to remove wholesale the Albanian community at the heart of the conflict and present the world with a fait accompli. NATO strategists now say they expected some expulsions but were surprised by the speed and viciousness of the Serb campaign. That only underscores the ineptitude of NATO planning. Then there is the damage inflicted on the civilian population in Serbia, the support the strikes have stirred for Milosevic, and the anger sewn in Russia and many other parts of the world against Washington and its allies.

But all that does not mean NATO should ground its planes and return meekly to the negotiating table. At present, Milosevic has the upper hand. He has essentially cleared Kosovo of its Albanians. He has survived not only the threat of force but force itself. If bombs have left him unmoved so far, talk is unlikely to do much better. And unless Milosevic pulls out, the Kosovar refugees cannot go home. Whatever his promises - and he has offered a ceasefire and an open door - sending the traumatized Kosovars back without removing the Serbian instruments of oppression would be unworkable and morally untenable. And if the refugees remain stranded in border camps or resettled in third countries, that not only destabilizes Serbia's neighbors but gives the green light to every dictatorship to expel unwanted minorities onto the laps of the international community.

Asia's reaction to the crisis has been mixed. China has vehemently condemned what it sees as high-handed U.S. intrusion in the internal affairs of a sovereign nation. Premier Zhu Rongji wondered out loud if Kosovo meant foreign powers might one day intervene in Tibet. Another critic, India, was infuriated when Pakistan compared Kosovo with Kashmir. On the other hand, Singapore, worried by bubbling ethnic tensions in Indonesia, has quietly cheered U.S. efforts to impose stability. And Malaysia has loudly applauded the raids as necessary to protect the Muslim Kosovo Albanians. U.S. ally Japan has offered only lukewarm support, urging a diplomatic solution. Most other Asian nations have kept their heads down.

NATO's conditions to Milosevic are clear. He must end military action and repression in Kosovo, withdraw his troops, allow the deployment of an international military force, agree to the return of all refugees and access by aid organizations, and provide a "credible assurance of his willingness" to work on a political accord that would give Kosovo substantial autonomy. Certainly, the allies must keep fighting until Milosevic agrees, sending in ground troops if necessary. After that the situation gets more complicated. NATO is considering making the province an international "protectorate" with the involvement of the United Nations and of Russia. The help of those two parties - especially Moscow - is essential if the solution is to be acceptable to Serbians and their Russian kin.

All that amounts to little more than a giant band-aid, but it will end the fighting and underscore that genocide and expulsions of entire populations will not be tolerated. The protectorate may have to remain for decades, until cooler heads and warmer hearts prevail. Meantime, all nations - and especially the U.S. - need to study the Kosovo debacle. They must ponder how not only to prevent such tragedies in future, but also to avoid worsening them through hamfisted intervention.

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Zhu Rongji's Year of Living Dangerously
Although he thrives in times of crisis, China's no-nonsense Premier faces two of his toughest challenges: keeping the economy afloat and mending ties with the U.S.


April 12, 1999

Life looks different down the barrel of a gun--more focused, urgent. Zhu Rongji seems to like it that way, relishing the edge it gives him. China's Premier is a risk-taker, a breed apart in the Chinese leadership. In Beijing they sometimes call him Zhu Fengzi, Madman Zhu, as he crashes through the rickety communist superstructure in the name of reform, laying off millions of workers at state-owned enterprises, terrorizing corrupt officials, having smugglers shot. On a good day they call him Zhu Laoban, Zhu the Boss, the only man capable of imposing order on an economy of 1.3 billion money-hungry people snarled in one of the greatest economic traffic jams the world has ever seen.

Discipline has always been Zhu's touchstone, from his early days as a lowly planning official to his current post as China's fiscal field marshal. When he was mayor of Shanghai in 1988, two relatives asked him over dinner to bend strict residency laws so they could come to live in the city. Zhu turned them down, according to another family member present, saying: "What I can do, I have done already. What I cannot do, I will never do."

The moment the mad boss steps off his Air China jet in Los Angeles this week on the first stage of his U.S. visit, he knows he will be in the crosshairs. Many Americans, fed up with allegations of nuclear espionage and China's dismal human rights record, are sure to take it out on the visitor from Beijing. He's looking forward to it. "Let them vent their anger," Zhu told a press conference last month. "I will go to tell the truth."

The truth is not pretty: a Chinese crackdown on domestic dissent harsher than anything since the Tiananmen massacre in 1989, allegations of a concerted campaign of nuclear espionage in U.S. labs, a trade surplus with America that Washington calculates at $57 billion--second only to Japan's, a brewing showdown over U.S. plans to provide Taiwan with a defense system against China's ballistic missile buildup. Relations between Washington and Beijing are frostier than they have been for years, as the old epithet "red" creeps back into America's discourse on China. Some Congressmen are even talking as if China has become the new cold war enemy.

Having reached the age of 70, Zhu should be resting on his achievements, letting others take the hits. But if anything he is wading in deeper, taking on the weight of a troubled bilateral relationship just as China's own economy is teetering on the edge of breakdown. His reasoning is simple: if he doesn't do it, nobody will. And time is short. "Black hairs have already turned to gray," he said last month, expressing his frustration at the slow pace of negotiations with the U.S. over China's long-delayed entry into the World Trade Organization. But he could have been referring to his own life story, an ever more difficult struggle against the forces of disintegration, anarchy and corruption that could yet rip China apart. He has four years left as Premier, and so much still to do.

Tall and sharp with the features of a falcon, Zhu dominates meetings with his quick mind. His IQ "must be 200," deputy U.S. Treasury secretary Lawrence Summers once said. He has a Rolodex memory, endless energy and overpowering impatience. "Zhu is a verb, an active verb," says Wu Qing, professor of American studies at Beijing Foreign Studies University. He is not a man that one likes, but "a man that one respects," says Singapore's Senior Minister Lee Kuan Yew. Above all, Zhu is a man in a hurry, with a mission to make up for lost time, both for himself and for China.

Zhu knows how much time China lost under Mao. Coming from the suspect background of a wealthy landowning family, Zhu spent two decades in political disgrace while incompetent planners pushed an already poor country into famine and industrial ruin. Only since his political rehabilitation in 1978 has Zhu been able to pursue his goal of modernizing China's economy.

Zhu is painted a different shade of red than the standard communist cadre. The Chinese character for his name means vermilion, the color used on the gates of wealthy people's mansions in old China. Descended from Zhu Yuanzhang, the first Ming dynasty emperor (1368-98), the Zhu clan were large landowners around Changsha in Hunan province where Zhu was born in 1928. "The Zhu family was very rich," says Zhu Yunzhong, 66, a retired doctor and a cousin of Zhu Rongji's. "That caused many of them problems after the revolution--even myself."

Yunzhong lives in the township of Ansha, 30 km from Changsha. Ten minutes' walk up the valley from his two-room house he points out the site of the Zhu clan's onetime palace. "It had dozens of rooms," he says, "I can't remember how many." A covered walkway once led over the hill to the family temple. "We used to say that whichever path you took from here to Changsha you had to pass over Zhu land," says Yunzhong. The palace was destroyed in an anti-landlord campaign in the late '50s, but Zhu's privileged background would not be forgotten.

Zhu's father died before he was born, and his mother perished when he was nine. Losing them at such an early age "made him quiet, thoughtful," says Yunzhong. The boy was brought up by his uncle, Zhu Xuefang, who gave his charge 100 pieces of silver when it came time for him to go to university. Zhu studied electrical engineering at Qinghua, joined the Communist Party in 1949 and found work in the State Planning Commission. It was there that he made a speech in 1957 questioning the party's economic policies. He was disgraced, thrown out of the party and sent to the countryside. He spent several years in China's northeast tending livestock until the late 1970s, when Deng Xiaoping began looking for people to help lead his economic reforms. Zhu was brought back as an economic planner and rose quickly in the ranks. His success was a tribute to his raw skills: after two decades in the political wilderness he had no base of support in the army, the party or the bureaucracy. He was always a wild card, following a different script from most of his comrades. "Everyone knew Zhu, not just for being efficient and honest, but primarily because of his rightist background," says Zhu Xingqing (no relation), who as a journalist observed Zhu in Shanghai in the 1980s.

After taking over Shanghai's reins in 1988, Zhu opened the city to foreign investors, starting a boom that lasts to this day and demonstrating a no-nonsense approach to the business of doing business. To show his seriousness, Zhu reduced costs by trimming official banquets from 12 dishes to four. "First of all, most of us couldn't eat that much," recalls Gareth Chang, who headed a McDonnell Douglas joint venture in Shanghai in the 1980s. "And second, he thought the longer meals were a waste of time." In 1991 Zhu was recalled to Beijing, where he was made vice premier and given the task of curbing China's worrisome inflation. With characteristic bravado, he announced that he was preparing his own coffin in case he failed. Zhu imposed an austerity package that brought prices under control, contrary to all predictions. His success won him the premiership, which he assumed last year just as Asia's economic collapse threatened to push China into the abyss.

This is Zhu territory, right on the edge--between disgrace and success, between oblivion and the front cover of newsmagazines, between smiling self-confidence and apoplectic fury at incompetence and corruption among his underlings. Those diatribes are becoming legendary. "I've seen documents detailing corruption involving local leaders," says a Beijing official. "On the margins are Zhu Rongji's terse inscription: che (Fire him!)." When TIME wrote last October that Zhu's wings had been burned as his overly ambitious reforms were being hurriedly scaled back, he sent a message through visiting former U.S. trade negotiator Carla Hills, "Tell TIME my wings are still strong."

Zhu is very conscious of his image, and he often quotes from stories about himself in the Western press--including their exact date. With little institutional support in the government, Zhu seems to feed on his own esteemed self-image to keep himself going. In public he is forceful and given to lecturing others, a habit he has retained since his days teaching economics at his alma mater, Qinghua University. Qinghua appreciated his talents: he became dean of the university's business school, and in that capacity pioneered its links with M.I.T.'s Sloan School of Management, where he plans to give an address when he visits Boston next week.

Zhu is widely admired for integrity in a society where holding an official post is all too often a license for self-enrichment. "Zhu has served as a role model to other bureaucrats," says Rana Talwar, group chief executive of Standard Chartered Bank in London, who has met Zhu on several occasions. "You notice the upgrading of people around him." Li Shan, a Beijing-born graduate of Qinghua, had been an executive director at the London office of Goldman Sachs until Zhu invited him back to China last year to set up an investment banking arm at China Development Bank. "He asked me on April 4," says Li. "By April 15, I was in Beijing. You cannot say no to him." But even Zhu's strongest supporters question whether he can single-handedly save China's economy from deflation, mounting unemployment and massive bad debts in the banking system. "Zhu is my No. 1 person in China," says Li. "But just by one man I don't think you can change the country."

What could do Zhu in is his obsession with micro-managing China's affairs. Insiders say he relies on about two dozen key advisers, most of them economists and technocrats in think tanks, who regularly send him policy papers and research material. But he insists on having the last say on every decision. A voracious reader, Zhu pores over many of the 16,000 letters he receives each year from citizens with grievances. "It is good for him to read them and know how people feel," says one Zhu aide. "But he should not be doing that too often--he should be dealing with the big problems."

To some, that attention to detail suggests a lack of vision. "You need someone at the top who can think of systemic change," says Andy Xie, China economist for Morgan Stanley Dean Witter in Hong Kong. "With his engineering background, Zhu attacks specifics. But he is not trained to think of system implications." When Zhu's patron Deng Xiaoping made his legendary trip through China's south in 1992, Deng said nothing more specific than that it was not a bad thing for socialists to get rich. With that, an unprecedented countrywide business boom ensued. By contrast, when Zhu traveled south to Guangzhou last October, in the space of five hectic days he personally supervised the closing down of a big, indebted investment trust and at the same time ordered the firing of 600 provincial officials involved in smuggling.

How will China's marksman stand up to Washington's crossfire? The war in Kosovo may be preoccupying American lawmakers, but Zhu cannot hope to pass entirely under the radar of China critics like Senator Jesse Helms. "Zhu said he knows the trip won't be easy, but he is amazingly calm," says Fred Hu, head of Asia economic research for Goldman Sachs in Hong Kong and a former student of Zhu's at Qinghua. "He is super-confident about himself."

The English-speaking Premier brings charm, shrewdness and a disarming sense of humor to the task of softening U.S. opinion on China. Though economics is his field, he will have to deflect questions on the thornier issues of human rights and nuclear espionage. In last month's press conference he won over his audience when he complained that a recent business magazine cover had made him "look like a dead man." He then went on to concede that difficulties in the economy were greater than he had expected in the past year: "I have not done a good job." A red with a sense of humor who admits he is wrong? Even Jesse Helms might hold his fire on that.

With reporting by Jaime A. FlorCruz and Mia Turner/Beijing and Wendy Kan and Isabella Ng/Hong Kong

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Why Are We Unloved?
Sin-Ming Shaw: Beijing would do well to admit its wrongs.
Until China comes clean on past horrors, it won't win the respect it craves


April 12, 1999

Americans will find much to like in Chinese Premier Zhu Rongji when he visits the United States this week. Zhu is a well-educated, down-to-earth person with a sharp sense of humor. He knows intimately the irrationality of the communist system: in 1957 he was "sent down" to the countryside for questioning the sensibility of Mao's economic targets. Zhu is the opposite of the arrogant, ignorant fool of a leader one so often meets in China. Yet, he is unlikely to find the respect he desires.

On the surface only three big issues divide the U.S. and China: trade, Taiwan and human rights. As always, the trade conflict will surely be resolved, however imperfectly. Despite frustration over China's allegedly unfair trading practices, quintessential American brands like Coke and Microsoft are now as much a part of Chinese daily life as they are American. And there is one U.S. export that doesn't show up in the trade balance: an American university degree. It is rare now to find children of Chinese leaders without one. What is the price tag of a friendly mind if it belongs to a future Chinese premier?

On the question of Taiwan, no sane person on either side of the Taiwan Strait believes war is even remotely probable. The Strait is the supply route for Japan's energy needs. Interrupting that flow would drag down the world's second-largest economy, pulling the rest of Asia into a black hole, a prospect nobody will tolerate. Taiwan is also an extension of Silicon Valley, supplying a huge share of the world's computer components. Every advanced nation needs to keep its computers humming, just as world manufacturing needs uninterrupted oil supplies. In addition, Premier Zhu must recognize that Taiwan represents something dear to the American psyche: a people who have freely chosen how they should live and be governed. The U.S. isn't likely to look the other way if Beijing moves on Taiwan. And if there were an invasion, Taiwan would become China's Vietnam, for the locals wouldn't welcome Beijing.

So the only issue that truly divides China and the U.S. is human rights. Beijing can reasonably claim that respect for human rights in China has never been better. Economic freedom, the foundation of all liberties, is visible across the land. On that basis alone, Beijing feels it should have its back patted, not kicked. It is also true that the U.S. is less demanding of certain allies that lack a credible human rights record.

But Beijing is missing the point. America expects more from China in part because of its ancient and civilized history. Americans find it repulsive when Beijing, claimant to that heritage, behaves in a thug-like manner toward those with different views, including defenseless youths and intellectuals who cannot possibly pose any serious threat to the 50-million-strong Communist Party.

Beijing often cites Russia's recent history as "proof" that democracy is wrong for China. But this ignores vast cultural and historical differences. The Russian experience with total central planning persisted far longer than did China's. And the Russian economy is now dominated by ex-KGB agents and gangsters; China's is freer. Beijing also says democracy is unsuitable for a country that has had to endure 5,000 years of feudalism. (That's one of Premier Zhu's favorite sound bites; listen for it in the U.S.) But Taiwan's thriving democracy shows the fallacy of that argument. Beijing's recent moves to lock up a few people who tried to form a political party--a right supposedly guaranteed by the Chinese constitution--betrays acute insecurity (not to mention stupidity) among China's leaders. It is conduct unbecoming of a great nation. If honest elections were held today, does anyone doubt the Communists would win? Historically it is governments, not students or the common people, who are the source of upheaval and chaos, for they alone have the power to implement disastrous policies.

To gain the respect Beijing feels it is unfairly denied, it must stop its pettiness toward its own citizens and level with them. The legacy of the Communist Party is one of brutality against its citizens. The bloody suppression of the Tiananmen democracy movement in 1989 is but a footnote compared with the tens of millions who died during the Great Leap Forward and the Cultural Revolution. Neither Chinese President Jiang Zemin nor Premier Zhu had anything to do with those murderous policies, and they should consider coming clean with the Party's sordid past if they want a place in history.

The Germans have apologized for their Nazis, though no current leaders were themselves responsible for past atrocities. Taiwan's President Lee Teng-hui has similarly apologized for the Kuomintang's massacre of thousands of Taiwanese in 1947. Leaders of both societies have gained universal respect for their moral integrity. Japan lacks that in Asia precisely because it refuses to forthrightly address its past. The magnanimity of those in power toward political opponents is not weakness. President Nelson Mandela of South Africa has successfully advocated public reconciliation between black citizens and their former white oppressors, while South Korean President Kim Dae Jung forgave his predecessors who wanted him killed. Both nations are nobler for it.

If Beijing ever finds the moral backbone to come to terms with its past, Chinese leaders like Zhu will find in future visits to America a welcome warm beyond their boldest wish. Unfortunately, that day still seems far off.

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Is This Cold War II?
As China's Zhu Rongji prepares for a high-profile visit to the U.S., the two nations find they have depressingly little to talk about

When Zhu Rongji arrives in the United States, he will have to traverse the minefield that Sino-U.S. relations have become.

April 12, 1999


Zhu Rongji has devised an unusual itinerary for his high-profile, high-pressure visit to the United States this week. Starting in Los Angeles--and including a visit to Hollywood mecca Universal Studios--Zhu then goes to Washington for the usual red carpet and speeches, returns a few thousand kilometers to Denver, does an about-face to Chicago, and then zigs and zags to New York and Boston. The Chinese have been using maps since the 3rd century B.C. so it's unlikely Zhu has a faulty atlas. Perhaps he sees the utility of being a moving target. Sino-U.S. relations have become so stridently fractious that China's powerful Premier may not want to sit still in a shooting gallery crowded with would-be pot-shot artists: conservative lawmakers outraged over allegations of Chinese high-tech spying, liberals howling about human rights abuses, trade negotiators demanding more open Chinese markets, the pro-Taiwan lobby, supporters of Tibet.

That troubled waters are swirling around the "constructive strategic partnership" between the U.S. and China--the highly elastic term that both sides use to describe the relationship--is undeniable. Two weeks ago, Washington sponsored a United Nations resolution condemning China's human rights record, infuriating Beijing. Representative Christopher Cox, chairman of a legislative committee investigating China's impact on U.S. national security, is sitting on a 700-page report that asserts a "concerted effort" by China to get U.S. missile, rocketry and nuclear secrets. (He's ready to make it public, though the White House may not be. "Since they control the timing," Cox tells Time, "I'd imagine it wouldn't be during [Zhu's] visit." White House officials counter that experts are going over the report line by line.) Tough negotiations are being held on China's application to join the World Trade Organization (WTO), and some in Washington are megaphoning the need for Taiwan, which China claims as its own territory, to be included in any Star Wars-type defense shield that the U.S. designs in Asia. If that weren't enough, China has condemned the U.S.-led bombing of Yugoslavia. "The politics of the bilateral relationship," says a senior Clinton Administration official, "are clearly in a tough period."

Back in China, the flak emanating from inside the Beltway is inspiring return fire. Until late last week, there was a somber, down-to-the-wire debate in Beijing's highest circles over whether Zhu should call off the trip. Reflecting the concern, the China Daily warned last week: "An outbreak of anti-China nonsense orchestrated by the U.S. media and politicians is still going on in Washington, which may put already strained Sino-U.S. ties in further danger." The rhetoric is heating up as well in Chinese think tanks that tend to be relatively forgiving toward America. "In the United States, it has become the fashion to slander China," says Zhang Yebai, senior fellow at the Chinese Academy of Social Sciences' American Studies Institute. "The situation there is in some ways like China's Cultural Revolution. U.S. scholars who have a better understanding of China do not dare to speak up."

Is the "constructive strategic partnership" becoming destructive and dangerous? The stakes couldn't be higher. No geopolitical relationship is more important for the 21st century than that between today's sole superpower and the rapidly modernizing nation of 1.3 billion people. But when Zhu got an earful on human rights from U.S. Secretary of State Madeleine Albright in Beijing last month, his response was sharp. "I told her: 'I'm 10 years older than you,'" Zhu later related to the press. "When I took part in the movement for democracy, freedom and human rights against the Kuomintang at the risk of my life, you were still in junior high school." Pulling rank, morally and chronologically, on Madeleine Albright: Is this a healthy relationship?

But beneath the fiery rhetoric, there may be room for hope that the relationship won't spin out of control. Firstly, Zhu will receive the kind of high-profile welcome that was impolitic to give Chinese leaders in the years after the 1989 Tiananmen massacre. Only days before Zhu's departure, China announced the purchase of 10 Boeing commercial jets, valued at $400 million, and General Motors signed a deal to sell another $400 million of U.S. components to its joint venture in Shanghai. These represented the traditional peace offerings of dignitaries from countries that run large trade surpluses with the U.S.

Secondly, state visits like Zhu's don't merely survive the controversies of the day but often fan them, especially when U.S. elections are on the horizon. China assumes that the Clinton Administration is sliding into a tougher stance in advance of this year's primary election season, in order to protect presidential aspirant Al Gore from charges of being "soft" on China. A parallel process is taking place in Beijing: conservatives in the Communist Party and the military regularly grouse that Zhu and Chinese President Jiang Zemin yield too frequently to America's demands and don't stand firm against Washington's carping on such sensitive issues as human rights and Tibet. "Because the U.S. is now such a swaggering superpower," asks a Chinese official, "how close to America do we get?"

And while Washington and Beijing seem to butt heads eternally on those hot-button issues, it's also true that major sore points between the countries flare and then recede. This year the most alarming controversy involves charges of Chinese espionage at the National Laboratory in Los Alamos, New Mexico and in other U.S. high-tech centers. Two years ago, when Jiang made his own high-profile visit to the U.S., he had to deflect charges that China was a military threat to the world at large: not long before, Beijing had fired missiles into the waters around Taiwan. But when U.S. President Bill Clinton went to China last June, that issue had dropped off the map, replaced by noisy outrage over China's alleged attempt to undermine American democracy through illegal campaign contributions. No one is saying that today's spying charges against China aren't serious--or denying that domestic U.S. politics often makes issues appear bigger than they really are. "China is a symbol in U.S. domestic politics," says the Clinton Administration official, "and in a tough period like this, the things China does that we do not like or agree with get a great deal of attention." Zhu himself has smoothly tried to place himself above the fray. Last month, when journalists asked if his visit would be affected by bilateral flash points, he said: "I will go anyway to lend them a chance to let off their steam."

An entire boiler's worth of pressure is building up. Pro-Tibet demonstrators are planning to be on hand when Zhu visits the NASDAQ stock exchange in New York and a Motorola factory in Chicago. When Zhu arrives on Capitol Hill, he will face Senators Jesse Helms and Robert Torricelli, who have already introduced a bill to increase military cooperation with Taiwan. Other Congressmen are trying to wedge their way formally into the WTO controversy by demanding that congressional approval be required for China's admission to the body.

In Washington, many describe this gauntlet as fallout from Jiang and Clinton's previous summits. The accusation is that both of those meetings papered over divisive issues that were guaranteed to return to haunt both countries. "The administration oversold the modest achievements of '98, which appear to be even more modest in 1999," says Douglas Paal, president of the Asia Pacific Policy Center, a non-profit institution that deals with defense-related trade issues. Kent Harrington, a former CIA analyst-turned-business consultant, says Clinton's claim that his China visit represented a true meeting of the minds rings hollow. "Washington set itself up for a fall. The administration failed to build a bridge to policymakers, politicians and the community in Washington, or to build a realistic view that the relationship would be at times troubled." According to deputy assistant secretary of Defense Kurt Campbell: "We need to lay out clearly what areas of policy we are having trouble with and what we have actually achieved. But we cannot oversell the situation."

The human rights issue is a guaranteed nonstarter. Election-season politics will sharpen U.S. criticism during Zhu's visit, and both the State Department and activist groups accurately note that China is not even fulfilling its pledges in two human rights-related covenants it signed in the last two years. "It's time to insist that the reality match the rhetoric," says Catharine Baber, China researcher for Amnesty International. Or is it? The situation in China is fragile. Zhu's economic reforms are causing massive unemployment in a country without any kind of social security. Besides, this year brings some emotive anniversaries: the 50th of the founding of the People's Republic, the 80th of the student-led May 4 movement and, on June 4, the 10th anniversary of the Tiananmen Square massacre. Anniversaries often spur protests in China, and Beijing is sure to use all its tools of oppression to avoid that. "To the Chinese, political matters are internal affairs," says Hong Kong-based democracy activist Mak Hoi Wah. "They are not prepared to accept international intervention."

Another uncrackable nut is Washington's new interest in a Theater Missile Defense (TMD) system, a rehashed version of Ronald Reagan's Star Wars defense shield. Funding for research was approved only in March, but suggestions that Taiwan be included in the umbrella already have Beijing hopping mad. "On TMD, China and America are head-to-head in fighting postures," says Byron Weng, chairman of the department of government at Hong Kong's Chinese University.

Business should be Zhu's metier, considering his previous job as China's economics czar and his current campaign to overhaul China's economy. But even prosaic trade issues get political between China and the U.S. The Cox committee has investigated, among other things, the possibility that Hughes Electronics Corp. and Loral Space & Communications illegally transferred missile guidance technology to China in 1995. Cox's revelations could lead to further export restrictions on high-tech products to China, a possibility that worries the American business community. U.S. sales of satellites to China could rise to an estimated $171 billion by 2007, from $38 billion in 1997--but such growth won't occur under new export restrictions. Non-American firms could easily grab the business, warns the chairman of the American Chamber of Commerce in Beijing, Richard Latham. "Then you're locked out of that market for 10 to 15 years." As Commerce Secretary William Daley told an audience in Beijing last week: "This is the worst climate for high-tech trade in 20 years."

Similarly, China's bid to join the WTO had been touted as the one concrete achievement Zhu could conceivably clinch during his visit. Daley and U.S. Trade Representative Charlene Barshefsky both flew to Beijing last week for 11th-hour negotiations. But to make the deal palatable for U.S. business, they had to prod China to relax restrictions on various imports--and also pry open Chinese markets to such services as insurance and telecommunications. For China, WTO membership would aid its export-driven economy and give Beijing a commanding role in a large international organization. The cost: opening up large industries to competition, probably leading to more layoffs. That price seemed excessive to Zhu last year, when similar negotiations were allowed to lapse.

Zhu Rongji might well feel like a general behind enemy lines when he hits the U.S. "The two countries are destined to compete with each other," says Chinese University's Weng. "You cannot think of one being subordinate to the other. The two are bound to try to cooperate but also fight." Perhaps it is fitting that one of Zhu's first stops is Universal Studios, with its roller coasters and a ride in which a giant shark threatens to chew you up. It's good preparation for the thrills awaiting him in Washington.

Reported by Jaime A. FlorCruz and Mia Turner/Beijing, Maria Cheng and Isabella Ng/Hong Kong and Sally B. Donnelly and Elaine Shannon/Washington

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An Asiaweek-World Bank Roundtable ponders political, economic and social reform amid the Crisis

NO ONE DISAGREES THAT Asia needs to change to escape the economic crisis and avoid a repeat. But how best to undertake sweeping reform? At the recent World Bank Conference on Democracy, Market Economy and Development in Seoul, Asiaweek and the Bank convened leading experts to tackle the nitty-gritty of reform. The panelists: George Mason University politics professor Francis Fukuyama, who wrote the seminal work on democracy's triumph, The End of History and the Last Man; former Princeton professor Pei Minxin, an analyst of political change in China; Indonesian economist Mari Pangestu; Joel Rocamora of Manila's Institute for Popular Democracy; Korea Development Institute vice president Yoo Jung Ho; and from the World Bank, Daniel Kaufmann, an anti-corruption expert, and Vinod Thomas, the director of its research arm, the World Bank Institute. Excerpts from the hour-long discussion moderated by Assistant Managing Editor Ricardo Saludo:


Thomas: A crisis is a great opportunity for positive change. But good changes are not automatic. There is a huge opportunity to make some deep-seated reforms which have been long overdue. You've been seeing some signs of those reforms quickening in some places and not so much in others. So the turn of century is a huge point of departure for Asia. There is a sense that political change is inevitable. Particularly with globalization, because that makes transparency almost necessary. The spotlight is on everybody, and it is hard to hide. So political openness is a corollary of the [economic] changes coming about. The question is how best to build institutions. Being open to lessons from around the world and the region is one way to go.

Pei: The responsiveness of governments varies so much. In some of the more democratic countries -Taiwan, South Korea - governments are far more responsive. Japan is beginning to change. Authoritarian countries like China, Vietnam, and Indonesia are hardly responsive.

Yoo: [In Korea,] the Crisis seems to have changed a lot of the perceptions of the general public and the demands the public make on government. It really brought home that indeed there should be change - economic and political. In the National Assembly now, civil society groups come to watch how their representatives are doing, whether they attend committee meetings conscientiously, and what statements they are making. We realize now that the collapse of the economy had a lot to do with the erosion of the institutional base needed to support the market economy. We are very lucky. Things seem to be moving in the right direction. People like that there is change, but don't know where it is going.


Pangestu: How do you manage the transition where there are still authoritarian regimes? Indonesia is just starting the process. It's going to take time. My main concern is not just political but also social and economic. While you can describe what is ideal to make sure there is a participatory process, how do you get from here to there in a country not used to that kind of system. You have to think about stages: what is important to do in the short term, while recognizing what you want to do in the long term. We have had a change in president, but not the regime. There is a great deal of skepticism that the elections to be held in June will be fair. Only civil society is able to inform people. But again, we're starting from zero. How do you get civic education and awareness started? From the experience of the Philippines, it has to be across the board. Without it, I can't see how you can avoid the money politics and break the mindset that people are used to where local authorities tell them what to do and whom to vote for.

Fukuyama: It might be useful to separate liberalism from democracy. In the West, they are often together. You can talk about elections and representative government, which is part of democracy. There is the liberalism side as well, which has to do with the rule of law particularly in securing property rights. It is worthwhile reflecting on the appropriate timing and sequencing. It may pay off more to focus on the development of economic institutions and put off the development of formal democracy because economic institutions and a liberal rule of law are what create economic growth, [which] is conducive to democracy in the long run. This is a version of [Harvard professor Samuel] Huntington's authoritarian transition, an idea that has been around for some time.

Thomas: Maximizing economic growth especially in the short term, but not having the social and political sustainability, could be problematic. The question is whether the changes taking place in Asia are broadly based. Certainly the experience over the last few years suggests that the sustainability of growth over a long period of time does require concern for the social and political side simultaneously with the economic, and not sequenced one after the other. If that is taken to heart, that would be a big change in development thinking.

Rocamora: Former [Philippine] president [Fidel Ramos] said that [Indonesian] students should let up [their] pressure on President [B.J.] Habibie and let him do his work. That would be a disaster because there are many major issues in the democratization process that wouldn't go anywhere without the students pushing them. Corruption is one. Human rights is another. Of course, there needs to be some thought to how to reassert government authority. In Indonesia, it is very clear that the government has lost authority, not just at the top but at the base - the village heads, the town mayors. But if [reasserting authority] is done by knocking heads or putting people in jail, that would be disastrous because popular pressure and "organized" chaos - many aspects of which are quite negative - are what's pushing democratization.

Pangestu: We've had a total breakdown of authority and respect for the security forces - total chaos. If the problem can't be fixed before the [June 7] elections, then we probably should invite United Nations peacekeeping forces in because you can't hold elections under totally chaotic conditions.

Pei: In Indonesia, the first order of business is to restore political order. If it can't be restored, there can't be any room for political change. Any change will be superficial and unstable. For places like China and Vietnam, the government must seem serious in creating political opening. There is growing public demand for responsive government. But in some countries, there are no legitimate institutions to allow expression, and this will create, in the long run, a very untenable situation.

Pangestu: It's important to make sure people are aware that they have a choice. The elite and the urban [dwellers] are aware. The Philippines used religious organizations. I am not sure that can work in Indonesia. So it's going to be up to the students, media and local NGOs. And how do you avoid money politics? This is a crucial question. One way, based on other countries' experiences, is to empower people economically so they aren't bribed.

Yoo: After elections, whoever is elected should have some legitimacy. Political stability [requires] political legitimacy.


Thomas: In Asia, in particular East Asia, the links between business and government have been cited as a reason for success in as many articles as [cite them as] a reason for failure. In recent years, with globalization, the name of the game has changed. It is not possible to be both non-transparent and successful today as it was some years ago. Globalization took place at such a tremendous pace that countries have to build the regulatory and governance side at a pace much faster than other countries. There isn't the luxury of taking the decades to build up institutions in Asia that OECD countries may have had. So the build-up of regulatory institutions in tandem with the pace of globalization has to be a priority.

Yoo: In Korea, business practices and corruption had their roots in the political system. The executive branch of the government was mandated to increase the growth rate of the economy. They exercised power, and there was nobody who could control this power. They got into every business. They protected industry from foreign competition. They promoted certain industries. They infringed upon such basic things as civil liberty and property rights. If you have government power behind you, even if a business is unprofitable, you can make it successful. So market principles break down. The profitability of the business declines over time, leading to bankruptcy. Then the external conditions change abruptly. The whole economic structure collapses because it isn't really a market economy. All the things we are busy trying to learn, like corporate governance, the BIS banking standards, risk management in the banking system - these are all new to Korea.

Kaufmann: Recently in my country Chile, a citizen was asked what kind of candidate would he vote for in the parliamentary elections. He had a fantastic response: the one who distributes corruption more equally. That's the core of the problem. We need to be realistic. Corruption is not going to decline overnight and governance just improve magically.

But how does one start opening it up? With competition. The role of civil society is [also] crucial. The information revolution is helping civil society put things out into the media and the press. The financial crisis was a transparency crisis, even in the most basic things, like the amount of reserves and forward contracts, which were found to be in the billions of dollars for some countries. That was a complete shocker for the rest of the world. Any fund manager now wants much more information than before. We have looked at what Moody's, Standard and Poor's and foreign-exchange forecasters were saying for two years before the crisis. There was incredible optimism. There were no warnings until after Thailand was hit [in July 1997]. None of us had our ear to the ground. The exception was [some] surveys of firms. Going back to late 1995, what were the enterprises saying? That when it came to Korea and Thailand, the vulnerability of the banking sector was horrible. None of us paid attention.

Fukuyama: [Investors] could have known at the time that their funds were financing state-owned enterprises that weren't producing. This information was out there. But there were powerful forces of greed and ambition which were making people blind to data in front of their faces.

Pangestu: Creditors have to be made to pay for their mistakes in underestimating the risks. And the [debt-ridden] companies should not be bailed out. Punishment and sanctions have to be very clear. If we don't do that now, companies and creditors and lenders will make the same mistake. Everybody is going to have to take his share of the burden, but how to manage that is still very problematic.


Kaufmann: Why are reforms not always popular? It is a challenge. Former Malaysian deputy prime minister Anwar Ibrahim is immensely popular. He was a hard-nosed and ruthless reform proponent. Most of the reforms did not happen not because they were not popular, but because the leader didn't want them. The problem is with the leader. There are populist leaders who in the short term are not willing to embark on tough reforms. Increasingly, there are more far-sighted leaders who take a longer view, which eventually pays off. Institutions can change overnight because of a visionary leader.

From Asiaweek

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Openness, participation and accountability can become the new "Asian values"

April 9, 1999

FOR AMARTYA SEN, THE 1998 Nobel Prize winner in economics, it beats two world wars, the atom bomb, computers, cloning, even man on the moon. "The most important thing that has happened in the 20th century," he told his rapt audience of national and business leaders, top economists and academics, "is the rise of democracy." While acknowledging that liberal politics has been centuries in the making, the India-born master of Trinity College, Cambridge, argued: "In the 20th Century, democracy was established as the 'normal' form of government to which any nation is entitled. We do not have to establish afresh each time whether such and such country is 'ready' for democracy; we now take that for granted."

No one took issue with Sen about his choice of the top 20th century event or the supposedly worldwide norm for governance. It wasn't just because he was preaching to freedom's faithful at the World Bank Conference on Democracy, Market Economy and Development in Seoul in late February, the global lender's first foray into political issues. In fact, the Asian Economic Crisis has muted the voices that once praised East Asian authoritarianism - including the Bank. It once extolled competent technocracies unencumbered by elections or interest groups. But in Seoul, the Bank's boss James Wolfensohn joined South Korean President Kim Dae Jung in declaring: "It is only through the simultaneous establishment of open governance and markets that genuine social development can be achieved."

Plainly, those who favor strong governments largely free from critics' carping would not have been popular at the forum. Fidel Ramos of the Philippines was invited, but another leader with a sterling record was not: Singapore's Lee Kuan Yew. Reflecting the prevailing international view, ex-dissident Kim stressed in his opening speech: "By channeling scarce resources into a few targeted areas, and suppressing social conflicts, authoritarian rule can appear very effective in the short run. . . But behind the facade of rapid growth are moral hazard, bureaucratic rigidity and political cronyism. The problem of inequality - between regions, classes and industries - also becomes more serious."

So is the so-called Asian way of prosperity before freedom, the cause of the Crisis? Are democracy and free markets the solution? And - a related question also debated in Seoul - are Asian values incompatible with democracy? Former Japanese PM Nakasone Yasuhiro blamed the Crisis on factors outside Asia: "Much was due to the activities of hedge funds, and they must be monitored to prevent recurrence." But most saw things as Sen did: "The recent problems of East and Southeast Asia bring out the penalty of undemocratic governance." The ills are often said to include cronyism, graft and lack of transparency, even though some democracies are corrupt, like India, while there are authoritarian places like Singapore that are honest and efficient.

More solid is Sen's argument that "political and civil rights give people the opportunity to draw attention forcefully to general needs and demand public action." For that reason, "no substantial famine has ever occurred in any independent and democratic country with a relatively free press." In sum, the Nobel laureate explains: "When things go fine, this instrumental role of democracy may not be particularly missed. But it comes into its own when things get fouled up." Nowhere is this truism more evident than in Indonesia, where decades of suppressing unrest and even discussions about economic inequity and ethnic animosity set the stage for the anarchy that ousted Suharto last May and continues to bleed the nation.

Nakasone cautioned against too drastic a swing toward freedom. "Overemphasis on democracy has the danger of causing disorder," he said, "and overemphasis on market economy may destroy a nation's culture while stressing efficiency." Sen shared the latter concern over profit-oriented free enterprise with no sense of social responsibility. But Nakasone did concur with the general belief that greater freedom and openness is the direction Asia is headed, even in countries where strong government has worked. "Once development is accomplished, democracy should replace authoritarianism," said the ex-PM. "Korea and Taiwan are two examples where middle-class citizens played main roles in leading the shift."

AMERICAN POLITICAL SCIENTIST FRANCIS Fukuyama also thinks Asia will go the way of the West, adopting democracy and open markets. His most famous book, The End of History and the Last Man, declared Western liberalism, with its tenets of representative democracy, the rule of law, human rights and free enterprise, triumphant after the Cold War. Besides the global tide toward freedom, the Crisis is also driving Asia toward convergence with the West, says Fukuyama, for it "has led to the unconditional defeat of the Japanese economic model of state-led development." Asian authoritarianism too has suffered setbacks, with Suharto's fall and the troubles of Malaysia's Mahathir Mohamad. Even in China, where autocracy remains entrenched, citizens enriched or impoverished by economic reform are increasingly asserting themselves.

In the Asian values debate, Fukuyama reiterated the common position that there are different cultures in the region and no single continent-wide set of values to speak of. Moreover, he argued, values were manifested through institutions. For example, even if American forces imposed Western-style democracy on occupied Japan, the country did not evolve a political landscape with two or more parties frequently alternating in power. Instead, the Japanese tendency to strive for consensus helped elevate and keep a single party in power for most of democracy's half-century in Japan. The key point is, whatever a nation or region's values may be, they could well find expression in institutions borrowed from very different cultures.

You Jong Keun, a top Kim aide, went further and argued that Asian values did jibe with democracy. The concept of the mandate of heaven, enunciated by the Chinese philosopher Mencius, conferred on rulers both legitimacy and the duty to govern well. Otherwise, they could be overthrown. Confucian civil-service tests, You noted, were democratic - open to anyone, regardless of family and wealth. Confucian good governance stressed the authority of a well-cultivated elite, "the rule of superior man." And that, You argued, was one reason why Asian societies "failed to realize their ideals. They did not understand the rule of law, without which accountability, fair competition and transparency can be easily violated."

One highly objective voice among democracy's discussants in Seoul, if only for his heavy use of statistics, was China-born Pei Minxin, a former Princeton professor of politics. He used regression analysis of data on dozens of countries to gauge the effect of democratization, rising incomes and economic liberalization on one another and on governance. Mirroring other studies, Pei found no clear evidence that democratic governments promote development better than authoritarian ones. Nor does greater political freedom improve governance appreciably; indeed, corruption tends to rise in new democracies, particularly less affluent ones.

Does wealth enhance political freedom? To a small degree. What does pay off in both governance and democracy is economic reform, especially the ones that protect property rights, promote free enterprise and enhance macroeconomic management. "A unit increase in economic freedom has about three times the effect on governance as a unit increase in political freedom," Pei reported. For one thing, shrinking state control of business limits chances for graft. Economic reform also makes people richer and more assertive. For democracies, rising affluence tends to make them more likely to stay free longer: eight years on average when per-capita income hits $1,000 in purchasing-power parity terms (as in Cambodia); and 26 years at $2,000-$3,000 PPP (Philippines). At $6,000 (Thailand), democracy becomes immortal.

Pei concluded that democracy advocates ought to put the priority on economic reform - against the fashion in the West of pushing political rights first, often with economic sanctions, which could harm private enterprise. Besides improving governance and, in the long run, promoting democracy, economic liberalization is less likely to be suppressed, since it poses no political threat to regimes. Unfortunately, says Pei, "it is harder to educate U.S. congressmen on these points than to find reformers in non-democratic countries."

During his presidency, Fidel Ramos also grappled with the practicalities of promoting both democracy and development - a double-barreled agenda Lee Kuan Yew cautioned against. In an hour-long talk with Asiaweek, he explained how he liberalized major industries to promote growth, improve services and liberate people and businesses from corrupt, abusive officials and "the overpowering political influence of the elite." On the political front, he built on the democratic foundations laid by his predecessor, Corazon Aquino, implementing electoral and judicial reform and forging peace accords with rebel groups threatening the fledgling Philippine democracy.

"People empowerment" was his overarching label for the program. In effect, Ramos tried to make democracy really work for ordinary citizens. Summing up his thinking, he explained: "While economic growth may begin without democracy, democracy is possible only under the market economy, which helps create the private realm - called civil society - that enables political and social freedom to flourish. In turn, democracy consolidates development. The self-worth that it nurtures in people sustains civil society and liberates the entrepreneurial spirit."

Kim and Sen also referred to the need for new values as nations embraced democracy. Sen said greater public involvement can give people a deeper sense of justice and the common good. Kim called for a spirit of "universal globalism." If the Crisis does help create a new soul for Asians, it may just be worth all the agony.

From Asiaweek

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I.T. Takes a Village
Hong Kong's plan for a new cyber-tech center looks to many like an old-fashioned, cozy property deal


APRIL 5, 1999 VOL. 153 NO. 13

In a boardroom high above Hong Kong's twinkling neons, several dozen cyber-entrepreneurs have gathered to brainstorm on harnessing the power of information technology to help spark Asia's economic recovery. For an hour the buzz is infectious. The 20- and 30-somethings swap e-mail addresses and big ideas in a supercharged atmosphere that is more Palo Alto than Hong Kong. Then Stephen Chan enters the room. Vice president of cyber-entrepreneur Richard Li's Pacific Century Regional Developments, Chan is here to sell the crowd on a $1.7 billion plan to build a "Cyberport" info-tech center on 26 hectares of reclaimed land on Hong Kong island. The government has awarded the project, without competitive bidding, to Li's firm.

But as Chan describes the plan, the techies express disdain, dismissing it as just another property deal in a city whose business environment knows little else. "A more appropriate name would be Cyber Villas," cracks Internet analyst David Webb, a former investment banker. The techies cringe when Chan proposes that the Cyberport's "intellectual cluster" be reserved for "technology Úlites," with a screening committee to filter out "inappropriate tenants." The approach seems to run counter to the anything-goes ethos that built California's booming Silicon Valley--and that characterizes the Netizens who live, work and play there. Says Hong Kong cyber-investor Nick Anthony, who is building an entrepreneurs' club of technology start-up companies: "The world has moved on and we're stuck in the mud. We're not in the plastic flowers business anymore."

That's an apparent dig at the business empire of Richard Li's father, Hong Kong's legendary plastic-flowers-to-property tycoon Li Ka-shing. As the Li family well knows, Hong Kong is desperate for a new economic angle. But a clutch of government initiatives has failed to define a future for the territory. The Cyberport plan follows last year's massive stock-market intervention and talks (still continuing) with U.S. entertainment giant Disney to build a $3 billion theme park. Besides rankling Hong Kong's fledgling cyber-Úlite, the Cyberport has rival property developers and other critics complaining of cronyism. Meanwhile, the city languishes in a recession, with unemployment at a 20-year high. "It's a reversion to type," says Stephen Brown, head of research at Kim Eng Securities. "It shows what little inspiration there is in official circles."

If Hong Kong really does have a high-tech future, it could learn from the example of people like Mark Duff. The 32-year-old Bostonian co-founded Asia's first online brokerage, boom.com, from a small flat in the territory's crowded Causeway Bay. Duff thinks Hong Kong can help foster the creation of would-be Netscapes and Yahoo!s, but not by erecting Cyberport's slick, fiber-optic-cabled office buildings. Instead, he thinks the territory should make available sites like an abandoned warehouse in North Point that's due for demolition but could be cabled and refurbished quickly and cheaply. Says Duff: "Theoretically we can operate anywhere."

To Richard Li, that's not the point. "Cyberport will not be a technology incubator," he says. "We will be bigger and better than that." A Stanford computer engineering graduate who launched Star TV and sold it profitably to Rupert Murdoch in 1993, Li, 32, sees Cyberport as a "mini-California" that will draw foreign knowledge workers and galvanize local talent. "This project moves me--I would do this for free if it covered my cost. Hong Kong missed technology's hardware phase and we have probably missed the software phase, but we must not miss the service phase of e-commerce and the Net." Li says multinational companies like Oracle, Microsoft and Intel have expressed interest in the project. "Cyberport," he says, "is not, repeat, not a property development."

Skeptics, however, note that 75% of the site is designated for luxury apartments and that the project will take at least two years to complete--an eternity in cyberspace. Moreover, Hong Kong's notoriously high costs and worsening pollution may make it difficult to compete with other Asian countries for high-tech brain-power. Says Jeremy Tromp, who runs an online company in Hong Kong that brokers Asia's distressed inventory to Western buyers: "If the Philippines gives me reliable lines and bandwidth, why suffer Hong Kong's high prices and bad air?" Whether Cyberport can make up for such deficiencies won't be clear for at least two years.

From Time Magazine

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Buchanan charges Clinton ignores Chinese threats to Taiwan

April 4, 1999 Web posted at: 7:03 p.m. EST (0003 GMT)

WASHINGTON (AP) -- GOP presidential hopeful Pat Buchanan is accusing the Clinton administration of feeding China's trade surplus rather than paying attention to "clear and ominous" signs of Chinese aggression towards Taiwan.

Buchanan, in remarks prepared for delivery Monday at San Francisco's Commonwealth Club, a nonpartisan public affairs forum, described the president's China trade policy as a "demonstrable failure." He accused U.S. officials of turning a blind eye to human rights violations in China.

"For Americans there must always be some things still greater in the hierarchy of values than the bottom line of a balance sheet," Buchanan said. "It's time to put country before commerce and let America be America again."

China's prime minister, Zhu Rongji, visits Washington this week. One topic under discussion is Beijing's application to enter the World Trade Organization.

"What the president ought to tell Mr. Zhu Rongji when he gets here is, 'Sir, you double-crossed us and we're gonna suspend (China's normal trade status) for one year, and we're gonna impose on you the same taxes on your goods entering our country as you impose on our goods entering yours,"' Buchanan said Sunday on "Fox News Sunday."

Buchanan, in the prepared speech, also criticized fellow Republicans for "embracing a series of myths about China" in their failure to renounce Clinton's policy.

Buchanan said the United States easily could drop China as a trade partner, because less than 2 percent of its exports went to China last year. Beijing, he said, crafts its trade policies to augment state power.

He also charged that China steadily has increased the number of missiles it targets against Taiwan, boosted its forces and mock test-fired missiles at U.S. forces on Okinawa, Japan and in South Korea.

"China is now clearly preparing for another crisis to force Taiwan back to the 'embrace of the Motherland' and intends to use the threat of a missile blockade if Taiwan resists," Buchanan said.

He predicted China would put every U.S. warship and base "between the Asian coast and Guam" at risk if American forces intervene. Confrontation is avoidable, "but China is clearly preparing for it," Buchanan said.

He urged Congress to impose taxes on imports from China; suspend China's "most favored nation" status until it improves its human rights record; veto loans to China by the World Bank or the Asian Development Bank; and contest attempts to admit China into the WTO, working instead for Taiwan's admission.

From CNN

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