GUNS AND POSES

By Bruce W. Nelan

China's energetic traders send much more to the U.S. than toys and clothes--and not all the commerce flows through legitimate channels. In California last week federal agents swept up seven suspects, including a representative of a state-owned Chinese arms company, in a sting operation that involved smuggling 2,000 fully automatic AK-47 assault rifles into the U.S. A plot that would have earned $4 million and contributed to the illegal firepower already menacing American streets is, as Justice Department officials said, a very serious matter. But the diplomatic questions hovering over it may be still more important: What did the Chinese government know about this criminal operation? And how should Washington respond?

The Clinton Administration has shown a willingness to let Beijing off the hook in such scrapes. In a similar episode only a few weeks ago, the U.S. chose not to impose economic sanctions, accepting Chinese leaders' assurances that they had not known about the sale to Pakistan of magnets that could be used in building nuclear weapons. Was last week's affair another case of an unsupervised Chinese sales staff?

Imperial China used to administer a punishment called death by a thousand cuts. Each slice in the prisoner's flesh was minor, but the overall effect was fatal. There are some similarities in the way the U.S.-China relationship is enduring a series of clashes and confrontations. Each one is relatively small, but taken together they threaten the viability of the Administration's policy of cooperation and engagement with Beijing. President Clinton last week proposed an extension of China's most-favored-nation (MFN) trading status for another year. Congress will soon take up the issue in what is expected to be an emotional argument about trade versus morality and whether Clinton is now "coddling dictators," the charge he made against George Bush. The fight over China policy is sure to go on into the fall and become a talking point in the presidential campaign.

No one in Washington claims to have any evidence that the Chinese government was involved in the smuggling operation. State Department spokesman Nicholas Burns was quick to label it a law-enforcement matter and say, "I don't see why this needs to complicate U.S.-China relations." But there are suspicions. Norinco, the Chinese company that manufactured the AK-47s, is a vast military complex supervised by the State Council, headed by Premier Li Peng. The company that sold the weapons, Poly Technologies, is a trading company directed by officials with links to the armed forces and the leading political families in Beijing. One of its executives, He Ping, is married to Deng Xiaoping's daughter. The two companies denied any involvement with the smuggling and also that any of those arrested had worked for them.

Americans with experience in China assume the national leaders do know what kinds of sales are being made even if they are not aware of the details of each transaction. "China is chasing bucks," says John Frankenstein, a former U.S. diplomat teaching at the University of Hong Kong, "and people will do anything to make a buck. It's all about that anything-goes mentality that exists in China."

Some of the recent disputes have indeed been about making money. The U.S. has charged China with failing to live up to its pledge to crack down on the piracy of American computer software, films, music and other intellectual property. Rightful owners of the copyrights claim they are losing an estimated $2 billion a year. The U.S. has warned that if the Chinese government does not close the pirate factories, Washington will slap an extra $2 billion tariff on imported Chinese goods. Beijing is threatening to retaliate in kind, and there is worried talk about a trade war, though veterans of these negotiations predict a settlement before the deadline of June 17. Some high-profile Chinese government raids on the pirate plants are likely to take place before that date, which will provide the Clinton Administration with an excuse to avoid imposing sanctions.

But the magnet affair goes beyond dollars and yuan. U.S. intelligence learned last year that a Chinese company had sold devices to Pakistan that are used to produce enriched uranium for nuclear warheads. The amount of money involved was small--less than $100,000--but the implications for the proliferation of nuclear weapons were very great. Although U.S. law called for sanctions against China, Secretary of State Warren Christopher ruled against them after receiving private pledges from his counterpart, Foreign Minister Qian Qichen. Qian told Christopher the top leaders had not known about the transaction and would make sure it did not happen again--though he refused to say it publicly.

Another weapons dispute last week concerned a Chinese proposal to buy, not sell. The U.S. had information, Secretary of Defense William Perry confirmed, that China was trying to buy technology, and possibly parts, of the SS-18 missiles built in Ukraine and deployed in the former Soviet Union. China has already deployed a few icbms, but Washington takes a dim view of China's acquiring technology from the huge, accurate, 10-warhead SS-18, the most threatening weapon in the Soviet nuclear arsenal. "We believe that would be a big mistake," Perry told reporters, "and have so represented our position to the Russian government and the Ukrainian government." Protests to Beijing on this score, he added, were "more general." Leonard Spector, who tracks nuclear proliferation at the Carnegie Endowment for International Peace, says that if China is determined to build SS-18s, it "would be a strategic threat to us and a very fundamental new dimension to the antagonism."

One of the State Department's most experienced China experts concedes, "You constantly get the sense that the U.S. is letting China get away with murder. But, while it may look like that, I think we're keeping them from doing even more egregious things." He refers to China's M-9 missile, which it no longer exports, and its M-11 missile, which U.S. officials believe China has not sold to Pakistan, despite pleas from the Pakistanis.

Even if the points of conflict make for a fairly long list, and one that is regularly replenished, Administration officials argue that each should be handled as a separate case, while the overall relationship should be nurtured. The charge that critics make, however, is that as the Administration takes up each case one by one, it relents again and again, without realizing that by doing so it hurts the overall relationship with the Chinese, who understand strength in international relations much better than charity.

There is a debate among the Chinese too about whether they should join the interdependent world or hang back in a nationalistic fortress. The Chinese leaders often distrust and disagree with Washington's arguments. They point out, for example, that the U.S. is by far the world's largest seller of armaments and is about to begin delivering 150 F-16 fighters to Taiwan, which Beijing considers a province of China. Last week the Chinese even had mixed feelings about Clinton's extension of MFN. "Clinton has made a wise decision," said Foreign Ministry spokesman Cui Tiankai, but he added that the Chinese dislike having this issue up for consideration every year. "We hope the U.S. side will reverse this erroneous practice," he said.

Right now both the U.S. and China are undergoing a succession crisis. In the U.S. that is known as a presidential campaign. In China, President Jiang Zemin's hold on power is uncertain, and various other leaders are vying for position as they await the death of Deng Xiaoping. For the time being, U.S.-China relations will be hostage to domestic politics in both countries, and no improvement can realistically be expected until both questions of succession are settled. The danger is that by then, the damage could be almost beyond repair.

--Reported by Sandra Burton/Hong Kong, Lewis M. Simons/Washington and Mia Turner/Beijing

With reporting by SANDRA BURTON/HONG KONG, LEWIS M. SIMONS/WASHINGTON AND MIA TURNER/BEIJING