The China Summit: How Bad Is China?

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The controversy does open to fresh scrutiny a very difficult issue: To what extent do all U.S. sales of dual-use technology (items for legitimate civilian purposes that can also be turned to military use) help China modernize its military and improve its nuclear and missile arsenal? The question is hardly new, and scientists have been arguing back and forth for years whether China should be allowed to buy a whole array of items, from supercomputers and centrifuges to clean rooms and ground-positioning systems. "They don't just want our hardware," says Henry Sokolski, a former Bush proliferation specialist. "They want our know-how and know-why, so they can do it themselves."

All these items require export licenses, and each satellite sale must win a waiver from sanctions imposed after Tiananmen. Every waiver requested has been granted: nine by former President Bush, 11 by Clinton. Critics are asking whether Clinton made the process dangerously easier by transferring responsibility from the security-minded State Department to the sales-eager Commerce Department two years ago. Such sales, says a Pentagon official, "are a manageable problem," but the U.S. "should err on the side of caution."

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Clinton is regularly vilified by a broad spectrum of critics who charge him with selling out American values in the name of trade with China. The impression they give is that Washington will concede anything to do business deals with Beijing. China is a tough customer when it comes to buying American. There is an enticing market there of 1.2 billion people, but most U.S. trade with China runs the other way. The deficit is running at $4.3 billion because Americans buy 70% of their low-end consumer goods, like shoes, toys and textiles, from China, which has replaced richer Asian nations as the cheapest supplier (which keeps U.S. inflation down). What America mainly sells to the Chinese is high-value-added items like machinery, aircraft and transportation equipment, a few big-ticket sales that don't begin to penetrate to China's exploding consumer class.

The Chinese market remains largely untapped because Beijing works at keeping it closed. The government is genuinely worried about competition at a time when massive reform of its moribund state enterprises is throwing millions out of work, but it is still a locked-down, state-protected economy. By dint of insistent negotiating, the U.S. has since 1993 reached 15 trade agreements that have opened the door somewhat. Included are two very difficult treaties to protect intellectual-property rights. The world's worst pirater, says U.S. Trade Representative Charlene Barshefsky, "has gotten very serious about this because they have to if they want foreign investment."