China's Headaches

January 01, 1993

Every country renounces a two-China policy, diplomatically. Just as universally, every major country pursues a two-China policy, commercially.

That's why Beijing's attempt to "isolate" Taiwan in military hardware sales is doomed to fail. In a time of recession and arms restraint, Western manufacturers trying desperately to survive will sell to any country their own governments approve. And no country has a credit rating as good as Taiwan's.

To punish France for Dassault Aviation's selling 60 MIrage 2000-5 fighter planes to Taiwan, China ordered the French consulate in Guangzhou to shut down. That is supposed to hurt France and not China? Guangzhou is the teeming capital of capitalism in South China, the traditional home of foreign business, just up the Pearl estuary from Hong Kong, known to Americans for two centuries as Canton. China is wooing all the foreign capital into Guangdong Province it can. Unlike the United States, France did not impose economic sanctions on China in 1989 despite public outrage over political repression there. French investment is cashing in on Washington's restraints on American business. The consulate is a boon to China.

Now, China is upset at the U.S. for selling F-16 fighters to Taiwan and for the visit of Trade Representative Carla Hills to Taipei. But China is buying U.S. wheat and Boeing airliners anyway, in hopes Washington will lift sanctions against U.S. investment there.

China says that military sales to Taiwan obstruct China's hope of reincorporating the island province by peaceful agreement. But its best chance of achieving that goal lies in honoring its agreement to maintain institutions in Hong Kong when that British colony is acquired in 1997. China now seems to be welshing.

Yet Beijing itself pursues a two-China policy of sorts. It is urging Taiwanese capital to invest in Fujian Province, opposite the island. The rulers of Beijing think that Taiwanese money for Western armaments to deter aggression against them would be better spent employing Chinese workers. They are not going to attract investors by shutting consulates. Deng Xiaoping's team would do better by forgetting the fantasy of isolating Taiwan, and getting its own act together.

5/8

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