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Archive for Tuesday, April 10, 2001

From trade to Olympics, stakes high in China standoff

April 10, 2001

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— The ripple effects from the U.S.-China standoff could spread far and wide.

Billions in trade, crucial to both countries, may hang in the balance. Also at stake could be U.S. arms sales to Taiwan, Beijing's bid to host the Olympics and the credibility of Presidents George W. Bush and Jiang Zemin.

"If this relationship starts to unravel, the consequences cannot be contained," said Kurt Campbell of the private Center for Strategic and International Studies. "The stakes are about as high as they can get."

Both sides' economies could suffer if relations continue to fray from the dispute over the U.S. Navy spy plane and its 24-member crew held by China.

China is the United States' fourth-biggest trading partner. American consumers buy $100 billion a year in Chinese-made toys, shoes, machinery, sports equipment, clothes and other goods. On the other side of the lopsided ledger, China buys $16 billion in U.S. machinery, aircraft, medical instruments and other products.

If legislators revoke China's new normal trade status, as some in Congress have threatened, "you're really into big-time direct costs for Americans," said James Reardon-Anderson, chairman of the faculty for Georgetown University's School of Foreign Service. The economic climate in both countries could change dramatically, he said.

There are also military considerations. The dispute is playing out as Bush is considering a request to sell sophisticated weapons to Taiwan, which China considers a renegade province.

The standoff could have implications for the Olympics, as well. Some in Congress have talked of working to block China's efforts to play host to the 2008 games.

Beyond the specific issues, the standoff is playing out as a test of the leadership of both Bush and Jiang, one hoping to stand tall in his first big international test and the other trying to shape his legacy and maintain influence once he leaves office.

"Both leaders have a greater stake in the maintenance of their credibility than they do in the settlement of the dispute," said Reardon-Anderson. "That makes the dispute exceedingly difficult to deal with."

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