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Despite China's decade-plus economic liberalization, its critics in the U.S. still see the country as a monolith obsessed with growing ever stronger through unfair trade practices. The view goes something like this: Beijing believes it can export whatever it wants while barring imports on any pretext it chooses. It can undercut other manufacturing nations by the use of cheap labor. It can steal ideas and ignore copyrights without much risk of retaliation. And it can essentially blackmail multinational companies into transferring jobs and technology as the price of cracking open a market of 1.2 billion people. Taken together, those practices help account for the tripling of the U.S. trade deficit with China since Clinton took office, to $40 billion a year. In 1995, Intel chief Andy Grove said he thought his biggest competition in 10 years would come from China. Asked last year if he stood by that forecast, Grove replied yes-- "but probably in eight years."
Given the growing trade imbalance, it especially irritates some American lawmakers that China is pressing for permanent most-favored-nation status, a guarantee of minimum tariffs. China is the only one of the 191 most favored nations whose status is renewed each year by a vote in Congress. That ensures a humiliating annual review on Capitol Hill of how Beijing punishes dissidents, suppresses Tibet and sells missiles to rogue states. Along with winning permanent MFN status, China wants to be admitted to the World Trade Organization, a goal the U.S. and other nations are obstructing until China lowers trade barriers.
Ironically, the world's last communist power largely relies on the FORTUNE 500 to advance its economic agenda. Whenever Congress considers China's MFN status, such companies as Lockheed Martin, Motorola, Intel, General Motors and IBM lobby on China's side. For Boeing, the stakes could not be higher: Beijing is expected to spend $124 billion on new planes over the next 20 years, making it the world's fastest-growing airline market. "When the U.S.-China relationship goes in the tank, so do our order books," says Boeing spokesman Thomas Tripp.
For years Beijing has envied the popularity that Taiwan enjoys in Congress. But it resisted advice to imitate Taiwan and hire pricey Washington lobbyists to make its case. That changed in May 1995, when Taiwan's President Lee Teng-hui was granted a visa to visit the U.S. to attend an alumni gathering at Cornell University. It was a step that followed a nearly unanimous vote in both houses of Congress. The Chinese were stunned by what appeared to be a departure from the U.S. policy of not having official contacts with Taiwan. "The Lee visit was a failure of their own guys to make an imprint [in Washington]," says James Lilley, who was U.S. Ambassador to China under George Bush. "So their bosses told them to get off their asses and start moving."
Thus perhaps did 1996 become for China the year of living dangerously, at least in its dealings with the U.S. Beijing used some conventional means of cultivating favor, like inviting members of Congress for get-acquainted trips. Ma Yuzhen, China's personable former ambassador to Britain, was put in charge of improving his nation's image abroad. At the Chinese embassy in Washington, more staff members were assigned to handle Capitol Hill.