2003 - Putting China on Notice

January 1, 2014
The Wall Street Journal Asia


Commentary (Asia)

Putting China on Notice


John TkacikJohn Tkacik

Updated May 27, 2003 12:01 a.m. ET


During my career in the U.S. State Department, I was one of the handwringers when it came to levying economic sanctions on China, even those mandated by U.S. law. We old China hands would always warn that "now is not a good time to antagonize Beijing." Yet that was just to disguise the fact that we never believed there was a good time to annoy the Chinese. As a result, whenever the department got around to recommending economic sanctions against Chinese firms, they were generally of the harmless, slap-on-the-wrist variety.


Now that has finally changed, ahead of next week's summit between U.S. President George W. Bush and Chinese President Hu Jintao. On Friday, one of China's biggest conglomerates, China North Industries Corp. (Norinco), was hit with an unprecedented two-year ban on exports to the U.S. That will affect at least $100 million in goods annually -- and possibly close to half a billion dollars if U.S. Customs can identify all of Norinco's subsidiaries.


The sanctions followed two stern messages the State Department sent to Beijing last year, warning Norinco -- China's premier arms manufacturer -- to stop selling rocket fuel and missile components to the Shahid Hemmat Industrial Group, the Iranian government agency in charge of developing and producing ballistic missiles. But, after years of toothless sanctions, the Chinese Foreign Ministry apparently believed they had little to fear and ignored the warnings.


Yet still the State Department hesitated. Out came the old excuses so common in my day. Last October was said to be a bad time because President Bush was preparing for a summit with then Chinese President Jiang Zemin. November was bad because the U.N. Security Council was about to vote on Iraq. In January, North Korea announced its withdrawal from the Nuclear Nonproliferation Treaty, providing a fresh excuse for avoiding any action that might complicate resolving this issue. In February, all attention was on Iraq and North Korea. Ditto for March.


But all that temporizing began to change after the U.S.-North Korea negotiation fiasco in Beijing on April 23. On that day, the North Koreans announced (in the presence of a Chinese diplomat) that Pyongyang had "essentially completed the reprocessing plutonium from spent nuclear fuel rods." A few hours later they threatened (this time without a Chinese witness) to export nuclear materials. "What are you going to do about it?" the Pyongyang envoy demanded of his U.S. counterpart.


After an experience like that, even the State Department lost its collective patience. President Bush and National Security Advisor Condoleezza Rice were in no mood for more North Korean threats, and almost as exasperated by Beijing's failure to do anything about them. U.S. Secretary of State Colin Powell gathered his top advisors and drew up an unprecedented sanctions regime against a Chinese government-owned corporation.


It is unprecedented because, for the first time, these sanctions include a blanket ban on a Chinese state-owned corporation exporting anything to the U.S. And Americans buy quite a bit from Norinco, at least $100 million a year according to the U.S. Commerce Department.


Central Intelligence Agency estimates put the figure far higher, pointing to the more than 4,000 product lines manufactured by Norinco's vast business empire, from toys and shoes to binoculars and auto parts. The company's -- now-banned -- exports to the U.S. reportedly include everything from Turkestani carpets to aluminum siding. It is also the world's biggest producer of aluminum heat sinks for computers and, given the broad language of the ban, computers and other electronic products which use these components could be affected.


There are so many Norinco subsidiaries in Shenzhen, one U.S. official said, that even Norinco doesn't know the full impact of the sanctions. In the end, the total amount affected could be nearer half a billion dollars a year.


Never before has a Chinese firm, much less a huge one like Norinco, been subject to a blanket ban on exports to the U.S. After some of its employees were caught helping smuggle 2,000 fully automatic AK-47 assault guns to drug dealers in Oakland, California in 1996, the Clinton administration banned Norinco from selling any more AK-47s -- but only for two years. Last week's sanctions are much more serious, designed to inflict pain and demonstrate that the Bush administration is willing to back its warnings with actions.


Yet there is little fear in Washington that Beijing will retaliate, despite an angry statement from the Chinese Foreign Ministry on Friday, denying Norinco had any contracts with Iran. First, Beijing has been chronically in the wrong. It has exported dangerous weapons and technologies to irresponsible regimes, and the U.S. has warned for years that strong counterproliferation sanctions would come. Moreover, China is seen broadly within the Bush administration (though not by the State Department) as having offered relatively little help in dealing with North Korea.


Nor has China been much help in the war on terror where the much-vaunted "cooperation" with Beijing has been a one-way street. The U.S. gave China's secret police access to Chinese Muslim prisoners at Guantanamo; the Federal Bureau of Investigation trained Chinese police in triaging and analyzing terrorist archives and financial documentation. But there is no evidence of any substantive Chinese contribution to the sum total of counterterrorist intelligence. Typically, State Department officials insist that China's antiterrorist cooperation has been "good" but they "can't talk about it." However one senior CIA officer painted a very different picture, describing China's help as "close to zero."


This isn't surprising. China's new leaders certainly aren't committed to helping the U.S. fight terror. As the influential Chinese foreign affairs journal Outlook Weekly explained in February, "China cannot be without any reservations when cooperating with the U.S. in combating terrorism because the U.S. is using the fight against terrorism as an opportunity to pursue its hegemonic strategy, which in turn would harm China's security environment."


Nor is there much appreciation for China's role in the Iraq campaign. Beijing essentially did nothing but complain about American hegemony and line up with Paris, Berlin and Moscow on most major issues. Of course, the Chinese leadership played only a bit part in harassing the American efforts to disarm Baghdad, preferring instead to let the French take the heat of America's post-Iraq retribution. This is understandable. China is loath to antagonize the U.S. too much -- after all, its economic growth is powered by a trade surplus with America that reached $103 billion last year.


President Bush and Mr. Powell have repeatedly stressed the administration's desire for a "constructive, cooperative, candid" relationship with China, and their policies have generally been consistent with that. China, for whatever reason, has done little to reciprocate. Now, as President Bush winds up three weeks of summits with the leaders of South Korea, Japan and Russia and prepares for his first presidential summit with Mr. Hu, at least the U.S.-China relationship will be candid.


Mr. Tkacik, a research fellow at the Heritage Foundation in Washington, D.C., is a retired officer in the U.S. foreign service who served in Beijing, Guangzhou, Hong Kong and Taipei.




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