The Reagan administration has made it clear that a strategic relationship with the People's Republic of China will be central to U.S. foreign policy. China is to be treated as "a friendly nation with which the United States is not allied but with which it shares many interests."
The results of Secretary of State Haig's trip to China stand in stark contrast to the campaign rhetoric of the fall of 1980 in which candidate Ronald Reagan raised the prospect of improved U.S. relation with Taiwan, even at the expense of deterioration of our relations with the People's Republic. With the Haig trip, the "pause" in U.S.-China relations has been put behind us, and new U.S. initiatives to remove export controls confirm that this administration foresees close working ties with China.
The danger of the Haig visit, however, grows out of this decision to ease export controls and to consider arms sales to China on a case-by-case basis. If we begin concentrating on the potential arms connection, we run the risk of returning the U.S.-China relationship to the environment of controversy that surrounded it before normalization. In the United States, legislators who are pro-Taiwan or who oppose arms sales over which Congress retains veto power. Others could argue successfully that the United States should discontinue exports of offensive weapons to China if our relations with the Soviet Union improve.
Within China, as well, the issue could become a point of contention. Chinese expectations have been raised that the United States will sustain its commitments to sell to the People's Republic military equipment. Senior Chinese leaders appreciate the complexities of foreign policy decision-making in the U.S. government. Nevertheless, vacillations in U.S. policy could be used by factions in China to weaken the positions of those leaders who have advocated strategic ties with the United States.
The irony of this potential controversy is that offensive weapons are not a high priority on China's shopping list. As a result of the 1978 modernization effort and subsequent revisions, agriculture and light industry are now emphasized by the government in order to improve the nation's living standards; heavy industry and defense are third-and-fourth-order priorities.
China has adjusted its foreign trade to reflect these changing domestic priorities. Equipment and raw materials purchased abroad are geared to expanding China's light industrial capacity. Selectively, China is seeking capital goods and technical assistance to modernize its ports and inland transportation links, as well as to develop its coal, oil and hydroelectric energy resources. Imports of grain and other agricultural commodities have also surged.
U.S.-China trade reflects these priorities, particularly China's emphasis on improved food supplies. In 1980, agricultural commodities accounted for more than 40 percent of our exports to China, and the People's Republic was our main customer for wheat exports. Last year China took 30 percent of our cotton exports and became a major purchaser of synthetic fibers. Textile imports from China -- a highly controversial issue within the United States and other industrial countries -- amounted to less than half the value of our cotton sales.
U.S. policies should now focus on strengthening our economic ties with China and promoting the flow of goods between our two countries. Trade has always increased dramatically, rising from $374 million in 1977 to $4.8 billion in 1980. Further liberalization of U.S. policies would foster even stronger ties, and in doing so would contribute to the success of China's modernization effort. Success of that development effort is crucial for political stability in China, and thus is also a vital strategic concern for the United States. Specifically, the Reagan administration should act in the following areas, encouraging legislative changes where necessary:
Support more liberal tariff treatment for China in the form of the Generalizes Scheme of Preferences (GSP), which affords a developing country the most generous tariff concessions a developed country can offer. GSP has already been extended to China by Japan and the European Economic Community. It is particularly appropriate that it be offered by the United States, as our imports from China in 1980 totalled $1 billion, less than one-third the value of our exports.
Pseed the export licensing process for high technology items to China. Even though restrictions on exports to China were eased in 1980, few licenses have been granted under the liberalized categories.
Remove legal prohibitions on foreign aid for China. Most of these prohibitions affect the People's republic through restricitions applying to the "international communist conspriacy" and the "world communist movement," and many date back to the 1950s.
Encourage Congress to meet U.S. commitments to the World Bank's concessional arm, the International Development Association. China's membership in the bank and its recent qualification for low-cost IDA funds is a concern to other low-income World Bank members who must share limited funds with a new member. Their concern is compounded because a major donor, the United States, is likely to fall short of its commitment.
By assisting in China's economic development, the Reagan administration can build a long-term relationship with the People's Republic, one that has an identity of its own and can stand apart from our relations with the Soviet Union.