U.S. Dept. of State - IIP: The United States and China

Transcript: Amb. Prueher Remarks to Credit Lyonnais Securities Asia
(Despite differences, U.S. and China share common interests)

Despite their differences, the United States and China share many common interests and now have the opportunity to travel the "right path," says Joseph Prueher, the U.S. Ambassador to the Peoples' Republic of China.

American differences with China, he said, "are tough but resolvable issues." Prueher cautioned against rhetoric that "tends to be a little inflated sometimes."

"I think we're working out our differences and we have the opportunity to be on that right path," he told attendees of the Credit Lyonnais Securities Asia's China Forum 2000 in a speech delivered May 10 in Shanghai.

The Ambassador noted regional common interests in "hotspots" such as Korea and Indonesia. Global issues -- the environment, energy issues, water, and arms control -- also concern both nations as do international systems such as the United Nations, the World Food Organization, World Health Organization, and the World Trade Organization, he said.

The Ambassador warned against focussing on any single issue while ignoring others: "You can't give complete attention to one thing and ignore something else," he said. "You have to work all the variables at the same time."

"Comprehensive security," he said, involves politics, economics and trade, and military security. "All of these things co-mingle. We have to stay busy with them all the time to make sure that they are in balance," he said.

TRANSCRIPT
SPEECH BY U.S. AMBASSADOR JOSEPH PRUEHER
TO CREDIT LYONNAIS SECURITIES ASIA [CLSA]
CHINA FORUM 2000
JINMAO CONVENTION CENTER
SHANGHAI, CHINA
MAY 10, 2000

CLSA MODERATOR: Ladies and gentleman, we're honored to have the U.S. Ambassador, Joseph Prueher, as the keynote speaker this morning. We're once again approaching a critical period in U.S.-China relations, with the upcoming Congressional vote on granting China Permanent Normal Trading Relations. As the United States Chief of Mission to China, Ambassador Prueher brings unique insights to the current state of U.S.-China relations and efforts being made to build a stronger strategic partnership geared towards the 21st Century.

Ambassador Prueher is responsible for directing all activities of the United States Executive Branch in the People's Republic. Prior to assuming his duties in China, Ambassador Prueher had a distinguished 35-year career as an officer in the U.S. Navy. Between February, 1996, and May, 1999, Admiral Prueher was the 17th Commander-in-Chief of the U.S. Pacific Command. In that role, Ambassador Prueher worked with Asia/Pacific civil and military leaders to promote security and cooperation in the region. Ladies and gentlemen, please join me in welcoming Ambassador Joseph Prueher. [Applause]

AMBASSADOR PRUEHER: I appreciate the introduction as well as the opportunity to be here. It's great to be here with you this morning. As an administrative item, I'm pinch-hitting a bit for Charlene Barshefsky whom, I think you'll be glad to know, aside from missing her here, is bringing her energy and her intellect to our U.S. Senate who is going through the final revisions of the Permanent Normal Trade Relations bill. Her thoughts were that that's probably where she needed to be. I'm sure you would agree with her, and in fact, this evening, I'm going to join them in Washington to work on this for that key vote that comes up later on this month. It's not only an economic vote of interest to the people here, but also one that has a big impact on U.S.-China relations overall.

I'd like to add my thanks to the Credit Lyonnais and also the Asia Society for hosting events here in Shanghai. I was looking a little bit ago, for those of you that haven't spent a lot of time in Shanghai, at a picture from 1949 that showed the Bund and showed Suzhou Creek. It looked like a logjam there in that period because of all the "sampans" and the boats that were there. It was just completely clogged, looking very different than it does now. I rode down in the airplane with a German businessman whose first time here was only 14 years ago, in 1986, when Pudong, where we're sitting right now, was farmland. So, it's a symbol and Mayor Xu Kuangdi is a great -- he's a great Ambassador also -- but a great Mayor and does a great job and I think Shanghai is a symbol of what can be in China's future.

For those of you looking at Mayors of Shanghai, it's an extremely powerful position. Wang Daohan is here and there have been a succession of Mayors of Shanghai -- Zhu Rongji, President Jiang Zemin, leading up to Xu Kuangdi. It's a pretty well connected bunch of folks to know and so I advise you to make some time to get with them if you can. One of the things they bring to the job is an energy and a vision, and courage, a steady hand, and intellect. Tonight with Premier Zhu, when he comes down, you're going to see a man who, I think arguably, has on his shoulders some of the biggest challenges of anybody in the world as he tries to work through the reforms in China and the changes that are occurring in China that are so immense these days and quite difficult. But he does bring those aforementioned qualifications of intellect, courage and vision to these and I know he'll be successful.

Today, this group is largely focused on business in an evolving Asia, and also, in an evolving China. I think, as with any business arrangement, it's very important that you understand well the environment in which you operate. A lot of what I do, and I'm still learning and will probably continue until the day I die, is working on the environment in which business can be pursued, both in Asia and also in China. In a sense, largely in the big context, my job is dealing with these environmental factors. It was pointed out by [Moderator] Jing, the job of the U.S. Ambassador in China is to be accountable and responsible for all the factors that involve the U.S. interests in China. What we are looking at, as we look in this area in which business operates in China, is trying to make the arena one in which business can prosper. It requires a focus and it requires that our Embassy focus not only on the economic and the trade aspects of things, but also the political and the security aspects of things so that they harmonize well to provide a climate in which business can prosper and grow. These issues are all interrelated. What I'd like to do is use an analogy from my experience and let me try. I'll keep an eye on you for your eyes glazing over as I go into this analogy.

I think a lot of you have seen film clips or have seen movies or have perhaps even been out and watched it yourself or some may have participated in it, watching airplanes land on aircraft carriers. As a matter of fact, I've spent a lot of 25 years of my life doing that. So, it's a very complicated system. In the final analysis, to the outside observer it looks fairly simple on a nice day. The components of this system, where you talk about airplanes landing on ships, you've got an aircraft carrier that's a ninety thousand ton ship, and -- it's a big ship -- it's got about 5500 people on it. It's got up to about 85 airplanes on it. It's got four and half acres or about 20,000 square meters of flight deck on it, but this whole thing exists. It's there just to launch and recover the airplanes that are there on the ship. So, the aircraft and the crews are another part of this system, and they're pretty highly trained folks.

The biggest airplanes or the heaviest airplanes, when they take off, weigh about 35 tons, 70,000 pounds. And the ship has four wires that go across, and they stop that airplane in a couple of hundred feet. It also has four catapults that accelerate that 35 tons from zero speed up to about 150 miles per hour, 250 kilometers per hour, in two seconds. So it's heavy gear on that ship, but it's very complex. And where you have the air crews and the airplanes going out and doing things, and I'll try not to stray -- that gets into the politics of things, and I'll leave that alone -- I just want to talk a little bit about this system. When you get the airplanes doing what they're supposed to do out and away, but when they come back to the ship, like business, and like some other things, it's the interface of these two systems where things really get complicated.

Most of the films that you might have seen of this, of an airplane coming down to land on the carrier, are taken on a pretty day -- a clear day. The deck is steady, the winds are steady, and you've come in. It's also a demanding environment. Just to give an example, about 30 inches of height will make a difference between the aircraft catching a wire on the ship and not catching one at all. So the flying is fairly precise. On a good day, it's a challenging task, but trained people can do it, and it works out just fine. But then, when you add in other factors -- you add in nighttime, and if you've been at sea at night, it's very black. You literally don't know which way is up unless you've got your instruments there. You add in weather, you add in a carrier deck that's pitching and moving around, you add in the idea of maybe you're getting a little low on fuel, which eat away at your confidence. It puts a little urgency in what you have to do. You add in perhaps a mechanical malfunction of some sort in the airplane where things aren't working quite right or else a problem also on the aircraft carrier. It increases the tension.

When this tension increases, and you're in this environment which is controllable, you can start to tighten up a little bit, and there's a tendency to over control. For those of you that do athletic events, or hit a golf ball or something like that, it's the same type of thing where you try too hard and it doesn't work. You don't try hard enough, it doesn't work. You have to have it just right. When the situation is tough in that environment, there is a guy down there watching, and nowadays in our Navy, it could be a guy or a woman there watching. The call that they give, if they see a pilot coming down the glide slope, and things are OK but you can tell that the person, that the airplane is moving around and it's tending to go not just right, the call they give over the radio is "easy with it, easy with it." And what this means, is "just relax a little bit." Give the corrections time to take hold and then you can come on in and make that safe landing.

Well, I could talk about this a long time. I'd like to; it's pretty interesting. But it's also not the topic today. But it is a useful analogy. I'd like to also mention one other thing in this carrier environment that I think is also a good analogy. It's the idea that on the aircraft carrier -- the part where the captain is on a ship, what we call the "island;" it's the superstructure that comes up out of the flight deck -- there's a catwalk along the side of the island where people line up and they watch the carrier landing. We call this "vulture's row." It's a place where people sit and they watch and they critique, but they don't participate in the game that's going on at all. They're there, they're watching, they are safe, they're not involved in the dynamics of what's going on, but they comment on it and they critique. I would submit that as we work through the political and the security issues, there are a lot of people like that, too, that don't play in the game, but yet they feel pretty free to critique. It's an interesting aspect of life, too.

Let me try to get back to this business of "easy with it," the tendency to not over control as we work the political, the economic, and the security environment, a lot between the United States and China. I'd like to make four points:

The first point is, and you'll have to forgive me, maybe I'm not a diplomat -- I haven't been one very long so I tend to speak in fairly simple terms -- but I call the first point "so what?" Why does this make any difference? Why does it matter how the U.S. and China get along in the world? For an airplane, where you're getting down there, and you're trying to land on the ship at night, it's obvious. You want to go get a hamburger or something after this is over. You want to have this occur safely.

But the U.S.-China relationship is also pretty obvious when you get into it. There are several parts of that. One is the bilateral relationship, as we work the issues between the United States and China. Again that creates the backdrop for the business community. There are really two paths: one path can go toward an adversarial relationship and the other can go toward a relationship where they are more partnerlike and we can work out our differences. There are a lot of factors to overcome, and we're dealing with those. I'll talk some more about them a little bit later on. But right now, I think we're working out our differences and we have the opportunity to be on that right path.

Yesterday I had a meeting with a "lao pengyou," an old friend of mine -- Zhang Wannian -- who's the senior military person in China, and he's quite a fine guy. Mayor Xu knows him well. He's a person of great gravitas, and he's a serious, serious man -- a real soldier. We were talking about these issues with Taiwan. We come at it from different points of view. However, we both respect each other. We can get through a good conversation because we trust each other, and once we get through that part of it, we can agree that there is some common ground on which solutions can occur. I think this is true of some other things as well.

The United States and China have a great number of common interests. We have regional common interests in Northeast Asia, South Asia, Southeast Asia, and hotspots in Korea and Indonesia. There are global issues -- the environment, energy issues, water, arms control -- and then there are international systems -- the UN, the World Food Organization, World Health Organization, and more important to us -- the World Trade Organization. Then in addition, we have something that's very important which is the business climate, and the business climate includes a lot of these things.

The second point, I'd like to make -- and going back to this analogy about landing the airplane on the ship -- there are a lot of variables and they're all in motion at once. Again, for those of you that participate in athletic events, you can't just assume one thing is going to stay constant. Business is the same way. One thing isn't going to stay constant while you focus entirely on something else. You can't give complete attention to one thing and ignore something else. You have to work all the variables at the same time. I won't belabor the airplane part of this thing, but as we work our relationship with China, there's a term that I would like to use and call "comprehensive security." It involves the politics, it involves the economics and trade, and it also involves military security. All of these things co-mingle. We have to stay busy with them all the time to make sure that they are in balance.

The third point I'd like to make is that the issues with China are tough but resolvable issues. Some of these are very important to the business community both directly and also as a background for the climate in which we do business. Again, in the airplane at night, there are a lot of things you have to overcome -- it may be pitching deck, there may be weather, there may be malfunctions -- but the idea is when you're out there, you can't quit. There's nobody else to fix the situation. You'd like to -- speaking for myself, there are lots of times I'd like to be somewhere else -- let somebody else do that, but that's not a choice. That's not a choice you have, and so you can't quit. You know the obstacles are there, but you also know that you can overcome these things. It takes confidence, it takes big pro-active, not just waiting for things to happen. Think of steering your car down the road, if you didn't make a steering correction until you ran off the road, and then you try to get back on. You're always making little corrections so it's an unconscious thing. You're making little corrections all the time. So you don't have to make those big swerving corrections, unless, of course, you go to sleep at the switch. That's not one of the things that you want to do either, and we don't want to do it in our relationship with China either.

But what are some of the tough issues that we have? Let me take one of them that is an emotional issue for a lot of people -- me, too -- up front, and that's an issue of human rights. This is a real challenge and one of the things that has been talked about. Listening to Gary [Coull] talk about economics up here, I thought, "well, he's pretty focused on that subject," and I think that's true. But the point is, the business community cannot neglect human rights, and in the situation with the United States, and in the situation with China, we come at it from different places.

Fundamentally, the United States is made up of immigrants, or descendants of immigrants, except for the American Indians. The United States is descended from people who left other countries because they didn't like it there, for the most part, not entirely. They didn't like the other countries, so they came to the United States, 225 years ago. The United States Declaration of Independence and Constitution are framed to protect individuals against government. China has a long history of -- it's not just the current since Communism took over in China, but the Emperors also -- there's a notion of protecting the system from the individuals. That's a fundamental difference of our approach to human rights.

There's another aspect of these human rights issues where in the United States, we tend to focus on human rights as being political human rights -- the rights of spiritual options, the rights of political options, the rights of dissent. In countries that have less, there are also human rights that are economic and social rights. China would make the case that ten years ago, 200 million people didn't have enough to eat and now they do. That's quite an advancement and that's a human right as well. But the point is, we have to have discussions, we have to face these issues, and we have to take them on. Quite frankly, I think the business community does take these on for the most part, and the point associated with the WTO arguments is: outside businesses in China help the human rights situation. They raise the level of the outlook on this, and they make the situation better.

We have other challenges. On Monday, the 8th of May, we had the first anniversary of the tragic and mistaken bombing of the Chinese Embassy in Belgrade. This is something -- it's a chaos theory type event -- that occurred; it's an embarrassment. It's something that is tragic and we regret it. The climate is such in China with respect to trust of the United States that they cannot imagine that we did not do this on purpose, though we did not. And this is something that we have worked through, and made a lot of steps in the last year, but it's another hurdle we have to overcome.

The Taiwan issues we talked about, and I won't get into a discussion of Taiwan; that could go on for quite awhile. Maybe we could do that in the questions and answers if you would like, but the process -- there needs to be a process -- and the "sine qua non" of moving forward is a cross-strait dialogue. The PNTR, I won't belabor that, but China's WTO accession and then Permanent Normal Trade Relations for China with the United States is important. There are issues of non-proliferation, there are issues of rule of law, which again directly affect the business climate. And so all of these are issues that create the situation, the environmental factors for our economic interactions that go on. There is with these issues a way ahead that one can visualize that is highly satisfactory, but it will take a lot of effort. It will take a lot of steady work to get there. And what we're working on right now is foundations.

The last point I'd like to make is really the point of that LSO call, the Landing Signal Officer call, of "easy with it" -- take it easy. What that call means is "settle down; don't overreact to all the stimuli that occur." From my vantage point, probably you see this. Maybe you're less sensitive to it than I am, but the rhetoric tends to be a little inflated sometimes: the lectures that people of one nation give to another, the threats that occur, the threats of military force or reaction -- some of these things are a little overstated. If you're not confident in your position, sometimes you tend to overstate things.

So as we move forward, it takes nations -- China, the United States, other nations involved in this, and certainly, the other Asian nations as well -- have a calm confidence and assurance as we move forward. We need to balance the strength of our country -- the United States is very strong; that's nice -- with the respect for the challenges that other nations undergo. China has a great many challenges these days. We need to look at the problems, take the reciprocal of the problems and make them opportunities, and make these common problems with common solutions. We need to guard our own interests. Each nation needs to look out for that and people need to look out for that and businesses need to look for that -- but also look for situations in which there's a common "win."

So I think that's the way we can move forward. I've tried to talk a little bit about the background climate for business, some of the things we're working on. I talked to some businessmen in Beijing, and I get some complaints -- which are well placed -- that I don't spend enough time with the businessmen there. And I think they're right. I'd like to spend more time with them. But right now I'm doing the groundskeeping on the arena and I'm fairly occupied with that. I hope that we can get all those things in place where we can spend more time with the peaceful pursuit of prosperity both in China as well as in the region. I think this takes the notion, politically -- and you can get this back to the people whom you help finance -- is to take it a little easy, and go "easy with it."

QUESTION: Ambassador, with regard to the deal that's currently being struck with China on WTO, do you believe that the deal that you've struck will go a long way towards addressing the trade imbalance that currently exists between the U.S. and China?

AMBASSADOR PRUEHER: Yes, I think the issues and the agreement that was cobbled out with some difficulty with China is a good deal. I think it will go to help the trade imbalance. Did you get the first part of that? I think the trade imbalance will be helped. One of the things on WTO is in the selling of it, is that there are phase-in arrangements, and there are some parts of the trade imbalance that I think will be addressed quite quickly and they will occur. We already have a, not as a part of WTO, meat, wheat and citrus agreements that are working in the agricultural business end of things. But I think over time, the trade imbalance will tend to be equaled out.

QUESTION: Hello. About trade imbalance, Japan and the U.S. have got a trade imbalance for years. That has not really caused any trouble between Japan and U.S., so I do not think that the trade imbalance is the real problem in isolation, because when it comes to China, does somehow finds its way back to the U.S. in terms of investment, foreign reserves in the form of Treasury Bills. So at the end of the day, I think, what is important is not the financial economy, but really the real economy that is taking place, so I just do not see that. So I just hope that people don't just think that trade imbalance is such a bad thing.

AMBASSADOR PRUEHER: I didn't detect a question in there, but I agree with your comment. [Laughter] Again, if you heard my background, economics is not my strong suit either, but the economists who advise me a lot, and I spend a lot of time with them, would certainly agree with you, that trade imbalance is not a real issue. But what it does turn into in a country such as ours and other countries as well, is a political issue, and so in that sense it becomes a problem which needs to be addressed in clear terms. But I think in '99 there was about -- well the U.S. gets about 40% of China's exports and China gets about between one and two percent of U.S. exports. I still think that the WTO agreement and the reduction of tariffs will tend to balance this out a little bit so I think your comments about the degree of the problem are probably technically correct, but the political answer to that sometimes is harder to make.

QUESTION: Mr. Ambassador, we'd like to hear your readings on the new Taiwan government, and your readings on the China-Taiwan cross-strait tension in the near term, and also what is the United States addressing itself in this very special situation? Thank you.

AMBASSADOR PRUEHER: OK. One of the things right now -- I think, first, a point I'd like to make is it's important in the Taiwan relations and trying to work this out across the strait -- that the U.S. profile be one that can help improve the climate for the solution, because the solution lies between the Chinese on either side of the strait, not with the U.S. I think, from my point of view, the signals for democracy, and the vote in Taiwan, is quite a positive thing. I think Chen Shui-bian has shown a willingness to reach out to the extent that he can, and again, be very hopeful that there's enough latitude to get a cross-strait dialogue going, even if it's just to talk about process. I think that's something that's very important. I'm hopeful at this point. The government in Beijing has taken the policy of "wait and see, look and listen." They're watching very carefully. The inauguration speech coming up on the 20th, I think that progress can be made, but I think there's steady work ahead, and it's one of these things where we need to be prudent and cautious and creative, the "we" being everybody that's interested in this. And I think the new government, or the authorities in Taiwan, can probably bode well for the future. I think it will be tricky in the short term, good in the long term.

AMBASSADOR PRUEHER: The actual building of trust is one that -- and I've talked to a lot of folks about this -- require, one, a knowledge between the U.S. and China. First is knowledge, then comes some understanding which is different than knowledge. And then comes, subsequent to that, trust. Or trust is available after that anyway if you can get there. Actually, I spend more time on security issues in this area than economic issues. I wish the balance were different, but as you look at the variables that are going on right now, the economic issues, or the business community has a lot of attention on it. It's working sort of in a band. The security issues are those variables -- and I get back to my airplane analogy again -- that could go divergent if we're not watching them carefully, and the cost is very high should they do so. So we spend a little more time on those security issues.

CLSA MODERATOR: Ambassador Prueher, as we know, the Congressional PNTR vote will come up that week of May 22nd. I understand in the Senate, there's already majority support in favor of granting China PNTR. However, in the House of Representatives, it's much less clear. How do you think the vote will be cast? Do you think we can garner up enough support from Congressmen to get the PNTR through for China?

AMBASSADOR PRUEHER: Again, my strong talent is not as a vote counter, so I report what others tell me. The vote's very close. I think people are very optimistic but not confident. In fact, yesterday I had a change of plans. I'm heading back this evening to Washington instead of hearing Premier Zhu which I wanted to do, to work on this because it's sufficiently close. And I think it has economic and security and social and political implications. And the vote is seen in the U.S. as a vote on the overall relationship, because I think the economic arguments are fairly clear-cut, and so the vote will be close. I'm optimistic that we'll get a good vote.

QUESTION: I have a question following Jing's question. On the vote, do you think that there is a pent-up demand for FDI flows from U.S. investors, that are waiting for a favorable action, or that this investment has been put in place regardless of the WTO accession?

AMBASSADOR PRUEHER: Again, probably there are people in this audience that can answer that question better than I. The people that I talk to, I would say, they're sort of in the "wait and see, look and listen" mode as well. I do think FDI is the critical issue, but I think they are going to wait and see how things go before there's a big commitment. I don't think that will necessarily follow right on the heels of the WTO vote, but I think there will be some sort of curve of increase in FDI in China. Again, that's not my field of expertise. I'm quoting what people who know a lot more about it tell me.

QUESTION: The legal system is an important part of the business environment in China. Can you comment at all on what you've been observing in Beijing about reform of the legal system and what you see in the future?

AMBASSADOR PRUEHER: The question is about the reform of the legal system. I think "rule of law" is a term that's used a lot and I think the "rule of law" is one of the fundamental changes that's occurring in China at a fairly slow rate right now. To business people, "rule of law" I think connotes more of a structure for contracts, a structure for getting adjudication if that's required on business deals, an enforcement type of thing, as well as perhaps a mediation or arbitration process. To others "rule of law" has much more of a human rights tone to it. And all of these things are encompassed in "rule of law."

WTO will have to bring an increased structure in China for "rule of law." The infrastructure for adjudication and resolution of differences is not inbred in the China system. I think it is coming. There's a lot of discussion amongst the Chinese. People from all over the world, from the European Community, from the U.S., from Australia, from Asia, are also interested in "rule of law." I think there is an interest and it is growing. The training of just a whole infrastructure to allow "rule of law" to be implemented in China does not now exist. It will take a long time to grow even if there's a decision to do so very quickly. So I think we'll watch this rise. The interest is there. I think it is rising. I believe it's in China's interest. From what I hear in Beijing, they see it that way. But I don't think it's something that's going to occur in a big rush because it will take time to build up the education and the training to do it.

QUESTION: Ambassador, assuming that China is successfully elected to the WTO, what safeguards do you think can or will be put in place to ensure that she complies with the rules of the organization?

AMBASSADOR PRUEHER: The safeguards that exist in the WTO structure which are some -- but I believe in time, WTO, and the other nations, like any other large function like that -- is dependent a lot on pressure from other nations and peer pressure. And I think for WTO implementation to occur, parts of it will go well. There will be political and economic pressure required like it is other places in the world for nations to fulfill their obligations. Again, this is something that the phase-in is very important because from the situation that China is in right now, with the points that were made earlier about conversion of SOE's, the loan situations, the non-performing loans at the banks. They can't just in a trice all of a sudden be in full WTO compliance. I think this will take some time. The safeguards will be economic pressures on China for continued development so that people enter into the agreements and that China's made to enforce or to carry out their end of the agreement. And I think these will be both bilateral and then eventually be probably a more global structure. I don't have great answer to this question, but I think it'll take a little bit of time as well.

CLSA MODERATOR: Let me repeat that question. In view of the recent protests in Washington, D.C., during the IMF/World Bank conference, and also the protests in Seattle, whether the Ambassador sees any protectionism arising?

AMBASSADOR: I'm assuming on these questions that you're not getting answers that are like a textbook. I'll give you my opinions on these things. I happen to be one that thinks that globalization is occurring in terms of communications, in terms of economics, and I think it's sort of like a tsunami. You can rail against it, but it's going to come. It's not all wonderful, so I think that the pushing back that was seen in Seattle and to some extent in Washington, and not necessarily by the protestors -- I think some of the protestors are not necessarily too up on what the real issues are -- but there are some real issues that they represent where rampant globalism doesn't, the way it's implemented, doesn't bring good to everybody. So I think there is always an element of protectionism, and in the United States, all spectrum of politics are represented and they are openly discussed -- in the newspapers and in our Congress, and so they all get aired out. And I think there is an element of that, but I don't think it will be transcendent at all. I think it's something that will come into balance and maybe temper some of the unabashed enthusiasm for globalism, but I don't think it will be transcendent.

GARY COULL: For those of you coming to Hong Kong next week, we're picking up this theme of protests and backlash, because, as the Ambassador says, there's a lot of "loonies" out there with the wrong idea on a lot of things. But there's also a lot of people who are very smart, and who've got a very coherent, albeit, maybe different view than us on development in emerging markets. So rather than have government leaders as we normally do on Monday and Tuesday in Hong Kong, we're bringing from the States and from Europe, one or two of these rabble rousers who've been on the streets and we're bringing them inside for the first time to speak to investors on what their view is to try and understand it better. So I think next week could be quite interesting. We haven't got the real "loonie, loonie" fringe coming [laughter] but people who are very different than what we're used to. Because I personally believe there's a major change going on in attitudes toward multilateral investment, globalization, and it needs to be addressed clearly. So we're spending about two and a half hours of forum time next week on that subject. I just wanted to make a plug for that. Excuse me.

QUESTION: To get the WTO passed in Congress, there have been some proposals in the House for a human rights commission, an ongoing human rights commission. Can you brief us exactly what those proposals are, and will they create the specter that we still have of an annual review of Chinese human rights and a threat that some of the WTO privileges will be revoked?

AMBASSADOR: In the U.S. Congress, there are quite a few proposals. I know what some of them are, but I haven't been involved in the last day and a half, so I don't know exactly where they stand. The notion, of course, is, on the WTO vote, it itself needs to be an unencumbered vote. Either you do it or you don't. The idea of passing some other bill that allows people to comment one way or another [end of tape].

Congressman Levin from Michigan is sponsoring a bill that has some of these elements in it where there can be annual reviews or comments about various situations that Congress, representing the American people do or don't care for. I don't really know how this is going to play out. I think I'll have a better feel for that after I get back. I expect that there will be something in there, but the issue with the old Most Favored Nation, or the annual NTR, was that it had to get voted each year in order to occur. There's a big difference, and I think as you probably work your guidelines for how you run your companies, is you have it where normal trade relations or MFN would be granted unless you vote against, as opposed to having to vote for it each year. And I think that's a key element in here, is having it go forward. Then there is an opportunity which the Congress already has any time they want to, to comment on something, to pass a bill that has the sense of the Congress. They can always do that as opposed to have to have a forced comment each year. Rather there can be an opportunity to comment each year, and I think that might be the nature of what turns out. I don't know; we'll have to see.

CLSA MODERATOR: Ambassador Prueher, there are several cross currents at work here with regard to U.S.-China relations. There's the Taiwan Security Enhancement Act, there's the PNTR vote which will be happening a week or two from now, and of course, there's the U.S. elections later this year. How do you think these events will influence U.S.-China relations this year and going forward?

AMBASSADOR PRUEHER: Well, the particular ones you mention are three of about ten or so, and I have an opinion on the Taiwan Security Enhancement Act. In fact, President Lee Deng Hui passed to one of our Senators the same thing, that it doesn't enhance the security of Taiwan. There is a statement by Senator Helms where he said, "we want to get along with the people of China; we don't want Taiwan to get kicked around." I think that's a fair statement, and the Taiwan Security Enhancement Act, I think, exacerbates the tensions across the straits rather than making those tensions abate. So right now the Taiwan Security Enhancement Act is on hold.

The U.S. election, if there is the rhetoric that could occur during an election -- I don't think that there will be a lot of inflammatory China rhetoric in the election -- but if for local or domestic political reasons, the candidates felt like they had to do that, that would be a downside for U.S.-China relations. China wouldn't like it. Likewise, in China there are some things now, as it becomes increasingly pluralistic, things that go on for domestic consumption in China, that we don't care for also. So all of these things tie together. We have to look at them one at a time, but also make sure we connect the dots. One of the things we try to do in the Embassy is try to connect the dots and make sure the people at home are doing this.

I'd like to go back to the foremost point I've tried to make, which is: what the Embassy does is look after U.S. interests. What we do is try to advance U.S. interests in the region. I happen to think that our interests in China are to a large extent coincident. A secure, stable Asia, that can peacefully pursue prosperity, is in the U.S. interest. It's also in China's interest and it also won't happen without a China that is also secure and stable, and can pursue prosperity. So we're trying to work it out in that framework.

QUESTION: Is the U.S. applying a different standard of approbation on human rights and the rule of law to China than it applies to other WTO members?

QUESTION: .....apply a different standard of approbation on human rights and rule of law to China than it does to other WTO members. There are a lot of countries out there with bad human rights and bad rule of law who are members of WTO.

AMBASSADOR PRUEHER: That question is one certainly we should "not." It's an arguable point made by a lot of people.

I think the United States is at a period in its history where we have a lot of economic, political, and also military power. It's very important that the United States use this power that we have right now, which is a phase of history for us, in a humble and responsible way. A lot of nations would argue that every now and then, we overstep the bounds a little bit there, so I think that's maybe the nature of your question. China should be held to the international standards and so should we, and so should other nations, and the standards ought to be very similar.

CLSA MODERATOR: Ambassador Prueher, we certainly appreciate you're making a special trip to Shanghai just to address the CLSA China Forum, and we look forward to seeing you again at another CLSA event, maybe our next China Forum in 2001.

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