" ; MORI DocID: 834556 a ae APPROVED FOR RELEASE = Sa Hd204. = ET * [bI(3) at Is) . itt @ China's View of the Sino-US Relationshi : An Update EXECUTIVE SUMMARY The relationship between the United States and China has progressed substantially and to the satisfaction of senior Chinese officials since the end of last year. The Soviet in- vasion of Afghanistan and the Chinese Communist Party Fifth: Plenum in February lent further impetus to closer relations. The party plenum enhanced the political positions of Vice Premier Deng Xiaoping and his associates who are strongly disposed toward the US connection. The strengthening of the positions of leaders committed to economic reform also en- . hances the prospects for wider involvement of US and Western capital and technology in China's economic modernization program. ' The Chinese leadership has made political decisions necessary to complete the institutional framework for a normal bilateral relationship by’ the end of the year. This is likely to result in agreements on consular conventions, @ civil air and maritime commerce, textiles, and the framework for trade relations involving preferential treatment of some Chinese goods. The Chinese have judged that the United States has adopted a stronger position against the Soviet Union in the wake of the invasion.of Afghanistan and have more closely aligned Chinese security policy to that of Washington. This memorandum was prepared under the auspices of the National Intelligence Officer for China by of the China Policy Support Center, Office Analysis, National Foreign Assessment Center, in response to a Department of Defense request. Questions and comments may be addressed to the NIO for China, telephone fo td as e MORI DocID: 834556 : APPROVED FOR RELEASE DATE: SEP 2002 Chinese officials stress that the Sino-US relationship is based on long-term and strategic considerations, and Beijing has sought increased cooperation -in security matters with the United States. China has participated in high-level consulta- tions with US officials and has taken steps to further reduce ties with Moscow. The Chinese mission headed by Geng Biao will explore US intentions regarding the transfer of military equipment to China and attempt to identify areas of broader military co~ operation. Geng is said to be coming to Washington with a shopping list of military equipment and authority to make possible "substantial achievements." -Problem areas persist in the Sino-US relationship. The Chinese have encountered difficulties in controlling the ef- fects on Chinese society of increased contact with the West. Taiwan remains a complicating factor; the Chinese persist in raising Taiwan, although in a largely pro forma manner, in bilateral negotiations. They have also indicated irritation, if only for tactical purposes, at US willingness to provide Taipei--but not Beijing--with military weapons. hostage crisis in Iran, aid to Pakistan, the anti-Vietnamese resistance in Kampuchea, and Korean reunification. The dif- ferences are largely tactical and remain Manageable. & Differences persist on major international issues: the ’ There remains, more, an underlying Chinese concern over US resolve in resisting Soviet expansion. This has inhibited a closer Chinese alignment with US policy and indicated caution in Beijing's identification with Washing- ton on some specific issues. ; _ SECRET MORI DocID: 834556 APPROVED FOR RELEASE DATE: SEP 2002 en DISCUSSION Introduction Since the end of last year, China's relationship with the United States has progressed rapidly in the political, economic, and security areas. The Chinese Clearly assess the relationship productive and promising in availing China a measure of additional security against the Soviet Union and access to Western capital and technology; senior Chinese officials have consistently indicated satisfaction with the main lines of US-Chinese relations, while also taking note of differences in policy and emphasis. The relationship received further impetus from the Soviet invasion of Afghanistan and the Chinese Communist Party's Fifth Plenum in February. The Chinese judge that; in the wake of the Soviet invasion, the visit by Secretary Brown to Beijing in January, and subsequent bilateral con- sultations on security issues, the United:States has adopted ‘a stronger stance against the Soviet Union, thus bringing US and Chinese security interests and requirements more in harmony. Senior Chinese officials are stressing that the relationship is long term and based. on strategic considera- tions. ; The Fifth Plenum substantially enhanced the political power of Vice Premier Deng Xiaoping and his associates, and thus enhanced the prospects that his emphasis on economic modernization and close ties to the United States and the West will persist after he departs from the political scene. This also decreases the chances that Deng's political op- ponents might be able to use setbacks, differences, or ir- ritations in US-China relations as political leverage. The plenum mandated the party and government to formulate long- term economic policies and reforms for formal adoption at the next party congress, later this year or early in 1981. These plans will substantially determine the scale and shape of Chinese economic interaction with the West. oy) Bilateral Relations The accelerated pace of government-to-government ex- changes is evident across a wide range of subjects; the bilateral relationship has become routine in many political, cultural, and economic. areas and is rapidly approaching a "normalized" state in others. The Chinese indicated in late SEGRET MORI DocID: 834556 APPROVED FOR RELEASE “~~” DATE: SEP 2002 SECRET March that they wished to complete by the end of this year the legal and institutional framework for a normal bilateral relationship. The Chinese termed a “complete success" the first meet- ing of the US-Chinese Joint Commission on Science and Tech- nology Cooperation, which was held in Beijing in late January. Deng cast the significance of the session in strategic terms, calling it the kind of "concrete act" required of China and the United States in order to strengthen relations and oppose the Soviet Union. The two sides completed or discussed pro- tocols in several natural sciences and discussed tangible cooperation in the physical science and energy fields. The S&T Commission's success clearly was spurred by the Brown mission and subsequent announcement of US intent to consider licensing for export to China equipment with dual military and civilian applications. Congressional action in granting China most-favored- nation status set. in motion a train of events that will lead to a normal trading relationship. The framework is the US- Chinese trade agreement, which took effect on 1 February and provides for trade offices, financial arrangements, and con- sultations on trade problems. Financing will be partially - provided through the Export-Import Bank, which was authorized in April to grant up to $2 billion in credits in fulfillment of a commitment made by Vice President Mondale in Beijing last August. Negotiations between the Eximbank and Bank of China are under way to arrange terms and procedures for credits. Eximbank has already given preliminary approval to a $60 mil-. lion credit for the US share of a German steel project, but Chinese internal bureaucratic disorganization and competing interests are hindering this arrangement, as they have in other bilateral dealings. , Since the first.of the year, Chinese officials have informed Washington that decisions have been made at polit- ical levels in Beijing to conclude negotiations on civil aviation, maritime, and textile accords. Chinese civil aviation authorities had raised several technical and opera- tional problems in earlier talks, which had hindered prog- ress toward an agreement. The Chinese have indicated, how- ever, that a round of talks in Washington in mid-May is likely to culminate in a formal agreement. After earlier-sparring over relatively minor issues, the United States and China | made substantial progress on a maritime agreement in a round of talks that ended in early April. The principal outstand- ing issue is Chinese access to US ports; Beijing is arguing 4 SECBET MORI DocID: 834556 DATE: SEP 2082 that most-favored-nation status should give Chinese ships access to all commercial ports in the United States. Nego- tiations on a textile agreement have been perhaps the most intractable because of the large political and economic stakes on both sides. In mid-April, the Chinese informed Washington that China wants an agreement “as fast as pos- sible." The Chinese also have signaled an interest.in con- cluding a convention on the conduct of consular affairs in both countries. Beijing recently authorized conclusion of joint-venture- enterprise agreements, which have been a matter of political and economic controversy in China for some time. A delegation of American corporate lawyers was told in January that the Chinese were prepared to accede to virtually whatever con- tractual arrangements required to attract American equity in- vestment. In late April, the Chinese announced final approval of four joint-venture projects, two of which involve US con- The Growing Security Relationship Prior to the Soviet invasion of Afghanistan, the Chinese believed that the worldwide balance of power was moving in the direction of the Soviet Union, and that this indicated caution in moving toward increased security cooperation with Washington. The Soviet invasion affected a range of impor- tant Chinese security interests: it brought the Soviets closer to a commanding position in a region that includes Pakistan, China's principal ally in South Asia, and contains much of the industrialized West's energy. supply; along with . Vietnamese pressure in Southeast Asia, it threatened to draw the circle of Soviet power even more tightly against China's periphery; and it bespoke a willingness to use force outside the Soviet Bloc that could serve Moscow's practice of coercive Giplomacy. . China considered the reaction of the United States cen- tral to its own security and to prospects for a mutually beneficial security relationship with the United States. The Brown mission to China in early January was. Beijing's initial opportunity to take a reading. A Chinese official later remarked that China was most satisfied with the re- sults of the Brown visit, particularly with agreement on the strategic implications of the Soviet invasion MORI DocID: 834556 APPROVED FOR RELEASE aa [= ar DATE: SEP 2002 Subsequent Chinese moves made it clear that Beijing was growing increasingly committed to a long-term, strategic relationship with the United States. China suspended the second round of Sino-Soviet political negotiations, which ended a phase in Sino-Soviet relations that had raised at least the possibility of reduced tensions. The Ministry of Foreign Affairs reportedly asked an official foreign trade agency to increase purchases of US grain in support of the US embargo of grain from thé Soviet Union. China also an- nounced that it probably would boycott the Moscow Olympics. The Chinese media clearly signaled the increasing ori- entation in Chinese security policy toward closer association ‘with the United States. Before the visit by Secretary Brown, the Chinese had consistently characterized the United States as uncertain of its strategic interests, susceptible to Soviet pressure, and ineffective when confronted by Soviet intransi- gence~-the latter judgment particularly. prominent in Chinese commentary on the issue of the Soviet combat brigade in Cuba. Subsequent commentary was made more positive. aes : A major assessment of US policy, broadcast some two months after the Soviet invasion, concluded that US policy toward the Soviet Union was undergoing a new development, which was significantly different from the past US policy of weakness, tolerance, and inaction toward the Soviet Union. But the assessment added a note of uncertainty that China must wait to see the tangible changes in US policy. The Chinese also reacted positively to a briefing in late February on US intentions to obtain access to military facilities in the Indian Ocean littoral and to enhance US ability to dispatch military forces to the region. In re- action to the briefing, Chinese Ambassador in the United States Chai Zemin raised questions regarding the strength of Soviet forces in the Arabian Sea, the sufficiency of US forces to response to a crisis in the Persian Guif, emergency US use of Israeli and Egyptian bases, and the permanence of US military facilities. This set the stage for bilateral consultations in Washington in late March involving Vice Foreign Minister Zhang Wenjin. Chinese participation in these consultations and Beijing's interest in periodic consultations involving senior foreign and defense officials confirmed China's assessment that the US stance against the Soviet Union was growing tougher. , 6 SECRET MORI DocID: 834556 APPROVED FOR RELEASE DATE: SEP 2062 zhang Wenjin's talks in Washington further spurred China's interest in a closer relationship. the Foreign Ministry erme é talks “useful” and indicate at the Chinese detected a more in- cisive US attitude toward the situation in Afghanistan, noting that qualified US support for the West European proposal on Afghan neutrality grew out of tactical considerations.: The Chinese had strongly opposed the proposal, in part because it could establish a precedent for resolution of the Viet- namese presence in Southeast Asia unfavorable to China, and because the Chinese believed the Soviet Union could exploit Western divisiveness on the Afghan issue. ——e Soon after Zhang left the United States, People's Daily carried a lengthy, positive assessment of US security policy, which probably reflected China's reading of the Zhang mission and implicitly argued for closer US-Chinese security coopera- tion. The article said that the Soviet invasion of Afghan- istan had prompted a more sober US appraisal of Soviet policy, which had led to the conclusion that US policy and military deficiencies had contributed to Soviet expansion. It added that antagonism between the United States and Soviet Union was "irreversible" and that adjustments in US policy were not products of expediency but “inevitable" consequences of international developments and intense US-Soviet conten- tion. In indicating some Chinese concern over US reliability in resisting Soviet expansion, the article raised a persis- tent theme in Chinese assessments of US policy. It said that doubts among the allies regarding US reliability have led to a centrifugal tendency in the Western alliance that _ the United States must remedy. Deng firmly endorsed China's security orientation in an interview with an American journalist on 11 April-- the day the 1950 Sino-Soviet treaty expired 7 SECRET MORI DocID: 834556 APPROVED FOR RELEASE DATE: SEP 2002 SE T eng Said he Was satisfie Wi e relationship wi Washington, which was "no matter of expediency or short-term duration but a major strategic decision."' In the interview, Deng implicitly turned aside an earlier Soviet proposal to reopen border or political negotiations, thus publicly closi China's Soviet option for the time being. the Geng Biao Mission The impending Geng Biao visit regularizes the defense consultations begun by the Brown trip and complements: the political and diplomatic exchanges initiated by the Zhang Wenjin visit. The Chinese earlier this year turned aside US proposals that a senior defense official be included in the Zhang mission, indicating a desire to keep military and political consultations separate. * In early May, however, Han Xu, the head of the Foreign Ministry office that deals with US affairs, informed US diplomats that he would accom- pany Geng. This suggests that the Chinese intend the dis- cussions on military matters to have a broader political and strategic context. On military matters, an official 2s preegur oti that Geng wotId come to Washington suificient authority to make possible "substantial achievements." The Geng mission and, in particular, the advance party headed by Liu Huaging would attempt to deter- mine with some precision the equipment the United States. would be prepared to provide China now and over the longer term. . The Chinese mission also will attempt to.identify broader areas of possible military cooperation, presumably including exchange visits, exchanges of information, .and the like. On the latter score, the Chinese have probed for US interest in regular contacts between US officials and scholars and members of the newly formed Beijing Institute for International Strategic Studies. Exploratory contacts have included a Chinese proposal for a meeting sometime this year on Soviet strategy in the 1980s. Through several channels, the Chinese have indicated that the Liu and Geng delegations will actively explore the limits of US willingness to approve transfer of lethal and sophisticated weapon systems and equipment to China. Imme-~ diately after the Brown trip to Beijing, members of the defense attache's office at the Chinese Embassy in Washington 8 SEGRET SR cg ag AR TS a ee MORI DocID: 834556 APPROVED FOR RELEASE DATE: SEP 2062 e — indicated disappointment that the United States would not provide military equipment to China. An assistant attache said many US companies have forwarded military sales proposals to the Chinese Embassy; On the eve of Zhang's mission to Washington in March, Vice Defense Minister Su Yu told Japanese visitors that China considered US willingness to provide military hardware to China a test of US security policy. He said the Chinese failed to understand how Washington could provide weapons to Taiwan, but not China. a While Su's comments were related to Zhang's forth- coming talks in Washington, they foreshadowed a concerted Chinese probe of US intentions. Y eaders expec quick results[ |from the Liu and Geng visits, and China hoped Washington would not complicate and = military equipment sales and technology transfer. Members of Liu Huaching's advance party also indicated to US diplomats that the Chinese defense establishment has - high expectations regarding purchase of advance US arms and military technology. In preparation for modernization of their armed forces, the Chinese reportedly are taking steps to dispose of obsolete and unneeded equipment. SECRET MORI DocID: 834556 APPROVED FOR RELEASE DATE: SEP 2002 SECRET ec eRe The gap between Chinese expectations and US policy regarding military sales appears wide and could give scope for the development of serious problems in US-Chinese security relations. Nevertheless, on balance, China's position on arms procurement from the West is realistic and cautious. Beijing appears to view the Geng mission as part of an explora- tory phase in arms purchases from the United States. One of China's most experienced Foreign Ministry officials, Han Nianlong, reportedly said that China believed there east es ee military assistance to China. | Han said the United States’ wante O avoid offending Moscow by moving too close to China and that Beijing did not expect to receive much US military assistance. It is also clear that the Chinese have much’ to learn about US laws, procedures, and regulations governing exports of US military equipment, and that their governmental appara- tus, not to mention the People's Liberation Army, is ‘some distance from being in a position to acquire and absorb quan- titiés of US-made military hardware. . Problem Areas As relations and contacts with the United States develop, the Chinese have encountered some difficulty in controlling the effects on their society. On the one hand, as reflected in a major speech by Deng Xiaoping to party officials in mid-January, the United States and its’ ways of doing things are held up for emulation. There has been, on the other hand, a variety of attacks on aspects of American life, apparently to inhibit wholesale adoption of Western lifestyles. This, in turn, has raised questions about the effects on China's relations with the United States. ; In late January, the us Embassy in Beijing sent a letter to major Chinese press media complaining that an earlier spate of articles in the Chinese press critical of the political and economic systems in the United States was potentially harmful to friendship between the two countries. The subsequent fre- quency of such articles has declined, and reports from Chinese correspondents in the United States in recent months have had a less negative cast. 10 SECRET MORI DocID: 834556 APPROVED FOR RELEASE DATE: SEP 2002 SECKET ee Se) In April, The Washington Post carried a report on a speech by a Chinese university official sharply critical of the United States. aA Foreign Ministry official later apol- ogized and attributed the speech to a bureaucratic foulu Deng publicly termed the official "haywire," The Taiwan issue also is a complicating factor in Sino-US relations. Beijing must balance its concern not. to allow the issue to hold back rapid expansion of rela- tions with Washington and its interest in holding the United States to China's view of the terms of normalization. Deng on 29 April told visiting US journalists that there were only minor differences between the United States and China; five days earlier, China presented an oral protest about the US role in the International Monetary Fund's decision to restore to Taiwan the latter's gold contribution. At various times the Chinese have complained about other issues, such as the resumption of new US arms sales to Taiwan and the use of the word "government" by US officials when referring to the authorities in Taipei. ey are obvious yY ancline oOo use i arms sales to Taiwan as a tactic in their effort to procure US military equipment: and technology by suggesting that the United States is willing to sell weapons to Taiwan that it will not sell to China. — China also remains sensitive to indications that the US approach to relations with China and the Soviet Union is "evenhanded." Chinese officials, including Deng Xiaoping, .@arlier this year protested China's inclusion with the Soviet Union within category "Y" of the Commerce Department Export Control Regulations List. Similarly, the Chinese periodi- cally have expressed skepticism regarding the transfer of sen- Sitive technology from the West to China, citing COCOM con- trols on exports to China. Chinese complaints on both matters more recently have faded away, however, in the wake of US assurances that China will be removed from category "Y" and that the United States is Pressing for COCOM action to differ~ entiate between technology transfers to China .and those to the Soviet Union. : ; On international issues, current differences in policy and emphasis between China and the United States have been, 11 : sEGwET MORI DocID: 834556 APPROVED FOR RELEASE DATE: SEP 2002 SECRET 2 ee ee . ae in the main, manageable. There has been disagreement over the Iran crisis almost from the start. The Chinese have attempted to discourage the use of sanctions, political pressure and force against Iran, arguing that this undercuts the anti-Soviet and relatively flexible Bani-Sadr government, creates opportunities for Soviet exploitation in Iran, de- flects international focus from the Soviet invasion of. Afghanistan, and tends to promote divisiveness within the Western alliance. Chinese concerns seemed to increase just before the US attempt to rescue the hostages. Beijing quickly expressed public regret over the rescue effort, although subsequent commentary has been more balanced and has stressed indications that the United States will rely on peaceful measures to resolve the crisis. Differences on Iran placed some stress on diplomatic exchanges between Washington and Beijing during delibera- tions in the UN Security Council in January over sanctions against Iran. ay ore closely associating China's foreign and security policy with. that of the United States, partly out of concern @ that this will undercut Chinese efforts to improve relations with Iran and maintain influence with states more sympathetic to Iran in the hostage crisis. Senior Chinese officials have publicly criticized us policy regarding Pakistan, specifically the US offer of $400 million in security and economic assistance. Beijing has all along urged that the United States provide Pakistan mone- tary and materiel assistance and a strong security quarantee sufficient to preclude Pakistan from fence sitting. In recent weeks, however, Chinese badgering of the United States on this question has decreased considerably, and the Chinese have urged US patience as Pakistan determines its strategy. Despite persistent US requests, the Chinese have not been forthcoming with information regarding Sino-Pakistani deal-. ings on issues of interest to Washington, including Chinese ‘plans for economic and military aid to Pakistan. China also has reacted negatively to US offers to transmit messages between Beijing and New Delhi. Sino-US tactical differences persist over the situation in Indochina. The Chinese now argue that Pol Pot's forces in Kampuchea have emerged from the Vietnamese dry-season offensive in far better shape than observers expected and 12 . SECRET MORI DocID: 834556 APPROVED FOR RELEASE DATE: SEP 2062 that now is not the time, contrary to US suggestions, to search for a new government. Rather, the Chinese argue, pressure for a Vietnamese troop withdrawal and against tendencies toward compromise exhibited by some states in the region should be increased. The Chinese share the US interest in stability on the Korean Peninsula, but, in order to retain leverage in Pyongyang, China maintains that the North does not pose a threat to South Korean security and that the United States can safely withdraw its troops from South Korea. China has been receptive to limited trade ties with the government in Seoul but rules out a recognition formula whereby it would recogniz, ile the United States recognizes the North. _ Many of the Sino-US divergences on international secu- rity issues stem from differences in emphasis and tactics. The Chinese wish the United States to subordinate the hostage issue with Iran to the larger interests of containing Soviet influence in the Indian Ocean area. Regarding proposals for: neutralization of Afghanistan, the Chinese emphasize the requirement for a Soviet troop withdrawal more than the desirability of reduced tensions. Beijing views the Afghan and Kampuchean situations as closely linked--and the shape of the resolution of one determining the shape of the resolu- tion of the other. Re ee There also remains, however, an underlying and persis- tent Chinese concern over US resolve. Chinese officials, most prominently Deng Xiaoping, continue to comment publicly on vacillation in Washington, on "shaky" US policy and on the need for China to encourage US perseverance. This con- cern contributes to Chinese caution in aligning Beijing's security policy more closely with Washington's. The Olympic boycott is a case in point. Beijing indicated as early as 1 decals its plans to join.the United States in boycotting 13 SECRE