Leading Article: Clinton can't win on China trade

BY AN unhelpful coincidence, the fifth anniversary of the slaughter of dissidents in Tiananmen Square falls only one day after President Clinton is to announce a decision on the renewal of Most Favoured Nation (MFN) trading status for China. In doing so last year, Mr Clinton demanded progress on five human rights fronts, including the release of political prisoners. Some have been allowed their freedom, others have been locked up, and harassment continues.

The Peking government continues to leave no doubt where its priorities lie. Last week President Jiang Zemin warned that national stability would be maintained at any cost. Yesterday, Prime Minister Li Peng delivered a similar message. Meanwhile an interview being given to a US television network by a student leader of the 1989 pro-democracy movement, Wang Dan, was broken up by police.

The Chinese leadership long ago decided that the most important single task was to stay in power. If suppressing dissent resulted in the imposition of tariffs on exports to the US, that would be a price worth paying: retaliation against American exporters to the huge Chinese market would ensure that the US suffered most. Potential contracts have been estimated at up to dollars 400bn over the next five years. Hong Kong, through which much of China's trade passes, would be badly hit by any trade sanctions. Further steps at the United Nations to force North Korea to open up its nuclear programme for inspection could be stymied by a Chinese veto in the Security Council.

Although there is much to admire in periodic American attempts to pursue a moral foreign policy, to tie human rights and trade so closely together in this instance is now widely seen to be a serious error. Even China's dissidents favour US renewal of MFN status: Wang Dan was suggesting it should be unconditional when his interview was broken up yesterday. The flourishing non-state sector of the Chinese economy would be worst hit by US trade sanctions. Yet the more entrepreneurs become prosperous, the more freedom they are likely to press for.

The US's entire policy towards the country with the world's most rapidly growing economy and greatest potential now balances on the pin-head of this annual exercise. Chinese reactions suggest a high level of immunity to moral pressure. This time Mr Clinton will no doubt seek to save face by penalising a specific sector of Chinese exports. His dilemma is real and painful. But there are means other than trade of exerting pressure on human rights. Steps should be taken to divide the two issues.