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Current Issues Brief

No. 7 1997-98

United States-China Relations and the Clinton-Jiang Summit

ISSN 1321-1560

 Copyright Commonwealth of Australia 1999

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means including information storage and retrieval systems, without the prior written consent of the Department of the Parliamentary Library, other than by Senators and Members of the Australian Parliament in the course of their official duties.

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document. IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

Published by the Department of the Parliamentary Library, 1999

I N F O R M A T I O N A N D R E S E A R C H S E R V I C E S

Current Issues Brief No. 7 1997-98

United States-China Relations and the Clinton-Jiang Summit

Dr Frank Frost Foreign Affairs, Defence and Trade Group 24 November 1997

Acknowledgments

The author wishes to thank Mr Gary Brown, Mr Michael Ong, Dr June Verrier and Mr Geoff Winter for their helpful comments on drafts of this paper

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Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Background: US-China relations in the 1990s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

President Jiang in the US: Progress and Discord . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Strategic dialogue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Economic relations and trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Non-proliferation and arms control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Human rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Additional cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Australia's interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

United States-China Relations and the Clinton-Jiang Summit

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Introduction

China's President Jiang Zemin made a nine day visit to the United States between 26 October and 3 November 1997. The state visit was the first by a Chinese head of state to the US since that of President Li Xiannian in 1985. President Jiang's visit was especially significant because relations between the US and China have been seen as one of the most important problems in the post-Cold War environment for the two countries themselves, for the Asia-Pacific, and for the international community.

President Jiang's visit brought some useful areas of agreement and the two countries declared that they would pursue development of a 'constructive strategic partnership'. The visit also illustrated that the two countries have substantial differences in a number of policy areas, particularly human rights issues. The visit was marked by demonstrations against Chinese policies and by some frank public exchanges between the two leaders. Nevertheless, Jiang's visit can be seen as a constructive development in US-China relations, which should assist the two countries to manage their difficult but vitally important relationship.

This paper reviews the background to the visit, major areas of discussion between the two sides, the ongoing areas of difference and challenge still facing the US and China, and the significance of the summit for Australia's interests in the Asia-Pacific region.

Background: US-China relations in the 1990s

The US and China have faced substantial difficulties in maintaining a stable relationship in the 1990s.1 For two decades after President Nixon established communication and dialogue with China in 1972, relations were developed in the context of the Cold War. Both countries in that period shared a common interest in combating the policies and influence of the Soviet Union. The two countries normalised relations in December 1978 and through the 1980s areas of potential major discord, such as human rights, were downplayed. Meanwhile, economic links grew as China's economic reforms produced very rapid growth and rising trade with the US.

The growth of US-China relations was disrupted severely by the Tiananmen massacre of pro-democracy demonstrators in June 1989 and the US imposed some sanctions and

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restricted dialogue. The decline and then collapse of the Soviet Union produced new complexities. Without the strategic 'glue' which the need to oppose Soviet power had provided, the US now had a range of different interests and goals in relation to China with no easy way of establishing clear priorities for their pursuit.

Bill Clinton in his 1992 election campaign criticised the Bush Administration for its allegedly 'soft' attitude towards China, particularly in relation to human rights. President Clinton in office sought to use China's access to 'Most Favoured Nation' status in trade as a way of gaining specific progress on human rights issues.2 China rejected this pressure and the US was forced to abandon this attempt in 1994. Relations were strained further in 1995 when, under Congressional pressure, the Clinton Administration allowed Taiwan's President Lee Teng-hui to make a private (but highly publicised) visit to the US. China was highly critical of this step. Tensions over Taiwan rose further at the time of the March 1996 Taiwan presidential elections. China mounted a series of military exercise (including live missile firings near Taiwan) and the US responded by deploying two carrier groups in the vicinity of Taiwan. These events aroused widespread concern in East Asia.

Since mid-1996 the Clinton Administration has sought to stabilise the relationship with China, with some success. The Administration reaffirmed its policy of 'comprehensive engagement' with China and dialogue and contacts have been expanded. Firstly, working dialogues have been enhanced in many inter-governmental areas including arms control, commerce, immigration and drug law enforcement. Military exchanges have been expanded, particularly since the visit to the US of Defence Minister Chi Haotian in December 1996 and the visit to China by Chairman of the Joint Chiefs of Staff General John Shalikashvili in May 1997. Secondly, the Clinton Administration has re-established a strategic dialogue with China's military and civilian defence establishment, to build up confidence even while policy differences persist. Thirdly, the US has encouraged China's increasing integration into the international institutional order. Progress in this area has included China's accession to the nuclear Non-Proliferation Treaty, the Comprehensive Test Ban Treaty, the Chemical Weapons Convention, and the Biological Weapons Convention. The US has also supported in principle China's membership in the World Trade Organisation although this has not yet been achieved (see below).3

While the Clinton Administration has made progress in engagement with China since 1996 it has had to contend with continuing disquiet and criticism in the US about China and US policies towards it. Critics have directed attention towards human rights conditions within China, China's conduct in Tibet, the alleged widespread use of prison labour, and China's potential to expand its military capacities as its economy grows in size and sophistication. The alleged provision of funds to the Democratic Party from Chinese business interests has been a further source of controversy in 1997. For their part, China's spokesmen and media have been at times critical of the US, seeing its attempts to influence China's policies and behaviour as interference, and even as an attempt to thwart China's development as a major power.4

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President Jiang in the US: Progress and Discord

Since President Jiang was visiting the US after a period of substantial tensions and of concerted efforts by both sides to stabilise relations, the visit was important in symbolic as well as substantive terms. The first full state visit by a Chinese leader since 1985 underlined the rising importance of China internationally. The Chinese delegation clearly appreciated the official reception in Washington, the details of which they had negotiated carefully. President Jiang's visits to specific locations, and some of his gestures, reflected a number of major Chinese concerns. By laying a wreath in Hawaii at a memorial to US servicemen killed in World War Two, Jiang reminded the world that China and the US have fought as allies in common struggles before. By visiting the restored colonial-era town of Williamsburg (where he donned a colonial hat) and Philadelphia, he conveyed an interest in US political history. By sounding the bell at the New York stock exchange to begin the day's trading, Jiang emphasised China's continuing commitment to economic reform and engagement with the international economy.5

President Jiang's presence provided the focus for a number of protest demonstrations against Chinese policies on human rights. In Washington, for example, a protest on Tibet was led by actor Richard Gere. However, President Jiang was also greeted by considerable numbers of supporters and the demonstrations did not dominate the atmosphere of the visit.

The visit and the summit meeting between the two Presidents were not expected to produce any epoch-making breakthroughs or decisions. Nonetheless there were important areas of discussion and agreement.

Strategic dialogue

Presidents Jiang and Clinton (in the words of their 29 October 1997 joint statement) 'had an in-depth and productive exchange of views on the international situation, US-China relations and the important opportunities and challenges facing the two countries'. The two sides announced that they would now work towards a 'constructive strategic partnership' in their relationship.6 This is valuable as a formal declaration of common interests although the tenor of this partnership will clearly depend on the outcome of a number of specific issues.

Communication between the two countries will now include a direct 'hot line' between Washington and Beijing. The US and China also reaffirmed their commitment to regular leadership dialogues. President Clinton will visit China next year but no date has yet been set, despite evident attempts by the Chinese side to see a date agreed during the summit discussions. The two countries renewed their commitment to regular exchanges of cabinet and sub-cabinet officials to consult on political, military, security and arms control issues.

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An agreement was announced to decrease the chances of maritime incidents arising from accident or poor communication. President Clinton affirmed that both countries share a 'profound interest in a stable prosperous, open Asia' and said that the US and China have worked well together in convincing North Korea to end its dangerous nuclear programs; both leaders, he said, had agreed to urge the North to take part in four party peace talks with South Korea.7

The tensions which had been experienced in US-China relations over Taiwan in 1995 and 1996 made the formal discussions and declarations on this issue particularly important. The existence of a separate government on Taiwan has been a long-lasting legacy of the

civil war in China, when the defeated Kuomintang withdrew to the island in 1949. Taiwan's lack of widespread formal diplomatic recognition since the 1970s has not prevented it from becoming a major trading state and source of foreign investment in East Asia, including China. For its part, China has consistently claimed sovereignty over the wealthy and now democratically-governed island and has been acutely sensitive about any perceived challenge to its rights to Taiwan. Recently, for example, China has reacted critically to the announcement of revised guidelines for the provision by Japan of support to the US defence presence in East Asia under the US-Japan security treaty. China has claimed that the guidelines could see Japan involved in the event of an armed conflict between the People's Republic and Taiwan and has not been satisfied with Japanese denials.8

In the 29 October 1997 joint statement, China stressed that '...the Taiwan question is the most important and sensitive central question in China-US relations, and that the proper handling of this question in strict compliance with the principles set forth in the three China-US joint communiques holds the key to sound and stable growth of China-US relations'.9 The statement added that 'The United States reiterates that it adheres to its "one China" policy and the principles set forth in the three US-China joint communiques'.10

However, the two Presidents' statements also indicated the basis of a continuing potential for controversy over the Taiwan issue. President Clinton in the joint press conference on 29 October said that 'I told President Jiang that we hope the People's Republic and Taiwan will resume a constructive cross-strait exchange. Ultimately, the relationship between the PRC and Taiwan is for the Chinese themselves to determine - peacefully.' President Jiang reaffirmed his country's desire to negotiate peacefully over the Taiwan issue but also said that '...we do not commit to renounce the use of force', adding that this statement was not directed at China's 'compatriots' in Taiwan but '...rather at the external forces attempting to interfere in China's internal affairs and at those who are attempting to achieve separation of the country or the independence of Taiwan'.11

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Economic relations and trade

The importance of trade was a strong theme of Jiang's visit. China's economic development and growth has benefited greatly from access to the US market and the trade is heavily in China's favour; the deficit is expected to reach $US44 billion in 1997.12 President Jiang met a number of senior US business leaders and addressed business groups. Agreement was announced for China to purchase 50 Boeing airliners at a value of $US3 billion. China announced its intention to participate in the Information and Technology Agreement, a designated list of information technology products which are to be traded freely by the year 2000, although the precise details of China's commitments in this area are not yet known. In the context of negotiations in relation to the World Trade Organisation (WTO), China also announced its commitment to make further substantial tariff reductions.

However, while the two sides declared their commitment to China's accession to WTO membership, the US was unwilling to specify a date for the achievement of China's entry and this remains one of the most significant issues on the countries' agenda for bilateral relations.13

China has made considerable progress towards qualifying for WTO entry. China's tariffs in 1997 are at an average level of 17 percent, down from 23 percent in 1996 and 44 percent in 1993. China has accepted a number of the WTO's key principles including uniform administration, transparency, judicial review of administrative action and non-discrimination. The planned further reforms and priviatisations of the state sector announced in September are a further contribution towards China's capacity to be accepted as a member.

However, considerable obstacles still need to be overcome between the US and China before the US is likely to support China's entry. One major issue is that while China is applying for membership as a 'developing country', the US has been unwilling to accept this so far, because of concerns that China's size and export potential could seriously disrupt world markets.

A second major issue is Most Favoured Nation (MFN) status, a fundamental principle of the WTO, which prevents members from discriminating amongst their WTO trading partners. The US extends conditional MFN status to China, which is renewed annually. In order for China to join the WTO, Congress would need to support the granting of permanent MFN status. This underscores the importance of the contacts which President Jiang had with Congressional and business circles during his visit but the inter-related areas of WTO membership and MFN status remain as crucial unfulfilled parts of the agenda for US-China relations.

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Non-proliferation and arms control

China's alleged provision of nuclear-related materials to countries including Iran and Pakistan has been one of the most contentious areas in bilateral relations with the US. In their joint statement, both sides reaffirmed their commitment not to provide any assistance to unsafeguarded nuclear facilities and nuclear explosion programs. China affirmed that it had placed controls on export of nuclear and dual-use materials and declared that it would impose further controls by mid-1998.

US officials had hoped to obtain from China an agreement to stop selling missiles or missile technology to Iran. This was not obtained. However, China did provide a promise in writing that it will not enter into any 'new nuclear cooperation' with Iran. A US official was reported by the Los Angeles Times as having said that this is '...a very significant step forwards in our efforts to try to prevent the Iranians from acquiring a basic nuclear capability.'14 In return, President Clinton gave approval for the export to China of American peaceful nuclear technology. China has been interested to increase its access to such technology because it is seen as a way of meeting the country's energy needs while alleviating severe pollution and environmental problems. The decision is also potentially highly beneficial for US companies. The chairman of Westinghouse, Michael Jordan, said that 'The market for nuclear power plants in China is $70 billion or $80 billion over the next ten years. It's huge. We'd like to get our fair share of it'.15

Human rights

The joint statement noted frankly that, 'The United States and China have major differences on human rights' and exchanges on these issues during President Jiang's visit were direct and highly publicised. In their joint press conference on 29 October, the two leaders came into conflict on human rights to a degree unusual on such occasions. In responding to a question on the Tiananmen massacre, President Jiang stated that China had taken 'necessary measures according to law'. President Clinton responded that the incident had 'kept China from politically developing the level of support in the rest of the world that otherwise would have been developed'. When Jiang went on to discuss issues of cultural differences and said that 'human rights are to be determined by the specific national situation of different countries' Clinton countered firmly that 'On this issue, we believe the policy of the [Chinese] government is on the wrong side of history'.16

Other comments by President Jiang on human rights were also controversial. In a speech in Washington, he claimed in relation to China's occupation of Tibet that this was 'similar to the liberation of black slaves in American history'. The observation was seen as provocative and unnecessary.17

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In the official discussions during the visit, disagreement between the two sides on human rights issues continued. The Clinton Administration refused to lift all the sanctions which the US had imposed after the Tiananmen massacre. The US also refused to drop its support for resolutions condemning China in the UN Human Rights Commission in Geneva.

In the immediate aftermath of President Jiang's visit, the interchanges on human rights were seen as having been useful as an opportunity for each side to express its position. At their joint press conference both Presidents stated clearly that they had had a very detailed discussion on human rights issues, along with specific cases, including China's best known dissident figure, Wei Jingsheng. In President Jiang's statements there had been little sign of any flexibility on the Chinese side. However on 16 November, it was announced that Wei Jingsheng, who has been serving a 14-year prison term, would be released and allowed to leave for the US. Wei has suffered from a series of medical problems and concern had been expressed about his capacity to survive continuing imprisonment. It was also reported that another prominent dissident, Wang Dan, might also be released. While the release of Wei has not been viewed as presaging any substantial change in the Chinese government's attitude towards political opposition, the release so soon after President Jiang's visit may be seen as an indication that the Chinese government is actively interested to see further progress in the relationship to achieve its wider economic and strategic goals with the US.18

Additional cooperation

The official discussions between the US and China produced agreements in several significant technical areas. In the field of law, the two sides agreed to establish a joint liaison group on law enforcement cooperation and foreshowed cooperation on exchanges of legal experts, training of lawyers and judges, strengthening legal information systems and exchanging legal materials. Additional cooperation was also announced in science and technology, education and cultural exchanges.19

Australia's interests

Australia is an ally of the US, has a longstanding and extensive relationship with China and an extensive trade relationship with Taiwan. China in 1996 was Australia's fifth largest trading partner with trade (valued at $A 8 billion) having grown by over 15 percent annually since 1992; Taiwan in 1996 was Australia's sixth largest recipient of exports and our eight largest source of imports. Continuation of this pattern of growing trade clearly depends in part on maintenance of a stable regional economic and security environment, issues of abiding interest to Australia. Australia thus has a direct stake in the character of

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US-China relations and in the continuation of productive dialogue beyond the summit just held.

Australia has wished to pursue an independent policy towards China while maintaining its alliance with the US. There is an ongoing potential for Australia to be affected by discord or tensions in the US-China relationship and this has been evident recently. In 1996 Australia's relations with China came under strain as China reacted critically to some Australian actions which China perceived in negative terms. These actions included the public support given by Australia to the US position in the tensions in the Taiwan Strait in March 1996, the AUSMIN talks between Australia and the US which China perceived as indicating a shift in Australia's foreign policy stance further towards the US, and the visit of the Dalai Lama in September 1996.20

The tensions evident in 1996 have abated in 1997 and the progress in dialogue between the US and China from President Jiang's visit is a further contribution towards a positive climate for Australia-China relations. Nonetheless, along with managing a growing relationship with China, a key challenge for Australia will be to balance the demands of the Chinese connection while maintaining close ties with the US. In this context Taiwan is likely to continue to be a sensitive issue for Australia in its relations with both the US and China. In a recent public seminar (entitled 'Will China Divide Australia and the US?', in Canberra on 6 November) Professor Stuart Harris (Australian National University) suggested that Australia could well experience some policy tensions and conflicts of interest if tensions between the US and China were to rise. He argued that Taiwan is the most worrying potential problem for US-Australia-China relations. Both the US and Australia were now committed to a 'one China' policy based on peaceful resolution of the reunification issue by the parties themselves, but he added:

The question is whether the US administration can maintain this policy, and the status quo hold in the face of Congressional activity or with a new President... The policy challenge would arise crucially were the Taiwan issue not managed carefully by the US. Forces pulling Australia into Asia could attenuate bilateral ties with the US, particularly if the US finds it difficult to accommodate comfortably to China's rise, and if US-China relations deteriorate.21

An example of the potential sensitivities in Australia-US-China relations was provided in early November 1997 by reports of a request from the US for the US-based 'Radio Free Asia' to be allowed to utilise transmitters in the Cox peninsula, formerly used by Radio Australia. China would be highly likely to react very negatively to an Australian decision to facilitate broadcasts which the Chinese government would regard as critical and an interference in internal affairs. After consideration of the issue, the Australian government announced that this request would not be met.

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Conclusion

For the United States, now the world's sole superpower, relations with China constitute one of its most important foreign policy challenges. China's rapid growth is propelling it to major power status in both economic and political terms. The US has a wide range of interests - economic, political and strategic - about which it needs to engage with China. As the American specialist Professor David Shambaugh has argued: 'China and the United States are likely to be the two dominant world powers during the twenty-first century. It is imperative that these two continental giants learn to live and work together productively and cooperatively.'22

President Jiang's visit to the United States can be regarded as a positive step in the development of a difficult and sensitive relationship. Both sides indicated a strong interest in developing areas of accord and mutual interests, and they were also able to express disagreements publicly without risking a breach in communication. The significance of economic relations was highlighted during the visit and the specific areas of negotiation were productive. The discussions on arms control and non-proliferation will hopefully increase cooperation in these areas. The success of President Jiang's visit has clearly contributed to the basis for dialogue, which can be continued when President Clinton visits China in 1998.

The critical reaction accorded to President Jiang by a number of interest groups and some public officials also indicated that sections of US opinion are a long way from accepting the legitimacy of China as a 'constructive strategic partner' for the US. While the release of Wei Jingsheng is a positive step in the wake of the visit, China will continue to attract criticism on human rights and on other grounds in the US. The ongoing potential for such criticism was illustrated by the passage by the House of Representatives in mid-November of eight bills which included challenges to Chinese policies in a number of areas including human rights and arms control. The bills attracted strong support from both Republicans and Democrats and were condemned by a Chinese spokesman as a 'gross interference in China's internal affairs'.23 While House members were aware that the bills are unlikely to become law (because they would need to both pass in the Senate and surmount an almost certain Presidential veto),24 the bills illustrated continuing dissent in Congress with the Administration's policies of engagement with China.

The development and maintenance of a consensus to support a stable pattern of relations with China, particularly in Congress, remains a highly important challenge for the Clinton Administration and its successors if they are to be able to carry forward the progress made recently. If the Clinton Administration were not to be able to maintain support in the community and in Congress for its China policies, then further vital steps in the relationship, such as China's entry to the WTO along with the granting of permanent MFN status, might be obstructed.

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Endnotes

1. For a more detailed account of the recent development of US-China relations in the 1990s see Frank Frost, The United States and China: Containment or Engagement?, Current Issues Brief, No. 5, 1996-97, Department of the Parliamentary Library, Canberra, 20 August 1996.

2. 'Most Favoured Nation' status essentially confers normal trading rights to countries trading with the US. Under the Jackson-Vanik amendment to the Trade Act of 1974, MFN status can be extended to non-market economies only if the President grants a waiver certifying that the country does not impede emigration. This measure was adopted to encourage the Soviet Union to permit the emigration of Soviet Jews. China first gained MFN status under the Jackson-Vanik amendment in 1980 and its annual renewal was regarded as routine until the Tiananmen massacre in 1989. Since 1989, the annual renewal has often become the focus for contention: see Marcus Noland, US-China Economic Relations, Working Papers Series on Asia Pacific Economic Cooperation, Washington, Institute for International Economics, June 1996, p. 11.

3. David Shambaugh, 'The United States and China: Cooperation or Confrontation?', Current History, September 1997, pp 243-245.

4. Frost, op cit., p. 9.

5. Matt Forney, 'Hoist With His Own Petard', Far Eastern Economic Review, 13 November 1997.

6. 'Joint US-China Statement, 29 October 1997', pp. 1-2.

7. 'Transcript: Clinton-Jiang Joint Press Conference, 29 October 1997', p. 1.

8. 'Li tells Japan to steer clear of quarrel over Taiwan', International Herald Tribune, 13 November 1997.

9. The three joint communiques were signed by the US and China in 1972,1979 and 1982. The communiques established a 'one China' policy in which the US recognises Beijing as the legitimate government of China, and does not have official diplomatic ties with Taiwan. The US has been able to maintain extensive non-official links with Taiwan, including a major trade and investment relationship and has also supplied Taiwan with some weapons; for example, 150 F-16 fighters in a sale approved by President Bush.

10. 'Joint US-China Statement, 29 October 1997', p. 2.

11. 'Transcript: Clinton-Jiang Joint Press Conference, 29 October 1997', pp. 2,5.

12. International Herald Tribune, 30 October 1997.

13. Colleen Ryan, 'China trade setback', Australian Financial Review, 30 October 1997.

14. Jim Mann, 'East and West Still Divided Despite Summit', Los Angeles Times, 1 November 1997.

15. Cameron Forbes, 'Beijing Duck', The Weekend Australian, 1 November 1997.

16. Forney, loc cit.

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17. ibid.

18. Trevor Marshallsea, 'China releases its top dissident', Beijing, AAP, 16 November 1997.

19. 'Joint US-China Statement, 29 October 1997', p. 4.

20. For a detailed discussion of these issues see Stephen Sherlock, Australia's Relations with China: What's the Problem?, Current Issues Brief No. 23, 1996-97, Department of the Parliamentary Library, Canberra, 21 February 1997.

21. Geoffrey Barker, 'Radio interference imperils US alliance', Australian Financial Review, 7 November 1997.

22. Shambaugh, loc cit , p 245.

23. 'Beijing Assails U.S. Bills That It Calls "Anti-China"', International Herald Tribune, 12 November 1997.

24. Under the US Constitution, a Presidential veto can only be overcome by a two-thirds majority vote of both houses of Congress.