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Long-Term Effects of Standoff

Aired April 11, 2001 - 11:39   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
STEPHEN FRAZIER, CNN ANCHOR: Now looking ahead to some of the long-term effects of this resolved standoff now, we are joined by Betty Liu, who is southeast correspondent and now Atlanta Bureau Chief for Britain's "Financial Times."

And before that, you were in Taiwan as the Taipei bureau chief. Thank you for joining us again.

BETTY LIU, "FINANCIAL TIMES": Thank you.

FRAZIER: When we spoke on the weekend, we spoke specifically about trade, and you gave us some amazing numbers. Let's go through those again. The size of the trade back and forth between the two countries.

LIU: Sure. Well, obviously, over the last 10 years, U.S. and China trade has grown exponentially, and it's right now worth about $115 billion. Of course, about $100 billion of that is the China trading with the U.S. Essentially, the Americans buying goods from the Chinese. And a lot of that is sort of more low-tech goods, toys, shoes, apparel -- things of that sort.

FRAZIER: Now, you may have heard. Our Mike Chinoy was reporting that today's "People's Daily" -- or no, he said Thursday's "People Daily" in China is going to call for the sort of nationalist fervor that's been seen on the streets of China to be rechanneled into economic nationalism. Or in other words: "Get back to work, everybody." Why would they call for that?

LIU: Well, I think that throughout this standoff, they've been very worried about nationalism being turned against the Chinese government, essentially. That there might be the same kind of protest at the foot of the U.S. embassy that we saw two years ago with the NATO bombing of the Chinese embassy in Belgrade.

I think what they'd like to seat is the Chinese turn that frustration into sort of bringing China up, bringing it into more of a superpower. And in that sense, President Jiang Zemin has always talked about China rising as an economic superpower. And so the Chinese are looking at this as a way to sort of channel that energy into reforming the Sino-enterprises, and creating more jobs, and bringing China into the World Trade Organization, that sort of thing.

FRAZIER: There was a call, we heard, one of the officials at the foreign ministry saying that the United States promised it would do nothing to hinder the development of normal relations. And he specifically -- I don't think he mentioned it, but we all took that to mean trade and not barring membership into the World Trade Organization.

LIU: Right, certainly. And in June the decision by Congress is going to come up to extend normalized trade relations with China. They think that it's good that the standoff has ended quickly and peacefully. I think that that's going to convince some of the hard- liners not to, perhaps, make as much noise about extending those relations, as they might have before, if the standoff would have continued for weeks.

FRAZIER: Some hard-liners in the United States were going to large retailers, those who import lots of goods from China, such as Kmart, and saying there should be a boycott. Were you surprised at that?

LIU: I wasn't surprised at that. I think that would -- but I think that that's a bit a dangerous move, and I think it might have been a little bit preemptive, certainly because the U.S. right now is possibly going to go into recession. I think that if we were going to start to launch trade sanctions or ask companies to boycott, that would really certainly increase inflationary pressures here, and certainly not be good for U.S. companies.

FRAZIER: We discussed when last we spoke that some of the industries -- the state-owned industries you just made a reference to -- are actually closely associated with the military, which may have been using this entire episode to strengthen its position within the internal political scene of China. Because it has been resisting calls to modernize and to move forward...

LIU: I think there are certainly hard-liners in China, of course, and they are mostly affiliated with the military. And at the same time, the military owns a lot of the state-owned enterprises in China, so they're sort of at -- politically, they're more hard- lined, but economically, they have a lot at stake, too, in the economy and in reforming the economy. Also in having China join the World Trade Organization and promoting more trade between -- so they're sort of more in a quandary. But I think, politically speaking, the military wants to have one voice, which is more of a hard-line voice.

FRAZIER: Well, then, as we wrap up then, would you conclude, from how things seem to be moving right now, that the centrists in the government in China seem to have won out in this internal fight?

LIU: Well, I think certainly the leaning is more towards reform in China. And even President Jiang Zemin, he's from Shanghai -- he was the former mayor of Shanghai -- he's certainly considered more of a reform-minded leader than the others in the government. So I think that with this standoff having ended quickly like this it certainly speaks of the centrists' viewpoint, of having spoken out in China.

FRAZIER: Betty Liu from Britain's "Financial Times." Thanks for joining us once again.

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