BBC News Online: World: Americas

Clinton's battle on China policy

Speaking at the White House, Mr Clinton said the American policy of engagement with China was serving America's interests and that not to renew trading privileges for China would jeopardise American trade and security - including 170,000 jobs.

But he is preparing for a tough battle as his opponents fight on two fronts.

The debate over whether or not to extend China's Most Favoured Nation (MFN) status is one of the most bitter in the American political calendar.

This year it promises to live up to its billing with Mr Clinton's Democratic White House pitted against the Republican majority in the Senate.

Anti-Chinese sentiment is sweeping Capitol Hill as President Clinton prepares for his visit to Beijing later this month - when he will become the first US president to visit China since the Tiananmen Square massacre nine years ago.

Congress has been looking into the decision to allow a company, owned by one of President Clinton's biggest financial supporters, to launch a satellite on a Chinese rocket.

At the time Loral Space & Communications Ltd was being investigated by the Justice Department for unauthorised transfers of missile technology.

Loral chairman Bernard Schwartz was the largest individual contributor to the Democratic Party in 1996.

President Clinton's opponents are asking whether his $1m (£625,000) donation secured the permission.

The Senate Majority Leader, Trent Lott, said: "We are deeply troubled about the national security implications of satellite exports and related technology Transfer.

"We are concerned that Chinese ballistic missile capabilities may have been enhanced, either directly or indirectly."

Funding inquiry

Republicans are also investigating allegations that President Clinton's administration received funding for the 1996 presidential campaign from Chinese government sources.

A Democrat fundraiser says Liu Chaoying, a daughter of China's former top military commander General Liu Huaqing, illegally contributed to the campaign.

The president's supporters admit the controversies will not help the case for China's continued presence on the MFN list but they still expect it to be granted.

Improved relations

Commerce Secretary William Daley said the status has improved relations between the two countries and it should not be allowed to regress.

Mr Clinton's planned visit to China is a sign of those improved relations.

The Chinese Foreign Ministry spokesman Zhu Bangzao has called for America to take a positive view of China' s MFN status.

The official news agency, Xinhua, quoted him as saying that the annual argument hinders the smooth development of economic and trade ties between the two countries.

MFN allows goods from China to enter the US at the same low tariffs as goods from most other countries.

Opponents argue China's human rights record should rule it out of benefitting from the MFN system. Others argue MFN gives Washington leverage with China.

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