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Chris Yeung

John Kohut

BEIJING has warned Washington that revoking its Most Favoured Nation (MFN) trading status will not only render bilateral trade ''impossible'' but deal a body blow to Hong Kong and Taiwan.

  Chinese Vice-Premier and Foreign Minister Qian Qichen said yesterday that while Beijing could cushion the shock of the suspension of MFN, ''some countries and regions'', including Hong Kong, could not.

  Mr Qian also defended the big budget increase for the Army and attacked Taiwan President Lee Teng-hui's ''holiday diplomacy''.

   He made the remarks at a press conference at the National People's Congress two days after American Secretary of State Warren Christopher left Beijing without succeeding in wringing human rights concessions from his hosts.

  ''If the US side should decide to revoke the MFN status, it will be impossible for China and the US to trade,'' Mr Qian told 600 Chinese and foreign reporters.

  ''If that happens, surely the US and China will be affected. At the same time, places like Hong Kong, Taiwan and other regions and countries will also suffer losses.

  ''I think the US can bear such losses, and so can China, but I don't think the other regions and countries can bear that.''  In assessing the Christopher visit, Mr Qian said that while China and the US were still at odds over human rights concepts, the two countries had found ways around some specific points contained in President Bill Clinton's executive order governing extension of the MFN status this year.

    Responding to Mr Clinton's expression of disappointment over the Secretary of State's mission, Mr Qian said the visit had borne some fruit, while falling short of expectations.

   ''I'm also a bit disappointed with the results of the visit by Secretary Christopher because we had expected more results,'' Mr Qian said.

  ''I don't think the differences between China and the US in terms of our respective concepts of human rights have been reduced, but we can say that we have reduced some differences in terms of specific measures to handle these differences,'' he said.

    Mr Qian hinted that Beijing was able at least in a roundabout way to meet a number of points raised in Mr Clinton's executive order.

   ''China is under no obligation to implement the executive order of the US President,'' Mr Qian said. However, some points of the order ''posed no problems'', he said.

    For instance, the export of goods made by prison labour had been resolved. ''It's a simple matter because China is a big market. It doesn't have to export its prison labour products to the US,'' he said.

    The Vice-Premier also said there was no problem with freedom of emigration, as required in the executive order, but that the major obstacle was US restrictions on the number of Chinese allowed to travel to America. ''How can you say this is a condition?'' Mr Qian said.

    He said both sides were making efforts to avoid the deterioration of relations.

  While contacts would be maintained, the possibility of another meeting with Mr Christopher before June, when Mr Clinton must decide whether to renew China's MFN status, had not so far been raised, Mr Qian said.

    Yesterday, the Vice-Premier also defended the 20 per cent budget increase that the State Council awarded the People's Liberation Army, claiming the figure testified to the fact that China did not seek hegemonism.

  Mr Qian argued that the purchasing power of the 52.04 billion yuan (HK$46.21 billion) earmarked for defence this year had not increased due to hyperinflation.

  This year's total defence expenditure took up about 11 per cent of the total annual expenditure, he said. The level was similar to that in the previous years.

  ''On the surface of it, there is an increase. But it is in effect a result of inflation,'' said Mr Qian.

  The share of military outlay was only 1.7 per cent of the forecast total gross national product of the country in 1994, he said, adding that was even a bit lower than corresponding figures in the past.

  Mr Qian said the actual value of the budget would be similar to that of last year's if the expenditure were measured in US dollars.

  He cited the defence expenditures of the US and Japan when he said China's army budget was ''disproportionately'' small.

  ''The figures testified to the fact that China has concentrated on its economic construction. It does not seek to become a super military power,'' he said.

  On the Taiwan issue, Mr Qian accused the Kuomintang Government of taking advantage of the good intentions of Asian nations to promote quasi-diplomatic links through ''holiday diplomacy''.

  He was referring to the ''holiday trips'' made by Taiwan President Lee Teng-hui and premier Lien Chan to some Asian countries in the past few months.

  ''No matter what the arguments are, the purpose of the visits is clear. They have political intentions,'' Mr Qian said. ''Taiwan has made use of [the trips] to pursue the 'one China, one Taiwan', 'two Chinas' policy.

  ''This is against the world trend and against the wish of the people across the Strait,'' he said.

   He said the new law on the protection of Taiwan investments on the mainland passed early this month was more comprehensive and would give greater protection to the booming Taiwan investment in the country.

  Mr Qian did not rule out the possibility that non-governmental bodies from the two sides would sign an agreement to protect investments.

  ''But the conditions are not yet available. It's mainly because the present communication is one-way,'' he said, apparently referring to the ban on direct Taiwan investments in the mainland.

  On relations with Pretoria, Mr Qian said formal diplomatic links between the two countries would be put on Beijing's agenda after the general elections in South Africa next month.

  The two countries already had non-governmental links, he said.

  The Vice-Premier spoke warmly of the upcoming visits to Beijing by Prime Minister Morihiro Hosokawa of Japan and Prime Minister Edouard Balladur of France.

  Mr Hosokawa's trip this weekend ''will play a very important role for further development of Sino-Japanese relations and co-operation in economic fields'', Mr Qian said.

  The Balladur trip next month, coming nearly two years after Franco-Chinese relations soured in the wake of French arms deals with Taiwan, was a ''major event'', he said.



Warning of 'body blow' if MFN lost