CHINA'S offer to discuss human rights conditions, release ill dissidents and mediate on the North Korea nuclear weapons crisis will increase the likelihood of unconditional renewal of Most Favoured Nation (MFN) status by the United States, according to Paul Cheng, chairman of the Hong Kong General Chamber of Commerce. Speaking after a business mission to Washington last week, Mr Cheng said he expected President Bill Clinton to renew China's MFN trading status for another year from June 3, but that the renewal was likely to include conditions. He said there was still a chance for unconditional renewal, but Beijing would have to offer to help in certain areas to send more positive signals to Washington. ''For example, they could continue to release dissidents suffering from ill-health, and refrain from putting any more dissidents in jail,'' he said. ''They could make some supportive statements to the US over the North Korean nuclear issue, and they could pledge to continue the dialogue on human rights after the MFN renewal.'' In addition to Mr Cheng, the business mission included Raymond Chien, chairman of the Federation of Hong Kong Industries, Lui Ming-wah of the Chinese Manufacturers Association, and Philip Wong of the Chinese General Chamber of Commerce. Mr Cheng said there had been a significant change of sentiment within the US Administration and on Capitol Hill. ''The feeling now is that the US should adopt a policy of positive engagement with China in trade and other areas, and that MFN and human rights should be de-linked,'' he said. ''This has been brought about to a large extent by the efforts of the US business lobby, which this year has been strong and well-orchestrated, but also by the increasing number of US senators, representatives of Congress and their aides, who have visited China and Hong Kong to gain first-hand knowledge of the situation.'' Mr Cheng said he was cautiously optimistic about the renewal of MFN for China, but said Mr Clinton still faced a serious dilemma over the issue. ''He has to find a way to de-link the issues [MFN and human rights], while appearing not to climb down from his campaign promises,'' he said. ''That will take time, and there seems little chance of it happening before June. If he renews MFN without conditions, he will again find himself in a difficult political position.'' However, Mr Cheng said a partial renewal of China's MFN status would not be practical and would prompt some form of retaliation from Beijing. He said a concept was being floated in the US for the establishment of a bilateral human rights commission between Beijing and Washington to act as a channel for both sides to discuss the human rights issue. He said it seemed to be a good idea and might help to pave the way for the de-linking of MFN and human rights. He said the pending visit of Chinese Vice-Premier Zou Jiahua to Washington might provide an opportunity for China and the US to improve understandings on the matter. He added that he would welcome a meeting between Mr Clinton and Mr Zou to discuss MFN and other issues. In lobbying US politicians, the Hong Kong mission last week focused on freshmen and those on the House Foreign Affairs Committee, the House Ways and Means Committee, the Congressional Task Force on US-China Policy and the powerful Senate Finance Committee. Members of the US Administration who the mission met included Assistant Secretary of State for East Asian and Pacific Affairs Winston Lord; Principal Deputy Assistant Secretary of State for East Asian and Pacific Affairs Peter Tomsen; and Director for Asian Affairs Robert Suettinger.