US-CHINA RELATIONS: SHORT-TERM PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00310R000100190002-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 27, 2016
• Document Release Date: September 7, 2010
• Sequence Number: 2
• Publication Date: July 1, 1984
• Content Type: REPORT

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Directorate of Secret-
Intelligence
US-China Relations:
Short-Term Prospects
A. LM ue AISNIt
sue
EA 81-101.35
.July 1981
cQ" 236
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virectorate of .7C1fCl
IF r -4-11:
.
ence
US-China Relations:
Short-Term Prospects
This paper was prepared by Office of
East Asian Analysis. Comments and queries are
welcome and may be directed to the Chief, China
Division, OEA,
Secret
EA 84-101:15
July 1984
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Secret
US-China Relations:
Short-Term Prospects)
Key Judgments Beijing since the spring of 1983 has begun implementing a basic decision to
Information available improve relations with the United States. Chinese leaders-who are
as of 15 June 1984 acutely conscious of China's relative military weakness and absorbed by
was used in this report.
China's ambitious modernization program-want to retain the United
States as a strategic counterweight to the USSR and gain greater access to
US technological and economic resources.
We believe Beijing will subordinate criticism of US policy toward Taiwan
and other bilateral issues at least through the end of 1984 in order to build
a more stable, working relationship with the Reagan administration.
Beijing intends-in our view-to build on the positive atmosphere devel-
oped during the visits of Premier Zhao and President Reagan and will
probably work to prevent US-China relations from becoming entangled in
the US election campaign.
There are limits to Beijing's ability to expand relations, however. Beijing
does not want to undermine its ability to manage the Soviet threat through
negotiations or to pursue expanded ties with the Third World and touchy
associates, such as North Korea, by identifying too closely with Washing-
ton. As China does improve relations-especially military relations-with
the United States, it will take even greater care to preserve the appearance
of "independence" in its foreign policy.
During the next six months, we believe China will gradually attempt to
strengthen security ties with the United States by:
? Continuing steps toward the purchase of defensive weapon systems.
? Broadening discussions of strategic issues.
China will continue to press for a greater US role in economic moderniza-
tion through increased US investment in Chinese enterprises, greater
access to US technology, and an end to alleged US trade "discrimination"
against China. As the United States and China broaden their economic
ties, however, Chinese expectations may exceed the ability of the United
States to fulfill them. The Chinese may express their disappointment
publicly. We expect the Chinese to press for US ratification of the Nuclear
Cooperation Agreement, for instance, and to react-sometimes harshly-
to Congressional statements doubting Chinese promises on nuclear prolif-
eration. Nonetheless, we do not believe that the Chinese will risk damage
to the overall relationship by pursuing the issue too aggressively.
iii Secret
EA 84-10135
July 1984
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On Taiwan, China has taken a less aggressive position and, we believe, will
continue to insist only that the United States adhere to the Joint
Communiques and accelerated reduction of US arms sales to Taiwan.
Beijing will nevertheless remain particularly sensitive to signs that Wash-
ington is improving the quality or quantity of arms sales-directly or
through third countries-and to remarks by US leaders on policy toward
Taiwan that China interprets as violating the US commitment to a one-
China policy. We believe that China will publicly protest any US arms
sales to Taiwan, though in a relatively low-key manner.
We believe that internal Chinese political factors will play only a minor
role in US-China relations in the next six months. Some senior leaders
apparently do not share Deng Xiaoping's enthusiasm for relations with the
United States, but we have no evidence of significant opposition.
Although Chinese leaders will be constrained by the existing strategic
situation, the death of Deng Xiaoping would probably lead to a period of
less activity in bilateral relations while a new leadership begins to assert
itself.
Over the longer term, a fundamental shift in international pressures on
China or altered domestic political and economic priorities would almost
certainly prompt China to review its approach to the United States. Even
so, we believe that, as long as China remains primarily committed to
economic modernization and faces an expanding Soviet threat, Beijing's
need for a security tie to Washington will remain.
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Secret
US-China Relations:
Short-Term Prospects
After three years of strongly pressing the Reagan
administration for concessions on Taiwan and other
matters, Chinese leaders have made a basic decision
to improve relations with the United States. Beijing
has elected to subordinate criticism of US policy
toward Taiwan and other divisive issues in the interest
of building a more stable, working relationship-
including improved economic and military ties. For at
least the short term-through the end of 1984-we
believe the Chinese intend to build on the positive
atmosphere developed during the last year and will
work to prevent US-China relations from becoming
entangled in the US election campaign.
Beijing has changed tactics-in our view-primarily
because it feared that further decline in US-China
relations would undermine Chinese security and dip-
lomatic leverage in the face of the continuing Soviet
military buildup. Chinese leaders are well aware of
China's relative military weakness and the need for
time to complete military modernization. They there-
fore want to retain the United States as a strategic
counterweight and to cautiously increase military ties.
China's long-term need for US and Western economic
and technical assistance provides them with addition-
al incentives to seek a closer US connection.
Chinese leaders also believe they established better
personal relations with President Reagan and key
members of his administration during the visits of the
President and Premier Zhao.
Premier Zhao was particularly pleased
by the reception he received in Washington-and
regarded it as a significant indication of the renewed
importance the administration attaches to relations
with China. Chinese leaders indicated after the Presi-
dent's trip in April that they believed it had been a
success and that the President had reassured them on
the US position on sensitive issues such as Taiwan.
the appearance of "independence" in its foreign poli-
cy. We expect the Chinese to take further steps
toward the purchase of US military technology and
weapon systems-following the June 1984 visit of
Defense Minister Zhang Aiping and during succeed-
ing visits by military delegations-and to broaden
their discussions of strategic issues with US policy-
makers. The Chinese will almost certainly take ad-
vantage of the visits of senior US military officials,
such as General Vessey, to do so. Beijing probably
intends to consult the US increasingly on matters of
mutual strategic interest-such as arms reduction
negotiations or Southeast Asia.
Publicly, we expect that China will underline for
Moscow its evolving security cooperation with the
United States but will continue to preserve an air of
ambiguity about the relationship-in order not to
precipitate overly hostile Soviet reaction nor to alien-
ate friends and associates in the Third 'World and
elsewhere.' While sending Defense Minister Zhang
Aiping to the United States in June, for example,
Beijing indicated its intention to send Vice Foreign
Minister Qian Qichen to Moscow for talks and had
Premier Zhao publicly express China's support for
closer ties with Europe
Chinese leaders have indicated they will continue to
urge the United States to provide greater long-term
assistance for their ambitious economic moderniza-
tion program. Beijing continues to stress its interest in
increased US investment in Chinese enterprises,
greater access to advanced US technology, conces-
sionary financing for joint ventures and industrial
projects, increased funding from international finan-
cial organizations in which the United States plays a
prominent role, and an end to alleged US trade
' Beijing also wants to preserve an image of independence in its
foreign policy-and avoid overly close identification with Washing-
ton-to further its relations with North Korea, East European
nations with whom China is seeking closer ties, including Romania,
Yugoslavia, and East Germany, and the socialist and Communist
Chinese Expectations
During the next six months, we believe China will
gradually attempt to strengthen its security ties with
the United States while striving not to compromise
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"discrimination" against China. During the period in
question, the Chinese will probably continue to press
discreetly but persistently for US action on economic
issues raised during the President's visit, such as
technology transfer and the amendment of some US
trade laws. We expect Beijing to also seek US approv-
al of the Nuclear Cooperation Agreement, but we
believe that it is prepared to wait rather than risk a
major political controversy over the issue this year.
On Taiwan, Beijing has retreated to a baseline posi-
tion that asks for US adherence to the joint communi-
ques and accelerated reduction of arms sales to
Taiwan. Beijing will be particularly sensitive to signs
that the United States is upgrading the quality or
quantity of arms it sells to Taiwan, and to remarks by
US leaders on policy toward Taiwan that China
interprets as violating the US commitment to a one-
China policy.
Taiwan has not been a
fractious issue in i ate~tions recently because
the United States has not taken actions that require
Beijing to react.
China's Concern About Its Strategic Position
Chinese leaders demonstrated concern in early 1983
that their "independent" stance in foreign policy
threatened to jeopardize long-term Chinese security
and development interests. In the two preceding years,
angered by perceived US slights over Taiwan and
encouraged by the increasingly strong US response to
the Soviets, Beijing had set in abeyance its interest in
joining the United States in an anti-Soviet "united
front." Chinese leaders instead strongly pressed the
United States on bilateral disputes, stressed China's
fundamental identity with the Third World, and
revived political consultations with the Soviet Union.
Beijing was in part exploiting a perceived US need for
good relations with China, and Chinese leaders
judged that Beijing's new "independence" would in-
crease its leverage within the US-China-USSR strate-
gic triangle.
We believe, however, that by early 1983 Chinese
leaders realized they had miscalculated. Talks with
the Soviets had failed to slow the pace of the Soviet
drive for military and political dominance in East
Asia. At the same time, Chinese leaders were met by
US firmness on bilateral issues and were concerned
that Washington had downgraded China's strategic
value. They were worried in particular that growing
US military ties with Japan, South Korea, and
ASEAN-without taking Chinese interests into ac-
count-could leave China strategically isolated
against the USSR in East Asia. Further, according to
the Embassy in Beijing, Chinese assessments indicat-
ed that the President would win reelection and that
the bilateral relationship could continue to be trou-
bled well into the Reagan administration's second
term. Thus, we believe, Chinese leaders began to
reassess their ties with the United States.
Increased Chinese concerns since then about the
growing Soviet military and political threat in East
Asia have also pushed China closer to the United
States. A recent series of People's Daily articles, for
instance, detailed the buildup of the Soviet Pacific
Fleet, the strengthening of Soviet forces stationed at
Cam Ranh Bay, and the expanding deployment of
SS-20 intermediate-range missiles in Siberia.
In unusually strident language, the Chinese media
recently accused the Soviet Union of supplying mas-
sive military and economic aid to Vietnam for "strate-
gic reasons" and stated that unprecedented Soviet-
Vietnamese joint naval exercises in the Tonkin Gulf in
March were aimed at encouraging Vietnamese "ag-
gression and expansion" against China.
Chinese leaders have concluded that Moscow's intran-
sigence over security disputes with China will proba-
bly continue, despite periodic Sino-Soviet talks. Deng
Xiaoping told an unofficial US delegation earlier this
year that the Soviet leadership has entered a long
transitional period during which Moscow will become
more "rigid" and even less willing to compromise with
China
Chinese officials noted that the Soviets had warned
the Chinese Government they would cancel the visit
of First Deputy Premier Arkhipov if the President's
visit went well After
the cancellation, a Foreign Ministry official com-
mented that China would not permit the Soviets to
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the growing Soviet threat was
enough to dampen the leadership's desire for a "rap-
prochement" with Moscow and to underline its inter-
est in ties with the United States, which, unlike the
United States:
? To provide an undergirding for bilateral relations
during times of political stress.
? To create leverage within the United States.
? To demonstrate tangible benefits from good rela-
tions with the United States to skeptics in China,
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USSR, was not a threat to China.
During the unprecedented exchange of visits over the
past year, the Chinese gradually indicated an increas-
ing interest in reviving strategic ties z with the United
States. During the visit of Secretary of Defense
Weinberger last September, Chinese leaders began to
discuss the purchase of US military technology and
weapon systems. Premier Zhao affirmed China's in-
terest during his visit to Washington in January and
later during the President's visit to Beijing in April.
And Defense Minister Zhang underlined China's
intent to purchase specific advanced weapon systems
during his June 1984 visit.
The Chinese also revived a close, detailed dialogue
with the United States on Soviet strategy in East Asia
and globally. During the President's visit, Chinese
leaders pointed to the Soviet threat to China as one of
several areas in which US and Chinese strategic
interests converge. Following the visit, they attempted
publicly to convey the impression that the United
States approved Chinese military activity against
Vietnam. Nonetheless, China continues to criticize
some US actions in the Third World and Europe that
it believes permit the Soviets to gain advantage (see
inset).
The Importance of Economic Ties
Chinese leaders regard closer economic ties with the
United States as vital to the long-term success of
China's ambitious modernization program. As senior
policy adviser Huan Xiang indicated last August,
China wants continued access to what it believes will
be the world leader in high technology for a long time.
Chinese leaders also attach broader political signifi-
cance to building stronger economic ties with the
' By strategic ties, we mean a range of relations with the United
States that directly or indirectly strengthen China's position against
the Soviet threat. Most concretely, these involve US sale of arms,
military equipment, and dual-use technology to China's defense
industries. More broadly, they concern bilateral consultations that
give China a clearer understanding of the US position toward
Moscow, allowing Beijing to more effectively adjust its own
Chinese leaders have ceased for now to elevate eco-
nomic disputes to a level that would sour overall
bilateral relations. During the past year, they have
sought to emphasize the potential for bilateral eco-
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nomic relations while continuing to press for greater
US concessions. Minister of Foreign Economic Rela-
tions and Trade Chen Muhua, for instance, told
Xinhua news agency in April 1984 that "many obsta-
cles and difficulties" remain in bilateral economic
relations. But she also took pains to emphasize the
considerable development of bilateral trade, US in-
vestment in Chinese industries, and the removal of
bureaucratic impediments to further development by
both countries.
Chinese leaders have been cautiously optimistic about
the administration's decision to liberalize technology
transfer to China. They have publicly hailed the US
action as a significant step forward in bilateral rela-
tions, although they complain about continuing im-
pediments-most notably involving COCOM~
according to the Embassy in Beijing.
Deng Xiaoping underlined the political importance of
US economic concessions when he remarked last
August that technology transfer is the key to the
Chinese determination whether China and the United
States are "good friends" or just "ordinary friends,"
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Beijing began to hint at its desire for better strategic
ties and the amelioration of bilateral disputes in
conversations with US officials and other foreign
visitors in 1983. In May, the Chinese Ambassador to
the United States tied increased US willingness to
transfer technology to China to Chinese acceptance of
current US policy toward Taiwan. Subsequent US
gestures to China over technology transfer, an-
nounced during the visit of Commerce Secretary
Baldridge in late May, opened the way for the
unprecedented series of high-level visits. During the
visit of Secretary of Defense Weinberger in Septem-
ber, the Chinese indicated revived interest in US-
Chinese military exchanges, dormant for several
years because of differences over Taiwan.
A major test of Chinese resolve in seeking closer
strategic ties came last November. The leadership
met-sifter two Congressional resolutions appeared
to call into question US support for a one-China
policy-to decide whether to cancel the visit of
Premier Zhao.
Chinese leaders decided that China must
improve relations with the United States by sending
Premier Zhao-in spite of disagreements over
Taiwan policy. Official guidance later justified the
decision in general terms by noting that the visit
would improve China's position in the triangular
relationship and its overall international influence.
Chinese treatment of Premier Zhao's January 1984
visit to Washington and President Reagan's visit to
Beijing this spring further defined China's growing
interest in developing cooperation on parallel strate-
gic matters. In Washington, Zhao told leaders of
Congress that China could not accept "comprehensive
strategic cooperation" with the United States but
indicated a genuine interest in arms purchases from
the United States. At the same time, Zhao noted the
"great strategic importance" of US-China relations
and termed good bilateral relations "an irresistible
trend of history. "
In Beijing, despite their censorship of the President's
remarks on the Soviet Union, the Chinese under-
scored the Soviet threat to China and points of
parallel US-China strategic interest. They also tried
to convey an impression of US approvalfor China's
escalated military action against Vietnam-including
an unprecedented naval exercise in the South China
Sea-in April and May 1984.
Beijing timed the action to coincide with the Presi-
dent's visit. The Chinese media highlighted an unusu-
al separate meeting between Chinese Defense Minis-
ter Zhang Aiping and military officials in the
President's party-at which the Chinese privately
rformed the Americans of Chinese intentions toward
Vietnam, according to the United States military
attache. Zhang publicly indicated an interest in a
carefully calibrated increase in military ties during a
visit to Washington in June.
Despite basic agreement on strategic issues, Chinese
leaders continue to place different emphases-public-
ly and privately-on policy toward INF, the Third
World, and other areas. They see the United States
overplaying its hand to the ultimate benefit of the
USSR. Chinese leaders now argue, for instance, that
the United States should attempt to reach an arms
China supported the right of the
United States to deploy in the face of the buildup of
Soviet nuclear forces in Europe, but believes that US
failure to draw the Soviets back to the negotiating
table by halting deployments now may provide the
Soviets with an opportunity to drive a wedge between
the United States and NATO.
the United States for its support of "unsinkable
aircraft carriers, " such as Israel and South Africa,
that alienate natural opponents of the Soviets in the
Third World-and create opportunities for Soviet
meddling. They also publicly oppose the handling of
US policy in Central America and the Middle East-
despite agreement with the anti-Soviet thrust of US
policy there.
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Premier Zhao meanwhile has repeatedly sought to use
the lure of the China market to build a constituency
within the US business community and the adminis-
tration for better relations. Last November, for exam-
ple, Zhao extolled the merits of greater US invest-
ment in Chinese industry to US governors but
lamented that expanded trade would not be possible
until the US removed various obstacles. In the same
vein, while expressing a desire to purchase US equip-
ment, Chinese officials have told US nuclear industry
executives that China would have to turn to Europe if
the United States was unable to secure ratification of
the Nuclear Cooperation Agreement this year.
Chinese leaders have also explicitly linked US inten-
tions to improve political relations with China to
better opportunities for US businessmen to trade with
China. Zhao underlined this point while in the United
Taiwan
US policy toward Taiwan remains the most conten-
tious issue and is the one issue on which the bilateral
relationship would be most likely to falter during the
rest of this year. Nonetheless, we believe that Beijing
is willing to set aside its more extreme demands on
Taiwan for better relations with Washington-at
least through the November elections. Beijing will
probably claim for domestic consumption that its
posture is justified by significant US concessions.
Beijing's public treatment of US policy toward
Taiwan last year was laced with accusations that the
United States favored a "one-China, one-Taiwan"
policy and continued to violate the August 1982 joint
communique. Chinese commentary during this period,
however, also included calls for strengthening
"mutual trust" and improving relations. And Chinese
officials-such as the Ambassador in Washington last
May-sometimes hinted that Beijing would be willing
to lessen its criticism of US policy toward Taiwan if
the United States were to strengthen relations in other
areas.
Since the exchange of visits between Premier Zhao
and President Reagan, Beijing's public treatment of
US-Taiwan policy has changed markedly. Recent
authoritative media commentary has not emphasized
past demands, threats, or sharp accusations that the
United States is not fulfilling the joint communiques.
Indeed, the recent comment by a Foreign Ministry
spokesman that the United States had violated the
quality stipulation of the joint communique by selling
C-130 aircraft to Taiwan was mild. Instead, Chinese
leaders for the first time have publicly accepted US
claims that the United States is reducing arms sales to
Taiwan and have urged that the pace of reduction be
accelerated. They have not called upon the President
to seek the recision of the Taiwan Relations Act-as
they did in the past-but ask simply that it be
managed in a low-key way that least harms Chinese
interests
Privately, Chinese leaders have acknowledged since
early this year that they believe that the "basic
orientation" of US-China relations is set and that
further US concessions on its policy toward Taiwan
realized that the United States would riot abandon the
idea of "one-China, one-Taiwan"-no matter who sits
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continue to supply arms to Taiwan. ~ 25X1
Meanwhile Beijing has launched an invigorated effort
to convince Taiwan-and overseas Chinese-that its
reunification proposals are reasonable. While in the
United States, Premier Zhao appealed to Chinese-
American audiences in San Francisco and New York
to accept Beijing's efforts toward Taiwan. Beijing has
publicly urged Washington not to "interfere" in the
process (through stepped-up arms sales, for example)
though it has not pressed for US support.
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Other Political Issues
With the exception of US policy toward Taiwan, the
Chinese have shown greatest sensitivity about their
status in the bilateral relationship. Zhao Ziyang told
the US delegation in February that China resented
the alleged US treatment of it as a "junior partner" in
bilateral relations and likened some US actions with
those of the Soviets toward China during the 1950s.
The Chinese indicated during President Reagan's trip
that the President had alleviated their concerns on
this score. On the President's last full day in Beijing,
for instance, Premier Zhao expressed his appreciation
at the "spirit of mutual respect and mutual benefit"
that the President "repeatedly emphasized" while in
China.
Nonetheless, despite US assurances, the Chinese con-
tinue to cling to residual fears that the United States
will use improved bilateral relations to China's disad-
vanta e.
China had censored the President's remarks in
Beijing on the Soviet Union because China did not
want to be "used" against the Soviets. And some
Chinese officials have suggested that the administra-
tion was improving relations, including military sales
to China, partly to reduce Chinese complaints about
the sale of weapons to Taiwan.
Chinese Domestic Politics
We believe that internal Chinese political factors will
play a relatively small role in US-China relations over
the course of the next six months. Beijing's decision to
improve its relations with the United States was based
primarily, we believe, on its assessment of China's
strategic and development needs. Unlike domestic
policy, China's foreign policy is formulated by a small
group of senior leaders and is not usually debated
beyond the Politburo. China's current policy toward
the United States reflects the views of Deng Xiao-
ping-China's dominant leader and primary strategic
thinker. Most other leaders appear to support it,
though there may be some disagreement over the pace
of development of the relationship. We have no ?
evidence to suggest that particular groups in the
leadership have vigorously opposed it.
Domestic political arguments, however, could affect
the tone of Chinese foreign policy statements or
inflame ongoing bilateral disputes. A People's Daily
commentary during the height of the spiritual pollu-
tion campaign last fall, for instance, contained some
strident anti-American overtones. The antiforeign ele-
ment of the campaign was short lived and was
thoroughly discredited by the leadership, however.
Although Hu Yaobang's remarks threatening the
cancellation of Premier Zhao's trip to the United
States were made at the height of the campaign, there
is no evidence that domestic political considerations
were behind Hu's comments.
The strongest supporters of relations with the United
States, with the exception of Deng himself, are repre-
sented most prominently by Premier Zhao and those
most deeply involved in the management of China's
modernization program. Senior officers of the Army's
General Staff Department and Defense Minister
Zhang Aiping also appear to be strong supporters of
improved US-China relations, especially the strategic
and defense elements. In fact, on the eve of the
President's trip to China, Zhang publicly identified
himself with emerging US-China defense coopera-
tion-which he dated to the visit of Secretary of
Defense Weinberger.
Party General Secretary Hu Yaobang has not clearly
articulated his views on relations with the United
States and probably is still content to follow Deng's
lead on foreign policy. Hu is now becoming personally
identified with China's strategic opening to the West,
especially Japan, however, and is beginning to play a
greater role in US-China relations. Although Hu has
expressed some ambivalence about the United States
in the past and was the chief articulator of China's
"independent" foreign policy line, he has increasingly
lent his support to the strategic aspects of bilateral
relations. He recently told Japanese reporters that he
supports Chinese efforts to buy United States military
technology
Leaders such as Politburo Standing Committee
members Chen Yun and Li Xiannian-who have been
critical of United States policy toward Taiwan and
other aspects of relations with the United States over
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Octr. ?
the past two years-appear to support China's recent
initiatives. Li Xiannian told the President in April
that China supports US policy in East Asia and, at
the end of the visit, publicly pronounced it a "suc-
Ministry officials dispute the accuracy of US figures,
the quality or quantity of US weapons sold to
Taiwan-either directly or through third countries.
Although China has formally accepted the US posi-
tion that it is reducing arms sales to Taiwan in accord
with the August 1982 communique, some Foreign
Beijing
The occasional opposition of some senior Army and
party conservative leaders, like Chen Yun, to relations
with the United States stems primarily from their
concern with the byproducts of the opening to the
West. These leaders worry about the infatuation of
Chinese youth with Western ideas and material goods
and the consequent deleterious impact on public order
and revolutionary purity. Some of them, such as
Politburo member Wei Guoqing, have lost key posi-
tions from which they could have rallied support
against the open-door policy, however.
Continuing Irritants
We believe that China will carefully nurture the
positive momentum in US-China relations for the rest
of this year and will take special care to preserve the
strategic basis of its relations with the United States.
Chinese leaders will try to confine unanticipated
disputes over bilateral issues and to deal with them in
a way that will not sour relations as a whole. Nonethe-
less, there remains a distinct but low-level chance that
accumulated friction over US policy on such sensitive
issues as Taiwan, Chinese nuclear proliferation policy,
or Korea could raise bilateral tensions substantially.
The Chinese remain extraordinarily sensitive to per-
ceived shifts in US policy toward Taiwan. They will
probably react strongly to public statements that
appear to question the US commitment to a one-
China policy, to support Taiwan's independence in
any form, or, to a lesser extent, to reaffirm the role of
the Taiwan Relations Act in the formation of US-
China policy. The Chinese will probably respond more
temperately to Congressional statements on these
issues-unless the administration is seen as not oppos-
ing them vigorously.
Similarly, the Chinese would probably react to com-
pelling evidence that the United States is increasing
would probably be quick to seize upon indications that
the United States has violated China's interpretation
of the August communique-as it did :recently with
the sale of the C-130 aircraft to Taiwan. The severity
of China's reaction would probably be directly related
to the extent of US actions and the publicity they
receive.
Chinese leaders appear to be concerned that the
Korean Peninsula could become an issue in US-China
bilateral relations as well. Chinese officials have
indicated privately that China has little leverage with
the North Koreans and worry that instability on the
peninsula could lead to Soviet inroads and an unwant-
ed US-Chinese confrontation there. The Chinese are
especially concerned that North Korean leader Kim
11-song could strike agreements with the Soviets lead-
ing to greater Soviet involvement on the peninsula-
and more intense pressures on the Chinese to woo the
North. In this case, China would probably feel con-
strained to adopt a more publicly anti-US position on
Korea, including stronger calls for withdrawal of US
troops from South Korea or greater insistence that the
United States participate in tripartite talks on Korean
reunification.
statements.
The Chinese appear to have had high expectations
that the United States would soon ratify the Nuclear
Cooperation Agreement that was initialed in Beijing
last May. Nonetheless, China remains very sensitive
about disclosures-in the media or before Congress-
that it may have transferred nuclear technologies to
other countries. Should the administration be buffeted
by strong Congressional or other criticism of China's
nuclear proliferation policy, China may react defen-
sively. We believe, however, that Chinese leaders will
want to limit damage done by debate over China's
nuclear policy-though they may express their asper-
ity over it to US officials privately or through public
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Declassified in Part - Sanitized Copy Approved for Release 2012/01/19: CIA-RDP85T00310R000100190002-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/01/19: CIA-RDP85T00310R000100190002-4
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Other possible economic irritants include:
? Technology Transfer: The Chinese are pressing the
United States to remove China from COCOM
restrictions, or, at a minimum, to remove additional
COCOM restrictions from sensitive US technol-
ogies-such as fiber optics communication technol-
ogy. China hopes to sign a Telecommunications
Protocol with the United States in the fall that
incorporates some of these wishes. If that effort
fails, Beijing probably will moderately protest US
reluctance to accommodate Chinese interests.
? Textiles: The Chinese are pressing the United
States to allow greater imports of textiles and have
expressed resentment of the administration's "un-
reasonable" restrictions. If restrictions on Chinese
textiles go up markedly this year, China would
certainly protest-though probably also at a low
level.
Although Deng Xiaoping appears to be in good
health, his death could also have a significant impact
on US-China relations in the near term. If Deng
Xiaoping dies within the next six months, an interim
leadership-probably led by Party General Secretary
Hu Yaobang-would most likely be absorbed by
efforts to construct a new leadership and would not be
in a position to implement initiatives in foreign af-
fairs. Although a new leadership would continue to be
bound by the existing strategic imperatives, it might
feel constrained to adopt a more nationalistic posture
or to place greater stress on China's foreign policy
"independence.'
Declassified in Part - Sanitized Copy Approved for Release 2012/01/19: CIA-RDP85T00310R000100190002-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/01/19: CIA-RDP85T00310R000100190002-4
Secret
Declassified in Part - Sanitized Copy Approved for Release 2012/01/19: CIA-RDP85T00310R000100190002-4