THE NEW YORK TIMES

Wednesday, December 4, 1996

Foreign Affairs

---------------

THOMAS L. FRIEDAM

FED UP

Washington - This was a good foreign-policy week for both Mickey Mouse and Ronald McDonald. It started with the Walt Disney Company's rejecting China's demand that it scrap movie Disney is co-producing about the life of the Dalai Lama, the exiled Tibetan religious leader, whose drive for Tibetan rights is the bane of Beijing. Less well publicized, but not

less important, was the deal struck this week between McDonald's and

the Beijing authorities over the world biggest McDonald's, next to Tiananmen Square. For two years McDonald's resisted an arbitrary order

by the Beijing government that McDonald's remove the restaurant, despite a 20-year lease, because the city wanted to erect a lucrative commercial complex in its place. After standing up to Beijing, McDonald's finally won compensation for its move and the right to open at least two more outlets along an adjacent street. There are some lessons here worth reflecting on. To begin with, both of these cases remind us that for too long the American business community in China has behaved as if human rights were two different things, and that as long as business rights were not trod upon by the Chinese, human rights could be ignored. Wrong. Human rights and business rights are just flip sides of the same coin, and the coin is called "the rule of law." If democracy advocates in China are subject to arbitrary arrest or intimidation, then sooner or later Mickey Mouse will be as well. And that's what really happened in this Disney case. Micky Mouse got thrown in the slammer with Wang Dan. The Disney folks shouldn't forg

et that. The second lesson, for both business and the Clinton Administration, is that we have leverage with the Chinese; we've just spooked our selves into thinking otherwise. They crave Big Macs, Macintosh, Microsoft and Mickey Mouse. They can't finance their growth without exporting to America. They desperately need the $38 billion trade surplus they have with the U.S. Whenever America actually does use this leverage in a sophisticated manner whether it's McDonald's or the Government, it's successful. Look at how the U.S. Trade Representative's negotiators dealt with China in June on the question of piracy of U.S. goods. The U.S. negotiators went to the Guangdong Province government and said, "Look, guys, if you don't close your pirate factories we're going to block Guangdong's textile exports to the U.S. and, more importantly, we're going to let people know that this is a pirate province and you won't attract a dime of high-tech investment, and that will leave you making Nike tennis shoes forever." To rei

nforce that message the U.S. team brought along some American high-tech executives. Surprise, surprise, the Guangdong government cracked down. (True story: At the dinner to seal the agreement in June, the U.S. negotiators asked for dim sum, but the Guangdong officials insisted on sending out for McDonald's.)

Show the Chinese you have leverage, make a specific set of demands and then show them why the way out is in their interest and they will respond. Finally, there is a message here for China's leaders: Kook at all the columns, editorials and articles written this week about the Disney case in the U.S. What is striking about them is the hooray for Disney that comes through. In part it is a hooray that a U.S. company has finally put principle before profit. But in part it also reflects the simmering anger with Beijing in this country - a sense that for the last four years the Clinton team has been over backward, shamelessly at times, to address China's concerns in order to improve the relationship, while the Chinese have done nothing - not one thing, zippo, nada, zero - to address even the most minimal U.S. concerns about human rights or arms proliferation to improve the relationship. People are fed up, so there is a certain irrational joy in America with Disney's slam-dunking Beijing's demands. The Chinese lead

ership ought to reflect on that mood. There are many Americans who want to see a healthy relationship with China, who want to see China develop, and who understand the difficult transition it is embarked upon, but Beijing has made it very hard to be a friend of China in this country, That's the real moral of this Mickey Mouse story.