By Scott Hillis

BEIJING, June 15 (Reuters) - China is making progress on human rights, raising hopes that U.S. sanctions left over from the 1989 crackdown on pro-democracy demonstrations in Tiananmen Square will be lifted soon, U.S. Ambassador James Sasser said. But in remarks made less than two weeks before a landmark trip to China by U.S. President Bill Clinton, Sasser said he saw few signs that Beijing would release more political prisoners. ``There are still some sanctions from the Tiananmen incident that are still outstanding, and we are hopeful that at some juncture in the not-too-distant future, all or many of these will be lifted,'' he told reporters in a briefing looking ahead to the Clinton trip. Such sanctions include a ban on political risk insurance to U.S. companies in China by the Overseas Private Investment Corp, a U.S.government agency. Funding of U.S. corporate projects by the U.S. Trade and Development Agency was also halted. Sasser gave no timetable for a lifting of sanctions, but noted an increased will

ingness by Beijing for a dialogue on human rights, long athorn in Sino-U.S. ties.

``We are seeing the movement, if glacial, in the direction of a greater appreciation of what we in the West call human rights and political diversity,'' he said. Sasser cited the release from prison last year of leading dissident Wei Jingsheng followed by the freeing this year of former student leader Wang Dan as evidence of a new political tolerance by Beijing. He also pointed to tours by European officials of China's restive Tibet region, where critics accuse Beijing of trying to wipe out indigenous culture, and a freer climate of political debate among Chinese intellectuals. But Sasser said there was no hint that Clinton's visit would win freedom for more political prisoners, saying: ``We are always hopeful that there will be a release, but at this juncture we have no indication there will be.''Human rights groups have estimated China still holds about 2,000 political prisoners in its prisons.``There have been a number of changes which are, I think, obvious, although we don't take the view that the human

rights situation in China is acceptable,'' Sasser said.

He also said he expected little progress at the summit on Beijing's bid to enter the World Trade Organisation (WTO), long stalled over insistence by Western countries that China do more to open its markets. ``I'm not optimistic that we'll be able to announce our support at the summit for China's accession to the WTO,'' he said. Defending Beijing's stance, Zeng Peiyan, minister of the State Development Planning Commission, was quoted as saying the ability of U.S. firms to tap the Chinese market depended on whether Washington changed its policy on trade with China. ``China has urged the U.S. government to ease technical export limitations on China and remove barriers such as the annual review of China's Most Favoured Nation status and entry into the World Trade Organisation,'' the Xinhua news agency quoted Zeng as saying.

Sasser also brushed off as domestic squabbling mounting criticism in the U.S. Congress of Clinton for heading to China amid several scandals involving Beijing.``I think that once the president's visit is over, Congress will turn its attention to other matters,'' said Sasser, himself a former senator. ``And certainly once the November (congressional) elections have come and gone, I think you won't see much reference to China on the part of the congressional leadership,'' he said. One of the scandals involves whether a decision by Clinton to allow Loral Space & Communications Ltd to launch a satellite on a Chinese rocket was related to campaign donations by Loral chairman Bernard Schwartz.

Congress is also looking into whether Loral earlier handed China sensitive information on rocket guidance technology, data that could improve the accuracy of China's nuclear missiles. Yet another scandal centres on allegations that a Chinese aerospace executive whose father was China's top military leader, made illegal donations to the 1996 Democratic campaign. Clinton will make a five-city tour of China from June 25 to July 3, becoming the first U.S. president to set foot on Chinese soil since the June 4, 1989 massacre of pro-democracy demonstrators at Tiananmen Square in the centre of Beijing.