Colony threatens Gore's fragile friendship

Hong Kong handover

As far as China's prime minister, Li Peng, was concerned yesterday, Taiwan was "the central issue with the utmost importance and sensitivity" in Sino-United States relations. But in the immediate future it is Hong Kong which could disrupt the fragile improvement in relations between Washington and Peking, sealed this week by the arrival of Vice-President Al Gore, the highest level American official to visit China since the 1989 Tiananmen killings.

Mr Gore met Mr Li yesterday for talks which both men sought to present as constructive and amiable. Neither human rights nor the controversy surrounding alleged Chinese political donations in the US was permitted to cloud the occasion.

Mr Gore said his meetings had been "very positive". According to the Chinese, the Vice-President had prepared well for his first trip to the Middle Kingdom by reading "quite a lot of books" about Chinese culture and history; as proof, Mr Gore quoted an old Chinese saying that "seeing once is better than hearing 100 times".

Mr Li told Mr Gore that China was "fully confident on the smooth transfer and the stability and prosperity" of Hong Kong after sovereignty reverted to China on 1 July. Earlier this month, US Congressmen voted 416-1 for a bill which has infuriated China because it calls for trade sanctions if the US administration decides that Peking has broken its pledges of a high degree of autonomy for the former British colony after the handover.

Yesterday, Mr Gore stressed to Mr Li that "preserving Hong Kong's economic vigour and long-term prosperity and stability was very important for the whole world". Formal agreement was reached yesterday for the US to maintain a consulate in Hong Kong after 1 July.

The potential for the Hong Kong issue to undermine Sino-US relations this year was emphasised yesterday by Joseph Nye, the former US assistant secretary of defense, who was on a separate visit to Peking.

"There will be many in the [US] Congress who may find the smallest incidents after the turnover of Hong Kong as grounds to try to bring about a problem in US-China relations. This is certainly a real possibility," Mr Nye said. Peking should be careful "not to take actions, particularly actions after the reversion of Hong Kong, which would feed into those who wish to vilify China", added Mr Nye, who is now Dean of the John F Kennedy School of Government at Harvard. It was "critical" that China abided by its "one country, two systems" principle for governing the territory.

After meetings with senior government and military officials, Mr Nye said he had been "pleasantly surprised by the sophistication of the answers ... particularly on Hong Kong ... Now whether they will be able to follow through on that in the heat of the moment, when somebody chains themselves to the fence outside Government House, and the TV cameras all carry that as if it is the major event in Hong Kong, I don't know."

One possible threat to Hong Kong's future under Chinese rule is the politicisation of trade and business, an issue which came to the fore in Peking yesterday. Fighting shy of any role as a dealmaker, Mr Gore's publicly issued itinerary made no mention of any contract signings by US companies, even though these normally take centre-stage during such visits.

In the end, however, he and Mr Li duly presided as Boeing and General Motors closed much-delayed contracts. Boeing has sold five 777-200 jets, worth $685m (pounds 425m), to Air China, while General Motors sealed a $1.57bn joint venture in Shanghai to make sedans.

Ronald Woodward, president of Boeing's Commercial Airplane Group, said both sides reached basic agreement a year ago, but signing was delayed. "There is no doubt the contract was not executed when it was ready because of tension between the US and China last year and the year before," he said. "There are times when politics are involved."

John Smith, chairman of General Motors, said Mr Gore's trip had provided a "catalyst" for his signing.

The Vice-President's visit, paving the way for a Sino-US presidential summit later this year, is a key test for the US administration in defending its policy of "constructive engagement" with China.

Mr Nye firmly backed this approach. "If the alternative is to follow a pre-emptive containment policy, I know the outcome. And I would submit that a Cold War in Asia would be a costly event for all of us, and not necessary," he said.