Leading Article: Peking pays a price for repression

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THE TIMING of last week's unrest in Tibet could not have been more unfortunate for the Chinese leadership. With President Bill Clinton pondering the renewal of US trade concessions, on which Peking depends heavily for its runaway economic growth, reports of Chinese police using tear gas against demonstrators chanting independence slogans in Lhasa seemed likely to drive up the political price of Most Favoured Nation (MFN) treatment for China.

In the event Mr Clinton did as expected: he renewed MFN until July next year, but announced that China would have to behave better in the fields of trade, nuclear non-proliferation and human rights to secure future renewals. His conditions were deliberately left vague to allow him flexibility in a year's time. For instance, China is told to recognise Tibet's 'distinctive religious and cultural heritage'. But that leaves Peking's economic miracle more vulnerable to American public opinion, since further eruptions in Tibet could be taken as proof that China has failed to satisfy American conditions.

The contradiction between China's economic liberalism and political repression is nowhere more stark than in Tibet. This could be seen last week, when those policemen not engaged in putting down the protests were being sent round to hotels and guest houses to try, in vain, to stop foreign businessmen and tourists telling Western journalists, over newly improved telephone links, what they had seen. For the same reason, the authorities used tear gas rather than live ammunition, which they might have preferred in less conspicuous circumstances.

China denounces those who express the hope that greater economic freedom will have political consequences, but its confusion on this point can be seen most clearly in Tibet, where it appears to believe that 'reform and opening up' will seduce people away from independence and loyalty to the exiled Dalai Lama. Instead its policies have brought inflation and a wave of generously subsidised Chinese settlers. So what began last week as an officially tolerated protest against rising prices turned into two days of demonstrations for independence, during which new Chinese- owned shops were stoned.

For Britain, which has never recognised Chinese sovereignty over Tibet, such contradictions are familiar. Hong Kong is just emerging from a period in which China demonstrated its inability to understand the economic consequences of its political behaviour. Having come close to wrecking business confidence as a result of its onslaught on the political reform plans of Chris Patten, the Governor, Peking is now attempting to treat the two spheres separately. This is likely to be no more successful in Hong Kong than it is in Lhasa.

The longer China seeks to ignore the chasm between its political and economic policies, the more unpredictable the outcome is likely to be. MFN may seem like a blunt instrument for promoting human rights through restrictions on trade, but Peking's leadership has shown itself unresponsive to anything more subtle.