Written Responses to Questions Submitted by the Far Eastern Economic Review

May 9, 1984

President's Trip to China

Q. How would you sum up the achievements of your recent visit to China and your meetings with the Chinese leaders?

The President. Well, we all feel very good about the trip, and I do particularly. Granted there are differences between us -- in our styles and kinds of government and all -- yet there was a friendliness. We found they and we had the same idea. The things that were important were not the differences, but the things we had in common.

They are as opposed to expansionist policies as we are, attempts to dominate or have hegemony over other areas or other countries. We made it plain to them that we respected their nonaligned situation. They're very serious about wanting to be nonaligned, and we agreed with that, but said that didn't mean that we could not work together on things as two independent countries with the same interests.

I happen to be a believer in the Pacific Basin as the place of the future. An American once said: ``Go west, young man.'' Well, we're still going west.

And I think between us, the two biggest nations -- the United States and China -- can contribute a great deal to stability in the whole Pacific Basin and East Asia. I was struck by the changes the Chinese are making as part of their modernization, including their welcome to outside capital. It was pretty unusual after recent years actually to go through a plant that was a partnership between a Massachusetts company and the People's Republic, to know that they have now also opened up to investments without partnership, involving the outright ownership of concerns and industries by foreign firms. I think it all was a most successful trip. We found ourselves in agreement on so many things.

Q. Are they moving closer to our way of life?

The President. Well, in the sense of believing in incentives for the people, yes. The last day we were there, we visited what a few years ago was a commune -- now they call them townships. They are set up virtually as a township, with autonomous government, local control and all, with their own schools and so on. There are production quotas which they must meet which go to the government. But over and above that, they can sell their surplus produce in the marketplace. We visited the home of a young couple, with their son and his father and mother living with them. He had a new home -- and he had built it. He spoke of how they were able to save money to do this and of how they were now saving for further furnishings for the home. It sounded very American.

Q. Do you feel as a Californian who has just quoted the saying ``Go west, young man'' that you have a more positive view of the Pacific than someone from, say, the eastern seaboard, who still tends to look towards the Atlantic?

The President. I think that's only natural in the Western States of the United States. We started our trip with a visit to the State of Washington, seeing the lumber industry there. Much of their foreign trade -- as far as I could see, all of it is across the Pacific to the west. Yes, we do have that. It does not mean that we downgrade in any way our Atlantic relations or our participation in the North Atlantic alliance. Actually, our parentage, you might say, is basically European. But you cannot help but feel that the great Pacific Basin, with all its nations and all its potential for growth and development -- that is the future.

Q. When you campaigned for the Presidency back in 1980, did it ever occur to you that in 1984 you would make a ``red carpet'' tour of China?

The President. I have always recognized the importance of good U.S.-China relations. From the very outset of my administration, I was determined to place this relationship on a more stable and enduring footing. I think we have succeeded. We have had some problems and some differences over the past 3\1/2\ years, but we have never stopped communicating with each other.

Improving U.S.-China relations is in the best interests of the American people, the Chinese people, the peoples of the East Asian region, and the cause of world peace. We made substantial progress in working out some difficult problems and then proceeded to advance the relationship in a number of important areas -- technology transfer, trade, student exchanges, and so on.

The exchange of high-level visitors during our administration has been intense, leading to the visit to the United States in January by Premier Zhao and my visit to China. The Vice President, Secretary of State Shultz, Secretary of Defense Weinberger, Secretary of the Treasury Don Regan, and Secretary of Commerce Baldrige all visited China for substantive talks prior to our recent visit. We look forward to continuing this exchange with visits to the United States by Chinese President Li Xiannian, General Secretary Hu Yaobang, and Defense Minister Zhang Aiping.

We went to China to advance the prospects for stability and peace throughout the world. And we went to illustrate, by our presence, our sincere desire for good relations. We went to meet again with the Chinese to review our concerns and our differences. And we went to China to further define our own two countries' relationship -- and, by defining it, advance it. And I feel that we made progress.

I had long and thoughtful meetings with the Chinese leadership, comprehensive meetings. We each listened carefully to what the other had to say. We agreed that in this imperfect world, peace in its most perfect form cannot always be reached -- but it must always be our goal. And we, the people of China and the United States, must make our best efforts to bring greater harmony between our two countries.

I told the Chinese leaders that we must continue to acknowledge our differences, for a friendship based on fiction will not last. But we agreed that there is much to be gained from mutual respect. And there is much to be gained on both sides from expanded opportunities in trade and commerce and cultural relations, and much to be gained through stability and economic progress throughout the entire Pacific Basin.

Q. Your administration has categorized China as ``friendly'' for export control purposes. Do you think that China's status under COCOM should be changed?

The President. COCOM is a cooperative organization of many countries, and any changes would need the careful consideration and approval of all its members. COCOM has been processing cases for China expeditiously and has approved many exports to China at higher technical levels than exports to the U.S.S.R.

The steps we have taken on export licensing take into account China's needs and capabilities by providing support for China's modernization programs. We still maintain some controls, as we do for many friendly countries, on very sophisticated items which are essential to our national security interests. But very few exports to China -- less than 1 percent last year -- have been denied.

Taiwan

Q. You have always been known as a friend and supporter of Taiwan, arguing for official recognition during your campaign for the Presidency. What are your feelings about the island today, and do you expect that any agreement reached on the future of Hong Kong will augur well or ill for Taiwan?

The President. My longstanding, personal friendship and deep concern for the people of Taiwan are steadfast and unchanged. I am committed to maintaining the full range of contacts between the United States and the people of Taiwan -- commercial, cultural, and other contacts -- which are compatible with our unofficial relationship. As I have often said, we will not abandon old friends to make new friends.

The British and Chinese are continuing discussions on Hong Kong. I hope the two sides will reach an agreement which preserves the prosperity and stability there. We have an interest in such a settlement, particularly in light of our significant business and investment presence in Hong Kong.

Trade With Japan

Q. Your administration has emphasized a closer relationship between Japan and the United States as a vital link between the world's two most powerful economies, both married to the principle of free trade. However, during this election year, Tokyo has come under increased pressure from the United States to internationalize and revalue the yen, open its markets to U.S. goods, and limit exports to the U.S. (a strong theme in the Mondale campaign). Are you satisfied with Tokyo's moves to liberalize its market, and can Japan expect a softening of U.S. pressure next year?

The President. Our trade policy toward Japan this year is the same one we have been pursuing all through my administration. It is a simple and, we believe, fair policy. We would like our companies to have the same access to Japan's market that Japanese companies have to ours. During the past 2 years, Japan has made considerable progress in opening its markets further to American products, and we are confident we'll see more progress in the months ahead.

Now, as you pointed out, this is an election year, and there are those who would like to take the easy way out and throw up protectionist barriers around our country. This may seem like good politics in an election year, but I can assure you that it is bad economics, and bad for our country and the world trading system. We are determined to resist this, but we need progress in foreign markets opening to our products.

As for internationalizing the yen, I gave my view in my speech to the Diet last November. Here you have a country that has the world's second largest free market economy and tremendous political stability. We believe that its currency should reflect this and play the same role in the world economy that other major currencies do. Our Treasury Department and the Japanese Finance Ministry have been meeting on this issue since February, and I believe that we have been making steady progress.

Economic Recovery

Q. Your administration continually exhorts other countries, particularly in the developing world, to practice fiscal and monetary discipline. But would you not agree that it is the United States own unmanageable budget and current account deficits which endanger the world economic recovery and its (still historically high) interest rates which result in the undervalued yen, increase the debt burdens of borrowing countries, and inhibit investment worldwide?

The President. By reviving strong economic growth, while reducing the rate of growth of government spending more than in half, we are beginning to make real progress in reducing the Federal deficit. With cooperation from Congress, we expect further reductions. Meanwhile, the rest of the world is benefiting greatly by the rapid recovery in the United States, which has led to a sharp increase of American orders for foreign goods and services.

The strength of the dollar results from a number of powerful market forces, including the strength of our economic recovery and the confidence of foreign investors who see the United States as the safest and most attractive country in which to invest. It is true that our interest rates are still high by historical standards, but they have been cut nearly in half since the beginning of this administration. And now that we have succeeded in bringing inflation down, we are determined to keep it down. Once this commitment becomes clear, we expect interest rates to decline even further.

Southeast Asia

Q. On the Cambodian issue, the U.S. policy of passively supporting ASEAN is seen, even in ASEAN, as reflecting a less positive commitment to the region and even as a willingness for China to play a larger role in Southeast Asia (while the United States confronts the Soviet Union in Northeast Asia). Is there any justification for the feeling that, faced with the problems of relations with the Soviet Union, the Middle East, Central America, and Europe, the United States accords low priority to the former ``dominoes'' of Southeast Asia?

The President. Not at all. The United States has very important economic and security interests in Southeast Asia, particularly in the ASEAN [Association for South East Asian Nations] countries. ASEAN, as a group, is our fifth largest trading partner and the site of some $10 billion in U.S. investment. We have bilateral security commitments to two ASEAN members, Thailand and the Philippines. If our involvement appears to be less than in other areas of the world, it is only because of the success the ASEAN countries have had in managing the economic and political issues they face, independent of a heavy U.S. presence.

United States support for ASEAN's efforts to achieve a just political solution to the problem of Kampuchea, which will restore to the Khmer people control over their own destiny, has been vigorous. It is, however, ASEAN's security which is most directly threatened by Vietnam's occupation of Kampuchea; therefore, ASEAN should continue to take the lead on this issue.

ASEAN, the United States, and China have a common interest in restoring peace to Southeast Asia. China's role in the area will be determined by the state of its relations with the region's governments, not by the United States. We will continue to manage our relationship with China so that the interests of our friends in Southeast Asia are not disadvantaged.

Q. In supporting ASEAN, China and the Khmer coalition in exile (which includes, of course, the Khmer Rouge), U.S. policy increases Vietnam's dependency on Moscow and thus Moscow's leverage over Hanoi, resulting in Soviet naval and air force units using the bases at Cam Ranh and Danang. Just as former President Nixon once helped to open China up, is there any possibility of a Reagan initiative to Vietnam designed to break the Cambodian deadlock?

The President. First, the United States does not recognize the Khmer coalition as a government. We welcomed it as a vehicle to press for a settlement based on the ICK (International Conference on Kampuchea) principles. We provide moral and political support to the non-Communist resistance groups, as evidenced by my meeting last September with Prince Sihanouk and Son Sann in New York. We give no support to and have no contact with the Khmer Rouge, whose record of atrocities we have always condemned.

Second, it is not the United States which has isolated Vietnam. Hanoi's policies in Kampuchea have isolated it internationally and left it with almost no friends outside the U.S.S.R. and its most obedient followers. The Soviet Union has been able to trade on its massive military and economic assistance to obtain access to air and naval facilities in Vietnam. Hanoi has chosen its present isolation. It can choose to end it by negotiating a comprehensive political solution to the problem of Kampuchea.

At the same time, we and the Vietnamese have agreed that the question of Americans missing from the Indochina war is a humanitarian matter separate from other issues. Our discussions with Hanoi on this question continue and resolution of this issue could only help to improve the American people's image of Vietnam.

Q. Vice President George Bush, visiting Manila, once praised President Marcos' ``commitment to democracy.'' Marcos has recently quoted excerpts from a letter from yourself, which, at least out of context, appear to be supportive. Will the U.S.A. continue to support Marcos with money and good will if he fails to deliver free and fair elections? How would you view the emergence of a military regime? Are you worried about the anti-U.S. base position of the non-Communist opposition to Marcos?

The President. We have recently underscored to President Marcos the deep commitment to representative government and a democratic electoral process which all Americans share. Various steps had been taken in the Philippines to encourage fair and open legislative elections in May. Continued movement toward fully functioning democratic institutions appropriate to the Philippines is the key to rebuilding both economic and political confidence after the difficulties of the last months.

I'm not in the habit of commenting on events that haven't yet occurred, but I would point out that the United States and the Philippines are treaty allies. The United States, through both Republican and Democratic administrations, has had very good relations with the Philippines. We expect to continue these relations in the years to come.

Your question about the emergence of a military regime is highly speculative when we consider the unbroken Philippine tradition of civilian authority over the military. To my mind, the whole point of elections in the Philippines is to strengthen their political institutions, to assure that they reflect and are responsive to the will of the people, and to enable the country to meet the serious political and economic challenges that it faces.

The U.S. military presence is not a campaign issue in the Philippine elections. Thanks in part to the vast reservoir of good will that exists between the American and Filipino peoples, there seems to be an appreciation by the majority of Filipinos that the U.S. military facilities serve the security interests of both countries and of the region as a whole.

U.S.-India Relations

Q. Despite its anti-American stance and its close relations with the Soviet Union, do you not feel that past and present U.S. administrations could have done more to improve relations with the world's most populous democracy, India?

The President. Well, I do not consider India to be anti-American. It is certainly true that India has close relations with the Soviet Union, but this has not prevented us and other Western nations from developing our own relations with India. Mrs. Gandhi has said that India is not pro or anti any other country, but is instead pro-India. We accept that position.

In this administration, we have taken a number of steps to strengthen our bilateral relationship. Recognizing that India is a very important country both in the South Asian region and globally, I have met with Mrs. Gandhi three times. During her 1982 visit to Washington, we agreed that there must be a regular dialog between us. This process is continuing. Secretary Shultz visited India in 1983, and Vice President Bush will be visiting India this month. In addition, we have taken steps to strengthen business and commercial relations between India and the United States, which I believe is a very important factor in building a long-term relationship. Furthermore, we are making efforts to increase understanding between India and the United States through major cultural exchanges this year and in 1985.

We have our differences with India, certainly. But I truly believe that India and the United States have reached a point where we can pursue a mature and constructive relationship, based on the values and interests we share rather than on points of difference.

U.S. Foreign Policy

Q. In its past efforts to contain Communist expansion in Asia, America allied itself with many corrupt dictators unworthy of the support of the world's most powerful democracy. This allowed the Communists to claim to represent the ``people'' (although in fact they were manipulating the forces of nationalism). Is not America in danger of repeating these mistakes in backing the present regime of El Salvador and in undermining that of Nicaragua, forfeiting in the process the revolutionary idealism in which America was born and which remains its greatest international appeal?

The President. I think your question can best be answered by describing current U.S. policy and the situation on the ground in Central America.

The image of an area ruled by corrupt dictators simply does not reflect current circumstances. Today there are four practicing democracies in the area: Costa Rica, El Salvador, Honduras, and Belize. Two of the remaining three countries, Guatemala and Panama, are committed to an early return to full democracy. Only in Nicaragua is there a serious exception to this area wide norm, and there the people face a dictatorship of the left.

Those who would look for simple one-sided solutions to the problems of Central America will be disappointed. The issues are complex, and during the past year, the United States has pursued a policy designed to deal with many aspects of the constantly evolving situation. That policy is based on four elements: support for political reform, support for economic development, support for dialog within and among the countries of the region, and security assistance to provide a shield behind which reforms, development, and negotiations can take place.

This balanced, comprehensive policy recognizes the deep-rooted economic, social, and political problems which are the fundamental cause of the current instability in Central America. It also addresses the external sources of the conflict: attempts by Marxist-Leninist forces to exacerbate indigenous problems.

The situation in El Salvador is frequently portrayed as your question implies: a clash between extremes of left and right -- the forces of oppression versus the forces of violent revolution. But this view omits a vital new element: The reformist coup of October 1979 and subsequent coalition governments have created an alternative that offers the prospect of genuinely democratic and progressive reform. A new, liberal constitution was passed by the Salvadoran Legislative Assembly in December 1983, and on June 1, a democratically elected President will be inaugurated. Since 1979 the history of El Salvador has been fundamentally the story of these kinds of efforts for change and reform.

In Nicaragua, when the Sandinistas came to power in 1979, they pledged to the Organization of American States to establish a democratic, pluralistic, and nonaligned regime. The United States took a leading role in the international effort to assist the new government in Nicaragua, and the first 21 months after the fall of Somoza, we authorized 117.2 million dollars in economic assistance.

Despite the promises, what we see today are Sandinista leaders who have succeeded in removing from influence everyone who disagreed with them, who have built an army four times the size of Somoza's who have developed close ties with Cuba and the Soviet Union, and who have continued to support subversion in neighboring states, particularly El Salvador. Today there is no longer any serious dispute that Nicaragua is a major source of instability in Central America.

The Contadora peace process offers the opportunity for Nicaragua to address the legitimate concerns of the United States and its neighbors. The United States supports the comprehensive, verifiable implementation of the Contadora Document of Objectives, agreed to by the five Central American states and the Contadora Four countries -- Colombia, Mexico, Panama, and Venezuela -- last September. The principles identified in the Document of Objectives, which include the reciprocal, verifiable withdrawal of foreign military advisers, an end to arms trafficking and support for subversion, and national reconciliation through the democratic process, are the issues which must be treated if there is to be a sincere and lasting peace in Central America.

Afghanistan

Q. Your administration has been giving active support to the opponents of the leftist Nicaraguan regime, but little direct help to the Afghani resistance to Soviet occupation. Is the difference a matter of geography or of a willingness to confront Soviet ``proxies,'' but not the Soviets themselves?

The President. I think your question mixes apples and oranges a bit, but you seem to be suggesting that we have not been supportive of the Afghans who are resisting Soviet efforts to take over their country. If that's the implication, I'm afraid I'd have to disagree. The United States has been active, along with the vast majority of the free nations of the world, in trying to help the Afghan people win back their independence. Such support has taken many forms -- diplomatic activity within the United Nations, making Afghanistan an important part of our bilateral agenda with the Soviets, substantial aid for the refugee communities, and firm backing for Pakistan in its efforts to resist Soviet intimidation.

The general point is that there is more than one effective response to Soviet-backed aggression. These problems are complex and vary from region to region. So do our responses. But one thing should be clear: Soviet actions in Afghanistan, including recent escalation of warfare there, seriously undermine the search for a negotiated political settlement, based on the four elements of the repeated U.N. General Assembly resolutions: withdrawal of Soviet forces; restoration of the independent and nonaligned status of Afghanistan; self-determination for the Afghan people; and permitting the Afghan refugees who have been forced to flee their own country to return with safety and honor.

The United States remains committed to achieving these internationally agreed objectives. It is past time that the Soviet Union respect the wishes of the world community and bring to an end the terrible ordeal which they have imposed on the Afghan people.

Note: As printed above, the questions and answers follow the text of the White House press release.