Jack Smith urges 'permanent' MFN status for China

Stop the brinkmanship and let American companies get on with opening up what could become the second largest economy in the world, General Motors Corp. Chairman John F. Smith Jr. warns.

Speaking recently at the Economic Club of Detroit, Mr. Smith backs President Clinton's call for unconditional Most Favored Nation status for China. But Mr. Smith would go one step further and make China's MFN status permanent rather than subject to annual renewals during which the two nations engage in a political showdown.

"Every year we go through the ritual of whether to grant regular trading status to China," Mr. Smith says. "While the U.S. is debating China, Europe is selling them Airbuses."

While seeking renewal of MFN, the Clinton administration is threatening to slap $2 billion in punitive tariffs on Chinese textiles, toys and electronic goods because of the Chinese government's failure to stop widespread piracy of American compact disks, CDROMS and video cassettes that is costing U.S. companies at least $2 billion in lost sales.

Asked what he would tell his fellow CEOs in industries hurt by such piracy, Mr. Smith offers only vague comfort. Doing business in China "does present some risks, but we need to sit down with the Chinese and work it out.

"China is the great equalizer of missed opportunities," Mr. Smith says. "Imagine 1.2 billion people who save 50% of their income and whose per-capita income has tripled since 1980."

Meanwhile, GM continues waiting for the Chinese government to complete a feasibility study of its $1-billion joint venture with Shanghai Automotive Industry Corp. to build up to 100,000 Buick Regals annually, along with engines, transmissions and a new technical center.