Clinton Tries to Quell China Funds Impact

President Clinton and his White House struggled Friday to contain the foreign policy fallout from intelligence reports suggesting that China’s top leaders have been involved in an effort to covertly funnel money into the U.S. electoral system.

Clinton, speaking at a news conference, recommended against jumping to dire judgments and noted that many countries, including Israel, Ireland and Greece, spend money to legally lobby this country’s policies.

“I think it important that we not accuse people of something that we don’t know for sure that they have done,” he said.

Sources close to the investigation, however, confirmed that evidence shows China did mount a well-funded effort to influence the U.S. political process, that the orders came from top officials and that not all of the planned tactics were legal or proper.

The new information about the Chinese effort was provided in a closed briefing for key members of Congress this week by Atty. Gen. Janet Reno and FBI Director Louis J. Freeh, and reported publicly Friday by the Washington Post.

The revelations were particularly awkward for the White House because it appeared that Clinton had not received a similar briefing. In the past, the FBI has been wary of providing investigative updates because the probe is exploring, in part, whether fund-raisers for the Democratic National Committee who have ties to China were among the conduits of illegal Chinese money.

While skirting questions about what he had been told, Clinton asserted that the White House must not be cut out of the information loop on important foreign policy matters. “I believe that the president and secretary of State and the national security advisor should have access to whatever information is necessary to conduct the foreign policy and to protect the national interest of the country,” he said.

An FBI spokesman declined comment.

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The intelligence disclosures come at a sensitive time between the countries--on the eve of a planned visit to Washington by Chinese Foreign Minister Qian Qichen and shortly before Congress is to consider the extension of most-favored-nation trading status for China.

In the fall, Clinton and President Jiang Zemin are scheduled to hold the first meeting of U.S. and Chinese heads of state since the violent Chinese crackdown against pro-democracy protesters in 1989.

Already battered from the months-long controversy over foreign-linked contributions to the Democratic National Committee, the president and his aides sought to put the best face on the disturbing new reports.

At a joint news conference with visiting Japanese Prime Minister Ryutaro Hashimoto, Clinton signaled the administration’s strong reluctance to roil relations with China unless it is absolutely necessary.

“We have very large interests in a stable relationship with China and having China be a stable force in the Asia-Pacific region . . . and so I think it is important that we not assume something we do not know and act in a way that may not be warranted,” Clinton said. “We need to get the facts here before we do that.”

At the State Department, spokesman Nicholas Burns said he was not certain Secretary of State Madeleine Albright would even raise the influence-peddling issue with the Chinese foreign minister at a meeting on Monday. “I don’t want to anticipate publicly that of the 100 to 200 issues in the U.S.-China agenda, we’re going to raise a certain number,” he said.

A source close to a Justice Department investigation into possible improper foreign influence in U.S. campaigns said the Chinese scheme involved $2 million or more and was aimed at politicians in both parties in an attempt to win policies favorable to China.

Officials said it has not been determined whether any illegal money actually got to American candidates, or whether some money wound up going into legitimate lobbying. Only people with U.S. residency status or corporations with U.S. subsidiaries may legally contribute to U.S. campaigns.

“The most favored nation status is important for the government of China and some of this could be legitimate politicking, lobbying, just what Taiwan does,” said one official.

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Clinton also stressed the possibility of legal lobbying. “A lot of our friends in the world, countries with whom we’re very closely allied, have friends in the United States that advocate for the policies of their governments all the time,” Clinton said. “To take two obvious examples, it’s true of Israel, it’s true of Greece. And I would not consider that improper.”

On Capitol Hill, lawmakers said the new reports of Chinese meddling would give ammunition to those seeking to oppose most favored nation status for China--especially when combined with concerns over the trade imbalance with China, human rights violations and arms proliferation.

“I think the charges are quite serious and a number of issues could be affected, most immediately [most favored nation status],” said Rep. Doug Bereuter (R-Neb.), chairman of the House subcommittee on Asia.

Kristi Hamrick, director of communications for the Family Research Council, a conservative Christian group that is lobbying strenuously against most favored nation approval, said the donations scandal is “having a snowballing effect” on growing opposition to granting such status to China.

Rep. Howard L. Berman (D-Mission Hills), the ranking Democrat on the Asia panel, said he takes the reports about China seriously but hopes they do not cloud this country’s Asia policy.

“I would hope we would not succumb to any Chinese government pressure or make decisions on substantive issues in reaction to stories about those pressures,” Berman said.

Still, Berman and others urged a thorough investigation of the reports. Already, the House, the Senate and the Justice Department have launched separate probes of the controversy, attempting to establish clear links between foreign governments and U.S. political campaigns.

“An effort by a foreign government to try to influence the political process through illegal contributions is a very, very serious charge,” Berman said. “The investigation of this ought to be given top priority.”

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In Beijing, the Chinese government condemned the new reports.

“These statements are sheer fabrication,” the state information department said in a written statement. “We express indignation at the evil actions of those persons within the U.S. government who continue to spread rumors, disrupting and sabotaging Sino-U.S. relations.”

Twice in the last two months, China has registered official protests with the U.S. Embassy in Beijing, demanding that U.S. officials put a stop to leaks of “hearsay” stories about Chinese-driven political contributions.

Times staff writers Henry Chu in Beijing and Sara Fritz, Janet Hook and James Risen in Washington contributed to this story.