The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MS. WARNER: And I'm Margaret Warner in Washington. After the News Summary, we have excerpts from the final House debate on this NAFTA decision day and political analysis from Mark Shields and Vin Weber. Then a documentary report on China's army, and an update on the World Trade Center bombing trial. NEWS SUMMARY

MS. WARNER: As the House waged a fierce public debate on NAFTA today, both sides acknowledged that the pro-NAFTA forces apparently had the votes to win but neither side gave up the scramble for more votes. President Clinton lobbied members throughout the day. White House officials arranged a photo opportunity through the Oval Office window as the President telephoned a potential supporter. The eight-hour debate on the House floor began late this morning. Here's a sampling of how it went.

REP. DAN ROSTENKOWSKI, [D] Illinois: Repeatedly in our history, we have been asked to enlarge America's markets. There have always been doubters, but they have always been proven wrong. Each enlargement in our market has led to an enhancement of our standard of living. I am confident that our approval of NAFTA will open another positive chapter in America's history.

REP. GERALD SOLOMON, [R] New York: There is nothing fair about this treaty, and under the terms of this treaty and the attendant side agreements there is no semblance of a level playing field, and all of you know it. As a matter of fact, the entire playing field is tipped in the favor of Mexico, guaranteeing unfair competition for American business and industry and American workers. And, Mr. Speaker, this is a bad treaty, a destructive treaty, and a treaty that must be rejected by this Congress today. It will not be the end of the world if we do that.

MS. WARNER: We'll have more on the story right after the News Summary. In economic news, construction starts on new homes and apartments rose 2.7 percent in October, the third straight monthly increase. The pace of new construction was the best in nearly four years. Building activity was strongest in the Midwest and South but declined in the Northeast and the West. Robin.

MR. MacNeil: Sec. of State Christopher delivered stern warnings to China and North Korea today. He did so during a speech in Seattle opening an economic meeting of Asian nations. He called on Asia to further open its markets to U.S. goods, but his strongest comments were on security and human rights. He demanded that North Korea permit international inspection of its nuclear sites, saying the International Community would not allow it to pose a nuclear threat to its region. And he had these words for China on its human rights record.

WARREN CHRISTOPHER, Secretary of State: China is a very great nation, an influential member of the World Community. A stable, prosperous China is in the long-term interest of the United States. Recent problems have created the risk of a downward spiral in our relationship. On human rights, unless there is significant overall progress, the President will not be able to renew China's most favored nation status when it comes up for reconsideration next spring.

MR. MacNeil: President Clinton travels to Seattle tomorrow to take part in the summit portion of the conference. He is due to meet with the Chinese president on Friday. It'll be the first meeting of the two countries' heads of state since the 1989 Tiananmen Square massacre. We'll have more on China later in the program.

MS. WARNER: The Senate today approved a ban on 19 military style assault weapons. The vote was 56 to 43. The bill's sponsor, California Democratic Senator Dianne Feinstein overcame opposition by agreeing to exempt more than 650 gun types used by hunters and sportsmen. The Senate also gave final congressional approval to the President's "don't ask, don't tell" policy on gays in the military. It was part of a 261 billion dollar defense operation bill that passed by a three to one margin. The controversial policy will let homosexuals serve as long as they don't disclose their sexual orientation.

MR. MacNeil: South Africa's political leaders signed a revolutionary agreement today formally ending white minority rule. The signing kept two years' of negotiations over a new constitution that treats blacks and whites as equals for the first time since the arrival of Dutch settlers in 1652. The accord sets up elections next April that could make African National Congress leader Nelson Mandela South Africa's first black president. White conservatives and the nation's second largest black group, the Inkatha Freedom Party, boycotted the negotiations. They have warned the government and the ANC against a new constitution without their consent.

MS. WARNER: The 1986 extradition order that sent John Demjanjuk to Israel to face a war crimes trial was overturned today. A federal appeals court in Cincinnati said its own order seven years ago was tainted because prosecutors withheld evidence that might have raised questions about witnesses who identified Demjanjuk as a Nazi death camp guard. Today's ruling clears the way for Demjanjuk to seek reinstatement of his U.S. citizenship. His conviction of war crimes was overturned by the Israeli supreme court this summer.

MR. MacNeil: The United Nations Security Council has formally ended the hunt for Somali clan leader Mohamed Farrah Aidid. The vote last night brought the U.N. into line with the U.S. position that a political, not military, solution is needed in Somalia. It is likely that Aidid would have to be a party to any such settlement. The U.N. first issued a warrant for his arrest in June, after his men were blamed for attacks that killed two dozen Pakistani soldiers.

MS. WARNER: That's it for the News Summary. Now it's on to NAFTA countdown on the Hill, China's military muscle, and searching for truth in the Trade Center bombing. FOCUS - NAFTA - VOTE BY VOTE

MS. WARNER: Now to NAFTA's fate. Later tonight, the House of Representatives will finally vote on whether to link the U.S., Canada, and Mexico in a free trade zone. President Clinton has waged the most intensive lobbying effort of his presidency on NAFTA's behalf. The weeks of argument and dealmaking have deepened fault lines within both parties on Capitol Hill. Those divisions were exposed again during hours of floor debate today, a debate that's still underway. We'll look at these last hours of the legislative battle with Mark Shields and Vin Weber, but first Kwame Holman has this report on today's proceedings.

SPOKESMAN: The House please come to order. We need to commence the debate.

MR. HOLMAN: The eight hours the House set aside to debate NAFTA started out with the familiar arguments for and against the treaty but delivered with heightened emotion as the day of the vote finally had arrived.

REP. NEWT GINGRICH, Minority Whip: This is a vote for history. Every once in a while there is that magic moment that is larger than politics, it is larger than re-election, it is larger than personal ego. It's a moment when you define for the future of the nation and the future of the world who we are and what we believe in.

REP. PATRICIA SCHROEDER, [D] Colorado: NAFTA lowers tariffs. It lowers tariffs against American products. On the average, an American product will be 20 percent less expensive after NAFTA. That means the average person will buy 20 percent more. That means more jobs in America making that 20 percent more.

REP. BERNARD SANDERS, [D] Vermont: Corporate America and the big money interests have told us that NAFTA is a good deal. I don't believe them. Recent history has told us that corporate America is concerned about one thing and one thing alone, and that is their own wealth and their own power. NAFTA may be a good deal for the people who own our corporations, but it is a bad deal for American workers, for our family farmers, and it is bad for the environment.

REP. BUTLER DERRICK, [D] South Carolina: We're probably going to lose a million jobs over the next twenty years. The taxpayers according to the Joint Economic Committee are going to have to pay over $20 billion. And in my conclusion, let me say to this, to the administration, if this is such a good deal, why did we almost have to give the Portico away on the White House to get it?

MR. HOLMAN: What made this debate so unusual was that Democrats attacked Democrats and Republicans attacked Republicans on the floor of the House.

REP. JOHN LEWIS, [D] Georgia: This legislation should stand on its own merit. The dealmaking, the horse trading, and the outright buying and selling of votes by this administration is obscene, and not becoming of a great nation!

REP. GERALD SOLOMON, [R] New York: This administration has bought but not paid for stores of these pro-NAFTA votes courtesy of the taxpayers, and those taxpayers are going to be outraged. When you start adding 'em up, did you read the New York Daily News or the New York Post this morning, front pages, they say there's $50 billion there, $50 billion in goodies, giveaways.

REP. PAT ROBERTS, [R] Kansas: No deals have been made in Pat Roberts' office as the ranking Republican on agriculture. There have been no deals. I have been for NAFTA on the strength of that. Now, the gentlemen and I are members of the United States Marine Corps, and we're colleagues. In the Marine Corps, they teach you to shoot straight. You, sir, have fired a shotgun of fear at me, and I resent it.

MR. HOLMAN: While the debate raged on in full view of the public, pro and anti-NAFTA strategists worked behind the scenes to win over the few remaining undeclared members.

REP. BILL RICHARDSON, [D] New Mexico: [2:30 PM] We are very close to meeting the goal on the Republican side by maybe one or two votes, and we are four short of meeting the goal on the Democratic side. We hope that at the time of the vote we will hit our one hundred, and the Republicans will hit their number of one eighteen, one twenty.

MR. HOLMAN: By midday, an Associated Press survey of House members confirmed what had become increasingly clear over the past 24 hours, that pro-NAFTA forces had at least the 218 votes needed to certify the trade pact, and one by one, those previously undeclared declared.

REP. SHERWOOD BOEHLERT, [R] New York: I rise in support of NAFTA, and that's something I wasn't sure I was going to be able to say within the past 24 hours. And quite frankly, it's somewhat uncomfortable to say it. The easier vote for me, the more political vote, would be to oppose this agreement. I find myself uneasy standing apart from the labor movement when we so often stand together.

REP. BILL McCOLLUM, [R] Florida: Agriculture is Florida's largest -- it's the second largest industry and job producer. Until very favorable, side agreements with Mexico on citrus, sugar, and fresh vegetables were signed this week, I was prepared to vote no. Since these concerns have been resolved, I have carefully reviewed the core criticisms of NAFTA, which have been brought to my attention, and I have found them wanting.

REP. THOMAS PETRI, [R] Wisconsin: In the end, I will vote yes. We will lose some jobs, and I agonize over that, but we are losing those jobs anyway. With NAFTA, we'll gain other jobs.

MR. HOLMAN: The late surge in favor of NAFTA became obvious even to its opponents.

REP. JAMES INHOFE, [R] Oklahoma: The votes are in already that it will pass. It will look like a very narrow margin of victory for those who are pro-NAFTA, but there will be about 20 Democrats in the back who have said, Mr. President, if you really need my vote, it'll be there.

MR. HOLMAN: Apparently, the President's all out lobbying effort will succeed in getting the votes needed to pass NAFTA later tonight, but with that victory is likely to come fresh criticism of the means he used to achieve it.

MS. WARNER: Now, the NAFTA vote as seen by our regular political analyst, syndicated columnist Mark Shields. With Mark tonight is Vin Weber, a former Republican Congressman from Minnesota. He's now president of Empower America, a GOP research group based here in Washington. Welcome, Vin and Mark. Well, Mark, is the conventional wisdom right? Does the President have it, and if so, how did he do it?

MR. SHIELDS: Margaret, having confidently predicted on this broadcast two weeks ago that NAFTA would go down, I've ordered a large slice of humble pie.

MS. WARNER: Are you going to have salsa on it?

MR. SHIELDS: Which I'll eat with salsa on it. The President did it by -- those of us who had questioned the President's commitment, intensity, and passion on earlier issues, the job stimulus package, even on the budget and tax, certainly cannot do so on this. I mean, he has been all out for six weeks now, and particularly for the last two weeks he's been a man obsessed, a man possessed. He's worked around the clock tirelessly, and it's a tribute to his White House staff as well as to him but it's basically a personal victory for Bill Clinton.

MS. WARNER: Personal victory?

MR. WEBER: Well, to an extent. First of all, the President deserves a lot of credit. I think what the President did that really deserves credit beyond using all the tools of his office for which he's now going to be criticized and for which he would be even more criticized, I would argue, if he hadn't used them. All the people that are now arguing about buying votes if he hadn't done this would be saying this guy doesn't understand how to use power in Washington. He's not like Roosevelt and Lyndon Johnson, he's still dealing with the Arkansas legislature. But, more important than that, he understood that he needed to elevate the importance of this issue every day for about the last three weeks, no matter how loud the screaming got on the other side, and say this is in the paramount interest of the country, the paramount interest of my presidency, you can't possibly be against me, never flinched, and that worked. I have to add one point to my friend Mark's analysis of all of this, and while we're giving Bill Clinton all this credit, let's remember that the majority of the votes, the substantial majority of the votes that are going to pass this are going to come from the Republicans. That's to their credit and to Newt Gingrich, who took this on as much as Bill Clinton did as a personal cause. And they're going to deliver more Republican votes tonight than anybody thought they would at any point in this debate.

MS. WARNER: Well, Mark, what's the long-term significance of that, that Gingrich-Clinton alliance?

MR. WEBER: This shotgun marriage of political convenience? I don't think that even an optimist like Vin Weber would predict this is going to endure through the cold winter months in Washington. Margaret, you pointed out in the first, in your opening narrative that this is the most intense, the most passionate, the most committed the President has been. I think the long-term, quite frankly, is going to be, is the President prepared again, having established this standard of commitment, intensity, and passion to match it on whether it's health care or other legislative priorities? I mean, Vin is right. He took a lower case issue. NAFTA had not been an issue in the campaign of 1992. I mean, there was nobody in an exit poll that said they voted for Bill Clinton because or against his position on NAFTA. And he elevated it to the point of urgency and that his own presidency rode on it. So I think, I think that's, the long-term consequence is going to be those on the other side who opposed say why didn't you show the same kind of intensity and passion on, on issues such as stimulus and BTU and all the others, why now, and if this is a change in the President, is he prepared to continue at this level of intensity.

MS. WARNER: Do you agree it's just a shotgun marriage, this new coalition?

MR. WEBER: I think that they're at a crossroads, Margaret.

MS. WARNER: The --

MR. WEBER: The administration and the Congress. It could well turn out, in fact, it'll probably turn out as Mark suggested, that this is a one time alliance. It doesn't have to, and I would argue that that's a very important decision for this President to make. NAFTA admittedly, as Mark pointed out, did not have to be elevated to this level of importance. But by doing so and by portraying it as the country fundamentally at a crossroads in terms of its relationship with the rest of the world, people could legitimately look at this and draw implications about the President's view of other issues. If more taxes and regulations internationally, which is what protectionist trade legislation is, are a bad idea, then why are more taxes and regulations good at home? If, indeed, we are inevitably integrating into the world economy, which is the premise of the President's pitch for NAFTA, then don't we have to look at taxation and regulation in terms of our competitiveness with Japan, with Germany, with everybody else? There's a majority in the Congress right now that I think is going to say yes to that vision of the future and unite with the President on a more market- oriented health care reform, an economic approach that's quite different than the one that he talked about last winter, maybe including, Mark, pardon me, the vaunted capital gains tax reduction. But the President would have to turn away from a lot of his traditional allies. I suppose the other thing would have to be that he's going to rush to get back in bed with the people that, that were against him on the NAFTA. All I'm suggesting is that does not have to be the case?

MS. WARNER: Mark, do you agree? Do you think Clinton is at a crossroads here sort of between his new Democrat self and his old Democrat self?

MR. SHIELDS: Yes. I think, I think Vin is right there. I think it's a new and refreshing idea to hear a cut in the capital gains tax proposed by a conservative colleague of mine. I think the first time that came around was Chester Allen Arthur but the, the reality is this. Bill Clinton was elected with 43 percent of the vote. He - - any President and I think Richard Nixon who was as shrewd a political operator as, as probably who ever held the office said that no President is really in command politically unless he's testing his base of support, unless he's asking his base to do more and making them slightly uncomfortable. But what Bill Clinton did was he switched his political base on this issue. I mean, he attacked organized labor and criticized them for strong arm tactics. There was very little mention of the strong arm tactics that he asked for organized labor to provide on his budget and deficit bill when he was being opposed by the vast majority of Vin's party in the House. So I mean, he does have a choice. I think there is really the Democrats face a difficult period of healing. Those speeches, that of John Lewis, Democratic House whip, today, an enormously respected member from Georgia, very, very heated, charge, passionate charges against what the White House had done. Butler Derek, another Democratic assistant House whip from South Carolina, it's going to take some real healing. And I think that's what the President has to be about in a hurry.

MS. WARNER: Do you agree, Vin, that this division is going to persist?

MR. WEBER: Well, I think it is definitely going to persist. I think Mark is exactly right on that. The problem for the President is -- and not to draw inordinate conclusions from the round of elections completed a couple of weeks ago -- but Dinkins and Florio do not indicate to this President that going down the traditional liberal labor line is any sure road to success. On the other hand, deciding that he's going to forge the new coalition that we've talked a little bit about here and really maybe do ongoing battle with the, if you will, the Bonior wing of the Democratic Party, probably puts him at risk in a Kennedy style challenge a la 1980 when Kennedy took on President Jimmy Carter.

MS. WARNER: From the left.

MR. WEBER: From the left in his own primary. I don't think that he has an easy answer to this, but, you know, my guess is that he'll probably, given his instincts, try to patch things up in the Democratic Party. I hope not.

MS. WARNER: Mark, let's look at the opponents for a minute, the Bonior wing of the Democratic Party. Did they make any mistakes?

MR. SHIELDS: Did they make any mistakes? Obviously, their count was a little stronger. They lost some people who had told them they were with them. But I think it was kept at a -- other than the attack essentially on organized labor, I think the President made every effort to de-personalize the attack, the debate. And I think so did those who opposed the President on it. I don't think in that sense there were mistakes made. I don't know how else they could have done it. I mean, the President, the President showed a commitment on this issue that he hadn't shown in his presidency before, Margaret, and I don't know if you could have anticipated that.

MS. WARNER: And where do you think, Mark, this leaves the two most outspoken opponents of this, labor and Ross Perot?

MR. SHIELDS: Well, I think Ross Perot was obviously hurt by the debate with Al Gore. And organized labor is -- is -- was hurt by the attack. They felt a little bit misused by, by the President, who had -- they had been key and very helpful inhis campaign. They had been key in his earlier fights. They were committed on health care. And to be singled out as sort of a villain in the piece was, I think, upsetting. I think what organized labor faces, and candid voices in that movement will acknowledge it, is a loss of their membership's enthusiasm and loyalty to Ross Perot, that they see Ross -- that the Democrats didn't stand up, because this was a bottom up issue. This came in the ranks. The fury that was expressed by the leadership of organized labor really came from its membership. This was not something that was galvanized simply from the top. And I think that they were reflecting that kind of fury, and if they feel that organized labor's own leadership let them down or the Democratic Party let them down, then the one person who kind of stood with them on this was Ross Perot.

MS. WARNER: Do you agree, Vin, we're going to see that?

MR. WEBER: Yeah. I think, Margaret, in a year in which or by any of them in which labor faced NAFTA, significant labor law reform, striker replacement legislation, and health care reform, among other issues, for them to have put this much on the line on NAFTA has to be judged as one of the great mistakes, I would argue, literally of modern, political history for organized labor. They are the biggest losers in all this. They have inadvertently, it seems to me, given Clinton the equivalent of Ronald Reagan's victory over labor in crushing the PATCO strike. And he didn't ask for it. So labor is the biggest loser in all of this. I, I don't think that they come back from it very easily, frankly.

MS. WARNER: Well, Vin, Mark, thanks very much. SERIES - CHINA IN TRANSITION

MR. MacNeil: Now another of our documentary reports on the People's Republic of China. China is joining thirteen other nations this week in Seattle at the Asia Pacific Economic Cooperation meeting. For the first time, President Clinton will meet China's President, Jiang Zemin in an effort to restore harmony to Sino- American relations. They've been strained this year by disagreements over arms sales to the Middle East and Pakistan, nuclear testing, and human rights. Our special correspondent is China scholar Robert Oxnam, former president of the Asia Society, now at Columbia University and the Bessemer Group, a New York investment institution. Tonight he looks at the People's Liberation Army and China's military role in Asia.

MR. OXNAM: China currently has some three million troops on active duty. More than 1.2 million are in the reserves. The People's Liberation Army, the PLA for short, is the world's largest fighting force. It's an unsettling fact of life for its neighbors, who are gathering this week in Seattle. China's land mass, population, booming economy, and huge army make it a formidable presence, especially since China has been an unpredictable neighbor, at times friendly, at times obstinate. One of the PLA's top officers insists its strategic motives remain unthreatening.

MAJ. GEN. XIONG GUANGKAI, People's Liberation Army: [speaking through interpreter] To say that the China threat is growing goes against the reality. Our defense policy, our strategic policy is a defensive one, I might say one of active defense. We do not have a single soldier stationed abroad. We have no military bases abroad. We have a policy of active defense.

MR. OXNAM: Throughout much of its history, China's military posture has been defensive, as symbolized by the famous Great Wall. Over 2,000 years ago, China's first emperor built the Great Wall for a military purpose. It was supposed to keep foreigners, so- called "barbarians" from invading the Middle Kingdom. It didn't work. Time and again the barbarians broke through the Great Wall and often established their own dynasties. And then in the 19th century something happened that the first emperor never thought of: European and Japanese barbarians invaded China by the sea, thus rendering the Great Wall a quaint tourist attraction. The People's Liberation Army was founded as an arm of the Chinese Communist Party in the 1920's. Under the leadership of Mao Zedong, it fought the Japanese and the nationalist forces and put Communists firmly in control in 1949. Since then, the PLA has fought occasional border wars against India in the early 1960s, the Soviet Union in the late '60s, the Vietnamese in the late '70s. Only in the Korean War, 40 years ago, did the Chinese strike deeply into enemy territory. Today, China is using its newfound economic prosperity to fund costly military modernization. Willy Lam covers the People's Republic of China for the South China Morning Post.

WILLY LAM, South China Morning Post: Well, the neighbors of China suddenly are very nervous about the arms modernization program which the Chinese have bene pushing vigorously since the late '80s. So I guess so long as China continues to import large amounts of sophisticated weapons from Russia, for example, it is very difficult for the leadership to convince its neighbors that it doesn't have ambitions to be the military superpower of the region.

MR. OXNAM: During a recent trip to China, we asked to visit a military post. After some resistance, we were allowed to inspect a model infantry unit near Beijing. In many respects, the 196th Infantry Division is just like a western military unit. It's a major center for training and supplies. But it is different in two respects: For one thing, many of the soldiers are also farmers. The division is self-sufficient in food. It's different in another way. It still feels the towering presence of the late chairman Mao Zedong. Mao's calligraphy in the division's museum urges troops to clothe and feed themselves. It is the legacy of the famous long march of the 1930s when the Red Army had to live off the land while being pursued by the Chinese nationalists. The 196th proudly demonstrates its agricultural prowess. All this produce comes from soldier-operated farms nearby. The majority of China's three million troops are still foot soldiers. Their training is rugged. Crack units put on exceptional displays of assault technique, hand- to-hand combat, individual marksmanship, and artillery firing. The emphasis at this military base is clearly on human skills, not on technology, where experts agree the PLA is deficient. To overcome the military technology gap is a major goal for the PLA in the 1990's. Michael Swaine of the Rand Corporation.

MICHAEL SWAINE, Rand Corporation: The Chinese feel that they are behind the ball, behind the curve, on their capabilities militarily. I think this point was driven home during the Gulf War, where the Chinese leadership really saw that technologically they were not really in the ballgame. Their basic air force is still very much vintage 1950's or 1960's, using adaptations of MiG-21's, MiG-19's that they've improved from the original versions. And this is why it's very important for them, and it's been important to acquire some Russian, more advanced Russian air force aircraft. They've acquired a small number of Suikoi-27 aircraft which are very capable, a long range aircraft.

MR. OXNAM: The lagging technology of the PLA is openly acknowledged even by senior officers attending an elite command course at the National Defense University in Beijing. A rear admiral assessed the navy.

REAR ADM. KANG ZHENHAD, PLA, Navy: [speaking through interpreter] I think you must be quite clear about the level of modernization of our navy. The level is not high, but as instructed by Comrade Deng Xiaoping, we're trying to develop our military and also trying to develop our navy.

MR. OXNAM: Missile-firing, late model frigates berthed in Shanghai are examples of the medium-sized vessels designed to make China a regional sea power. The PLA Navy has been using such vessels to project its force into the South China Sea, especially around the Spratly Islands, which the Chinese claim as their own and call the Nansha Islands.

MAJ. GEN. XIONG GUANGKAI: [speaking through interpreter] There can be no argument about China's sovereignty over the Nansha Islands. But some foreign countries have occupied some of the islands in the Nanshas. Faced with these facts, we have proposed to solve the dispute peacefully by means of consultations and negotiations.

MR. OXNAM: The foreign countries who dispute China's claim include Vietnam, Brunei, Malaysia, and the Philippines. The 190 tiny islands that make up the Spratlys are 600 miles southeast of China and 300 miles off the Vietnam Coast. China's stated willingness to engage in cooperative economic development of the islands still leaves its neighbors uneasy because Beijing won't give up its claim to ownership. Australian China Scholar Desmond Ball.

DESMOND BALL, Professor, Australian National University: I believe that the overall goal of the current Chinese defense modernization program is to put China in a position where, on all major security issues which affect China, it can basically dictate the terms of settlement of those issues, whether they concern border issues with India, border issues with Vietnam, or islands in the South China Sea.

MR. OXNAM: In its efforts to modernize, China is the only large country in the world whose military budget has gone up since the end of the Cold War. Chinese leaders are sensitive about this statistic and seek to put it in perspective. Major Gen. Xiong Guangkai is assistant chief of staff of the PLA.

MAJ. GEN. XIONG GUANGKAI: [speaking through interpreter] So I think that it should be pretty clear to the Americans what this really means, to have a $7.3 billion defense budget for a military strength of three million soldiers. China is the country with the lowest defense budget. There is no comparison between our defense budget with the one of the United States.

MR. OXNAM: The numbers are challenged by others who study China's military.

DESMOND BALL: China's defense budget in 1993 in U.S. dollars is probably somewhere around 25 to 30 billion dollars. That includes not just their manpower and their conventional weapons, but also their nuclear program, which remains a very active program. There is no way that they could be supporting all of these programs as well as all their new acquisitions with a budget of any less than about $25 billion.

MR. OXNAM: A former Pentagon official says China's spending makes him suspicious.

HENRY SOKOLSKI, Former Pentagon Official: Well, the first thing that they're doing that's really troublesome is that they're modernizing their strategic nuclear forces, which makes absolutely no sense if all they want to do is to deter an attack. What they seem to be aiming towards, literally, is a much more accurate type of missile that can penetrate missiledefenses, that will be very hard to target, and that can reach not only in the region to Japan but also to the United States.

MR. OXNAM: China's recent muscle-flexing on military issues cast dark clouds over already stormy relations between Washington and Beijing. Washington strongly protested when it claimed China was transferring missile technology to Pakistan in violation of international agreements. Then the U.S. demanded inspection of a Chinese ship, accusing it of transporting chemical weaponry to Iran. The inspection by Saudi Arabia revealed nothing, causing smug rejoinders from China. So part of the background to the Seattle summit, beyond touching human rights issues and trade question is a rancorous military relationship between China and the U.S. The private meeting between President Clinton and China's president, Jiang Zemin, their first, might set the stage for renewing a more cooperative military dialogue. Official military exchanges had been cut off abruptly following the PLA's role in suppressing the 1989 Tiananmen Square demonstrations. Paul Godwin of the U.S. National War College.

PAUL GODWIN, U.S. National War College: Regular contact between the two officer corps, regular contact between the senior military officers such as the commander in chief of the Pacific Command and so on and so forth of the Chinese military gives a sense of confidence, a sense of understanding between the two militaries that simply cannot be achieved without regular contact. And if we're going to have a new China, as I believe we will, and a much more powerful China fifteen to twenty years down the road, then I think it behooves us to have a good working relationship with China's military.

MR. OXNAM: Human rights activists like Robin Munro of Asia Watch say western contact with the PLA should not be resumed.

ROBIN MUNRO, Human rights Activist: It was the Chinese military that carried out the massacre in Beijing on June 3rd, 4, 1989. They acted as the internal, repressive arm of the Chinese government. At the time, I think many PLA soldiers were very resentful of being forced to play that role. But there's no doubt that they will continue to play that role if, if demanded by the political authorities. They will repress again. They will open fire again if ordered to.

SPOKESMAN: The Chinese military like bureaucracies in China in general are run by men, not by laws.

MR. OXNAM: Experts who gather regularly for conferences on the PLA think the army's domestic role is just as worrisome as its international behavior. Hardest to see but perhaps most important is how much the PLA supports and influences the civilian government. The biggest question is whether the military will intrude into the succession process after the death of Deng Xiaoping.

MICHAEL SWAINE: I think the position of the military towards the succession will be a key issue in the entire process. That doesn't necessarily mean that the Chinese -- that the military will take over the succession process and intervene in an overt way. But I think it's -- it's always played, the military has always played a very crucial role in politics in China.

MAJ. GEN. XIONG GUANGKAI: [speaking through interpreter] On this matter I can tell you flatly there is no possibility. I want to stress that our armed forces are under the absolute leadership of the Communist Party of China. Moreover, I want to make the point that the succession within the leadership has been an issue which our party has been working on for many years. As you know, we have already established the third generation of collective leadership with President Jiang Zemin at its core.

MR. OXNAM: Whatever future role the military plays in politics, there is no doubt about its current roles in economics. In a Communist country that has recently fallen in love with capitalism, it's the Chinese military who are the biggest entrepreneurs of all. Officer investments cover a wide range, from the elite Palace Hotel in Beijing where the five stars might describe the rank of the generals who own it, to the popular J.J.'s Disco in Shanghai, where a "Star Wars" spaceship offers an appropriately martial theme for the most unusual PLA money maker. So while its troops train for any eventuality, the People's Liberation Army faces a delicate challenge, how to be loyal to the Community Party, while enjoying the once forbidden fruits of capitalism. And its neighbors hope the biggest kind on the Asian block can modernize militarily without becoming a world class bully. UPDATE - TERRORISM TRIAL

MR. MacNeil: Next tonight, an update on the World Trade Center bombing trial. February's bombing was an act of urban terror that shocked the world and set off fears of a wave of terrorism on American soil. But within weeks, the FBI charged seven members of a Muslim fundamentalist group with the bombing. In June, the FBI made more arrests and said members of the same group had planned a second wave of bombings of other New York City landmarks. Four of the seven men charged in the World Trade Center bombing are now on trial. The others are awaiting trial. We begin our coverage with this backgrounder from Correspondent Tom Bearden.

MR. BEARDEN: The trial is taking place in federal court in lower Manhattan, just blocks from the Trade Center, itself, the scene last February of one of the worst terrorist incidents in American history. Extra security precautions were added after the prosecutors received death threats. FBI agents with earphones are a constant presence during each session. Jurors are identified only by number, and Judge Kevin Duffy even asked the courtroom artist to draw the jurors only from behind. In his opening statement, lead prosecutor J. Gilmore Childers said defendant Ahmad Ajaj had brought bomb-making materials and videotape into the country. He said defendant Mahmoud Abouhalima mixed and provided the chemicals. Defendant Nidal Ayyad, he said, provided the chemical engineering expertise to make the bomb, and defendant Mohammed Salameh was accused of being involved in several phases including renting the warehouse where the chemicals were stored and renting the van to carry the bomb. Initial testimony recalled the horror of the blast, itself, with diagrams of the bomb crater and emotional testimony by survivors. From the start, the government acknowledged that it had no witnesses who actually saw the defendants do anything illegal. The result has been long days of tediously technical testimony as the government tries to build up its circumstantial case bit by bit. There are charts, maps, forensic photos of bloody victims. There's a veritable auto junkyard of blast-damaged vehicle parts. There are expert witnesses. Childers says it's all part of a chain that will link the defendants to the explosion that killed six people in the Trade Center's garage and injured more than a thousand others. The key physical evidence was a yellow Ryder rental van like this one. Prosecutors say the van brought the explosives to the garage and that defendant Salameh had rented it from a lot in Jew Jersey a few days before. The bomb reduced everything in its vicinity to twisted metal, so prosecutors sought to make their case by linking the tiny increments of evidence together into larger patterns. Elaborate charts showed where each fragment of rubble was found to establish the pattern of the blast and place the location of the vehicle responsible. The jurors saw dozens of those crumpled parts. They heard testimony from experts who connected the wreckage back to the Ryder truck firm from identification numbers stamped on each part then back to Salameh, the last person who rented it. Salameh has never denied he rented the van. His lawyer, Robert Precht, says he reported it stolen and never used it to carry explosives to the Trade Center.

ROBERT PRECHT, Defense Lawyer: The government is arguing that Mr. Salameh's conduct was consistent with that of a person who had just plotted to blow up the World Trade Center. And what I attempted to do before the jury is to show that at key points in the days before, during and after the World Trade Center bombing, Mr. Salameh acted as a man who had a completely innocent state of mind. And you have to ask yourself whether it is believable that a man who has been charged with blowing up the World Trade Center would have rented the vehicle in his own name, giving true addresses and true phone numbers; whether he would have reported this very vehicle stolen 15 hours before the World Trade Center explosion.

MR. BEARDEN: After the first month, the case took a surprise twist with the news that a key government informant, Emad Salem, had taped his talks with FBI agents. Salem had penetrated the circle of Muslim fundamentalists which included Sheik Omar Abdel Rahman. Members of the group have been charged either in the Trade Center case or in a second plot to blow up other New York City landmarks. When transcripts of the tapes were leaked to the press, they showed that Salem had warned the FBI about the general outlines of the bomb plot well before the Trade Center blast. The transcript quotes an FBI agent telling Salem his agency had failed to act in time, saying, "The fact of the matter is that nothing was done about it. If it had been handled correctly, we should have been able to intervene." The jury has not yet heard those tapes. They raise the possibility that defense lawyers may use them to charge government entrapment or move for a mistrial.

MR. MacNeil: For more on the story we're joined by Peg Tyre, a reporter for New York Newsday who has been covering the trial since it began. We are in the seventh week. What can you say has been achieved by all this slow accumulation of evidence?

MS. TYRE: I think that the government has so far focused on Ajaj, who is Ahmad Ajaj, one of the four defendants in this case, and they have incrementally, using up until now, I guess, ninety-eight witnesses have established that Ajaj traveled to this country with another defendant, who is now a fugitive, and he was carrying bombing manuals and was intercepted at JFK by INS agents.

MR. MacNeil: And he had four passports.

MS. TYRE: He had four passports, and he was sharing aliases with this other defendant, Ramsey Youssef.

MR. MacNeil: And he was a man, although he just worked in a pizza joint I think in Houston, had a first class ticket from Pakistan to -- airline ticket to come here.

MS. TYRE: There were several mysterious things about Mr. Ajaj. He presented a Swedish passport with a picture, his picture superimposed on top of the actual picture. He had a very curious story about how he got that passport, what his citizenship was, where he resided, and he seemed to have a lot of artifacts from - - of the Afghanistan conflict, including Mujahadim postcards of I would assume friends of his standing on top of a train holding a rifle in victory.

MR. MacNeil: Now was he the one who was also supposed to have been tortured by Israeli security people?

MS. TYRE: That's fairly well document.

MR. MacNeil: That is documented that he was?

MS. TYRE: There are photographs of him when he was released by the Israeli police and he was delivered here by the Red Cross, and he did undergo extreme torture, and according to people who knew him when he first arrived here, it was quite -- was quite a mentally imbalanced man as a result of that torture.

MR. MacNeil: And he tried to kill himself last week --

MS. TYRE: He did.

MR. MacNeil: -- in jail.

MS. TYRE: Yes.

MR. MacNeil: Describe that. What do we know about that?the

MS. TYRE: Well, we know that there was some sort of communication between himself and another defendant, Bill Al Akazi. What happened is they took -- they tried to hang themselves and also cut their, the veins in their arms. It was interrupted by guards, and I guess there was a brief lockdown situation because the other prisoners began to -- a small riot which I don't think is uncommon but in this case it's supposed to be a secure facility, so it was of utmost importance to the Bureau of Prisons.

MR. MacNeil: And you've seen Ajaj in court since that attempt?

MS. TYRE: I have. He seems pale and it's clearly not an easy time for him. He seems under a lot of stress, and all the defendants have complained repeatedly to the judge about their treatment. They find it very difficult to live in prison, as many would, and they find that the meals are inadequate because of their dietary restrictions. And they feel that they need to have more contact. Ajaj is a way, is thousands of miles from his family and has very few visitors or contact with people outside of his fellow defendants.

MR. MacNeil: How strong is the case against him? You say they've concentrated on him so far.

MS. TYRE: Well, so far, they have established that he came to this country, that he used a false passport, and that he was carrying bombing manuals. Carrying bombing manuals is not a crime, but bombing manuals were, in fact, printed here in Illinois, so he was just carrying back the Arabic translation of those manuals. He served six months for presenting a false passport. He served his time for that. There is one element that remains to be seen in the government's case against Ajaj, and that is some tapes that they made of his conversations from Otusville, a prison in New York, and from MCC, the prison in New York City. If those conversations can tie him to a larger conspiracy, I think he's in a lot of trouble, but they'd have to be very strong conversations and conversations --

MR. MacNeil: And that would be relevant to the second trial that's coming up, would it?

MS. TYRE: No, that would be for the first trial.

MR. MacNeil: For the first trial. I see.

MS. TYRE: If he was -- had talked to other people who might have been involved in the explosion at the World Trade Center if he had had conversations with these defendants, if he had spoken about the act before it happened, anything like that would indicate that he had some involvement beyond what they accuse him of, which is bringing bombing manuals in. The question comes up: If he brought the bombing manuals in and they were intercepted at JFK, then how could he -- how is that the recipe for the bomb, if they were?

MR. MacNeil: So, so far a questionable case against him.

MS. TYRE: I think he's the weakest.

MR. MacNeil: He's the weakest. All right. Let's just go very quickly through the others. Mr. Abouhalima, who is charged with having run the warehouse and mixed the chemicals that, that allegedly went into the bomb, what about that case?

MS. TYRE: Today was the first day they mentioned Mahmoud Abouhalima's name, and they mentioned -- they said that he was a visitor to another defendant's apartment. They've never mentioned him in terms of any criminal acts, and I have a feeling they're going to save him for last, as he is probably the most problematic. He played a -- if you could believe the government's opening statements -- he played a very key organizational role, and yet, he didn't leave many fingerprints. He didn't sign many things. He was probably the smartest of the group. What he -- what they do have as far I know is they do have an eyewitness but it's not a trained eyewitness. It's not a federal investigator, a police officer. It's a fellow at a garage -- at a gas station where they filled up the van, the gas tank of the van, and that's the person who will -- who is pivotal for the government's case. They also have discussed other forensic evidence, but I am somewhat skeptical about that.

MR. MacNeil: And you haven't heard it all yet presented.

MS. TYRE: I haven't heard any of it yet.

MR. MacNeil: No. And Ayyad, the man who is supposed to have provided the chemical engineering expertise?

MS. TYRE: Nidal Ayyad has had a few witnesses speak to his case, a few government witnesses, and I have to say that one of them was at one time partially quite damning and partially quite charming on his behalf, a secretary who he worked with who said that -- who was a lovely man, who was very concerned about America and the freedoms here and very much enjoyed them and was happy to talk about it.

MR. MacNeil: And impressed when he got his American citizenship.

MS. TYRE: Very happy about that, but he -- she also testified that a few -- about 45 minutes after the explosion he came to tell her that terrorists had bombed the World Trade Center. Now we know that even police radio was putting out that it was a transformer fire, so it would suggest that he had some foreknowledge. There's also a problem with Nidal Ayyad's defense in that he had a -- in his computer there was a copy of the letter which was sent to various organizations taking credit for the bombing. That's going to be a difficult piece of evidence to argue around.

MR. MacNeil: And finally, of these four, Mohamed Salameh, whose lawyer we just saw on that, who rented the van, what is the case there? Is that a good case?

MS. TYRE: I think the government has a very strong case against him. Salameh is the man who signed the leases. He's the man who ordered the chemicals in his name or in his alias, his consistent alias. People -- he left his -- a paper trail. He was easily spotted by others. I think that probably there's so much paper on him, there's so many receipts they have from chemical companies that I think that he's probably the one most likely to be convicted.

MR. MacNeil: Now, what about connections with other countries? I mean, we've talked about Ajaj coming from Pakistan and somebody paid for a personalized airline ticket for a guy who works in a pizza joint, and two of them, of the seven people accused have absconded and there are rumors that they've gone to Iraq. What has come out, and what do we know about who paid for this and connections with international terrorism, other governments, whatever?

MS. TYRE: That's the question that everyone wants to know and unfortunately, the government is not trying that case. They're trying a case on minutia, on minute forensic evidence, a stain here, a chemical ere, a receipt here. We're never getting the big picture because I think that case is impossible to prosecute. A case involving international conspiracy is far beyond the scope of what they want to tackle. So it's been the great question and the great unknown. There is money involved in this but not a tremendous amount of money. There were plane tickets, $2,000 here. There were chemical receipts. But this bomb was not that expensive, $3,000. The van was not $200 to rent. This is not a high priced operation. This is not a plastic explosive, you know, high paid operatives. These are pizza guys and taxi drivers and not people who are commanding great salaries.

MR. MacNeil: Would you expect that when the wider conspiracy trial begins when -- in a few weeks time?

MS. TYRE: No. That won't be until the -- I would -- it's hard to say but probably the spring.

MR. MacNeil: The spring. Will that -- would you think that will be when the government would try and make wider connections, or does it not have the evidence to do that?

MS. TYRE: I don't think they have the -- I haven't heard it if they have. I -- my sense is that it's much -- that it's much more of a homegrown operation than the World Trade Center explosion, although many of the people involved in both these cases had ties to the Afghanistan conflict and traveled frequently to Pakistan. There -- I don't think there will be much of an international scope to that case at all. We know that the World Trade Center bombers, because of the work that we've done at Newsday, have -- were on the telephone constantly, calling a vast array of countries, Middle Eastern countries, constantly, I mean, to the tune of maybe 15 calls an hour to Egypt. So we know that they were in constant contact, but that's not the case that's being tried.

MR. MacNeil: Okay. Well, we'll bring you back when we're further along in the trial. Peg Tyre, thank you.

MS. TYRE: Great, thanks. RECAP

MS. WARNER: Again, the major stories of this Wednesday: With the crucial House vote on NAFTA approaching, supporters appeared to have more than enough votes needed for passage. The Senate voted to ban 19 military style assault weapons, and South Africa's political leaders signed a revolutionary agreement formally ending 350 years of white minority rule. Good night, Robin.

MR. MacNeil: Good night, Margaret. That's the NewsHour for tonight, and we'll see you again tomorrow night. I'm Robert MacNeil. Good night.