BEIJING - While the rumor mill in Beijing keeps on whirling and spitting out names for the future leadership that will emerge from the Communist Party Congress that gets under way this Friday, China has made a significant geopolitical breakthrough on its most sensitive territorial claim, that of the Spratly Islands.

Premier Zhu Rongji has signed a landmark agreement in Phnom Penh with member countries of the Association of Southeast Asian Nations (ASEAN) to avoid conflicts in the area, ownership of all or parts of which are disputed by China (and Taiwan), Vietnam, the Philippines, Malaysia and Brunei.

"This important advancement of China-ASEAN relations marks a higher level of political trust between the two sides and will contribute to regional peace and stability," Zhu said in a speech in the Cambodian capital. Under the agreement, claimants will practice self-restraint in activities that could spark disputes, such as inhabiting the islands. The signatories also agreed to exchange views among defense officials and give advance warning of military exercises in the region.

The agreement should mitigate a potential flash-point between China and ASEAN at a time when both parties are keen on improving commercial and diplomatic relations to boost growth in East Asia, which so far has largely escaped the economic doldrums encompassing most of the rest of the world. While in Phnom Penh, where ASEAN leaders were holding a summit, Zhu also moved up the timetable of a free-trade agreement with the region. Since the 1997 financial crisis, Beijing has been developing trade and investment in neighboring countries in an effort to produce a virtuous circle of imports and exports among these countries, which incidentally are increasingly using the yuan in bilateral transactions, even though the Chinese currency is not freely convertible.

The Spratlys agreement, however, has a broader political goal than improving ties with Southeast Asia, and is important as a signal of the political intentions of the new Chinese leadership due to be announced next week. Those who worry about a possible future Chinese threat point to the Spratlys and argue that after reunification with Taiwan, Beijing would press ahead with its claim on the disputed islands. That area of the South China Sea, dotted by a few rocky islets, is a crossroads of important maritime routes leading ultimately to Japan and the United States, and is also an important potential source of oil and gas. The Chinese claim on the Spratlys is thus a byname for much-feared Chinese expansionist intentions. The China-threat theorists argue that after Beijing has achieved the reunification with Taiwan it will push for the full control of the South China Sea, and after that possibly the control of all Asia.

This scenario would mirror that of the German dictator Adolf Hitler in the 1930s, when he first gobbled up the Ruhr, then asked for Austria, then moved for the Sudeten but actually swallowed all of Czechoslovakia while he was appeased by the timid European powers. The China-threat theorists warn that Beijing should not be similarly appeased on the Taiwan issue but should be stopped before it is too late.

China has always vehemently rejected such comparisons to 1930s Germany and has not given up its goal of reunification with Taiwan or its claim on the Spratlys. This latter claim is sensitive in theory, although not nearly as strategically important as that of Taiwan. Maoist China in fact gave up about one-fourth of its territory to the then Soviet bloc. Mongolia, now an independent country, is still considered part of China according to the traditional maps used in Taiwan. Moreover the surrender of this territory was for the decades cited by Taiwan's Nationalists as evidence that the communists were not patriotic. At the time, Beijing's argument was that ultimately the whole world would become communist and therefore the cession of Mongolia was only temporary and did not matter in the face of the total victory of communism.

In fact, this argument from Beijing covered the fact that China, very weak after 1949, had its arm twisted by Moscow, keen on expanding its territory in the east. This thorny issue flared up again in the early 1970s with a border war with Russia over some disputed islets on the Ussuri River. However, in recent years, even after China had gained more clout vis-a-vis a very weak Russia in the mid-1990s, Beijing made no effort to regain the ceded territories. In fact it signed an agreement with Russia and other former Soviet republics ending all border issues to ensure a peaceful environment for many years to come. At the time the internal argument was that the territory had already been given up by Mao Zedong, and successive leaders had to comply. Similarly, the claim on the Spratlys had been endorsed by Mao, and therefore for the same reason that Beijing could settle the border issue with Moscow, it could not yield on the South China Sea.

Now, however, China is extremely keen on reaching out to ASEAN countries. In the early 1990s both Beijing and Taipei toyed with the idea of staging war games in the Spratlys that would frighten neighboring navies out of the contested area and reinforce Beijing's and Taipei's hold on the islands. Since the 1997 financial crisis, however, China has realized that it must maintain good diplomatic relations with these neighbors in order to expand its foreign economic relations to form a safety net in a world whose economy and trade are extremely volatile.

China has also said in the past years that while it is not giving up its claim on the islands, it wants mutually profitable development of the area. The agreement on avoiding conflicts in the region is thus an important contribution to further defusing any row with ASEAN, while removing an argument from the arsenal of the China-threat theorists.

This is perhaps the most important political signal China is sending to the world before the 16th Party Congress. China wants a peaceful environment for the future and wants to concentrate on economic development for many years to come. This is far more important than territorial claims that would only take away energy and resources from the country's healthy economic growth. (2002-11-06 Asia Times)