By Fred Hiatt

Sunday, May 30, 1999; Page B07

Through history America has veered from demonizing China to romanticizing it. Last week, Washington seemed to be doing both at the same time. Underlying the confusion was a U.S. policy toward China that has been muddled since the end of the Cold War.

But the immediate catalyst for last week's rumpus was the release of the Cox report on Chinese espionage. The 872-page report of the House Select Committee chaired by Rep. Christopher Cox, a California Republican, maintained that China has successfully stolen every U.S. nuclear warhead design as well as important classified technology relating to missiles, submarines, space weaponry and more.

It said that China has a massive and continuing campaign to collect high-tech information from the United States by methods licit and illicit. Republican and Democratic administrations alike have failed to respond adequately to this campaign, the committee found; U.S. aerospace companies have been at times complicit.

What was remarkable about the report was that nine members of Congress, ranging from conservative Republicans to liberal Democrats and from enthusiastic China-engagers to true China-skeptics, unanimously endorsed its conclusions. Even the Democrats who seemed to be backpedaling under political pressure once it was released -- not one of them had dissented or even filed additional views.

Nonetheless, critics quickly accused the Cox panel of seeking to ignite a new Cold War. Republicans saw a juicy campaign issue and demanded the resignations of President Clinton's national security adviser or attorney general, or both.

Cox, taking a break from the furor to talk in his Capitol hideaway last week, was quick to point out in an interview that the committee report recommends no particular U.S. China policy. "There is nothing in the report itself that requires a change in anything except our security policy and our counterintelligence policy," he said.

But Cox the Republican foreign policy leader -- as opposed to Cox the bipartisan committee chairman -- has definite views on what's gone wrong in U.S. policy toward China. To a large extent, his analysis mirrors that of "About Face," a valuable new history of U.S.-China relations by journalist James Mann.

Both Cox and Mann point out that from the time that Richard Nixon established relations with Communist China until 1991, U.S. policy had a specific goal: the isolation and weakening of the Soviet Union. The United States was willing to indulge China, strengthen its military, share intelligence and encourage U.S. investment in order to forestall a China-Soviet alliance.

The Chinese regime's execrable treatment of its own people and its dangerous proliferation of nuclear and missile technology were generally viewed as irrelevant.

"It was a logical strategy," Cox said. "It sacrificed human rights to strategic aims, but at least it was logical."

When the Soviet Union collapsed, so did the rationale of U.S. China policy. But that policy just kept going -- "out of habit," Cox says.

Mann believes it wasn't just inertia. China's growing economy, and the U.S. investment that Washington had encouraged, created a powerful business lobby that opposed any rethinking of U.S. policy. That more than anything moved Clinton from his 1992 campaign opposition to "coddling" Beijing's dictators to his 1998 willingness to slap down the aspirations of democratic Taiwan while traveling in Shanghai. "Under Clinton, commerce became the dominant motivating force behind American policy," Mann writes.

The result, Cox says, is an Asia policy too focused on China. "If, as Nixon said, it's hard to ignore a billion people, we're proving him wrong in India," Cox said.

Nixon was talking about China, of course, not India. But Cox points out that India is a market with nearly as much potential, with English speakers and a legal system "transparent to a degree China doesn't even approach." And India is a democracy, while China's Communist regime regularly cites the United States as its chief enemy. Yet Clinton, who took his longest foreign trip ever to China, pays attention to India only when it does something the United States disapproves of.

If you make these arguments, "you're always fighting against the straw man" that you want to isolate China, Cox said, or that by showing a certain wariness toward China you will be responsible for it turning hostile.

"If you read the People's Daily, you see that is their line -- 'If you want to make China an enemy, treat us as an enemy,' " Cox said. "As if states don't have interests, as if they are personalities that get moody."

From the start, Mann's book shows, China has pursued its national interests in its relations with the United States with remarkable adeptness; the Cox report is just one more piece of evidence. The United States, meanwhile, slighting the democracies of Asia for fear of offending the Beijing regime, has yet to sort out where its interests lie.

The writer is a member of the editorial page staff.