Thank you very much for that kind introduction. It is a greatpleasure to be in Hong Kong again -- and to be able to enjoythe renowned hospitality of the American Chamber of Commerce.You know, I look forward to my periodic forays out of theMiddle Kingdom to discover how those of you on the peripheryof civilization are faring. And, you're doing quite well.

In speaking with some of you before lunch today, I was notsurprised - perhaps humbled somewhat - to learn about themany years of experience in China you have. Businessexperience, certainly, but also experience in dealing with Chinese government and politics. Education and culture.The prudent course of action would be to yield the podium to you.

Still, the toughest thing for a former senator to do is sit downand keep quiet. So, let me take a few minutes to sketch -- inbroad outline -- the enormous stakes we have in making sure thatChina and America better understand and work with one another.

My message is quite simple. The U.S.-China relationship will beone of our most important bilateral relationships in theremaining years of this decade -- and well into the 21st century.There is little we cannot accomplish together if we have:

-- the determination to cooperate to resolve the challengesconfronting us, and

-- the understanding that there will be disagreements --sometimes quite profound -- even with the best of intentions.

A simple message, perhaps. But, you will remember that littlemore than a year ago, China was conducting military maneuvers andlobbing missiles across the Taiwan Straits. The potential formiscalculation then was high. In response, and in order toprevent any miscalculation, the United States sent aircraftcarriers to the area.

Since last spring, we have witnessed a resurgence in ourbilateral relationship -- a dialogue at all levels -- anencouragement, if you will. Critics may carp -- and they do --that we have not defined "engagement". Engagement is amutually respectful effort to meet and enlarge the common groundwe share -- to try to resolve our differences through candiddiscussion.

I have said many times that there is no good alternative to thepolicy of engagement. We tried isolation in the past. It didnot work. After the Tiananmen incident in 1989, we began searching for a policy that would balance our many--andsometimes conflicting--interests in China and East Asia.Admittedly, there were some fits and starts. We have such acoherent policy now.

The Clinton administration has worked quietly, effectively -- andwith courage and determination -- to develop a comprehensive,credible and constructive policy toward China. A realisticpolicy:

-- One grounded on better understanding of China and of ourinterests here.

-- One which does not take any single issue as the soledeterminant of our bilateral relationship.

-- One which makes our intentions very clear.

The administration worked first to improve the tone of therelationship. This was not an easy task, given the images weheld of one another last March.

Since then we have had serious and substantive discussions onhuman rights, the World Trade Organization, Arms Control, Taiwanand -- a topic very close to your concerns -- Hong Kong.

It is not just the Clinton administration which is leading thecharge on our China policy. Since last November's elections,we have had nearly 15 percent of the U.S. Congress in China.Fifteen percent. I think that is unprecedented. My staff oftenrecoils when I tell them I am determined to have the other 85percent visit as well. I remind them -- as many of you wellknow -- that one trip alone does not provide a sense of thechanges occurring here. I'd like to see each member of theCongress in the People's Republic two or three times during thenext few years.

Speaking of the Congress, just two weeks ago the Speaker of theHouse visited. Speaker Gingrich urged his traveling party "tosee China" and they all professed, upon departure, that they hadcome away from the visit with a better understanding of China'srichness and complexity -- even though they might question thepolicies and practices of the Beijing government.

Just about every member of Congress who has visited Beijing hassaid the same thing as the Speaker. Sure, they will havedifferences with the President's policy. That is inevitable. But, the views of the Congress -- as theSpeaker implied -- should be based on first-hand observationsand conversations with China's leaders.

I take that as a vote for engagement. And, as you might guess,I have not often voted with Speaker Gingrich.

Now, why have I spent so much time talking about the Congress?Quite simply, it has a major role in shaping our bilateralrelationship. The administration -- and you -- need to beresponsive to that interest. Let me cite some examples:

-- Congressman Bereuter, who was here with the Speaker,sponsored the Hong Kong Reversion Act which calls on the StateDepartment to look closely at post-reversion developments.Senators Mack and Lieberman will be looking at the BereuterLegislation when it reaches the Senate. This is the second timein recent years -- the first being Senator McConnell's Hong KongPolicy Act -- that the Congress has expressed concerns about thefuture of Hong Kong.

-- Congressman Gephardt and others are sponsoring a bill whichwould require Congressional approval of any agreement China andthe United States may conclude regarding China's participationin the World Trade Organization.

-- Several members of Congress are working on a House ofRepresentatives-National People's Congress exchange to improveunderstanding among our parliamentarians. And,

-- Congress was the leading force two years ago in persuading theAdministration to issue a visa to President Lee Teng-hui ofTaiwan to visit his alma mater, Cornell University.

Personally-- having spent 18 years in the United States Senate --I welcome this interest. I believe an informed Congress -- likean informed public -- will eventually reach conclusions similarto those of the President about how to sustain the forwardmomentum in our relationship with China.

Like the Legislative branch, the Executive branch of governmenthas been active in China. Secretary of State MadeleineAlbright's late February discussions with Chinese leaders -- andespecially with President Jiang Zemin, just 12 hours before hewas to deliver the all-important eulogy of Deng Xiaoping -- showedhow intent the Chinese were on signaling their desire for animproved relationship.

Vice President Gore's visit less than a month ago did much toenhance Chinese confidence in America's desire for improved tiesand to establish a channel of direct communication. His visit-- the first by a President or Vice President since early 1989-- was a symbolic break from the constraints which have inhibiteddialogue at the very highest level. It had substance. The VicePresident proved to be a resolute interlocutor-- and I don't saythat just because he's from Tennessee. He discussed forcefullythe issues of importance to us.

And, he was particularly thoughtful and incisive in his commentsabout the environment. I would commend to you his remarks at theforum on environment and development where he emphasized how ourplanet will suffer if we fail to address key issues like energyusage and climate change. I would also commend to you the VicePresident's remarks at Qinghua University in which he discussed the linkage of political and economic freedoms-- again a subjectof interest to many here.

Looking ahead at the calendar, we have a very full schedule ofsenior meetings between now and the end of the year. I am enroute tomorrow to Washington to participate in Foreign MinisterQian Qichen's working visit there next week. Minister Qian andSecretary Albright will begin preparing President Jiang Zemin'sstate visit which is set for this autumn. Chinese leaders at thehighest level need to observe first-hand what makes Americaunique, just as we need to view for ourselves the changes thatare transforming China.

Visits of this sort are important. But, they must also move ourcommon agenda with China. That considerable agenda includes atleast three areas of special relevance to Hong Kong:(1) the current status of the World Trade Organizationdiscussions, (2) human rights, and (3) the reversion of Hong Kongto Chinese sovereignty.

First, the World Trade Organization. President Clinton has saidthat the United States supports China's application for a seat atthe international trade table. However, any WTO agreement mustbe commercially meaningful--with open markets and a levelplaying field--for all American companies.

We want to ensure that our companies have the right to importand export -- and ultimately distribute and service -- theirproducts and will not have to go through state-run corporations.We want to ensure that non-tariff barriers do not deny us theopportunities that tariff schedule concessions are supposed toprovide.

We want to ensure that our agricultural products -- from produceto processed foods -- are not subject to unreasonable,non-scientific compliance standards.

China, I predict, will someday be our largest export market.Without progress on market opening, our bilateral deficit withChina--already $39.5 billion in 1996 according to U.S. statistics-- will continue to be an irritant and a serious politicalliability in our relationship. China will be perceived as willingto accept privileges but neither the responsibilities nor theobligations of a fair trader.

Human Rights. We have time and again reaffirmed the seriousnessof our commitment to advancing freedom of expression, freedom ofthe press, the rule of law and the accountability of government.This defines who we Americans are as a people.

We believe China still has much to do in terms of protectingfreedom of political and religious expression in the PRC.

But, we have also said that we are not out to remake China inour image. We believe that China should uphold thoseinternational standards of human rights it has already grantedin its constitution and recognized in the Universal Declaration of Human Rights. We have encouraged China to sign and ratifythe United Nations Human Rights Covenants. We applaudPresident Jiang Zemin's decision to sign the InternationalConvention on Economic, Society and Cultural Rights. We hope China also will soon sign the companion covenant on civiland political rights.

Our own strong support for these values was reflected in ourdecision to proceed again this year with like-minded nationsto place a China resolution at the United Nations Human RightsCommission session in Geneva. We regret that the Commissiondecided not to go ahead with the resolution.

However, we should not be blind to important trends in China.The expansion of personal liberties and the creation of a legalsystem to provide protections in civil, commercial, and criminalcases--while far from complete-- are positive steps forward.

Finally, on Hong Kong. Hong Kong is clearly one of the biggestinternational stories of 1997. Reversion will be a definingmoment for China--and inevitably bear on U.S.-China relations.

China's leaders understand that the entire world will be watchingto see whether China preserves intact Hong Kong's economic system,civil service and legal and judicial institutions. And, as youknow, Secretary Albright recently announced her intention toattend reversion ceremonies, calling U.S. interest in the futureof Hong Kong "an important element in the U.S. dialogue." TheSecretary's decision underlines U.S. support for Hong Kong'scurrent way of life and freedoms.

I believe China will try to maintain that way of life out of itsown self-interest. The Chinese need the entrepreneurial geniusand financial markets that have made Hong Kong the world's eighthlargest trading market with just 6.3 million people.

I tell my Chinese friends that while they may be able to make acase for some of the changes they plan in a court of law, theymust consider the court of international public opinion indealing with this dynamic community after July 1.

China's statement and actions to date reflect a recognition ofthe need to preserve Hong Kong's dynamic capitalist system.Unfortunately, there appears less understanding of the need toprovide Hong Kong with the same degree of autonomy in thepolitical area. Although the U.S. is not a party to the Sino-British Joint Declaration, we have played a strong supportingrole in our dealings with China, Great Britain and the currentadministration in Hong Kong to ensure our interests areprotected. We have had extensive discussions on Hong Kong atevery senior level visit during my tenure in Beijing.

In part, we do this out of self-interest. You know the figuresbetter than I. Thirty-seven thousand Americans live in Hong Kong-- 800 U.S. firms have corporate headquarters here. Two-way tradebetween the United States and Hong Kong amounted to nearly $24 billion last year, making Hong Kong our 11th largest tradingpartner. Americans have invested $15 billion here. To sustainthis U.S. presence requires a society governed by the rule oflaw and protection of basic freedoms.

As the Vice President said recently in Beijing, we will lookafter U.S. interests in Hong Kong after July 1. This policyis spelled out in the U.S.-Hong Kong Policy Act, whichestablishes domestic legal authority to treat Hong Kong asan entity, distinct from the PRC, after reversion. We havesigned an agreement to maintain our Consulate General afterreversion. This ensures our official presence, operations andassistance to American citizens. China has also agreed, inprinciple, to allow U.S. naval ships to continue using Hong Kongas a port of call. We plan to continue to live and work in HongKong and to sustain the business environment that has broughtpeople success here.

For now, judging by the leading economic indicators-- real estate,the stock market, new foreign firm registrations, a stable amountof Hong Kong dollar deposits, even the decline in the number ofU.S. citizens petitioning for immigrant visa for their Hong Kongrelatives-- the people of Hong Kong appear confident in China'sability to manage the transition.

Together, China and the people of Hong Kong can make "one country,two systems" -- an unprecedented experiment in government -- work.

The basis of the understanding we reached with China 25 years agoin Shanghai -- and then reaffirmed in our communiqu‚ establishingfull diplomatic relations -- is still around. Its principlesremain valid, as the United States and China work to meet thechallenges of a strategic dialogue. I believe we will besuccessful in this effort. Together we will develop a policythat is comprehensive, credible, constructive-- and to add afourth "C"-- civil. We need to infuse our dialogue with the kind of cordiality that befits the engagement of two great powers.

I look forward to working with all of you to build thefoundations for a genuine, substantive engagement with China --which should be the cornerstone for peace and prosperity in thecoming Pacific century.

Since 1997 is the year to visit China, come see us! Our door isalways open.

Thank you.