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Cohen meets US business leaders in Hong Kong

HONG KONG: U.S. Defence Secretary William Cohen met American business leaders in Hong Kong on Saturday and said they were worried about tension between China and Taiwan over reunification before the Taiwanese presidential elections on March 18.

"I think they are all concerned that the rhetoric has gotten a bit too heated and they (China and Taiwan) needed to back away," Cohen told reporters after a private meeting with members of Hong Kong's American Chamber of Commerce.

"I think the overall concern was that if it got out of hand there would be a very negative consequence flowing from it should there be any military action."

He was referring to a war of words involving Beijing, Taipei and Washington over reunification of Taiwan with China.

China accused Washington this week of encouraging Taiwan to delay reunification by providing Taiwan with sophisticated arms.

Business people worry that if the strains explode into military action Hong Kong and Southeast Asia could have major economic problems. Some 1,100 U.S. firms have direct investments of more than $21 billion in Hong Kong alone.

China sees Taiwan as a maverick province. The United States, which has urged peaceful negotiations toward reunification, recognises Beijing as the legitimate government of China but warns Beijing not to resort to war to recover Taiwan.

Cohen was on the first leg of an historic Asian trip that will include the first visit by a U.S. defence secretary to Vietnam since the end of the war there in 1975.

The American Chamber of Commerce in Hong Kong is the largest outside the United States and the group recently took the unusual step of publicly protesting against U.S. legislation calling for increased U.S. military support for Taiwan.

President Bill Clinton has promised to veto that bill if it is passed by the Senate following its approval by the House of Representatives.

Cohen also met Hong Kong Chief Exeutive Tung Chee-hwa and praised China's treatment of Hong Kong, which has been left economically and politically autonomous by Beijing since it was transferred back to China by Britain in 1997.

"We talked about the successful transition that has been achieved between Hong Kong and China," he said of his meetings with Tung and American business leaders.

"There were serious apprehensions at the time the transition started, but I think everyone seems reasonably satisfied that it has unfolded in a way that they expected."

Cohen and Tung also discussed maintaining strict export controls in Hong Kong to prevent smuggling of sensitive weapons and other technology into and out of China through one of the world's busiest harbours.

Cohen praised the recent resumption of U.S. warship visits to Hong Kong after a period of chill when China cut off such port calls after the Chinese embassy in Belgrade was hit during NATO's bombing campaign against Yugoslavia last year.

Stephen Lam, spokesman for Tung's office, said the Hong Kong administration agreed with Beijing's suspension of U.S. warship visits but welcomed the recent decision to lift the ban because it was good for tourism and public relations in Hong Kong.

He declined to comment on reports that the Chinese government had refused to allow some types of U.S. warplanes, early-warning radar planes such as AWACS, to visit Hong Kong.-Reuters