President Clinton told American business leaders today that corruption, environmental neglect, weak financial regulation and restrictive trade practices threaten China's growth and full entry into the global economic system.
In an address to the American Chamber of Commerce here, Mr. Clinton said rapid economic growth has brought significant challenges to the Chinese Government and people.
He said the dynamic growth of the last 20 years and the rapid pace of reform have changed the lives of Chinese citizens, bringing more career choices and opportunities to run their own businesses, but also breaking the system of guaranteed lifetime employment as Beijing slashes payrolls at Government-owned enterprises.
''China's economy still is burdened with complicated and overlapping barriers,'' Mr. Clinton said in his 21-minute address at the Portman Ritz Carlton hotel. He said he hoped that Beijing would make the difficult decisions needed to bring China into the World Trade Organization on the same terms that govern the other members of the global trading body.
''China and, indeed, Shanghai, face major challenges in advancing economic progress beyond the present point,'' the President said.
He specifically cited the problems of inefficient state monopolies, weak legal and regulatory systems, wasteful and polluting energy patterns, corruption, closed markets and poor supervision of the nation's banks.
The White House also announced today that Mr. Clinton would meet in Hong Kong with Martin Lee, the leading advocate for democracy there. This is a calculated affront to Beijing, which took control of the former British colony a year ago. The White House is playing down the meeting, which will take place in the President's suite at the Hyatt Hotel Kong on Friday. No public statements are planned, officials said.
In a concession to Beijing on another sensitive issue, Mr. Clinton formally stated on Tuesday that the United States did not support independence for Taiwan.
The Chinese Government, which considers Taiwan a breakaway province that should be politically reunited with the mainland, had pressed Mr. Clinton to state the American policy while he was on Chinese soil.
Secretary of State Madeleine K. Albright and other officials have expressed the carefully worded position on other occasions. But it was important to Beijing that the words come from the President himself, and he obliged during a discussion with Shanghai residents today.
In response to a question from Wu Xinbo, a professor in the American Studies Institute at Fudan University here, Mr. Clinton said he had told Jiang Zemin, China's President, that American policy on Taiwan remained unchanged.
Taiwan reacted harshly, although Mr. Clinton followed the same formula that American officials have used before. ''The United States and Chinese Communists have no rights and are in no position to conduct bilateral talks on anything related to our affairs,'' said Roy Wu, Taiwan's Foreign Ministry spokesman.
There is considerable debate about how new Mr. Clinton's statement is. The ''three no's'' formula was publicly used last fall by the State Department, which saw it as a reiteration of longstanding policy. But some scholars and supporters of Taiwan say the formula, as it was expressed then, was more detailed and restrictive than past statements, and they called on Mr. Clinton to disavow it.
Officials traveling with Mr. Clinton tried to minimize the importance of the President's statement. He told the same thing to Mr. Jiang, they said, and there was no intention of putting it into a written communique, which would give it more weight.