Why Peking may want to downgrade relations with Washington

The administration is expected shortly to announce its decision to extend the F-5E coproduction program between Northrop and Taiwan. There is wide fear that the sale, unless accompanied by Washington's promise to end arms sales to Taiwan in the future, will cause Peking to downgrade relations with the United States.

What is not widely understood, however, is that the PRC may actually want to downgrade relations. Such a move would have numerous advantages from Peking's point of view.

First of all, downgrading would send a clear signal that Peking no longer considers itself part of a Western-dominated, anti-Soviet strategic alliance. This would help achieve two important foreign policy objectives: a reduction in the level of tensions between the PRC and the USSR, and an increase in Peking's prestige among third-world nations.

Both goals are fundamental to China's new direction in foreign affairs, which emphasizes an independent course between the two superpowers for maximum flexibility and influence in world affairs. The new strategy is apparently based on several conclusions: (a) the short-term threat from the Soviet Union has diminished, (b) the US probably will not intervene militarily if the Soviets launch a limited attack against China, and (c) Peking's interests can be best served as a leader of the third world rather than a quasi-member of the Western security bloc.

Second, downgrading relations with Washington would have the important domestic effect of disarming military and radical opposition to the current regime, while at the same time enabling the moderate leadership to continue its program for China's economic modernization. Businesses in the US, Western Europe , and Japan can be expected to compete vigorously for the potentially lucrative Chinese market, regardless of the state of Sino-American diplomatic relations.

Also, downgrading would strengthen China's bargaining position with Western firms and provide ample justification for carefully screening those aspects of Western society allowed into the People's Republic.

Third, and perhaps most important, downgrading would put Peking - unless skillfully countered by Washington - into the driver's seat of Sino-American relations. The maneuver would not only offer a wide range of retaliatory options to China but also give the PRC tremendous leverage over US domestic politics and future China policy.

Examples of the types of leverage Peking might expect are:

* Strong pressure on the Reagan administration to resume friendly relations with China. Friendly gestures urged, for instance, might include a US commitment to support PRC participation in the soft-loan window of the World Bank.

* A cause celebre for the Democrats, who would like to brand the Reagan administration as being incompetent in foreign affairs. Such a label might prove disastrous for the President and the Republican Party in the 1982 and 1984 elections.

* Justification for Peking to set a new list of preconditions for normalization of relations with the US. Whereas the current administration is unwilling to make further major concessions over Taiwan, a new administration might be willing to accept such preconditions for its own political reasons.

If, as the above argument indicates, the PRC has no compelling incentives to accept US efforts to achieve a balanced China policy - one that extends friendly , official relations to Peking while at the same time preserves for Taiwan a measure of security and self-determination - then the American people may shortly face the spectacle of Peking downgrading relations with the US.

As unfortunate as this development would be, Peking's decision should be seen for what it actually is: a carefully orchestrated move designed to further the immediate domestic and international objectives of China's current leadership. It should not be interpreted as a permanent disruption of Sino-American relations nor as a failure of our China policy.