"We are too interconnected to try to hold China at arm's length," U.S. Deputy Secretary of State Robert Zoellick said Wednesday in New York. "It is time to take our policy beyond opening doors to China's membership into the international system, we need to urge China to become a responsible stakeholder in that system."

Why are such changes sought?

He said Washington "welcomes a confident, peaceful and prosperous China, one that appreciates that its growth and development depends on constructive connections with the rest of the world."

The United States hopes to "intensify work with a China that not only adjusts to the international rules developed over the last century, but also joins us and others to address the challenges of the new century," Zoellick told the National Committee on U.S. China Relations at their annual dinner.

As the former U.S. trade representative, he completed negotiations that brought Beijing and Taipei, Taiwan, into the World Trade Organization.

Citing "a gulf in perceptions" on both sides, Zoellick, said China needs a "benign international environment for its work at home (and) does not want a conflict with the United States."

But, he said, "Many Americans worry that the Chinese dragon will prove to be a fire breather. There is a cauldron of anxiety about China."

One source of that anxiety is whether mercantilist Chinese policies will try to direct controlled markets instead of opening competitive markets, leaving Americans wondering if they will be able to compete.

Mercantilism was the trade policy prevalent in the 1500-1800 period in which nations sought to sell more than they bought to accumulate bullion as wealth and treaties were adopted for exclusive trading rights.

"China needs to recognize how its actions are perceived by others," the deputy secretary of state said. "China's involvement with troublesome states indicates at best a blindness to consequences and at worst something more ominous. China's actions-- combined with a lack of transparency -- can create risk."

This could lead the United States and others to "hedge relations with China," he said. "Many countries hope China will pursue a 'peaceful rise,' but none will bet their future on it."

An example of troublesome states could be Sudan. An energy-hungry China, a veto-wielding permanent member of the U.N. Security Council, blocked action by the panel against the east African state over recent troubles in Darfur in an apparent move to protect its interests in Sudan.

Beijing has a considerable presence in the nation as one of its chief buyers of Khartoum's oil.

The deputy secretary of state said, "China seems to be acting as if it can somehow 'lock up' energy supplies around the world.

"China should take more than oil from Sudan, it should take some responsibility for resolving Sudan's human crisis," a reference to the fighting in western Darfur between nomads and pastoralists, that was seen as black Arabs against black Africans but with an ethnic dimension. The United States called it genocide.

Saying it was "not a sensible path to achieving energy security," he said "A mercantilist strategy leads to partnerships with regimes that hurt China's reputation and lead others to question is intentions."

China should work with the United States and others to develop "diverse sources of energy, including through clean coal technology, nuclear, renewables, hydrogen and biofuels," Zoellick said.

Another 'perception' angle cited was China's rapid military modernization and increases in capabilities.

He said the recent U.S. Department of Defense study on China's military posture was not confrontational, "but unfortunately, China's reaction to it was."

Said Zoellick, "If China wants to lessen anxieties, it should openly explain its defense spending, intentions, doctrine and military exercises." That last was an apparent reference to the East Asia joint exercises with Russia a few weeks ago.

Inevitably, the diplomat got to the $162 billion trade deficit the Washington has with Beijing and which contributes to a global $665 billion current account deficit.

"China -- and others that sell to China -- cannot take its access to the U.S. market for granted," Zoellick warned. "Protectionist pressures are growing.

"China has been more open than many developing countries, but there are increasing signs of mercantilism, with policies that seek to direct markets rather than opening them," he said.

"The United States will not be able to sustain an international economic system -- or domestic U.S. support for such a system --without greater cooperation from China, as a stakeholder that shares responsibility on international economic issues."

So, Zoellick said, the United States seeks some changes in China, including opening up its now -closed internal politics.

"It is simply not sustainable," he said. "As economic growth continues, better-ff Chinese will want a greater say in their future."

The diplomat cited as examples, one umbrella labor union "that faces waves of strikes," a "party that cane to power as a movement of peasants now confronts violence rural protests, especially against corruption" and a government with "massive police powers (that) cannot control spreading crime."

He said Beijing should also expand religious freedom and "stop harassing journalists who point out problems."

Zoellick suggested the United States should "help foster constructive action by encouraging China to become a responsible stakeholder in the international system" so the two nations could work together to sustain that system.

"Relationships built on shared interests and shared values are deep and lasting."

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