A prep course for the month-long World Cup soccer tournament, a worldwide pheno

ng words very similar to those used over the past year by the many critics of hi

s policy . In the view of some China scholars and experts , Clinton 's blending 

of threat-and-retreat left the United States in worse position than if he had ne

ver threatened at all . For the message to the world , to China 's Asian neighbo

rs and to the Chinese people themselves is that China can defy the United States

 virtually at will . `` This is being handled in a way that is eroding our credi

bility with the Chinese , '' Kenneth Lieberthal , a University of Michigan China

 specialist , observed recently. `` .. . The Chinese can see that with this admi

nistration , when it 's time to decide whether to hold 'em or fold 'em , it will

 fold . This administration will take a fig leaf and give away the store . '' Th

e administration is left hoping now that what it calls `` a new policy '' toward

 China will produce more results than the past one . That new policy is based on

 what administration officials Thursday vaguely called a `` strategic relationsh

ip '' with China a phrase that sounds somewhat like the words former Secretary o

f State Henry Kissinger once employed . Over the past year , the administration 

has made a series of concessions to China in hopes of winning its cooperation fo

r some changes in its human rights policies . ( Begin optional trim ) Clinton me

t with Chinese President Jiang Zemin in Seattle . On the eve of that meeting , t

he administration cleared the way for the sale of a Cray supercomputer to China 

. The administration approved the sale of several U.S.-made satellites to China 

. And it ended the ban on high-level military contacts that had been imposed by 

the Bush administration . `` They decided to give everything away , '' observed 

one U.S. official. `` .. . Somehow , there is still this view that if we just gi

ve them enough , they will do what we want . It just doesn't work . '' Throughou

t the past year , while making these other concessions , the administration held

 up on the one thing it felt , rightly , was the thing China wanted and needed m

ost : most-favored-nation trade status , which allows tens of billions of dollar

s in Chinese exports to be sold in this country with low duties . But in the end

 , China called Clinton 's bluff . It turned out that Sen. Max Baucus , D-Mont. 

, was right when he called the threat to withdraw MFN benefits `` the economic e

quivalent of a nuclear bomb '' that is , a weapon too powerful to use . ( End op

tional trim ) Yet no one could have envisioned a year ago just how many steps Ch

ina would take to show its utter disregard for the administration and his polici

es . In March , Chinese security officials rounded up a series of prominent diss

idents while Secretary of State Warren Christopher was in Beijing . In April , t

hey locked up Wei Jingsheng , China 's most prominent advocate of democracy , wh

o had been freed last September after more than 14 years in jail . Wei is still 

in detention . China has refused to make even some of those human rights concess

ions the Clinton administration considered relatively easy to achieve . Early th

is year , U.S. officials believed China was ready to stop its jamming of the Voi

ce of America and other foreign broadcasts into China . That action might come a

t the time of Christopher 's mission in March , they believed . But China hasn't

 even done this yet . The most it has been willing to do has been to receive a d

elegation to `` discuss '' some of the technical aspects of broadcasting in Chin

a . China 's intransigence goes beyond the area of human rights . There has been

 no sign , for example , that China has been willing to help the United States m

uch in trying to persuade North Korea to abandon its nuclear weapons program . I

n Cambodia , the Khmer Rouge , who were once considered China 's client , are on

ce again threatening to overrun the government in Phnom Penh . What went wrong ?

 Some officials , including veterans of the Bush administration , question the e

ntire style and underpinnings of Clinton 's approach . They argue that it was co

unter-productive to confront China head-on . `` Once you put your fist in the fa

ce of the Chinese and tell them they have to do something , they tend to go rigi

d , '' says Douglas Paal , who served as director of Asian affairs for the Bush 

administration . The Clinton administration misjudged a year ago how far China w

ould be willing to go . Administration officials sincerely believed that the con

ditions they were imposing on China would be relatively easy to meet . `` Narrow

 , narrow '' was how Assistant Secretary of State John H. F. Shattuck described 

the U.S. conditions to Hong Kong reporters . But the Chinese regime facing both 

the threat of new social unrest inside China and a looming struggle to see who w

ill succeed the ailing Deng Xiaoping as China 's paramount leader was unwilling 

to do even the things the administration considered modest . The administration 

misread the strength of sentiment in the American business community , which did

n't like the idea of tying MFN renewal to human rights in the first place and wh

ich grew increasingly threatened and nervous by the prospect of a cut off in tra

de . Clinton himself bears the ultimate responsibility for being either unwillin

g or unable to impose discipline on his own top administration officials . But n

ot all of the blame for the American retreat should go to Clinton . It must also

 be shared with Congress , an institution which Clinton administration officials

 also misjudged . Over a period of three years , from 1990 to 1992 , Congress re

peatedly passed laws tying renewal of China 's MFN benefits to improvements in h

uman rights . It was what is known as a `` free vote . '' Each time , President 

Bush vetoed the legislation , just as Congress knew he would . President Clinton

 in effect borrowed the vetoed Democratic legislation and put it into the execut

ive order he imposed last year . And this year , for the first time , Congress h

as been forced to deal with the real-life consequences of its legislation . Chin

a failed to make significant human rights improvements , and that meant that the

 cutoff in MFN which Congress originally threatened might actually be imposed . 

In droves , congressmen retreated . It turns out that members of Congress includ

ing leading Democrats like Sen . Bill Bradley , D-N.J. , were willing to vote fo

r a linkage between human rights and trade with China only at a time when they k

new their legislation would be vetoed . Under the circumstances , it seems fair 

to conclude that the congressional Democrats weren't serious about linking trade

 and human rights , but rather were using China as a partisan issue against Bush

 . ( Optional add end ) `` Times have changed , ` ` said Rep. Jim Kolbe , R-Ariz

 . , `` It was easy for Congress to take the positions it did during the Bush ad

ministration . '' The American retreat was of far-reaching , even historic , sig

nificance for China and its relations with the rest of the world . The Chinese r

egime was faced with a direct challenge from the United States , and it proved t

hat the United States could not back up its threats . On Oct. 1 , 1949 , on the 

day the People 's Republic of China was founded , Mao Tsetung stood up above Tia

n An Men Square and declared to cheering thousands : `` The Chinese people have 

stood up . '' Chinese leaders may soon proclaim the modern-day corollary : `` Pr

esident Clinton has sat down . ''

 In ROSTY ( Eaton & Ostrow , Times ) , insert after 9th graf ( adding Justice De

partment investigation of Rostenkowski ) xxx of office . The Justice Department 

has been investigating allegations Rostenkowski abused office and campaign accou

nts by , among other things , receiving money improperly from the House post off

ice , hiring workers who did not work , and making improper furniture and gift p

urchases with office funds . PICK UP 10th graf : While it was xxx .

 BALTIMORE A burglar alarm from hell was finally silenced Thursday after six day

s of nearly constant noise when a police officer climbed a ladder in a blinding 

rainstorm and snipped the wire . A cheer erupted from a watching crowd when sile

nce descended suddenly on the normally quiet , tree-shaded court in suburban Bal

timore . It was almost eerie for a few seconds . `` Thank you , Jesus , '' shout

ed Joan Sheppard , the next-door neighbor , raising her arms to the sky and igno

ring the pelting rain . Once the alarm was silenced , the crowd scattered quickl

y under the deluge and the daylong circus occasioned by the presence of televisi

on units and a rock radio station was over . The alarm , at the home of a psycho

logist traveling in Indonesia , went off early Saturday morning . There was a br

ief break later that morning when an accident nearby caused a power outage and a

nother short break , during another outage early Tuesday . Except for the two br

ief periods , the alarm had pulsed continuously , generally making life miserabl

e for the neighborhood . Exasperated to the extreme , Sheppard spent much of Thu

rsday trying to get a court order to allow police to shut off the alarm . Becaus

e the matter involved private property and there was no emergency , the county a

ttorney 's office was called in and lawyers began working on a petition to the c

ourt . But as the lawyers debated , the whoop-whoop-whoop of the alarm continued

 unrelentingly . An employee of the psychologist was in contact with him Tuesday

 and he was supposed to have air-freighted a house key back to her from Asia . W

hen the key didn't arrive , police contacted the woman again and she agreed to a

ct as the homeowner 's agent . She gave Lt. J.A. Spiroff permission to do what h

ad to be done . Just as the lieutenant signaled his men , the skies opened up . 

As one officer steadied the waiting ladder , the second climbed to roof level , 

pulled loose some siding and cut the wire .

 WASHINGTON Moving to break `` a licensing stranglehold '' on glassmaking that k

eeps U.S. companies out of foreign markets , the Justice Department said Thursda

y it has settled an antitrust suit against a British glass company . The suit wa

s filed under a U.S. policy designed to protect U.S. exports from anti-competiti

ve conduct by foreign companies . Attorney General Janet Reno , who announced th

e suit and the settlement simultaneously , said the action `` will open new mark

ets abroad for American businesses exporting high-tech services . '' Robert E. L

itan , deputy assistant attorney general for antitrust , said the settlement wit

h Pilkington plc and its U.S. subsidiary could open the door to between $ 150 mi

llion and $ 1.25 billion in exports for U.S. companies through the year 2000 . T

he suit was the first brought under a 1992 policy that permits the Justice Depar

tment to take antitrust action against foreign businesses that harm U.S. export 

trade without having to demonstrate harm to U.S. consumers . When the policy was

 announced by the Bush administration , it was widely believed that Japanese fir

ms would be the immediate targets . Litan said other cases are under investigati

on but he declined to name either the companies or the countries involved . Pilk

ington dominates the world 's $ 15 billion-a-year float glass industry , which m

anufactures flat glass used in most cars and buildings . The complaint accused P

ilkington of closing off foreign markets to U.S. companies and costing U.S. jobs

 by strictly limiting the use of commercial flat glass technology , part of whic

h it developed and patented more than 30 years ago . Although Pilkington 's pate

nts expired long ago , placing the technology in the public domain , the Justice

 Department complaint said the company restrained competition by using licensing

 arrangements to prevent American glass producers from employing the technology 

outside the United States . Sir Robin Nicholson , a Pilkington director , conten

ded that the settlement in the form of a consent decree will have `` no material

 economic impact on the company . '' In a phone interview , he said the company 

had agreed to the decree while denying unlawful conduct for two primary reasons 

. The decree allows the company to continue licensing technology it has develope

d since 1983 . The second factor was `` pure cost , '' Nicholson said , estimati

ng that the company would not lose more than $ 1 million a year under the decree

 , while continued litigation would have cost `` many millions of dollars . '' H

owever , K. Craig Wildfang , special counsel to Anne K. Bingaman , assistant att

orney general for antitrust , noted that the decree covers technology disclosed 

to U.S. licensees , the last of which occurred in 1982 . It also frees up techno

logy that licensees added themselves after 1982 , he said .

 WASHINGTON President Clinton Thursday reversed course on China and renewed its 

trade privileges despite what he said was Beijing 's lack of significant progres

s on human rights . Echoing the case made by George Bush when he was president ,

 Clinton said he was convinced the Chinese would take more steps to improve huma

n rights if the issue were separated from the threat of trade sanctions . `` Thi

s decision offers us the best opportunity to lay the basis for long-term sustain

able progress on human rights and for the advancement of our other interests wit

h China , '' he said at a news conference announcing his decision to extend Chin

a 's most-favored-nation ( MFN ) trade status . To demonstrate what he stressed 

was his administration 's continuing concern about human rights in China , Clint

on said he was banning the import of Chinese munitions and taking several other 

small steps to support the pro-democracy cause in China . But his action stopped

 well short of appeals by Senate Majority Leader George J. Mitchell , D-Maine , 

and Rep. Nancy Pelosi , D-Calif. , for selected sanctions on some Chinese produc

ts as a way to penalize China for failing to improve human rights . Both said th

ey would introduce legislation that continues a link between trade privileges an

d human rights improvements . `` I disagree with the decision , '' Mitchell said

 of Clinton 's move . `` This decision will confirm for the regime the success o

f its policy of repression on human rights and manipulation on trade . '' Severa

l other Democratic senators , however , issued statements of support and said th

ey would join Clinton in Congress in resisting legislation to alter the trade st

atus . Sen. Sam Nunn , D-Ga. , said that the decision reflected a key role China

 can play in geopolitics , specifically `` maintaining stability on the Korean p

eninsula and preventing the proliferation of nuclear weapons . '' Clinton had be

en the subject of heavy lobbying by American business interests and his economic

 advisers to continue China 's trade privileges . With China now the world 's fa

stest growing economy , the United States exports $ 8 billion a year there , whi

ch sustains up to 150,000 American jobs . Many major American businesses see eve

n greater potential in Chinese markets , expecting China to become a massive pur

chaser over the next decade of the phones , electronic gadgets and thousands of 

other products made in America . `` I think we have to see our relations with Ch

ina within a broader context '' than simply human rights , Clinton said , adding

 that the link between rights and trade was no longer tenable . `` We have reach

ed the end of the usefulness of that policy , '' he said . Human rights groups a

nd a strong lobby in Congress had pressed Clinton to adhere to the goal he set l

ast year in an executive order that made renewal of China 's MFN status dependen

t on `` overall significant progress '' in human rights . Clinton in his preside

ntial campaign had sharply attacked Bush for extending trade privileges to China

 in the years following the 1989 crackdown on pro-democracy activists in Beijing

 's Tiananmen Square , accusing him of `` coddling criminals . '' But Clinton sa

id Thursday he has had a change of heart . `` Let me ask you the same question I

 have asked myself , '' he said . `` Will we do more to advance the cause of hum

an rights if China is isolated . '' What the United States policy should be , he

 added , is `` to intensify and broaden its relations '' with Beijing , not isol

ate it . He acknowledged that the one sanction he was imposing the ban on import

s of guns and ammunition from China involving about $ 200 million in sales const

ituted little more than a `` discrete '' symbol of U.S. displeasure . Most weapo

ns are made by the Peoples Liberation Army , agent of the 1989 crackdown that se

t off congressional calls for revoking China 's trade status . The other measure

s he announced include increased broadcasts for Radio-Free Asia and the Voice of

 America , increased support for non-governmental organizations working on human

 rights in China and the development with U.S. business leaders of a voluntary s

et of principles for business activity in China . Clinton 's decision came after

 an intensive , sometimes fractious , debate within the administration over what

 steps to take and how . At one point , the president was leaning toward extendi

ng the trade privileges , but putting sanctions on a range of military-made prod

ucts . The Treasury and Defense departments vehemently objected , and from the o

utset the president 's economic advisers argued that trade and human rights shou

ld not be linked . In assessing China 's human rights record over the past year 

, Secretary of State Warren Christopher reported to Clinton earlier this week th

at China had made progress in allowing emigration and had begun complying with a

n agreement that produces investigations of the use of prison labor in making Ch

inese goods . But Christopher also concluded that the Chinese had not made progr

ess in complying with the Universal Declaration of Human Rights , in providing a

n acceptable accounting for political and religious prisoners and in treating th

em humanely . He also found no change in China 's repression of Tibet and no end

 to China 's jamming broadcasts by the Voice of America .

 In TOBACCO ( Cimons , Times ) sub for 7th graf ( deleting `` first '' ) xxx gra

nts : The existence of such `` special projects '' was reported in Thursday 's L

os Angeles Times . PICK UP 8th graf : Glenn , xxx :

 With a few tightenings of the national credit spigot , the Federal Reserve Boar

d already seems to have achieved one of its goals for 1994 : The central bank ha

s converted more than a few mutual fund investors into models of financial conse

rvatism . That is apparent in the latest report on fund investment activity from

 the industry 's chief trade group , the Investment Company Institute . The ICI 

said Thursday that gross purchases of stock and bond fund shares totaled $ 40.6 

billion in April , down sharply from $ 53.4 billion in March and even below the 

pace of $ 41.1 billion in April 1993 . Net new cash flow , which measures fund p

urchases minus redemptions and after adjustment for net exchanges among funds in

 the same families , was $ 11.3 billion for stock funds in April , a rebound fro

m March 's depressed $ 6.6 billion but still below the $ 11.7 billion of April 1

993 . For bond funds , net new cash flow was a negative $ 4.8 billion in April ,

 compared with a negative $ 7.7 billion in March and a positive $ 10 billion in 

April 1993 . The seeming contradiction in the numbers above gross fund purchases

 were down between March and April , but net cash flow improved actually is easi

ly explained . Overall , investors ' appetite for funds declined in April . But 

because fewer investors redeemed shares in April than March , cash flow was bett

er . This month , fund companies report a further easing of the panic that had g

ripped some fund investors in March and April , when markets convulsed because o

f the Fed 's decision to raise short-term interest rates for the first time in f

ive years . Redemptions are down again in May , and a respectable number of peop

le are buying funds . But what 's in demand are mostly the kind of stock funds t

raditionally favored by conservative , long-term investors , some fund companies

 say . Meanwhile , bond funds many of which have dropped more sharply in value t

han stock funds this year still appear to be losing money , though at a slower p

ace than in March and April . At fund giant Fidelity Investments in Boston , spo

kesman Neal Litvack says net new cash flow into the company is expected to total

 $ 1.5 billion this month , up from $ 1.3 billion in April . But more than 90 pe

rcent of this month 's cash flow is going into stock funds , Litvack says . Bond

 funds are basically flat , he says , meaning money coming in is just replacing 

the money that 's leaving . Significantly , Litvack says , Fidelity investors no

w are shying away from small-stock funds and `` sector '' funds that target stoc

ks of specific industries . Instead , the company 's most popular stock funds th

is month are conservative names such as the Blue Chip fund and the Puritan fund 

, which are marketed as long-term holdings for relatively cautious investors . S

imilarly , at the Kemper mutual funds in Chicago , the best-selling investment t

his month is the Total Return fund , a balanced ( stock and bond ) fund that is 

having its best month in a year . In contrast , Kemper said that its U.S. . Gove

rnment Securities bond fund has continued to experience redemptions this month .

 Small investors ' ongoing interest in blue-chip stock funds and in balanced fun

ds , while pure bond funds suffer , may not seem like evidence of a turn to cons

ervatism . After all , academics would typically argue that bonds are more conse

rvative investments than stocks , at least in the long run . But the problem in 

the bond market by late last year was that almost everyone had come to believe t