By Arthur Waldron

Sunday, February 27, 2000; Page B07

Chinese take the maxim "every decade a great change" as a guide to the vagaries of their political system. Events of the past week suggest the West should perhaps do so as well, bearing in mind that the changes can be for good as well as ill.

Why did China decline Japan's invitation to join the G8 meeting? Why did China let World Trade Organization accession talks with the Europeans break down? Why did the Chinese release their menacing new document threatening military force against Taiwan--particularly just hours after Strobe Talbott and his colleagues left China?

The signs are that Jiang Zemin is having domestic political troubles and that the new hard line against the West is part of his survival strategy.

Faltering economic growth over the past year has swelled a rising tide of protest by farmers and industrial workers and has also driven a steadily increasing crackdown on all forms of dissent, including democratic activists (even as they scrupulously follow prescribed procedures in seeking recognition), the harmless followers of the Falun Gong movement, Roman Catholics, as well as Protestants and Tibetan Buddhists--and now the Internet and international business interests involved in it.

Politically, however, the big issue, and the one that explains last week's warning about Taiwan, has to do with power: Who will rule?

"Jiang wants to be huangdi"--emperor--is how one longtime PRC insider puts it. But emperors rule for life, and Jiang forswore that ambition a few years ago, when all the other members of his generation in power stepped down--on the condition that Jiang would step down as well when his current term expired.

Now a "spontaneous" movement has reportedly begun to keep him in power--and that has alarmed many Chinese, including "retired" elders.

The problems for Chinese foreign relations arise from the stance that Jiang must now adopt internally against this potential check to his ambitions. He cannot present himself as a reformer, so he is evidently rallying the military, consolidating his party ties and wrapping himself in the flag.

What can the rest of the world do? The error is to imagine that somehow we have caused or contributed to the crisis, an error to which the Clinton administration seems particularly prone.

For instance, in the case of Taiwan--where Jiang dearly hopes for more concessions--the Clinton administration has regularly confused effect with cause, imagining that American or Taiwanese actions were somehow "provoking" Beijing, when in fact China was raising the stakes for its own reasons.

This has led to a counterproductive policy that has exacerbated the military tension it was designed to reduce. When China fired missiles near Taiwan during the island's last presidential election, the American response--after sending the carriers--was to make concessions, asserting a "one China" policy and imposing the current de facto moratorium on major arms sales to Taiwan.

American movement on the issues--and the fact that the movement came in response to Chinese military threats--emboldened Beijing and led it to expect that further threats will lead to yet more movement in its direction.

Beyond understanding this much, however, we can do little more in preparation for the possible storm other than to ensure that our own policies in Asia are hedged, even as we maintain communications with China and keep strong alliances with states whose values we share, whose politics are democratic and whose economies are free.

The prospects are not all grim. If Jiang stakes out such a hard line as his power position, then his opponents may go for the opposite: domestic reform and liberalization, constructive relations with the West and conciliation with Taiwan. Strong constituencies exist in China and in the Communist Party for such policies.

Abrupt change is characteristic of the Chinese system. Although a storm may be brewing, it could--eventually--bring better weather.

The writer is a professor of international relations at the University of Pennsylvania and director of Asian studies at the American Enterprise Institute.