Nixon’s China Trip Helps Sino-U.S. Ties, Bush Says : Foreign Policy: The President declares that Beijing must take the first steps in rebuilding the strained relationship.

WASHINGTON — President Bush expressed eagerness Tuesday to begin normalizing relations with China and said former President Richard M. Nixon’s recent visit to Beijing was “very helpful” in impressing on China’s leaders that they must take the first steps.

Meanwhile, congressional sources said House and Senate representatives reached agreement late Tuesday on a broad package of sanctions against China, including a ban on arms sales, high-tech exports, nuclear cooperation, satellite technology and financial help from the Overseas Private Investment Corp. The legislation, which is expected to win full congressional approval, goes much further than the sanctions that Bush imposed last June.

Under the measure negotiated Tuesday, the President would have broad authority to lift the congressional sanctions. Such presidential latitude was included at the insistence of the White House, which threatened that without it, Bush would veto the bill.

Bush stressed Tuesday that China must take the first steps in “untying the knot” in relations between Washington and Beijing caused by China’s violent crackdown on pro-democracy demonstrators last June. He said he has quietly recommended several specific measures to the Chinese, and added, “We’ll see where it goes.”

He delivered his message at a potentially important point, holding out the prize of improved U.S. relations just as Chinese officials began the first Communist Party Central Committee meetings since the crackdown.

The President made his remarks at a White House news conference marking the first anniversary today of his election. On other topics in the foreign policy arena, Bush:

* Nearly slammed the door on renewed military aid for the Contras, acknowledging that “it would be extremely difficult to get the money” from Congress, despite Nicaraguan President Daniel Ortega’s decision to abandon the cease-fire there in the wake of what he says are renewed attacks by the anti-Sandinista guerrillas.

* Left open the possibility of meeting with Israeli Prime Minister Yitzhak Shamir, if Shamir visits Washington next week. The two countries are currently at a standoff over Israel’s reluctance to accept Secretary of State James A. Baker III’s proposal for talks intended to lead to elections in the Israeli-occupied West Bank and Gaza Strip. Seeking to keep up the pressure on Israel, Bush said, “I’d like to feel that a meeting would be held and that it would be constructive, that we’d have something positive to talk about.”

* Sharply criticized the supporters of Lebanese Maj. Gen. Michel Aoun, whose objection to the choice of Rene Mouawad as president led them to terrorize Maronite Christian Patriarch Nasrallah Sfeir, a supporter of Mouawad.

“This does not contribute to peace in any way. . . . It is just totally counter-productive,” Bush said of a mob’s attack on the religious leader’s compound this week.

The President also reported that retired Army Gen. John W. Vessey Jr., his emissary for POW/MIA affairs, has found “a new openness . . . on the part of the Vietnamese leaders, a new spirit, a stepped-up spirit of cooperation in terms of accounting for remains” of U.S. servicemen missing in Indochina. Bush met with Vessey on Monday.

In demonstrating his eagerness to move U.S.-Chinese relations to a more normal level, Bush, who served as the head of the U.S. mission there in 1974 and 1975, employed a Chinese expression to also emphasize that it was up to China to move first.

“The Chinese have a slogan, ‘He who ties the knot should untie it.’ The Chinese still feel that we tied the knot and thus should untie it. I don’t feel that way,” Bush said.

At the heart of the diplomatic minuet both countries are performing is the question of whether China should first relax martial law and ease other restrictions or the United States should first remove its sanctions.

During Nixon’s visit on Oct. 31, China’s senior leader, Deng Xiaoping, said it was up to the United States to take the necessary steps to improve relations.

Despite his optimism, Bush made it clear that he rejected Deng’s approach--and so did Nixon.

Nixon, he said, “made the point that we didn’t tie the knot.” The President invited Nixon to dinner in the White House on Sunday night to present a written and oral report.

In the Chinese view, the June crackdown in Beijing was a matter of domestic Chinese politics, and by imposing sanctions as a protest, the United States actually moved first to disrupt U.S.-Chinese relations.

In addition to the lifting of martial law, the Bush Administration wants a satisfactory resolution of the case of two dissidents, Fang Lizhi and his wife, Li Shuxian, who have taken refuge in the U.S. Embassy in Beijing since the crackdown. It also seeks indications that market-oriented reforms, under way before the disruptions, are continuing, and that the purge of intellectuals and students that followed the crackdown is easing.

The Chinese want an end to the diplomatic isolation into which the West has placed them, following the lead of the United States. They also want a restoration of $600 million in World Bank loans, and additional loans from the Asian Development Bank, that were cut off last June.

Times staff writer Jim Mann contributed to this report.

BACKGROUND

After the Chinese government crackdown ending the occupation of Tian An Men Square in Beijing by pro-democracy demonstrators last June, President Bush ordered a number of sanctions to voice U.S. displeasure. Sales of goods or technology with military applications were banned. Exchanges between U.S. and Chinese officials above the rank of assistant secretary were prohibited. The United States and its allies forced the World Bank to suspend $780 million in loans to China. U.S. officials have said that a decline in tourism as a result of the Tian An Men action will cost China $1 billion in foreign exchange this year and that China will lose $1 billion to $2 billion in foreign investment.