DATE=3-26-02

TYPE=CORRESPONDENT REPORT

NUMBER=2-287985

TITLE=CHINA / PERES (L)

BYLINE=JIM RANDLE

DATELINE=BEIJING

VOICED AT:

INTRO: Israeli Foreign Minister Shimon Peres, who is visiting Beijing, heard Chinese criticism of Israeli incursions into Palestinian territory and restrictions imposed on Palestinian leader Yasser Arafat. But as V-O-A's Jim Randle reports, Shimon Peres says it's the Palestinians who must do more to end the cycle of bloodshed.

TEXT: China's Prime Minister Zhu Rongji says Israel and the Palestinians must try to create a better atmosphere for peace talks, and stop 18 months of violence that has killed 15-hundred people, mostly Palestinians.

Other Chinese officials have told visiting Foreign Minister Shimon Peres Israel needs to stop sending tanks and bombers into Palestinian territory and let Palestinian President Yasser Arafat travel to the Arab summit convening in Beirut.

But Mr. Peres says Palestinian President Yasser Arafat has not yet met Israel's key condition for attending the summit.

/// PERES ACT ///

If the conditions will be met in the case of a cease fire, I do not see any difficulty for Arafat to go to Beruit.

/// END ACT ///

Beirut is where the 22-member Arab League opens a summit meeting Wednesday to consider, among other things, a new Middle East peace plan offered by Saudi Arabia.

Israeli Prime Minister Ariel Sharon wants Palestinian President Arafat to implement a cease-fire on the ground and arrest more Palestinian militants before giving him permission to go to Beirut.

Israeli military forces have confined Mr. Arafat to the West Bank City of Ramallah since December, demanding that he do more to stop attacks by militants on Israel.

In spite of Beijing's criticism, Mr. Peres said Israel's relations with China are good. He says the two sides have gotten past a diplomatic squabble that grew out of the broken deal to sell China a high-tech radar plane. Mr. Peres confirmed press reports that Israel paid China a hefty sum in compensation.

/// PERES ACT ///

We are happy with the agreement, the 350 million dollars. The ... issue is closed.

/// END ACT ///

Israel broke its promise to sell the "Phalcon" radar plane to China after Washington threatened to cancel some of the U-S aid for Israel's military. U-S officials feared China might use the formidable radar plane against U-S forces in a possible future conflict over Taiwan. Mr. Peres called the incident a "misunderstanding." (Signed).

NEB/HK/JR/MAR