SYDNEY — China’s opening to the world amid its economic reform and modernization has brought immeasurable benefits to many of its citizens who are being enriched through growing trade linkages. Trading with the rest of the world and even the lukewarm welcoming of foreign investment capital have improved the material well-being of the Chinese more than all the years they were in the thrall of Marxist-Leninist rule.
Of course, it is no small matter that China’s participation in international markets has provided consumers around the world with a greater range of choice and lower prices. China’s continued expansion of trade and capital inflows will make even more people even more better off in the future.
However, it is an unsettled matter whether China’s entry into the World Trade Organization or receiving permanent normal-trade-relations status from the United States will assist proreform leaders in Beijing. Although it is in the U.S. national interest that China continue to liberalize and adopt more market-oriented policies, there is little reason to believe that WTO membership or PNTR will accelerate those processes.
Benefits to the U.S., the world trading community and the citizens of China are likely to be considerably less than is claimed. Should China receive PNTR, it is unlikely that U.S. companies will benefit fully from the market access provisions of China’s agreement to comply with WTO rules and obligations.
Advocates ignore many aspects of China’s Realpolitik. On the one hand, it is hard to imagine that an authoritarian government that can arrest thousands of its citizens who seek political reform or engage in breathing exercises must rely upon international agreements to impose economic change. On the other hand, China’s crumbling state-owned enterprises place considerable limits on what can realistically be expected from a Leninist regime that uses economic progress as its only source of legitimacy.
In all events, Beijing has a poor record of honoring its international obligations. Although a signatory member of the International Human Rights Charter, China’s leadership tries to claim that cultural differences justify reneging on its obligations.
Another case of dodging obligations relates to Hong Kong. Although it is true that the former crown colony has not become a Leninist state since its return to mainland rule, Beijing continues to flout the Basic Law that was to serve as the blueprint for keeping its pledge of “one country, two systems.”
And then there is the insistence on using a modern form of gunboat diplomacy to try to force Taiwan back into the fold, and a Tibet that remains under Beijing’s unrelenting control. In all instances that it considers “internal matters,” China will brook no outside interference. This provides the Chinese government with a convenient dodge that can be applied on any matter they choose.
This sort of behavior makes it almost certain that there will be no sweeping economic reforms in return for accession to the WTO. Interest groups there have few of the democratic fetters that exist in countries where citizens actively engage in civil society. For example, the People’s Liberation Army and the more conservative cadres of the Chinese Communist Party have considerable influence over trade relations. Not even the most ardent advocates of accommodating China believe that its reformist leadership could or would act against the interests of these two powerful interest groups.
So, there are few guarantees that tariff rates will continue to be lowered. China’s disregard for the WTO’s multilateral dispute-settlement process is not likely to be better than the U.S., itself embroiled in constant niggling over details opposed by special-interest groups.
In the end, the vote in the U.S. Congress over extending PNTR to China is not terribly important. Supporters of open markets surely understand that free trade occurs between companies not countries. Perhaps it is necessary to offer a reminder that political agreements are less important as a motivating force than are economic realities. China’s need to maintain high growth is a better inspiration for its leaders to choose to do the right thing by their citizens.
The basic premises in the arguments in favor of PNTR or China’s WTO memberships are flawed. In the end, international trade does not require the approval of politicians or bureaucrats in the Department of Commerce or the WTO. However, it is in their interest that the rest of us believe this. It gives them power and justifies their large budgets, including expensive junkets to far-off capitals.
There may be no great disadvantages to the U.S. economy if German and French companies succeed in gaining market share in China. Producers that offer the best product or service at the most competitive prices will win the deal. If the deal were done on this basis, then PNTR would make no difference. If the deal required cutting a deal between European trade officials and corrupt Chinese cadres, then some of the costs will be shifted to European taxpayers or the costs might be shifted to consumers.
It is not surprising that government officials are indulging in well-crafted propaganda to impose their preferences onto an unwitting public. What is surprising is that advocates of free markets and small government seem to have been suckered into lending their support.
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