Commentary

We Must Persist In Trade With China

The death of the supremely pragmatic Chinese strongman Deng Xiaoping has introduced new jitters into the U.S.-Chinese relationship. Tensions over human rights, security and trade all remain high. And with Hong Kong set to return to Beijing’s authority in a few weeks, we seem destined to live in, as the old Chinese curse terms it “interesting times.”

That China, a likely superpower in the next century, presents a potentially serious challenge to U.S. interests is reason for caution, not coercion, in Washington’s treatment of Beijing. Critics of “appeasement” include many congressional Republicans and conservative pundits. Yet the weapons they usually favor wielding— Most Favored Nation trade status and World Trade Organization membership— are ill-suited to turn a communist gerontocracy into a democratic republic. Even attempting to do so risks harming not only American businesses and consumers, but average Chinese citizens who have the most at stake in China’s future development.

Of course, there’s no denying that Beijing has an ugly human rights record, but then, that’s no surprise for a totalitarian state. Unfortunately, there’s no reason to believe that trade sanctions would change Chinese policy. (Denying China MFN and WTO benefits is imposing a punishment, not withholding a privilege, since both are available to most other nations, irrespective of democratic behavior.)

If nothing else, unilateral action would be ineffective.

It’s not that the regime in Beijing doesn’t value the American market, but it doesn’t value the American market enough to relax its grip on power, especially when alternative markets abound in Japan, Europe and elsewhere. Despite the moral fervor of sanction proponents, economic self-flagellation won’t increase the freedom of the Chinese people.

To the contrary, cutting trade ties would likely most hurt the Chinese who Washington should want to most help. While international subsidies, such as World Bank loans, directly aid the Chinese government, and, therefore, should be terminated, trade advances the growing private sector, especially in China’s increasingly autonomous coastal provinces. While a larger business elite and wealthier urban population aren’t sufficient to guarantee China’s evolution into a more capitalist and democratic system, they are probably a necessary condition.

Of course, critics of cooperation point to political and security concerns— China’s military buildup, disputed claims over such territories as the Spratly and Paracel Islands, saber-rattling against potential Taiwanese independence and weapons sales to renegade states. All of these warrant wary watchfulness, but restricting trade won’t help.

For instance, China has been modernizing her military, but its defense budget remains low and, adjusted for inflation, has been growing only slowly. Beijing has territorial disputes with Japan, the Philippines and Vietnam, but so far seems committed to resolving such quarrels peacefully. China appears loath to go to war even over Taiwan; anyway, Washington should sell more arms, especially submarines, to Taipei, rather than either provide military guarantees to Taiwan or impose sanctions on China.

Beijing’s weapons transfers are worrisome, but are more likely to be resolved through united allied diplomatic pressure. We should expect China to respect international norms only if it believes it has something significant at stake in a stable global order. Severing economic ties between America and China would reduce that stake.

Not surprisingly, other nations in the region favor engagement over ostracism. It is easy for pundits in Washington to counsel confrontation; they are thousands of miles away if the policy backfires. But without exception allied governments, ranging from Japan to South Korea to Taiwan, oppose sanctions. It’s not that they trust China; rather, they understand that purposeless punishment would provoke without yielding any countervailing benefit.

Finally, Washington should eschew the trade weapon because it politicizes American as well as Chinese economic activities. The U.S. government already intrudes in almost every area of private life, interfering with trade would be yet another public infringement of private rights. Washington should leave trade alone absent a compelling national interest, one that isn’t present here.

Allowing trade to continue is common sense, not appeasement, and will benefit the Chinese as well as American people.

Doug Bandow is a senior fellow at the Cato Institute.