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Congress should

comparison with Hong Kong's, which was

tions if it supplies Americans with cheap tex-

8.7 in 2003 (the latest data), but China is

tiles and apparel or to use dubious national

see China's

moving in the right direction.

security arguments to deny China the right to

prosperity as

Although China is by no means a free soci-

bid for U.S.-owned energy companies. Deny-

a positive

ety, the advancement of economic liberty, as

ing China access to our markets while requir-

an important component of U.S. foreign poli-

ing it to open its markets is hypocritical and

development,

cy, will help promote overall freedom. The

will only play into the hands of hardliners who

not a threat to

process may be painfully slow at times, but

already distrust the United States.

what is the alternative? Institutions and new

Yet politicians on both sides of the aisle in

U.S. security.

ways of thinking do not emerge overnight--or

Congress see China as a major threat to U.S.

because Congress wills them to. Erik Gartzke,

jobs and view trade as a form of economic

a political science professor at Columbia

warfare rather than a mutually beneficial

University and a member of the Saltzman

arrangement that increases the wealth of

Institute of War and Peace Studies, writes,

nations. They forget that, as Alan Greenspan

"Since prosperity is necessary for stable

said before the Senate Finance Committee in

democracy and sufficient to produce peace,

June,

the best foreign policy is one that enhances

and extends capitalism."38 If the United States

In the decades ahead, it is in our interest

and that of the global economy that

is to maintain a "cooperative and construc-

China continue to progress toward

tive" relationship with China, the first order of

becoming a more market-based, produc-

business should be to adhere to a policy of eco-

tive, and dynamic economy in which

nomic engagement.

individual initiative, not government

China is an emerging market economy, but

decision making, is the fundamental

that does not mean it can dismantle its large

strength behind economic activity. For

state-owned enterprises overnight. While out-

our part, it is essential that we not put

right privatization has been slow, the party lead-

that outcome, or our future, at risk with

ership has allowed the nonstate sector to grow

a step back into protectionism.35

rapidly so that it now accounts for the bulk of

China's economy. That transformation of eco-

nomic life--from a centrally planned economy

Even before joining the World Trade

to an emerging market economy--has given the

Organization at the end of 2001, China had

Chinese people new opportunities and has

made substantial progress in moving toward a

exposed them to Western ideas and culture. To

market economy and liberalizing trade. Most

shut off trade because China does not revalue

prices are now determined by demand and

its currency according to the dictates of the U.S.

supply rather than by central planning, and, as

Congress would be foolish. Likewise, denying a

Nicholas Lardy, a scholar at the Institute for

joint-stock company like CNOOC, which is list-

International Economics, told a congressional

ed on Hong Kong and New York stock

committee, "China is certainly one of the most

exchanges, the opportunity to acquire a small

open, perhaps the most open, of all emerging

market economies."36

U.S. company like Unocal interferes with the

rights of U.S. shareholders and with the free-

Since 1978 China has dramatically trans-

dom of international capital markets.

formed its economy and increased economic

Of course, if CNOOC were a truly private

freedom. Congress should see China's pros-

firm, Congress would not have been so con-

perity as a positive development, not a threat

cerned. China's challenge is to move more

to U.S. security. In 1980 China's economic

rapidly toward privatization and the rule of

freedom score, based on the Fraser Institute's

law. Future cross-border transactions will

Economic Freedom of the World: 2005 Annual

then be less costly and more successful, and

Report, was 3.8 out of a possible 10; by 2003 it

had risen to 6.0.37 That score is still low in

U.S.-China relations should improve.

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