Free Trade Promotes Chinese Liberalism

May 23, 2000 • Commentary
This article originally appeared in The Korea Herald on May 23, 2000.

Is China a rising colossus that intends to bully its neighbors and dominate Asia? Should Washington adopt a more hard‐​line policy toward the Beijing on trade, human rights, and national security issues? Or is China a country that has already moved so far along the road to a market economy and a more open society that it is committed to being a stabilizing, cooperative power? Those are the questions U.S. policymakers must examine as they consider whether to establish permanent normal trade relations with China and whether to support its accession to the World Trade Organization.

The United States and other countries are betting that China’s accession to the WTO will make the country a more open society and will eventually lead to democratic rule, as well as to a more stable and peaceful international policy by Beijing. But, while free trade is necessary for peace, it is not sufficient. The Chinese Communist Party may be willing to sacrifice substantial gains from trade in order to protect its power and privilege.

The challenge for the United States is to exploit opportunities for further gains from trade while moving closer toward a constructive partnership with China, while at the same time protecting vital American interests.

Unfortunately, the U.S. policy debate thus far has been largely a contest between the Clinton administration’s muddled and inconsistent approach and the extremely confrontational approach advocated by many conservatives. The latter strategy risks creating a self‐​fulfilling prophecy of China’s becoming an enemy. Indeed, a growing chorus of voices in Congress and the U.S. foreign policy community argues that China is a belligerent dictatorship and an implacable future enemy of the United States.

It is true that no one can be certain how the China will behave on security issues in the future. Unlike Nazi Germany or the Soviet Union, however, Beijing is not a messianic, expansionist power. It is a normal rising (or reawakening) great power. That can be difficult enough for other countries to deal with at times, but such a country does not pose a malignant security threat.

The best course is to treat China as a normal (albeit sometimes repressive and prickly) great power and to avoid the extremes of seeing the country as either an enemy or as a strategic partner. The United States would also be wise to encourage other major countries in Asia to think more seriously about how they intend to deal with a rising China. A collection of diffident, militarily weak neighbors, wholly dependent on the United States for protection, is not likely to cause Beijing to behave cautiously.

The Taiwan issue remains an especially dangerous flash point. Any move toward formal independence by Taipei would surely provoke military action by Beijing. China’s strong economic dependence on Taiwan’s prosperity, however, means that military action must be seen as a last resort. Moreover, the election of Chen Shui‐​bian and the defeat of the long‐​dominant Nationalist Party are stern reminders to the Chinese communists that their own future is highly uncertain.

Beijing’s biggest dilemma is how to allow its productive non‐​state sector to grow while at the same time preventing an erosion of the party’s power as market participants demand greater civil liberties and a more meaningful political voice. The domestic tension created by opening China’s economy to the outside world while meaningful political change is suppressed has to be released sooner or later.

Gradualism appears to have worked reasonably well thus far, but the inefficiency of China’s state‐​owned sector is apparent and corruption is rampant. Wholesale privatization would help solve the problems of inefficiency and corruption, but would undermine the last vestiges of party power. So the challenge for China’s leadership is stark.

Cutting off — or even limiting — trade with China in the hope of improving human rights would be self‐​defeating. Isolating China would strengthen the party and the state while harming the nascent market sector and reducing economic freedom. If free trade is restricted, the probability of conflict between the China and the United States will also increase. That is why it is essential for peace and prosperity that the U.S. Congress vote in favor of permanent normal trade relations with China and support its accession to the WTO.

The best concise answer to the question of whether China will be a constructive partner or an emerging threat in the early 21st century comes from an independent scholar in Beijing. The answer will, “depend, to a very great extent, on the fate of liberalism in China: A liberal China will be a constructive partner; a nationalistic and authoritarian China will be an emerging threat.”

America must prepare for both possibilities, but its policies should avoid needless snubs and provocations that would undermine the prospect for the emergence of a democratic, peaceful China.

About the Authors
James A. Dorn

Vice President for Monetary Studies, Senior Fellow, and Editor of Cato Journal