China’s Long March to a Market Economy: The Case for Permanent Normal Trade Relations with the People’s Republic of China

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The U.S. Congress is in the historic position of being able tohelp pro-reform leaders in China move their country in amarket-oriented direction. A vote to grant China permanent normaltrade relations (PNTR) status will bolster the position of thoseleaders in Beijing who are attempting to deepen and broaden thescope of China's two-decade experiment with economic reform.Granting PNTR and China's subsequent accession to the World TradeOrganization will benefit, not only the United States and the worldtrading community, but most directly the citizens of China,millions of whom are still mired in abject poverty.

Granting PNTR to China will enable U.S. companies to take fulladvantage of the market access provisions that China has agreed toadopt in order to comply with WTO rules and obligations.Import-using businesses and consumers here in the United Stateswill also have better guarantees that low tariff rates willcontinue to apply. If Congress does not extend PNTR to China, Chinacan still enter the WTO and extend benefits to competitors inEurope and Japan while denying them to U.S. companies.

Nontrade issues will and should remain an important part of theU.S.-Chinese relationship, but the annual debate on whether toextend normal trade relations is an ineffective tool forinfluencing China's long-term behavior. As a member of the WTO,China will be subject to a multilateral dispute settlement processthat is likely to be far more effective than sanctions imposedunilaterally by the United States.

Ultimately, Congress should ask a straightforward question:Is it in the U.S. national interest to encourage China toliberalize and reform its economy in a more market-orienteddirection?

The answer is a resounding yes. A vote in favor of extendingPNTR to China is a vote for reform of the Chinese economy. It isalso a vote for U.S. business and citizens who will reap thebenefits of expanded U.S-Chinese trade.