Q: Should Congress grant permanent 'most favored nation' status to China?

Insight on the News, Jan 6, 1997 by Richard L. Lesher, Harry Wu

Yes: Trade empowers Chinese citizens of every rank and quickens the march toward democracy.

The annual legislative debate about whether China should enjoy so-called "most favored nation," or MFN, status as a trading partner with the United States is a wasteful and potentially damaging exercise that undermines our ability to negotiate long-term economic arrangements and strategic plans with Chinese enterprises.

Much confusion surrounds this debate, in part because the very term "most favored nation" is misleading. In truth, the great majority of the world's nations enjoy MFN status, which entitles them to routine low-tariff treatment. Only a handful of rogue nations, plus a few former Soviet Republics, do not enjoy MFN status, the latter simply because their MFN standing has not yet been conferred by Congress.

As a matter of fact, many industries in more than 50 developing countries receive tariff-free benefits under the Generalized System of Preferences, which actually is better than MFN status. No other major competitor of the United States even has contemplated terminating Chinas MFN status for any reason.

Without question the United States should continue to promote greater political and economic freedom in China. Rather, the question is whether threatening Chinas status as a trading partner every year helps or hinders that goal. Everything we have learned about dealing with other nations teaches us that coercion invariably evokes resistance and defiance. The Chinese are an extremely proud people who do not take kindly to lectures from foreigners.

On the other hand, we have ample evidence that aggressive commercial relations among nations help to promote communication and progress in a variety of areas not directly related to commerce. Certainly, the collapse of Communist governments in the former Soviet Union and nations of Eastern Europe offers profound testimony to the influence of trade. It was commercial contacts with free-world products and services that undermined the credibility of Communist dogma and exposed the glaring inefficiencies of the Communist system. It was the countless personal contacts made possible by commercial relations that gradually brokered a Similarly, we can rely upon increased commerce with China to gradually expose the Chinese to the irresistible light of economic and political freedom. Already we see tremendous progress throughout China in which free-market forces are working their magic on a variety of levels.

To be sure, the Chinese people - representing fully one-fourth of the worlds population - are not free to express their views and participate in government. Basic political freedoms the citizens of Western democracies take for granted do not exist in China. Lacking a popular mandate, the government endeavors to suppress opposition by the most reprehensible and inexcusable means. At the same time, we must remember that the Chinese enjoy much more economic freedom than they did even a few years ago.

In 1980 and again in 1989 visited China. I never will forget one man I met - a rather forlorn-looking factory worker who spent his days fashioning artifacts of various kinds from coral. He told me he spent an average of two years on each artifact he made. He had been assigned to that job straight out of school 40 years before by some faceless Communist bureaucrat, and there he was after all those years still sitting there making those artifacts.

But mainly I was impressed by the character of the Chinese I met at all levels of society, from the government bureaucrats who were looking for more efficient production techniques to the young people who so clearly hungered for a better life. I honestly was awed by the resilience and spirit of the Chinese students I addressed who clearly were determined to cast off the shackles of government control that so circumscribed their parents. Day by day, in a million subtle ways, that spirit is being felt throughout the nation. One day soon those young people will change the face of China.

It is an inexorable fact of life that economic and political freedom are two sides of the same coin, no government can long permit its people to enjoy economic freedom without expecting them to demand political freedom as well. More open economic ties with the West only can hasten the awakening of political liberty in China.

On a more practical level, the United States has powerful incentives for promoting greater commerce with China. China already has the world's third-largest economy and most experts reckon it will be the world's second-largest early in the next century. Last year, Chinas gross domestic product grew by an astounding 10.2 percent; during the last 14 years the growth rate averaged 7 percent.

Not surprisingly, China rapidly is emerging as a major market for U.S. goods and services. In 1995, U.S. exports to China totaled nearly $14 billion. China has become a major market for U.S. high-tech goods and agricultural products. Total direct U.S. investments in China exceed $9 billion.