China Trade-Off?

International Economy, The, May, 2000

Is America trading off its strategic interests in the Pacific in return for greater trade with China? If so, is the potential of the Chinese market worth this sacrifice?

Protecting American strategic interests in the Pacific and improving trade with China are not mutually exclusive goals. Through discipline and consistency in America's foreign policy toward China, these interests can be balanced.

JAMES A. BAKER, III Senior Partner, Baker Botts L.L.P, and former Secretary of State and Secretary of Treasury

Like it or not, China today is key to Asian stability. And, sooner rather than later, it will be the largest market in the world. Both America's strategic and economic interests are more likely to be advanced by engaging it in vigorous trade, diplomatic relations, and other political and economic relationships than by trying to ignore, isolate, contain, or sanction it.

One important such relationship would be membership for China in the World Trade Organization (WTO). The key is that China should be admitted on the same terms as other members, with no special treatment. The standards for admission should not be relaxed, whether they require China to open its markets, protect intellectual property, or take other steps toward liberalization. China should be required to reform its economy, both internally and by opening its markets to free trade, in the same way other WTO members do.

WTO membership will strengthen the hands of the economic and political reformers in China, improve the lives of the Chinese people, and help stabilize and normalize China's relations with the rest of the world. In many ways, Chinese accession to the WTO will benefit America and China's Pacific Rim neighbors even more than it benefits China. For America to oppose China's entry into the WTO, if the terms of entry are fair to us, is to cut off our nose to spite our face.

America will continue to have differences with China, of course, particularly on human rights, proliferation of weapons of mass destruction, and Taiwan. America should -- and will, I am convinced -- continue to be tough on these issues, even after China joins the WTO. But this will require America, among other things, to reaffirm its commitment to the Taiwan Relations Act. It will also mean making no deals about opposing or delaying Taiwan's accession to the WTO, foregoing any regional missile defense preparations necessary to defend America's interests in the region, or reducing its credible military presence in the Pacific. That presence must be maintained to offset any possible move by China for regional hegemony.

Turning its back on China might make the U.S. feel good, but it would be counterproductive to American interests. China is not an enemy, at least not yet, but America can make her one. Of course, the best way to find an enemy is to look for one. And when the U.S. talks about containing China by opposing entry into the global trading system, it is, in my opinion, looking for an enemy.

PAUL BRACKEN Professor of Management, Yale School of Management.

From China's standpoint, no trade-off exists between strategic interests and increased trade. But from America's perspective, interestingly, a trade-off does exist. This perspective, or belief, is part of a tradition of using foreign policy as domestic psychotherapy. "Americans see a rigid trade-off between economic success in an age of globalization and increasing military power because it needs a comforting myth about good and evil in a complex world. Forgetting history, America cannot imagine how a country can pursue parallel economic and military modernization at the same time.

But China's two supposed camps -- one for liberalization and modernization, the other for militarization -- exist in the American mind more than they actually do in China. In the 1990s, China opened up more than ever before. Business deals, the Internet, and mass consumption have all emerged in the big cities as part of modern China. Beijing had trouble controlling the deals, leading to greater change and economic decentralization. The Internet is hard to control from the standpoint of authorities without simultaneously destroying its positive transforming effects. In the cities, the cell phones, the Avon-calling-door-to-door saleswomen, and the McDonaldization of China capture what American visitors perceive as China's future. But there is more to the future than this.

China has been transforming its military into a force with the capacity to threaten the U.S. presence in the western Pacific. More modernization is occurring within China's military today than under the old Communists, because for them the army was a tool for domestic, not foreign policy use. True, the Army is being cut in size, but this frees up resources for deploying hundreds (if not thousands) of ballistic missiles, naval expansion, anti-satellite weapons, and a nuclear modernization that puts teeth into China's deterrence of the U.S. For China, a country should be strong economically and militarily.