The second category is made up of intellectuals and students. “This is the group which ultimately will bring democracy in China. . . . No outsider, not the United States, nobody, can bring democracy to China, except those people.” A sound human rights policy would attempt to maintain the respect of these people through appropriate, supportive activities in our own country and in international organizations without continually pretending that something is being accomplished by “constructive engagement,” the current euphemism for the ineffective sermonizing and browbeating tactics used by the State Department and others to attack China verbally on the issue. Personal diplomacy by officials who are well informed and sensitive to Chinese society is always more effective when we are trying to win freedom for people who have risked their lives for ideals we support.
The Dalai Lama’s third category is made up of the masses, concerned with “daily livelihood,” for whom “democracy is not much relevant in their day-to-day life.” The Dalai Lama argues that those engaged in a positive human rights policy toward China should seek advice from the second group on what ought to be done about preserving the rights of this third group.
Human rights must be an important dimension of any American policy toward China that truly addresses Chinese problems and is sensitive to the Chinese record in particular cases. Such a policy is best implemented by trained and experienced diplomats, not by politicians speaking in generalities to domestic audiences for political advantage. Inevitably, demands for political reform will grow in China over time, just as they have in Taiwan and South Korea, so long as the regime’s basic policies remain what they are today. In the meantime, the U.S. government should exercise patience and firmness, while discreetly intervening in particular cases where we might make a difference.
The second aspect of human rights in China we must recognize is to ensure that poor working conditions and prison labor in China (and elsewhere) do not end up destroying the livelihoods of American workers. Without question the most powerful human rights tool the United States could wield would be to deny access to the American market to products from multinational companies that have abandoned American workers to seek out low-wage foreign workers lacking in economic or political rights of any sort, not to speak of human rights. The economics profession may attack such policies as “protectionism,” but the time is long past when the United States should allow corporations to use the bottom line, “globalization,” or the pressures of competition—”Adam Smith made me do it”—as excuses for their indifference to basic human rights at home or abroad. Failure to consider this dimension of the rights question leaves the United States open to a charge of hypocrisy.
The United States is formally as well as emotionally and intellectually committed to an academic textbook definition of “free trade,” which it believes (or pretends to believe) was the foundation of the General Agreement on Tariffs and Trade (GATT). Created in 1948 as a specialized agency of the United Nations, GATT governed trade among the so-called free-market economies during the era of the Cold War. Its greatest accomplishments were a series of multilateral negotiations among its members to reduce or eliminate tariffs on many different products, which greatly stimulated international trade over the years. It was replaced on January 1, 1995, by the World Trade Organization (WTO). Actually, for most of the Cold War, GATT was part of an American grand strategy vis-a-vis the USSR in which the United States traded access to its market and its technologies in return for support against communism by nations like Japan, South Korea, and Taiwan. The WTO has no similar strategic purpose; it must either deliver the allegedly
China’s primary trade goal is to gain admission to the WTO with the status of a developing country. As a developing country, China would not have to open its markets to foreign competitors on an equal basis and would be exempt from the provisions of the WTO treaty concerning national subsidies for industries and intellectual property rights covering items like foreign films and books. If it achieves that—as the ideological myopia of American trade negotiators of both parties and the economists who advise them makes likely—its mercantilism will ultimately do serious damage to the American economy, not to speak of the WTO system. Like Japan before it, China will run up huge trade surpluses with the United States rather than generating a balanced and mutually beneficial trade. Managed trade is the antidote to this, and it need not hamper China’s economic development, but it is anathema to the economic ideologists of the United States. Management of trade with China would require the kind of political leadership and a governmental capability that the country may simply not be able to muster in the post–Cold War world. After all, the United States has never given the same priority to trade as to human rights, arms sales, or territorial disputes.
Before the economic crisis that began in 1997, which greatly expanded global dependency on the American market, the United States was already absorbing about 25 percent of all exports from East Asia and running annual trade deficits with the area well in excess of $100 billion. China’s trade surplus with the United States, more than $60 billion in 1998, is second only to Japan’s and growing much faster. When China launched its economic reforms in 1978, its overall foreign trade totaled $20.6 billion; by 1993 the figure was $195.8 billion, an increase of 950 percent. Some 80 percent of China’s exports are manufactured goods, and China is the world’s largest textile exporter as well as the largest source of American textile and apparel imports. The Europeans and Japanese also run trade deficits with China, but the U.S. deficit is approximately two to three times theirs.
In a sense, this “trade problem” is really a matter of “systems friction,” the clash of different forms of capitalism, exactly as one might expect given the developmental-state strategy that China is pursuing. The point of this strategy is to bend the rules and norms of laissez-faire capitalism in order to achieve national wealth and power, since economics in this view is inevitably a zero-sum game in which some nations win and others lose. China has never tried to become a “free-market economy” but rather to engage and exploit other market economies to become a great power. Economic reform, after all, was undertaken in the first place in order to preserve the Communist Party’s political control and to achieve through other means what it had failed to achieve through Stalinism and then Maoism.
The U.S. response to this challenge has primarily been to try to induce or cajole China into “reforming” its economy to give it the look of American-style capitalism. Thus, in 1994, reflecting the attitudes of Washington’s economic theorists and trade bureaucrats, the
The answer to these problems, in the sense of helping to promote China’s economic development while preventing its predatory trade policies from provoking international conflict, is managed trade. All this means is the use of public policy to manage outcomes rather than procedures. It assumes that when either public or private companies in different economic systems trade with and invest in each other’s economies, a mutually beneficial outcome cannot be assured merely through agreement on rules. Managed trade is not nearly as uncommon as professional economists imply. In 1960, at the height of the Cold War, when the United States began to trade with Poland, Romania, and Hungary, it set goals that these Leninist countries had to meet. It required, for instance, that Polish imports from GATT countries rise 7 percent per year or trade would be cut off.18
The economic challenge of China is likely to be the most difficult test not just for American economic policy but for its foreign policy in general in the first quarter of the twenty-first century. Unfortunately, Americans still remain
