China Is Too Big to Ignore
The Dallas Morning News
May 22, 2000

Following a recent speech, a questioner asked me to comment on China. Not knowing what to say—or, more accurately, where to start—I finally came out with "China is really, really big."

One kind soul later called my answer profound. She said it captured the essence of the matter.

Well, in the spirit of Peter Sellers in the movie Being There, here is another news flash: China has lots and lots of people.

Because of the country's size, population and strategic importance, the arguments for free trade apply to China in spades. Many people concede the economic argument, though, and object to establishing permanent normal trade relations with China for human rights, labor or environmental reasons.

But those aren't reasons to curb trade with China; they are additional reasons to increase it.

To say to the Chinese government that we won't let U.S. citizens trade with Chinese citizens until it reforms is like the boss saying, "The beatings will continue until morale improves," or the preacher saying, "First repent, and then you may come hear my sermon."

Trade opens countries, strengthens the private sector, promotes the rule of law and diminishes the relative role of government. Trade raises living standards, making labor and environmental reforms more affordable.

I am sure the Chinese love their children as much as we hate child labor. I am sure they like clean air and water as well. Child labor, sweatshops and a poor environment are products of poverty, not perversity.

I went to grammar school with farm kids who shed their shoes in early spring and were taken out of school for cotton-picking season. They were needed at home, and their parents were lucky not to have moralizing foreign governments threatening to make a bad situation worse.

Freer trade is an easy call for economists. It is at the top of the list of what they agree on. But the permanent normal trade relations bill now before Congress isn't about free trade; it is about a free lunch—for us.

The Chinese agreed last year to open their markets to U.S. products in exchange for the promise of permanent normal trade relations. Our markets already are open to Chinese products. A failure to pass the bill could close their markets to us at a time when they are opening to other nations.

Specifically, the bill would exempt China from a Cold War litmus test applied to the Soviet Union and other Communist countries. As it stands, Chinese products can enter the United States at normal tariffs if the president grants an annual waiver. Every year, Congress threatens to override his decision, but it never has.

The permanent normal trade relations legislation would do on a permanent basis what we have done year by year for a long time. Our only concession would be giving up our annual, self-righteous ritual of pronouncing the Chinese fit to trade with us.

But remember, our beefs are with the Chinese government—not the Chinese people. If we ever made good on our threats to close our markets, the repercussions would hit the people. A no vote on permanent normal trade relations would say to the Chinese government, "Until you stop abusing your citizens, we are going to threaten to abuse them, too." Let's get real.

Forget economics and forget politics for a moment. Freedom to trade is part of freedom. Free trade is part of free enterprise. Are we for freedom or not?

About the Author McTeer is president and CEO at the Federal Reserve Bank of Dallas.