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2 Sino-American
friction builds By Benjamin A
Shobert
developing internationally
competitive Chinese companies, while also
restricting the role of international companies in
certain sectors" (p 4).
A second official
strikes a similar chord by stating: "Over the past
12 months we have seen an upsurge in industrial
planning measures as tools of economic development
by central government authorities. China's leaders
currently face a choice: either to narrowly
interpret WTO commitments and maximize the
use
for government intervention to protect and nurture
Chinese industries, or to apply the letter and
spirit of the WTO and recommit to the broadest
possible use of markets to drive innovation, job
creation, and economic growth."
The
primary thrust of the USTR report is that
"developments evidencing this reduced momentum for
economic reforms over the past year make clear
that China has not yet fully institutionalized
market mechanisms, and that some Chinese
government agencies and officials have not yet
fully embraced the key WTO principles of market
access, non-discrimination, national treatment and
transparency" (p 4).
For Chinese
policymakers, this type of analysis is unhelpful.
Given the mixed nature of its economy - part
centrally controlled, part free-market - it is
inevitable that certain economic decisions that
come from the government and not the invisible
hand of the market will be viewed negatively as
unnecessary government interference. When the
Chinese government, concerned with corruption, or
industrial overcapacity, or an overheated
real-estate market moves to correct these
missteps, it is accused of a lack of transparency,
of being arbitrary, and of undue governmental
involvement.
When one is finished with the
USTR report, it is impossible not to ask where
China should be with respect to its WTO
compliance: What elements of the USTR report
reflect pathologies within the Chinese government
that may forever resist the necessary changes, and
what portions are unresolved but not entirely
unaddressed? For WTO membership to mean something,
the privileges the WTO status confers must be
balanced against its obligations, and in this
respect China may not plead complete innocence.
What makes this issue particularly sensitive is
that many of the areas where the USTR report
highlights discontinuities between WTO mandates
and the changes China must embrace to be in
compliance revolve around vestiges of the
socialist heritage from which China is emerging.
This can be seen most easily in the USTR's
handling of how China continues to limit the
trading rights of US "producers and distributors
of electronic publications and audio and video
products" (p 15). Here, conforming to WTO
standards requires that China deal with an issue
inexorably tied to its central control of the
media, and the much deeper question of whether
China will trust its people with free access to
content that might increase its citizens' already
urgent desire for internal political reform.
Reducing every issue to economic terms
might suit the tenor of the USTR report, but the
US, as the contemporary progenitor of ideas about
the essential role unlimited access to information
and freedom to dissent should play in an
enlightened government, owes China the duty to
appreciate that some of the changes WTO compliance
requires go beyond mere economic policy and touch
on much deeper questions for China.
At
times, the authors of the 2006 USTR report seem to
want to ascribe China's entry into the WTO in 2001
with almost Tiananmen-like significance, and
history may in fact look at the moment of China's
WTO membership as a signpost of its desire to
change and enter the next stage in its market and
political liberalization. Political realism would
suggest that one of the strategies that have
allowed China to modernize has been the
willingness of its global partners to meet it
where it is, and to understand that change within
China will take place in ways that are
frustratingly, and even at times maddeningly,
unique to China and its culture.
If the
events of the past month, marked most recently by
Paulson's trip to Beijing and the release of the
USTR report, are any sign of US willingness to
continue to engage in political realism, US-China
relations may be off to a bumpy start in 2007.
If the United States, for its own internal
political reasons, cannot afford to engage China
in a serious discussion about what changes it must
make to comply with international systems of
accountability, perhaps it is in large part
because the US has reached what economists call a
stationary state - the idea that, as Edward Gibbon
in his The History of the Decline and Fall of
the Roman Empire said best - "All that is
human must retrograde if it does not advance."
The USTR report says many things about
US-China relations, but what it struggles to say
well - that China has made progress and that its
shortcomings should be balanced against its
successful efforts to change - may signal a unique
US need to blame its own economic stagnation on
others.
Benjamin A Shobert is
the managing director of Teleos, Inc and an
economic and policy analyst covering US-China
relations.
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