China and Washington: At a Turning Point? : The U.S. should renew economic exemptions for Beijing

America needs to have extremely modest expectations about China. Anything more than that is sure to lead to severe disappointment.

That glum thought arises anew as the issue of maintaining most-favored-nation status for Beijing comes up for its annual review. President Bush said Wednesday that he wants to extend MFN status to China for another year, but he has until June 3 to formally make his intentions known to Congress. Last year Bush approved renewal of China’s trade status--which confers exemption from certain U.S. tariffs and thus makes the goods of that country less expensive to buy here.

The last MFN approval came in the aftermath of the bone-chilling Tian An Men Square massacre, which reinforced Beijing’s international image as a cruel and repressive regime.

Even so, the President was right last year to seek extension of MFN status. The question now is whether another year is warranted.

THE CRITICISM: The argument against China is hardly without merit. Drawing on this nation’s finest ideals, it suggests that Beijing has forfeited all rights to most-favored-nation status. China continues to violate basic norms of human rights, to export missile and nuclear technology in defiance of its own assurances that it would stop fueling the arms race, to exploit prison labor to produce cheap exports and, in further pursuit of trade advantage, to violate international copyright laws on computer-software products and limit U.S. access to the Chinese market.

Such a wide-ranging bill of particulars is being drawn up in Congress to oppose extension of MFN status. But on balance, the argument for extending for another year still holds.

Nothing the West can do will prompt Beijing to modify its domestic and international behavior to satisfy its critics. So the real issue is whether the extension is in U.S. interests.

From a purely economic perspective, it is. Trade relations with China are extremely important and exports are one of the few truly expanding sections of the U.S. economy. Even though the estimated $15 billion trade imbalance now favors Beijing, the United States cannot afford to dismiss a market that includes one of every five people on Earth.

From a purely political perspective, Washington will have some leverage with Beijing as long as MFN status is in place. In fact, the Chinese did bring to trial accused members of the 1989 democracy movement, as the U.S. had encouraged, and the sentences were lenient by Chinese standards.

THE REALITIES: Moreover, it is hard to imagine that terminating MFN would accomplish anything other than causing Beijing to resurrect a version of the Bamboo Curtain. It could give the Chinese government an excuse for new crackdowns on democracy groups and for anti-Americanism.

By contrast, continuing a trade relationship allows Washington to nurture its leverage with China--and spare innocent Chinese people from the economic hardship of losing MFN status. And it makes more sense to use existing U.S. laws to penalize Beijing, when that is necessary.

MFN status shouldn’t be renewed without sending a clear signal of displeasure to Beijing. Setting conditions for renewal next year is a tricky proposition. Conditions must be crafted carefully so as not to be unenforceable and thus meaningless to the Chinese. For instance, Congress could require the Administration to monitor China for any further retrogressions in human rights and issue a formal report before renewal next year. It does that now for other nations whose U.S. financial aid or other beneficial ties are dependent on certification that they are respecting human rights.

But nothing will be gained now by turning back the clock on U.S.-China relations to the pre-Nixon era.