Fiscal Leeway for China

Of all the issues and numbers pondered by Chinese and American diplomats on Beijing’s long march toward World Trade Organization membership, one counts most: $57 billion. That was the U.S. trade deficit with China last year, and it’s the number that politically colors a long list of issues between the two global powers, matters like human rights and military buildups as well as the Chinese economy.

In talks today in Washington, Premier Zhu Rongji and President Clinton will take up the deficit and other potential obstacles to China’s bid for WTO membership. The White House said Wednesday that progress continues on a range of WTO-related issues and political matters. Zhu’s visit alone will not resolve them, but the prospects are improving.

There is no deadline for a deal on U.S. support of China’s bid for membership. Washington could block acceptance, but that would not be in the U.S. interest. Republican spokesmen can argue otherwise, but the world economy will work more smoothly if partisans put aside Beijing’s multibillion-dollar annual trade surplus and concentrate instead on what a reformed Chinese economy can deliver to its people and its trading partners. Washington needs to engage China on a series of levels. Doing that ultimately depends on fair and open trade relations, and the key requirement is a Chinese economy prepared to play by WTO rules.

But China has problems, and Zhu frankly admits them. Addressing the annual National People’s Congress in March, he said that “economic order is somewhat in disarray . . . financial discipline is lax . . . and demand in the market is feeble.” This adds up to an economy not performing at the level China must attain to engage the WTO powers in trade.

Zhu came to office as a can-do man on market-oriented economic progress, but he faces an economy often hobbled by party apparatchiks and corruption. His goal of a more flexible economy, one ready to play by WTO rules, cannot wait for a slow transformation. Nothing would help more than U.S. support for Beijing’s eventual WTO membership bid.

The Chinese know their place in the world, and it is formidable. The goal should be to make its economy fair and open, at the level that invites WTO membership. But Zhu cannot be expected to roll the Chinese economy all the way from its Marxist roots to the open Western style in a short period. That will take time, and Washington and other world powers should give him some slack in reaching that goal. China will play in a very tough league when it does join the WTO and it must be ready.