Why We Need China and Why China Needs Us

By Thomas Donohue

July 2001

Though this week's Congressional vote to extend normal trade relations with China lacked the widespread media attention, intensive grassroots efforts, and nonstop lobbying blitz that characterized last year's passage of a permanent extension, it had equally important consequences for our economy, natural security, and global stability.

Permanent extension of favorable trade ties is on hold until China completes its accession into the World Trade Organization, which now appears likely to occur late this year or early next year. In the meantime, Congress did the right thing and renewed year-by-year normal trade relations status with China—something it has done every year for the past 20 years.

Why is it important that we continue to have normal trade relations with China? First, trade with China offers U.S. workers and businesses tremendous opportunities. The United States exported over $18 billion in goods and services to China last year, supporting hundreds of thousands of high-paying U.S. jobs and improving American living standards. Our commercial relationship with China is more important now than ever before given that U.S. manufacturing, agricultural and high-tech sectors are in the midst of a serious economic downturn and need access to foreign markets to recover.

However, encouraged by recent challenges in U.S.-China relations, a small but vocal group of labor union bosses, human rights activists, political ideologues and anti-free traders opposed China NTR, arguing that China should be punished through the loosening of U.S.-China economic ties.

But history is proof that commercial engagement is America's most effective tool in promoting democracy, free enterprise, human rights, and rule of law in China. Consider the enormous economic, political, and social changes that have gripped China in the first two decades since normalization of U.S.-China economic ties.

China's per capita gross domestic product has increased fivefold, with some 250 million Chinese having been lifted out of poverty. A completely state-controlled economy and closed society back then, today China boasts more than a million private businesses, which created more than 4 million new jobs last year alone and account for more than 20% of China's $1 trillion gross domestic product.

China's economic engagement with the U.S. and other Western democracies triggered the historic display of free political expression in Tiananmen Square, and the infiltration of American traditions and values into China through open engagement has forced the unbending Communist Party to loosen its grip on Chinese society, even recently inviting private businessmen to join the party.

But China has a long way to go before its people enjoy the same freedoms Americans do. That's why it's important we continue to engage China, nurture it, and guide it along the path toward a free enterprise democracy.

We have already laid the foundation for a strong, multifaceted partnership. Over the last quarter century, the U.S. and China have worked together to address a host of regional and global concerns, from the threat of nuclear conflict between India and Pakistan to developments on the Korean Peninsula.

But we need to build a more trusting, lasting relationship, one that will withstand the tests of minor disagreements or disturbances. We must strive to see the day when an occurrence like the spy plane incident last spring doesn't unravel our entire relationship. Like in any strong marriage, we must work through the rough spots in our relationship by expanding two-way dialogue and promoting mutual understanding.

Increased trade is our strongest ally in this endeavor.

China's impending entry into the WTO sets the framework for a continually growing U.S.-China partnership and opens up plentiful new opportunities for U.S. companies and workers. But in many ways, China's entry into the WTO represents the beginning, not the end, of a long process to bring China into the community of nations. It's our duty to make sure China lives up to its commitments and remains true to economic reform. Congress helped with its vote to extend normal trade relations.

Thomas J. Donohue is President and CEO of the U.S. Chamber of Commerce.