In recent years, I've seen a number of people trying to make the case that the conventional wisdom on trade with China in the late 1990s was wrong. Here is a version of the argument from James Hohmann of the Washington Post:
The Washington consensus at the dawn of this century that unfettered trade would propel China toward democracy, free enterprise and human rights turned out to be wrong.
This blog post addresses several aspects of the issue: How much trade liberalization was there, why didn't China change more in the direction people hoped, and what to do now.
How much trade liberalization was there?
As I have said before here on this blog, we don't have anything close to "unfettered trade" (with China or anyone else), and this has been the case since well before the Trump administration's various protectionist measures. As just one example, Chinese products in particular have been hit hard by anti-dumping duties on a wide range of products. So, there are clearly plenty of "fetters" still in place.
Also, in terms of the liberalization that occurred when China joined the WTO, it's worth noting that Chinese tariffs and other barriers were lowered significantly, but the U.S. and other countries didn't have to do much in this regard. Thus, the liberalization process was fairly one-sided. On the other hand, it is true that U.S. trade with China became more stable after permanent normal trade relations was granted, and that did have an impact on the views of U.S. and other non-Chinese companies about investing in China.
To sum up on this point, rather than a sudden onset of "unfettered trade" with China at the beginning of the 2000s, maybe the better description of what happened is that China liberalized its own import regime quite a bit, and, in addition, China's ability to export to the U.S. and other countries became more stable and secure.
Why didn't China change the way people hoped?
But perhaps that's all a bit nitpicky (although I do think an accurate characterization of these events is important), and the bigger point raised by the Hohmann statement is this: However we characterize Chinese trade liberalization, why didn't that bring democracy, free enterprise, and human rights to China?
I confess that I wasn't paying much attention to China at the time. I was focused on WTO disputes, and was waiting until China got into some of those. But if I had thought about China much in the late 1990s and early 2000s, I certainly would have hoped to see progress there towards democracy, free enterprise, and human rights after its WTO accession. South Korea joined the GATT in 1967 and subsequently transitioned from an authoritarian state to a democratic capitalist state (I'm not suggesting cause and effect here, but one did follow the other after a period of time), so couldn't something similar happen in China?
But every country is different, and I would not have expected that South Korea's experience could be easily replicated in China. China would have to follow its own path, and given the very different geopolitics of China and South Korea, that path was likely to be quite different.
When China joined the WTO in 2001, that might have been the moment to test out the possibilities for promoting democracy, free enterprise, and human rights in China. And it seems like many U.S. foreign policy officials were very focused on China in the summer of 2001. It's hard to say how that focus would have manifested itself, but pressure in the areas of democracy, free enterprise, and human rights was certainly possible.
But something got in the way. After 9/11, the U.S. foreign policy focus shifted to the Middle East. As part of that shift, the U.S. needed China's support, or at least non-objection, to U.S. actions in the War on Terror. As a result, I think it's fair to say that the U.S. did not press China on issues of democracy, free enterprise, and human rights during this period as much as it otherwise would have. It's difficult to quantify just how much pressing was going on, but certainly it was less than if the War on Terror had not been taking place.
With that as background, I think the statement that "[t]he Washington consensus at the dawn of this century that unfettered trade would propel China toward democracy, free enterprise and human rights turned out to be wrong" is a bit misleading in a couple ways.
First, I'm not sure there was a "consensus" -- Washington or otherwise -- about what the ultimate result would be here. Rather than a widespread belief that trade "would propel" China, it was more of a hope that trade could help contribute in some degree to these outcomes, in the way it had with other countries. But there was not much certainty about any of this. People wanted to see China move in that direction, and an agreement under which China would liberalize trade, and increase interactions with people in capitalist democracies more generally, seemed like a good way to make progress. It certainly made more logical sense than an approach of trying to isolate China.
Sorting through what every expert said at the time is beyond the scope of this blog post, but President Clinton made a long and well-known speech on the issue in March 2000, intended in part to convince Congress to pass the Permanent Normal Trade Relations for China statute. Read the whole thing, but here are some key points from it:
the path that China takes to the future is a choice China will make. We cannot control that choice; we can only influence it. But we must recognize that we do have complete control over what we do. We can work to pull China in the right direction, or we can turn our backs and almost certainly push it in the wrong direction.
The W.T.O. agreement will move China in the right direction. It will advance the goals America has worked for in China for the past three decades.
...
If Congress passes P.N.T.R., we reap these rewards. If Congress rejects it, our competitors reap these rewards. Again, we must understand the consequences of saying no. If we don't sell our products to China, someone else will step into the breach, and we'll spend the next 20 years wondering why in the wide world we handed over the benefits we negotiated to other people.
...
But most of the critics of the China W.T.O. agreement do not seriously question its economic benefits. They're more likely to say things like this: China is a growing threat to Taiwan and its neighbors; we shouldn't strengthen it. Or, China violates labor rights and human rights; we shouldn't reward it. Or, China is a dangerous proliferator; we shouldn't empower it. These concerns are valid, but the conclusion of those who raise them as an argument against China W.T.O. isn't.
China is a one-party state that does not tolerate opposition. It does deny citizens fundamental rights of free speech and religious expression. It does defend its interests in the world, and sometimes in ways that are dramatically at odds from our own. But the question is not whether we approve or disapprove of China's practices. The question is, what's the smartest thing to do to improve these practices?
I believe the choice between economic rights and human rights, between economic security and national security, is a false one.
Membership in the W.T.O., of course, will not create a free society in China overnight or guarantee that China will play by global rules. But over time, I believe it will move China faster and further in the right direction, and certainly will do that more than rejection would.
Balancing out all of his various statements, it seems to me that he was hopeful but realistic about the possibilities here. He wasn't arguing that letting China into the WTO would guarantee positive results, but rather it was the best chance. Would democracy, free enterprise, and human rights be in a better state today if China had not joined? It's hard to imagine they would be.
And second, as noted above, I don't think the policy was properly tested, in the sense that "propel[ling] China toward democracy, free enterprise and human rights" was not a priority for the U.S. after 9/11. For example, when China joined the WTO in December 2001, that would have been a good moment to press the extensive commitments that China made. But that seems to have happened less than one might have expected, with some key obligations related to state-owned enterprises (e.g. para. 46 of the accession Working Party report) mostly ignored as far as I can tell (but if someone has details on how they were raised at the WTO or bilaterally, I'd love to hear more).
To be clear, I don't know how much could have been achieved if these issues had been a U.S. priority. But regardless, my sense is that the perception in China was that the U.S. wasn't focused on these issues, and as a result China wasn't feeling much external pressure to make changes.
What could be done now?
But what's done is done, and now we are at a different point in history. Are there things that the U.S. government could do today that would push China in the direction of democracy, free enterprise and human rights? Maybe. It's difficult to influence any government in this way, and with a major power like China it is particularly difficult. But I do think it is possible to have some influence in relation to these issues in China, with one big caveat: It would have to be done across the board for all countries, rather than only be applied to China. If we are friendly and accommodating with some authoritarian states, calling for democracy, free enterprise, and human rights in others is unlikely to be effective.
Also, it would have to be done in a careful, diplomatic way. Public criticism will often backfire, and economic sanctions don't have a great track record either.
And finally, the best way to have an impact on these issues -- in China or elsewhere -- is probably through leading by example, by setting high standards at home. I think we can all agree that there are problems with democracy and human rights in the U.S. (although people disagree on what exactly those problems are!), and making an effort to improve those could be helpful in our international dealings.
All of this makes inducing changes in China a serious challenge. However, I think that if expectations are set at a reasonable level, it is possible that something could be achieved. One major hurdle is that criticism of China here in the U.S. often seems to be about scoring domestic political points, rather than thinking about what words or actions by the U.S. government or its officials might actually lead to changes in China. There are not enough conversations in the U.S. political world about how the Chinese government or people are thinking about the various issues related to democracy, free enterprise and human rights, and, taking that thinking into account, what might be an effective way for the U.S. government to address these issues.
