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50th Anniversary of Communist China (11/2/99)

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The World Factbook: U.S. and China

The White House and PNTR for China

U.S. House of Representatives

The World Trade Organization

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The International Monetary Fund

Anything But Normal
(May 25, 2000)

Inside the halls of Congress this month, arguments are flying over whether to grant China, a country of more than 1 billion people, permanent normal trade relations (PNTR). The U.S. House of Representatives is scheduled to debate and vote on the issue this week.

What's the big deal? It's a complicated story that involves American jobs, principles about democracy, and a whole lot of money.

China and the U.S. were enemies for a long time, and though relations are warming up, the U.S. still puts a lot of restrictions on business transactions with China. Granting PNTR means the U.S. would start treating China the same way it treats friendly nations, at least when it comes to business.

Until now, Congress had to vote every year on whether to offer lower taxes (also called tariffs) on goods traded with China. If leaders were unhappy with the way the Chinese government was acting, they could threaten to impose trade restrictions. PNTR means getting rid of the annual vote and putting China on the list with most of our trading partners like Canada, Mexico and Japan.

President Clinton believes PNTR will help steer the communist nation towards democracy. For the United States, freer trade with China means U.S. farmers and manufacturers can make money by selling products to billions of potential customers.

But some people are worried about the way the Chinese government treats its citizens - people who criticize the government or practice some religions get thrown in jail and even tortured. They argue that letting China into the world’s most exclusive “members-only” business club isn’t going to make them clean up their act.

A Bit of the Past

China is home to one of the world’s most ancient and complicated civilizations. For thousands of years, China was mostly a rural society controlled by a series of powerful warrior emperors.

In more modern times, China endured a long series of difficult clashes with Japan, and conflict among its own people about what kind of government the nation should have. But in 1949, the Communist Party under Mao Ze-Dong staged a revolution and took control of the government.

Since then, relations with the U.S. have been rocky. For a long time, many Americans considered China “the enemy” along with other communist countries like the Soviet Union.

During the 1950s, ‘60s, and ‘70s, U.S. soldiers unofficially fought Chinese troops in Korean and Vietnam, where communism was taking hold.

U.S. relations with what was then called “Red China” were almost nonexistent, until 1972, when President Richard Nixon was invited to visit. That visit was a big breakthrough for the two countries. Nixon played Ping-Pong with Premier Zhou Enlai and the Chinese government gave the U.S. a pair of rare panda bears as a gift. Soon after that, the two nations established normal diplomatic relations. But the U.S. still didn’t consider China a friend on the same level as other democratic nations.

In 1999, Chinese communism celebrated its 50th anniversary. It also marked a year of strain between the U.S. and China. A Chinese-American scientist working in a top secret U.S. lab was accused of stealing nuclear secrets for the Chinese. And during an air campaign against Serbia, the U.S. accidentally bombed the Chinese embassy in Kosovo, killing three Chinese journalists. Angry Chinese students threw rocks and bottles at the U.S. embassy. The United States apologized and paid the Chinese government for damages.

Modern Day China

Although China is still communist, everyday life for Chinese citizens is a lot like life in the U.S. People communicate by e-mails, faxes, and cell phones. For years the government owned most of the factories, land and industry, but that’s changing. Private businesses are expanding. And there’s plenty of American influence in entertainment and culture. The capital city of Bejing has more than 300 Kentucky Fried Chicken fast food restaurants.

But the government still controls society in some important ways. The government controls the newspapers, TV and radio. The protesters who recently marched against large international banking organizations in Seattle and Washington, DC would have been arrested in China. People serve long prison sentences for speaking out against the government.

Work in China for some, means sweatshops. People can work as long as 18 hours day - with small breaks and little pay. Children work in sweatshops too. It’s not uncommon for children of sweatshop workers to work alongside their parents, missing school or not being enrolled at all.

Recently the Chinese government outlawed a religious group known as Falun Gong. Most of the followers of Falun Gong practice exercises similar to yoga. The group has thousands of well-organized members who have staged peaceful mass demonstrations. Feeling threatened, the Chinese government ruled that this movement is “an evil cult” and has jailed and even beaten and tortured thousands of people who refuse to stop practicing it.

The most notorious crackdown of the Chinese government against its own people happened in 1989, when Chinese college students demanding a more democratic system marched in protest against the government in Tiananmen Square. They were met by armed government troops in dozens of tanks. They steadily advanced on the unarmed students. When the protesters refused to move, government troops shot them. Many students were killed. Others were arrested and sent to jail. Some were thrown out of China for good. The whole showdown was captured by TV news cameras and beamed around the world.

The Art of the Deal

China is a poor country, but it is hoping that access to the global economy will change that. U.S. businesses, on the other hand, know they can make billions of dollars selling TVs, soybeans, T-shirts and almost anything else to the Chinese.

Under a deal brokered between U.S. Trade Representative Charlene Bafshefsky and her Chinese counterpart in November, that’s exactly what could happen.

The deal allows U.S. telecommunications companies doing business with China to own as much as 50 percent of the company. U.S. farmers could sell much larger amounts of wheat, corn, rice, cotton and other staple goods. Financial companies would be able to sell services to Chinese companies and people. In exchange, the U.S. would grant China permanent low tariffs. China says it would deny U.S. firms wide access to its more open markets unless the bill passes.

Opening the world’s largest marketplace would certainly help narrow the difference between what the U.S. buys from China and what it sells to China. Last year, the U.S. exported $13.1 billion to China, while importing $81.8 billion from the country. That means the U.S. is buying four times as much stuff from the Chinese as we sell to them. The U.S. ends up sending a lot of money out of the country and not getting much back.

But opening Chinese markets also means that U.S. companies will be able to employ Chinese workers, who generally get paid a lot less than American workers.

Because they can save so much money on labor costs, some U.S. firms may be inclined to close factories and move to China. Many American factory workers worry they might lose their jobs. Moreover, some U.S. employers worry China will flood U.S. markets with cheaper products, stealing a lot of their business.

Protest to Policies

President Bill Clinton is actively pushing to get Congress to grant China permanent normal trade relations. But even if the U.S. doesn’t officially grant PTNR, China may still be admitted to the most exclusive international “business club,” the World Trade Organization or WTO.

The WTO is an international business organization of 136 nations. The WTO, headquartered in Geneva, Switzerland, sets global trading rules and tries to end disputes between countries over trade. The U.S. joined five years ago.

When the WTO held a big meeting in Seattle last year, Americans objecting to China’s possible entry into the trade organization took to the streets in protest.

Human rights advocates protested China’s human rights record. U.S. workers came because they object to China’s labor policies and working standards. Environmentalists came because China's rapid growth has damaged rivers and air quality.

Now, the debate over China, trade, and PNTR has moved from the streets to the halls of Congress, specifically, the House of Representatives. Many Congressmen have agreed to vote for the bill, but supporters still don’t have enough votes to guarantee that it will pass. Both sides are working hard to persuade the few undecided Congressmen to vote their way.

Who’s for PTNR? Presidential candidates George W. Bush and Al Gore, as well as former presidents George Bush, Jimmy Carter and Gerald Ford. The AFL-CIO, the largest U.S. labor union, is against it, and so is Democratic leader in the House of Representatives, Richard Gephardt.

Even if Congress doesn’t pass the trade bill, China can still gain entry into the WTO. Canada and England, who have to work out their trade own agreements with the country, could help China get in.

The House vote is scheduled for next week, and you can look for lots of heated exchanges over this complicated decision.

What do you think? Should the U.S. grant permanent normalized trade relations with China?