The process of creating a modern economy or a modern polity is measured not in years but in decades. Chinese long-term plans

Human right issues

Since 1989, the organizing principle of the US-Chinese relationship has been the image of the tanks crushing demonstrators in and around Tiananmen Square.

MFN

Most favored nation status (MFN) is simply the provision of normal trade status to another country. It confers basic membership of the international trading system by providing an assurance that the country will not be discriminated against by giving special advantages to other countries. In practice, what it means for US trading partners is that the country's exports will be charged tariffs at normal rates rather than at the ruinous Smoot-Hawley rates which destroyed world trade earlier in the century, and which were one of the prime causes of the Great Depression.

At the end of 1992, out of more than 160 countries, only six outlaw countries were deprived of MFN status: Cambodia, Cuba, Laos, North Korea, Romania and Vietnam. The USA does not consider depriving Japan of MFN status even for very large trade deficits and many unfair practices. It does not eject Thailand, Malaysia or Indonesia for much more extensive violations of intellectual property rights and (in Indonesia's case) fair market access than China's. Nor has it denied many African counties of MFN status for far more violation of human rights than those of China. Without MFN, the tariffs of the most important categories of toys rise from 6.8 to 70%; most clothing tariffs rise to 90%.

Depriving of MFN status expels the country from the system. It does not say, We are going to charge you more to deal with us. It says, We don't want to deal with you at all.

What would be the specific impact of taking MFN status away from China? The biggest blow would fall on Hong Kong and adjacent areas. Since Hong Kong has moved almost all its industry across the border, Hong Kong industry is completely dependent on its ability to export from China. Tens of thousands of jobs would be lost in this one city. Taiwan would also be hit hard; for instance, almost all of Taiwan's shoe industry uses the Chinese coast as a manufacturing platform. Coastal Guangdong and Fujian would be particularly devastated. These are the areas which are export-dependent. Not coincidentally, they are the most liberal areas of China.

Traveling around southern Guangdong. Mile after mile, in all directions, one just sees construction. People and companies have torn down their old buildings and leveraged themselves to the hilt in confidence that the continuing reforms will enlarge their trading opportunities. If their market collapsed, they would collapse. From Beijing, the consequences would look very different. The trade cutoff would be painful, but hardly unbearable. Most of China's growth is domestic, not trade-oriented. The area around Beijing is not dependent on exports to the USA. For bureaucratic socialist leaders there could be political pleasure inside the economic pain. It would discredit the super-reformers once and for all. From the view point of Beijing's conservatives, it would demonstrate decisively the dangers of opening the country too much to foreign influence. Depriving China of MFN status would isolate the USA. Not one other country in the world would support the policy. Most Asian Leaders have spoken actively against it.

The progress of Chinese reform has granted all Asian countries not just economic benefits, but more importantly the benefit of a China which has shifted from disruptive revolutionary influence to constructive support. In addition, since MFN is reciprocal, the collapse of US exports to China would cost well over a hundred thousand American jobs. MFN deprivation has been used as a lever to extract huge concessions. But is very dangerous to make threats that one is not willing to implement.

In 1976 much of America's political leadership expressed the same kind of anger at the Park Chung Hee regime in South Korea that is expressed against China now. Leading newspapers focused anger on South Korea, portraying student demonstrations in front-page stories and stating that the regime was doomed to collapse because it was undemocratic and abused human rights. Therefore, they argued, America should withdraw its troops before South Korea became another South Vietnam. These reports made the most negligible mention of South Korea's extraordinary economic growth. The early advisers of Jimmy Carter convinced him to make the pullout of the American troops that protected South Korea against the huge army of North Korea.

As it happened, my own research on South Korea showed that the economic take off was generating broad support for the regime. The South Korean economy was extremely egalitarian, particularly in keeping rural incomes fairly comparable to urban incomes - a unique accomplishment that not even Taiwan had been able to duplicate. Most important, the South Korean regime had developed institutions (the army, the government ministries, the competitive business system) that were world class in leadership, technical competence and effective organization. A middle class was emerging. Workers were becoming educated. The number of industrial workers had gone from a few tens of thousands in 1950 to millions. Society was becoming more differentiated and more difficult to control. People were less afraid, both of starvation and of North Korea. The economy was becoming too complex to control from the president's office, so the government would lose control over people's jobs.

While much of the emotional drive behind Carter's policy came from the desire of human rights advocates to punish Park Chung Hee for his very real abuse of human rights, South Korean human rights activists despised the policy. All the major dissident leaders were interviewed, and not one supported the troop withdrawal.

In Burma a vicious regime is not just abusing the human rights of its people, but also destroying their livelihoods through insane economic policies. How does one promote freedom and democracy in China? The most important part of the answer is: spur economic development. Educated people will demand more freedom than uneducated people. Employees of private and foreign enterprises will act more freely than employees of state enterprises. People who can move around are freer than people confined to their home towns. People who travel to foreign countries will have a broader range of ideas and experience, and a wider range of freedom, than people who must stay at home.

Pitfalls in US-China relations.

The process of creating a modern economy or a modern polity is measured not in years but in decades. This work has constantly referred to processes that take a generation or two. (I take a generation to be about twenty-five years.) Western societies find it extremely difficult to make very long-term plans and to grasp things that take many years to occur. Members of Congress accuse businessmen of having very short-term perspectives; they are absolutely right. But most politicians cannot think in terms of policies that have payoffs more than two or four years in the future, and this is just too short for policies designed to enhance human rights or democracy in most third world countries. It is axiomatic that successful democracy requires a society dominated by an educated middle class. This understanding dates all the way back to Aristotle, and any college student who has studied the subject could explain why. A country dominated by a rural society of semi-literate people earning under one hundred dollars a month is not ready for democracy. The emergence of the preconditions for democracy took twenty-six years in South Korea if one counts from Park Chung Hee's military revolution in 1961 to democratic election of 1987 - and six years longer to civilian president Kim Young Sam in 1993. South Korean democracy appears as stable and prosperous as any other in the third world. (Earlier elections were sometimes free, but the democracy had no chance of stability.)

Park Chung Hee, so hated by American human rights advocates, is now universally regarded as the father of his country and the one who installed the prerequisites of democracy. China is a lot bigger and more complex than South Korea and the process will take longer. China's leaders think in decades: note Deng Xiaoping reflecting publicly on whether a hundred years would be a more appropriate time frame for Hong Kong to have a separate system, rather than the mere fifty years currently provided. If they are serious about promoting democracy, American leaders must learn to think along the same lines.

Elite versus mass perspectives.

Political leaders tend to see global politics as a game between politicians. When members of Congress weigh the appropriateness of sanctions on China as a response to Tiananmen Square, they are thinking about punishing Li Peng and Deng Xiaoping for their brutal decisions. The whole focus is on finding a stick big enough to beat the leaders. But the primary effects of many economic policies may not fall on the leaders. They may - and, in the case of MFN deprivation, do - fall primarily on the little people. The delivery of a devastating economic blow to these millions of people who are just climbing out of hunger seems like a massive version of the Vietnam War tactic of burning down the village in order to save it.

Proper policies must take both aspects into consideration. What is the effect on the leaders, and what is the effect on the people? If one is likely to impoverish huge numbers of people for long periods of time with negligible or regrettable impact on the leaders, then advocates of the policy need to do some very serious soul-searching to ask whether they really care about people. There is no way to be sure about future.

Most Asian countries have moved faster than any other part of the third world in the direction of stable freedom and representative government.

One of the classic dilemma of democratic theory is the balancing of popular rule with competence. One device for marrying the two is representation: the people may not be capable of voting directly on budget details, but in theory they can choose representatives who can vote with competence. Another device is to remove certain things from the voting arena; in one classic formula, nobody thinks that aircraft passengers should vote on the maneuvering of the plan in a storm. The creation of an independent central bank and the delegation of most of the details of policy making to large professional bureaucracies are variants of the aircraft-in-a-storm approach. During war time, democracies give more weight to expertise: they elect more competent leaders (Roosevelt, Churchill) at the expense of interest group considerations; centralize more power in those leaders, and give those leaders far more leeway to install competent subordinates at the expense of patronage and seniority consideration. The Clinton/Carter policy assumes that one can start from the end of the developmental process, that one can install the full panoply of interest group politics without spending decades ensuring that competent institutions can withstand the onslaught of divisive, inflationary, and corrupting pressures. It assumes that one can provide the whole range of individual freedom at a time when budding police and judicial systems face gigantic challenges from criminal triads, terrorism, subversion and insurgency. The Asian experience shows that democracy cannot survive without a modicum of order.

Cold war or conflictual cooperation?

The risk of a new and unnecessary cold war with China, is very severe. The most sensitive spots on China's anatomy are Taiwan, Hong Kong and Tibet. The Bush administration in 1992 made the decision to reverse a decade old policy and sell high performance fighter aircraft to Taiwan, just prior to an election that brought advocates of Taiwanese independence closer to power than they have ever been.

Simultaneously, Washington supported Britain's rush for democratization in Hong Kong. Clinton's new secretary of state adopted the language of Congressional advocates of Tibetan independence by referring to Tibetans as if they were not citizens of China. It was the US policy to change the nature of China's government, and striking at the core of China's national strategy of economic rejuvenation. This is the stuff that wars, cold and hot, are made of. If rhetoric and actions escalate quickly and confusingly, then each side's people will indeed believe that the other side started it.

Many psychologists define maturity as the ability to handle contradictory aspects of a situation. The United States and China need a mature relationship. Washington needs to learn to deal with both faces of Beijing. An American president must look at Deng Xiaoping and be able to say: This man bears heavy responsibility for Tiananmen Square; this man is a communist; this man has approved nuclear and missile sales to dangerous nations. And at the same time he must be able to say: This man has done more to alleviate world poverty than any other man in world history; this man has made China a more peaceful nation than we would ever have believed possible.

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