Commentary | Budget, Taxes, and Public Investment

Memo to Beijing: It’s Time for a Time-out

Opinion pieces and speeches by EPI staff and associates


Memo to Beijing: It’s Time for A Time-out

By Robert E. Scott and David Kusnet

In the aftermath of the Cox Report, politicians are bickering over who’s to blame for more than two decades of nuclear espionage by the Chinese government and lax security procedures by our own.

While there’s more than enough blame to go around, it’s time for our nation’s leaders to amend their priorities. That means re-evaluating our policies toward China (which contributed to a $57 billion trade deficit for the U.S. in 1998) and refusing to renew China’s trading status or support its admission into the World Trade Organization.

For those who wonder why the Clinton Administration and a Republican-dominated Congress still seem intent on continuing business as usual with Beijing, the current debate demonstrates who’s really responsible for failed policies towards China. Political leaders come and go, but much of corporate America has been unwavering in its insistence on selling rockets, satellites, and state-of-the-art computer technology to China’s military-industrial complex.

That’s why U.S.-based multinational corporations are funding a massive lobbying campaign, with a reported budget of over $10 million, to convince Congress to support China’s entry into the WTO.

While there’s much talk of China’s lucrative import markets, the real magnet for multinationals is China’s workforce of some 700 million, many of whom are forced to work for little more than a dollar a day. The tragedy is that it’s China’s military machine, and not its exploited workers, who will buy U.S. exports.

That’s why the Clinton Administration and Congress should just say no to the new China lobby and impose a “time out” on expanding trade relations with Beijing. Just as trade restrictions against the former Soviet Union and apartheid South Africa speeded up the process of internal reform in these countries, a respite in trade deals with China will force Beijing to address its shortcomings.

Make no mistake about it: We need to tell the Chinese government to call a halt to its unfair trade competition against its economic rivals, its unconscionable treatment of its own people, and its unprecedented espionage against the United States.

Much of China’s economic advantage can be traced to an exploited workforce, with low wages and few rights. To its credit, the U.S. State Department recently concluded that free and independent trade unions — an essential institution in any democracy — are not permitted in China. As if to prove the point, China sentenced two railroad workers to a labor camp this past January, simply for protesting against unpaid wages. And, on the tenth anniversary of the repression of Chinese protestors at Tiananmen Square, it’s worth remembering that a regime that squashes unions will squelch other forms of free expression as well.

Similarly, technology transfers are an integral part of Beijing’s economic strategy. Its recent success in high-tech industries such as computers and aircraft is due in large part to a system of market-distorting government policies. Foreign firms wishing to set up plants in China are forced to transfer technology to local partners and to produce an increasing share of their products with local content. Over time, U.S. imports from these factories escalate rapidly, while exports to them dry up.

These developments threaten America’s economic and military security. Despite our booming economy, the U.S. has lost over 400,000 jobs in manufacturing in the past year alone, because of the yawning trade gap. Multinationals based in the United States profit from the artificially low price of labor in China, while U.S. workers are pushed into lower paying jobs in the services industries.

Even more disturbingly, the technologies that Beijing has acquired, through economic blackmail or outright espionage, threaten the security of its neighbors and our nation as well. The rockets, satellites, and ultramodern computers have all been used to advance Beijing’s military missile and thermonuclear weapon development.

To be sure, no reasonable people want to isolate China from the world community or begin a new trade war, much less a new cold war. And it is difficult to determine which technologies are purely commercial in nature and which have military applications as well.

These uncertainties are one more reason to postpone expanding American economic engagement with China. We need time to evaluate our policies. They need time to eliminate their most offensive practices. And the entire world will benefit if its largest nation is encouraged to respect human rights at home and international norms abroad.


Robert Scott is an economist at the Economic Policy Institute. He specializes in globalization and international trade issues.

David Kusnet was chief speechwriter for President Clinton from 1992-94. He is the author of Speaking American: How the Democrats Can Win in the Nineties and a visiting fellow at the Economic Policy Institute.