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Why did China, which has achieved great profitable growth, not open up its society? The U.S. regularised trade relations with China in 2000 by welcoming it into the World Trade Organization (WTO). The normalisation of trade relations was believed to open China to the world and bring collective profitable benefits to China and the United States.
Illustration by The Geostrata
While China gained entry into the world's requests, the United States integrated China into the world's providence and pushed it toward political reform. Still, problems arose. Vice Premier Zhu Rongji's visits in 1999 formally raised the labour norms issue more as an internal U.S. contention. In contrast, President Bill Clinton's 1998 state visit stressed the conflict between adding profitable exchange and China's moral rights practices.
Sino-U.S. exchanges have been constrained in opening up Chinese society by political styles, similar to a public admonishment by the U.S. Secretary of State Madeleine Albright concerning religious freedom and moral rights.
What had driven these exchanges, and how did they affect posterior Sino-U.S. relations? Would the Communist Party's strategy shape or reflect domestic programs and global comprehension? Was a profitable upsurge in China compatible with political reforms that meant commodities or needed a zero-sum game?
TIME OF CHINA’S ADMISSION TO THE WTO
In 1986, China first applied to join the General Agreement on Tariffs and Trade, the precursor of the World Trade Organization. China faced obstacles, the chief among them being the severe damage China's 1989 human rights violations caused to the world. Further disputes on market access, tariffs, and intellectual property rights delayed its membership.
Admission to the World Trade Organization for China became feasible on December 11, 2001. China officially became the WTO's 143rd member due to improvements in China and the U.S.'s diplomatic efforts influenced and shaped by changing global economic trends and strategic considerations from both countries.
However, by the 1990s under Deng Xiaoping, China was transitioning from a centrally planned to a more market-oriented economy, realising that WTO membership would give it global markets, foreign investment, and modernisation.
Under the Clinton administration, the U.S. found inclusion of China into the world economy better served Sino-U.S. relations and assisted the functioning of the global market system. Yet, though aware of the risks, China realized that inclusion in the WTO was necessary to preserve high-speed economic growth with minimal political compromise.
CLINTON ADMINISTRATION APPROACH, CHALLENGES AND KEY MOMENTS
The accession of China to the WTO by U.S. President Bill Clinton himself was regarded as a critical economic and strategic opportunity. American businesses wanted to open an enormous market in China, and it was through WTO membership that China would integrate into a rule-based global trading system.
Clinton hoped that this would spur market-based reforms, and economic transparency, leading to political liberalisation in the country. But the potential was battered at home. Labour unions and industries worried that cheap imports would flood America and threaten jobs, especially in textiles and steel.
Abroad, concerns centred on China's state-owned enterprises, intellectual property enforcement, and trade imbalances. In April 1999, Zhu Rongji, the Premier of China, then travelled to the US to finalise the arrangements.
Although internal debates on labour protections made Clinton temporarily withdraw, straining the relationship, negotiations resumed and finally, on 15 November 1999, a landmark agreement was reached requiring that China must enact market reforms and reduce tariffs to become a WTO member.
WHY CHINA FAILED AS AN OPEN SOCIETY?
Why has China failed to open its society while achieving remarkable economic growth? This is a paradox rooted in the commitment of the CCP to strict political control since the beginning of the economic reforms initiated in 1978.
The Chinese Communist Party values stability and party supremacy, as democratic reforms could topple the dragon throne from within its firm grasp. It has thus controlled political discourse, media, and civil liberties as a means of suppressing dissent and limiting civil rights.
Despite this lack of openness, China's economy has been booming, with an average growth rate higher than 9% per annum since the reforms. In 1978, the government adopted the 'open door policy' by abandoning total state control to allow private enterprises and foreign investment, which greatly improved productivity.
While annual growth in pre-reform China was only about 6%, growth in the post-reform period shot up and even jumped into double digits to more than 13% in some years. Per capita income has almost quadrupled over the last 15 years.
Analysts have taken the assessment that the economy of China would surpass that of the United States within 20 years from now. According to the IMF study, productivity gains accounted for more than 42% of China's growth between 1979 and 1994, shifting away from the traditional capital accumulation focus.
That means that although the CCP closed society, still much strategic initiative in the economic aspect was pushed by it, which led to huge growth. Authoritarianism contradicts economic success.
DID U.S.’ HOPES FOR A CHINESE DEMOCRACY CREATE A FALSE REALITY?
China, the world's sixth-largest economy, with a population of one billion in 2000, was already a rising power. Until 1978, China had a socialist-planned economy but had opened up gradually. Clinton and other U.S. leaders encouraged China's accession to the WTO, thinking that it would force China to bring down its tariffs and respect intellectual property while hastening its transition to a market economy.
Indeed, George H.W. Bush, Clinton's predecessor, was another propounder who thought that free trade would introduce democracy, but as of 2013, although China had achieved all the economic parameters, like a per capita GDP of $7,000, it was still far from being democratic.
U.S. businesses benefited from China's WTO entry - the consumers in China constituted 15% of sales at Apple by 2017, while exports from the United States to China increased by 450% since 2001. During this time, from 1999 to 2011, labor unions in the United States suffered a devastating defeat as they lost 5.8 million manufacturing jobs, but during this same period, the poverty rate in China decreased from 67% in 1990 to less than 1% by 2015.
But now with Xi Jinping, the Communist Party intensified the level of control, restricting the use of the internet and dissent, and growing anxiety over authoritarianism as the economy keeps booming.
CHINA’S JOUNEY POST-WTO
The WTO registry in 2001 was a turning point for China. The economy has experienced breathtaking success, rising to become the world's second largest by GDP and the largest exporter, the second-largest importer in goods. Commercial services exports ranked fourth, while imports ranked third.
This is also the top destination among developing nations for foreign direct investment (FDI). This marvellous turn-around reflects not only greater economic growth but also the rising influence of China within and outside China, reshaping trade dynamics and setting new standards of development.
Of course, Chinese accession to the WTO marked a momentous chapter in China's economic journey. But it simultaneously exposed the kaleidoscope of U.S.-China relations. For the U.S., ever hopeful that more trade would translate into political reform and liberalization, reality diverged sharply. Instead, China's authoritarian regime became more entrenched, rendering its society less open.
The profitable benefits came with the cost of lost U.S. jobs and ongoing China human rights problems. In the final analysis, this subtle interplay of intentions and data underscores the long-standing pressure between profitable engagement and popular values.
BY VAIBHAV PANDEY
TEAM GEOSTRATA
So interesting