President George W. Bush signed a proclamation Thursday granting the People's Republic of China permanent normal trading status.
Previously, China was subjected to an annual Congressional review of its human rights and emigration record under the 1974 Jackson-Vinik law.
Congress voted last year to give China permanent normal trade relations once it had achieved membership in the World Trade Organization (WTO). China became a member of the WTO this month.
China has achieved things it has long sought, membership in the WTO and relief from those pesky, meddling US congressmen.
Yet its reaction was anything but friendly, not to mention grateful.
Ma Dezhi, spokesman for the Ministry of Trade and Economic Cooperation, was reported by the Associated Press saying "It's not necessary to issue a statement because Bush was only doing what he ought to have done." Does this man have a career in diplomacy? I think not.
What would have been wrong with putting out some piece of throw-away diplomatic clap-trap, something like "China is looking forward to expanding trading relations with the US and is pleased to be a member of the WTO?" And though it is more coincidence of timing than deliberate policy, China happens to be on one of its all-time biggest binges of executing convicted criminals. Agence France-Presse reported Friday China executed at least 41 people over the past few days.
In part this is because China has an annual tradition of carrying out executions before Chinese New Year. Seasonality in executions -- what does that tell you! But AFP also reports that Western diplomats in Beijing say as many as 2,000 executions have taken place from April to July as part of the "strike-hard" anti-crime campaign.
These measures don't apply only to violent crime -- you can get the death penalty for white-collar crime in China. In fact, Thursday an accountant at Air China was sentenced to death for embezzling.
So did Congress and the President do the right thing by giving China a pass on human rights? The truth is that there is nothing much the US can do to change the way the Beijing leadership runs China.
Still there is an important exception to that rule. We, in the free world, should actively convert China to free trade and open market policies as fast as possible.
There is no better way to frame this than from the perspective of Milton Friedman's book Capitalism and Freedom. Friedman links individual freedom to capitalist prosperity. No riches without freedom for the people.
China seems to be testing Friedman's hypothesis. It wants to have the benefits of free trade but it doesn't want to extend personal freedom to its people. If Friedman is right, China will fail unless it changes the status of its citizens.
But more to the point, encouraging free trade and the emergence of a capitalist economic system may introduce an irrepressible tendency to bring human liberty to China. That is why Bush did the right thing in scraping Jackson-Vinik.
David DeRosa, president of DeRosa Research & Trading, is also an adjunct finance professor at Yale School of Management and the author of In Defense of Free Capital Markets.
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