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How Free Trade With China Politically Impoverished Both Countries

Donald Trump talks tariffs with China

In contract negotiations between labor and management, it is not uncommon for both sides to agree to kick the can down the road on certain issues. Management might extract a smaller salary increase now in exchange for labor’s demand for more generous pensions or retiree benefits later on.

It’s one area where unions tend to be better at long-term thinking than corporate managers, although the effect is often to plant the seeds of a future corporate bankruptcy or takeover. Still, when the deal is announced, everyone likes it, and everyone maintains it was a good deal until it is too late.

That pattern of procrastination and willful blindness is also evident in our trade agreements with communist China. Since the United States normalized trade relations with China in 2000 and agreed to let China join the World Trade Organization in 2001, we have been delaying the inevitable reckoning in much the same way.

While we hoped freer trade with the West would lead China toward liberal democracy, their oppressive government has only become stronger. Thirty years after communists crushed pro-democracy protests in Tiananmen Square, they look to do the same to the like-minded, peaceful gatherings in Hong Kong.

The totalitarian regime has not changed one iota in its aim to control the people of China. The only difference is in our gentle treatment of them since the Cold War, which gives Red China the leverage to snub its nose at human rights while devouring our industrial economy. In 1989, we had leverage to demand change. Now we have far less.

Growing the Government, Harming the People

Our free-trading relationship with China started out with the best of intentions. Victorious in the Cold War, America’s leaders were pleased to see liberal democracy spreading across Eastern Europe and Russia. They encouraged it there and assumed the same trends would develop in the undemocratic countries in Asia.

In this, they were partially correct. Our less-than-free Cold War allies such as South Korea and Indonesia have developed into more liberal, more democratic, more capitalist places. But the communist nations of China, Vietnam, and North Korea remain resolutely unfree.

It was a very popular thing to say, in those heady post-Cold War days, that more money and a growing middle class would lead to more freedoms. Poor peasants on a collective farm might not have the ability to demand their government recognize their natural rights, but middle-income urbanites would, or so the thinking went. That had often been the course of history, but events unfolded differently in East Asia.

In China, especially, access to world markets only supercharged the command-style economy. The industrialization Mao Zedong had tried to force with disastrous results during his reign over Red China was achieved now in the way it had always been achieved: through markets.

But that wealth did not remain in the people’s hands and increase their independence from the state. Instead, it fueled the tyrants’ government, giving those rulers the resources to manage and oppress their population in ways they never could before.

The spread of technology to China also benefited the government, not the people. Recently, we have seen the protesters in Hong Kong cutting down “smart lampposts” the state erected. These lampposts were, in fact, facial recognition towers: Orwellian devices that enabled the Chinese government to track citizens wherever they moved in the streets of Hong Kong.

China’s growing “social credit” system attempts much the same, monitoring citizens’ sentiments and actions to create a government-issued rating of their personalities from which there is no escape. Technology has not made the Chinese people freer; it has only added new chains.

Building 25 Years of Friction

Republican President George H.W. Bush presided over the end of the Cold War, but our deepening relationship with Red China was a bipartisan project. Bill Clinton, running in 1992 as a “New Democrat,” pulled his party from trade protection and silenced those who would take a principled stand on China’s human rights violations in order to prove he was not a pie-in-the-sky liberal like previous nominees Walter Mondale and Michael Dukakis. The shift worked, insofar as it got him elected, but it also left the United States without a major party that opposed free trade and fuzzy relations with the new evil empire.

Both parties publicly committed to freer trade and friendship with communist China, and both were reluctant to pull back from that position, even as it became increasingly clear that things were not working out as planned. Trumpeting the gains from trade — cheaper goods made through dubious labor practices — they ignored the growing problems caused by deindustrialization and outsourcing, especially in the Midwest. That pattern continued for a generation: politicians telling the people all was well, while the people found their lives to be increasingly at odds with that rosy portrait.

There were murmurings of dissent from a few Democrats, such as Dick Gephardt, and from Independent candidates, such as Ross Perot, but the full expression of the Middle American discontent was not found until Republicans nominated Donald Trump in 2016. Members of both parties’ political establishments were appalled by Trump’s candidacy, but it was their own inaction on trade protection that made Trump possible. The economic conflict happening now is the built-up friction of 25 years, sprung loose at last and wreaking havoc in the markets.

No More Kicking the Can Down the Road

Those who decry the chaos should look beyond Trump for the cause. Trade protection is, perhaps, the one principle the president has held consistently throughout his public life. If not for that, his other missteps as a candidate could easily have doomed him. But the free trade consensus left voters who disagreed no other choice.

While mainstream politicians hinted at anti-dumping litigation and targeted tax credits, Trump was the first nominee in a generation to question the bipartisan free trade consensus. Outside of Washington, it turned out a lot of other people were questioning it, too.

The bill on 25 years of malign neglect has come due. With it comes not only economic upheaval but the realization that we have become so entangled in the communist sweatshop economy that we now lack the leverage to pressure China on human rights.

We could demand an end to gulags in the USSR, but we are suspiciously silent about the Uighur concentration camps in China. If the situation in Hong Kong deteriorates like the Tiananmen Square protests did 30 years ago, part of the blame must fall at the feet of those who neutered our economic power and, through it, our political strength.

We can rebuild economic resources that decay and pick up power we lay aside. It will require work — not just in temporary tariffs the president enacts, but in real laws passed in the normal course of legislative business. Congress ceded power to the executive branch, and president after president has kicked the can down the road.

Temporary tariffs can bring China back to the bargaining table, but only real, permanent tariffs applied systematically across the economy can inspire the confidence we need to rebuild our industry supply chains here at home. Trade wars are chaotic, but if the result is a stronger domestic economy with more jobs for more people, a little chaos is worth it.