U.S. Dept. of State - IIP: The United States and China

Text: Greenspan on Permanent Normal Trade Relations for China
(WTO strong vehicle to foster individual rights in China)

Freer trade is not only the key to greater economic growth in the United States and China, but also to greater freedom for the Chinese people and enhanced stability in international relations, according to Federal Reserve Chairman Alan Greenspan.

In a letter to Representative James A. Leach, Chairman of the House Committee on Banking and Financial Services, May 5, Greenspan said: "History has demonstrated that implicit in any removal of power from central planners and broadening of market mechanisms as would occur under WTO is a more general spread of rights to individuals. ... Further development of China's trading relationships with the United States and other industrial countries will work to strengthen the rule of law within China and to firm its commitment to economic reform. "

May 5, 2000
[Letter To]
The Honorable James A. Leach
Chairman
Committee on Banking and
Financial Services
House of Representatives
Washington, D.C. 20515

I am writing in response to your letter of May 2 asking for my perspective on the issue of permanent normal trade relations with China.

The addition of the Chinese economy to the global marketplace will result in a more efficient worldwide allocation of resources and will raise standards of living in China and its trading partners. Should China accept the challenge of international competition embodied in WTO membership, it will doubtless promote internal economic development, encourage the adoption of modern technologies, and contribute to lifting its citizens out of poverty.

History has demonstrated that implicit in any removal of power from central planners and broadening of market mechanisms as would occur under WTO is a more general spread of rights to individuals. Such a development will be a far stronger vehicle to foster other individual rights than any other alternative of which I am aware. Further development of China's trading relationships with the United States and other industrial countries will work to strengthen the rule of law within China and to firm its commitment to economic reform. China's citizens will come to have greater choice about their lifestyles and employment and to enjoy enhanced access to communication and information from around the globe.

As China's citizens experience economic gains, so will the American firms that trade in their expanding markets. China's progress toward prosperity and accession into the WTO will create new opportunities for American businesses and farmers. China, with a population of 1-1/4 billion people, has an economy that when measured taking into account the purchasing power of alternative currencies is larger than that of Japan and may be approaching half the size of the U.S. economy. China's trade now accounts for 3 percent of world trade and should expand further in response to WTO participation. Our markets are already generally open to China and that will not be altered by PNTR. Passage of PNTR, however, will facilitate a further opening of China's markets to U.S. producers.

Accordingly, I believe extending PNTR to China and full participation by China in the WTO is in the interests of the United States.

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)