Posts Tagged ‘China threat’

It’s Time to End China’s Most Favored Nation Status

Tuesday, December 1st, 2020

China was granted Most Favored Nation status through presidential proclamation on an annual basis from 1980 – 1998. This was because the Trade Act of 1974 stated that “MFN status may not be conferred on a country with a nonmarket economy if that country maintains restrictive emigration policies” China was, and still is, a nonmarket economy and restricted emigration, but the Act allowed the president to “waive this prohibition on an annual basis if he certifies that granting MFN status would promote freedom of emigration in that country.”

According to CRS Report 98-603 for Congress, “China’s Most-Favored-Nation (MFN) Status:  Congressional Consideration, 1989-1998:” After the Tiananmen Square protests in 1989, there was enough opposition to granting MFN status to China that the “House passed joint resolutions disapproving MFN for China in both 1991 and 1992,” but the Senate didn’t pass the joint resolution. However, the real focus of the debate was not whether to deny MFN status for China altogether, but whether or not to “place new human rights conditions on China’s MFN eligibility.” Congress passed legislation in 1991 and 1992 that would have placed further conditions on China’s MFN status, but President Bush vetoed the legislation.

In 1993, President Clinton announced he would link China’s MFN status to human rights progress beginning in 1994. However, President Clinton reneged on his campaign promise and reversed himself:  “On June 2, 1995, President Clinton transmitted to Congress his intention to waive the emigration prohibition and extend MFN status to the People’s Republic of China for an additional year, beginning July 3, 1995.”

An L.A. Times article of May 27, 1994, reported: “President Clinton, abandoning a central foreign policy principle of his Administration, announced Thursday that he has decided to “de-link” China’s privileged trading status from its human rights record. While acknowledging that China “continues to commit very serious human rights abuses,” Clinton said that he has come to believe that broader American strategic interests justify the policy reversal.” 

The annual granting of MFN status to China by a presidential waiver continued through 1998. Note that “On July 22, 1998, legislation was enacted which replaced the term “most-favored-nation” in certain U.S. statutes with the term “normal trade relations.”  This made it easier for Congress to make the fateful decision to extend “permanent normal trade relations,” or PNTR, to China when the Senate voted to give China permanent most-favored-nation status on September 19, 2000. This vote paved the way for China’s accession to the World Trade Organization.

As Reihan Salam, President of the Manhattan Institute wrote in an article titled “Normalizing Trade Relations With China Was a Mistake,” in the June 8, 2018 issue of The Atlantic, “PNTR was a euphemism designed to get around the fact that the traditional term for “normal trade relations” was “most-favored-nation” (MFN) tariff status…MFN status meant imports would be treated as favorably as those arriving from “the most favored nation.” Absurd as it might sound, this linguistic convention had meaningful political consequences. To argue that we ought to have normal trade relations with China was one thing. Sure, why not? To make the case that China ought to be treated as our most favored nation was a more vexing PR challenge, not least in the wake of the brutal crackdown that followed the Tiananmen Square protests in 1989.”

An article in the American Economic Review, “The Surprisingly Swift Decline of US Manufacturing Employment,” byJustin R. Pierce and Peter K. Schott, July 7, 2016, states: “The permanence of PNTR status made an enormous difference: Without PNTR, there was always a danger that China’s favorable access to the U.S. market would be revoked, which in turn deterred U.S. firms from increasing their reliance on Chinese suppliers. With PNTR in hand, the floodgates of investment were opened, and U.S. multinationals worked hand-in-glove with Beijing to create new China-centric supply chains.” 

This change in U.S. trade policy that eliminated potential tariff increases on Chinese imports resulted in industries that were more vulnerable to the change experiencing greater employment loss, increased imports from China, and higher entry into the U.S. market by U.S. importers and foreign-owned Chinese exporters. My three books and the hundreds of articles I’ve written since 2009 have described what has happened to U.S. manufacturing since 2001. Besides the loss of 5.8 million manufacturing jobs and the closure of an estimated 67,000 American manufacturers, American manufacturing shifted toward more high-tech, less labor-intensive production. However, as China upgraded their technology in the past few years, we started losing our high-tech manufacturing also.

In addition to the annual reports to Congress by the U.S.-China Economic and Security Review Commission documenting China’s violation of World Trade Organization rules along with human rights violations, the U.S. Department of State submits an annual report on International Religious Freedom in accordance with the International Religious Freedom Act of 1998. According to the 2018 International Religious Freedom Report : “Multiple media and NGOs estimated the government detained at least 800,000 and up to possibly more than 2 million Uighurs, ethnic Kazakhs, and members of other Muslim groups, mostly Chinese citizens, in specially built or converted detention facilities in Xinjiang and subjected them to forced disappearance, torture, physical abuse, and prolonged detention without trial because of their religion and ethnicity since April 2017.  There were reports of deaths among detainees.  Authorities maintained extensive and invasive security and surveillance, in part to gain information regarding individuals’ religious adherence and practices.” 

Therefore, it gave me great pleasure when I read that on September 17, 2020, Senator Tom Cotton (R-Arkansas) introduced a bill (S.4609) that “would strip China of its permanent most-favored-nation status—also known as Permanent Normal Trade Relations—a designation it has held for the last twenty years. If passed, the legislation would make extending most-favored-nation status to China an annual decision for Congress and the president.”

Cotton said, “Twenty years ago this week, the Senate gave a gift to the Chinese Communist Party by granting it permanent most-favored-nation status. That disastrous decision made the Party richer, but cost millions of American jobs. It’s time to protect American workers and take back our leverage over Beijing by withdrawing China’s permanent trade status.”

Senator Cotton’s press release states: “The China Trade Relations Act would revoke China’s permanent most-favored-nation status and return to the pre-2001 status quo, whereby China’s MFN status must be renewed each year by presidential decision. Congress could override the president’s extension of MFN by passing a joint resolution of disapproval.

The bill also would expand the list of human-rights and trade abuses under the Jackson-Vanik Amendment that would disqualify China for MFN status, absent a presidential waiver. The abuses that would make China ineligible for MFN status, absent a presidential waiver, are as follows:

  • Uses or provides for the use of slave labor;
  • Operates ‘vocational training and education centers’ or other concentration camps where people are held against their will;
  • Performs or otherwise orders forced abortion or sterilization procedures;
  • Harvests the organs of prisoners without their consent;
  • Hinders the free exercise of religion;
  • Intimidates or harasses nationals of the People’s Republic of China living outside the People’s Republic of China; or
  • Engages in systematic economic espionage against the United States, including theft of the intellectual property of United States persons”

China’s strategic goal is to dominate the sectors of economic growth that historically have held the key to world power:  transportation energy, information, and manufacturing. Their “Made in China 2025” plan is designed to dominate key technology sectors such as artificial intelligence, quantum computing, hypersonic missiles, and 5G. They also plan to become the dominant power in space by 2049.

If this bill isn’t passed in the Lame Duck session, I strongly urge that it be reintroduced into the next Congress and passed unanimously next year. It’s time China for us to stop treating China as a friend and recognize China as the enemy to our national sovereignty it is.

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U.S. Must Face up to the China Threat

Wednesday, November 18th, 2020

Over the past ten years that I have been writing blog articles, one of my reoccurring themes has been the danger posed to the U.S. by China because of their predatory mercantilism through product dumping, currency manipulation, intellectual property theft, and government subsidies. More recently, I have written about China’s written plan to become the superpower of the 21st Century through a combination of economic coercion, industrial espionage, and the buildup of their military.

In this article, I want to share some of the points made in the September 2020 issue of Imprimis, published by Hillsdale College. The article was “adapted from a speech delivered on September 29, 2020, in Rapid City, South Dakota, at a Hillsdale College National Leadership Seminar,”by Brian T. Kennedy, “president of the American Strategy Group, chairman of the Committee for the Present Danger: China, and a board member and senior fellow of the Claremont Institute.”

Kennedy catches your attention immediately saying, “We are at risk of losing a war today because too few of us know that we are engaged with an enemy, the Chinese Communist Party (CCP), that means to destroy us. The forces of globalism that have dominated our government (until recently) and our media for the better part of half a century have blinded too many Americans to the threat we face. If we do not wake up to the danger soon, we will find ourselves helpless.”

He points out that our relationship is based on two beliefs initiated during the Cold War: “President Nixon’s strategic belief that China could serve as a counterweight to the Soviet Union” and “economic liberalism would lead to political liberalism, and China’s communist dictatorship would fade away.” History has shown that these two beliefs were false and “America’s China policy from the 1970s until recently was very costly because it involved a great deal of self-deception about the nature of the Chinese regime and the men who were running it.”

He comments that after the Cold War, “pursuing the China dream appeared a safe course of action, given that the U.S. was then the world’s preeminent military power.” During the last year of the Clinton administration, “China was granted “Most Favored Nation” trading status and membership in the World Trade Organization.” We know the disastrous consequences of this action:  the lost of over 5 million good paying manufacturing jobs between 2001 – 2010 and the closure of some 67,000 manufacturers.

Under the subsequent Bush and Obama administrations, “the U.S. failed to build a military that could challenge Communist China’s aggression in the Pacific—specifically its building of a modern navy and its construction of military installations on artificial islands in the South China Sea—and acquiesced in the export of much of the U.S. manufacturing base to China and elsewhere.”

He explains that China’s 1.4 billion population is “governed by the Chinese Communist Party, which has 90 million members, and by an elite class of approximately 300 million additional Chinese who are deeply invested in the regime’s success…The system benefits these elites, whose businesses, mostly state-owned enterprises, are privately run with active participation by the CCP. Once a business reaches a certain size, it will take on board a cadre of party members who serve as a direct liaison between the business and the government.”

He goes on to explain that “the CCP operates a massive global intelligence network through its Ministry of State Security. This network does its part to assist Chinese business and industry through industrial espionage, cyber warfare, and economic coercion.”

With regard to China’s military buildup, he states that China “has a military of two million men, including the world’s largest navy. This military may not be qualitatively on par with the U.S. military, but quantity has a quality of its own. In the last five years of U.S. naval war game simulations, in which the U.S. is pitted against China, the U.S. has failed to come out victorious. We do not have enough ships and munitions to defeat China’s navy absent the use of nuclear weapons… “As for China’s air force, it possesses and is building today advanced fighter aircraft that rival anything the U.S has built. They may not yet have the quantity, but that will come with time.”

Next, he mentions the book, “Unrestricted Warfare, written in 1999 by two People’s Liberation Army colonels. It argues that war between the PRC and the U.S. is inevitable, and that when it occurs China must be prepared to use whatever means are necessary to achieve victory. This includes economic warfare, cyber warfare, information warfare, political warfare, terrorism, and biological warfare, in addition to conventional and nuclear warfare. The book’s purpose was not only to shape Chinese policy, but also to plant the idea in the minds of U.S. policymakers that China will consider nothing out of bounds.”

He comments that “In thinking about the implications of the word unrestricted, it is useful to look at the CCP’s treatment of its own people. Estimates put the number of those killed at the hands of the CCP—whether through war, starvation, or execution—at roughly 100 million…. And these numbers do not even take into account the forced abortions stemming from China’s one-child policy. That number is conservatively estimated to be 500 million—500 million children murdered in the womb.”

He reminds us of “CCP’s imprisonment in concentration camps of one to two million Muslim Uyghurs in Xinjiang province. Fewer of us are aware of how the Chinese government facilitates the abduction of Uyghur women for sexual use by Chinese soldiers—or even worse, if that were possible, how the government harvests the organs of the Uyghur population for sale both in China and abroad.”

Next, he states that “The CCP operates a vast intelligence network in the U.S as well. It is made up not merely of intelligence operatives working for the Ministry of State Security, but also a myriad of business and industry officials, Chinese scholar associations, Confucius Institutes operating on American campuses, and 370,000 Chinese students attending American universities.…It should not be surprising that a combination of the efforts of this network and of China-based cyber criminals yields $500 to $600 billion of intellectual property theft annually.”

Of particular importance to me is his comment that “Perhaps the greatest threat to the U.S. posed by the CCP is its corruption of America’s business and financial elites, who view the economic benefits of dealing with China as more important than America’s national interests. If there is a single group committed to the globalist project and the delusory China dream, it is Wall Street. Our great investment banks are now selling trillions of dollars in debt and equity in Chinese corporations to American investors and retirees. They are literally betting on the success of China at the expense of the U.S.”

I’ve long written about how American companies have put short term profits before their loyalty to America by transferring so much of their manufacturing to China. As a result, we have decimated our middle class as manufacturing jobs are the foundation of the middle class.

He concludes saying, “Americans are not looking for war with Communist China, but Communist China appears to be at war with us. As a first order of business, we must continue what we have at long last begun: building a military designed to deter Chinese aggression and pursuing trade and other policies that put our own national interests first.

Equally important—especially given the violence in our cities that our foreign enemies cheer—is defending our American way of life and teaching our countrymen why America deserves our love and devotion, now and in the days ahead.”

It’s past time to wake up.  It’s time for action. The next administration must make putting American first if we want to remain a free democratic republic and maintain our national sovereignty.

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