Foreign Correspondence

[StephanieVanbryce]

China Briefing: Confessions of a former Chinese free market disciple

Commentary by Kin-ming Liu

I must plead guilty of being stupid enough to have once believed this myth: economic openness would lead to political liberalization in China. I’m ashamed to admit that, five years ago, I supported granting the communist state Permanent Normal Trade Relations status. PNTR then smoothed the way for Beijing to become a member of the WTO. With hindsight, I was totally misguided.



Coming from Hong Kong, which has been hailed by the Heritage Foundation and the Wall Street Journal as the freest economy on earth for more than a decade, I naturally appreciate what the free market has done to my hometown. As one who is fascinated by Milton Friedman and who has friends at the libertarian Cato Institute, I always consider myself as being part of the free market, free trade camp.



But when I left a panel discussion titled “Economic Engagement and Freedom in China” hosted by the American Enterprise Institute last Tuesday, I knew I could no longer remain a free market disciple. In a much less dramatic way than David Horowitz and Peter Collier did regarding their rejection of 1960s radicalism, I am having second thoughts about the free market.



The panel sought to address an underlying assumption of U.S. economic engagement with China: namely, that market forces unleashed by international trade and investment will necessarily spur economic and political change in Chinese society. To what extent has this assumption been borne out by more than two decades of booming economic ties between America and China? Is American business promoting economic and political freedoms in China, or do U.S. firms risk being co-opted by Chinese authoritarianism as a result of doing business in China?



I think it’s fair to summarize the answers from two panelists, John Frisbie, president of the U.S.-China Business Council, and James McGregor, author of “One Billion Customers: Lessons From the Front Lines of Doing Business in China,” as follows: U.S. companies are doing a heck of a good job in China. U.S. business is not being corrupted by the system in China, and American capitalists are dealing with the situation as best as they can, Mr. McGregor said. American businessmen, at the right place and at the right time, are bringing world-class practices to China and making a positive impact, Mr. Frisbie emphasized.



A number of familiar lines from the panda huggers could also be heard. “The genie is out of the bottle”—China has been opening up and no one can reverse the trend. “If you treat China as an enemy then it will become one”—mistreating China now will only bring about this self-fulfilling prophecy. A lot of evidence was provided to show China today is much more open than before.



I am, of course, not blind to the tremendous changes that have been taking place in China. There’s little doubt that, for most of the Chinese people, China is a less brutal country than before. However, behind the glittering skyscrapers and the other signs of modernity, China today is still dominated by one salient fact: the core of the regime remains unchanged, and it will do whatever is necessary to maintain its iron grip on power. And Westerners, I must add, cannot always appreciate what ordinary Chinese people have to endure because Westerners will always be treated separately (better) by the government there.



The panda huggers’ Achilles heel is Taiwan, an issue which is always conveniently ignored. It’s no accident that Taiwan was never mentioned by the two panelists. Once the Taiwan Straits—a flashpoint where American GIs getting killed by the People's Liberation Army remains a real possibility—is introduced into the discussion, it would make all the rosy talks on China sound hollow. People inside China may get a bit more non-political freedom as their country is trading like crazy with the outside world. However, Beijing now is more and not less determined to “liberate” the island democracy through the use of power as the regime is being enriched by the international business community, with Americans playing a significant role.



“Let market forces work,” “the market will win out in the end”—such assurances became the last straw for me. If the free market means empowering Beijing like what we have been witnessing, then I don’t want the free market anymore.



- Mr. Liu is a former Washington-based columnist for Hong Kong’s Apple Daily and a columnist for Insight on the News.

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