It was 25 years ago today when President Bill Clinton stood in the Rose Garden and signed the United States – China Relations Act into law, which granted permanent normal trading relations (PNTR) with China.
That law would change the U.S.-China trading relationship forever. It gave China the same trade terms as America’s allies, and it greenlit China’s entry into the World Trade Organization (WTO), integrating their developing economy into the global trade system.
At the time, the world’s “expert class” all predicted PNTR would be an economic gift for American workers and industry. Testifying before Congress in May 2000, then-Treasury Secretary Larry Summers claimed that “On this issue there has been only one answer: that welcoming China into the global economic system is right for the American economy and for the global economy.”
Former Obama and Biden economic advisor Gene Sperling concurred, saying “The question is whether passage of PNTR will make positive change in China more or less likely. We believe it will make positive change more likely.”
Lael Brainard, former Director of the National Economic Council under President Biden, also supported opening trade relations with China, asserting that, “This Agreement [U.S.-China WTO agreement] will also strengthen our ability to assure fair trade and to defend our agriculture and manufacturing base from import surges and unfair pricing.”
Of course, let’s not forget then President Bill Clinton, who promised that the new law “will move China in the right direction. It will advance the goals America has worked for in China for the past three decades. And of course, it will advance our own economic interests.”
These so-called “experts” were not just wrong. They were catastrophically wrong. They fatally misjudged both the economic and geopolitical consequences of allowing China into the WTO and granting them PNTR.
President Clinton, surrounded by Secretary of State Madeline, Treasury Secretary Larry Summers, Sen. William V. Roth (R-DE), and House Speaker J. Dennis Hastert (R-IL), signed a bill permanently normalizing trade relations with China on the south lawn of the White House 0n October 10, 2000. (Tom Williams/Roll Call/Getty Images)
China’s economy did not become freer. American companies that expanded their operations in China fell victim to rampant intellectual property theft, censorship, and oppressive regulation. China didn’t transform into that liberal democracy we were promised. China’s respect for human rights only worsened, America’s trade deficit exploded as China deepened its unfair trade practices.
The numbers paint a stark picture. In 2001, America’s trade deficit with China was $84 billion. By 2018, that deficit was five times larger, at $418 billion.
Nearly 25 years ago, China was responsible for roughly 8% of the world’s manufacturing output. But by 2020 that number had reached nearly 30 percent. As one headline put it, China is now the “world’s sole manufacturing superpower.”
At the start of the 2000s, my state of Indiana enjoyed one of the nation’s highest shares of employment in manufacturing. But shortly after PNTR was signed into law, cheap Chinese imports flooded our markets, forcing many companies and manufacturing plants to close permanently across the state.
A closed down factory, one of many, lied idle in Huntington, Indiana, on April 29, 2016. (Michael Robinson Chavez/The Washington Post via Getty Images)
Analysis from the Coalition for a Prosperous America estimates that China’s unfair trade practices cost almost 80,000 manufacturing jobs in Indiana between 2001 and 2023. That same analysis shows that America’s exploding trade deficit with China has cost us over 3.8 million jobs since 2001.
The “experts” who cheered when Bill Clinton guaranteed normal trading relations with China have failed the American worker time and again.
But instead of showing any kind of humility, they continue to double down and refuse to admit their errors, which led to the economic predicament America now finds itself in today against China.
Meanwhile, workers in small towns like where I grew up understood that the fallacy of “free trade” with China was an economic loser for them and their families. All they had to do was look around and see for themselves what trade with China had yielded in return: millions of blue-collar jobs outsourced, entire towns and communities decimated, and the livelihoods of these workers and their families destroyed.
Grave stones that bear the names of local shuttered factories sit across the street from the closed NewPage paper mill in Kimberly, Wisconsin, on Dec. 11, 2008. (Matt Ludtke/Bloomberg via Getty Images)
“Free” trade with China was always destined to fail, because we were subsidizing an economic system which made us less prosperous here at home and more dependent on our enemies abroad.
You can’t have free trade with a country that’s out to destroy free trade.
I’m glad that we finally have a president who is serious about putting an end to China’s free ride at the American worker’s expense. Unlike leaders before him, President Trump’s America-First trade policy is committed towards putting our country and workers first — no more selling out to China.
Jim Banks is the U.S. Senator from Indiana. He serves on the Senate Banking Committee.
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