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Businessweek Archives

What China Must Understand



At the dawn of the 21st century, Chinese President Jiang Zemin's state visit with President Bill Clinton marks an opportunity to establish a long-term strategic relationship between the fastest rising global power and the world's undisputed superpower. There is nothing more important to either Washington or Beijing than managing this relationship to a peaceful and prosperous end (page 54).

For most of its tenure, the Clinton Administration's China policy has been inarticulate at best. A coherent policy should try to achieve political and economic security--both for the U.S. and the world. Thanks to some ad hoc moves, the Clinton Administration has done a reasonable job in promoting political security. Under strong U.S. pressure, China has signed treaties banning chemical weapons and nuclear-weapons testing. Beijing is playing a big role in the four-party talks on North Korea, and it seems ready to agree to cut missile sales to Iran. China is shifting from being an outsider challenging the international system to a responsible participant.

No such responsibility is evident on the economic front. China wants "in"--but only on its terms. Its political and military elites see growth as a means toward global power. Beijing has deliberately run up nearly $200 billion in foreign reserves by exporting madly while controlling access to domestic markets. This cannot continue. China is simply too gigantic to duplicate the Japanese or Korean export model of growth. It will totally unsettle the world economic order.

The U.S. must strive to get China to play by international rules. Balanced growth with strong domestic demand is critical, and China's entry into the World Trade Organization is the process through which this balance can be forged. The Administration should not back away from the right kind of deal permitting China's entry. Nor should it shirk the hard work of explaining to Congress and the American people the need for long-term strategic relations with China.

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