In 2000, Congress made the fateful decision to extend “permanent normal trade relations,” or PNTR, to China. As the economists Justin Pierce and Peter Schott
have argued, 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.
What might the world have looked like had the U.S. never granted PNTR to China? One possibility is that China would have pursued an economic strategy built around fostering indigenous entrepreneurship and bettering the lives of its own workers, as it did
in the 1980s. Instead, Beijing chose to
transfer wealth from ordinary Chinese citizens to its politically powerful export sector, a path made possible by PNTR. China might very well have become just as rich by embracing a more balanced and humane approach to development. Doing so, however, would have required that its central government surrender a measure of control to its citizens. Rather than foster liberalism and openness in China, I suspect PNTR did exactly the opposite—creating the conditions for China’s central government to exert tighter control over the Chinese populace.
The United States, meanwhile, would have entered the age of globalization under markedly different terms: Instead of offshoring much of its industrial base to an often-hostile authoritarian power, perhaps it would have deepened its economic ties to democratizing states in Latin America, Asia, and the wider world. Trade with China would have proceeded apace, to be sure, but U.S. multinationals wouldn’t have felt quite as secure in locating production facilities in one of the world’s last remaining communist dictatorships, which sees economic development as a weapon in its struggle for power and influence.