25 years ago today, President Bill Clinton stood in the Rose Garden and signed US-China Relations Act into a law that granted permanent normal trade relations (PNTR) with China.
This law will forever change the US-China trade relationship. He gave China the same trading terms as America's allies and gave the green light to China's entry into the World Trade Organization (WTO), integrating their emerging economies into the global trading system.
At the time, the global “expert class” predicted that the PNTR would be an economic gift to American workers and industry. Testifying before Congress in May 2000, then-Treasury Secretary Larry Summers claimed that “There was only one answer to this question: bringing China into the world economic system is right for the American economy and for the world economy.”
Former economic adviser to Obama and Biden Gene Sperling agreedstating: “The question is whether the adoption of the 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 up trade relations with China. claiming that“This Agreement [U.S.-China WTO agreement] will also strengthen our ability to ensure fair trade and protect our agricultural and manufacturing base from surges in imports and unfair prices.”
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 for which America has worked in China for the past three decades. And, of course, it will advance our own economic interests.”
These so-called “experts” weren't just wrong. They were disastrously wrong. They fatally misjudged both the economic and geopolitical consequences of admitting China to the WTO and granting it the PNTR.
Flanked by Secretary of State Madeline, Treasury Secretary Larry Summers, Senator William W. Roth (R-DE), and Speaker of the House J. Dennis Hastert (R-IL), President Clinton signed the permanent trade normalization bill with China on the South Lawn of the White House on October 10, 2000. (Tom Williams/Roll Call/Getty Images)
China's economy has not become freer. American companies that have expanded their operations in China have become victims of rampant intellectual property theft, censorship, and repressive regulation. China has not become the liberal democracy we were promised. China's respect for human rights has only worsened, and America's trade deficit has ballooned as China has deepened its unfair trade practices.
The numbers paint a grim picture. In 2001, America's trade deficit with China amounted to 84 billion dollars. By 2018, this deficit had increased fivefold to $418 billion.
Almost 25 years ago, China accounted for approximately 8% of global industrial output. But by 2020, that number had reached almost 30 percent. Like one headline put this onChina is now “the world's only manufacturing superpower.”
In the early 2000s, my state of Indiana enjoyed one of the highest shares of manufacturing employment in the country. But soon after the PNTR Act was signed, cheap Chinese imports flooded our markets, forcing many companies and manufacturing plants to permanently close throughout the state.
The closed factory, one of many, idled in Huntington, Indiana, on April 29, 2016. (Michael Robinson Chavez/The Washington Post via Getty Images)
China's unfair trade practices, according to an analysis by the Coalition for a Prosperous America expenses nearly 80,000 manufacturing jobs in Indiana between 2001 and 2023. The same analysis shows that America's explosive trade deficit with China has cost us more than 3.8 million jobs since 2001.
The “experts” who cheered when Bill Clinton guaranteed normal trade relations with China have failed American workers time and time again.
But instead of showing any humility, they keep doubling down and refuse to acknowledge the mistakes that led to the economic predicament America finds itself in today against China.
Meanwhile, workers in small towns like the ones where I grew up realized that the fallacy of “free trade” with China was causing economic harm to them and their families. All they had to do was look around and see for themselves what trade with China brought in return: millions of jobs were outsourced, entire cities and communities were destroyed, and the livelihoods of these workers and their families were destroyed.
Gravestones bearing the names of local closed mills lie across the street from the closed NewPage paper mill in Kimberly, Wisconsin, on December 11, 2008. (Matt Luedtke/Bloomberg via Getty Images)
“Free” trade with China was always doomed to fail because we subsidized an economic system that made us less prosperous here at home and more dependent on our enemies abroad.
It is impossible to have free trade with a country that seeks to destroy free trade.
I'm glad we finally have a president who is serious about ending China's free ride at the expense of American workers. Unlike leaders before him, President Trump's “America First” trade policy is about putting our country and workers first, not selling out to China.
Jim Banks is a US Senator from Indiana. He serves on the Senate Banking Committee.
