Will China Defeat America in the Battle of the WTO?

A battle is shaping up between America and Communist China, not in the Strait of Taiwan but in the hushed corridors of the World Trade Organization. It marks an escalation of what’s being called the “Chip Wars” — America’s effort to limit the export to China of our highest technology semiconductors to prevent Beijing from using them to strengthen its military and defy America’s global leadership. Which side will the WTO take?China’s gripe stems from a rare episode in which President Biden showed some spine against Beijing and its drive for economic supremacy. The export ban, also intended to stifle communist research into artificial intelligence, “effectively kneecapped China’s semiconductor industry,” CNBC reports. Beijing argues America is “abusing export control measures,” CNBC says, not to mention “obstructing normal international trade.”The communist mandarins are also, according to the Wall Street Journal, calling the chip export ban a form of “trade protectionism.” This is ironical considering that America has long been the world’s freest and fairest market, open to nearly all the world’s trade. China, by contrast, has for decades pursued a mercantilist strategy, protecting its inefficient home industries and artificially depressing the price of its products in global markets.Communist China, in other words, has rigged the rules of world trade to its own advantage — and may yet triumph if the bureaucrats of the WTO take its side in the cynical contretemps over chips. Feature, after all, what happened in the Clinton years, when China outsmarted America to gain admission to the World Trade Organization. “The W.T.O. agreement will move China in the right direction,” President Clinton burbled* in 2000. “The most significant opportunity that we have had to create positive change in China since the 1970’s,” Mr. Clinton called it. He imagined that WTO entry “requires China to open its markets” to American “products and services in unprecedented new ways.” Said he: “All we do is to agree to maintain the present access which China enjoys,” he crowed, calling the deal economically the “equivalent of a one-way street.”Lest you think Mr. Clinton was naive in his appraisal of China’s prospects for democratization, he offered some hard-headed insight. China, he conceded, is “a one-party state that does not tolerate opposition.” He was well aware, too, that “China has been trying to crack down on the Internet,” Mr. Clinton said, earning guffaws from his audience. “Good luck,” he chuckled, calling it “sort of like trying to nail jello to the wall.”Such laughter — on the part of Mr. Clinton and the bien-pensants who at the time saw only the potential for profit from the opening of the world’s largest export market — would ring hollow sooner than expected, as vast swaths of the American industrial heartland were hollowed out by the so-called “China Shock” — while America was flooded with cheap exports from China, whose markets remained closed in many key respects to our own.That was because of the terms by which China entered the WTO. This was, China historian Frank Dikotter observes, the “greatest coup” of the former Communist ruler, Jiang Zemin. The terms, which classify China as a “developing” nation, give it special exemptions to trade rules for industrialized countries. As a result, the Wall Street Journal’s Tunku Varadarajan writes, “no country inside the WTO can compete with China.”No wonder President Trump told Congress in 2018 that America had “erred in supporting China’s entry into the WTO.” The terms “have proven to be ineffective in securing China’s embrace of an open, market-orientated trade regime.” The fact that Beijing is now looking for the WTO to take its side in the battle for tech supremacy is the latest sign that the ground rules for China’s engagement with world trade are overdue for reappraisal.____________________* Patrick Buchanan warned during the 1992 campaign that the extent of the Arkansas governor’s “foreign policy experience is pretty much confined to having had breakfast once at the International House of Pancakes.”

Will China Defeat America in the Battle of the WTO?

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