Greenspan: Once More for China

May 19, 2000

Federal Reserve Board Chairman Alan Greenspan joined President Clinton in the Rose Garden Thursday for one more pitch to Congress for a favorable vote on permanent normal trade relations with China. Greenspan said as power is removed from central planners, individual rights broaden. That will happen when China joins the World Trade Organization, he said.

In an indirect reply to opponents of PNTR who say China needs to improve human rights before any U.S. blessing is bestowed on trade, Greenspan said "implicit in any removal of power from central planners and broadening of market mechanisms, as would occur under the World Trade Organization, is a more general spread of rights to individuals. Such a development will be a far stronger vehicle to foster other individual rights than other alternatives of which I am aware."

Sharing some of his views with the House Banking Committee earlier, Greenspan also said adding the Chinese economy to the global market will result in "a more efficient worldwide allocation of resources and will raise standards of living in China and its trading partners." WTO membership "will doubtless promote internal economic development, encourage the adoption of modern technologies and contribute to lifting its citizens out of poverty."

China also will be pressured into a greater reliance on the rule of law and a firmer commitment to economic reform with WTO membership, said Greenspan. "As China’s citizens experience economic gains, so will the American firms that trade in their expanding markets," he added.

As prosperity progresses in China, U.S. businesses and farmers will benefit from new opportunities created as a result. China, with a population of 1.2 billion, has an economy that is larger than that of Japan and "may be approaching half the size of the American economy," said Greenspan.

"Passage of PNTR will facilitate a further opening of China’s markets to U.S. producers," he added. "Accordingly I believe extending PNTR to China, and full participation by China in the WTO, is in the interests of the United States.

The House is expected to vote on PNTR next week with the Senate taking up the issue after the House has acted. So far, there do not appear to be enough House votes committed to the trade deal to approve it.