Letter to US Congressmen for the unconditional renewal of MFN status for China
MOST FAVOURED NATION STATUS
AND
THE PEOPLE'S REPUBLIC OF CHINA
The Hong Kong Democratic Foundation was established in 1989 as a political group, but has more recently focused on adopting the role of a political "Think Tank", addressing a wide range of economic, political and social issues.
The purpose of this communication to you(1) is to lobby for the unconditional renewal of Most Favoured Nation (MFN) status for the People's Republic of China, for although we do not deny that human rights in China have deteriorated during the last year, we strongly believe that the chances for an improvement in human rights there are greater if there is total separation of political issues from business issues.
No Way Without International Will
The purpose of withdrawal of MFN status is to use economic disadvantage to force action to improve human rights. However, unilateral action by one country only is unlikely to produce sufficient hardship to change China's stance. This might only be achieved if the European Union countries, Japan and other large economies can be persuaded to participate, but there is no sign at present that these countries have the appetite for concerted economic action to achieve a politico-social objective.
There is little doubt China would be prepared to ride out the short-term economic hardships and could largely neutralize the medium term economic damage the withdrawal of MFN might cause, through intensifying its trading activities with other countries, not least within the Asian area. During the recent long recession in the USA and Europe, the Asian economies scarcely suffered because they had reached a level of economic development where their own consumers were able to compensate for the downturn in purchasing from their traditional export markets. The consumers in these rapidly growing markets are becoming an increasingly important factor in international trade.
Economic Instruments for Economic Objectives, Political Instruments for Political Objectives
Using economic measures to achieve political or social objective is ultimately a self-defeating exercise. American investment in China will be jeopardized and American business will be the loser as China favours other countries with its contracts.
American policy should focus on achieving a multi-national action plan approach to the application of pressure on China to improve its human rights standards. International co-operation on this issue can best be achieved if such action concentrates on non-economic pressures.
Building Pressure From Within
Our principal argument for the retention of MFN for China is our firm belief that the only sure way of achieving progress over human rights is as a result of pressures from within.
The demands for improvement in human rights and a more equitable and accountable system of law come from the newly emerging entrepreneurial class. These members of China's society are accumulating assets which they will want to see properly and adequately protected and not subject to the vagaries of arbitrary officialdom and the only way this can be achieved is through the development of an effective system of the rule of law, rather than rule of official and respect for human rights.
Already, we can see embryonic moves towards the implementation of a rule of law system, with Special Economic Zones such as Shenzhen and major economic areas like Guangdong Province looking to implement a better system of commercial law, based on what they see in place in Hong Kong.
Recently the National People's Congress passed a new Criminal Procedure Law which among other things formally recognized lawyers as a profession instead of merely state employees, limits the duration suspects could be held in custody without being charged and improve their access to defending lawyers both before and after they have been discharged. The status of the legal profession in China is being further enhanced through the recent promulgation of the Lawyers Law.
While these may seem very basic and minimal concessions, they are nevertheless important first steps down the right road and we have no doubt that the momentum towards an improved legal system and respect for human rights will build up in step with the development of China's economic progress.
By assisting in the development of China's economy, America will be helping to hasten improvements, not acquiescing to abuses, in the human rights situation there.
The Hong Kong Factor
In the short-term, at least, the withdrawal of MFN would have a significant adverse effect on Hong Kong. It is estimated that such a withdrawal would halve the growth rate of our economy from 5% to 2.5% and deprive 90,000 people of jobs, increasing the unemployment rate from just over 3% to a little under 7%. The reduction in growth rate would greatly hamper our ability to implement already much needed social programmes for the less well off members of our community and the growth in unemployment would further increase the need for them. These are problems and burdens we can ill afford, particularly at this very sensitive time in Hong Kong's history with the imminent transfer from British to Chinese sovereignty.
Our Final Words
We most strongly urge you(1) to vote for the unconditional renewal of MFN status for China.
Hong Kong Democratic Foundation 21 May, 1996
(1) US Congressmen
Reproduction of this paper is permitted with proper attribution to the Hong Kong Democratic Foundation