The Long Game | 2021
“Permanent Normal Trading Relations”
Abstract
Chapter 6 considers the economic components of China’s grand strategy to blunt American power. It demonstrates that the “traumatic trifecta” at the end of the Cold War laid bare China’s dependence on US markets, capital, and technology. Beijing had previously been relatively unconcerned about the annual US congressional votes that granted China “most-favored nation” (MFN) trade status, but that changed overnight. Washington’s post-Tiananmen sanctions and its threats to revoke MFN trade status—which could have seriously damaged China’s economy—deeply concerned China’s leaders. Beijing sought not to decouple from the United States but instead to bind the discretionary use of American economic power, and it worked hard to remove MFN from congressional review through “permanent normal trading relations,” leveraging negotiations in APEC and the WTO to obtain it.