China and the Free Trade Fantasy

President Obama's personal summit with China's new president, Xi Jinping, at the well-named venue of Rancho Mirage, Calif., covered a wide range of issues, from North Korea to cyber-spying to territorial disputes with Japan and Taiwan, to global climate change. What the meetings did not engage is the fact that China's entire economic system violates the naïve American premise that free markets produce efficient and balanced outcomes.

As China has demonstrated for more than a generation, "free trade" is a useful American fantasy, and state-led capitalism is not a contradiction in terms. It is a recipe for hollowing out the U.S. economy in favor of Chinese economic primacy. Nor does capitalism, Chinese-style, logically lead to increased democracy and human rights.

Although the Clinton administration allowed China's entry into the World Trade Organization in 2000 on promises of better behavior, the Beijing regime doubled down on its strategy of state-owned or state-led enterprises, systematic theft of intellectual property, and deals with Western multinationals that demand transfer of sensitive technologies to Chinese "partners" in exchange for cheap labor and government industrial subsidies.

China's violations of trade norms, to the disadvantage of the United States, have been repeatedly documented by the U.S.-China Economic and Security Review Commission, an independent government body created by the U.S. Congress.

But Democratic and Republican administrations alike have refused more than slaps on the wrist, while China becomes more of an economic threat.

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