Republican candidates for their party’s presidential nomination are increasingly open to the idea of ending the trade relationship between the U.S. and China that, since 2000, has given Beijing permanent normal trade relations (PNTR) status and has smoothed commerce between the world’s two largest economies.

In his effort to gain ground on former President Donald Trump in the Republican primary, Florida Governor Ron DeSantis on Monday said he would revoke China’s trade status as part of what he characterized as a “Declaration of Economic Independence.”

“The abusive relationship, the asymmetric relationship between our two countries, must come to an end,” DeSantis told a crowd in New Hampshire. “No more massive trade deficits. No more importing of goods with stolen intellectual property. No more preferential trade status.”

In a statement provided to VOA, the Chinese Embassy in Washington criticized DeSantis and other GOP candidates for “smearing and blame-shifting” on the issue of trade.

Origins of PNTR

China was in negotiations to join the World Trade Organization in 2000, a move that many believed would open the country to foreign investment and allow non-Chinese companies access to its more than 1 billion consumers.

Until 2000, the specific trading relationship between the U.S. and China was the subject of annual reassessment, a situation that created uncertainty for companies looking to develop business relationships in China.

 

In 2000, President Bill Clinton made the decision to grant China PNTR.

Although trade between the two countries expanded rapidly, the U.S. frequently complained that China had failed to live up to its side of the bargain. They cited government interference to support Chinese firms, currency manipulation and other tactics that critics claimed Beijing was using to tilt the playing field in its favor.

Many of those practices were cited by the Trump administration as justification for the imposition of broad tariffs on Chinese goods during his term in office.

Evolving GOP position

Even Trump did not go as far as revoking China’s trade status with the U.S. It is a move that would be extremely disruptive and would put at risk billions of dollars of two-way trade between the world’s two largest economies.

However, the former president has added a call for the revocation of China’s PNTR status to his campaign for the presidency in 2024. In a campaign video released earlier this year, the former president made his new position clear.

“We will revoke China’s most favored nation trade status, and adopt a four-year plan to phase out all Chinese imports of essential goods — everything from electronics to steel to pharmaceuticals,” Trump said.

“This will include strong protections to ensure China cannot circumvent restrictions by passing goods through conduit countries — countries that don’t make a product, but all of a sudden they’re making a lot of the product, it comes right through China, right out of China, and right into our country.”

Leverage on fentanyl

Former South Carolina Governor Nikki Haley has put forward a more comprehensive China policy than many of her rivals for the nomination, and in a speech in June she floated the possibility of using the potential revocation of China’s trade status as leverage in talks with Beijing.

 

Haley noted that Chinese firms supply Mexican drug cartels with the precursor chemicals used in manufacturing the drug fentanyl, a major contributor to the opioid crisis in the U.S.

“China cannot plead innocence here,” she said in remarks delivered at the American Enterprise Institute in Washington. “It knows exactly what it’s doing by putting these chemicals into the hands of the cartels.

“We’ve tried sanctions, but they’re not working,” Haley said. “We must ratchet up the pressure. As president, I will push Congress to revoke permanent normal trade relations until the flow of fentanyl ends. If China wants to start normal trade again, it will stop killing Americans.”

Biden administration actions

While the Biden administration’s rhetoric regarding China has not been as pointed as that of Republican presidential contenders, the White House has struggled to maintain a productive relationship with Beijing over the past two and a half years.

When he took office in 2021, President Joe Biden inherited a regime of tariffs on different imports from China that were put in place during the Trump administration. The administration has left most of them in place.

In addition, Biden has overseen the implementation of export controls meant to prevent China from obtaining specific goods, including advanced microprocessors and the machines used to build them. This has led to complaints from Beijing and accusations that the U.S. is attempting to hamstring China’s growth prospects.

The official position of the Biden administration is that China is an economic competitor, not an enemy, a position that Republican candidates for the presidential nomination have derided as naive and shortsighted.

Chinese reaction

In response to an inquiry from VOA, a spokesperson for the Chinese Embassy in Washington issued a statement reacting to calls for revocation of PNTR.

“China-U.S. economic relations are mutually beneficial,” the statement said. “Overstretching the concept of national security and politicizing economic, trade and investment issues run counter to the principles of market economy and international trade rules. Pushing for decoupling with China not only harms the legitimate rights and interests of Chinese companies, but also destabilizes global industrial and supply chains.

“The Chinese side is strongly against drawing attention by smearing and blame-shifting in the election campaign.”

‘Declaration of economic war’

Many economists argue against the elimination of PNTR, warning that such a dramatic change would be damaging to the interests of the U.S.

In a July 19 debate sponsored by the House Select Committee on the Chinese Communist Party, economist Mary Lovely argued that such a move would be economically disastrous, leading to high prices for American consumers and harm to U.S. manufacturers.

“Revoking permanent normal trade relations with the People’s Republic of China is not in the best interest of American families, American workers or American businesses,” said Lovely, a senior fellow at the Peterson Institute for International Economics.

“Removing PNTR is a declaration of economic war with China,” she continued. “An abrupt and destabilizing decoupling of the world’s two largest economies will hurt the United States and undermine ongoing efforts to work with like-minded countries to reduce our exposure to China.”
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