Xi Jinping’s role in Ukraine is far less visible than Vladimir Putin’s, but make no mistake: China is also a combatant in the war. What isn’t yet clear is whether China will feel the consequences as Russia has.
On Friday, President Joe Biden announced that the United States, along with NATO members, European Union countries, and Group of Seven nations, will withdraw “most favored nation” trade privileges for Russia. Biden also announced bans on imports of Russian goods—seafood, vodka, and diamonds—and a prohibition on exports of luxury items.
These actions, at least on their face, run afoul of trade rules. Russia has MFN, most-favored-nation status, now in America renamed PNTR or permanent normal trade relations. A nation with PNTR will receive the trade benefits accorded to all other nations with PNTR.
“Putin is an aggressor—is the aggressor,” Biden said on Friday. “And Putin must pay the price.”
The president is right. But China, playing a particularly malign role in Ukraine, should also pay the price.
Beginning February 4, when Beijing and Moscow proclaimed their “no limits” partnership in a 5,000-word communique, Russia announced large commodity sales of oil, gas, and coal to China, and Beijing removed restrictions on the importation of Russian wheat. In other words, China is giving Russia the cash to wage war in Eastern Europe.
Beijing is, in addition, making its financial system available to Russian institutions as the U.S. and Europe cut them off, so expect Russian banks to soon join the Cross-Border Interbank Payment System, China’s version of SWIFT. Russians, after Visa and Mastercard pulled out of their country, can now sign up for China’s UnionPay card.
Moreover, Beijing is putting its diplomats in the service of Russia and using state media to propagate ludicrous Russian narratives about the war.
China was clearly involved in Vladimir Putin’s planning for the invasion. Beijing persuaded Moscow to postpone its attack until the Beijing Winter Olympics ended, according to The New York Times. The Olympic flame was extinguished February 20. Russia invaded February 24.
In the U.S., legislation—not presidential action—decides which countries are accorded PNTR. Last March, three Republican senators—Tom Cotton of Arkansas, James Inhofe of Oklahoma, and Rick Scott of Florida—introduced the China Trade Relations Act, which would revoke PNTR for Beijing. The bill, among other things, would go back to pre-2001 rules requiring China to obtain MFN status each year. This yearly review gave Congress the opportunity to examine Chinese behavior.
Staunch human rights defender Rep. Chris Smith, the New Jersey Republican, and New York Democrat Rep. Tom Suozzi will, this week, co-sponsor a bill to take away China’s PNTR status. “Many if not most business and political leaders, Republican and Democrat, bought into the ‘China Fantasy,’ overlooking human rights abuses while saying increased trade will make China more like us,” Smith, co-chair of the House’s Tom Lantos Human Rights Commission, told Newsweek. “It was not true then, and it’s not true now.”
Smith believes Congress should “make annual renewal of normal trade relations contingent on concrete progress on human rights.”
Smith is correct. With PNTR safely in hand, China’s regime has been free to embark on genocide and other crimes against humanity, most notably against Uyghurs, Kazakhs, and other Turkic minorities. Now, it is, among other aggressive acts, directly supporting Russia’s slaughter of Ukrainians. Beijing is pressuring India, Japan, the Philippines, Taiwan, and others. The U.S. should not trade with countries committing atrocities at home and aggression abroad.
There’s a legal hiccup. U.S., China, and Russia are members of the World Trade Organization. Generally, a revocation of MFN-PNTR status violates the WTO’s core non-discrimination principle because revocation permits the revoking country to treat the target nation differently than the revoker treats other members.
As a practical matter, Biden’s move to withdraw PNTR is, as Washington, D.C.-based trade expert Alan Tonelson tells Newsweek, “largely symbolic for a variety of practical reasons.”
Why? As an initial matter, the U.S. almost certainly will argue that the WTO’s “national security” exception applies so it can discriminate against Russia and China.
Russia and China, however, will not agree, and they could initiate cases before the WTO’s dispute-resolution mechanism.
Fortunately for America, that will help neither Moscow nor Beijing. WTO rules structurally favor nations that intentionally violate the rules, because no trade penalties may be imposed unless a nation continues violative conduct after a WTO dispute-resolution panel issues a ruling. A ruling can take years.
Yet neither Russia nor China can obtain a decision against the U.S. because, thanks to the Trump and Biden administrations, the trade organization cannot field a panel with a quorum. Tonelson, a WTO critic who blogs at RealityChek, says it is now open season on the world’s trade rules.
In short, the U.S. can continue to impose discriminatory treatment on Russia and China even without Congress formally voting to revoke PNTR.
Bills to revoke Russia’s status will now sail through Congress.
China is a different story. The Senate effort to revoke China’s PNTR status has been stalled for months, and the Biden administration will undoubtedly oppose the Smith-Suozzi bill.
Yet Biden opposition is not necessarily the end of the story. CNN reports that his administration had opposed the suspension of Russia’s PNTR status and was successful in killing the concept in Congress. Circumstances changed on February 24, however.
And circumstances can change for China as well. China, after all, is losing friends in Washington fast.
Gordon G. Chang Bio
Gordon G. Chang is the author of The Great U.S.-China Tech War and Losing South Korea, booklets released by Encounter Books. His previous books are Nuclear Showdown: North Korea Takes On the World and The Coming Collapse of China, both from Random House. http://www.gordonchang.com/