Clinton's U.S. Bond Push Could Fill China's Jails

Feb. 26 (Bloomberg) — The Obama administration is too young to be cynical. Yet one of its leading figures has just struck a deal so cynical as to qualify as Nixonian.

That's the deal Hillary Clinton struck with the Chinese leadership.

The new secretary of state materialized in Beijing to ask the Chinese to shore up the tottering American economy by buying more U.S. bonds. On her way there, she made clear what we trade for China's economic support: the U.S. will henceforward downgrade human-rights priorities.

The ongoing push for such rights in China, she told reporters, "can't interfere with the global economic crisis, the global climate crisis and the security crisis." (Read: can't interfere with bond auctions.)

The U.S. has long been uneven in its attitude toward China's abuse of its own citizens. Still, Clinton's move constitutes a devastating shift. It is a special betrayal for the hundreds of lawyers, journalists and rights advocates whom U.S. presidents, Democratic and Republican, encouraged to take the lead in reforming their country.

To the background of the betrayal: Immediately after World War II, the U.S. was concerned with finding prosperity for itself. Then it wanted to do good — at home and elsewhere. Sure, it sought to create markets around the world. But it also wanted to share its wealth, measured in prosperity as well as democracy.

After Mao

From the 1976 death of Mao Zedong, the West pressured China to recognize some of the basic rights of its people. U.S. and European leaders demanded explicitly that the regime in China loosen up.

One tool for pressuring abusive regimes was Jackson-Vanik, the 1975 U.S. measure that denied most-favored-nation status to countries that curtailed emigration.

Jackson-Vanik aimed primarily at the Soviet Union and was regularly waived for China. But it provided an opportunity for annual review of human-rights conditions in both Russia and China. That showed Mao's successors the U.S. was watching.

President Ronald Reagan realized that a prosperous U.S. could outlast the Soviet Union and its shamelessly exaggerated data on economic growth. Similarly, the U.S. saw a chance to use its prosperity to press China to honor religious freedom and cease locking up democracy advocates.

The result of the West's economic pressure was concrete, if not always positive, change. In 1989, as the Berlin Wall fell, desperate Chinese leaders struck back at peaceful protesters in the bloodshed of Tiananmen Square.

Reforms Upon Reforms

"There was steady progress from the end of the cultural revolution in 1976 on, with the exception of Tiananmen Square," says Minky Worden, editor of "China's Great Leap: The Beijing Games and Olympian Human Rights Challenges," and media director of Human Rights Watch. "With economic reforms has come the expectation of reforms to protect rights and put in place the rule of law."

The West had made a wager: that a modernizing, growing China would eventually become a democratic China. In 2008, that wager appeared to have lost.

There were crackdowns on protests in Tibet and Xinjiang, state-sponsored muggings of reporters by plainclothes police, and censorship of a major public-health threat — poisoned milk.

Leading human-rights activists were jailed. An advocate of citizens with AIDS, Hu Jia, is in Beijing Municipal Prison serving a three-and-a-half year sentence for subversion (against the Communist Party). Hu's real error was taking Beijing at its word when it promised to respect human rights. In the run-up to the Olympic Games, Hu, along with dozens of others, signed open letters publicly pressuring Beijing.

Internet Stars

Another target has been literary critic Liu Xiaobo, who is also the former president of PEN, the literary-freedom group. Liu was arrested in December and has since been detained without charges at an undisclosed location. Both Hu and Liu had been Internet operators, which is to say they had been operating in the relatively new space for civil society in China created by global economic freedom.

The Chinese-U.S. situation today is the reverse of the 1970s and 1980s. Then, it was the U.S. that had the economic advantage and exacted concessions. Now, it is China that has the financial advantage and the U.S. that is stumbling and giving ground.

While the current economic crisis is being felt around the world, it has left the U.S. particularly dependent on China's continued interest in its bonds. That Chinese advantage can only grow. There's also a sense that, as per Secretary Clinton, the U.S. will continue to look away from China's human-rights abuses, however awkward that stance becomes.

Hostage to Banking

What a weird place we're at: a universal cause like human rights is hostage to the appalling behavior of certain U.S. banks and government-sponsored agencies. President Vaclav Havel and the others must be thanking their stars that Fannie Mae and Freddie Mac didn't go under in the winter of 1988.

We can only imagine what Hu and Liu will think when they eventually learn the details of Clinton's visit. Interviews with East Bloc citizens in the 1990s made clear that anti-communist declarations by confident, wealthy Western nations kept dissident movements alive in the 1970s and 1980s.

Americans, for their part, have a hard time understanding the links between jail time in Beijing and their own adjustable-rate Visa cards. If there is a good thing to say about Secretary Clinton's trip, it is that she made that connection clearer.

(Amity Shlaes, author of "The Forgotten Man: A New History of the Great Depression" is a Bloomberg News columnist. The opinions expressed are her own.)

© Copyright 2009 Bloomberg

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