out with communism

China will commemorate 50 years of Communist Party rule this year. However, communism is dead in the hearts and minds of its people. Like their former comrades in Russia and Eastern Europe, the Chinese people prefer market riches to Marxist dogma. Now even the Communist Party leaders are conceding that private enterprise is here to stay.
The diminishing role of state-owned enterprises (SOE) and the raising status of non-state enterprises, including private firms, are realities that the ruling elite can no longer ignore. State enterprises account for only 30% of industrial output, but their political pull has meant that they still capture the bulk of investment resources - bureaucrats directed 70% of state bank loans to SOE’s last year. With the change in the constitution, private firms hope to be able to compete on a more equal basis for scarce capital.
If the people's congress does approve the constitutional change and recognizes "multiple forms of ownership" in addition to state ownership, the Communist Party will be admitting what the common folk already know: The future of China lies with free markets and private property.
Nearly a decade after the Tiananmen Square uprising, President Jiang Zemin has made "stability" the No. 1 policy to ensure no deviation from the basic party line. But his increasingly harsh crackdown on dissidents is a sign of weakness, not of strength.
The truth is the Communist Party of China is weaker now than at any time since 1949. The economic liberalization that began in 1978 has given more power to the people, and, unintentionally, undercut the Party's power.
People have little faith in industrial enterprises or banks run by the state. They know that, regardless of official rhetoric to the contrary, government ownership means party control. But that authoritarian approach to economic organization has been a giant failure for all to see.
China cannot solve its economic problems alone. That is why it is essential for the West, especially the United States, to continue its policy of engagement and refine its policy of engagement.
The United States should help move China in the direction of greater economic and personal freedom by normalizing trade relations, integrating China into the global trading order, and promoting exchange on a broad front. Congress should not let the bilateral trade deficit with China interfere with that strategy.
Any movement away from freer trade and toward protectionism would only delay China's progress toward freedom and prosperity and harm the global economy. Trade sanctions should be used only in extreme cases and only when they have a high chance of success; too often they can delay real reform.
Likewise, China should be admitted to the World Trade Organization as soon as possible, provided China respect the principles of a liberal trading order, including the rule of law and the principle of non-discrimination.