� Thank you, Ralph, and good morning. I want to begin by asking if
the microphone's too loud, so-can we turn it down just a little bit?
That's good. I'm delighted to be here. I know you just had a good
panel on the economy. And I wanted to talk mostly about China today,
but I would like to mention just a couple of other matters very
question of how to keep the economy going. And I don't have much to
add to what I'm sure Secretary Summers said, except I would like to
just make three points very briefly. Number one, I think it is
terribly important that we continue to pay the debt down and for
reasons that you understand. But it's an enormous hedge against the
necessary borrowing by business to continue to invest and continue
to grow. And whatever the Fed does, the interest rate structure will
be lower than it otherwise would be, not only now but for, perhaps,
decades in the future. So I think it is a critically important
thing. And I think it's important that people understand this. I've
seen all kinds of articles in the papers saying I've adopted
Coolidge economics, but I don't think so. We're continuing to invest
robustly in our people and our future. But I think it's important.
� The second point I want to make is, I think it is even more
important that we continue to invest in the education and skills of
our people. A lot of you are heavily involved in trying to make our
elementary and secondary schools better. We have a proposal now
before the Congress to make college tuition tax deductible, which
American, with the other increases we've made in the Pell grants and
other things. But I think we need to do more on this, particularly
with people who are already in their young adult years who are out
there and not either employed or are underemployed. I think that's
� And the third thing I would say is, many of you have helped us on
this new markets initiative, but I hope all of you will. Some of you
have been involved in OUT Welfare to Work Partnership, which has
12,000 companies now and has hired hundreds of thousands of people
from welfare to work. And reports indicate that they're doing quite
� But I think when you consider the fact that telecommunications,
among other things, enables us to bring economic opportunities to
rural areas-and in the worse case, some of our Indian reservations
still have unemployment rates that are around 70 percent-- there are
real opportunities there for noninflationary growth if we can figure
out how to do it. I don't want to minimize the risk. I'm trying to
get Congress to pass some legislation that would give significant
these areas, but I think they are profoundly important.
��And as I said, I know a lot of you have been involved in this
already, but this is the only chance we've had, I think, in my adult
lifetime to genuinely bring free enterprise to people in places that
have been left behind. And it's an opportunity I think we ought to
take, and I also think it would be good for the overall economy.
� Now, I want to talk a little about China today, because I think it
is the most important question that the Congress will take up in the
first half of this year. And I realize that in many ways, I may be
preaching to the choir, but I think it's important that we all
understand not that this is a good thing to do but that -it is an
essential thing to do.
� For 30 years now, every single President, without regard to party,
has worked for the emergence of a China that contributes to the
stability, not the instability, of Asia; that is open to our
products and to our businesses; that allows people access to ideas
and information there; that upholds the rule of law at home and
adheres to the rule of law around the world.
� We have a big stake in how China evolves. We have, after all,
fought three wars in Asia in the 20th century. And the path China
takes to the future will either eliminate or cast a great shadow far
beyond its borders. I think we all know that. Therefore, it is clear
that the more we can promote peace and stability in Asia by helping
the right kind of China to develop, the more America's interests and
values will be served.
� The WTO agreement with China helps to advance all these goals in
unprecedented ways. It's the kind of opportunity that comes along
once in a generation. If we seize it, a generation from now people
will wonder why the debate was hard at all. If we don't, we'll be
regretting it for a generation.
� I don't think there's any question that this is in America's
economic interests. The agreement requires China to open its markets
on everything from agriculture to manufacturing to high-tech
products. All we do is simply agree to maintain market access
already given to China. For the first time, our companies will be
workers here at home. It strengthens our response to unfair and
market-distorting trade from China, from import surges to forced
technology transfers to protection of intellectual property.
� One of the things I am quite sure that many Members of Congress
still do not know is that this agreement actually contains bilateral
protections that we don't now have to deal with problems like import
surges, and it's important that they know that.
� if you think about what this agreement could mean to our economy,
we could start with agriculture. From corn to wheat to barley,
tariffs are cut by two-thirds, and our farmers get full access to a
fifth of the world's population. It's little wonder that the pay
stubs at the Farmland Institute read, and I quote, "China will
account for nearly 40 percent of the future growth of American
� With regard to our telecommunications industry, those of you in
that business know that China has the largest potential market in
the world, and only 5 percent of it has been tapped. This agreement
the other 95 percent.
� With regard to the auto industry, tariffs will fall by nearly 75
percent. The requirement that we rely on Chinese distribution is
eliminated, as is the requirement that we have to transfer our
technology, I think a very important advance secured by Ambassador
Barshefsky and Mr. Sperling in this agreement.
� For the first time, American manufacturers will be able to sell
American-made cars in China, to set up their own distribution
centers, to run their own service shops, to provide their own
financing to consumers. That means we'll sell more American cars and
auto parts there and have more jobs here at home.
� Most Members of Congress don't question the economic benefits.
Critics are more likely to say things like this: "China is a growing
threat to Taiwan and other neighbors. We shouldn't strengthen it."
"China is a drag on labor and environmental market rights, and if
you put them in the WTO, they will block further progress on those
issues." Or, "China is an offender of human rights, and we shouldn't
� Now, all these concerns, I believe, are legitimate. The question is
whether they will be advanced or undermined by the decision Congress
will make and America will make on letting China into the WTO. I
believe to set this up as a choice between economic rights and human
rights or economic security and national security is a false choice.
I believe that this agreement is vital to our national security and
that every single concern we have will grow greater and the problems
will be worse if we do not bring China into the WTO. So I believe
this agreement promotes not only the economic interests of the
United States but progress toward positive change in other areas in
� For the past 20 years, China has made progress in building a new
economy. It's lifted more than 200 million people out of absolute
poverty. It's linking so many people through its wireless
communication network that it's adding the equivalent of a new Baby
Bell every year. But the system still is plagued by corruption. Less
than one-third of the economy is private enterprise. The work force,
million people in China are still looking for work, and economic
growth has slowed just when it needs to be rising.
� So the leaders of China actually face quite a dilemma in making
this decision to go for Vv'TO membership. They realize that if they
open their markets to global competition, they risk unleashing
forces that are beyond their control: unemployment, social unrest,
demands for political freedom. This is a big decision in a country
that time and again has suffered more from internal chaos and
disintegration than from external threat.
� But they have concluded that without competition from the outside,
China will simply not be able to attract the investment or build the
world-class industries they need to thrive in a global economy. So
with this agreement, Chinese leaders have chosen to embrace change.
They are highly intelligent people. They know exactly what they're
doing, and they're prepared to take a risk that will require them to
change as well.
� So the real question for America is, now that they have decided to
want to risk a total rejection of the profound decision and choice
they have made? I think it would be a terrible mistake. We need to
embrace their decision, not only for our own interests but for the
long-term interests of the world.
� The WTO agreement advances our interests by encouraging China to
meet, not muzzle, the growing demands of people for openness. Rather
than working from the outside in, it will work from the inside out,
as all profound change has to do.
� Let me just make a few points about this. First, having China in a
rule-based system increases the likelihood that China will follow
the rules of the road in terms of the international economy. Under
this agreement, for the first time, some of China's most important
decisions will be subject to the review of an international body. It
means China is conceding that governments cannot behave arbitrarily
at home and abroad, that their actions are subject to international
� Opponents say that doesn't matter, because China will just break
longer be ascribed to U.S. bullying. This time it will be 135
nations making collective judgment. Look, nobody agrees with the WTO
all the time. I don't agree with their FSC decision. I presume most
of you don't. And we'll have to work with Congress to try to figure
out whether there is a WTO-consistent way for us to continue to play
on a level playing field. But having a system of rules is,
nonetheless, profoundly important.
� Second, the agreement will obligate China to deepen its market
reforms and intensify the process of change. A decade ago, China's
best and brightest college graduates sought jobs in the Government
and large, stateowned firms or universities. More and more now,
they're starting their own companies or choosing to work for
foreign-invested companies where, generally, they get higher pay, a
better work environment, and a chance to get ahead based on merit,
not politics. That process will also accelerate if China joins the
� Third, this agreement has the potential to help open China's
society in noneconomic ways. In the past, virtually every Chinese
Government, went to work in a factory or farm run by the Government,
read newspapers written by the Government. The state-owned
workplaces operated the schools where they sent their children,
clinics where they got health care, the stores where they bought
food. The system was a big source of the Communist Partys power. The
meager benefits provided were a big Source of the loyalty it
� Now, with lower tariffs and greater competition, China's state
sector will shrink, the private sector will expand. In that way, the
WTO will speed a process that is removing Government from vast areas
of people's lives. It will also increase access to communications
� A year ago, China had 2 million Internet addresses. Now it has 9
million. The agreement will bring the information revolution to
cities and towns all across that vast nation it hasn't reached yet.
And as the Chinese people see how the world lives, they will seek a
greater voice in shaping their own lives. in the end, China will
learn what people all over the world are now learning: You can't
� Bringing China into the WTO doesn't guarantee, of course, that it
will choose a path of political reform, but by accelerating the
process of economic change, it will force China to confront the
choice sooner in ways that are more powerful, maling the imperative,
I believe, the right decision.
� Of course, bringing China into the WTO is not, by itself, a human
rights policy or a political rights policy for the United States.
The reality is that China continues today to suppress voices of
those who challenge the rule of the Communist Party. It will change
only by a combination of internal pressure for change and external
validation of the human rights struggle. So we must maintain our
leadership in the latter even if the WTO agreement contributes to
� That's why we sanctioned China as a country of particular concern
under the International Religious Freedom Act last year, why we're
once again sponsoring a resolution at the U.N. Human Rights
press China to respect global norms on nonproliferation, and we'll
continue to reject the use of force as a means to resolve the Taiwan
question. We'll also continue to make absolutely clear that the
issues between Beijing and Taiwan must be resolved peacefully and
with the assent of the people of Taiwan.
� We must not, and we cannot, rely solely on the invisible hand of
the market to do all our heavy lifting in China and neither should
the private sector. For all of us, including the business community,
permanent NTR must mean a permanent commitment to positive change in
� But to even get that opportunity, we've first got to sell this
agreement to the Congress, and we can't underestimate how hard it
will be. I want you to know that 1 will push as hard as I can to
secure agreement as quickly as possible. I made that clear in the
State of the Union Address, in my press conference at Davos. Last
week I started meeting with Members of Congress, and those meetings
are continuing. You will get a fullcourt press from our
administration, ably led by Secretary Daley.
permanent normal trading relations, we risk losing the full benefits
of China's WTO membership. In a global market economy, your
companies would be shut off from a fifth of the world, while your
European, Japanese, and other competitors would take advantage of
the benefits we went to the trouble to negotiate. Failure would also
send a signal to the world that America is turning inward. It would
be, I believe, a devastating setback to our vision for the future.
� Now, I think it's important that we be honest with the Congress and
the country on one thing. We don't know-you don't know and I don't
know what choices China will make over the next decade. We can't
control the choices they make, but we can control the choice we
make; that's all we can do. And all my experience, not only as
President in dealing with China, but as a person who has lived more
than half a century in dealing with human nature, indicates that
this is a time for the outstretched hand in constructive
� And I believe-I will say again-if we pass this up, we will regret
paying a price far greater than economic, because of our rejection.
We cannot allow this effort to fail.
� We face a choice between a Chinese market open to American products
and services or closed to us-and only to us; between speeding the
opening of China's economy or turning our backs; between a China
that is on the inside of an international system looking out or on
the outside looking in.
� Let me just make one other comment about this. Some of our friends
in the labor community, with whom I have great sympathy, say that,
well, if you put China in the WTO, it will make it even harder for
legitimate labor and environmental issues to be raised, because we
know where they stand. Look, I just went to Seattle and met with the
people in the WTO. That's a hard sell no matter who's there, and it
won't change substantially if China's there. That's just not a vital
argument, given where all the other countries are. That is not
� A lot of you don't even agree with me on that, but I can just tell
the WTO, given the perceived interest of the other developing
countries that are going to be in the WTO on these issues, will not
materially change what the WTO does on that over the next decade. I
feel very strongly about that.
� So we've got a simple choice to make. And the first thing we have
to do is to make it clear that there will be a vote on this, and
that we want the vote as quickly as possible. And no one should take
� I know that-I met with a lot of Republican members who were very
concerned about the religious liberty issue. I can just say-a lot of
you may know this-but the religious groups with whom I have met, who
have been involved in China for years, who have been doing their
missionary work there for years, are overwhelmingly in favor of
this. The forces that genuinely and sincerely advocate religious
freedom and then oppose this agreement are overwhelmingly people who
have not been involved in China, with the Chinese, seeing bow the
hope. They made a decision, and anybody who understands anything
about Chinese history knows that these people are very deliberate,
highly intelligent, and aware of the consequences of the decision
they have made. And they have decided to bear the risks of becoming
part of a more open society. They know it will require them to
change in ways that they have not yet come to terms with.
� We have the strongest economy we have ever had. We are the world's
only superpower, and whenever we walk away from an opportunity to
lead the world toward greater integration and cooperation, as I
believe we did with the Comprehensive Test Ban Treaty, we bear a
particular responsibility for future adverse consequences.
� So I ask you to help me with Members of the Congress, without
regard to party, based on the national interest, the clear
economics, and going beyond the economics. This is a profoundly
significant decision for the United States. It will affect our
grandchildren's lives, and we dare not make the wrong decision.
� Together, we can make sure it comes out all right. You can help us
casual effort with me, and it can't be with you. And even if your
companies don't have any direct stake in this, as an American you
have a huge stake in it. As a citizen of the world-and most of your
companies are citizens of the world-you have a huge stake in it.
I'll do whatever I can. I implore you to do the same. And we'll have
a good time at the signing ceremony.
� Thank you very much.
� NOTE: The President spoke at 11:45 a.m. at the Park Hyatt. In his
remarks, he referred to Ralph S. Larsen, chair, Business Council.
The President also referred to FSC, the foreign sales corporation
provision of U.S. tax law.