Japan and Australia recently signed and passed a trade agreement that abolishes or reduces some tariffs on their highest grossing trade items: beef and dairy from Australia and electronics from Japan. State officials as well as the media have branded this a “free trade agreement;” however, this is actually an example of a “Preferential Bilateral Trade Agreement.” While this is not as desirable as free trade agreements are, it is certainly a step in the right direction. Trade is almost always mutually beneficial provided that neither party is coerced – if it were not, then trade would never take place. Because of the international success of free trade agreements in that region, China is being forced to keep up by becoming more competitive in the international market.
Early this month, China met with South Korea to begin drafting a new bilateral trade agreement. The result is the Won-Yuan trading market in Seoul, which will be complete by the end of the year. This will enable South Korea to trade with China and not rely upon the dollar to do so, thus accelerating trade between the two countries. Up until this agreement passed, the Korean Won was not directly convertible to the Chinese Yuan, requiring the two countries to find another currency as the medium of exchange, specifically, the U.S. dollar. The agreement illustrates that China is increasing the economic freedom of the country in an attempt to boost its wealth and trade efficiency. Acton’s director of research, Samuel Gregg recently discussed transitions to more economic freedom and the ensuing religious freedom that comes with that. Gregg states:
Once you grant liberty in one area, it’s hard to preclude freedom from spreading to other spheres. Economic liberty, for instance, requires and encourages people to think and choose freely. Without this, entrepreneurship is impossible. It’s challenging, however, to limit this reflection and choosing to economic questions. People start asking social questions, political questions, and, yes, religious questions. And many Chinese have decided Christianity is the answer to their religious ponderings.
China has the experienced benefits from economic deregulation experiments, such as in Hong Kong, and the country as a whole seems to be headed down a very similar path. Liberty in China has had a direct connection to economic improvement. The government seems to have had a proclivity to allow such freedoms in order to attain wealth. By lessening trade restrictions, they are crafting a tomb for their socialist regime.
Thanks to the trade act, China is allowing for religious freedom to take hold as Gregg points out. China is still one of the most religiously repressed countries at this time, which is continued only due to the government’s power over it. With the wane of the Chinese government’s power, there will be a more vibrant religious and cultural exchange that comes naturally with trade. When there are multiple faiths and ideals, ideas are challenged and thoughts are provoked. Truth is often the result, and liberty follows, whether it be economic, cultural, or religious. In this particular instance, North Korea sees the trade agreement as an attack. One stratagem countries such as North Korea employ is isolation. The North Korean people know little more than what the government tells them, and they are only aware of the culture that the government deems appropriate.
The days of the Chinese socialist state are numbered. Chinese people are ready for change, as can be seen in their willingness to adapt to more Western methods of thinking and ideals such as the growing respect for personal liberty and free markets. If China is careful about the transformation, and realizes what is happening; it could become one of the wealthiest countries in physical capital, knowledge, culture, and liberty. It remains a country to keep a careful eye on over the next decade.