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Robert McGarveyNothing illustrates the vast differences between China and the West like the thorny issue of human rights.

Protecting and advancing basic human rights is central to western civilization. In China, individual rights are sacrificed to the imperatives of the state.

Canadians were reminded of this sharp divide a few weeks ago when Chinese Foreign Minister Wang Yi reacted angrily to a Canadian reporter who questioned China’s commitment to human rights.

Westerners have apparently once again misunderstood China. A few decades ago, it was common to believe that if only we were more sympathetic to communist China and opened our doors to their trade, they’d eventually recognize the superiority of our ways and become more like us.

Where did this unlikely idea come from? In part it emerged from the West’s unexpected victory in the Cold War. Francis Fukuyama’s influential 1989 article The End of History? was a celebration of that victory. Western capitalism, it seemed, had won the decisive battle and given time, the entire world would adopt our free-market system and values. The logic of the 1990s was that freer trade would inevitably lead to world peace and a China that would resemble the West.

How wrong we were. In fact, freer trade and greater openness over the last few decades have entrenched the Communist Party in power, increased its authoritarianism within China and destabilized the entire South China Sea region.

What went wrong?

First, there has been significant improvement in China, including advances in working conditions, wages and the general standard of living. Yes, western multinational corporations have exploited the fact that Chinese workers have few rights, but they’ve also built gleaming new factories, hired millions of very capable people and included them within their training programs. Many of the most talented Chinese employees found advancement through these company’s global management systems.

But American businessman and presidential hopeful Donald Trump is not wrong when he blasts China, saying, “we’re losing $500 billion (annually) in trade with China. Who the hell cares if there’s a trade war?”

The Communist Party’s disdain for human rights has institutionalized inequality in the Chinese workplace, and that has had negative consequences for workers in the West.

In the 30 years since the collapse of communism in eastern Europe and the dawn of globalization, wages in the U.S. and other developed economies have basically stagnated, while worker productivity has almost quadrupled.

How does the rights issue in China negatively impact wages in Canada and the United States?

Multinational companies now shift production around the world with the flick of a switch. If their plant in China has no unions, no punitive environmental standards and much lower wage structures, the companies can use these standards in negotiations with their domestic unions. More importantly, they can use China to leverage politicians to keep wages from rising in the West.

The message is clear: meet our demands or we’ll move production to other parts of the world, where governments are friendlier to business.

Free trade wasn’t supposed to be like this. In its early days, tariff reductions were bundled with a generalized respect for human rights, which helped improve living standards for workers by gaining them a fairer share of the economy’s surplus value.

The world should care about human rights in China for two reasons. First, strengthening human rights will reinforce workers’ rights and will help China redistribute wealth, setting the stage for its next consumer-driven growth spurt. Second, a rights revolution in China and other emerging economies is vital to balancing world trade and preserving the middle class in western developed economies.

Joseph Pickerill, an official in Canada’s Foreign Affairs ministry, suggested that “Frank engagement with open eyes is the way to make progress.” Well, opening everyone’s eyes to the reality that human rights are not a separate or purely political issue is of critical importance.

A failure to make progress on human rights in China would damage China’s economic prospects and worsen relations between China and the West. This kind of neglect would threaten world trade with potentially devastating consequences for global security.

Robert McGarvey is an economic historian and former managing director of Merlin Consulting, a London, U.K.-based consulting firm. Robert’s most recent book is Futuromics: A Guide to Thriving in Capitalism’s Third Wave.

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