The One-Way Street Runs the Other Way: Clinton’s WTO Forecast and the BYD Reality

On March 8, 2000, President Bill Clinton went to the Paul H. Nitze School of Advanced International Studies at Johns Hopkins to make his closing argument for granting China Permanent Normal Trade Relations and supporting its entry into the World Trade Organization (Johns Hopkins Gazette). I reprinted that speech in full in The Biden Administration Confronts Global Change, and concluded there that it is hard to find any foreign policy forecast as wrong as this one.

That judgment can now be tested against a single company.

When China became the 143rd member of the WTO on December 11, 2001 (WTO), BYD did not build cars. It was a Shenzhen battery maker, founded in 1995 by the chemist Wang Chuanfu, that made rechargeable cells for mobile phones (CNBC). It entered the automobile business only in January 2003, when it bought a struggling carmaker, Xi’an Qinchuan Automobile, from the state-owned defense conglomerate Norinco (Wikipedia, BYD Auto).

In April 2026 alone, BYD exported 135,098 vehicles, every one of them fully electric or plug-in hybrid (Yahoo Finance).

BYD is, in other words, a company whose entire life as an automaker falls inside the WTO era. It is as clean a test case as one could design for the claims Clinton made in 2000. Taking those claims one at a time shows how thoroughly reality reversed them.

Forecast One: “A One-Way Street”

Clinton’s central economic claim was blunt: “Economically, this agreement is the equivalent of a one-way street.” China would open its markets; the United States would merely maintain the access China already enjoyed. American firms would be able to sell into China “without being forced to relocate manufacturing to China.” In his words, “We’ll be able to export products without exporting jobs” (IATP full text).

The street did turn out to be one-way. It simply ran in the opposite direction.

As Ross Babbage has laid out, China’s manufacturing output was half that of the United States in 2004. Twenty years later it is double, and China’s trade surplus has reached $1.2 trillion, the largest ever recorded by any country.

BYD is that reversal in automotive form. SNE Research put BYD’s non-China deliveries at roughly 497,000 units in the first half of 2026, up 81 percent year on year (BYD Today). The company is targeting 1.6 million overseas sales this year, supported by new or expanding plants in Hungary, Brazil, Thailand, Indonesia, Pakistan, and Turkey (Boston Brand Media).

Clinton imagined American workers building products for Chinese consumers. What emerged is a Chinese firm building factories inside other countries’ borders, with assembly jobs going to the host nation while the battery cell, the chemistry, and the software stay anchored in China.

The jobs were exported. So, increasingly, is the factory.

Forecast Two: No More Forced Technology Transfer

Clinton told his audience that, “for the first time,” American companies would be able to sell in China without being forced to “transfer valuable technology.”

The automobile sector shows how hollow that promise was. From 1994, China required foreign automakers to enter the market through joint ventures with Chinese partners and capped foreign ownership at 50 percent. The rule was designed to protect domestic players and give them access to foreign automakers’ technology (Caixin Global). WTO accession did not end it. Ten years after China joined, foreign carmakers were still “forced to team up with local partners” and could own at most half of those ventures (Reuters factbox).

The cap was not lifted for passenger-car manufacturing until January 1, 2022 (International Trade Administration). The U.S. Trade Representative had long criticized the joint-venture regime as a means of forced technology transfer (HKTDC Research).

The timing tells the story. Beijing opened the door to full foreign ownership only once its own electric-vehicle champions were strong enough not to need the protection. The two decades in which foreign automakers trained China’s automotive ecosystem were the same two decades in which BYD learned how to build cars.

Forecast Three: The State Would Recede

The most revolutionary claim in the speech was that WTO membership would push the Chinese state out of economic life. Clinton described the state-owned enterprises as “dinosaurs that are least likely to survive in the global economy.” By lowering the barriers that protected them, he said, China would be “removing government from vast areas of people’s lives,” leaving the Party with “fewer instruments” of control.

The state did not recede. It changed instruments.

BYD’s entry into the car business was itself a product of state and local politics. When Wang bought Qinchuan, local authorities wanted to keep the ailing factory open and preserve employment, and BYD reportedly received a large piece of land for free along with loans at marginal interest rates (CarNewsChina).

That pattern then scaled up nationally. The Center for Strategic and International Studies calculates that Chinese government support for the EV sector totaled $230.9 billion from 2009 to 2023 (CSIS). CSIS calls this a highly conservative estimate, because it excludes local-government rebates, cheap land and utilities, and subsidies to the battery supply chain (Quartz).

Babbage identifies four structural levers behind China’s export machine: a protected home market of 1.4 billion consumers, state subsidies the OECD estimates at three to five times those of other major economies, a currency the IMF assesses as undervalued by 20 to 40 percent, and a state apparatus of commercial intelligence, IP theft, cyber operations, and influence that works alongside Chinese firms abroad.

Clinton saw a state trying to shovel coal into the furnaces of a sinking Titanic. What Beijing actually built was a state that picks the industries of the future and funds them at a scale no market competitor can match.

Forecast Four: Rules and Binding Dispute Settlement

Clinton acknowledged that critics expected China to “break its promises.” His answer was that China’s most important decisions would now be “subject to the review of international bodies with rules and binding dispute settlements.” He also promised “the largest enforcement effort ever given for a trade agreement.”

The best measure of whether the rules disciplined China is how the rest of the world is behaving now. It is not litigating in Geneva. It is building tariff walls.

The barrier against Chinese electric vehicles now runs across political systems that agree on almost nothing else: 102 percent in the United States, 75 to 125 percent in India, 80 to 125 percent in Thailand, 60 percent in Pakistan, 65 to 95 percent in Egypt, and a flat 200 percent on Chinese light manufactured goods in Indonesia. The European Union, facing a tenfold increase in Chinese EV exports over two years, is preparing its own package of tariffs and quotas.

The most telling data point is a vote. At the recent G20 finance ministers’ meeting, nineteen countries backed a statement calling on countries with “excessive and persistent external surpluses” to remove the distortions behind them. China voted no, alone.

A rules-based system that worked as Clinton described would not need nineteen-to-one votes and 100-percent tariffs. Those are signs that the system was used rather than joined.

BYD’s response to the tariffs shows the limits of even that defense. When the EU imposed tariffs on Chinese battery-electric imports in October 2024, BYD did not retreat. It began building local capacity in Hungary (S&P Global Mobility), turning a trade barrier into a localization strategy that still leaves the battery cell Chinese.

Forecast Five: The Genie of Freedom

Clinton’s grandest prediction was political. By joining the WTO, China was “agreeing to import one of democracy’s most cherished values: economic freedom.” Liberty would “spread by cell phone and cable modem,” and Beijing’s attempt to control the internet would be “like trying to nail jello to the wall.”

Beijing nailed the jello to the wall. Then it began exporting the hammer.

The technologies Clinton expected to carry liberty into China are now carrying Chinese systems out into the world. A modern electric vehicle is a connected device. Every BYD sold abroad brings with it years of reliance on Chinese cells, Chinese charging and diagnostic software, and Chinese-controlled mineral processing for the eventual replacement battery.

This is the “Architecture of Dependency” that Kenneth Maxwell and I traced through lithium refining, rare-earth processing, and port infrastructure such as Chancay: control of the value chain rather than conventional market access. China controls 57 percent of global lithium refining and 85 percent of rare-earth processing, even though Australia alone produces 45 percent of the world’s raw lithium. A BYD battery pack is that architecture shrunk down and put on four wheels.

Clinton expected the network to change China. Instead, China is building the network.

What Clinton Got Right

Fairness requires noting what the speech got right, because those points sharpen the indictment rather than soften it.

China did cut its tariffs. Duties on automobiles fell from 80 to 100 percent to 25 percent by June 2006 (Reuters factbox). But the cuts had limited effect for foreign carmakers, who were already producing most of their models inside China through the mandated joint ventures. The tariff concession was real. The access it was supposed to buy was not.

Clinton also warned that if America did not sell to China, “someone else will step into the breach, and we’ll spend the next 20 years wondering why.” Someone did step into the breach. It turned out to be China itself, and the breach was the global automobile market.

He was right, too, that “the path that China takes to the future is a choice China will make.” China made it. The error was assuming that integration would determine the choice. Beijing’s leaders, as Clinton himself said, “know exactly what they’re doing.” What they did was use membership in the system to reshape it.

The Deeper Error

The core mistake of 2000 was not miscalculating tariff schedules. It was a theory of history: the belief that markets would dissolve the Party-state, and that commerce would do the work strategy did not need to do.

As my colleague Harald Malmgren told me, efforts to attach real conditions to China’s entry, of the kind that had shaped Japan’s integration into the American-led economic order, were rebuffed by the Clinton Administration. Entry came on trust, and the trust rested on a forecast.

BYD shows what that forecast produced. A battery company that had never built a car when China joined the WTO is now one of the world’s leading exporters of vehicles. It was built with state land, state credit, and state subsidies behind a protected market. Today it is expanding through factories in Hungary, Brazil, Thailand, and Turkey that function as tariff workarounds. Chancay was a fixed chokepoint that a government could study, debate, and refuse. The battery under a BYD hood is a chokepoint bought one car at a time, with no single point of sovereign decision.

The Lesson for Middle Powers

The danger now is that the Clinton bet is being placed again, one country at a time.

Each government that welcomes a BYD plant for its assembly jobs and headline investment figures is making a smaller version of the 2000 wager: that bringing Chinese capital inside will make the relationship more balanced. The record of the past quarter century suggests the reverse. Host nations end up confined to downstream roles while the higher-value steps, including mineral processing, cell chemistry, and battery-management software, stay in China.

The alternative is not autarky. It is to treat battery chemistry and midstream processing as sovereignty issues, to tie local-content rules to processing rather than final assembly, and to back credible non-Chinese supply chains, such as Toyota’s solid-state program with Idemitsu Kosan (Electrek), before the dependency hardens.

In 2000, Clinton asked how America could turn its back on the chance China was offering. Twenty-six years later, the better question is how the democracies could have read China’s intentions so badly. They must not make the same misreading again, in a new sector, with the factory already built inside their borders.

Sources

• President Bill Clinton, speech at Johns Hopkins SAIS, March 8, 2000, reprinted in Robbin Laird, ed., The Biden Administration Confronts Global Change, Chapter Six, “The China Challenge”; full text at IATP
• Robbin Laird, “China’s Trade War Isn’t With Washington. It’s With Everyone,” info, September 25, 2026, drawing on Ross Babbage, The Australian Financial Review
• Robbin Laird, “BYD, Batteries, and the Architecture of Dependence,” info, September 27, 2026
• Kenneth Maxwell and Robbin Laird, The Australian, Brazilian, and Chinese Dynamic