We now have a new proposal, as I'm sure you're aware of, called the China Non-proliferation Act, that was introduced by Senator Thompson, that seeks for the first time to use access to our capital market and access to our banking system as an instrument of American foreign policy. The objectives of the bill are objectives that no one can disagree with, and that is, we would like nations not to proliferate in terms of weapon sales. As you know, my own view is that our gradual increase in engagement commercially with China is undermining many of the types of structures which I think lead to the problems we have. China's continuing assistance to Pakistan's weapons program in the face of so many U.S. efforts to talk Beijing out of it shows the limits of a non-confrontational approach. By the same token, the United States should make clear that a certain amount of Chinese missile-making is incompatible with business as usual .
Capital controls are undesirable.
In addition to questioning the value of this amendment, there's a very serious question as to whether it will produce, indeed, what is suggested it will produce. First, let me just say that the remarkable evolution of the American financial system, especially in recent years, has undoubtedly been a major factor in the extraordinary economy we've experienced. And it's the openness and the lack of political pressures within the system which has made it such an effective component of our economy and, indeed, has drawn foreigners generally to the American markets for financing as being the most efficient place where they can, in many cases, raise funds. As a result, the Institute has eschewed capital controls, undue government intervention and other measures which could impede the free flow of capital into and out of the United States in favor of the market-oriented strengthening of disclosure and transparency requirements for foreign entrants into our markets. It is a mistake to believe that the rest of the world is without dissimilar resources.