A New Experience for Both Countries

Sino-American relations may be the single most important relationship, in terms of its impact on the international situation. If China and the United States are in a cooperative relationship, it will be easier to construct an Asian and global system on the basis of common objectives and purposes.

If we are in a confrontational position, many if not most countries in Asia will have to choose sides. This will strain their domestic structure and lead to stagnation in international politics—and if it were to lead to war, it would result in the exhaustion of both sides.

At the same time, global cooperation with equals is not the national style of either country. There’s a difference in cultural perspective, in the sense that we believe our values are relevant to the entire world, and the entire world are aspirant Americas. As a result, there’s a strong missionary spirit in American foreign policy.

Chinese believe that their values are exceptional but not accessible to non-Chinese. And, therefore, the Chinese concept of world order is one in which their importance is recognized and respected by other countries.

We are both challenged to modify our historical approach. It’s a new experience for both countries.

—Henry Kissinger, in an interview with AFSA President Susan Johnson, “Four Decades after the Opening to China,” Sept. 2012 FSJ.

China’s Economic Growth: Source of Disorder?

The most immediate impact of China’s rapid economic growth has been on its Asian neighbors. When Deng Xiaoping jump-started economic reforms in 1979, he not only introduced the market into China but also opened up the country to foreign trade and investment. This essentially helped to build up China as a major link in the regional supply chain— first in low-end manufactured products such as textiles, toys and shows and then, more recently, in higher-technology electronic and electrical appliance products that are primarily exported to the United States and other more developed economies.

In the 1980s, Hong Kong basically moved its manufacturing lock, stock and barrel to the mainland as its own production costs rose, thus accounting for up to 70 percent of foreign direct investment in China. In its wake, Taiwan, Singapore, South Korea and Japan also began moving more of their factories to the Chinese mainland, contributing to steadily increasing FDI.

Thus, while benefiting from increasing FDI inflows, China helped sustain Asia’s economic growth by providing a new source of relatively inexpensive land and labor for the more developed economies in the region. At the same time, as often the last link in this regional supply chain, China expanded as a market for raw material and component products from other countries around the region.

Many in the United States continue to focus simplistically on China as the chief culprit behind our increasing global trade deficit. There have been persistent calls in Congress for economic sanctions against Beijing for alleged “currency manipulation” due to its fixed exchange-rate policy. This is in sharp and ironic contrast to our pressure on it to maintain this policy in the late 1990s during the Asian financial crisis. When the rest of the region experienced dramatic currency depreciation, we looked to China to maintain currency stability. Now we blame it for our global trade deficit.

—Robert Wang, FSO economic minister-counselor in Beijing, from his article by the same title in the Focus on China in the May 2005 FSJ.

As Hong Kong’s Takeover by China Looms

The future’s so bright for Hong Kong’s business community, members may have to don shades this summer. With 24-carat gold frames, of course. That kind of unbridled confidence continues for a glowing business climate after China’s takeover, fueled by the belief that the mainland won’t tamper with what has made this city one of the world’s leading financial centers. Yet a small group of pessimists fear that, if Beijing has its way, the city may see more shadow than light.

According to the results of an annual business confidence survey by the American Chamber of Commerce in Hong Kong, more than 95 percent of the 663 members surveyed believe the city’s business environment will be “favorable” or “very favorable” for the next five years—the highest approval rating since the survey began in 1992.

—Dan Kubiske, a Foreign Service spouse and freelance writer, from “A City Bullish on Itself,” in the March 1997 FSJ Focus on Hong Kong.

Delinking MFN Status from Human Rights: Lessons Learned

In the six-month aftermath of President Clinton’s decision not to link human rights with Most Favored Nation status for China, the two most important lessons learned were about politics: the enormous influence wielded by the U.S. business bloc in Washington and the subtle influence of U.S. companies in China in moving forward Clinton’s agenda there.

The United States wields tremendous influence in China—most notably through resident U.S. companies. Those who work here feel it every day. Americans are consulted by government ministries on the wording of laws; American businesses’ complaints receive hearings at the highest levels of government; American executives visit towns and cities in China’s hinterlands as celebrities, representatives of the all-powerful Western capital. Any third-string manager from an American company can get a meeting with a city mayor in China, and the hint that a company may be considering an investment is considered a red alert that will draw officials away from other duties to listen to whatever criticisms the foreigner might have of the local investment environment. Americans are strong partly for cultural reasons, but mostly because of their happy and well-paid look. Americans carry the promise of prosperity.

—Anne Stevenson-Yang, head of the Beijing office of the U.S.-China Business Council, from “Why MFN Won in China” in the November 1994 FSJ.

Did the U.S. Miss a Chance to Change Postwar History in Asia?

Ever since Robert Blum’s article “Peiping Cable: A Drama of 1949” appeared in the Aug. 13, 1978, New York Times and revealed the existence of a top secret message to the “highest American authorities” purportedly from Chou En-lai, there has been speculation as to its significance for Sino-American relations. Some scholars have strongly questioned its validity, while others have cited it to support the view that the United States had a genuine opportunity to reach an understanding with the Chinese Communist leadership in the late spring of 1949.

In the course of some research at the Public Record Office in London in the late spring of 1981, I came across Foreign Office documents dealing with this same message as it was received by the British government.

Both versions argued that the leadership of the Chinese Communist Party (CCP) was bitterly divided between a strongly pro- Moscow radical faction under the leadership of Liu Shao-ch’i and a liberal faction under Chou En-lai’s leadership. The latter advocated early establishment of relations with the Western powers since they alone could help China out of its dire economic straits. A victory for the Chou faction would mean that the CCP would not always follow Moscow’s foreign policy lead but would exercise a moderating influence, thus reducing the danger of war.

—Edwin W. Martin, a retired FSO who served in China (1946-1949) and as director of the State Department Office of Chinese Affairs (1958-1961), from his “The Chou Démarche” in the November 1981 FSJ.

What Lies Ahead for America and China?

The convulsions in Chinese political life today baffle insight into our future relations with Peking, because they are the chaotic phenomena of a revolutionary transition.

Mao’s personal rule has already outlived its historical usefulness for China, and like all anachronisms eventually will be superseded. Yet the issue of China’s destiny can only be determined within the Chinese political structure.

Meanwhile, the United States is obliged to help frustrate Mao’s policy of militaristic expansionism, whether direct as in the case of India or indirect as in the case of Laos and Vietnam. The choice afforded the United States is between a firm containment which keeps doors open to the possibility of a fundamental change in policy by China … and a policy of progressive escalation, directed at finding a terrain on which U.S. “victory” (and Chinese humiliation) can somehow be established.

The keys to a wise choice between them are patience, prudence, and steadfastness: the patience to realize that changes in China’s attitude toward the outside world will come slowly, through modification of the entire regional environment, and not through isolated military measures; the prudence to adjust the necessary use of force to the dimensions of the particular issue at stake; and the steadfastness where necessary to sustain drawn-out, indecisive campaigns throughout the Asian periphery as the price of an eventual stabilization.

—William N. Stokes, FSO, from his article, “The Future between America and China,” in the January 1968 FSJ.

American Foreign Policy and China

One of the most vexing problems of the international scene for more than a decade and a half has been the Sino-American confrontation. It would not be an exaggeration to say that throughout this period the U.S. and the communist Chinese have been in a de facto state of war with one another.

The Chinese at this stage of their history are suffering from all manner of complexes, foremost among them a sense of inferiority. The leaders in Peking and the people themselves, whatever their differences, are both struggling with the inheritance of the years when Chinese territory was fought over, partitioned, and expropriated by foreign powers. The backwardness and impotence of their country is something the communists are determined to put an end to once and for all, whatever the cost.

Various proposals have been put forward for relaxing the official American stand on such issues as admission of Peking to the United Nations, the trade embargo and exchanges of various sorts. The United States must first recognize in its own mind the reality of China and its place in the world. Having done this, American policy can then come to grips with the issues requiring settlement. As long as the U.S. maintains its Biblical position of treating China as a prodigal son who must repent before he can return to the fold, there is no hope of any progress.

—James A. Ramsey, FSO, from his article by the same title in the October 1966 FSJ.

Shanghai: How the Iron Curtain Is Drawn Tight Around a City

When the Chinese Communists took over Shanghai they soon summoned newsmen to a “discussion forum” where the Red version of press freedom was explained: “Press and publications which serve the interest of the people will be granted freedom. Those detrimental to the interest of the people will not be granted freedom.” It was as easily stated as that.

USIS was told summarily to close, or, as the Wen Hui Pao newspaper put it: “The megaphones of the Imperialists in this city have been ordered to cease their activities.”

Soon the innumerable bookstalls of Shanghai began to be flooded with booklets and pamphlets following The Line as the published houses were taken over. One of the first such pamphlets accused Chiang Kai-shek of granting Americans “all conceivable rights” to reside where they pleased, travel where they liked, to engage in any kind of business, or to gather intelligence. Quite an impressive list. And the conclusion was: “China has thus been turned into a satellite nation of Imperialistic America, or an American colony.”

The Red drive to wipe out the scourge of imperialism soon rid the city of such street names as Wedemeyer Road. It substituted Chinese for English on such manufactured items as soap.

By such maneuvers the Communists were able within four months after their capture of Shanghai to plug every hole in the iron curtain, excepting only the Voice of America. Unlike the Russians, they did not yet have the jamming equipment to do that.

—Earl J. Wilson, Foreign Service staff officer, from his “The Line Forms to the LEFT” in the March 1950 FSJ.

Opium and Consuls

Just as it was the slave trade that made the African coast well known to the mariners of the 18th and early 19th centuries, it was the opium trade that familiarized the British and American seafaring men with the coast and commercial opportunities of China. Gradually, however, public sentiment became aroused against the opium traffic and in 1880 the United States concluded a treaty with China, by which the governments of the two countries mutually agreed to prohibit the importation of opium by Americans into China or by Chinese into the United States. Our legislation putting this treaty into effect dates from 1887, and it is this statute which makes the smuggling of opium back and forth across the Pacific a criminal act.

Ever since this enactment, the detection of opium smugglers has been one of the best known activities of American customs and consular officers. The trade is now, as always, extremely lucrative— provided the smuggler is not caught—and, despite the fact that action taken by our authorities in China has resulted in the confiscation and destruction of large quantities of opium, clandestine traffic continues.

One of the most daring schemes for selling opium was that unearthed by Vice Consul Walter A. Adams at Changsha, China, in June 1921.

—Consul Edwin L. Neville, from his article by the same title in the August 1922 American Consular Bulletin.