The Foreign Service Journal, July-August 2019

Sino-American Relations Through the Years From the FSJ Archive MANAGING COMPETITION WITH CHINA FOCUS 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 systemon the basis of common objectives and purposes. If we are in a confrontational position, many if not most coun- tries 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 acces- sible 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 tomodify our historical approach. It’s a new experience for both countries. —Henry Kissinger, in an interview with AFSA President Susa n 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 intro- duced 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 primar- ily 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 invest- ment in China. In its wake, Taiwan, Singapore, South Korea and Japan also beganmoving 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 themore developed econo- mies in the region. At the same time, as often the last link in this regional supply chain, China expanded as amarket for rawmaterial and component products fromother 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 sanc- tions 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 tomaintain 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 tomaintain currency stability. Nowwe 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. THE FOREIGN SERVICE JOURNAL | JULY-AUGUST 2019 45