Liu by The Harker School Libraries

The China Card versus the China Trade: Sino-American Economic Relations, 1972-1989

Justine Liu

Mr. Westgate and Mr. Itokazu John Near Scholar Grant April 11, 2011

Liu 2 The United States’ relationship with China has long been termed, and appropriately so, “special.”1 The subtle tactics exercised bilaterally in the late 1960s by both President Richard Nixon’s administration and the government of the People’s Republic of China (P.R.C.) culminated in Nixon’s official visit to the P.R.C. in February of 1972.2 Recognition of Communist China inaugurated a new era of Sino-American relations, illustrated in the dramatic increases in bilateral trade levels, but such growth was inconsistent and tempered by continued political issues. Quarreling between the two states included controversies over the Republic of China (ROC), changes in the administrations of both countries, and the actions of the Soviet Union.3 From the aftermath of Nixon’s visit to the People’s Republic of China in 1972 to the Tiananmen Square protests of 1989, the volatility of the trading relationship reflected the reality that the economic imperative for normalized U.S.-P.R.C. ties was subordinate to American political interest in curbing the Soviet Union’s power. Accordingly, U.S. marginal expectations of Sino-American trade aligned with the 1989 reality that, despite the P.R.C.’s trade liberalization policies and extensive industrialization, repealing its Most Favored Nation status and imposing sanctions to limit trade with the state were feasible responses to the Tiananmen human rights abuses. What were the circumstances leading up Nixon’s visit in 1972? Although the Sino-American trade relationship grew dramatically in the wake of the February 1972 Shanghai Communiqué issued after Nixon’s initial visit, domestic party politics, the Vietnam War, and the development of Sino-Soviet tensions contributed far more to the diplomatic move than any sudden American desire for increased economic profit.4 President Richard Nixon’s reputation as a conservative right-wing Republican gave him the political capital he needed to be able to initiate a warmer Sino-American relationship without being

Liu 3 perceived by the American public as acquiescing to Communist China.5 His determination to open relations with the P.R.C., as illustrated by his 1967 Foreign Affairs article, “Asia after Vietnam,” reflected the contemporary political atmosphere of America.6 By 1969, Nixon‘s personal desire for a foreign policy victory in the wake of Vietnam led him and then U.S. National Security Advisor Henry Kissinger to lay the groundwork for rapprochement. Nixon’s recognition of how progress on Sino-American relations might impact his image for the upcoming presidential election, in conjunction with the stalled Vietnam War negotiations, the loss of Laos and Cambodia to Communism, and increasing tensions with the Soviet Union, explain the timing of the move in 1972 to normalize relations with the P.R.C.7 Domestic party politics thus remained a major impetus for the visit, since Nixon was committed to establishing a relationship with China before the Democrats could.8 Especially as Democrats such as Senator Edward Kennedy and Senate Majority Leader Mike Mansfield advocated for changes in U.S.China policy, Nixon felt particular pressure to initiate rapprochement to stake normalization of Sino-American relations as a Republican victory. During Zhou Enlai’s extension of an invitation to the American table tennis team to visit China in what was termed “ping-pong diplomacy,” a P.R.C. government official’s suggestion that Democratic Senators Kennedy, Edward Muskie, and George McGovern also be invited illustrates Zhou’s manipulation of American politics to achieve the P.R.C.’s interests.9 The official’s insinuations emphasized to Nixon that continued inaction might mean that the Democrats in Congress, as opposed to the Republicans in the executive branch, would be able to claim the success of opening China, motivating the President to initiate a warmer Sino-American relationship.10 Moreover, because of the ongoing Vietnam War, the American public was generally more inclined to be in favor of better relations with the P.R.C. because they perceived a Sino-

Liu 4 American détente to be crucial to reducing the risk of future conflicts similar to Vietnam.11 A continued containment policy in East Asia seemed unreasonable because the Vietnam War had exhausted America’s willingness to do so, thus a primary motivation for warmer Sino-American relations was to facilitate U.S. withdrawal from Vietnam.12 With these domestic political conditions in place, the Nixon Administration was then able to move forward with its plans to initiate a diplomatic relationship with the People’s Republic, even as the Democrats in the State Department remained relatively unaware of the foreign policy changes and fundamentally convinced that the necessary preconditions of Sino-American rapprochement included an end to the Vietnam War and the abandonment of Taiwan.13 Although war weariness contributed to greater public support for détente, signs of SinoSoviet tension by the early 1970s laid the foundation for Nixon’s visit by facilitating the playing of the “China Card” against the Soviet Union.14 However, at the time, Nixon denied all allegations that friendlier policies toward the People’s Republic necessarily constituted manipulation of Sino-Soviet relations: “Our desire for improved relations is not a tactical means of exploiting the clash between China and the Soviet Union. We see no benefit to us in the intensification of that conflict, and we have no intention of taking sides. Nor is the United States interested in joining any condominium or hostile coalition of great powers against either of the large Communist countries.”15 Similarly, in his memoirs, Henry Kissinger emphasized that, while the United States could best take advantage of Sino-Soviet issues by remaining neutral and thus simultaneously preserving closer relationships with both than either had with the other, the opening of China “was not a crude attempt to play a China card against the Soviet Union, or vice versa.”16 Yet, although both Nixon and Kissinger publicly maintained that movements toward Sino-American rapprochement were not motivated by the geopolitical strategic advantage of

Liu 5 intimidating the Soviet Union, the timing of the visit unmistakably coincided with the escalated Sino-Soviet conflicts of the late 1960s and early 1970s. The U.S. and the P.R.C. both had cause for concern regarding Soviet expansionism taking place under Leonid Brezhnev. This mutual interest was the primary stimulus for the 1972 visit, not the desire to widen cultural and economic ties through increased intellectual exchange and relaxed trade relations. Indeed, Brezhnev’s buildup of the Soviet Union’s conventional and nuclear military capacities threatened the People’s Republic directly, as his innovations were being deployed in large part along the Sino-Soviet border.17 From discovery in March 1969 that Soviet and Chinese military forces had engaged in a series of clashes along the Sino-Soviet border at the Ussuri River, the United States began discreetly arranging covert meetings between Kissinger and Zhou Enlai, formulating strategy as to how to benefit from the tensions, and maintaining strong opposition to any Soviet attack against China.18 Ironically, a motivation for China to take steps toward improved relations with the United States seemed to be perception that the Soviet Union and the United States were beginning to pursue détente, which the Strategic Arms Limitation Talks and the conclusion of a series of economic agreements illustrated.19 At the same time, the United States, already overstretched and war-weary because of Vietnam, was understandably threatened by the Soviet Union’s efforts to augment its military capability.20 As both China and the United States found rapprochement to be in their interests given Soviet advancements, the 1972 visit seems more likely a product of Sino-Soviet tensions, despite the public insistences of Nixon and Kissinger. While the main goal of the visit may indeed not have been to exacerbate existing Sino-Soviet conflicts, domestic politics and the timing of the event suggest that America’s inclination toward more normalized relations with Communist China evolved from the shared interest of preventing Soviet

Liu 6 expansionism. Any evolution in the bilateral trade relationship as a result of Sino-American rapprochement was thus a beneficial side effect to the United States, but not the end goal of the Nixon Administration. What were the American economic expectations of rapprochement? Because a relaxation in trade restrictions was seen more as a way for progress in the Sino-American political relationship to occur rather than advantageous in and of themselves, the expectations of the trade implications of rapprochement were accordingly rather modest. As Arthur Doak Barnett, a government advisor on China affiliated with the Brookings Institution wrote in 1977, “Economic relations with China are of minor importance in relation to overall U.S. economic interests. Even under the most optimistic assumptions, trade with China is not likely to exceed one or two percent of total U.S. trade in the years immediately ahead.”21 Rather, scholars such as Barnett stressed how improving trade relations with the People’s Republic was politically valuable to the United States because greater contact under the guise of improvements in trade levels could promote political and economic cooperation between the two states, and a stable economy could deter Chinese interest in threatening East Asian peace.22 Placing trade relations purely in the context of its political purposes reflects how the American foreign policy community generally held rather pessimistic outlooks on the potential for a long-term trade partnership fostered between the People’s Republic and the United States. Indeed, Kissinger acknowledged that the small steps taken to reduce barriers to SinoAmerican trade from 1969 to 1972 were done “not in the expectation of any substantial immediate increase in trade or travel, but because the adoption of these proposals would show the genuineness of our desire to improve relations and possibly eventually develop significant trade.”23 The general sentiment was that trade with a Communist nation could only be politically

Liu 7 motivated because China’s ultimate goal was autarky, an end that completely undermined the United States’ ability to develop a real long-term economic partnership with the People’s Republic.24 These realities thus undermine arguments attributing Nixon’s 1972 visit to market forces: unlike the romanticized notion that the trip constituted “a tremendous catharsis in terms of human perspective toward the capitalist and communist camps,” China remained relatively committed to its autarkic revolutionary ideologies, framing progress in economic reform in the context of enhancing China’s ability to be an independent power.25 Moreover, the market force or the desire to exploit the untapped Chinese market could not reasonably have been the primary motivation for warmer Sino-American relations, particularly since American businesses generally were averse toward being perceived by the public as pro-Communist. This wariness had been fostered by public outcry during business negotiations with the Soviet Union or East European states.26 Nixon may have decreased Chinese trade restrictions to indicate America’s willingness to inaugurate a policy of rapprochement with the People’s Republic, but his incentives were political in nature, having never accepted the idealized perception of China as a vast virgin market for U.S. goods.27 In fact, Congressional visits made following 1972 yielded virtually no reported interest from the P.R.C. perspective in terms of China’s importation of U.S. consumer goods, purchases of military technology, or acquiring economic loans from the United States.28 Moreover, to illustrate how improved trade was fundamentally a lower priority than geostrategic situations involving the U.S.S.R., U.S., and P.R.C., the American approach was to develop equal levels of commerce with either country, and the Chinese approved this strategy.29 On the question of whether or not to grant China mostfavored-nation (MFN) trade benefits so that the People’s Republic could avoid exporting its goods under high protective tariffs, Deng Xiaoping responded, “China doesn’t need MFN, as

Liu 8 long as the Soviets don’t get it.”30 In terms of actual trading levels, Chinese importation of U.S. grain and technology served mostly to supplement China’s food supply after a particularly lowyield harvest year, as opposed to marking the desire of either party for any long-term economic relationship.31 Thus, although the Shanghai Communiqué had expressed a desire to improve trade, advances made between 1972 and 1974, the couple of years succeeding the visit, proved to be only short-term. Under the terms of the Communiqué, Nixon and Mao had “agree[d] to facilitate the progressive development of trade between their two countries.”32 Accordingly, in the years immediately following the Nixon trip, Sino-American trade increased from $5 million in 1971 to $930 million by 1974, with the majority of the trade constituting agricultural exports from the United States to the People’s Republic.33 Yet, the abrupt decline in U.S.-China trade the following year during the Ford Administration, from $930 million in 1974 to $495 million in 1975, demonstrated the fragility of the relationship.34 Moreover, the decline of trade levels yet again to $336 million in 1976 following the reemergence of the political issue of Taiwan, in addition to the inability of Gerald Ford to pursue China policy as strongly as Nixon had, illustrated that trade was very much subject to political constraints.35 Such dramatic decreases in the span of several years reinforced the rather cynical outlook of both the American business and foreign policy communities on the potential for a substantial trade relationship.36 Therefore, it was not until 1978 that the cycle of U.S-China relations again hit a high point, since the political situations in both countries had encountered complications. While the U.S. was distracted by other foreign policy pursuits, including the improvement of its relations with the Soviet Union, China witnessed an internal political crisis and a power struggle following the death of Mao Zedong, accounting for the drop-off in trade levels following 1974.

Liu 9 Once again, it was Soviet actions that pressured the U.S. and P.R.C. to resume actions toward normalization, since bilateral Soviet-American and Sino-Soviet negotiations had stalled.37 While certain American analysis attributed the halting of progress in the Sino-American relationship to the United States’ failure to fully normalize relations as had been implied in the Shanghai Communiqué, others criticized the United States for attempting to prioritize futile Soviet détente attempts over Sino-American normalization.38 On the other side of the spectrum, critics of normalization maintained that any sign of a closer relationship with the P.R.C. might serve to worsen prospects of negotiation with the Soviet Union. They also argued that the Sino-Soviet conflict was rooted so deeply that, regardless of Sino-American relations, rapprochement between the Soviets and the Chinese was impossible.39 Regardless of such ideological debates between Congress and the White House, the result of the Carter Administration’s renewed drive for closer Sino-American ties was the formal transfer of diplomatic recognition from Taiwan to the People’s Republic on January 1, 1977. The Joint Communiqué on the Establishment of Diplomatic Relations between the United States of America and the People’s Republic of China included explicit U.S. recognition that Taiwan was a part of China.40 Throughout the process of negotiation, as had been true in the planning of President Nixon’s visit in 1972 and the issuing of the Shanghai Communiqué, economic interests were again secondary to political reactions to stalled Soviet-American diplomacy in the drive for warmer Sino-American relations. What economic reforms did China undergo in the wake of Nixon’s visit? Following normalization in 1979, the People’s Republic began comprehensive, broadlevel reforms to its command economy to demonstrate commitment to the Four Modernizations in the fields of agriculture, industry, national defense, and technology, and the P.R.C. also adopted a number of measures to improve foreign trade prospects.41 Even as the ideology of the

Liu 10 past promoted strict autarky, the People’s Republic had implemented new policies since 1971, including a more liberal approach to credits and deferred payments, accounting for the Chinese willingness to accrue sizeable foreign trade deficits.42 Yet, these measures in the 1970s were still fairly state-controlled: higher levels of exports and imports were more the result of the need for grain to supplement the Chinese food supply, and to improve its internal production technologies, than desire for a more capitalistic system. Furthermore, these trading practices were mostly administered by state corporations rather than through the private sector. Only in late 1978, incidentally also the time period when the Carter Administration and Beijing began negotiating the framework for normalization, did the Chinese government begin to reverse its isolationist principles and propound an open-door policy for trade and international exchange.43 Indeed, during Deng Xiaoping’s visit to the United States in 1979, Chinese officials expressed a strong desire for the MFN benefits they had disdained in 1975.44 China’s willingness to move toward capitalism, however, was met with a degree of trepidation from the United States. As Washington Post journalist Jeremiah Novak wrote in 1979 in response to Sino-American normalization, “We now seem to be at an extreme of openness that may well be, over the medium term, moved to a more central position.…Therefore…keep in mind that what opens up can close.”45 Such pessimism seemed fairly defensible, since Chairman Hu Yaobang announced in late 1982 that the P.R.C. would make greater strides toward expanding economic cooperation with other countries and importing Western technologies only to improve China’s ability to be “self-reliant.”46 Regardless of the warnings of individuals such as Novak, the Carter Administration met Chinese demands for MFN status without regard for making an equal gesture to the Soviets. In the early 1980s, the United States finally granted MFN benefits to the People’s Republic and

Liu 11 accompanied this measure with the extension of Export-Import Bank financing and a relaxation of licensing export controls to China.47 With the People’s Republic finally given MFN trading status, the Chinese economy’s organizational structure, trade planning, contract system, and foreign exchange policies were completely reformed to allow for greater foreign trade levels. Whereas foreign trade previously had been monopolized by the state, reform under Deng Xiaoping entailed the decentralization of these controls and the granting of greater flexibility at the provincial and municipal levels to regulate foreign trade. In addition, the requirement that enterprises conduct foreign trade through state-run corporations was relaxed. Moreover, the opening of foreign exchange adjustment centers resulted in private foreign exchange markets with floating exchange rates, facilitating greater trade levels. Reforms that allowed foreign-trade corporations to reduce the business that needed to be conducted through central planning exemplified China’s steps toward developing a market economy more receptive to U.S. businesses.48 The P.R.C.’s rising levels of imports was termed the Great Leap Outward, and it resulted in the development of a balance of payments deficit of $5.1 billion accrued between 1978 and 1980.49 The confluence of Deng Xiaoping’s rise to power, stagnation in Soviet relations for both countries, and American leadership willing to break with the tradition of treating commerce with the Soviet Union and the P.R.C. equally were necessary political prerequisites for revitalization of the Sino-American trading relationship following normalization in 1979. The development of strong bilateral trading ties, however, also provoked problems between the two nations. From 1978 to 1982, P.R.C. exports of textiles to the United States grew sevenfold.50 This change interestingly fostered conflict between the two states, since the textile industry had historically been one of the most protected sectors in the United States and America itself was in the midst of

Liu 12 a recession. In 1983, the United States placed unilateral restrictions on Chinese imports, while the P.R.C. responded with a reduction in imports of cotton, soybeans, grain, and chemical fibers from the United States. Moreover, several American corporations initiated accusations against Chinese corporations for underselling U.S. goods in America at less than fair value, and they increased demands for restrictions to be imposed on Chinese manufacturers to protect U.S. industries.51 China struggled to reduce its foreign debts by restricting foreign imports and America simultaneously reduced its imports of Chinese goods in the energy and raw material industries to cope with the early 1980s recession, leading to a $100 million decline in SinoAmerican trade between 1982 and 1983. In turn, this reduction in trade virtually abolished the trade surplus that the United States had maintained with the Peopleâ&#x20AC;&#x2122;s Republic. The next step in the evolution of Sino-American trading ties was the development of trade deficits on the United Statesâ&#x20AC;&#x2122; side by 1986 and continuing through the decade.52 These tensions relating to the newly established Sino-American economic relationship were only exacerbated by the political problems that developed in the 1980s that culminated in the crisis at Tiananmen Square. This incident, in which the Chinese government took military action against nonviolent protestors agitating for economic reform, nevertheless proved to be one where trading ties were used as leverage to accomplish American political goals. How important was the trade relationship to the U.S. economy as compared to the Chinese by 1989? By 1986, trade levels were at $5.5 billion compared to the approximately $5 million exchanged in 1971, though they seemed to be of lesser value to the economies of both the Peopleâ&#x20AC;&#x2122;s Republic and the United States than advantageous from a purely political perspective.53 As to which state maintained a greater dependency on high Sino-American trading levels,

Liu 13 Professor Rosalie Tung’s analysis from the Journal of International Business Studies found that, in 1982, a mere 8.7% of business negotiations were initiated by Chinese corporations; the majority by far consisted of American firms contacting the Chinese to discuss the prospect of improving the trade relationship between the two states.54 This reality of the trading dynamic seemed to support the notion that U.S. businesses were eager to access the Chinese market of almost one billion consumers, but political opposition to warmer Sino-American relations during the Reagan Administration coupled with growing recognition of the development of a sizeable trade deficit with the People’s Republic indicated that such enthusiasm diminished as the decade progressed. Indeed, according to Henry J. Groen’s analysis in a paper submitted to the Congressional Joint Economic Committee in 1982, approximately half of American firms engaged in trade or investment with the People’s Republic then considered the results of their Chinese interactions “disappointing.”55 At the very least, even if American corporations continued to view access to the vast Chinese market as profitable, their interest was not so great as to outweigh the political imperatives for restricting trade with the Chinese. The United States thus engaged in a fairly mixed approach toward the trade relationship: it simultaneously encouraged economic ties by ratifying a bilateral tax treaty and discussing China’s application for General Agreement on Tariffs and Trade (GATT) membership in 1986, while also attempting to restrict textile exports and criticizing China for its high tariffs and taxes on American goods.56 Political conflicts that developed in the 1980s between the United States and China further complicated the economic situation and demonstrated how America was apt to use the trade relationship as a bargaining chip to gain leverage over the P.R.C. The United States’ willingness to gamble its trade ties on the fulfillment of its geopolitical goals, in addition to the P.R.C.’s response to such economic pressure, paint a different picture of the dynamic of the trade

Liu 14 partnership between the two countries than what Professor Tung described in 1982. For example, during the 1980s, when China began supplying arms to countries in the Middle East, including to both sides during the Iran-Iraq War, the Reagan Administration responded by placing economic sanctions on China in 1987. American business generally resisted Reagan’s move to restrict the export of high-technology products to China, but the sanctions succeeded in causing the People’s Republic to acquiesce to U.S. demands for the Chinese to halt the arms trade.57 This decision suggested that the Chinese were somewhat more dependent on the Sino-American trade relationship than the United States was. This exchange was the first real instance that caused the United States to view China as a real threat to its Middle East foreign policy interests, though it was followed by the discovery of covert Chinese arms sales to Saudi Arabia and Syria in 1988.58 Such developments were particularly relevant as the security motivation of partnering with China to hinder Soviet expansionism declined in the face of warmer Sino-Soviet and Soviet-American ties.59 Mutually beneficial economic relations thus emerged as the vocalized primary strategic advantage to a closer Sino-American relationship, but only to the extent that the People’s Republic did not threaten the United States’ foreign policy agenda elsewhere in the world. The crisis at Tiananmen Square in June 1989 indicated that, in addition to China’s troubling involvement in Middle Eastern arms sales, the extensive political controls and human rights abuses perpetrated by the Communist Party qualified the P.R.C. as a threat to U.S. interests. China’s failure to enact what the United States saw as necessary political reforms to accompany economic liberalization was impossible to ignore in the wake of the Tiananmen incident.60 Moreover, without the geostrategic justification of preserving a Sino-American relationship to

Liu 15 pressure the Soviet Union, the Bush Administration chose to use the existing economic ties to force concessions from the P.R.C.61 The Tiananmen crisis spurred immediate action from the Bush Administration. On June 5, 1989, the United States declared sanctions against the People’s Republic, including the freezing of the military relationship through the halting of military sales to China, in addition to a warning against American travel to the state.62 Deng Xiaoping’s public endorsement of the tragedies inflicted by the Chinese military at Tiananmen and his continued nationwide oppression of political dissidents worsened the tensions, and it indicated that Beijing was not so reliant on their trade partnership with the United States that it was willing to concede to its political flaws and denounce its repressive behavior. The United States had little choice following Deng’s declaration but to impose a harsher set of sanctions on the P.R.C., eliminating international loans to China as well as freezing high-level contacts with the state.63 While there was evidence of American business leaders reacting adversely to the imposition of such sanctions, including the chief executive of Reebok approaching Senate Majority Leader George Mitchell, protesting the consequences of such unilateral actions to U.S. manufacturers in China, Congress remained unmoved.64 The split between the Democratic Congress and the executive branch as to how to approach the P.R.C. in the wake of the Tiananmen incident further complicated the process of determining an appropriate U.S. response. The Bush Administration’s simultaneous struggle between public pressures to crack down on Beijing and the necessity of preserving a Sino-American relationship for the United States’ long-term benefit embodied America’s divergent attitudes toward China. Irrespective of the economic ramifications of imposing sanctions or revoking China’s MFN trading status, the political motivations of appeasing an American public outraged by the use of force on peaceful protesters in Tiananmen

Liu 16 Square outweighed whatever gains U.S. businesses achieved through unrestricted Sino-American trade.65 Thus by 1989 following the Tiananmen Square riots, the United States and the People’s Republic of China again had found themselves at the nadir of Sino-American economic relations. The economic expectations of Nixon’s initial visit in 1972 then seem fairly aligned with the realities of the trade relationship in 1989, given the sequence of events that unraveled in the twelve-year span. The initial eruption of the trade relationship following the issuing of the Shanghai Communiqué in 1972 stagnated by 1975. The reemergence of the Taiwan issue and unstable leadership in both countries led to this diplomatic plateau, and it was reversed only in 1979 following official diplomatic recognition and normalization of relations. This rapprochement lasted until the political conflicts of the 1980s hindered the progress of SinoAmerican trade yet again. During this relatively short time span, the United States went from maintaining a favorable balance of trade to accruing a substantial and controversial trade deficit with the People’s Republic, while China underwent intense internal reforms to make the transition from autarkic isolationism to a thriving socialist market economy characterized by greater economic liberalization and openness to foreign economic influence. Following the Tiananmen incident, the United States was left with the task of “renormalizing” relations with the People’s Republic as Nixon had done in the early 1970s, only this time without the Cold War motivation of containing Soviet expansionism. Rather, the lengthy process of reconciliation of the issues between the People’s Republic and the United States following 1989 placed, for the first time in U.S.-China policy, economic motivations at the center of the movement toward rapprochement. Yet, in sharp contrast to the forecasts of the scholars of the 1970s, even the most optimistic of expectations regarding the Sino-American

Liu 17 economic relationship could not have predicted the realities of bilateral ties between the People’s Republic and the United States in the twenty-first century: desire for the “China Market” has since clearly won out over the “China Card.”

Liu 18

Notes 1

Harry Harding, A Fragile Relationship: The United States and China Since 1972 (Washington, DC: The Brookings Institution, 1992), 358. 2

Michel Oksenberg, "A Decade of Sino-American Relations," Foreign Affairs, Fall 1982, 175, accessed October 31, 2010, http://www.jstor.org/stable/20041357. 3

Robert G. Sutter, "The Economic Factor in the Evolution of U.S.-China Policy, 19711981," in The China Quandary: Domestic Determinants of U.S. China Policy, 19721982 (Boulder: Westview Press, 1983), 20-21. 4

Sutter, 21.

James C. Humes and Jarvis D. Ryals, "The Handshake of History," in "Only Nixon": His Trip to China Revisited and Restudied (Lanham: University Press of America, 2009), 47. 6

James Mann, About Face: A History of America's Curious Relationship with China, From Nixon to Clinton (New York: Alfred A. Knopf, Inc., 1998), 16. 7

Margaret Macmillan, Nixon and Mao: The Week That Changed the World (New York: Random House, 2007), 190. 8

Mann, 18.

Mann, 28-29.

Sutter, 17-18.

A. James Gregor, "Beijing's Rapprochement with the United States," in The China Connection: U.S. Policy and the People's Republic of China, ed. Peter Duignan, United States Foreign Policy Series (Stanford: Hoover Institution Press, 1986), 87. 13

Humes and Ryals, 41-44.

Jeremiah Novak, "Realities of the China Trade," in About Face: The China Decision and Its Consequences, ed. John Tierney Jr. (New Rochelle: Arlington House Publishers, 1979), 314. 15

Foreign Relations Report, February 18, 1970, Box 86, Henry A. Kissinger Office Files, Richard Nixon Presidential Library and Museum, Yorba Linda.

Liu 19 16

Macmillan, 123.

Harding, 4.

Mann, 21. Claude A. Buss, The People's Republic of China and Richard Nixon, The Portable Stanford (Stanford: Stanford Alumni Association, 1972), 64. 19

Harding, 4.

A. Doak Barnett, "A New Agenda of Issues," in China Policy: Old Problems and New Challenges (Washington, DC: The Brookings Institution, 1977), 36. 22

Barnett, 37-38.

Henry A. Kissinger to Richard M. Nixon, memorandum, March 25, 1971, NSC 26167, Henry A. Kissinger Office Files, Richard Nixon Presidential Library and Museum, Yorba Linda. 24

Thomas G. Corcoran, "Myths of the China Trade," in About Face: The China Decision and Its Consequences, ed. John Tierney Jr. (New Rochelle: Arlington House Publishers, 1979), 318. 25

Gordan C.K. Cheung, "Nixon's 1972 Visit to China as a Result of Market Forces," in Market Liberalism: American Foreign Policy Toward China (New Brunswick: Transaction Publishers, 1998), 93. 26

Jerome Alan Cohen, "Implications of the Detente for Sino-American Trade," in Sino-American Detente and Its Policy Implications, ed. Gene T. Hsiao (New York: Praeger Publishers, 1974), 49. 27

Cohen, 46.

Sutter, 26.

Mann, 106.

Alexander Eckstein, "China's Trade Policy and Sino-American Relations," Foreign Affairs, October 1975, 150, accessed October 31, 2010, http://www.jstor.org/stable/20039560. 32

John T. Woolley and Gerhard Peters, "Richard Nixon: Joint Statement Following Discussions with Leaders of the People's Republic of China," The American Presidency Project,

Liu 20

accessed June 23, 2010, http://www.presidency.ucsb.edu/ws/index.php?pid=3754&st=shanghai&st1=. 33

Sutter, 21.

Barnett, 35.

Sutter, 21-22.

Harding, 63.

Harding, 67.

Harding, 70.

Sutter, 55.

Harding, 81.

Hang-Sheng Cheng, "Foreign Trade," in China's Economic Reform, ed. Walter Galenson (n.p.: The 1990 Institute, 1993), 197. 42

Eckstein, 150.

Cheng, 197.

Mann, 107.

Novak, 307.

A. James Gregor, "The Elements of Policy," in The China Connection: U.S. Policy and the People's Republic of China, ed. Peter Duignan, United States Foreign Policy Series (Stanford: Hoover Institution Press, 1986), 195. 47

Rosalie L. Tung, "U.S.-China Trade Negotiations: Practices, Procedures and Outcomes," Journal of International Business Studies 13, no. 2 (Fall 1982): 25, accessed October 31, 2010, http://www.jstor.org/stable/154294. 48

Cheng, 208-213.

Harding, 130.

Novak 309

Harding, 129-130.

Liu 21 52

Harding, 131.

Gregor, 193.

Tung, 28.

Groen quoted in Harding, 135.

Harding, 148; Harding, 192.

Mann, 168.

Mann, 169-170.

Harding, 206.

Mann, 193.

Harding, 225.

Harding, 226.

Mann, 199.

Mann, 193.

Bibliography

Liu 22

Barnett, A. Doak. “A New Agenda of Issues.” In China Policy: Old Problems and New Challenges, 34-77. Washington, DC: The Brookings Institution, 1977. The Brookings Institution, a nonpartisan research organization, sponsored Barnett’s publication, which discusses the challenges that still exist to Sino-American relations. Barnett, writing in 1977, highlights some of the new policy issues that have arisen in the wake of rapprochement, including gradually growing economic relations. Barnett advises that the United States actively help bring about better trade relations as a way to stabilize China and global politics, not just to benefit the U.S. economy. Thus, he provides a more practical view of U.S. foreign policy and argues that in order to prevent the deterioration of the relations that Nixon established, trade and economic relations must be pursued. Buss, Claude A. The People’s Republic of China and Richard Nixon. The Portable Stanford. Stanford: Stanford Alumni Association, 1972. Buss’s overview of China relations, published in 1972 during the perceived “new era” that followed Nixon’s visit to China, is a primary source that may be used to shed light upon the reception of Nixon’s initiatives among the scholarly community. Buss traces the history of Communism in China and gives overviews of the China policies conducted by each president since 1949, attempting to give more a compilation of facts and information, rather than “inject[ing]” any “personal opinions.” Cheng, Hang-Sheng. “Foreign Trade.” In China’s Economic Reform. Edited by Walter Galenson., 197-230. N.p.: The 1990 Institute, 1993. Hang-Sheng Cheng, former Vice President of the Federal Reserve Bank of San Francisco, outlines the dramatic changes toward greater openness that the foreign trade industry in China underwent since reform attempts began in1979 following normalization of SinoAmerican relations and diplomatic recognition of the PRC. Pre-1970s China was characterized by an extreme, isolationist trade policy, but Cheng describes how the liberalization of trade begun under Deng Xiaoping’s leadership transformed the state into one of the twentieth century’s leading market powers, an important perspective to the understanding of how the initial economic expectations of Sino-American rapprochement manifested in Chinese reform. Cheung, Gordan C.K. “Nixon’s 1972 Visit to China as a Result of Market Forces.” In Market Liberalism: American Foreign Policy Toward China, 85-95. New Brunswick: Transaction Publishers, 1998. Dr. Cheung places U.S. foreign policy measures in the context of Augmented Market Liberalism, giving the economic rationale behind the historic 1972 visit to China. Cheung also notes that these market forces can indeed serve to buffer the relationship, preventing conflict between China and the United States. He cites 1971 literature highlighting the potential benefits

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of China’s economic development, the revocation of the gold standard, and the 1967 congressional hearing to support the thesis that Nixon’s trip was not merely justified by the Cold War, but also by the policy of market liberalism. Cohen, Jerome Alan. “Implications of the Detente for Sino-American Trade.” In Sino-American Detente and Its Policy Implications. Edited by Gene T. Hsiao., 46-75. New York: Praeger Publishers, 1974. Cohen’s essay explores the growing trade relationship between China and the United States as a result of rapprochement between the two nations, despite the observation that American incentives for detente were mostly political. Because it was published in 1974, this essay acts as a primary source to illustrate the potential economic benefits that scholars in the Nixon era saw in warmer Sino-American relations. In particular, Cohen argues that a more active trade relationship between China and America, an end desired by both nations, would bring greater collective security. Corcoran, Thomas G. “Myths of the China Trade.” In About Face: The China Decision and Its Consequences. Edited by John Tierney Jr., 317-324. New Rochelle: Arlington House Publishers, 1979. Because Corcoran writes in 1979, his predictions that dreams of American businesses profiting from the untapped Chinese market will not happen reflect Carter-era challenges to the pursuit of detente with China for economic relations. According to Corcoran, trade with China will always be for political reasons, in light of the Cold War, and not practical economic ones. He supports this thesis by noting that trade prospects seem is far better in Taiwan or Japan than that with mainland China, hypothesizing about potential competition for the Chinese market with other developed nations, and describing the rigid command economy of Red China. Corcoran’s essay represents the aftermath of Carter’s decision to extend diplomatic recognition to the PRC as a “betray[al]” of Taiwan. Eckstein, Alexander. “China’s Trade Policy and Sino-American Relations.” Foreign Affairs, October 1975, 134-154. Accessed October 31, 2010. http://www.jstor.org/stable/ 20039560. Eckstein of the Brookings Institution gives a four-year look back at the development of trade following the 1972 opening of China, particularly in the context of the global recession of 1973. The quantification in the growth of Chinese imports and American exports to China and its fluctuations through the four-year period is useful to the analysis of American perception of the China trade in the immediate aftermath of Nixon’s visit, preceding full normalization under the Carter administration. Similarly Eckstein’s attempts to illustrate the Chinese reorientation of their foreign economic policy towards the United States emphasize the disconnect between

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expectations that the U.S. would become a major capital goods supplier to China and the realities of 1975 where only 10-15% of sales to China comprised industrial goods. Foreign Relations Report. February 18, 1970. Box 86. Henry A. Kissinger Office Files. Richard Nixon Presidential Library and Museum, Yorba Linda. This primary source file available at the Nixon Presidential Library’s Archives provides a particularly compelling glimpse into the perspective of the Nixon administration as it was making the arrangements for the initial trip to China in 1972. The emphasis that no “China Card” was being played or no strategic maneuver was behind the opening to the People’s Republic gives insight as to what American public opinion of China was in the years prior to rapprochement and why it was that the Nixon administration needed to treat the situation extremely delicately. Gregor, A. James. “Beijing’s Rapprochement with the United States.” In The China Connection: U.S. Policy and the People’s Republic of China, edited by Peter Duignan, 75-97. United States Foreign Policy Series. Stanford: Hoover Institution Press, 1986. Professor Gregor, affiliated with the University of California at Berkeley’s Political Science Department, outlines both the American and Chinese motives for rapprochement, and explains its short-term consequences. Gregor attributes the warming of relations to China’s desire to advance its ideals of “world revolution” in contrast to the Soviet “state monopoly capitalism” and growing tensions with the Soviet Union due to violations of Chinese territory and air space. American incentives for rapprochement included its sluggish economy, the Vietnam War perception that East Asian containment had failed, and the desire to take advantage of Sino-Soviet conflict. Gregor’s thesis is that Nixon’s state visit was the culmination of these circumstances.. ———. “The Elements of Policy.” In The China Connection: U.S. Policy and the People’s Republic of China, edited by Peter Duignan, 183-214. United States Foreign Policy Series. Stanford: Hoover Institution Press, 1986. Professor Gregor’s scholarly primary source demonstrates that Sino-American economic relations were simply not perceived as very significant in 1986. Even though trade had grown drastically in the ten years following the Nixon visit, to the United States benefit, Gregor pessimistically views the trade and investment relations between China and the United States as hardly substantive, concluding that “The PRC will probably never be a major trading partner of the United States.” His reasons include the Communist Party’s restrictions upon economic policy and the Chinese principles of self-reliance, as well as the predicted volatility in China following Deng Xiao Ping’s death in the near future.

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Harding, Harry. A Fragile Relationship: The United States and China Since 1972. Washington, DC: The Brookings Institution, 1992. Leading China expert and Brookings Institution Fellow Harry Harding writes a comprehensive study of Sino-American relations from 1972 to the book’s publication year, 1992. Harding’s thesis is that the improvement in the relationship between China and the United States fostered by Nixon’s initial visit has faced growing conflict in the decades following. While Harding recognizes the necessity of preserving diplomatic relations with China, he does not view the prospects of economic partnership as potentially very viable given the “highly fragile” nature of the nations’ diplomacy as a result of differing ideologies concerning Taiwan and human rights. Humes, James C., and Jarvis D. Ryals. “The Handshake of History.” In “Only Nixon”: His Trip to China Revisited and Restudied, 40-53. Lanham: University Press of America, 2009. Professor Humes, a State Department planner and White House speechwriter under Nixon’s administration, and Dr. Ryals write about the process of organizing the Nixon visit in 1972 through various anecdotes and interviews with the Chinese Foreign Service officials who had planned the meetings. In this chapter, they assert that preparations for the visit were stalled by an American State Department unwilling to undergo any sort of accommodation with China, including Kissinger, therefore Nixon did his best to circumvent them through secret meetings and a “carefully orchestrated escalation of signals” from the beginning of his presidency. This chapter also challenges the notion that “only a ‘hard right wing Republican’ could have initiated the opening to Red China,” finding the Nixon presidency as more progressive than commonly perceived. Kissinger, Henry A. “Steps toward Augmentation of Travel and Trade between the People’s Republic of China and the United States.” Henry A. Kissinger to Richard M. Nixon, memorandum, March 25, 1971 NSC 26167. Henry A. Kissinger Office Files. Richard Nixon Presidential Library and Museum, Yorba Linda. This previously classified memo sent in March 1971 from Henry Kissinger to President Nixon openly states that the primary motivation for rapprochement with Beijing was political in nature, and the relaxation of restrictions on Sino-American exchanges purely a strategic ploy to demonstrate America’s willingness to begin negotiations for normalizations. Knowledge of the perspectives of Kissinger and Nixon is particularly helpful to analyzing the American economic expectations of Sino-American detente. The little emphasis Kissinger placed upon economic benefits of the United States’ actions indicates how greater levels of trade between the two countries was an advantageous side effect, but not the driving focus of negotiations.

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Macmillan, Margaret. Nixon and Mao: The Week That Changed the World. New York: Random House, 2007. Professor Macmillan, a recognized history scholar, details the events that occurred during Nixon’s weeklong visit. Macmillan’s work is a more neutral account of the highlights of the state visit. Through historical anecdotes and specific descriptions of the interactions between the United States and the Chinese government, Macmillan provides an overview of the goals of the trip from both the American and Chinese perspectives, the debates and negotiations that happened, and ultimately the impacts on American foreign policy. Mann, James. About Face: A History of America’s Curious Relationship with China, From Nixon to Clinton. New York: Alfred A. Knopf, Inc., 1998. Mann, former chief of the Los Angeles Times bureau in Beijing, accounts U.S.-China relations in the decades following Nixon’s initial visit. His research includes an analysis of Nixon’s strategy behind engaging in diplomatic relations with China that describes the president’s motives and the negotiations he undertook to secure the 1972 visit. Beyond Nixon, Mann explores the implications of Carter’s official recognition of the PRC and extension of MFN trading status, as well as the ending of the Cold War and the Tienanmen crisis to trace the tumultuous relationship between China and the United States. Novak, Jeremiah. “Realities of the China Trade.” In About Face: The China Decision and Its Consequences. Edited by John Tierney Jr., 306-316. New Rochelle: Arlington House Publishers, 1979. Novak, a journalist writing in 1979, expresses fears about the growth of economic relations between the United States and China, citing specific negative consequences that he perceives in the near future as a result of rising levels of trade. First, Novak emphasizes that normalizing Sino-American relations harms Taiwan’s national economy, as well as third world countries who will see their credit and capital being diverted to China. Novak also accurately predicts that a consequence of the growth of Chinese trade will be competition with American manufactured goods, an issue that, though brought up in 1979, has manifested in the twenty-first century. Oksenberg, Michel. “A Decade of Sino-American Relations.” Foreign Affairs, Fall 1982, 175195. Accessed October 31, 2010. http://www.jstor.org/stable/20041357. Oksenberg of the Council on Foreign Relations summarizes a ten-year history of SinoAmerican relations following Kissinger’s 1971 visit and Nixon’s opening of China in 1972. Oksenberg attempts to explain the fragile start-stop nature of the relationship, and his observations of the 1975-1976 and mid-1980 periods attribute tensions to changes in political leadership within both countries and Soviet Union complications to account for the delay of

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normalization until 1979. This article gives insight into the perspective of contemporary American foreign policy experts on Sino-American ties to explain the timing of key events in the development of the relationship. Sutter, Robert G. “The Economic Factor in the Evolution of U.S.-China Policy, 1971-1981.” In The China Quandary: Domestic Determinants of U.S. China Policy, 1972-1982, 127-140. Boulder: Westview Press, 1983. Sutter observes that the economic implications of the rapprochement Nixon’s visit signaled were incentives subordinate to having a Cold War political strategy of threatening the Soviet Union with a U.S.-China alliance. However, American businesses have still viewed better relations with China engendered by Nixon’s visit as an economic opportunity, even though they have not been politically active in improving these ties. Sutter also traces the volatility of trade since 1971, noting a precipitous drop in 1975 as a result of China’s concern for its rising trade deficit, Nixon’s resignation, and a resurgence in the Chinese mentality of self-sufficiency. This work therefore provides an account of Sino-American trade and business enterprise in the decade following Nixon’s initiatives that demonstrates that the visit was far from decisive to the future of the two countries’ economic relations. Tung, Rosalie L. “U.S.-China Trade Negotiations: Practices, Procedures and Outcomes.” Journal of International Business Studies 13, no. 2 (Fall 1982): 25-37. Accessed October 31, 2010. http://www.jstor.org/stable/154294. Professor Tung’s study of the dynamics of U.S.-China trade negotiations following normalization and the outcomes of American businesses engaging with a China prioritizing the Four Modernizations goals is particularly significant in its analysis of the motives U.S. corporations had in initiating trade dialogue with China and the imbalanced relationship where the majority of negotiations were begun by Americans and not the Chinese. Woolley, John T., and Gerhard Peters. “Richard Nixon: Joint Statement Following Discussions with Leaders of the People’s Republic of China.” The American Presidency Project. Accessed June 23, 2010. http://www.presidency.ucsb.edu/ws/ index.php?pid=3754&st=shanghai&st1=. The Joint Communiqué Between the People’s Republic of China and the United States of America, also known as the Shanghai Communiqué, was released by the two nations at the end of Nixon’s February 1972 trip. A primary source document, the Shanghai Communiqué marks the first step toward detente between China and America. The Communiqué included the pledges of both countries to prevent the development of any hegemon in Asia, briefly discussed the issue of Taiwan, and signaled desires to expand the Sino-American cultural and trade relationship.