Forgotten Vanguard: Informal Diplomacy and the Rise of United States-China Trade, 1972–1980 026810297X, 9780268022181

Table of contents :
Cover
Half Title
Title Page
Copyright
Dedication
Contents
List of Abbreviations
Acknowledgments
Introduction: The Forgotten Importance of the National Council
ONE Disorder under Heaven: The Deep Uncertainty of Sino-American Trade
TWO Backchannel to China: The Nontraditional Diplomacy of the National Council
THREE Informal Trade Diplomacy in Détente and Rapprochement: A Comparative Analysis
FOUR The National Council, 1974–1977: Capability and Contingency
FIVE Deng Xiaoping, the Council, and the Normalization Breakthrough, 1977–1980
Conclusion: A Changed China, a Changed National Council
Afterword: Complicating Models of Civil Society Interaction
Appendix A. An Interview with Dwight Perkins
Appendix B. An Interview with Eugene Theroux
Appendix C. An Interview with Nicholas Ludlow
Notes
Bibliography
Index

Citation preview

FORGOTTEN VANGUARD

F OR G OTTEN VA N G UA RD Informal Diplomacy and the Rise of United States-China Trade, 1972–1980 C H R I S T I A N TA L L E Y

University of Notre Dame Press Notre Dame, Indiana

University of Notre Dame Press Notre Dame, Indiana 46556 undpress.nd.edu Copyright © 2018 by University of Notre Dame All Rights Reserved Published in the United States of America

Library of Congress Cataloging-in-Publication Data Names: Talley, Christian, 1993– author. Title: Forgotten vanguard : informal diplomacy and the rise of United States-China trade, 1972–1980 / Christian Talley. Description: Notre Dame, Indiana : University of Notre Dame Press, [2018] | Includes bibliographical references and index. | Identifiers LCCN 2017055614 (print) | LCCN 2018006566 (ebook) | ISBN 9780268102999 (pdf ) | ISBN 9780268103002 (epub) | ISBN 9780268102975

(hardcover : alk. paper) | ISBN 026810297X (hardcover : alk. paper) Subjects: LCSH: National Council for United States-China Trade. | United States—Foreign economic relations—China. | China—Foreign economic relations—United States. | United States—Foreign relations—China. Classif ication: LCC HF1456.5.C6 (ebook) | LCC HF1456.5.C6 T35 2018 (print) | DDC 382.0973/051—dc23 LC record available at https://lccn.loc.gov/2017055614

∞ This paper meets the requirements of ANSI/NISO Z39.48-1992 (Permanence of Paper) This e-Book was converted from the original source file by a third-party vendor. Readers who notice any formatting, textual, or readability issues are encouraged to contact the publisher at [email protected]

For Lucy

Even the objects of simplest “sensuous certainty” are given to him only through social development, industry, and commercial relations. The cherry tree, like almost all fruit trees, was transplanted into our zone by commerce only a few centuries ago, as we know, and only by this action of a particular society in a ­particular age has it become “sensuous certainty” for Feuerbach. —Karl Marx, The German Ideology

CONTENTS



List of Abbreviations Acknowledgments

ix xi



Introduction: The Forgotten Importance of the National Council

1

ONE

Disorder under Heaven: The Deep Uncertainty 22 of Sino-American Trade

TWO

Backchannel to China: The Nontraditional Diplomacy of the National Council

45

THREE

Informal Trade Diplomacy in Détente and Rapprochement: A Comparative Analysis

71

FOUR

The National Council, 1974–1977: Capability and Contingency

80

FIVE

Deng Xiaoping, the Council, and the Normalization Breakthrough, 1977–1980

105



Conclusion: A Changed China, a Changed National Council

124



Afterword: Complicating Models of Civil Society Interaction

137

viii  Contents



Appendix A. An Interview with Dwight Perkins Appendix B. An Interview with Eugene Theroux Appendix C. An Interview with Nicholas Ludlow

144 157 173



Notes Bibliography Index

183 233 259

A B B R E V I AT I O N S

AAA AIT CCP CCPIT CIA COCOM CSC CSO FDI FTAC FTC GDP GNP IEC ISC KMT LDC LIEC MFN MNC NBER NCUSCR NCUSCT NGO NIE NSC OPEC OPIC

American Arbitration Association American Institute in Taiwan Chinese Communist Party China Council for the Promotion of International Trade Central Intelligence Agency Coordinating Committee Committee on Scholarly Communications with China civil society organization foreign direct investment Foreign Trade Arbitration Commission foreign trade corporation gross domestic product gross national product Import Export Corporation Importers’ Steering Committee Kuomintang less developed country local import-export commission most favored nation multinational corporation National Bureau of Economic Research National Committee on United States-China Relations National Council for United States-China Trade nongovernmental organization newly industrializing economy National Security Council Organization of Petroleum Exporting Countries Overseas Private Investment Corporation ix

x  Abbreviations

PRC PRCLO PRM ROC SALT SATC SEZ TEC TRA UFC USAID USCBC USSR

People’s Republic of China People’s Republic of China Liaison Offi Presidential Review Memorandum Republic of China (Taiwan) Strategic Arms Limitation Talks Sino-American trade council special economic zone United States-USSR Trade and Economic Council Taiwan Relations Act United Fruit Company United States Agency for International Development US-China Business Council Union of Soviet Socialist Republics

ACKNOWLEDGMENTS

This project began, as many do, with an accidental discovery. While in­ vestigating the Vietnam War’s impact on China’s geopolitical influenc , I noticed a reference to the National Council for United States-China Trade. I had never heard of the group, and its (somewhat ungainly) name caught my eye. Upon this original encounter, I had no pretense of writing a book on the subject. Yet soon, I found myself drawn into a three-year journey to uncover the Council’s forgotten history. Finding the topic was f ortunate, but I was more f ortunate still in the advice and resources afforded to me throughout my writing. I would like to thank, in no particular order, Thomas Schwartz, Samira Sheikh, and Peter Lorge for their invaluable guidance; my interviewees Eugene ­Theroux, Dwight Perkins, and Nicholas Ludlow; the dedicated archivists of the Gerald R. Ford Presidential Library; my insightful reviewer Norton Wheeler; the Vanderbilt Department of History, for a generous research grant; its secretary, Heidi Welch; the Vanderbilt University Library; the Bodleian and KB Chen China Centre Libraries; my f riend Pete Millwood; and my publishers at Notre Dame. Christian Talley Oxford, England January 2017

xi

Introduction The Forgotten Importance of the National Council

As I entered, I was greeted by a round of applause and the announcement by the Chairman that I had been elected president of the [National] Council. I expressed appreciation for their vote of confidence in me and pledged my best efforts to live up to their expectations. “But,” I added, “it would be very helpful if you could give me a bit more guidance about the precise role you see for the Council.” “Oh,” said Don Burnham, looking a little puzzled, “You know Chris, just to develop our trade and economic relations with the People’s Republic of China.” —Christopher H. Phillips, President of the National Council for United States-China Trade, 1973–19861

China’s economic modernization is “one of the most important developments in modern history.”2 By opening its economy, China has lifted hundreds of millions of its citizens out of grinding poverty. While Mao Zedong’s China “suck[ed] the world’s great powers into gigantic conflicts” by sponsoring insurgencies, fighting the United States, and opposing international institutions, China has now integrated itself into the pro-trade world order.3 In addition to new hopes, China’s rise has also engendered new dangers and controversies. As the Middle Kingdom searches for its place in the sun, its assertive foreign policy in the South China Sea has 1

2  F O R G O T T E N V A N G U A R D

spawned uneasiness in Asia and beyond, “straining geopolitical tensions that were already taut.”4 A minority view—notable for its pessimism but also its gravity—suggests that regional conflict might anticipate a wider war between China and the United States.5 Though the present remains uncertain, the arc of history suggests a resurgence of China’s traditional global eminence. China’s rise has manifested itself most profoundly in its tremendous economic growth, which has essentially altered the American and global economies. China’s industrialization poses concerns about pollution, intellectual piracy, and consumer safety. It has simultaneously created an explosion of affordable consumer goods and driven up a massive trade surplus against the United States. In 2013, China produced more than 90% of the world’s personal computers, held $1.3 trillion of American debt, and exported $440 billion worth of goods to America.6 China, in fact, is now America’s largest supplier of goods imports.7 In the same year, America shipped $122.1 billion worth of goods to China, making China America’s third largest export market.8 Regarding the volume of total trade, Bloomberg reported that in 2013 China’s net exports and imports had fina ly surpassed America’s: $3.87 trillion compared to $3.82 trillion, respectively.9 While China’s nominal GDP remains only about 60% of America’s, in 2014 China’s GDP actually surpassed America’s as measured in purchasing power parity.10 China is, self -evidently, important. Unsurprisingly, literature on United States-China relations and United States-China trade has proliferated in the past three decades. The Library of Congress lists almost one thousand relevant books and periodicals in its collections.11 Given this ­attention, one would expect vigorous investigation of relevant historiographical issues: the periodization of trade’s growth, the contingent nature of Sino-US globalization, and the importance of Taiwan in American trade relations with China. While a broad consensus on these central questions has emerged, scholarship on United States-China trade remains understudied in important ways. I challenge pervasive historical assumptions about the growth of SinoUS trade by examining the National Council for United States-China Trade (NCUSCT). The National Council was a private, non­governmental organization (NGO) established in 1973 by the US government and composed of diverse and powerful American businesses. Its first president, former Ambassador Christopher H. Phillips, served under George H. W.

Introduction   3

Bush as deputy ambassador to the United Nations from 1969 to 1973. It also boasted the membership of hundreds of major multinational corporations (MNCs), including Westinghouse, Monsanto, General Electric, and Chase Manhattan Bank, as well as dozens of import-oriented small businesses. The Council bound together these interests to play an important but unacknowledged role as America sought to build a globalized relationship with China. Not only did the Council advocate for and directly facilitate early bilateral trade in the 1970s, but it also acted as a diplomatic backchannel between the United States and China, a key role in the era before the two nations had normalized their relations. By effecting trade and diplomacy, and by directly negotiating with the Chinese leadership, the Council helped set the stage for the presently globalized Sino-US relationship. Despite the Council’s role, it has attracted sur­prisingly little attention from subsequent historians. Yet reevaluating the group will yield fresh insights into the trajectory of Sino-US relations. F OR G I N G A N AT I ON A L CO UNCIL

Following President Richard Nixon’s historic opening to Beijing in February 1972, the United States engaged in an ongoing rapprochement—a rebuilding of relations—with China. Surveying the international landscape, America’s leaders found clear strategic benefits in such rapprochement. China had taken a hard stance against the Soviet Union during the acute deterioration of Sino-Soviet relations in the 1950s, culminating in the Sino-Soviet split of 1960.12 Nixon and his national security advisor, Henry Kissinger, thought that opening to the Chinese could facilitate the short-term benefit of withdrawal f rom the Vietnam War as well as the long-term benefit of gaining the Chinese as a counterweight to the Soviets in the Cold War struggle.13 Trade, in this drama, initially played a marginal role in the minds of top US policymakers. In 1972, Kissinger concluded, “the maximum amount of bilateral trade between us”—the United States and China— “even if we make great efforts, is infinitesimal in terms of our total economy.”14 Kissinger had good reason to be skeptical of trade. China in 1972, then emerging from years of devastation under the Great Leap Forward and in an ongoing Cultural Revolution, had an average per capita income of around US$100. Its command economy remained mostly rural-­agrarian.

4  F O R G O T T E N V A N G U A R D

While Mao’s regime had previously sought capital goods from Europe and the Soviets to aid China’s modernization program, trading with the United States posed a distinct and difficul set of challenges. China’s upheavals in the mid-1970s, historical Sino-American animosity, and Mao’s resistance to US foreign investment seemed to make China uniquely problematic for American business. Despite the long odds of bilateral trade, skepticism did not translate into fatalism. Trade remained an interesting possibility as a method of promoting ties between the United States and China. An important institutional obstacle that Nixon first addressed was America’s ongoing embargo of China’s economy. After China sent troops into North Korea to repel the US Army in the Korean War, President Harry S. Truman broke off all relations and, in December 1950, froze Chinese assets and imposed a strict embargo against trading with China.15 In the same month, the Chinese retaliated, blocking American accounts and expropriating American assets in China.16 As the Korean War dragged on, the Truman administration led an international campaign, supported by Clement Atlee’s government in Britain, to enforce a multilateral embargo against the Chinese economy. These commercial controls, directed by a Coordinating Committee (COCOM) in Paris, theoretically blocked all trade in strategic goods between China and the NATO nations (minus Iceland and plus Japan).17 The regulations engendered controversy between the United States and European allies, as various European countries had traditionally significant trade with China and sought to subvert the controls. Yet Washington continued to see its total embargo as vital to containing the Chinese threat. Thus, f or two decades, commercial relations between the United States and China lay shattered. As Nixon opened to China, however, he began to reverse these policies, rebuilding the legal f rameworks of trade that had been severed since 1950. Nixon relaxed some of Truman’s restrictions by ending the travel ban against visiting the mainland and by mostly abolishing the embargo on United States-China trade, excepting certain strategic items. Though Nixon considered trade a minor economic factor, it could still be of diplomatic signifi ance in cultivating new ties with China. Perhaps trade, even if lacking in major economic importance, could still be of political and diplomatic importance in increasing bilateral connections. A House of Representatives mission to China in mid-1972 endorsed this conclusion. House Majority Leader Hale Boggs and House Minority

Introduction   5

Leader Gerald Ford wrote in their post-trip brief that “though diplomatic ties with China may be a condition precedent to any dramatic increase in the range and volume of goods traded, this is not to say that some significant trade cannot occur before that event. Obviously, trade itself can play an important part in bringing about diplomatic ties.”18 As rapprochement went on, the government became progressively more interested in bilateral trade, as well as in circumventing the grave challenges to a Sino-American economic relationship. As it became clear that traditional methods of stimulating bilateral trade—treaties, f oreign investment, economic liberalization—were unavailable in the atypical Sino-US relationship, the US government turned to nontraditional proposals. One such idea was a nominally private yet governmentally endorsed commercial trading organization. To this end, the US Departments of State and Commerce, with the direct approval of Nixon and Kissinger, began to build a private NGO, the National Council. They intended the group to focus on promoting United States-China trade and on spreading basic information about the Chinese economy. By May 1973, the executive branch had handed off its creation to the private sector, nominating Westinghouse Electric’s chairman, Donald Burnham, as the first chairman of the National Council. In a relatively rapid ascent, the Council grew to include more than two hundred major American corporations within the year. The Council, however, embraced important roles outside bilateral trade advocacy. By design, for a short period in the 1970s it also acted as a diplomatic go-between group for Washington and Beijing. The US government used the Council, under the veil of its private, nongovernmental status, to promote officia American diplomatic positions to the Chinese. At the time, the Chinese were intensely dissatisfied over Washington’s continued recognition of Chiang Kai-shek’s Nationalist government in Taiwan, and occasionally refused to meet with American diplomats. Yet the Council, as an ostensibly nonpartisan organization, could take up backchannel negotiations where formal talks had broken off. Such informal diplomacy was especially useful in the era af ter Nixon’s opening in 1972 but before the formal resumption of Sino-American diplomatic relations in January 1979. In practice, the Council proved effective in such diplomacy, as Kissinger himself recognized in an enthusiastic letter to its board of directors in 1973. At a time when the United States and China had shown f riendly overtures but had not yet reestablished their formal

6  F O R G O T T E N V A N G U A R D

ties, the Council’s “alternative forms of representation” helped mitigate the difficulties of ormal diplomacy.19 The Council’s role in f acilitating early bilateral trade transactions must also be recognized. Indeed, its go-between functions applied with equal utility in rekindling Sino-US economic exchanges, due in part to the complexities of trading with Mao’s China. As China was then a state trading country, Beijing centrally directed all import and export quotas through a governmental trading bureaucracy. Until 1978, China’s f oreign trade was directly transacted by these centralized, state-run foreign trade corporations (FTCs).20 Buying and selling with the FTCs was a tedious and exclusive process, creating the need for the Council’s sophisticated middleman operations. By directly coordinating the early contacts of American businesses and China’s FTCs, the Council facilitated some of the first business t ansactions after Nixon’s 1972 opening. The Council’s litany of other functions cemented its role in early bilateral trading. It staffed an offic at the Canton Trade Fair in Guangzhou (then China’s major outlet for foreign trade), providing needed services to American traders in China. It published the industry-standard magazine on the Chinese economy, the U.S. China Business Review, which was well received in American business circles and sought by Chinese diplomats f or its accuracy and comprehensiveness. The Council held conf erences and established an academic advisory board that spread “basic information” about the Chinese economy at a time when such information was at a premium.21 While China’s trade remained enigmatic—due not only to Mao’s policies, but also because of the two-decade cut-off in cultural and economic contacts—the Council provided essential insights into Sino-­ American trade. Though still small in comparison with the absolute size of America’s foreign trade, United States-China trade had grown considerably by 1978. While in 1970 the United States and China had exchanged $0 of goods, and many considered large-scale trading with China to be fanciful, by 1978 total trade grossed more than $1 billion (table I.1). These gains were, in no small part, attributable to the National Council’s efforts. They also demarcate the origins of the modern, globalized relationship between the American and Chinese economies. Citing these early trade figu es is apparently uncommon outside specialized literature and statistical handbooks. Indeed, early rapprochement trade seems to have garnered little interest in the broader context of

Introduction   7

Table I.1. China’s Trade with the United States, 1970–1980 (millions of dollars)

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

Imports Exports

0 0

Total

0

4.9 60.2 759 888 334 149 188 906 1,896 4,131 0.1 32.3 66 115 159 200 203 324 594 1,056 5

92.5 825 1,003 493 349 391 1,230 2,490 5,187

Sources: Graph by author. 1970–1972 data from John L. Scherer, China Facts & Figures Annual, vol. 1 (Gulf Breeze, FL: Academic International, 1978), 166; 1973–1979 data f rom idem, China Facts & Figures Annual, vol. 4 (Gulf Breeze, FL: Academic International, 1981), 216; 1980 data f rom idem, China Facts & Figures Annual, vol. 5 (Gulf Breeze, FL: Academic International, 1982), 179.

United States-China relations, as if it were merely a disjointed prelude to the relationship’s full stride of the 1990s and 2000s. In the following section, I examine reasons why historians have overlooked this period’s economic ramifi ations. T H E H I STOR I OG R A P H Y OF U N I TED STAT ES- CH INA T R AD E R E L AT I ONS

The historiography of United States-China trade relations in the 1970s has focused on two watershed events: Nixon’s opening in 1972 and Deng Xiaoping’s assumption of power in 1978. Nixon’s opening signaled the initial possibility of bilateral trade. Deng, then, by embracing gaigekaifang (reform and opening up) in 1978, fulfi led the initial economic promise of Nixon’s overture.22 By dismantling Mao’s autarkic and xenophobic prohibitions against foreign direct investment (FDI) and foreign technology, and by rationalizing China’s foreign trade regime and creating the special economic zones (SEZs), Deng set China on a path to economic ­revolution. Deng’s reforms obviously played a key role in preparing China for a major expansion of its export-oriented production. Chapter 5, in fact, is devoted substantially to examining how a number of political agreements

8  F O R G O T T E N V A N G U A R D

between Deng and the United States in 1978, 1979, and 1980 began to resolve the contradictions impeding bilateral trade. The major historiographical issue is not the recognition of Deng as a watershed, which is well established. Rather, Deng’s centrality often crowds out a more extended examination of trade relations in the 1973–1978 period and the progress made therein. This is the case because many authors assume that United StatesChina trade relations only gained a meaningful status af ter 1978, when liberalization began.23 This position is sensible f rom the standpoint of economic statistics. As mentioned, though the gains of 1973–1978 were respectable in the context of immediate history, they had a negligible net economic impact when compared to America’s overall volume of foreign trade. From the historian’s perspective, however, the 1973–1978 period ­remains ripe for examination, particularly in its potential insights about the later course of United States-China trade and political relations. T H E H I S TO R I OG R AP H Y OF T H E N AT IO NA L CO UNCIL

Scholarly treatment of the National Council has, thus far, unfolded in two basic waves. The fi st, from the 1980s to the 1990s, included retrospectives by journalists and diplomats who claimed some direct connection to China’s opening, coupled with a few political science analyses. The retrospectives were generally superficial in their treatment of the Council. James Mann, in his 1997 book Beijing Jeep: A Case Study of Western Business in China, included a handful of references to the Council, though he did not expound the group’s f unctions.24 Randall E. Stross’s Bulls in the China Shop: And Other Sino-American Business Encounters, despite addressing themes similar to those of this book’s first chapter, also covered the Council only sparsely.25 The same was true of the memoirs of John H. Holdridge and George H. W. Bush, which both mentioned the Council only in passing.26 The early political science monographs were divided about the Council’s role in normalization. In 1983, for example, Robert G. Sutter wrote that “with the notable exception of the National Council for U.S.-China Trade, a private, nonprofit organization formed in 1973 to promote U.S.PRC economic relations, U.S. business interests have not played a prominent role in trying to change U.S.-China policy.”27 Jaw-ling Joanne Chang, in her work United States-China Normalization: An Evaluation of Foreign

Introduction   9

Policy Decision Making, took a more dismissive stance. Chang argued for the f ederal government’s lack of concern about the Council’s interests, concluding that such “interest groups rarely played a decisive role in foreign policy.”28 Several issues confounded the development of a Council historiog­ raphy. The first as mentioned, was Deng’s modernization narrative overshadowing discussions of pre-1978 trade. Deng’s ascendancy provides a useful (if oversimplified) signpost for economic analysis. For examinations unconcerned with the historical issues of 1973–1978, the current periodization remains a useful heuristic. Deng transformed a trading relationship of primarily political, diplomatic, and historical signifi ance into a more thoroughly economic relationship. In light of the Council’s activities, however, I contend that historians should pay greater attention to the continuities between the Council’s work and later developments, relaxing the assumption of 1978 as a historical rupture. The second confounding issue was that of sourcing. Many documents relevant to the Council have only recently been declassified A signifi ant number of the sources in chapter 2, which traces the conceptual development of the Council in the executive branch, were only released in the early 2000s. While authors like Chang were quick to dismiss the Council as irrelevant from the government’s perspective, her position was understandable given that she was writing in 1986 and did not have access to the pertinent documentation. Indeed, as new sources have shown, the US Departments of State and Commerce viewed the Council as a key form of “alternative . . . representation” in the pre-normalization era, complementing difficult ormal diplomacy.29 Finally, previous historians prioritized the examination of geopolitics over trade relations, without necessarily highlighting the linkages between the two fields This trend was apparent in the millennial canon of United States-China relations, including Nancy Tucker’s China Confidential: Ameri­can Diplomats and Sino-American Relations, 1945–1996 (2001), Warren Cohen’s America’s Response to China: A History of Sino-American Relations (2000), and Harry Harding’s A Fragile Relationship: The United States and China since 1972 (1992). The aforementioned source constraints aff ected these works as well. Yet the authors also showed a deeper bias ­toward classic diplomatic history, which discounted economic analysis. Tucker’s work provides a vignette representative of the previous historiography of the National Council. In early 1973, shortly bef ore acting-­ Ambassador Arthur K. Watson met with China’s Liaison Offic Chief

10  F O R G O T T E N V A N G U A R D

Huang Chen, Charles (“Chas”) Freeman of the State Department showed Watson a set of detailed proposals explaining the concept of the National Council. Freeman recalled that Watson “glanced at them and tossed them back in my lap,” angrily responding, “This is crap. I’m not going to talk about this penny-ante stuff. What I really want to do today is talk about global issues, sort of a tour d’horizon.”30 Watson’s dismissive preference for global grandeur endured for more than three decades. Yet recently, historical concern about NGOs’ role in the Sino-US normalization has undergone a tentative renaissance, indi­ cating the timeliness of this book. In 2012, Norton Wheeler published The Role of American NGOs in China’s Modernization: Invited Influence. Wheeler brought an unprecedented level of theoretical rigor to the issue, including useful discussions of informal diplomacy, civil society, and cultural imperialism. However, he focused on cultural and educational groups: the Hopkins-Nanjing Center, the National Committee on United StatesChina Relations, and The 1990 Institute. (He also discussed the con­ temporaneous organization devoted to Sino-US scientific exchanges, the Committee on Scholarly Communications with China, or CSC.) His treatment of the Council was minimal. He acknowledged that “prior to the formalization of relations, the non-governmental National Council for United States-China Trade helped lay the groundwork for commercial relations,” and that together, the CSC, the NCUSCR, and the National Council all “functioned as a kind of surrogate State Department” in the pre-recognition period.31 The National Council itself, which remains in operation, has provided more directly germane historical analysis. In 1988, the National Council changed its name to the US-China Business Council (USCBC) in the effort to broaden its mandate f rom trade to include such things as investment, financ , and shipping.32 The USCBC still represents more than two hundred prominent American fi ms doing business in China. Two recent articles f rom the China Business Review (formerly titled the U.S. China Business Review) were directly relevant to this book. Eugene Theroux, an international trade lawyer and the Council’s first vice president from 1973 to 1975, wrote the first Entitled “America’s First Trade Mission to the New China,” Theroux’s article summarized the Council’s founding and its historic mission as the first trade delegation to visit Beijing in twenty years, in November 1973.33 Another article f rom the China Business Review, ­entitled “Highlights from the US-China Business Council’s 40 Year

Introduction   11

History,” provided a useful chronology cataloguing the Council’s early ­activities.34 Finally, recent scholarly works have offered more systematic historical examination of the National Council. Min Song’s unpublished 2009 dissertation, “Economic Normalization: Sino-American Trade Relations from 1969 to 1980,” dealt with the Council in its fourth and fi th chapters.35 Min examined the Council’s role in Chinese export promotion and offered a valuable survey of Chinese perspectives on Sino-US trade. A pair of 2017 journal articles has similarly reinforced the Council’s historical relevance. The first by Mao Lin, offers a reconsideration of the roles of trade and sof t power in United States-China relations. I disagree with Mao’s assertion that Americans pursued the Sino-US opening, at least ­initially, from a desire to transform China’s economic model, having found little evidence for this claim. Nevertheless, I am obviously sympathetic to the spirit of his piece—that historians “can no longer dismiss U.S.-PRC trade in the 1970s . . . as insignif i ant and thus unimportant to the reconciliation.”36 The second, by Kazushi Minami, details the National Council’s role in promoting Sino-US oil and oil technology exchanges in the 1970s, a topic addressed in my own chapter 4.37 The historiographical gap on the Council, once wide, shows signs of narrowing. It is time f or a deeper examination of the Council’s history and signifi ance. Aside from reconstructing a forgotten history, this book also reveals the Council’s relevance beyond United States-China trade. ­Indeed, the Council’s historical operations also engage globalization, broader American diplomatic history, and the importance of Taiwan in the Sino-American normalization, particularly as Taiwan relates to trade. Using the Council as a prism through which to view these fields brings a fresh look to each. T H E I M PAC T ON G L OB A L I Z AT I ON H ISTO R IO GR A P H Y

Was modern globalization inevitable, or was it a historically contingent process? Barry K. Gills, a political scientist and noted globalization scholar, has catalogued this basic dichotomy in writings on globalization. On the one hand, the economic determinist approach sees globalization as “historically obvious or inevitable,” determined by “economic logic,” and the “automatic” result “of a technologically determined market oriented law

12  F O R G O T T E N V A N G U A R D

of progress.”38 On the other hand, the historist approach “operationalizes” globalization by “putting ‘people as agents’ back into the center of analysis” and by emphasizing the importance of “conscious human decisions” in producing globalization.39 This is a divisive topic in economic and political theory, with various intellectual schools supporting the notion of globalization’s inevitability and others denying it. Karl Marx and Friedrich Engels, building on G. W. F. Hegel’s dialectical view of history, initially endorsed the notion that globalization was inevitable. Given the “law of the tendency of the rate of profit to fall,” Marx asserted that capitalism would inevitably tend to globalize in search of new markets and resources.40 In The Communist Manifesto, Marx and Engels wrote that the bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. . . . In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations.41 Given this seemingly prescient analysis, some commentators have called The Communist Manifesto “more relevant than ever,” spawning an entire “Marx-on-globalization” genre.42 Yet this reassessment of Marx-on-­ globalization has also created a derivative theoretical debate on the extent to which Marx actually believed in globalization’s inevitability. While he apparently thought it inevitable in his early writings, as he matured he ­became skeptical about the possibility of globalization in, ironically, China. (He believed it would take a protracted struggle to subsume the “Asiatic mode of production” to industrial capitalism.)43 The notion of globalization’s inevitability has also f ound support among non-Marxists. Modern-day neoliberals, who endorse a pro-trade, liberal capitalist international order predicated on deregulation, privatization, and fis al austerity, have also come to see globalization as an inevitable process. The New York Times columnist Thomas Friedman, an early advocate of the term “neoliberal,” has done much to popularize the notion of globalization’s—or “flattenin ’s”—inevitability.44 For Friedman, pre­ cipitous decreases in the price of transportation and the growing sophistication of technology have made global economic interdependence a fait

Introduction   13

accompli. Francis Fukuyama, author of the controversial book The End of History and the Last Man, characterized this as the “Wall Street Journal school of deterministic materialism” that “sees man as essentially a rational, profit-maximizing individual.”45 Despite Fukuyama’s derision of gross determinism, he too endorsed the Hegelian notion that there was “some larger process at work,” that is, broader trends that positioned Western liberalism and f ree enterprise as the “final evolution” of human society’s dialectical ascent.46 In sharp contrast to such metanarratives, the historist perspective emphasizes the importance of “conscious human decisions,” as Gill writes, and sees globalization as a contingent process.47 I explicitly assume and endorse the historist view in my examination of the Council. Surveying the Council’s history and operations highlights the importance of contingency and discrete decisions in the development of United States-China trade relations. Against conceptions of ineluctable trends, I use the National Council to historicize the process of resuming trade relations with China and to demonstrate the profound obstacles to the resumption of bilateral trade that the Council labored to overcome. Ultimately, the notion that Sino-American trade inevitably expanded into a major relationship is a teleological and ahistorical view. While today the economic intermingling of the Chinese and American economies may seem obvious or natural, this is a recent historical development. As ­Kissinger’s and Boggs’s earlier comments demonstrate, in 1973 the idea of a major trading relationship with China seemed fantastical. Not only were there politico-diplomatic obstacles to trade (Truman’s embargo, high ­tariffs, the lack of most-favored-nation [MFN] status, the lack of bilateral trade agreements, and the outstanding foreign claims issue), but there were also deep and systemic cultural obstacles that the National Council sought to mitigate. T H E I M PAC T ON AM E R I C A N D I P L OM AT IC H ISTO R IO GR A P H Y

The purported manipulation of American f oreign policy by MNCs— some of which is well documented—of ten produces a cynical scholarly evaluation of the interplay of wealth and state power in foreign relations. Bruce Mazlish, professor of history at MIT, encapsulated such suspicion when he wrote,

14  F O R G O T T E N V A N G U A R D

In addition to economic power (including lobbying in its own country), Exxon Mobile [sic], as an example, exercises extraordinary political inf luence. . . . How great the inf luence is, is unknown, but it is probably as great or greater than the ability of the U.S. Congress in setting policy. Diplomatic history usually shortchanges this topic. . . . Exxon Mobile [sic] plays an outsize[d] role in international affairs with little accountability (shareholders are pushed aside). It clearly is not only wealthier than 70 or so nation-states, but also more ­powerful. . . . I suspect that there is a department in the oil company devoted to foreign affairs. If not, or in addition, resort may be had to advisory organizations such as Kissinger Associates. In any case, one can be sure that Exxon Mobile [sic] plays a strong role in shaping foreign policy as well as pursuing ever-more petroleum resources. Exxon Mobile [sic] is a striking example of the political power exercised by the MNCs, even over big and powerful countries.48 Mazlish, writing in 2012, provides a good example of such contemporary skepticism. His comments may be particularly relevant given the National Council’s deep connections to Exxon: not only was Exxon a member fi m, but the Council’s second vice president, Melvin Searls, came to the Council after serving as an executive with Exxon’s Hong Kong branch. While Mazlish singles out Exxon Mobil as a manipulator of short-term state policy, his concerns are attached to the broader New Left critique, formulated at midcentury by William Appleman Williams. The New Left read the history of American foreign relations as business and diplomacy working hand in hand to promote long-term American commercial ­imperialism. Williams, a prolific revisionist, reflected a deep suspicion about the influence of banks and corporations in American foreign policy. He laid out these views comprehensively in his 1959 magnum opus The Tragedy of American Diplomacy. For Williams, the tragedy of American diplomacy was that while America had at its core the promise of be­neficent ideals (democracy and self -determination), in practice Americans presumed that “other people really cannot solve their problems and improve their lives unless they go about it in the same way as the United States.”49 For Williams, this fla ed presumption had oriented American foreign policy away f rom ideals and toward “forcing” American values, with “economic and political” and military pressure, “upon the other society,” in order

Introduction   15

to “‘internationaliz[e] business through the expansion of the American ­corporation.”50 Williams viewed American diplomacy as focused on “free-trade imperialism,” in which the United States “relied upon its industrial and general economic power to structure and control weaker or less developed nations.”51 A key corollary to free-trade imperialism was the major influence Williams felt that banks and corporations played in dictating American foreign policy. Williams, in particular, attacked the “legend of isolationism” in the interwar period by examining American conduct in Latin America. He argued that the desire for “corporate expansion” and the “effort to expand American exports” had suffused American foreign policy, orienting it toward “developing a political system in Latin America . . . loyal to the basic interests of the United States.”52 Business and diplomacy thus worked synergistically to create the economic subservience and political hegemony that benefited both field Williams’s critiques do find validation in specific episodes in American diplomatic history, and even within the Nixon administration. Nixon’s long-running attempt to destabilize Salvador Allende in Chile over concerns of Allende’s hostility to US business is a prominent example. The Central Intelligence Agency (CIA)-sponsored and United Fruit Company (UFC)-endorsed 1954 overthrow of the Jacobo Árbenz regime in Guatemala is another well-known example, though from the Eisenhower years.53 Given these apparent examples of perfidy and violence in the state-­ corporate nexus, it is only natural to wonder if the Council was a similarly cabalistic endeavor, exerting its corporate influence to reform China along pro-commercial lines. Yet the Williams critique is broadly inapplicable to the National Council for two basic reasons. First, the National Council was not an example of private industry co-opting American foreign policy for its own interests, but actually an example of the reverse: the government co-opting private industry to facilitate international diplomacy. The National Council did not set the American diplomatic agenda in relation to China, nor did economic interests dictate the course of rapprochement. In certain cases, decisions such as a break in relations with Taiwan actually seemed to go against American economic interests. Rather, the Council, by using trade as an ostensibly nonpolitical method to maintain backchannel access to Chinese leaders, was fundamentally serving the public interest of the American diplomatic establishment.

16  F O R G O T T E N V A N G U A R D

The notion of a loose public-private coalition promoting American diplomatic interests (rather than Williams’s more cynical take) is, by itself, not particularly novel. For example, the United States had previously employed the help of American banks and corporations in the effort to stabilize Europe after World War I. Owen Young, the founder of RCA, negotiated a revised reparations plan with the German government, in which J. P. Morgan & Co. would provide financing for Germany’s reparations payments.54 The Council distinguishes itself, however, by the explicit nature of its diplomatic mission, as pronounced by its designers in the US government. It was more than a case of public and private interests happening to coincide; indeed, it was the government consciously deploying private interests under the banner of a discrete NGO to facilitate diplomacy with the Chinese. The second feature that negates Williams’s assertion of commercial imperialism is that the political situation in China obviated the American government’s ability to mold the China market to American interests. This reality had certainly not always been the case in United States-China relations. For much of China’s “Century of Humiliation” (c. 1839–1949), the United States and Europe had been so much more powerf ul than China (and China so internally disorganized) that the Western powers could readily impose imperialism on the Chinese to promote Western business interests. American commercial imperialism surf aced in the Treaty of Wangxia (1844), guaranteeing the United States favorable trade provisions; the Treaty of Tientsin (1860), forcing open China’s ports to the United States; and John Hay’s infamous Open Door Note of 1899, recognizing Euro-American spheres of influence in China. Similarly telling, when the US Marines deployed to China during the Chinese Civil War and the Second Sino-Japanese War, one of their central mandates was the protection of American business assets in China. Af ter the Chinese Revolution in 1949, however, China regained a considerable amount of organization and power, making it effectively impossible for American foreign policy to manipulate China’s internal business environment. Mao unif ied the country and radically increased its military power, which, af ter 1964, included atomic weapons. The AntiRightist Campaign in 1957 and the later Cultural Revolution made the Chinese extremely suspicious of “American imperialism,” and of America generally. Mao’s politics created not only intense xenophobia, but also paranoia of displaying any perceived collusion with American influenc .

Introduction   17

Accusations of imperialist or revisionist tendencies could land hapless Chinese in hard labor camps, or worse. In one instance, a university professor’s father was put under house arrest because a taxi driver “accused him ­ eijing of preferring American can openers.”55 In its economic policies, B heavily regulated China’s foreign trade to comport with its commandeconomic schemes. The Ministry of Foreign Trade ensured that trade was highly centralized and conducted strictly on the basis of “equality and mutual benefit ” thus preventing the renewal of unequal trading arrangements that exploited China. Unlike in relatively weak Latin American countries, as Williams tended to cite, American foreign policy could not tear down China’s trade regime and reformulate it to cater to American interests. Rather, f rom 1973 to 1978, it was forced to work within the Chinese system and to mitigate the constraints that China’s regime created. As Wheeler argued in The Role of American NGOs in China’s Modernization, it was fundamentally through such “invited influenc ”—the Chinese desire to renew cultural contacts, rather than through American imposition—that Americans could begin to rebuild United States-China ties. R E A S S E SSI N G T H E I M P ORTAN C E O F TA IWA N

A final revision of the historiography concerns the impact of Taiwan, and the domestic Taiwan lobby in particular, on the development of bilateral trade. Taiwan, as mentioned, became a crucial issue hampering the normalization of relations between the United States and China. Following the Chinese Revolution in 1949, the United States refused to recognize the legitimacy of the communist state. Rather, it recognized Taiwan’s ­Nationalist government under Chiang as the legitimate government of China. The United States had successfully prevented the admission of China to the United Nations for two decades, relenting only in 1971 on the eve of Nixon’s opening to China. Despite the pivot in UN policy, the mainland remained in diplomatic limbo in Washington. The United States continued to recognize Taiwan and did not recognize the communist regime in Beijing until 1979. Concomitantly in the United States, Taiwan retained an influential pocket of supporters known historically as the China lobby (or, for clarity, the Taiwan lobby). As discussed in chapter 4, the Taiwan lobby consisted

18  F O R G O T T E N V A N G U A R D

mainly of Republican politicians and anticommunist businessmen who strongly supported Nationalist Taiwan, opposed the mainland’s admission to the United Nations, opposed the normalization of relations with China, and supported the 1954 Mutual Defense Treaty binding the United States to protect Taiwan’s national security. The Taiwan lobby’s heyday, as the historiography accurately describes, was during the Red Scare/McCarthy era of the 1950s, when emotions ran high over the supposed loss of China. This work revises the Taiwan historiography in two respects. First, though historians have rightly argued that the Taiwan lobby had declined in influence by the time of Nixon’s opening in 1972, they have understated Taiwan’s continuing importance in delaying the normalization of relations until 1979. While the Taiwan lobby’s influence had obviously waned since the heyday of McCarthyism, this was not always apparent to American policymakers. Nixon, Ford, and Jimmy Carter, in their private records (including in the Nixon tapes), all expressed ongoing concern with the power of the Taiwan lobby to promote a domestic backlash against the diplomatic recognition of China. Further, the Taiwanese themselves continued to prosecute lobbying efforts in the United States even late in the Sino-US rapprochement. A prime example was Taiwan’s creation of the USA-ROC [Republic of China] Economic Council in 1976—a direct Taiwanese reply to the National Council. Meant to secure the US-Taiwanese business ties that were, in Taipei’s view, imperiled, the new group angered the Chinese and threatened to impede US trade ties with the mainland. In light of these factors, I reevaluate the problems Taiwan posed for the Council’s mission to expand trade. More importantly, the historiography on Taiwan has neglected the interplay of politics and economics. It has assumed that while the Taiwan issue had political impacts, Taiwan had “not much” of an impact on trade after Nixon’s opening.56 In reality, by blocking normalization, the Taiwan problem blocked corollary trade measures that were contingent on diplomatic recognition: an MFN treaty, bilateral investment treaties enabling FDI, intellectual property protections, export-import credits, and the resolution of the foreign claims issue.57 Additionally, the advent of the USAROC Economic Council created numerous complications f or the National Council’s informal diplomacy. This book thus synthesizes political and economic historiographies, demonstrating not only Taiwan’s political impacts, but also its corollary stunting effect on Sino-American trade.

Introduction   19

A ROA D M AP

I examine the Council in the course of fi e chapters. Chapter 1 catalogues the litany of challenges to United States-China trade in the 1970s. Though Nixon and Kissinger saw trade as a possible avenue of exchange, they did not prioritize it for many reasons. China’s economic weaknesses seemed to preclude a major trading relationship. Despite China’s population of nearly one billion, its foreign trade sector was so weak that it accounted for only half a percent of all global foreign trade in 1976.58 Americans misunderstood the Chinese economy f ollowing the cut-of f of all contacts f rom 1951 to 1971. Cultural ignorance affected the Chinese as well, as both sides lacked basic insights into how each other’s economies functioned. From the vantage point of the 1970s, Sino-US globalization seemed not only not inevitable, but also distinctly unlikely. Chapter 2 examines the Council’s founding, its design as an institution of backchannel diplomacy, and its mission to Beijing in November 1973. I argue that the Council’s role in augmenting officia diplomacy in China was not merely incidental, but that the executive branch designed and deployed the Council as a means of “alternative . . . representation”— thus complementing traditional state-to-state diplomacy—in the period before diplomatic relations.59 Chapter 3 presents a comparative analysis of the Nixon administration’s economic strategy in China and in the Soviet Union. Both nations were the subjects of ongoing diplomatic efforts (rapprochement and détente, respectively) that also incorporated inf ormal, nongovernmental trade diplomacy. Their status as the world’s two most important non­ market economies, the Nixon administration’s emphasis on triangular ­diplomacy, and Nixon’s view of China and the Soviets as on parallel tracks in the American response to East-West trade all make the two cases ripe for comparison. Chapter 4 examines the Council’s activities from 1974 to 1977. Relying on the Ford Library’s archives, the chapter reconstructs the Council’s role in facilitating early bilateral trade. Issues include the U.S. China Business Review, the academic advisory board, reciprocal trade missions of the China Council for the Promotion of International Trade (CCPIT), and delegations of China’s FTCs. By directly coordinating its member fi ms with China’s buyers and sellers in the FTCs, the Council enabled some of

20  F O R G O T T E N V A N G U A R D

the first post-embargo business transactions. The Council, fina ly, mitigated the lack of a legal trade framework by privately negotiating agreements with the Chinese, including a notable measure protecting American intellectual property. The chapter then turns to the Council’s limits, demonstrating the contingency and fragility of bilateral trade. It analyzes three factors that destabilized bilateral trade: the resurgence of the Taiwan lobby (especially in the 1976 election), the Tangshan earthquake of 1976, and the deaths of Mao and Zhou Enlai. Chapter 5 examines the Council in the midst of key political watersheds at the close of the 1970s. The normalization of relations, achieved in 1979, coupled with Deng’s ascendancy, began to unravel the toughest ­obstacles to bilateral trade. In the immediate term, normalization boosted interest in the Council to unprecedented levels, causing its corporate membership to triple in a few months. Yet normalization also entailed basic changes to the roles and signifi ance of the Council, including diminished importance in the long-term future of bilateral trade. The book concludes with an examination of the Council’s post-1980 history—its successes, failures, and ultimate importance in the history of Sino-US relations—and a historiographical afterword on the Council and current NGO scholarship. A N OT E ON S OU R C ES

A number of primary sources have proven indispensable. First was the United States-China Business Council Records, two substantial donations of the Council’s original papers to the Ford Library. These primary sources formed the backbone of my work, spanning original newspaper clippings on trade from the 1970s, to the first editions of the U.S. China Business Review, to many pages of Christopher H. Phillips’s handwritten notes. I am indebted to the Ford Library’s archivists, who reviewed and released fi e boxes of previously sealed materials relating to the Council and the debate over MFN status. A glance at this book’s notes will confi m the centrality of this collection. I should note that in many instances these sources include only the Wade-Giles Romanization of various Chinese names, which was customary until 1980. Where the figu e was sufficien y eminent to cross-reference (for example, Han Xu), or in the instances in which the Chinese characters survived, I have converted the Chinese names to

Introduction   21

their more modern pinyin spellings. Taiwanese names remain in WadeGiles, however, as was the general custom until recent years. I also drew from a number of other primary source collections. The US Department of State’s Foreign Relations of the United States series helped contextualize the broader political landscape in which bilateral trade developed. Hale Boggs and Gerald Ford’s “Impressions of the New China,” a report made to the House of Representatives after their 1972 mission to China, was particularly useful for chapter 2. Where the primary sources were unclear, two excellent secondary sources mapped out the broader timeline: Ezra Vogel’s Deng Xiaoping and the Transformation of China and Daniel Breck Walker’s unpublished dissertation, “‘Yesterday’s Answers’ or ‘Tomorrow’s Solutions’?: The Cold War Diplomacy of Cyrus Vance.” Finally, I relied extensively on four interviews. The first was a 1993 interview of the late Christopher H. Phillips, the Council’s first president, by the noted oral historian Charles Stuart Kennedy. Phillips’s insider perspective united important but diffuse pieces of the story. The three other interviews I conducted in the fall of 2015. These were with the economist Dwight Perkins; the Council’s first vice president, Eugene Theroux; and the Council’s executive director, Nicholas Ludlow, who also spearheaded the development of the U.S. China Business Review. I am especially indebted to Ludlow, who mailed me a dossier of his notes and personal recommendations f rom his time at the Council, including correspondence with George H. W. Bush, who served as Peking liaison chief f rom 1974 to 1975. These rich collections have helped fi l gaps in understanding regarding early Sino-US diplomatic and economic interaction. A glimpse into the past may also illuminate the potential future(s) of Sino-US relations— an evolution still unfolding in the living present. Indeed, as Mao was a vanguard for the discarded ideas of Marx, the Council was, in many ways, a vanguard for the presently globalized Sino-American relationship. Historicizing the Council’s early bilateral trade and reappraising its forgotten contribution will alter and refine our conceptions of this world-historic development.

CHAPTER 1

Disorder under Heaven The Deep Uncertainty of Sino-American Trade

I am confident that our side can keep multiplying the complexities as long as your side can. It is something we are very good at. —Henry Kissinger to Deng Xiaoping, Beijing, November 26, 19741 We’re revolutionaries. There is nothing you could sell us that we [would] want. —Unnamed Chinese official to Rob t Hormats, 19722

In economic theory, there is a difference between “risk” and “uncertainty.”3 Risk implies that while the outcome is unknown, there is a known probability calculus that can be used to predict the results. Uncertainty, in contrast, implies that not only is the outcome unknown, but that there is also no known method to approximate the chances of success or failure. Trading with China in the early 1970s was, in many ways, illustrative of such uncertainty. China’s political instability under Mao Zedong’s Cultural Revolution, Mao’s previous expropriation of American business assets, and the lack of normalized relations meant that American businesses would be forced to go it alone in China. Moreover, China’s economy and 22

Disorder under Heaven   23

culture remained an alien commodity in the United States, as was Ameri­ can culture in China. What was China like? What could it produce? What did it demand? From the vantage point of the early 1970s, entering the China market was the commercial equivalent of taking a shot in the dark. The barriers to trade discussed in this chapter underline the highly contingent nature of America’s early economic relationship with Mao’s China—likely intriguing to contemporary readers accustomed to China’s economic power. Yet the historical record suggests no deeper force—no invisible hand—led to the teleological end of a trading relationship. Rather, it was a course propelled by discrete political decision-making, and occasionally, as with the Tangshan earthquake, a course repelled by uncontrollable events. Indeed, as trade seemed near a breakthrough in 1975, the year 1976 ushered in grave economic, political, and environmental instabilities that caused trade to plummet. Simultaneously, these pervasive contingencies demonstrated the need for an organization like the Council, which could navigate and mitigate such issues in trade and diplomacy. T R A D E : NOT P R I OR I T I Z E D I N N I X ON’S R A P P RO CH EMENT

Richard Nixon and Henry Kissinger did not conceive of rapprochement as an economic endeavor. Their aim in China was, rather, a political alliance against the Soviet Union. Bilateral trade was so small in 1973 that it was a laughing matter for Mao and Kissinger. Mao reminded Kissinger: Mao: The trade between our two countries at present is very pitiful. It is gradually increasing. You know China is a very poor country. We don’t have much. What we have in excess is women. (Laughter.) Kissinger: There are no quotas for those or tariffs. . . . Our interest in trade with China is not commercial. It is to establish a relationship that is necessary for the political relations we both have.4 As their exchange reveals, a major trading relationship was regarded to be not only unlikely, but so improbable as to be a joking matter. Grasping China’s economic troubles, Nixon and Kissinger instead viewed the opening to China as a hardheaded act of realism with dual strategic aims. They believed first that by courting China, they could induce

24  F O R G O T T E N V A N G U A R D

Beijing to decrease its aid to North Vietnam, facilitating an American withdrawal from the Vietnam War.5 Second, they thought that in the long term they could contain the Soviet Union and reduce its capabilities by drawing China into a geopolitical partnership.6 On the eve of Nixon’s 1972 visit to Beijing, Kissinger explained, “Right now, we need the Chinese to correct the Russians and to discipline the Russians.”7 By engaging in this “triangular diplomacy,” or “linkage,” Nixon and Kissinger thus hoped to retrench American power against the backdrop of the Vietnam quagmire. This classic strategic interpretation has recently become a matter of historiographical contention. A new view asserts that US policymakers saw China as a “frustrated modernizer” embittered over its failure “to become a first rate industrial power and establish modern economic sectors under communism.”8 Thus, the United States might reverse its embargo and use its economic power “to persuade China to abandon its communist model” and “move closer to . . . the capitalist example.”9 Economic modernization might similarly induce Beijing to “turn toward the free world rather than the Soviet Union.”10 While this view eventually gained some traction, that Richard Nixon was steered by it is dubious. In arguing for the “f rustrated modernizer” thesis, Mao Lin casts Nixon as an early doubter of the wisdom of Truman’s embargo. He writes, “As early as in 1953, Nixon pointed out that the ‘policy of containment and economic [blockade] of China . . . has very little chance’ of success.”11 Yet placing the quotation into its proper context in Nixon’s 1953 brief reveals a different sentiment: Nixon: We could follow a policy of containment and economic blockade, basing the policy on the hope of overthrowing the government f rom within instead of f rom without. In my opinion, this has very little chance.12 Then-vice president Nixon was referring to the possibility of overthrowing the Chinese state sheerly through economic coercion—an issue that differed f rom the overall logic of the embargo. While in 1949 and early 1950, Truman, George Kennan, Dean Acheson, and British strategists had hoped to draw China f rom the Soviets through economic concessions, after the Korean War, support for a Chinese embargo ran high.13 The outbreak of hostilities reinforced the American belief that it was illegitimate

Disorder under Heaven   25

to economically aid known enemies. Yet such belief s were not widely shared by those European allies uninvolved in the Korean War and desiring Chinese trade.14 When Nixon commented in the same report that “we must recognize that trade [with China] is inevitable,” this was, as he spelled out, in reference to “the pressures of our allies and the neutral nations” that disagreed with the American-led Coordinating Committee (COCOM) regulations.15 That is to say, as Nixon recognized that allies still desired Chinese trade contacts, he advised that the United States should not treat discovery of such contacts so harshly as to alienate allies and neutrals. This was particularly the case with Great Britain, at once Washington’s strongest ally and also a historic trader with China through Hong Kong. Nixon’s insight was thus distinct from the claim that by 1953 he precociously considered the economic controls futile. Fourteen years later, Nixon again laid out his views on United StatesAsia relations. His seminal Foreign Affairs article, “Asia After Viet Nam,” reinforced his skepticism about an economic opening to China.16 Writing around October 1967, Nixon repeatedly referred to the “Chinese threat” to stability in Asia.17 Most Asian nations, he argued, “recognize[d] a common danger, and s[aw] its source as Peking,” perceived “the common ­danger from Communist China,” and considered the “threat of ‘Red China’ . . . clear, present, and repeatedly and insistently expressed.”18 Nixon famously cautioned that “we simply cannot afford to leave China forever outside the family nations,” but also warned against those who urged a rapid opening.19 Constructive diplomacy did “not mean, as many would simplistically have it, rushing to grant recognition to Peking, to admit it to the United Nations, and to ply it with offers of trade.”20 Economic concessions to China would simply “confi m its rulers in their present course,” while prudence dictated “a policy . . . of no reward.”21 Indeed, Chinese modernization was undesirable so long as China’s geopolitical loyalties remained uncertain. Benefits derived from an American-led modernization could just as easily be turned against the United States. Yet Nixon’s strategic conception of China—more wistful than clairvoyant in its 1967 formulation, which entertained only long-term hopes for change—rapidly evolved in light of geopolitics. After he assumed the presidency, impetus f or Sino-American triangular diplomacy began to spring from the increasingly explosive Sino-Soviet split. While Moscow and Beijing had traded ideological criticisms and competed for Hanoi’s loyalty throughout the 1960s, tensions boiled over in March 1969 when

26  F O R G O T T E N V A N G U A R D

the Chinese and Soviets initiated a nine-month border war. The Chinese interpreted their worsening relations with Moscow as a reason to seek American contacts. Following the Chinese Communist Party’s (CCP) 9th Party Congress in April 1969, Mao convened four Chinese marshals— Chen Yi, Ye Jianying, Xu Xiangqian, and Nie Rongzhen—to produce a strategic assessment of the geopolitical situation.22 The marshals concluded, in September 1969, that while the Soviets were indeed planning to launch a large-scale attack on China, Soviet “apprehensions about possible Sino-American unity ma[d]e them uneasy to raise a large-scale military assault on our country.”23 Leaning to the American side, then, could provide Beijing with an answer to its fears about the Soviet encirclement of China. Nixon similarly considered the potential that China might be “smashed” as dangerous to world stability, as the Chinese served as a counterweight to Soviet hegemony.24 The border clash indicated that the Chinese were likely now more anti-Soviet than anti-American, and thus, that Nixon and Kissinger might co-opt Beijing in their “game with the Soviets.”25 While the CIA cautioned the administration that there was “almost no chance of signifi ant compromise on the ideological questions,” it also reinforced that China’s “hope to unsettle the Soviets” had “moved [Beijing] f rom its previous intransigence to a more flexible approach designed to exploit the Sino-US relationship.”26 The Sino-Soviet border war thus “undoubtedly [acted as] the principal catalyst in prompting a more urgent ­approach to rapprochement” with Beijing—converting Nixon’s “policy . . . of no reward” to more immediate-term trade concessions following his 1969 reevaluation of the commercial controls.27 From this potential Sino-American opening, Nixon and Kissinger theorized additional strategic benefits They saw China’s military aid as the lynchpin behind North Vietnam’s continued resistance. Since the 1950s, China had underwritten substantial portions of North Vietnam’s war effort and had provided key technical assistance.28 The assumption that diplomacy could soften this aid informed Kissinger’s secret mission to Beijing in July 1971. On April 27, two months before his historic secret trip, Kissinger told Nixon: “I think if we can get this [China] thing working, we’ll end Vietnam this year.”29 Yet Kissinger encountered resistance to this theorem in Beijing. In their July meetings, Zhou Enlai would not and could not make any concessions on Indochina. The pair at least saw eye to eye about their mutual desire to contain the Soviets. When briefing

Disorder under Heaven   27

Nixon about his trip, Kissinger encouragingly reported that “[the Chinese] are deeply worried about the Soviet threat and see us as a balancing force against the USSR.”30 Zhou’s overture suggested that Beijing would entertain further US negotiations, at least on the Soviet issue—in line with the Four Marshals’ earlier recommendation. Before his own visit in February 1972, Nixon sent an officia message to Mao that underlined the importance of “find[ing] a negotiated settlement to the Indo-China war.”31 Yet again, during their negotiations in Beijing, Mao and Zhou showed little interest in selling out North Vietnam. Zhou directly told Nixon and Kissinger, “the Vietnamese are figh ing for their country, and as long as they continue fightin , we must continue to support them.”32 Chinese concessions on Vietnam came only indirectly. Chinese funding to the North declined f rom $200 million in 1972 to $85 million in 1973, but the drop arguably would have occurred anyway in light of pending American troop withdrawals.33 The Chinese also encouraged the North Vietnamese to settle at the ongoing peace talks in Paris. Overall, however, rapprochement could not reverse South Vietnam’s ultimate fall. By 1974, Chinese funding had bounced back to $180 million per year, and by April 1975 the communists had overrun Saigon.34 Regarding the anti-Soviet facet of their mission, Nixon and Kissinger were more successful. The visit reconfi med that both the Americans and the Chinese saw the Soviet Union as the primary threat to their respective interests. The Nixon opening changed the world in the sense that it laid the groundwork for future American efforts to further isolate the Soviets from their former allies in Beijing. It seemed that Nixon’s “enemy of my enemy is my friend” strategy had worked, paving the way for further triangular diplomacy in détente. When it happened to surface, trade remained a tangential issue in these early negotiations. Nixon and Kissinger valued trade possibilities more for their potential political symbolism than for their economic impacts. The New York Times recognized this reality in a 1971 analysis. While “only symbolic trade [was] anticipated” from relaxing controls on business, Nixon instead hoped to “stimulate the business of diplomacy.”35 Indeed, administration official “made it plain that President Nixon’s announcement . . . was designed primarily as a political rather than an economic gesture. Neither the Administration nor American business executives anticipate meaningful commerce with China in the ‘foreseeable future.’”36

28  F O R G O T T E N V A N G U A R D

Rather than economic motivations, Nixon believed that granting trade concessions could show his “willingness” to embrace the Chinese as a geopolitical partner.37 He thus began to relax Truman’s embargo in a calculated manner, using each concession to boost Sino-US diplomacy. In June 1971, for example, while appreciating that trade would remain small in absolute terms, he unfettered a long list of nonstrategic trade items as an amity gesture before Kissinger’s trip in July.38 As Nixon explained in a conversation in April 1971, “the relaxation of trade that we are planning is mostly symbolic.”39 It was, indeed, mostly symbolic in the context of overall levels of foreign trade, but a highly important symbol in the context of geopolitics. Nixon, in conversation with Alexander Haig and Bob Haldeman in May 1971, also opined that “releas[ing] some more items for trade with China” could send a political message to the USSR.40 Nixon understood that the Soviets were closely monitoring American trade concessions to China. Partial liberalizations, signaling warming Sino-US relations, could push the Soviets into greater cooperation on détente. Yet Nixon was also aware that moving too quickly with concessions for China would be “galling” to the Soviets, risking détente altogether.41 The issue was particularly delicate given the ongoing Strategic Arms Limitation Talks (SALT) in Helsinki, which had commenced in November 1969. Nixon considered the agreements a potential capstone of his presidency. The State Department thus proved cautious about the issue, informing him that he must do nothing to “irritate” the Russians, given the overarching push for détente.42 While Nixon ridiculed what he considered the State Department’s ­timidity, his actions on trade nevertheless adhered to its basic advice. Nixon proceeded by unwinding the trade embargo in “small steps”— a three-tiered approach suggested by Kissinger.43 Seeking leverage over the Soviets in Helsinki, he approved a list of nonstrategic trade items f or China.44 This first foray into triangular diplomacy seemed to profit “As Nixon and Kissinger had hoped,” writes Daniel Sargent, “their China opening ‘improved Russian manners’ and invigorated Soviet-American détente with new urgency,” leading to a successful conclusion of SALT in May 1972.45 Nixon triumphantly concluded, “Let me tell you something: without China, they [the Soviets] never would have agreed to the SALT.”46 Securing the Anti-Ballistic Missile Treaty temporarily depressed concerns of Russian irritation, opening a path to greater liberalization of Sino-US trade policy.47 Though America’s trade with China remained small in

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e­ conomic terms, the SALT experience validated its importance as a geopolitical chess piece. In the American estimation, the Chinese shared a similar basic perspective on the signifi ance of trade: while trade might provide economic benef its political concerns outweighed monetary values. In Kissinger’s second visit to Beijing in October 1971, Zhou swept aside discussions of “subsidiary issue[s]” like trade.48 In Zhou’s view, trade distracted f rom more pressing geopolitical concerns. Discussing such a “technical” matter also “serve[d] to make relations look more ‘normal’ than they really” were.49 Zhou, in Kissinger’s words, thus “airily dismissed the subject of trade.”50 Auxiliary talks between Kissinger’s and Zhou’s entourages reinforced the blasé attitude the Chinese projected regarding trade. On October 22, the State Department China hands John H. Holdridge and Alfred Jenkins sat down with Zhou’s aide, Xiong Xianghui, to discuss bilateral exchanges. When Jenkins broached the subject of trade, Xiong reiterated three times that he was “not interested in this question.”51 Not only were the “present conditions . . . not yet right” for trade, but Xiong also boasted that he was thankful for the American embargo, as it had “enabled us to carry out Chairman Mao’s policy of self-reliance even more rapidly.”52 Summing up these views around March 1972, the National Security Council (NSC) stated, the PRC [People’s Republic of China] has made it clear that trade could be expected to grow only slowly and hinted that the rate of growth would be determined politically. . . . The PRC looks on trade as a means of obtaining items essential to its economy and exports only items which it must in order to get the hard currency for vitally needed imports. It also uses trade as a means of encouraging peopleto-people relationships and inf luencing policies of other countries concerning such issues as Taiwan.”53 Nixon’s public visit to China in February 1972 made only marginal gains in forwarding the Sino-American trade agenda. The Shanghai Communiqué, a statement of mutual understanding issued by Nixon and Mao at the end of Nixon’s first visit, tepidly endorsed bilateral trade at the document’s end: “Both sides view bilateral trade as another area f rom which mutual benefit can be derived, and agreed that economic relations based

30  F O R G O T T E N V A N G U A R D

on equality and mutual benefit are in the interest of the peoples of the two countries. They agree to facilitate the progressive development of trade between their two countries.”54 While Chinese and American diplomats would reference the communiqué throughout later negotiations, its trade provisions had no im­ mediate effect. Kissinger, appreciating both Chinese poverty and Chinese diplomatic subtlety, privately expressed his skepticism: “The maximum amount of bilateral trade possible between us, even if we make great efforts, is infinitesimal in terms of our total economy. And the exchanges, while they are important, will not change objective realities.”55 Kissinger later said of the communiqué’s agreements, “We both know that basically they don’t mean anything.”56 Though Kissinger’s comments seem pessimistic given our current knowledge of China’s economic ascent, they were a reasonable stance at the time, given the immense obstacles to bilateral trade. T H E AC U T E W E A K N E SS OF C H I N A ’S ECO NO MY

Globally, the Chinese economy had been in decline since the turn of the twentieth century, in both relative and absolute terms. While in 1860 China had accounted for about 20% of global GDP, by 1950 it produced less than 5% of global GDP.57 As the Western economies had grown dramatically, reducing China’s relative share of global wealth, China itself had also stagnated for decades. From 1913 to 1950 overall, and particularly from 1927 to 1949, when the Chinese Civil War and Japan’s simultaneous invasion wracked the Chinese mainland, China’s economy grew only 1.5% over thirty-seven years.58 After Mao consolidated control of China and ejected the Nationalists, he temporarily reversed some of this profound economic stagnation, at least in nominal terms. From 1952 to 1959, Chinese officia figu es reported that GDP per capita expanded at about 3% per year.59 As many economic historians have shown, there is good reason to doubt these official statistics. The Chinese government’s accounting, in the first instance, relied on inaccurate and inflated price statistics to calculate GDP, which systematically overestimated industrial values.60 As in the Soviet system, prices were not determined by market rates, but rather were set by artificial governmental estimation. Moreover, Soviet injections of capital and

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technical assistance before the Sino-Soviet split helped to mask the systemic weaknesses of Chinese industry.61 Even in officia estimation, however, the Chinese economy suffered devastating setbacks with the advent of Mao’s Great Leap Forward, beginning in 1958. In this f renzied push f or modernization, local cadres came under extreme political pressure to report positive, even if fictitious growth rates in everything from agriculture to steel production. The fantastical yield estimates they provided to Beijing led the central government to requisition local goods, including f ood supplies, at an unsustainable level that caused major local resource deficits 62 By about 1960, the contradictions of the Great Leap reached a critical point. Following Mao’s political break with Moscow in the Sino-Soviet split, the USSR withdrew all investments and technical advisors on extremely short notice, arresting the development of Chinese factories.63 Industrial growth would not recover to its f ormer levels f or at least f i e years.64 Mao’s rapid collectivization experiment had also failed to meaningfully increase the production of such crucial items as steel and grain. Backyard furnaces, in the attempt to create high-quality steel, had smelted thousands of tons of useless pig iron. Furthermore, governmental requisitions of grain left the provinces with little or no surplus harvests.65 The barrage of mismanagement combined with drought in 1958, the Yellow River flood in 1959, and further drought in 1960 to create a serious resource crisis, leading to the Great Chinese Famine in which somewhere between twenty-fi e million and forty million Chinese died.66 The tragedy was compounded not only by the fact that China remained a net grain ­exporter through the famine, but also by Mao’s consistent refusal to accept international food aid.67 Even according to China’s officia numbers available to observers at the time, the Great Leap Forward had devastated China’s economy. From 1960 to 1962, its GDP contracted more than 20%.68 More modern estimates have suggested that “grain output fell 26% and cotton output by 38%” following the Great Leap, making it “a very expensive disaster” on the whole.69 By 1970, China’s economic situation was not much more encouraging. The political chaos of the Cultural Revolution, lasting from 1966 to 1976, gave Americans the impression that China was a risky investment. The Cultural Revolution caused further economic slowdowns in 1967 and 1968. Even by Beijing’s contemporary estimates, the economy contracted at least -5.7% and -4.1%, respectively, in these two years.70 As Nixon’s

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opening neared, China remained poor in both total and per capita GDP. China’s national GDP in 1970 was about $91 billion, falling far short of the United States’ $1.07 trillion.71 Though China had a population in 1970 four times larger than America’s, its GDP was ten times smaller. ­Perhaps most telling was the GDP per capita figu e. Americans earned approximately $5,246 per year in 1970 (the highest per capita income in the world), while the average Chinese took in a meager $113 annually.72 China’s abysmal per capita income produced the corollary of virtually no Chinese consumer demand, betraying the myth of the China market. Mao’s philosophy also impeded foreign trade. Recalling the “Century of Humiliation” at Western hands, he remained focused on tightly con­ trolling the foreign trade apparatus to prevent the development of trade imbalances. While other newly industrializing economies (NIEs) such as Taiwan, South Korea, and Singapore had emerged as global competitors given their low labor costs and openness to f oreign direct investment (FDI), Mao took a strong stand, both rhetorically and in practice, against this trend. In a characteristic exchange, when Nikita Khrushchev asked to use Chinese workers for a 1958 logging project, Mao responded: “For years it’s been a widely held view that because China is an underdeveloped and overpopulated country, it represented a good source of cheap labor. But you know, we Chinese find this attitude very offensive. Coming from you, it’s rather embarrassing.”73 Mao continued his resistance to FDI, privatization, and the emerging “East Asian model” up until his death in 1976. Even if Mao had allowed FDI, there is the further question of what the Chinese themselves could have done with it.74 During the Cultural Revolution, the CCP had gutted the Chinese university system, and particularly science and engineering. Mao abolished the entrance exam and replaced concerns for scientific rigor with the priority of political education for the “proper classes,” dampening China’s technical innovation and industrial capacity.75 Only af ter Deng Xiaoping’s ascent to power would China make signif i ant gains in restoring its science and engineering regime. “CHINA WAS SIMPLY AN INTELLECTUAL ABSTRACTION IN MY MIND”: THE PROFOUND GULF OF KNOWLEDGE ON THE NEW CHINA

Another factor that cannot be ignored was the contemporary gulf of cultural understanding. While there is allegedly an American tendency to-

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ward cultural insularity (and such a tendency in Chinese culture as well), in the 1970s a special confluence of factors forced even America’s most sophisticated diplomats and China hands to admit their deep ignorance of China’s culture and society. And in the reverse, Chinese ignorance of American culture and custom would create substantial work for the National Council as it facilitated bilateral exchanges. Michel (“Mike”) Oksenberg poignantly described this dilemma in a 1977 interview with China trader Julian Sobin. Oksenberg, who was then serving as a China expert in President Jimmy Carter’s NSC, had, on the eve of his first visit to China, studied the nation for more than a decade.76 He was a professor of political science at the University of Michigan and worked for its Center for Chinese Studies.77 Yet the night before he entered mainland China for the first tim , he found himself awestruck: MO: I think that after all, 25 years, we had been without direct contact with China and a study of China for many academics is sheerly an intellectual exercise. I remember very well the night before I went into China for my first tim . JS: When was that, Mike? MO: Summer, excuse me, December of 1972. And I had taken my tape recorder as we all do and I was sitting in the hotel room in Hong Kong and I decided that I would tape on the evening before I went in what I thought I was going to see in China so that I could compare. JS: Aren’t you disciplined? That’s wonderful. MO: So I sat down, and this is a very sobering experience. I had studied China then for 12 years. I had begun graduate school in 1960 and I turned the tape on and normally I have no problem of talking, and all of a sudden I had nothing to say, and I realized that China was simply an intellectual abstraction in my mind and that the range of possibilities for me as to what I really was going to see was so great that I really had very little idea precisely what I would see. I knew some of the cities that we were going to, so I thought, “well if I didn’t have anything of a general nature to say, I would at least say what did I think Canton or Shanghai would really be like.” All that came on in

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that television screen in the back of my mind was the letters C-A-NT-O-N, with nothing to fi l in. I realized I had been a huge fraud.78 Oksenberg’s modicum of knowledge, as both a professor and a China specialist, was still presumably much vaster than that of the average American. Dwight Perkins, then the associate director of Harvard’s East Asian Research Center, similarly recollected to Sobin that “there was a tremendous level of ignorance about how to deal with China in the early years.”79 Undoubtedly one of the greatest contributors to Sino-American cultural ignorance had been the ban on traveling to China that Washington imposed from 1950 to 1970. While President Lyndon Johnson, in 1965, had made limited concessions by allowing medical personnel and scientists to apply for visas, real change did not come until 1970.80 In anticipation of an overture to China, Nixon “remove[d] all aspects of the travel ban” and allowed unrestricted American application for Chinese visas.81 Even with the ban removed, travel still remained problematic. Of the one thousand Americans who applied for Chinese visas in 1970, only three received them.82 Unsurprisingly, “no Chinese applied f or entry to the United States.”83 The cumulative and incredible result of the two-decade travel ban was that f rom 1950 to 1970 only an average of seventy-fi e Americans per year had set foot in mainland China.84 Such miniscule exchanges stand in stark contrast to current American travel to China: in 2015 alone, Americans made about 1.2 million visits to the mainland.85 The embargo and travel ban, in turn, meant that a generation of American businessmen had had no meaningful interaction with the Chinese economy. Further, the Chinese American diaspora remained relatively small and marginalized in this period. By the 1970s, the diaspora had not developed its later levels of sophistication and entrepreneurial capacity. Though Chinese exclusion had ended in 1943, the Immigration and Nationality Act of 1952 had established a tiny 105-visa quota for every “Asian” country.86 The Immigration Act of 1965 represented the first major liberalization, expanding the quotas to 20,000 immigrants per nation, with a 270,000­immigrant cap annually.87 Under this arrangement, the United States counted Hong Kong, Taiwan, and mainland China as separate “nations,” for a total of 60,000 immigrants per year.88 Additionally, Chinese now could immigrate to the United States for the purpose of “family reunifi ation,” creating an uptick in Chinese arrivals.89 While the new arrivals bolstered Chinese American numbers from about 240,000 in 1960 to 436,000

Disorder under Heaven   35

in 1970, they did not substantially enhance bilateral trade.90 As Wellington K. K. Chan has documented, the first generation of post-1965 immigrants generally came f rom the working or lower-middle class and lacked college education or managerial experience in modern business. When they engaged in retail business, it tended to be of the traditional type—small groceries selling Chinese goods, tourist gift shops, restaurants, laundries, and the like. The majority among this group did not possess sufficient independent resources to start their own businesses; they simply found employment within the ethnic community or in locations nearby.91 These initial arrivals differed sharply from Chinese American immigrants in the 1980s and 1990s, who tended to be wealthy and well educated, and who had substantial trans-Pacific ties that benefited trade.92 Additionally, the diaspora of the 1960s predominantly sympathized with the Nationalists; the Taiwanese embassy “spent a lot of time . . . trying to reassure them” of America’s continued support for Chiang Kai-shek.93 This lack of cultural, political, and economic ties to the mainland in the wake of the trade and travel bans created unique and interesting problems for bilateral trade. Eugene Theroux, first vice president of the National Council, recounted such misunderstandings in a 1978 interview. Once, while at the Canton Trade Fair, he encountered some Chinese merchants unsuccessfully peddling sewing machines. Theroux was surprised to discover their brand name: “Typical Sewing Machine.” Theroux then asked the sellers why they had chosen to call their product “Typical Sewing Machine,” as it seemed like an “undistinguished” name.94 The Chinese retorted that if America had “Standard Oil,” why should they not call their product “Typical Sewing Machine”? Theroux then had to explain to the Chinese that while “standard” connotes a measure against which all others are judged, “typical” connotes an undifferentiated or boring product.95 Theroux recalled other issues that arose with Chinese manufacturers and cultural misunderstandings. Why should they have to produce their products under American brand names? Why must they specify that a garment be hand-washed? (Few Chinese owned washing machines, and thus hand washing was the only method they had considered.) They also asked Theroux why they had to sew button-eyes on stuffed panda bears so tightly. Theroux replied that it was a consumer product safety ­measure

36  F O R G O T T E N V A N G U A R D

so that a child would not eat them. The sellers then asked him why a child would eat the eyes when they were plastic and not made for eating. Theroux also recalled some of the issues that translation introduced. Occasionally, Chinese brand names made no sense to Americans. In other instances, “their brand names just wouldn’t work here—like White Ele­ phant Auto Parts, Pansy Men’s Clothing, Junk Chemicals, Fang Fang Lipstick, F ­ uking Pliers.”96 While such issues arise often in international business, the twentyyear cut-off meant that by the 1970s American traders were effectively starting de novo in China, with access to few institutional resources. Indeed, mutual cultural ignorance proved a systemic obstacle to bilateral trade. The American business community did not understand what China wanted, had few Chinese-speaking Chinese Americans to act as medi­ ators, and remained ignorant of what the Chinese could supply. As Perkins would later recall, getting trade into full swing would require “basic education on the nature of China.”97 T H E L AC K O F N OR M A L I Z E D R E L AT I ON S: A MA JO R O BSTACLE TO T R A D E

The dual absence of diplomatic recognition and most-f avored-nation (MFN) status for China presented two of the most pernicious handicaps to renewed trade. MFN, also called “normal trade relations,” implies that if “a country gives favorable treatment to one country regarding a particular issue, it must treat all [other MFNs] equally with respect to the same issue.”98 Essentially, af ter making a nation an MFN, the United States cannot subsequently offer that country less favorable terms of trade than it has offered all other MFNs. While MFN remains a bedrock principle of international trade, Truman had (somewhat redundantly) revoked MFN f or China in 1951, shortly af ter his general Chinese embargo.99 Without MFN, Chinese goods entering the United States after Nixon’s relaxation were subject to the infamous Smoot-Hawley Tariff of 1930, which had radically hiked import duties at the onset of the Great De­ pression.100 The United States would not reinstate MFN for China until January 24, 1980, creating special problems for bilateral trade in the 1970s. In practical terms, the lack of MFN made many Chinese imports uncompetitive on the American market. While the tariffs f or non-MFN

Disorder under Heaven   37

­ ations were non-standardized, a few items demonstrate the impact of n MFN’s absence. Kites, for example, faced a 17.5% import tariff if coming f rom an MFN, but a 70% tariff when coming f rom mainland China.101 Americans paid only a 9.3% tariff on T-shirts from MFN nations, yet paid 17% on Chinese T-shirts; 13.5% on Chinese bed sheets versus 7.5% on MFN sheets; and 50% on Chinese bamboo versus 25% on MFN bamboo.102 These restrictions undoubtedly prevented Chinese exports to the United States from expanding to their full capacity. Tarif f discrimination against Chinese products, aside f rom simply hindering the development of American demand for such goods, enabled a substantial trade imbalance to accrue in favor of the United States. From 1972 to 1973, China’s trade def icit with the United States grew f rom -$27.9 million to -$693 million.103 As the Chinese became increasingly wary of the growing defic t, they lodged their concerns with American diplomats. Not only did they wish to even out the trade imbalance, but the American failure to offer MFN also undermined Nixon’s pledge about treating China as an equal geopolitical partner. American diplomats soon identified the gravity of the MFN issue. On June 9, 1972, a little over three months after the Nixon opening, Richard Solomon forwarded Kissinger a note emphasizing “MFN status and tariff barriers” as key concerns.104 Chinese Foreign Minister Ji Pengfei also objected to Kissinger about the “growing [trade] imbalance with” America.105 Trade, characteristically, became not just an economic issue, but also one of political symbolism. Indeed, a 1977 memo f rom Secretary of Commerce Juanita Kreps to Zbigniew Brzezinski reiterated that extension of nondiscriminatory tarif f treatment (MFN) to China, now governed by the requirements of the Trade Act of 1974, including the Jackson-Vanik Amendment, would assist Chinese exports, but the removal of this stigma of second-class status as perceived by the Chinese would be an even more significant stimulant of Chinese decisions in favor of placing more orders with American suppliers.106 In practice, however, the reinstatement of MFN was a complex problem, taking eight years after Nixon’s opening to fina ly resolve. Two global issues dampened progress on normalizing Sino-US trade relations: relations with the Soviet Union and relations with Taiwan. Regarding the Soviet Union, which also lacked MFN, American diplomats

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believed that to retain the global balance of power, they could not show lopsided trade favoritism toward the Chinese. The United States could not extend something to China it was not similarly prepared to grant to the Soviets. Conversely, the Chinese held that they were uninterested in trade concessions if the conditions they received were not as favorable as what Washington offered Moscow.107 Too obviously preferential treatment of China could threaten détente, while too restrictive a China policy could alienate Beijing. Thus, the United States had to pursue a policy that placed both powers “on an equal footing.”108 Yet domestic US politics eventually complicated the balancing act by blocking extension of MFN to the Soviets. The Jackson-Vanik Amendment to the Trade Act of 1974, signed into law by President Gerald Ford on January 3, 1975, forbade the United States from conducting any “commercial agreement” with any “non-market economy” that did not respect the right of free emigration.109 The original amendment aimed at punishing the Soviet Union for its controversial measures against Jewish emigration. The amendment enjoyed bipartisan support, as liberals appreciated the human rights aspect while conservatives saw it as tough on communism.110 By extension, however, American politicians often problematically misapplied it to all nonmarket economies, including China’s. The China application was as tenuous as it was damaging. Kissinger, Nixon, and Cyrus Vance thought the act absurd, antagonistic to the Soviets, and overly restrictive of diplomatic options.111 Even Senator Henry Jackson, who cosponsored the bill, eventually became convinced that it had no application to China.112 In practice, those who seized on the human rights issue were those preexistingly opposed to Sino-US relations—that is, conservative Taiwan lobbyists and liberal labor advocates. Nevertheless, the issue of Sino-Soviet trade parity remained broadly compelling throughout the 1970s. Détente seemed too vulnerable to preferentially offer China MFN. While the lack of MFN hindered Sino-American trade, it was only a component of the larger problem of broken diplomatic relations. The two issues, in fact, were deeply entangled. While the National Council once suggested that a trade agreement might precede diplomatic relations, the Chinese never took the idea seriously.113 In their view, any legal trade framework had to come after the broader achievement of formal relations. And at a time when the United States did not recognize the legitimacy of the mainland’s communist government, had no ambassador in Beijing, and maintained a longstanding defense treaty with Taiwan, bilateral legal trade

Disorder under Heaven   39

frameworks remained impossible. Indeed, America’s recognition of Chiang Kai-shek’s Nationalists in Taipei throughout the 1970s continued to annoy Beijing and preclude full relations. TA I WA N : T H E B Ê T E N OI R E OF SI N O-A MER IC A N R ELAT IO NS

In the beginning phases of Nixon’s opening to China, when both sides treaded lightly f or f ear of derailing rapprochement, the Chinese had downplayed their preoccupation with the Taiwan issue. Mao and Zhou spoke of Taiwan in breezy terms. “We can do without them [the Taiwan issue] for the time being, and let it come after 100 years,” Mao promised. “Why such great haste? . . . This issue [Taiwan] is not an important one. The issue of the international situation is an important one. . . . The small issue is Taiwan, the big issue is the world.”114 Kissinger also recalled Zhou telling Nixon, “We, being so big, have already let the Taiwan issue remain for twenty-two years, and can afford to let it wait there for a time.”115 When it came to negotiating the Shanghai Communiqué, however, Mao and Zhou drove a harder bargain. The Chinese side stated, “The Taiwan question is the crucial question obstructing the normalization of relations between China and the United States.”116 It appears that the Chinese expected the imminent de-recognition of Taiwan, faster even than by Nixon’s pledged date of 1976. Indeed, as US recognition of Taipei continued, Sino-US relations noticeably ebbed. In analysis briefings published as early as 1974, the Central Intelligence Agency (CIA) concluded that Mao was “personally disappointed with the pace of US moves in respect of Taiwan,” that is, America’s failure to immediately abandon the ­Nationalists.117 Compounding the recognition issue, since 1954 the United States had maintained a pact with Taiwan called the Sino-American Mutual Defense Treaty. The treaty pledged that the United States would regard any attack on Taiwan as “dangerous to its own peace and safety,” and thus would respond with force to protect Taiwan’s integrity.118 Economically, it also contained pro-Taiwanese trade stipulations that annoyed the Chinese. Negotiating their way out of the formal Taiwanese alliance, while also finding a formula to preserve some guarantees for Taiwan, would prove a tedious project for American diplomats. As the goodwill of Nixon’s initial opening subsided, the Taiwan problem became increasingly rancorous. Non-recognition and the Mutual

40  F O R G O T T E N V A N G U A R D

Defense Treaty with Taiwan dominated bilateral talks during Kissinger’s 1974 visit to Beijing. Deng reminded him, “Of course, if we are to achieve the normalization of relations between our two countries and abide by the course set in the Shanghai Communiqué, then the treaty you have with Taiwan must be done away with.”119 When Deng further pressed Kissinger, he forced Kissinger to admit that the United States had “not worked out a legal formula” facilitating the abolition of the Mutual Defense Treaty.120 Kissinger reflected his own pessimism on the Taiwan issue in a pre-trip briefing with President Ford before Ford’s visit to China in December 1975. Kissinger admitted to Ford that there was no clear resolution to the Taiwan alliance issue and that without one, Ford’s visit was unlikely to make meaningful progress.121 The American side was hesitant to dump the relationship with Taiwan for a number of reasons. The American public entertained both romantic and strategic attachments to Taiwan, creating the threat of a domestic backlash against treaty cancellation. Internationally, cancellation of the Taiwan treaty in light of the Vietnam withdrawal would further impugn the value of American f oreign policy commitments. Taiwan also seemed the more promising economic opportunity, especially when comparing its nascent industrialization to China’s disorganized collectivism. The domestic Taiwan lobby also vocally opposed de-recognition of the Nationalist regime. American attachment to the Nationalists was longstanding, dating back to the massive aid packages Washington supplied Chiang’s armies in the Chinese Civil War. Barbara Tuchman damaged Chiang’s reputation to some extent in her Pulitzer Prize–winning book Stilwell and the American Experience in China, 1911–1945, which she published, perhaps significantly, during the initial phase of Nixon’s opening in 1971.122 Recalling the American postwar disappointment in Chiang’s regime, Tuchman portrayed him as recalcitrant and wrathful, the bane of her gritty yet beleaguered protagonist, General Joseph Stilwell. On balance, however, American public opinion continued to favor Taiwan, especially in comparison with the PRC. Gallup polling in 1972 revealed that 53% of Americans held favorable views of Taiwan—much higher than the PRC’s 23%.123 American conservatives, in particular, romantically considered Taiwan an isolated democracy bravely standing alone in a sea of communist aggression—a view that endured into the 1980s. It was thus America’s duty to support a democracy and a noncom-

Disorder under Heaven   41

munist ally. In the fallout of the Chinese Revolution, Dwight Eisenhower’s head of China Affairs, Walter McConaughy, argued that there was “reason to hope that the government at Taipei will continue to grow in strength, in devotion to the cardinal principles of democracy, and in international prestige.”124 At a 1960 dinner in honor of infamous Taiwan lobbyist Alfred Kohlberg, William F. Buckley Jr. counted among “those few symbols of hope for the Far East that are left to us” the non-recognition of the PRC, the preservation of “Free China” (Taiwan), and “the continued independence of little Quemoy and Matsu.”125 When Chiang died in 1975, Representative Walter Judd, the unofficial dean of the Taiwan lobby, eulogized Chiang as “one of the greatest men of the century on the record of achievements.”126 The reality, of course, was different from the image American Taiwan lobbyists cultivated. Chiang had kept tight-fisted controls on Taiwan since the 228 Incident on February 28, 1947, when Kuomintang (KMT) troops massacred several thousand Taiwanese following a protest.127 Taiwan’s period of martial law, from May 19, 1948, to July 15, 1987, was, at that time, the longest imposition of martial law in world history.128 Chiang made it illegal to criticize the government and join any political party other than the KMT and gave the “military wide censorship powers.”129 During this period of “white terror,” Chiang’s secret police arrested more than 100,000 Taiwanese and executed tens of thousands.130 They were also known to use both physical and psychological torture, coerced confessions, and forced labor.131 If Chiang’s government could not match Mao’s in scale, it imitated certain abuses at least in spirit. Regardless, Chiang and particularly the Taiwanese ambassador to the United States, James C. C. Shen (Chen Jianhong), propagandized Taiwan as “Free China,” which held a natural appeal for American conservatives.132 Other Americans, while entertaining less romantic views of Taiwan, saw the island as a strategic asset and an anchor of American influence in an unfriendly region. During the Vietnam War, it had served as “an important forward logistics and R[est] & R[ecuperation] center for American forces,” hosting a substantial military presence.133 In the 1970s, there still remained in Taiwan several thousand American troops, two squadrons of F-4 Phantoms, a US Army Communications Command, and a War Reserve Matériel depot.134 Geopolitical considerations also supported the Taiwanese alliance, or at least complicated dissolving it. Japan, a key economic partner and home

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to thousands of American troops, strongly favored the Sino-American Mutual Defense Treaty, as it guaranteed the security of Japanese commercial assets in Taiwan.135 American official particularly Richard Solomon of the NSC, feared that leaving Taiwan would create a power vacuum that would open Taiwan to Soviet influence and alliance.136 Ambassador to Taiwan Leonard Unger suggested that after cancelling relations with Taiwan, Taiwanese “independentists” might try to reestablish the Republic of China (ROC) by invading the mainland, leading to a military conflict with the communists that would destabilize the region.137 Economically, Taiwan appeared to be the more obvious place f or American investment. With American aid and guidance, the Taiwanese had established an investment center in downtown Taipei, at which potential investors could indicate their needs “in way of utilities, labor, [and] raw materials,” and expeditiously resolve business disputes.138 Given the f riendly investment environment, American corporations had injected millions of dollars of capital into the island by the time of Nixon’s opening. In 1972, for example, Ford Motor Company opened a multimilliondollar plant, Lio Ho Motors, in Taoyuan.139 More broadly, Taiwan had cemented itself as a “newly emerging economy” with explosive growth rates that averaged 9.2% annually from 1965 to 1981.140 Despite its comparatively small population (14.5 million versus ~ 850 million on the mainland), per capita productivity in Taiwan vastly exceeded that of China. One contemporary estimate put the figu e at $192.50 contributed to bilateral foreign trade per capita in Taiwan, versus $5.50 in bilateral foreign trade per capita in China.141 From the economic vantage point of the 1970s, then, Taiwan seemed the logical bet for American business. T H E G L OB AL 1 9 7 0 S AN D T H E D ECLINE O F A M E R I C AN H E G E M ONY

As this chapter has shown, the United States and China faced extensive systemic obstacles to bilateral trade. Far from an inevitable, magnetic attraction of their two economies, it seemed unlikely that a major SinoAmerican trade relationship would develop in the foreseeable future. In addition to these specific difficultie Taiwan, MFN, cultural ignorance— the global 1970s also harbored a landscape of instability that greatly com-

Disorder under Heaven   43

plicated United States-China relations. As Deng reminded President Ford during his 1975 visit to China, “There is great disorder under heaven. . . . The basic contradictions in the world are sharpening daily. The factors for both revolution and war are clearly increasing.”142 While the perceived Soviet threat had driven together the United States and China, managing this delicate balance of power continued to dominate the foreign policy agenda. A number of recent works have reconstructed the destabilizing political landscape, for example, the anthology The Shock of the Global: The 1970s in Perspective. As its editors Niall Ferguson, Charles S. Maier, Erez Manela, and Daniel J. Sargent have commented, the 1970s saw the “breakdown of the postwar economic order” as the “authority of superpowers diminished.”143 Non-state actors, terrorist organizations, and cartels began to compete with the traditional hegemony of the nation-state. The decade, in short, “transformed international politics.”144 Domestically, it produced great distractions from Sino-US diplomacy, including the eruption of the Watergate scandal in mid-1973. Globally, it harbored crisis. On October 6, 1973, the Yom Kippur War broke out in the Middle East. In response to American support f or Israel, the Organization of Petroleum ­Exporting Countries (OPEC) began the Arab oil embargo from October 1973 to March 1974 that quadrupled energy prices.145 The negative oil supply shock precipitated the energy crisis of 1973 and American stagfl tion. Nixon, hamstrung by the Watergate revelations, resigned in August 1974, rather than face impeachment. In April 1975, Saigon f ell to the North Vietnamese, capping two decades of America’s failed intervention in Indochina. By 1976, President Ford would face the worst economy since the Great Depression, ushering in economic malaise and a full-blown crisis of capitalism. For the firs time in four decades, America was in decline. In China, Zhou, the crucial negotiator in the American rapprochement, would fall gravely ill by 1974 and begin to recede from public life. Simultaneously, Mao succumbed to Lou Gehrig’s disease and increasing paranoia. He purged key official including Deng, and suffered a series of debilitating strokes in mid-1976. His death on September 9, 1976, ushered in a domestic power struggle that would determine China’s political future. Instability in the international system had brought together the United States and China in 1972. Yet it also threatened to tear the b­ udding

44  F O R G O T T E N V A N G U A R D

relationship back apart. As the Americans and Chinese got down to brass tacks, it became increasingly clear that formal diplomacy, especially in light of the lack of diplomatic recognition, was underequipped to h ­ andle the multifaceted problems of the Sino-American relationship. To realize the full benefits of rapprochement, the United States would have to look to nontraditional forms of diplomacy to grapple with these issues, including the question of bilateral trade.

CHAPTER 2

Backchannel to China The Nontraditional Diplomacy of the National Council

Though diplomatic ties with China may be a condition precedent to any dramatic increase in the range and volume of goods traded, this is not to say that some signifi ant trade cannot occur before that event. Obviously, trade itself can play an important part in bringing about diplomatic ties. —Hale Boggs and Gerald Ford, “Impressions of the New China,” 19721 Because of what the Chinese considered to be our quasi-officia status, we sometimes had easier access to Chinese official than our people at the U.S. Liaison Offi . —Christopher H. Phillips to Charles Stuart Kennedy 2

By mid-1972, the American diplomatic establishment was well aware of the deep obstacles to Sino-American trade. Though National Security Council (NSC) brief s argued that China had shown a “genuine desire to further improve its relationship with the United States,” progress remained plodding throughout 1972.3 In response, the government began to explore alternative solutions to jumpstart trade. One interesting p ­ roposal 45

46  F O R G O T T E N V A N G U A R D

that gained traction in the executive branch—first mentioned in a 1972 policy study—was the creation of a nongovernmental trading council to coordinate the American effort. Aside from the council’s nominal role in bilateral trade, the government also proposed a second, similarly important role: as a diplomatic backchannel between Washington and Beijing. In the period before the United States and China had established diplomatic relations, the council could provide “alternative forms of representation” through nongovernmental means.4 The council, they thought, could “do good” while also “doing well”—as it was promoting Sino-American trade, it could simultaneously facilitate pre-normalization diplomacy. With diplomatic progress stalling as the goodwill from Nixon’s opening subsided, perhaps this informal council could overcome the developing impasse. The concept of a backchannel spanning broken relations was not original to the National Council. Since 1959, the White House and the Castro regime had maintained a diplomatic backchannel of secret negotiations between Washington and Havana. In the case of China, the United States had used intermittent backchannels since the mid-1950s. First at Geneva in 1955, then at the Warsaw talks, and later through Pakistani President Yahya Khan, these third-party channels allowed American and Chinese diplomats a limited f orum to convey official views.5 Yet these were secret negotiations conducted by American official rather than by a governmentally founded yet privately run nongovernmental organization (NGO). Rather than the president or secretary of state negotiating in secrecy, the Council saw the heads of influential American corporations representing officia diplomatic interests in China. In this nongovernmental mode, the Council, along with its counterparts, the National Committee on US-China Relations (NCUSCR) and the Committee on Scholarly Communications (CSC), respectively, represented departures from traditional diplomacy. As I argue further in chapter 3, the Council’s initial governmental organization, its financial independence f rom the government, the high levels of political access it achieved in China, and its representation of ­officia positions before normal relations all contributed to its nontraditional nature. While the Council’s corporate basis was innovative, its focus on informal diplomacy and alternative representation meshed with the efforts of the NCUSCR and the CSC. It was the Council, however, which most accurately anticipated what would ultimately become the defining feature of Sino-US relations: the bilateral trading relationship.

Backchannel to China   47

If the Council was innovative, the complexity and delicacy of the Sino-American relationship had mandated its innovation. As chapter 1 detailed, officia negotiations with the Chinese were highly susceptible to political interference. While Nixon had premised the opening on gaining leverage in détente, the new Sino-American relationship proved to be a blunt instrument in geopolitical manipulation. American moves toward détente with Moscow incensed Beijing, which continued to fear Soviet aggression. Such perceived political slights, along with China’s command economy and lack of f oreign currency, had chilling effects on bilateral trade. Simultaneously, lower-level Chinese official were paranoid about perceived collusion with American interests, and particularly American capitalism. American technology presented a panacea for China’s backwardness, and yet American capitalism represented a repudiation of the Maoist system. As Mao’s criticisms of Deng Xiaoping and Liu Shaoqi demonstrated, supposedly “taking the capitalist road” could endanger political reputation and, in Liu’s case, life itself.6 In an environment where cooperating too closely with American business could result in intense criticism, banishment to the countryside, or worse, Americans were forced to find su h oblique ways to interact with China. Christopher H. Phillips, the Council’s first president, reconfi med this reality in a later interview. Phillips suggested that the Council, as a nominally private organization, provided a level of insulation from the American government the Chinese needed to save face. At a time when China presented itself as a vanguard in the world communist movement, economic opening with the leading capitalist power could undercut Mao’s hardline rhetoric. As Phillips explained, the “institutional arrangement” of the privately run Council “seemed to suit them very well . . . they could say they were working with a private, non-governmental American organization, but one which had close ties to the American government.”7 Emphasizing informal diplomacy, Phillips commented, “Although the Council was a non-governmental organization, Chinese official sometimes found it a useful channel for political purposes. As a former US Ambassador, I would occasionally be invited to meet informally with official to ‘share views’ about various aspects of US-China relations.”8 He continued, “in the absence of full diplomatic relations between the two countries, the Council ha[d] a pivotal liaison role as the principal intermediary between the American commercial sector and its counterparts in China. We work[ed] closely with the U.S. State Department and other departments of the ­government.”9

48  F O R G O T T E N V A N G U A R D

This chapter, f itting y, examines f our aspects of the Council’s rapprochement-­era informal diplomacy. First, it analyzes Nixon’s privatization of economic diplomacy, which created preconditions for the National Council. Second, based on fresh diplomatic evidence, it reconstructs the Council’s origins as a government-founded, yet commercially run, in­ formal diplomacy NGO. The chapter then turns to the Council’s organization and its first venture into backchannel diplomacy: its mission to Beijing in November 1973. Finally, it examines the Council’s impact on our understanding of American diplomatic historiography, and especially the New Left thesis. Despite the apparent interplay of corporate and state power, informal diplomacy, rather than commercial manipulation of foreign policy, became the Council’s clear orientation. N I X O N ’S R E T R E N C H M E N T A N D T H E P R ECO NDIT IO NS F OR T H E N AT I ON AL C OU NCIL

From Presidents Lyndon Johnson and John F. Kennedy, Nixon inherited a rocky economy and an increasingly unpopular foreign aid apparatus. Johnson’s tenure was marked by a “guns and butter” philosophy of government spending. While previous wars had entailed great domestic sacrific , Johnson simultaneously pursued increases in domestic spending (the Great Society), military spending (the Vietnam War effort), and tax cuts (through the Revenue Act of 1964, reducing individual income taxes by 20%).10 As a result, government spending ballooned from $94 billion in 1961 to $178 billion in 1968, while the budget defi it expanded 325%, from $5.9 billion in 1964 to $25.1 billion in 1968.11 Inflati n in 1969 was up to 4.5%, while by 1970 real GDP growth had slowed to just 1.2% per annum.12 In 1971, for the first time in de ades, America ran a foreign trade deficit Regarding foreign aid, Dwight Eisenhower’s administration had fundamentally altered the direction of American overseas investments. From 1947 to the mid-1950s, the vast bulk of American overseas aid had gone to Western Europe as part of the Marshall Plan. Yet “there was a growing concern in the United States with communist subversion in the less developed countries [LDCs].”13 This concern became particularly acute in Indochina following the Viet Minh’s defeat of the French at Dien Bien Phu, which led to the 1954 Geneva Accords, the withdrawal of French forces, and the partitioning of Vietnam. In the effort to bolster South Vietnam against communism, the Eisenhower administration began major infu-

Backchannel to China   49

sions of foreign economic aid—an average of $220 million per year from 1955 to 1961, “or roughly 22% of South Vietnam’s GNP.”14 Kennedy’s administration expanded and further institutionalized the foreign aid program. In November 1961, through Executive Order 10973, Kennedy created the United States Agency for International Development (USAID), thus centralizing America’s foreign aid apparatus. Walt Rostow, an MIT economist, Kennedy’s deputy national security advisor, and later Johnson’s national security advisor, particularly influenced Kennedy’s and Johnson’s views on aid. In 1960, Rostow published his magnum opus, The Stages of Economic Growth: A Non-Communist Manifesto. The book, which impressed Kennedy, promoted the theory that all nations modernize in fundamentally the same stages. In Rostow’s view, well-timed injections of governmental capital could propel a nation along the developmental stages—from traditional society to take-off to maturity to high mass consumption. As a case study, he cited the governmental investment that facilitated the building of the Eerie Canal.15 Rostow urged Kennedy and Johnson that they could apply the same principles to South Vietnam, using large-scale infrastructure spending to propel it from rural agrarianism to modern democracy. Rostow’s views came to define American economic aid policy in Indochina. By 1966, more than half of all USAID’s projects were taking place in South Vietnam.16 Instead of small-scale food and medicine aid, these projects focused on large-scale infrastructure spending, per Rostow’s capital injection theory. American foreign aid fl ws to Vietnam grew from $230 million in 1964 to nearly $800 million in 1966.17 As historian James Carter has catalogued, these “projects consisted of installing a president; building a civil service and training bureaucrats around him; creating a domestic economy, currency, and an industrial base; building ports and airf ields hospitals, and schools; dredging canals and harbors to create a transportation grid; constructing an elaborate network of modern roadways; establishing a telecommunications system; and training, equipping, and funding a national police force and . . . military.”18 P R I VAT I Z I N G E C ON OM I C DIP LO MACY

Unfortunately for Rostow, history did not bear out his theories on South Vietnam’s modernization. As it turned out, America’s massive aid injections “created a disincentive system that was to work against economic

50  F O R G O T T E N V A N G U A R D

­ evelopment.”19 Import dependency, combined with instability arising d from war and governmental corruption, prevented the rise of South Vietnam’s native industries and agriculture. From 1963 to 1967, the South switched from being a net exporter of rice to a net importer, as its overall trade deficit quadrupled.20 Inflati n surged from a pre-1964 average of 4% to more than 40% in 1969.21 The American withdrawal in 1972 and 1973, which erased 300,000 South Vietnamese support jobs, pushed the South into a deep recession, with urban unemployment at 20%.22 Aside from the fis al pressures Vietnam created for Nixon, the failed experiment f ostered an intellectual crisis in modernization theory and “a growing disillusionment with f oreign aid.”23 A popular view developed that it was a “f allacy” to transplant the Marshall Plan’s inf usions of public capital to LDCs.24 While “Europe was an industrial society in place with the crucial element of capital missing,” LDCs lacked all the key ­institutions—“a trained labor pool . . . adequate power supplies . . . transportation infrastructure”—to make use of large capital infusions.25 Moreover, as the Senate Foreign Relations Committee concluded, “the Vietnam War led to the realization that U.S. . . . aid commitments could be the first step in costly involvements in areas of limited U.S. national interest.”26 The governmental response to the sour experience in Vietnam was twofold. First, legislation such as the Mutual Development and Cooperation Act of 1973 drew a sharp distinction between “aid” and “assistance.” The act defined the sort of inf rastructure spending seen in Vietnam— bridges, canals, and industry—as assistance, in which the US government was no longer interested. Rather, it shif ted its “primary emphasis” f rom Rostow-style assistance to smaller-scale “basic needs”: “food, rural development and nutrition, population growth and health, and education and human resources development.”27 Second, the government increasingly turned to private multinational corporations (MNCs) f or technological and inf rastructure investment in LDCs. One manifestation of this trend was the Overseas Private In­ vestment Corporation (OPIC), created by legislation in December 1969 and empowered on January 19, 1971, by Nixon’s Executive Order 11579. ­OPIC’s primary function was as a governmental insurer of overseas private investment. It insured against three major risks: inconvertibility (that is, a host country bank’s refusal to transfer corporate funds), war damage, and expropriation. As the legislation creating OPIC explicitly stated, the organization worked “to mobilize and facilitate the participation of

Backchannel to China   51

United States private capital and skills in the economic and social development of less developed countries . . . thereby complementing the development assistance objectives of the United States [government].”28 From 1971 to 1979, OPIC underwrote about $10 billion of this “political risk ­insurance”—covering corporate investments in 68 developing countries— and settled 73 insurance claims valued at $355 million.29 OPIC, and more broadly this new recruitment of MNCs in overseas investment, seemed to solve the problems of Rostow-style f oreign aid. Shifting the burden f rom the public sector to the private sector reduced governmental outlays at a time of great budgetary strain. It ostensibly stimulated domestic business during an overall trade deficit It transferred risk and responsibility for investments f rom the government to the private sector, obviating the possibility of another Vietnam-style intervention to protect a foreign aid commitment. It also, at least in theory, encouraged “the private enterprise system in the investment-receiving countries,” ­bolstering host nations against communist influenc .30 Thus, Nixon’s new look to MNCs in diplomacy demonstrated a clear philosophical shift from the Kennedy-Johnson years regarding overseas investment. While Rostow had endorsed massive governmental injections of capital as part of his now-tainted modernization theory, Nixon and Congress instead devolved responsibility to MNCs as increasingly important and autonomous agents in foreign aid and diplomacy. The increasing role of the private sector in international investment is borne out in the period’s economic statistics. As table 2.1 reflects during Johnson’s last year in offi , American investment abroad totaled about $146.8 billion, including both liquid and illiquid assets. Of these assets, about 30.1% were owned by the US government, with 69.8% controlled privately. By the end of Nixon’s first term, private assets accounted f or more than 75% of overseas investments. Further, while international investment by the US government increased by only 11.5% during these years, private international investment under Nixon increased by 46%, ­reflecting the p o-private reorganization. OPIC, incidentally, was not permitted to operate in China until 1980, creating the concern of expropriation for the National Council. The Foreign Assistance Act of 1961, the source of authority for OPIC’s creation in 1969, banned “assistance to any communist country,” explicitly including the People’s Republic of China (PRC) and eighteen other nations.31 In a consistent theme, such political, legal, and diplomatic blockages belied

52  F O R G O T T E N V A N G U A R D

Table 2.1.  US International Investment Position, 1968–1972 (in billions of dollars) Year

1968

1969

1970

Total international investment Private investment US government investment Percentage private Percentage governmental

146.8 158.1 166.9 102.5 110.3 120.2 44.2 47.7 46.7 69.8% 69.76% 72.01% 30.1% 30.17% 27.98%

1971

1972

180.7 199.3 134.5 150 46.3 49.3 74.4% 75.2% 25.6% 24.7%

Source: US Department of Commerce, “Statistical Abstract of the United States, 1974,” p. 779, fi . no. 1310: International Investment Position, 1950–1972.

the simplistic faith in the transformative power of American capital. Only following diplomatic recognition in January 1979, China’s promulgation of its commercial code, and the first Sino-US bilateral investment treaty in July, did Jimmy Carter push legislation—which passed in August 1980—to open OPIC’s first ope ations in China.32 This overview of the Johnson, Kennedy, and Nixon administrations’ aid policies reinforces the philosophical divergence involved in Nixon’s look to multinationals in the prosecution of American diplomacy. Many commentators have recognized Nixon’s pro-business disposition, as well as his executive connections stemming from his days as a corporate lawyer.33 More importantly, however, he was able to translate these ties into a coherent shift in foreign policy. While Nixon and Henry Kissinger came to favor the Council not because they worried about a foreign aid commitment in China, but because it could f acilitate inf ormal diplomacy, ­Nixon’s shift to corporate involvement in foreign affairs indicates a necessary precondition for his administration’s positive reception of the ­Council. N I X O N I N C H I N A : T H E W E E K T H AT C H A NGED T H E WO R LD?

By late 1972, the emerging problems in Sino-US relations created what Kissinger later termed a diplomatic “slowdown.”34 Foremost was Nixon’s attempt to leverage the opening with China against the Soviet Union,

Backchannel to China   53

thus pushing the Soviets deeper into détente. As discussed in chapter 1, Nixon had been initially successful with this tactic during the SALT talks. Yet Nixon’s use of the Chinese in triangular diplomacy contained a contradiction: by leveraging the China relationship to strengthen détente with the Soviets, he simultaneously annoyed Beijing, which rejected détente as ­untoward American friendliness with Moscow. Beijing remained convinced that the Russians were pursuing the “Soviet encirclement of China;” thus, American overtures to Moscow undermined China’s confidence in America as an anti-Soviet partner. “Privately, the Chinese fear that these [détente] developments will tend to isolate them politically and strengthen their major enemy,” Kissinger wrote.35 In public, the Chinese media lambasted détente as “outright appeasement,” while criticizing America’s “strategic passivity.”36 In the words of Zhou Enlai, China had not pursued the Sino-American opening so that Nixon could “stand on Chinese shoulders” against the Soviets.37 The Chinese also became increasingly annoyed over the issues of ­Taiwan and Watergate. Despite Mao’s and Zhou’s 1972 statements that Taiwan was not an issue of urgent importance, Mao privately began to doubt America’s willingness to actually sever relations with Taipei. As news of the Watergate break-in hit in July 1972, and as the Senate investigation accelerated in mid-1973, the Chinese also began to worry about the continuity of Sino-US relations in the event of Nixon’s resignation. Mao, in a conversation with Kissinger in 1973, interrogated him about the developing scandal. “Why is it in your country,” Mao asked, “you are always so obsessed with that nonsensical Watergate issue?”38 Mao, at the seat of absolute power in China, understandably had difficu y grasping the problem with a head of state ordering a break-in on his political enemies. The cumulative slowdown from these bilateral disagreements pushed Nixon’s executive branch toward alternative diplomatic paths. T H E C OU N C I L AS A LT E R N AT I VE DIP LO MACY; O R , T H E G OV E R N M E N T ’ S N ON GOV ER NMENTA L S OL U T I ON TO S L OW I N G R ELAT IO NS

Only recently have historians been able to grasp the full scope of the administration’s strategy. For most of the decades since the Council’s founding in 1973, a comprehensive analysis of its origins in the American

54  F O R G O T T E N V A N G U A R D

g­ overnment had been impossible due to classif i ation. Yet since 2000, many important documents on the Council’s formation have been released to the public.39 Reviewing these fresh sources illuminates the original conception of the Council as a backchannel to Beijing—an American response to the Chinese desire for informal, people-to-people contacts. An early question that conf ronted American negotiators was the proper relation between the public and private sectors in the promotion of Sino-US trade—how the government might harness the profit moti e to create a coherent diplomatic response. Extensive governmental involvement would spoil trade’s status as an ostensibly informal field of interaction, while a laissez-faire approach would lead to disorganization. Thus, two weeks after Nixon’s historic opening, Kissinger directed strategists to examine “the role which should be played by the US government and how it should relate to US private individuals and corporations.”40 In their talks in Beijing, Zhou had hinted at the type of arrangement the Chinese would find suitable: so-called people-to-people channels.41 These channels, he said, would enjoy “the assistance of our respective governments,” yet would remain formally nongovernmental.42 While the suggestion was somewhat novel for the US side, Beijing had long relied on such informal diplomatic measures. The Chinese term for this practice was Renmin waijiao, or, “People’s Diplomacy.”43 In December 1949, Zhou had overseen the founding of the Chinese People’s Institute for Foreign Affairs (CPIFA). While the CPIFA’s nominal mission was the study of international relations, the Chinese also used CPIFA delegations to maintain informal contacts with nations with which they did not have diplomatic relations.44 The Chinese used similar tactics in their early trade initiatives, beginning with the f ounding of the China Council f or the Promotion of International Trade (CCPIT) in 1952. Through the CCPIT, the Chinese had initially sought to strike inf ormal trade deals with the Japanese, as formal trade agreements were then restricted by the American-­led Coordinating Committee (COCOM) sanctions, of which Japan was a part.45 The use of informal trade and diplomatic channels had been particularly useful for the Chinese in the 1950s and 1960s, when many nations continued to formally recognize the Nationalist government in Taiwan at Beijing’s expense. As Nixon showed renewed interest in a Sino-US relationship, the Chinese hoped to adapt these mechanisms to the American case as well. The celebrated instance of ping-pong diplomacy had shown the utility of

Backchannel to China   55

informal Sino-US contacts. Moreover, realizing that any relationship before formal recognition would be, of necessity, informal, the American side was receptive. Nixon’s administration thus began to develop its own people-­to-people approach to bilateral trade. On March 10, 1972, Kissinger issued National Security Study Memo­ randum 149, which directed the executive departments to investigate ­augmenting bilateral trade. The first governmental document that suggested forming a Sino-American trade council came in response about twenty days later.46 Under strict secrecy, an Ad Hoc Group chaired by Ambassador Winthrop Brown, a senior of f icia in the Bureau of East Asian and Pacific Affairs prepared an analysis of United States-China trade. The group’s “Trade Paper” dealt with a number of topics, including the lack of a most-favored-nation (MFN) agreement, potential exchanges in aviation and agriculture, and the f ormation of a “China Section” of the American embassy in Paris.47 It also suggested that the government ­“encourage [the] formation of a ‘Sino-American Trade Council,’” which could provide “information and guidance” for private American fi ms interested in the China trade.48 Such a council might also prosecute a “vanguard trade delegation” to establish links with China’s f oreign trade apparatus.49 In their review of the Trade Paper, NSC official John Holdridge and Robert Hormats expressed support for the formation of such “umbrella organizations.”50 As the government was then receiving a “myriad of requests for assistance on exchanges,” a centralized group might provide a measure of “structure and control” in the American response to China.51 Yet they also cautioned that China’s willingness to liaise “with private groups in the U.S.” was uncertain.52 “The exact mechanics of dealing with the Chinese on exchange matters,” they noted, were “not clearly conceptualized.”53 Despite Holdridge and Hormats’s admonition, the Trade Paper piqued Kissinger’s interest. In his handwritten notes on the NSC’s review, Kissinger remarked, “Can’t we get some systematic approach?”54 The desire for a more systematic approach continued to inform executive action on China trade policy. Nixon himself reviewed the Ad Hoc Group’s Trade Paper, as well as an April 24 report by the US Departments of Commerce and State that suggested concrete topics for dialogue with the Chinese. Nixon and Kissinger’s response to these papers, National Security Decision Memorandum (NSDM) 170, was issued on June 8, 1972.55 The pair suggested tabling issues that were too sensitive or tedious to be

56  F O R G O T T E N V A N G U A R D

broached immediately with the Chinese, including the MFN problem, the assets-claims dispute, transportation regulations, and legal prohibitions on the importation of endangered species.56 Yet NSDM 170 also implicitly approved the formation of a trade council. Kissinger, given the green light, directed the executive branch to draw up plans for the council’s creation. In response to Kissinger’s memoranda and informational requests, Under Secretary of Commerce James Thomas Lynn drafted a report that would become of foundational importance. Entitled “Creation of a Sino-American Trade Council (SATC),” his memo argued for a “prestigious, private organization which would facilitate the development of U.S. trade with the People’s Republic of China.”57 The fi e major functions he outlined in this memo would eventually become the core roles of the National Council. Lynn bifurcated the memo into two key issues: trade and alternative representation. He argued first that the Sino-American trade council would be the logical counterpart of the preexisting organization in China, the CCPIT. The two groups would not be mirror images. The CCPIT differed in practice in its true relationship with the Chinese state. While the group had “independent juridical status” (that is, it was “not technically an agency of the State”), it was subordinated to the Ministry of Foreign Trade and the Chinese Communist Party’s (CCP) Central Committee, and its staff included governmental figu es.58 It also did not take positions independent of preexisting state policy, reflecting the reality of an autocratic society and a state-run foreign trading apparatus.59 While the CCPIT was thus informal but essentially quasi-governmental, the American counterpart would be informal and private, in both staff and fundin . Despite these differences, the CCPIT provided a valuable framework on which to build a complementary organization. Lynn argued that the American counterpart, functioning on a nongovernmental basis, could address issues that would be too politically controversial to entertain at the highest levels of officia diplomacy. He postulated that America’s own informal trade institution could “establish liaison with the CCPIT” to begin working with the Chinese on issues of bilateral trade.60 Building on the liaison theory, Lynn postulated f our other major functions of the council. First, it would “arrange for reciprocal trade missions and exhibitions” of each country’s wares.61 Such exhibitions were critical in the period when the twenty-year break in Sino-US contacts had made China’s economy an enigma. Lynn alluded to the Canton Trade Fair, the twice-annual goods exhibition that China had hosted in Guangzhou

Backchannel to China   57

since 1952, aimed at promoting international trade. Lynn recognized that the fair represented the single best opportunity for American traders to begin business with China. He argued that the council could establish reciprocal displays of Chinese goods, complementing the Canton Trade Fair, and that the council could also facilitate American travel to Canton by securing visas and invitations for American businessmen. Second, Lynn suggested that the council should “provide information to US businessmen” who remained largely ignorant about the Chinese market, its demands, and its (limited) productive capacity.62 Third, he suggested that the council could publish a trade inf ormation bulletin to ­remedy these issues of economic and cultural ignorance. Finally, he contended that the council would maintain “liaison with the US government” to keep diplomats and the White House abreast of contemporary developments in Sino-US trade.63 Lynn’s memo proved a key roadmap for the council’s functions. Not only did Lynn theorize these important trade roles, but he also suggested using the NGO for backchannel diplomacy. The notion that trade could provide a diplomatic back door had circulated for at least a year: Hong Kong Consul General David Osborn suggested in April 1971 that trade could facilitate “de facto” representation in China.64 Lynn’s innovation was to propound the council as the conduit for such representation. He wrote that “the SATC w[ould] arrange annual meetings with Chinese trade officials to exchange views on how to best improve US-China relations,” which would be particularly useful “during the period when there are no diplomatic relations.”65 Lynn’s memo immediately made an impact with the executive branch. The trade council concept gained further traction with Kissinger and the NSC. In its subsequent research, the NSC endorsed the idea of trade as a means of alternative diplomacy in the prenormalization era. On June 9, 1972, NSC Asian affairs specialist Richard Solomon sent a secret memorandum to Kissinger entitled “Possible Next Steps in SinoUS Relations.”66 Solomon’s memo substantially endorsed Lynn’s ideas, including the concept of backchannel diplomacy. In an expansive memo, touching on ocean laws, US prisoners in China, and even narcotics control, Solomon recommended “the establishment of a Joint US-PRC Trade Commission.”67 He contended that “such a Commission would be devoted to the resolution of bilateral trade problems and the promotion of Sino-American trade in the spirit of the Shanghai Communiqué.”68

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Solomon further endorsed NGO diplomacy as a backchannel to Beijing. He acknowledged that “little progress ha[d] been made in establishing a formal framework for other exchanges.”69 However, he suggested, a commercial commission with access to Beijing, ostensibly functioning in a trade role, could provide “alternative forms of representation which would enable us to deal with impediments to Sino-American trade such as private claims against the PRC and the related f rozen assets problem, the issue of MFN status and tariff barriers, and additional regulatory constraints.”70 Where governmental negotiations had stalled, perhaps a nongovernmental organization could find better luck with the Chinese. An additional NSC memo, sent f rom the NSC’s Hormats and Holdridge, provided a final boost for the council. They wrote positively of a “SinoAmerican trade council,” possibly “under the auspices of the U.S. Chamber of Commerce,” that could promote Sino-American trade.71 Cumulatively, these documents reflected a clear momentum in the executive branch by late 1972 for the construction of a trade council. Yet writing briefs in support of the idea was a world away from actually constructing a functioning organization. In mid- to late 1972, with China and its economy still enigmatic to the American understanding, it was unclear from where the government would draw the needed expertise to run such an enterprise. As it turned out, Hormats’s involvement with the NSC trade council briefings would prove propitious for the ultimate Council. It was via Hormats that an important character entered the scene: the young international trade lawyer Eugene (“Gene”) Theroux. A N OT H E R S O U R C E OF C OU N C I L M OM E NT UM: T H E BO GGSFO R D M I SSI ON A N D T H E T H E ROU X CO NNECT IO N

Following Nixon’s opening to China in February 1972, the rush to the Middle Kingdom was palpable. George H. W. Bush, chief of the pre-­ recognition Liaison Offic in Beijing f rom 1974 to 1975, later reflected “everybody in the United States want[ed] to go to China.”72 Physicians wanted to see the mysterious acupuncture; Sinologists wanted to experience what remained simply intellectual; businessmen wanted to access the mythic China market. Nixon, in response to this electric atmosphere, worked with Beijing to organize a diplomatic voyage to China for Senators Mike Mansfield and Hugh Scott, the respective Senate Majority and

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Minority Leaders. While Nixon had aided the Senate, he made no provisions for a House mission. “House members,” accordingly, “complained bitterly when Nixon’s White House . . . offered no such junkets for those f rom the lower chamber.”73 While Nixon had thrown his hands up, responding that any invitation was Beijing’s prerogative, the Chinese later accommodated the House by inviting Hale Boggs and Gerald Ford, the House Majority and Minority Leaders, respectively. By a lucky coincidence, the Boggs-Ford mission would become central in the National Council’s establishment. In preparation for their two-week sojourn in China, Boggs and Ford assembled an entourage of several aides. These figu es, among the firs Americans to visit China in twenty years, included Paul A. Miltich, Ford’s press secretary; the political scientist Paul Sigmund; and various others, including Theroux.74 From June 23 to July 7, 1972, Boggs and Ford toured Shanghai, Beijing, Canton, and Anshan, visiting a historical excavation site, a Chinese “kindergarten,” as they termed it, and the Great Wall.75 Additionally, they engaged in high-level talks with Qiao Guanhua, then the vice foreign minister, and with Premier Zhou at a June 28 state dinner.76 The trip’s contribution to the Council’s founding ultimately came in a roundabout way. Boggs and Ford made little, if any, progress with the Chinese on trade. On June 29, they met with the deputy director of the CCPIT, Li Hsifu. Entering talks hopefully, Boggs suggested to Li a “joint commission on trade” to facilitate Sino-US commerce.77 Li deflected the question and refused to comment further on the idea of a trade council. Boggs found Li “studiously diffiden ” and considered the trade talks the low point of his mission to China.78 In his report written jointly with Ford, entitled “Impressions of the New China,” Boggs speculated that acupuncture, rather than trade, would be the most effective vehicle of continued cultural exchange with the Chinese.79 Despite Li’s difficu y, the trip made two contributions to the Council’s founding. First, Boggs’s post-trip debriefings lent substantial legitimacy to the idea of a trade council. He inserted the council idea into the public discourse, in contrast to the secret planning of the NSC. On July 10, in post-trip testimony before the Joint Economic Committee of the House of Representatives, Boggs explicitly endorsed a “commercial commission” that could negotiate trade issues on a “quasi-public” basis and could work toward resolving the MFN and export-import credit issues.80 Theroux later recalled Boggs’s address to Congress as one of the first clear

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public calls for a trade NGO, furthering the momentum in the executive branch.81 The trip also signifi antly exposed Theroux to China’s economy and culture. While on the mission, Theroux made personal contacts with Chinese that he would later use on his missions with the Council, including a friendship with the interpreter Wang Genliang.82 T H E E X E C U T I V E B R A N C H F OR GES A H EA D

In Washington, Secretary of Commerce Frederick Dent had begun to complete the organization of the National Council. On November 1, 1972, Under Secretary Lynn forwarded President Nixon a memo outlining the final structure and function of the Council, which Nixon personally approved on December 23, 1972.83 The group’s final name, jointly selected by the US Departments of State and Commerce, was the National Council for United States-China Trade.84 Nixon, in approving the memo, had directed Secretary Dent to recruit prestigious American businessmen to serve on the Council’s executive committee.85 The memo supplied fi e criteria for choosing executives: the “personal prestige of the nominee,” the “acknowledged ability of the nominee,” “the general interest of the nominee in this trading area,” “the association of the nominee with product areas with considerable and immediate economic interest to the Chinese,” and “the experience of the nominee.”86 The memo, fina ly, mandated that Dent assemble broadly representative candidates with diverse commercial and geographic connections.87 Kissinger and the NSC closely monitored the early stages of the Council’s formation. In January 1973, as Dent was assembling the Council’s executive committee, Kissinger asked Holdridge for a status report on the Council. On January 18, a few days later, Holdridge confi med that the US Department of Commerce had begun to assemble the group, having selected a list of corporate candidates with input from the US Department of State.88 The Council, for so long the secret project of Kissinger and the NSC, fina ly came into being on March 22, 1973.89 At the US Department of Commerce in Washington, Dent convened the executive committee to legally incorporate and establish the Council. Dent trimmed his list to create the Council’s first twenty-man board of directors, representing something near the apex of corporate power in the United States. They included

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Donald C. Burnham, the chairman of Westinghouse Electric and the new National Council’s first chairman; William (“Bill”) Hewitt, the chairman of John Deere; Charles Weaver, the vice president of Westinghouse ­ anover Trust Electric; Gabriel Hauge, the chairman of Manufacturer’s H bank; Walter Sterling Surrey, an Offic of Strategic Services veteran and a named partner of the Washington law fi m Surrey, Karasik, & Morse; Andrew Gibson, a noted authority on maritime law and the president of Interstate Oil Transport Company; Fred Seed, president of Cargill; and William M. Batten, the CEO of J. C. Penney Company.90 Following the conclusion of the March 22 meeting, Dent made his most signifi ant move: relinquishing the National Council to complete private-sector control. Its private corporate members and its own leadership would thereafter dictate the Council’s structure, finances and members, including its board of directors and its president and vice president. The Council’s eventually private nature had always been central to the NSC’s conception of the group, and it remained a key insight. By offici ly disaffiliatin itself from the government, while maintaining close informal connections, the Council could access Chinese official who had previously demurred in seeing American diplomats. As Phillips recalled two decades later, this chimerical, “quasi-officia ” nonprofit NGO would prove an effective institutional compromise for the Chinese who were paranoid about American influenc , yet still desired trade contacts on a people-topeople basis.91 T H E T H E ROU X N E XUS

The “China euphoria” then in vogue perhaps influenced the Council’s new board of directors as well. Chairman Burnham scheduled the Council’s first- ver engagement for just two months after the March 22 founding: a business conference on the ambitious date of May 31, 1973. Burnham wanted to begin working on China trade “as fast as possible” to preserve the Council’s existing momentum.92 Yet Burnham’s deadline created a small problem—neither he nor any of the other directors had any direct knowledge of China or any comprehensive plan to jumpstart bilateral trade. With the May conf erence nearing, Burnham and the embryonic Council had a stroke of good fortune in late April, just one month before

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the inaugural event. Hormats, who had been involved with the NSC’s planning of the Council, learned from Burnham that he and the Council were desperate for figu es with experience in China. Hormats happened to know Theroux, as he and Theroux were jogging partners who exercised every Sunday morning at the American University track. Hormats recommended Theroux to Burnham, who then set up an initial meeting with Theroux in Pittsburgh (the location of Westinghouse’s headquarters) where they discussed how the Council might “gain traction” in the China trade.93 As propitious as the Theroux connection was to Burnham, so the Burnham connection was to Theroux. Theroux, then an associate at the international law fi m of Baker & McKenzie, had separate plans to attend the Canton Trade Fair in Guangzhou to build trade contacts for his legal clients. Burnham then offered to sponsor Theroux’s trip to Canton on the condition that Theroux would prepare a briefing for Burnham about SinoAmerican trade that could give the Council material f or its f irs conference.94 Theroux agreed, initiating a frenzied tour of Canton to broaden his personal contacts and trade knowledge as much as possible before the May 31 deadline. In Canton, Theroux met with his friend Wang, the interpreter from the Boggs-Ford mission. Wang introduced Theroux to “senior official at the Canton Trade Fair” who, in turn, helped Theroux gain an audience with the CCPIT in Beijing.95 They also helped him obtain the necessary visas to travel f rom Canton to the capital. In Beijing, Theroux met with the vice chairman of the CCPIT and informed him of the Council’s desire to open bilateral exchanges. Theroux recalled it as “a cordial meeting and very encouraging for the Chinese side who,” perhaps to his surprise, “were looking for ideas too.”96 While it was “a very general meeting,” Theroux’s copious notes, coupled with an endorsement from the CCPIT, gave him enough information to make “a detailed report” for Burnham.97 After returning to the United States and consulting with Hormats, Theroux compiled an extensive memo suggesting tactics the Council might use to enhance trade: “exchange of delegations, exchange of ideas, communications, written communications, trade fairs,” and the like.98 While the ideas remained basic, Burnham was quite pleased with the work and considered it sufficient or the critical May 31 conference. As Burnham had anticipated, the initial meeting became an early watershed f or the Council. The success of the conf erence established the Council as the preeminent NGO handling United States-China trade

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matters. To the directors’ surprise, more than three hundred top American fi ms interested in the China market attended.99 Theroux’s notes were incisive and exclusive enough to demonstrate that the Council could get privileged access to key actors in the China trade, such as the CCPIT. At the May 31 conference, Burnham also announced that Deputy Ambassador Phillips, at the time working under Ambassador Bush at the United Nations, would be the first president of the National Council.100 Theroux had demurred f rom the presidency, desiring to remain at Baker & Mc­ Kenzie. He and the directors reached the compromise that Theroux would serve as the vice president, yet would be hired through his law fi m rather than work on the Council’s payroll. Finally, and perhaps most importantly, the directors secured the attendance of the head of the Chinese Liaison Offi , Han Xu, at the May 31 meeting. Han’s presence indicated that the Chinese took the National Council seriously, bolstering its legitimacy in the business community.101 By May 31, it had become clear that the Council had accrued massive institutional support: f rom the federal government, f rom the American business community, from Chinese diplomats, and from the CCPIT. As the government had hoped to do, by lending such imprimatur to the Council, it had made the Council the preeminent NGO dealing with Sino-US trade, thus establishing a special public-private relationship that enabled the Council to represent officia views.102 In turn, the Council embraced its inf ormal diplomatic f unctions as it engineered its f irst visit to Beijing. B U I L D I N G A B AC K C H AN N EL TO CH INA

Despite the ostensible conference success, skeptical observers contended that the early Council offered little “more than promises.”103 Noted East Asian legal scholar Jerome A. Cohen said that the Council, as “the creation of the White House as well as the Commerce and State Departments, bears some of the marks of politicization.”104 Burnham was an “old friend” of Nixon, while Kissinger had vetoed a Brookings Institution China specialist f rom speaking at the May conference.105 Cohen further noted that the directors included no women; had little experience with China; and “reflected a very strong export orientation, even though perhaps the principal problem in Sino-American trade is how to increase American i­mports.”106

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The China trader Charles Abrams also adopted the Council’s bigbusiness focus as his angle of attack, as he attempted to found the competing United States-China Chamber of Commerce in the fall of 1973. “You know damn well,” inveighed Abrams, “that when Burnham and Haugy [sic] go to China they’re going to push Westinghouse and the Bank. They’re just out for the big guys, they don’t pay attention to the little guys.”107 Abrams’s attempt to legally incorporate the US-China Chamber of Commerce was confounded by the existence of a previously existing group, the US-China Chamber of Commerce and Industry, founded by, ironically, the Taiwanese.108 Instead, Abrams continued to trade doing business as the China Trade Corporation, in which he emphasized smalltime importing f rom China presumably more so than did the early ­Council. The White House, too, displayed a measure of early skepticism about its own creation. In August 1973, the NSC sent Kissinger a memo entitled “Problems in the China Trade.” The authors, including Hormats and Solomon, criticized the Council for a “very slow start,” citing organizational problems, staffin issues, and the continued interference of the federal government.109 They suggested that Washington was “overloading” the Chinese by requesting too many invitations for American governmental official to the Canton Trade Fair.110 Hormats and Solomon’s memo strongly urged Kissinger to reduce requests for governmental invitations, as officia diplomats would “overshadow the Council,” thus undermining the NGO’s nominally private status.111 Theroux, as the Council’s new vice president, had been working overtime on the issues that Hormats and Solomon had isolated. He moved the Council’s “office,” previously located in an empty room in Surrey’s law fi m, to a permanent location on Seventeenth Street in Washington, DC, adjacent to the Mayfl wer Hotel. “That’s signifi ant,” Theroux recalled, referring to the street location: By that time, the Chinese Liaison was located where? The Mayflower Hotel! It was just entirely coincidental, but it was so close—­ Christopher Phillips could look out his window of his office into the Mayflower Hotel room where the Chinese were playing ping-pong! I’m sure—because it actually did come up a couple of times, but not in a tense way—that the Chinese Liaison Office realized that the National Council for US China Trade was in a position to look into their

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windows! Well, of course they closed all their shades, but I’m sure they thought there was some “research” going on and that the US government had been behind it, but that wasn’t the case.112 Shortly thereafter, Theroux made the Council’s first staff hire. Pursuant to the Council’s desire to create a periodical demystifying China’s economy, Theroux recruited the British business writer Nicholas Ludlow, who had previous journalistic experience in Hong Kong. Ludlow would go on to serve as the Council’s executive director for nine years. Globally, the Council’s formation coincided with further political disputes between Beijing and Washington. To the strong disapproval of the Chinese, the United States had resumed heavy bombing of Cambodia as a part of the Vietnam War’s Operation Freedom Deal. Additionally, a US Navy cruiser, the USS Oklahoma City, caused a diplomatic spat with Beijing when it “ ‘intruded’ by sailing through the Taiwan Straits about 25 ­kilometers from the mainland.”113 Global instability, however, could also benefit Sino-US relations. On October 6, 1973, a coalition of Arab states attacked Israel by surprise, ­initiating the Yom Kippur War. Knowing that the Soviets were resupplying the Arabs, the United States responded with a massive military aid package for Israel. On October 25, Kissinger unilaterally ordered that all American forces be placed on a DEFCON III nuclear alert against the Soviet Union. While Kissinger’s actions became highly controversial for his perceived recklessness (and his failure to consult Nixon), the Chinese strongly approved of the anti-Soviet stance. During Kissinger’s diplomatic mission to Beijing in November 1973, Mao reflected on how Kissinger’s thinking on the Soviet Union so often mirrored his own, and how Kissinger seemed to regard seriously the possibility that the Soviets might ­attack China.114 Simultaneously in October, the visas the Council had requested for its mission to China, and which the CCPIT had helped secure, came through from Beijing. After months of organizational work, the inaugural mission was fina ly close to a reality. On October 27, two days after his historic nuclear alert against the Soviets, Kissinger forwarded Burnham an enthusiastic letter reminding him that the Council’s “mission [was] a historic one” as “the f irst visit to Peking by a broadly representative business ­delegation in twenty-four years.”115 Kissinger pledged the support of the

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State Department and the NSC for the Council and its pursuit of backchannel diplomacy, writing, Despite the goodwill which exists on both sides, it is not surprising that some problems are encountered in re-establishing normal trade relations between our countries after a hiatus of two decades. There is a need for a broadly-based private organization, enjoying the confidence of both countries, which can . . . represent the American business community as a whole in discussions with Chinese trade officials. Some problems of a technical nature which would be dif f icult or ­inappropriate to raise at an intergovernmental level may be resolved to the benefit of both sides through the National Council.116 Kissinger’s words reflected not nly an enthusiasm for the Council’s mission, but also his broader belief that growing trade relations could increase Sino-US political amity, forwarding his strategic concept of triangular diplomacy. As Kissinger had reminded Mao in February 1973, “Our interest in trade with China is not commercial. It is to establish a relationship that is necessary for the political relations we both have.”117 Regardless of his feelings about the absolute economic impact of trade, Kissinger’s letter to the Council clearly reflected his belief that the Council, in its promotion of Sino-US trade, was also promoting American diplomatic aims by increasing the level of bilateral engagement. NOV E M BE R I N B E I J I N G : A C ON V I N C I N G P RO O F O F CO NCEP T

After the visa breakthrough, the Council began final preparations for its “historic mission” to Beijing. Theroux, as with the May 31 conference, had gone on an advance mission to China to prepare for the Council’s arrival. He stopped first in Canton, arriving on October 14, 1973, to begin organizing the Council’s representation at the ongoing Canton Trade Fair. Shortly thereaf ter, Arne J. de Keijzer of the NCUSCR joined him in ­Canton. While Theroux traveled to Beijing to ready the Council’s reception, de Keijzer would remain in Canton, acting as the National Council’s official epresentative at the trade fair. Stateside, the Council’s members greatly anticipated their impending mission to China. A secretary had warned the delegation to pack warm clothes—Theroux had come down with a cold as he made final prepara-

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tions in Beijing. The Council’s internal memos reflected that the delegation’s overall tone would be conservative. In its initial mission, it would prioritize amity with the Chinese over haggling on the brass tacks of trade. A “points not to be discussed” list included the controversial topics of claims against the PRC for expropriations against American business in 1950 and the issues of foreign direct investment (FDI) and export-import credits.118 Instead, the memo indicated that the Council would present itself as a source of reliable information on the American market and as an organization that could smooth cultural misunderstandings. It argued that some of the American businessmen who [the Chinese] have encountered have undoubtedly confused them by their aggressiveness, extravagant intentions and language, desire f or haste in establishing business relations, lack of discretion and, occasionally, downright dishonesty. Thus, the Chinese have a need for a real source of information, which the National Council can fill.119 By taking a conservative approach, the Council hoped to build trust with the CCPIT, allowing it to broach more dif f icul topics af ter they had formed a solid relationship. The Council delegation, including Ambassador Phillips and nine of the Council’s directors, arrived in Hong Kong on November 4, 1973. They rode by rail to the verdant Lo Wu frontier in northern Hong Kong. After alighting f rom the train, they carried their hand luggage over the Sham Chun River on a small f ootbridge. Despite twenty years of hostilities, physically entering Mao’s China had proved a relatively simple affai . The Council’s delegation—tall, white corporate executives and their wives— turned heads. Phillips recalled that the Chinese regarded them with f riendliness but also “with a good deal of curiosity.”120 Tish Hewitt, Bill Hewitt’s wife, “never failed to attract the attention of the Chinese. Her six-f oot f igu e and f laming red hair greatly amused them. I remember thinking,” Phillips said, “that not so long ago the Chinese referred to westerners as red-haired barbarians.”121 The return to China was especially moving for the former ambassador. A full seventy years earlier, Phillips’s father had served in the American Legation in Peking during the dying days of the Qing Dynasty.122 Once in Guangzhou, the Canton branch of the CCPIT met the directors and offered them a tour of the city. They then fl w from Guangzhou to Beijing, where the main branch of the CCPIT received them.

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Also present was an American advance delegation including Holdridge and Liaison office Herbert Horowitz. Theroux recalled that it was “a very good reception there.”123 The Chinese showed off Peking Opera, the Ming tombs, a department store, a tool factory, and, after a road trip, the Great Wall of China. The trip confi med that further NGO-based backchannel diplomacy would be viable. The Council received a serious welcome from the CCPIT, including a reception with its president, Wang Yaoting. Wang was “a very well-known figu e” in China’s foreign trade and was someone “that you’d only get to see on very special occasions.”124 More impressive still was the decision of senior CCP of f icial to meet with the Council, which the Council had not specifi ally requested. On November 8, the directors met with Li Xiannian, a PRC vice premier and a senior economic authority.125 They also met with Li Qiang, China’s minister of foreign trade. Based on their attendance, Phillips sensed that the trip was going auspiciously. The Chinese reconfi med this fact somewhat mysteriously when arranging a toast at the first joint CCPIT-Council dinner. Theroux, aided in interpretation by his friend Wang Genliang, described it as such: [The Chinese asked him] “If Mr. Wang Yaoting offers a toast to your delegation, would there be a response f rom your delegation leader?” And I said, “Yes, of course, I’m sure.” I mean, I didn’t know that for a fact, but it’s just common sense, yes, of course there’ll be a response. Mr. Wang said to me, “Good. Now can you please provide me with Mr. Burnham’s, your chairman’s, response to the toast?” And I said, “You mean his remarks in response to the toast?” He said, “Yes,” and I said, “Yes, I could do that. Can we have a copy of the text of Mr. Chairman Wang Yaoting’s remarks?” And they said, “Oh no, that’s not ready yet.” But they said, “It would help us to interpret and translate if we could have a copy of your chairman’s remarks.” And I thought, “This is really kind of cuckoo!”126 When the directors regrouped before dinner to decipher the strange Chinese request, David Bruce, an American ambassador acting as the liaison chief in Beijing, informed them that it was really a propitious sign. The Chinese were allowing the Council to set the meeting’s agenda. By reading the preemptive response to a nonexistent toast, the Chinese could learn which issues interested the Council, thus allowing the Chinese to

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shape their remarks around these issues. After discerning this intrigue, the Council then crafted a toast for the Chinese addressing issues in bilateral trade, leading to a productive discussion at their first major encounte . While the Council’s visit in November 1973 had been only an initial overture, it had shown the validity of the Council’s informal diplomacy. Not only had the CCPIT engaged and entertained the Council, but the Council had enjoyed access to high-level Chinese official like Li Xiannian and Li Qiang, during which they could communicate American views about trade. The overture, and China’s willingness to work with the Council, struck the board of directors as an excellent harbinger for the future of the Council’s work in China. Phillips called it “a propitious introduction to China’s political elite and a clear indication that China was prepared to cooperate with the Council.”127 T H E C OU N C I L A N D AM E R I C A N DIP LO MAT IC H I S TOR I OG R AP H Y

By reconstructing the Council’s forgotten founding and early diplomacy, this chapter has refuted the assumption that the American government cared little about the actions of the Council. As shown, the government remained intimately interested in the Council, its early difficultie and its diplomatic success on its “historic mission” to China, as Kissinger termed it. Additionally, this chapter documented the Council’s peculiar union of state-corporate diplomacy. As a privately run, corporation-based NGO promoting American diplomatic interests, the chimerical Council defies easy categorization in the New Left’s interpretations of American foreign policy. The corporations of the Council were not setting or shaping America’s f oreign policy agenda vis-à-vis China. As chapter 1 has shown, American policymakers considered the absolute monetary value of possible Sino-US trade negligible. While the actual foreign policy agenda— rapprochement—happened to correspond in a general way with the corporate aim of entering the China market, the government itself had actually conceived of and deployed these corporations in a noneconomic mode. By consolidating American businesses into the National Council, the government hoped to promote Sino-US amity by using the Council’s ostensible interest in bilateral trade to pursue informal diplomacy. Rather

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than the government serving corporate interests, corporate interests were actually serving the public interest of diplomacy. As a highly organized NGO, the Council represented a more coherent form of state-corporate diplomacy than the acute manipulation conjured by Bruce Mazlish, or the epochal transformation suggested by the Williams thesis. The underlying reality was that the American government was in no position to coerce China into more favorable treatment of American corporate interests or to reform China’s internal society along liberal capitalist lines. The task that the US government articulated and enacted was, instead, to work within the suboptimal Chinese framework by blending American corporate and strategic interests. By founding the National Council, the US government had thus endorsed a nontraditional method of international diplomacy. Governmentcreated and yet privately run, the Council could autonomously prosecute its dual mission of trade and diplomacy while also maintaining close working connections with Washington. The “historic mission” in November 1973 went down as a demonstration of this concept. Yet it was only a first foray into the challenges of the New China.

CHAPTER 3

Informal Trade Diplomacy in Détente and Rapprochement A Comparative Analysis

Trade is far more important to the Soviets than it is to us. It is one of the few bargaining chips we have and while we must not say that we consider it to be a bargaining chip, we must be sure that we don’t give it away for nothing. —Richard Nixon to Secretary of State William Rogers, ­February 3, 19721 As you serve your stockholders in this respect, please be assured that you are also serving the national interest. —Secretary of Commerce Frederick Dent, at the founding of the National Council for United States-China Trade, May 31, 19732

As multinationals, in Secretary Frederick Dent’s words, served both their stockholders’ interests and the national interest under the Council’s aegis, the Nixon administration postulated it could apply a similar logic of informal trade diplomacy to the Soviet case. As economic concessions to the Chinese served as a stick against the Soviets, economic concessions for 71

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Moscow could serve as a carrot. Thus, the administration organized a nongovernmental organization (NGO) to focus on Soviet trade in late 1973, borrowing f rom the Council experience and reinforcing Nixon’s private, corporate turn in foreign policy. The Soviet and Chinese cases are thus valuable analogues for comparative analysis. They were the world’s two most important communist economies, both the subjects of long-term American diplomatic projects (détente and rapprochement), both the key units of triangular diplomacy. The similarities they shared permitted the Nixon administration to view its policies as a coherent response to the issues of East-West trade, while the differences between the two cases illuminate the peculiarities of informal diplomacy with pre-recognition China. T H E C O N T E M P OR A N E OU S D É T E N T E : F URT H ER UNIFY ING D I P L OM AC Y AN D E C ON O MICS

Though détente was primarily a geopolitical strategy, as was rapprochement, détente also had economic components. Secretary Dent’s speech at the founding meeting of the National Council in May 1973 drew heavily on this insight. Surveying the interrelation of trade and geopolitics, Dent remarked, In viewing the socialist states broadly, there is an emerging commercial relationship not only of substantial economic consequence to American business, but, beyond that, an evolving relationship which is a critical element in the growing political détente with the East. In some cases, particularly with the People’s Republic of China, the rate of political development has been determinant in setting the pace for commercial growth. In other instances, the desire for trade has served as a modus vivendi for further political rapprochement. Political and economic developments, then, are not mutually exclusive features in the East-West formula. It should be apparent that there could be dangers abroad in the world today which could destroy us all if we remain paralyzed by their complexity and magnitude. But men of initiative see in these very perils great opportunity for policies of action designed to allay f ear and reduce hostility and tension. Simply put, they see the possibility of replacing military competition with commercial competition. No one has grasped the value of this simple

Informal Trade Diplomacy in Détente and Rapprochement   73

axiom more strongly than President Nixon. Clearly, his visits to ­Peking and Moscow last year provide an historic watershed in our perception of relations with the East.3 This distinct clarity of vision—the need f or “men of initiative” to fuse ­economic and geopolitical strategy to allay chaos in the global order—­ resonated in subsequent Nixon-era economic diplomacy toward the East. The Moscow Summit in 1972 occasioned the first developments in the Soviet trade formula. While chapter 1 discussed the antagonistic aspect of Nixon’s trade policy (that is, concessions to China), his policy also contained positive incentives for Soviet cooperation. Nixon realized that certain economic concessions could play well with Leonid Brezhnev owing both to the Soviet Union’s lagging technology and its acute grain shortage. In a note to Secretary of State William Rogers on February 3, 1972, in preparation for the Moscow Summit, Nixon explained, It is my view that as f ar as our actions are concerned, how f orth­ coming we will be on the trade issue, particularly where credits are concerned, will depend on how forthcoming the Soviet leaders are on political issues in which we are concerned. Incidentally, on this point, I do not share the view of [Maurice] Stans, [Pete] Peterson, et al., that trade with the Soviets is a good thing for us in and of itself. Trade is far more important to the Soviets than it is to us. It is one of the few bargaining chips we have and while we must not say that we consider it to be a bargaining chip, we must be sure that we don’t give it away for nothing.4 Such remarks are interesting on several fronts. They show Nixon’s willingness to question the orthodoxy that free trade was always beneficial in and of itself. His sentiment was not that of “the rising tide lifts all boats,” but rather one that asserted deep entanglements of economic and geopolitical strategy. Even as Nixon was injecting neoliberal realignment into foreign policy, he, ironically, voiced disagreement with one of its key tenets. ­Nixon’s comments also demonstrate the coherency of his thought on trade as political symbolism. His “bargaining chip” conception harkens back to the comment quoted in chapter 2: that “the relaxation of trade we are planning [with China] is mostly symbolic.”5 Finally, Nixon’s remarks outline the strategy he actually followed in Moscow.

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On May 26, 1972, as he was securing the better-known Anti-Ballistic Missile Treaty, he also issued a joint communiqué with Brezhnev that announced the formation of the US-USSR Joint Commercial Commission.6 The Commercial Commission was to be a government-to-government organization that met at regular intervals—alternating between Washington and Moscow—chaired by Secretary of Commerce Pete Peterson and Soviet Minister of Foreign Trade Nikolai S. Patolichev. Nixon and Brezhnev charged the Commercial Commission with negotiating, on a bilateral governmental basis, an agreement on most-favored-nation (MFN) status for the Soviet Union; governmental export-import credits; the construction of business facilities in each country; and agreements on arbitration, patents, and licensing.7 The Commercial Commission met first in July 1972 in Moscow, then in October 1972 in Washington, and later in October 1973 in Moscow.8 The Moscow Summit and the agreement on the Commercial Commission paved the way for further economic concessions from the United States. Three weeks after the summit, the United States agreed to sell the Soviet Union 440 million bushels of grain—essentially the entire Ameri­ can grain surplus—at a subsidized rate well below world market prices.9 In October 1972, Soviet and American negotiators reached a mari­time cargo agreement and formulated a settlement on outstanding lend-lease claims. While the United States had initially requested repayment in the amount of $2.6 billion for World War II assistance, negotiators down­ oviets graded the amount to a mutually agreeable $722 million, which the S would pay out over a thirty-year timespan.10 The grain deal became highly controversial in the United States. ­Labeling the deal the “Great Grain Robbery,” detractors accused the ­liquidation of the American surplus of having tripled the domestic price of wheat and of doubling the prices of corn and soybeans.11 Moreover, the executive branch had spearheaded the grain deal without congressional approval. The fallout f rom the Grain Robbery also likely mobilized congressional support for the Jackson-Vanik Amendment in 1974, blocking MFN status for the Soviet Union on the grounds that it did not permit the f ree emigration of Soviet Jewry. An angry Brezhnev called the amendment an “utterly irrelevant and unacceptable . . . attempt at intervention in internal affairs ”12 Despite this inconvenient development in domestic politics, in July 1974 Henry Kissinger defended the linkage of détente to economic concessions. As he stated,

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There is a myth developing that détente is one-sided. But: 1.  We settled Vietnam on our terms. 2.  We squeezed them [the Soviets] in the Middle East in an unbelievable way. 3.  We protected Berlin. 4.  We stopped a Cuban submarine base. What did they get? Some Ex-Im credits, a little trade, some wheat— which was not part of détente. We tie everything to good f oreign policy behavior.13 To Kissinger, ever skeptical of trade with nonmarket economies, minor trade concessions seemed a small price to pay for perceived geopolitical victories. Trade-as-bargaining chip, in his view, had secured the desired leverage in détente. As with rapprochement, détente further illustrated the Nixon administration’s desire to recruit private capital in service of diplomacy. At the Washington Summit in June 1973, the Soviets indicated that “they not only wanted trade agreements”—à la the Commercial Commission—“but they [also] wanted commercial contracts” from American corporations.14 On June 22, 1973, Treasury Secretary George Shultz and Foreign Trade Minister Patolichev signed a protocol agreeing that the US Department of Commerce would create “a specialized organization” to facilitate private corporations trading with the Soviet Union.15 Much like he had done with the National Council throughout 1972, Secretary of Commerce Dent then met with twenty-four American corporations in mid-1973 interested in Soviet trade. Dent ultimately recruited twenty-six directors f or the organization, which they incorporated in New York on September 5, 1973, four months after the National Council, as the US-USSR Trade and Economic Council (TEC).16 The TEC offici ly started operations on December 26, 1973, and held its first meeting of the board of directors on February 26, 1974.17 Ostensibly, the National Council and the TEC were quite similar organizations, both demonstrating the Nixon administration’s turn to greater public-private cooperation in diplomacy. As figu e 3.1 illustrates, Nixon’s trade bureaucracy regarded both councils as opposite wings of the same private, business-sector response to the issues of East-West trade.

FIGURE 3.1. The Nixon Administration’s East-West Trade Bureaucracy President

Structure of East-West Policy Making in US Government Business Sector

Kissinger

US/USSR Trade and Economic Council National Council for US-China Trade

EXPORT CONTROLS Export Administration Review Board Operating Committee (Interagency, including Defense rep.) Commerce. Office of Export Control Defense. Directorate on Strategic Trade & Disclosure State. Office of East-West Trade Treasury. Office of Foreign Assets Control

EAST-WEST TRADE POLICY COMMITTEE Chairman: Kenneth Rush, Chmn. of CIEP Members: Henry Kissinger, Sec. of State, NSC H. Sonnenfeldt, Counselor Frederick Dent, Sec. of Commerce Wm. Eberle, Special Trade Rep. Wm. Simon, Sec. of Treasury Working Group: Jack Bennett, Undersec. of Treas. Chairman (additional rep. from Ex-Im Bank & CIA) JOINT US/USSR COMMISSIONS Commercial

Science & Technology

FINANCING Export-Import Bank National Advisory Council Chmn: Simon, Treasury Members: Kissinger Dent Burns, Federal Reserve Casey, Chmn., Ex-Im Bank Board of Directors: Wm. Casey A. C. Sauer, VP, Ex-Im Bank R. A. McCullough, Dir. John C. Clark, Dir. M. P. Kolbinski, Dir.

Agriculture

SECRETARIATS Department of Commerce

National Science Foundation

Department of Agriculture

Note: CIEP = Council on International Economic Policy. Source: “Structure of East-West Policy Making in U.S. Government,” in “Investments by Multinational Companies in the Communist Bloc Countries,” June 19, 1974, Hearing before the Subcommittee on Multinational Corporations of the Committee on Foreign Relations, US Senate, 93rd Cong., 2, Part 10 (Washington, DC: US Government Printing Office, 1975), 96. Figure redesigned by Keely Bergin.

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Secretary Dent organized both groups in a similar manner by reaching out to private executives interested in trading with nonmarket economies. Like the National Council, the TEC provided translation services and business consulting and attempted to spread inf ormation on the ­Soviet economy to the American private sector.18 It staffed an offic in Moscow, like the Council’s offic in Canton, which provided trade services to American corporations. There was also a degree of membership overlap, and even occasionally of administrative overlap, between the two groups. Of the 129 member corporations in the TEC in 1974, 49 were also members of the National Council.19 In at least two cases—David Rockefeller of Chase Manhattan and Alden W. Clausen of the Bank of America—the TEC and the Council had common members on their boards of ­directors.20 While Nixon’s administration quite apparently instituted both the TEC and the National Council as separate parts of the same trade strategy, notable differences between the groups further illuminate China’s particular challenges. The bright line that distinguished trading with the ­Soviets f rom trading with the Chinese was that, in the former case, the United States had diplomatically recognized the Moscow regime for forty years. In mission and function, then, the Council’s activities were distinct in a number of ways from those of the TEC. The first difference was that the TEC arose out of a mutual diplomatic agreement, while the Council began as a speculative and informal undertaking. Dent, Kissinger, and others simply inferred that the National Council could establish liaison with the China Council for the Promotion of International Trade (CCPIT), placing great emphasis on the success or failure of the November 1973 mission. The mission’s success marked the Council’s transformation f rom merely a trade advocacy institution to an institution of informal diplomacy. That the Chinese would work with the Council was not f oreordained, at least in the American perception, as Holdridge and Hormats had warned. Nor was there any formal bilateral framework guiding the Council’s functions. In contrast, as detailed earlier, the TEC arose from a diplomatic protocol in 1973 between Treasury Secretary Schultz and Foreign Trade Minister Patolichev. The reality of diplomatic relations with the Soviets also allowed for trade negotiations to take place on an officia governmental basis. While the TEC conducted trade advocacy and coordination, the Commercial Commission, as a formal institution, handled bilateral policy negotiations.21 In the Chinese case, as the lack of diplomatic relations precluded such governmental

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­ egotiations, the Council was of ten forced to improvise (as detailed in n chapter 4) to strike nongovernmental trade and arbitration arrangements with the Chinese. Second was the issue of funding and leadership. Owing to normal diplomatic relations between the United States and the Soviet Union, the TEC divided its representation and funding between American private corporations and the Soviet government. Half of its directors were private American businessmen, while the other half were Soviet government official 22 The TEC was initially co-chaired by Pepsi-Cola’s CEO Donald Kendall on the American side and by Deputy Foreign Trade Minister Vladimir Alkhimov on the Soviet side.23 Reflecting this state-­ corporate division, the TEC drew only 50% of its funding from American corporate dues, while the Soviet government provided the other 50%.24 By contrast, the lack of Sino-US diplomatic relations and the emphasis on informality precluded such public-private sharing arrangements in the Council’s case. Owing to its intentionally informal nature, its funding and directorship remained exclusively corporate and private. Finally, the realities of trade promotion differed sharply in the Soviet and Chinese cases. As chapter 1 discussed, the Council was entering China following a profound break in diplomatic contacts and the cancellation of bilateral trade. Given this lack of precedent for American business in the People’s Republic of China (PRC) (excepting the few corporations that had traded around the embargo), the Council attempted to begin trade de novo as it entered China in 1973. The TEC differed, entering the Soviet Union during a period of steadily expanding and preexisting trade. (While Mao Zedong still nominally endorsed self-sufficie y, Brezhnev had shown comparatively greater openness to foreign investment.) Though the Soviets lacked MFN privileges, as did the Chinese, their economy was also relatively stronger and more advanced. Soviet-US bilateral trade had been $87 million in 1965, $92 million in 1966, $101 million in 1967, $115 million in 1968, $157 million in 1969, $190 million in 1970, and $220 million in 1971, two years before the TEC’s formation.25 Whereas the TEC’s mission was thus one of augmenting existing trends in trade, the Council’s was more so the creation of trade. Predictably, in practice, the National Council was considerably more active than the TEC, which met only annually in Washington or Moscow.26 Finally, selection criteria for the TEC’s initial directors bear out these differing levels of trade precedent. In the TEC’s case, Dent simply selected

Informal Trade Diplomacy in Détente and Rapprochement   79

corporate directors based on which figu es were doing the most business with the Soviets.27 Kendall’s nomination as the co-chairman, in fact, arose given his extensive business contacts in the USSR, dating back to his 1959 “Pepsi-for-Vodka” trade agreement.28 In contrast, as chapter 2 detailed, the selection criteria for Council directors were based on deductive presumptions about what might make an effective nominee in the new market: the nominee’s prestige, ability, and interest in the Chinese economy, and the anticipated interest of the Chinese in the nominee’s wares. Despite these important nuances, however, it remains broadly the case that Nixon’s administration was able to translate its views of trade and strategy into a sort of “NGO moment” in East-West trade diplomacy. Not since the Russian Revolution in 1917, and the subsequent question of America’s diplomatic and economic response to Leninism, had such issues of nongovernmental interaction with a nonmarket economy dominated the political agenda. Indeed, the Soviet and Chinese cases were historically linked, rapprochement being the second great instance of ­trading without recognition.29 In the Chinese case, however, Nixon’s vision proved to be more creative than that of the State Department’s response to the Bolsheviks in the 1920s. Shunning Charles Evans Hughes’s denial of the linkage between trade and diplomacy—Hughes’s view that it was a “fallacy” to think one could influence the other—the Nixon administration’s non­governmental trade response to the East distinguished itself by its ­pragmatism.30

CHAPTER 4

The National Council, 1974–1977 Capability and Contingency

The National Council is in the vanguard of really helping organizations and corporate institutions in doing their business or beginning their business in China. —Julian Sobin, owner of Sobin Chemicals1 In July, China experienced a major earthquake which virtually destroyed the coastal cities of Tangshan and Tientsin [Tianjin] and did considerable damage to Beijing. It so happened that I was in Beijing at the time for a week of meetings with Chinese official That week turned out to be a bit more than I had bargained for. —Christopher H. Phillips, interview with Charles Stuart Kennedy, 19932

By mid-1975, Gerald Ford needed some good publicity. Af ter Richard Nixon’s resignation in August 1974, Ford became the only man to assume both the vice presidency and the presidency without being elected to either of f i . He had controversially pardoned Nixon f or his f ormer boss’s complicity in Watergate. He watched Saigon fall to communism on 80

The National Council, 1974–1977   81

April 30, 1975, after the House killed his $722 million emergency appropriations bill intended to reinforce South Vietnam.3 Stagflati n dragged on as a result of both the Vietnam deficit and the effects of the Arab oil embargo. While the horizon seemed dark, in October 1975, six weeks before they were scheduled to visit China, Ford indicated to Henry Kissinger that relations with China might be one of his presidency’s high points. The President: The first trip of Nixon was a tremendous extravaganza. There was massive television coverage. I think it would be good to do something different. What is there which is dramatic? See if you can find s mething different. Kissinger: Why don’t I suggest to them that you would like something Nixon didn’t do? Sian is the first capital and there is excavating there. The President: That might attract the television.4 Despite such hopes, Ford’s mission accomplished little. The Chinese had come into negotiations expecting a normalization proposal. Nixon had promised China recognition by 1976, placing a special signifi ance on the timing of Ford’s trip.5 Ford, however, was not prepared to sever the relationship with Taiwan. Fearing the wrath of American conservatives heading into the election of 1976, Kissinger decided to table any moves on ­normalization.6 Ford’s trip was ultimately an unoriginal goodwill gesture. When the American entourage arrived in Beijing on December 1, Vice Premier Deng Xiaoping received them at a state dinner. Deng’s toast to the Ameri­ can delegation, though ambiguous in its tone, was both poetic and prophetic. He began with praise f or the peoples of both nations and the obliga­tory denunciation of the Soviet Union. Yet he reminded all present that despite any pretenses of global stability, “the basic contradictions in the world are sharpening daily. . . . The wind sweeping through the tower heralds a rising storm in the mountains. The wind is blowing harder and harder, and nothing can prevent the storm.”7 As Deng hinted in his toast, many global issues and potential instabilities threatened the nascent rapprochement. The Arab oil embargo and Nixon’s shocking resignation were only two issues among the many. As it turned out, the 1974–1977 period held f urther surprises f or the Sino-American relationship, not least of which was Beijing’s regime change in 1976.

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These turbulent years held major implications for the Council as well. Though the Council’s first three years had seen success, the events of 1976 would test its mettle. This chapter thus examines the Council through the dual lenses of capability and contingency. The Council’s utility lay in such operations as international business arbitration with China, reciprocal Chinese visits to the United States, relations with China’s foreign trade corporations (FTCs), and its presence and services at the Canton Trade Fair. Successes in these fields boosted bilateral trade as well as informal diplomacy. Yet three important contingencies simultaneously destabilized the Sino-American relationship: the reassertion of the Taiwan issue, the devastation of the 1976 Tangshan earthquake, and the deaths of Zhou Enlai and Mao Zedong in 1976. In particular, the chapter reinterprets the Taiwan issue in bilateral trade. Though established sources portray Taiwan as a nonissue, Taiwan remained a surprisingly resilient impediment to SinoUS trade in the 1970s. These difficultie underscored the fact that trade, while growing in both size and importance, remained a fragile institution shaped by political realities. And the Council played a considerable role in mitigating these realities in the pre-normalization era. T H E C A PAB I L I T I E S OF T H E N AT I ONA L CO UNCIL

After the well-received mission to Beijing in November 1973, the Council continued to work toward its major goals: informing corporations about the Chinese economy, informal diplomacy, and facilitating travel to China. In April 1974, the Council hosted a major trade conference at the World Trade Center, entitled “How to Buy to and Sell f rom the People’s Republic of China.”8 In addition to discussing legal and logistical aspects of the China trade, the Council also showcased Chinese wares ranging f rom stuffed pandas to porcelain to ping-pong paddles. Businesses and academics requested copies of the U.S. China Business Review with increasing frequency, Council membership grew to three hundred fi ms by 1975, and Christopher H. Phillips and the Council continued to maintain liaison with Beijing.9 Total bilateral trade by 1974 was more than $1 ­billion—a sharp contrast f rom the barely $5 million in exchanges just three years prior.10 In 1975, the Council sought to expand backchannel relations with the Chinese and to fulfi l one of Under Secretary Lynn’s original goals: a re-

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ciprocal trade delegation. Following China’s reception of Phillips and the directors in November 1973, the Council began to construct a worthy American itinerary for their counterpart, the China Council for the Promotion of International Trade (CCPIT). On August 20, 1975, the Council secured ten visas for the CCPIT from the US Department of State.11 The Chinese, in turn, arrived in Washington, DC, on September 6, 1975.12 Just as the Council maintained backchannel relations with Beijing, so the CCPIT preserved subtle Chinese access to Washington. Ironically, shortly after the CCPIT’s delegation arrived on American soil, the Chinese government released an officia statement accusing the United States of “‘blood-sucking exploitation and plunder’ in world trade.”13 Such a profound divergence between public pronouncements and private actions illustrated why Beijing proved receptive to inf ormal diplomacy in this period. To those nations in the world communist movement observing China’s leadership, Beijing projected itself as thoroughly anti-capitalist and anti-imperialist, as it simultaneously, yet discreetly, sought backchannel contacts with major American corporations. Such informal trade diplomacy thus created a level of latent stability, separating hardline rhetoric from the new reality of Sino-US contacts. Indeed, Kissinger and President Ford took keen interest in convening with the CCPIT’s delegation. On September 8, Ford, Kissinger, General Brent Scowcroft, and George H. W. Bush met with the CCPIT and the National Council at the White House for a discussion of trade and exchanges.14 The CCPIT’s delegates included Vice Chairman Li Chuan and the interpreter Wang Genliang, whom Gene Theroux had met with Hale Boggs.15 Representing the Council were Bill Hewitt, by then the new chairman, Phillips, Theroux, and six others, including the attorney Walter Sterling Surrey. President Ford commented that he was “grateful for Mr. Hewitt and Mr. Phillips, and others of you, for taking leadership in stimu­ lating the trading relationship between China and the United States.”16 Hewitt responded that he was thankful for the “enormous boost” Ford’s support provided the Council, and he reaffirmed that the Council strove to “facilitate and help promote trade exchanges and exhibitions between our two countries.”17 Li, representing the CCPIT, thanked them both for their generosity in hosting the delegation and in allowing such high levels of political access. As he assured President Ford, “We are most pleased to be received by Your Excellency.”18 Ford reminded Li that his own presidential delegation was scheduled for an imminent visit to China, and that he looked forward to continuing substantive dialogue in Beijing.

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Aside from the more formal elements of backchannel diplomacy, the Council’s liaison with the CCPIT also highlighted the careful choreog­ raphy of Sino-American interaction in the early rapprochement. Following its visit to Beijing in November 1973, the Council had spent almost a year assiduously planning the CCPIT’s eighteen-day tour of the United States. The itinerary combined banquets, visits with the boards of Sears and J. C. Penney, demonstrations of dishwashers and f reezers, and tours of a shopping mall in New Jersey and a supermarket in Illinois.19 In addition to ­visits to Washington, DC, New York, Chicago, Houston, San Francisco, and Seattle, the Council’s itinerary also included a brush with rural America.20 In one of the more remarkable juxtapositions, the Council brought the ten Chinese to a rural farmhouse in Moline, Illinois (the city in which Hewitt’s company, John Deere, was headquartered), to dine on “turkey, ham, corn-on-the-cob, squash, and melon,” and to speak with Illinois farmer Darrel Hein “about his corn yield.”21 As it turned out, painting a favorable picture of the United States for the Chinese required tactful accommodation from the National Council. The Chinese cancelled a meeting with the US Conference of Mayors because they “said it would be ‘inconvenient’ to receive” the Puerto Rican mayor in attendance, as China had recently demanded Puerto Rican independence in the United Nations.22 While touring the Museum of Science and Industry in Chicago, the Chinese delegation noticed that the museum was fl ing the Taiwanese fla . When they objected, the museum’s director informed them that he refused to lower the fla , as the United States still recognized Taiwan. The Chinese immediately cut the visit short after a mere fi teen minutes, exiting out the back door.23 Other commotion involved the delegation’s entertainment. The CCPIT had been so hospitable to the Council’s directors on their 1973 visit that they, in turn, “wanted to be sure that on the reciprocal visit from the Chinese side, [they] did the utmost to make them feel welcome and to give them good entertainment.”24 Hewitt charged Theroux with pulling something together for the CCPIT during their initial stay in Washington, DC. He instructed Theroux, “Gene, I want a real dog and pony show for them. They were so good to us.” I said, “Oh, rightfully, of course, yeah.” So I said, “What do you have in mind?” And he said, “A real dog and pony show.” And I said, “Yes,”—but you know, they had put on Peking Opera and Revo-

The National Council, 1974–1977   85

lutionary Opera, and stuf f f or us—I said, “Did you have any special thoughts?” I figured a corporate executive had planned a lot of events. He said, “Gene, you’re not listening to me. I want a real, real dog and pony show.” I said, “You mean with dogs and ponies?!” And he said, “Oh yeah. Dogs, ponies, monkeys, the whole thing. That’s what I want.”25 The CCPIT’s reception, hosted in Washington’s posh Shoreham Hotel, came “really, really close to disaster”: There were toasts back and f orth [between the Council and the CCPIT], it was a long meal, good meal, toasts back and forth. And, you know, since I was the guy that had put together this—at Hewitt’s request—dog and pony show, the hotel guy was tearing into me: “I’ve got to get—I’ve got horses out there! People have to clean up after them! We didn’t ever used to have to do that! I’ve got monkeys! I’ve got dogs barking! Get this shit together! Please make them stop!” And I said, “I’ve got to put on this show!” Anyways, so we did it.26 Aside from the flag and mayoral incidents and the potential ill will of the Shoreham’s management, the CCPIT’s visit appeared another success. It validated the concept of a reciprocal trade mission and put the CCPIT in contact with the highest American leadership. It further conveyed to the Chinese the technological goods the United States might export, and paved the way for later missions of China’s FTCs to sign the crucial contracts that reestablished trade. Indeed, despite the importance of its informal diplomacy, the Council’s underlying charge remained the expansion of bilateral trade. Trade was a symbol, Phillips acknowledged, but it was not “merely . . . symbolic”; its “tangible” and reciprocal nature could give rise to a more durable and “very much ongoing” relationship.27 As such, the Council embraced its trading mission by handling two fundamental issues: information and ­access. As discussed in chapter 1, information on the Chinese economy remained difficul to find and even harder to verify. The Council’s business programming and reference publications sought to close the American ­information gap on the China market. Moreover, the Council enabled the direct contact of American businesses with Chinese producers and suppliers. By inviting trade delegations and China’s foreign trade c­ orporations

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to the United States, arranging American travel to the Canton Trade Fair, and aiding American traders in China, the Council, in Phillips’s words, presided over “an extraordinary expansion in trade”—at least until further contingencies in China’s political situation began to complicate its ­efforts.28 S PR E A D I N G I N F OR M AT I ON AB OU T C H INA ’S ECO NO MY

At a time when China’s economy remained opaque to the American business community, the Council’s intellectual production served to demystify trade. With Nicholas Ludlow leading the effort, the Council established and maintained a unique research library in Washington, DC, available for use to its member fi ms, which held rare and topical resources on China’s economy. The library contained books and articles “on more than 400 separate subjects” pertinent to the China trade, ranging from agriculture to construction to chemicals.29 Along with its seventy-fi e specialized reports, a comprehensive encyclopedia on the Chinese economy, and an economic map of China eventually adopted by the World Bank, the Council also spread needed knowledge through its flagship publication, the U.S. China Business Review.30 The Review ran fi ty to sixty pages—in contrast to the short, competing pamphlets then available—and was issued on a bimonthly basis. It was soon recognized as the preeminent resource on the issues of Sino-­ American trade. Later letters of recommendation written f or Ludlow, editor of the Review, consistently noted the publication’s unusual originality and quality. The magazine earned accolades both from the Chinese Liaison Offic in Washington, DC, and f rom such American diplomats as George H. W. Bush.31 The US Liaison Offic in Beijing wrote the Council numerous times in praise of the Review, while also requesting additional copies for distribution to the Chinese. In May 1976, a Liaison Offic commercial and economic offic , Frank Wardlaw, wrote that “unlike some of our handouts, Business Review copies are eagerly read by our contacts in other embassies.”32 Bob Perito, another commercial and economic office in Beijing, similarly commented that “our diplomatic colleagues in Peking”—the Chinese—“are wildly enthusiastic about the magazine and many have expressed amazement about ‘how you get your businessmen’ to provide such

The National Council, 1974–1977   87

detailed reports on their dealings with the Chinese.”33 Perito, in an earlier letter, had sounded much of the same praise: “Your magazine is so popular that we are beginning to receive inquiries from our diplomatic colleagues asking when they can expect to receive their copies.”34 In Washington, People’s Republic of China (PRC) Commercial Counselor Peng Chinpo called the U.S. China Business Review “ ‘rich’ in content,” while “his wife called the magazine excellent” and “said that they had both read many copies of it.”35 Michel Oksenberg called the magazine “the leading contemporary journal on Chinese affairs ”36 By 1981, the Review had achieved a circulation of about 16,000.37 The Review became such a staple due both to its production value and the accuracy and topicality of its writing. Most other publications on the China trade were short, simplistic bulletins, rather than magazine-length publications. Moreover, due to the Council’s unique contacts with the CCPIT, the FTCs, and the Chinese Liaison Offi , the Council could ­request informational reports inaccessible to other nongovernmental organizations (NGOs). The chief of the Chinese Liaison Offic in Washington, Huang Chen, demonstrated the closeness of the relationship when he personally painted the calligraphy for the f ront cover of the magazine’s first issue.38 Similar to the Council’s exclusive information channels with the Chinese, the Council could reciprocally supply the Chinese specialized data on the American market. In one instance in January 1974, the Chinese Liaison Offic asked for “assistance in determining . . . the potential market in the United States for Chinese hand tools.”39 The Council, leaning on its connections with its member fi m J. C. Penney, provided the Chinese an exhaustively detailed, nineteen-page report on the American hand tool market, covering everything from wrenches to pruning shears.40 Drawing on its reference library and its contacts in China, the U.S. China Business Review demonstrated its utility in its first print run: the January–February 1974 issue’s comprehensive report on China’s oil. Given the Arab oil embargo, the skyrocketing price of oil, and incipient stagfl tion in the American economy, China’s oil reserves began to attract intense attention in the United States. In reality, China’s oil production remained in its adolescence, with small onshore reserves confined mostly to Daqing. Nevertheless, misinformation and speculation on China’s oil abounded. P. T. Ho of the University of Chicago, writing in the Los Angeles Times, postulated, based on “authoritative sources in Peking,” that “by the early 1980s, China’s oil exports might reach 300 million tons, or more than

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2.1 billion barrels a year, an amount roughly equal to Iran’s present annual production.”41 China trader Charles Abrams went even further, claiming in late 1974 that “the oil reserves of the Chinese People’s Republic exceeded those of the U.S. and the Middle East combined [!] and by the 1990s, could supply all the world’s oil need.”42 Rather than fanning the flames of speculation, the U.S. China Business Review’s f irst issue comprehensively analyzed China’s oil industry. The main article, written by Executive Director Ludlow, partially confi med reasons to seek out Chinese oil. When Arab oil ran $10.80 a barrel in January 1974, China’s National Chemical Export and Import Corporation had negotiated a deal with Japan providing oil for a mere $3.83 a ­barrel.43 Despite the potential boon China’s oil seemed to present to the West, Ludlow detailed the realistic limitations. Oil f rom China’s known onshore reserves tended to have a high pour point, making it harder to handle and of a lower quality than Arab oil.44 China’s oil prices also ran lower than the market rate because of Beijing’s immediate political motivations. In addition to China’s FTCs ignoring prevailing prices when setting price levels for export deals, Beijing also desired to undercut an ongoing Soviet oil deal with the Japanese.45 Where similar incentives for the Chinese did not exist, buyers could not expect Japan-level prices. Ludlow’s analysis, rather than focusing on China as an oil exporter, suggested instead that the United States might become a key supplier of drilling technologies. Recent oceanographic surveys had suggested possibly significant offshore Chinese oil reserves. Thus, the United States could supply the rigs, surveying equipment, and tankers needed for offshore drilling.46 The magazine’s first issue established its reputation for detached analysis. Subsequent issues, whether on China’s fi e-year plans, business arbitration, or banking in China, stood out to the diplomatic and business communities for their reliable information. By supplanting speculation with fact, the Council prosecuted its “basic education” campaign on the Chinese economy.47 The Chinese, in turn, saw the Review as a valuable conduit through which they might modify American discourses on the China trade. In a 1975 meeting with Council official a Chinese commercial office criticized what he considered the US media’s occasionally “very childish . . . press reports.”48 For example, the media extensively covered American grain sales to China, and f rom those sales, concluded that China had a “food problem and must rely on the U.S.”49 Yet when a team of American

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agricultural specialists returned f rom China with a favorable assessment of Chinese agriculture, the media had largely ignored their appraisal. ­Theroux countered that The New York Times had, in fact, recently run a story on the agricultural mission. Nevertheless, the commercial office suggested that overall, the “press left the wrong impression about China’s food situation.”50 In his view, the Council could “offset unfavorable influences of mass media with objective stories” in the Review.51 While the Review avoided propagandizing the Chinese economy, which would have undermined its point, the encounter reinforced China’s symbolic sensitivities about trading with the leading capitalist power. In addition to the U.S. China Business Review, the Council’s academic advisory board demystified the political and economic situation in China. The board consisted of “the nation’s leading experts on China,” including Dwight Perkins of Harvard; A. Doak Barnett, previously at Columbia University and then the Brookings Institution; and Alexander Eckstein of the University of Michigan.52 To counter the lack of American business experience in China following the two-decade embargo, the board instead provided insights into China’s economy based on academic study. It aimed “to give a political dimension to the Council’s work,” contextualizing economics within China’s political milieu.53 It also provided “conf identia consultation” to any member fi m considering doing business with China.54 The board also hosted conferences across the United States “for hundreds of businessmen,” as Perkins explained, enabling the Council’s member f i ms to “receive an up-to-date assessment of current US-Chinese ­relations, and to ask questions related to their fi ms’ specific commercial interest.”55 The board’s conferences attracted a number of the Council’s high-powered fi ms, including Honeywell, McDonnell Douglas, Cargill, IBM, Caterpillar, Ford, and Exxon.56 A conference in Houston, entitled “China’s Petroleum Industry,” further clarified the realities of Chinese oil. Featuring Oksenberg, Philip Habib of the State Department, and a number of Council speakers, it attracted two hundred corporations, including a handful from the Middle East and Japan.57 Concurrent with the U.S. China Business Review, the academic advisory board, consultation, and conferences, the Council also addressed the difficu y of physically accessing Chinese markets—and of the Chinese accessing American markets. These concrete efforts at last brought trade from theory to reality.

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S OLV I N G T H E P ROB L E M OF ACCESS

In the early and mid-1970s, selling directly to Chinese end-users remained difficult f or American businesses. All bilateral trade filtered through China’s state trading monopoly: “a handful of FTCs owned and controlled by the Ministry of Foreign Trade” that carried out all “import and export plans,” an arrangement also common in the Soviet bloc.58 These FTCs included the China National Import Export Corporations for Cereals, Oils, and Foodstuffs; Native Produce and Animal By-­products; Textiles; Light Industrial Products; Chemicals; Machinery; Metals and Minerals; and Complete Plants.59 China’s complicated trade regime necessitated a sophisticated middleman organization like the Council. As the Council’s second vice president, Melvin Searls, explained, “all the business in China is done through these FTCs which monopolize the foreign trade.”60 Phillips, in a status report on the Council’s activities, similarly explained that “all actual business with U.S. fi ms is conducted by China’s FTCs,” making “good relations between them and the Council . . . an obvious necessity.”61 Further complicating the issue of access, the Ministry of Foreign Trade refused to field communications from the American business community.62 The Chinese insisted that the Ministry was only for those nations with which China had of f icia diplomatic relations. The CCPIT, similarly, was “legally empowered to sign contracts” yet “very rarely” did.63 Direct contact with the FTCs was thus crucial in arranging bilateral business contracts. The Council helped its member f i ms cope with the FTCs—and China’s trade regime generally—in several ways. These measures included arranging FTC delegation visits to the United States to sign contracts, organizing American travel to the Canton Trade Fair, facilitating negotiation and arbitration, and stimulating imports of Chinese goods through its Importers’ Steering Committee (ISC). FT C D E LE G AT I ON S A N D T H E C AN TO N T R A DE FA IR

The Council spearheaded the effort to bring China’s FTCs to the United States to negotiate business deals. In November 1975, Theroux met with each of the FTCs, in addition to the Bank of China, to open dialogue

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about the possibility of increased commercial exchanges.64 Following the meeting, the Council then extended invitations to each of the FTCs to visit the United States. By October 1976, the Council had hosted six FTC delegations on American soil, including three f rom the Light Industrial Corporation, one from Textiles, one from Minerals and Metals, and one f rom Native Produce. Not only had the Council prepared receptions for each delegation, but it also secured each delegation the necessary visas through the State Department’s passport offi .65 The Council then directly arranged contacts between the FTCs and its member corporations on an exclusive, invite-only basis. Without invitation and recommendation by the Council, the chances of an American business contracting with an FTC were slim; “the invitation list [was] ­basically controlled by the National Council.”66 As Searls explained, the FTC process remained so exclusive for a variety of reasons.67 The FTCs had only limited time in the United States, and thus needed an intermediate body to filter out all but the most serious and capable fi ms. Since FTCs were so specialized, their delegations wanted to meet only with specific American buyers and sellers. (For example, the Textiles Corporation would not meet with an American aluminum vendor.) Further, the FTCs often requested specific goods needed in the immediate term for China’s modernization projects. Given these demands, the Council’s screening process increased the likelihood of fi ms signing contracts. And once in the United States, the FTCs meant business. Searls described them as “the hard sell, and I mean hard sell. They come in and they sign new contracts and they want to do business. They want to meet new customers and they have very little time for the corporate f ront offi .”68 Searls recalled that one FTC, within a half hour of meeting with several American corporations, had already signed its first c ntracts.69 To coordinate meetings of fi ms and FTCs, the Council publicized the Chinese FTC’s impending arrival and then created a list of its ­member fi ms that desired to see the Chinese. The Chinese, in turn, informed the Council “as to whom they would like to see.”70 Af ter the FTC arrived, the Chinese and the National Council then cross-compared their lists to see which fi ms overlapped. As Searls explained, “we go through the lists, match up the companies that want to see the Chinese, that we recommend see the Chinese, and that the Chinese want to see, and then we come up with a final itinerary.”71 In rare cases, the Chinese rejected a fi m that the Council had recommended. To work around such instances, the Council

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arranged further receptions with the FTC “to make sure that those people who did not see the delegation have some access to them even on a social basis.”72 Julian Sobin concluded, reflecting on Searls’s description of such exclusivity, “And somebody not a member of the Council, the only access he has to this is to read about it in the press.”73 Despite the exclusivity being a product of China’s state trading apparatus, the Chinese occasionally expressed annoyance with the Council’s membership model. In 1975, Chang Tsien-hua informed the Council that it must “not limit activity to [its] own members” in trade promotion, as this inherently constrained China’s reach among the American business sector.74 Phillips countered that, due to the Council’s private, informal nature, which required it take no public funds, the Council could only directly help those fi ms contributing dues. Additionally, the Council created positive externalities even for those fi ms outside its ranks. As subscription records showed, a signifi ant number of the Review’s readers were nonmembers, while the policies the Council advocated (for example, mostfavored-nation), if achieved, would benefit the entire American business community’s China trade.75 In additional to FTC exchanges in the United States, the Council also facilitated Sino-American trade in China by screening American invitations to the Canton Trade Fair. The fair, which remains in operation, is a semi-annual goods exhibition hosted in Guangzhou. During the 1970s, the fair was “China’s principal forum for trade with non-­communist countries.”76 It presented the best possible opportunity to foster a business re­ lationship with the Chinese, allowing American “f i ms’ executives [to] meet and negotiate with the Chinese and establish personal contacts.”77 As the U.S. China Business Review explained, the Canton Trade Fair was “a very good place, indeed the only place, to start a long-term business relationship” in China, making “obtaining an invitation to the Fair” a critical “stepping stone” to a broader business relationship.78 Like the FTC delegations, exclusivity was also a basic reality when trying to access the Canton Trade Fair. As Foreign Service Office Norman Getsinger explained to a Council conference, “Unfortunately, you can’t go over there unless you’re invited.”79 The invitation process was complex. Invitations were “obtainable only from the foreign trade corporations, and, in limited instances, the Secretary of the Fair.”80 Americans could apply for a Chinese visa only after they had received an invitation to the fair.81 While American fi ms could attempt to apply for a fair invita-

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tion directly with the FTCs, there was only a small chance that they would be accepted. Given the volume of interest in obtaining fair invitations, the FTCs relied on the National Council to recommend specific fi ms that it could guarantee had a “bona fide interest in attending the Fair.”82 The Chinese, in turn, pledged to treat the Council’s recommendations with “most serious consideration,” boosting a fi m’s chances of invitation.83 To further assist traders, the Council maintained a full-time offic in Canton that provided a wide range of business services. To aid American businessmen in China, the Canton Offic assisted traders with “secretarial services,” “translation and interpretation services,” typewriters, copiers, and up-to-date information on supply and pricing.84 The Council’s Canton associates also provided business consultation and “introduce[d] member fi ms to key Chinese trade official ”85 In these capacities, the Council served some of the most important American corporations doing business in Canton, including Cargill, Caterpillar, Coca-Cola, Exxon, Monsanto, and J. C. Penney. J. C. Penney, in particular, provided an example of the Council’s power to open channels of bilateral trade. Bob Boulogne, the company’s director of international buying, had followed Nixon’s opening to China with intense interest and regarded China as a major potential market for his fi m. He previously tried to secure an invitation to Canton through the Chinese, and even through the Canadian Embassy, to no avail.86 Boulogne described the Council as “really the breakthrough” in J. C. Penney’s operations in China.87 It was the Council that fina ly secured J. C. Penney the fair invitations and visas needed to enter China. In 1974, the Council arranged for a fi e-man group of J. C. Penney’s traders to visit Canton and then to travel to Shanghai. The J. C. Penney group bought $200,000 of Chinese goods in Canton and an additional $1.4 million in Shanghai, for a combined purchase of $1.6 million.88 T H E I M P ORT E R S’ S T E E R I N G CO MMIT T EE

As previously mentioned, an early charge leveled against the Council was that its corporate membership had an export-oriented bias. At a time when America’s growing bilateral trade surplus annoyed the Chinese, the member fi ms’ preference for exports, rather than purchases, seemed to these critics somewhat counterproductive. China’s weak industrial capacity

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and legal issues like the lack of most-favored-nation (MFN) status were more culpable in the pro-US trade imbalance than was the Council’s member composition. Nevertheless, the symbolic sensitivities of trade required a sincere effort to increase imports f rom China, thereby offsetting the American trade surplus, respecting China’s preoccupation with “equality and mutual benefit ” and keeping good relations with the ­Chinese.89 In response, in 1974 the Council formed the ISC, a specialized group within the Council dedicated solely to facilitating imports f rom China. The ISC attracted small specialty importers by requiring lower dues than those the Council required f rom major corporations. According to the Council’s dues schedule, companies with $50 million or more in gross income owed $2,500 annually in dues; for corporations with greater than $20 million but less than $50 million in sales, the fee was $1,000; and for those corporations with gross incomes smaller than $20 million, annual dues were $500.90 To attract smaller importers, however, the Council offered a special dues rate of $250 per year for businesses that made less than $10 million in gross annual income and focused on importing from China.91 The Council initially organized the ISC into fi e committees based on importer specialty: textiles, foodstuffs, light industrial products, metals, and machinery.92 (The Council would later devise additional importers’ committees.) The committees embraced a dual mandate they thought would boost imports from China. First, they were to aid China’s FTCs “in understanding the import regulations, consumer tastes, and other market conditions in the United States” so that the FTCs could boost their sales to American fi ms and remain in compliance with American law.93 Second, the ISC’s importer companies acted as liaisons for American businesses buying from China. Phillips, in the Council’s 1975 Annual Report, commented that importing from China required navigating the issues of “tariffs, quality, supply, pricing, currency fluctuati ns, shipping, exclusivity, dispute settlement, import financin , and compliance with relevant U.S. statutes and regulations,” making guidance a necessity for businesses and the FTCs.94 Given that the American business community had little experience in importing mainland Chinese goods, and lacking legal trade f rameworks until diplomatic recognition in 1979, importer consulting proved helpful. A prominent consultant was Stanley Lubman, an expert on Chinese law and a law professor at the University of California, Berkeley.95 Lubman ran

The National Council, 1974–1977   95

an importer service that accompanied American businessmen f rom the time they set foot in Canton until they returned to the United States. Lubman, through his fi m Lubman and Company, could “act as [a] buying agent for importers and large retail groups, buy on behalf of customers in China, prepare negotiations” for corporate representatives, “assist during negotiations, follow through in the implementation of contracts, and help to resolve any post-contractual problems.”96 In the period before the United States and China had formalized arbitration, such intimate aid for American businesses in China was especially valuable. China’s “business atmosphere” remained “esoteric,” while it boasted “perhaps the world’s toughest negotiators.”97 An importer liaison helped mitigate these risks—cultural misunderstandings, misleading contracts, or the purchase of defective or incorrect products. Moreover, by countering the strong American trade surplus, importers helped smooth relations with the Chinese Liaison Office and the CPIT. N E G OT I AT I ON A N D AR BIT R AT IO N

Coping with the legal idiosyncrasies of the China trade was yet another area where the Council proved valuable to American business. The protection of American intellectual property rights in early Sino-US trade remained a major concern (and justifiab y so, given the massive levels of intellectual piracy China eventually began to perpetrate). Initially, the Chinese refused to recognize American trademarks due to the lack of official diplomatic relations. Under China’s trademark regulations, promulgated in April 1963, “foreign trademark registration” required “both home country registration and the existence of an intergovernmental reciprocal trademark protection agreement.”98 The lack of diplomatic relations precluded such an intergovernmental agreement. Indeed, “the PRC has demanded that diplomatic recognition precede the conclusion of such agreements.”99 Instead of the general law of trademarks, all trade secrecy relied on “contractual secrecy clauses for their protection.”100 Despite China’s initial obstinacy, the Council ultimately secured the registration of American trademarks in China “on the basis of reciprocity,” effective January 1978.101 The Council’s lead attorney, Walter Sterling Surrey, had negotiated with the CCPIT three times on the trademarks issue— during the original mission in November 1973, in October 1976, and

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again in 1977.102 In 1976, the Council furnished evidence to the CCPIT that the United States was allowing the registration of Chinese trademarks on American soil. It was a Council member fi m, in fact, that registered the first modern Chinese trademark in the United States: a “Good Health” logo on imported human acupuncture models.103 Arbitration and dispute resolution were other top concerns. Should a business dispute arise between American and Chinese fi ms, it was initially unclear what recourse either might have. The lack of normalized relations precluded a bilateral trade agreement specifying a method of adjudicating disputes, while China’s arcane business laws created ambiguities. The legal regime’s uncertainty could have a chilling effect on trade. In one instance, the Chinese ordered a batch of aluminum ingots at a specified purity of 97.5%, “some of which on shipment were stamped 95% purity.”104 The American fi m responded to the skeptical Chinese that the ingots were actually 97.5% pure, but had been mislabeled. After an ad hoc settlement for “a very nominal amount,” the Chinese, in turn, “made it very clear that they would not do business again with this fi m.”105 The Chinese themselves strongly preferred informal conciliation— “f riendly discussion,” as the FTCs called it—to formal adjudication.106 The CCPIT’s informal dispute resolution system had, in practice, three stages of mediation that varied by the intensity of the dispute. The most common was “consultation,” a preemptive settlement between an FTC and an “aggrieved foreign party” that required no officia hearing.107 The second level was “conciliation,” a settlement “achieved in the course of a hearing.”108 Finally, f or the most serious disputes, the CCPIT’s Foreign Trade Arbitration Commission (FTAC) convened formal (though nongovernmental) binding arbitration hearings, which occurred relatively rarely. In 1974, f or example, the CCPIT settled one hundred disputes through consultation, twelve through conciliation, and only one through arbitration.109 Sino-American disputes, however, presented additional challenges for the Chinese mediators. At Chinese insistence, Chinese and American fi ms adopted arbitration clauses in their business contracts, which perplexed many American traders. Surrey described the tedious conciliation process as “like being pecked to death by a thousand Peking ducks,” while others disputed that arbitration in the Chinese system would lead to fair results.110 For these reasons, the Council and the CCPIT worked to establish a form of joint conciliation to secure the presumption of fairness to both sides.111

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Yet the lack of normalized relations made the legal enforceability of such procedures unclear f or Americans, at least until the US Supreme Court decided the case Scherk v. Alberto Culver in June 1974. Scherk examined the enforceability of an arbitration clause signed between a German citizen and an American business fi m. The Court held, in a 5–4 ruling, that “the arbitration clauses of international agreements . . . were de­serving of enforcement.”112 The decision legitimated the authority of the American Arbitration Association (AAA) to resolve international trade disputes.113 The National Council subsequently worked with the AAA and the FTAC to settle pre-recognition trade disputes through nongovernmental channels. Surrey was, in fact, the AAA’s lead arbitrator when the AAA and the FTAC reached their first milestone nongovernmental dispute resolution in October 1977, involving an FTC and an American commodities company.114 Though the broader Sino-US political relationship remained uncertain, the Council’s nongovernmental circumventions helped smooth and stabilize bilateral exchanges. “A R I S I NG STOR M I N T H E M OU N TA INS”: T H E LIMIT S O F T H E N AT I ON A L C OUNCIL

The Council’s services to American fi ms did not go unnoticed by the Chinese. In January 1975, Phillips and Theroux held a private meeting with Chang Tsien-hua, commercial counselor from the Chinese Liaison Offi . They asked Chang not what the Council was doing well, but rather asked him to name “the inadequacies on our part.” 115 Chang acknowledged “the good contribution” the Council had made to United StatesChina trade relations.116 Chang discussed remaining issues in labeling, transportation, and packaging, yet cryptically added that there was “a fi th problem I need not mention.”117 Despite this comment, Chang spelled out the unmentionable problem only a few moments later: “To be frank, the situation is not at all satisf actory. The political situation may not change all of a sudden. The causes of this are known to us all.”118 Chang was referring to normalized relations. Phillips was more blunt: “it became increasingly clear that, without normal diplomatic relations, a major expansion of business wasn’t going to happen.”119 The year 1976 would bring these political questions into even sharper relief. As Deng had presciently admonished Ford, a “rising storm in the

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mountains” would begin to unleash itself upon the Sino-US trade relationship. As the contradictions of Taiwanese recognition and Chinese rapprochement continued to simmer, Mao’s decline and death and the cataclysmic Tangshan earthquake created urgent new questions about the future of Sino-US trade. T H E C ON T I N U I N G TA I WA N ISSUE

Though Washington continued to offici ly recognize Taipei’s Nationalists, many of the initial reasons for the alliance with Taiwan had dissipated by the 1970s. In the early 1950s, many assumed that Chiang Kai-shek’s Kuomintang (KMT) f orces might militarily “recover mainland China from Mao Zedong and the Communist forces.”120 Getsinger recalled that “we were very much caught up in the idea that Chiang Kai-shek might have a chance to get back” the mainland.121 With the Chinese Civil War still a f resh memory, Chiang’s incipient counterattack did not seem as ­implausible in 1954 as it did by the 1970s. Yet the passage of time had deflated these prospects. The last, fleeting plan Chiang devised in the mid1960s to invade the mainland, so-called Project National Glory, collapsed after a series of tactical blunders and PRC counterattacks. Two decades of communist rule on the mainland had apparently settled the question of China’s permanent governance. Other assumptions had been predicated on the paradigm of containment and the ongoing Vietnam War. During the war, the United States had used Taiwan as a logistics center and a friendly port and had stationed American assets on the island.122 The withdrawal from Vietnam obviated the need for Taiwan as an operations base. Moreover, the drive for Chinese containment relaxed during the détente period of 1972–1979. Rather than defending Taiwan, mending relations with China had become the overarching strategic concept, as the China relationship was of greater importance for triangular diplomacy. Why, then, did the United States take seven years after Nixon’s opening to diplomatically recognize the PRC? An important factor that the historiography has underrated was the Taiwan lobby’s (aka the China ­lobby’s) continuing pressure on Nixon, Ford, and Jimmy Carter to maintain relations with Taipei. Previous historians have downplayed this explanation, with one source commenting that the lobby’s influence had “de-

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clined considerably in the mid-1960s. . . . President Nixon’s sudden change of U.S. policy toward the PRC further triggered the decline of influence of the China Lobby. . . . When the Nixon administration changed its policy toward the PRC, the China Lobby, losing executive support, found itself powerless to battle against the new China policy.”123 In this view, the Taiwan lobby was essentially a dead letter by 1972. On Taiwan’s impact on Sino-US trade, another source comments, “The ’70s, you have to realize, once Nixon opened up, there really wasn’t very strong right wing opposition. The major supporters of Taiwan were fighting a rear guard action, but I don’t think they had much influence n trade at that point.”124 Fresh diplomatic evidence declassified in the past two decades has complicated these positions. Despite a period of latency in the mid-1960s, the Taiwan lobby remained an important specter stalking Sino-US relations. With the revelation of the Nixon tapes, historians learned that as Nixon was considering withdrawing American support for Taiwan’s representation in the United Nations, he invoked the China lobby as an important consideration. In a conversation with Kissinger and Secretary of State William Rogers, he commented, “I’ve got to get Walter Judd [the dean of the China lobby and a resolutely pro-Taiwan congressman] in and talk about this issue. . . . I’ve got to get [in] these domestic people—the hardliners in the House and Senate, some of the columnists, and people, f rankly, who are part of the China Lobby, which is still a considerable group.”125 In the long view, the Taiwan lobby might not have provided ­sufficien resistance to derail Nixon’s overture. Yet at the time, Nixon was clearly concerned about a potential backlash. The same concerns resurfaced after Nixon’s Watergate implosion and Ford’s assumption of power, particularly around the election of 1976. As previously noted, Kissinger blocked a normalization proposal in December 1975 for fear of the Taiwan lobby’s reaction during Ford’s presidential campaign. Explaining the decision in July 1975, Kissinger told the diplomat Winston Lord, “For political reasons it’s just impossible for the U.S. to go to normalization before ’76. If there’s any one thing that will trigger a conservative reaction to Ford, that’s it.”126 The Taiwanese, feeling the sand shif ting beneath their feet, began ­domestic lobbying action in the United States. In a direct rebuttal to the National Council, in December 1976, the Taiwanese government instigated the creation of the USA-ROC Economic Council. Several American corporations alleged “heavy-handed,” maf ia-like tactics on the part of

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Sun  Yun-suan, then Taiwan’s minister of economics and later its premier.127 Sun had repeatedly called the headquarters of American corporations, ­recited for them in detail their holdings in Taiwan, and then asked them to join the Economic Council.128 (The implication being that failure to do so would be looked on very unfavorably.) By such veiled “threats of economic reprisals,” Taiwan hoped to “keep its capitalist backers in [the United States] f rom switching their loyalties to communist China.”129 One American fi m reported that the Taiwanese had threatened it with the cancellation of a $40 million contract if the fi m were to withdraw from the USA-ROC Economic Council.130 The Chinese reaction to Taiwan’s foray into informal trade diplomacy was swift and stern, pushing the National Council into a triage effort in 1976 and 1977. While some American executives had “naïve[ly]” believed that they could separate business from politics, Chinese official emphasizing the politically contingent nature of bilateral trade, reminded them that “business and politics can’t be separated.”131 “The ‘two Chinas’ implications of membership in the two councils” was unacceptable to Beijing.132 As such, the Chinese began to punish those companies trading in both Taiwan and the PRC that had joined the USA-ROC Economic Council. The Chinese refused to cash American Express traveler’s checks and withdrew General Electric’s and Union Carbide’s visas to the Canton Trade Fair.133 The deputy manager of the Bank of China informed Phillips that Beijing viewed joining the USA-ROC Economic Council as a “most unfriendly act.”134 He further advised that if the National Council’s members continued to join the USA-ROC Economic Council, the PRC would regard their membership in the latter as a “black mark” against those fi ms.135 The National Council was partially successful in mitigating such Taiwan lobbying in the 1970s. Throughout rapprochement, the National Council helped to create a “new China lobby—the so-called ‘Red China lobby’ . . . actively advocating recognition of the PRC”—that encouraged corporations to shif t their attitudes away f rom support for Taiwan and ­toward support f or normalization with Beijing.136 Tellingly, one of the clearest ways the Taiwan lobby’s power had declined by the mid-1970s was not in its political support, as the historiography asserts, but in its support from the American business community. Historically, American business had been ambivalent about relations with the PRC. Some organizations, like the US Chamber of Commerce, had supported normalizing commercial relations with China on the prin-

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ciple of f ree trade and the belief that America’s non-entry to the China market simply decreased competition for British and Japanese traders.137 Monsanto and Xerox had previously traded around President Truman’s embargo through third-party nations, including Britain, Italy, Japan, and France.138 Yet as these pro-Chinese corporations did little serious advocacy for normalization with the PRC, those corporations opposing the PRC ­intensively advocated their support for Taiwan. With certain exceptions, the American business community in the 1950s and 1960s was staunchly anticommunist. General Motors, R. J. Reynolds Tobacco, ARMCO, and Gulf Oil had all worked in collaboration with groups such as the John Birch Society to provide anticommunist educational materials to their employees.139 Companies also recruited paleo­conservative ideologues, for example W. Cleon Skousen, to speak to employees about “a house-cleaning of the State Department, a break in diplomatic relations with all Communist and neutralist countries, withdrawal from the U.N., etc.”140 In a 1961 supervisors’ meeting, Boeing brought in Nicholas Nyaradi, a hardcore anticommunist and a “regular performer” for “extreme rightist” organizations.141 He delivered a withering anticommunist speech that was then “distributed . . . to Boeing management as a worthwhile contribution to education about ­Communism.”142 Anti-PRC corporations also attempted to sway public opinion against normalizing relations with China. In 1953, Congressman Judd and his great collaborator in China lobbying, businessman Alf red Kohlberg, through their organization The Committee of One Million Against the Admission of Communist China to the United Nations, arranged a major petition to President Dwight Eisenhower voicing their “opposition to the admission of the so-called Chinese People’s Republic to the United Nations.”143 Judd and Kohlberg’s petition argued that expelling Taiwan from the United Nations would be an “unthinkable outrage against human decency and international justice” and would encourage “subversive totalitarian movements in the f ree nations of the world.”144 Among the petition’s 210 signers were Eli Lilly (chairman of Eli Lilly and Company), James H. Rand (vice chairman of Sperry-Rand), Philip D. Reed (president and CEO of General Electric), and Robert E. Wood (chairman of Sears ­Roebuck).145 By the mid-1970s, however, all the companies aforementioned (GM, RJ Reynolds, ARMCO, Gulf Oil, Boeing, Eli Lilly, Sperry-Rand, GE, and Sears) were members of the National Council, having reversed their

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antipathy for the PRC.146 While these fi ms would likely have explored China trade regardless of the Council, the Council coalesced their infl ence into a central institution that could more effectively advocate f or ­relations with the PRC. Thus, though business interests alone did not outweigh the political factors against normalization, the Council found success in the creation of a Red China lobby and the reorientation of business toward a pro-PRC stance. As Phillips explained, “without exaggerating the Council’s role, I think it’s fair to say that we did galvanize a signifi ant part of the American business community, which helped to overcome opposition by the pro-Taiwan lobby and others opposed to recognition of the PRC.”147 T H E TA N G SH A N E ART H QUA K E A N D T H E MA NDAT E OF  H E AV E N

As the Taiwanese complicated matters for the Council, China’s political order began to convulse. On January 8, 1976, Zhou succumbed to the bladder cancer that he had battled for four years.148 Though medical treatment might have saved him, Mao ordered that Zhou should not be informed of the diagnosis or have surgery performed.149 By September 1975, Zhou had withered to a mere 88 pounds.150 His death was a major blow to the stability of the regime. While Mao had focused on political ideology, Zhou had predominantly conducted China’s foreign policy, and especially the Sino-American rapprochement. Zhou was a mitigating force against Mao’s radicalism; indeed, “in the public eye, Zhou had saved [the Chinese] f rom Mao’s excesses.”151 Zhou’s death set off a chain reaction that demonstrated the deep paranoia of Chinese politics, culminating in a shake-up of China’s leadership. Following Zhou’s negotiations with American diplomats, Mao began to increasingly criticize Zhou as a sell-out to American interests and as “soft on the United States.”152 The Gang of Four, a group of ultra-­leftists led by Mao’s wif e, Jiang Qing, similarly sought to marginalize Zhou’s memory and to restore the intensity of the Cultural Revolution. In the newspaper Wenhui bao, the Gang of Four attacked Zhou as “taking the capitalist road.”153 Mao refused to attend Zhou’s funeral and strictly limited the time allowed for mourning Zhou’s death.154 By slighting Zhou’s memory, Mao had drastically misread Chinese public opinion: “Many Chi-

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nese people were upset that Zhou, who had earned their respect and admi­ eserved.”155 ration, was not given the posthumous recognition they felt he d Mao and the Gang of Four simultaneously began intense criticisms of Deng, the presumptive heir to power, along the same lines. They “criticized [Deng] as the head of the reviled capitalists in the party.”156 Mao ­accused him “of forming a faction designed to seize power and, ultimately, to restore capitalism.”157 These tensions boiled over in April 1976, during the Qingming (Pure Brightness), an annual festival honoring the dead. As a result of the truncated mourning period for Zhou, Chinese began to demonstrate in Tiananmen in Zhou’s memory. The protestors wrote “poems and essays honoring Zhou,” openly expressed their support for Deng despite Mao’s attacks, and laid more than two thousand wreaths dedicated to Zhou.158 By April 5, the crowds had grown to more than 100,000.159 The Gang of Four accused Deng of having planned such “counter-­revolutionary” demonstrations.160 As a result, on April 8, 1976, Mao purged Deng for a third time, removing him from all his positions in the Chinese Communist Party (CCP).161 The f racturing of the political order and the resurgence of anti-­ capitalist sentiment coincided with a deadly natural disaster. On July 28, 1976, an extremely powerful earthquake leveled the coastal industrial city of Tangshan. The tremor became the second-deadliest earthquake and the f ourth-deadliest natural disaster in recorded history, killing perhaps 450,000 Chinese. Its af tershocks damaged one-third of Beijing’s buildings.162 By chance, Phillips was in Beijing at the time negotiating trade matters with Chinese official He was forced to cut talks short when he developed dysentery as a result of salmonella poisoning. Matters only became worse when, at 3:30 a.m., af tershocks f rom Tangshan’s epicenter struck Beijing, nearly destroying Phillips’s hospital. He explained, “acting on instinct, I dove under the bed where, if the ceiling collapsed, there might be at least some protection f rom the mattress and bedsprings.”163 “The huge influx of injured people” f rom Tangshan forced Phillips and others into a makeshift hospital of open-air tents, where he fortunately recovered after three days’ rest.164 On September 9, 1976, Mao perished at the age of eighty-two. Tangshan’s timing seemed to confi m the old Chinese superstition that natural disasters harkened the passing of heaven’s mandate f rom one dynasty to the next. Yet the character of the next “dynasty” remained unsettled. Though Mao had handpicked the unremarkable premier Hua Guofeng as

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his successor, passing up Deng and Chen Yun among others, a power struggle ensued between Hua and the Gang of Four. A major issue concerned control of Mao’s unpublished papers. By publishing and interpreting his writings, either Hua or the Gang of Four could claim legitimacy and define Mao’s true wishes. Jiang pored through Mao’s papers, hoping “to find or perhaps to alter some document of Mao’s that would allow her to secure more power and define Mao’s legacy.”165 Hua struck back, however, on October 6. Sending out a team of elite policemen, he had the Gang of Four arrested and imprisoned.166 The Chinese public broadly supported the move, as Jiang had come to symbolize the worst ideological excesses of the Cultural Revolution. With the Gang of Four imprisoned, Hua, for the time being, held control of the Chinese state. China’s foreign trade, concomitant with these uncertainties, took a hard hit. The earthquake’s massive disruption f roze all business negotiations in Beijing through August 1976. Chinese of f icial cancelled all business delegations incoming to Beijing and Tianjin as well as both cities’ trade fairs, and asked that all businessmen currently in either city leave for Shanghai or Canton.167 Chinese exports to the United States demonstrated at least a modicum of stability. The United States was one of the few nations that, f rom 1973 to 1979, saw imports f rom China actually increase each year.168 However, for 1976–1977, the rate of increase for imports f rom China was a sluggish 1.5%, the smallest of the 1970s by a factor of 15.169 American exports to China, by contrast, plummeted by 600%, to their lowest levels since the end of the embargo in 1971.170 In the af termath of the earthquake, the Chinese government had diverted attention and resources away f rom foreign trade and toward emergency r­ ebuilding.171 Though the Council had presided over three years of growth, political contingencies began to arrest its mission, ushering in a moment of acute uncertainty. As William H. Miller perceptively concluded in Industry Week, “The future of Sino-US trade is more uncertain than ever as the result of [the] two convulsions that—literally and figu atively—have shaken the People’s Republic of China.”172

CHAPTER 5

Deng Xiaoping, the Council, and the Normalization Breakthrough, 1977–1980

On our part, we have too few laws, and it is imperative that we adopt some. —Deng Xiaoping to Walter Sterling Surrey, June 5, 19791 By 1985, Commerce and the Council predict we could well be doing $8 billion a year in trade with China. ($5 billion in U.S. exports and $3 billion in U.S. imports.) And, there are those, ­including me, who find this figu e conservative. And twenty years from now? Who knows. —Norman W. Getsinger, Director of Export Services at the National Council for United States-China Trade, January 10, 19802

As Hua Guofeng began to reassert political order in Beijing, the nation he inherited lay exhausted from Mao Zedong’s ideologically driven mismanagement. The Cultural Revolution had crippled the Chinese university system.3 Political indoctrination supplanted legitimate university classes, while political loyalties, rather than exam results, determined ­university 105

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admissions.4 China’s science and technology lagged behind given Mao’s resistance to foreign influenc .5 The disaster at Tangshan was only the latest blow in this long pattern of stagnation. Such cumulative setbacks plunged China’s contemporary share of world trade to less than 1%.6 Hua, recognizing the need to rebuild China’s economy, delivered a foundational address on the subject a few weeks after arresting the Gang of Four. On December 25, 1976, Hua spoke at a national conference on the subject of “Learning f rom Dazhai in Agriculture.”7 Ironically, Mao had organized the Learning f rom Dazhai movement in 1963 to propagandize the power of politically aware, self-sacrificing rural peasants. Yet Hua used the conference for a different purpose: to announce the “Four Modernizations” he believed would counteract Mao’s stagnation, bringing China’s “national economy to the front ranks in the world before the end of the century.”8 These reforms focused on the “comprehensive modernization of agriculture, industry, national def ense, and science and technology.”9 Given the continued reverence surrounding Mao’s persona, Hua could not directly implicate the late chairman’s fla ed policies. Rather, he improbably pinned China’s economic troubles on the Gang of Four, whom most Chinese despised anyway. In repudiation of their policies, Hua urged the Chinese “to prepare for a big growth in the national economy,” predicated on improved transportation, electricity, communication, and management.10 Hua’s comments, heralding China’s incipient economic opening, garnered widespread support in China’s political establishment. Hua had not conceived the Four Modernizations in a flash of original insight; rather, he appropriated the ideas and phrase Zhou Enlai had used as early as 1963.11 The difference was that af ter Mao’s death and the Gang’s arrest, Hua was now free to propound the Modernizations as state policy without being castigated as a reactionary. The strategic exigencies of triangular diplomacy had pushed the American side to deal economically with the Chinese. Af ter several twilight years in which trade remained symbolic, the Chinese then made the crucial counter-response, signaling a more ideologically pragmatic approach to foreign trade and influenc . Perhaps now they could shift the progress made from 1972 to 1977 from the realm of symbol to the reality of modernization. While Hua’s nod toward modernization tentatively endorsed this new socioeconomic course, doubts surfaced that he could actually execute such widespread reforms. His “readiness to learn f rom other countries and to bring in foreign technology” showed rhetorical breaks f rom Mao, yet he

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remained thoroughly wedded to Mao’s persona and mission.12 Chairman Hua, attempting to create a Mao-style personality cult, grew out his closecropped hair and slicked it back, as had the Great Helmsman.13 He began to dress in the same styles and to pose for officia portraits that reflected a conscious imitation of Mao.14 His ruling philosophy proved thoroughly derivative as well. In an editorial in Renmin Ribao in February 1977, he explained his adherence to the “Two Whatevers”: he would follow “whatever policies Mao supported” and “whatever instructions Mao gave.”15 His ideas were Mao’s, yet he lacked the institutional support, persona, and rigid ideological control that had enabled Mao’s supremacy. Not only did Hua’s attempt to reignite a personality cult annoy the Chinese political establishment, which sought to distance itself f rom Mao’s ideological fervor, but Deng Xiaoping’s well-received return to Beijing also undermined Hua’s primacy. On July 17, 1977, the Third Plenum of the Tenth Party Congress passed a resolution (“The Decision Concerning the Return of Comrade Deng Xiaoping to Work”) offici ly rehabilitating Deng f rom his third exile.16 The Party reinstalled Deng to all his former posts to the general approval of the Chinese public. Renmin Ribao commented on the establishment’s reception of Deng: “This meeting’s decision to return Deng to his positions inside and outside the party embodies the hopes of the broad masses of party members and the public.” 17 When Deng appeared at a soccer match on July 30, he received “an extraordinarily lengthy standing ovation.”18 In a short time, Deng’s pragmatic management revealed him to be better suited than Hua at running the Chinese state. He began comprehensive improvements of science, technology, and education. In May 1977, Hua approved Deng’s plans for a Chinese Academy of Social Sciences independent of the Ministry of Education, thus allowing the Academy to focus on legitimate research rather than propaganda.19 In August, Deng issued a decision restoring the university entrance exam, subsequently raising “the quality of both university applicants and recruits entering the workforce.”20 In March 1978, Deng presided over a major conference on science and technology, which he considered “necessary to guide modernization.”21 Finally, in December, the Chinese Communist Party’s (CCP) Third Plenum of the Eleventh Party Congress ratified Deng’s proposals for China’s “reform and opening,” signaling Party endorsement of widespread economic reforms in China.22

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T H E C OU N C I L : ON T H E C U SP OF A WAT ER SH ED?

The National Council f ollowed Hua’s modernization overtures—and Deng’s jostling within the CCP apparatus—with great interest. Editorials in the September–October 1976 issue of the U.S. China Business Review hoped that Hua’s address would entail a new “emphasis on professional, pragmatic thinking, as opposed to ideological attitudes,” that could, in turn, boost Sino-US trade.23 The new modernization zeitgeist in China also ushered in an unprecedented level of Council delegation activity: ten trips to and f rom China in 1977 alone.24 The month of June saw a particular concentration of bilateral exchanges. Christopher H. Phillips and Council Chairman Bill Hewitt, hosted by the China Council for the Promotion of International Trade (CCPIT), visited Beijing for two weeks. During their stay, they engaged in talks with the chairman of the CCPIT, Wang Yaoting, and met with Minister of Foreign Trade Li Qiang and various Chinese foreign trade corporations (FTCs).25 Subsequent delegations reflected the Chinese hunger for equipment and knowhow that could fuel the Four Modernizations. On the heels of the Phillips-Hewitt mission, later in June the Council invited ten members of a Chinese petroleum equipment delegation on a six-week tour “of the American petroleum industry from Texas to Alaska,” featuring the latest technology in drilling and refinin .26 A Council petroleum delegation reciprocated with a visit to China later in November.27 Also in June, the Council’s new Food Processing and Packaging Machinery Committee visited China to deliver twenty-seven presentations “dealing with aluminum can manufacture,” as the Chinese were eager to begin selling Tsingtao beer in aluminum cans rather than glass bottles.28 The China National Export Commodities Packing Corporation reciprocated in October, visiting a dozen US cities at the invitation of the National Council.29 In July, at the invitation of the CCPIT, a sixteen-person group from the Council’s Mining Committee visited China f or two weeks. The Chinese added the stipulation that each person in the group should be required to give fi teen hours of technical presentations related to mining, which were subsequently attended by some two hundred Chinese mining personnel.30 While the Council had anticipated that ideological attitudes regarding trade might recede, some exchanges continued to reinforce the inextricable reality of politics. In April, for example, the Council’s Importers’

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Steering Committee (ISC) visited China at the behest of the CCPIT. The ISC’s gift to the Chinese, a three-volume set entitled 200 Years of American History, was rejected for its “political content.”31 Melvin Searls reminded Council staf f that “to avoid embarrassment to all concerned, National Council gifts should be of an economic or technical nature and should be secured by the escort office beforehand.”32 Though Mao was gone, the Council remained obliged to police the politicization of its exchanges. BI LAT E R AL T R AD E A N D AM E R IC A N P O LIT ICS

Regime change in the United States, while hardly as dramatic as in Beijing, also reinforced the linkages between politics and trade. In the presidential election of 1976, the relatively unknown governor of Georgia, Jimmy Carter, def eated the incumbent Gerald Ford. While Ford’s decision to stall a normalization attempt had been for pragmatic reasons (a potential conservative electoral backlash), Carter’s campaign rhetoric seemed more foreboding for Sino-US relations. His focus on human rights in foreign policy, announced in such speeches as his 1975 address to the US Chamber of Commerce in Tokyo, seemed to implicate the Chinese, who were already sensitive to human rights issues given the Jackson-Vanik Amendment.33 One commentator opined that Carter’s philosophy “inject[ed] new facts, new pressures, new questions, and new issues into an already volatile and uncertain situation,” thus “seriously endanger[ing] chances of early relations with Communist China.”34 Despite Carter’s moralistic rhetoric, the issue of human rights was mostly absent f rom his China policy. An early internal Presidential Review Memorandum (PRM) explained that normalization was too important a strategic goal to be derailed by human rights concerns. Indeed, Carter’s policy on China would “strain . . . the credibility of [his] human rights policy.”35 Af ter just eight months in offi , Carter made his firs major move toward normalization. In August 1977, Carter deployed Secretary of State Cyrus Vance to negotiate with the Chinese in Beijing. Vance had “intended to use the August trip” merely “to explore the Chinese positions.”36 Given the 1976 shake-up in Chinese politics, Vance assumed that the newly installed Hua would be unable to make any serious moves toward normalization. While Carter initially supported Vance’s conservatism, he did an about-face on the urging of his national security

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advisor, Zbigniew Brzezinski. Carter ordered Vance to “go for it” and “put a specific American proposal on the table,” that is, an offer to break diplomatic relations with Taiwan.37 Before Vance had departed, however, Carter reversed himself again when his administration had an unexpected breakthrough on negotiations to overturn control of the Panama Canal. Believing the Panama Canal Treaty to be of more immediate concern, and not wanting to distract the Senate’s debate on the treaty with the China issue, Carter instead ordered Vance to present the more conservative proposal.38 “Vance,” in turn, “was authorized to indicate American interest in nor­ malization, but not to ‘cross the Rubicon insofar as U.S. relations with Taiwan were concerned,’” that is, to propose de-recognizing Taiwan.39 As expected, the Chinese rejected the proposal, marking the failure of Vance’s normalization overture. Whether or not the mission’s failure was Vance’s fault—(subsequent historians mostly exonerated him)—the debacle’s short-term optics were very poor for the Carter administration. In a confidential Council memo to staff, Nicholas Ludlow explained, In a private conversation, f ormer Prime Minister Ted [Edward] Heath told me the Vance trip to China was considered a disaster. He emphasized “disaster.” This was his own opinion, plus feedback from the British government and other governments. The trip was a disaster for two reasons: (a) It was poorly prepared and nothing new was said to the Chinese. (b) Even worse, Vance claimed it was a success afterwards, which it was not. The Chinese thought very poorly of the American statement to this effect.40 Simultaneously, however, the Vance debacle again demonstrated trade’s utility as a diplomatic backchannel in Sino-US relations. Precisely as Deng was castigating the failed Vance mission as “a setback in United StatesPeople’s Republic relations,” Beijing permitted the CCPIT to travel to the United States in September 1977.41 It was the CCPIT’s most signifi ant exchange with the National Council since its first trip to the United States in September 1975.42 As Seattle Times reporter Svein Gilje perceptively argued, “In other times, China might have cancelled its highest-level-ever trade mission to the United States in the face of the kind of political setbacks Deng discussed. But the mission came as planned. That’s where the message lies.”43 The message was signifi ant indeed, indicating Deng’s

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pragmatic willingness to use trade to stabilize ties, even as political routes had soured. The CCPIT’s September 1977 visit, in turn, proved successful in promoting both trade and diplomacy. Led f or the f irst time by chairman Wang, the CCPIT’s fi teen-person delegation arrived in Seattle on September 6, 1977, from which they continued on to Washington, DC. On the morning of September 9, Vice President Walter Mondale formally received the Chinese at the White House, delivering a message from President Carter.44 Afterward, the Council and the CCPIT dined with Secretary of Commerce Juanita Kreps.45 While still in Washington, the Chinese also met with, ironically, Vance, and toured the Capitol Building with Speaker of the House Tip O’Neill and Representatives John Brademas, Jonathan Bingham, and Lester Wolff.46 Departing from Washington, the CCPIT then began its eighteen-day “shopping trip” around the United States.47 The Chinese had asked the Council to focus their trip particularly on industrial machinery. A central corollary of the Four Modernizations was the improvement of agricultural efficie y, thus freeing up labor for industrial projects. The Chinese toured DuPont factories in Washington, DC, Exxon and AMAX Copper in New Jersey, Union Carbide in West Virginia, ALCOA and Deere in Illinois, Textron in Connecticut, General Electric and Ford Motor Company in Cleveland, and Caterpillar in New Orleans.48 The Council placed its other members in direct contact with the CCPIT delegation “either at plant visits or at a series of dinners and receptions organized in different parts of the country.”49 The industrial bent of the CCPIT’s delegation had, in the Council’s view, provided “serious indications of China’s future economic plans.”50 T H E TA I WA N I S S U E AN D T H E N E W L O O K TO R ECO GNIT IO N

Shortly after the Senate had ratified the Panama Canal Treaty in March 1978, Carter made a second push for normalization. Taiwan, as usual, remained the central issue standing in the path of recognition of the People’s Republic of China (PRC). Yet Carter, prodded by Brzezinski, was willing to face the problem head-on. On July 29, 1977, Brzezinski wrote Carter a comprehensive memo explaining the Taiwan lobby’s potential resistance to normalization. Brzezinski mentioned that the Taiwanese had resumed

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lobbying in the United States: “Taipei’s lobbying activities are national in scope. Recently, for example, the ROC [Republic of China] has made a special effort to cultivate support among Georgians, especially in Plains [Carter’s place of birth]. Taiwan’s second largest city has adopted Plains as  a sister city.”51 He also noted the remaining domestic supporters of ­Taiwan, including Senators Barry Goldwater, John Tower, and Bob Dole and Representative Clement Zablocki.52 Brzezinski suggested moving urgently on the issue, as “the Lobby is actively campaigning to derail recognition.”53 The f ollowing day, July 30, Carter echoed the same themes: “My own inclination is to be bold about it. My experience in life has been that it never pays to procrastinate. If we are sure that our position is correct, I am prepared to move ahead as soon as possible. Let’s get our ducks in a row and get it over with. Af ter all, the Taiwan Lobby is active.”54 ­Carter’s new resolve on the issue led him to relatively quick action, as he severed formal ties with the Taiwanese within two years of his inauguration. Carter’s decision to de-recognize Taiwan ultimately rested on (at least) four basic developments: the Brzezinski pivot, his critical reassessment of the Taiwan lobby, the unlikeliness of a Chinese invasion of Taiwan, and the ambiguous projected impact of normalization on AmericanTaiwanese trade. Following the f ailure of Vance’s normalization mission in 1977, ­Brzezinski came to dominate Carter’s thinking on China (thus, the Brze­ zinski pivot). Brzezinski, a détente skeptic, advocated a harder anti-Soviet line than did Vance, particularly in his belief that the United States could use the China relationship not just to balance but to fight and reverse ­Soviet interests. Indeed, Brzezinski saw “playing the China card” as essentially a panacea for America’s geopolitical problems.55 He argued that the Chinese could strengthen the Angolan guerrillas fighting against the Soviet-backed regime in Angola, that they could pressure Robert Mugabe to accept an Anglo-American peace settlement in Rhodesia (now Zimbabwe), and that they could encourage the Marxist president of Mozambique to close Rhodesian guerrilla bases.56 During a visit to the Great Wall, Brzezinski had even jokingly challenged the Chinese to a race to the top of the Wall, with the loser having to fight the Soviet-backed Ethiopian forces in the Ethio-Somali War.57 Recognition of the Beijing regime would be a natural step toward greater Sino-US cooperation and an important precondition of Brzezinski’s tilt toward China. Second, Brzezinski aggressively downplayed the reach of the Taiwan lobby. In an influential memo, he urged Carter to “grasp this thorny issue”

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(recognition) in order to realize the strategic benefits of Sino-US nor­ malization.58 Referencing Taiwan’s domestic lobbying activities, he argued that “the ROC is good at using mirrors to make us think they have a constituency.”59 Yet it was a constituency that he doubted. Taipei’s strategic use of rhetoric—for example, the argument that Taiwan was the “Israel of Asia”—struck at the American conscience. In Brzezinski’s estimation, however, only the Republican base cared enough about Taiwan to strongly resist normalization. Brzezinski noted that a constituency of Taiwan lobbyists remained in the US Congress, but he concluded that “we can easily exaggerate the Lobby’s effectiveness and thereby intensify in our minds an essentially manageable problem.”60 Thus, he argued to Carter, “the Taiwan Lobby does not constitute a major obstacle to normalization.”61 Third, the mainland seemed to have abandoned its focus on militarily retaking Taiwan. In their previous conversations with Richard Nixon and Henry Kissinger, Mao and Zhou Enlai had been quite frank that they saw the liberation of Taiwan as one of their most important objectives.62 By 1978, however, the Chinese had begun to soften this stance. Though the Central Intelligence Agency (CIA) had argued since at least 1976 that the PRC could not retake Taiwan “before the 1980s without unacceptable losses” (assuming the PRC did not use nuclear weapons), Deng repeatedly indicated that the PRC no longer viewed reconquering Taiwan as a priority in Chinese foreign policy.63 In January 1979, in a series of interviews he gave shortly before his own tour of the United States, Deng “gave U.S. congressmen the feeling that the PRC might be content to allow Taiwan to develop a relationship analogous to the close existing ties the PRC maintains with Hong Kong and Macau.”64 Deng commented, “We no longer use the word ‘liberation’ of Taiwan.”65 Finally, regarding bilateral trade, the Carter administration estimated that recognizing the PRC would not substantially damage American business interests in Taiwan. By 1978, bilateral trade with Taiwan remained about six times larger than with the PRC—$7.5 billion versus about $1.2 billion.66 Taiwan’s lopsided, if ephemeral advantage in trade was made all the more incredible given that it had a population of only seventeen million, versus the PRC’s one billion. At a time when China was still cautiously moving toward the first foreign direct investment (FDI) a­ greements with the United States, Taiwan already hosted $156 million of American investments.67 Despite the comparative economic stakes, the administration supposed that recognizing the PRC would not signif i antly damage

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American-­Taiwanese trade. The House Subcommittee on Asian and Pacific Affairs issued a comparative report demonstrating that other nations’ de-­recognitions of Taiwan had had little impact on their bilateral trade (assuming legal trade privileges remained intact). Af ter recognizing the mainland in 1972, by 1973 Australia’s trade with Taiwan had increased 62%.68 In Japan’s case, post-de-recognition trade with Taiwan increased 60%, while in West Germany’s case it had jumped by 84%.69 In January 1979, Vance concluded, “Taiwan will continue to prosper. It is now our eighth largest trading partner, and there will be no change in the way private business is conducted with Taiwan.”70 Guided by these suppositions, Carter sent Brzezinski to reopen bilateral talks with China shortly af ter the Senate had ratif ied the f irs ­Panama Canal Treaty in March 1978. Brzezinski, establishing the “target announcement date of December 15,” handed off negotiations to the head of the US Liaison Offi , Leonard Woodcock, who resumed talks with Deng in June 1978.71 Woodcock and Deng then worked out the substantive points that would lead to recognition: the United States would close its embassy in Taiwan, remove its military assets, and end its formal governmental relationship with Taipei. Though America’s continued arms sales to Taiwan would later become a sticking point in Sino-US relations, Woodcock had sufficien y downplayed the issue such that Beijing found the settlement palatable. On December 15, 1978, Woodcock and Deng announced an agreement that would enter legal force on January 1, 1979: the United States would recognize the PRC and concomitantly de-­ recognize Taiwan’s Nationalists. Carter’s decision to break formal relations with Taiwan remains controversial. Had the United States abandoned an ally? Despite the terms of the Mutual Defense Treaty of 1954, Carter failed to give advance warning to Taipei that he planned to unilaterally abrogate its terms. Chiang Chingkuo, Taiwan’s new president following his father’s death in 1976, had only learned of the cancellation at 2:00 a.m. on December 15, after Ambassador Leonard Unger had woken him at his residence.72 In its divorce with Taiwan, had the United States given up more to the Chinese than had been strictly required? Many outraged Taiwanese certainly believed so. When Carter sent Deputy Secretary of State Warren Christopher to meet with Chiang in January 1979, “20,000 screaming, abusive” Taiwanese encircled his car in the streets of Taipei, smashing its windows “and rocking it back and forth.”73 While Taipei maintained that the demonstration had been spontaneous, Carter believed that its size and fervor indicated official

Deng Xiaoping, the Council, and the Normalization Breakthrough   115

organization. In 1983, Taiwan’s last ambassador to the United States, James Shen, wrote U.S. & Free China: How the U.S. Sold Out Its Ally, ­indicting Carter’s policy. The US Congress, similarly uneasy about the ­abrogation, mitigated Carter’s actions by rewriting his Taiwan Enabling Act into the Taiwan Relations Act of 1979, which provided “much fi mer” guarantees of US support to Taiwan, especially through arms sales.74 Regarding the domestic reaction, Brzezinski’s predictions turned out to be mostly correct. While there was no widespread backlash against Carter, aside from the simmering criticism of the pro-Taiwanese bloc, the Taiwan lobby did present an important challenge to his policy in late 1979. Conservative senators, led by Goldwater, sued Carter in federal court for his unilateral cancellation of the Sino-American Mutual Defense Treaty. The senators argued that under the Constitution’s Article II, only the US Senate could make and break treaties, and thus that Carter’s executive action had been unconstitutional. The US Supreme Court ultimately dismissed the case without argument in a 6–3 decision in December 1979.75 The justices held that the conduct of foreign policy was a political question, rather than a constitutional question, and that the case was not actionable as the Senate had not passed any resolution disagreeing with Carter’s decision.76 After twenty-fi e years of the Mutual Defense Treaty, the Court fina ly slammed the door shut on the alliance with Taiwan. “L I T T L E C H I L D R E N SI N G I N G C H INESE SO NGS”: T H E C OU N C I L E N T E RTAI N S DENG XIAO P ING

Shortly after the normalization agreement entered legal force on January 1, 1979, Deng and Carter arranged the most signifi ant Sino-US diplomatic visit since Nixon’s in 1972. Deng himself would tour the United States from January 29 to February 5, 1979. With four weeks to plan one of his administration’s most important state visits, Carter requested, on January 4, that the National Council choreograph Deng’s sojourn. The Council was, after all, a logical choice for Carter. Not only did it have extensive experience in hosting and entertaining Chinese delegations (including the 1975 dog-and-pony-show imbroglio), but its members also had the deep pockets with which to finance a lavish gala. Phillips commented, “With the President acting as host, it’s been kind of a joint en­ terprise with the White House.”77 Af ter the Council accepted Carter’s ­entertainment request, it asked its one hundred largest corporations for

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donations of $2,500 each, for a total of $250,000 (or about US$895,000 in 2017).78 In exchange, they received “four highly prized tickets to the gala” and a credit line in the gala’s program brochure.79 In addition to the 400 tickets guaranteed to the donating fi ms, the Council received another 400, or 800 in total, to distribute to its officer and other VIPs, out of the 2,300 gala tickets available overall. The Council sold all 800 tickets in just two days. Some corporate official traveled from as far as Hong Kong for the event.80 With the money raised f rom corporate donations, the Council and producer George Stevens Jr. (the winner of seventeen Emmys) compiled a program to showcase American culture.81 The venue would be the expansive, recently constructed Kennedy Center for the Performing Arts in Washington, DC. Stevens recruited talk-show host Dick Cavett, actress Shirley MacLaine, Senator John Glenn, and Chinese American architect I. M. Pei to serve as the program’s emcees.82 The pianist Rudolf Serkin played selections of Schubert for Deng and his wife.83 Knowing Deng’s love f or American f olk and country culture, the Council arranged f or John Denver to serenade Deng with “Rocky Mountain High.”84 Denver, an erstwhile f ree speech and anti-militarism advocate, enthusiastically greeted Deng: “Mr. Vice Premier,” he said, “it is with great joy that we welcome you to our country, and it is with true love that we extend our very best wishes to you and your people on your new long march to modernization in this century.”85 Stevens also surprised Deng with an appearance by the Harlem Globetrotters.86 At the close of the ceremonies, the National Cathedral Children’s Choir, without knowing the irony their words would later assume, sang “I Love Beijing’s Tiananmen Square,” in Chinese no less, to the vice premier.87 Carter recalled the gala as a major success. In fact, he described the vice premier’s reaction to the entertainment in sanguine terms: Deng and I, his wife Madame Zhoulin, Rosalynn and Amy went on stage with the performers, and there was a genuine sense of emotion when he put his arms around the American performers, particularly little children who had sung a Chinese song. He kissed many of them, and the newspapers later said that many in the audience wept. Senator [Paul] Laxalt, who has been a strong opponent of normalization, said after that performance that we had them beat; there was no way to vote against little children singing Chinese songs. Deng and his wife

Deng Xiaoping, the Council, and the Normalization Breakthrough   117

genuinely seemed to like people, and he was really a hit with the audience present and also the television audience.88 Deng’s benign presence, it seemed, marked a profound transition f rom Mao’s ideological self-destruction of China. With the pragmatic Deng in charge, the United States and China looked to be on the cusp of a new era in Sino-US relations. R E S O LV I N G C ON T R A D I C T I ON S: A BILAT ER A L T R A DE F R AM E WOR K D E V E LO P S

Following the normalization breakthrough, the activities of the National Council, which by 1979 had grown to 580 fi ms, further proliferated.89 Council delegation exchanges reached unprecedented highs: from June 1978 to May 1979, eleven US export delegations had traveled to China, while eight Chinese export delegations had ventured to the United States.90 On the importers’ side, the Council had hosted fourteen Chinese import delegations.91 In the period from June 1979 to June 1980, the pace increased, with thirteen Chinese export delegations coming to the United States, sixteen US export delegations heading to China, and twenty Chinese import delegations hosted in the United States.92 Along the way, the Council achieved notable firsts In March 1979, the Council hosted a ­Chinese petroleum delegation led by Zhang Wenbin, which signed a historic first contract for a joint operation with an American company: a deal with Atlantic Richfield for a seismic survey of China’s potential offshore oil reserves.93 In April 1979, the Council’s Transportation Committee greeted “the first Chinese flagship vessel to dock at an American port in over thirty years,” when a seaborne delegation of China’s Ocean Shipping Company landed in a port in Seattle.94 Simultaneously, the United States and China began to develop the legal frameworks needed to enhance trade relations. In May 1979, ­China’s finance minister, Zhang Jifu, and Treasury Secretary Michael Blumenthal agreed to a $280 million settlement resolving the assets-claims issue ­stemming f rom the expropriations after China’s intervention in the Korean War.95 The Chinese returned an initial lump sum of $30 million to American asset holders in October 1979 and agreed to make fi e further annual payments.96 Washington, in turn, agreed to release all Chinese ­assets by January 31, 1980.97

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The next major hurdle was the lack of most-favored-nation (MFN) status f or China. Initially, the primary obstacle to MFN seemed to be ­China’s human rights situation. The Jackson-Vanik Amendment to the Trade Relations Act of 1974 prevented the United States from concluding any “commercial agreement” with any “non-market economy” that failed to respect the f reedom of emigration.98 Despite the growing momentum for normalization, the Jackson-Vanik Amendment retained a few pockets of hardline support in the United States. The Republican base ­f avored the amendment as “tough on communism,” while lef t-liberals generally supported the amendment’s presumed human rights protections.99 Charles Vanik, the House co-sponsor, remained one of the amendment’s most vocal supporters. A Council memo written by Ludlow explained that Vanik “rigorously oppose[d] amendments” to his bill, not only over human rights concerns, but also “simply as an assault on his amendment generally.”100 Ostensibly, Carter’s human rights stance also seemed to complicate the issue, given that circumventing the Jackson-Vanik Amend­ment would require a presidential waiver exempting the PRC. As in the recognition decision, however, Carter ignored human rights concerns as his administration forged ahead on MFN. By disregarding the Jackson-Vanik Amendment, Carter’s stance was broadly consistent with that of the American f oreign policy establishment. By 1979, most key American diplomats believed the amendment irrelevant to China policy. Even Henry Jackson, the amendment’s co-author, “felt that the amendment had no relevance whatsoever to China” following his four subsequent visits.101 When President Carter mentioned the amendment to Deng, Deng simply mocked the issue, inf orming Carter that Beijing would gladly ship the United States ten million Chinese emigrants if Carter so desired.102 Believing that he had little leverage over Deng, Carter dropped the emigration issue in his negotiations and opened further trade dialogues. By July 1979, Deng and Woodcock had initialed a comprehensive bilateral trade agreement addressing MFN; protection of American patents, copyrights, and trademarks; and export-import credits.103 Though the agreement had been signed, it remained in limbo. Only after the consent of the US Congress would the agreement come into effect. T H E C OU N C I L AN D C ON GR ESS

Despite the growing consensus in the foreign policy establishment that the Jackson-Vanik Amendment had little relevance to China, Treasury

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Secretary Blumenthal presciently expected a congressional f ight over the MFN bill. Throughout 1979, skeptics and Taiwan lobbyists in both chambers of Congress had subjected Carter’s China policy to acrimonious, bipartisan attacks. On the Democratic side, Representative Larry McDonald of Georgia advised that Sino-US trade would ultimately be insignifi ant, and thus that the abandonment of Taiwan had been unjustified 104 Representative Clarence Long of Maryland introduced a survey indicating that a majority of US citizens disfavored normalizing relations with the PRC if doing so came at Taiwan’s expense.105 Representative Clement Zablocki of Wisconsin advocated a bill to “uphold Taiwan’s security,” in criticism of Carter’s proposed Taiwan Enabling Act.106 On the Republican side, Senator Goldwater and his colleague, Arizona Representative Eldon Rudd, sharply criticized Carter’s treaty abrogation. Ohio Representative John Ashbrook called Carter’s policy a “sellout” of Taiwan and attacked Deng’s visit.107 Texas Representative Ron Paul “condemned de-­recognition of the R.O.C.” on the House floo , and advised that the United States should “stop [the] subsidy of socialist countries” such as the PRC.108 Senators Jesse Helms of North Carolina and Bob Dole of Kansas worked to secure greater US defense guarantees for Taiwan. California Representative Robert Lagomarsino excoriated China as the “world’s ­largest concentration camp,” while Maryland Representative Robert Bauman denigrated Deng as a “mythical Hitler.”109 Historically, the Council’s record in dealing with Congress had been somewhat mixed. In early 1978, for example, Phillips had delivered extensive testimony to the House of Representatives in favor of H.R. 8196, the so-called AuCoin bill. Introduced by Oregon Representative Les AuCoin, the bill would authorize the US Export-Import Bank to begin operating in Sino-US trade. (The US Export-Import Bank functions by granting loans to f oreign buyers, enabling them to make large purchases of US goods. Historically, the repayment rate on these loans is above 99%.)110 Phillips suggested that passage of the AuCoin bill would have “both practical and symbolic value.”111 Practically, it would make US export-import f acilities available to US companies and the Chinese; symbolically, it would be “a signal to the [Chinese] of a genuine interest by the US, in maintaining momentum in the relations between our two countries.”112 Unfortunately for these aims, however, the AuCoin bill was defeated in June 1978. In anticipation of the vote, Ludlow had called Michael ­Armacost of the National Security Council (NSC), hoping to have the NSC dissuade Vanik f rom presenting objections to the bill.113 “On the

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floor however,” Ludlow recounted in a memo, “Vanik did offer his amendment, which opened the way for Rep. Millicent Fenwick (‘the militant ­pro-Taiwanese lobbyist’) to talk about human rights,” and for further objections from Zablocki.114 The US Department of State had lobbied Fenwick in the hope that “the human rights effort question did not get onto the House floo ,” though this ultimately proved futile.115 As the AuCoin debacle showed, even years into the normalization project signifi ant obstacles remained for the pro-Chinese agenda. The advent of diplomatic recognition in 1979 brought a new intensity to the Council’s congressional advocacy. Of specific concern was Carter’s proposed Sino-US trade agreement, submitted to Congress on October 23, 1979. To circumvent the Jackson-Vanik Amendment, Carter included an executive waiver exempting China f rom its restrictions.116 He argued that the exemption was legitimate as China was supposedly moving toward greater rights protections.117 Predictably, a sharp debate broke out in Congress. Bauman (clearly no fan of “mythical Hitler” Deng) “argued that the Chinese wanted to buy American technology, while flooding the U.S. market with consumer goods.”118 He stated further that “the communists are willing to export to us the trinkets and antiques and feathers and down and licorice and the root tea, but what they want from us is sophisticated computers. They want the ability to build up their military capacity, the ability to bring their nation out of the dark age in which it now exists and to grow strong for world conquest.”119 Representative McDonald and Senators Goldwater and George McGovern of South Dakota also lodged critiques of the trade agreement. McDonald stated that China was “only temporarily the enemy of our enemy, not our ally,” while McGovern suggested that the United States could not “assume a parallelism of United States and Chinese interests.”120 Blumenthal, himself a former director of the National Council, requested that President Phillips testify before Congress to bolster support f or the trade agreement.121 Phillips, obliging, began on October 30 to blanket the House Ways and Means Committee and the Senate Finance Committee with pro-agreement literature.122 He furnished to both chambers copies of the U.S. China Business Review and pro-MFN press releases, and offered the assistance of the National Council in whatever way the senators and representatives requested. Phillips also enlisted the Council’s board of directors to begin lobbying Congress in favor of the trade agreement. He aimed to rebut the “protectionist” sentiment he detected in ongoing House and Senate testimony.123

Deng Xiaoping, the Council, and the Normalization Breakthrough   121

Phillips delivered his own testimony before both chambers on November 2, 1979. While the issue nominally at stake in the MFN debate was Chinese imports to the United States, Phillips reversed the issue, ­focusing instead on the reciprocal benefits to US exports. Aside from the agreement removing barriers to selling to China, as the Chinese earned hard currency f rom their exports they could, in turn, purchase a greater amount of American manufactures. Phillips, warned by an impatient Vanik not to take up too many minutes of the congressman’s life, propounded “the very real benefits passage of this agreement will confer on American export business and on the U.S. economy generally.”124 Phillips explicitly premised his advocacy on the assumption that the United States would continue to maintain a favorable balance of trade with China. Asked directly, “Do you think we will have a favorable balance of trade with China? If so, for how long?” Phillips responded, “I think for the indefinite future that trade will be in our favor. If in the next decade China should become a very important oil exporter to the United States as well, it is conceivable that there might be a balance, but until that time I don’t see it.”125 Mass importation of Chinese goods remained, in his view, inconceivable. Phillips flat y suggested, “Chinese goods will not flood the U.S. market.”126 To the contrary, China might actually be a solution to America’s manufacturing decline. In Phillips’s words: “Frankly, it is time for American companies to be more aggressive. The United States needs a clear-cut, pragmatic export policy. We have an astronomical trade deficit over $30 billion last year alone, that seems to grow ever worse. Passage of the Trade Agreement with China will certainly help reduce the deficit ”127 At the close of Phillips’s testimony, Vanik, apparently moved from his prior curtness, informed Phillips that he “appreciate[d] the long work” of the Council.128 He promised to pass along the Council’s “very thorough and very important” documents to the rest of his colleagues.129 In a universe where trade was so contingent on political realities, the passage of the trade agreement unfolded characteristically. As discussed in chapter 1, the United States maintained an equal treatment policy regarding MFN for the Soviets and Chinese throughout the 1970s. If the United States granted such benefits to one nation and not simultaneously the other, the apparent US tilt could destabilize relations with the nonMFN nation. As Congress weighed the economic merits of the trade agreement, the issue remained that granting the Chinese MFN might be unduly provocative to the Soviets.130 Yet on December 25, 1979, as the Chinese trade agreement sat in congressional limbo, the surprise Soviet

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invasion of A ­ f ghanistan obviated concerns about evenhandedness. Soviet aggression decisively shattered détente. Congress now had in hand ­Carter’s waiver of the Jackson-Vanik Amendment and no incentive to maintain Sino-­Soviet parity in trade relations. It thus passed the trade agreement with the ­Chinese—“a slap at the Soviet Union” for its aggression in Afghanistan—on January 24, 1980, with supermajorities in both chambers.131 Eight years af ter Nixon’s opening, the United States and China had f ina ly resolved one of the greatest legal hurdles to normal trade relations. T H E U N C E RTAI N F U T U R E

In 1975, Deng could only warn President Ford of the growing contradictions in the bilateral relationship. Yet by 1979, he was in a position to reverse them. Deng’s devolution of China’s trade regime, which began to break the FTCs’ foreign trade monopoly, granted signifi ant leeway for local Chinese business commissions to expand bilateral trade.132 Deng also emanated a new pragmatism, forged in the years of his repeated excommunications during the throes of the Cultural Revolution. It was this pragmatism—this appreciation of stability—Deng wished to convey when he met with the directors of the National Council on June 5, 1979, in Beijing’s Great Hall of the People.133 Walter Sterling Surrey, leading the delegation, opened remarks with a discussion about the emerging legal f rameworks of bilateral trade. He went on to mention Sino-American trade in oil, joint-funded investment ventures, consumer product manufacturing, and China’s legal regulations and taxes. It was plainly evident to him that under Deng’s leadership, China had undertaken a major political “readjustment.”134 Deng, in turn, mentioned China’s desire to import needed American technologies on an equitable basis. Yet the bulk of his remarks focused on his hope for renewed stability in Chinese society. “Another question which some people are concerned with,” remarked Deng, is “whether or not there will be more turbulence in the political situation in China.”135 He commented that China had learned its lesson from the excesses of the Cultural Revolution and the Gang of Four: “We in China have suffered too much from this turbulence and we have gained a very deep impression from this experience.”136 He assured Surrey that a new era of “political stability and tranquility” had set upon China.137

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Yet in his promise of a new stability, Deng referenced curious and perhaps ominous evidence for his sincerity: his recent crackdown on protestors at Democracy Wall in Tiananmen Square.138 Following Mao’s death and the arrest of the Gang of Four, the wall had served as an informal ­medium for the expression of previously repressed dissent. Intellectuals, students, and workers had scrawled slogans in chalk criticizing Mao, the Gang of Four, and the Chinese government. Some had even begun to question Deng. If the economy could be modernized and Westernized, why not Westernize the political system as well? Deng, knowing the dangerous implications of such appeals, ordered the demonstrations broken up and the chalk messages washed away. In his remarks to Surrey, Deng conflated such liberal protests with the Gang of Four’s former mischief: “There may still be some people affected by the ideological system of the Gang of Four who express themselves on Democracy Wall, but they cannot affect the overall situation.”139 Deng forebodingly assured Surrey that, in the future, policies against further spontaneous expression would “be carried out fi mly.”140 As history unfolded, it became clear that Deng kept his word. Ten years later almost to the day of this meeting, on June 4, 1989, Deng sent the People’s Liberation Army into Tiananmen Square to crush the student demonstrations that had broken out in April. The alienation that had produced such an outpouring of protestor sentiment was inextricably linked to the new pressures capitalist transformation placed on China’s social fabric. A competitive job market, the influx of Western mass culture, rising wealth inequality, perceived corruption and nepotism in governance, and the breaking of the “iron rice bowl” (the traditional job security program) shook Chinese society.141 For the first time, China’s currency and its inefficien state-owned enterprises had come under pressure from market reforms. As revolutions swept Eastern Europe in 1989, Deng and China’s conservative Elders resolved to stay the course. Momentary passions could not subsume the stability for which Deng had fought for so long. The modernization project would be enacted, whatever the cost. Deng, who made his gala audience at the Kennedy Center weep when he kissed the heads of schoolchildren, gave the order to shoot to kill.

Conclusion A Changed China, a Changed National Council

This government isn’t going to last forever. —Roger Sullivan, President of the US-China Business Council, 1989, commenting on the Chinese government after the Tiananmen Square massacre1 I am proud to say that Henry Kissinger is not my f riend. I will not take advice f rom Henry Kissinger. . . . This is the guy who opened up relations with China and pushed various types of trade agreements, resulting in American workers losing their jobs as corporations moved to China. —Senator Bernie Sanders, PBS NewsHour Democratic Debate, 2016 China is ripping us off on trade. They’re devaluing their currency. And they’re killing our companies. —Donald Trump, Fox Republican Presidential Debate, 2016

In the decade following America’s normalization with China, Sino-US relations and China itself began to transform in ways that, from the perspective of the 1970s, seemed highly counterintuitive. Norman Getsinger’s prediction that total Sino-American trade would be $8 billion in 1985 was close to the actual mark of $7.71 billion.2 Yet his presumption that the United States would retain a trade surplus proved drastically wrong. Already by 1985, China had pulled equal to the United States in net exports 124

Conclusion   125

and imports.3 Throughout the 1990s and 2000s, China’s trade surplus became increasingly lopsided, leading to 2015’s $367 billion imbalance in China’s favor.4 In contrast to Christopher H. Phillips’s assurance that China posed a great boon for America’s balance of trade, America’s burgeoning trade deficit with China became symbolic of America’s broader industrial decline. Moreover, Deng Xiaoping would reassert the totalitarianism the Chinese had hoped his ascent would mitigate. Though he distanced himself f rom Mao Zedong’s destructive personality cult, he ultimately reconfi med one of Mao’s most famous dictums: that political power grows out of the barrel of a gun. Deng’s promise to Walter Sterling Surrey—that his crackdown at Democracy Wall in 1979 harkened a new era of Chinese stability—only vaguely presaged the shocking violence of the Tiananmen Square massacre. The Chinese state’s actions in June 1989 undermined a basic presumption of America’s strategic concept toward post-Maoist China: that economic liberalization might liberalize politics as well. President Jimmy Carter invoked this logic in his original order waiving the Jackson-Vanik Amendment’s applicability to China, paving the way for most-favored-nation (MFN) status. Carter had argued that the waiver would “substantially promote” human rights in China and specifi ally free emigration.5 Later presidents invoked similar reasoning. In the wake of the massacre in 1989, George H. W. Bush explained his underwhelming response (a small and briefly enforced sanctions package on China) using the same justifi ation. “I believed that the commercial contacts between our countries had helped lead to the quest for more freedom,” he argued.6 “If people have commercial incentives, whether it’s in China or in other totalitarian systems, the move to democracy becomes inexorable.”7 With the suppression of the democracy movement, the Chinese Communist Party (CCP) had delayed any “inexorable” liberal transition. The Chinese hardliners who engineered the massacre, including Premier Li Peng, were acutely aware of the presumed connection between economic and political liberalization. In a crucial report Li ordered on the Tiananmen protests just two days before the massacre, China’s State Security Ministry argued that America had used China’s reform to “carry out . . . infilt ation of China through economic and cultural exchange.”8 It asserted that the United States desired “to use American civilization to pull China toward liberalization.”9 By exposing the Chinese to “American democracy, liberty, and material civilization,” the United States hoped to

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“hasten China’s evolution to capitalism” and democracy as well.10 The trade and exchanges of the 1970s that signified goodwill had, by the late 1980s, become tantamount to destabilizing infilt ation. The tight control of the 1970s, which had precluded deference to Western influenc , had fallen away: China’s leaders were now existentially concerned about their nation’s cultural and economic integrity. The Chinese state’s violence at Tiananmen thus shattered the notion of a necessary linkage between economic liberalization and democracy. The watershed moment of Tiananmen shocked the world by securing the coexistence of neoliberal foreign trade policies and an authoritarian political regime. Deng proved to be no Mikhail Gorbachev, despite their contemporaneity in a moment of world revolution. He was, rather, a chimera of Lenin and Stalin, possessing the former’s frenetic drive for modernization and the latter’s heavy-handed repression. As the Eastern Bloc turned toward peaceful revolution—in Hungary, East Germany, Poland, and Czechoslovakia—China had done precisely the reverse. In fact, the decision to crack down at Tiananmen was deeply linked with the increasing liberalization in Europe and the Soviet Union. In May 1989, Gorbachev had visited Beijing as an overture in the historic Sino-Soviet rapprochement that sought to end three decades of rancor. The student protestors had embarrassed the Chinese state during Gorbachev’s momentous visit to Beijing, forcing his motorcade to take winding back-alleys to avoid the massive protests in Tiananmen. The Chinese also cancelled Gorbachev’s tours of the square and the Forbidden City in an effort to conceal the loss of control over the capital.11 The protestors’ disruption had caused the CCP to lose face with Gorbachev, the emerging leader of the communist world. Moreover, as new evidence from East German archives has shown, China’s leaders clearly feared the possibility of ­“contagion”—that the series of European liberalizations might spread to China, culminating in a final revolution in Beijing 12 Simultaneously, the Sino-Soviet rapprochement and the USSR’s own dissolution in 1991 impacted the future of United States-China relations. From 1972 until the mid-1980s, American policy toward China could be explained as a simple, powerful method to counteract Soviet interests. As former President Nixon told The New York Times in October 1982, “The key factor that brought us together ten years ago was our common concern with the Soviet threat.”13 Though China’s behavior was occasionally noxious, as in its human rights abuses, viewing China as a Soviet counter-

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weight made China not merely tolerable, but a desired geopolitical partner. Yet as the Soviet threat waned, and in fact as China and the Soviets began to decisively mend their relations, it became less obvious why the Sino-US quasi-alliance could ignore an outrage like Tiananmen. China specialist Harry Harding has referred to this development as the “decline of the anti-Soviet rationale,” a f acet of the broader strategic rif t that emerged between the United States and China during and after 1989, as the primacy of the Soviet threat faded into the distance.14 Sino-American trade in the 1980s also began to fundamentally transform from the old realities of the 1970s. As I have argued, the small level of bilateral trade in the 1970s was largely political symbolism that facilitated diplomatic accord. Yet after diplomatic recognition and agreements on MFN, foreign claims, export-import credits, and maritime shipping, trade began to evolve into a more purely economic activity—trade f or trade’s sake. Indeed, in just f our years between 1985 and 1989, bilateral trade expanded 229%: f rom $7.7 billion in 1985 to $17.7 billion in 1989.15 By 1988, China had become the United States’ fourteenth largest trading partner, while the United States accounted f or about 13% of all China’s foreign trade.16 American foreign direct investment (FDI) also expanded exponentially in the 1980s. While in 1983 Americans had invested only about $18 million in China, by 1988 the amount had risen to $1.5 ­billion.17 T H E C OU N C I L AF T E R N OR MA LIZAT IO N

The normalization of Sino-US relations forced the National Council into a more normal role in diplomacy. Ironically, the issue that had undergirded the Council’s importance, the fight for normalization, had, in its achievement, begun to undermine the Council’s relevance. 1972–1979 was the great aberration in modern Sino-US relations—a twilight period between resumed contacts and the advent of a formal relationship. This strange interim created the push for alternative representation. Yet the achievement of officia relations diminished the need for such nongovernmental backchannels. The shift did not necessarily entail the Council losing access to high-level Chinese leaders, at least in the immediate term. In April 1982, Premier Zhao Ziyang and State Councilor Gu Mu met with Phillips and a Council delegation to discuss China’s views on trading with Taiwan.18

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Yet the Council did lose its primacy in steering the course of Sino-US trade relations. By 1980, formal trade frameworks accompanied the pervasive decentralization of China’s foreign trade apparatus, lessening the utility of such middlemen. Indeed, Deng’s rationalization of China’s foreign trade regime forced the National Council into a more conventional business-consulting role.19 Deng’s decentralization of the foreign trade corporations (FTCs) eliminated the need for an intermediary like the Council to coordinate contracts between American business and the Ministry of Foreign Trade. Corporations could now work directly with China’s various local importexport commissions (LIECs) and Chinese joint investors. The six hundred Sino-US joint ventures negotiated by 1989 reflected such decentralization.20 With formal diplomacy and relaxed trading a reality, the Council thus regressed to the prolific ranks of other American trade advocacy groups (the US-India Business Council, the Brazil-US Business Council, etc.). The 1980s also brought institutional changes to the National Council itself. In 1986, Phillips left to resume work with the United Nations and to lecture on China, including “a lecture tour on a Royal Viking cruise ship f rom Japan to Hong Kong.”21 President Bush, Phillips’s former superior at the United Nations, later appointed Phillips the ambassador to Brunei.22 In 1988, the Council changed its name to the US-China Business Council, reflecting the changing nature of the Sino-American economic relationship. While in 1973, it had been characterized by the direct exchange of goods implied by the word “trade,” by 1988 the relationship was more complex and multifaceted.23 Aside from simply trading, the relationship now included FDI, joint ventures, banking, and international shipping and financ . Finally, as the Council fought to stay relevant in the changing geopolitical and economic environment, the Tiananmen Square massacre proved a body blow to its short-term interests. Investor confidence in the wake of the massacre fell to all-time lows. Not only were there immediate concerns about stability in China, but bipartisan domestic support grew for the repeal of China’s MFN status as punishment for the slaughter.24 Most observers expected President Bush to approve MFN on the date of the ­annual renewal vote, which by a poignant coincidence occurred every June 3, the first day of the massacre. It was less clear, however, that Congress would not override Bush’s vote. Heading into Bush’s review of MFN in 1990, “widespread, bipartisan opposition” ran high against the Beijing

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regime, and particularly against the continuation of MFN.25 So strong was the anti-MFN sentiment that analyst Robert Kapp opined in the Journal of Commerce, “Insiders are pretty much agreed that the United States will soon cancel China’s most-favored-nation trade status.”26 In recognition of how controversial Bush’s human rights waiver would be, Kapp doubted that Bush’s administration really would “immolate itself ” by vetoing the inevitable congressional override of his MFN renewal.27 Testifying before Congress, the second president of the newly christened US-China Business Council, Roger Sullivan, strongly urged that Washington renew China’s MFN. He predicted that cancellation of MFN would be a disaster, resulting in retaliatory tariffs from the Chinese that would reverse the progress of Sino-US trade relations.28 He estimated that in the unstable weeks leading up to Tiananmen, the Council received between fi ty and sixty calls a day (up from the normal two or three) from businesspersons concerned about their investments in China.29 Staying the course, he argued, was better than injecting yet more uncertainty into the budding economic relationship. As predicted, in response to Bush’s human rights waiver on June 3, 1990, preserving China’s MFN status, Congress attempted to strip Bush of his MFN renewal powers. The House of Representatives passed a bill by 384–30 that would severely limit China’s MFN.30 The bill died, however, as the congressional term closed before the Senate could vote on its own version. In 1991, Congress again attempted to strip Bush of his power to renew China’s MFN. Despite extensive lobbying f rom Bush’s admin­ istration, an anti-MFN bill that required an immediate suspension of ­China’s trade privileges passed the House by 223–204, though the ­Senate did not act on it.31 A more moderate anti-MFN bill then passed the House by 313–112 and the Senate by 55–44.32 Yet the bill’s 55 votes did not make the two-thirds majority needed for the bill to be veto-proof. Bush thus overrode the legislation, preventing the second near-­extinction of China’s MFN. Breaking his campaign promises and reversing tough human rights rhetoric, Bill Clinton also continued to renew MFN throughout his administration.33 In 2001, George W. Bush fina ly made China’s MFN status permanent.34 Though trade continued to expand in 1989, 1990, and 1991, the massacre had shaken the Council’s confidence in its basic understanding of the China market. Sullivan recalled that “before June 4, most of us believed the ref ormers were dominant or at least the wave of the f uture.

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Now they are a beleaguered minority.”35 Sullivan predicted that shortterm trade would be “tough f or everyone and probably impossible f or some.”36 In 1991, the Council held a special meeting of its board of directors to consider voluntarily dissolving the group af ter its eighteen years of operation.37 The directors ultimately voted to continue the Council’s ­operations, believing they still provided valuable services to American business. The vote, though indicating the trying times after Tiananmen, was for the better: the US-China Business Council operates to this day, decades af ter its founding, claiming more than two hundred American member c­ orporations. T H E U LT I M AT E I M P ORTA N C E OF T H E NAT IO NA L CO UNCIL

In the fin l estimation, the National Council f or United States-China Trade was a forgotten vanguard for the modern Sino-US trading relationship. It succeeded in most aspects of its mission, while its failures, however damning, were extraneous to its stated goals. Alternative representation through informal trade diplomacy proved useful to the US government throughout the normalization. The Council, in its liaison role between the Chinese trade establishment, the White House, Congress, and Chinese official had proven a valuable conduit for the exchange of views. In the estimate of Senator Mike Mansfield “In the absence of formal diplomatic relations with the People’s Republic of China, trade is providing a most important means of communication and interaction with the Chinese people. In this regard, I feel the Council has done a most effective job.”38 The Council also succeeded in promoting greater trade f rom 1973 to 1979, however modest these gains were in comparison with the postMFN boom. While Deng’s reforms provided impetus for expanding trade, he was actually amplif ying trends that preceded his rise. The Chinese themselves acknowledged this contribution. Minister of Foreign Trade Li Qiang remarked in October 1979, “the National Council, as the counterpart organization to the CCPIT in the United States, has really done a great deal of useful work for the expansion of US-China trade. Before the establishment of diplomatic relations between our two countries, the ­National Council, just like our CCPIT, played a positive role in the promotion of economic trade and friendly relations between our two peoples.”39 The Council had been responsible for such gains both indirectly, through

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information proliferation and congressional advocacy, and directly, by arranging exchanges of Chinese trade delegations, careful work with China’s foreign trade corporations, securing visas to the Canton Trade Fair, and the litany of other services it furnished American traders. The Council’s historical reputation becomes more problematic when judged by three criteria. First, the Council actively tried to avoid the human rights question, as seen in the debate over the AuCoin bill. As the Council’s mandate was to enhance the level of trade, angering the Chinese with human rights objections would have been an absurd strategy. The Chinese hewed to the line that such questions were strictly “internal matters.” Nevertheless, accepting the coexistence of vigorous trade and vigorous human rights abuses indicates a certain amorality. If this was a sin of the Council it was, more importantly, a sin of America’s foreign policy establishment. While the US government placed signifi ant pressure on the Soviet Union to permit the free emigration of Soviet Jewry, the same authorities turned a blind eye to China’s forced abortions and imprisonment of dissenters. From the outset, the “human rights president” Jimmy Carter declared such moral concerns a second-tier issue in Sino-US relations. Others, like George H. W. Bush, were content to believe that liberalizing trade would somehow liberalize politics as well. The executive branch’s campaign for normalization, in turn, marginalized the human rights concerns of such detractors as Larry McDonald and Robert Lagomarsino. Second, as mentioned, the utility the Council derived f rom pre-­ recognition informal diplomacy would not last with the achievement of recognition. From the standpoint of achieving a vigorous trading relationship, such a concern was ancillary for the Council. Yet from the standpoint of its primacy in Sino-US relations, the reality of formal treaties obviated the sort of ad hoc circumvention that had been a Council specialty. In an ironic twist, a close future relationship between the US government and an informal diplomatic institution lay not with China, but with Taiwan. Shortly after abrogating formal relations with Taiwan, in January 1979 the State Department established a Taiwan Task Force to implement longterm, informal relations with Taipei.40 The task force’s lawyers and staff drew up plans for the American Institute in Taiwan (AIT), which was incorporated as a private, nonprofit nongovernmental organization. While the AIT maintained its nominally unofficia status to fulfi l the conditions of the Deng-Woodcock normalization agreement, it served all the

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f­ unctions of a US Embassy. Staffed by retired (or “separated”) American diplomats and led from 1979 to 1986 by career diplomat David Dean, the AIT was “unique and exceptional.”41 In Dean’s estimation, the AIT was the first time in US history that “a private contractor conducted the whole range of US relations with a foreign entity.”42 It is through this legal fi tion that the United States has thus far maintained its informal relations with Taiwan. In a remarkable nod to the importance of inf ormal diplomacy, on January 15, 1979, Cyrus Vance and Zbigniew Brzezinski briefed top officials f rom both the National Council and the USA-ROC Economic Council on the administration’s plans for the AIT.43 Vance and ­Brzezinski assured them that cancellation of relations with Taiwan would not damage US-Taiwanese trade. They asked that both groups support the impending Taiwan Relations Act (or TRA, which Carter ultimately signed on April 10), by which the government would empower the AIT. The TRA also preserved Taiwan’s existing trade benefits with the Overseas Private Investment Corporation (OPIC).44 Such a juxtaposition—a private trade and diplomacy NGO founded by the US government, a trade and ­lobbying NGO f ounded by the Taiwanese, and a proposed US-­ government founded, nongovernmental quasi-embassy staffed with de-­ activated d ­ iplomats—reinforced how deeply the US government’s response to China had delved into nontraditional solutions. The final critique of the Council involves its failure to foresee that the US balance of trade with China would totally invert within a decade. By 1985, the trade balance had pulled virtually even, with a slight imbalance ($6 million) in China’s f avor.45 Just f our years later, however, the 1989 trade deficit with China had grown by 1,000 percent, to −$6.2 billion.46 America’s trade deficit with China in 1989 was, for the first time, greater than the total value of its exports to China. This deficit would continue to grow almost uninterrupted for the next three decades.47 The Council had repeatedly presented China as a market for Ameri­ can exports, rather than China as a potential workshop of the world. Case in point was Phillips’s November 1979 testimony bef ore Congress, in which he opined that Carter’s trade agreement would “certainly help reduce the [trade] deficit ” and that he could not foresee a situation in which China would become the relationship’s dominant exporter.48 Phillips’s advocacy was obviously not part of a pernicious design to erode American manufacturing—for years, the dominant critique of the Council had been its overwhelming export orientation. Rather, his comments reflected the

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conventional wisdom of the endless China market. Getsinger’s 1980 address similarly appraised “the China market . . . the world’s and America’s best new business opportunity,” invoking both China’s technological needs and its “billion” customers.49 It was not the Council, in the end, that accurately predicted the future of the Sino-US economic relationship. Rather, it was the maverick trader Charles Abrams discussed in chapter 2. “For the last half-dozen years,” reported the Chicago Tribune in late 1978, “Abrams has been a lonely apostle of a reverse conventional wisdom on doing business with China. Instead of eyeing the communist nation as a virgin market of 900 million people hungry for consumer goods, he views China as a potentially tremendous producer of items that can be prof itab y sold in the West.”50 Abrams’s wait for vindication was not a long one. In every year from 1985 to 2016, the balance of Sino-US trade has increasingly favored the Chinese (table C.1). The inversion from a lopsided US advantage in bilateral trade to an even more lopsided Chinese advantage is a massive study in unintended consequences. Surveying the Council’s activities has revealed that the advent of the globalized Sino-US economic relationship did not begin ­organically. Early Council-CCPIT exchanges were politically contrived theater—dogs and ponies, tractor rides, dramatic exits after seeing the Taiwanese flag— ather than the natural intercourse of two economic powers. Only a handful of American corporations considered it worthwhile to trade around Truman’s embargo in the 1950s and 1960s. The fact remained that China’s productive capacity was severely limited, and broad sentiment considered it an unacceptably risky investment. As economic statistics depicted, investment in Taiwan was actually the more logical proposition for short-term profits in the 1970s Rather, the push for a more interconnected Sino-US economic relationship came into vogue only when Nixon appointed it national strategy. The business aspects of this strategic relationship were predicated not on great profits but on a possibility—China’s economic resurgence—that, from the vantage point of 1972, seemed fundamentally uncertain and unlikely. Frederick Dent captured these f acts in his 1973 address at the Council’s founding: East-West trade is not a panacea for our economic difficulties, but it is a good developing market with considerable potential, a market that this country simply cannot afford to ignore. Thank you for your

1986 -1,664

1987 -2,796

1989 1990 1991 -6,234 -10,431 -12,691

1992 -18,309

1993 1994 1995 -22,777 -29,505 -33,789

1998 1999 2000 2001 2002 2003 2004 2005 -56,927 -68,677 -83,833 -83,096 -103,064 -124,068 -162,154 -202,278

1988 -3,489

Source: US Census Bureau, “Trade in Goods with China,” Foreign Trade, https://www.census.gov/foreign-trade/balance/c5700.html.

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -234,101 -258,506 -268,039 -226,877 -273,041 -295,249 -315,102 -318,683 -344,863 -367,172

1996 1997 -39,520 -49,695



Table C.1.  US Balance of Trade with China, 1986–2015 (millions of dollars)

Conclusion   135

i­nterest in, and apparent commitment to, participation in this new national commercial initiative. As you serve your stockholders in this respect, please be assured that you are also serving the national interest.51 Ref lecting the contemporary understanding, Dent acknowledged that China was not panacea but potential—a potential few at the time truly grasped. Dent’s closing line, however, betrayed Nixon’s immediate and contingent concern for Sino-US trade relations: to deepen bilateral ties to advance America’s strategic interests. It was through the Council, he hoped, that he might harness the profit motive of corporations to create a more organized response to China. If the initial reasons for pursuing an economic relationship discount the view of inevitable, blindly material attraction, so too does the extensive legal f ramework required to f acilitate expanding Sino-US trade. From 1971 to 1980 and beyond, US policymakers repeatedly made contingent and discrete decisions to boost the level of Sino-American trade. They abandoned Truman’s embargo, extended diplomatic recognition and MFN status, concluded treaties on joint ventures and foreign direct investment, and secured agreements on arbitration, export-import credits, maritime shipping, and regulatory compliance. As American public sentiment ran high to punish Beijing for its massacre at Tiananmen, George H. W. Bush reversed the popular will, vetoing Congress’s effort to strip China of its MFN. Every succeeding year, the president and Congress repeatedly decided to renew crucial aspects of China’s trade privileges, culminating in the permanent MFN grant in 2001. What obligated American policymakers to this recurrent assent? On the Chinese side, internal battles between reformers, such as Hu Yaobang and Zhao Ziyang, and conservatives, such as Li Peng and Yang Shangkun, reinforced the contingency of China’s new pragmatism. Recent scholarship has documented how these struggles shaped China’s policies, as Deng himself was generally agnostic on economic theory.52 Without these collisions of circumstance and human action, on both sides of the world, economic history would have unfolded on some profoundly different course. As economic populism resurges and directs considerable ire at China, such historical investigations reveal how we arrived at our present state. The relationship between the United States and China underwent a signifi ant and unintentional inversion, facilitated by an American policy that failed to grasp its own implications. What began as a rapprochement for

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geopolitical advantage, with trade as an ancillary symbol, transformed into a huge and unequal trading relationship with uneasy implications for geopolitics. An economic relationship initially predicated on “equality and mutual benefi ” abandoned this very precept—gradually, and then suddenly. The rise of neoliberal doctrines amplified the inversion. Globalization advocates accepted such platitudes as “a rising tide lifts all boats” and “trade is a good thing in and of itself,” without considering the type of world these sentiments produced. Ironically, as Nixon was instituting his corporate turn in US foreign policy, he contested these now-dominant neoliberal doctrines. He disagreed with his economic advisors “that trade with the Soviets is a good thing for us in and of itself. Trade is far more important to the Soviets than it is to us. It is one of the few bargaining chips we have and while we must not say that we consider it to be a bargaining chip, we must be sure that we don’t give it away for nothing.”53 Whether or not globalization’s sentiments hold true in economic theory, they rest on the presupposition that comparative advantage and aggregate profit are all that matter in craf ting economic policy.54 Aside f rom obvious questions about inequality and the condition of American workers, Washington must reevaluate economic policy in light of America’s long-term strategic interests. It is not enough to simply assume that economic growth and integration lead to political homogenization as well, as China’s mixed model has shown. To the surprise of the classical liberals, China modernized without democratizing. Nor did America’s complicity in the genesis of an economic superpower guarantee Beijing’s permanent loyalty or alignment. As the Council experience suggests, future leaders must look past gross domestic product and see economic concerns as inseparable from political symbolism and geopolitics.

Afterword Complicating Models of Civil Society Interaction

Formation of the Council in no way diminishes the work of ­government. The Council and the government have complementary roles. —Secretary of Commerce Frederick Dent at the founding of the National Council for United States-China Trade, May 31, 19731

Some of the more intriguing and recurrent questions I received from early reviewers of this manuscript concerned what type of institution the National Council “really” was. Was it genuinely private, or merely a façade to please the Chinese? Was it nongovernmental, or intertwined with the state? Was it a break from traditional diplomatic tactics, or another manifestation of the foreign policy establishment? As these questions forced me to clarify my own thinking and writing, I came to the realization that scholarship on nongovernmental organizations (NGOs) and civil society interaction, as it currently stands, may not be equipped to taxonomize the NGO activities detailed in the previous pages. Current models suffer both from over-broadness and from adherence to artificial dichotomies in their conceptions of NGOs. As it turns out, the Council was a chimera of all the features mentioned: genuinely a private effort, but also mutually recognized performance; nongovernmental, but deeply intertwined with the Chinese and American governments; a break f rom traditional state-tostate diplomacy, but also a creature of the elite establishment. The apparent incongruity of the historical Council with current civil society models suggests more nuanced interpretations are needed. 137

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What even is an NGO? Riva Krut, writing in 1997, characterized the term as commonly referring “to any organization that is not public.”2 She admitted the hopeless open-endedness of this definiti n, as, in her view, it plausibly included everything from the Roman Catholic Church to the Mafia f rom the International Chamber of Commerce to Greenpeace.3 She suggested that the term “civil society organization” (CSO) might be more descriptive than “NGO.”4 CSOs occupy “‘a sphere of social interaction between the household and the state, characterized by ‘community cooperation, structures of voluntary association, and networks of public communication,’” and are therefore “separate f rom the household, the state, and political parties.”5 Whatever the novelty of the term “CSO,” however, it is the f ormer term, “NGO,” that has gained theoretical currency in describing these phenomena. Her attempts to further classify NGOs demonstrate the problematic state of the debate. Under the subtitle “The Alphabet Soup,” she wrote of PINGOS (public interest NGOs), BINGOS (business and industry NGOs), ENGOs (environmental NGOs), DINGOs (Australian NGOs), DONGOS (donor-­ organized NGOs), ONGOS (operational NGOs), and GRINGOS (government-run NGOs), along with seventeen other sub-classifi ations, which, presumably, could expand indefinite y.6 She also suggested, on the basis of a 1995 UN declaration, that NGOs include those groups “created for the public good,” and exclude those “created for the pursuit of profi ” (which, presumably, would be called “businesses”).7 Lester Salamon and Helmut Anheier, in a more rigorous meta-­ analysis of the “nonprofit sector,” isolated “fi e crucial or operational features” as “the defining features of the set of entities encompassed in this sector.”8 These factors are: 1.  organizations—institutionalized to some meaningful extent 2.  private—institutionally separate from government 3.  nonprof it-dist ibuting—not returning prof its to their owners or directors 4.  self-governing—equipped to control their own activities 5.  voluntary—involving some meaningful degree of voluntary participation9 From these fi e criteria, the authors then tested a number of models that purported to explain the rise of CSOs/NGOs. They found “the most con-

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sistent support in the data” f or a government/market failure theory, in which either the government or the market fails to provide some public good, for example, immunizations, relief efforts, or other social services.10 The vacuum created by these market or state failures thus invites the efforts of NGOs to adopt such responsibilities. Akira Iriye, author of several studies on NGOs in American and global history, proffers perhaps the most succinct definition. In “A Century of NGOs,” he writes, By non-governmental organizations are usually meant voluntary and open (non-secret) associations of individuals outside of the formal state apparatus (central and local governments, police and armed forces, legislative and judicial bodies, etc.) that are neither for profit nor engage in political activities as their primary objective. Such a definition of an NGO would exclude a secret f raternity, a business enterprise, or a political party. NGOs, therefore, are generally interchangeable with, and sometime [sic] called non-profit organizations (NPO) or private voluntary organizations (PVO).11 Later in the essay, Iriye muddles his definiti n by writing, “many of the organizations the Americans joined in the nineteenth century were secret societies, political movements, and business associations—organizations outside our definiti n of NGOs.”12 Iriye thus conflates businesses with business associations, which was probably unintentional. Iriye’s f urther writings confi m this conflati n. In his book Global Community: The Role of International Organizations in the Making of the Contemporary World, he states that businesses are to be excluded, as “their profit-seeking nature distinguishes them fundamentally from the rest” of NGOs.13 Most business associations, however, are not profit-seekin , usually being incorporated as nonprof i institutions. Iriye admitted that his classif i ation of NGO f unctions was arbitrary anyway, citing as counterpoints Harold ­Jacobson, who examined NGOs vis-à-vis “trade and economic affairs, and Salamon and Anheier, who counted “business and professional associations and unions” among the ranks of NGOs.14 Furthermore, in actual practice, those who deal with trade associations on a regular basis classify them as NGOs. The World Trade Organization, for example, counted among a list of NGOs at a 1999 conference the US-Bangladesh Business Council, the US Chamber of Commerce, and the US Grains Council.15

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The National Council for United States-China Trade, then, clearly comports with these various definiti ns, emerging as a bona fide NGO on the authors’ own terms. The Council was legally incorporated as a nonprofit 501(c)6 trade organization, was institutionally separate from the US government, had no active government official on its staff, took no governmental funds (which many NGOs do), was self-governing and voluntary, and neither took nor distributed profits 16 (While the corporations that happened to be members of the Council had deep coffers, this had no relation to the Council’s own financial standing as a separate legal entity. See, f or example, the $721 budgetary surplus it ran in 1977, or, more vividly, Christopher Phillips’s exasperated May 1975 letter to his staff about a high telephone bill.)17 Its completely private funding would seem to make it even more rigorously discrete f rom the US government than other contemporary Sino-US NGOs, such as the National Committee on United States-China Relations (NCUSCR), which received government funding.18 Explicitly so in Krut’s formulation, the government’s role in founding the Council does not preclude its NGO status, given Krut’s provision for so-called GONGOS. Finally, its mission was not politics per se, but rather the promotion of Sino-US trade. Discerning readers, however, may still f eel an implicit uneasiness about the National Council-as-NGO. Do not Krut, Iriye, Salamon and Anheier have in mind, when discussing NGOs, the Save the Children Foundation, the humanitarian Church World Service, the Women Strike for Peace group, the rural Indian voluntary association, the environmental action group protesting nuclear energy, and so on?19 How is it that the Council—a group of economic powerbrokers convoked to serve high ­diplomacy—and the rest of these institutions exist on the same defin tional plane? The nature of the problem becomes clearer when examining NGOs in the context of the so-called transnational turn. In the past two decades, a certain school of historians has attempted to decenter the nation-state as the natural unit of historical analysis, examining, instead, “extraterritorial movements of goods, individuals, capital, and even ideas” as “transnational phenomena.”20 The aim of this new approach, in the words of leading transnational scholar Thomas Bender, is to move “beyond the uncritical acceptance of the nation as both the ‘natural’ unit for historical study and the ‘natural audience’ for historical work.”21 In this new mode of transnational history, scholars have increasingly turned to NGOs as a unit of analysis to displace the state. According to

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Chi Chien-hua, NGOs, as “transnational, private international actors . . . cut across national boundaries.”22 Thus, “in the transnational view, nonstate actors (especially NGOs) are much more important than previously thought.”23 Chi concludes that the “emerging role of NGOs” thus divides “the realists’ state-centered view of international politics and the liberals’ transnational view of world politics.”24 Iriye has also endorsed this notion of NGOs as decentering the nation-state in historical analysis. In an essay entitled “Internationalizing International History,” which appears in a transnationally oriented anthology edited by Bender, he writes, In my own current work, I have been inspired by the work of political scientists and sociologists on international organizations, especially of the non-governmental variety. Excellent studies of these organizations exist, and yet historians have not paid them the attention they deserve. But I have felt that they provide a relatively easy way to reconceptualize international history, if for no other reason than that international organizations are by definition nonstate actors, so that to focus on them, rather than on sovereign states, is to begin to conceive of an alternate history of international relations. In particular, I am interested in the activities of international nongovernmental organizations, def ined as those organizations that are not established through an agreement among governments and are nonprofit, nonreligious, and nonmilitary. . . . Not simply in number, but also in action, these organizations have demonstrated that not everything has to be related to the state in order to understand the nature of world affairs at a given moment in time.25 Iriye’s comments on transnationalism and globalized world trade are also revealing: “If these people are engaged in trade, global commercial affairs are the key framework, not relations between sovereign states.”26 Herein lies the problematic that has complicated taxonomizing the Council: current scholarship tautologically presumes that NGOs decenter the nation-state since they “are by definiti n nonstate actors.”27 It is apparent that the Council does not decenter the nation-state, unlike other such environmental, relief , or developmental NGOs. Yet the supplied ­definiti ns of the term “NGO” do not make such decentering a logical requirement of NGO status. As examining the National Council has shown, an alternate history of globalization focused on non-state actors can actually highlight how deeply nation-states were entangled in producing such

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a “transnational” phenomenon as Sino-US trade. This reading would support an interdependent and synergistic conception of state and non-state actors in geopolitics, rather than the exclusive dichotomy Iriye asserts. Far f rom obviating “relations between sovereign states” as a f ramework, and thus substituting the framework of “global commercial affairs ” this book has shown why understanding the pervasive interconnections between the two is crucial to understanding the modern history of Sino-US trade. If, as Bender broadly generalizes, there has been an “uncritical acceptance of the nation” by traditional historians, then transnationalists have also, on occasion, uncritically read the nation-state out of globalization n ­ arratives.28 We can attempt to solve this problem in a couple of ways. The first is definiti nal refinement which is needed anyway. Consider, for example, Iriye’s definiti ns of NGOs in “A Century of NGOs” and “Internationalizing International History.” It is not clear to me that Iriye’s definiti n would exclude the charade of the American Institute in Taiwan (AIT). The AIT is a nonprofit organization definiti nally “outside of the formal state apparatus.” Only if we dubiously def ine “diplomacy” as “politics” would his definiti n preclude the AIT. (I do not think Iriye has informal diplomacy in mind when he writes of politics in the sense of “political parties,” that is, domestic elections or formal political lobbying.29 If informal diplomacy is synonymous with “politics,” then the definiti n would disqualify so many well-recognized NGOs as to be untenable.) Ironically, though, his definiti n would exclude the United States-USSR Trade and Economic Council (TEC), as it arose from a joint US-Soviet protocol on June 22, 1973.30 Yet it seems that the TEC institutionally conforms much better to the spirit of the NGO definiti n than does the quasi-embassy AIT. The Salamon-Anheier definiti n, by contrast would exclude the AIT (based on criterion 4) yet include the TEC. But their definiti n may be overbroad, as it, at least superficia ly, could include such institutions as the Catholic Church or labor unions. If the institutions discussed in this volume (the National Council, the NCUSCR, the AIT, the TEC, and the USA-ROC Economic Council) should not be classified as true NGOs, then there remains some criterion for NGO status that scholars have not made explicit. The other option is, simply, that certain historical phenomena do not align with the current transnational, state-displacing conception of NGOs, and thus that we must preserve nation-states as a unit of analysis in globalization. Take, f or example, Iriye’s remark that “extraterritorial

Afterword   143

movements of goods, individuals, capital, and even ideas would seem to be less international than transnational phenomena.”31 There is an unwritten supposition here: that such exchanges would occur in the context of a relatively open international order, which would allow the exchanges to be organically driven, rather than state-orchestrated. In a closed or semi-closed order, however, economic protectionism, embargoes, and travel bans would severely curtail the chances for truly transnational exchange. Ironically, then, “transnational” fl ws are actually contingent on nation-state policy. The Sino-US trade experience confi med this reality, as the nations’ bilateral relations followed a closed and then semi-closed order from 1950 to about 1980. Predictably, exchanges bore greater marks of state-directed internationalism than state-decentering transnationalism. The carefully contrived delegations of the National Council and the China Council for the Promotion of International Trade (CCPIT), suff sed with obvious levels of state influenc , initially reified rather than subsumed, the division of sovereign states. This f act explains the f easibility of the present ­volume—an NGO history embedded in and intertwined with a traditional diplomatic narrative. Rather than abandoning the nation-state, we have thus come f ull ­circle. If f acilitating truly transnational exchanges, rather than merely international exchanges, requires a relatively liberal international order, then the nation-state must remain key. As international affairs currently exist, it is nation-states that can make or unmake the liberal order through their battery of powers over trade and travel. As the arc of modern history suggests—having moved from a globalized belle époque to interwar isolationism to a resurgence of postwar globalization—the openness of the international system is deeply dependent on the policy of sovereign states.32 This same truth is, in sum, the story of Sino-US trade relations from the mid-twentieth century to the present: an unmaking of relations from 1950 to 1971, followed by their deliberate recasting against the backdrop of profound political contingency.

APPENDIX A

An Interview with Dwight Perkins* September 26, 2015 Dwight H. Perkins is Harvard University’s Harold Hitchings Burbank Emeritus Professor of Political Economy. Previously, he served as the director of the Harvard University Asia Center, as associate director of the East Asian Research Center, as chair of the Department of Economics, and as director of the Harvard Institute f or International Development. In the 1970s, he was considered the preeminent academic authority on China’s economy. He served as Senator Henry Jackson’s economic advisor during Jackson’s four missions to China in 1974, 1975, 1978, and 1979. He also served on the National Council’s academic advisory board.

CT: I’d like to initially ask you how you became so interested in China in this period, and specifi ally the Chinese economy. What motivated you? DP: Well, I got interested long before that. I got interested in China as an undergraduate in the 1950s, and when I went to graduate school in the early 1960s, or actually 1958, I started a PhD in economics at Harvard. And I was in economics because I thought it was the most useful thing to have. My PhD thesis was on China. It was published as a book way back when. *  On-the-record phone interview. 144

Appendix A   145

CT: And this was China in a very different era, the era of McCarthyism and so on. DP: Oh yeah, it was China—when I wrote my thesis it was about the transformation of China f rom a market economy to a centrally planned economy. And then of course it’s the reverse once you get to now, after 1978. And then I was hired at Harvard partly to teach about the Chinese economy. CT: This initial dissertation was on price formation in China? DP: That was the dissertation. The book was called Market Control and Planning in Communist China, which was a Harvard Press book, published in ’65 or ’66, which is really more of what it was. Price formation reflected where I started in the research, but the book was where I really ended up. CT: Around the time of Nixon’s rapprochement, around 1972, what was thought of the economic prospects of trading with China? Was it seen as an impossibility or something that could be readily achieved? How was it viewed? DP: Well, it depends on who was viewing. The people who were doing trade with China in those days tended to be promoters. Then there’s what I refer to as the “Marco Polo syndrome,” which, you know, is all through Chinese history. Every businessman thinks if he can sell one of whatever it is he produces to each Chinese then he’ll be doing just fin . And so there’s this lack of a certain reality to it. At that time, in reality (I occasionally wrote a little about it) we had taken the embargo off. The embargo had gone off so it was legal for Americans to trade with China but the amount of trade before Mao’s death and in fact on into ’78—I think the total exports of China were something like $7.5 billion. And in fact when they opened up af ter Mao’s death, in ’77 the Chinese government had already basically told state enterprises that they could import without being criticized politically. And so they did. Then you get the beginning of the effort to really promote exports and to create a situation where after ’78 they grow very rapidly. So prior to ’78 and the ’70s, all trade was mostly conducted through the Canton [Trade] Fair. It was small-time traders. There was a man here in Boston named Julian Sobin who did it. They

146  Appendix A

could make a living on it. And of course at that time the oil companies were also very much interested in offshore [drilling]. They were talking to the Chinese. There were probably more prospects, except that it took them a very long time to get the agreements to do anything and many of them never succeeded. Now the oil business in China is dominated still by the Chinese state enterprises. CT: Regarding oil, I found an interesting book recently, written in 1976, entitled China’s Petroleum Industry: Output Growth and Export Potential by Zhuyuan Zheng. I noticed he gives you a credit in the acknowledgments as a specialist, but the book really paints a picture of how Americans looked to China as a potential oil reserve given the instability of the ’70s with the Middle East crisis. He quotes Charles Abrams, chairman of the China Trade Corporation, who stated in ’74 that “the oil reserves of the Chinese People’s Republic exceeded those of the US and the Middle East combined and by the 1990’s, could supply all the world’s oil need.” DP: Oh yeah, well— CT: Some fanciful predictions! DP: Yeah, we started a small consulting group and our main clients were two or three of the oil companies. But they were eager. And there is offshore oil. But obviously now China is a massive importer of oil. I’ve forgotten how much their production is in million barrels per day—maybe three million barrels a day—but now they’re importing more than they’re exporting. But yeah, without a big boom in oil there was a question of where the exports would come from. The answer was to follow the East Asian model and to expand manufactured exports. But again, it’s after ’78. CT: Regarding imports f rom the United States there was also the big question of Chinese poverty. China’s per capita GDP at this time was around 160th in the world and had generally low consumer demand. DP: Oh yeah, China’s per capita income in the prices of those days was under $100. It was a poor country and in terms of consumption and people’s incomes they were probably pretty stagnant, from ’57 through 1978. The GDP was growing although the official were using data that way

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overstated the growth rate, not because they cheated, but because they used prices from the 1950s that greatly exaggerated the power of industry. The prices of industry were very high, as is the nature of a Soviet-type system, and so you get a 6% growth rate in GDP throughout the ’57 to ’78 period, with major dips in ’58, ’59, ’60, ’61, and another lesser dip in the Cultural Revolution in ’67, ’68, and ’69. But generally they get a 6% growth rate over that time. When you redo it in year 2000 prices, it’s more like 3.9% and most of that was going into rising levels of investment and things like that. Very little of it was going to personal goods. And so the people themselves were very poor. And of course most people were wearing blue workers’ clothes. That was partly poverty and partly political. CT: And I think this is reflected in what was actually being exchanged at this time. Consumer goods weren’t going into China, but it was high technology, Boeing 707s, agriculture goods . . . DP: Oh yeah. Yesterday or the other day they announced they were going to buy a f ew hundred Boeings. Back then it was a big deal when they bought, I think, ten 707s. That was seen as a great transformation; it was by far the largest sale. And I think one or two of the oil companies actually got permission to drill in the South China Sea, a few things like that. I don’t remember whether we were buying textiles or whether we were buying rare earths or something like that. CT: Another issue I’ve seen in the literature is that China was a nonobvious market because we already had Taiwan. Not only was there the issue of normalizing relations, but we also already had substantial investment interests on the island and there was also the domestic China lobby. How much of an obstacle do you think Taiwan was to establishing trade with China? DP: Well, I think in the ’70s not much. Because the main issue was that you had gotten rid of the embargo earlier. And so once the embargo was gone, there were no legal restrictions other than on certain high-tech things related to the military. And then, of course, Taiwan was out of the UN. Now we didn’t normalize until ’79, the negotiations were in ’78, and the actual decision was in ’79. But, you know, after the Nixon visit, I don’t think there was any effective restriction. There were plenty of obstacles in

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China actually. Particularly in terms of foreign direct investment. There was very little coming f rom the US other than maybe a little bit of oil money. I’m not even sure of how much that was. But foreign direct investment didn’t really take off until the 1990s because while China wanted to make the fundamental changes in ’78 and ’79, for the first time welcoming foreign direct investment, it was really not welcome under Mao. It was prohibited basically. But when it opened up most of the f oreign direct investment was really Hong Kong, and mostly going into Guangdong, and mostly relatively small. You know, the average investment was a million dollars, $2 million, something like that. The big investment—and the total per year figu es are all in the statistical handbooks—was $2 or $3 billion per year, whereas by the ’90s the sum total might have been $50 billion a year, and now it’s higher. But yeah, there was no legal basis for companies, they didn’t know how taxes would affect them, and so the main people who were able to work out deals were the Hong Kong Chinese who could go to their fellow Cantonese speakers, you know, probably their relatives, and work out deals with the local governments in Guangdong to set up factories and produce manufactures for export. So there was a lot of activity of that sort, geared to exporting to the world, laborintensive stuff, particularly in Guangdong Province. But yeah, basically in the ’70s there really wasn’t any foreign direct investment. CT: You mention businesses not knowing how taxes would affect them, I also wonder, what did you think of the most-favored-nation issue? To me it seems a critical obstacle in the sense that tariffs were blocking Chinese imports, leading the Chinese to ask why they were obligated to run such a trade deficit What do you think about MFN status in this era? DP: I don’t remember the timing—I used to know this well—the Jackson-­ Vanik Amendment was designed basically to pressure the Soviet Union to allow more emigration but applied to all nonmarket economies. So I went to China with [Senator Henry] Jackson three times and he, f rom the beginning, f elt that the amendment had no relevance whatsoever to China. Deng Xiaoping had a famous statement later af ter he had been restored to power. I actually met with him the first time I went in ’74. Deng said, you know, “You want emigrants? How many do you want?!” So China was perf ectly willing to allow ten million people to emigrate if anybody would take them. Of course, nobody would. So I don’t remember

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exactly how the fight went and how much of a fight it was. The ’70s, you have to realize, once Nixon opened up, there really wasn’t very strong right-wing opposition. The major supporters of Taiwan were fighting a rearguard action, but I don’t think they had much influence on trade at that point. China at that time, by both Republicans and eventually by Democrats under Carter, was basically [regarded as] a strategic ally against the Soviet Union. It was quite very different from what it is today. We had signifi ant amounts of cooperation on a lot of intelligence and things like that vis-à-vis the Soviet Union. And the US made it very clear that a Soviet invasion of China would be very much against US interests. Then we had strategic discussions with very senior Chinese. Everything in Chinese f oreign policy was totally geared toward “anything that helps the Soviet Union is bad, anything that hurts it is good.” So they were generally much on the same wavelength as we were. Later, the most-favored-nation issue became an annual vote in Congress over human rights issues, but that was later, and for the people who were trying to pressure China, all was lost. China kept getting it until we fina ly moved to make the relationship more permanent and we got rid of the annual vote. CT: So you met Deng Xiaoping in China? DP: Yeah, three times. CT: What was that like? DP: Well, I was with [Senator] Jackson. It was basically one-on-one discussions with Jackson, but Jackson typically took a couple of Asia specialists with him. I was the second one on the first trip and the primary one on the next two. And you basically worked with Jackson ahead of time and you made sure that he was asking the questions he wanted to ask. But he and Deng thought in a very similar way—basically had a balance of power view of the world. And so most of the discussions were going around the world, discussing their views of the situation in, say, Pakistan. In the first meeting in ’74 we spent actually fi e hours with Deng because he let the discussion continue over lunch. The Pakistan discussion—Deng was very worried that Pakistan might break up, and of course Pakistan was an important ally of China. It was particularly important in blocking what they considered the Soviet effort to encircle China. He was asking us “Why

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doesn’t the US government do more to prop up Pakistan?” and so on. Jackson would come back and say, “Why don’t you support our base in Diego Garcia?” Deng would come back and say, “Well, we have nothing against the base in Diego Garcia, but it has nothing to do with Pakistan.” And then you know in ’79 when we met the last time, it was a few months af ter the Chinese invasion of Vietnam and much of the discussion was around why they had invaded. There wasn’t a lot of economic discussion. Basically because Deng f rankly, when the discussion moved into economic issues, he called on certain people. He had his economic specialist in the room sitting behind him. But Deng was very direct. There was not one word that could be considered ideology or propaganda. It was all hard-nosed discussion of practical issues. CT: Quite different from Mao Zedong then, I imagine. DP: Well, Mao Zedong really didn’t do the negotiations. CT: Zhou Enlai did. DP: Yes, Mao certainly met with Nixon and a few others. There’s a big difference when you’re meeting with somebody between the outright government negotiations and then there’s meeting with somebody who you really want to understand how they think, and you want them to understand how you think. And then there’s the meetings which are the more common meetings with the figu es coming where you basically want to sof t soak them to get them to do something together. Those are more superficial I’ve been in lots of meetings of those types, and one or two formal negotiations with the Chinese government. But anyway, I remember in ’79 on another trip meeting with the Foreign Minister Huang Hua. And he just blathered the Chinese officia positions. We met with him in ’78, actually, and after that Jackson said, “Well, that was a waste of time.” So we didn’t meet with him in ’79, we met with somebody else. But again, Huang Hua, when he was in actual negotiations, got down to business. But with visiting delegations it was just propaganda. CT: What was your impression of the stability of the Chinese regime at this point? Varying sources I’ve read say that even when Deng came to power, there was uncertainty. In ’79 he only had power for two years and

Appendix A   151

even his regime could change, and so on. How did this uncertainty impact business, and how did you perceive it? DP: Well, the obvious point of instability is 1976, where Zhou Enlai dies first and Deng is purged again. And then Mao dies, and then Ye Jianying, the field marshal, moves with the aid of the Party guard force to arrest the Gang of Four, Jiang Qing, and so on. That obviously was a period of instability. Then you get ’77 and ’78; Hua Guofeng is formally the leader, he’s both general secretary of the Party and chairman of the Party, and premier, I think. Deng is restored—he’s brought back from his brief second period of exile. But he isn’t really in power until sometime in ’78. And then by ’79, Hua Guofeng is clearly pushed back. I remember when I went with Jackson we also met with Hua that year. And Hua said, “Oh, I’ve been wanting to meet you” to Jackson, which was probably baloney. Because when he was in charge, he didn’t want any part of it, and then he was out. So I don’t think there was much of any instability. There were fights over what became the rapid transf ormation of China. Chen Yun and Deng, who were basically allies since the beginning, ultimately had very different views of where the economy should go. Chen Yun in the context of the ’50s was a real moderate reformer and in the context of the ’80s he was a conservative trying to hold back. Chen Yun was the dominant economic figu e in the Party beginning in the ’50s and sort of went up and down depending on Mao’s role. Anyway, I don’t think there was instability in the sense of “was Deng really in charge?” I think after ’79 there was no doubt that Deng was in charge. The left had been totally crushed—the extreme left—Party members who had been sent to the countryside were all brought back and put into positions of power. I remember visiting—I had led a delegation in ’75 to study rural industry and we had met with a couple members of the Revolutionary Committee, or whatever they called it, in Shanghai. I met with the Shanghai people again in ’79 and asked, “Well, how many of those people are still around? Still in the government?” And the guy proudly said, “Zero.” So I mean there’s instability around Tiananmen, but that’s ’89–90. That’s the main period of political instability in China. Obviously as long as Mao was there, there was no one in a position to challenge him. But these are removed f rom the issues you’re involved in. The problem with opening to the US bef ore Mao’s death is that the left made foreign direct investment impossible. And anybody who imported in a major way was subject to criticism f rom them.

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And at that time you didn’t know if Mao died who would actually end up in charge. Except the left had no real capacity to run anything. They could create chaos. CT: Turning to the National Council for United States-China Trade, how did you get involved in that organization initially? DP: I have no specific memory. I probably got a phone call f rom Chris Phillips or something. There weren’t very many people who knew much about the Chinese economy at that time and I was one of the few. And I was well established and sort of the senior person at that point in the academic world working with the Chinese government. So I got invited to do a lot of things. When the Council was set up it had a relatively small number of members. You could undoubtedly f ind out how many there were. But a lot of activity going on was to basically explain to the business community what opportunities there were in China and to get the business community to understand the situation in China better so that they could make their own decisions about getting involved. The job of the Council was to f acilitate the growth of trade between China and the United States. It was not an officia body. It was like the Committee on Scholarly Communications with China which managed in those days most of the semi-official changes with China in the sciences and social sciences. Basically the government turned over a lot of these nongovernmental activities to these institutions. The government stayed out of it and let these institutions take the lead. And the National Council was basically taking the lead on trade, the Committee on Scholarly Communi­ cations on scientific exchanges, the National Committee on US-China Relations on a whole range of things—ping-pong diplomacy and a whole range of other kinds of things, unofficia but important exchanges. The US government on the whole only did real officia negotiations where government officials went to do them. And so the Council was responsible for business, trade, and investment. To that end they held briefings for the business community around the country, and they published a journal, and in those early days a lot of it was just basic education on the nature of China. In that role I knew a lot about the Chinese economy. As you moved to where companies already had their representatives there and had factories in China, then, increasingly, people who did not yet have it, what they really wanted was “Who do I contact? Who do I work with?”

Appendix A   153

More of the nitty-gritty of business relationships. Then the most valuable people for that sort of thing were people who were heavily involved in business relationships. I was not and had no particular interest in that. I had lots of involvement with China, but it wasn’t in a business context. So my role sort of faded out. I must have written at least one article for the [U.S. China Business] Review, and I wrote another one more recently f or them about discussing business with a representative in Beijing. When I say “recently” it could have been ten years ago. But it was about a meeting the Chinese have every year for various CEOs and corporations around the world. I haven’t had much to do with them in the past two decades though. I also remember these briefings though; they were for hundreds of businessmen, in Denver and San Francisco, f or example. Chris Phillips would speak and I would speak and businessmen would speak. Those were done all over the country. And they would have smaller things in Washington where I, for example, met several members of their board of directors to discuss what was going on in China. CT: What was your impression of Christopher Phillips? In my reading and survey of their records, I have seen him emerge as a protagonist, leading the way, organizing things. How did you see his role? DP: Well, he was in charge of this effort to build closer relations with China in the trade sphere and to facilitate business. He wasn’t the ambassador to the UN, but he had an ambassadorial rank under whoever, and he had that kind of status. He was a Republican and a political appointee, not a career foreign service offic ; he was a Republican but of the kind we don’t have enough of today. As a person, he was a nice person. He wasn’t some fi ry, driving executive. He was a very polite, nice, decent person. But, you know, he wasn’t gooey about China or anything. He was realistic. He had a job he was doing and he believed in it, I’m sure he believed in it. CT: What do you think was the overall impact of the Council in this era? Do you think that it was successful as an agent of change? How do you rate their success in this era? DP: I think they were an effective agent for facilitating American business, getting involved with China, in terms of trade and investment, and providing a realistic f ramework. They made trips, the board of directors,

154  Appendix A

would make trips to China and meet with senior Chinese and talk about concrete problems. The Chinese saw the organization as f riendly and helpful. They would meet at a roundtable and talk about what the problems were, what needed to be worked on. And I’m sure they also lobbied Washington. But I was not involved with that. CT: That brings me close to the conclusion of my questions. I am wondering, do you have any sort of favorite memory or anecdote of China at this time? DP: I don’t have any single memory, just that it was a very different atmosphere in the ’70s from what it became in the ’80s. At a very high level you could have these very tough discussions. At lower levels, in ’74 and ’75, even ’78, but particularly ’74 and ’75, it was still f ormally the Cultural Revolution period. Jackson only dealt with Qiao Guanhua and Deng. We also visited some places and so on. But that was very high—Qiao Guanhua was becoming foreign minister and was acting foreign minister at the time. And those were hard-nosed discussions. When I led the delegation in ’75, obviously there was still a very small number of scientific exchanges. But we weren’t negotiating then, we were looking at rural industry for the most part and so we’d meet with senior government official to the various localities. But the people accompanying us saw their main role as to try to control what we saw. In those days, in the early ’70s, even somewhat later, no Chinese would ever be with you alone. They always had to have at least one other Chinese there to verify what they said so that they didn’t get into trouble. And on the whole, in a banquet setting, you could have two conversations. The safest one was on the food and then, if they were feeling a little risky because they weren’t supposed to talk about personal things, you could find out if they were married and had children. But after that, everything they said could saf ely be published on the f ront page of the Renmin Ribao. I’ll give you one example of that. When I was leader of this delegation I was in a separate car, the rest were in a van. With the senior Chinese accompanying us was said to be an economist. So I had, mostly through the interpreter who was also with us—because my spoken Chinese was lousy, my reading was fine but my spoken was lousy—I had four or fi e hours of discussion with him in the car in the course of going from one factory to another. I would explain at great length why we were asking things and on one occasion he said “Profits ” and then he made sure that we didn’t get any answer to that particular kind of question after that.

Appendix A   155

And I thought he was a hopeless apparatchik. Well, the next time we saw him in 1980 or ’81 he was head of the population census and he was a senior figu e. I also actually noticed I had a book of his which was actually a serious quantitative study on land rent in China in the 1940s to ’79. But, you know, he wasn’t about to go back to what they call May Seventh Schools where the cadres went during the Cultural Revolution to get reeducated through a form of semi-prisons. And then you move to, by the ’80s, you could travel with individual Chinese, you could talk to anybody. It was just a totally different world. At the day-to-day level, I remember hearing from a foreign service office who was there in the early ’70s as a liaison, that the only time you could have a real discussion with a Chinese was if you were riding your bicycle. You could ride alongside somebody and sometimes strike up a real conversation. In that context the bicycle rider knows that he can veer off very quickly and be gone if anybody looks like they’re studying him too hard. You could be anonymous. But then it just totally changes. Today, it would be ludicrous to try to control the information. CT: I was actually just in China this summer. The Chinese have so much social media and Internet access that I think the communist state is figh ing a losing battle trying to control it. DP: I couldn’t agree more. We hear all about the “big fi ewall” and all. I think the fi ewall is very effective for the Chinese peasants. As you get up to what is now the majority of the population, in the urban areas and educated, they have so many ways of finding out what’s going on that the notion that you can control the information fl w—I think for the most part they’ve given up on controlling most of the information; it’s just on politically highly sensitive things. CT: I’d like to thank you for this interview. I think it will be invaluable to my thesis. DP: What kind of thesis is this? CT: History—I’ve gotten access to some of the Records of the National Council through the Ford Library, and I am reconstructing the narrative history of the Council—

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DP: This is a PhD thesis? CT: Undergraduate senior thesis. DP: Oh, undergraduate. That’s an impressive amount of work. CT: It should be exciting to see how it turns out. It’s still very early. DP: Yeah, actually I don’t know of anybody who’s tried to look at the National Council in any systematic kind of way. I guess Chris Phillips is no longer living? CT: He passed away in 2008—though Gene Theroux is still around. DP: If you could get ahold of him, he would have vast amounts of ­information. CT: I’ve tried, though his contact information is not as readily available as yours. I think he will be my next endeavor. DP: I wish you good luck!

APPENDIX B

An Interview with Eugene Theroux* October 16, 2015 Eugene (“Gene”) Theroux worked as an international trade lawyer with Baker & McKenzie f rom 1968 to 2012. He served as Hale Boggs’s aide on the Boggs-Ford Joint Mission to China in the summer of 1972, placing him in the first wave of Americans to visit China after Richard Nixon’s historic opening. His contacts in China were instrumental in the National Council’s initial operations. He served as the Council’s vice president f ormally from 1973 to 1975 and in later years provided friendly advice to the Council.

CT: How initially did you become involved with the Council? GT: It started with my first trip to China in 1972. I think you know about that. Do I need to tell you about that? CT: The Boggs trip? GT: The Boggs-Gerald Ford trip, yup. I say it started there because some questions did arise and some discussions were held there on relations between the United States and China. Business and trade opportunities *  On-the-record phone interview. 157

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came up. We don’t have to get into that in any detail. We did have a meeting with the China Council f or the Promotion of International Trade (CCPIT). I think only Mr. Boggs attended that meeting, and I was with him. The man we met I believe was Mr. Li Hsifu. When the two congressmen came back and made a report to Congress—have you seen that? CT: I actually have. The Boggs-Ford Report to Congress in 1972? GT: Right, right. It’s called “Impressions of a New China.” Either in that report or in a set of remarks Mr. Boggs gave to the Congress shortly after, he suggested, and I think he might have been joined by Congressman Ford, the Minority Leader, that some kind of nongovernmental trade promotion organization might be useful to promote trade in a nongovernmental way because diplomatic relations had not been established. That was in the summer of 1972. In the spring of 1973, the White House encouraged the formation of what became the National Council for USChina Trade. I say that because they got Secretary Dent, Fred Dent at the Commerce Department, to call together the principal individuals who were given the green light to try to set up something to promote trade with China. The man that became the chairman of the board was Donald Burnham of Westinghouse Electric Corporation. The lawyer that did the work was the only Democrat among the board of directors that was constituted. He was Walter Sterling Surrey, a lawyer in Washington at that time whose law practice was devoted substantially to trade issues. Surrey & Morse was the name of his fi m. About that same time, I was meeting, very informally, with a young fellow named Robert Hormats. We got together for two reasons. One is that we used to meet on Sundays at the American University track and run on Sunday mornings, then read the paper, so we had that interest together. Another reason was that he was the person on the National Security Council staff in the Nixon White House who was given the responsibility for shaping, in a thoughtful way, what this National Council for US-China Trade might do. He was in the White House, so he would be the link between the White House and the Commerce Department. And we chatted about it because, of course, he knew that I went to China with Boggs and Ford, and that it was a subject of interest to me and to him. I forget who made the suggestion to whom, but I was invited to go to Pittsburgh in April to visit with Mr. Burnham. He was curious to know what in the world could we do to

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get started or get traction with China. What kind of program would we have—we had a legal organization, but what exactly would we do? We needed some kind of idea of what we would do because, by then, a meeting had been scheduled for May 31, 1973, at the Mayfl wer Hotel. Many invitations were sent out to corporate leaders, not just a few but as many good ones as possible, to come and learn about the National Council for US-China Trade. Don Burnham, in the early part of April, wanted to be well prepared for that meeting. Lucky for me, I was hoping and planning to go to China anyway to go to the Canton Trade Fair, which is held every spring and fall, in Guangzhou. So I visited with Mr. Burnham with a list of things—exchange of delegations, exchange of ideas, communications, written communications, trade f airs on a limited scale in each country where the country would showcase its wares and signify its interests in trade. So we had a very positive meeting. He encouraged me and helped me financia ly to make the trip. I was back at Baker & McKenzie law fi m, and we had some clients who were interested in exploring possibilities in China, but high on the list of my objectives, for various reasons including keen interest, was to try to advance things for the National Council for US-China Trade, and get back with those ideas and share them with Mr. Burnham before the May 31 meeting. At the time, Mr. Burnham actually was looking for a person to be president of the Council, but at that first meeting he didn’t share with me what talks he was actually having. Eventually, it led to the selection of Christopher Phillips, by the board, to be president. So I went to Beijing—we were still calling it Peking then—to meet with the CCPIT, because I thought they would be a counterpart organization, or at least the obvious one. Initially I had trouble, but without knocking on too many doors, I was able to meet senior people at the Canton [Trade] Fair who gave me the paperwork necessary to travel from Guangzhou to Beijing. (As like every other traveler to the Canton Trade Fair, they had limited me to going to Canton.) So I went there and I met the vice chairman of the CCPIT and had a fine meeting with him, largely due to the work of an interpreter who was the same interpreter we had used when Mr. Boggs went there. His name was Wang Genliang. It was a very general meeting, but it gave me enough to bring back a detailed report to Mr. Burnham. It was a cordial meeting and very encouraging for the Chinese side who were looking for ideas too. Their organization had been promoting trade with lots of other countries—especially ones where China did not have formal diplomatic relations—for some time.

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So they knew what they were doing, but they wanted to have some US ideas so I gave them some. The thoughts were not just my own—I had had several talks with Mr. Burnham and Bob Hormats and others. So I came back and I made a report for Burnham and made plans to attend the [May 31] meeting. When that meeting happened, that was where it was announced that Christopher Phillips had been chosen to be president. It was a very good turnout—a couple hundred companies showed up. The key development there was that Ambassador Han Xu attended. Everything looked promising, but there was no plan beyond “Let’s get started.” Companies signed up but [the Council had] no offic and no staff. Walter Surrey’s law offic was the place where most of the board’s meetings and ­appointments—that was all done in Walter Surrey’s offi . Incidentally, it never shows up in any history of it, but—it may be of no interest to you— the National Council was not the only organization that had the idea to promote trade with China. If you just go on Google and punch in “trade promotion organization with Cuba,” you’d probably find a dozen or more, whether it’s companies or individuals who are trying to set up trade with Cuba. That was the case in the spring of 1973. In the United States, there were a couple of organizations in New York, one in Washington, that were determined to take over that function. It’s an interesting side story. CT: Why would you say the National Council ultimately succeeded then? Was it the best organized and had the best connections? GT: Yeah. It was more “legit,” I would have to say. We had the sponsorship and encouragement of the United States government and the recognition and presence of the Chinese ambassador being at our inaugural meeting. You don’t want to get tied up in something if there’s any question as to whether it’s legitimate. The challenge right at the outset at the end of May was that there was no staff whatsoever for the organization, other than Walter Surrey and a young lawyer in his fi m, about my age at the time, named Ben Fishburne. Fishburne was Walter Surrey’s associate at his fi m and was helping out. Don Burnham told me at a meeting afterward, where I met Chris Phillips, that they had a problem of getting traction early. Chris Phillips was the deputy US ambassador to the UN and George H. W. Bush was the ambassador to the UN. At the time, they were deeply involved in Law of the Sea negotiations, and so Chris Phillips was not in a position to move to Washington f rom the UN to take over

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the reins of the Council until later in the year. For June, July, and most of August, there would be no one really in charge. They wanted to hire me on a payroll, but I said, “No, if you want to hire me you have to pay my law fi m.” I moved the offic out of Walter Surrey’s offic and found a good location on Seventeenth Street in Washington. It was an interesting address and there was space available—there happened to be an offic building that was adjacent to the Mayfl wer Hotel. That’s signifi ant. By that time, the Chinese Liaison was located where? The Mayfl wer Hotel! It was just entirely coincidental, but it was so close—Christopher Phillips could look out his window of his offic into the Mayfl wer Hotel room where the Chinese were playing ping-pong! I’m sure—because it actually did come up a couple of times, but not in a tense way—that the Chinese Liaison Offic realized that the National Council for US-China Trade was in a position to look into their windows! Well, of course they closed all their shades, but I’m sure they thought there was some “research” going on and that the US government had been behind it, but that wasn’t the case. Anyway, so the first person I hired was a secretary, Mary Frances Cooper, and I hired a fellow named Nicholas Ludlow. Have you come across his name? CT: Yes, I believe he helped organize the U.S. China Business Review. GT: That’s right. He was working for Business International up in New York to put out information and a newsletter and publications on international trade and business. Incidentally, the man that ran it was a man named Orville Freeman who had been governor of Minnesota, a very, very interesting man. But anyway, I met with Nick Ludlow and he seemed like just the right person. He had spent time in Hong Kong, he seemed to be very diligent, he was putting out publications related to trade, and he was very interested in China. Long story short, he was our first staff hire. And then there were some other people. The first thing I devoted my attention to, obviously at the request of Ambassador Phillips, even though he wasn’t on the job, was to try to get a delegation to China as soon as possible. Correct me if I’m wrong, but I don’t think we got it organized in the fall of ’73, was it ’74? The first delegati n? CT: It was ’73. I actually found an interview that Christopher Phillips did  with Charles Stuart Kennedy f or the Library of Congress, and he

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describes how you all first went over to China, through Hong Kong, into Beijing. It was very interesting. But, yes, it’s November ’73. GT: I just can’t believe we got it done that fast! We worked faster than I remember. I went there ahead of time and then the delegation arrived. A couple of interesting things happened. . . . Am I running on too long? Am I interrupting any questions? CT: No, no—it’s fascinating. GT: Okay, so the delegation that went there was led, of course, by Don Burnham. You can find a list of the people represented. J. C. Penney was there, Manufacturer’s Hanover Trust Bank . . . CT: John Deere, too. With Hewitt. GT: Yup, yup. Hewitt. Bill Hewitt. Remind me to come back to him because he was a very interesting character in this play. But anyway, we went over there and I had had preliminary meetings with the CCPIT before they got there. And so I ran into my friend Mr. Wang [Genliang]. One of the curious things that happened there was this: I’ll just mention that David Bruce was the American ambassador, sort of the ambassador-elect. He had been ambassador to Paris and London, a very distinguished diplomat. So he was chief of the Liaison Offi , so he was the chief US diplomat in Beijing at that time. So we arranged a luncheon with him. Before that happened, and before the delegation got to meet him, I had a meeting with Mr. Li Chuan, who was vice chairman of the CCPIT, and with Mr. Wang. We had a meeting and we said, “Yes, the delegation’s here,” and they said, “We want to have a banquet. Would the American delegation be willing to attend?” Well, of course, yes. And then I remember Mr. Wang kind of on the side said to me, “If Mr. Wang Yao-ting”—the chairman of the CCPIT, he was a very well-known figu e that you’d only get to see on very special occasions—but I was told, “If Mr. Wang Yao-ting offers a toast to your delegation, would there be a response from your delegation leader?” And I said, “Yes, of course, I’m sure.” I mean, I didn’t know that for a fact, but it’s just common sense, yes, of course there’ll be a response. Mr. Wang said to me, “Good. Now can you please provide me with Mr. Burnham’s, your chairman’s, response to the toast?” And I said, “You

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mean his remarks in response to the toast?” He said, “Yes,” and I said, “Yes, I could do that. Can we have a copy of the text of Mr. Chairman Wang Yao-ting’s remarks?” And they said, “Oh no, that’s not ready yet.” But they said, “It would help us to interpret and translate if we could have a copy of your chairman’s remarks.” And I thought, “This is really kind of cuckoo!” But otherwise everything went smoothly—the arrangements, where the banquet would be held, and so on. And so when the whole delegation, the board of directors, met thereafter with Ambassador Bruce and a couple of his aides, I mentioned that we had gotten this curious request f rom the Chinese side that they wanted the text of the response to Mr. Wang Yaoting’s toast in English, so they could put it into Chinese and understand it, but that they wouldn’t give us a copy of the text that we were responding to. Then Ambassador Bruce said, “Well, that’s wonderful! That’s wonderful! They’re inviting you to set the agenda! They’re inviting you, and even if they’re not doing it intentionally, it’s your golden opportunity to say, ‘We’re so pleased that we’ve made progress on the following: we’re going to have a reciprocal delegation, we’re going to have visits from time to time in between that, or whatever.’ ” And so I found that amusing and interesting. And we did just that. We prepared a text and handed it over to the Chinese side and things went very smoothly. The other interesting thing doesn’t relate exactly to the Council, but it came up there. One of the members of the delegation asked Ambassador Bruce how soon did he think it would be before the Chinese would allow the bureaus of the major news gathering organizations in the United States to have an offic in Beijing. They were thinking The New York Times, The Wall Street Journal, The Washington Post, and so on. And Ambassador Bruce said, “Well, I hope never! It would just be a lot of trouble. We aren’t ready for that.” And so we had a very good reception there, got a tour of all the relevant spots to visit in China, and made plans for what would happen next. I think everyone came back well-satisfied We had roundtable discussions and talked about specific issues: banking, exports and imports, priorities, and so on. There must be minutes of these meetings somewhere because I helped write them out. Af ter the meetings in Beijing, the delegation went to Shanghai. But I had been over there for quite some time, not a whole lot of time but a couple of weeks or more before they got there, so I needed to get back to Washington to my work. So I didn’t go to Shanghai. But when the board got there, they elected me, in my absence and without my knowledge, but subject to my agreement, they elected me vice

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­ resident of the Council. I was happy about that, but I was an associate at p a law fi m so I made an arrangement that they didn’t pay me, they paid the law fi m for my services, the same way they had done prior. So I served as vice president for not more than a year and a half, I don’t remember exactly how long, it seemed like forever! But we built up a good staff, stayed in the same offi , Chris Phillips was the president. He was a very fine representative. I don’t know if you know anything about his background, but his father had been in the diplomatic service in China . . . CT: Yes, in the oral history I read I remember his father was under secretary of state under [Franklin] Roosevelt and had served in China and at the Hague. And I read that a young Christopher Phillips had personally received Charles Lindbergh at the [US] Embassy in Brussels in 1927 when he made his transatlantic flight . . GT: Phillips’s father? CT: Phillips himself. Phillips’s father was actually away on business in the United States, and when Lindbergh visited Brussels, the young Christopher Phillips, maybe six or seven, actually personally welcomed ­Lindbergh. GT: Is that a fact? Well, that’s fascinating! He really was a wonderful man. A very, very, very nice man. Just perfect for the job. Very diplomatic. He had China in his background. Of course. He came f rom Massachusetts, where the first ships that did trade with China were built. There’s a museum I think in Salem, Massachusetts, I think on China trade. CT: I actually interviewed Professor Dwight Perkins of Harvard . . . GT: Oh yeah? CT: I think he was academic advisor to the Council f rom ’74 to ’78. I thought he actually had a funny comment about Phillips, he said, “He was a Republican, but of the kind we need more of today.” GT: Well, that’s true! CT: But I really do see him as a diplomat and certainly a protagonist in this story. He seems central in organizing the Council.

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GT: Yeah. You know, I’ll tell you something interesting. There’s a lot of little details that may not interest you. When I was working at the Council in my vice president capacity, I went back and forth to China a couple of times and, on one trip, I think ’74, there was a younger fellow, a graduate of Yale, named Sandy Randt. Clark T. Randt, but nicknamed Sandy. Am I wasting your time? CT: Oh no, it’s all interesting to me. GT: Alright, well anyways, his name was Sandy Randt. He was a young lawyer, he had studied Chinese, and he went to Yale. And he desperately wanted to meet Ambassador Bush. I had met Ambassador Bush a few times before that and I got along with him very well. Talking about good Republicans, he was really right there at the top, in my view as a Democrat. So we went and I introduced him to Ambassador Bush. We had some pending things that I had told him about. Sandy Randt kind of let me go first Then Sandy said, “It’s actually a great pleasure to meet you. I went to Yale.” Of course, Ambassador Bush had gone to Yale. And then, Sandy said something that I wasn’t sure if it was in English, or in Chinese. And here’s what he said, “[Garbled].” And I didn’t know what he said. I had him repeat it. But Ambassador Bush got it right away. I don’t know if you heard what I said, but he said, “I’m a very good friend of W,” Ambassador Bush’s son, who became the president. So they got along really well. I tell you this because Sandy Randt’s first trip to China was with me! And that trip we were doing interviews and getting things to send back to Nick Ludlow to publish and so on. Sandy Randt, in the George W. Bush administration, for the entire eight years, was ambassador to China. CT: That’s a fantastic story. GT: Yeah! You can look it up. He’d maybe be worth tracking down, may be hard to track down. I don’t know where he’s at, but he was ambassador to China. He was a really, really good f riend, though, of the president, when they were both at Yale . . . misbehaving. But not too badly! Okay. So back to the Council. I’ll tell you another interesting thing. The Chinese were so hospitable to the board of the National Council for US-China Trade that every member of the board who was on that trip wanted to be sure that on the reciprocal visit f rom the Chinese side, that we did the

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utmost to make them feel welcome and to give them good entertainment, which they had done for us. By that time, the time that the Chinese visited in ’75, the chairman [of the Council] at that time was Bill Hewitt, the chairman of Deere & Company. I was still vice president then because we talked about how to do it right, you know, hosting the Chinese side. And I said, sure, yes, it should be good, and of course they should come to Washington and to New York. And he said to me, “Gene, I want a real dog and pony show for them. They were so good to us.” I said, “Oh, rightfully, of course, yeah.” So I said, “What do you have in mind?” And he said, “A real dog and pony show.” And I said, “Yes,” but you know, they had put on Peking Opera and Revolutionary Opera, and stuff for us. I said, “Did you have any special thoughts?” I figu ed a corporate executive had planned a lot of events. He said, “Gene, you’re not listening to me. I want a real, real dog and pony show.” I said, “You mean with dogs and ponies?!” And he said, “Oh yeah. Dogs, ponies, monkeys, the whole thing. That’s what I want.” And that’s what we did. I forget which hotel it was—the Sheraton or the Shoreham or something . . . CT: I think it’s Shoreham. I’ve actually read about that hotel in some of the Council’s documents. GT: Is there anything in there about the entertainment? CT: Not that I’ve read. This is the first ’ve heard. GT: It was really, really close to disaster. Because, you know, there were toasts back and forth, it was a long meal, good meal, toasts back and forth. And, you know, since I was the guy that had put this together—at Hewitt’s request—dog and pony show, the hotel guy was tearing into me: “I’ve got to get—I’ve got horses out there! People have to clean up after them! We didn’t ever used to have to do that! I’ve got monkeys! I’ve got dogs barking! Get this shit together! Please make them stop!” And I said, “I’ve got to put on this show!” Anyways, so we did it. That’s kind of a blur for me. But I do remember that was what happened, among other things, at that particular event. Anyways, Nick Ludlow—have you talked to him at all? CT: No, I haven’t.

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GT: He’s very accessible—I mean he loves to talk about the early days of the Council and he was there for a long time. I tell you one interesting thing. He published the first—ha e you ever seen the early magazines? CT: Yes, I’ve seen some of the first nes actually. GT: Have you seen the very first one? Volume 1, number 1? It’s got Don Burnham’s picture on the cover? CT: You mean the one all about Chinese oil? GT: Yeah! That’s the one. Nick Ludlow did everything for that magazine to get it launched and get it going. He was very good and he was very, very proud of that first issue because we got it out very soon. I’m pretty sure it has Don Burnham on the cover talking to a Chinese officia I have them all bound at my house in Virginia but I’m in Massachusetts now. If you ever need them scanned or something, I could send them. But anyway, the reason I’m mentioning volume 1, number 1, is that as soon as it was off the presses, I arranged a meeting at the Chinese Liaison Offi , which I think by then was already their new location. It was out of the Mayfl wer Hotel. And we had a meeting with the two senior commercial counselors there. We met with these two men and we gave them a couple of copies of the magazine so they flipped through, they looked at it, and they said, “Wonderful! We’d be glad to read through it!” And then Nick was very proud; I was very happy. We left those with them, and sent it out to the members. You know, the members had to get something for their dues! About two days later, I was summoned up there with Nick to the Commercial section of the Chinese Liaison Offi . And, you know, the Chinese don’t slam things around and kick things over. But they were very unhappy, very stern. And they showed us all the things wrong with that article on oil. We had referred to the islands as the “Spratly Islands,” and they refer to them as something else.† They had red-penned the entire magazine and that article in particular, because of errors that we had committed. It was really sobering. You didn’t know whether to laugh or cry. I’m sure Nick would remember that very well. I don’t know whatever happened to that   The Chinese term is Nansha qundao (Nansha archipelago).

†

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­ agazine they marked up—it would be a nice auction item. But they m marked it up pretty heavily. They had read it there and talked to China about its contents, so they were displeased with that. CT: I guess there is the issue of ownership of the islands. You call them “Spratly,” as opposed to the Chinese name, and that says you don’t think the islands are really Chinese. GT: Yeah. If you look at today’s news, the Chinese are doing absolutely everything to assert themselves and extend their territorial waters into the South China Sea. So they have different names for these places. And it’s a very—even back then, and we’re talking 1973—it was a serious faux pas as they saw it on our part. First of all, we had speculated about their own industry. There were thoughts and speculations that Nick had put in this very thoughtf ul article, and then maps and names of places that they found objectionable. CT: That’s fascinating. One thing I have focused on in my discussion of why trade was so difficul to reignite after 1972 were these cultural misunderstandings that had come out since there were so few Americans in China af ter the Korean War. I f ound a f antastic interview you gave to People magazine in ’78 where you were talking about Chinese products: “Fang Fang Lipstick, White Elephant Auto Parts, Fuking Pliers,” and so on. It seems like an incredible cultural divide. GT: Right, right, right. I’ll tell you a funny story about that. I had forgotten that I had mentioned “Fuking Pliers.” Did I mention that in that People article? CT: Yes. GT: Oh God! Well the reason I mentioned that is, you know, ambassadors have a lot of serious stuff on their plate. So when I came along and was meeting with Ambassador Bush, one of the things we enjoyed talking about was just the crazy things that happened at the street level in doing trade with China. And one of them was, yes, the product names. So, for example, one was “Typical.” Did I mention that?

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CT: Yes! “Typical Sewing Machine.” GT: Yeah! And did I tell you what they said in return? CT: They said, “If you have Standard Oil, why can’t we have ‘Typical Sewing Machine’?” GT: That’s right. That’s exactly right. So that was in People magazine. One day I told Ambassador Bush, I said, “You know, [the Chinese] are learning. They’re learning what kind of trade names or product names could be popular in the United States and which may not work. They are learning.” And he said, “Yeah? Well, like how?” And I said, “I was in a hardware store,” and I presented him with a pair of Fuking Pliers. And I said, “You know, this proves they’ve done market research in the United States. When there’s a guy on the roof repairing something and his f riend is down on the ground with the tool kit, and he needs a tool, like a hammer, he doesn’t say, ‘Fred, throw me up that hammer.’ He says, ‘Fred, throw me up that fucking hammer!’ Or he says, ‘Where are my fucking pliers?!’” I told Bush, “They’ve obviously done some research. They know that the people want a specific kind of pliers when they ask for pliers.” So I guess that didn’t go into People. But it makes me laugh. But there’s more serious stuff about China and the trade council. In the early days, there was very strong corporate membership. I opened the first offic of the Council at the Canton Trade Fair. It wasn’t a major thing but it was a place where Americans could come in and talk about all the crazy things that were happening to them, about trying to get their business done at the f air. Even after the Council was established, most businesspeople were limited in their ability to travel from Guangdong Province. So they ran into a lot of funny problems. CT: Aside f rom the cultural issue, what did you think of the other obstacles to trade? Say, most-favored-nation status? GT: Well, most-f avored-nation status was a serious obstacle. I wrote something about that for the Congressional Record. Have you found that? CT: I know there was Council testimony about most-favored-nation before Congress. There may be something additional though.

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GT: I think Mr. Boggs put it into the record. I’ll have to see if I can find it. I had done a long study of that. But they knew that there were people like Mr. Boggs and Mr. Ford that were promoting MFN for China. But it was a slow process. The other obstacles—one of them was that the Chinese at the trade fair were telling Americans, and even those who managed to get into Beijing and were buying antiques or arts and craf ts or whatever, textiles, the Chinese were telling them that they were giving them their best price. I found out later from talking to people like the fellow I mentioned, Mr. Wang, that, in fact, the Chinese were making every effort to favor American business visitors. Buyers always want to get the lowest possible price, and when they’re being told by the Chinese that this is our “best price,” they didn’t believe them. It’s like buying a carpet in Pakistan. They’re probably lying in most places. But in China when they were doing that, they were actually favoring Americans substantially. And Americans didn’t really get the picture. The other obstacle was that they would not make products, for many years, with a brand name on them. GE, for example, I was doing some work with GE. And GE was making some headway with the Chinese on some things. They wanted products made like radios, or, you know, consumer electric products. And they were going to give the Chinese all the plans, place large orders, and so on, to have things made, provided they had the GE logo on them. The Chinese refused. The same with sporting goods. I did work with a sporting goods company that wanted soccer balls and volleyballs and boxing gloves, things like that. But, for example, they wouldn’t put Spalding’s name on a ball. They said, “No, you have to put ‘Golden Top.’ ” And I said, “No, Spalding wants Spalding. Let them tell you how they want them made.” But they wanted Chinese names on sporting goods. Same with a lot of other products. I thought we might have a breakthrough when the Spalding people said, “Well, will they put Muhammad Ali on the boxing gloves? His signature?” It wasn’t a company name, and he was world famous by then. But they refused because it was a foreign name. It had to say “Golden Top.” They wouldn’t make foreign products. The same with shoes. They wouldn’t make shoes with the “Nike” name on them. It had to be something Chinese. Of course, eventually that all broke down to the point where now not only are Nike shoes made in China, they’re making foreign products with brand names on them without permission from the brand name owner. So now it’s gone in a different direction.

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CT: I know initially, for the large part of the 1970s, the trade imbalance was actually the reverse of what it is today. The United States was selling to China a lot more than China was selling to the US, and so the US was running a trade surplus. Did you ever foresee the reversal of that? GT: Yes, I think it was inevitable because the price of labor there was so low compared to here. And the Chinese always emphasized “equality and mutual benefi ” as a principle. They don’t want to be on the wrong end of trade on the balancing scale. So they were buying airplanes, and a ton of big-ticket items. I’ll tell you a quick funny story. . . . I’m wasting your time now probably. CT: Oh no! Please go on. GT: I accompanied a delegation of GE executives and Chinese executives on a trip to the West Coast and GE was very good to them. They fl w them to the Grand Canyon on a spiffy corporate jet and showed them the Grand Canyon and the sunset, and had dinner, and they fl w them over the Glen Canyon Dam in Arizona. They saw the Glen Canyon Dam, which uses General Electric turbines. Anyway, there was one guy f rom GE who was not too happy with the trip because he just didn’t think the Chinese were going to buy anything. We went across the desert in Page, Arizona, and we went around and went across the desert. And the guide was saying, “This is all Indian Reservation land.” So that was interesting to all of us—I didn’t know that. And we’re taking a little railroad that was using a GE locomotive. And when they got back, someone from the GE delegation said, “Do you have any thoughts about your visit? What do you think about GE? Do you have any questions?” And the head of the Chinese group at that time—this was the early ’70s—said, “Well, we went across land here that belongs to Native Americans. And you have a big dam there. But the Native Americans should own and operate that dam. It’s on their land. Why is it GE?” So after we broke up and went home this one fellow from GE said, “Oh boy, if that’s typical we’re going to be so uphill we’re never going to get anywhere in China.” That guy was head of the Electro-Motive division of GE in Pennsylvania, and made locomotives. And within a couple of years after that, he had sold a first order of four hundred locomotives to China.

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CT: Oh wow. GT: So, the Chinese were buying big then. CT: That exhausts my questions for now. I’ve really enjoyed this conver­ sation. GT: If I come up with any other thoughts I’ll be glad to pass them along to you. Keep in mind I stopped keeping track when they basically went paperless, but I have the first ten years of the China Business Review, in bound volumes. I’ll flip through them when I’m back in Virginia and see if there’s anything worth passing on. CT: I’d appreciate that. Thank you very much f or your time. I think everyone will be very interested that I got in touch with you. GT: You’re very welcome. If you need contact inf ormation f or Nick ­Ludlow I can send it to you, if you want to talk to him or anybody else. CT: That would be excellent. You have my email, correct? If you could drop me that contact I’d really appreciate it. GT: I’ll pass it on. CT: Excellent, thank you again. GT: Take care, Christian. Good luck with your project.

APPENDIX C

An Interview with Nicholas Ludlow* November 30, 2015 Nicholas (“Nick”) Ludlow, the Council’s first staff hire, served with the organization from 1973 to 1982. For most of his Council tenure, he was the executive director for publications, research, and planning. He spearheaded the development of the Council’s ref erence library and the U.S. China Business Review. He also planned and prepared the working papers for the Council’s board of directors in their liaison with Chinese official prepared congressional testimony for Council members, and helped produce Deng Xiao­ping’s 1979 gala. His skill as a writer and organizer led Eugene Theroux, writing in 1985, to call Ludlow the “engine” of the National Council.†

NL: Hi! How are you? CT: I’m great. How are you? NL: Pretty good. I’m drinking some coffee at the moment.

*  On-the-record phone interview.

  Eugene Theroux, Letter to Bruce Sievers, June 18, 1985, in Nicholas Ludlow’s possession. †

173

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CT: Excellent. Me too, actually. NL: Well, what can I do for you? CT: I wanted to— NL: I have a question of you actually. How did you come to choose this subject? CT: So, I am a history major. I was looking at the politics of the Vietnam War, the Sino-Soviet split, and how Vietnam was competing for aid from the Soviets and the Chinese after the split. How both the Chinese and the Soviets tried to increase their aid to win the favor of Vietnam. One of the main points I looked at was how China was outwitting the Soviets, so to speak. They were blocking Soviet shipments, they were more persuasive and effective at gaining support in Hanoi, ultimately how they gained a more favorable postwar settlement with the United States, economically as well. I found in sort of a footnote something about the National Council for United States-China Trade. So I decided that that was interesting, and that I had never really heard of it, and that I should look into it further. NL: Ah! CT: Then I found the collection at the Ford Library; I interviewed Mr. Theroux and Dwight Perkins. So it’s really all blossomed f rom a single footnote. NL: I understand. It’s very nice you did so. I don’t think anybody else has done this at all. CT: Right. I haven’t found much secondary source material to go off of relating to the Council. I’ve f ound myself mostly looking at primary sources. I found some great interviews, Julian Sobin’s interviews— NL: Yes! CT: And what I found at the Ford Library. So a lot of it has been primary. NL: Yes.

Appendix C   175

CT: So I wanted to ask you about your background. I understand you were involved in previous magazines. What was your experience in publishing before you were hired with the National Council? NL: Well, first of all, the magazine was one of the major activities. But it was not the only activity at all that I was involved in. My own publishing career went back a very long time. I once worked f or the Manchester Guardian for a year; I worked for Time Life as a photographer in Hong Kong. That’s how I have that background in China, through photography. And I wrote programs f or Radio Hong Kong f or six months. But the main thing was I wrote—I was a writer for Business International in New York for four years. I specialized on Asia for four years. It just happened that during that four years I became a specialist in the Asian economies, Japan in particular, but China also, almost as much. At that very time, at Business International, we wrote a weekly newsletter and also prepared two monthly reports: “Investing, Licensing, and Trading Conditions,” on all the major countries we dealt with, and “Financing Foreign Operations.” So I had a very broad international business background prior to coming to the Council. It turned out, as I recall, I had prepared twentynine pieces on China at the time Gene Theroux approached me. I was interviewed by Gabriel Hauge, the chairman of Manufacturer’s Hanover Trust, there in New York. At that time, which was more than forty years ago, it was quite an event. So I had a considerable publishing background. I also did other magazines, I was editor of a college paper, various other things. So that was the background. When I got to the Council there was nothing there, it was bare rooms. But I knew very well, and I had a very good sense of, what American companies were looking for at that time. At Business International, or BI, we dealt only with international ­companies—companies involved in international business. As you saw, I prepared the talking papers for the board of directors of the Council in high secrecy, as soon as I got there in September ’73, and that included Don Burnham, Hewitt— CT: Hauge— NL: Hauge, all major US companies. So that was the first starting point which laid out a broad set of interests. In general, I think my aims were to make the China business more visible and more accessible as the Council was doing at that time. We had a membership and they expected things

176  Appendix C

f rom us that brought the China business to life. At that time, the main side of business was actually imports from China and the issue of mostfavored-nation. I wanted to shift that focus f rom trade, actual trade and imports, to business itself—all the aspects I was used to dealing with. So that included exports, financin , intellectual property, all the things that went with business and would go with that in the future—I felt pretty sure about that. So I f elt bringing it to lif e would involve pictures, as well as information, the best information. I had a pretty good sense of what big, international companies were looking for. They wanted broad, detailed, sophisticated information. Aside f rom the magazine, we published seventy-­f i e publications other than the magazine, including the first really detailed encyclopedia of China’s economy, by province. It was really the first one that had ever been done using great detail. And we made a map of that for any company wanting to know where and how it would market in China—this would give it a map. This large map that came with it the World Bank used when it was preparing its f irst goaround with China. They framed it and put it on one of their walls. I was chuffed by that! I was also very proud when doing those talking points for the board of directors. Of course, each one had a considerable background to it. And all this when I had just turned thirty!—more than forty years ago. That was a great thing—perhaps the greatest thing of my life. Then, among the other publications which I bound and which are all the way up at Ann Arbor, were from the professional societies in China. Because we had these various delegations restarting the imports—the import ­delegations—we were able to get a lot of the little reference guides the Chinese themselves made. Each one of these had the details of its source, so that we could put together a very considerable detail on the professional societies in China, which were in fact the places where foreign technology was researched and disseminated in all the various economic categories. We also did a three-volume set on China’s research institutes. These would be distributed to all members. They would provide any company with basically all kinds of background that they would be using, or would want to use, on China, to make it very accessible. The prime sources of information in China we were able to obtain on our delegations. It was quite a program altogether. CT: What was your role in these delegations?

Appendix C   177

NL: I took the first American export delegation for agricultural chemicals to China in 1976. It was only eight people, but very much an eye-opener. The biggest eye-opener while we were there came in Guangzhou Province in the South. We were in the middle of a commune—this was of course in the Mao era—surrounded by brown earth and a little open shelter. A Chinese chap was coming with us, dressed in a Mao outfit all blue. In the course of the conversation, he began reciting the whole formula of one of the most complex agricultural chemicals. He went on talking for a good fi e minutes or so and, as he talked, the chap from Dow Chemical based in Hong Kong sat there with his mouth gaped open. He was absolutely astonished that they knew it, astonished that they had reverse engineered the whole thing which, in itself, was a huge accomplishment. It was an illustration back then of the lengths to which the Chinese were going to try and copy Western technology. Of course, the extent to which they could actually put it into production was an issue. It was a very complex thing that took years for Dow themselves to develop. It was sort of a foretaste of what would become a common feature of dealing with China. CT: Speaking about the transition f rom direct trade to broader international business, one area I saw that was with oil. So at the time the United States had a domestic economic crisis with war inflati n, the Arab oil embargo, and so there was a lot of “hype,” you could say, about China’s oil reserves, what amount of oil does China really have, and then on the flipside of exports and business, what kind of tankers and drills can we sell China, what kind of oil rigs is China purchasing. Could you speak on China’s oil at that time? NL: Oh yes, we did a book on China’s oil, its organization, etc. One of the first eatures of the magazine—you might have seen it. CT: The first editi n was all about China’s oil. NL: Yes, and as you saw as well, we shif ted the name f rom [the National Council for] United States-China Trade to the US-China Business Council, as it is now, so we shifted the emphasis. I’d like to think that we succeeded in all these objectives and really made a difference. I also took the f irst construction delegation to China in 1978, which had twentyeight people on it. We also had other export delegations which gradually

178  Appendix C

e­ xpanded that side of the Council’s activities. By the way, I had three suggestions that might be helpful to you. One, I have a booklet here of what I call “Personal China References,” which goes through to 1986 and which I prepared quite a while ago, fi e years ago or so. I could send you two things. I could fax you two items. One is a reference that Chris Phillips, Ambassador Phillips, wrote about me, which is quite comprehensive and which might answer many of the questions you’ve been raising, and secondly, a similar letter by Gene Theroux as to what I did at the Council. If you give me a fax number, I can do that this afternoon, actually, and if you give me an address, I can send you this docket if you promise to send it back. If you’d be interested. CT: Oh, of course. NL: It’s quite comprehensive. Those were three suggestions I had, if you’re interested. CT: Certainly. I will email you my fax number and address a bit later so that it’s all perfectly clear. But I would appreciate that—it sounds very interesting. NL: Anyways, it was quite an emotional time for me. I spent many years there. I’d like to think I’d mined every possible aspect that would be of interest to US companies, where they had literally had no information at all. One of the features of the magazine which you probably saw was we put all the deals that we had news on in the magazine until it became overwhelming. Also, in the other publications were the details of import deals from China. CT: You’re speaking about the information. It seems to me that at the time this was one of the biggest obstacles, that there was just so little information on the Chinese economy in terms of what they could produce or what they wanted to trade. This importer, Sobin— NL: Yeah, our economic references dealt with that comprehensively. We had all these committees that dealt with specific aspects, like construction equipment, and the agricultural chemicals, and the various import sectors. As you saw, Gene Theroux, one of my closest f riends, was a partner at

Appendix C   179

Baker & McKenzie here in Washington, but he did play an active role in helping in this regard as well, and in the preparation of the establishment of the Council. He was at the Canton Trade Fair prior to the board of directors meeting, going to Beijing. So he was involved in the import sectors. And who was the importer you mentioned? CT: Sobin? NL: Julian Sobin. Boy. That’s really going back. I haven’t seen or heard of him in a very long time, but he was one of the big players in importing at the time. CT: I also wonder if you could touch on the Council’s relationship to other NGOs, or nongovernmental organizations, working on China at this time, with the Council. You have the Committee on Scholarly ­Communications— NL: The Committee on Scholarly Communications, that’s right. That was Anne Keatley. The National Committee on US-China Relations, with Jan Berris. They still exist. They were established before the Council. I still know Jan Berris. I had close relations with her over the years. However, we knew them, but we didn’t have too much actual contact with them. We were going on parallel tracks in terms of US-Chinese relations. But we had our own job to do, as it were. CT: It also stood out to me as unique that the Council received no government funding; it was a completely private endeavor. NL: That’s right, yes. We paid our way in what we delivered to the members, in many different ways, as I’ve been discussing. CT: Right, dues as opposed to government funding. NL: We also gave speeches all over. I and Gene and Chris Phillips, with whom I had a very close relationship long after we both left the Council, in fact, until he died. And Mr. Surrey, the attorney. Luckily, the three of us, and Gene, had a very close working relationship, which I think was very important.

180  Appendix C

CT: Could you explain f urther that division of duties—your ­responsibilities—within it? I know you handled the magazine and publications, but I’d like you to expound your broader role. NL: Well, it was much more than that. I was actually in charge of planning and policy development for the Council. I wrote those drafts [for the board of directors] standing with only a secretary, behind closed doors, for a period of two weeks. Mary Frances Cooper was her name. I dictated those to her, over that period, standing up—it was amazing. So I was executive director of planning and policy planning, in addition to publications and research. So the first thing I did, as I said, was establish this sort of register system, this library, which was the basis of everything. I placed it on the coding system of Business International, except I transformed the international coding system of BI into a single coding system relating to a single country, China, of course. The first librarian, Marianna Graham, was great. She was just wonderful. So, again, publications were part of it, but they couldn’t have been part of it without the information system. I also recall having to establish the magazine at the same time as the delegation to China [in November 1973]. As you saw, the very first magazine had a picture of the board of directors on the Great Wall. There was also congressional testimony, speechwriting; I think Gene called me the “engine” of the Council. CT: That’s right. Probably 75% of what I saw in Ann Arbor had your name on it. That’s why I was so interested in reaching out to you. I also wanted to further discuss the Council’s relationship to the government. I actually a saw handwritten correspondence between you and George H. W. Bush, who had been the liaison chief in China. It was when Bush was leaving to become the CIA [Central Intelligence Agency] director in 1974 or ’75. So what was that relationship like? NL: You’ll see in this booklet I’m sending you, some notes f rom him, which were certainly nice. It was—how can I put this succinctly—we were strictly on the private side. I was very cooperative with the government. Those papers I wrote for the directors, I reviewed them with the State Department, with Chas Freeman. But it was our talks, and, in the information I developed, it was strictly our information. We had gone to a huge amount of trouble to put it together, and there was no comparison with what the Commerce Department had put together, or anybody else in the

Appendix C   181

government. I think we might have had some assistance, and at one point, you’ll see, I had a letter from Hans Heymann when we discovered that the CIA was using our information without any reference to us. I got a letter f rom Hans Heymann apologizing. So we had a duty to perform, and it was separate f rom that of the government. I think, looking back on it, it was important that we were separate, and we stood out as a separate group. We had our own integrity. If you look at those various publications, they were such a huge amount of effort, there was no way the US government could have compiled them. We actually still know, socially, Dave Denny, who was at the US Embassy. I think it was at the time that Bush was there, the chap who became ambassador to China, Sandy Randt, we still know very much, and he actually was the best man at Joan and my wedding. So, we have, you could say, social ties with a number of them, and definitely respect for them. I think that there was a mutual understanding from them, and a respect from them, for what we did. But it was we who did it. We were very much a separate entity. The other organizations you mentioned, they had relations with the US government that were closer than ours. I know that Anne Keatley was very close to the government. Of course, Phillips had been an ambassador before that. So in a certain sense, he had been a part of the government. Anyways, I find it very interesting that I am talking about all this. So can I ask you, Christian, where do you come from? I know this is Nashville, your university. CT: Yes, Vanderbilt in Nashville. I’m f rom Tennessee, actually, f rom Chattanooga, which is about two hours to the southeast. And you are f rom England, I gather? I hadn’t known that. I was somewhat surprised by your accent. NL: Well, yes, I am, originally. I’ve been here for quite a long time. This is another thing: in retrospect, when I joined the Council, I had just turned thirty. I was a Brit who had just arrived at an opportune moment when all of this was starting up. As a Brit, as I mentioned, I had been working in Hong Kong for Radio Hong Kong for six months. I had written thirteen half-hour programs on a variety of subjects. And as a Brit, I was able to visit China. China Travel Service ran these tourist visits to the Canton [Trade] Fair. I think I was one of the last ones. So I’ve actually got firs hand experience of China very much in the depths of the Mao era, which was scary, actually. We were at an opera, so-called, called The East is Red. We were, the little group of us, sitting there in this huge crowd of Chinese.

182  Appendix C

At the climax of this opera, they rolled a tank on stage. And as it came on, it swiveled its barrel so that it seemed to point directly at us! Believe me, it was quite something. We were very happy to have crossed the border back into Hong Kong at that point. CT: Yes, it always seems there was the question of entertainment in US-China relations as well. Mr. Theroux told me how the CCPIT [China Council for the Promotion of International Trade] had entertained the Council delegation with Peking Opera, and then when they returned, Hewitt recruited Theroux to get a bunch of farm animals together to give the CCPIT a “dog and pony show.” Do you have any recollection of that? NL: Not specifi ally, though I do remember well when Deng Xiaoping came. CT: Oh yes, when he came in ’79, it seems that the Council was quite deeply involved in his entertainment. I saw where the China Business ­Review had a picture of Bill Hewitt and Deng on the front. NL: Oh absolutely, when he came here we gave him a huge entertainment at the Kennedy Center. The Harlem Globetrotters— CT: John Denver— NL: Yeah, that was quite an event all together. Anyways, Christian, will that do it? CT: I think so, this was helpful and very enjoyable. NL: Well, I would love to see a finished co y. CT: I think you and Mr. Theroux absolutely deserve that. You have been so helpful. NL: Anyway, Christian, call anytime. I am glad to be of help. CT: Thanks so much and good-bye. NL: Cheers!

N OT E S

Introduction 1.  Christopher H. Phillips, interview with Charles Stuart Kennedy, May 12, 1993, p. 22, Foreign Affairs Oral History Collection, Association for Diplomatic Studies and Training, Library of Congress. 2.  William H. Overholt, “China and Globalization,” testimony presented to the US-China Economic and Security Review Commission, May 19, 2005, p. 2, Rand Corporation, http://www.rand.org/content/dam/rand/pubs /testimonies/2005/RAND_CT244.pdf. 3.  Ibid., 4. 4.  Derek Watkins, “What China Has Been Building in the South China Sea,” The New York Times, October 27, 2015, http://www.nytimes.com/inter active/2015/07/30/world/asia/what-china-has-been-building-in-the-south -china-sea.html?_r=0. 5.  Graham Allison, “The Thucydides Trap: Are the U.S. and China Headed for War?” The Atlantic, September 24, 2015, https://www.theatlantic .com/international/archive/2015/09/united-states-china-war-thucydides -trap/406756/. 6.  Lisa Mahapatra, “China Manufacturing: 10 Things the Chinese Make More of Than Anyone Else in the World,” International Business Times, August 2, 2013; US Department of the Treasury/Federal Reserve Board, “Major Holders of Treasury Securities (in Billions of Dollars),” http://ticdata.treasury .gov/Publish/mfh.txt; and Offic of the US Trade Representative, “The People’s Republic of China,” https://ustr.gov/countries-regions/china-mongolia -taiwan/peoples-republic-china. 7.  Of f ic of the US Trade Representative, “The People’s Republic of China.” 8.  Ibid. 183

184  Notes to Pages 2–4

9.  Bloomberg, “China Eclipses U.S. as Biggest Trading Nation,” February  10, 2013, http://www.bloomberg.com/news/articles/2013-02-09/china -passes-u-s-to-become-the-world-s-biggest-trading-nation. 10.  Vittorio Hernandez, “IMF Forecasts China to Dethrone US as Biggest Economy with $17.6T GDP,” International Business Times, October 10, 2014. 11.  Library of Congress, “US-China Trade [in books],” https://www.loc .gov/books/?q=us-china+trade. 12.  The “Sino-Soviet split” refers to the acute deterioration of relations between the People’s Republic of China (PRC) and the USSR in the 1950s, culminating in the split in 1960. Mao Zedong had strongly disagreed with Nikita Khrushchev’s pursuit of détente with the West, leading to open antagonism of the Soviets in China’s state media and on Chinese diplomatic missions to Moscow. The Soviets withdrew all economic aid and technical advisors in 1959 and 1960, marking the beginning of the Sino-Soviet enmity that would last until the mid-1980s. 13.  This motivation for American diplomacy is explored more substantially in chapter 1. On October 11, 1982, Richard Nixon recollected to The New York Times: “The key factor that brought us together ten years ago was our common concern with the Soviet threat, and our recognition that we had a better chance of containing that threat if we replaced hostility with cooperation between Peking and Washington. This overriding strategic concern dominated our dialogue, and our relationship, during the first decade.” See Richard M. Nixon, “America and China: The Next Ten Years,” The New York Times, October 11, 1982, A19. 14.  Quoted in Margaret MacMillan, Nixon and Mao: The Week That Changed the World (New York: Random House, 2007), 304. 15.  For an excellent discussion of the Harry S. Truman administration’s imposition of the embargo, see Shu Guang Zhang, Economic Cold War: Ameri­ ca’s Embargo against China and the Sino-Soviet Alliance (Palo Alto, CA: Stanford University Press, 2001). 16.  Elaine Sit, “Broken Promises: The Status of Expropriated Property in the People’s Republic of China,” Asian American Law Journal 3, no. 6 (1996): 112. These assets were valued at approximately $180 million. See Nancy Tucker, Patterns in the Dust: Chinese-American Relations and the Recognition Controversy, 1949–1950 (New York: Columbia University Press, 1983), 126. 17.  For a comprehensive treatment of Anglo-US diplomacy in the creation of the COCOM commercial control system, see Ian Jackson, The Economic Cold War: America, Britain and East-West Trade, 1948–63 (New York: Palgrave, 2001).

Notes to Pages 5–8   185

18.  Hale Boggs and Gerald R. Ford, “Impressions of the New China,” Joint Report to the US House of Representatives (Washington, DC: US Government Printing Offi , 1972), 9. Emphasis mine. 19.  Memorandum f rom Richard H. Solomon of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kis­ singer), June 9, 1972, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 229. 20.  Lee Branstetter and Nicholas Lardy, “China’s Embrace of Globalization,” NBER Working Paper No. 12373, July 2006, p. 4, http://www.nber .org/papers/w12373.pdf. 21.  Perkins, interview with the author, September 26, 2015. 22.  This is itself an oversimplifi ation. The post-1978 moment was key for the embrace of reform and opening up, the devolution of the foreign trade regime, and the establishment of the first SEZs in 1980. But the economic reform initiatives lulled in the 1980s as China slowly devolved the state-owned enterprises. Following the Tiananmen Square massacre in 1989, after which institutional support for Deng’s market reforms waned, Deng’s Southern Tour in 1992 fina ly helped reenergize the economic reform initiative. 23.  The Third Plenum of the Eleventh Party Congress meeting in December 1978 is often cited as the watershed moment that demarcates the beginning of signifi ant interest in foreign trade. See the introduction of Zhang Peiji and Ralph W. Huenemann’s China’s Foreign Trade (Halifax: The Institute for Research on Public Policy, 1987), 1, or the preface to Barton V. Celone’s United States-China Trade: Inextricably Intertwined? (New York: Nova, 2008), ix. Ezra Vogel presents an interesting periodization of the early renewed interest in foreign trade-cum-modernization in his Deng Xiaoping and the Transformation of China (Cambridge, MA: Harvard University Press, 2011), 221. He pins much responsibility f or interest in modernization on Gu Mu’s trip to France, Switzerland, Germany, Denmark, and Belgium, from May 2 to June 6, 1978. He writes that “what these highly respected official saw and learned in Europe, and how they articulated the new possibilities for China at the state forum that followed the visit, made their observations extraordinarily influential.” Emphasis mine. Gu was a vice premier of the PRC who steered the economic reforms under Deng. These ideas were, of course, not original to Gu. Zhou Enlai had advocated for rapprochement with the United States in 1972 on the grounds that American technology could help China rapidly modernize (see Han Suyin’s Eldest Son: Zhou Enlai and the Making of Modern China, 1898–1976 [New York: Hill and Wang, 1974], 376–77). Even before that, prior to the Sino-Soviet split in the 1960s, the Chinese had viewed the Soviets as the key providers of modernizing technology. The difference is that while Zhou had advocated these reforms while they were politically untenable under

186  Notes to Pages 8–10

Mao, Gu made them at a time when the CCP had already shown a clear ­sympathy for the renewed modernization impulse—see chapter 5 of this book and Hua Guof eng’s “Four Modernizations” speech at the “Learning f rom Dazhai in Agriculture” conference, December 1976. 24.  See, for example, James Mann, Beijing Jeep: A Case Study of Western Business in China (Boulder, CO: Westview, 1997), 33, 65, 122, 194. 25.  Randall E. Stross, Bulls in the China Shop: And Other Sino-American Business Encounters (New York: Pantheon, 1990), 17–19, 31, 39. 26.  George H. W. Bush recalled a meeting with Eugene Theroux—“a very decent fellow”—in his diary while serving as the PRC liaison offic chief from 1974 to 1975. See Jeffery A. Engel, ed., The China Diary of George H. W. Bush: The Making of a Global President (Princeton, NJ: Princeton University Press, 2008), 76, 274. John H. Holdridge recalled meeting Christopher H. Phillips at the PRC Liaison Offic see John H. Holdridge, Crossing the Divide: An Insider’s Account of the Normalization of U.S.-China Relations (Lanham, MD: Rowman & Littlefield 1997), 117. 27.  Robert G. Sutter, The China Quandary: Domestic Determinants of U.S.-China Policy, 1972–1982 (Boulder, CO: Westview, 1983), 128. 28.  Jaw-ling Joanne Chang, United States-China Normalization: An Evaluation of Foreign Policy Decision Making, University of Denver Monograph Series in World Affairs (Denver, CO: University of Denver, 1986), 147, 145. The point Chang is trying to make is that politico-diplomatic interests, rather than economic interests, dictated the course of normalization with China, and that thus an economic interest group could not have been particularly relevant. The premise is correct, but the conclusion is wrong. Not only did trade actually play a role in diplomacy, but the Council was also not strictly a trade organization. It could step out of the bounds of its normal trade mission to encourage bilateral relations more generally, as with its work for Deng’s 1979 state reception at the Kennedy Center gala. (See chapter 5 of this book.) 29.  Memorandum f rom Richard H. Solomon of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), June 9, 1972, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 229. 30.  Nancy Tucker, China Confidential: American Diplomats and SinoAmerican Relations, 1945–1996 (New York: Columbia University Press, 2001), 286. Cohen’s book was last updated in a fourth edition, issued in 2000, while Harding’s was published in 1992. 31.  Norton Wheeler, The Role of American NGOs in China’s Modernization: Invited Influence (New York: Routledge, 2013), 146, 29. The NCUSCR and the CSC were both founded in 1966. For whatever reason, these NGOs have attracted more historical attention than the Council. The CSC, for lack

Notes to Pages 10–12   187

of funding, closed in 1996. Its records are available at George Washington University; see https://library.gwu.edu/sites/default/files/g c/CSCPRC.pdf. 32.  As Nicholas Ludlow explained in our interview, as the Council matured, its mission expanded beyond simply trade (the direct exchange of goods) to business more broadly (investment, shipping, financial transactions, etc.). As the nature of the bilateral trade relationship evolved in sophistication, the Council updated its name accordingly in 1988. 33.  Eugene Theroux, “America’s First Trade Mission to ‘the New China,’” China Business Review (November–December 2008): 20–23. Note: The Council’s publication was originally entitled the U.S. China Business Review. 34.  China Business Review, “Highlights f rom the US-China Business Council’s 40 Year History” ( January–March 2013): 22–27. 35.  Min Song, “Economic Normalization: Sino-American Trade Relations from 1969–1980” (PhD diss., University of Georgia, 2009). 36.  Mao Lin, “More Than a Tacit Alliance: Trade, Soft Power, and U.S.Chinese Rapprochement Reconsidered,” Journal of American-East Asian Relations 24 (2017): 41. 37.  Kazushi Minami, “Oil for the Lamps of America?: Sino-American Oil Diplomacy, 1973–1979,” Diplomatic History (2017): 1–26. 38.  Barry K. Gills, “Overturning Globalization: Rethinking the Politics of Resistance,” in Globalization and Social Change, ed. Johannes Dragsbaek Schmidt and Jacques Hersh (New York: Routledge, 2000), 229. 39.  Ibid. 40.  Miguel D. Ramirez, “Is Capitalist Globalization Inevitable in the Marxian Paradigm?” Journal of the History of Economic Thought 36, no. 1 (2014): 83. 41.  Karl Marx and Friedrich Engels, The Communist Manifesto (London: Penguin, 1967), 223. 42.  There is an extensive discussion of this “Marx-on-globalization” genre in Manfred Steger’s “The Specter of the Manifesto Stalks Neoliberal Globalization: Reconfigu ing Marxist Discourse(s),” in The Cambridge Companion to the Communist Manifesto, ed. Terrel Carver and James Farr (Cambridge: Cambridge University Press, 2015), 175–94. See also, f or example, Spyridon Flogaitis, The Evolution of Law and the State in Europe: Seven Lessons (Oxford: Hart, 2014), 87. He writes, “The globalization of the economy was an in­ evitable result of capitalism, as Karl Marx and Friedrich Engels had already foreseen in the Communist Manifesto.” 43.  Ramirez, “Is Capitalist Globalization Inevitable?” 85. 44.  Robert A. Schultz, Information Technology and the Ethics of Globalization: Transnational Issues and Implications (Hershey: Inf ormation Science Ref erence, 2010), 32. “Both Friedman and Marx,” he writes, “regard

188  Notes to Page 13

g­ lobalization as inevitable, but have opposing views about its value. Second, on Friedman’s account, IT [information technology] plays an enormous role in globalization.” For Friedman’s advocacy of the term “neoliberalism,” see Thomas Friedman, “Read My Lips,” The New York Times, June 11, 2003, http:// www.nytimes.com/2003/06/11/opinion/read-my-lips.html. 45.  Francis Fukuyama, “The End of History?” The National Interest (Summer 1989). 46.  Francis Fukuyama, The End of History and the Last Man (London: Penguin, 1992), 59. Fukuyama praised Hegel as “one of the constitutive philosophers of modernity. Whether or not we acknowledge our debt to him, we owe to Hegel the most fundamental aspects of our present day consciousness.” Fukuyama is an interesting case. The End of History argued that Western liberal democracy, as the final evolution of human government, had proven itself “victorious” on the global stage. Fukuyama’s thesis recalled the Hegelian notion of a dialectical ascent in asserting the triumph of Western liberal democracy and capitalism. In doing so, he became identified with the strain of neoliberalism that considers globalization an inevitable result of capitalism. Fukuyama’s thesis remains highly controversial for a number of reasons, not least of which were the September 11 attacks, which reignited the “Clash of Civilizations” paradigm and questioned the triumph of Western liberalism. Above all, however, Fukuyama’s work is an obvious product of its time. Written in the wake of the Soviet Union’s collapse, it reflected the widespread enthusiasm for the end of the Cold War and the democratization of the Eastern Bloc. Fukuyama’s limited perspective becomes apparent when transposing his thesis into a different historical era. Consider, as a thought experiment, if Fukuyama had lived and written his book during La Belle Époque, the era f rom approximately 1871 to 1914. He then would have had stronger evidence for his thesis than during the period in which he actually wrote: The relative lack of international conflict cheap international travel, and major advances in science and technology supported the perception of a “beautiful era” of liberal triumph. Moreover, the global economy from 1871 to 1914 was more highly globalized during this period than at any other time in human history. See Jeffrey A. Frankel, “Globalization of the Economy,” NBER Working Paper No. w7858, August 2000, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=240064. Of further interest, World War I and the Great Depression ushered in a pointed contraction of globalization and a period of international isolationism. In place of the “beautiful era,” acute political and economic shocks hampered further globalization until the 1970s. There is a strong historical case to be made, then, that while capitalism might have globalizing tendencies, the reality of a globalized economy is ultimately contingent on political events; thus, globalization is neither historically inevitable nor irreversible. This position is a reasonable com-

Notes to Pages 13–18   189

promise that avoids the baggage of determinism and makes room for the role of historical contingency. 47.  “Historism” is not to be confused with “historicism.” Historism regards history as diachronic, contingent, and particularized, while historicism, as critiqued by Karl Popper, sees history unfolding toward a definite end along predetermined lines. See Stef an Berger, “Stef an Berger responds to Ulrich Muhlack,” German Historical Institute London Bulletin 23, no. 1 (2001): 28–29, note 5, and Karl Popper, The Poverty of Historicism (New York: Routledge, 2002). 48.  Bruce Mazlish, “Three Factors of Globalization: Multinational Corporations, Non-Governmental Organizations, and Global Consciousness,” Globality Studies Journal, March 1, 2012, https://gsj.stonybrook.edu/view /three-factors-of-globalization-multinational-corporations-non-govern mental-organizations-and-global-consciousness/. 49.  William Appleman Williams, The Tragedy of American Diplomacy (Cleveland: World, 1959), 13–14. 50.  Ibid., 14, 108. 51.  Ibid., 66. 52.  Ibid., 108. 53.  Many of the historical cases providing fodder for the Williams interpretation occurred in Latin America. The New Left critique often singles out the UFC’s advocacy with the US government that led to a CIA-backed overthrow of Guatemala’s democratically elected leader Jacobo Árbenz. Árbenz had damaged the UFC’s profits by cracking down on its labor practices and threatening to nationalize its land holdings. Allen Dulles, the director of the CIA, who had ties to the UFC, then authorized the training of a small invasion force that toppled Árbenz. Whatever fi ancial motives the lef tist critique alleges Dulles had, the overthrow was also broadly consistent with the Eisenhower administration’s stated policy of “rolling back” communist regimes. See Stephen Schlesinger, “Ghosts of Guatemala’s Past,” The New York Times, June 3, 2011. 54.  Michael H. Hunt, The American Ascendancy: How the United States Gained and Wielded Global Dominance (Chapel Hill: University of North Carolina Press, 2007), 97. 55.  Jan Wong, Red China Blues: My Long March from Mao to Now (Toronto: Doubleday, 1996), 151. 56.  Perkins, interview with the author, September 26, 2015. 57.  The “foreign claims issue” refers to the claims that American businesses held against the Chinese government and that the Chinese government, in turn, held against the American government. Following Truman’s 1950 embargo, China had expropriated American business assets on the mainland, while America had f rozen all Chinese bank assets. The foreign claims issue

190  Notes to Pages 19–24

emerged as a key problem in bilateral trade. It created resentment against the Chinese and fueled the idea that an expropriation could reoccur if American businesses were to establish substantial assets on the mainland. It also hampered international banking, shipping, and mutual trade fairs. The fear was that if American assets went into Chinese territory or Chinese assets came into American territory, these assets might be seized and held against the nations’ outstanding claims against each other. See Charles H. Bayar, “China’s Frozen Assets in the US: Their Present Status and Future Disposition,” U.S. China Business Review 2, no. 6 (September–October 1975): 31. 58.  Nicholas R. Lardy, “Trade Liberalization and Its Role in Chinese Economic Growth,” paper presented at the International Monetary Fund and National Council of Applied Economic Research Conference, “A Tale of Two Giants: India’s and China’s Experience with Reform and Growth,” p. 5, New Delhi, November 14–16, 2003. 59.  Memorandum f rom Richard H. Solomon of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), June 9, 1972, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 229. C H AP T E R 1   Disorder under Heaven

1.  “Vice Premier Teng Hsiao-peng’s Toast,” December 1, 1975, Kis­ singer Reports on USSR, China, and Middle East discussions, December 1–5, 1975, Box 2: President Ford’s Visit to Peking, Gerald R. Ford Presidential Library, https://www.f ordlibrarymuseum.gov/library/document/0331 /1553946.pdf. 2.  Ben Baden, “40 Years of US-China Commercial Relations,” China Business Review ( January–March 2013), http://www.chinabusinessreview .com/40-years-of-us-china-commercial-relations/. 3.  The Chicago School economist Frank Knight developed this point in his foundational text Risk, Uncertainty, and Profit (Boston: Houghton Miffli 1921). 4.  William Burr, The Kissinger Transcripts: The Top Secret Talks with Beijing and Moscow (New York: The New Press, 1998), 93–94. 5.  Zhihua Shen and Danhui Li, After Leaning to One Side: China and Its Allies in the Cold War (Palo Alto, CA: Stanford University Press, 2011), 224. 6.  Ibid., 243. 7.  Richard Nixon, Conversation Between President Nixon and his Assistant f or National Security Af f ai s, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 192.

Notes to Page 24   191

8.  Mao Lin, “More Than a Tacit Alliance: Trade, Sof t Power, and U.S.-Chinese Rapprochement Reconsidered,” Journal of American-East Asian Relations 24 (2017): 48. While Nixon did not rely on the diplomacy of modernization in conceiving the opening, the hope that Sino-US trade would reform Chinese society along liberal capitalist lines eventually did surface. This book’s conclusion details how both Jimmy Carter and George H. W. Bush invoked such rhetoric to defend their respective China policies. Significantly, however, both presidents were referring to the reformed political climate of post-Maoist China. As an aside, certain early iterations of the “f rustrated modernizer” thesis contain an apparent contradiction, as demonstrated in George Melloan’s article “China Trade: A New U.S. Policy,” The Wall Street Journal, April 28, 1971, 20. On the one hand, detractors of the American embargo (including Melloan) claimed that it had an “obvious fla ,” as it “didn’t really stop Communist countries from laying hands on any items, such as computers or machine tools, that can be sold in the West.” “Resourcef ul traders” simply transshipped to China through neutral countries. The American attempt to punish traders dealing in advanced goods to China “had little noteworthy effect.” Yet on the other hand, the thesis contended that abolishing the commercial controls could bring China “back into the world market” with “cars, refrigerators, [and] washing machines.” “Ideology [was] no real obstacle to trade,” and thus trade could push China “toward stability.” So, were the commercial controls a total failure in blocking East-West trade, or, contradictorily, if Chinese ideology was irrelevant, had the controls retarded China’s economy and made it a “f rustrated modernizer” and pariah? The reality was that ideology in fact was an obstacle to trade, especially on the Chinese side, which explains why Deng’s pragmatism enabled the formation of the new legal trade f rameworks discussed in chapter 5. Furthermore, the limited sales of technology facilitated by third-party smuggling were obviously dwarfed in scale by the eventual opening of Sino-US trade—a move enabled in part by the dismantling of the commercial controls. 9.  Mao Lin, “More Than a Tacit Alliance,” 41. 10.  Ibid., 53. 11.  Ibid., 54. 12.  Memorandum of Discussion at the 177th Meeting of the National Security Council, Washington, December 23, 1953, Foreign Relations of the United States, 1952–1954, China and Japan, Volume XIV, Part 1, Document 163. 13.  For a discussion of Anglo-American perceptions of the early SinoSoviet relationship, see Qiang Zhai, The Dragon, the Lion, and the Eagle:

192  Notes to Pages 25–27

Chinese-­British-American Relations, 1949–1958 (Kent, OH: Kent State University Press, 1994), 36–45. 14.  For a recent discussion of Western European trading interests in China, see Martin Albers, Britain, France, West Germany and the People’s Republic of China, 1969–1982: The European Dimension of China’s Great Transition (London: Palgrave, 2016). 15.  Memorandum of Discussion at the 177th Meeting of the National Security Council, Washington, December 23, 1953, Foreign Relations of the United States, 1952–1954, China and Japan, Volume XIV, Part 1, Document 163. 16.  Contrary to Mao Lin’s assertion that the article anticipated the “frustrated modernizer” thesis; see Mao Lin, “More Than a Tacit Alliance,” 55. 17.  Richard Nixon, “Asia After Viet Nam,” Foreign Affairs (October 1967), https://www.foreignaffairs.c m/articles/asia/1967-10-01/asia-after-viet-nam. 18.  Ibid. 19.  Ibid. 20.  Ibid. Emphasis mine. 21.  Ibid. 22.  Xiong Xianghui, Wode qingbao yu waijiao shengya [My Intelligence and Diplomatic Career] (Beijing: CCP History Publishing House, 2007), 178. 23.  Ibid., 199. 24.  Geoffrey Warner, “Nixon, Kissinger, and the rapprochement with China, 1969–1972,” International Affairs 83, no. 4 (2007): 764. 25.  Ibid., 768. 26.  “China’s Communist International Posture,” National Intelligence Estimate 13-7-70, November 12, 1970, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 95. 27.  Warner, “Nixon, Kissinger, and the rapprochement with China,” 764. 28.  Shen and Li, After Leaning to One Side, 225. 29.  Miller Center, “Nixon Conversation 002-052,” Richard M. Nixon Presidential Recordings, http://millercenter.org/presidentialrecordings/rmn -002-052. 30.  Daniel J. Sargent, A Superpower Transformed: The Remaking of American Foreign Relations in the 1970s (Oxf ord: Oxf ord University Press, 2015), 64. 31.  Message from the Government of the United States to the Government of the People’s Republic of China, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 186. 32.  Han Suyin, Eldest Son: Zhou Enlai and the Making of Modern China, 1898–1976 (New York: Hill and Wang, 1994), 382.

Notes to Pages 27–28   193

33.  Central Intelligence Agency, Directorate of Intelligence, “Communist Military and Economic Aid to North Vietnam, 1970–1974” (Washington, DC: Central Intelligence Agency, date classified) 4, http://www.foia.cia.gov /sites/default/files/document_c nversions/89801/DOC_0001166499.pdf. 34.  Ibid. 35.  Tad Szulc, “New Gesture to China: Easing of Embargo Seen as a Move to Stir Diplomacy, Not Just Trade,” The New York Times, July 11, 1971, 8. 36.  Ibid. 37.  Memorandum from the President’s Assistant for National Security Affairs (Kissinger) to President Nixon, March 25, 1971, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 111. 38.  Dong Wang, The United States and China: A History from the Eighteenth Century to the Present (New York: Rowman & Littlefield 2013), 249. 39.  Richard Nixon, conversation with Zhou Shukai and Henry Kissinger, April 12, 1971, in Douglas Brinkley and Luke A. Nichter, The Nixon Tapes: 1971–1972 (Boston: Houghton Miffli 2014), 57. 40.  Richard Nixon, conversation with Bob Haldeman and Alexander Haig, May 6, 1971, in Douglas Brinkley and Luke A. Nichter, The Nixon Tapes: 1971–1972 (Boston: Houghton Miffli 2014), 118. 41.  Memorandum f rom the President’s Assistant for National Security Affairs (Kissinger) to President Nixon, March 25, 1971, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 111. 42.  Richard Nixon, conversation with Bob Haldeman, Henry Kissinger, and John Scali, April 13, 1971, in Douglas Brinkley and Luke A. Nichter, The Nixon Tapes: 1971–1972 (Boston: Houghton Miffli 2014), 60. 43.  Memorandum f or Record of the Senior Review Group Meeting, March 12, 1971, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 108, and Memorandum from the President’s Assistant for National Security Affairs (Kissinger) to President Nixon, March 25, 1971, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 111. 44.  Wang, The United States and China, 249. 45.  Sargent, A Superpower Transformed, 64. 46.  Richard Nixon, conversation with Bob Haldeman and Henry Kissinger, April 23, 1971, in Douglas Brinkley and Luke A. Nichter, The Nixon Tapes: 1971–1972 (Boston: Houghton Miffli 2014), 100. 47.  See timeline in Dong Wang, “U.S.-China Trade, 1971–2012: Insights into the U.S.-China Relationship,” The Asia-Pacific Journal 11, no. 24 ( June 17, 2013).

194  Notes to Pages 29–31

48.  Memorandum f rom the President’s Assistant for National Security Affairs (Kissinger) to President Nixon, November 1971, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 164. 49.  Ibid. 50.  Ibid. 51.  Memorandum of Conversation, Beijing, October 22, 1971, Foreign Relations of the United States, 1969–1976, Volume E-13, Document on China, 1969–1972, Document 43. 52.  Ibid. 53.  Memorandum from John H. Holdridge and Robert Hormats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 217. 54.  Shanghai Communiqué, in Margaret MacMillan, Nixon and Mao: The Week That Changed the World (New York: Random House, 2007), 344. 55.  Ibid., 304. 56.  Ibid. 57.  Wolfgang Keller, Ben Li, and Carol Shiue, “Shanghai’s Trade, China’s Growth: Continuity, Recovery, and Change since the Opium War,” NBER Working Paper No. 17754, January 2012, 70. 58.  Angus Maddison, Contours of the World Economy, 1–2030 AD (Oxford: Oxford University Press, 2007), 379. 59.  Xiaodong Zhu, “Understanding China’s Growth: Past, Present, and Future,” Journal of Economic Perspectives 26, no. 4 (2012): 6. 60.  Dwight Perkins, interview with the author, September 26, 2015. 61.  Dwight Perkins, “China’s Economic Policy and Performance,” in The Cambridge History of China, vol. 15, The People’s Republic, Part 2: Revolutions within the Chinese Revolution, 1966–1982, ed. Roderick MacFarquhar and John King (Cambridge: Cambridge University Press, 1991), 483. 62.  Robin Munro, Death by Default: A Policy of Neglect in China’s State Orphanages (New York: Human Rights Watch, 1996), 31. Munro writes, “The extreme pressure placed on local official to report success in these areas produced an almost complete breakdown of accurate statistical reporting (the socalled ‘wind of untruthfulness’).” See also Jasper Becker, Hungry Ghosts: Mao’s Secret Famine (New York: Simon & Schuster, 1996), 50. 63.  Becker, Hungry Ghosts, 50. 64.  Ibid. 65.  Ibid. 66.  Munro, Death by Default, 31. See specifi ally note 29 for a discussion of famine deaths. 67.  See, for example, John F. Kennedy’s January 25, 1961, comment that “we’ve had no indication from the Chinese Communists that they would wel-

Notes to Pages 31–34   195

come any offer of food.” Taken f rom John F. Kennedy, Public Papers of the Presidents of the United States: John F. Kennedy (Washington, DC: US Government Printing Offi , 1964), 8. 68.  Knoema, “GDP Levels and Per Capita GDP for China, Japan, and South Korea,” Historical Statistics of the World Economy, 1–2008 AD, http:// knoema.com/mpeqfkc/gdp-levels-and-per-capita-gdp-for-china-japan-and -south-korea. 69.  Dwight Perkins, The Economic Transformation of China (London: World Scientific 2015), 143–44. 70.  Ibid. 71.  World Bank, “Gross Domestic Product,” https://www.google.com /publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_pcap_cd&idim =country:CHN:IND&hl=en&dl=en#!ctype=l&strail=false&bcs=d&nselm =h&met_y=ny_gdp_mktp_cd&scale_y=lin&ind_y=false&rdim=region& idim=country:CHN:IND:USA&ifdim=region&hl=en_US&dl=en&ind=false. 72.  World Bank, “GDP Per Capita (Current USD),” http://data.world bank.org/indicator/NY.GDP.PCAP.CD?locations=US; compare with China’s f igu es: http://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations =CN. 73.  Henry Kissinger, On China (New York: Penguin, 2011), 163. 74.  In international political economy, this concept is termed “host absorptive capacity.” If a host nation has weak infrastructure, human capital, financial markets, and the like (that is, absorptive capacity), then it is difficul for the host to utilize aid or FDI effectively. 75.  Ezra Vogel, Deng Xiaoping and the Transformation of China (Cambridge, MA: Harvard University Press, 2011), 205. 76.  New York Times, “Michael [sic] Oksenberg, 62, China Expert in Washington,” February 4, 2001. Note: His given name was Michel, not Michael. The Times later appended a correction. 77.  Ibid. 78.  Michel Oksenberg, interview with Julian Sobin, August 19, 1977, p. 3, Box 373: The China Trader—Julian Sobin interviews with Stanley Marcus, Michel Oksenberg, and Dwight Perkins File, United States-China Business Council Records, Gerald R. Ford Presidential Library. Note: The original version contains no punctuation. I have added punctuation to aid clarity; doing so had no material impact on the text’s meaning. 79.  Dwight Perkins, interview with Julian Sobin, 1977, p. 13, Box 373: The China Trader—Julian Sobin interviews with Stanley Marcus, Michel ­Oksenberg, and Dwight Perkins File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 80.  Rosemary Foot, “Redefiniti ns: The Domestic Context of America’s China Policy in the 1960s,” in Re-examining the Cold War: US-China D ­ iplomacy,

196  Notes to Pages 34–36

1954–1963, ed. Robert S. Ross and Changbin Jiang (Cambridge, MA: Harvard University Press, 2001), 274. 81.  Ibid. 82.  Ibid. 83.  Ibid. 84.  Wang, The United States and China, 227. 85.  Stephanie Rosenbloom, “Where Will Americans Travel in 2015?” The New York Times, January 6, 2015. 86.  Allan W. Austin and Huping Ling, Asian American History: An Encyclopedia (New York: Routledge, 2010), 121. 87.  Ibid., 122. 88.  Ibid. 89.  Ibid. 90.  Ibid. 91.  Wellington K. K. Chan, “Chinese American Business Networks and Trans-Pacific Economic Relations Since the 1970s,” in The Expanding Roles of Chinese Americans in U.S.-China Relations: Transnational Networks and TransPacific Interactions, ed. Peter H. Koehn and Xiao-huang Yin (New York: M. E. Sharpe, 2002), 148. Chan discusses how US corporations did not begin to build “personal and cultural” trans-Pacific networks until the mid-1970s, with the phenomenon only truly blossoming in the 1980s and 1990s. Regardless, the constituency of these networks was most frequently Hong Kongers or Taiwanese rather than mainland Chinese. 92.  Ibid., 147. 93.  Norman W. Getsinger, interview with Charles Stuart Kennedy, January 19, 2000, p. 55, Foreign Affairs Oral History Collection, Association for Diplomatic Studies and Training, Library of Congress. 94.  Judith Weinraub, “Eugene Theroux Helps Promote U.S.-China Trade—But Will Fang Fang Lipstick Really Sell?” People, July 24, 1978. 95.  Ibid. 96.  Ibid. There is a comical backstory to the “Fuking Pliers” comment; see Appendix B, 168–69. 97.  Perkins, interview with the author, September 26, 2015. Emphasis mine. 98.  Japanese Ministry of Economy, Trade and Industry, “Most-Favored -Nation Treatment Principle,” http://www.meti.go.jp/english/report/down loadfiles/gCT0212 .pdf. 99.  In 1951, Truman canceled MFN for all communist nations other than Yugoslavia. Bruce Odessey, Warner Rose, and John Schaffer, “An Overview of U.S. Trade Laws,” Economic Perspectives–An Electronic Journal of the U.S. Information Agency 2, no. 3 ( June 1997): 19–20.

Notes to Pages 36–38   197

100.  John M. Rothgeb Jr., U.S. Trade Policy: Balancing Economic Dreams and Political Realities (Washington, DC: CQ Press, 2001), 224. 101.  Weinraub, “Eugene Theroux Helps Promote U.S.-China Trade.” 102.  Far Eastern Economic Review, “Tariffs on China’s Ten Top Export Items to the United States,” May 14, 1979, quoted in Mei Renyi and Chen Juebin, “US-China Trade Relations in the 1970s and Hong Kong’s Role,” p. 6, paper presented at the American Studies Network conference, University of Hong Kong, 2006. 103.  Data f rom John L. Scherer, China Facts & Figures Annual, vol. 1 (Gulf Breeze, FL: Academic International Press, 1978), 166, and China Facts & Figures Annual, vol. 4 (Gulf Breeze, FL: Academic International Press, 1981), 216. 104.  Memorandum f rom Richard H. Solomon of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), June 9, 1972, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 229. 105.  Memorandum f rom John H. Holdridge of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), January 18, 1973, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 4. 106.  Memorandum from Secretary of Commerce Kreps to the President’s Assistant for National Security Affairs (Brzezinski), March 11, 1977, Foreign Relations of the United States, 1977–1980, Volume XIII, China, Document 17. Emphasis mine. 107.  Memorandum f rom the President’s Assistant for National Security Affairs (Kissinger) to President Nixon, June 3, 1971, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 131. 108.  James Mann, About Face: A History of America’s Curious Relationship with China, from Nixon to Clinton (New York: Alfred A. Knopf, 1999), 106. 109.  “19 U.S. Code § 2432—Freedom of emigration in East-West trade,” US Code, Title 19, Chapter 12, Subchapter IV, Part 1, hosted at the Legal Information Institute of the Cornell University Law School, https://www.law .cornell.edu/uscode/text/19/2432. 110.  John Quigley, “Most-Favored-Nation Status and the Jackson-Vanik Amendment: Does the Jackson-Vanik Amendment Apply?” Loyola of Los Angeles International and Comparative Law Review 11, no. 4 (1989): 545. 111.  See, f or example, Karen DeYoung, “Vance Sees Hope f or Jackson Amendment Repeal,” The Washington Post, June 17, 1977. 112.  Perkins, interview with the author, September 26, 2015. 113.  Christopher H. Phillips to Philip C. Habib, “National Council for U.S.-China Trade,” memo, September 2, 1975, Box 39: NCUSCT Meetings

198  Notes to Pages 39–41

with the Department of State and National Security Council File, Gerald R. Ford Presidential Library. 114.  Martin L. Lasater, The Taiwan Issue in Sino-American Strategic Relations (Boulder, CO: Westview, 1984), 153–54. 115.  Ibid. 116.  Shanghai Communiqué, 344. Emphasis mine. 117.  Central Intelligence Agency, paper prepared by the Central Intelligence Agency, October 1974, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1973–1976, Document 89. Emphasis mine. 118.  “Mutual Defense Treaty between the United States and the Republic of China, December 2, 1954,” The Avalon Project, Yale Law School, http:// avalon.law.yale.edu/20th_century/chin001.asp. 119.  Memorandum of Conversation, November 26, 1974, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 94. 120.  Ibid. 121.  Memorandum of Conversation, President Ford with Kissinger and Scowcroft, October 17, 1975, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 120. 122.  Barbara W. Tuchman, Stilwell and the American Experience in China, 1911–1945 (New York: Random House, 2017). Originally published in paperback in 1971. 123.  Michael Y. M. Kau, Pierre M. Perrolle, Susan H. Marsh, and Jeffrey Berman, “Public Opinion and Our China Policy,” Asian Affairs: An American Review 5, no. 3 (1978): 135. 124.  Walter P. McConaughy, “Speech Delivered by Walter P. Mc­Conaughy, Director of the Offic of Chinese Affairs Before the Richmond Public Forum, Richmond, Virginia,” December 7, 1953, Taiwan Review, http://www.taiwan today.tw/ct.asp?xItem=146127&ctNode=2198&mp=9. 125.  Joseph Keeley, The China Lobby Man: The Story of Alfred Kohlberg (New Rochelle, NY: Arlington House, 1969), xiii–xiv. 126.  Florence Times—Tri-cities Daily, “Chiang Right on Major Issues: ExCongressman,” April 6, 1975. 127.  Craig A. Smith, “Taiwan’s 228 Incident and the Politics of Placing Blame,” Past Imperfect 14 (2008): 143. 128.  See Amber Parcher, “Remembering the White Terror: 25 Years after the End of Authoritarianism, Taiwan Is Still Struggling to Come to Terms with Its Past,” Foreign Policy, October 12, 2012. 129.  New York Times, “Taiwan Ends Four Decades of Martial Law,” July 15, 1987. 130.  See Parcher, “Remembering the White Terror.”

Notes to Pages 41–42   199

131.  See Julie Wu, “Remembering Taiwan’s White Terror: One Man Recounts His Journey through a Dark Chapter in Taiwan’s History,” The Diplomat, March 8, 2014. 132.  Shen would serve as Taiwan’s ambassador to the United States until Carter officially dissolved relations on January 1, 1979. Af ter Carter diplomatically recognized the communist regime in Beijing, Shen went on to write the polemical critique The US and Free China: How the US Sold Out Its Ally (Washington, DC: Acropolis Books, 1983). For Taiwanese appropriation of freedom rhetoric, see, for example, Chiang Kai-shek’s comments on the release of POWs in 1954: “The spontaneous outbursts of joy and triumph on Freedom Day throughout Free China bespeak the warmth and admiration with which all f reedom-loving Chinese welcome their brethren back f rom Korea. These stout-hearted men made history when they rejected Communism in favor of freedom at the risk of their lives. The vehemence and determination with which they objected to being returned to Communist enslavement leaves no room f or doubt that, were the people on the mainland given the same chance, they, too, would not hesitate to fight for their f reedom in the same heroic manner as has been demonstrated by these compatriots.” From “Statement by President Chiang Kai-shek on the Release of POWs,” January 24, 1954, Taiwan Review, http://www.taiwantoday.tw/ct.asp?xItem=146127&ct Node=2198&mp=9. 133.  Lasater, The Taiwan Issue, 153. 134.  National Security Decision Memorandum 248, March 14, 1974, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 74, and Memorandum from the President’s Assistant for National Security Affairs (Scowcrof t) to President Ford, September 17, 1976, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 155. 135.  Memorandum of Conversation, President Ford with Kissinger and Scowcroft, October 17, 1975, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 120. 136.  Memorandum of Conversation, April 24, 1974, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 76. 137.  Memorandum of Conversation, January 15, 1976, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 139. 138.  Norman W. Getsinger, interview with Charles Stuart Kennedy, January 19, 2000, p. 40. 139.  John F. Lawrence and Sam Jameson, “Ford Plant Is a Case Study: Taiwanese Learn How to Deal with Prosperity,” Los Angeles Times, June 9, 1985.

200  Notes to Pages 42–47

140.  Justin Yifu Lin and Chen Chen-Liang, “Dutch Disease, Taiwan’s Success, and ‘The China Boom,’ ” in Three Chinese Economies: China, Hong Kong, and Taiwan: Challenges and Opportunities, ed. Linda Fung-Yee Ng and Chyau Tuan (Hong Kong: Chinese University Press, 1996), 53. 141.  Congressional Quarterly, “China and US Foreign Policy” (Washington, DC: Congressional Quarterly, 1973), 40. Note: Ambassador Shen, a clearly partisan source, furnished this estimate. It nevertheless gives a rough picture of the massive per capita productivity disparity between Taiwan and the m ­ ainland. 142.  “Vice Premier Teng Hsiao-peng’s Toast.” 143.  Niall Ferguson, Charles S. Maier, Erez Manela, and Daniel J. Sargent, eds., The Shock of the Global: The 1970s in Perspective (Cambridge, MA: Harvard University Press, 2011), dust jacket. 144.  Ibid. 145.  Bancrof t Library, “1973–1974 Oil Crisis,” Fiscal Politics & Policy from the 1970s to Present, http://bancrof t.berkeley.edu/ROHO/projects/debt /oil crisis.html. C H AP T E R 2   Backchannel to China

1.  Hale Boggs and Gerald R. Ford, “Impressions of the New China,” Joint Report to the US House of Representatives (Washington, DC: US Government Printing Offi , 1972), 9, https://www.fordlibrarymuseum.gov/library /document/0358/035800376.pdf. 2.  Christopher H. Phillips, interview with Charles Stuart Kennedy, May 12, 1993, p. 26, Foreign Affairs Oral History Collection, Association for Diplomatic Studies and Training, Library of Congress. 3.  Memorandum f rom Richard H. Solomon of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), June 9, 1972, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 229. 4.  Ibid. 5.  US Department of State, “U.S.-China Ambassadorial Talks, 1955– 1970,” Offic of the Historian, Bureau of Public Affairs https://history.state .gov/milestones/1953-1960/china-talks. 6.  The charge of being a “capitalist roader” (zouzipai), in fact, became one of the most serious charges the CCP could level against an officia De­ veloped by Mao Zedong in 1957, the concept of “taking the capitalist road” referred to the supposed reactionary, pro-capitalist tendencies of certain dis­ favored CCP official Mao most famously accused Deng Xiaoping of being a capitalist roader, with more truth in this charge than Mao probably realized.

Notes to Pages 47–50   201

7.  Phillips, interview with Charles Stuart Kennedy, May 12, 1993, 24. 8.  Ibid., 30. 9.  Christopher H. Phillips, Letter to Commander, U.S. Army Reserve Components Personnel & Administration Center, May 6, 1974, Box 26: Government Agencies File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 10.  Jeffrey W. Helsing, Johnson’s War/Johnson’s Great Society: The Guns and Butter Trap (Westport, CT: Praeger, 2000), 20. 11.  Offic of Management and Budget, “Summary of Receipts, Outlays, Surpluses or Deficits (1789–2021),” https://www.whitehouse.gov/sites/default /files omb/budget/fy2017/assets/hist01z1.xls. Note: Incidentally, on paper, the federal government ran a $3.2 billion surplus in 1969. This was not due to decreased spending, which actually increased 2.8% from 1968 to 1969, but due rather to Lyndon Johnson’s new “unified budget,” which counted surpluses from the Social Security Trust Fund as governmental revenue. While Johnson could not tap into the Social Security fund to finance government spending, it nevertheless nominally erased the budget deficit 12.  Marc Labonte and Mindy Levit, “Financing Issues and Economic Effects of American Wars,” Congressional Research Service, July 29, 2008, https://www.fas.org/sgp/crs/natsec/RL31176.pdf; see table 3 on p. 11, “Economic Indicators in the Vietnam Era.” 13.  “The Overseas Private Investment Corporation,” October 11, 1973, Report to the Committee on Foreign Relations, US Senate Subcommittee on Multinational Corporations (Washington, DC: US Government Printing Offic , 1973), 3. 14.  Douglas Dacy, Foreign Aid, War, and Economic Development: South Vietnam, 1955–1975 (Cambridge: Cambridge University Press, 1986), 3. 15.  W. W. Rostow, The Stages of Economic Growth: A Non-Communist Manifesto (Cambridge: Cambridge University Press, 1960), 25. 16.  Thomas Robertson, “Foreign Aid,” in Postwar America: An Encyclopedia of Social, Political, Cultural, and Economic History, ed. James Ciment (New York: Routledge, 2015), 569. 17.  Dacy, Foreign Aid, War, and Economic Development, 10. 18.  James M. Carter, Inventing Vietnam: The United States and State Building, 1954–1968 (Cambridge: Cambridge University Press, 2008), 6. 19.  Dacy, Foreign Aid, War, and Economic Development, 10. 20.  Ibid., 11. For trade deficit see table 4.3 on p. 83. 21.  Ibid., 9–10. 22.  Ibid., 16–17. 23.  “The Overseas Private Investment Corporation,” 4. 24.  Ibid.

202  Notes to Pages 50–53

25.  Ibid. 26.  Ibid., 5. 27.  “Mutual Development and Cooperation Act of 1973,” July 20, 1973, Report of the Committee on Foreign Affairs Together with Minority and Additional Views on H.R. 9630, to Amend the Foreign Assistance Act of 1961, and for Other Purposes, Together with Minority Views (Washington, DC: US Government Printing Office, 1973), 1. Note: The exception to this trend under Richard Nixon was Israel, particularly as seen in Operation Nickel Grass, the massive resupply effort during the Yom Kippur War in 1973. Indeed, the 1970s saw the rise of Israel as the main client state of Washington; Israel was the largest recipient of American foreign aid from 1976 to 2004. 28.  Foreign Assistance Act of 1961, Title IV—Overseas Private Investment Corporation, Sec. 231—Creation, Purpose, and Policy, “Legislation on Foreign Relations Through 2005,” p. 116, Joint Committee Report of the Committee on Foreign Relations and the Committee on International Relations, January 2006, https://www.opic.gov/sites/default/files/docs/statute 0106.pdf. 29.  J. Bruce Llewellyn, Statement of J. Bruce Llewellyn, President of OPIC, S.1916, A Bill to Authorize Operations by the Overseas Private Investment Corporation (OPIC) in the People’s Republic of China, p. 6, Hearings bef ore the Committee on Foreign Relations, US Senate, 96th Cong., 2 (March 3, 1980), https://babel.hathitrust.org/cgi/pt?id=pur1.32754076920705 ;view=1up;seq=7. 30.  Foreign Assistance Act of 1961, 118. 31.  Llewellyn, Statement, 3. 32.  Jimmy Carter, “Legislation Amending the Foreign Assistance Act Statement on Signing S.1916 into Law,” August 8, 1980, The American Presidency Project, http://www.presidency.ucsb.edu/ws/?pid=44898. 33.  Nixon’s business ties have been highlighted especially in examinations of his administration’s attempt to confound Salvador Allende’s presidency in Chile, as American businesses viewed Allende as threatening to their Chilean interests. For a critical account, see Christopher Hitchens, The Trial of Henry Kissinger (New York: Verso, 2001), 56. 34.  Memorandum f rom Secretary of State Kissinger to President Ford, November 20, 1975, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 132. 35.  Ibid. 36.  Ibid. 37.  Memorandum of Conversation, February 15, 1973, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 8.

Notes to Pages 53–56   203

38.  Memorandum of Conversation, November 12, 1973, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 58. See also William Burr, The Kissinger Transcripts: The Top Secret Talks with Beijing and Moscow (New York: The New Press, 1998), 181. 39.  For example, Nixon’s decision ratifying the Council proposal was only declassified on February 14, 2007. See http://fas.org/irp/offdocs/nsdm-nixon /nsdm_170.pdf . Under Secretary of Commerce James Thomas Lynn’s key memo, “Creation of a Sino-American Trade Council,” was declassified on November 28, 2000. 40.  National Security Study Memorandum 149, March 10, 1972, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 211. 41.  Memorandum of Conversation, February 26, 1972, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 201. 42.  Ibid. 43.  Casper Wits, “The Japan Group: Managing Chinese People’s Diplomacy Toward Japan in the 1950s,” East Asia 33 (2016): 92. 44.  “About CPIFA,” Chinese People’s Institute of Foreign Affairs http:// www.cpifa.org/en/class/view?id=10. 45.  Wits, “The Japan Group,” 98. 46.  Memorandum from John H. Holdridge and Robert Hormats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), undated, Foreign Relations of the United States, 1969– 1976, China, 1969–1972, Document 217. The document is technically undated, but its placement in FRUS suggests March 30. 47.  Ibid. 48.  Ibid. 49.  Ibid. 50.  Ibid. 51.  Ibid. 52.  Ibid. 53.  Ibid. 54.  Ibid, note 8. 55.  National Security Decision Memorandum 170, June 8, 1972, Federation of American Scientists, National Security Decision Memorandums (NSDM), Nixon Administration, 1969–1974, https://f as.org/irp/offdocs /nsdm-nixon/nsdm_170.pdf. 56.  Ibid. 57.  James Thomas Lynn, Memorandum to Henry Kissinger and Peter M. Flanigan, “Creation of a Sino-American Trade Council,” June 8, 1972, Box 37:

204  Notes to Pages 56–59

NCUSCT Formation, 1973 (1) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 58.  Wits, “The Japan Group,” 95, and “China’s Economy and Foreign Trade,” undated, p. 11, Box 128: Business/Industry Business Perspectives– London (2) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 59.  Jerome Alan Cohen, “Implications of Détente f or Sino-American Trade,” in Sino-American Détente and Its Policy Implications, ed. Gene T. Hsiao (New York: Praeger, 1974), 53. 60.  Lynn, Memorandum to Henry Kissinger and Peter M. Flanigan. 61.  Ibid. 62.  Ibid. 63.  Ibid. 64.  National Security Study Memorandum 124, April 19, 1971, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 117. See note 3. 65.  Lynn, Memorandum to Henry Kissinger and Peter M. Flanigan. 66.  Memorandum f rom Richard H. Solomon of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), June 9, 1972, Foreign Relations of the United States, 1969–1976, Volume XVII, China, 1969–1972, Document 229. 67.  Ibid. 68.  Ibid. 69.  Ibid. 70.  Ibid. 71.  Memorandum from John H. Holdridge and Robert Hormats of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), undated, Foreign Relations of the United States, 1969– 1976, China, 1969–1972, Document 217. 72.  Jeffrey A. Engel, ed., The China Diary of George H. W. Bush: The Making of a Global President (Princeton, NJ: Princeton University Press, 2008), 76. See in particular note 67. 73.  Ibid., 76. 74.  Boggs and Ford, “Impressions of the New China,” 25. 75.  Ibid., 24. 76.  Ibid., 23. 77.  Hale Boggs, Conversation between Hale Boggs and Li Hsifu, First Deputy Director of the Chinese Council for the Promotion of International Trade (CCPIT) at the CCPIT Offic in Peking, June 29, 1972, National Security Advisor Trip Briefing Books and Cables for President Ford, 1974–1976, Gerald R. Ford Presidential Library, https://www.fordlibrarymuseum.gov/library /document/0358/035800378.pdf-pagemode=bookmarks&page=38.

Notes to Pages 59–61   205

78.  Hale Boggs and Gerald Ford, Letter to President Nixon, July 20, 1972, appended to “Impressions of the New China,” 15. 79.  Hale Boggs and Gerald Ford seemed to be quite enthusiastic about acupuncture, and in particular the new method of acupuncture anesthesia—the introduction of small electric charges to the patient via acupuncture needles wired to a battery. In “Impressions of the New China,” they remarked that “acupuncture anesthesia, which was begun in the late 50’s appears to be a highly signifi ant medical advance. . . . The jamming of pain circuit transmission by needle-electric stimuli seems to be the most widely accepted theory, and we believe it will be a widely used technique in the United States before long. . . . The Chinese are justly proud of their remarkable achievements in acupuncture anesthesia and therapy. In this area, we have much to learn from each other for the ultimate benefit of our people, and so we are optimistic that contact in this area will be active” (ibid., 12, 22). 80.  “Economic Developments in Mainland China,” Hearings before the Joint Economic Committee of the Congress of the United States (Washington, DC: US Government Printing Offi , 1972), http://www.jec.senate.gov /reports/92nd%20Congress/Economic%20Developments%20in%20Main land%20China%20%28575%29.pdf. Boggs testified on July 10, 1972; his “recommendations” come on pp. 144–45 of this report. 81.  Eugene Theroux, interview with the author, October 16, 2015. 82.  Ibid. 83.  Steven Lazarus, Letter to Robert Hormats and Dean Hinton, “The National Council f or U.S.-China Trade,” January 24, 1973, p. 1, Box 37: NCUSCT Formation (1) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 84.  Ibid. 85.  Ibid. 86.  Ibid. 87.  Ibid., 2. 88.  Memorandum f rom John H. Holdridge of the National Security Council Staff to the President’s Assistant for National Security Affairs (Kissinger), January 18, 1973, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 4, and Steven Lazarus, Letter to Robert Hormats and Dean Hinton, see attached name list. 89.  Gerald R. Ford Library, “United States-China Business Council Records” Finding Aid, https://www.f ordlibrarymuseum.gov/library/guides /findingaid/United%20States-China%20Business%20Council%20-%20 Records.htm. 90.  These directors were also the nine present on the “historic mission” to China in November 1973. See “Members of the Delegation,” in “November 1973—NCUSCT to China,” Box 60: Itinerary File, United States-China

206  Notes to Pages 61–64

­ usiness Council Records, Gerald R. Ford Presidential Library. For Surrey in the B Offic of Strategic Services, see Jonathan Marshall, Peter Dale Scott, and Jane Hunter, The Iran Contra Connection: Secret Teams and Covert Operations in the Reagan Era (New York: Black Rose Books, 1987), 44. 91.  Phillips, interview with Charles Stuart Kennedy, May 12, 1993, 26. 92.  Theroux, interview with the author, October 16, 2015. 93.  Ibid. 94.  Ibid. 95.  Ibid. 96.  Ibid. 97.  Ibid. 98.  Ibid. For Theroux’s original recommendations to Burnham, see Eugene Theroux, Memo to the National Council for U.S.-China Trade, “Suggestions for Consideration by the Program Committee,” April 25, 1973, Box 37: NCUSCT Formation 1973 (1) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 99.  “U.S. Traders Welcoming Possibilities in China, Council Indicates Interest,” Commerce Today, June 11, 1973, Box 37: Formation of the NCUSCT 1971 (1) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 100.  Theroux, interview with the author, October 16, 2015. 101.  Ibid. 102.  Nancy Tucker, China Confidential: American Diplomats and SinoAmerican Relations, 1946–1996 (New York: Columbia University Press, 2001), 286. 103.  Cohen, “Implications of Détente,” 53. 104.  Ibid. 105.  Ibid. 106.  Ibid. 107.  Memorandum, Arne J. de Keijzer to Nick Ludlow, October 9, 1973, Box 129: Outside Organizations: Business/Industry: U.S. China Chamber of Commerce 1973–75 (1) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 108.  Ibid., 2. 109.  Memorandum from Charles Cooper, Robert D. Hormats, and Richard H. Solomon of the National Security Council Staff to the President’s Assistant f or National Security Af f airs (Kissinger), August 16, 1973, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 49. 110.  Ibid. 111.  Ibid.

Notes to Pages 65–71   207

112.  Theroux, interview with the author, October 16, 2015. 113.  Burr, The Kissinger Transcripts, 167. 114.  Mao said to Henry Kissinger: “You are always saying something with respect to the Soviet Union something we ourselves are saying. And your views seem approximately the same as ours, that is, there is a possibility that the Soviet Union wants to attack China” (Memorandum of Conversation, November 12, 1973); see The Kissinger Transcripts, 183. 115.  Henry Kissinger, Letter to Donald C. Burnham, October 27, 1973, Box 34: Background Inf ormation on National Council 1973 File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 116.  Ibid. 117.  Memorandum of Conversation between Henry Kissinger and Mao Zedong, February 17, 1973; see The Kissinger Transcripts, 93–94. 118.  Memorandum, Christopher H. Phillips to Members of the November 1973 Delegation of the National Council for U.S.-China Trade to China, Box 35: Background Material File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 119.  Ibid. 120.  Phillips, interview with Charles Stuart Kennedy, May 12, 1993, 25. 121.  Ibid. 122.  Ibid., 1. 123.  Theroux, interview with the author, October 16, 2015. 124.  Ibid. 125.  Phillips, interview with Charles Stuart Kennedy, May 12, 1993, 27. The Eight Elders were a group of senior communist official who directed the CCP’s most important decisions. They included Deng Xiaoping, Chen Yun, Li Xiannian, Peng Zhen, Yang Shangkun, Bo Yibo, Wang Zhen, and Song Renqiong. 126.  Theroux, interview with the author, October 16, 2015. 127.  Phillips, interview with Charles Stuart Kennedy, May 12, 1993, 27. CHAPTER 3  Informal Trade Diplomacy in Détente and Rapprochement

1.  Memorandum f rom President Nixon to Secretary of State Rogers, February 3, 1972, Foreign Relations of the United States, 1969–1976, Volume XIV, Soviet Union, October 1971–May 1972, Document 44. 2.  Frederick B. Dent, Address by Secretary of Commerce Frederick B. Dent, May 31, 1973, p. 14, Box 4: Annual Meetings, Conferences, May 31, 1973, Speeches File, United States-China Business Council Records, Gerald R. Ford Presidential Library.

208  Notes to Pages 73–75

3.  Ibid., 1–2. 4.  Memorandum f rom President Nixon to Secretary of State Rogers, February 3, 1972, Foreign Relations of the United States, 1969–1976, Volume XIV, Soviet Union, October 1971–May 1972, Document 44. 5.  Richard Nixon, conversation with Zhou Shukai and Henry Kissinger, April 12, 1971, in Douglas Brinkley and Luke A. Nichter, The Nixon Tapes, 1971–1972 (Boston: Houghton Miffli 2014), 57. 6.  Richard Nixon, “Communiqué about a Joint United States-Soviet Union Commercial Commission,” May 26, 1972, The American Presidency Project, http://www.presidency.ucsb.edu/ws/?pid=3431. 7.  Ibid. 8.  Bruce Parrott, ed., Trade, Technology, and Soviet-American Relations (Bloomington: Indiana University Press, 1985), 363–65. 9.  Clifton B. Luttrell, “The Russian Wheat Deal—Hindsight vs. Foresight,” October 1973, p. 1, Federal Reserve Bank of St. Louis, https://www .staff.ncl.ac.uk/david.harvey/MKT3008/RussianOct1973.pdf. 10.  US Senate, Committee on Finance, “Background Materials Relating to the United States-Soviet Union Commercial Agreements,” April 2, 1974, US Senate, 93rd Cong., 2 (Washington, DC: US Government Printing Offi , 1974), 9, http://www.financ .senate.gov/imo/media/doc/soviet.pdf. 11.  Luttrell, “The Russian Wheat Deal,” p. 3, table 1: “Prices of Selected Farm Products.” 12.  Memorandum of Conversation, October 18, 1974, Foreign Relations of the United States, 1969–1976, Volume XVI, Soviet Union, August 1974–­ December 1976, Document 59, note 7. 13.  Memorandum of Conversation, July 10, 1974, Foreign Relations of the United States, 1969–1976, Volume XV, Soviet Union, June 1972–August 1974, Document 200. 14.  Donald Kendall, Testimony of Donald Kendall, President, Pepsico; Chairman, US-USSR Trade and Economic Council, July 18, 1974, “Multinational Corporations and United States Foreign Policy,” Part 10, Hearings before the Subcommittee on Multinational Corporations, Committee on Foreign Relations, US Senate, 93rd Cong., 2 (Washington, DC: US Government Printing Offi , 1974), 191. 15.  Frederick B. Dent, Prepared Statement of Frederick B. Dent, “Multinational Corporations and United States Foreign Policy,” July 18, 1974, Part 10, Hearings before the Subcommittee on Multinational Corporations, Committee on Foreign Relations, US Senate, 93rd Cong., 2 (Washington, DC: US Government Printing Offi , 1974), 160. 16.  Parrott, Trade, Technology, and Soviet-American Relations, 365.

Notes to Pages 75–79   209

17.  Kendall, Testimony, 216. 18.  Ibid., 192. 19.  Comparative analysis: ibid., “Membership List,” 193, and National Council for United States-China Trade, “TheNational Council for US-China Trade: Member Firms,” Brochure, Box 177: Council Publications, Member Firms of the National Council File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 20.  Ibid. 21.  Frederick B. Dent, Testimony of Hon. Frederick B. Dent, Secretary of Commerce; accompanied by Lewis W. Bowden, Deputy Director, East-West Trade, July 17, 1974, “Multinational Corporations and United States Foreign Policy,” Part 10, Hearings before the Subcommittee on Multinational Corporations, Committee on Foreign Relations, US Senate, 93rd Cong., 2 (Washington, DC: US Government Printing Offi , 1975), 134. 22.  Kendall, Testimony, 191. 23.  Donald Kendall was, in f act, a close conf idante of Richard Nixon, owing to Nixon’s days as a corporate lawyer in California when he had worked on Kendall’s accounts. Kendall enjoyed privileged access to Nixon, and apparently even counseled him during the Watergate debacle. See Jonathan Aitken, Nixon: A Life (Washington, DC: Regnery, 1993), 364. 24.  Kendall, Testimony, 191. 25.  Central Intelligence Agency, “Developed West and US Trade with the USSR, 1965–1971,” Chart, in “Détente and Soviet-US Trade,” March 7, 1972, p. 4, http://www.foia.cia.gov/sites/default/files/document_c nversions/89801 /DOC_0000307809.pdf. 26.  Message f rom the Counselor of the Department of State (Sonnenfeldt) to Secretary of State Kissinger, October 21, 1974, Foreign Relations of the United States, 1969–1976, Volume XVI, Soviet Union, August 1974–December 1976, Document 63, note 4. 27.  Kendall, Testimony, 192. 28.  Ibid., 190. 29.  The international lawyer Samuel Pisar argued this case explicitly in April 1971. Speaking to The Wall Street Journal, he stated, “The Chinese now are where the Russians were in 1925. The first flush of revolution is over. They have the problem of industrialization. They cannot do it by themselves. They tried in a romantic and unscientific way and it didn’t work.” See George Melloan, “China Trade: A New U.S. Policy,” The Wall Street Journal, April 28, 1971, 20. In the same vein, the law professor Charles H. Bayar, writing for the U.S. China Business Review, suggested that the Litvinov Agreement, by which Franklin Roosevelt and Maxim Litvinov absolved the Soviet-American claims

210  Note to Page 79

dispute in 1933, could provide a model for the contemporary Sino-US dispute. See Charles H. Bayar, “China’s Frozen Assets in the US: Their Present Status and Disposition,” U.S. China Business Review 2, no. 5 (September–October 1975): 42–43. Two monographs may be consulted for greater detail on the American experience of trading without recognition with Russia, from 1917 to 1933. They suggest a number of parallels to, and divergences from, Nixon’s experience with China in the 1970s. The first is Linda Killen’s The Russian Bureau: A Case Study in Wilsonian Diplomacy (Lexington: University of Kentucky Press, 1983). Killen details how Woodrow Wilson’s administration attempted to bolster the White Russian government against the Bolshevik advance by providing economic aid. When an official plan led by Secretary of Commerce William Redfield fell through, Wilson instead had his confidantes incorporate a public corporation in Connecticut in October 1918 called the Russian Bureau. The Bureau secured a $5 million investment in the ongoing construction of the Trans-Siberian railroad and attempted to boost Russian-American bilateral trade. After these dual initiatives collapsed into incoherence and failure—including the Bolshevik seizure of the new railroad—the Bureau was legally dissolved in June 1919. Nevertheless, the Bureau provides an instructive case study on early conceptions of foreign aid and unofficial diplomacy. The second monograph is Katherine A. S. Siegel’s Loans and Legitimacy: The Evolution of Soviet-American Relations, 1919–1933 (Lexington: University of Kentucky Press, 1996). Siegel tracks how the US State Department, guided by a legalistic view of international relations that considered the Bolshevik government an illegal aberration, consistently refused to recognize a linkage of diplomacy and trade. In March 1923, Secretary of State Charles Evans Hughes argued that “it was a ‘fallacy’ to think that recognition would favorably influence trade,” while he “dismissed prospects of trade as ‘insignificant’” (Siegel, Loans and Legitimacy, 91). When an American Trade Commission coalesced to pursue Russo-American trade, Hughes rejected a reciprocal mission f rom its proposed Russian counterpart. Receiving an informal Russian trade mission in the United States was unacceptable, as this might be “construed and interpreted in some circles as being a direct or indirect, an actual or constructive recognition of the Bolshevik Russian Government” (see Memorandum of Conversation with Mr. Chicherin at Lausanne, February 2, 1923, in Documents of Soviet-American Relations, Volume 2: Propaganda, Economic Affairs, Recognition, 1917–1933, ed. Harold J. Goldberg [Gulf Breeze, FL: Academic International Press, 1995], 247–48.) The most successf ul inf ormal trading group of the era, the AmericanRussian Chamber of Commerce (ARCC), f ounded in 1926, rigorously de-

Notes to Pages 79–82   211

linked politics and trade to avoid problems with the State Department. Its president, Chase National Bank’s Reeve Schley, pledged an apolitical stance on recognition. He explained, “The Chamber has been revived f or the sole purpose of f ostering trade. It will not become a political debating society” (see James K. Libbey, “The American-Russian Chamber of Commerce,” Diplomatic History 9, no. 3 [ July 1985]: 239). Further, Schley stated, “our Chamber . . . has endeavored not to be drawn into controversy on political subjects” (Siegel, Loans and Legitimacy, 108). While the State Department thus refused to execute an early instance of inf ormal trade diplomacy, trade nevertheless helped build a bilateral relationship before the advent of formal recognition. 30.  Siegel, Loans and Legitimacy, 57. C H AP T E R 4   The National Council, 1974–1977

1.  Christopher H. Phillips, interview with Julian Sobin (undated, c. 1975), p. 6, Box 373: Publications and Research Department, “The China Trader” File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 2.  Christopher H. Phillips, interview with Charles Stuart Kennedy, May 12, 1993, p. 31, Foreign Affairs Oral History Collection, Association for Diplomatic Studies and Training, Library of Congress. 3.  Congressional Quarterly, “Last Vietnam Aid Bill Dies in House” (Washington, DC: Congressional Quarterly, 1976), https://library.cqpress .com/cqalmanac/document.php?id=cqal75-1214000#315. 4.  Memorandum of Conversation, President Ford with Kissinger and Scowcroft, October 17, 1975, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 120. 5.  Ibid. 6.  Memorandum of Conversation, Kissinger on China, July 6, 1975, ­Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973– 1976, Document 113. 7.  “Vice Premier Teng Hsiao-peng’s Toast,” December 1, 1975, Kissinger Reports on USSR, China, and Middle East discussions, December 1–5, 1975, Box 2: President Ford’s Visit to Peking, Gerald R. Ford Presidential Library, https://www.fordlibrarymuseum.gov/library/document/0331 /1553946.pdf. 8.  “How to Buy and Sell from the People’s Republic of China,” April 2, 1974, Box 25: World Trade Institute File, United States-China Business Council Records, Gerald R. Ford Presidential Library.

212  Notes to Pages 82–84

9.  Phillips, interview with Julian Sobin, 4. 10.  “China’s Trade Volume with the U.S. 1970–1980 (million dollars),” Report to the U.S. Congress Joint Economic Committee (1978), 743, quoted in Mei Renyi and Chen Juebin, “US-China Trade Relations in the 1970s and Hong Kong’s Role,” p. 1, paper presented at the American Studies Network conference, University of Hong Kong, 2006. 11.  “PEKING01584,” Cable f rom China US Liaison Of f ic to Hong Kong, US Department of State, Secretary of State, August 20, 1975, Wikileaks Public Library of US Diplomacy, https://wikileaks.org/plusd/cables/1975 PEKING01584_b.html. 12.  Hartford Courant, “Chinese Group to Study U.S. Economy,” September 7, 1975, Box 31: CCPIT Visit to the US 9/75 File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 13.  Register-Mail (Galesburg, Illinois), “China Trade Council,” September 11, 1975, Box 31: CCPIT Visit to the US 9/75 File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 14.  “MemCon of Pres. mtg. w/China Council for the Promotion of Int’t Trade Sept. 8, 1975,” The National Security Advisor’s Memoranda of Conversation Collection, Gerald R. Ford Presidential Library, https://www.fordlibrary museum.gov/library/document/0314/1553217.pdf. 15.  The full delegation was Li Chuan, vice chairman of the CCPIT; Tien Kuang-tao, managing director, China National Minerals and Metals IEC; Cheng Chi-hsien, deputy managing director, China National Machinery IEC; Han Piao, deputy managing director, China National Native Produce and Animal By-products IEC; Kao Feng, deputy managing director, China National Light Industrial Products IEC; Liu Shao-shan, deputy director, Department of Legal Af f airs in the CCPIT; Yeh Chung-chi, secretary to the Delegation Liaison Department in the CCPIT; Han Li-fu of the China National Machinery IEC; and Wang Genliang, the interpreter. Only the WadeGiles romanization survived. The complete list may be found in U.S. China Business Review, “CCPIT Delegation Visits the US: Hosted by National Council,” 2, no. 2 (September–October 1975): 18–19. 16.  Ibid. 17.  Ibid., 3. 18.  Ibid., 2. 19.  Ibid., 20. 20.  Ibid., 19. 21.  Quad-City Times (Davenport, Iowa), “Polite Chinese Taste U.S. Life,” September 15, 1975, Box 31: CCPIT Visit to the US 9/75 File, United StatesChina Business Council Records, Gerald R. Ford Presidential Library.

Notes to Pages 84–87   213

22.  New York Times, “Chinese Mission Meets with Ford,” September 9, 1975, Box 31: CCPIT Visit to the US 9/75 File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 23.  News (Chicago, Illinois), “Chiang Flag Flies, Reds Quit Tour,” September 16, 1975, Box 31: CCPIT Visit to the US 9/75 File, United StatesChina Business Council Records, Gerald R. Ford Presidential Library. 24.  Eugene Theroux, interview with the author, October 16, 2015. 25.  Ibid. 26.  Ibid. 27.  Christopher H. Phillips, interview with Julian Sobin, 4. Emphasis mine. 28.  Phillips, interview with Charles Stuart Kennedy, 23. 29.  Christopher H. Phillips, “The Second Annual Report of the National Council for US-China Trade,” U.S. China Business Review 2, no. 5 (May–June 1975): 6, Box 177: Council Publications—CBR Volume 2, United States-China Business Council Records, Gerald R. Ford Presidential Library. 30.  Nicholas Ludlow, interview with the author, November 30, 2015. 31.  Nicholas Ludlow, “Personal China References,” in the possession of Nicholas Ludlow. Ludlow graciously allowed me to borrow this dossier for my research for a signifi ant period in 2016. 32.  Frank P. Wardlaw, Letter to Melvin W. Searls, May 28, 1976, Box 26: Government Agencies, Liaison Offic File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 33.  Robert M. Perito, Letter to Nicholas Ludlow, October 24, 1975, Box 26: Government Agencies, Liaison Offic File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 34.  Robert M. Perito, Letter to Nicholas Ludlow, August 27, 1975, Box 26: Government Agencies, Liaison Offic File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 35.  Memorandum, Nicholas Ludlow to all staff members, July 28, 1977, Box 250: PRC Liaison Offic File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 36.  Christopher H. Phillips, Recommendation for Nicholas Ludlow, May 1986, in the possession of Nicholas Ludlow. 37.  “Nicholas H. Ludlow,” Résumé, p. 1. In the possession of the author. 38.  Christopher H. Phillips, Letter to Huang Chen, December 5, 1973, Box 40: PRCLO Correspondence File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 39.  Eugene Theroux, Letter to William M. Batten, January 15, 1974, Box 216: J. C. Penney Incorporated File, United States-China Business Council Records, Gerald R. Ford Presidential Library.

214  Notes to Pages 87–90

40.  “Import & Domestic Hand Tool Market in the United States,” February 8, 1974, Box 216: J. C. Penney Incorporated File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 41.  Chu-yuan Cheng, China’s Petroleum Industry: Output Growth and Export Potential (New York: Praeger, 1976), 37. 42.  Ibid. 43.  Nicholas Ludlow, “China’s Oil,” U.S. China Business Review 1, no. 1 ( January–February 1974): 22. 44.  Ibid. 45.  Ibid., 21. 46.  Ibid., 27. 47.  Dwight Perkins, interview with the author, September 26, 2015. 48.  “Notes from a meeting between Chang Tsien-hua, Tung Chih-kuang, Christopher H. Phillips, and Eugene A. Theroux,” January 3, 1975, p. 4, Box 41: PRCLO Meetings File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 49.  Ibid. 50.  Ibid. 51.  Ibid. 52.  Christopher H. Phillips, Letter to the Washington Representatives of National Council Member Firms, undated (c. early 1975), Box 34: NCUSCT Academic Advisory Board File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 53.  Christopher H. Phillips, Notes, undated, Box 34: NCUSCT Academic Advisory Board File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 54.  Nicholas Ludlow, Memorandum to Christopher H. Phillips, May 28, 1974, Box 34: NCUSCT Academic Advisory Board File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 55.  Perkins, interview with the author, September 26, 2015, and Phillips, Letter to the Washington Representatives of National Council Member Firms. 56.  National Council f or United States-China Trade, “The National Council for US-China Trade Academic Advisory Board Luncheon: Registrants,” Memorandum, January 16, 1975, Box 34: NCUSCT Academic Advisory Board File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 57.  U.S. China Business Review, “Successf ul Petroleum Conf erence in Houston,” 3, no. 4 ( July–August 1976): 24. 58.  Lee Branstetter and Nicholas Lardy, “China’s Embrace of Globalization,” NBER Working Paper No. 12373, July 2006, p. 4, http://www.nber .org/papers/w12373.pdf.

Notes to Pages 90–93   215

59.  China Council for the Promotion of International Trade, “National Organizations of Foreign Trade and Organizations of Other Foreign Business of the People’s Republic of China,” Brochure, 1973, Box 139: Publications and Research Department, China’s Foreign Trade Corporations and Organizations File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 60.  Melvin W. Searls, interview with Julian Sobin, undated, pp. 10–11, Box 373: The China Trader—Julian Sobin Interviews with Melvin Searls and Walter Sterling Surrey File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 61.  Phillips, “The Second Annual Report,” 10. 62.  U.S. China Business Review, “Who Not to Write To,” 1, no. 1 ( January– February 1974): 9. 63.  Ibid. 64.  Phillips, “The Second Annual Report,” 11. 65.  George Driscoll, Letter to the U.S. Passport Offi , October 2, 1975, Box 26: Government Agencies—Passport Of f ic File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 66.  Searls, interview with Julian Sobin, 21. 67.  Ibid., 21–23. 68.  Ibid., 9. 69.  Ibid., 11. 70.  Ibid., 21. 71.  Ibid. 72.  Ibid., 22. 73.  Ibid. 74.  “Notes from a meeting between Chang Tsien-hua, Tung Chih-kuang, Christopher H. Phillips, and Eugene A. Theroux,” p. 1. 75.  Ibid., 5. 76.  U.S. China Business Review, “The Kwangchow Fair and How to Obtain an Invitation,” 1, no. 1 ( January–February 1974): 9. 77.  Ibid. 78.  Ibid. 79.  Norman Getsinger, “Prospects for Industrial Development and Trade,” p. 20, paper presented at the Institute for Asian/Pacific Studies’ conference, “U.S.-China Trade: Prospects for the 1980s, January 10–11, 1980,” Box 234: Norman Getsinger File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 80.  U.S. China Business Review, “The Kwangchow Fair,” 9. 81.  Ibid. 82.  Ibid.

216  Notes to Pages 93–96

83.  Ibid. 84.  Phillips, “The Second Annual Report,” 15. 85.  U.S. China Business Review, “Direct Contact with Chinese Com mercial Official ” 1, no. 1 ( January–February 1974), backside of magazine’s front page. 86.  Bob Boulogne, interview with Julian Sobin, undated, p. 2, Box 373: The China Trader—Julian Sobin interviews with Murray Berger and Bob Boulogne File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 87.  Ibid. 88.  Christopher H. Phillips, Notes, June 3, 1974, Box 216: J. C. Penney Company Incorporated File, United States-China Business Council Records, Gerald R. Ford Presidential Library, https://www.fordlibrarymuseum.gov/library /document/0029/7490125.pdf. 89.  See, f or example, “Notes f rom a meeting between Chang Tsienhua, Tung Chih-kuang, Christopher H. Phillips, and Eugene A. Theroux,” regarding the importance of American importing in maintaining smooth trade ­relations. 90.  U.S. China Business Review 1, no. 1 ( January–February 1974), magazine back cover. 91.  Ibid. 92.  U.S. China Business Review, “National Council Import Committees,” 3, no. 4 ( July–August, 1976): 24. 93.  U.S. China Business Review 1, no. 1 ( January–February 1974), magazine back cover. 94.  Phillips, “The Second Annual Report,” 14. 95.  After a period in private business, Stanley Lubman later returned to Berkeley Law, where he still teaches. 96.  U.S. China Business Review, “Lubman and Company,” 3, no. 5 (September–­October 1976): 25. 97.  Norman Getsinger, “Prospects f or Industrial Development and Trade,” 18–19. 98.  Clark T. Randt Jr., Letter to Stanley Schlosser (US Patent Office June 11, 1974, Box 26: Patent Offic File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 99.  Ibid. 100.  Ibid. 101.  U.S. China Business Review, “US Firms May Now Register Trademarks in the PRC,” 6, no. 2 (March–April 1978): 12. 102.  Ibid. 103.  Ibid. The fi m was Sobin Chemicals.

Notes to Pages 96–99   217

104.  Nicholas Ludlow, “Mike Oksenberg’s Comments on CCPIT Business Papers,” Memorandum from Nicholas Ludlow to Christopher H. Phillips, September 1, 1977, Box 370: Oksenberg File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 105.  Ibid. 106.  Eugene Theroux, “Recent Arbitration Decision,” U.S. China Business Review 1, no. 6 (November–December 1974): 7. 107.  “China’s Economy and Foreign Trade,” undated, p. 11, Box 128: ­Business/Industry Business Perspectives–London (2) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 108.  Ibid. 109.  Ibid. 110.  Walter Sterling Surrey, interview with Julian Sobin, undated, p. 14, Box 373: “The China Trader” File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 111.  Ibid. 112.  Ibid. 113.  Ibid. 114.  U.S. China Business Review, “Milestone Case in Dispute Settlement in Trade with the PRC,” 4, no. 6 (November–December 1977). 115.  “Notes f rom a meeting between Chang Tsien-hua, Tung Chihkuang, Christopher H. Phillips, and Eugene A. Theroux,” p. 1. 116.  Ibid. 117.  Ibid, 3. 118.  Ibid. 119.  Phillips, interview with Charles Stuart Kennedy, 29. 120.  Jeff Blackwell, “‘The China Lobby’: Influences on US-China Foreign Policy in the Post War Period, 1949–1954,” The Forum 2, no. 1 (2010): 43. 121.  Norman W. Getsinger, interview with Charles Stuart Kennedy, January 19, 2000, p. 47, Foreign Affairs Oral History Collection, Association for Diplomatic Studies and Training, Library of Congress. 122.  Martin L. Lasater, The Taiwan Issue in Sino-American Strategic Relations (Boulder, BO: Westview, 1984), 153; National Security Decision Memorandum 248, March 14, 1974, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 74; and Memorandum from the President’s Assistant for National Security Affairs (Scowcrof t) to President Ford, September 17, 1976, Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973–1976, Document 155. 123.  Jaw-ling Joanne Chang, United States-China Normalization: An Evaluation of Foreign Policy Decision Making, University of Denver Monograph Series in World Affairs (De ver, CO: University of Denver, 1986), 144–45. 124.  Perkins, interview with the author, September 26, 2015.

218  Notes to Pages 99–102

125.  Richard Nixon, conversation with William Rogers and Henry Kissinger, May 27, 1971, in Douglas Brinkley and Luke A. Nichter, The Nixon Tapes, 1971–1972 (Boston: Houghton Miffli 2014), 140–41. Emphasis mine. 126.  Memorandum of Conversation, Kissinger on China, July 6, 1975, ­Foreign Relations of the United States, 1969–1976, Volume XVIII, China, 1973– 1976, Document 113. 127.  Fox Butterfield “U.S. Companies Stir Peking-Taipei Trade Dispute,” The New York Times, March 28, 1977, 43, 48. 128.  Ibid. 129.  Dan Morgan, “Firms Eyeing Peking Tie Face Taiwanese Pressure,” The Washington Post, November 21, 1976, 8. 130.  Ibid. 131.  Butterf ield “U.S. Companies Stir Peking-Taipei Trade Dispute,” 43, 48. 132.  1976PEKING01401_b, Cable from US Liaison Offic in Peking to the US Department of State, July 27, 1976, Wikileaks Public Library of US Diplomacy, https://wikileaks.org/plusd/cables/1976PEKING01401_b.html. 133.  Butterf ield “U.S. Companies Stir Peking-Taipei Trade Dispute,” 43, 48. 134.  1976PEKING01401_b. 135.  Ibid. 136.  Chang, United States-China Normalization, 145–46. 137.  Kailai Huang, “American Business and the China Trade Embargo in the 1950s,” Essays in and Business History 19 (2001): 40. 138.  Congressional Quarterly, “China and US Foreign Policy” (Washington, DC: Congressional Quarterly, 1973), 39. 139.  Alan F. Westin, “Anti-Communism and the Corporations,” Commentary, December 1, 1963, https://www.commentarymagazine.com/articles /anti-communism-and-the-corporations/. 140.  Ibid. 141.  Ibid. Nyaradi was a professor of economics at Bradley University and the former finance minister of Hunga y. 142.  Ibid. 143.  Stanley D. Bachrack, The Committee of One Million: “China Lobby” Politics, 1953–1971 (New York: Columbia University Press, 1976), 62. 144.  Ibid., 62–63. 145.  Ibid., 69. 146.  National Council f or United States-China Trade, “The National Council for US-China Trade: Member Firms,” Brochure, Box 177: Council Publications, Member Firms of the National Council File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 147.  Phillips, interview with Charles Stuart Kennedy, 29.

Notes to Pages 102–105   219

148.  Ezra Vogel, Deng Xiaoping and the Transformation of China (Cambridge, MA: Harvard University Press, 2011), 157. 149.  Gao Wenqian, Zhou Enlai: The Last Perfect Revolutionary (New York: Public Affairs 2007), 235–36. 150.  Vogel, Deng Xiaoping, 158. 151.  Ibid., 159. 152.  Ibid., 84–85. 153.  Ibid., 165. 154.  Ibid., 158. 155.  Ibid., 157. 156.  Ibid., 166. 157.  Ibid. 158.  Ibid., 166–67. 159.  Ibid., 167. 160.  Ibid., 169. 161.  Ibid., 171. 162.  Ibid., 172. 163.  Phillips, interview with Charles Stuart Kennedy, 32. 164.  Ibid. 165.  Vogel, Deng Xiaoping, 176. 166.  Ibid., 178. 167.  Memorandum, “Effects of the Earthquake in China,” Christopher H. Phillips to all members, August 3, 1976, Box 122: General Staff, Phillips Christopher H. Memoranda 1974–76 File, United States China Business Council Records, Gerald R. Ford Presidential Library. 168.  John L. Scherer, China Facts & Figures Annual, vol. 4 (Gulf Breeze, FL: Academic International Press, 1981), 216, and China Facts & Figures Annual, vol. 3 (Gulf Breeze, FL: Academic International Press, 1980), 164. 169.  Ibid. 170.  Ibid. 171.  William Miller, “Power Struggle, Earthquakes Could Slow U.S.China Trade,” Industry Week, September 6, 1976, 26, Box 122: Council Staff, Phillips Christopher H. Memoranda 1974–76 File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 172.  Ibid., 28. C H AP T E R 5   Deng Xiaoping, the Council, and the

Normalization Breakthrough, 1977–1980

1.  U.S. China Business Review, “Walter Sterling Surrey’s Remarks to Deng Xiaoping,” 6, no. 4 ( July–August 1979): 15.

220  Notes to Pages 105–108

2.  Norman Getsinger, “Prospects for Industrial Development and Trade,” paper presented at the Institute for Asian/Pacific Studies’ conference, “U.S.China Trade: Prospects for the 1980s, January 10–11, 1980,” Box 234: Norman Getsinger Speech File, United States-China Business Council Records, Gerald R. Ford Presidential Library. Getsinger’s guess was a good one. By 1985, bilateral trade was about $7.71 billion per year. 3.  Ezra Vogel, Deng Xiaoping and the Transformation of China (Cambridge, MA: Harvard University Press, 2011), 205. 4.  Ibid. 5.  Ibid., 201. 6.  Nicholas R. Lardy, “Trade Liberalization and Its Role in Chinese Economic Growth,” paper presented at the International Monetary Fund and National Council of Applied Economic Research Conference, “A Tale of Two Giants: India’s and China’s Experience with Reform and Growth,” p. 5, New Delhi, November 14–16, 2003. 7.  U.S. China Business Review, “China’s Future,” 4, no. 1 ( January–­ February 1977): 3. 8.  Ibid. 9.  Ibid. 10.  Ibid. 11.  “Zai shanghaishi juxing de kexuejishu gongzuo huiyi shangzhou zongli chanshu kexuejishuxiandaihua de zhongda yiyi” [At the science and technology working conference held in Shanghai last week, the Premier expounded the great importance of the modernization of science and technology], Renmin Ribao, January 31, 1963, 1. 12.  Vogel, Deng Xiaoping, 190. 13.  Jan Wong, Red China Blues: My Long March from Mao to Now (Toronto: Doubleday, 1996), 186. 14.  Ibid. 15.  Vogel, Deng Xiaoping, 188. 16.  Ibid., 198. 17.  Ibid., 199. 18.  Ibid. 19.  Ibid., 209. 20.  Ibid., 207. 21.  Ibid., 209. 22.  Ibid., 229. 23.  U.S. China Business Review, “China’s Future,” 3. 24.  National Council for United States-China Trade, 1978 Annual Report: The National Council for US-China Trade, June 14, 1978, p. 11, Box 2: Board of Directors Meeting, June 14, 1978, Packet sent to board members who did not

Notes to Pages 108–111   221

attend meeting File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 25.  Ibid., 3. 26.  Ibid., 9. 27.  Ibid. 28.  Ibid., 9–10. 29.  Ibid., 10. 30.  Ibid., 11. 31.  Memorandum, M. W. Searls to EK/SR/NL/JK/A deK, April 19, 1977, Box 55: Importers Services, Importers’ Steering Committee, Delegation to China April 1977, Comments Following Trip File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 32.  Ibid. 33.  “New Approach to Foreign Policy,” May 28, 1975, Foreign Relations of the United States, 1977–1980, Volume I: Foundations of Foreign Policy, Document 2. 34.  Bob Retchko, “Carter Rights Stand Called China Threat,” Pittsburgh Press, March 17, 1977, 2, Box 119: Pittsburgh, The US and China: Under New Leadership File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 35.  Presidential Review Memorandums. “PRM on Human Rights (28),” p. 20, Carter Administration, 1977–1981, Federation of American Scientists Intelligence Resource Program, http://fas.org/irp/offdocs/prm/prm28.pdf. 36.  Daniel Breck Walker, “‘Yesterday’s Answers’ or ‘Tomorrow’s Solutions’?: The Cold War Diplomacy of Cyrus Vance” (unpublished PhD diss., Vanderbilt University, 2007), 181. 37.  Ibid., 182. 38.  Ibid. 39.  Ibid., 185. 40.  Nicholas Ludlow, “London Trip, 2/5–2/7/78—Key Points,” Memorandum f rom Nicholas Ludlow to all staff, February 16, 1978, Box 128: Business/Industry, Business Perspectives—London (4) File, United StatesChina Business Council Records, Gerald R. Ford Presidential Library. 41.  Svein Gilje, “Chinese Silent, but There’s a Message,” Seattle Times, September 15, 1977, Box 2: Board of Directors Meeting, December 6, 1977, Packet sent to board members who did not attend meeting File, United StatesChina Business Council Records, Gerald R. Ford Presidential Library. 42.  Ibid. 43.  Ibid. 44.  National Council for United States-China Trade, 1978 Annual Report, 4.

222  Notes to Pages 111–113

45.  For luncheon with Juanita Kreps as well as dates, see China Council for the Promotion of International Trade, Itinerary, August 30, 1977, Box 32: CCPIT Visit to the US, 1977—Business Meeting File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 46.  National Council for United States-China Trade, 1978 Annual Report, 4. 47.  Mike Seemuth, “Chinese ‘Shop’ at Deere & Co.,” Quad-City Times, September 16, 1977, Box 2: Board of Directors Meeting, December 6, 1977, Packet sent to board members who did not attend meeting File, United StatesChina Business Council Records, Gerald R. Ford Presidential Library. 48.  China Council for the Promotion of International Trade, Itinerary. 49.  National Council for United States-China Trade, 1978 Annual Report, 4. 50.  Ibid. 51.  Memorandum f rom the President’s Assistant for National Security Affairs (Brzezinski) to President Carter, July 29, 1977, Foreign Relations of the United States, 1977–1980, Volume XIII, China, Document 40. 52.  Ibid. 53.  Ibid. 54.  Memorandum of Conversation, July 30, 1977, Foreign Relations of the United States, 1977–1980, Volume XIII, China, Document 41. 55.  Washington Post, “Playing the China Card,” June 22, 1978. 56.  Ibid. 57.  Walker, “‘Yesterday’s Answers’ or ‘Tomorrow’s Solutions’?” 198. 58.  Memorandum f rom the President’s Assistant for National Security Affairs (Brzezinski) to President Carter, Foreign Relations of the United States, 1977–1980, Volume XIII, China, Document 40. 59.  Ibid. 60.  Ibid. 61.  Ibid. 62.  The “liberation” of Taiwan had long been Beijing’s public stance. See, f or example, “Zhongguo renmin yiding yao jief ang taiwan” [The Chinese people must liberate Taiwan], Renmin Ribao, June 27, 1965, 1. Zhou Enlai initially publicly stated that the PRC would have to use force, but in later decades mentioned a “peaceful liberation” of Taiwan. Mao Zedong maintained, “I do not believe in a peaceful transition,” that is, the PRC would have to resolve the Taiwan issue with force. See William Burr, The Kissinger Transcripts: The Top Secret Talks with Beijing and Moscow (New York: The New Press, 1998), 186. 63.  Central Intelligence Agency, “PRC Defense Policy and Armed Forces,” National Intelligence Estimate, November 11, 1976, http://www.foia.cia.gov /sites/default/files/document_c nversions/89801/DOC_0001097855.pdf.

Notes to Pages 113–117   223

64.  Hobart Rowen, “Taiwan Could Still Play Key U.S. Trade Role,” Los Angeles Times, February 20, 1979. 65.  Ibid. 66.  Ibid. 67.  Ibid. 68.  “Taiwan: The Other Side of the Normalization Coin,” Box 375: Impact on Taiwan of Normalization with the PRC File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 69.  Ibid. 70.  Rowen, “Taiwan Could Still Play Key U.S. Trade Role.” 71.  Ibid., 197. 72.  John H. Holdridge, Crossing the Divide: An Insider’s Account of the Normalization of U.S.-China Relations (Lanham, MD: Rowman & Littlefield, 1997), 191. 73.  Ibid. 74.  Ibid., 192. 75.  Oyez, “Goldwater v. Carter” (1979), Chicago-Kent College of Law at Illinois Tech, https://www.oyez.org/cases/1979/79-856. The case was a landmark for the political question doctrine. 76.  Ibid. 77.  William J. Eaton, “U.S. Firms Produce $250,000 for Gala,” Los Angeles Times, January 30, 1979. 78.  Ibid. 79.  Ibid. 80.  Ibid. 81.  Kennedy Center, “George Stevens, Jr.,” http://www.kennedy-center .org/Artist/A56458. 82.  U.S. China Business Review, “Council Activities,” 6, no. 1 ( January– February 1979): 13. 83.  Ibid. 84.  Ibid. 85.  “1979, John Denver greeting Chinese dictator Deng Xiaoping,” filmed January 1979, Youtube video, 1:13, posted July 22, 2014, https://www .youtube.com/watch?v=BmBrsmt6a80. 86.  U.S. China Business Review, “Council Activities,” 13. 87.  Ibid. 88.  Jimmy Carter, Keeping Faith: The Memoirs of a President (Fayetteville: University of Arkansas Press, 1995), 165. The entry above is taken from Jimmy Carter’s daily diary, authored the night of Deng Xiaoping’s gala. It was re­ produced in his memoirs. Reflecting years later on Deng, Carter continued,

224  Notes to Pages 117–119

“­ Perhaps because he was so exuberant and so small, Deng was a favorite of Amy and the other children that night” (Deng was 5'0"). 89.  National Council for United States-China Trade, 1979 Annual Report: The National Council for US-China Trade, May 17, 1979, p. 1, Box 372: Council Publications: Annual Reports ’79–’81 File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 90.  Ibid., 8. 91.  Ibid., 12. 92.  National Council for United States-China Trade, 1980 Annual Report: The National Council for US-China Trade, June 4, 1980, pp. 9, 11, Box 372: Council Publications: Annual Reports, ’79–’81 File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 93.  Ibid., 4. 94.  Ibid. 95.  Dong Wang, The United States and China: A History from the Eighteenth Century to the Present (New York: Rowman & Littlefield 2013), 251. 96.  Charlene M. Levie, “The Blocked Chinese Assets-United States Claims Problem: The Lump Sum Settlement Solution,” Fordham International Law Journal 3, no. 1 (1979): 61–62. 97.  Ibid. 98.  “19 U.S. Code § 2432—Freedom of emigration in East-West trade,” US Code, Title 19, Chapter 12, Subchapter IV, Part 1, hosted at the Legal Information Institute of the Cornell University Law School, https://www.law .cornell.edu/uscode/text/19/2432. 99.  John Quigley, “Most-Favored-Nation Status and the Jackson-Vanik Amendment: Does the Jackson-Vanik Amendment Apply?” Loyola of Los Angeles International and Comparative Law Review 11, no. 4 (1989): 545. 100.  National Council for United States-China Trade, “Meeting on January 11, 1979,” Memorandum, Box 370: Legislation—EXIM Bank File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 101.  Dwight Perkins, interview with the author, September 26, 2015. 102.  Jimmy Carter, Keeping Faith: The Memoirs of a President (Fayetteville: University of Arkansas Press, 1995), 166. 103.  Wayne M. Morrison, “China-U.S. Trade Issues,” December 15, 2015, p. 2, Congressional Research Service, https://www.fas.org/sgp/crs/row /RL33536.pdf. 104.  96th Congress Congressional Record Summary, p. 2, Box 375: Publications Staff Subject Files, COMINEX Congress File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 105.  Ibid., 7.

Notes to Pages 119–120   225

106.  Ibid., 4. 107.  Ibid., 2, 4. 108.  Ibid., 6, 11. 109.  Ibid., 2, 6. 110.  Export-Import Bank of the United States, “The Facts about EXIM Bank,” http://www.exim.gov/about/facts-about-ex-im-bank. 111.  Christopher H. Phillips, Testimony of Christopher H. Phillips, President, National Council for US China Trade at the House Subcommittee on International Trade Hearings on the AuCoin Bill, HR 8196, That Would Make Available U.S. Eximbank Financing for Trade with the People’s Republic of China, January 26, 1978, p. 6, Box 166: US Govt. Legislation, HR 8196, 1978 (2) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 112.  Ibid. 113.  Memorandum, Nicholas Ludlow to All Staff, June 21, 1978, Box 166: US Govt. Legislation, HR 8196, 1978 (5) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 114.  Ibid. 115.  Ibid. 116.  Morrison, “China-U.S. Trade Issues.” 117.  Ibid. 118.  Congressional Quarterly, “Trade Pact with Peking” (Washington, DC: Congressional Quarterly, 1981), http://library.cqpress.com/cqalmanac/cqal80 -1176384. 119.  Ibid. 120.  Ibid. 121.  U.S. China Business Review, “Walter Sterling Surrey’s Remarks to Deng Xiaoping,” 6, no. 4 ( July–August 1979): 15. Michael Blumenthal asked Christopher H. Phillips to testify; Phillips’s handwritten notes state, “Blumenthal wants our help in getting Congressional support on a J-V Amendment repeal.” See Christopher H. Phillips, Notes, undated, Box 370: Legislation— EXIM Bank File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 122.  See entire fil , Box 389: Trade Agreement Mailing to House Ways & Means and Senate Finance 10/30/79 File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 123.  Memorandum, Christopher H. Phillips to Board of Directors, November 6, 1979, Box 389: Testimonies—Hearings 11/1-2/79 CHP Trade Agreement (1) File, United States-China Business Council Records, Gerald R. Ford Presidential Library.

226  Notes to Pages 121–123

124.  Christopher H. Phillips, Statement of Ambassador Christopher H. Phillips, President, National Council for US-China Trade, November 2, 1979, p. 4, Box 377: Publications Staff Subject Files, Trade Agreement Hearings (4) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 125.  Ibid., 35–36. 126.  Ibid., 8. 127.  Ibid., 14–15. 128.  Ibid., 16. 129.  Ibid. 130.  James Mann, About Face: A History of America’s Curious Relationship with China, from Nixon to Clinton (New York: Alfred A. Knopf, 1999), 106–7. 131.  Congressional Quarterly, “Trade Pact with Peking.” The actual vote tally was 74–8 in favor in the Senate; 294–88 in favor in the House. 132.  Deng undertook a major devolution of China’s foreign trade system. In place of the large FTCs that had previously monopolized foreign trade, he created a number of local foreign trade bureaus (primarily based in cities and provinces, such as Beijing, Shanghai, Fujian, Guangdong, and Tianjin) to exe­ cute contracts with foreign nations. They had a looser and more decentralized relationship with the Ministry of Foreign Trade. The new local import-export commissions (LIECs) could initially sign trade deals up to $1.9 million in value without having to notif y Beijing’s new Foreign Investment Control Commission. Deng’s devolution also created the better-known special economic zones (SEZs), which had special rules encouraging foreign direct investment and export-oriented manufacturing. For an excellent discussion of this effort, see Sally L. Ellis, “Decentralization of China’s Foreign Trade Structures,” Georgia Journal of International and Comparative Law 11, no. 283 (1981). 133.  U.S. China Business Review, “The National Council Meets with Vice-Premier Deng Xiaoping,” 6, no. 4 ( July–August 1979): 13. 134.  U.S. China Business Review, “Walter Surrey’s Remarks to Deng Xiaoping,” 15. 135.  U.S. China Business Review, “The National Council Meets with Vice-Premier Deng Xiaoping,” 13–14. 136.  Ibid. 137.  Ibid. 138.  Ibid. 139.  Ibid. 140.  Ibid. 141.  Timothy Cheek, “Revolution, Evolution, and Continuity,” in China: Ancient Culture, Modern Land, ed. Robert E. Murowchick (Norman: University of Oklahoma Press, 1994), 174.

Notes to Pages 124–126   227

Conclusion 1.  Donald Morrisson, ed., Massacre in Beijing: China’s Struggle for Democracy (New York: Time Books, 1989), 178. 2.  US Census Bureau, “Trade in Goods with China,” Foreign Trade, https://www.census.gov/foreign-trade/balance/c5700.html. 3.  Ibid. 4.  Ibid. 5.  Andrew Brick, Thomas J. Timmons, and Bryan Johnson, “Washington’s Agonizing Decision: To Extend or Revoke China’s Most-favored-nation Trade Status,” Asian Backgrounder 104, Heritage Foundation, May 8, 1990. 6.  George H. W. Bush, quoted in George H. W. Bush and Brent Scowcroft, A World Transformed (New York: Alfred A. Knopf, 1998), 89. 7.  Ibid. 8.  State Security Ministry, “On ideological and political infilt ation into our country f rom the United States and other international political forces,” Report to Party Central, June 1, 1989, cited in Andrew J. Nathan and Perry Link, eds., The Tiananmen Papers: The Chinese Leadership’s Decision to Use Force against Their Own People—In Their Own Words (New York: Public Af f airs 2002), 339. There is some doubt as to the provenance of the Tiananmen Papers. The compiler of the papers, the pseudonymous Zhang Liang, has chosen to remain anonymous. While he is thought to have been a high-level Party officia during the Tiananmen Square massacre, how he came into possession of the papers is unclear. Moreover, he transmitted copies of the papers, rather than the originals, to Nathan and Link. Nathan, in the paperback edition, has written an essay entitled “The Documents and Their Signifi ance,” presenting a strong defense of their legitimacy and arguing that to fake them would have been essentially impossible. For the sake of this book, however, these concerns are largely irrelevant. As M. E. Sarotte has pointed out in his “China’s Fear of Contagion: Tiananmen Square and the Power of the European Example,” International Security 37, no. 2 (2012): 156–82 (see note 459), the Tiananmen Papers simply reinforced understandings of the massacre timeline that were already widely accepted. Moreover, new information f rom East German archives has corroborated the papers’ major claims. The Chinese gave the East Germans privileged access to their decision-making processes during the massacre, as the East Germans were one of the few states to openly support China’s actions. 9.  Nathan and Link, The Tiananmen Papers, 339. 10.  Ibid., 340–41.

228  Notes to Pages 126–129

11.  Jan Wong, Red China Blues: My Long March from Mao to Now (Toronto: Doubleday, 1996), 234. 12.  Sarotte, “China’s Fear of Contagion.” 13.  Richard Nixon, “America and China: The Next Ten Years,” The New York Times, October 11, 1982, A19. 14.  Harry Harding, A Fragile Relationship: The United States and China since 1972 (Washington, DC: Brookings Institution, 1992), 174. 15.  US Census Bureau, “Trade in Goods with China.” 16.  Harding, A Fragile Relationship, 146–47. 17.  Ibid., 147. 18.  China Business Review, “Highlights f rom the US-China Business Council’s 40 Year History” ( January–March 2013): 23–24, http://www.china businessreview.com/highlights-from-the-us-china-business-councils-40 -year-history. 19.  Sally L. Ellis, “Decentralization of China’s Foreign Trade Structures,” Georgia Journal of International and Comparative Law 11, no. 283 (1981): 295. 20.  Clyde H. Farnsworth, “Washington Talk; Crisis Management f or Business in China,” The New York Times, June 20, 1989. 21.  Christopher H. Phillips, interview with Charles Stuart Kennedy, May 12, 1993, p. 34, Foreign Affairs Oral History Collection, Association for Diplomatic Studies and Training, Library of Congress. 22.  The ambassadorship to Brunei was an interesting placement. Phillips “was realistic enough to know that I would not be offered a large post because I fell between two categories of appointees to such positions—big contributors to the campaign and career Foreign Service officer I was neither, although I already had considerable experience in the foreign affairs area” (ibid.). George H. W. Bush, who had been f riends with Phillips for two decades, asked him what position Phillips would like in the new administration. Phillips requested either something with the United Nations or something in Asia. While the Chinese ambassadorship went to James R. Lilley, Phillips, to his pleasure, was posted to the small state of Brunei. 23.  Nicholas Ludlow, interview with the author, November 30, 2015. 24.  Congressional Quarterly, “Bill to Limit China Trade Not Completed” (Washington, DC: Congressional Quarterly, 1992), https://library.cqpress .com/cqalmanac/document.php?id=cqal91-1110099. 25.  Ibid. 26.  Robert Kapp, “Don’t Strip China of MFN,” Journal of Commerce, May 8, 1990, http://www.joc.com/dont-strip-china-mfn_19900508.html. 27.  Ibid. 28.  William Armbruster, “Shaky Ties with China May Cost U.S. Importers,” Journal of Commerce, April 16, 1990, http://www.joc.com/shaky-ties -china-may-cost-us-importers_19900416.html.

Notes to Pages 129–132   229

29.  Los Angeles Times, “Turmoil in China: American Executives Put off Visits; Some Employees Leaving,” May 24, 1989. 30.  Congressional Quarterly, “Bill to Limit China Trade Not Completed.” 31.  Ibid. 32.  Ibid. 33.  Ann Devroy, “Clinton Grants China MFN, Reversing Campaign Pledge,” The Washington Post, May 27, 1994. 34.  “President Grants Permanent Trade Status to China,” Statement of the Deputy Press Secretary, December 27, 2001, The White House, https:// georgewbush-whitehouse.archives.gov/news/releases/2001/12/20011227-2. 35.  Richard Seltzer, “U.S.-China Business Ties Face Dim Future,” Chemical Engineering News 67, no. 45 (1989): 5. To clarify, the Tiananmen Square massacre unfolded over three days, though June 4 is often cited as the singular date. The killing began at about 10:00 p.m. on June 3, when the 38th Army opened fi e on the protestors. It continued throughout June 4 as the troops cleared the square. June 5, fina ly, was when the Chinese leaders called in the tanks, leading to the iconic “Tank Man” picture captured by photojournalist Jeff Widener. 36.  Ibid. 37.  Pei-tse Wu, “US-China Business Unit Considered Closing Shop,” Journal of Commerce, February 25, 1991, http://www.joc.com/maritime-news /us-china-business-unit-considered-closing-shop_19910225.html. 38.  Mike Mansfield, Letter to Christopher Phillips, May 30, 1974, Box 4: Annual Meetings, June 3, 1974, Greetings f rom Congressional Leaders File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 39.  National Council for United States-China Trade, Annual Report draft document, Box 115: Council Annual Report (9) File, United States-China Business Records, Gerald R. Ford Presidential Library. 40.  David Dean, Unofficial Diplomacy: The American Institute in Taiwan (Xlibris, 2014), 78. 41.  Ibid., 79. 42.  Ibid. 43.  Cyrus Vance and Zbigniew Brzezinski, Briefing by the Secretary of State Vance and the President’s Assistant for National Security Affairs (Brze­ zinski), January 15, 1979, Foreign Relations of the United States, 1977–1980, Volume I: Foundations of Foreign Policy, Document 108. 44.  US Department of State, Public Law 96-8, 96th Congress—“Taiwan Relations Act,” January 1, 1979, p. 4, https://photos.state.gov/libraries/ait -taiwan/171414/ait-pages/tra_e.pdf. 45.  US Census Bureau, “Trade in Goods with China.” 46.  Ibid.

230  Notes to Pages 132–138

47.  Ibid. 48.  Christopher H. Phillips, Statement of Ambassador Christopher H. Phillips, President, National Council for US-China Trade, November 2, 1979, pp. 14–15, Box 377: Publications Staff Subject Files, Trade Agreement Hearings (4) File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 49.  Norman Getsinger, “Prospects for Industrial Development and Trade,” p. 7, paper presented at the Institute f or Asian/Pacif ic Studies’ conf erence, “U.S.-China Trade: Prospects for the 1980s, January 10–11, 1980,” Box 234: Norman Getsinger Speech File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 50.  Myron Kandel and Phillip Greer, “Banker is Going af ter Chinese Exports to U.S.,” Chicago Tribune, August 24, 1978, 8, http://archives.chicago tribune.com/1978/08/24/page/48/article/banker-is-going-after-chinese -exports-to-u-s. 51.  Frederick B. Dent, Address by Secretary of Commerce Frederick B. Dent, May 31, 1973, p. 14, Box 4: Annual Meetings, Conferences, May 31, 1973, Speeches File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 52.  Julian Gewirtz, Unlikely Partners: Chinese Reformers, Western Economists, and the Making of Global China (Cambridge, MA: Harvard University Press, 2017). 53.  Memorandum f rom President Nixon to Secretary of State Rogers, February 3, 1972, Foreign Relations of the United States, 1969–1976, Volume XIV, Soviet Union, October 1971–May 1972, Document 44. 54.  For a critique of modern free trade theory and an interesting work of heterodox economics, see Ha-Joon Chang, Bad Samaritans: The Guilty Secrets of Rich Nations & the Threat to Global Prosperity (London: Random House, 2008). In particular, chapter 3 deals with the problematic assumption of perfect factor mobility in Heckscher-Ohlin-Samuelson trade theory.

Afterword 1.  Frederick B. Dent, Address by Secretary of Commerce Frederick B. Dent, May 31, 1973, p. 9, Box 4: Annual Meetings, Conferences, May 31, 1973, Speeches File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 2.  Riva Krut, “NGO and Civil Society: NGO Influence in International Decision-Making,” Discussion Paper No. 83, p. 11, United Nations Research Institute for Social Development, April 1997.

Notes to Pages 138–141   231

3.  Ibid., 12. 4.  Ibid., 11. 5.  Ibid., 12. 6.  Ibid., 13. 7.  Ibid. 8.  Lester M. Salamon and Helmut Anheier, “Social Origins of Civil Society: Explaining the Nonprofit Sector Cross-Nationally,” Voluntas: International Journal of Voluntary and Non-Profit Organizations 9, no. 3 (1998): 216. 9.  Ibid. 10.  Ibid., 232. 11.  Akira Iriye, “A Century of NGOs,” Diplomatic History 23, no. 3 (Summer 1999): 422. 12.  Ibid., 423. 13.  Akira Iriye, Global Community: The Role of International Organizations in the Making of the Contemporary World (Berkeley: University of California Press, 2002), 2. 14.  Ibid., 3. 15.  World Trade Organization, “NGOs Attending the Third WTO ­Ministerial Conf erence, Seattle, 30 November–3 December 1999,” https:// www.wto.org/english/forums_e/ngo_e/ngoinseattle_e.htm. 16.  ProPublica, “US China Business Council,” https://projects.propublica .org/nonprofits organizations/237275160. For representative budgetary breakdowns, see National Council for United States-China Trade, Proposed Budget 1978, Box 2: Board of Directors Meetings December 6, 1977, Packet sent to board members who did not attend meeting File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 17.  For the 1977 budget, see ibid.; for the telephone bill, see Christopher H. Phillips, Memorandum to All Staff, May 6, 1975, Box 122: Council Staff, Phillips, Christopher H. Memoranda 1974–76 File, United States-China Business Council Records, Gerald R. Ford Presidential Library. 18.  Norton Wheeler, The Role of American NGOs in China’s Modernization: Invited Influence (New York: Routledge, 2013), 30. 19.  Iriye, “A Century of NGOs,” 422, 426, 432. 20.  Akira Iriye, “Internationalizing International History,” in Rethinking American History in a Global Age, ed. Thomas Bender (Berkeley: University of California Press, 2002), 51. 21.  Thomas Bender, “Historians, the Nation, and the Plenitude of Nar­ ratives,” in Rethinking American History in a Global Age, ed. Thomas Bender (Berkeley: University of California Press, 2002), 10. 22.  Chi Chien-hua, “NGOs and the Creation of the International Criminal Court” (unpublished MA thesis, National Chengchi Institutional

232  Notes to Pages 141–143

Repository, 2004), 3. See https://nccur.lib.nccu.edu.tw/bitstream/140.119 /33686/8/53003108.pdf. 23.  Ibid., 13. 24.  Ibid., 13–14. 25.  Iriye, “Internationalizing International History,” 52. 26.  Ibid., 50–51. 27.  Ibid., 52. 28.  Bender, “Historians, the Nation, and the Plenitude of Narratives,” 10. 29.  Iriye, “A Century of NGOs,” 422. 30.  Frederick B. Dent, Prepared Statement of Frederick B. Dent, “Multinational Corporations and United States Foreign Policy,” July 18, 1974, Part 10, Hearings before the Subcommittee on Multinational Corporations, Committee on Foreign Relations, US Senate, 93rd Cong., 2 (Washington, DC: US Government Printing Offi , 1975), 160. 31.  Iriye, “Internationalizing International History,” 51. 32.  For this periodization, see Jeffrey G. Williamson, “Globalization and Inequality, Past and Present,” The World Bank Research Observer 12, no. 2 (August 1997): 117–35. Paul Kramer makes a similar point in his influential review essay “Power and Connection: Imperial Histories of the United States in the World.” He discusses transnational history’s reliance on triumphalist assumptions of post-sovereignty and “emancipatory capitalist borderlessness.” These assumptions, in turn, were predicated on “nineteenth-century ideologies of civilizing, laissez faire commercial intercourse” and twentieth-­ century modernization theories that saw globalization “as inevitable and apolitical.” As a corollary, the transnational view imagined nation-states as “obstacles” to its narrative and thus imagined these states as “locked in an antagonistic contest with the global.” See Paul Kramer, “Power and Connection: Imperial Histories of the United States in the World,” American Historical Review 116, no. 5 (2011): 1353.

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INDEX

Abrams, Charles, 64, 88, 133, 146 Acheson, Dean, 24 Alkhimov, Vladimir, 78 Allende, Salvador, 15 American Arbitration Association (AAA), 97 American business community, 101–2 American Institute in Taiwan (AIT), 131–32, 142 American-Russian Chamber of Commerce (ARCC), 210–11n29 America’s Response to China (Cohen), 9 Anheier, Helmut, 138, 139, 142 Anti-Ballistic Missile Treaty, 28, 74 Arab oil embargo, 43, 81 Árbenz, Jacobo, 15, 189n53 Armacost, Michael, 119 Ashbrook, John, 119, 120 Atlee, Clement, 4 AuCoin, Les, 119 Barnett, A. Doak, 89 Batten, William M., 61 Bauman, Robert, 119, 120 Bayar, Charles H., 209n29 Beijing Jeep: A Case Study of Western Business in China (Mann), 8 Bender, Thomas, 140, 142 Berris, Jan, 179 Bingham, Jonathan, 111

Blumenthal, Michael, 117, 119, 120 Boggs, Hale, 4–5, 21, 45, 59–60, 83, 158, 205n79 Boggs-Ford mission to China, 59–60 Brademas, John, 111 Breck Walker, Daniel, 21 Brezhnev, Leonid, 73, 74 Brown, Winthrop, 55 Bruce, David, 68, 162, 163 Brzezinski, Zbigniew, 37, 111–13, 114, 132 Buckley, William F., Jr., 41 Bulls in the China Shop: And Other Sino-American Business Encounters (Stross), 8 Burnham, Donald, 5, 61, 62–63, 158, 159 Bush, George H. W. on American interest in China, 58 China policy, 83, 191n8 friendship with Christopher Phillips, 228n22 meeting with Sandy Randt, 165 memoirs of, 8 political career, 2–3, 21, 180 on promotion of democracy in China, 125 relations with Eugene Theroux, 165, 168, 169 259

260  Index

Bush, George H. W. (cont.) renewal of China’s MFN status, 128–29, 135 view of liberalization of Chinese trade and politics, 131 Bush, George W., 165 Canton Trade Fair, 62, 66, 92–93, 159 Carter, James, 49 Carter, Jimmy China policy, 52, 109–10, 111, 118, 120, 191n8 on Deng Xiaoping, 223n88 dissolution of relations with Taiwan, 112, 114–15, 199n132 election of, 109 on gala for Deng Xiaoping, 116–17 position on human rights issue, 109, 125, 131 Cavett, Dick, 116 Central Intelligence Agency (CIA), 39, 181, 189n53 “Century of NGOs, A” (Iriye), 139, 142 Chan, Wellington K. K., 35 Chang, Jaw-ling Joanne, 8, 9 Chang, Tsien-hua, 92, 97 Chen, Yi, 26 Chen, Yun, 104, 151 Chi, Chien-hua, 141 Chiang, Ching-kuo, 114 Chiang, Kai-shek, 39, 40, 41, 98, 199n132 China, People’s Republic of (PRC) admission to the United Nations, 17 American businesses and, 100–101 border war with the USSR, 26 “Century of Humiliation,” 16 comparison with the Soviet Union, 209n29 control of information, 155 Cultural Revolution, 16

diplomatic recognition of, 98, 111–12 economic reforms, 1–2, 3, 4, 7–8, 86–89, 106–7, 125–26 Euro-American influence in 16–17 famine in, 31 fear of Soviet threat, 26–27 foreign relations, 4, 27, 53 foreign trade, 17, 19, 185n23, 226n132 Great Leap Forward, 31 gross domestic product, 2, 30, 31–32, 146–47 impact of market reforms on society, 123 informal diplomacy, 54–55 military power, 16 modernization program, 4 most-favored-nation status of, 36–37 oil production and export, 87–88 Open Door policy, 16 “People’s Diplomacy,” 54 per capita income, 146 policy towards Taiwan, 113, 222n62 political instability in, 22, 47, 123, 135, 151–52 poverty in, 147 productive capacity of, 133 science and university system, 32, 105–6 special economic zones (SEZs), 185n22 struggle for power in, 102–4 suppression of democracy, 125–26 as threat to Asian states, 25, 26 trademark regulations, 95 as US ally against the Soviet Union, 149 in US media, 88–89

Index   261

China Confidential (Tucker), 9 China Council for the Promotion of International Trade (CCPIT) creation of, 54 dispute resolution system, 96 National Council as counterpart of, 56, 67–68, 69, 110–11 trade delegations, 19, 84–85, 108–9, 110–11, 212n15 China National Export Commodities Packing Corporation, 108 China’s foreign trade corporations (FTCs), 6, 19, 87, 90–91, 92, 94, 108, 128 China’s National Chemical Export and Import Corporation, 88 China’s Petroleum Industry (Zheng), 146 Chinese brand names, 35–36 Chinese Communist Party (CCP), 26, 185n23 Chinese Liaison Office i Washington, 64–65, 87 Chinese People’s Institute for Foreign Affairs (C IFA), 54 Christopher, Warren, 114 civil society organizations (CSO), 138 Clausen, Alden W., 77 Clinton, Bill, 129 Cohen, Jerome A., 63 Cohen, Warren, 9 Committee of One Million Against the Admission of Communist China to the United Nations, The, 101 Committee on Scholarly Communications with China (CSC), 46, 152, 179, 186n31 Cooper, Mary Frances, 161, 180 Coordinating Committee (COCOM), 4

“Creation of a Sino-American Trade Council (SATC)” report, 56–57 Cultural Revolution, 16, 22, 31–32 Dean, David, 132 de Keijzer, Arne J., 66 Democracy Wall in Tiananmen Square, 123, 125 Deng, Xiaoping diplomacy of, 81, 115–17, 122, 149–50 domestic politics, 122–23, 125, 126 economic reforms, 7–8, 9, 32, 130, 135, 185n22, 191n8, 226n132 foreign policy, 122, 149–50 joke on emigration, 148 Mao’s criticisms of, 47, 103 modernization of science and education, 107 rehabilitation of, 107, 151 remark on Chinese laws, 105 removal from power, 103 Taiwan issue and, 40, 113, 114 view of international affairs 43, 81 Deng Xiaoping and the Transformation of China (Vogel), 21 Denny, Dave, 181 Dent, Frederick, 60–61, 71–73, 75, 77, 133, 135, 137, 158 Denver, John, 116 diplomatic backchannel, 46. See also informal diplomacy Dole, Bob, 112, 119 Dulles, Allen, 189n53 Eckstein, Alexander, 89 Eight Elders group, 207n125 Eisenhower, Dwight, 48–49, 101 End of History and the Last Man, The (Fukuyama), 13, 188n46 Engels, Friedrich, 12 Exxon Mobil, 14, 93

262  Index

Fenwick, Millicent, 120 Ferguson, Niall, 43 Fishburne, Ben, 160 Food Processing and Packaging Machinery Committee, 108 Ford, Gerald enthusiasm about Chinese acupuncture, 205n79 “Impressions of the New China” report, 5, 21, 45, 158 meeting with CCPIT delegation, 83 presidency of, 80 visit to China, 40, 43, 59, 81 Foreign Trade Arbitration Commission (FTAC), 96 Fragile Relationship, A (Harding), 9 Freeman, Charles, 10, 180 Freeman, Orville, 161 Friedman, Thomas, 12–13 Fukuyama, Francis, 13, 188n46

Han, Xu, 63, 160 Harding, Harry, 9, 127 Hauge, Gabriel, 61 Heath, Ted, 110 Hegel, G. W. F., 12, 188n46 Helms, Jesse, 119 Hewitt, Tish, 67 Hewitt, William, 61, 83, 84–85, 108, 162, 166 Heymann, Hans, 181 historism vs. historicism, 189n47 Ho, P. T., 87–88 Holdridge, John H., 8, 29, 55, 60, 68 Hormats, Robert, 22, 55, 62, 158 Horowitz, Herbert, 68 host absorptive capacity, 195n74 Hu, Yaobang, 135 Hua, Guofeng, 103–4, 106, 107, 151 Huang, Chen, 10, 87 Huang, Hua, 150 Hughes, Charles Evans, 79, 210n29

Gang of Four, 102–3, 104, 151 Geneva Accords (1954), 48 Getsinger, Norman, 92, 98, 105, 124, 133 Gibson, Andrew, 61 Gilje, Svein, 110 Gills, Barry K., 11, 13 Glenn, John, 116 Global Community (Iriye), 139 globalization, 11–12, 13 Goldwater, Barry, 112, 119, 120 Gorbachev, Mikhail, 126 Graham, Marianna, 180 Gu, Mu, 127, 185n23 Guatemala CIA activities in, 189n53

Importers’ Steering Committee (ISC), 90, 94, 108–9 Indochina American aid to, 48, 49 informal diplomacy, 142 “Internationalizing International History” (Iriye), 141, 142 international relations, 43–44 Iriye, Akira, 139, 140, 141, 142

Habib, Philip, 89 Haig, Alexander, 28 Haldeman, Bob, 28

Jackson, Henry, 38, 118, 148, 149 Jackson-Vanik Amendment, 37, 38, 74, 118, 120, 148 Jacobson, Harold, 139 J. C. Penney Company, 84, 87, 93 Jenkins, Alfred, 29 Ji, Pengfei, 37 Jiang, Qing, 102, 104, 151 John Birch Society, 101 Johnson, Lyndon, 34, 48, 201n11

Index   263

J. P. Morgan & Co., 16 Judd, Walter, 41, 99, 101 Kapp, Robert, 129 Keatley, Anne, 179, 181 Kendall, Donald, 78, 79, 209n23 Kennan, George, 24 Kennedy, Charles Stuart, 21, 161 Kennedy, John F., 49, 194n67 Khan, Yahya, 46 Khrushchev, Nikita, 32, 184n12 Killen, Linda, 210n29 Kissinger, Henry bilateral talks with Deng Xiaoping, 40 criticism of, 124 DEFCON III nuclear alert, 65 on détente, 74–75 on Jackson-Vanik Amendment, 38 meeting with CCPIT’s delegation, 83 National Council and, 5, 52, 60, 65–66 National Security Study Memorandum 149, 55 rapprochement with China, 3, 19, 22, 23, 26–27, 57 secret mission to Beijing, 24, 26 on Shanghai Communiqué, 30 Taiwan lobby and, 40, 99 on trade with nonmarket economies, 75 Kohlberg, Alfred, 41, 101 Korean War, 4 Kramer, Paul, 232n32 Kreps, Juanita, 37, 111 Krut, Riva, 138, 140 Lagomarsino, Robert, 119, 131 Laxalt, Paul, 116 Learning from Dazhai movement, 106

less developed countries (LDCs), 50–51 Li, Chuan, 83, 162 Li, Hsifu, 59, 158 Li, Peng, 125, 135 Li, Qiang, 69, 108, 130 Li, Xiannian, 68, 69 Lilley, James R., 228n22 Lilly, Eli, 101 Liu, Shaoqi, 47 Long, Clarence, 119, 120 Lord, Winston, 99 Lubman, Stanley, 94–95 Ludlow, Nicholas assistance to American export ­delegations, 177–78 background and career, 161, 173, 181 on China’s economy, 175–76 on China’s oil industry, 88, 177 on Council’s cooperation with government institutions, 180–81 on Council’s relationship to NGOs, 179 development of the U.S. China Business Review, 21, 167 on failure of Vance’s mission, 110 on Gene Theroux, 178–79 on interest of Chinese in Western technology, 177 interview with, 21, 173–82 memo on Jackson-Vanik Amendment, 118 on mission of National Council, 187n32 on “Personal China References” booklet, 178 travel to Communist China, 181–82 work for National Council, 65, 86, 175, 179–80 Lynn, James Thomas, 56, 60

264  Index

MacLaine, Shirley, 116 Maier, Charles S., 43 Manela, Erez, 43 Mann, James, 8 Mansfield Mike, 58, 130 Mao Lin, 11, 24 Mao Zedong break with Moscow, 31 concern of Watergate scandal, 53 criticism of Deng Xiaoping, 103, 200n6 criticism of Zhou Enlai, 102–3 cult of personality, 107 Cultural Revolution, 16, 22 decline of international food aid, 31 disagreement with Khrushchev, 184n12 economic policy, 31–32 fear of Soviet invasion, 26, 207n114 foreign policy, 27 illness and death of, 43, 82, 103–4, 151 reflecti n on Kissinger’s anti-Soviet stance, 65 resistance to foreign investment, 4, 32 on Taiwan issue, 39, 53, 113, 222n62 “taking the capitalist road” concept, 47, 200n6 trade policy, 6, 8, 23 Marshall Plan, 48, 50 Marx, Karl, 12 Mazlish, Bruce, 13–14, 70 McConaughy, Walter, 41 McDonald, Larry, 119, 120, 131 McGovern, George, 120 Miller, William H., 104 Miltich, Paul A., 59 Min, Song, 11 Minami, Kazushi, 11 Mondale, Walter, 111

Moscow Summit (1972), 73, 74 most-favored-nation (MFN) principle in international trade, 36 Mugabe, Robert, 112 multinational corporations (MNC), 14, 50 Mutual Development and Cooperation Act (1973), 50 Nathan, Andrew J., 227n8 National Committee on United States-China Relations (NCUSCR), 10, 46, 140, 152, 179, 186n31 National Council for United StatesChina Trade (NCUSCT) academic advisory board, 89 activities of, 6, 19–20, 85–86 after normalization of US-China relations, 127–30 aid to American businesses, 95 American foreign policy and, 15 board of directors, 60–61, 158 Canton Trade Fair and, 92–93 capabilities of, 82–86 Chinese criticism of, 92, 93, 97 comparison with TEC, 77–79 conferences organized by, 6, 82, 89 contacts with Chinese official 68–69, 87 cooperation with US government, 180–81 creation of “Red China lobby,” 100, 102 criticism of, 132 dealings with US Congress, 119 export-oriented membership model, 92, 93 finances 140 formation of, 2–3, 53–54, 58, 60–61, 158

Index   265

formation of Importers’ Steering Committee, 94 funding, 179 gala for Deng Xiaoping, 115–17 growth of, 117 historiography of, 8–11 importance of, 130–31 informal diplomacy of, 3, 5–6, 46, 47–48, 54–58, 69, 70, 83 initial meeting of, 61–63 internal memos, 67 limits of, 20, 97–98 mandate of, 56–57, 83, 128, 131 missions to China, 65, 66–69, 108, 110–11, 158–62 name change, 10 as nongovernmental organization (NGO), 5, 137, 140–41 office l ation, 161 official dip macy and, 19, 186n28 organization of, 128, 160–61 post-1980 history, 20 president of, 1, 63 primary sources about, 9, 20–21 publications of, 6, 10, 86, 175–76 reception of Chinese delegations, 90–92, 108, 117 reputation of, 130–31 research library on China trade, 86, 180 scepticism about, 64 trademark issue negotiations, 95–96 voluntary dissolution of, 130 See also United States-China Business Council (USCBC) National Security Council (NSC), 29, 45, 60, 61, 64 National Security Decision Memorandum (NSDM) 170, 55–56 nation-states, 141–42, 143 Nie, Rongzhen, 26

Nixon, Richard business connections, 202n33 China policy, 3, 4, 24–26, 28, 34, 58–59, 99, 133, 135, 184n13 on Jackson-Vanik Amendment, 38 private international investment under, 51 relations with the USSR, 53, 71, 74 resignation of, 43, 53, 80 review of the Ad Hoc Group’s Trade Paper, 55 SALT talks, 53 on Soviet threat, 126 support of National Council, 5, 60 Taiwan lobby and, 99 on trade with China, 19, 25 on trade with the Soviet Union, 73, 136 triangular diplomacy, 19 on United States-Asia relations, 25 Vietnam settlement with China, 26–27 visit to China, 29–30 Nixon administration East-West trade bureaucracy, 76 economic strategy in China, 19, 71–79 nongovernmental organizations (NGOs) backchannel diplomacy and, 58 vs. business associations, 139 classifi ation of, 138 definiti n of, 138, 139, 142 scholarship on, 137 state-displacing conception of, 141, 142 transnational view of, 140–41 nonprofit secto operational features of, 138 North Atlantic Treaty Organization (NATO), 4 Nyaradi, Nicholas, 101

266  Index

Oksenberg, Michel, 33–34, 87 O’Neill, Tip, 111 Osborn, David, 57 Overseas Private Investment Corporation (OPIC), 50–52, 132 Patolichev, Nikolai S., 74, 75, 77 Paul, Ron, 119 Pei, I. M., 116 Peng, Chinpo, 87 Perito, Bob, 86–87 Perkins, Dwight career of, 21, 144 on China’s economy, 146–47 on Christopher Phillips, 153 education of, 144–45 on foreign investments in China, 148 interview with, 21, 144–56 on lack of knowledge about China, 34, 36 on Mao Zedong, 150 Market Control and Planning in Communist China, 145 on meeting with Deng Xiaoping, 149–50 personal memories of China, 154–55 on political uncertainty in China, 151–52 on role of National Council, 153–54 on strategic alliance with China, 149 on Taiwan issue, 147–48 on trade with China, 145–46, 147 work for National Council, 89, 152–54 Peterson, Pete, 74 Phillips, Christopher H. career, 128, 160, 228n22 on China market, 133

on earthquake in China, 80 on import from China, 94 on informal diplomacy of National Council, 45, 47, 69 meetings with Chinese official 97, 115, 127 personality, 153, 164 political affiliat n, 153 on political situation in China, 86 as president of National Council, 1, 2–3, 21, 63, 159 on Taiwan lobby, 102 on Tangshan earthquake, 103 testimony before Congress, 119–21, 132–33 on US-China trade, 61, 85, 121, 125 visit to China, 67, 108 ping-pong diplomacy, 54–55 Pisar, Samuel, 209n29 Qiao, Guanhua, 59, 154 Rand, James H., 101 Randt, Clark T. (Sandy), 165, 181 Reed, Philip D., 101 Republic of China (ROC). See Taiwan Rockefeller, David, 77 Rogers, William, 73, 99 Role of American NGOs in China’s Modernization, The (Wheeler), 10, 17 Rostow, Walt, 49, 51 Rudd, Eldon, 119 Salamon, Lester, 138, 139, 142 Sanders, Bernie, 124 Sargent, Daniel J., 43 Sarotte, M. E., 227n8 Scherk v. Alberto Culver, 97 Schley, Reeve, 211n29 Scott, Hugh, 58

Index   267

Scowcroft, Brent, 83 Searls, Melvin, 14, 90, 91, 109 Seed, Fred, 61 Serkin, Rudolf, 116 Shanghai Communiqué, 29–30, 39, 40, 57 Shen, James C. C., 41, 115, 199n132 Shock of the Global, The (Ferguson et al.), 43 Shultz, George, 75, 77 Siegel, Katherine A. S., 210n29 Sigmund, Paul, 59 Sino-American Mutual Defense Treaty, 39–40, 42, 115 Sino-American relations. See United States-China relations Sino-Soviet relations, 3, 25–26, 126, 184n12 Skousen, W. Cleon, 101 Smoot-Hawley Tariff, 36 Sobin, Julian, 33, 80, 92, 145, 179 Solomon, Richard, 37, 42, 57, 58 Spratly Islands, 167–68 Stages of Economic Growth: A NonCommunist Manifesto, The (Rostow), 49 Stevens, George, Jr., 116 Stilwell and the American Experience in China (Tuchman), 40 Strategic Arms Limitation Talks (SALT), 28–29, 53 Stross, Randall E., 8 Sullivan, Roger, 124, 129–30 Sun, Yun-suan, 100 Surrey, Walter Sterling, 61, 95, 96, 122, 158 Sutter, Robert G., 8 Taiwan American troops in, 41, 98 economy and foreign trade, 42, 100, 113–14

historiography about, 18 political regime in, 41 public perception of, 40–41 US relations with, 17–18, 39–40, 100, 114–15, 131 Taiwan lobby, 17–18, 41, 98–99, 102, 112–13 Tangshan earthquake, 82, 98, 103–4 Theroux, Eugene American trip of Chinese executives and, 171–72 Boggs-Ford mission and, 58, 59, 157–58 on Boggs’s address to the Congress, 59–60 on branding of Chinese products, 35–36, 168–69, 170 at Canton Trade Fair, 159 career, 157 creation of the National Council and, 178–79 on Donald Burnham, 158–59 interview with, 21, 157–72 meetings with Ambassador Bush, 165 meetings with Chinese official 68, 97, 159, 162–63 on most-favored-nation issue, 169–70 National Council’s inaugural mission and, 66, 158–61, 162–64 Nicholas Ludlow and, 65, 166–68 on organization of the National Council, 160–61 publications of, 10–11 reception of Chinese delegation, 84, 165–66 trip to China, 62, 159–60 on US-China trade, 171 work for the National Council, 62, 63, 64–65, 157, 165 Tiananmen Papers, 227n8

268  Index

Tiananmen Square massacre, 123, 125, 126, 229n35 Tientsin, Treaty of, 16 Tower, John, 112 “Trade Paper” on US-China trade, 55 Tragedy of American Diplomacy, The (Williams), 14 transnational history, 232n32 Truman, Harry S., 4, 24, 36 Trump, Donald, 124 Tuchman, Barbara, 40 Tucker, Nancy, 9 Unger, Leonard, 42, 114 United Fruit Company (UFC), 189n53 United States AuCoin bill, 119 budget deficit 48 Chinese diaspora in, 34–35 economic crisis, 43 foreign aid programs, 16, 48–50, 51, 52 foreign policy, 14–15, 46, 69–70, 136 government spending, 201n11 immigration policy, 34, 35 interest to China in, 58 international investments, 48, 52, 148, 210n29 multinational corporations and diplomacy, 13–17 public opinion of Taiwan and China, 40–41, 101 recognition of the Soviet state, 209n29 relations with Chile, 202n33 relations with Israel, 43, 202n27 relations with Taiwan, 17–18, 39–42, 113, 114, 115, 131, 132 trade policy, 37–38, 72–73

trans-Pacific co porate networks, 196n91 treatment of non-MFN nations, 121 United States Agency for International Development (USAID), 49 United States Chamber of Commerce, 100–101 United States-China Business Council (USCBC), 10, 128, 130 United States-China Chamber of Commerce, 64 United States-China Normalization (Chang), 8 United States-China relations academic literature on, 2 American business and, 100–101 assets-claims issue, 117, 189n57 delegations exchange, 117 diplomatic “slowdown,” 52–53 human rights issue, 109, 131 informal diplomacy, 10, 46, 57–58, 83, 94–95, 97 Korean War and, 4 legal frameworks, 117, 135 mutual cultural ignorance, 32–36, 42 normalization of, 98–99, 114, 127, 186n28, 191n8 policy of containment of China, 4, 24–25 political disputes, 65 primary sources, 20–21, 174 Soviet factor in, 24, 25–27, 43, 52–53, 65, 126–27, 149, 184n13 Taiwan issue in, 5, 17–18, 39–42, 53, 82, 98–102, 111–15 traveling ban, 34 US media on, 27 Vietnam War and, 23–24, 26, 27, 99

Index   269

United States-China trade American media coverage of, 88–89 arbitration and dispute resolution, 96 challenges of, 19, 20, 22–23, 36–37, 42–44, 93–94 Congress approval of agreement on, 122 current state of, 135–36 decentralization of, 128 development of, 6, 108, 135 geopolitics and, 9–10 globalization and, 13 historiography of, 2, 6–7 intellectual property rights issue, 95–96 most-favored-nation (MFN) issue, 36–38, 118–19, 121, 169 politics and, 27–28 problem of access to Chinese market, 90 rebuilding of, 4–5, 8 Soviet Union and, 37–38 statistics on, 6, 7, 82, 93, 104, 127, 134 Taiwan issue and, 2, 38–39, 42, 100 tariffs, 36–37 trade balance, 37, 124–25, 132, 133, 134 trademarks issue, 95–96 as transnational phenomenon, 142–43 umbrella organizations, 55 in US-China relations, role of, 3 United States-USSR relations détente strategy, 72, 74–75 Litvinov Agreement, 209n29 Moscow Summit, 74 scholarship on, 210n29 trade deals and diplomacy, 71–72, 73, 74, 78 Washington Summit, 75

United States-USSR Trade and Economic Council (TEC), 75, 77–79, 142 U.S. & Free China: How the U.S. Sold Out Its Ally (Shen), 115 USA-ROC Economic Council, 18, 99–100 U.S. China Business Review, 6, 20, 21, 82, 86–89, 92, 108, 161, 167–68 USSR border war with China, 25–26 US-USSR Joint Commercial Commission, 74 Vance, Cyrus, 38, 109–10, 114, 132 Vanik, Charles, 118, 119–20 Vietnam, 48, 49–50 Vietnam War, 23–24, 26–27, 43, 65 Vogel, Ezra, 21, 185n23 Wang, Genliang, 60, 62, 68, 83, 159, 162 Wang, Yaoting, 68, 108, 111, 162, 163, 170 Wangxia, Treaty of, 16 Wardlaw, Frank, 86 Watergate scandal, 43, 53 Watson, Arthur K., 9–10 Weaver, Charles, 61 Wheeler, Norton, 10, 17 Widener, Jeff, 229n35 Williams, William Appleman, 14–16, 17 Wilson, Woodrow, 210n29 Wolff, Lester, 111 Wood, Robert E., 101 Woodcock, Leonard, 114, 118 World Trade Organization, 139 Xiong, Xianghui, 29 Xu, Xiangqian, 26

270  Index

Yang, Shangkun, 135 Ye, Jianying, 26, 151 Yom Kippur War, 43, 65 Young, Owen, 16 Zablocki, Clement, 112, 119 Zhang, Jifu, 117 Zhang, Wenbin, 117 Zhao, Ziyang, 127, 135

Zheng, Zhuyuan, 146 Zhou, Enlai foreign policy, 26 illness and death of, 43, 82, 102, 151 informal diplomacy, 54 position on Taiwan, 39, 113, 222n62 on Sino-American rapprochement, 29, 53, 185n23

CHRISTIAN TALLEY is a writer and independent scholar. He received a graduate degree from the University of Oxford.