Published in 2016 annual issue of
Diplomatist (India)
On April 6,1971, the 31st
World Table Tennis Championship took place in Nagoya, Japan. Today, not many would
remember the outcome of the international competition but the world remembers
an act of friendship that led to “the week that changed the world.”
When an American player
missed his bus after practice and the Chinese players invited him to ride in
theirs, the athletes became friends. When this encounter was reported back to
Beijing, China’s leader Mao Zedong promptly invited the American team to tour
China after Nagoya.
The White House interpreted
Mao’s invitation as a clear signal that China was interested in re-establishing
relations with the U.S. In response, President Richard Nixon sent Henry
Kissinger to Beijing to secretly arrange for Nixon’s visit to China.
Nixon went to China in
February of the following year and he wrote that his diplomatic breakthrough
with China was the week that changed the world. The encounter that led to his
visit became known as Ping-Pong diplomacy. History would remember the event as
the beginning of a new bilateral relationship between China and the U.S.
Cynics in the West attributed
the entire matter to calculated manipulation by Mao rather than innocent
friendship between athletes. Then again, pundits in the West tend to see
ulterior motives related to anything that China does.
In reality, officials from
China and the U.S. had been maintaining low-level diplomatic contacts for
sometime and both sides had reached the conclusion that resuming official
diplomatic relations was of mutual interests.
President Nixon felt that it
was not realistic to isolate a quarter of the world’s mankind indefinitely and
Mao realized that Nixon wanted to get out of the Vietnam quagmire and could use
China’s help. Both were interested in forming a united front in face of a
common adversary, namely the Soviet Union.
Shanghai Communiqué
At the end of Nixon’s visit
in China, the U.S. and the PRC jointly issued the Shanghai Communiqué. In the Communiqué,
the U.S. acknowledged that there was only one China and that Taiwan was a part
of China. This acknowledgement was absolutely essential to China in order for
Nixon’s visit to be considered a success.
The Communiqué has indeed
served the bilateral relations well. Every US president since Nixon has pledged
to honor the terms contained in the joint agreement. Despite or perhaps because
of the latitude for interpretation by the ambiguity in the document, Beijing
has been sufficiently reassured by the American pledge.
To the Chinese, the American
pledge means that the U.S. will not interfere in the evolving development of
the cross-straits relations between Taiwan and the mainland. Washington would add
to China’s understanding with “so long as the cross-straits relations proceed
peacefully.”
Formal normalization
The next milestone in the
U.S. China relations was the formal normalization between the two countries on
January 1, 1979. One can see the greatest importance Beijing placed on this agreement
for normalization when the People’s Daily
splashed the news in the form of a proclamation, printed in a special one-page extra
edition in bold red ink. The only previous occasion when such a special edition
was published was to announce the detonation of China’s first atomic bomb (and
much later when China put a man in space).
Mao died in 1976 and by 1979,
Deng Xiao-ping had returned to power and he celebrated the normalization with a
grand tour of the U.S. in mid January. Despite his diminutive physical stature,
he was a media sensation. Photos of Deng wearing a ten-gallon cowboy hat
charmed the American public. What followed after Deng’s visit was a decade long
honeymoon in Sino American relations.
While Deng got the bilateral
relations off on an up-beat note, he was busy leading the reform of China’s
economic policy. Where the central planners used to set the production goals
and allocate the resources, now state control was gradually loosened. China
went through a transitional phase when it was called a market economy with
socialist characteristics. Eventually China dropped any pretense and simply referred
theirs as a market economy.
Deng begins reform
During this period, the world
came to know Deng by a number of his favorite aphorisms. By “to get rich is
glorious,” Deng was recognizing that as market dynamics were allowed to exert their
influence on the economy, some individuals would become wealthy before others.
He saw that it was inevitable and the country would be better off than when
everybody remained equally poor under Mao.
“It doesn’t matter if it’s a
white cat or black cat, so long as it catches mice, it is a good cat.” This
expression was a salute to pragmatism as Deng decided to move away from total
state control to policies that will encourage individual initiative and entrepreneurism.
“Crossing the river while
groping for the stones,” reflected the experimental nature of the policy
changes that Deng had embarked. Sometimes this meant one small cautious step at
a time and measure the impact before taking another. Other times, policy
changes were applied to a small region to fully understand the impact before
introducing the change on a national scale.
These quotes reflected Deng’s
move away from ideology and dogma toward a pragmatic approach that was to
stimulate China’s economy and set China on the road of more than three decades
of double-digit growth. Deng’s pragmatism meant allowing foreign direct
investments to participate in China’s economy, i.e., opening some windows even
if it meant letting in some (Western) flies.
Tiananmen resets the relations
The next major marker in the
Sino-American relations was June 4, 1989. The previous nightfall and early dawn
was when the People’s Liberation Army tanks rolled into Tiananmen Square and
dispersed the student protesters gathered there. On the way to the square, some
PLA soldiers were assaulted and some bystanders and protesters were shot and
killed. To this day, official tally of the casualty is not known.
Ironically, Soviet leader
Gorbachev made a state visit to Beijing that May with a large contingent of western
media in tow. The media noticed a ragtag group of student protesters in
Tiananmen that had been there since April.
The students had been
protesting official corruption and unfair and arbitrary job assignment
following their graduation. After interacting with the western media, the
student protest was energized and turned into a full-blown protest, ostensibly
in quest of democracy.
After Gorbachev returned to
Moscow, the media stayed behind to follow the student protest that in part they
had inadvertently rekindled. Thus in the confrontation that ensued, the western
media had front row seats to witness the shootings, the bloodied civilians, the
bodies on the street and the world famous image of the lone young man standing
in front of a column of tanks.
The world was shocked by the
images shown on their TV as transmitted live from Beijing. China was loudly
condemned for gross violation of human rights. Some members of the U.S.
Congress were particularly vehement and vociferous.
Gorbachev was a mere two
years away from presiding the total implosion and disintegration of the Soviet
Union. The USSR menace had been fading for some time and therefore so was the
importance and relevance of the Sino American alliance to oppose the USSR. Tiananmen
marked the end of the long Sino-American honeymoon.
Overseas Chinese invests in China
After the Tiananmen debacle, some
of the western companies already in China hesitated or even retreated from
China. Deng strived harder than ever to open up China with economic reform. His
historic tour of Shenzhen in 1992 as one of the first Special Economic Zones launched
the transformation of a sleepy fishing village into an eventual megapolis that
was to become more Hong Kong than even Hong Kong.
A popular notion was that the
developed countries with advanced economies and technologies came pouring into
China in response to the open windows. In reality, for the first decade after Deng’s
southern tour, the major influx of foreign direct investments did not come from
the West.
The first chunk of FDI came
over the border from Hong Kong Chinese industrialists. They were the first to
move their manufacturing operations to Shenzhen and surrounding area to take
advantage of the lower wages and to enjoy various incentives.
The Taiwan companies were the
next wave to follow and move their operations into China. Their lines of
businesses, such as electronics, were generally more sophisticated than the
Hong Kong products. Both groups of investors enjoyed not only government incentives
but also the ability to operate in an environment of a common language and
culture.
Often overlooked and not
given enough credit, these Hong Kong and Taiwan companies introduced good
manufacturing practices into China and helped raise the quality and
productivity of the workforce in China. Local Chinese operations were forced to
discard the lackadaisical attitudes ingrained by years of state control
(popularly known as iron rice bowl mentality) and raise their productivity in
order to compete.
By the time western companies
entered China in significant numbers to set up their manufacturing plants, the
effectiveness of the Chinese workforce already had the benefit of a decade or
more learning from the presence of Hong Kong and Taiwan companies.
Beginning of the age of terrorism
When bin Laden’s gang of
terrorist attacked New York’s world trade center on September 11, 2001, a lot
had already changed in the Sino-American relations.
The neoconservatives in the
U.S. saw the collapse of Soviet Union as the opportunity to project American
might and move toward world domination as the sole superpower standing. Others
in need of a replacement adversary to continue to justify the massive
allocation for the national defense budget began to look at China as the most
likely candidate.
The idea of American hegemony
and a strong military budget often goes hand in hand among policymakers in
Washington. They were the same folks that believe a shock and awe blitzkrieg in
Iraq would lead to quick celebration of American soldiers as liberators in
Baghdad—a horrendous miscalculation that continues to exact a toll in human
suffering today.
Thus consistent with a
warmongering mentality, politicians from the left and right derived political
profit by attacking a demonized China and accusing their opponent of not being
tough on China. At every presidential election, aspiring candidates invariably
attacked the incumbent for being soft on China.
Once the winning candidate
moved into the White House, the newly elected president had to face the reality
that the relationship with China was too important to be treated as a throwaway
piece in the game of domestic politics.
By 9-11 2001, China’s economy,
doubling every 7 years, had become too large to dismiss in the name of politics.
Its economy fueled by low cost labor and being export driven complemented
perfectly with the U.S. economy driven by conspicuous consumption that needed low
cost imports from China.
Economists, not politicians,
observed that the two economies were just like Siamese twins joined at the hip.
Killing one would be fatal to the other. Some members of Congress, knowing full
well that there is no downside to criticizing China, have taken full advantage to
pummel China for political points from their constituents.
Thus as the world watched in
horror the collapse of the twin towers in lower Manhattan, China’s president
Jiang Zemin called George W. Bush at the White House to express his condolences
and offer China’s solidarity with the U.S. in the fight against the radical
jihadists. Surely, Jiang must have thought that now that the Americans have a
real enemy, they can direct their vitriol away from China.
Indeed, in the name of war on
terror, Americans marched into Iraq and Afghanistan and now have their hands
full dealing with the mess that they created. It was beginning to look like
falling into another Vietnam quagmire that will take a long time to extricate.
It became more important to get along with China than not.
Financial crisis of 2008
Then came the world financial
collapse of 2008. This crisis was caused by the funny money schemes such as
credit default swaps and mortgage-backed securities created by the wizards of
Wall Street. The crisis caught the world by surprise.
To keep the giant
multinational banks that were too big to fail from failing, the U.S. government
injected massive amounts of dollars to give the banks enough liquidity to keep
their heads above water.
To protect China’s economy
from being swamped by the global financial tsunami, Beijing invested heavily in
domestic infrastructure projects, such as superhighways, bridges, high-speed
rail, ports and airports.
At the end of the crisis, the
U.S. government saved its economy and recovered the funds lent to the banks in
distress. China got a breathtaking leap in infrastructure improvements that continue
to fuel the growth of their economy.
Most damaging of all, the
crisis shook Beijing’s faith and confidence in Washington and in the stability
of the dollar. To reduce their holdings and exposure to the dollar, China has
entered numerous currency swap agreements with many of its trading partners and
by-pass having to settle trade transactions in dollars.
Barrack Obama was elected
president in 2008 and inherited two hot potatoes. In his eight years, he
managed to tame one of them, the financial demon that threatened to sink the
U.S. economy and right the ship at home.
On the international front,
he was far less successful. Not only did he not end the conflict of Afghanistan
and Iraq as pledged in his campaign, Obama’s foreign policy had allowed and
even encouraged Islamic terrorism to spread uncontrollably to Syria, Egypt and
Libya.
Given the full plate, one
would assume that the U.S. would seek to find accommodation with China’s rise,
but the opposite has been true. The neocon hawks in Washington has been
anticipating, almost gleefully, the inevitable Thucydides Trap between a rising
power and the reigning power.
The Trap presaged the
collision and conflict between China and the U.S. However, that a rising power
and a reigning power must resort to killing each other is very much a western
idea based on western experiences tracing back to the days of Athens vs. Sparta.
It remains to be seen how far the U.S. can push China into a corner before
China gets exasperated enough to become a western state and fight back.
China’s way forward
Partly motivated by not
holding vast reserves of US dollars, China’s new leader, Xi Jinping, has been
offering a different kind of international relations with his “one belt, one
road” initiative along with the formation of the Asia Infrastructure Investment
Bank. He is offering to apply China’s experience and expertise in
infrastructure projects gained since 2008 to build along the maritime and land
silk roads from China to Europe. These projects could be financed by AIIB along
with other development banks.
Xi is not going around giving
away foreign aid packages. The beneficiary countries would be co-participants
and co-investors in the infrastructure projects. The projects would have to be economically
sound with reasonable prospect of payback. Xi believes infrastructure
investments will improve the local economy. Eventually the improved economies
would be integrated for the benefit of all the economies on the belt or road.
Many countries are already
seeing the appeal of being part of Xi’s win-win collaboration. U.K. was the
first to ignore Washington’s contrarian advice and rushed to become the first
western power to be a founding member of AIIB. When Xi made his state visit to
London in late 2015, the British government rolled out the red carpet to make
sure that Xi got the message, namely, U.K. considers China’s friendship to be of
their highest priority.
The newly elected president
Rodrigo Duterte of Philippines seemed to agree with U.K.’s point of view. He
has shunned the confrontation on the contested island in the South China Sea
favored by his predecessor and signaled a willingness to talk the matter over
with China. He too sees value in collaborating with China and being included in
the maritime silk route.
Choices for India
For non-aligned nations such
as India, there is a choice. On the one hand, India can seek the security that
comes with being protected by the military might of Uncle Sam, subject, of
course, to Uncle Sam’s whim on whether defending India continues to be in his
national interest. Since the U.S. already spends beyond their means for the
military, India would be expected to contribute their share of the burden.
America’s reassurance to
India on the ties that bind would be based on the fact that both have a
democratic form of government. The people of India should be in the excellent
position to decide on their own as to how well democracies have worked for them
in the past and can function in the future.
On the other hand, India can
seek to become an economic partner with China and collaborate on infrastructure
development. China will not seek to interfere with how India is governed nor insist
on entering into military alliances. India would simply benefit from China’s
experience in building and completing giant projects on time and under budget—something
democracies are not good at.
Of course, developing
relations with China and the U.S. are not mutually exclusive. Keeping friendly
relations with both superpowers will simply require skillful diplomacy and bearing
in mind that the expectations from the two will be very different.
Just June this year India
along with Pakistan has signed the necessary memorandum to be admitted as
member nations of Shanghai Cooperation Organization in 2017. SCO has been
evolving since it was established 15 years ago with China and Russia as the
prime movers. Other current members include Kazakhstan, Kyrgyzstan, Tajikistan
and Uzbekistan. With Iran expected to be the next member to be admitted, the
SCO alliance will soon cover a huge part of Asia and nearly half of the world’s
population.
The primary aim of SCO is to
promote mutual cooperation in safe guarding the military and economic security
of its members. Non-interference of the internal affairs of the member states
is part of the charter. Obviously it is an alignment not designed to please
Washington. (The American application to be an observer was rejected in 2005.)
In joining SCO, India shows
that it already knows how to hedge its bet. Xi is betting that more countries
will see economic cooperation to be more aligned to their national interest
than military confrontation favored by the United States.
