The legacies of Nixon's China diplomacy, 50 years on

Fifty years ago this week, Richard Nixon became the first US President to visit China. Two leading Chinese scholars reflect on the legacy of one of the biggest geopolitical shifts of the Cold War.

Understanding China Since Nixon

By Shang-Jin Wei

On February 21, 1972, Richard Nixon became the first US president to visit the People’s Republic of China, setting in motion a process that would end China’s decades-long isolation and kick-start the emergence of a modern, dynamic economy. But, despite the seismic economic changes in China in the intervening half-century, many in the West regard today’s People’s Republic as an unreformed communist country whose unfair trade practices are harming Western workers and consumers. Although this impression is partly a by-product of today’s geopolitical competition, it also reflects a lack of historical perspective.

At the time of Nixon’s visit, China was as isolated and closed off from the world as North Korea is today. Ordinary Chinese had no freedom to choose where to work and had to accept jobs assigned by their local government. Almost every Chinese adult worked for the state or in a state-owned firm, because no privately owned domestic enterprises or foreign firms operated in the country. Nixon’s entourage also noticed an astonishing lack of colour on the streets, as most Chinese wore either blue or green. There was not a single foreign brand on the streets of Beijing or Shanghai.

Today, Chinese can choose their place of employment, more than 80 percent of the workforce are employed by firms not owned by the state, and wages are determined by supply and demand in the labour market. An international tourist cannot tell from people’s clothing alone whether she is in Shanghai, Seoul, Tokyo, or Taipei. Virtually all major global brands that can be seen in New York, London, and Singapore, are ubiquitous in major Chinese cities as well.

Apple, Boeing, Caterpillar, Starbucks, and many other foreign companies are currently doing brisk business in China, supporting the returns of US pension and mutual funds that invest in them. General Motors sells more cars in China than in America or any other market. And firms in China that are wholly or majority owned by foreign investors account for 40 percent of China’s exports.

At the time of Nixon’s visit, the Chinese government’s most important border control policy — as in East Germany then or North Korea now — was to prevent ordinary Chinese from escaping the country for good. In 2019, the last year before the COVID-19 pandemic began, 150 million Chinese tourists visited the United States, Europe, Southeast Asia, and other regions, and returned home voluntarily. The personal freedom ordinary Chinese have now was unimaginable in 1972.

China’s transformation has not resulted in Milton Friedman’s brand of capitalism, in which the state plays a minimal role in the economy. But China has adopted many regulatory institutions similar to those in Germany, Japan, and even the US. China’s Food and Drug Administration, established in 1998, is partly modelled on its US counterpart. And the design of its State Environmental Protection Administration (now called the Ministry of Ecology and Environment) was influenced by that of the US Environmental Protection Agency.

Even China’s much-criticized industrial policy took its intellectual inspiration from Alexander Hamilton, who pioneered the concept. The China 2025 program, which aims to promote what the Chinese government regards as the industries of the future, resembles not so much Soviet central planning as Germany’s Industrie 4.0 initiative or even America’s own numerous industrial policies.

So, was Nixon right to help China reconnect with the world? To the extent that his visit and subsequent US policies contributed to China’s success in lifting a billion people out of abject poverty, it is difficult to think of another initiative that could have done more to promote human welfare.

Of course, that was not the motivation for Nixon’s diplomatic coup, which strengthened America’s hand in its struggle with the Soviet Union. But it is equally important — yet somehow often overlooked — that US households and firms have benefited tremendously from China’s economic rise.

US exports to China have increased faster than US exports to Europe, Japan, Mexico, Canada, Brazil, or Australia over the last three decades. While imports from China seem to have contributed to a decline in US manufacturing jobs, employment and value added in America’s modern service sectors grew faster, because low-cost Chinese products such as laptops and electric equipment boosted efficiency. Cheaper Chinese goods undoubtedly helped to hold down goods prices in Western economies from the 1980s until recently. And throughout the period of America’s increased economic engagement with China, there was no secular increase in US unemployment.

Former US President Donald Trump’s misguided trade war with China implies a reversal of these trends. By raising tariffs on Chinese imports to the level that prevailed under the Smoot-Hawley Tariff Act before World War II, Trump ensured that American households and firms faced higher prices than they otherwise would have. America’s trade deficit has widened rather than narrowed, partly because US firms are losing competitiveness in the global market as a result of the trade war.

While US policymakers are tempted, for geopolitical reasons, to end the policy of economic engagement toward China pursued by successive administrations in the decades following Nixon’s 1972 visit, the risks are significant. US living standards would likely increase less fast. While Chinese economic growth would suffer, the support for American institutions and ideals among many ordinary Chinese could decline as well. If a US decoupling strategy were to accelerate China’s strategic rapprochement with Russia, perhaps even resulting in a formal alliance, a combination of Russia’s nuclear arsenal and China’s mighty economy could present a more nightmarish challenge to US global hegemony.

Fifty years after Nixon’s historic visit, Sino-American relations are at a historic nadir. While finding common ground with China seems challenging in the current geopolitical context, the logic that engaging China in the world can enhance the personal freedom of the Chinese and also provide benefits to American households and firms remains as true as ever.

Shang-Jin Wei is former chief economist at the Asian Development Bank, is Professor of Finance and Economics at Columbia Business School and Columbia University’s School of International and Public Affairs.

Copyright: Project Syndicate, 2022 – www.project-syndicate.org

Nixon Was Right to Gamble on China

By Minxin Pei

With China currently the only country capable of unseating America as the leading global power, many in Washington may wish that US President Richard Nixon had never made his historic trip to China 50 years ago this week. In their revisionist narrative, it was Nixon’s meeting with Communist Party of China Chairman Mao Zedong, and the policy of engagement it initiated, that helped make China an economic superpower and a geopolitical threat to America. For these critics, the Nixon visit, far from being a stroke of diplomatic genius, was one of history’s greatest strategic blunders.

But such revisionist arguments discount the substantial benefits the United States gained from Nixon’s gambit and the decades of US-China engagement that followed. Although China did not directly assist the US, Nixon’s visit shifted the perceived Cold War balance of power and influenced the strategic calculations of both the Soviet Union and North Vietnam, resulting in immediate US gains. America and the Soviet Union signed the first nuclear arms control treaty (SALT I) in May 1972, and the US extricated itself from Vietnam a year later.

Former US President Richard Nixon and Chinese Premier Zhou Enlai toast, Beijing, China - February 25, 1972. Image credit: Richard M. Nixon Presidential Library and Museum.

Engagement with China also yielded significant longer-term geopolitical and economic dividends for the US. Regional tensions in East Asia eased dramatically, mitigating the Chinese threat to vital US interests there, while the US-China quasi-alliance against the Soviet Union in the 1980s contributed to America’s victory in the Cold War.

On the economic front, lower-priced imports from China helped to contain US inflation, while US exports to China grew rapidly and American corporations extended their reach into the country’s domestic market. Although competition from Chinese imports led to the loss of US manufacturing jobs, it is difficult to argue credibly that the US has not reaped economic benefits from its engagement policy.

To be sure, China has gained substantially more than the US in economic terms from the bilateral relationship. But that was mainly due to the process of reform and opening launched by Deng Xiaoping in 1979. Nobody, least of all Nixon or Mao, could have foreseen the Chinese economic miracle that was to materialise in the decades after their fateful encounter. At the time of Nixon’s visit, Deng was in the political wilderness, performing menial labour in Jiangxi province. It was Mao’s death in 1976 and Deng’s subsequent political rehabilitation and elevation that altered the course of Chinese history.

If the Nixon-Mao meeting made any difference in terms of China’s rise, it was by saving Deng the trouble of having to start from scratch in normalizing relations with the US. Without the Sino-American rapprochement that Nixon and Mao engineered (mainly to counter the shared Soviet threat), Deng would have needed more time and effort to persuade the West to embrace China, which had been a pariah state before 1972.

Revisionists also seem to forget that the US-China relationship forged by Nixon rested on fragile foundations, and that America’s engagement policy was in constant danger of being derailed by actions or events in both countries. Deng himself nearly brought US-China engagement to an end when he crushed the peaceful pro-democracy demonstrations in Tiananmen Square in June 1989. Only the intervention of President George H.W. Bush, who had served as the second US envoy to China from 1974 to 1975, saved the policy, at the cost of being criticised for kowtowing to the “butchers of Beijing.”

Nixon’s legacy was imperilled again in 2001, when the neo-conservatives who held sway in President George W. Bush’s administration decided that a fast-growing China posed a geopolitical threat and must be confronted. But 9/11 intervened before they could implement a new policy of containment. For reasons that remain elusive, the same neo-cons switched strategic focus and invaded Iraq in 2003, trapping the US in the Middle East quagmire for more than a decade.

Despite the volatility in US-China relations, the engagement policy crafted by Nixon and his national security adviser, Henry Kissinger, served the interests of both countries until about a decade ago. But China’s assertiveness and expansionism under President Xi Jinping has made sustaining this approach impossible. Nonetheless, a policy that helped produce 40 years of peace, prosperity, and stability between two former staunch foes must be considered a resounding success.

With the US and its allies now facing an unfriendly China, it is tempting to imagine repeating Nixon’s gambit, this time with an ironic twist. Specifically, some commentators in Washington think that the US should do a “reverse Nixon” and try to pry Russian President Vladimir Putin from Xi’s embrace.

Unfortunately, those advocating such a strategy overlook a crucial difference with the Nixon era. The concession that Putin seems to be demanding, now with the threat of war in Ukraine, is a fundamental revision of the post-Cold War settlement in Europe. Few Western leaders, including US President Joe Biden, appear willing to accept such a price in return for weaker Sino-Russian ties.

Likewise, revisionists appear to have forgotten that other than risking a domestic political backlash (which never occurred) Nixon did not have to make any real, let alone painful, concessions to China (the Taiwan issue was shelved with the help of linguistic legerdemain). Fifty years on, his visit to Beijing remains, as Americans would say, a geopolitical no-brainer.

Minxin Pei is Professor of Government at Claremont McKenna College, is a non-resident senior fellow at the German Marshall Fund of the United States.

Banner image: US President Richard Nixon meets with China's Communist Party Chairman, Mao Zedong, Beijing, China - February 21, 1972. Note from source: The companion of Mao, Zhang Yufeng, who is present in the background on the original photo, was photoshopped out of this version. Credit: Richard M. Nixon Presidential Library and Museum.

Copyright: Project Syndicate, 2022 – www.project-syndicate.org