One Billion Customers - James McGregor [22]
The Door Opens Again
War, peace, and a presidential election rekindled relations between the United States and China in December 1970. President Richard Nixon secretly signaled Beijing that he wanted to open serious talks with China. Nixon wanted the Chinese to influence North Vietnam to cooperate in a dignified U.S. exit from South Vietnam. He also wanted a cooperative alliance with China to entice the Soviet Union into détente with the United States. Prominent Democrats, including Hubert Humphrey and Edward Kennedy, were becoming increasingly vocal about opening trade and political relations with China and giving up the fiction that the KMT government on Taiwan was the government of all of China. Nixon’s offer to talk met a willing reception. China faced forty-five hostile Russian army divisions along the 4,800-mile border with Russia. Brutal skirmishes in the spring and summer of 1969 between Chinese and Russian troops had left China feeling vulnerable. The country was in dire need of investment capital, technology, know-how, and overseas markets to rebuild its shattered economy.
As the two sides exchanged notes aimed at bringing Nixon to China, Zhou Enlai demonstrated that China hadn’t lost its knack for playing one barbarian off against another. He sent a message that China might invite the three Democrats then lining up to challenge Nixon—Senators Kennedy, Muskie, and McGovern—to visit China, as well. Aghast, National Security Adviser Henry Kissinger cautioned that no other American “political visitors” should be allowed into China before Nixon. Nixon’s arrival and well-staged excursions in Beijing, Shanghai, and Hangzhou were broadcast around the world in what amounted to a huge campaign commercial. The resulting Shanghai communiqué provided for the United States to recognize that Taiwan was part of China and indicated that the United States wanted a peaceful settlement of the issue “by the Chinese themselves.” Nixon vowed to progressively reduce the eight thousand-person American military contingent on Taiwan and establish channels for Sino-U.S. cultural exchanges and business development. Nixon’s resignation because of the Watergate scandal and internal politics on both sides delayed formal diplomatic recognition until 1979. Then Deng toured and charmed America, opening the way for a decade-long honeymoon between the United States and China. U.S. recognition not only sent a flood of U.S. businesses into China, it also made Europe and Japan more comfortable and aggressive in pursuing China trade and investment. New York bankers and German engineers found themselves sleeping on cots in the hallways of the overcrowded Beijing Hotel. The Chinese established a special Negotiations Building in Beijing with a warren of rooms to which they would invite foreign companies competing for government investment and purchasing contracts. Chinese negotiators would move back and forth among supplicants, extracting more and more concessions. In the end, many foreign companies struck money-losing deals as their entry fee into the China market. Later, when new deals were offered, many of these pioneering firms weren’t even invited to bid. Foreign businessmen spent much of their time “walling and ducking,” a term for the inevitable excursions to the Great Wall and the seemingly endless Beijing duck banquets that gave English-speaking Chinese a chance to pump the foreigners for information about their businesses and sniff out divisions among the foreign negotiators.
An Unstoppable Power
The flood of business into China was spurred by the creation of an updated version of the “treaty ports.” The new bases for foreign business—special economic zones—offered tax breaks and simplified permit and licensing regulations. But this time the “unequal treaties