[CORR] H-Diplo Article Review 111- "Diplomacy vs. Economics"

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H-Diplo Article Review 1111

24 May 2022 [includes typographical correction- Xiahang to Xiayang]

Xiayang Ding.  “Diplomacy vs. Economics: Examining the Roots of Decline in Sino-U.S. Trade in 1975.”  Journal of American-East Asian Relations 28:2 (June 2021):  133-158.

https://hdiplo.org/to/AR1111
Editor: Diane Labrosse | Commissioning Editor: Thomas Maddux | Production Editor: George Fujii

Review by Niu Jun, Peking University, Emeritus

Ding Xiayang’s “Diplomacy vs. Economics: Examining the Roots of Decline in Sino-U.S. Trade in 1975” examines the reasons for the significant decrease in Sino-American trade in 1975. The author argues that with respect to Sino-American bilateral trade, “in 1975 the explosive growth of Sino-American trade that only had resumed after 1971 ended with a severe decline from $920 million a year to just $461 million,” (133) thus contracting by half in one year. This large decrease in the volume of Sino-American trade has attracted the attention of scholars studying this period of Sino-American relations. They have offered two kinds of explanations for this precipitous decline in Sino-American trade in 1975.

According to the first theory, during the most dramatic period of Sino-American conciliation, around the time of President Richard Nixon’s visit to Beijing in February 1972, Sino-American trade did not occupy a particularly important place on the agenda of either the Nixon government or that of China’s leader Mao Zedong. The fundamental motive for both leaders was addressing the growing Soviet security threat. Sino-American conciliation quickly led to a great increase in Sino-American trade, but this ‘surprisingly high’ increase lacked a foundation as well as powerful political support and was therefore ‘unstable.’ The second explanation is that the rapid decrease in Sino-American trade was related to China’s foreign policy, particularly to its foreign trade policy. As Ding Xiayang’s citation of statistics demonstrates, what China needed most was industrial equipment, and in that respect China’s traditional partners were capitalist countries that were able to offer better choices than the United States (135). Since America’s major export to China was grain, China was therefore less interested.[1]

On the basis of detailed analysis, the author takes issue with the two aforementioned explanations. He suggests that “the most realistic explanation for the Sino-U.S, trade decline in 1975 is that the imbalance between imports and rapidly declining exports triggered a sudden foreign currency crisis that forced the People’s Republic of China (PRC) to urgently cut imports in late 1974” (154). Ding Xiayang’s explanation of the reason for the large decline in Sino-American trade in 1975 is undoubtedly valuable. First, he utilizes and compares historical documents from both China and the United States; in particular he analyzes Chinese historical archives, including the reminiscences and biographies of several Chinese leaders who were involved in decisions relating to Sino-American trade.[2] Compared to earlier studies that made use of American historical records,[3] his approach contributes to a better understanding of the process of decision-making and motivations on the Chinese side.

It should also be pointed out that Ding Xiayang’s analysis probes deeply into the complex structure of Chinese domestic politics; the influence of this frequently changing structure on China’s foreign trade is a realm that is far from having received the attention it deserves. Ding’s analysis touches upon two aspects of China’s political structure. First is the relationship between the central departments and the local authorities during the Cultural Revolution. A good example involves the relations between the Shanghai Revolutionary Committee and the Beijing Central Government departments. Because of the radical differences between them during the Cultural Revolution, they had different attitudes regarding how to deal with Sino-American trade. According to Ding, “the anti-American approach was not widely accepted within the circles of the PRC government. There were entities – mainly the Shanghai Revolutionary Committee (an equivalent of the city government during the Cultural Revolution) – that in 1974 voiced strong opposition to buying grain from the Americans, but the PRC government never followed their advice” (142).

The second aspect relates to the decision-makers in Beijing. Apparently, because of the different subjective requirements of their domains, there were variant views between foreign policy leaders and those officials who were in charge of the department of foreign trade. Ding asserts that “most previous studies also ignore the contradiction between Chinese policymakers and the people in charge of implementing those policies” (154). Logic suggests that it is well worth probing deeply into the level of influence that the differences in policy that emanated from the division of labor in the system exerted upon the relevant policies. Be that as it may, delving deeply into China’s complex and changing political structure to look for changes in China foreign trade policy, especially studying what influences they exerted on Sino-American trade in this period, is indeed a worthy field of inquiry. This aspect of the article is very enlightening.

The context of Ding’s account is that China was in the midst of the Cultural Revolution and that China’s system of planned economy was in its most extreme phase. Ding’s account also explains that, comparatively speaking, the American side was more interested in trade with China; this was connected to the influence of American commercial circles on U.S. policy. Chinese decision makers were less concerned with Sino-American trade. In sum, a government with a strong tendency to ‘politicize’ matters, irrespective of the degree of complexity of its internal structure, was more likely to ‘politicize’ trade issues. Trade imbalances and a shortage of hard currency were immediate factors influencing trade relations. Under any circumstances this argument conforms to logic and common practice.  A significant question is how, under identical conditions of unequal trade and amounts of foreign exchange, a given country’s unique political situation and political structure, and the influence of leaders who are inclined to view foreign affairs from ‘the political heights,’ and other elements, determines the country’s foreign trade policy. That is a topic that remains to be explored in the literature; this article addresses that question only in the context of its influence on Sino-American trade relations. Here one may suppose that in 1975, even without the influence of trade imbalance and foreign exchange problems, the sharp changes in the political situation in China could not but have exerted an obviously negative influence on Sino-American trade. We must dig deeper into the historical archives to prove that assumption.

 

Niu Jun, Professor of International Studies, Peking Unversity, received his Ph.D. at The People’s University of China (Renmin daxue) in 1988. His current research focuses on a project involving China-U.S. relations and the Cold War in East Asia. He teaches courses at Peking University including: “The foreign relations of the People’s Republic of China since 1949,” and “China’s foreign policy-making process.” Among his major publications is Cong yan’an zouxiang shijie: zhongguo gongchandang duiwai zhengce de qiyuan which appeared in English translation as From Yan’an to the World: The Origin and Development of Chinese Communiust Foreign Policy (Norwalk: EastBridge, 2005).


Notes

[1] For discussions on the theories see John W. De Pauw, U.S.-Chinese Trade Negotiations (New York: Praeger, 1982), 5; Alexander Eckstein, “China’s Trade Policy and Sino-American Relations,” Foreign Affairs 54:1 (October 1975): 152Randall E. Stross, Bulls in the China Shop: And Other Sino-American Business Encounters (New York: Pantheon Books, 1990), 8–9.  See also Song Min, “Economic Normalization: Sino-American Trade Relations from 1969 to 1980,” unpublished Ph.D. dissertation, University of Georgia, 2009.

[2] See Li Xiannian Nianpu bianxiezu [The Writing Group of A Chronicle of Li Xiannian]. “E Yu bian qu ge ming bian ji bu” [“E-Yu Border Regional Revolutionary Editorial Office”]. Li Xiannian Nianpu, VI, 1970–1978 [A Chronicle of Li Xiannian VI, 1970–1978]. Beijing: Zhong Yang wen xian chu ban she, 2011.

[3] Tao Wenzhao, The History of China-The United States’ Relations (Zhongmei guanxi shi) 1972-2000, Volume 2 (Shanghai: Shanghai Renmin Press,2016), 1-28; Robert S. Ross, Negotiating Cooperation: The United States and China, 1969-1989 (Stanford: Stanford University Press, 1995):  17-54