December 18th, 2019

Sino-US relationship

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Most Americans think US engagement with China starts with President Nixon. But Sino-US history goes back as far as back as the American Revolution and before that.

In the 17th century, China was already trading with the US, then a U.K. colony. Tea, silk, and porcelains were imported from China. After independence, the US became China’s number two trading partner after British.

Through the 300 odd years of engagement, the relationship between the US and China had good times and bad times, but more often somewhere in between.

In the mid-1800, a large number of Chinese labors came to California in search of gold. By the 1860s, the Chinese were the largest aliens in West America. Expectedly, the US pass laws to ban more Chinese from coming.

Around the same time, many US Christian missionaries went to China. They were impressed by Hong Xiuquan and supported him in the Taiping Rebellion. Taiping Rebellion is one of the bloodiness rebellions in human history that leaves 40 million death, in an attempt to create a new “Heavenly Kingdom” in China. Ironically, the US State Department supported the Qing government instead and squash the rebellion.

In the late 1900s, the Boxer Rebellion, an anti-Christian, anti-foreign peasant movement supported by the Qing government, massacre Christian missionaries, including Americans. In response, the US joins the other nations, in the Eight-Nation Alliance and loot and pillage Beijing and other cities in 1900 for over a year.

[Incidentally a lot of Chinese thought the Eight-Nation Alliance, including the US, was responsible for the Burning of Old Summer Palace. The Burning of the Summer Palace happens in 1860 by the Anglo-French expedition, nothing to do with the American]

The Qing government was then forced to sign the Boxer Protocol, in 1901 and have to pay 450 million tales of silver (about $10 billion) to the Eight-Nation Alliance over many years, of which 300 million is paid immediately.

President William McKinley, as an act of friendship, remitted the majority of that back to China, who then use the money to build what is today Tsinghua University, and sent students to the US to study.

At the beginning of the 20th century, during the Sino-Japanese war, Americans’ public sympathy for the Chinese was aroused by the Nanking Massacre in 1937. Volunteers from Army Air Corp and Navy and Marine Corps, recruited under President Franklin Roosevelt in 1941, went over to help the Chinese to bomb Japan cities. They are known as the Flying Tigers whom many Chinese still remember fondly. A Museum in Kunming is now dedicated to the Flying Tigers.

After World War II, China went into the Civil War between the Communists and Nationalists. Dixie Mission, in 1944, was one of the early contacts between the US and the Communists. The Americans travel through the dangerous war zone to Yan’an to negotiate unification between the Communists and Nationalists.

But then McCarthyism in 1947, followed by two wars, the Korean War and Vietnam War in 1950-60s, where US & China fought against each other altho technically not directly, US-Sino relationship soured.

It is not until President Nixon visited China in 1972 that the relationship finally warms up and eventually normalization in 1979. By 1983, the US State Department classifies China as “a friendly, developing nation”.

Then Tiananmen Square in 1989, and the relationship deteriorated sharply. It took 10 years to recover, until 1999 where US-China signed trade agreement where the US support the China accession into WTO.

[When Trump said China has taken US advantage for many years, he is referring to this agreement because, from the US perspective, China didn’t live up fully to the promises made in 1999 or other commitments in the 2001 WTO accession. This is why USTR Robert Lightnizer is negotiating very hard on the Chinese on the enforcement]

[Dec 24 Update] One cannot talk about 1999 without mentioning the bombing of Chinese embassy in Belgrade in May. While the US have give an official apologies as well as financial settlement, in addition to expediting US-China trade agreement, the Chinese never got over this transgression. Very few believe US excuse that it is an honest mistake and many don’t believe US apologies to be sincere.

2000 to 2010 was the best 10 years of US-China relationship, investments, trades, technology transfer, humanitarian aids as the China economy grows rapidly. The Sino-US relationship was so well that US government agencies were encouraged to help its counterpart in China. The prevailing view is that as China becomes more prosperous, it will become more open and the more the American helps them, the more the Chinese will be like America.

But the relationship starts to erode after 2010. US Intelligence was the first to become concerned. China counterintelligence systematically eliminated the informer network in China in 2010 & 2011. China also forms its “cyber army” in 2009 (China only admits to it in 2016) and then for the next few years, engaged in extensive unrestraint, high volume cyber espionages, pinnacle to the OPM hack in 2015 (the Chinese had denied they were involved).

But the Chinese never understood how damaging the OPM hack is to Sino-US relationship: while there are many higher value cyber espionages, the OPM hack makes the Chinese cyber espionages very personal to 4 to 20 million government senior employees, who have their privacy violated. Many of them have to change bank account and credit cards and their life affected many ways (family & friends overseas).

Such that President Obama and President Xi met in 2016, the main discussion was cybersecurity. Altho they agreed on a set of codes of conducts, it has not followed up after President Trump was elected in 2017.

President Trump was especially focused on US-China trade deficits. So after President Trump hosted President Xi in Mar-a-Lago in April 2017, both sides agreed to start trade negotiations. According to people familiar with the trade negotiations back then, the Chinese find the US demands one-sided, and the US finds Chinese requests unrealistic and most importantly, the Chinese attitude “hubris”.

But President Trump was distracted by the North Korea crisis, that he needed President Xi assistance, so he willing to overlook that. To the extent, Trump said he is willing to give a good deal on trade if China can help in North Korea.

Several months later, it became clear to President Trump that the Chinese do not have effective control over North Korean. In Oct 2017, Trump decided to decouple the North Korea issue with the China trade issue.

So beginning 2018, Trump imposed the tariff on solar panels and washing machines under Section 201 and then tariff on steel and aluminum under Section 232.

But the big one is Section 301 in June of 2018. In May 2018, every Chinese media and many Chinese do not believe Trump would dare to impose the 25% tariff on the $50 billion of Chinese goods as he threatened.

They were all wrong. And then wrong again in Sep 2018 when the second $200 billion of good was hit with a 25% tariff. Finally, the Chinese comes to their sense in Oct 2018 and come back to the negotiation table.

But then, it was too late. Up until June 2018, there are still voices within Washington that the US should not pick a fight with China and that a trade war with China would be very damaging to the US economy.

By Oct 2018, the mood in Washington had a consistent voice, that the US must deal with the “Chinese problem”. The only debate is how.

Within a year, the mood in Washington on China had deteriorated. It went from “Strategic Coopetition (cooperative competition)” to “Strategic Rival”. Today, the most hawkish voice is calling to define China as an “enemy” towards decoupling between US & China.

Today, the Sino-US disputes include not just trade but also military, intelligence, national security, foreign affairs and international policy, human rights, economic and technology race. Trade is probably the easiest among them.

Once the US established China as a threat, the echo-chamber within Washington ecosystem of think tanks, national security, and military departments, media, and politicians will inevitably frame China as an “enemy”, as everyone tries to one-man up another, that “I am a bigger enemy of China”. It is difficult to reverse and will not end with trade resolution.

We are at the beginning of the next down cycle of the US-Sino relationship that would last at least 10 years or more. Particularly, decoupling scared the shit out of me. US and China are the world number one and two economies, and if they were to be decoupled, everyone else would be forced to take sides.

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