Amid historical reverberations, NY-based China Institute to address rising US-China tensions 

The non-partisan organisation’s event will examine the countries’ business ties, with panellists including Nobel Prize-winning economist Joseph Stiglitz and former US Treasury secretary Henry Paulson

PUBLISHED : Wednesday, 11 April, 2018, 9:49pm
UPDATED : Wednesday, 11 April, 2018, 10:37pm

“Not only is this export trade menaced by a Chinese boycott, but our hold on much greater future development is practically given over to European nations. There are few interests in the United States that will not feel the pinch of a Chinese boycott in one way or another.” 

The above comment, which could sum up the concerns of US companies now facing fallout from the punitive trade actions that Washington and Beijing are bringing against each other, was taken from a Los Angeles Times editorial from 1905. US-China relations show how history repeats itself. 

The current atmosphere of friction and mistrust between the US and China is just one of many downturns in the bilateral relationship since trade between the countries began a few years after the US won independence from the British in the late 18th century. 

The implications of a US-China trade war for the rest of the world, however, have never been greater. US President Donald Trump directed Trade Representative Robert Lighthizer to prepare punitive tariffs on US$50 billion worth of Chinese imports and has threatened to target US$100 billion more. 

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China has retaliated by announcing tariffs on more than US$50 billion worth of imports from the US, focusing on soybeans and other agricultural products, a strategy meant to damage US farm states, one of Trump’s core constituencies. 

“The benefits of China’s economic engagement with advanced economies – first of all the United States – are huge, and closing the window on this commercial growth would be dearly felt around the world,” Daniel Rosen, a founder of Rhodium Group – a China-focused management consultancy and publisher – told the South China Morning Post.

“Commerce can only move as fast as political and security like-mindedness, and until leaders from China and the market-oriented democracies can regain a sense of convergence toward a shared model, economics will be under a cloud.” 

While the connection between the vintage Los Angeles Times comment and current events shows the repetitive nature of the US-China relationship, a conference organised by the China Institute – the oldest US-based non-profit dedicated to advancing a deeper understanding of China – is another reminder. 

The organisation is hosting an event this week featuring keynote speeches by Nobel Prize-winning economist Joseph Stiglitz and former US Treasury secretary Henry Paulson that will address the “frustration … rising on both sides” and discuss the factors behind the rising tension between the two countries.

The New York-based China Institute played a role in the eventual resolution of the tensions referenced by the Los Angeles Times more than a century ago, in the editorial headlined “We May Lose Chinese Trade” – friction that stemmed from a disagreement between Washington and the Qing dynasty court.

China had demanded the return of money it had overpaid in a settlement with Washington over loss of American lives and property during the Boxer Rebellion, a violent two-year uprising against foreigners in China that ended in 1901. 

Instead of returning the approximately US$17 million, China agreed with a US proposal to use the money to begin the Boxer Indemnity Scholarship programme to aid Chinese students coming to the US.

The China Institute was founded in 1926 with some of the indemnity scholarship funds and in turn financed the American education of some of the more than 1,300 Chinese students who received grants during the programme’s lifetime.

The China Institute has, since its founding as a membership-based non-profit, run programmes and events serving to maintain cultural ties with its namesake country. 

These have included a corporate programme to promote discussion on US-China trade and investment issues, started in 1983, and a 12-month series of events launched the following year, “commemorating the bicentennial of the sailing of the Empress of China from New York City to Canton”. 

Founded by Chinese reformers including Hu Shi – a figure embraced both by the Chinese Communist Party in Beijing and the Nationalists (or Kuomintang), who established the Republic of China on Taiwan – the China Institute has remained apolitical throughout its history. 

This neutral stance helped the institution survive as a resource on issues ranging from ancient Chinese art to bilateral investment and a channel for US-China dialogue. China Institute President James Heimowitz took part in welcoming China’s President Xi Jinping on his first state visit to the US in 2015. 

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“We’ve done so many different things and incarnated in different ways as we’ve tried to get Americans to have a more nuanced understanding to China, which is so exotic and alien to so many people that it’s led to a lot of misperceptions,” Heimowitz said in an interview. 

But in Washington, the mood towards China is far from celebratory these days. 

Even before the Trump administration threatened tariffs on more than US$150 billion worth of Chinese imports, a warning from the US Defence Department about China’s efforts to acquire technology through cyber espionage and other illegal means had begun souring American sentiment towards China. 

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The Defence Department study – a 49-page document called “China's Technology Transfer Strategy: How Chinese Investments in Emerging Technology Enable a Strategic Competitor to Access the Crown Jewels of US Innovation” – was first circulated among US lawmakers in February 2017. 

By the end of the year, a bipartisan group of lawmakers – including Senator Dianne Feinstein, a California Democrat, and Senator John Cornyn, a Republican from Texas – had introduced legislation that would tighten US government scrutiny of investments by Chinese companies. 

Trump then accused China of “attempting to erode American security and prosperity” in his national security assessment speech in December. 

Since announcing its tariff measures, the rhetoric from the White House has been mixed. 

“China’s reaction to Mr Trump’s legitimate defence of the American homeland has been a Great Wall of denial – despite incontrovertible evidence of Beijing’s illicit and protectionist behaviour,” White House trade adviser Peter Navarro said in an editorial published in the Financial Times this week. 

“Instead, China is attacking American farmers with the threat of retaliatory tariffs in the apparent hope of rattling a key component of the coalition that put Mr Trump in office. There is a reason, however, that the president sits behind the Resolute desk in the Oval Office.” 

Meanwhile, Trump said at a cabinet meeting that he would “probably” come to an agreement with Beijing about outstanding trade issues. 

Further indications of where the US-China stand-off is headed may come out at the China Institute event. 

Gilbert Kaplan, US undersecretary of commerce for international trade, is expected to discuss “manufacturing in America and trade with China”. Ni Pin, president of the US unit of Hangzhou-based Wanxiang Group, and Yuan Ning, president of China Construction America, are part of a panel discussion on Chinese investments in the US. 

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With some of the largest investments among Chinese companies operating in the US, Ni and Yuan are vulnerable to any political backlash stemming from the current strain in relations. 

Heimowitz said he hoped to use his organisation’s event this week to help defuse some of that tension. 

“We’d like to neutralise or de-ionise the environment because it’s so tense at the moment,” he said. “We’d like people to be able to come here to express on neutral ground and neutral territory their aspirations, anxieties and concerns. We’re looking at both sides, the opportunities and the roadblocks. ”