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40 years of reform and opening up

Over 40 years of diplomatic drama, a rising China opens up to, and transforms, the world

  • When the inner circle of China’s Communist Party endorsed a new direction for the country in December, 1978, few would have imagined the immense changes that would be unleashed. Deng Xiaoping’s push for ‘reform and opening up’ launched China’s rise from the wreckage of the Cultural Revolution to the world’s second-biggest economy
  • To mark the 40th anniversary of the start of the process, the South China Morning Post takes an in-depth look at the forces that shaped that transformation. In the first part of our series, Cary Huang examines the new era of diplomacy that Deng ushered in to allow China to focus on economic development
PUBLISHED : Monday, 12 November, 2018, 6:00am
UPDATED : Wednesday, 14 November, 2018, 9:28am

On the blustery, cold morning of January 29, 1979, the red flag of China was flying over the South Lawn of the White House when US President Jimmy Carter welcomed Deng Xiaoping, the first Chinese leader to visit the United States since the communists took control of China in 1949.

The visit by the then vice-premier not only symbolised an end to what 74-year-old Deng described as the “period of unpleasantness between us for 30 years”, it also ushered in a new era in global geopolitics, as well as China’s development ever since.

In Washington, Deng and Carter signed accords switching the United States’ diplomatic recognition from the Republic of China in Taipei to the People’s Republic of China in Beijing.

Deng was also eager to learn from the US about ways to modernise China, making stops at Coca-Cola in Atlanta, Boeing in Seattle and Nasa’s Johnson Space Centre in Texas – where during a side visit to a rodeo he captured the American public’s imagination by donning a cowboy hat.

The events both formal and spontaneous signalled an end of China’s isolation from the world, as well as Beijing’s determination to open its doors to the capitalist West.

Since then it has become a frequently asked question: has it been China that has changed the world, or has the world changed China?

The question derives from China’s dramatic change and its impact on the global economy, security and geopolitics since Beijing stretched its arms to embrace economic globalisation four decades ago.

“Sino-US relations have arrived at a fresh beginning, and the world situation is at a new turning point,” Deng told his US hosts. “Friendly cooperation between our two peoples is bound to exert a positive and far-reaching influence on the way the world situation evolves.”

Since Deng launched the opening-up policy in 1978, China has transformed itself from a backward, agrarian economy and politically isolated state into the world’s second-largest economy and an important player with global interests and influence.

For instance, in the 30 years from 1949 to 1978, only 200,000 Chinese people travelled abroad. Last year alone, they made 130.5 million trips overseas, while foreigners made 139 million visits to China. The statistics speak volumes about how China needs the world, and vice versa.

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With the desperate desire to rebuild the economy from the ruins of bankruptcy after Mao Zedong’s three-decade-long radical rule, Deng also declared a new Chinese diplomacy to match the nation’s domestic agenda of economic development. Deng observed that peace and development were then the world’s two main themes, replacing Mao’s “Three Worlds” revolutionary doctrine of diplomacy. Mao’s dictum was to align with the developing “Third World” nations, to unite the “Second World” developing powers in opposition to the two superpowers – the United States’ imperialism and the Soviet Union’s social imperialism.

Under Deng’s new strategy, Beijing was seeking harmony with the outside world to enable it to focus on economic development. Most diplomatic historians maintained that US president Richard Nixon’s ice-breaking trip to China in 1972 helped nurture the birth of Deng’s pro-West market reform and opening-up policy.

Zhiqun Zhu, a professor of international relations and director of the China Institute at Bucknell University in Pennsylvania, said Nixon’s visit was crucial as China prepared to reopen to the outside world after the Cultural Revolution. “A secure and peaceful international environment was indispensable for China’s reform and opening up,” Zhu said.

But history suggested that Mao and his colleagues also favoured leaning toward the West even before Nixon’s China trip.

A research report compiled by four Chinese marshals – Chen Yi, Ye Jianying, Xu Xiangqian and Nie Rongzhen – under Mao’s instruction in 1969 suggested that the Soviet Union was a bigger threat to China than the US. Titled “Preliminary Evaluation of the War Situation”, the report said: “Soviet revisionists have made China their main enemy, imposing a more serious threat to our security than the US imperialists.”

Richard Bush, director of the Brookings Institution’s Centre for Northeast Asian Policy Studies in Washington, said Nixon’s 1972 China visit did not directly cause Deng’s launch of the reform and opening-up policy in 1978. “Mao Zedong did not see the value of reform and opening up,” Bush said.

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But he said an article by Nixon published in Foreign Affairs magazine in October 1967 issue might have laid some groundwork. “The China part of Nixon’s 1967 Foreign Affairs article suggested an implicit bargain that provided the conceptual basis for China’s new direction after 1978,” Bush said.

In the essay “Asia After Viet Nam”, Nixon – who had his eye on the 1968 Republican presidential nomination – presciently observed: “Taking the long view, we simply cannot afford to leave China forever outside the family of nations, there to nurture its fantasies, cherish its hates and threaten its neighbours.”

Said Bush, who was US de facto ambassador to Taiwan, or chairman of the board of the American Institute in Taiwan, from 1997 to 2002: “That bargain was if China focused on domestic development and didn’t threaten the security of its neighbours, the United States would help.”

Since then Chinese foreign policy has become more active, pragmatic and flexible, with effort focused on improving relations with the US-led West. This includes Deng’s visit to the US in 1979 to establish diplomatic ties with the world’s most powerful capitalist country; his trip to Japan – then the world’s second-largest economy – in October 1978 to declare the enactment of the China-Japan Treaty of Peace and Friendship with Japanese prime minister Takeo Fukuda; and his visit to Singapore in November 1978, in which he sowed the seeds for the replication of the Singapore model in China’s future development. Deng had also cultivated a special friendship with Singaporean statesman Lee Kuan Yew, who played a critical role in mediating Beijing’s relations with Washington.

“Deng’s visit to Japan, the US and Singapore in 1978-79 affirmed his belief that development is the hard truth,” Zhu said.

Deng also improved relations with other Western powers and neighbouring emerging economies – like Asia’s four dragons of South Korea and Singapore and the Chinese communities of Hong Kong and Taiwan – as Beijing was sorely in need of funding and technology from those newly industrialised economies. With such aims, Beijing also stepped up efforts to build closer relations with other leading industrialised economies. It established diplomatic ties with the European Union and all major European nations in the 1970s. Deng suggested that all foreign policy must first serve China’s economic development. Since then, all administrations – from those led by Hu Yaobang, Zhao Ziyang, Jiang Zemin to Hu Jintao – have followed his pragmatic diplomacy.

However, China’s decade-long cordial relations with the West suffered a severe setback in the aftermath of Beijing’s bloody military crackdown on the nationwide pro-democracy movement on June 4, 1989, and the consequent purge of reformist leader Zhao Ziyang, who was accused of advocating “complete Westernisation”. Bush said the June 4 crackdown put China on the defensive and raised the possibility that some countries, including the United States, would impose economic sanctions that could hurt the reform and opening-up process.

However, Deng soon reaffirmed Beijing’s commitment to its market reforms and opening-up policy in a party plenum in late June 1989.

The worldwide collapse of Soviet bloc socialism in the early 1990s dramatically changed global geopolitics as it left China as the world’s last major Communist Party-ruled state. The break-up of the Soviet Union implied the disappearance of the strategic triangle and balance between the US, China and the Soviet bloc, which was the chief reason that prompted Nixon’s China trip. From Beijing’s perspective, the development meant that China could no longer exploit the rivalry between the world’s two superpowers and play one off against the other. And thus, China’s strategic value, in the eyes of Western strategists, would be much depreciated.

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At the time, Bush said, there were calls in China for it to take over leadership of the world socialist movement, an idea Deng squarely rejected.

“It was in response to those calls that Deng enunciated the principle of taoguang yanghui,” Bush said, referring to his initiative of a “low key” diplomacy.

Deng summed up the diplomatic principle with a well-known instruction: “China should maintain calm; secure our position; deal with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership.”

He also tried to depoliticise Chinese diplomacy as he had attempted to depoliticise domestic policy with his famous dictum of “no debate” on ideological issues. Then Beijing adjusted its post-cold war diplomacy with efforts to develop relationships with all nations, from the West, to former Soviet bloc nations, to neighbours, to countries in Latin America and Africa.

Yun Sun, a Chinese diplomacy expert and director of the China programme at the Stimson Centre, a Washington-based think tank, said the worldwide collapse of socialism made the Chinese Communist Party more isolated.

“The result is: 1) learn from Soviet mistakes and keep a low profile rather than pursue competition with the US; 2) enhance relations with the remaining communist countries, especially in the case of North Korea; 3) consolidate China’s identity as a developing country and seek coalitions among the developing nations’ bloc,” Sun said.

However, the US and other Western nations were putting more emphasis on political issues in their relations with China, such as paying more attention to political freedom and human rights conditions. Washington had made human rights a pre-condition of granting China’s “most-favoured nation” trade status, which became an annual issue of debate in the US Congress in the 1990s.

There were a series of setbacks in China’s relations with the West in the post-cold war era.

Washington approved of Taiwanese president Lee Teng-hui’s travel to the US in 1995 – the first visit by a Taiwanese leader since the end of diplomatic ties in 1979. US president Bill Clinton dispatched aircraft carriers to sail through the narrow Taiwan Strait in reaction to Beijing’s test-firing of missiles off the island in effort to intimidate Taiwanese voters before the first presidential elections in 1996. Nato accidentally bombed the Chinese embassy in Belgrade during its campaign against Serbian forces occupying Kosovo in May 1999. In a tense 12-day stand-off in 2001, China detained a 24-member US crew after an American reconnaissance plane collided with a Chinese fighter, killing the Chinese pilot, and made an emergency landing on the Chinese island province of Hainan.

On the other hand, however, the collapse of the Soviet Union helped reduce tensions along China’s northern borders and prompted a resumption of friendship between the former socialist brothers. Beijing and Moscow signed a declaration restoring ties in 2001. Beijing also resumed friendly relations with several former Soviet bloc nations.

In the post-cold war era, tensions along China’s frontiers – such as border conflicts with Vietnam and India; the Soviet-involved Afghanistan civil war; and the confrontation between the two Koreas – have been substantively reduced. China improved relations with all neighbouring nations, restored diplomatic ties with Indonesia and established diplomatic relationships with all other Asian nations, including South Korea and Singapore, two emerging economies that have played a critical role in aiding China’s development. China and Japan were at the peak of their relations when Emperor Akihito paid a historic visit to China in 1992. Beijing even established diplomatic relations with Israel, a historic enemy of China’s Arabian friends in the Middle East.

China’s relations with Europe have been smoother than those with the US and Japan. The EU-China Strategic Partnership was adopted in 2003; by contrast, the US and Japan have rejected such “strategic partnerships” with China. The EU has been more supportive than the US or Japan on Chinese initiatives such as the China-led Asian Infrastructure Investment Bank (AIIB) and the “Belt and Road Initiative”. But the EU has shared US complaints about China’s state capitalism, trade practices and theft of intellectual property.

Zhu, the Bucknell professor, said the key to Deng’s diplomacy was the maintenance of a peaceful regional and global environment to aid domestic development. “Such a sophisticated approach helped China to grow after 1978,” he said. “Deng’s successors inherited this approach, which proved to be a wise option.”

In the post-Deng era since 1997, Jiang Zemin and Hu Jintao continued Deng’s pragmatic “low-key” diplomacy. China earned international acclaim for its positive role in the 1997 Asian financial crisis as it mobilised resources to support beleaguered Asian economies.

Beijing also used the September 11 terrorist attacks in 2001 as an opportunity to improve relations with the US. Jiang, the Chinese president at the time, was quick to express sympathy to the United States and to denounce “all violent activities by terrorism”. Beijing supported Washington’s call for international cooperation and joint responsive action, including the adoption of UN Security Council resolutions condemning the attacks. Washington’s post-September 11 preoccupation with terrorism and its need for Beijing’s cooperation gave China an extended respite from unwanted scrutiny.

In 2005, deputy US secretary of state Robert Zoellick defined Washington’s China policy as one encouraging the communist giant to become a “responsible stakeholder” in the international system. As such, “China would be more than just a member; it would work with us to sustain the international system that has enabled its success”, Zoellick said.

China’s admission into the World Trade Organisation (WTO) was a landmark event in its development, and was only made possible with Washington’s endorsement. When US president Bill Clinton signed of the US-China Relations Act of 2000, it granted Beijing permanent normal trade relations with the US and paved the way for China’s WTO entry in 2001. China’s economic transformation since 1978 has been on a far greater scale than that of the US between 1870 and 1914, when it overtook Britain to become the world’s largest economy and greatest power.

When Deng launched his economic reforms at a party plenum in 1978, the Chinese economy was only 5 per cent the size of that of the US, with a per capita gross domestic product roughly on a par with that of Zambia, and even lower than two-thirds of the African average.

Since then, China experienced an average GDP growth of close to 10 per cent annually until 2014, raising per capita GDP almost 50-fold, from US$155 at today’s prices in 1978 to more than US$8,000 last year, and lifting more than 700 million people out of poverty.

In 2009, China became the single largest contributor to global economic growth, and it overtook Germany as the world’s biggest exporter in 2010. In 2011, it surpassed Japan as the world’s second-largest economy. It has become the world’s wealthiest nation in terms of foreign reserves with around US$3 trillion. Its share of the world economy grew from a mere 1.8 per cent in 1978 to a staggering 18.2 per cent in 2017.

China is not just an emerging economy but has returned to its status as a major global economic power, one that counted for nearly 30 per cent of the world economy in the 15th and 16th centuries.

The statistics tell a lot: China would not be what it is now without the world, and the world would not be what it is today without China.

Deng’s pragmatic diplomacy played a crucial role in China’s development. Its four-decade-long economic boom has been built on its embrace of global capitalism as multinational companies moved their production lines to China, making it the world’s manufacturing hub.

With its growing clout, China’s foreign policy and diplomatic behaviour have undergone tremendous transformation under Xi Jinping, who was elected general secretary of the Communist Party in late 2012 and became president in March 2013.

No Chinese leader, ancient or contemporary, has been as active as Xi in diplomacy. With his ambitious “Chinese dream” of “National Renaissance” strategy having replaced Deng’s “low key” diplomacy, Beijing has been more proactive and confident on the world stage, with an increasingly assertive military and security policy.

During his first five-year term, Xi attracted many foreign leaders to China and hosted five major world summits. And no Chinese leader has done more globetrotting within such a short time: in his first term, Xi went on 28 overseas trips that took him to 56 countries across five continents.

In addition, never before has China had such a profound impact on global economic development. Under Xi’s stewardship, China initiated the AIIB, the Silk Road Fund and the New Development Bank, and launched the belt and road programme. However, all these actions have been controversial, at least in the eyes of US diplomats who see such moves as efforts to undermine the global governance built on US-led post-war institutions, like the International Monetary Fund and the World Bank.

Of course, when China was weak, no one saw it as a threat as it caused no discomfort among its smaller neighbours, not to mention a superpower like the US or an industrial power such as Japan. But as it became a giant – with its fast-growing clout rarely seen in modern history – China stokes anxieties among rivals as well as small neighbours. As a result, its relations with the US, Japan and its neighbours have all worsened in recent years.

Competition between China and Japan for regional dominance and global influence has intensified, as both seek to redefine their roles amid a rapidly changing geopolitical environment. They have been at odds over historic perceptions, territorial disputes and security policies.

Relations between Beijing and Washington have plunged to a low not seen since before Nixon’s China trip as the nations engage in a full-blown trade war. US President Donald Trump has signalled his determination to contain the country he views as the chief threat to American supremacy and US-led world order and peace. US Vice-President Mike Pence’s recent era-defining speech marked a historic change in the US-China relationship, with some observers saying it was tantamount to a declaration of a new cold war between the two countries.

Analysts said such shifts were a reaction partly to China’s wild rise since the new millennium. They are also seen as a reaction to the leadership of Xi, who has transformed China’s domestic and external policies to radically alter the internal political landscape and global relations.

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For US strategists, the US-China relationship in the decades since Nixon has been built on the belief that an engagement policy would inevitably help China evolve, as it embraced global capitalism and enjoyed greater interaction with the international community. It is also built on the confidence that China’s rising power could be moderated by perpetual American superiority and primacy in many areas.

However, many in Washington now say that an increasingly assertive China is not only seeking to compete commercially with the US, but is also aiming for military and geopolitical supremacy.

Robert Sutter of George Washington University, an expert on communist China’s diplomatic history, said the US government was undergoing its most substantial re-evaluation of China policy since Nixon’s trip in 1972.

“Its impact on China and its trajectory could be and probably will be important and substantial in explaining why and how this is happening, and its implications are important,” Sutter said.

Amid rapidly changing geopolitics, the US has also gradually restructured its China policy in the past seven years. US president Barack Obama initiated a “Pivot to Asia” strategy that aimed to contain China’s rising clout with a proposed deployment of two-thirds of US naval assets in the Asia-Pacific region. Obama also initiated the Trans-Pacific Partnership (TPP), a proposed – and now defunct – trade agreement between the US and 11 Pacific Rim nations that excluded China. It would have been the world’s largest free trade deal, covering 40 per cent of the global economy.

Trump has signalled even more radical China policy changes with several policy documents identifying Beijing as a “major rival” that seeks to “undermine the US economy, interests and values”.

Trump has even risked a full-blown economic war by threatening to impose punitive tariffs on all Chinese goods imported to the US if Beijing refuses to make substantive changes to its state-dominated economic system and unfair trade practices. The continuing tariff war marks the end of four decades of normal trade relations as both sides appear unlikely to back down and find a way out of one of the worst commercial wrangles in modern history.

There is also growing fear that the ongoing trade war might spill into other spheres, including technology, geopolitics and military, and that the feud between the world’s leading free democracy and the world’s last major communist-ruled state could signal the revival of a cold war-style confrontation.

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Sun, of the Stimson Centre, summed up China’s more than four decades of diplomacy since Nixon as such: “Largely, from a high-profile, revolutionary, ideology-driven foreign policy under Mao to a low profile, practical, development-driven foreign policy under Deng, Jiang and Hu to a high-profile, assertive, personality-driven foreign policy under Xi.”

However, one basic tenet of Chinese diplomacy remains unchanged as Beijing continues to commit to the late premier Zhou Enlai’s so-called five peaceful coexistence principles, with Xi insisting on a narrative of “peaceful rise”, no matter how the West and China’s neighbours feel about China’s ascendancy.

Chinese analysts have noted that Xi’s tough stance on territorial matters might reflect what Deng once suggested: that disputes should be settled by next generations “who must be wiser than us”.

Forty years on, the question of whether China will eventually change the world, or the world will change China, still lingers in the minds of diplomats and strategists. The whole world, the West and China’s neighbours in particular, are keeping a close watch on this rising communist giant – one ruled by a nationalistic leader who wants to restore the country’s historic glory as the world’s greatest power and also revive the orthodoxy of Marxism and Maoism.

Observed Zhu: “The competition or even rivalry will intensify in the years ahead as the global power structure continues to shift in China’s favour.”