Impact of President Nixons Visit to China in 1972 - Case Study Example

NIXON’S VISIT Student’s name Course & code Professor’s name University City Date Contents 1.0 Introduction 3 1.1 Diplomatic Relations 4 1.2 China’s Opening and Reform Policy 5 1.3 Special Economic Zones 6 1.4 Normalization and Reform 9 1.5 Infrastructural Development 9 1.6 Economic Growth 10 1.7 Higher Education 10 1.8 China’s Human Rights 11 1.9 The World Trade Organization 11 1.10 Economic Challenges 12 2.0 President Nixon’s Presidency 12 3.0 President Nixon’s visit to China: The Legacy 14 Impact of President Nixon’s visit to China in 1972 1.0 Introduction In 1972, President Richard Nixon (then the President of the United States of America) made an 8-day state visit to the Peoples’ Republic of China. This was indeed a unique gesture for two reasons. Firstly, President Nixon was the first seating US president ever to visit China (Bader, 2012). Secondly, this state visit happened at a time when the two countries regarded each other as staunch enemies. The enmity between the countries partly grew from the United States’ refusal to recognize the ruling government of the day, and instead choosing to recognise a parallel one that was stationed in Taiwan (Bader, 2013). After the end of the Chinese Civil War in 1949, the People’s Republic of China established their government on the mainland, while the defeated soldiers of the Republic of China retreated to the mainland of Taiwan (Nixon, 1978). The diplomatic wrangles, therefore, grew because, for 30 years, the US government recognised the Republic of China (Nationalist Government) as the legitimate government of China while distancing itself from the Communist Government in the mainland (Overholt, 1973). At the same time, China was embroiled in the cold war as well as dealing with war tensions from the Soviet Union. The Vietnamese war and the Soviet Union were china’s problems at the time. The visit to China, forty years ago, by President Richard Nixon, will remain an iconic symbol in the history of the relationship between the the United States and China, and the entire world. Apparently, the trip had a tremendous impact on both countries which brought about developmental changes and restructuring of the values and ideologies shared between the two nations. In a span of two decades, a hostile relationship had existed between the People’s Republic of China and the United States, and which came to a halt from the intervention made by President Nixon’s visit and Chairman Mao Zedong in a bid to salvage the future of their relationship. In essence, the trip made a huge transformation in the matters regarding the Cold War, modified the geopolitical plan internationally, reinforced the relationship among East Asia nations, and importantly developed the foundation for the opening of China to the global trade market (Bader, 2012). The fundamental changes were made with the consent of the two nations, as a sign to bury their past that had created a rift between them since the inception of communism in 1949, and therefore, work together for a future that is so bright. After this period, the two countries’ interests began bringing them together. Whilst the US was interested in bringing an end to the Vietnam War, China’s interests, on the other hand, was to tackle the Soviet Union (Nathan & Ross, 1997). President Nixon’s 1972 visit, therefore, marked the beginning or rapprochement between the two countries. The Visit culminated in the signing of the Shanghai Communiqué through which the diplomatic relations emerged, punctuated with trade, educational and cultural exchanges. 1.1 Diplomatic Relations One of the most tangible and highly visible impacts of President Nixon’s visit to China is the development of full diplomatic relations between the two countries. Beginning officially in 1979, this diplomatic relation saw the breaking off of the United States’ formal recognition of the “government’ of Taiwan (Young, 1990). In order not to create anarchy, the United States’ Congress legislated and passed the Taiwan Relations Act in 1979. The Act obliges the United States to maintain Taiwan’s self-defence capacity as well as consider coming to Taiwan’s aid should they face attack from the mainland China. China’s rapprochement with U.S. made significant shifts in the political scenery within South East Asia. On a global scale, this rapprochement had a role to play in the ensuing détente between the Soviet Union and the U.S. Improved relations with the Soviet Union, and the Peoples’ Republic of China is perhaps another conspicuous Impact of President Nikon’s visit. Alongside this was the precarious issue of the Taiwanese government (Kissinger, 1979). Through lengthy discussions, the U.S. agreed to recognize the People’s Republic of China as the legitimate government (Dallek, 2007). In terms of trade, what this recognition achieved was to open doors for trade and contracts, not only with the U.S. but also with other countries including Japan. As such, this recognition put China on the world map in terms of trade, tourism and bilateral agreements. This gave way to China’s economic growth and development that is witnessed even today. China is now a member of the United Nations and a permanent member of the United Nations Security Council. 1.2 China’s Opening and Reform Policy Around the 1950s, China had adopted the stalin style in its economic policies in a bit to elevate the country’s economy. The analogy of explaining the stalin style is simply “crossing the river by feeling the stones”. This was a pure trial-and-error system where everything was put to the trial. So extreme was this method that it triggered the great famine in China between 1960 and 1962, which was responsible for over 30 million deaths (Overholt, 1973). Before the country had even recovered from the aftermath of this famine, the Cultural Revolution of 1966 to 1976 almost brought the entire Chinese Society to a total collapse. At this point, the Chinese government became desperate and needed not only a political but also an economic solution. The country was in a crisis. The solution came in the form of a flexible market for China through the adoption of the now famous ‘Opening and Reform Policy”. Towards the end of 1978, the Third Plenum of the Central Committee of the Communist Party adopted what has commonly come to be known as China’s “Opening and Reform Policy”. Like the name itself suggests, the policy focussed on opening up China to the world and reforming existing policies that would later favour the expected responses from the world in terms of trade in China. President Nixon’s visit gave impetus to the subsequent developments that arose as a result of the policy. The policy was heavily supported by the then leader Deng Xiaoping. Under this policy, a lot of emphases was placed on modernisation and economic and political reforms. The policies were aimed at transforming China from rural reform to urban reform, from reform of economic structure to structures in all aspects, and from internal vitalization to external opening up. These modernizations help put China on the world map in terms of international trade. The modernisations bordered on agriculture, science and technology as well as industry (MacMillan, 2007). As a result of the gradual implementation of the policies, the country has witnessed growth. For instance, China now enjoys a 6% share of global GDP compared with 1.8% in 1978, representing approximately 70% increase in gain production (Tudda, 2012). This growth in gain production, as well as, improved GDP was as a result of China’s rapprochement with the US that put China on the world map as well as China’s willingness to open up their trade avenues to the rest of the world. Under the policy, some reforms took place. First of such reforms was the revival of the responsibility system of production in agriculture. This system ensured a general availability of land for production and distribution by farming families. Second was the decentralisation of administrative functions of the government. Resource distribution powers were delegated to Regional authorities and Local government. This was a move from the previous unitary structure of central authority. Under this decentralised system, these authorities had influence over the decision regarding revenues, fiscal resources and others. Lastly, the creation of Special Economic Zones was perhaps the most visible and most successful venture by the Chinese government. 1.3 Special Economic Zones The opening and reform policy saw the establishment of Special Economic Zones in China. These were zones in which foreign and domestic companies could trade without much trade control bottlenecks from the government. The zones eventually proved to be highly advantageous as they rapidly influenced industrialisation in China. Zeng (2015) opines that China is one of the most successful countries that have managed to create global leverage in achieving the much needed economic transformations. At the time of the establishment of the SEZs and years back, China operated on a centrally planned economy (China Development Zones Association (CDZA), 2013). Every aspect of the economy was planned and administration carried out by China’s central government. All the areas of the economy were subject to the same business control practices especially in terms of tax and customs duties. There was not much export or involvement in international trade owing to the socio-political instability caused by China’s troubles with the Soviet Union (Brautigam & Tang, 2013). Things, however, changed after President Nixon’s visit, with the adoption of the Open Door policy in 1978. This policy virtually opened up China’s markets to the whole world. It signalled China’s ‘grand entrance’ into international trade. The policy then gave birth to China’s most fundamental leap into the international trade: the SEZs. The SEZs varied in the range including free trade zones, export processing zones, industrial parks, economic and technology development zones, high-tech zones, science and innovation parks, free ports, enterprise zones among others. Typically SEZs operate under less stringent economic laws and as such are quite favourable for investment as they present low-risk business environment. The zones were easily recognisable due to certain key characteristics. Firstly, the zones were physically secured with each zone having separate management and administration. Secondly, incentives offered to investors were offered physically within each zone depending on the needs and uniqueness of the zone. Thirdly, each zone had separate customs area where tax and other related incentives were availed to investors (Zeng, 2010). Primarily the zones were established to boost and elevate China into the international trade arena, to encourage international investment in China as well as enhance China’s economic growth. By creating the zones, the Chinese government’s objective was to attract more foreign investment and foreign investors they did attract. It, therefore, enabled a partial liberalization of the factors of production in addition to allowing private and corporate capital accumulation (Young, 1999). Indeed, the establishment of the SEZs witnessed massive and rapid investment ventures especially in the areas of real estate, utilities, communication and transport. In addition, the economic benefits of the SEZs were quite significant and were two-fold; static benefits and dynamic benefits. According to Zeng (2015), static economic benefits include tax and other revenues for the government, revenue accrued from foreign exchange, increased employment opportunities and increased growth in export. Dynamic economic interests, on the other hand, refer to benefits such as transfer of technology, science and innovation, increased production by local businesses, upgrading of skills as well as economic diversification. In 1980, the first four SEZs were established in Shantou, Shenzhen, Zhuhai, Xiamen as well as the entire island province of Hainan (Hong Kong Trade Development Council (HKTDC), 2014). The first four were set up as pilot projects to test the international trade waters. The four SEZs performed so well that the Chinese government designated the entire island of Hainan as an SEZ (Wang, 2013). The island too produced a lot for export markets around the world. This led to the development of modernised port infrastructures thus increasing accessibility which was paramount for supporting an export-oriented strategy such as the SEZs. The SEZs impacted hugely on china’s integration into internal trade and global economic arena. They attracted investment and technology. They were very beneficial because they created employment, utilised China and its resources and eventually led to the massive capital formation. The strategy must have been to create opportunities for export so that the rest of the world got to know what China had to offer. Within the SEZs, the government offered lucrative incentives. In terms of labour incentives, for instance, the SEZs were located in areas where labour was plentiful and cheap. In addition, the labour practices within these zones were relaxed a little. Investors, for instance, were allowed to hire and dismiss workers at will; a practice that was not attuned to the existing labour practices. In terms of land incentives, the Chinese government went out of its way to ensure that SEZs had proper infrastructure developed to ease access to raw materials and for transporting the processed goods away for export. The SEZs there had clear access to the port for shipping as well as airports for air cargo. The SEZs, therefore, were developed in such a manner that they were linked to setting and expansion of major container port infrastructure. It is also worth noting that at the time, property law had not developed, and as such the Chinese government simply protected these SEZs as thou, they were private property. Thus, security in and around this area was of particular interest to both the government and investors. In terms of tax incentives, there was reduced corporate income tax rate. This included income tax exemptions for foreign nationals working in the zones. Also, there was no tax charged on imported materials on the understanding that part of the processed goods was to be for export (Zeng, 2010). Such tax incentives had never been experienced in China before and played a big role in China’s international trade. This was a major boost in opening China into International Trade. According to Zeng (2010) the combination of favourable policies and factors of production within the SEZs, China experienced exponential economic growth. This is due to the success of the SEZs in the international trade arena. SEZs did not only contribute greatly towards China’s GDP, exports and employment but also attracted Foreign Direct Investments (FDIs). At the national level, for instance, they accounted for 22 percent of national GDP, forty-six percent of FDI, sixty percent of exports and created more than thirty million jobs (Zeng, 2010). 1.4 Normalization and Reform In full recognition of the importance of the visit made by President Nixon to China, the alteration of the Cold War was a distinct feature. The breaking out of the Cold War after two decades had a significant impact on both countries and was a decision that will remain historic. In retrospect, Nixon had qualms about the relationship between China and the Soviet Union, and driven by the perception that the Soviet Union posed a critical threat to the United States, he was deemed to act and hence the beginning of normalization negotiations in 1971 (Solomon, 2012). The effect of the normalization talk was shattering to the Russians, and enormous enhancements were achieved in the relationship between PRC and the United States. At the moment, the situation in Taiwan was likewise demanding, and plans were made to ensure Taiwan rejoins the mainland (Tucker, 2012). From the groundwork laid during normalization, the stability of the political system in China was weakened following the death of Chairman Mao and attracted international scrutiny, in particular on the issue that China and Taiwan were missing a seat in the United Nations (Tofte, 2012). However, it is arguably viewed that despite the massive military capability of China to settle the Taiwan issue, Nixon’s intervention in that politics was potentially sufficient for peace and also an assurance for the continuity of the Communist governance (Kirby, 2012). Similarly, in 1991 saw the fall of the Soviet Union which had posed a security risk to many. 1.5 Infrastructural Development Following the visit, a ten year period of 1971-1980 was the time that recorded significant expeditious developments and infrastructure coupled with the elimination of barriers and hence, an increase in opportunities for channeling technology, goods and human resource between the United States and China. Indeed, the impact remodeled the trade correspondence of the U.S and China, and importantly improving the world economic position of China (Wang, 2013). By 1971, China was remote in the global trade and after the visit, implementation of the addressed issues of inflation and joblessness began, and thanks to the Nixon’s administration that valued the U.S dollar less by 8 percent and led to other countries rise value their currencies (North, 2005). The removal of trade restrictions that prevented mutual exchanges between the two countries enabled export of goods to China and also the commencement of Inertial Navigational Systems (INS) with Boeing 707 airplanes and aircraft from the Anglo-French Concorde (Wang, 2013). 1.6 Economic Growth The impact of the political normalization of the U.S-China alliance led to significant economic changes due to the first trade of commodities and services between the two countries in the 1980s. The trade was very beneficial to China which was ranked third after Japan and Hong Kong. By 1988, China’s trade was roughly 1.7 percent of the U.S total foreign trade (Kahn, 2011). However, the United States seems to dominate in the established commerce and China still has a small growth in trade, for example comparing between the two countries and their commercial links, the United States is well established and independent. Recent research shows that by the fall of 2012 the total trade of books in the U.S was averaging to $536.2 billion while China recorded an average of $484.7 billion on the same (Wang, 2013). 1.7 Higher Education The launch of China into the world market accelerated the widespread learning and speaking of English by 1978. The education system lacked various teaching tools as well as competent teaching staff. Therefore, the government began to secure opportunities for Chinese students to learn English in countries in North America, Australia, and Europe. The progress was so remarkable such that by 1981 graduate and doctorate study programs were initiated by universities of different studies in China. A plenty of English schools and colleges followed rapidly marking The English language a debut thanks to President Nixon’s visit to China (Fu, 2014). 1.8 China’s Human Rights It was not until the spring of 1994 that the issues of Human Rights came into play in China’s trade. As Samuel Tofte (2012) reports on his research, the United States foreign policy is functional regardless of the bad intelligence; it is clear that the Communist party was failing on the issue of Human Rights. However, during the 1993 Congress meetings President Clinton renews the Human Rights conditions linked to the status of MFN in China. For example, free migration, trade of goods manufactured from prisons should be terminated, the compliance with the Human Rights stipulated by the United Nations Declaration and conservation of the culture mainly involving the native religion of the Tibetan, among other Human Right components (Wang, 2013). 1.9 The World Trade Organization The culmination of the U.S-China relationship was such that in 2001 China gained access to the World Trade Organization and hence came the birth of an advanced order of an economy fostered exports in which was the bond shared by China and America. Despite the many conferences made in respect China’s membership in WTO for years ranging between (1968-2001), the visit of President Nixon and the relationship built in the aftermath was the primary contributor to China’s absorption into WTO (North. 2005). An increment of exports to China was recorded to be approximately of 34 percent while 92 percent was the estimate of imports made from China by the U.S. There were extensive explorations by entrepreneurs from America due to the quick progress of built businesses in China (Kahn. 2011). 1.10 Economic Challenges In under Nixon’s visit, it was unprecedented about the economic upheavals that would result from this relationship. After years of progress and harvest, disagreements between the trading groups have been inevitable. Despite, the enormous investments by the Americans to China, a rift emerges at the onset stiff competition between the two giants and Chinese business strategies have been unpleasant to the Americans (Bader, 2012). An assortment of challenges in the trade has brought the perception of competition threat called bilateral security presumably caused by either party. This echoes what Nixon considered being his big challenge on whether the relationship between China and the United States was sustainable. 2.0 President Nixon’s Presidency The visit to China by President Nixon had some objectives and what remains untold in many sources was the fact that the tour was an essential element of Nixon’s presidential elections in his second term. Thanks to his wise advisor Henry Kissinger, who planned the visit, Kissinger orchestrated the visit and massive media coverage that would broadcast to the entire humanity of the United States and defend his candidacy by the good works he did like the resettlement of Taiwan and retreat from war by the Vietnamese (Snaije, 2012). Primarily, elimination of the enormous threat from the Soviet Union was a priority and second came normalization (Tucker. 2012). In analyzing the overall implementation of the U.S-China trade bond was that since its significant establishment transformation have been achieved by the two countries and have also realized massive economic growth. Their partnership in this business was mind blowing which escalated rapidly and was valued at 10-18 percent in comparison with the total trade globally. It is undoubted that the access of China to the economic realm of America created the platform for a millennial development. However, those days were characterized by China’s small economy as a client for the United States. Currently, with the vast economies of both countries, their continued economic association will stir the global economy to another reality of stunning transformation (Wang, 2013). 3.0 President Nixon’s visit to China: The Legacy “Only Nixon could go to China.” The above words were uttered in a 1991 science-fiction movie entitled Star Trek VI and which words sum up the events of 1972. President Nixon’s visit was a unique one as it was the first visit to China, by a sitting president of the United States, in close to 30 years. This was the first obvious legacy of President Nixon. President Nixon’s visit also effectively meant that the United States of America now recognised the Peoples’ Republic of China (PRC) as the legitimate government of China (Bader, 2013). This certainly opened a new chapter in the Sino-American relations with China having achieved the much needed international status. The recognition of PRC as the legitimate government also eased the tension between mainland China and the island of Taiwan. The acknowledgement of legitimacy came automatically with President Nixon’s visit. The recognition of legitimacy is the most prized concession that China received resulting from this visit (Dallek, 2007). This is because the recognition of legitimacy gave China global leverage to negotiate, on behalf of the people of China, with the rest of the world including with the USA itself. The visit served as an acknowledgement of China’s importance in the world. Before Nixon’s visit, China was known as the ‘red China’. The country hardly featured anywhere in world politics. China was just a name. Nothind much was known about the country. Nixon’s visit also brought China to the ‘family of nations’. America’s recognition eventually led to China taking its rightful position at the United Nations. Upon this recognition, the United Nations also followed suit and recognized the PRC as the legitimate government of China. This bestowed upon China the status to enter into deliberations with the United Nations. These deliberations led China to join the membership of the United Nations and eventually to take its rightful place as a permanent member of the United Nations Security Council (Hong Kong Trade Development Council, 2015). By joining the United Nations, China has achieved a great milestone regarding its status in the world politics, as well as its willingness to negotiate and enter into binding agreements and treaties with other nations. That explains why in 2001, the Republic of China became the 143rd nation to join the World Trade Organisation (WTO) as a member (Tudda, 2012). This was another significant economic milestone for China. China was now able to participate in trade making policies that affected the whole world. While the trip was hailed as a political saviour for China, it also stirred the diplomatic issues between Taipei, Tokyo and Perking. Japan and China were bitter rivals at the time. To make matters worse, neither the government at Taiwan nor the PRC had any legitimacy before the government of Japan. As a consequence, Japan’s severed its diplomatic relations with Taipei. President Nixon’s legacy is evident in the politics around the Asian region. As a consequence of the visit the Russians and North Vietnamese were frightened. This is the fear of the Soviet Union was a major motivation for the rapprochement. Through this rapprochement, China got powerful leverage against the Soviet Union (MacMillan, 2007). The USA also gained leverage against the United Soviet Socialists Union (U.S.S.R). Eventually, this leverage by the USA enabled them to facilitate a convergence of Chinese and American policies with the aim of neutralising Soviet and North Vietnamese influence in Southeast Asia. In the same year, President Nixon travelled to Moscow, and the resultant détente with Russia also helped heal diplomatic wounds that had been inflicted during the cold war. Reference Lists Bader, A.J. (2012). China and the United States: Nixon’s Legacy after 40 years. Washington DC: Brookings Institution Press, Bader, A.J. (2013). Obama and China’s Rise. Washington DC: Brookings Institution Press Brautigam, D.A. and Tang, X. (2013). Going Global in Groups: Structural Transformation and China’s Special Economic Zones Overseas. World Development China Development Zones Association. (2013). China Development Zones Yearbook. Beijing: China Financial & Economic Publishing House. Dallek, R. (2007) Nixon and Kissinger: Partners in Power. New York: HarperCollins. Dong Wang. (2013) U.S-China Trade, 1971-2012: Insights into the U.S-China Relationship. The Asia-Pacific Journal, vol. 11.4 (24). Douglas C. North. (2005) Understanding the Process of Economic Change. Princeton, N.J, Princeton University Press. Dr. Jing Fu. (2014) The Impact of English Language Education in China. CIDEC Seminar, University of Toronto. Hong Kong Trade Development Council. (2014) China-Singapore Suzhou Industrial Park (Including Suzhou Industrial Park Export Processing Zone. Hong Kong, China. Available at http://china-trade –research.hktdc.com/business . Accessed on 10/March/2016. Jeffrey A. Bader. (2012) China and the United States: Nixon’s Legacy after 40 Years. Washington D.C. Brookings Institution Press (March 21). Joseph Kahn.(2011) Executives Make Trade with China a Moral Issue, New York Times, December 14. Retrieved from: http://%20www.nytimes.com/2000/02/13/us/executives-make-trade-with-china-a-moral-issue.html?pagewanted=print&src=pm Kissinger, H. (1979) White House Years. Washington DC: Little, Brown & Co. MacMillan, M. (2007) Nixon & Mao: The Week that Changed the World. New York: Random House. Nathan, A.J. & Ross, R.S. (1997) The Great Wall and the Empty Fortress: China’s Search for Security. New York: W.W. Norton. Nixon, R. (1978) RN: The Memoirs of Richard Nixon. New York: Grosset & Dunlap. Overholt, W.H. (1973) President Nixon’s Trip to China and its Consequences. Asian Survey 13(7) pp707-721. Tudda, C. (2012) A Cold War Turning Point: Nixon and China, 1969-1972. Baton Rouge, LA: Louisiana State University Press. Young, A.K. (1999) The World Today. London: Royal Institute of International Affairs. Zeng, D.Z. (2010) Building Engines for Growth and Competitiveness in China: Experience with Special Economic Zones & Industrial Clusters. Washington, DC: World Bank. Wang, J. (2013) The economic impact of Special Economic Zones: Evidence from Chinese municipalities. Journal of Development Economics 111, pp 133-147. Star Trek VI: The Undiscovered Country. 1991. A movie directed by Nicolas Meyer. Written by Gene Roddenberry, Leonard Nimoy, Lawrence Koner, Mark Rosenthal. Produced by Leonard Nimoy. Los Angeles, CA: Paramount Pictures. Mischa Snaije. (2012) Nixon in China 1972. McGill University, Graphite Publications. Nancy Bernkopf Tucker. (2012) Taiwan Expendable? Nixon and Kissinger Go to China. Journal of American History, vol. 92 (1), pp. 109-135 Richard H. Solomon. (2012) President Nixon and “The Week that Changed the World”: The Challenge of Managing US-China Relations. Shanghai Institutes for International Studies, pp. 1-5 Samuel, T. (2012) The Politics of a Gesture: The Impact of Nixon’s Visit to China on Nixon’s Presidency,” Psi Sigma Siren, vol. 7 (2.4), pp.1-14 William C. Kirby. (2012) Cross-Currents: East Asian History and Culture Review. E-Journal No.2, pp. 1-3 Read More