China Is Telling the West: Let’s Do Business; Forget Your One-Upmanship Tantrums

Dr Ivanovitch - MSI Global
Dr. Michael Ivanovitch

Washington’s China wooing is a long succession of “strategic ambiguity,” naivety, huge policy errors, and a current impasse dressed up at a NATO summit on June 28-30, 2022, as a “strategic competition” where Beijing presents a “challenge” to West’s “interests, security, and values” and seeks “to undermine the (West’s) rules-based international order.”

A spectacular failure indeed of a diplomacy that started during the Nixon administration in 1971 and led to the signature of the Shanghai Communique on February 27, 1972.

That document is wrongly hailed as a breakthrough in U.S.-China relations, because its fundamental intent was to destabilize the U.S.S.R. by leveraging the Moscow-Beijing hostility as a significant negotiating asset in Washington’s running battle with the Soviets.

Remarkably, however, the Chinese were skeptical about U.S. offers of support in their struggle with erstwhile Soviet friends and allies. To Washington’s dismay, Beijing also insisted on a clear statement of problems and disagreements with the U.S. concerning Laos, Cambodia, Vietnam, North Korea and Japan’s renascent militarism.

Most importantly, that Communique established the principle of One-China, with Beijing’s peremptory call that “the Government of the People's Republic of China is the sole legal government of China; Taiwan is a province of China … ; the liberation of Taiwan is China's internal affair in which no other country has the right to interfere.”

A policy based on “strategic ambiguity”

In response to that, Washington declared that “The United States acknowledges that all Chinese on either side of the Taiwan Strait maintain there is but one China and that Taiwan is a part of China. The United States Government does not challenge that position. It reaffirms its interest in a peaceful settlement of the Taiwan question by the Chinese themselves.”

And here comes the “strategic ambiguity” – a matter of semantics raised by the actual meaning of “The United States acknowledges …” According to Merriam-Webster, acknowledge means “to recognize the rights, authority, or status of,” but it also means “to take notice of.”

A torrent of media reports, and apparently authoritative opinion pieces, now pretend that Washington simply “took notice of” – but never recognized or endorsed that the People’s Republic of China represented the whole of China.

And that, in fact, is what, reportedly, Henry Kissinger, the chief negotiator of the Shanghai Communique, calls the “strategic ambiguity” that allows the U.S. a broad and “creative” interpretation of its One-China policy – a casus belli issue for Beijing.

The question is: How wise was it to lay the foundation of U.S.-China relations on an “ambiguity” that puts in doubt China’s sovereignty and territorial integrity?

Pretty naïve, disastrously myopic and disingenuous, isn’t it?

But that’s what led to a monumental outsourcing of U.S. manufacturing to China, soaring bilateral flows of trade and finance, with trillions of dollars in transfers of wealth and key technologies. A policy that crippled the U.S. economy by reducing the goods producing sector to less than 10% of the country’s GDP.

China laughing all the way to the bank

A very smart national security strategy indeed, by granting China an unquestioned advantage as a key supplier of goods and services, while, at the same time, branding Beijing as the main threat to America’s rules-based world order?!

Here are some numbers.

In the first four months of this year, China’s exports to the U.S. rose 20% from the year before to a whopping $179.3 billion. Over the same period, U.S. exports to China had zero growth, staying at a puny last year’s level of $47.6 billion.

That gave China a trade surplus of $131.7 billion -- an annual increase of 28%.

With that extremely generous treatment of a chief strategic adversary, China has nothing to complain about. All those blistering and invectives-laden attacks on America in Chinese official media should be replaced by thank-you notes to Beijing’s main trade benefactor.

Beijing is not even buying Uncle Sam’s IOUs. In the year to April, the thrifty Chinese dumped $100 billion of U.S. Treasuries to show gratitude for large incomes on American trades (?), and to signal how confident they were about an inflation-ridden U.S. economy (?).

And then Washington wants the European allies to join its alleged anti-Chinese policies.

Led by the U.K., the Europeans beg to differ. London says it’s OK to do business with China, but to stay vigilant and not become overly dependent on China trade.

Germans go much further. They say their automobile industry cannot survive without China. Audi, BMW, Daimler Benz and Volkswagen are all expanding their factories in China. When attacked by German media that Volkswagen has production facilities in Xinjiang, a province of China where Germans say Beijing is using slave labor, the VW boss Herbert Diess responded “we kept producing cars even during South African apartheid governments.”

China is watching all that, laughing all the way to the bank and taking a condescending view of West’s resolve to defend its rules-based international order.