China: Dealing Across Ideologies
1989 Tiananmen Square Protests

Today China is a contradiction: a one-party economic powerhouse. It’s now the world’s second largest economy behind the U.S. But in the early 1980s, China was a lesser power, overshadowed by its Soviet neighbor. Despite ideological similarities, the Chinese were equally concerned about Soviet ambitions as they were about the United States and its support for Taiwan.

Still, Secretary of State George Shultz wanted to engage with the Chinese. The idea was to let Reagan get his diplomatic feet wet with a less significant Communist power before any serious attempt to engage the Soviets. So the foreign policy itinerary would be first to visit the neighbors (Canada and Mexico), then the allies (Europe and Japan) then the Chinese and finally, the Soviets.

“Then should come a Reagan trip to China, to repair relations and put them on a sustainable footing so that we could focus most effectively on the country that presented the most critical issues of strategic significance: the Soviet Union. Ronald Reagan’s first trip to a Communist country would require him to ‘deal across ideologies.’ It would not be easy for someone with his political principles, but it was a skill he would have to develop if we were to succeed in our foreign policy.” (T&T, p. 381)

It turned out, Reagan and Shultz had similar ideas about China. They both believed it was an important power, with geostrategic importance. But, in Shultz’s view the Sino-American relationship was rapidly deteriorating.

“So it was not surprising when I arrived at the State Department in mid-1982 that our relationship was in trouble. The Chinese seemed to complain about every detail of the relationship, but the immediate issue was Taiwan, and, in particular, the question of U.S. arms sales to Taiwan.” (T&T, p. 382-383)

Taiwan had been a thorny issue since relations with China were normalized in the mid-1970s. But the U.S. refused to stop arms sales or relations with Taiwan -- even as the U.S. recognized China as the legitimate ruler of Taiwan. This led to considerable tension between the U.S. and China. By the time Shultz came into office, China had begun to equate the U.S. with the Soviet Union, deeming both “hegemonic” powers.

To improve relations with China, the U.S. could have stopped selling arms to Taiwan, but as Shultz recalled: “I thought the demand that arms sales be stopped was unacceptable, and so did President Reagan.” (T&T, p. 384)

Interestingly, only five days after Shultz defended arms sales to Taiwan in a confirmation hearing, the U.S. made a breakthrough with the Chinese. It appeared that the Chinese were responding positively to a firmer U.S. foreign policy.

“The Chinese for the first time agreed to drop their insistence that the United States cease all arms sales to Taiwan and agreed to proceed instead on the basis of the concept of gradual reductions in arms sales. The breakthrough in the Chinese position in our arms sales negotiations was to me a powerful signal, after a year of futile talks, that China was ready to deal with a policy of firmness from Washington. I felt that we should move quickly to capitalize on this development. Thus began a period of intense negotiations.” (T&T, p. 384)

After receiving this powerful signal, it was left to Shultz’s team to come up with a policy.

In the end, they came to an agreement that not only improved Sino-American relations, but quelled both sides’ fears of a conflagration over Taiwan.

“In a compromise formula stemming from the U.S. position taken at the start of the negotiations, the United States stated that it did not intend ’to carry out a long-term policy of arms sales to Taiwan,’ that future sales would not exceed past quantitative or qualitative levels, and that the United States intended to reduce gradually its arms sales to Taiwan. The Chinese stated their peaceful intent toward Taiwan, acknowledging that should their peaceful intent change, U.S. policy would also change.” (T&T, p. 385)

This agreement laid the groundwork for a more fruitful relationship between the two nations. Shultz now wanted to work towards an intelligence exchange with the Chinese, to leverage common interests regarding the USSR, and to take measures that might move them to a more open society. But these ambitions would first require stabilizing the Sino-American relationship. Despite the Chinese having agreed about Taiwanese arms sales, it was still a bitter pill to swallow. The relationship would take more work on the part of Shultz and the State Department.

Shultz took the opportunity during a state visit to Beijing to try and lay the foundation for a more stable relationship. On this trip Shultz found vast cultural differences and radically divergent concepts of governance:

“One recognition came to me with clarity: The Chinese simply did not comprehend the pluralism of America. Our concepts of ‘checks and balances’ and ‘separation of powers’ were utterly alien to them and to their experience with government. Skepticism about Western concepts came easily from a people who assumed the superiority of their ancient culture. Many of the welter of problems between our two countries stemmed from this gap in perceptions. I had, however, achieved my objective of reviving the flagging fortunes of Sino-American relations and had moved to restore a climate of cooperation and problem solving.” (T&T, p. 392-393)

The economist in Shultz knew that expanding trade with the Chinese would be a powerful first step in stabilizing relations. However, the U.S. had a burdensome and outmoded classification system for exporting goods to China. This system was a barrier to trade and increased transaction costs between the two nations. “Although we called China a ‘friendly and non-allied country’”, recalls Shultz, “the complicated classification system had the effect of putting them in virtually the same category as the Soviets.” (T&T, p. 394)

There was considerable debate within the administration on the question of whether China should be reclassified. Shultz knew that a lot of stability could be achieved through commerce, as exchange is not only mutually beneficial but raises the costs of conflict for both parties. Shultz pushed to make it possible for the U.S. to license a far greater range of exports to the People’s Republic. “Finally, the president decided on May 21, 1983, to approve the reclassification so that we could follow through on our pledge to support China’s modernization.” (T&T, p. 394)

With commerce and trade moving forward more smoothly, relations with the Chinese significantly improved. As proof, China agreed to send a nuclear delegation to the U.S. to address the American concerns over nuclear proliferation. Even with the mounting positives in the Sino-American relationship, some problem areas remained:.

“We knew that China wanted it both ways: to gain the benefits of a booming economy while maintaining state control over key aspects of economic and political behavior. They would have to face the reality that a society cannot be Communist and capitalist at the same time—and this they were not ready to do.” (T&T, p. 396)

The fundamental conflict between Communism and capitalism was one that could not be addressed solely through Shultz and the State Department. President Reagan would have to become an ambassador as well. Finally, Reagan went to China. There, the president extolled the virtues of freedom and faith.

“The Chinese leadership did not like everything that the president said, and they censored some of the passages in their broadcasts to the Chinese people. The effect of this censorship, however, was to highlight those very passages which, as a result, received even greater attention. Wherever the president traveled, he wore American values on his sleeve and spoke of them with pride. It was vintage Ronald Reagan.” (T&T, p. 398)

Shultz reflects on the China visit fondly: “In my final press conference summing up the trip, I highlighted the theme of Ronald Reagan “dealing across ideologies.” (T&T, p. 393) It had been his first visit to a Communist country, and it had come off as a resounding success. Even the New China News Agency described it as “a significant step forward…”

Relations with China proved to be a valuable lesson for both Reagan and Shultz, having gotten their first tastes of dealing with a communist power they had an idea of what to expect when dealing with the Soviets:

“There would always be a gap between what we expected from one another and what we were willing to deliver. We would continue to do what we could to maintain, and wherever possible, improve relations, but we would not abandon our fundamental values or principles in dealing with the Chinese. This was a lesson the president would carry over into his dealings with the Soviet Union.” (T&T, p. 398-399)

It turned out to be a good start for the Reagan-era foreign policy. And while there were vast difference between the Chinese and the Soviets, Reagan got the experience he would use later on with the likes of Yuri Andropov and Mikhail Gorbachev.

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