This year marks the 100th year anniversary of the founding of the Chinese Communist Party. Born out of a revolutionary ideology geared toward overthrowing what many saw as a corrupt ruling class, China’s communists took over, sent the remaining power structure to Taiwan, and then oversaw an economy that went from a dollar a day to the world’s no. 2 economic power.
We all know it now. Gone are the days of China making your Happy Meal Toys. They’re in your closet and on your phone.
But how did they get there in roughly 50 years’ time? China has a bigger presence in all of our lives than the old powers of Europe. More American businesses have their fortunes tied to China than they do France. More Americans have Chinese apps on their phones than German apps.
What’s the power behind it all?
Barring the “build something from nothing” Taoism of the average Chinese worker, China became the Frankenstein monster thanks to the work of the “good doctor” himself, right here in the U.S.
Cai Xia, a high-level CCP defector and former professor at the Central Party School of the CCP now working at the Hoover Institute at Stanford says U.S. engagement policy with China is a CCP enablement policy.
Washington, Wall Street, and American multinationals have helped create the China of today. Not just in a small way. But in a meaningful way.
When CNBC host Jim Cramer tells his followers to buy China’s Uber, known as Didi, one shouldn’t have to think to hard to imagine China doesn’t return the favor. In fact, retail investors in China are not even allowed to invest in the U.S., per Beijing’s rules, not ours.
Cai’s 49-page essay published June 28 is a must-read for China watchers. Born in 1952 in China’s Jiangsu Province, Cai holds a doctoral degree and specializes in CCP politics and China’s political transformation in its “opening up” years. She has published four books and more than one hundred journal articles on the inner workings of the CCP.
China “should ﬁrst afﬁrm and thank the U.S. government for its ‘engagement policy’ with China, which helped China end thirty years of isolation and poverty. China’s rapid economic and social development and tremendous changes are inseparable from the sincere exchanges and help of the US government as well as people in American scientiﬁc, technological, educational, cultural, and economic circles.”
In her essay, Cai says the U.S. was naïve in thinking China was going to become one giant Japan through trade and commerce. And that, from the early opening up days of Deng Xiaopeng, Beijing always knew the importance of roping in big multinationals. It was, and remains, the best way to bring Washington to heel on most things China-related. Beyond the hard work of Chinese workers and their entrepreneurs, Western capital has been the sole source of CCP’s rise.
So have policies from Washington.
No matter how many doubts it has about the CCP, the United States continues to treat China as a normal country. Washington granted China Permanent Most Favored Nation (PNTR) trade status during the presidency of Bill Clinton and supported China’s accession to the WTO. At that time the U.S. was happy to see China’s national strength rapidly increasing, under the assumption that economic freedom would bring about political changes. “While well-intended, such actions were profoundly naïve,” she says in her essay.
Yet, this goes on to this day. Despite the trade war tariffs initiated by Trump, we have in the newly passed U.S. Innovation and Competition Act from the Senate, trade provisions that would make it easier for companies to get exemptions from those tariffs. For years, American firms had been put on notice: find new supply chains. That was what the tariffs were about. They did not. They also, apparently, did not search for local American suppliers who could build the same thing they were getting from China. And now, some members of the Senate want to allow them to go back to importing from China, despite the tariffs.
“Since the 1970s, the two political parties in the United States and the U.S. government have always had unrealistic good wishes for the Chinese communist regime, eagerly hoping that the People’s Republic of China (PRC) under the CCP’s rule would become more liberal, even democratic, and a ‘responsible’ power in the world. This approach was a fundamental misunderstanding of the CCP’s real nature and long-term strategic goals. All along the CCP hid its real goals and intentions, so as to gain various beneﬁts from the United States.”
CPA recognizes that engagement has helped the Chinese people rise out of poverty and isolation and enter the international community. It has also allowed a fragile civil society to emerge.
But that same engagement policy – fostered by Washington policymakers and the offshoring of American manufacturing jobs once the PNTR and WTO were in place – “hastened the rapid rise of China under the CCP’s neo-totalitarian rule,” Cai says. Now those policymakers should take note. “The CCP is determined to reframe the existing international order and norms and lead the world in the opposite direction of liberal democracy,” she says.
Even though Wall Street and multinational corporations, like Nike, like to tout how important the China market is to them, the U.S. market is the primary, most important, the growth story for the CCP.
From Xiaopeng to Xinping
Under Deng Xiaopeng, 14 coastal cities were designated as Special Economic Zones, offering various preferential policies in order to attract U.S. and foreign investment to China. China also began sending students to the U.S. and Europe to learn cutting-edge technology and social science theories.
Engagement and “opening up” were the hallmarks of happy China for the West. Until the student uprising of Tiananmen Square on June 4, 1989. This put the CCP’s international reputation on the line. The G7 countries strongly condemned the action and instituted various sanctions against China. The CCP was very nervous because without Western capital, there would be no jobs program for millions of Chinese who were making cheap electronics, clothes, toys and American Christmas ornaments.
But Deng knew he had leverage against the West.
Cai writes that Deng had given a talk inside the party at the time, asking them to think why should the CCP be afraid of sanctions. Before the reform and opening-up policy the CCP had been blockaded for thirty years, but the party and country survived. More importantly, and here is the kicker, he also said that China’s one billion people were a “big market” and “we don’t need to beg the foreigners to come back—they will do so of their own volition, as they need us.”
He had been doing this for years. Deng also told President Richard Nixon, during his first visit to China which got the ball rolling, that “the Chinese market is not fully developed yet, and the United States can take advantage of it in many ways. We shall be happy to have American merchants continue doing business with China. This could be an important way of putting the past behind us,” Cai recalled him saying in her essay.
He was right to think that.
President George H.W. Bush bought it. He dispatched his national security advisor, Brent Scowcroft, to Beijing on two secret trips, in July and December 1989 to talk about the Tiananmen Square incident. Bush would later go on to be the first U.S. ambassador to a re-opened China.
Here is Cai’s recollection: “Instead of keeping Deng isolated and on the defensive, Bush’s initiative appeared groveling and played into Deng’s hands. He also knew that the CCP’s legitimacy and survival depended on its economic performance. If China could not shake off poverty, the Communist Party would collapse sooner or later. China’s economy could only improve by continuing the reform and opening-up policy. And only by so doing would China’s relations with the U.S. be eased.”
The CCP might have grown to be a force to reckon with nationwide in China, and maybe even in smaller countries like Malaysia and Vietnam. But it would arguably not be the country many pundits say will replace the United States as the world’s economic power. And is already replacing it in Asia. Some say this gleefully.
For sure, Xi Jinping sees it that way. The pandemic showed the rise of the East, the fall of a Keystone Cops West, bumbling idiots of Covid, as China is continually praised by many in Western intellectual circles and media as being the gold standard system for fighting a global health crisis.
In 2020 Xi tore up China’s commitment to “one country, two systems” and willfully passed the Hong Kong version of China’s National Security Law. The failure of the US and European countries to impose resolute sanctions to support the struggle of the Hong Kong people is tantamount to tacit acceptance of the CCP’s severe suppression. When the pandemic spread across the world, causing serious damage to the US and the global economy, Xi said that China now has the strength to “look at the world on an equal footing.” In the eyes of CCP leaders, “the East is rising and the West is declining.” Their judgment is that there are opportunities embedded in crisis, and the crisis can turn to opportunities to realize the “great rejuvenation of the Chinese nation.”
Cai says the CCP has used the engagement policy to inﬁltrate the U.S., steal scientiﬁc and technological intellectual property, gather commercial and political intelligence, and “lure some American political, business, academic, and technological elites to serve the interests of the CCP.”
Since Xi came to power, the party has stepped up all of these efforts, led in part by its United Front program.
President Bill Clinton said, “By joining the WTO, China is not simply agreeing to import more of our products, it is agreeing to import one of democracy’s most cherished values, economic freedom. The more China liberalizes its economy, the more fully it will liberate the potential of its people, their initiative, their imagination, their remarkable spirit of enterprise…(and) the genie of freedom will not go back into the bottle.”
President George W. Bush also said, “Economic freedom creates the habits of liberty, and habits of liberty create expectations of democracy. Trade freely with China and time is on our side.”
For Cai, the CCP has merely been using the engagement policy for its own needs. CPA believes it has come at the expense of blue-collar manufacturing labor and supply chain resiliency.
“The CCP just used and took advantage of the goodwill and benign intentions of the Americans,” she says. “The reason why the engagement policy ended sadly is due to the fundamental misjudgment by the United States about the nature of the Chinese Communist Party, which in turn has made the US a victim of its own policy.”