Asian Strategies Group

7. Recent Developments

Sino-US Relations: Reinventing the Past

The slow improvement in Sino-US relations provides an opportunity to examine the impact of the relationship on American companies in China, drawing lessons for the future and identifying problems from the past.

Small and medium-sized American companies hardly noticed the deterioration in the Sino-American dialogue after 1992. Their contact with Chinese was at the local and provincial level, their projects were approved at those levels, and they carried on business pretty much as usual. But for large American companies like ________, the situation was different. Large companies did notice the deterioration in relations, in most cases did act to protect their interests, and in a few cases did lose business they otherwise would have won.

Steps that Beijing and Washington are now taking to improve relations mirror measures taken by past administrations: establish and maintain strong links between officials at many levels. Thus, Secretary Christopher will visit China in the fall, followed by Vice President Gore and other cabinet officials and eventually President Clinton, subject of course to the results of the election. Meanwhile, Chinese Defense Minister Chi Haotian and other cabinet-level officials will visit Washington in December, followed next year by several vice premiers and President Jiang Zemin. The past has been reinvented.

The first lesson of the past four years is that the Chinese greatly value, in fact will not cooperate without, such personal relationships. Because the Clinton administration vetoed an exchange of state visits and did little to encourage dialogue at lower levels, it paid a heavy price in Chinese irritation and ultimately contributed to a nationalistic turn in Chinese policy. The second lesson of the past is that trade and other kinds of disputes with China cannot be avoided-but they can be cushioned by strong personal relations.

These lessons are relevant to ________, which has investments in place and others in the implementation or planning stages. All of its projects depend heavily on sustaining good personal relations with key officials. Contracts signed and sealed mean little without the good will needed to make them work. Disputes with the Chinese will certainly occur--doing business in China will never be easy--but the disputes can be managed if ________ keeps in close and constant contact with the right officials. This also includes using _______'s influence to keep Washington focused on building the same kind of durable relationships.

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