Focus: Anniversaries
America's First Trade Mission to "the New China"
In 1973, the National Council for US-China Trade led the first US business delegation to China since 1949, jump-starting US-China trade relations
by Gene Theroux
China's market has been a magnet for US merchants since the 1784 voyage of the US ship, Empress of China. That vessel left New York and sailed east around the southern tip of Africa, across the Indian Ocean, into the Pacific, and up the Pearl River to Canton (Guangzhou), one of the Middle Kingdom's thriving southern ports. The venture launched a trade that would grow and flourish until World War II.
In his report to US Secretary of Foreign Affairs John Jay in 1785, Major Samuel Shaw, soon to be the US Consul at Canton, explained how he got the Chinese interested in commerce with the United States: "By the map," he related, "we conveyed to them an idea of the extent of our country, with its present and increasing population," adding that the Chinese "were highly pleased at the prospect of so considerable a market for the production of their own empire." And how "considerable" a market it would become—the two countries recorded $386.7 billion in bilateral trade in 2007 alone!
After the founding of the People's Republic of China in 1949, a US embargo on China from 1950 to 1971 made trade between the countries illegal. Commerce ceased. President Richard Nixon's historic 1972 trip to China made a renewal of trade possible and reawakened the powerful US interest in bilateral trade. The small staff of the National Council for US-China Trade (later renamed the US-China Business Council) enthusiastically pursued the facilitation of a new and successful US commercial relationship with China. The Council's hopes were bolstered by the Boeing Co.'s 1972 sale of 10 aircraft to China and the positive experiences of US importers at the fall 1972 and spring 1973 Chinese Export Commodities Fair in Guangzhou (the Canton Fair), who were quick to develop US demand for a wide variety of Chinese commodities and manufactured goods.
Trip preparations
The Council's chair, Donald Burnham, also chair and CEO of Westinghouse Electric Corp., and the Council's president, Ambassador Christopher Phillips, recognized the need to assess a broader range of opportunities for US business with China, identify obstacles to trade, and prepare for a comprehensive exchange of views with leaders of the China Council for the Promotion of International Trade (CCPIT), the Council's official counterpart in China. At Burnham and Phillips' request, Council Director for Publications and Resources Nicholas Ludlow canvassed the Council's membership, both importers and exporters, for possible topics of discussion. Ludlow compiled and indexed comments from members, producing an invaluable resource volume from which delegation presentations to CCPIT were prepared. Subjects included a broad array of proposed trade development initiatives, including exchanges of commercial missions, trade exhibitions in the two countries, and regular communication on subjects of mutual interest and concern.
With the help of officers at the PRC Liaison Office in Washington, DC, the de facto embassy in the absence of formal diplomatic relations, and through telex communication with CCPIT in Beijing, Council staff arranged for 10 members of the Council's board to travel to Beijing in early November 1973 as the first formal US trade mission to China since the People's Republic of China was founded in 1949. Board members included the leaders of Deere & Co.; JC Penney Co., Inc.; Manufacturers Hanover Trust Co.; and Westinghouse Electric Corp. As the delegation prepared to leave for China, Secretary of State Henry Kissinger described the Council's mission as a "historic one"—"the first visit to Beijing by a broadly representative American business delegation in 24 years." The Council, he said, "will continue to enjoy the support of the Department of State."
President Phillips sent me to open a Council office at the fall 1973 Canton Fair to assist US companies as they explored opportunities to buy and sell. He then directed me to travel to Beijing to advance the board's November deliberations with CCPIT. Shortly before the arrival of the Council's delegation, I met with my counterpart at CCPIT, a senior officer in the CCPIT Liaison Office named Wang Genliang, to help ensure a smooth and successful meeting of our principals. Our meetings were cordial, but there were some surprises. At one point, Wang Genliang informed me that CCPIT Chair Wang Yaoting would invite the Council's board to a welcome banquet following the first day of meetings. He advised me that Wang Yaoting would offer a toast and asked if Burnham, as leader of the US delegation, would respond to that toast. I assured him that Burnham would respond to the toast. "In that case," said Wang, "please provide us, beforehand, the text of Mr. Burnham's response to the toast, for our interpreter." I agreed to do so and asked for the text of the toast to which Burnham would be responding. Wang informed me that the text of Wang Yaoting's toast would not be available in advance. The following day, at a luncheon for the Council's delegation arranged by Ambassador David Bruce, chief of the US Liaison Office, Burnham related the curious CCPIT request for an advance copy of the text of a toast to be made in response to a welcoming toast that we would not see ahead of time. The question provoked amusement among delegation members, but Bruce displayed his diplomatic insights, observing, "This is a wonderful opportunity! That request is your opportunity to set the agenda and the outcome for your discussions! Prepare a response that records your sincere appreciation of CCPIT's agreement to whatever specific proposals you plan to make in the course of your deliberations." His sage advice was followed.
A warm welcome for foreign guests
The Council's delegation was warmly welcomed by CCPIT officials in the shadow of a Mao Zedong statue at Beijing's nearly empty international airport. The group traveled to the Beijing Hotel in a motorcade that breezed past legions of bicyclists into a city where, in 1974, automobile traffic congestion was unknown. The US delegation was housed in the elegant—if somewhat frayed—old wing of the hotel that overlooked the eastern edge of the Forbidden City. A tour of the hotel included a large ballroom that boasted an antique spring-mounted dance floor, where Zhou Enlai and his wife had often waltzed before the Great Proletarian Cultural Revolution stopped the music. (During the Cultural Revolution, many foreign and "bourgeois" activities, such as ballroom dancing, were frowned upon, if not forbidden.)
Business sessions with the CCPIT were held at the hotel. General sessions were held in a comfortable conference room, where hotel staff attentively kept large, flowered thermoses filled with steaming hot tea, and red canisters of Great Wall cigarettes were thoughtfully placed within easy reach. Separate meetings were arranged with CCPIT departments in charge of imports, exports, banking, technical exchange, legal matters, and trade exhibitions in the two countries. Among the subjects discussed were US export controls, which were limiting PRC imports of certain kinds of US products and technologies, and the hope for eventual "most favored nation" tariffs on US imports of Chinese goods.
As many US business visitors were to learn in the years that followed 1973, the Chinese can be superb hosts. The CCPIT arranged for Council board members to attend memorable performances of revolutionary ballet, Beijing opera, and a show displaying the dazzling skills of Chinese gymnasts and acrobats. And we all found ourselves humming a melody broadcast daily—and often—from the loudspeakers that dotted Beijing. We later learned that the tune was an ode to Mao Zedong: "Sailing the seas depends on the helmsman."
Following deliberations with the CCPIT in Beijing, the Council's delegation traveled to Shanghai and Guangzhou for visits to industrial plants and meetings with municipal officials. Heading for Hong Kong, the delegation exited China by rail and passed through Shenzhen—then a small village where people were outnumbered by scurrying free-range hens. In Hong Kong, Burnham led a press conference and issued a press release that, among other things, announced joint agreement on the further exchange of trade missions, beginning with a first-ever commercial delegation from the PRC to the United States in 1974.
Incidentally, responsibility for arranging a cordial welcome for the reciprocal 1974 PRC delegation was given to the able and imaginative Council Vice Chair William Hewitt, who was also chair of Deere & Co. Hewitt told the Council's staff that the hospitality extended to the US delegation a year earlier was so overwhelming that the CCPIT's return visit warranted "a real dog and pony show." Asked what, precisely, he had in mind, Hewitt explained that CCPIT had welcomed us with such memorable performances of Chinese music and dance that he wanted to present "a real dog and pony show with real dogs, real ponies, the whole works!" He got such a show in 1974, at a large Washington hotel ballroom, to the amazement of Chinese and American guests alike, but that's a story for another time.
The Founding of the US-China Business Council
The idea for a private US organization to foster US trade relations with China arose from a report to Congress by House Majority Leader Hale Boggs and Minority Leader Gerald Ford. In presenting the report of their June-July 1972 China trip, Impressions of the New China, Boggs told the House that "until we have normal state relations with China, a quasi-public body" could lay a basis for US trade with the PRC. He recalled that in the Shanghai Communique of 1972, the two sides agreed that "It is in the interest of both countries to take measures to create conditions for the further development of trade on the basis of equality and mutual benefit." Boggs urged private efforts to enlarge trade and business with China, and identified the China Council for the Promotion of International Trade (CCPIT) as the PRC's channel for fostering trade relations "where lack of diplomatic relations might otherwise be a barrier to international contact." The House leaders' meetings in Beijing had included a session with CCPIT Vice Chair Li Xifu.
In spring 1973, at President Richard Nixon's request, US Commerce Secretary Frederick Dent and Robert Hormats, then a young international economist on the National Security Council staff and now vice chair of Goldman Sachs (International), established a private sector organization to advance business with China. They asked Donald Burnham, chair and CEO of Westinghouse Electric Corp., to assemble a roster of distinguished US corporate leaders who would later become members of the Council's board of directors. Washington attorney Walter Sterling Surrey incorporated the group as the National Council for United States-China Trade, Inc., a name that was subsequently changed to the United States-China Business Council, Inc. in 1988. Burnham announced a May 31 conference on China trade at the Mayflower Hotel in Washington, DC, to inaugurate the new Council. Prior to that conference, Burnham dispatched Gene Theroux, a young Washington lawyer who had accompanied Boggs and Ford to Beijing, to meet with CCPIT Vice Chair Li Zhuan to explore a range of bilateral initiatives. Beijing demonstrated its support for the Council by sending Ambassador Han Xu, chief of China's Liaison Office in the United States (there would be no PRC Embassy in Washington until 1979, six years later), to attend the conference. Han announced that his government viewed the Council as one founded "precisely in accordance with the principles of the Shanghai Communique."
In May 1973, 13 months after Nixon's China trip, the American business community was brimming with curiosity and optimism about trade with China. Turnout for the Council's inaugural conference was large, with about 300 corporate participants. Burnham introduced Ambassador Christopher Phillips, then deputy US representative at the United Nations under George H. W. Bush, as the board's choice to be the first president of the Council. (Bush would soon be in Beijing, heading the US Liaison Office from October 1974 to December 1975.) Phillips, an able and popular diplomat, was no stranger to China. His father had served with distinction in Beijing in the early 1900s at the American Legation.
In the years that followed, the Council played an instrumental role in the establishment of commercial relations between the two countries. For example, in April 1974, Phillips testified before the US Senate on reducing tariffs on Chinese imports to help balance US-China trade and improve relations. (In 1973, US businesses had sold 11 times as much to China as PRC businesses had sold to the United States, according to Phillips' testimony—quite the opposite of today's situation.) Also, until diplomatic relations were formally established in 1979, the Council also sometimes served as a point of contact for US-China commercial discussions.
—Gene Theroux
Gene Theroux is senior counsel at Baker & McKenzie LLP in Washington, DC. In 1972, he accompanied House of Representatives leaders Hale Boggs and Gerald Ford on their trip to China. In 1973, he helped organize the Washington, DC, office of the National Council for US-China Trade and was appointed the Council's first vice president. He was later elected vice chair of the board.
Copyright 2008 US-China Business Council
Top of Page
Table of Contents
