Made in China: When US-China Interests Converged to Transform Global Trade (Harvard University Press), the new book by Assistant Professor of International History at LSE Elizabeth O’Brien Ingleson, may focus on the US experience of trading with China, but there is much for the UK to learn too. How did the US, EU and Britain – along with many other countries – help make China the world’s foremost trading power?
It’s also an extremely useful overview of the up-and-down vicissitudes of trading with contemporary China. From the faltering, uncertain beginnings of trade in the 1970s through the period of opening up and reform, to the go-go years around the new century and the problems of retrenchment since then. Paul French spoke with Elizabeth O’Brien Ingleson about the rocky ride of the last 50 years and where things stand at present.
Made in China is a fascinating history of American (and, by extension the UK and Western European) trade with China from the 1970s. Usually, we just think Maoism equalled no trade and seclusion before the Nixon visit and then Deng Xiaoping opened things up. However, you frame it slightly differently and suggest Mao had started a process of encouraging trade even during the Cultural Revolution?
Yes, I was surprised to find that it was during the latter years of the Cultural Revolution – from the late 1960s and into the 1970s – that China’s foreign trade began to change substantially both in terms of the volume of trade and its geographic partners. Throughout the 1950s and 1960s, China maintained small levels of trade with foreign nations, especially the Soviet Union and the Global South. From the late 1950s, China also began to trade with some capitalist nations, such as Britain, Japan and West Germany. But it was only during the 1970s that Mao began to increase China’s overall levels of trade for the first time since the Communists’ victory in 1949, and it was China’s engagement with advanced capitalist democracies – not members of the socialist world – that drove this growing trade. It was amidst the social and political chaos of the Cultural Revolution that Chinese leaders within and beyond the elite levels of politics experimented with economic reorganisation that laid the groundwork for the reform and opening that Deng Xiaoping would later launch.
You go back to the pre-WW2 period and Carl Crow’s infamous 400 Million Customers. The war ended that dream sadly. But then you discuss ‘the transformation of the China market from 400 million customers to 800 million workers’ during the Cold War – what was going on, in the West and in China, to make that leap attractive to foreign business?
Carl Crow’s best-selling 400 Million Customers crystallised the promise of the Chinese market, which had so driven business interests for centuries. Since first contact in the 18th century, US merchants had understood trade with China to mean expanding their exports. Throughout the United States and Europe, the imagined possibilities of a vast landmass teeming with potential customers compelled businesspeople to trade with China. The British used to quip that if Chinese customers increased the lengths of their coats by one centimetre, it would be enough to fill the requirements of all the mills of Lancashire. When Crow published his book in 1937, his evocative title quickly saw “400 million customers” become a symbol of the potential profits to be made from trade with China. As you say, World War II interrupted China’s foreign trade, and after that, it was Cold War dynamics that shaped much of China’s trade.
By the 1970s when US-China trade resumed, just 30-odd years after Crow published his bestselling book, US businesspeople began to transform the centuries-long vision of a Chinese market filled with 400 million proverbial customers into one of 800 million workers instead.
Exploring how and why this transformation took place is at the heart of my book. I trace the ways that changes happening in US capitalism converged with the experimentations that pragmatists within China were undertaking. Li Xiannian, Chen Yun, Deng Xiaoping and other Chinese pragmatists – all of whom would go on to play important roles in China’s reforms of the 1980s – slowly experimented in the 1970s with ways of using exports to fund industrialisation: selling cotton goods, for example, to pay for fertiliser factories. So too were US corporations, experimenting with their own manufacturing processes. They were increasingly turning to overseas sources of production and raising their imports. This was aided in part by containerisation, which made shipping from abroad faster and cheaper. But was additionally enabled by legislative changes including the end of the Bretton Woods system and the 1974 Trade Act. As US corporations and Chinese pragmatists worked out new ways of engaging with manufacturing and trade, they incorporated each other’s own experiments into their visions. They worked together to create a new idea of the “China market”: one not of US exports but of imports.
You paint a very different picture of inter-governmental and corporate business cooperation in the 1970s that got trade restarted – ‘American capitalists and the Chinese state worked together, with assistance from US diplomats, to alter the very meaning of the China market: from 400 million customers to 800 million workers.’ Do you see any lessons from that period that might be pertinent to how we repair today’s rather fractured US-China trade relationship?
Over the course of doing this research and writing, the history that I chart has felt increasingly distinct to today’s US-China relationship. In the 1970s, US diplomats and government officials worked with the business community to assist them in rebuilding a trade relationship. And the interests of the US business community they worked with began to align more and more with those of Chinese pragmatists. While all three groups came from differing spaces, their interests converged, with the result being a fundamental transformation in the meaning of the China market – from a site of 400 million customers to 800 million workers.
In terms of repairing the relationship today, I think the key thing to consider is that the history I chart is one of unintended consequences. As US policymakers encouraged the business community, they did so from a position that saw the interests of labour as an impediment to that process. When a group of domestic manufacturers launched the first case calling for restrictions on imports from China, due to concerns about the impact it would have on their workers, the State Department and Liaison Office tipped off their Chinese counterparts to ensure the case would not succeed. Today, we are living through a very different kind of trade dynamic, but US policymakers would do well to be wary of the long-term repercussions of some of their decisions.
The history I am telling was not the headline news; it occurred quietly while policymakers devoted their attention elsewhere. But it led, ultimately, to the situation US policymakers face today whereby China is blamed for the impact its economic growth has on workers in the US. Without proper consideration of which interests truly need protecting, a similar kind of unintended consequence is likely to occur again: a quiet structural transformation in the international political economy that occurs while the major headlines focus on US-China competition. I think one of the key ways this might take play is in AI. As the US and China increasingly compete over AI technology, we may find that the actions taken in the name of competition lead to different kinds of unintended consequences for ordinary people in both countries 30 years from now.
As you point out, the term “Made in China” means many things to many people. For much of the time you discuss, Made In China was perceived as a threat by many American politicians, labour organisations and workers. There is obviously still a backlash to globalised manufacturing and branding, but given this process is now 50 years old, how do you feel most Americans react to Made in China labels today?
Today, there are similar emotional responses to the labels, but the trade dynamic underpinning it is more complicated precisely because of the changes that occurred throughout the 1970s. The internationalisation of manufacturing has fundamentally changed the relationship between trade and the nation-state – and, therefore, the meanings of country-of-origin labels. In our post-Covid era we’re all familiar with the centrality of supply chains to global manufacturing and trade. We know that a good labelled “made in China” has been manufactured along chains of supply involving many other nations along the way. But the politics of trade remains remarkably bound by the nation state.
To many Americans today, “Made in China” carries symbolic and emotional meaning. It represents a threat to American manufacturing, and the threat is connected to China itself rather than the corporations making the goods. “Made in America” suggests its effects can be countered, too, by the nation-state. The long history of yellow peril fears combined with the national pride engendered by the ameliorative “Made in America” has long been a winning combination in American politics. This is why the very first executive order President Biden passed in early 2021 was dubbed “Made in America.” It called for more federal agencies to use products produced within the United States. However, the fine print of Biden’s executive order reveals the messiness behind country-of-origin labels today. The standard for his Made in America plan would be met if only 55% of components were manufactured within the United States.
So, the 1970s approach of using trade as a political tool – in today’s context that often means applying tariffs – doesn’t impact China in the way that it would have 50 years ago. Despite today’s tariffs, China-made semiconductors are entering the United States in increasing numbers via Mexico, for example. What this history reveals is that in order to redress the very real problems that American workers are facing, US policymakers need to focus on the factors that led the country to where it is today. Most particularly, a politics that prioritised the interests of capital over labour to such an extreme extent.
Your book focuses on the United States, but I wonder, from your perch at LSE, can you draw any broad comparisons with the way the UK approached trade with China from the 1970s onwards?
Even before the 1970s, the UK took a very different approach towards trade with China despite the Cold War dynamics. During the Korean War, the United Kingdom followed the United States in imposing a trade embargo on China, but by May 1957, it had ended its embargo entirely. This was the start of the UK taking a very different approach towards trade with China. And in so doing, the UK led the way in encouraging other nations to end their embargo too – soon after the UK ended its restrictions, so too did the Netherlands, Japan, West Germany and elsewhere. The decision was driven in part by pressure on Downing Street from the British business community in Hong Kong, which saw expanding opportunities in the Chinese market. But the end result was that by the late 1950s, the United States was the sole nation upholding the economic containment of China.
The major advantage for the UK is that it was able to show leadership in the international system and lead the way for how other nations should engage with China. The major disadvantage for the United States, of course, was that for twenty-odd years it had no trade contact with China despite the economic relations many of its rivals had. By the time the US reopened trade ties in the 1970s, Britain, Japan, West Germany and elsewhere had already established themselves in the China market and US businesspeople were forced to catch up.
Finally, given your position and academic interests, you can’t fail to have noticed recent differences in approach to China between Washington and London. What do you think DC has got right/wrong? And conversely, what has London done right/wrong on China trade relations?
I think London has the opportunity to again show leadership on China policy by navigating a middle path between geopolitical imperatives and economic interests. As in the late 1950s, when Cold War tensions were at their peak, the United Kingdom found a way to move beyond the economic embargo of the Korean War era. By the 1960s, the United States stood alone in upholding its economic embargo on China. Today, as President Biden extends the trade restrictions that President Trump instigated, he is targeting goods such as Chinese electric vehicles. Despite what he says publicly, Biden is doing so not from a place that is protecting American jobs, but rather seeking to protect American corporations. These Chinese EVs are not US products manufactured in China, as had been the case in the 1970s, but rather Chinese-owned products made in China. Imposing tariffs on Chinese goods, such as EVs, is not going to redress the fundamental problems faced by US workers, the vast majority of whom work in the service sector, not manufacturing. Instead, it is an attempt to protect US capital – not labour. In the long-term, imposing tariffs on green energy is not going to help the US move towards a better future, and it’s here that the UK has significant potential to push the United States towards a less punitive approach towards clean energy and in the process, diffuse the narrative that China poses an unambiguous threat to the United States.
