How the US created China's dominance

A New Cold War: Henry Kissinger and the Rise of China

Author: Sanjaya Baru and Rahul Sharma

Publisher: Harper Collins

Pages: 320

Price: Rs 799

The immeasurably significant initiative taken by Richard Nixon and Henry Kissinger to visit China in February 1972 led to a de-facto downgrading of US relations with Taiwan and diplomatic recognition of mainland China. China replaced Taiwan as a permanent member of the UN Security Council and thereby gained political capital around the world. This compendium of chapters edited by Sanjaya Baru and Rahul Sharma provides a well-rounded understanding of the extent to which Kissinger and US businesses fostered the economic and political rise of China and the consequences thereof. The chapter-authors are distinguished journalists, former diplomats, university professors and think-tank specialists from India, Russia, South-Korea, Japan, Singapore, the US, Pakistan, Australia, France and the UK.

In the past few years, the US, more than other G7 countries, has called out the bristling hubris of a totalitarian China. Led by their supreme leader Xi Jinping, the Chinese government claims nowadays that China’s one-party system is better for average citizens than oligarchic multiparty democracies. Kissinger either exaggerated or misunderstood the threat posed by the Soviet Union given that the country’s economic autarky-weaknesses made it relatively easy to isolate. The USSR may have broken up anyway due to the boundless incompetence in the management of its economy and needless military intervention in Afghanistan. The book does not capture the mutual interest of Nixon and Kissinger in bolstering the former’s chances of getting re-elected president in November 1972. China’s cooperation was needed to bring the Vietnam war to some semblance of a dignified ending. By contrast, US support for China’s rise through transfer of capital and technology and also by providing ready access to Chinese products in US markets is well explained.

The Nixon-Kissinger outreach to China and the loosening of US trade controls finally led to China’s accession to WTO in December 2001. In the name of countering the Soviet Union, other G7 countries followed the US lead and invested in China to manufacture consumer goods and machinery. Even prior to the Covid-19 pandemic by calendar 2019, trade-led growth helped China become the world’s largest economy in purchasing power parity terms. In 2019, China had a surplus in goods trade of $425.2 billion, surplus in total trade, including services, of $164.1 billion and $3.4 trillion in foreign exchange reserves. China has benefited from becoming a member of the World Bank, IMF and ADB. The access to loans from these financial institutions must have been useful and the economic-financial sector expertise in these multilaterals probably improved China’s ability to better assess the progress of its economy.

As several authors have pointed out in this book, the US has created a hugely significant rival by making the concessions it did to China. A perceptive observation in Dr Baru’s chapter is that the US was mesmerised by the “desire of American capital to secure access not just to China’s continental market, but to its non-unionised and trained working class.” And Kissinger’s cunning role in neutralising all those who opposed trade concessions to China is well analysed. Of course, US presidents such as Bill Clinton have to share the blame for China’s entry into WTO. The easy-to-deride former US President Trump got one thing right about his foreign policy. The real challenge for the US is China and not an enfeebled Russia. Consequently, the foreign policy pundit status of Kissinger needs to be junked more categorically than was done in this book.

The Russian perspective provided by Igor Yurgens is useful. Except that this author does not provide any reasoning about Soviet and later Russian thinking on why Russia did not slow China’s economic rise by modifying its policies towards the West. The Russians are world champions at chess. It is unclear why Russia could not anticipate the incremental shrinkage in its global profile to its current dependency on Chinese imports of Russian fossil fuels.

None of the authors except for one brief table in Dr Baru’s chapter provide numerical details of US FDI into China since 1972 and the steady increase in the trade in goods and services between G7 countries and China. Nevertheless, readers would benefit greatly from the care and dexterity with which this book peels off the layers of complexities for the rise of China. It is surprising that only Rahul Sharma refers to the continuing Covid-19 crisis but without holding China responsible for delaying communication about this pandemic to the rest of the world.

Raja Mohan’s chapter captures the misplaced idealism of the Nehru years, that China would empathise with India’s preoccupation with promoting a pan-Asian identity and decolonisation in Africa. A common thread in the chapters written by those based in ASEAN nations is that while the US could continue to underwrite their security, the West should accept China as the pre-eminent power in Asia. The South-Korean and Japanese authors imply that the disconnect between their wide-ranging trade and investment linkages with China yet dependence on the US for security, including stationing of US troops on their soil, is likely to get worse.  An unstated revelation in several chapters is that if India has to clutch at China’s hem and accept its overall superiority in Asia including a China-dictated understanding about the India-China border—so be it.

j.bhagwati@gmail.com. The reviewer is former Indian ambassador; head, corporate dinance, World Bank; and currently distinguished fellow, Centre for Social and Economic Progress