Workers World, Vol. 21, No. 20
May 15 – On May 14 the People’s Republic of China and the U.S. agreed in principle to the first trade agreement between the two countries in 30 years. A memorandum was initialed by Secretary of Commerce Juanita Kreps for the U.S. and Foreign Trade Minister Le Qiang for China.
The memorandum in and of itself is less important than the fact that it sets the framework for a general trade agreement between the two countries. Nevertheless, it has a considerable distance to go before it becomes effectuated to any substantial degree. In the first place, it has to be reviewed and formally agreed to both in Washington and in Beijing. Assuming that that is done, the agreement has to be approved by the U.S. Congress. For the agreement to become effective, Congress has to lift the discriminatory trade ban on China – the so-called most-favored-nation provision – a vicious, anti-communist restriction directed against all the socialist countries.
It should be noted at the outset that this trade agreement, however significant it may prove economically, is far outweighed by the broad political and diplomatic considerations which unquestionably entered into its execution. It should also be noted that it comes after a major slowdown in the pace of China’s so-called four modernizations, which the Deng-Hua leadership had launched with such reckless and breathtaking speed.
The euphoria which dominated the political pronouncements both in China and in the U.S. regarding the speed with which trade and industrial and economic development would take place in China has considerably evaporated. In fact, an undertone of hostility, even in the current negotiations for the trade treaty, has been noted.
The causes for the sharp retrenchment ordered by the new Beijing leadership still have to be carefully analyzed. But it is plain that it was planned and ordered either during or on the heels of the aggression against Viet Nam. Whichever way one views the sharp retrenchment in industrial development, the cancellation and suspension of important projects, and the relocation of hundreds of thousands of workers, it had much to do with the Viet Nam war.
A second factor is that both the Chinese leadership and the Carter administration were somewhat sobered up when the real and not fancied relationship between the two countries emerged following the consummation of the diplomatic recognition agreement.
It seemed at the outset that the People’s Republic was ready to order projects involving huge industrial developments. Foreign capital was to play an enormous if not predominant role in helping China become a “powerful industrialized socialist state by the end of the twentieth century.” On its part, Western finance capital, including Japan and the United States, of course, was eagerly looking forward to a fabulous new era of super-exploitation in China such as had not been seen since the last century.
Basically it is the political strings attached to this “help” from the imperialist countries which have caused a shift in China’s economic plans. What the Chinese government wanted, whether it said it in so many words or not, was what passes in the language of international finance as “free access” to the financial markets of the world and to form a credit which of course means borrowing from the capitalist governments, whether directly or indirectly. Domestic policy in China, however, makes it necessary to camouflage foreign borrowings, to hide the retreat from Mao’s policy of self-reliance which was opposed to dependence on the imperialist monopolies.
As it turned out, U.S. capital was not willing to give “easy terms” to Beijing, not withstanding Washington’s basic need for diplomatic and military rapprochement with China against the USSR and Viet Nam. Nor was Beijing ready to give in on onerous terms which would endanger the real sovereignty of the country.
Not much is known of this aspect of the negotiations and retrenchment, but that is what is at the bottom of it all.
The virtual surrender of Taiwan to imperialist domination after 30 years in which this has been a major focus of struggle between the U.S. and China indicates how close the leadership has come to endangering the political and territorial integrity of China.
Taiwan is but one issue. Far more serious from the point of view of internal class relations is the lifting of the socialist ban on imperialist investment and on join capital construction ventures with the imperialists. These are both gross violations of the Chinese Constitution, and their repercussions within China have yet to be fathomed.
As it stands both sides have retreated somewhat from their previously conceived tight embrace, although their diplomatic and military hostility to the USSR and Viet Nam still remains. But the U.S.’s further implementation of economic and industrial cooperation as a reward to China to help it modernize has now been at least partially cast into limbo. It never had any reality in the first place.
The interests of the imperialist countries in China, as far as economic and industrial development go, are strictly of a limited character calculated to aid imperialism, not China. Where China may be helped is in areas where imperialism is constrained by economic necessity and by mutual rivalry for markets within the camp of the bourgeoisie to make limited deals with China, as it has done over the years with the USSR, notwithstanding the mutual class antagonism. But this is altogether different from giving China what it wants and needs in the way of planning its economic and industrial development.
One has to view the May 14 trade accord between China and the U.S. in this general political context in order to appreciate its significance. Moreover, the trade accord, if once it reaches the stage of Congressional approval, will reveal that American finance capital together with world capitalism has a common class criterion for dealing with China, the USSR, and all other socialist countries.
The May 14 U.S.-China accord will have little if any importance for China unless the vicious most-favored-nation clause trade ban is lifted or some other arrangement is made equivalent to lifting the trade ban. The discriminatory trade ban has a unique history in American legislative history. The ban is not directed against just any country, only socialist countries. Ostensibly it is directed against countries like the USSR because of an alleged restrictive emigration policy or violation of so-called human rights, or some such tripe.
Thus, since practically the end of the Second World War, there has been one or another form of trade discrimination against the socialist countries which restricts them from pursuing normal commercial relations.
But since long before that, since practically the inception of the October Revolution, imperialism has carried out a criminal war of economic sabotage, trade prohibition, embargo, and sometimes outright military aggression. The struggle of the socialist countries has had as one of its main objectives to attain normal trade and commercial relations from the capitalist countries without their interference and without submitting to discriminatory trade and commercial practices which are at bottom based on reactionary political considerations.
Thus in the early 1950s when the Cold War fever was running very high, all the socialist countries were put on the trade ban. Some of course were denied even diplomatic recognition, such as China itself, and still including Viet Nam, Laos, Kampuchea, Cuba, Korea, and others. Gradually the trade ban against some of the socialist countries was lifted. It is very instructive to relate just when and how they were stricken from Wall Street’s and Washington’s blacklist.
Poland, Yugoslavia, Hungary, and Rumania have been stricken from Washington’s discriminatory trade ban list. Yugoslavia had its name removed after its break with the USSR in 1948. This was basically in recognition for its rightward turn in domestic and foreign policy.
The lifting of the trade ban from Poland and Hungary was just as illuminating and instructive. Their cases were considered by Washington only after the Polish and Hungarian insurrections of 1956 which ushered in the period of so-called liberalization, in which imperialist influence was to a considerable degree established in the domestic policy of both countries. Poland and Hungary were opened up to the penetration of Western capital in the years following these reactionary upheavals as part of the readjustments, or rather concessions, made to the strong bourgeois current that pervades these countries.
Both Poland and Hungary are sound members of the Warsaw Pact. But the hand of imperialism has a considerable hold in both countries and the lifting of the most-favored-nation clause is a reward for tolerating and enduring the inroads of imperialist influence economically, politically, and socially.
Rumania is a different case. The U.S. lifted the trade ban against the Rumanian government as a reward for its “independent” foreign policy, an independence that is applauded also by Pinochet, Menachem Begin, and others of their ilk but is also loudly praised nowadays in Beijing and Belgrade.
It’s to be noted that the impairment of the real sovereignty and independence of these countries has been a required condition for obtaining the lifting of the discriminatory trade ban.
Several years ago, as a result of the Nixon-Brezhnev summit meeting, it was assumed that the trade ban against the USSR would be lifted. However, rather than lift the ban, the U.S. Congress instead enacted the Jackson-Vanick amendment which tied lifting the trade ban with free emigration, meaning allowing so-called dissidents and other reactionary elements to leave the USSR.
Paradoxically, it almost appeared that the USSR had virtually agreed to the basic provisions of the Jackson-Vanick provision. This certainly would have been an infringement on its sovereignty and rank interference in the internal affairs of the country. The long negotiations and the struggle over the wording of an agreed formula indicated how far the USSR leadership was ready to go under such circumstances, which seemed at the time to usher in a new era in détente. Fortunately, the USSR turned the agreement down.
Now, it is not to be considered impossible that some of the socialist countries, depending upon the urgency of the need, might make an onerous trade-off by surrendering a political consideration in the interests of obtaining urgently needed trade and economic and technological assistance on a normal basis. Such a situation is conceivable.
It is of course fraught with dangerous potentialities. The outcome of such a maneuver depends upon the strength of the socialist foundations of the individual socialist country and the political orientation of the socialist government. At any rate, no socialist government should look forward to such a situation.
What is most ironic about the new U.S.-China trade accord is that those who are now the PRC leadership as well as the leaders close to Mao in earlier years consistently inveighed against Yugoslavia, Poland, Hungary, and others for taking the “capitalist road” and inviting capitalism back after it had been overthrown. They consistently pointed out the danger of foreign imperialist influence.
The PRC leaders went to the extent of flatly characterizing the Yugoslav state as “capitalist,” of having sold out to the imperialist monopolies. They labeled the Yugoslav leadership and Tito as “fascist.” Now the PRC itself is in the process of negotiating on the very same terms that Yugoslavia, Poland, and Hungary agreed to in order to lift the trade bans against them at an earlier date.
What does this indicate? It indicates in the first place that imperialism is pursuing a common class policy against all the socialist countries, that it deals with all of them on a class basis fundamentally different from that it uses toward the capitalist countries. In dealing with the socialist countries, the imperialists inevitably try not only to wrest economic and political concessions from them but also to destabilize their socialist economies. Wherever it comes up against a strong socialist country and is unable to enforce its will upon it by trade and commerce, it seeks other means.
It is most instructive to note that with regard to Cuba, Viet Nam, Angola, Laos, Ethiopia, Bulgaria, the German Democratic Republic, and the USSR, the imperialists have a common policy. Where they have had to extend recognition, they have done so out of weakness and necessity. Where they have been able to enforce their will to a limited extent, as in Poland, Hungary, and others, they have taken advantage of the weakness of the regimes there.
In relation to the PRC, the imperialists have basically the same objective historically that they have against all other socialist countries, namely to undo them. The fact that the PRC, notwithstanding that it has a virtual de facto diplomatic and military alliance with imperialism, nevertheless has to toe the line as did Yugoslavia, Poland, Hungary, and Rumania on the trade ban matter, indicates in an indirect way that they are all in the same socialist camp.
While they are very divided on both political and diplomatic exigencies, in the main these could be overcome by a united stand against imperialism.
The fact that the great Chinese People’s Republic with its 960 million people and its nuclear arsenal, although a limited one, is so hard pressed that it needs to humiliate itself before Wall Street and Washington is more of an indication of the reign of political reaction ushered in by the new Deng-Hua rightist leadership than of insurmountable economic conditions in China. These conditions, even if they cannot be wholly overcome, can be much more easily ameliorated by the combined effort of all the socialist countries than by letting imperialism pick them off one by one or split them apart.
In a recent interview with a French newspaper, as reported in the New York Times of May 3, General Wu emphasized to the French that his army was 15 years behind the Western armed forces. Whether this is true is not the important point. It is possible that General Wu deliberately exaggerated in order to impress Western imperialism with the need to modernize China’s forces and the People’s Liberation Army. The Times says in this dispatch that “General Wu stressed that the gap (between China and the West) could be closed through cooperation between the West and China.”
As long as that remains the deliberate policy of the Beijing leadership, it alone is responsible for obstructing the road to socialist construction. As long as Chinese foreign policy is oriented towards cooperation and close alliance with Western imperialism, while looking to Western imperialism to “close the gap” between its military forces and the West, it is on a road that has a dead end.
Only a break with imperialist collaboration and a return to friendly fraternal relations with all socialist countries, including Viet Nam and the USSR, can be of genuine material assistance in resuming socialist construction in China.
Last updated: 11 May 2026