AmCham China Legacy: Furthering US-China Relations

At critical moments, AmCham China fostered discussion and understanding between China and the US

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Almost 7,000 miles separate Beijing from Washington, DC, and at times the distance between the two governments has seemed much more. But ever since American businesspeople established a chamber of commerce in Beijing in 1919, AmCham China has sought to build bridges, correct misunderstandings and promote engagement through respect.

Playing a mediating role hasn’t always been easy – during the darkest days of US-China relations the chamber and its members have been put in very uncomfortable positions. But with the ability to take the long view, the chamber has managed to stick to the objective expressed in its constitution to “strengthen cooperation and understanding between the United States and China.”

When the chamber was created in Beijing in 1919, Woodrow Wilson occupied the White House and Xu Shichang was President of the then seven-year-old Republic of China. US-China relations at this time were far from rosy – the anti-foreign Boxer Rebellion had occurred less than 20 years before, and China was particularly upset at a deal the victorious Allied forces from World War I were making to hand over Germany’s possessions in China to arch-rival Japan. Nevertheless, the chamber did what it could to “further China-American cooperation.”

Even so, despite US support for the Nationalist government, the Second Sino-Japanese War and the subsequent Chinese Civil War left little room for American commerce, and at some point the chamber disbanded.

By the time the chamber reformed in 1981, some 32 years after the founding of the People’s Republic, things had changed dramatically. Under Deng Xiaoping, China had launched economic reforms and joined the World Bank and International Monetary Fund. President Ronald Reagan visited in 1984, and Chinese President Li Xiannian reciprocated the following year. A new chapter in the relationship had clearly begun – although exactly what that meant to American business wasn’t particularly clear.

In its early years, the chamber wasn’t even recognized by the Chinese authorities. China was still a very poor country and anyone interested in the region usually got no further than Hong Kong. But as China’s importance grew, so did space for the chamber to help clarify what was at stake in the economic relationship and push the two sides toward closer cooperation.

A big deal

Perhaps one of the most important episodes in the chamber’s history was its steadfast support for China’s entry to the World Trade Organization (WTO). Because the US’s attitude toward China shaped the rest of the world’s opinion, AmCham China had a crucial role to play in persuading US lawmakers that engaging China in the global trading system was good for American business, and good for America.

China began to pursue WTO membership in 1986, which generated a lot of interest among the chamber’s members. “We were enthusiastic about China joining the WTO, very excited, and very interested in the details,” said Sally Harpole, who was the chamber’s chairman at the time. 

But after the Tiananmen tragedy, the US had to review annually China’s “most-favored nation” (MFN) status and the trade benefits this provided China. President Bill Clinton initially tied China’s human rights record to MFN approval, but eventually changed course to push for greater engagement. Nevertheless, there was a great deal of opposition in Congress, and approval every year was by no means a foregone conclusion.

“Freedom without prosperity is difficult, and as economies develop, human rights improve,” wrote AmCham China member Chuck Hamrick in response to the concerns of Congress. “It is a false dichotomy that human rights and business interests do not support each other. In China we see daily the result of the freedom that economic development brings, as people have more access to external information, goods and person-to-person contacts.”

Progress on China’s accession to the WTO (which was called the General Agreement on Tariffs and Trade until 1995) continued at a glacial pace during the early 1990s, and ground to a halt following the Third Taiwan Strait Crisis in the run-up to the 1996 Taiwan presidential election.

Even so, the following year relations began to improve, and Clinton’s groundbreaking visit to China in 1998 paved the way for negotiations to accelerate. Zhu Rongji, who had taken over as Premier, saw an opportunity to apply external pressure in his bid to reform China’s economy and establish the country’s position in the world.

However, not everyone appreciated fully what was at stake. Consumed by the difficulties of day-to-day operations, the country heads of US companies in China had little time to appreciate the significance of China’s inclusion into the global trade body. So AmCham China member Timothy Stratford, then working for General Motors, took it upon himself to educate other chamber members through a series of seminars on what was in the works, and why they should be promoting it.

 

Former Chairman Tim Stratford with then-US Secretary of State Madeleine Albright

“As well as creating new business opportunities, it would also cement the idea that China was integrating its economy and systems with the global system,” Stratford said. “If China had been blocked from joining, its economic development and relationship with countries like the United States would have been very different. So it was colossal, hugely important.” 

Setbacks, large and small

China had to negotiate deals with all existing WTO members who wanted them, and many were looking to the US as a benchmark. By 1999, it looked as though an agreement was possible, and Zhu traveled in April to the US to seal the deal. Zhu had staked his reputation on economic reform and WTO entry in particular, and had signaled his optimism before he departed for the US. Instead, the episode marked the beginning of what Stratford described as a heated national debate within the US regarding the future of US-China relations.

Clinton’s domestic advisors were concerned that the deal on the table didn’t do enough to allay the concerns of labor groups and the agriculture sector, and advised pressing for better terms. This last-minute hardening meant a deal would be impossible, and Zhu ended what the Foreign Ministry described as a “constructive and fruitful” trip empty handed. However, in an unprecedented move, the office of the US Trade Representative released the details of what had been agreed thus far, drawing much speculation over exactly how united the Clinton Administration was in its position on China’s WTO accession.

In answering the question of whether the disclosure helped or hurt, then AmCham China Chairman Richard Latham said: “On the one hand, without the knowledge we now have, we could not so strongly urge a quick conclusion to the negotiations. On the other hand, every opponent in China of China’s accession to WTO now knows what China offered. There will be considerable pressure to take things off the table.”

Progress toward an agreement suffered a further setback on May 7, 1999, when the US bombed China’s embassy in Belgrade, Serbia, killing three Chinese journalists.

Despite the enormous damage to US-China relations created by Zhu’s failed US trip and the Belgrade embassy bombing, talks resumed in September, and a deal was signed Nov. 15.

The end of the beginning

However, the real make-or-break point was making MFN status permanent. Renamed “normal trade relations” (NTR) in 1998, Congress needed to make the status permanent to adhere to WTO regulations. No permanent NTR, no WTO accession.

Aligned against the deal were various groups concerned about American jobs, human rights in China, the trade balance and the environment. For example, Jeff Faux of the Economic Policy Institute said granting China permanent normal trade relations status “would signal to the world that the United States has abandoned the cause of putting worker rights and environmental standards into international economic agreements.”

As a vote in the House of Representatives neared in late May 2000 on giving China permanent NTR, protests increased outside Capitol Hill attracting the full range of interests aligned against the move. Thousands of anti-NTR teamsters waved signs reading, “880,000 Jobs Lost to China, Could Yours Be Next?”

The DC Doorknock that year carried particular significance. Around a third of the nearly 30 members who travelled to Washington that year were Chinese nationals, who helped put a human face on the issues on being discussed. One of them was Joan Ren, who had worked as the Public Affairs Manager for Enron but at the time was with the Eric Hotung Trust Fund. She had the chance to address an audience of 30 Republican congressmen, telling them of her life starting during the Cultural Revolution and her dreams for China’s future.

Joan Ren (pictured in red) was one of the Chinese members of the DC Outreach delegation in 2000 who put a human face to the WTO issue.

“By telling Congress members our personal stories and our strong desire for stable, peaceful, and progressive Sino-US relations, we helped build an invisible bridge over which people of different backgrounds, different cultures, and different beliefs could meet and talk with each other,” she wrote in China Brief (now called Business Now) on her return. “We also learned how ordinary individuals, like us, can be part of a mission that is of vital importance to China and the United States. It was by no means an easy task. ... Yet we truly believed the best way for people to understand each other is through communication and mutual respect.”

Stratford himself remembers coming out of a meeting with congressmen in Capitol Hill and sharing an elevator with members of the one of the most powerful American labor unions. “They’d be talking about how ‘We really set that last congressman straight about how bad China is and why they shouldn’t vote for this. Right on!’” Stratford recalls. “They were in the same place as we were delivering exactly the opposite message about the best way to help China conform to global standards.”

The vote on May 24, 2000, was pretty close, but decisive. The House voted 237-197 to grant China permanent normal trade relations, which the chamber praised in a press release. A subsequent 83-15 vote in the Senate sealed the deal, but more drama surrounded negotiation of the final details of accession.

“I thought this negotiation process is really doomed,” China’s Chief WTO Negotiator Long Yongtu said about the impact of the Sept. 11, 2001 terrorist attacks. Addressing AmCham China members less than a month later, he said that although negotiations were suspended for a couple of days, the US team quickly offered to come back to the table. “This showed me that in times of difficulty, China and the US can work together.”

China joined the WTO on Dec. 11, 2001.

Speaking several years later, China’s Ambassador to the WTO, Sun Zhenyu, expressed his appreciation to the chamber for its work during that period. “AmCham has played a very prominent role in promoting China-US trade and economic cooperation,” he told an audience of AmCham China members in April 2005. “I still remember during the days when we were fighting for MFN and later PNTR, and AmCham, every year at this time, organized a doorknock team to visit Washington and lobby senators and congressmen. At that time MOFTEC (predecessor to the Ministry of Commerce) also sent some teams, so your doorknock team and ours were on airplanes at the same time and knocking on the same doors.”

Vice Premier Zeng Peiyan speaks at AmCham China's Appreciation Dinner in 2003 as then-Chairman Christian Murck listens. 

At the 2004 Appreciation Dinner, then-Commerce Minister Bo Xilai praised AmCham China for its help in securing permanent NTR for China, joining the WTO and producing its annual White Paper. “We Chinese people always remember in our hearts the good things our friends have done,” he said.

Balancing act

Despite the successes, sometimes the chamber has found itself in awkward positions. On April 1, 2001, a US spy plane made an emergency landing in Hainan following a collision with a Chinese military jet in which the Chinese pilot died. The US crew was held for 10 days by the Chinese authorities, during which Stratford was due to give a televised speech sponsored by the China Council for the Promotion of International Trade.

“As long as the American crew was being held captive, we couldn’t be all smiley-faced and say that things were great and normal – because they weren’t,” Stratford said. “So what was I going to say that would be appropriate for the occasion but wouldn’t look like American business didn’t care about the fact there was a crew being held against their will.” 

In the end, Stratford publicly acknowledged the difficulties the two sides were facing but expressed confidence the differences could be resolved. Even so, he said “it was the trickiest speaking assignment I had when I was chairman.”

Then there was the Chinese Embassy that derailed WTO negotiations for several months. Conducted as part of NATO’s pressure on what was left of Yugoslavia to withdraw from Kosovo, the bombing was condemned by Hu Jintao, then Vice President, as a “barbaric” and “criminal” act. Demonstrators gathered around US diplomatic missions around China, with protests frequently turning violent.

Despite an apology from President Clinton, the two sides weren’t talking to each other, and US Ambassador to China Jim Sasser found himself besieged in the embassy by rock-throwing students. The AmCham China leadership at the time decided to take matters into their own hands and arranged a meeting with Yang Jiechi, then a Vice Foreign Minister who went on to become Minister and then State Councilor.

“We kept telling him this wasn’t a good thing for the US-China relationship,” said Mike Furst, then the chamber’s Executive Director (a position now referred to as President). “We said to him, ‘This reminds everyone of Tehran in 1979…all that’s going to end up happening is that China’s going to get a bad name.’”

The protesters disappeared the following day, but it wasn’t until the end of the year that an agreement was reached on compensation for the damage to each other’s diplomatic property. Nevertheless, Sasser wrote in the chamber’s magazine that the relationship had “been battered, not ruptured. There is simply no rational alternative to engagement between the world’s largest developed country and the world’s largest developing country.”

Indeed, the chamber has often worked closely with the US Embassy for the benefit of its members, even though they have no official relationship. In the early days of the chamber, there were regular briefings and social events for the chamber’s members at the embassy. Even today, embassy officials brief the board of governors each month, and the broader membership on issues of specific concern.

On the policy side, the embassy and chamber have also worked together in making sure the issues of greatest importance to American business in China make it to the negotiating table in discussions between the two governments. William Zarit, a former Minister Counselor for Commercial Affairs at the embassy and now a chamber governor, worked with Jon Huntsman when he was the Ambassador.

“I remember him saying there’s no light between AmCham and the US Embassy, because we were so close,” Zarit said. “He was a huge advocate, and he understood very well how the embassy and policymakers relied on AmCham members.”

Reaching out to Washington

An important aspect of being a bridge between the US and China has been the annual DC Doorknock, now known as the DC Outreach. Started in 1992, the main focus of the early trips was to ensure votes in favor of continuing China’s MFN status. In 1993, for example, the delegation visited several senators, among them now Vice President Joe Biden and US Ambassador to China Max Baucus, who have both addressed the chamber in China in the past couple of years.

Former Chairman Jim McGregor (1996) spent a lot of time preparing the missions to Washington, and making sure the message was clear.

“AmCham China was very involved in getting China most-favored-nation status every year,” he said. “Our basic position was: These are reasonable people, they’re moving toward more openness, so give them a chance. You can’t contain China, but make sure they follow the rules.”

The trips provide important on-the-ground context from American businesses in China to legislators, some of whom may not have visited China. As well as MFN status and WTO entry, important topics over the years have been the trade deficit, the value of the renminbi, the loss of US manufacturing jobs and many other issues that foster an us-versus-them mentality. Of issues close to the heart of chamber members, high on the list has been intellectual property rights protection, market access and visa restrictions on their Chinese employees.

In the run-up to China’s WTO entry and for a few years after, it wasn’t uncommon for AmCham China to send delegations to Washington twice year a year. In recent years, however, a single trip in late April or early May to coincide with the launch of the White Paper has been the norm. The President also usually joins the AmCham Shanghai trip later in the year.

Larger delegations have been split up into teams, either based on interest or, when the chamber has had a particularly important message, as a means to reach a greater audience. As well as Capitol Hill, the delegation focuses on key ministries and agencies, as well as the U.S. Chamber and influential think tanks.

On other occasions, AmCham China has been called to Washington for special duty. In 2010, AmCham China’s then-President Chris Murck testified to the House Ways and Means Committee and the International Trade Commission regarding the protection of intellectual property rights in China and China’s industrial policy. Of particular concern at the time was China’s drive to promote “indigenous innovation,” regarding which Murck said that China’s “use of the nationality of intellectual property as a condition of market access is highly unusual and has been widely objected to by China’s trading partners, including the United States and American companies doing business in China.”

Hosting dignitaries from both sides

As well as visiting Washington, AmCham China has often been an important port of call for visiting delegations of US government officials and lawmakers. Over the years, chamber members have met with numerous commerce secretaries and dozens of Congressional delegations. The volume of visits by US dignitaries reached such a level that in 1995 the chamber felt obliged to formulate rules on how they should be handled, for example barring campaign speeches and specifying who would get a free lunch.

McGregor recalls some of the early visitors weren’t as diplomatic as they could have been.

“Sometimes it was embarrassing when Congressional delegations came in. They were as ignorant as they were arrogant, and they would lecture the Chinese officials,” McGregor said. “One time, in the Great Hall of the People, two congressmen from opposing parties started yelling at each other.”

Early honored guests included US Vice President George Bush, Sr., who had been the unofficial US ambassador to China before diplomatic relations were established, and Attorney General Ed Meese. More recently, Vice President Joe Biden and Secretary of State John Kerry have both addressed the chamber.

Vice President Joe Biden addresses AmCham China members in Beijing in 2013.

On the other side of the coin, the chamber has also had the honor to host many senior figures in the Chinese administration, including ministers and vice premiers. Many of these engagements have centered on the annual Appreciation Dinner, the chamber’s biggest event of the year.

Helping Chinese visit the US

AmCham China has also actively promoted people-to-people exchanges between the two sides, especially through the relaxation of visa rules. Around the time that China joined the WTO, increasing numbers of Chinese were visiting the US, including the employees of member companies. At that time, around 250,000 Chinese secured a US non-immigrant visa every year, with another 100,000 denied visas, largely because of fears generated by the 19 percent overstay rate for Chinese visitors. Not only that, but there were just four or five visa officers in the embassy, interviewing 500 to 600 applicants a day.

Following the Sept. 11, 2001, terrorist attacks, visa rules became stricter, including for Chinese visiting the US, which meant interviews for everyone apart from those renewing a recently expired visa.

To help release the logjam, the chamber developed a two-pronged approach. It first came up with a practical way to work with the US Embassy to the benefit of US companies. In the first half of 2002, the Express Lane Visa Program launched, processing 200 visas in the first week. It offered speedy visa processing for AmCham China member companies and their customers and business partners.

Second, the chamber lobbied for visa processing that didn’t unnecessarily harm American business interests. During the 2003 DC Doorknock, the team distributed a paper highlighting the difficulties visa restrictions presented to US companies in China. For a few applicants from high-tech companies, their visa applications could take more than 10 weeks, and even then still be rejected. Combined with a perceived tightening of export controls, the chamber’s paper said: “It is clear that these conditions have created a new competitive disadvantage for American firms.” It suggested increasing the resources available for assessing applications and the transparency of the process for American companies.

With the high number of rejections, the number of US non-immigrant visas granted to Chinese nationals in 2004 was still below the pre-Sept. 11 level.

In 2005, the service was expanded to handle more applicants and help ensure they fill out the forms correctly, as well as express processing for important Chinese customers of member companies. The same year, the US and China came to an agreement on offering 12-month, multiple-entry visas.

However, the ability of the US Embassy to process visas couldn’t keep pace with demand, resulting in interview wait times shooting up to four months during the summer of 2010. The chamber lobbied hard for more consular resources, which were forthcoming, and a lengthening of the visa validity. Finally, at the end of 2014, the two sides announced that they had agreed to lengthen the times for business visas to 10 years with multiple entries.

In the meantime, the chamber’s Business Visa Program has processed 142,232 applications, helping thousands of Chinese citizens enrich their experience in the US, and American companies to do business in China.

Looking ahead – a bilateral investment treaty

AmCham China has also been a long-time advocate of a bilateral investment treaty (BIT) between the two countries. The chamber met with the US negotiators on the treaty after the first round of talks in 2008. But even by the following year, it was clear a quick deal was unlikely.

“Negotiating this will be far harder than any similar treaty the two countries have separately previously negotiated, and both sides are thus moving cautiously in light of the numerous issues raised,” Beijing-based lawyer Spencer Griffith wrote at the time. “We should expect that the talks may not be resolved for some time, possibly years.”

Negotiations largely petered out until mid-2014, when China agreed to use the US “model BIT” as a starting point for negotiations, and use a negative list approach, whereby everything would be covered by the treaty apart from exceptions agreed by both sides. The talks continue, and in the 2016 Business Climate Survey, more than two-thirds of members said they expect a deal to be done by the end of 2018. As with China’s WTO accession, such an agreement would only be the start of the battle in Congress, but it nevertheless would represent the most significant breakthrough in economic relations between the two sides since China joined the global trading body.

Regardless of how quickly the bilateral investment treaty is agreed, there is no doubt about the significance of the US-China relationship. More than nine in 10 members say that it is important to their business in China, and through the chamber they have helped reduce the misunderstandings and increase cooperation to ensure the relationship continues moving forward. As Baucus said before arriving in China, “The US-China relationship is one of the most important bilateral relationships in the world. It will shape global affairs for generations to come. We must get it right.”