Chapter 15 Clinton became a prisoner of China

In terms of timing, the grand opening of Shanghai KFC coincides with another step on the development path of "China America". In the spring of 1994, President Clinton made a highly controversial and widely debated decision to delink China's trade MFN status from human rights issues. After 1989, U.S. policy makers have been plagued by a desire to open up the Chinese market for the commercial interests of the West and the U.S. on the one hand, and to adopt a tougher policy against the Chinese government on the other.In the first two years of the Clinton administration, intense pressure on human rights issues became a major feature of US foreign policy in the post-Cold War era.And China has just become the target of attacks by US human rights organizations.

Over the past 20 years, tensions over human rights issues have been one of the major discordant factors in Sino-US relations.However, the problem is not as simple as it seems.In the early days of the Clinton administration, there were strong voices in the administration supporting a tough policy toward China, including refusing to grant China most-favored-nation status.And for the strengthening of economic ties between China and the United States, China's most-favored-nation treatment is indispensable. When Clinton participated in the presidential election in 1992, he once focused on criticizing the Bush administration's China policy as connivance with China.So his decision in May 1994 to delink economic concerns from human rights concerns has attracted great attention.

According to U.S. law, if China's most-favored-nation treatment is cancelled, the U.S. will impose high tariffs on imported Chinese goods and at the same time restrict the types of U.S. exports to China.Because in the eyes of the United States, China is a "non-market economy" country, so the President of the United States must re-examine the most-favored-nation treatment for China every year.This has made policy toward China an annual topic of discussion in Washington, with many in Congress wanting to repeal China's most-favored-nation status as punishment for the Chinese government and force it to follow Washington's agenda on political reform schedule.Of course, Deng Xiaoping and his successors will not change the original reform path under the coercion of the United States.They made it clear to US officials that China will follow a development path with Chinese characteristics.

Despite the development of Sino-US trade, in 1994, the trade volume between the two countries was still less than 40 billion US dollars.However, at that time, the Chinese market was already one of the fastest-growing markets for U.S. merchandise exports, and Americans could not ignore the prospect of greater development in the future.In the end, Clinton decided that the US government would no longer continue to link trade issues with China's human rights issues.While remaining committed to continuing to press China toward reform, Clinton announced in May that trade would no longer be the administration's main point of pressure on Beijing.He concluded that pressure on trade issues is unlikely to force the Chinese government to make changes, and this policy of the US government is no longer effective.

This time, as usual, Clinton is not thankful.The Chinese were offended by the arrogant attitude of the Americans.The US media and the human rights faction in Congress also accused Clinton of putting trade above morality. "New York Times" columnist AM Rosenthal (AM Rosenthal) strongly condemned Clinton and said: "Politically, the Chinese Communist Party has a new prisoner-US President Clinton." In the past 20 years, the United States' China policy has been a combination of realism, idealism and capitalism.Correspondingly, there are discussions in China around idealism and pragmatism in foreign policy.Deng Xiaoping and his successors have de-emphasized ideology, but the United States has not yet shaken off the shackles of ideology.For most of the time after the founding of New China, the United States' China policy was backed by strength.No one doubts that the U.S. economy, military power, and global influence are superior to China's, and the evolution of U.S. policy toward China is based on this background.Although China has undergone tremendous changes since the reform and opening up, before 1994, this balance of power between China and the United States remained unchanged.Still, the entry of KFC and other foreign companies into the Chinese market is a sign that the balance between China and the United States is shifting, though Americans and Chinese are largely unaware of it.

After Clinton announced in May 1994 that China's most-favored-nation treatment would be decoupled from human rights issues, American companies, including KFC, which saw China as the next huge market, expressed their gratitude for this.As soon as Clinton made this important decision, KFC President John Cranor flew to Shanghai to attend the opening ceremony of the KFC Bund store.He said: "The door of the Chinese market has opened further. American companies can now enter the Chinese market at full speed. By permanently decoupling human rights issues from American economic investment, President Clinton has removed the uncertainty of our business in China. We no longer have to Worried that Sino-US relations will deteriorate." After attending the ribbon-cutting event of the KFC Bund store, Crano and some other top executives visited the lively Bund accompanied by 100 children, all of whom were dressed as Colonel Sanders appearance.Next, they took a boat across the Huangpu River to Pudong, where more celebrations awaited them.

Crano said he had planned to shelve investment plans in China if the U.S. government did not delink trade concerns from human rights concerns.Now, with no further obstacles from the US government, his concerns can be allayed.KFC plans to invest 200 million US dollars to expand its business scope in China to 45 cities in 1998.KFC has already regarded China as the most potential market in the future.Other American companies, including General Motors, Chrysler, Boeing and Caterpillar, feel the same way as KFC. It can be said that the view that 1994 marks the end of the tense US policy toward China is a bit too optimistic, but Clinton's decision can still be said to be a watershed in the US policy toward China.It gives the green light for American companies to enter the Chinese market, allowing companies like KFC that have already taken the first step to accelerate their development in China.At the same time, in terms of arms sales and sensitive technologies, the US government still maintains some restrictions and sanctions on China, and some punitive tariffs have not been cancelled.But some criticism of Clinton's decision was justified.This decoupling decision has accelerated the process of American companies pouring into the Chinese market, and shelved some people's plans to use economic interests as bait to induce changes in the Chinese government's political and legal systems.

After 1994, the tension in Sino-US relations eased.However, the idea that Americans believe that they have the strength and the right to issue orders to China has not changed. After 1994, the United States temporarily shelved its tough China policy, but few Americans felt that the influence of the United States would decline.Although more and more American companies and companies from other countries and regions in the world are investing in China and establishing joint ventures with local Chinese companies, the Chinese government is still suspicious of the United States.Although that period is not far away from now, it is very different from now.At that time, there were no rules for the behavior of American companies in the Chinese market. They did not have any precedents to learn from. The result is excitement, confusion, and often frustration.Sometimes, some profitable investment plans are drawn up in haste by businessmen in order to do business.

KFC entered the Chinese market and became one of the most recognized foreign brands at that time. The number of its chain stores in China has reached thousands, and hundreds of new stores are opened every year. 20 years ago, all these were just dream.It’s also been a dream of Western corporations and investors for centuries, a dream that once ended almost like a nightmare.Since the Venetian explorer Marco Polo came to China in the 13th century and wrote passionate travel notes praising the magic and wealth of the East, Western businessmen have been attracted and driven by the huge temptation of the Chinese market. If every If the Chinese can buy one piece of their product, the total sales volume will reach hundreds of millions. In the 19th and early 20th centuries, Western companies and governments in Western countries tried to extract profits from China, but mostly failed.Britain had some success in China's Hong Kong region, and Shanghai served as a distribution center for Western commerce between the two world wars.After the founding of New China, some new changes took place.

In the late 1980s and early 1990s, some difficulties encountered in doing business in China deterred many foreign companies.Ambiguities in property ownership, deeds, intellectual property rights, banking structure and withdrawal of funds create a host of problems.There is a lack of infrastructure, few roads, inadequate rail lines, erratic power supplies, and an unstable legal system that applies to foreign companies and domestic individuals participating in private-sector investments.For well-run U.S. or European companies, the opportunities in the Chinese market are unproven, but the risks are real.You may one day make a lot of money in China, but first, you're investing a lot of money with an unclear payback date.

Companies like KFC, which have struggled to remain globally competitive and have changed hands many times, have an incentive to try their luck in the Chinese market.For them, the Chinese market is worth the risk.Of course, in the 1990s, some companies with strong markets in the United States and around the world and whose management teams were willing to innovate, such as General Electric and Nike, set their sights on the Chinese market because of its potential, and took measures to enter China market.But few businesses have been as successful as the likes of KFC. As Chinese patronize KFC more and more and make it a part of their lives, their understanding of what it means to be in the modern world has also changed.Of course, food is still food, KFC did not have any groundbreaking breakthroughs in cooking.However, KFC is not like the food stalls in the market, nor is it as formal and grand as a traditional Chinese banquet, it looks and feels very "alternative".For Chinese customers, it became a symbol of new modern culture rather than traditional or local culture.While the same can be said of any Western chain operating in a non-Western country, the difference is that in most countries around the world, Western companies can call the shots, whereas in China it is not the same.The huge size and potential of the Chinese market and the macro-control of the market by the Chinese government prevent things from being completely carried out in accordance with the Western model.Western companies cannot issue orders when they come to China, but must cooperate with the Chinese.They cannot set an agenda as they please, and can only act according to China's situation.In this way, a new system was gradually formed.