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Government, Foreign Policy

Kuomintang, territorial disputes, Congress members, Chinese Communist Party, MFN

When the Chinese Communist Party won the civil war in 1949, the Nationalist (Kuomintang) government that had ruled China fled to the island of Taiwan. For two decades the government on Taiwan received backing from the United States and retained the China seat in the United Nations (UN), which gave it international recognition as the rightful government of all China. Meanwhile, in 1950 the People’s Republic of China, the Communist government on the mainland, signed a treaty of friendship and alliance with the USSR, reflecting Mao’s policy to “lean to one side” by aligning with the socialist camp. Relations between China and the USSR deteriorated, however, due in part to ideological differences, disagreements over strategy toward the West, and border disputes, and by 1960 the split between China and the Soviet Union was evident. The two countries fought border battles in 1969 and 1970. During the 1960s, therefore, China was on bad terms with both the USSR and the United States, and was isolated from world affairs.

Relations with the United States began to improve when President Richard Nixon visited China in February 1972. By 1979 China and the United States had normalized diplomatic relations. Meanwhile, the government on Taiwan saw its international standing fall as the United States and other foreign governments shifted their formal diplomatic relations to the Communist government in Beijing. In the late 1980s, just before the collapse of the USSR, China’s relationship with the Soviet Union also warmed.

China currently pursues an independent diplomacy in which it seeks good relations with all powers but opposes dominance by any country, including the United States. Its resources are its large size and population, strategic location in the center of Asia, growing economic influence, permanent membership in the United Nations Security Council, and status as a nuclear power. The country’s chief problems are its relative military and economic weaknesses compared to the United States and nearby Japan. China seeks to promote relations with all of the many countries on its periphery, while taking an uncompromising stance in its territorial disputes with such neighbors as India, Vietnam, Japan, and the Philippines. It insists on its sovereignty over Taiwan and rebukes any country that accepts diplomatic dealings with the government on that island.

As China has become a major export power, economic diplomacy has become an important part of its foreign policy. In the 1980s China began to seek membership in the General Agreement on Tariffs and Trade (GATT) (now the World Trade Organization, or WTO) in order to maintain favorable tariff treatment by other markets, including the United States, its chief export market. As part of the application process, China was required to negotiate bilateral agreements on opening its markets with members of the trade group. After 15 years of negotiations, China formally became a member of the WTO in December 2001. In joining the WTO, China agreed to reduce import tariffs, eliminate state subsidies for farmers and state-owned firms, drop many restrictions on foreign investment, and abide by WTO standards for protection of patents, copyrights, and intellectual property. After China’s entry in the WTO, the United States permanently normalized trade relations with China, in accordance with legislation passed by the U.S. Congress in 2000. Normal trade relations, formerly known as most-favored-nation (MFN) status, is the favorable tariff treatment the United States extends to all but a small group of countries. Previously, the United States had extended normal trade relations to China based on an annual review procedure. In some years, U.S. Congress members who were dissatisfied with China’s human rights and arms proliferation practices threatened to discontinue normal trade relations with China.

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