Understanding China Since Nixon

NEW YORK – On February 21, 1972, Richard Nixon became the first US president to visit the People’s Republic of China, setting in motion a process that would end China’s decades-long isolation and kick-start the emergence of a modern, dynamic economy. But, despite the seismic economic changes in China in the intervening half-century, many in the West regard today’s People’s Republic as an unreformed communist country whose unfair trade practices are harming Western workers and consumers. Although this impression is partly a by-product of today’s geopolitical competition, it also reflects a lack of historical perspective.

At the time of Nixon’s visit, China was as isolated and closed off from the world as North Korea is today. Ordinary Chinese had no freedom to choose where to work and had to accept jobs assigned by their local government. Almost every Chinese adult worked for the state or in a state-owned firm, because no privately owned domestic enterprises or foreign firms operated in the country. Nixon’s entourage also noticed an astonishing lack of color on the streets, as most Chinese wore either blue or green. There was not a single foreign brand on the streets of Beijing or Shanghai.

Today, Chinese can choose their place of employment, more than 80% of the workforce are employed by firms not owned by the state, and wages are determined by supply and demand in the labor market. An international tourist cannot tell from people’s clothing alone whether she is in Shanghai, Seoul, Tokyo, or Taipei. Virtually all major global brands that can be seen in New York, London, and Singapore, are ubiquitous in major Chinese cities as well.

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