The meeting ended shortly before 1 A.M., and Zhou courteously accompanied us to the door to bid each of us good-bye.
It had been a fascinating meeting. Zhou had been friendly, and I was surprised at the degree of his interest in exploring serious issues. Unlike the Russians, especially Khrushchev in our 1964 meeting, Zhou was uninterested in scoring ideological points. I suspect he thought the severe problems then besetting the United States and the free market economies of Western Europe and Japan were not the result of imprudent policies, as I had suggested, but rather the product of the fundamental “contradictions of capitalism.” But if so, he was too polite to correct me.
China paid an immense price for Mao’s dictatorship. The Cultural Revolution destroyed an entire generation of the country’s ablest people—engineers, teachers, scientists, factory managers. In 1973 we knew almost nothing about the enormity of Mao’s crimes or the complicity of his closest associates, including Zhou Enlai. I found Zhou to be urbane, charming, and erudite. It was a shock to learn later that he had tolerated such crimes against humanity.
OBSERVING CHINA’S TRANSITION
I visited China five more times over the next fifteen years and met with the successors of Mao and Zhou on a number of occasions. These trips gave me the opportunity to observe the evolution of China’s position in the world.
My second visit in early January 1977 came less than a year after the deaths of Mao and Zhou, and at a time when the transition from the radicalism of Mao’s final years had barely begun. The infamous Gang of Four had been imprisoned in late 1976, and the ineffectual Hua Guofeng had just become chairman of the Communist Party.
PIFA had again invited me, this time in my capacity as chairman of the Council on Foreign Relations, with whom they wanted to establish closer ties. I accepted the invitation with the understanding that I would also be able to discuss banking matters with Chinese officials. Nurturing the relationship between PIFA and the CFR was important to me, but I was more interested in prodding the Chinese to be a bit more imaginative about Chase’s operations. Five years had elapsed since Nixon’s historic visit, but full diplomatic relations had not been restored between the United States and China. Each country had been distracted by internal political concerns—the death of Mao and the protracted Watergate crisis. As a result Chase’s correspondent relationship with the Bank of China had been slow to develop.
With this in mind I visited Washington before leaving for the Far East to determine the attitude of the incoming Carter administration toward normalizing relations with China. I met with Cyrus Vance, who was about to take over as Secretary of State, and Zbigniew Brzezinski, who would serve as national security advisor. I also met briefly with Jimmy Carter. All three of them indicated that resolving the remaining areas of disagreement with the PRC was high on their list of priorities, and they gave me permission to convey this information to the senior officials I was scheduled to see in Beijing.
I raised the issue with both Vice Premier Li Xiannian and Huang Hua, who by then had become minister of foreign affairs. To my dismay they were notably cool in their response. They insisted that the principal obstacle to normalization was our country’s continued support for the “criminal regime” on Taiwan. Until we changed our policy there, nothing would be done. I found most of the senior leaders I met almost as suspicious of the United States as they were of the Soviet Union, which they invariably referred to as the Polar Bear. Although courteous to me, my requests to expand Chase’s operations met with a firm refusal. All in all it was a very disappointing trip.
THE OPEN DOOR
A little less than two years later, sentiment had changed completely. Deng Xiaoping displaced Hua Guofeng and rapidly consolidated his power over both the Party and the State. The Carter administration was prepared to complete the process begun by the Nixon administration. In December 1978, American and Chinese diplomats finally agreed to a formula that finessed the intractable issue of Taiwan’s independence, and with it came the restoration of full diplomatic relations between the United States and the PRC.
Chase benefited immediately from the agreement. With the “blocked assets” issue resolved, we established a full correspondent relationship with the Bank of China, which finally opened a substantial dollar account at our home office in New York. In addition, the Ministry of Finance authorized a Chase representative office in Beijing, and soon after we made our first loan—to the Chinese Ministry of Mining and Metallurgy. The Chase World Information Corporation, our information services subsidiary created in 1972, began to introduce American businessmen to investment opportunities in China.
In many ways Chase served as China’s point of entry into the United States. We hosted a business luncheon in New York for their minister of finance in 1979, and in June of the following year organized a China forum attended by senior representatives of more than two hundred American companies. In the fall of that same year I hosted a small private luncheon in Pocantico for Vice Premier Bo Yibo, who was accompanied by Rong Yiren, the chairman of the China International Trust and Investment Corporation (CITIC). This gave me the opportunity to meet the man who would do more to implement his country’s opening to the West than any other.
Rong was the scion of an old Shanghai banking and manufacturing family that had extensive investments in China, Hong Kong, and the United States before the revolution. After Mao took power, Rong remained as a favored “national capitalist,” continuing to run his family’s many enterprises with only nominal supervision from the government. Eventually, however, the Red Guards caught up with Rong, confiscated his property, and submitted him to torture. Only the intervention of his protector, Deng Xiaoping, had saved him from a long term of “reeducation” on a rural commune.
After Deng consolidated his hold on power in the late 1970s, he appointed Rong to head CITIC. Deng knew that China desperately needed foreign capital to finance its development and turned to Rong as one of the few Chinese with the requisite knowledge and contacts in the Western world. Rong was an able and farsighted businessman who quickly became the focal point for all foreign investment in China. Over time, he and I became good friends.
The door to China had swung open, and Chase was waiting on the other side as American companies began to walk through it.
I next visited China in May 1981, shortly after I retired from the Chase, and found more evidence of change. Deng Xiaoping’s moderate faction of the Politburo had wrested control from the hard-line Maoists and had begun to repair the damage done during the decades of Mao’s harsh rule. There was a new openness and a tolerance for foreign ideas that had not existed on my earlier visits.
A measure of this change was the Chinese leadership’s willingness to meet with a delegation from the Trilateral Commission. After a plenary session of the Trilateral in Tokyo, a group of us went to Beijing to discuss opportunities for economic cooperation between China and the Trilateral countries with a dozen or so senior Chinese intellectuals. The highlight of the trip was our meeting with the three Chinese vice premiers, including Deng himself.
Deng was a diminutive man with an extraordinarily weathered face. He was seventy-seven years old when I first met him and looked much older. He smoked nonstop during the course of our one-hour meeting. It was apparent he was very much the man in charge. Both of his companions, although his equal in rank within the government, deferred to him constantly.
Deng was quite willing to discuss any and all topics. He was fully engaged throughout the meeting and seemed eager to reassure us of his commitment to continued economic liberalization.
THE CAVES OF DAZU
In April 1986, Peggy and I returned for a vacation trip at the invitation of my old friend Ambassador Winston Lord and his wife, Bette, the author of Spring Moon, a widely acclaimed novel about China in the early twentieth century.
Before leaving Beijing I had the chance to meet and talk with Premier Zhao Ziyang, and I liked him immensely. Zhao was considered by many the logical successo
r to Deng once the aging leader fully retired. Zhao seemed fully committed to the process of change and eager to experiment with new ideas. He was comfortable talking about economic matters and candid about the difficulties that China faced in making its transition to a more market-oriented economy. In talking with him I felt a sense of compatibility I had never experienced with other Chinese leaders. He had Zhou Enlai’s urbanity and cosmopolitan interest in the rest of the world.
Rong Yiren gave a splendid banquet for Peggy and me at one of the guest houses adjacent to the Forbidden City, where Nixon and Kissinger had stayed in 1972. It was an indication of Rong’s power and influence that he was able to do this in a place normally reserved for heads of state. Rong and his wife also entertained us at their home—the only time I have ever been to a private home in China. They lived in a beautiful old house built in the traditional style with several rooms arranged around a large inner courtyard. We were served a delicious formal Chinese “tea,” and Rong told us about his family’s long and interesting history. Later, after we returned to New York, Rong sent me an unusual reclining wooden chair that I had admired in his house. These two gestures of friendship were unique to my experience in China and ones I would have expected from a senior official in the old Imperial China, but not from the representative of a Communist government.
When Rong learned we would be traveling to Chongqing to begin our journey down the Yangtze, he made a suggestion that turned an exotic vacation into a deeply memorable experience. He told us about Dazu, an eight-hundred-year-old Buddhist complex and pilgrimage center located fifty miles west of Chongqing, which he said was one of the great artistic treasures of China. We followed his suggestion even though we had to leave our hotel in Chongqing at 4 A.M. in order to get back in time for the departure of our riverboat.
The drive to Dazu gave us our first glimpse of rural China—men and women planting young rice plants by hand in the flooded paddies, and huge water buffalo pulling single-bladed plows behind them. Our car was the only modern piece of equipment in sight. Dazu itself was incredible: Buddhist monks had hollowed out caves in limestone cliffs where they lived, and during the twelfth and thirteenth centuries they carved more than fifty thousand statues of Buddha and other religious figures on the cave walls and on the faces of the cliffs. Dazu was comparable in quality to the much older (first century B.C. to eighth century A.D.) and more famous Ajanta and Ellora caves in India, which may have been, I learned on a visit many years later, the inspiration for the caves in Dazu.
In May 1988, I traveled with the Chase IAC to Beijing for a four-day visit. We met with Zhao Ziyang, who had by then reached the pinnacle of power as general secretary of the Chinese Communist Party, Premier Li Peng, and Deng himself, who at the age of eighty-four still exercised the ultimate power through his position as head of the Red Army. Winston Lord said he did not recall any other private group being received by the three senior leaders in one day.
On my previous visits I had met with Chinese officials at the Great Hall of the People or in their offices. This time our meetings were held in the Ziguangge, the Hall of Purple Effulgence within Zhongnanhai, the exclusive enclave next to the Forbidden City, where the highest officials of the Communist Party had lived since coming to power in the late 1940s. The area was exquisite; traditional Chinese homes were set on well-tended grounds surrounding two beautiful lakes.
Deng was even more diminutive and frail, but his mental faculties were as sharp as ever. Deng claimed he was semiretired because he wished to make way for younger leaders. He noted with pleasure the presence of Henry Kissinger, an IAC member with whom he had met on many occasions, and commented favorably on the meeting he had held with my Trilateral group seven years before.
Deng pointed with pride to the progress China had made over the previous decade and stated that both Zhao and Li were committed to the forceful implementation of a program of economic reform. However, Deng also provided a frank appraisal of China’s current situation. His country was weak economically, hampered by a low level of technology, and pressed by an ever-increasing population. The solution lay in economic growth and the campaign to limit population growth. But China also needed foreign investment and infusions of modern technology. Deng was optimistic that this would happen and expected that by the end of the century China would have made considerable progress in meeting all these goals.
In a reflective mood, Deng talked about his vision of the world. He saw the twenty-first century as the “Century of Asia,” with Latin America gradually becoming a force. He even saw a time when Africa would be a world leader. By implication he saw the stars of Europe and the United States waning, although he knew that China would be dependent on the Western world for technology and capital for some time.
In closing the meeting he said that China had no option but to pursue reform and to improve relations with the developed world. He was pressing his successors to move swiftly. Deng conceded that mistakes would be made but felt that this should not deter the reform effort. “China should not be afraid to make errors,” he said, “but it should avoid repeating them.” He indicated, ominously as it turned out, that in the event too many errors were made, he would not hesitate to reexert his authority and make changes in his country’s leadership.
This was a chilling prophecy. A year later, with the Tiananmen Square demonstrations, Deng sent in the tanks to crush the dissidents. This reprehensible act has tainted Deng’s place in history, but it should not obscure his pivotal role in breaking with China’s immediate past. It must be remembered that it was Deng who authorized the dismantling of China’s inefficient communal farm system, opened the country to foreign trade and investment, and initiated, albeit quietly and slowly, the process of political decentralization and democratization.
At the start of the twenty-first century China has become a far more open and tolerant society than the one I observed almost three decades earlier.
CHAPTER 19
EMISSARY FOR “BALANCE” IN THE MIDDLE EAST
Nowhere in the world was my family and our close connections to the petroleum industry so complex and so easily misconstrued as in the Middle East. In turn, Chase’s involvement in the region stemmed from its close and longtime association with the major U.S. oil companies.
The bank had been one of the earliest financiers of the American petroleum industry, and as new sources of oil were discovered in Latin America, the Far East, and the Middle East, Chase underwrote the shipment of both crude oil and refined products all over the world. By the mid-1930s, oil had become so central to Chase’s profitability that Winthrop Aldrich created a separate Petroleum Department, which was soon recognized as the best in the business. In 1947, Winthrop opened a branch in Beirut, the financial center of the region, as part of his international strategy. But we faced difficulties there from the start. The main problem was the regional dominance of the large British and French overseas banks, but we simply did not assign enough resources to the area. A single officer, James Major in the Foreign Department, was expected to cover all the Middle Eastern countries outside Lebanon from New York. He made one trip a year to keep in touch with our correspondents and other customers, hardly sufficient to develop meaningful new business.
In 1953, Jim asked me to accompany him on his annual trip even though I had shifted to the domestic side of the bank by then. The visit was an eye-opener. Both the Saudis and the al-Sabahs, the rulers of Kuwait, retained important aspects of their Bedouin heritage. They were courageous, shrewd, and daring people with little knowledge of Western culture or the modern world. Riyadh, the capital of Saudi Arabia, was encircled by a high crenellated wall, and its tall wooden gates were closed every night against intruders. Women in veils, muezzins calling the faithful to prayer from the tall minarets, and desert warriors in long robes with curved ornamental daggers in their belts presented the Western visitor with a colorful mosaic of a time that seemed long past. As if to keep the modern world at bay, foreign embassies were requir
ed to locate in Jidda on the Red Sea, more than five hundred miles distant from the capital.
In 1950, Winthrop Aldrich convinced King Ibn Saud to allow us to open a branch in Jidda. But the follow-up was poor, and Saudi officials declined to approve the request. Although we maintained an important depository relationship with the Saudi Arabian Monetary Agency (SAMA), their central bank, and with a number of Saudi private banks, and also served as the personal bank for some members of the Saudi royal family, we still needed a direct presence in the country.
In contrast, City Bank took a more aggressive approach and succeeded in getting permission to open a branch in 1955. This gave them an enormous advantage when Saudi oil production increased in the ensuing years.
Recognizing the weakness of our position, I made the Middle East an integral part of my plans for international expansion after I became co-CEO of the bank in 1961. I called on political leaders and banking officials in Lebanon, Kuwait, Saudi Arabia, Bahrain, and Iran during the course of a round-the-world trip in February and March 1962, a trip on which Peggy accompanied me.
I saw signs of change everywhere we went in the Middle East. The increasing flow of oil wealth had provided the funds to build new highways, airports, desalinization plants, and vast housing projects, and governments throughout the region were signing contracts with American and European companies to do the work.
Memoirs Page 34