This is the story of one of the most spectacular transformations in world history—the progress of China during the twentieth century from a backward, poverty-stricken peasant society on the verge of partition by imperial powers into a modern industrial state that will almost surely be America’s most serious rival in the twenty-first century.

This book covers the period from the last days of the Chinese Empire around the turn of the twentieth century to the rapprochement between Red China and the United States in 1971-72. It was this last culminating event that made possible the dynamic China of today. It gave the government in Beijing a permanent seat on the United Nations Security Council, opened China to the world, and set in motion the dazzling economic transformation of the nation in the decades that followed..

This book tells the intertwining stories of the revolution in 1911-12 that ended the last of the imperial dynasties stretching back more than 2,000 years, of the half-century effort by Japan to conquer China, of the cataclysmic confrontation between the Nationalists and the Communists within China, of the failed effort by the U.S. to turn China into a bastion from which to defeat Japan in World War II and to elevate it thenceforth into a democratic stabilizing force in the Far East, and of the generation-long collision that followed between Red China and the United States.

Only the last part is well known in the West—the war and the threats of war between the U.S. and China in Korea, along the Taiwan Strait, and in Vietnam. But the other events are essential parts of the whole drama. The historic toast of reconciliation between President Richard M. Nixon and Chinese Premier Zhou Enlai in 1972 was the denouement of a saga that began three-quarters of a century before when Japan launched a sneak attack against the Chinese navy in the Yellow Sea and set the Chinese civilization on its path to the destruction of the ancient Middle Kingdom and the birth of a new and modern China.

After 1972, China intensified its efforts to industrialize. Leaders began to realize that Marxist doctrines of centralized decision-making—which suppressed individual initiative and creativity—left China incapable of meeting the challenges of the emerging global economy dominated by microelectronics, computers, robotics, space technology, and worldwide communications. Leaders began to downplay orthodox Communism, eliminating the huge, unwieldy rural communes, allowing peasants to work for themselves, and exploiting China’s single greatest resource—the industry, inventiveness, and energy of its people.

China turned away in part from the numbing command economy of state ownership of factories, farmland, and other productive resources that Mao Zedong had imposed on the Chinese people. This system was characterized by central bureaucrats who dictated what materials factories and communes would be allotted and what they would produce, ignoring the wishes of consumers and prohibiting individual originality, inspiration, innovation, and ingenuity.

Since 1972 China has increasingly allowed individuals, groups, corporations, and foreign investors to create a modern, fast-growing market economy that most definitely produces what consumers want—not only in China, but in households across the world. This new China is slowly closing out the inefficient state-owned factories that still drag down the economy. The tendency in China has been steadily toward a more liberal policy, modeled less on Marxism and more on the laissez-faire doctrines of the father of free-market economic theory, Adam Smith.

For a decade and a half after 1972 the world adjusted to a China that seemingly was fitting comfortably into the comity of nations, and seemingly was moving away from authoritarianism and toward democracy.

Then, in Beijing's Tiananmen Square in June 1989, Communist authorities shot down students who were trying to bring democracy to China. Tiananmen Square froze relations with the world’s free societies for a decade. The official crushing of the democratic movement still causes human rights groups to revile the Beijing regime. But in other arenas attitudes have softened. China increased confidence among business leaders and foreign governments because it opened itself wider to foreign corporations, adopted policies that protected foreign investors, and showed that it wished to be a part of the world economy. The process by no means is complete, and China is not as open and transparent as the United States or Western Europe.

The partial opening of China has led to dramatic expansion. Between 1980 and 2004 China’s growth rate was 9.8 percent annually—compared to 2.7 percent for the G7, the world’s seven most industrialized states. China has become America’s and Japan’s greatest trading partner.. Measured in terms of purchasing power parity (since prices are much lower in China than in the U.S.), China already is the world’s second-largest economy behind the U.S., and, if current trends continue, China will overtake the United States as the world’s largest economy in 2050.1 The diligence of the Chinese people accounts in large measure for this growth. But the decision of the United States to stop a generation of hostility played a major role, because it ended China’s pariah status and opened the world’s markets to China.

Nevertheless, the bloodbath in Tiananmen Square reminded us that China operates by different rules and traditions than the democratic societies of the West. The Chinese students who led the brave movement were seeking to create a society that had never existed in China. From the earliest days of the imperial dynasties, China has been ruled by authority. Democracy, representative government and civil rights never were significant factors in Chinese civilization, and are not today. The leaders responded in a quite traditional Chinese fashion to the student challenge in 1989: they called in the troops.

Human rights conditions have not improved since 1989. China outlaws “subversion of the state’s power” and efforts to “plan or pursue the overthrow of the socialist system.” In 2001, Amnesty International reported that 310,000 political dissidents and “individuals opposed to the Communist party” were being imprisoned in work camps.2

New York Times columnist Thomas L. Friedman draws the metaphor of China as “a six-lane, perfectly paved road, but with a huge speed bump off in the distance labeled ‘Political reform: how in the world do we get from Communism to a more open society?’” When the Chinese people “going 80 miles an hour” hit this speed bump, either the car flies into the air and slams down and all the parts hang together, or it flies into the air, slams down, and all the wheels fly off. No one knows which it will be, Friedman says.3

Mao Zedong articulated eight decades ago that political power grows out of the barrel of a gun. His aphorism crystallized the political reality of a civilization that for millennia has achieved social and political change almost exclusively by force. We need to understand this civilization. And to understand it, we need to know how it was shaped (and in many ways distorted) by what happened in the amazing sweep of history from Japan’s sneak attack on China in 1894 to Nixon’s reconciliation with China in 1972..

Between these two world-altering events China had to confront foreign exploitation, particularly an unparalleled effort by Japan to make China the centerpiece of a great East Asian empire, while, at the same time, it also had to find a way to eliminate centuries of victimization and oppression by its privileged elite who had driven the vast majority of the Chinese people into poverty and shame.

Although the United States was the only nation with the strength to counter the burgeoning power of Japan, American isolationism and disillusionment with international affairs after World War I combined to prevent our leaders from challenging Japan's attempt to subdue China. The U.S. failed to work with the League of Nations or the Soviet Union to deter Japanese aggression in Manchuria in 1931 and only responded decisively in the summer of 1941 when Japan threatened southeast Asia and the East Indies.

The United States also did not realize until after World War II that the effort to reform China's society had grown into a sweeping revolution. This revolution commenced with the founding of the Chinese Communist party in 1921 and its adoption of the cause of the peasants and workers. The Nationalists, who represented privileged entrenched interests, attempted to destroy all Communists after the breakup of the Communist-Nationalist common front in 1927. This internal conflict absorbed China, causing both antagonists to focus on each other, thereby giving Japan the opportunity to exploit and invade China.

The Communist party gained control of the mainland only after a long and devastating civil war. By taking on the cause of the oppressed and the poor, the Communists guaranteed their ultimate domination. However, the Communists were no more willing than the Nationalists to accept change which they themselves had not ordained, and they are not willing to do so today. The present-day government is accommodating modernization and economic growth to a degree unprecedented in Chinese history. Nevertheless, the pattern for many centuries in China has been revolution, repression, and revolution. Hopefully, the Chinese people will come to make changes in the future by internal evolution and democratic consensus, instead of by the old pattern—another revolution. But this by no means is certain.

U.S. leaders failed to recognize that the Chinese revolution arose from domestic inequities and believed that the Communists were part of a Soviet conspiracy of world conquest being directed by the Kremlin. By supporting the Nationalists after the victory over Japan in 1945, Americans took sides and turned the Reds into opponents.

The Communists were not tools of the Kremlin, but American antagonism forced them into an alliance with the Soviet Union at a time when U.S. interests were to divide Communists from each other. Even after the Communists drove the Nationalists to Taiwan in 1949, the U.S. supported Chiang Kai-shek's government. When the North Koreans attacked South Korea in 1950, President Harry Truman quarantined Taiwan and prevented the Communists from concluding the civil war by eliminating the Nationalists. We are protecting Taiwan militarily to this day.

The People's Republic turned against the United States when American leaders resolved to eliminate the North Korean state in the fall of 1950 and to place American forces on the Yalu river frontier with China. Beijing feared such an event would result in a joint American-Nationalist invasion to reconquer the mainland. In the war that followed, China thwarted the U.S. effort to destroy North Korea and demonstrated that its military power was sufficient to block any imperialist attack short of a nuclear holocaust. Later, China threatened a similar intervention if the United States invaded North Vietnam, a move that would have placed American forces against China's southern frontier. President Lyndon Johnson, unlike President Truman, heeded the warnings and did not invade North Vietnam.

However, the defeat of the Nationalists, the conflict over the status of Taiwan, the intervention in the Korean War, and the threat to intervene in Vietnam aroused intense antipathy in the United States and led American leaders to work for destruction of the Chinese Communist state. This aim never could come to pass because U.S. power was inadequate without use of nuclear weapons, and American leaders shrank from this step.

Meanwhile, China developed its own nuclear weapons and came to maturity as a military power. Richard Nixon realized that the continued attempt by the U.S. to exclude the People's Republic from the United Nations and from U.S. recognition threatened world peace. This fierce anti-Communist exhibited resolve no other American president had shown and sought an understanding with Beijing.

Today we need to know the story of China in the last century, because it tells us much about what has made and is making modern China and the modern world. We also need to know it because the history of China in the twentieth century is a marvelous tale of human passions, human aspirations, human courage, and human achievement in the face of stupendous odds.

There could scarcely be a more compelling odyssey than the journey of the Chinese people as they overcame attempts by the West and Japan to dominate them, and as they changed their ancient, class-ridden, unprogressive, family-based civilization into a society that has adapted brilliantly to modern industry, modern technology, modern communications, and modern warfare.

It is important for Westerners, especially Americans, to remember the essential good sense of the decision the U.S. government came to in 1972—to remove the last of the barriers that were blocking this venerable civilization and to welcome it into its rightful place as one of the great nations of the world.

Chapter 1: China and the Imperialist Threat >>

1. Source: Danmarks Nationalbank Monetary Review 4th Quarter 2004 under publications. China’s total trade was 1.15 trillion dollars in 2003, and its trade surplus was 32 billion dollars the same year. Although there are wide regional disparities in China’s development (Shanghai’s per capita gross product was $4,412 in 2003, while that in the southern interior province of Guizhou was $423), China as a whole is experiencing phenomenal growth. See a presentation on March 23, 2005, at the Center for Strategic and International Studies in Washington, D.C., by Kang Wu, fellow of the East-West Center, Honolulu, Hawaii.

2. Manfred Götzke, “China bleibt ein Feind der Menschenrechte,” Deutsche Welle world service, June 4, 2005.

3. Thomas L. Friedman, “Bangalore: Hot and Hotter,” New York Times, June 8, 2005.