ward. Zhou’s efforts to expand trade were not successful.
By 1960, as the Japa nese economy was steadily moving ahead, the Chi-
nese economy was in a disastrous state. China urgently needed to expand
food production to alleviate a famine that had already caused tens of mil-
lions of deaths. China needed chemical fertilizer for crops as well as iron
. 318 .
The Col apse of the Japa nese Empire and the Cold War, 1945–1972
and steel to make agricultural machinery. To decrease the acreage devoted to
growing cotton and increase the acreage devoted to food production, China
also needed help in manufacturing chemical fibers to replace cotton for the
production of cloth. Furthermore, after the Sino- Soviet split in 1960, the
Soviet Union withdrew 1,400 scientists from China and also scrapped more
than 200 joint development proj ects and departed China without leaving
any of the blueprints behind. China, in desperate need of help in advanced
science and technology, looked to Japan as the most promising source of aid.
But Chinese leaders did not feel they could work with Prime Minister Kishi,
who supported Taiwan.
In July 1960, just ten days after Ikeda Hayato replaced Kishi as prime
minister, a high- level Chinese del e ga tion arrived in Japan, the first trade del-
e ga tion to go to Japan since trade had been disrupted in 1958. Ikeda Hayato
had not been a so- called friend of China, but he was not an enemy and he
believed that trade between the two countries could help achieve his eco-
nomic goals for Japan. In August, a month after Ikeda became prime min-
ister, Zhou Enlai introduced the concept of “friendly firms.”
During the Ming period, only those ships that had received licenses (tal-
lies) approved by the Chinese government had been allowed to transport
goods between China and Japan. In 1960, the friendly- firms policy oper-
ated in a similar way: Japa nese firms that did not trade with Taiwan could
be certified and allowed to trade with China. Eleven firms were classified
as friendly firms in 1960, and by 1962 there were 190 such companies.
Private Japa nese firms responded quickly to the new opportunities for
trade and sales to China. In October 1960 Takasaki Tatsunosuke, repre-
senting private Japa nese businesses but with the approval of the Japa nese
government, led a del e ga tion to China where he met with Liao Chengzhi,
with whom he had established good relations in 1955. In December 1962
Liao and Takasaki signed a five- year agreement, the Memorandum on Sino-
Japanese Long- Term Comprehensive Trade, also known as the Liao-
Takasaki (or L- T) trade agreement, whereby the governments made trade
and finance arrangements for specific items, despite not having formal dip-
lomatic relations. The agreement also permitted “friendly trade” by private
companies outside the formal L- T trade agreement. The Liao- Takasaki
trade offices became quasi- governmental agencies promoting exchanges be-
tween the two countries, just as the Manchurian Railway had been a
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china and japan
quasi- governmental structure after the Russo- Japanese War. Several Japa-
nese officials who served in the Liao- Takasaki office in Beijing had been of-
ficials in Japan’s Ministry of Trade and Industry (MITI) prior to their as-
signment in Beijing.
The Chinese government would not then accept loans from Japan to
build plants in China, but it did agree that it would make “deferred pay-
ments” when funds from the Export- Import Bank of Japan financed a vi-
nylon plant in China built by Kurashiki Rayon. The vinylon plant became
a model for synthetic fiber plants in China. Japan also sold China chemical
fertilizer, iron, and steel.
The L- T trade agreement was strongly criticized by the pro- Taiwan
groups in Japan and by the U.S. government, which was influenced by a
power ful Taiwan lobby. After 1964, because of pressure from Taiwan, the
Japa nese government stopped funding the export of industrial plants to
China. Although formal government trade did not increase dramatically,
friendly trade by private companies approved by the Liao- Takasaki trade
offices continued to grow rapidly. Two- way trade between China and Japan
grew steadily from $48 million in 1961 to $621 million in 1966, whereupon
the outbreak of the Cultural Revolution stopped any further increase.
China and Japan also expanded other contacts. In 1963 Liao became
chairman of the China- Japan Friendship Association. To deepen Sino-
Japanese relations, the two sides celebrated the 1,200th anniversary of the
death in 763 of the famous blind Chinese monk Ganjin, who reached Japan
in 753, after many failed efforts, and contributed to the development of Bud-
dhism in Japan. China also celebrated the arrival of Abe no Nakamaro, the
brilliant Japa nese scholar and poet who passed the Chinese examination
for officials and served in China as a governor- general. In 1963 the Chinese
formed the Sino- Japan Friendship Association of the Chinese People’s As-
sociation for Friendship with Foreign Countries, with Liao Chengzhi as
president and Guo Moruo as honorary chairman.
Chinese officials who went on study tours to Japan to learn how it had
advanced its economy while China suffered from the Great Leap Forward
observed how Ikeda’s goal of “income doubling” in the 1960s had provided
a framework for Japa nese planning. In 1980 Deng Xiaoping, impressed by
Ikeda’s income- doubling program, announced that China would “double its
income twice” (i.e., qua dru ple it) by the end of the century.
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The Col apse of the Japa nese Empire and the Cold War, 1945–1972
Chinese officials, aware by the mid-1960s that Japan’s trade with China
was about to surpass its trade with Taiwan and that China’s economy was
growing faster than Taiwan’s, announced that they would not permit trade
with Japa nese firms that traded with Taiwan. Japa nese firms cut their ties
with Taiwan but then set up dummy companies to trade with Taiwan, or
opted for trade with Taiwan but then set up dummy companies to trade
with the mainland. China tried to punish Japa nese companies that set up
such dummy firms, but it was difficult to keep track of all the new compa-
nies, and the policy did little to force Japa nese companies to end their trade
with Taiwan.
The scale of Sino- Japanese trade in the 1960s was miniscule compared
with what it would be two de cades later, but at the time, it gave China cru-
cial support to recover from the disaster of the Great Leap Forward, and it
allowed a key group of Japa nese officials and private Japa nese firms to keep
up their knowledge of how to operate in China, making it easier to expand
operations after the two countries normalized relations in 1972.
China’s Turn Inward and the Cultural Revolution, 1966–1969
During the peak years of the Cultural Revolution, when so many top leaders
were attacked, Liao Chengzhi also became a victim. Red Guards attacked
the Liao- Takasaki office for helping Japan. Japa nese trade representatives
in Beijing w
ere required to conduct “self- criticisms,” to attend study sessions
on Mao’s po liti cal thought, to sing Red Guard songs, and to take part in
Red Guard demonstrations. As a result, the number of Japa nese busi-
nessmen working in Beijing declined.
However, owing to a 1964 agreement to exchange journalists, as arranged
by the Liao- Takasaki office, a dozen Japa nese journalists were working in
Beijing when the Cultural Revolution broke out. Reporters from many
other countries could not read the posters in Chinese characters, but the
Japa nese journalists could. They informally divided Beijing into districts,
with diff er ent reporters covering diff er ent districts, and by pooling their
findings, they were able to give far more detailed reports on the Red Guard
posters and activities than news agencies from any other country. Eto Shin-
kichi, a leading Japa nese China scholar at Tokyo University, and other
Japa nese academics later criticized the Japa nese journalists who, they said,
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yielded to Chinese pressures and reported sympathetically on Red Guard
activities.
Red Guard attacks had declined by early 1968, when Zhou Enlai was
able to tell Japa nese representatives that Liao and Takasaki could forge a
new agreement. The L- T trade agreement, which had been criticized earlier
during the Cultural Revolution, was replaced in 1968 by the Memorandum
Trade Agreement, which had a similar function, and although their names
were not used for the office, Liao Chengzhi and Takasaki Tatsunosuke re-
sumed their impor tant roles. Trade had declined in 1966 and 1967 because
of the Cultural Revolution, but it increased in 1969 and 1970. In 1970 China
had more trade with Japan than with any other country, although their two-
way trade still amounted to less than $1 billion per year— less than 1 percent
of what it would be thirty years later.
Asakai’s Nightmare and the Turn to Tanaka, 1970–1972
When China started reaching out to other countries after the 1969 border
clashes with the Soviet Union, Japa nese businessmen and politicians who
had long been hoping to restore and expand relations with mainland China
began to feel that the opportunity had fi nally arrived. Since 1945 Japan had
reluctantly followed U.S. requests to limit its trade with China. It had fol-
lowed the U.S. lead in maintaining diplomatic relations with Taiwan and
voting to keep Beijing out of the United Nations. But in 1969 and 1970, with
signs that other countries were beginning to respond to Beijing’s efforts to
reach out and the prospect that within a year or two Beijing would have
enough votes to replace Taiwan in the United Nations, Japan’s business com-
munity wanted the government to respond more positively to China’s
overtures. They were dissatisfied with Prime Minister Sato Eisaku, then the
longest- serving prime minister in postwar history, who was not taking suf-
ficient steps to improve relations with China.
Japa nese leaders had expected that when China began to open up, Japan
and the United States would cooperate in managing the pro cess. By early
1970 some Japa nese diplomats began to worry that U.S. officials were
changing their perspective on China and were not fully open in sharing the
changes with Japan. U.S.- China talks had resumed in Warsaw in January
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The Col apse of the Japa nese Empire and the Cold War, 1945–1972
and February 1970, and the United States had made some small trade con-
cessions to China. On October 24, 1970, when Prime Minister Sato asked
National Security Advisor Henry Kissinger if the United States was con-
templating changes in its relationship with China, Kissinger assured Sato
that he was not contemplating any change and that he would see that Prime
Minister Sato was fully informed if there were to be any changes in China
policy. In April 1971, at an international Ping- Pong tournament in Nagoya,
Japan, the world- champion Chinese team, knowing that the U.S. team
wanted to visit China, invited them to come; the U.S. team accepted, and
the U.S. government approved. Amid headlines and cameras, the Ping- Pong
teams eased U.S.- China tensions. Japa nese diplomats had good reason to
fear that the United States might be contemplating changes in its relations
with China. Nevertheless, Melvin Laird, U.S. Secretary of Defense, again
reassured Prime Minister Sato that the United States was not considering
any basic change in its China policy.
Then suddenly, one week after Laird’s reassurance, “Asakai’s nightmare”
became a real ity. Asakai Koichiro, ambassador to the United States from
1957 to 1963, had over the years reported having trou ble sleeping because
of his fear that the United States might move suddenly to establish rela-
tions with China without consulting Japan. Thirty minutes before Presi-
dent Richard Nixon gave a speech on July 15, 1971, announcing that Kiss-
inger had been in Beijing and that he himself would travel to China early
the following year, Ambassador Ushiba Nobuhiko in Washington was in-
formed by telephone, by Secretary of State William P. Rogers, that Nixon
was about to announce his plan. Ushiba called the prime minister’s office,
and three minutes before Nixon began speaking, Prime Minister Sato
learned of the speech. Prime Minister Sato and all in Japan were shocked
and furious that the United States, their ally who had told them to defer
establishing relations with China, had suddenly, and without consultation,
moved ahead of Japan in opening up to China.
Henry Kissinger’s visit to China, July 9–11, 1971, and President Nixon’s
public announcement that he would visit China in early 1972 were a ter-
rible embarrassment to Prime Minister Sato, who had been yielding to U.S.
pressure not to expand relations with China. But for Nixon and Kissinger,
absolute secrecy had been necessary. If word had gotten out, Taiwan certainly
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china and japan
would have pressured Congress to block the Nixon- Kissinger plan. Not
only Japan but also the U.S. State Department and Congress had not been
informed of Kissinger’s plans to fly to Beijing.
Kissinger and Nixon had begun planning this move more than a year
earlier. For years, the Americans had been continuing ambassador- level talks
with China in Warsaw, and at their 134th meeting, which took place on Jan-
uary 20, 1970, Walter Stoessel Jr., the U.S. ambassador to Poland, told his
Chinese counterpart, Lei Yang, that the United States was willing to back
away from its exclusive relationship with Taiwan and send a representative
to Beijing for discussions. One month later, Lei Yang conveyed Beijing’s reply
to Ambassador Stoessel. Chinese leaders would welcome a representative
of the U.S. government to Beijing to prepare for a visit by President Nixon.
At a dinner in Pakistan in July 1971, following carefully laid- out plans with
both Pakistan and Beijing, Henry Kissinger feigned stomach trou ble, ex-
cused himself from the dinner, and flew secretly from Pakistan to Beijing,
where he
met with Zhou Enlai and Mao Zedong for broad- ranging dis-
cussions in preparation for a visit to Beijing by President Nixon.
Prime Minister Sato expected that he would soon be out of office for
not better managing relations with the United States and for having such
poor relations with Beijing that he was unable to normalize them. Nixon
and Kissinger had indeed been unhappy with Prime Minister Sato for his
failure to implement a secret agreement he had made earlier with the
Americans— that he would cut back textile exports to the United States,
an issue of great po liti cal importance to President Richard Nixon. In his
election campaign in 1968 Nixon had promised the textile- producing
southern states that he would limit textile imports from Japan. Nixon
needed support from the southern states to win reelection in November 1972,
and because Sato had failed to deliver on his promise, he was understand-
ably upset.
Prime Minister Sato Eisaku, like his blood brother Prime Minister Kishi
(who had changed his name to Kishi to continue the line of his maternal
uncle, who did not have a male heir), had close relations with Taiwan. Now,
with the opening of relations between the United States and China, Japa-
nese public opinion strongly supported taking immediate steps to improve
relations with China. Diet members began discussing who might replace
Sato as prime minister so that Japan could move boldly to improve rela-
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The Col apse of the Japa nese Empire and the Cold War, 1945–1972
tions with China. They naturally thought of Tanaka Kakuei, who had been
appointed minister of trade and industry in the Sato cabinet just before
Nixon’s shocking announcement and who was very popu lar for standing up
to U.S. pressures to curb Japa nese exports to the United States.
A second shock from the United States came on August 15, 1971, one
month after Nixon’s speech. The United States, again without warning
Japan, announced that it would place a 10 percent surcharge on imports from
Japan and that the exchange rate, which had been fixed since early during
the Occupation at 360 yen to the dollar, would thereafter be allowed to float.
The markets immediately raised the value of the yen in relation to the dollar,
thus raising the price of Japa nese textiles going to the United States.
China and Japan Page 50
