China and Appeasement


By
Henry C.K. Liu 

Part I: Beyond Munich

This article appeared in AToL  on April 27, 2007

The Munich Pact of September 30, 1938 has become an icon of the failure of appeasement.  What is generally left unmentioned by many Anglo-US historians is the fact that the Munich Pact, in addition to allowing Germany to annex the Sudetenland, an area of Czechoslovakia heavily populated by ethnic Germans, also allowed Poland and Hungary, eventual victims of German expansionism, to seize respectively the Teschen district and parts of Slovakia.  Munich is mainly viewed in the West as a symbol of the lack of resolve on the part of the two great powers of Western Europe, namely Britain and France, to resist German expansionism which later led to the outbreak of a European war that quickly became a world war. Most Western historians subscribe to the view that had the Western European Allies drawn a firm line in the sand backed by credible threat of force, Germany might not have been tempted by Franco-British appeasement to push beyond the line of peaceful co-existence. Yet the historical facts behind Munich do not support the simplification of it as a case of pure appeasement. Geopolitical calculations played a large role in Munich decisions.

Appeasement by one nation in international relations is a policy of accepting, rather than resisting, the illegitimate imposition by another nation of aggressive geopolitical expansion or interference or intrusion in the appeasing nation’s internal affairs or in the development of its indigenous socioeconomic and political system in ways that sacrifice indigenous cultural values, ideological principles, or national interests. In the case of Munich, appeasement was accomplished not by sacrificing the national interests of the appeasing powers but by sacrificing a helpless third nation whose opinion was never sought.

The compromise in appeasement is usually rationalized by an allegedly higher principle of a non-violent means of avoiding war. As Henry Kissinger, arguably the greatest statesman in Cold War realpolitik, famously said of the policy of Détente, which some criticized as appeasement: “Peace too is a moral imperative.” Notwithstanding post Cold War distortion of the meaning of the term by neo-conservative ideologue hawks in the second Bush administration, a willingness to negotiate does not in itself constitute a loss of “moral clarity” or appeasement, which is the unwarranted and counterproductive capitulation before or during negotiation.

Yale historian Paul Kennedy (Strategy and Diplomacy - 1983) defines appeasement as “the policy of settling international quarrels by admitting and satisfying grievances through rational negotiation and compromise, thereby avoiding the resort to an armed conflict which would be expensive, bloody and possibly dangerous.” While appeasement had at times led to successful outcomes as in the Anglo-Irish Treaty of 1921, albeit not without the tragedy of igniting a civil war, war hawks have used Munich to reinforce the negative notion of appeasement as a policy of failure. Since Munich, the term appeasement has gained a disparaging overtone in US political discourse, as a code word for moral weakness and political cowardice in the face of evil and strategic self-deception that would eventual fail the peace.

Nevertheless, Munich is deemed strategically successful by some historians of geopolitics for yielding critically valuable months (1938-39) for British rearmament. Munich also relieved pressure on Western Europe by channeling German expansion eastward. The sacrifice of Czechoslovakia to German geopolitical ambition, a development which the Franco-British alliance was not in a timely position to prevent anyway, had been rationalized by its effect on the strengthening of the subsequent defense of the British Isles.

Yet Germany was able to also significantly boost its offensive power in the time thus granted, and quite possibly to a greater extent than the Allies, since Germany had no illusion about Munich being a path to “peace for our time”. More significantly, the annexation of Czechoslovakia provided German militarism with much needed validation in German domestic politics. Munich also gave the German war machine access to well-developed Czech industrial resources and significantly improved German strategic standing, avoiding an otherwise costly conflict presented by the heavily fortified terrain of the Czech-German border. German occupation of Czechoslovakia also lengthened Poland’s border with Germany, making Polish defense more vulnerable.

Munich took place in an anti-war atmosphere in Western Europe in reaction to the mass slaughter of World War I. Fear of otherwise avoidable war with France and Britain also motivated the German high command, being apprehensive of Hitler’s reckless overrating of German military strength, to try at several points to move towards removing the adventurous little corporal Feurer from power to put a stop to his overreaching foreign policy. Forty days after Munich, buoyant in domestic popular support by its surprised success, the Nazis staged a massive, coordinated attack on German citizens of Jewish ethnicity throughout the Third Reich on the night of November 9, 1938 into the next day, which has come to be known as Kristallnacht or The Night of Broken Glass. Kristallnacht was the opening salvo of Nazi methodical persecution of the Jews of Europe.

Great Powers Maneuvered for War

Yet Munich was motivated by more than mere war avoidance. Geopolitical maneuvering on the part of Britain and France was clearly also a key factor. The Munich Pact followed Franco-British rejection of two successive Soviet offers (in 1934 and 1937) to form an alliance against Germany in Europe and Japan in Asia, thus pushing the USSR to enter into the Soviet-German Nonaggression Pact of August 23, 1939, less than a year after Munich. From the Soviet perspective, Munich was a Western scheme to turn Nazi aggression eastward to use German fascism to counter Soviet communism. The Soviet-German Nonaggression Pact was an attempt to turn the table against capitalism by freeing up fascism against it.

Munich convinced the USSR that the Western powers were pursuing a policy of selective appeasement only toward German eastward expansion and were not interested in joining the Soviet Union in an anti-Fascist alliance promoted through a popular front. In addition, there was concern about the possibility that Britain and France would stay neutral in a war initiated by Germany against the USSR, hoping that the two warring Eastern powers would wear each other out and put an end to both Bolshevik Soviet Union and Nazis Germany. In this sense, Munich was less a strategy of appeasement to secure peace than Western capitalist democracy’s strategy of directing war eastward between fascism and communism. Not withstanding Japan’s signing of the Anti-Comintern pact with Germany in 1936, the prospect of fighting the Soviet Union in addition to the US and Britain over the East-Asian Co-prosperity sphere convinced many in the Japanese government and officer corps to seek a neutrality pact with Moscow. On April 13, 1941, eight months before Pearl Harbor, the neutrality pact between the Soviet Union and Japan was signed in Moscow which lasted until the August 8, 1945.

There is also historiographical evidence of internationally acclaim on the Munich appeasement at the time of the pact’s signing. Munich was praised by practically all Western leaders, including Pope Pius XI, defender of the true faith, and US President Franklin D Roosevelt, defender of liberal democracy. Chamberlain was applauded by the British public for having cleverly avoided another war in the West at the expense of the East. It was viewed as another shining example of the triumph of high-minded British foreign policy rewarded by a bonus of collateral practical payoff of instigating war between fascism and communism.

France Paralyzed by Democracy

France had fallen into foreign policy paralysis through chaotic multiparty democracy. During the decade leading up to Munich, cabinets in France fell with maddening frequency. One government lasted but a single day; another only two days. Léon Blum became France’s first Socialist and Jewish premier on June 4, 1936 and immediately became the prime object of hate to the Catholic and the anti-Semitic right. On February 13, 1936, shortly before becoming Prime Minister, Blum was dragged from a car and beaten to near death by the members of the Camelots du Roi, a group of anti-Semite royalists. Blum formed a Popular Front Government that lasted an unprecedented period of over a year during which time it introduced the 40-hour week, paid holidays, collective bargaining and other socialist reforms for worker rights. It also nationalized the Bank of France and the armaments industry into service to the French nation rather than for the benefit of private capital.

With no effective capital control, the result was capital flight from France at such alarming pace that the Bank of France, striving to halt the exodus, had to raise the French central bank’s already-high discount rate of 4% to a “panic rate” of 6%. The Blum Cabinet was desperately short of cash throughout its tenure, leaving most socialist programs unfunded. Finance Minister Vincent Auriol devalued the franc by 40% and borrowed eight billion francs to deal with the liquidity crisis. The government’s Exchange Equalization Fund had been exhausted and only support from Washington and London kept the exchange rate of the franc from slipping further. The need for foreign financial support kept Blum’s socialist government from moving further to the left.

The French Popular Front had a majority in the Chamber composed of a coalition of Radical Socialists, Socialists and Communists. The Communists alone had no cabinet appointments. Nominal meanings notwithstanding, the Radical Socialists were literally less radical than the Socialists in French politics. At the emergency session, the Radical Socialists and Socialists quarreled over anti-labor tax policy. To deal with the financial crisis, the Cabinet asked National Assembly for dictatorial powers over the French economy and finance markets for six weeks, despite the fact that the left had always decried such power “as the opening wedge to Fascist Dictatorship!” The Communists, with 72 swing votes indispensable to the Blum Cabinet, at first refused to go along and finally fell in line after securing the government promise to aid the Spanish Popular Front.  By a vote of 346-to-247 the Chamber voted "full powers" for six weeks to the Blum Cabinet, but the bill was rejected by the Senate. Blum took his bill back to the Chamber, got it approved again before midnight by a margin of 346-to-248, but was rebuffed again by the Senate 168-to-96. The Blum Cabinet then resigned the next day, on June 23, 1936, after only 19 days in office.

Stalin’s political purge of the Red Army was confirmed in France by news of the execution of Soviet Marshal Mikhail Tukhachevsky and seven generals in Moscow on June 11, 1937. The news profoundly affected French political opinion, greatly weakening the French Communists. It revived France’s long-standing doubt on whether the Red Army was good enough to make the Franco-Soviet military alliance an effective check on Germany, France’s eternal enemy. With the Red Army weakened by political purge of its ablest professional leaders, Paris was forced towards conciliation with Berlin, and under pressure from Stanley Baldwin and Anthony Eden of Britain, rejected Communist demands to help the Spanish Popular Front and adopted a policy of neutrality, which had the practical effect of being pro-German.

A few days after news of the Red Army purge, for the first time since before World War I, a high-ranking German Staff Officer, General Ludwig Beck, was in Paris to confer with General Marie Gustave Gamelin of the French General Staff, to share with him the German Secret Service dossier on political developments in Moscow. Veteran Paris Correspondent John Elliott of the Herald Tribune reported: “There can be no doubt that the [German] General’s visit was inspired by the British Foreign Office, anxious to break up the Rome-Berlin axis and establish co-operation between Britain, France and Germany.”

As opposition leader, Blum campaigned for France to end its nonintervention policy towards the Spanish civil war. On March 13, 1938, Blum was returned to power as prime minister. He immediately reopened the frontier with Spain to allow military aid from France. Blum then came under heavy pressure from the right-wing press and politicians. On April 10, 1938, the Blum government fell for the last time and he was replaced as prime minister by Edouard Daladier, a Radical Socialist leader, with a centrist “national government”, supposedly above party politics and speaking for the nation as a whole. Without help, the Spanish left was smashed by Franco.

The French national government came into being shortly after the Nazi annexation of Austria. It capitulated to British leadership on the Munich crisis, swallowed the betrayal of Czechoslovakia, oversaw the outbreak of a “phony war” over German invasion of Poland, and fell in March 1940, nearly two years after its formation, due to Daladier’s failure to aid Finland during its Winter War with the USSR with lasted from November 30, 1939 to March 12, 1940. Poor Soviet performance in the Winter War damaged Soviet international image, putting the fighting ability of the Red Army into open question, a fact that some argue contributed to Hitler’s decision to launch Operation Barbarossa against the USSR on June 22, 1941.

When Germany invaded France on May 10, 1940, Daladier fled with other members of the government to Morocco under the mis-impression that the government would continue in French North Africa. He was arrested after France capitulated on June 25, 1940 and tried for treason by the Vichy government, handed over to the Germans and deported to Buchenwald concentration camp until the end of WWII.

Munich thus was less an example of Franco-British appeasement to preserve the peace than an example of devious geopolitical maneuvering by scheming great powers for war.

Pre-Munich Meaning of Appeasement

The Encyclopedia of US Foreign Relations defines appeasement as the term was used before Munich as “primarily referred to timely concessions to disgruntled nations whose grievances had some legitimacy, in the hope of defusing difficulties and promoting peace and goodwill. Acting from a position of strength, the appeasing power was motivated not by fear or weakness but by a sense of statesmanship and a perception that limited concessions would not endanger its vital national interests.”

The key words for an effective appeasement policy are “acting from position of strength; not motivated by fear or weakness; that limited concession would not endanger its vital national interests.” Without such pre-conditions, appeasement toward an insatiable belligerent will unfailingly be a policy of failure.

China’s History of Positive Appeasement

China has a history of effective positive appeasement in its diplomatic dealings with small neighboring states through the ages, bringing long periods of peace and prosperity to the Sinic world. Yet the fall of every Chinese dynasty can be traced to earlier appeasement policies. Appeasement by dynastic China was based on an outlook of hope and confidence, Confucian in its optimism on innate human goodness, in its belief that societies evolved from savagery to civilization, and that inclusiveness is a path to peace under heaven. Throughout its long history, Chinese appeasement has been a movement to open up the center of civilization to less developed nations which aspired to join the advanced Chinese system, not to change or destroy it or to rid it of its backwardness. The Mongol and the Manchu tribes conquered Han China not to change Chinese civilization but to preserve Chinese political, socio-economic and cultural institutions because those were the coveted prizes of conquest. They quickly became Sinizied through cultural assimilation.

Western Imperialism in China

Western imperialism in China took on a fundamentally different, destructive character. Europeans came to China with an unwarranted superiority complex derived narrowly from its advanced militaristic technology. Western political and economic imperialism was imposed at gun point, rationalized by presumptuous cultural imperialism, not by innate moral superiority. It was an intercontinental spread of the dark triumph of militarist Spartan over civilized Athens. Notwithstanding that Western imperialism sought not just to economically exploit China, but also to enslave the Chinese race, the West assumed a moral pretext of saving China from its alleged backwardness by seeking to change it, even though China has a longer continuous civilization than the expansionist West.

Unlike the West, China has been predominantly defensive throughout most of its history, trying to keep out barbarian invaders who clamored to join a more advanced civilization, whereas the West since the Age of Imperialism that began in the 17th century has acted as aggressive invaders that conquered, suppressed and destroyed indigenous civilizations and religions. While Christianity encountered resistance from Islam, it met no resistance from Buddhism, a religion of detachment. Modernization was abducted to mean Westernization, not only for China, but for the whole non-Western world, as described in my Asia Times on Line series on The Abduction of Modernization. This insidious attitude was made even more obscene by the rise of racism in 19th century Europe.

Chinese Appeasement in the Age of Western Imperialism

Unlike historical Chinese magnanimous appeasement of culturally deferential neighboring states, the new Chinese appeasement towards 19th century Western barbaric encroachment was based on a new mood of fear, not moral strength, Confucian in its untenable self satisfaction, blind denial of reality and refusal of self criticism based on false pride, Buddhist in its insistence upon secular detachment to justify swallowing unjust oppression in the hope that even Western barbarians must have some redeeming quality of human decency, pessimistic in its belief that ephemeral Western technological superiority would remain interminable, and fatalistic in its conclusion that militant imperialism, the highest stage of capitalism, despicable as it is, should be accepted as a new socio-economic order for lack of moral alternatives. The only rational salvation then was to copy Western imperialist ways, for the victim to out ape the oppressor. Survival of the fittest is twisted to mean survival of the morally unfit. This was Japan’s answer to the Western threat, by a return to moral barbarism. Many thinkers and leaders in Asia, perverted by Western cultural imperialism continue to this day to firmly believe that what went wrong with Japan was not that it embarked on a Westernization path that inevitably led to imperialist expansion, but that it lost the war of imperialist rivalry to imperialism.

The dean of Chinese studies in the US, John K. Fairbank of Harvard, wrote in an article, “The Manchu Appeasement Policy of 1843” in the Journal of the American Oriental Society, Vol. 59, No. 4, December 1939, pp. 469-484: “Those who delight in the study of pre-Tang China are commonly observed to scorn the ignoble senescence of the late Ch’ing [Qing] period. But the political pathology of nineteenth century China affords insights into Chinese civilization just as surely as medical pathology aids medicine. A century ago the Manchu dynasty was debilitated by corruption and all but bankrupt, lacking both the men and the ideas necessary for a creative response to the western impact. But in its weakness it retained the Confucian tradition, and the bureaucrats who negotiated with the British invaders after 1840 still thought in Confucian terms, - so much as, in fact, that unless the modern historian does likewise, their diplomatic maneuvers will remain as baffling to him as they were to the first residents of the treaty ports. It is both instructive and pathetic to see the Manchus taking their last refuge in an ancient system of human relationships which held no meaning for the British barbarians and so failed completely to subdue them.”

Chinese Appeasement on US Belligerence towards China

There are disturbing signs that Chinese relation with the US has been moving again in the direction of a failing appeasement policy on the part of China, making concessions to a unendingly disgruntled US whose ideological grievances have no legitimacy, with China not acting from a position of moral strength but motivated by needless fear of losing the US market, by ideological weakness devoid of self confidence and by the delusion that unprincipled concessions would not endanger vital Chinese national interests. Worse of all, similar to the failed Qing dynasty appeasement blunders, Chinese appeasement toward unreasonable US demands will only encourage more outrageous US belligerence. With such unsound pre-conditions, Chinese appeasement will unfailingly be a policy of failure that will lead not to peace between China and the US, but to otherwise avoidable future conflicts, since both sides may well be buying temporary peace with preparing for future war.

Taiwan and Peaceful Evolution of China

Two fundamental issues highlight Chinese appeasement as a policy doomed to failure. The first and more immediate issue is Chinese appeasement to escalating US violation of Chinese sovereignty by interfering in Chinese internal affairs in the matter of Taiwan. The second and longer term issue is Chinese appeasement on US strategy to change China from a socialist system towards a capitalistic market economy through “peaceful evolution”. On both issues, China has repeatedly made appeasement concessions to illegitimate US demands that endanger Chinese national interests. Such appeasement will inevitably lead to conflict, even war. The two issues on which no appeasement can be tolerated are: 1) protecting the territorial integrity of China and 2) preserving the socialist system in China.

More than two decades, since 1950, of hostile US containment policy towards China through diplomatic isolation and economic embargo of the new socialist republic by a Western block dominated by US superpower, a new page on US-China relation had been turned on the basis of a milestone bilateral documents: the Shanghai Communiqué of 1972, amended by the Normalization Communiqué of 1978 and the August 17, 1982 Communiqué.

The recognition of and respect for bilateral differences between China and the US was enshrined in the Shanghai Communiqué of 1972 which states:
“There are essential differences between China and the United States in their social systems and foreign policies. However, the two sides agreed that countries, regardless of their social systems, should conduct their relations on the principles of respect for the sovereignty and territorial integrity of all states, non-aggression against other states, non-interference in the internal affairs of other states, equality and mutual benefit, and peaceful coexistence. International disputes should be settled on this basis, without resorting to the use or threat of force. The United States and the People’s Republic of China are prepared to apply these principles to their mutual relations.”

US policy on Taiwan has consistently and unceasingly violated the principles of respect for the sovereignty and territorial integrity of China, and has interfered in its internal affairs.

The Cold War Geopolitical Basis of US-China Rapprochement

For the US, rapprochement toward China was a geopolitical expediency in its containment of Soviet expansion in a Cold War context. Few in US policy circles in 1972 had anticipated the dissolution of the USSR. Advances in US-China relations prior to the end of the Cold War were directly related to progress in US-Soviet détente.  Yet progress in détente also increased the incentive and prospect of Soviet pre-emptive military action against China. This prospect in turn was deterred by US warnings to the USSR about determined US response against such attacks.  The prospect of imminent Sino-Soviet military confrontation enabled fundamental ideological differences between the US and China to be put aside temporarily in an overriding geopolitical context in which a strong China independent of Soviet influence was considered to be in the US national interest.

The realpolitik in Kissinger’s geopolitical concept of international order required a strong and independent China to prevent Soviet expansionism from isolating the US into an unwitting garrison state: “Fortress America”, as the US had done twice in this century that resulted in two world wars.  Nixon was convinced that after the Cultural Revolution (1966-76), China was no longer an ideological threat to the US and that the need to isolate China from international forums in fear of it as being an enticing model of world revolution would be overshadowed by the need for balance-of-power geopolitics. The need of Western capitalism for a new huge Chinese market was not the central objective.  US-China rapprochement and US warning against preemptive Soviet attack on China were also viewed as necessary to relieve other countries in Asia from concerns about US-Soviet détente turning into a bilateral superpower global condominium, with a US-Soviet cabal against China as a centerpiece.

Thus, the warming of US-China relations in the last phase of the Cold War had been primarily externally motivated, as the current warming of US-China relations is externally motivated by the US War on Terrorism.  Historically, John Hay’s “Open Door Policy”, designed against European powers partitioning China into spheres of influence in the 19th century, remained tacitly fundamental in US policy towards China with regard to Soviet intentions in late 20th century. China was part of the continuation of the Great Game rivalry between Russia and the West that dated to before WWI.  It was to US national interest to neutralize any prospect of a China being dominated by a European power, such as the USSR. In short, US policy towards China had merely been a bargaining chip in US geopolitical grand design in the Cold War. It is clear that China will re-emerge as US enemy number one as soon as the US War on Terrorism winds down, as long as Russia fails to regain its superpower status.

Declassified US documents reveal that Nixon secretly made specific concessions to Mao Zedong on the question of Taiwan beyond the text of the Shanghai Communiqué of February 28, 1972. Nixon pledged to “actively work toward” and complete “full normalization” of US-PRC diplomatic relations by 1976.  He also promised not to support any Taiwan military action against the mainland or any Taiwan independence movement and to prevent Japan or any other third country from moving in on Taiwan as US presence was reduced. Nixon failed to deliver on his geopolitical concessions to Mao when he was forced to resign to avoid impeachment over the Watergate scandal which was not unrelated to domestic opposition to his rapprochement to China.

According to a declassified top-secret US memo of a conversation held on February 18, 1973 in Zhongnanhai with Chairman Mao, Kissinger said to Mao: “Our interest in trade with China is not commercial.  It is to establish a relationship that is necessary for the political relations we both have.”  Mao accepted this candid confession as accurate. Thus trade from the beginning of US-China rapprochement was viewed as a lubricant of geopolitical objectives. After the end of the Cold War, the causal relationship has been reversed. Geopolitics is now viewed as a foundation for enhancing free trade objectives in a new neo-liberal globalized regime dominated by the US. This is what Bush means when he asserts in a May 7, 2001 speech that “Open trade is not just an economic opportunity, it is a moral imperative. … And when we promote open trade, we are promoting political freedom.”

Thus it is not surprising that with the dissolution of the USSR in 1991, US-China relations, devoid of its geopolitical underpin, have floundered aimlessly until the emergence of neo-liberal globalization. The relationship that began in 1972 out of a common strategic concern with Soviet expansionism based on geopolitical conditions had been altered fundamentally with the dissolution of the USSR.

US Transformational Foreign Policy

Us policy on China has since taken on the objective of transformational foreign policy, aiming to transform socialist China by using capitalist Taiwan as a model. The US envisions the eventual return of Taiwan to China as a peaceful way of replacing socialism with capitalism on the Chinese mainland, and of transforming the ruling Chinese Communist Party by fragmenting it into several European-style social democrat parties. All the talk about the need to strengthen the rule of law through the establishment of an independent judiciary, carrying out monetary reform through a politically independent central bank and the need for an independent military implies independence from party control. It is all part of the US vision of transformation. Ironically, such devious talks of reform in order to enhance Chinese economic and political development enjoy substantial support from many US-trained returned Chinese neo-liberals, even inside the Central Party School of the Communist Party of China.

US Violations of the Shanghai Communiqué

The key bases of normal relationship between the US and China as stipulated in the Shanghai Communiqué, namely the principles of respect for the sovereignty and territorial integrity of all states, and non-interference in the internal affairs of other states, have not been observed by the US over the issue of Taiwan. Far from leading to peace, Chinese appeasement on the Taiwan issue will inevitably lead to war, as no government in China can survive politically the protracted separation of Taiwan that solidifies into a perpetual status quo from foreign interference. And a government which tolerates the endless extension of the status quo on Taiwan does so at its own peril. For a detailed account of such US violations of Chinese sovereignty and bilateral agreements, see my Asia Times on Line 10-part series on US-China: the Quest for Peace.

Trade Doves versus Security Hawks

The confrontation in the US-China-Taiwan triangular arena has become a conflict between the trade doves and the security hawks on all three sides. In reality, no amount of US arms sales to Taiwan, quantitative or qualitative, can enhance the island’s long-term security. Trade has never prevented war. The US traded with Japan and Germany up to the day of Japanese attack on Pearl Harbor. What makes China think twice about recovering Taiwan by force is the cost-benefit analysis of the prospect of a direct military conflict with the US over Taiwan. If US strategy in Asia requires the perpetuation of the status quo on Taiwan, then a Chinese military offensive to achieve the reincorporation of Taiwan would simply be a matter of forsworn conclusion.

Neo-liberal Distortion of the “One Country Two Systems” Principle

The “One Country, Two Systems” (OCTS) policy, originally framed by the Chinese leadership during the final phase of the Cold War for the terms of reincorporation of Taiwan, has since become a centerpiece of Chinese appeasement. OCTS was conveniently applied to Hong Kong in 1997 as a formula for its return to China from British colonial rule. For Hong Kong, OCTS has a time limit of 50 years.  For Taiwan, OCTS has no time limit. The two systems in OCTS refer to the socialist and capitalist systems in a strictly economic sense, although allowances are tolerated in Hong Kong for a neo-liberal socio-political-legal infrastructure deemed necessary for viable functioning of a market economy.

OCTS assumes a non-adversary relationship between the two economic systems separated by geography. It is a precarious assumption. Under OCTS, Hong Kong is not expected to be an anti-China political base nor is market capitalism expected to work for the demise of socialism on the mainland. Neither of these expectations has been fulfilled flawlessly in the decade since Hong Kong was returned to China in 1997.

One aspect of the OCTS policy that has been conveniently underemphasized by neo-liberals is that the “two systems” arrangement implies that socialism will remain the operative system on the mainland, and that Chinese policies of reform and open-to-the-outside do not include anti-socialist objectives. Many neo-liberal supporters of OCTS are in fact quietly and openly working for “One Country, One System” – the capitalist system, with direct US support. This is the prerequisite condition under which the US will allow China to recover Taiwan.

It is not at all clear that appeasement on the distortion of the OCTS principle has redeeming positive impacts on the sustainable development of the economy in China, or on the reincorporation of Taiwan into Chinese sovereignty. The Taiwan regime has consistently rejected the OCTS principle as a basis for reincorporation back into China. On the other hand, OCTS has been twisted by the US to legitimize the Hong Kong Relations Act and the Taiwan Relations Act, two pieces of US legislation that the US relies on to interfere openly in China’s internal affairs. The Taiwan Relations Act further provides the legal basis for provocative US arms sales to Taiwan.

Despite the fact that the OCTS principle allows Taiwan to keep its political and economic system, even its military as a local defense unit, Taiwan has exploited the rise of US moral imperialism to cement US commitment to help defend a democratic and capitalistic Taiwan in the event that its political offensive toward perpetual de facto separation, or worse, formal de jure independence, should provoke military conflict with the mainland. Officially, there is no such US commitment, but the current regime in Taipei banks on post-Cold War US hegemony to carry out Taipei’s own pursuit of separatist objectives that the US may not officially endorse, but that tacitly also does not disapprove as long as it serves US geopolitical interest in curbing potential extension of Chinese power into the Pacific Ocean.
 
The Taiwan Relations Act

The Taiwan Relations Act (TRA), US Public Law 96-8 of April 10, 1979, which came into being as an anti-China counterweight to US normalization with the PRC, is a US domestic law designed to appease right-wing intransigence toward communist China in US domestic politics. As a US law, it carries a legal authority exceeding the three diplomatic communiqués,