America & China Part II: Interregnum

This is part 2 of a continuing series on the strategic and financial relationship between China and the United States: how it came to be, how it works, and where it’s going. You can see part 1 here.

II. Interregnum

In the last installment, I covered the Rockefeller family’s considerable business interests in pre-Second World War China and their extensive philanthropic activities in the country that were designed to develop China into a more lucrative market. China was indeed beginning to see some agricultural growth and industrialization in the 1930s. But then the war came, and all of that went up in smoke.

The war came.

Squeezing the Juice from the Ashes

It’s difficult to get a sense of just how awful the Sino-Japanese War was. China had already been a war-torn and violent place, where human life was cheap, for many decades before the Japanese launched their war of enslavement in 1937. But the new war brought human degradation and annihilation on a scale even exceeding Genghis Khan’s invasions. Economic activity beyond subsistence agriculture, military production, opium manufacture and smuggling ceased. By 1940, China was cut off from the outside world and the Rockefeller family’s China dreams seemed to be over. The isolation didn’t end with the war. Mao Zedong and his Communist Party won the next round of the fight for the heap of rubble. From 1949 onwards, China was under the sole control of the Communist Party, and this might be surprising to you, but communist dictatorships don’t take too kindly to multinational corporations run by American capitalists. But, dear readers, something incredible happened: just when it seemed most unlikely, the Rockefeller’s Chinese dream was reborn.

You see, the new communist regime and the Rockefellers had one thing in common: they both wanted to see a more developed and industrialized China. Prior to WWII, Rockefeller institutions had been attempting to gently modernize China’s economic, medical and educational systems with some relatively small but important programs here and there. Mao’s regime took the same general idea-top down modernization and industrialization of China-and implemented like only 20th century Marxists could. Turning a whole country of hundreds of millions into an ant army; paying for thousands of new steel mills, factories and petrochemical facilities with executions and famines. For the low, low price of just about 25 million people dead from violence and famine, China experienced double digit growth in industrial and agricultural output for much of the 1950s and 1960s. You just don’t get that kind of work ethic from people nowadays.

“What, did you think I was gonna build all this? Get to work peasants.” – Mao

This wasn’t the kind of “economic growth” that today’s management consultants, investment bankers and global bureaucrats worship; there was no demand for the industrial products being supplied. But, by brute force, Mao had created an industrial base where none existed before. In the ashes of the 1940s, China didn’t really have any of the expensive, sunk-capital stuff you need for a modern industrial economy: big factories with complex machines, lots of skilled engineers and technicians, hydroelectric dams and the like. Mao threw the rules of supply and demand aside and just built all of that with forced labor, and hoped everything else would work out. Maybe that’s not the way the Rockefellers would have liked it done when they dreamed of a China of developed consumers back in the 1920s. But Mao had taken a big step towards making their dream real, even if he didn’t realize it. China now had the beginnings of a productive and capital-rich economy.

His efforts were not unnoticed back in America. Beginning in the Nixon Administration, the Rockefeller family began a new phase of their plan to develop China, and it would succeed beyond their wildest dreams. But first, I must introduce a new character in our story.

Meet Henry

No man was more responsible for the success of the Rockefeller empire’s China policy during the Nixon Administration than Heinz “Henry” Kissinger. Kissinger is Jewish, so his family moved to New York from Frankfurt, Germany with his family in 1938. He was 14, he couldn’t speak English very well, and he was shy to a fault. In the evenings he worked in a shaving brush factory. In Manhattan, the number of your street says a lot about your status. Henry, living above 155th Street, was a member of the anonymous working masses. The Rockefellers kept their main New York residence over one hundreds blocks south at 10 West 54th Street, the largest private residence in Manhattan at that time, in the heart of the city. Worlds separated them.

David’s childhood home under construction in 1912. Pretty dope spot if you ask me.

But then the war came. Kissinger was a smart young man, and he could speak German natively. So quickly he found himself in military intelligence, where his career really began. By summer 1945 he was leading Army Counter Intelligence Corps de-Nazification efforts in recently captured German towns and collecting wanted Nazi personnel. Not bad work, if you can get it. From there, Kissinger quickly received his elite credentials from Harvard and joined the growing national security state. Lavish sums were being spent on the creation of an entire ecosystem of intelligence agencies, planning staffs, public and private think tanks and organizations to be America’s brain for the Cold War. Heinz, now “Henry”, fit right in and distinguished himself.

Harvard, Class of 1950

He might have remained a bright but unknown apparatchik, but he acquired a wealthy and powerful patron. The turning point in Henry’s career came in 1955 when Kissinger was the director of a Council on Foreign Relations-funded study on nuclear weapons and foreign policy. The Rockefeller Foundation had been the primary donor to the CFR since the 1930s. David Rockefeller (the grandchild of John D., and patriarch of the family empire) was director of the CFR, and head of Chase Manhattan Bank’s foreign department at the time of the study. While working on the study, Henry met David, and David’s brother Nelson Rockefeller (Governor of New York 1959-1973). A lasting alliance was formed. Kissinger was brought onboard as director of the Rockefeller Brothers Foundation’s  “Special Studies Project”, which was basically a strategic plan for the next several decades of American foreign policy, published in 1957. The report was a smash hit: it warned that the United States was falling behind the Soviet Union militarily and technologically and called for a major increase in military spending. It didn’t matter that the study was almost totally wrong when it came to the facts; it formed the basis of much of President Eisenhower’s 1958 State of the Union address and was another huge boost to Kissinger’s career. Parts of the report are still not accessible to the public.
The Special Studies Project also formed the core of Nelson Rockefeller’s foreign policy platform during his multiple Republican presidential campaigns in the 1960s. Kissinger was a private consultant on foreign policy for all of these efforts. In 1968, he left the Rockefeller payroll, and went directly into office as Secretary of State and National Security Advisor (an unprecedented concentration of power) in the Nixon White House. He was there thanks, mostly, to Nelson and David.

Kissinger would use his power to bring about a vision he shared with his bosses: China, fully integrated into the global commercial and political system the America had built since the Second World War. The beginning of industrialization under Mao and the ascent of Kissinger to a position of unmatched power in America’s foreign policy apparatus had set the stage for the beginning of one the greatest strategic partnerships of all time: Corporate America and the Chinese Communist Party.

Coming in Part III: he Rockefellers and the CCP make a deal

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