Odd Lots - The American Entrepreneurs Who First Opened The Chinese Market

Episode Date: June 27, 2024

From cars to toys to clothes, we're just used to seeing the label "Made In China" on all sorts of things. But how did China become a go-to destination for manufactured goods in the first place? Who actually recognized that there was a huge opportunity to tap the abundant, low-cost labor to sell goods to Western consumers? On this episode of the podcast we speak with Elizabeth Ingleson, a professor at the London School of Economics and the author of the book Made in China: When US-China Interests Converged to Transform Global Trade. Ingleson traces the roots of the US-China trade relationship to a handful of US entrepreneurs in the early 1970s who first went into the country and recognized its opportunity as an export powerhouse. We discuss who these individuals were, the obstacles they had to overcome, and how they reshaped the entire global economy.See omnystudio.com/listener for privacy information.

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Saturdays and Sundays starting at 7 a.m. Eastern. Make us part of your weekend routine on Bloomberg Television, Radio, and wherever you get your podcasts. Bloomberg Audio Studios. Podcasts, Radio News. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthall. And I'm Tracy Alloway. Tracy, needless to say, always a lot of anxiety about the U.S.-China trade relationship

these days. I feel like there are new tariffs and new developments or new conversations about overcapacity and EVs and new headlines about planes. of basically every day right now. Yeah, there were new headlines this morning, weren't there from one of Trump's economic advisors? Right. I can't remember what it was. Oh, that's why God created tariffs. Oh, yeah. But you're absolutely right. I mean, it's been years, if not decades now, where China manufacturing has been this sort of thing that looms large over the U.S. economy. And I think what's interesting about the U.S.-China economic relationship is the way we think about it or the way we talk about it,

it seems almost like it was an inevitability. Yeah. Like it was inevitable that the two biggest economies in the world were going to have, you know, some sort of trade relationship and maybe because of specific decisions undertaken by the Chinese leadership like Deng Xiaoping or whoever to build out the Chinese economy in a certain way led to a lot of the increased tension. But, you know, in advance of this discussion, I was kind of thinking about it, like there was no inevitability, right? Like, India could have been our biggest trade partner. Yeah, that's a

really great point. Or we might not have like a big trade relationship at all. Or China could have been more like Russia in which trade is very modest. Right. Like this idea is like, okay, the U.S. is rich and we do services and stuff like that here. China is poor. Their comparative advantage is cheap labor. Therefore, China produces everything or produces a lot. That's how we talk. And it just sort of seems, as you say, like, yeah, inevitable. This is the natural order of things. But there are lots of countries that have big populations that aren't particularly rich or that aren't manufacturing powerhouses the way China has.

So I think it's interesting, as you say, like there's this conversation. Like it's sort of inevitable. And we talk about it now like, okay, this is the state of things. Do we want to change it, et cetera? But really not much conversation about like how we got here or how we built this relationship in the first place. Yeah, I think there's, going back to that inevitability point, there's usually an underlying tone of like, well, the market's going to market. Yeah, market's going to market. Market's going to market. Invisible hands going to invisible hand. That's right. And that's

how we ended up with, you know, lots of stuff being built in China where there is cheap labor. By the way, Joe, I'm old enough to remember when I was living in Japan. We're both old enough, but go on. Yeah. When I was living in Japan in the 1980s, I distinctly remember that most of my toys, like my cheap little plastic toys. They all came from Taiwan. Right. And I remember when I was like six years old, not really understanding where Taiwan was or what it was at that point. But I distinctly remember like thinking that it was this magical land where all the toys were made.

But, you know, like in the 1980s, I guess we were in that transition point from moving from Taiwan being a massive manufacturing base into China. But even as late as like the early 1980s, Taiwan. was still making a lot of stuff. For me, when I was 10 years old, I lived in Malaysia for a year. And then I have this memory of like visiting a friend's house when I was 11 back in the U.S. And I noticed that one of his Hot Wheels was made in Malaysia. And I was like, oh, that's so cool. I didn't even know like anyone else had heard of Malaysia. And so the idea like that this company had gone to Malaysia to manufacture the Hot Wheels, I just thought it was like so cool. It was like, oh, I've been to that country. I didn't know anyone else knew about it, let alone going up to setting up a

a toy manufacturing operation. I guess there's a little bit of a diversion, but it does remain true that a lot of the countries that are powerhouses of advanced manufacturing were one-time powerhouses and still are of low-end manufacturing. Absolutely. So I think it's worth digging into how we actually ended up in this now contentious trade relationship with China and why it is that, you know, instead of maybe selling a bunch of American made goods into that market, we ended up buying a bunch of Chinese made goods. And this is the other thing, the other key point here, which is that for a long time, and even still to some extent, you hear like the dream of selling it to China.

Oh, if we could sell one, you know, box of tissue to every one billion, or more than one billion now citizens of China, that'd be billions of dollars, et cetera. And I think a few companies have done that. You know, Starbucks sells a lot in China and Nike sells a lot in China, et cetera. But by and large, the idea of China. China is this huge consumer market for American-made brands. It exists to some extent, but probably not exists to the full, like, dream that people have imagined. Yeah, I think that's right.

Okay, well, I'm really excited. We do have the perfect guest to talk about how the U.S.-China trade relationship was really born. We're going to be speaking to Dr. Elizabeth Inglson. She is an assistant professor at the London School of Economics. And the author of a new book that came out this year called Made in China, when U.S.-China interests converged to transform global trade. So Dr. Inglson, thank you so much for coming on, Hotlots. Hi, Joe. Hey, Tracy. It's great to be here.

Thank you so much for coming on. Why don't we start with, why this book? What was it about this topic made in China that in your view was important enough that this is a focus for a book? Well, it's interesting hearing the two of you recollect your own engagements with made in Taiwan. or made in Malaysia because in many ways I didn't start off thinking I want to write this book. I started off as a history undergraduate and actually a major in literature, even more than history, and was really as an Australian growing up, just as the Cold War was ending and into the 1990s

and 2000s, the US and China were always the two biggest powers in the region. and they still are today. And it was the early 2010s, and at that period of time, political scientists, policymakers, they were talking about the US-China relationship in terms of its economic interdependence. They were saying there's so much at stake in the relationship,

especially economically, that the US and China aren't going to risk what they have for some kind of geopolitical conflict or diplomatic tensions or worse, right, or war. that the interdependence itself is enough to mitigate that. And I wanted to learn more about this. I wanted to think through where did this interdependence come from? How did we get to a state in the 2010s

where the United States and China did have such an entwined economic relationship? And that really took me down this path of research and thinking and going to archives all over the world, but particularly the United States. And here we are today with the book. So when I think of the way a lot of people talk and write about China's economic history, I feel like so much of the focus is on China's opening up, right? And caveat here, right before I cracked open your book, I was reading another book on China called

Wild Ride, a short history of the opening and closing of the Chinese economy. And I mean, the clue is in the title there, right? The emphasis is very much on the decisions that are being made. by China. So I'm curious why you decided to comment it from a slightly different way and from maybe some of the decisions, both diplomatic and economic, being made by the US and the rest of the world. I think one of the things that you are trained to do as a historian is to de-naturalize things, to look at a moment in time, and you seek to question the assumptions of the people operating in that period of time. And so as I mentioned, I wanted to sort of historicize a work

out where this interdependent relationship came from. And it led me to the 1970s. It led me to this period when the US and China were rebuilding a trade relationship after over 20 years of Cold War isolation. So throughout the 1950s and 1960s, both countries had very little, in fact, none at all economic contact and very little. social and political contact at all. It was a very strict Cold War embargo. It was a consequence of the Korean War, but it was also a consequence of Mao declaring the People's Republic of China. So it's this height of the Cold War tensions. And then in the 1970s, you have the famous Nixon-Mao meeting, the opening up of relations and the softening of these tensions. And it's in that period in

the 1970s that the two countries rebuilt a trade relationship. And you've really got to sort of about what it is that these people seeking to rebuild a trade relationship were assuming, and rather than accepting those assumptions, critiquing them. And so that led me then to not just look at the business people within the United States and within China, but a whole range of other actors who were part of this interdependence that was being built. So I look at diplomats in both countries. I look at labour unions.

I look at consumers, particularly within the United States. I look at retailers within the US. And one of the things that I found as I was doing this research was that understanding how this relationship was rebuilt was really a story not only about rebuilding a trade relationship, but a much bigger question of how does China, the world's largest communist nation, how did it converge with global capitalism?

And as you've mentioned, Tracy, when people think about the history of China's engagement with the capitalist world, Deng Xiaoping's reforms loon very large, and rightly so, they're a very, very significant moment in the history of China's political economy. But in looking at this 1970s period, started to see, well, actually a lot of the experimentation and a lot of the groundwork for what led to Deng's reforms in the very late 1970s and really the 1980s. A lot of those experimentations within China were already happening within the 1970s. And even more than that, I realized that one of the major assumptions that needed to be critiqued was that China wasn't just converging with a static capitalism.

China was converging with a system that itself was undergoing significant transformations in the 1970s. And the biggest capitalist power at the time, the United States, was at the heart of many of these transformations occurring within the capitalist system. And so what I trace in the book and what I realized needed to be historicized and understood was a way that these two different spaces, experimentations within China, but also the United States and its economic turbulence during the 1970s, the way that those two different spaces intersected and ultimately through the decisions and actions of certain groups within those two places, ultimately converged. And so it's a story of change within the capitalist system,

as much it is a story of change within China. And I was particularly struck by the way that those two factors began to converge in particular ways. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you about our new on-demand news report delivered right to your podcast feed. Bloomberg News Now is a short five-minute audio report on the day's top stories. Episodes are published throughout the day with the latest information and data to keep you informed. Yes, there are other products like this from a variety of news organizations. But they usually rerun their radio newscasts throughout the day.

That's not what we do. We create customized episodes that can only be heard on Bloomberg News Now. And we don't wait an hour to publish breaking news. When news breaks, we'll have an episode up in your podcast. feed within minutes. So you're always getting the latest stories and developments. Get the reporting and the context from Bloomberg's 3,000 journalists and analysts we're all over the world. Listen to the latest from Bloomberg News Now on Apple, Spotify, or anywhere you listen. It would be an easy story if the story were simply just Mao dies. There's a little bit of

turmoil trying to spend a couple years figuring out who's going to replace him. Deng Xiaoping comes of power opens up suddenly their capitalist or somewhat. But obviously, that's not the story. Well, let's talk about some of these specifics in the early part of the 1970s. Who are the first movers in the U.S. who sort of sensed an opportunity to trade with China in some form or another? And then how did they do it? Because still, I guess, maybe I just, my mind is in sort of the standard narrative where it's like, oh, trade with China is impossible. It's a communist country where there's no free or anything like that under Mile. But talk to us about like the first people who sort of sensed an opportunity and sort of operationally what they were able to do under the existing

environment. Yeah. Well, there are a couple of different groups of individuals or groups of business people that I particularly focus on. It was very important to my own analytic unpacking was to think about which kinds of business people and which kinds of American actors were beginning to trade with China. And so on one level, there were the big companies, the Boeing, the Westing houses, etc. So there were these very significant and large titans of American industrial capital who were looking to China really from the get-go and saying, we want to sell our planes, or we want to sell fertilizer factories, or what have you, to China. The end sort of result of those attempts were far more murky, and I can get into that in a minute. But some of the more

surprising groups, in addition to perhaps the more standard or expected groups of American business people, were these very maverick, entrepreneurial American business people, some of them with very little prior business expertise who saw in China opportunities to really take a gamble. And so one of the people that I look at who really was at the forefront in opening up the trade relationship with China was this woman named Veronica Yap. She was an art. architect in the early 1970s, who was born in Shanghai, had family in Hong Kong, but had grown up in the United States. And she, when she sort of heard that Nixon was easing trade restrictions, saw an opportunity to import from China. And so she began, through her connections in Hong Kong,

to import a whole range of different kinds of goods. So she was importing Chi-Powls and Mao Coats and a whole range of things that were overtly Chinese. And she very quickly made enough money that she was able to quit her day job. And she was one of a group of these small-scale importers who really led the way in not only importing from China, but the result was that they were selling China to American consumers. They were helping the larger diplomatic thaw by easing American consumers and therefore American voters into engaging with China in a very new way.

And so in the early 1970s, one of the really important results of these importers was not only in the diplomatic and economic realms, but in the cultural shift in sort of allowing for an acceptance of engagement with China. And that, I think, has a really important, longer-term impact on the way that the trade relationship unfolded. So I traced the story of Veronica Yap and a few other importers who, by the mid-1970s, while they continued to import malcoats and continue to import things that were overtly Chinese, also began to import things that had no real connection to China at all. So Veronica Yap, for example, imported these really amazing 1970s high-heeled men's shoes and like, really 70s stuff that had no connection to China other than the label saying made in China. And in order for that acceptance of engagement on everyday granular level with China, in order for that to occur, it necessitated the large-scale celebratory. cultural transformation of engagement with China that was certainly there from the start of the 1970s and very much continued in throughout the 70s as well. And so there's this real dynamic occurring

whereby American importers and retailers those selling Chinese goods begin this much larger transformation in what it means to even trade with China. Because as you mentioned at the beginning of the segment for centuries. Not just American traders, but foreign traders, had looked to China and seen in the China market a promise of selling to China. In the early 20th century, a very well-known American ad man, his name's Carl Crow, a maverick businessman of his own with his own fantastic story, he wrote a best-selling book in the United States called 400 million customers. It won the National Book Award. It was this, you know, really, big a moment in thinking through what the China market represented. And so he sort of crystallized

this idea that China represented 400 million customers. And yet 30 odd years after Carl Crow's book, in this 1970s moment, I began to see that, yes, you have your Boeing's and your Westing houses wanting to sell to China, sort of treading the path of the Carl Crow vision of selling your goods to China. But I began to see also the actions. of people like Veronica Yap and other importers and retailers began to reconfigure what it means to speak of the China market and what it means to speak of U.S. China trade. So you just laid out the sort of cultural diplomacy via textile imports very well, but it still sort of leaves a little bit of tension between diplomacy and geopolitical aims versus economic ambitions.

And one of the things I thought was interesting in your book is you sort of lay out a difference in mindset between the U.S. and China, which is very often Chinese leaders are sort of putting diplomacy or geopolitical goals before business. So if you agree to do what we want in terms of politics, then we'll trade more with you. But for the U.S., it's very much business before diplomacy. So let's build up our economic relationship and then we'll see how all the other stuff goes. How were they sort of able to surmount that difference of perspective in order to get the economic relationship really going? Yeah, well, this was one of the things that was so surprising to me about how I make sense of the diplomacy of this trade relationship.

And I had assumed that the trade relationship would from the U.S. perspective be understood as something that would assist the larger diplomatic aim. Because in this period, the diplomacy of the period is really what was driving the relationship, and it's certainly what has driven scholarship on the topic. So it's a period where the two countries sought to rework how they can have full diplomatic normalization. And the big sticking point was Taiwan. So how can the United States and China have embassies and a full diplomatic relationship? And what did that mean for Taiwan. So that was the big question, and that's usually how people think about 1970s, U.S.-China relations. They don't focus on the trade relationship. And a very significant reason for

that is that the trade numbers were really low. But precisely because the trade numbers were low is why it's really important, because when we look at the trade, not in terms of sort of the quantity of trade or the level of trade, but in terms of sort of quality of changes, that's where it matters. And so if I come back to this point that I made earlier about unpacking the assumptions of your actors at the time, the US actors that I look at, the US diplomats and at the executive levels, so Nixon, Ford, Carter, they all assumed that the trade relationship that they had reopened with China, that that would assist the larger diplomatic aims that they had, which is full normalization with China. And so because trade was understood as a tool,

to assist this larger diplomatic imperative, it was sort of seen as a secondary thing that would ease what really mattered to them was this normalization. And that therefore coincided with a very different, as you've outlined Tracy, a very different assumption on the part of Chinese policymakers who, as the archival documents sort of reveal,

who took a very overt and very different approach towards the relationship between trade and diplomacy. They said, no, we're working towards normalization with you, United States, but you only get trade benefits with us after we have improvements in those diplomatic conversations. So only after we can have concrete steps towards normalization. But where the sticking point lay was in Chinese sales of goods to the United States. Because even though Chinese leaders said, no, we're going to take a very different approach. Trade comes after improvements, not before.

there was a distinction where they said, okay, we'll allow for our sales of our goods to the United States. That wasn't the sticky point. That was eased partly because it gave them cash to buy other things from other countries. And so, in other words, imports to the United States of Chinese goods became a space that was within Chinese leaders' political interests, but it also became one within the US policymakers' interests too because of that assumption that they had, which is, let's use trade to help the larger diplomatic situation. And because the numbers were so low, it didn't seem to matter that, you know, helping China sell some of its textiles to the United States, that wouldn't have a big, or was perceived to not have, you know, a particularly negative consequence. Of course, the story is far different to that. But the political

assumption was something that I myself really wanted to denormalize and denaturalize and and unpack. So when people think about the history, there's the Mao era, there's the Dung era, opening up. Okay, so maybe that was an important shift, but there was more to it. But the other thing you said, which I thought, what I wanted to go back to is that capitalism in the United States was not some fixed permanent state that the U.S. was also undergoing a transition. And it was the inflation of the 1970s. And there were the wars. And there was the fact that Nixon went off the gold standard in in a 1971. And that was a big deal. Talk to us about the state of flux that America found itself in in the 1970s, such that both for diplomatic and I guess trade or sort of commercial reasons,

there was this impulse to figure out more about what could be done with the China market. Yeah. I mean, this is such an important part of the story, right? As you say, Joe, Nixon ending a gold stand at the end of Bretton Woods, it occurred within a month of Nixon's announcement of his about to go to China. And so they're often paired as these two Nixon shocks. They're paired because they were shocks because of their style rather than the substance underpinning them.

But when you look at American business people and American corporations, these two Nixon shocks actually worked together. And so they're how I begin the book is with these two shocks and their lasting and very unintended consequences. So something like the ending of the Bretton Woods system, but also by sort of the mid-1970s U.S. Congress passes the 1974 Trade Act. And some of these key legislative changes are crucial

to the ways that American policymakers sought to encourage the development of American manufacturing and finance, and the relationship between those two things. So we speak today of sort of neoliberalism or globalisation, but these are very much processes that were the products of deliberate decisions. And in the book, I suddenly try and pull out some of those core decisions that had these long-lasting repercussions. So the end of bread and woods and the sort of the freeing up there for of capital

was crucial to the capacity eventually of US corporations to invest their money overseas and have offshore manufacturing. It's hard to imagine today, and I always stress it, is, you know, in 2024, we take for granted the fact that we have sort of outsourced manufacturing and supply chain networks and all the rest of it. But in the 1970s, these dynamics were very much only developing. There's nothing about that that was certain American businesses. As you mentioned, Joe, there's significant inflation.

they very much felt like they were under attack from a whole range of different spaces. Labor unions were very, very active in this period. And so there was nothing guaranteed in the world that we live today. But there were certain steps, both legislative as well as within the corporate world, that did lead to what we now have of sort of offshore manufacturing and other things. So just to give you an example, J.C. Penny is one of the big sort of retailing companies that I look at in the book. and they had in sort of the early 1970s, 1973, only about 10% of their entire stock was goods that were made not in the United States. And JCPenney, I mean, it's big now, but it was really, really, really dominant in the market in the 1970s.

I think it was the second largest retailer in the period. And you're having gone through their company archives and their records. And JCPenney's company plan outlined in 1973 what their goals were going to be for the next five years. And one of the key goals in response, and it was very much in response to Nixon's ending of the Bretton Wood system and the gold standard, was to say, okay, we're in flux right now. Things are challenging right now. But our five-year plan is to increase the amount of goods that we sell in our stores that's manufactured overseas. So in other words, we want to strategically and deliberately choose to turn to outsourced manufacturing.

And within that company plan, they listed a range of countries that they thought would be good to get cheap labor from. And China was listed amongst those spaces. And this is very early days, right, 1973, like China, they've only been trading with each other for about 18 months, after 20 odd years of isolation. And JCPenney is listing China. It's a potential space with which they could engage. And that really tells you something about the very deliberate and overt, but also encouraged ways in which outsourced manufacturing was a product of decisions. Similarly, if we turn to the Trade Act of 1974, just briefly, is this really important, again, legislative moment where Congress said, you know, after a number of years in which Congress had introduced legislation that would have limited the roles of manufacturing corporations.

and limited the capacity of manufacturing multinational corporations to invest overseas, a range of bills, including the Mills bills and the Burt Hark bill in the early 1970s. By 1974, Congress passed this Trade Act of 1974 in which they chose to limit their own legislative powers after the early 70s where their own members had tried to curtail what they saw as the liberal international order. With the Trade Act of 1974, one of the consequences of it was to decrease Congress's powers in making trade decisions, in imposing tariffs and other things. So what the Trade Act did was that it gave the powers, some powers of tariff making and other sort of conditions on trade.

They gave those powers to the president, to the executive branch. And this is really, really significant for a number of reasons, not least of which is that this is happening right at the heart of the work. Watergate scandal. So faith and trust in the executive office and in the president is at its lawless. And yet Congress voted and passed this trade legislation that increased the capacity of the president to impose restrictions and whatever else on trade, precisely because of the assumption that the capacity to uphold the liberal international trading order would be far more protected and far more guaranteed with the office of the executive, the president, than it was

with this sort of unruly Congress, which was sort of introducing labor-backed policies and introducing sort of early sort of in the early 70s legislation that might have been a threat to this movement to offshore manufacturing. And it's precisely that increase in power that Donald Trump has been able to impose the tariffs that he has. It's precisely that change from the Trade Act of 1974, that Joe Biden, too, has been able to continue that. And so in the 70s, the assumption was the president is going to uphold and protect free trade and liberal international trade. And that certainly was the case for a number of decades.

But as we're living through today, that assumption is no longer something to be guaranteed. This is Tom Keene, inviting you to join us for the Bloomberg Surveillance podcast. It's about making you smarter every business day. I'm Paul Sweeney. we bring you complete coverage of the U.S. market open. We cover stocks, bonds, commodities, even crypto, all the information you need to excel. And I'm Alexis Christophis. Bloomberg Surveillance also brings you the analysis behind the headlines.

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Bloomberg Surveillance, Essential Listening, each and every business day. I'm glad you brought up Trump and Biden, because I wanted to ask you about the current state of affairs. And specifically, do you think there's any path? to maybe going back to that sort of time in the 1930s or even earlier, where China was regarded as a potential market for consumers. And one of the reasons I ask is because I think you mentioned in your book, but when China joined the World Trade Organization in, I guess it was 2001 or something like that, I think part of the narrative then was this idea that they could be customers for Western goods. And of course, in the years since then, that idea.

has sort of fallen away again, and we are very much used to talking about China as a competitor for manufactured goods and a cheap source of labor and all that stuff you've been discussing. Is there any way we could go back to a place where maybe it's regarded as more of a market to sell things into? There are a couple of things I want to say to that. The first is, first and foremost, China is a major consumer market. It consumes products that many of its own workers make. But the bigger question that you're asking, right, of sort of how can we, is there a possibility of going back to a different kind of trade order?

I think one of the major problems that we're living with and through is that in many ways, we're not so much as going back as remaining, at least rhetorically, back in the early 20th century when it comes to U.S. political conversations about trade. So even to this day, Biden speaks in terms of his tariffs protecting American jobs. And Donald Trump, even more so, in terms of sort of China is stealing American jobs and we've got to protect them. The problem with that thinking, and it ties back to seeing China as a space to sell to it, is that it doesn't take into account the very profound transformations in how manufacturing and finance and trade more broadly operate. and have operated since the 1970s, that the ways that corporations operate and the ways that are good that is labeled made in China operates,

we know contains a really significant set of other dynamics underpinning it, that a good labelled made in China has involved many other countries along the way. So in the age of COVID and all the rest of it, we're familiar, right, with this idea of made in China as representing a very sort of intertwined global system. And yet politically and rhetorically, the conversations about trade and the conversations about China remain very bound by the nation state. They remain bound by very early 20th century notions of made in China represents China and that's a threat and made in the USA is the solution and that's going to support American jobs. When really the reality of trade is such that the

central power and the central space of profit moves. far more fluidly between and amongst nation states, that it's not just made in China anymore, but a corporation made it, it's Apple or its gap or it's any of the brands, that they are the ones who need to be understood as central to these dynamic. It's not just anymore about a nation state, but the kinds of labels that we're familiar with that say made in X place, they are a product of late 19th century trade. They're a product, in fact, of the UK, of Britain in the very late 19th century, looking out at the world and seeing a threat from the industrial power or the industrialization of Germany.

And so in the late 19th century, the UK introduced legislation that would say, we want to limit goods coming from Germany because of its industrial might. And we're going to do so by labelling products from Germany with made in Germany. And the idea was, well, if British consumers see made in Germany, they're not going to want to buy it, and that's going to be good for us because we want to sort of stymie their powers. But what's really, really important, right? So there's a very common thread here, and that is nationalism, and that is sort of wanting to create this threat. But really, really importantly, when I looked into this history, I was like, okay, that's really interesting.

But then I looked at the legislation, and I looked at what it was. that the British had passed. And they, in the law, said, we're going to know if it's coming from Germany because of where the ship left. This is in the law. They said, if the ship leaves Germany, then we're going to know that all the stuff on that ship

was made in Germany. And that's how we will know to put the label made in Germany. And that reflects a very, very different way in which trade operated. compared to today. We know that trade operates differently. We know that we can't make a economic decision or a trade-based decision based on sort of the ship that the goods are left from. We know that things operate very differently. And yet, the labelling itself and the politics around these labels has remained very static. In many ways, we're still in the late 19th century

way of thinking about trade and manufacturing and goods. It's the same reason that we're still seeing tariffs as being wielded out as the one way which Biden, as much as Trump, is seeking to control trade. It's a very, very 19th century way of thinking, despite the fact that we know it operates very, very differently. Yeah, the idea of like, oh, it comes from X place, therefore it's from X is, it seems like we sort of understand the flaws and then we try, it's like, well, is it 60% this, was a 40% this, where's the value add and obviously very difficult. I just have one last question. You know, it's funny, I'm reading, I pulled up a story while you're talking 1972 by the New

York Times fashion writer Bernardine Morris about Veronica Yap and her introduction of these various Chinese styles and they're sold at Sacks Fifth Avenue and Bloomingdale's. But he uses in the article, it uses the word China hand. So Veronica Yap is referred to as a China hand. And you hear about that today, someone with a lot of familiarity who knows both countries very well and can sort of facilitate trade and dialogue, et cetera. Can you talk a little bit about that first generation of traders identifying goods made in China that might appeal to the U.S. fashion market?

But then the next level is, okay, not just stereotypically or typically Chinese goods, but just any good, you mentioned shoes that could theoretically be made in China more cheaply or more efficiently than somewhere else. And that's sort of like the beginning of the huge boom, which is anything can theoretically be made in China. What was the role of the Veronica Yaps of the world at that time of setting the stage for the next generation that wasn't just selling sort of Chinese style jackets and so forth, but in sort of identifying China as this huge potential production market for more and more and more and more advanced goods that type eventually getting to the point where we are today where there's significant concerns about

China being at the technological frontier of manufacturing. Yeah, I mean, so it operated in multiple ways. So it operated in terms, as I mentioned earlier, of the cultural transformation of accepting regular everyday goods that were made in China. With that label. Yeah. Exactly, with that label. But it also operated at, as you mentioned, an expertise level. This is a new generation of American business people who have been shut out of the China market. They're competing with the Brits and with the West Germans and the Japanese who had been trading with China much longer throughout the 1960s because their governments sort of ended the trade embargo that the United States continued to uphold. And so the Americans were latecomers to the China market. And so the importers began to create a

set of conversations and expertise amongst themselves, this sort of cultivated China hand, if you will, in which they explain to one another. Here's how you trade with China. And this phrase, doing business with China was ubiquitous. It's a real trope within the literature. And I began to see it. And perhaps this is the consequence of my earlier stage of being a literature undergraduate. I saw this as itself, a body of literature as a genre of writing because it was huge, number of pamphlets and books and what have you about how to trade with China. And in providing that expertise, it actually created a set of expectations and ideas about what China represents and what American business people wanting to get involved should expect. And one of the key

and most striking things was the advice, which said, you might lose money. In fact, you probably will lose money. Very, very few business people and corporations made much of a profit from trade with China in this period. Some of the larger companies were so big that they could absorb the loss. JCPenney absorbed the loss, for example. But part of the advice was to companies like Ford Motors or to Philip Morris, the cigarette company. And their advice that they were given was, okay, you want to sell to China. You want to sell your cigarettes or you want to sell your cars. Or you want to sell your cars, sure, but in order to get there, you need to buy from China first. And so the advice that was coming in to these huge titans of American capitalism was buy the rugs, buy the

porcelain, buy the tea. And so you have Coca-Cola, for example, buying tea from China, not selling its oaks or setting up its bottling plants. That came later. And the advice, and therefore actions that were being taken on an economic level were importing from China. It was to encourage a whole range of different stuff coming from China into the United States. And that set in motion a dynamic in which, with the exception of, I think, one year in mid-1980s, and it was due to the recession, US imports of goods from China has continued to grow for the rest of the 20th century. And that dynamic started in the 1970s. And as I mentioned earlier, that was a dynamic that didn't really raise big question marks at a political level

because of the assumption that trade would assist the diplomacy, but also because the numbers were low. But it's the bigger structural change that I think is really, really important. And that structural change is what matters. But there was one group who did see the repercussions of this. There was one group who said, we're looking at what's going on here, and we can see the writing on the wall. and that was American Labor. Right from the get-go, organized American labor, and it's a complex dynamic,

and it's one that I sort of don't present as a simplistic story of workers versus corporations or workers versus the government, but it was a complex story in which there were concerns being raised right from the get-go about what this might mean for ordinary Americans, but precisely because of political assumptions that labor was an impediment

or sometimes an irritant to larger geopolitical concerns, it was not central. And in fact, one story that I tell, it was suppressed as a consequence. And so this is a dynamic in which certain parts of the U.S. economy were prioritized over others. That was fantastic. We could probably do a whole hour on labor. We have to run because they're going to kick us out of the studio.

But Elizabeth, thank you so much for coming on. That was fantastic. It was a real pleasure to be here. Thanks for the opportunity. Tracy, I thought that was a really fascinating conversation. And I think the first thing that just sort of jumps out to me is being important. is that if nothing else, the story of Chinese development and China's integration with the rest of the global economy is not some switch that was flipped when Deng Xiaoping took over after Mao. Yeah, absolutely. I mean, you have to have two participants to every trade relation. And I think it's very true that we tend to view China's economic opening as this sort of unilateral thing almost. So yes, Kissinger was involved in the 1970s on the political side, but very much so when it comes to the actual trade relationship, we think about the liberalization stemming from China. And I thought Elizabeth's point about, well, there are two sides to this. And a lot was going on in the U.S. in the 1970s.

in terms of economic development and the way the economy was sort of evolving and that that played a huge role too. I also think the timeline is really interesting here. So the idea that in the 1930s, you know, you had, I think it was an ad executive she mentioned, right, writing a book about China and 400 million customers. And then 30 years later or 40 years later, it's more of a market for labor. That point is really wild to me too, because that book 400 million customers, Like you could totally imagine some book having been written like 1994, right, by some like Nike executive called like a billion customers that was like, oh, this. And I'm sure that book probably exists. I don't know who wrote it.

But it is funny that there has always been literally basically for almost a century now, this dream of the huge Chinese consumer market. And yet that basically for the most part, and there are obviously exceptions, the big opportunities have been on the sort of supply and production side. Absolutely. The other thing that I thought was kind of funny was the discussion of the, you know, made in whatever country labels and the idea of how we still have them today and yet they are not particularly well suited to global supply chains. And I was thinking back to in the midst of all these supply chain disruptions, I remember someone, it might have been like a official branch of the U.S. government did a study where they looked at a bunch of different businesses. as base cases for the global supply chain. And I remember they looked at this one company in particular. I think it made hot tubs or

saunas or something. And the saunas or the hot tubs were always pitched as made in America. Like they made a big deal of it in their marketing. But then this report had a diagram that showed how the hot tubs were actually put together and where all the components came from. And it was like everywhere you could imagine in the world, Vietnam, China, there was a piece coming from. like all sides of the globe, basically, and then being assembled somewhere in Montana or something like that. Not surprising, but funny. I also thought like something that came up, which I hadn't really appreciated it all before, but the idea of like fashion and style being sort of at the very forefront of that. And I, you know, I mentioned it on the show, but like, you know, going back and

reading about Veronica Yap and the idea that, and it makes sense, right, the first consumer excitement And, you know, Elizabeth titles her book, Made in China, was like this idea of like, oh, this is really exciting. This is a style of jacket. This is a style of baby carrier that they use in China that's made in China. And how like that was sort of along with the Nixon and China moments, like a key step in the opening and these first few business people that went over there and sort of discovered this opportunity and then taught other business people about that. Yeah, absolutely. Shall we leave it there?

Let's leave it there. This has been another episode of the Oddlots podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway. And I'm Joe Wisenthall. You can follow me at The Stallwart. Follow our guest, Elizabeth Inglson. She's at Liz Inglson.

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