Open Door Policy
The Open Door Policy is a term in foreign affairs initially used to refer to the policy established in the late 19th century and the early 20th century that would allow for a system of trade in China open to all countries equally. It was used mainly to mediate the competing interests of different colonial powers in China. Under the policy, none of them would have exclusive trading rights in a specific area. In the late 20th century, the term also describes the economic policy initiated by Deng Xiaoping in 1978 to open up China to foreign businesses that wanted to invest in the country. The latter policy set into motion the economic transformation of modern China.
The late 19th century policy was enunciated in US Secretary of State John Hay's Open Door Note, dated September 6, 1899 and dispatched to the major European powers. It proposed to keep China open to trade with all countries on an equal basis and to keep any power from totally controlling the country and called upon all powers, within their spheres of influence to refrain from interfering with any treaty port or any vested interest, to permit Chinese authorities to collect tariffs on an equal basis, and to show no favors to their own nationals in the matter of harbor dues or railroad charges. Open Door policy was rooted in the desire of businesses in the United States to trade with Chinese markets. The policy won support of all the rivals, and it also tapped the deep-seated sympathies of those who opposed imperialism by its policy pledging to protect China's sovereignty and territorial integrity from partition. It had no legal standing or enforcement mechanism, but it was not violated, and China was not partitioned the way that Africa had been in the 1880s and the 1890s. However, the policy humiliated the Chinese because its government was not consulted, which created long-lasting resentment.
In the 20th-century and 21st-century, scholars such as Christopher Layne in the neorealist school have generalized the use of the term to applications in 'political' open door policies and 'economic' open door policies of nations in general, which interact on a global or international basis.
Background
The theory of the Open Door Policy originated with British commercial practice, as reflected in treaties concluded with the Qing dynasty China after the First Opium War. The Open Door concept was first seen at the Berlin Conference of 1885, which declared that no power could levy preferential duties in the Congo. As a concept and policy, the Open Door Policy was a principle that was never formally adopted via treaty or international law. It was invoked or alluded to but never enforced as such. The policy collapsed in 1931 when the Japanese seized and kept Manchuria, despite international disapproval.Technically, the term Open Door Policy is applicable only before the founding of the People's Republic of China in 1949. After Deng Xiaoping took power in 1978, the term referred to China's policy of opening up to foreign business that wanted to invest in the country, which set into motion the economic transformation of modern China.
in Harper's Magazine November 18, 1899.
History
Formation of policy
During the First Sino-Japanese War in 1895, China faced an imminent threat of being partitioned and colonized by imperialist powers such as Britain, France, Russia, Japan, Germany, and Italy. After winning the Spanish–American War of 1898, with the newly acquired territory of the Philippine Islands, the United States increased its Asian presence and expected to further its commercial and political interests in China. It felt threatened by other powers' much larger spheres of influence in China and worried that it might lose access to the Chinese market if it was partitioned. As a response, William Woodville Rockhill formulated the Open Door Policy to safeguard American business opportunities and other interests in China. On September 6, 1899, US Secretary of State John Hay sent notes to the major powers to ask them to declare formally that they would uphold Chinese territorial and administrative integrity and they would not interfere with the free use of the treaty ports in their spheres of influence in China. The Open Door Policy stated that all nations, including the United States, could enjoy equal access to the Chinese market.In reply, each country tried to evade Hay's request by taking the position that it could not commit itself until the other nations had complied. However, by July 1900, Hay announced that each of the powers had granted its consent in principle. Although treaties after 1900 referred to the Open Door Policy, competition continued abated among the various powers for special concessions within China for railroad rights, mining rights, loans, foreign trade ports, and so forth.
On October 6, 1900, Britain and Germany signed the Yangtze Agreement to oppose the partition of China into spheres of influence. The agreement, signed by Lord Salisbury and Ambassador Paul von Hatzfeldt, was an endorsement of the Open Door Policy. The Germans supported it because a partition of China would limit Germany to a small trading market, instead of all of China.
Subsequent development
The results of the Open Door did not live up to American hopes. Dreams of a vast "China market" were not realized since American investments, while considerable, did not reach major proportions; the United States could not prevent other powers, especially Japan, from expanding in China; and Chinese leaders, while willing to seek American aid, were not willing to play the passive role that the Open Door implied.In 1902, the US government protested that the Russian incursion into Manchuria after the Boxer Rebellion was a violation of the Open Door Policy. When Japan replaced Russia in southern Manchuria after the Russo-Japanese War the Japanese and American governments pledged to maintain a policy of equality in Manchuria. In finance, American efforts to preserve the Open Door Policy led in 1909 to the formation of an international banking consortium through which all Chinese railroad loans agreed in 1917 to another exchange of notes between the United States and Japan. There were renewed assurances that the Open Door Policy would be respected, but the United States would recognize Japan's special interests in China. The Open Door Policy had been further weakened by a series of secret treaties in 1917 between Japan and the Allied Triple Entente that promised Japan the German possessions in China after the successful conclusion of World War I. The subsequent realization of the promise in the 1919 Versailles Treaty angered the Chinese public and sparked the protest known as the May Fourth Movement. The Nine-Power Treaty, signed in 1922, expressly reaffirmed the Open Door Policy.
Since the policy effectively hindered Chinese sovereignty, the government of the Republic of China endeavored to revise the related treaties with foreign powers in the 1920s and 1930s. However, only after the conclusion of World War II would China manage to regain its full sovereignty.
In modern China
In China's modern economic history, the Open Door Policy refers to the new policy announced by Deng Xiaoping in December 1978 to open the door to foreign businesses that wanted to set up in China. Special Economic Zones were set up in 1980 in his belief that to modernize China's industry and boost its economy, he needed to welcome foreign direct investment. Chinese economic policy then shifted to encouraging and supporting foreign trade and investment. It was the turning point in China's economic fortune, which started its way on the path to becoming 'The World's Factory'.Four SEZs were initially set up in 1980: Shenzhen, Zhuhai and Shantou in Guangdong, and Xiamen in Fujian. The SEZs were strategically located near Hong Kong, Macau,and Taiwan but with a favorable tax regime and low wages to attract capital and business from these Chinese communities. Shenzhen was the first to be established and showed the most rapid growth, averaging a very high growth rate of 40% per annum between 1981 and 1993, compared to the average GDP growth of 9.8% for the country as a whole. Other SEZs were set up in other parts of China.
In 1978, China was ranked 32nd in the world in export volume, but by 1989, it had doubled its world trade and became the 13th exporter. Between 1978 and 1990, the average annual rate of trade expansion was above 15 percent, and a high rate of growth continued for the next decade. In 1978, its exports in the world market share was negligible and in 1998, it still had less than 2%, but by 2010, it had a world market share of 10.4% according to the World Trade Organization, with merchandise export sales of more than $1.5 trillion, the highest in the world. In 2013, China overtook the United States and became the world's biggest trading nation in goods, with a total for imports and exports valued at US $4.16 trillion for the year.
Applications in 20th and 21st centuries
Scholars such as Christopher Layne in the neorealist school have generalized the use of the term to applications in 'political' open door policies and 'economic' open door policies of nations in general, which interact on a global or international basis.William Appleman Williams, considered as the foremost member of the "Wisconsin School" of diplomatic history, departed from the mainstream of US historiography in the 1950s by arguing that the US was more responsible for the Cold War than the Soviet Union by expanding as an empire. Pivoting the history of American diplomacy on the Open Door Policy, Williams described the policy as "America's version of the liberal policy of informal empire or free trade imperialism." That was the central thesis in his book, The Tragedy of American Diplomacy, which is one of the most influential books written on American foreign policy.