The International Chamber of Commerce: A new form of business internationalism

The ICC was established by European and American businesspeople in 1920 as an exclusively economic organization. However, political implications were unavoidable when rebuilding global markets following the First World War. Scholars have established the ICC’s importance in connecting business actors across the globe and have argued that the organization is key to understanding economic diplomacy after the First World War, as it brought together national committees formed from business associations and chambers of commerce and offered an arena for corporatist representation of economic interests.Footnote ³ The industrial mobilization triggered by the war accelerated collaboration between businesses and governments through corporatist institutions ‘founded on officially recognized functional groups, such as organized labor, business, and agriculture’ in which ‘institutional regulating and coordinating mechanisms’, created ‘a pattern of interpenetration and power sharing’.Footnote ⁴ According to Michael Hogan, corporatist interpenetration between state and non-state actors at the national level—a global phenomenon, which was also known as the ‘associative state’ in the USA after the patterns of public–private collaboration promoted under US Secretary of Commerce Herbert Hoover– was a crucial element of diplomacy in the aftermath of the First World War.Footnote ⁵ The tripartite structure of the ILO—where business and labour are represented separately and in addition to governments—is one crucial example of globalized corporatism.Footnote ⁶

The ICC’s national committees were devised to reflect the business community across the globe—with the notable exclusion of small businesses and rural interests. These committees elected delegates to the ICC Council, which in turn appointed an executive committee of a dozen members to assist the organization’s president. Every two years, the national committees nominated delegates to the ICC Congress, which elected new presidents and voted on resolutions reflecting the views of the ‘Businessmen of the World’.Footnote ⁷ The ICC maintained a headquarters in Paris (with 45 employees in the late 1930s, a number roughly similar to that of the League of Nations Economic and Financial Organization at the time), where an executive committee and the national committees (which met regularly and had their own secretariats) worked to implement resolutions adopted at the ICC Congress. In addition, the ICC had technical committees on a number of issues important to business circles, including the standardization of commercial terms, transportation, and trade, etc.Footnote ⁸ The organization also served as a platform where business stakeholders could meet and have their disputes mediated. Specifically, the ICC established the International Court of Arbitration in 1923 to provide peaceful resolution of international trade disputes in addition to offering networking platforms and related services for its members.Footnote ⁹ Despite an interruption during the Second World War, the number of ICC member states grew substantially in the twentieth century. By 1935, the ICC had 32 national committees, and more than 90 in 2019.

The ICC gradually consolidated its position as the leading international forum for businesspeople and global business advocacy. During the interwar years, the ICC’s technical committees were in constant contact with the League of Nations and promoted free trade policies, rules, and standards for the (self-)regulation of international trade and finance.Footnote ¹⁰ After the Second World War, the United Nations granted the ICC the highest consultative status, which enabled it to collaborate closely with the UN Economic and Social Council and regional commissions. The ICC was regularly invited to comment on international trade issues within the UN system. In 1969, its status among international organizations was enhanced when the Economic Consultative Committee formalized annual meetings between the ICC, the General Agreement on Tariffs and Trade (GATT), and UN agencies active in economic fields. These meetings helped the ICC to reach high-ranking people at the UN. The ICC thus managed to remain the most representative global business association, joining the UN in the Global Compact of 2000. In a joint press release issued in 1998, the two organizations stated that there was ‘great potential for the goals of the United Nations—promoting peace and development—and the goals of business—creating wealth and prosperity—to be mutually supportive’.Footnote ¹¹

Chinese economic internationalization in the twentieth century

Historian William Kirby uses the term ‘internationalization’—which he considers more appropriate than ‘globalization’—to describe China’s exchanges with other countries both before and after 1949. ‘States and governments matter, critically, to the private as well as the public dimensions of Chinese foreign relations in the twentieth century, which took place in settings that were inescapably inter-national […] And states and governments mediated, regulated, and registered an ever-growing percentage of the activities of non-state actors.’Footnote ¹² Kirby underscores the leading role played by Chinese authorities in guiding the country’s appropriation of foreign cultures, products, science, and technology. Official diplomatic relations were often the driving force behind waves of appropriation of foreign cultural and nation-building models in China. Formal diplomatic ties both conditioned and spilled over into other aspects of modern Chinese society.Footnote ¹³

China’s presence in intergovernmental organizations complicated that process. Studying organizations where multilateral negotiations took place can contribute to our understanding of the determining role played by diplomatic relations in introducing foreign governing practices to China. Indeed, the Chinese governments’ presence in a burgeoning international system led by imperial powers can be traced back to the 1890s. Near the end of the Qing government’s reign, China sent delegations to international gatherings and sought to participate in the international community.Footnote ¹⁴ Even the decision at the Paris Peace Conference to allow Japan to take control of former German holdings on Chinese territory—despite China having sided with the Allies during the war—did not compel China to retire from the international scene. Nor did the divisions of the Warlord Era prevent Chinese diplomats from pushing for their country to be given equal footing in different international venues including the League of Nations.Footnote ¹⁵ In the 1930s, at the Nationalist government’s invitation, the League of Nations provided expertise for China’s reconstruction programmes.Footnote ¹⁶ The government also called on the League of Nations for support in response to the Japanese invasion of Manchuria in 1931 and the Shanghai Incident of 1932. After the Second World War, the Chinese government played an essential role in launching the United Nations and its specialized agencies.Footnote ¹⁷ The establishment of the World Health Organization, for example, was an initiative led by the Chinese and Brazilian delegations,Footnote ¹⁸ and China was made one of the five permanent members of the UN Security Council, with veto rights. The Nationalist government’s loss of the Chinese mainland in 1949 did not change the situation until the 1970s. When the People’s Republic replaced the Nationalist government within the UN system in 1971, it used the UN as a platform to tout its social and economic development models to the world.Footnote ¹⁹

Researchers have demonstrated how international political concerns define and even dominate China’s participation in international organizations.Footnote ²⁰ The diplomatic battle between the Communist People’s Republic of China (PRC) and the Nationalist Republic of China (ROC) within the UN, for instance, was a recurring theme in many international meetings and conferences in the postwar period. Although inevitably influenced by diplomatic events, intergovernmental organizations and their specialized agencies both before and after the Second World War introduced China to elements of modern statecraft such as public health administration, central banking, and civil engineering.Footnote ²¹ For example, recent historiographies have illustrated that Chinese experts’ collaboration with the League of Nations left its mark on both postwar China and the United Nations.Footnote ²²

The ICC’s encounters with the different Chinese governments present two intriguing aspects that complement the literature described above. First, the ICC allowed only private actors to act as representatives, which limited direct intervention by national governments. Both Chinese governments were forced to step aside and exercise their influence through intermediating individuals or organizations, such as chambers of commerce. China’s ‘internationalization’ as described by Kirby was forced to take a different form. Second, the ICC’s advocacy in favour of private enterprise clashed with the Chinese governments’ attempts to control the country’s economy. The two sets of policies were entirely at odds. Studying China’s relationship with the ICC allows us to test the limits of various Chinese governmental efforts to control the country’s internationalization through political influence and negotiations with a private international organization and the impact on the Chinese states’ relations with their business circles.

The Chinese states’ relations with the ICC were also grounded on Chinese state-business relations, often mediated by business associations. Existing research confirms Margaret Pearson’s findings that business associations in China ‘exhibited elements of autonomy from the state and, simultaneously and in significant ways, were controlled by the state’. Writing in the 1990s, Pearson pointed to two periods of exception. First is the early years of the republican period, when the weak national government left a large manoeuvring space for business associations; and the second was in the late 1950s to 60s, when the PRC government strengthened its control over business circles, preventing private profit-seeking activities.Footnote ²³ Sixty years apart, China’s two encounters with the ICC, probably not coincidentally, took place at moments that immediately followed the two exceptional periods. Those moments of policy change created opportunities for the ICC to create meaningful contact with China as the Chinese central government sought a new balance.

Study of the interactions between the ICC and China also complements a second body of literature that examines foreign trade activities and competition in the Chinese market. Most such literature concentrates on specific companies or the commercial interests of a single foreign power in ChinaFootnote ²⁴ and is less focused on the interaction between foreign powers and business circles in safeguarding their commercial interests on Chinese soil. One exception is Ghassan Moazzin’s work on China’s liquidation of Deutsch-Asiatische Bank (DAB) upon entering the First World War, which showcases how multilateral diplomatic relations intertwined with China’s governance of its banking sector.Footnote ²⁵ The DAB should not have been liquidated, according to the Hague Convention, which prohibits countries from directly taking over private commercial activities. The Chinese government decided to liquidate the DAB nonetheless, entrusting the task to British experts so as to obtain the Allied Powers’ trust and be invited to the Paris Peace Conference. Moazzin’s research thus demonstrates how multilateral relations spilled over from the diplomatic to the business arena. Valeria Zanier also tackles the relationship between diplomatic policies and international trade in China, but during the PRC period. Zanier provides an account of trade relations between China and Western Europe via businesspeople and European chambers of commerce, which took place despite the official Cold War rivalry.Footnote ²⁶ Her research shows that a form of ‘parallel diplomacy’ existed and that non-governmental business interests gained traction against the PRC’s official trade policies through chambers of commerce.Footnote ²⁷

Following Moazzin’s and Zanier’s lines of study, this article uses the ICC as a prism through which to study the relationship between business and politics in China’s economic diplomacy. It also provides a new vantage point on Western multilateral efforts to gain access to the Chinese market. The private platform offered by the ICC not only mediated competition between foreign business in China but also inevitably touched upon Chinese foreign policy. Specifically, the Chinese governments of the 1920s and the 1980s sought integration into the global trade network while maintaining control of the Chinese market and promoting their political agendas within the ICC. They entrusted their plans to intermediaries, although at various levels of distance from the government: in the 1920s, it was the banker K. P. Chen, whose business model aligned with the government’s aim of abolishing extraterritoriality; in the 1980s, it was officers of the CCPIT, a semi-governmental organization founded in 1952. For the ICC, integrating the world’s most populous country into trade networks was vital to the organization’s very identity as a global forum for private business. The issue of Chinese membership not only demonstrates the ICC’s failure to provide an efficient multilateral hub for economic policy in the 1930sFootnote ²⁸ but also testifies to the organization’s resilience and flexibility in the 1980s, which paved the way for China’s re-entry into global capitalist networks.

The ICC and Nationalist China: Business internationalism meets national rivalries

In July 1928, a month after Chiang Kai-Shek’s Nationalist army took control of most of China, prominent Italian industrialist and ICC President Alberto Pirelli wrote to the banker Thomas W. Lamont, chair of the American national committee at the ICC that, ‘the Chamber could prepare usefully, studies by competent persons, in order to be ready—the day that interested governments might declare themselves in agreement—to send to China a delegation of business men with the purpose of realizing an accord of all parties upon a concrete program for the economic and financial reconstruction of the Celestial Empire’.Footnote ²⁹ As a unified Chinese government was forming, Pirelli envisioned the ICC working with global businesses interested in China’s economic and financial reconstruction. Highlighting ‘the importance of China in world trade’ and stressing that the ‘re-establishment of Chinese stability was one of the factors of peace for the world’,Footnote ³⁰ Pirelli’s vision for the Chinese market echoed the ICC’s contributions to the resolution of German war reparations and economic reconstruction in the 1920s.Footnote ³¹ In a letter to the General Chamber of Commerce in Shanghai, an organization he deemed to be representative and powerful in China, Pirelli explained that the ICC wanted Chinese businessmen to take ‘the empty seat at our table that should be filled by China’.Footnote ³² Pirelli was convinced that the economic principles of the new Chinese government—unlike those of the Soviet Union—would be compatible with the views of the ICC and that the new government was supported by Chinese and international business circles.Footnote ³³ At several financial and commercial conferences, the Nationalist government had underscored its collaboration with businessmen, which fitted well with global corporatist economic policies that were mainstream in the 1920s.Footnote ³⁴ For Pirelli, joining the ICC would provide Chinese businessmen with the opportunity ‘to create personal relationships with personalities of the business world from all countries’. Chinese businessmen could, he continued, ‘voice their preoccupations freely in the great international meetings where the future of the economic world is decided’.Footnote ³⁵

Pirelli’s objective was to bring Chinese delegates to the ICC Congress in Amsterdam in the summer of 1929. With this objective in mind, a consultative meeting was held at the ICC headquarters in Paris in January that year. Pirelli envisioned the meeting as a forum for preparing a resolution that the Amsterdam Congress could pass. For him, the Congress would be an opportunity for Chinese businessmen to voice their commitment to capitalist principles on the international stage.Footnote ³⁶ In practical terms, those principles included ‘monetary stability, budget equilibrium, payment of debts, efficient organization of a central bank, and so on’.Footnote ³⁷ He also hoped that the meeting would provide an opportunity for the ICC to express its concerns regarding trademark protections, arbitration, and custom duties. Although the ICC insisted that it was an apolitical organization, there was no way around political questions in either Paris or Amsterdam. At the Paris meeting, held over three days, the two Chinese delegates met with some 30 representatives from 12 nations, including the USA and Japan. The meeting included subcommittees on industry, trade, and legal matters under Sir Arthur Balfour of Great Britain, financial matters under Georges Theunis of Belgium, and transportation, communications, and public works under Felix Kilian of Germany.Footnote ³⁸

The differences between the Chinese delegates and the ICC representatives were conspicuous. On the ICC’s side, the participating members were business managers and capitalists who had commercial interests in China. In addition to Pirelli, whose firm owned rubber plantations in southeast Asia,Footnote ³⁹ other participants included the managers of the Tientsin branch of the Disconto-Gesellschat, La Banque de l’Indochine, and Mitsui Co. of London; Thomas W. Lamont was represented by J. R. Carter from the Paris office of J. P. Morgan & Co. Some representatives had formerly served in their respective governments and maintained political ties. Georges Theunis, who succeeded Pirelli as president of the ICC in 1929, was a former prime minister of Belgium and a businessman who was involved in ‘Chinese business for many years (especially railways)’.Footnote ⁴⁰ The Chinese delegation, on the other end, comprised two diplomats stationed in Europe with no business background. The chief delegate, Liang Lung (who also used the name Liang Hsueh-Sung, 1893–1968), was a Chinese diplomatic official based in Berlin. The other was Hsia Chi-Feng (1889–1961), the unofficial public relations man for the Chinese delegation to the League of Nations from 1923–1928. In order to be accepted by the ICC, Hsia was presented as a representative of the National Association of Chambers of Commerce, the General Chamber of Commerce of Shanghai, and the National Association of Bankers, despite having no ties with those associations and absolutely no business experience.Footnote ⁴¹

The Paris meeting failed to achieve consensus for several reasons. One was the political tensions between China, certain Western countries, and Japan. The latter countries had extraterritorial trade privileges in China, abolition of which the Nationalist government considered its highest diplomatic priority. Hsia explained that ‘it was necessary to find a practical way of revising the unequal treaties’ that had established extraterritorial rights in China. Doing so was of course the responsibility of governments, not business, but Hsia asserted that the ICC’s national committees could convince their governments to act. Although Chinese delegates claimed that their traders were no different from those of the West and simply wanted ‘to make money’, they insisted upon the need for equal rights among member states.Footnote ⁴² Some delegates argued that these issues were too political to be discussed at the ICC, which should stick to economic matters. Other participants, however, sided with China and denounced the inequalities between countries that enjoyed extraterritorial rights and others that did not. One German delegate protested against any endeavour ‘to obtain the cooperation of the International Chamber of Commerce in the protection of the unequal treaty rights of the former allied and associated powers’.Footnote ⁴³

The ICC’s failure to unite meant that its member states had to apply separate strategies. The administrative commissioner of the ICC US Committee, Richard Eldridge, was aware of the stalemate. He reported to his fellow American businessmen that ‘the political problems involved such as the unequal treaties, Japanese demands, and the conflict of interests between European ‘Treaty’ States and European ‘non Treaty’ States make it very desirable to deal with Chinese affairs very cautiously’.Footnote ⁴⁴ The Reichsverband der Deutschen Industrie, the main German business association, on the other hand, pursued its own negotiations with the Chinese government that year. Nonetheless, some members of the ICC Council remained optimistic. For the ICC’s honorary president, former French Minister of Trade Etienne Clémentel, ‘[t]he International Chamber alone was in a position to undertake the work that would finally open the way to government action’.Footnote ⁴⁵

At the Amsterdam Congress in July, the same deadlock prevented the ICC from passing a resolution on the matter. The only significant difference between the Amsterdam and Paris meetings lay in the composition of the Chinese delegation. At the ICC’s request, the delegation sent to Amsterdam included a majority of businessmen.Footnote ⁴⁶ The delegation’s speech to the Congress was delivered by its acting chief, K. P. Chen, who was traveling in Europe on business. Speaking as an envoy of the Chinese General Chamber of Commerce, Chen read a speech that he had prepared with Chinese diplomats.Footnote ⁴⁷ Unsurprisingly, the speech was similar to the pseudo-business representative Hsia’s stance during the January meetingFootnote ⁴⁸ and concluded: ‘The Chinese people are always willing to cooperate with you in making China a world’s market for trading on an equal footing and on a basis of reciprocity.’Footnote ⁴⁹ Chen finished by stating that Chinese business circles were willing to collaborate with foreign businessmen but also pushed for the cancellation of unequal treaties.

Chen was more than just a government mouthpiece, however: his speech was also in perfect alignment with his own business interests. Such ‘nationalist internationalism’ had been the backbone of the Republican government’s diplomatic policy; that is, international collaboration was welcome on condition that China recovered its full rights as a modern nation.Footnote ⁵⁰ Chen’s business interests followed the same line, as he worked to introduce China to modern banking products and practices—such as foreign exchanges and insurance—by partnering with foreign banks.Footnote ⁵¹ Chen was open to using foreign experts and capital and suggested that the new Nationalist government formed in 1928 should work with League of Nations experts to design a central bank.Footnote ⁵² At the same time, Chen was a vocal advocate for restored tariff controls. Pushing for the abolition of extraterritoriality was also in Chen’s business interests, as it would put his bank on an equal footing with foreign banks in China; the latter attracted more capital at the time, as they were exempt from Chinese law and any governmental interference,Footnote ⁵³ while Chinese banks were often forced to issue war bonds at the government’s request.Footnote ⁵⁴ The situation became even more unequal during political and military incidents. For example, in his diary, Chen recorded his frustration when Chinese banks had to close during the Shanghai Incident of 1932 because they feared that they would lose their savings accounts to foreign banks in Shanghai.Footnote ⁵⁵

Chen’s Amsterdam speech met with well-prepared opposition from countries with extraterritorial rights in China, exposing the diplomatic tensions at play. In June 1929, the American, British, French, and Japanese chambers of commerce in Shanghai (the USA, Great Britain, and Japan were China’s top three trading partners at the time) proposed an ICC resolution that was discussed during the Congress.Footnote ⁵⁶ The resolution stipulated that governments should ‘refrain from modifying the existing status of foreigners in China’.Footnote ⁵⁷ A British delegate further accused the Chinese delegation of bringing a political agenda to the ICC.Footnote ⁵⁸ At the official session of the Congress on 10 July, Chen’s speech focused on the Chinese government’s promise to consolidate its financial situation and invite international collaboration for the country’s development; he left it to his colleague Ping-Wen Kuo, a state official and well-established educator who had been trained at Columbia University, to relay the government’s appeal to abolish unequal treaties.Footnote ⁵⁹

Thomas W. Lamont also delivered a speech that carried considerable weight among ICC representatives, as he and J. P. Morgan Bank had played a central role in Europe’s economic recovery during the 1920s, and he had collaborated, directly or indirectly, with some of the ICC’s main figures.Footnote ⁶⁰ Lamont’s speech set the tone for the ICC’s response to China’s appeals. Speaking directly after Chen, Lamont stressed the importance of China paying its debts before seeking international capital for development. He opened by asserting that he was in favour of collaborating with China, but his tone changed when it came to the government loans that some Chinese officers secretly hoped would be forthcoming from American banks: ‘On this point we must be realists, and the greatest lack of friendship that we could show today would be simply to speak pleasant words to the Chinese, to give them general assurances and yet to fail to make concrete mention of certain steps that are requisite in the situation.’ Lamont’s position was clear: unless China introduced measures to restore its international credit, no loans to the Chinese government ‘could be made in the markets of New York and I will venture to add in those of Europe as well’.Footnote ⁶¹ Lamont’s attitude was in line with the business strategy at J. P. Morgan. Lamont, who had led the first Wall Street mission to Japan in 1920, was instrumental in the issuance of several large loans to the Japanese government in the 1920s. As historian E. S. Rosenberg has chronicled, Lamont always favoured Japan over China, as ‘Japan offered immeasurably greater investment security and opportunity for profit’. Rosenberg further argues that ‘the House of Morgan actually helped deprive China of capital [and] (because no competing loans could be offered […]) helped build Japan’s economic strength’.Footnote ⁶²

The tensions among Western powers posed a challenge to Pirelli’s goal of making the ICC a platform for coordinating business interests in China. However, Germany’s Reichsverband launched bilateral negotiations with the Chinese government in 1929, advancing Pirelli’s project. As Kirby has illustrated, the Reichsverband established a China study group in January 1929 based on previous contact with the Chinese government. Two months later, the study group sailed to China to confer with government officials there.Footnote ⁶³ The Reichsverband conspicuously did not wait for the ICC Congress in July. When, in 1929, K. P. Chen arrived at the Berlin office of the general manager of the Deutsch-Asiatische Bank, Felix Kilian, who was also a member of the ICC China meetings (chairing a subcommittee in Paris), chose to sideline the ICC in favour of Germany’s bilateral initiatives.Footnote ⁶⁴ Kilian pointed out to Chen that the ICC’s core aim was to support coordination between countries that wanted to issue loans to China. At the January meeting, he had understood that China did not want a coordinated effortFootnote ⁶⁵ and put that fact forward to Chen. Also from the January meeting, Kilian was aware of the Chinese government’s focus on abolishing imperialist treaties. He told Chen that it was Germany who had insisted on including China in the ICC’s China Affairs Committee.Footnote ⁶⁶ Kilian’s conversation with Chen was not the only driver behind the bilateral relationship. China and Germany also shared a similar position vis-à-vis the post First World War international organizations. Both governments felt persecuted by the terms of the Treaty of Versailles; they thus sympathized with each other and preferred bilateral dealing. The Chinese government also preferred to collaborate with countries with no imperial presence, making Germany one of the suitable candidates among industrialized countries. The German delegates to the ICC were aware of their advantage when it came to working with China—as described above, they had sided with China regarding the abolition of extraterritoriality during the consultative meeting.Footnote ⁶⁷

The 1929 encounter between China and the ICC demonstrates that the latter was indeed a forum where businesspeople met and compared their interests, but not one where agreements were reached. Rather, the business communities from different countries worked to safeguard their respective economic interests via the ICC. China’s main trade partners even used the ICC to counter China’s diplomatic agenda, petitioning not to discuss extraterritoriality there. The American banker Thomas W. Lamont, in line with the House of Morgan’s business interests and in close collaboration with the US government, cautioned ICC members against dealing with the Chinese government, citing its lack of financial credibility. The German Reichsverband, however, expressed support for China’s political appeals, partly because it was in Germany’s interest to open up the Chinese market. As these powers did not manage to find common ground within the ICC, the organization lost its role as a consortium for investment in Chinese economic reconstruction, and all stakeholders went on to advance their respective agendas through other platforms.

Chinese participation in the ICC was intermittent after 1929. Progress on ‘Chinese questions’, as the ICC termed them, was crippled by internal disagreements and the general weakening of the ICC due to the Great Depression and failed conferences of the 1930s, such as the World Economic Conference of summer 1933. The Chinese government instead turned to the League of Nations—a public intergovernmental organization—for support with economic reconstruction. German business circles would eventually obtain their share of the Chinese market through industrial diplomacy in the 1930s.Footnote ⁶⁸ Even Great Britain, which had the greatest commercial interests in China, followed the German Reichsverband’s example and sent its own separate naval mission and study commission to China.Footnote ⁶⁹ The failure of the ICC’s initiative on China was in line with the interests of the Chinese government, whose main diplomatic tactic was to negotiate with foreign powers separately.

The most significant contribution of the 1929 Congress, from the Nationalist government’s perspective, lay perhaps in the discovery of its business diplomat, K. P. Chen. In the 1930s and 40s, Chen continued to act as the Nationalists’ envoy to the USA for loan negotiations. He carried out his final mission of business diplomacy in 1944, at an ICC event, heading China’s delegation—the second-largest after the Americans’—at the International Business Conference in Rye, New York, which relaunched the ICC’s activities after the Second World War.Footnote ⁷⁰ After the conference, Chen remained in the USA for another two years, investing capital for US–China joint ventures in Chinese reconstruction.Footnote ⁷¹ When Communist forces took Beijing, Chen retired from financial diplomacy and moved his family and bank to Hong Kong, and then to Taiwan in the 1950s.Footnote ⁷² Interviewed in 1961, Chen explained that international meetings such as those of the ICC ‘helped immeasurably’ in broadening his outlook and enabled him to meet key people in the financial world, such as the banker Winthrop Aldrich, chairman of Chase Manhattan Bank, who became president of the ICC in 1944 and with whom Chen remained in contact for decades after the Amsterdam meeting.Footnote ⁷³

The ICC and the People’s Republic: From brief encounter to lasting relationship

Chen’s retirement from financial diplomacy was followed by a long hiatus in China’s relations with the ICC. The newly founded People’s Republic of China implemented a socialist system modelled after that of the Soviet Union, which emphasized the collectivization of land, state-owned enterprises, and heavy industry. It also introduced several controls on cross-border trade and investments.Footnote ⁷⁴ Integration into the global capitalist economy was no longer an official policy. Instead, the Chinese Communist Party (CCP) developed close ideological, military, and economic relations with the USSR in the 1950s. While the CCP’s United Front policy gradually disassembled the business class,Footnote ⁷⁵ government influence also penetrated into chambers of commerce, starting in 1951 via representatives sent by state-owned enterprises.Footnote ⁷⁶ The rest of the 1950s saw a wave of nationalization and collectivization of private enterprises.

The PRC withdrew from the Western-led international scene at the exact moment when the ICC was fortifying its position in international business. In the 1950s, the PRC had minimal contact with the ICC. A PRC delegate attended the ICC’s Asia and Far East Conference in 1956 but left early to protest the inclusion of the exiled Nationalist regime settled in Taiwan.Footnote ⁷⁷ As at other international gatherings during the same period, the PRC was firmly against the Nationalists’ being present at the same conferences as the People’s Republic, which created a ‘two Chinas’ situation. The PRC did not make an exception for the ICC, despite the organization’s private nature. The PRC’s absence from the ICC over the following years lowered the political barrier for the Republic of China (ROC) to establish an ICC national committee, which the organization approved in 1966 and which had been instrumental in the creation of the Confederation of Asia Pacific Chambers of Commerce and Industry (CACCI) that same year.Footnote ⁷⁸ However, the status of the ROC committee and the relationship between the PRC and the ICC underwent profound changes from 1978 as soon as the PRC introduced policies that successively opened its economy and entered into contact with the ICC again.Footnote ⁷⁹

Under the leadership of Deng Xiaoping, waves of reform opened up China’s economy to foreign capital, stimulating economic growth and legitimizing the CCP’s governance.Footnote ⁸⁰ Domestically, the private sector—eliminated by the CCP in 1956—gradually reemerged as a salient actor for the Chinese economy. During the 1980s, and despite some ebbs and flows, the PRC became progressively integrated in the world economy—Chinese exports and imports grew steadily, as did foreign direct investment to China. The country also participated in international organizations such as the World Bank and the International Monetary Fund (IMF).

The first contact between the ICC and China took place immediately after China introduced its open-door policy. Between 1979 and 1980, the ICC launched several ‘unofficial contacts’ with the Chinese representative to the United Nations, and the Chinese ambassadors to France and Pakistan.Footnote ⁸¹ A year later, in 1981, the ICC pressured the ROC national committee into changing its name and downgraded its status. The Chinese Business Council of the ICC in Taipei, previously the National Committee of the Republic of China, retained rights to take part in the ICC’s activities but no longer enjoy ‘the status of a National Committee for diplomatic or protocol purposes’.Footnote ⁸² As proposed by the ICC Secretary General, ‘the position of Taiwan in international organizations had evidently been a sensitive matter ever since the PRC joined the United Nations in the 1970s’.Footnote ⁸³ In 1980, PRC’s membership in the IMF and the World Bank led to the expulsion of Taiwan from those institutions.Footnote ⁸⁴ Following international organizations’ protocol regarding PRC was crucial, as the ICC derived its legitimacy within the business community from its close relations with international organizations. The President of the ICC pointed out to the board in 1987 that the failure to achieve an institutionalized relationship with the PRC ‘could have important repercussions on ICC relations with the United Nations’.Footnote ⁸⁵ Beijing authorities were informed of the demotion of the ROC national committee to the ICC and ‘apparently accepted it’.Footnote ⁸⁶

The People’s Republic established institutional relationships with the ICC at the beginning of 1985 via the China Council for the Promotion of International Trade (CCPIT), which was founded in 1952 and served as a buffer between the Chinese government and foreign firms.Footnote ⁸⁷ These relations began after the PRC introduced a series of economic reforms furthering the open-door policies, despite some policy swings in the early 1980s.Footnote ⁸⁸ In October 1984, the Twelfth Center Committee of the CCP adopted the ‘Decision on the Reform of the Economic Structure’, which not only enlarged the proportion of the market economy but also appealed for the enterprise to become a ‘relatively independent economic entity’ and ‘producer and operator of socialist commodity production’.Footnote ⁸⁹ The decision granted enterprises substantial power in terms of making and retaining profits.Footnote ⁹⁰ The Chinese authorities also improved the environment for foreign investment through the Joint Venture Implementing Regulations in late 1983 and, in 1984, expanded the geographical scope of the Special Economic Zones by opening 14 coastal cities to foreign investment.Footnote ⁹¹ Moreover, the PRC took on permanent observer status at GATT in 1984 in order to facilitate its admission as a full member.Footnote ⁹² All these changes constituted a precedent for ICC members, leading the ICC executive board to undertake high-level contacts with China in January 1985.Footnote ⁹³

Two months later, in March 1985, the organization concluded its Congress in Seoul by acknowledging China’s growing role in the world economy. The final report added that China ‘should be brought increasingly into the world’s multilateral trading system’.Footnote ⁹⁴ This expressed the ICC’s motivations in sending an official delegation to China in April 1985, which laid the groundwork for integrating the People’s Republic into the ICC. The delegation was led by the ICC’s president, M. F. van den Hoven, chairman of Unilever, which had opened a joint venture in Shanghai in 1985.Footnote ⁹⁵ Other members included ICC Secretary-General Hans König and Adnan Kassar. A Lebanese businessman and banker, Kassar was a founder and partner of Adnan & Adel Kassar enterprises (AA KASSAR), a group with activities in several economic sectors. He was an influential figure within the ICC, serving as chairman of the Lebanese national committee from 1973–2006 and president of the ICC from 1999–2000. His business relations with the PRC dated back to the 1950s; in 1955, he was instrumental in concluding the first trade agreement between Lebanon and China.Footnote ⁹⁶

At the end of that same year, a PRC delegation flew to Paris to meet with the ICC.Footnote ⁹⁷ At the helm of the delegation was Zheng Hongye, director of the CCPIT and an experienced diplomat specialized in commercial affairs.Footnote ⁹⁸ Just as at the 1929 meeting, the ICC’s principle of private-sector participation was challenged by the Chinese government’s choice of envoy. The ICC had probably expressed some doubts as the PRC worked to demonstrate that the CCPIT was ‘equivalent to the central Chamber of Commerce in a market economy country’.Footnote ⁹⁹ Both parties eventually agreed in a joint declaration issued following the 1986 meeting that the CCPIT was qualified to represent China during its application for ICC membership. The creation of the CCPIT–ICC cooperative council aimed to allay concerns regarding the openness of China’s economic system. The CCPIT was allowed official status despite the ICC constitution stipulating that ‘member organizations [must] subscribe to the principles of the market economy and private enterprise’.Footnote ¹⁰⁰

With the visits of Kassar and Zheng setting the basis of collaboration, no fewer than eight meetings between the ICC and the CCPIT officials took place between June 1986 and November 1988. The meetings focused mostly on ‘technical and practical issues’Footnote ¹⁰¹ such as commercial practicalities and related legal systems. Specifically, ICC-nominated experts visited the PRC on an ad-hoc basis and the ICC assisted in organizing trips for Chinese officials to visit Western countries, to deepen their knowledge of technical and legal issues.Footnote ¹⁰² This series of meetings was part of a process of ‘international education’ that played a salient role in opening up China’s economy. Margaret Pearson describes the international learning process in her work on China’s learning of international trade policy starting from the 1980s, which is useful for understanding meetings and exchanges within the ICC framework. That is, China turned to ‘representatives of foreign businesses, foreign governments and multilateral economic institutions’ about drafting laws ‘in the areas of foreign investment, trade, IPR, and currency convertibility’.Footnote ¹⁰³ Their suggestions impacted official rule-setting.Footnote ¹⁰⁴ Hui Feng mentioned a similar situation regarding China and the World Trade Organization (WTO), as the foreign actors ‘brought in the norms and rules of the market economy and international regime into the Chinese polity, including various levels of the government and the business community’.Footnote ¹⁰⁵ The ICC was thus part of this ecosystem of international education, organizing its technical meetings with Chinese officials, alone or in collaboration with UN agencies.Footnote ¹⁰⁶

The ICC acted as the specialist in commercial law and trade practices in this ecosystem. Since its creation, the ICC had created dozens of technical committees on practical matters of international trade, such as customs formalities, banking techniques, or taxation.Footnote ¹⁰⁷ Throughout the history of the ICC, these committees had formulated numerous self-regulated instruments, such as codes, standards, model contracts, guidelines, etc. which were voluntarily implemented by large firms around the world and often acknowledged by international organizations and national governments. The meetings between the ICC and China during the second half of the 1980s were dedicated to such instruments, aiming to favour international trade.

Meetings on international commercial arbitration and on the instruments to settle business disputes of an international character were also organized. The ICC boasted legitimacy and abundant experience in that field as it created the ICC International Court of Arbitration in 1923, the leading body in commercial arbitration. In June 1988, the CCPIT invited Michael Gaudet, the director of the ICC International Court of Arbitration, to Beijing for a business seminar.Footnote ¹⁰⁸ The issue was crucial for China’s ICC membership, as the ICC Council initially required a country to adhere to ICC’s international arbitration regulations before considering an application.Footnote ¹⁰⁹ There were significant differences between the Western and Chinese processes of arbitration. According to the ICC Australian national committee, China’s integration in the global economy was undermined by the fact that the legal framework for conducting business transactions was ‘considered by many in the legal profession to be in its infancy’.Footnote ¹¹⁰ It further suggested that the ICC ‘could assist China in narrowing those differences. This would increase the confidence of foreign investors in arbitration as a viable option in dispute settlement.’Footnote ¹¹¹

China gradually developed a ‘pro-arbitration stance’ in the 1980s and 90s. The emergence of a more professionalized legal field in China linked to the global legal community partly explains this phenomenon.Footnote ¹¹² Two individuals embodied this development and played a pivotal role in the rise of Chinese arbitration: Tang Houzhi, the ‘father of modern arbitration in China’ and Ren Jianxin, the ‘Judge and Party’ who, during these two decades, held various high positions within the legal system (President of the Supreme People’s Court between 1988 and 1998) and within the Party.Footnote ¹¹³ Both, in particular Tang Houzhi, participated regularly in technical meetings between the ICC and China from 1985 onwards.Footnote ¹¹⁴ The ICC played a part in contributing to the legitimization of arbitration in China.

Political negotiations between China and the ICC continued. Despite the 1981 demotion of the ROC’s national committee, China continued to stress its reservations concerning the ICC’s relations with Taiwan. In particular, it insisted that the Chinese-language name adopted in 1981 by the ROC’s national committee should be amended as it implied that the latter was still the ICC’s Chinese National Committee. For the ICC Executive Committee, ‘ICC’s overall interest to strengthen and institutionalize the constructive relations already established with PRC representatives […] [and] clearly required the change.’Footnote ¹¹⁵ After lengthy negotiation,Footnote ¹¹⁶ the committee was renamed the Chinese Taipei Business Council in 1988.Footnote ¹¹⁷ Chen-Fu Koo, the committee’s chairman, played a critical role in the change.Footnote ¹¹⁸ Koo, fulfilling the same role as K. P. Chen in the 1920s, had substantial business interests in China.Footnote ¹¹⁹ In the 1980s and 90s, Koo contributed to improving relations between China and Taiwan: he helped set up private institutions on both sides to discuss issues such as the management of capital and migratory flows without touching on political issues such as reunification.Footnote ¹²⁰

Albeit playing along with China’s diplomatic policies, the ICC had reservations regarding integrating China as a full member. The ICC Executive Board reasoned that the ICC constitution ‘required members to support the principles of the market economy and the existence of a substantial private sector—conditions to which no PRC-based body could yet subscribe’.Footnote ¹²¹ Zheng Hongye recalled that the PRC had to submit reports on economic reform and development to the ICC to ease the latter’s concerns regarding its economic system and to conform to the ICC’s rules.Footnote ¹²² In 1988, the CCPIT added a new title, the China Chamber of International Commerce (CCOIC),Footnote ¹²³ counting 170 founding enterprise members with all kinds of capital composition—state-owned, but also private, joint ventures, Chinese-foreign co-management, and wholly foreign-owned enterprises—across a variety of sectors.Footnote ¹²⁴ The CCOIC was considered officially by the ICC as the ‘foremost organisation in the People’s Republic of China paving the way for the internationalisation of Chinese business’.Footnote ¹²⁵ However, scholarly research conducted in the 1990s indicated that Chinese business associations, such as the CCPIT and China Individual Laborers Association,Footnote ¹²⁶ still lacked power in negotiating with the state and argued that their revival or establishment was the CCP’s corporatist efforts in devising state-sanctioned business organizations to pre-empt a business voice independent of the government.Footnote ¹²⁷

The ICC’s reservations regarding integrating China were not shared by all ICC members and led to lively debates in the Executive Board.Footnote ¹²⁸ Hari Shankar Shingania, an Indian businessman who became President of the ICC in 1994, wrote a long and critical letter to ICC Secretary General Hugh Faulkner in 1989. Among his arguments, he put forward that many ICC members had ‘mixed economies in which public sector plays varying degrees of role’. He concluded by asking: ‘Should the aims of integration of all countries in the world economies and promoting higher international trade and investment conducive to both greater global prosperity and peace among nations not override other considerations?’Footnote ¹²⁹ Another consideration that Shingania hinted at was the possible implications of the ICC’s links with China with regard to its relations with the communist countries belonging to the Council for Mutual Economic Assistance (CMEA). Through an East-West Committee created in 1964, the ICC had official contacts with these countries without the latter being members of the ICC. The ICC was concerned that this situation might destabilize if the COMECON countries ‘perceived any formal ICC-PRC relationship as implying that the PRC would have a higher form of association with ICC activities than the CMEA group’.Footnote ¹³⁰ The ICC was all the more inclined to be cautious about the possible claims of the CMEA countries vis-à-vis China as this was ‘currently a sensitive matter at intergovernmental level due to the desire of both the PRC and the U.S.S.R. to join GATT’.Footnote ¹³¹ Indeed, at the end of the 1980s, with both China and the Soviet Union eager to become members, the GATT found itself caught between these two large economies.Footnote ¹³²

As an article in the CCP-controlled news outlet the Beijing China Daily recalled in 1995, China’s formal contact with the ICC related to China’s application for re-entry into the GATT and attempts to join the WTO over the next decade.Footnote ¹³³ Zheng, the director of the CCPIT, further specified that China’s strategy of using the ICC as a stepping stone towards GATT. He noted that ‘[w]e will use the important channel offered by the ICC, to further connect with foreign business associations, in the hope that the WTO would recover China status within the GATT as soon as possible’.Footnote ¹³⁴ Chinese perceptions of the closeness between the ICC and GATT were not baseless. The ICC had regarded the GATT as a crucial partner since the 1940s. In 1986, ICC intensified its relation with GATT by organizing annual meetings between its members and the heads of the permanent missions of the GATT contracting parties, aiming to make its voice better heard in the GATT, in particular during the Uruguay Round negotiations (1986–1994). Tellingly, Arthur Dunkel, less than a year after leaving his position as Director General of the GATT, became Chairman of the ICC’s International Trade Commission, in 1994.

On 12 June 1989, a high-level meeting between the ICC Executive Board and representatives of the CCOIC was planned in Stockholm to prepare for the creation of the ICC-CCOIC Co-operation Council. The Council would be in charge of policy issues in which the CCOIC had a specific interest in ascertaining the positions of the ICC e.g., privatization, foreign direct investment, international trade policy and the GATT Uruguay Round; technical and practical issues such as arbitration and the ATA system;Footnote ¹³⁵ the organization of seminars on such issues; and finally, the exchange of experiences relating to cooperation between PRC enterprises and member enterprises of the ICC.Footnote ¹³⁶ The PRC had endorsed the creation of this Council after the change of name of the ROC committee for the second time and after the ICC had expressed willingness to seek ‘a lasting and mutually satisfactory solution as regards the legal status of CCOIC in the ICC within 18 months as from January 1, 1989’.Footnote ¹³⁷

Although the meeting was delayed for several months as the CCOIC delegation was unable to travel to Stockholm after the Tiananmen Square protests and massacre, China’s integration into the ICC accelerated once the meeting was held. In 1993, the CCPIT participated in the ICC Congress as an observer. Chinese delegates became increasingly well versed in liberal market discourse. Ji Chaozhu—who had been Mao Zedong’s and Zhou Enlai’s English interpreter and was by that time under-secretary-general of the United Nations—read an open letter at the end of that Congress, encouraging governments to adapt to a free market and entrepreneurs to take an active part in making free trade a reality.Footnote ¹³⁸ On 29 December 1993, the day when the Chinese National People’s Congress voted in favour of the PRC’s first company law, the People’s Daily published an article on a CCPIT conference focusing on the roles of chambers of commerce. The article stated that chambers of commerce and business associations played a unique role as intermediaries between the government’s macroeconomic policymaking and (private and public) companies’ microeconomic strategies, and that such associations could stimulate the development of the socialist market economy.Footnote ¹³⁹ Although the People’s Daily listed the author as Zhang Dongqi, business journals had published similar pieces a year earlier signed by Zheng, the director of the CCPIT.Footnote ¹⁴⁰ Again rhetorically, the Chinese government sided with the ICC’s conception of the role of associative work of businesspeople. In reality, the associations maintained a close relationship with the government and functioned in a constrained way in mediating between private sector and the government.Footnote ¹⁴¹

China joined the ICC in 1994; the CCOIC came to act as the Chinese national committee of the ICC.Footnote ¹⁴² At the inaugural meeting of ICC China in Beijing, ICC Secretary General Jean-Charles Rouher claimed that ‘by joining ICC and encouraging the adoption of its codes of business practice’, ICC China’s members ‘were helping to give confidence to companies wanting to invest in China’.Footnote ¹⁴³ The following year, the PRC passed the Arbitration Act, which was ‘the first effort to put all arbitration—domestic and foreign—on a formal legal footing’.Footnote ¹⁴⁴ In 1997, the PRC hosted the ICC Congress in Shanghai. In his closing speech, PRC Vice Premier Li Lanqing aligned with the ICC policy by affirming that China would continue to improve conditions for foreign investors and that his government would enhance the legal system to secure a free market. Li also promised that China would combine the introduction of foreign investment, the acquisition of technology, and the improvement of China’s industrial structures into the same agenda and promote them conjointly.Footnote ¹⁴⁵

The ICC opened a regional office in Hong Kong a few months before the handover of Hong Kong to China. The main goal of ICC Asia was to provide arbitration resources for businesses in the region. Setting it in Hong Kong was clear evidence that Hong Kong was strategically important for international arbitration activities.Footnote ¹⁴⁶ In an interview, the first director, Louise Barrington, a pioneer in arbitration,Footnote ¹⁴⁷ made clear that the ICC Asia would focus purely on business matters and not take a stance on labour or human rights issues, ‘[o]therwise, we will divorce ourselves from most of our members’.Footnote ¹⁴⁸ A year later, in December 1998, the International Chamber of Commerce–Hong Kong (ICC-HK) was created as the Hong Kong representative body of the ICC. It consisted of leading companies, chambers of commerce, and businesses in Hong Kong. Until then, some business associations, such as the Hong Kong General Chamber of commerce, had been members of the ICC, but no umbrella committee had been created.Footnote ¹⁴⁹

For the second time in the ICC’s history, China was able to create a lasting, meaningful relationship with the organization. This collaboration was made possible by a ‘confluence of interests’ between foreign multinational corporations and the Chinese government during the 1980s and 90s.Footnote ¹⁵⁰ On the ICC’s end, commercial interests were crucial: businesspeople with ongoing commercial interests in China mediated in the relationship. Besides Adnan Kassar and the ICC’s president, F. Van den Hoven, subsequent ICC presidents such as Peter Wallenberg, Joseph E. Connor, and Helmut Maucher—who negotiated China’s admission to the ICC—chaired multinational companies that had invested in the country.Footnote ¹⁵¹ After an investment seminar organized in China in 1987, several participants from the ICC delegation ‘were able to move ahead in joint venture negotiations that had been stuck for some time or to initiate negotiations in view of new joint ventures’.Footnote ¹⁵² The establishment of strong links with the PRC was also related to ICC’s relations with international organizations, such as the United Nations, the World Bank, and the GATT. On the PRC’s side, the main motivation was joining the global market and attracting foreign technology and capital.Footnote ¹⁵³ The ICC offered training in commercial and trade practicalities and privileged access to numerous multinationals. Preparing for ICC membership was also a way for China to signal and complement its efforts to join the GATT and the WTO. The PRC applied to join the GATT in 1986 and was accepted into the WTO in 2001—achievements that overlapped with its intensified contact with the ICC.Footnote ¹⁵⁴