In late 1991, a Paris gallery exhibited 10 imposing Chinese bronze window panels, each towering 10 feet and emblazoned with iconic serpents and raised floral designs. They had been looted by foreign armies during the Boxer Rebellion in 1900, pillaging the Baoyun Pavilion at the Summer Palace in Beijing. News of this exhibit reached T. C. Hsu, Starr’s protégé who had become president of the Starr Foundation, the private foundation that received the bulk of Starr’s estate. Hsu reported the exhibit to Greenberg, chairman of the Starr Foundation. The two set out to verify the panels’ provenance, which held extraordinary national significance for China.
The Pavilion, built in the 1750s by the Jesuits on behalf of the Emperor Qianlong as a religious shrine for Buddhist monks, had been closed ever since the Boxer Rebellion, as the loss of those window panels amounted to a loss of face for the Chinese.1 The Starr Foundation contacted China’s minister of culture, offering to pay the costs of experts traveling to France to investigate. The experts confirmed that the window panels were indeed those missing from the Pavilion. The treasured national assets had been stolen by a French army officer in 1900.
The Starr Foundation, whose assets were concentrated in AIG stock that would enjoy a peak value exceeding $6 billion, made substantial philanthropic contributions to China. It bought the iconic window frames from the Paris gallery for $515,000 and arranged for their repatriation to China. A national rededication service followed in December 1993, broadcast throughout the country on television. Millions of grateful Chinese watched tearfully during the ceremony. It was the first time that any foreign organization had returned missing national Chinese artifacts to the homeland. Greenberg thought it was the right thing to do in a country where he and his company had developed important relationships during the toilsome process of reopening China for business, culminating in China’s accession into the World Trade Organization (WTO).2
Starr had begun his insurance companies in China in 1919, and his businesses prospered there. In 1941, however, the Japanese army seized Shanghai, and its liquidators impounded all properties. Ahead of that, loyal Starr employees, led by K. K. Tse, managed to preserve the company’s files, and even much of the furniture, and store them safely amid the chaos of the siege. When World War II ended, in 1945, Starr returned to his old office to find that his employees had reassembled it, furniture and files, much as it had been when the war began.3 With the outbreak of civil war in China in the late 1940s, however, Starr’s companies were again forced out of the country. China and the United States terminated all diplomatic and economic relations.
Greenberg kept a close eye on China. Through his many regular trips to Hong Kong to meet with AIU executives, he had developed good relationships with Chinese businessmen running insurance companies in Hong Kong. They were knowledgeable about China, yet exposed to the broader world by their base in a leading international trading hub. Greenberg learned a great deal about Chinese history and hopes. China had been isolated but was an ancient civilization whose people had accumulated immense wisdom and knowledge. And the Chinese people genuinely liked Americans and remained grateful for the U.S. military support protecting China from Japanese hostilities during World War II. As a result, Greenberg surmised that, with a massive population and an area of continental scale, China would not be isolated from the world or the United States for long.
These insights began to pay off when President Richard M. Nixon and his indefatigable national security adviser and later secretary of state, Henry A. Kissinger, quietly reopened the U.S. door to China. Their 1972 trip to China, the first by a sitting U.S. president, produced the joint Sino-American “Shanghai Communiqué” with Zhou Enlai and Deng Xiaoping stating, “Progress toward normalization of relations between China and the United States is in the interest of all countries.” President Nixon and Secretary Kissinger held primarily geopolitical objectives; they embraced China as a counterweight to the Soviet Union’s power, to gain advantage in the Cold War. For their gambit to pay off, however, it was important that American businesses embrace China to nurture commercial and cultural exchanges. AIG was well suited for the task at hand.
Inspired by Nixon and Kissinger’s trip, Greenberg’s initial overture was a letter to the People’s Insurance Company of China (PICC), the state-owned monopoly insurance company. It proposed developing a new insurance business together. Officials responded belatedly, eventually sending a “Welcome to China” kit, asking for more information about Greenberg’s intentions. He wrote back explaining that he would like to visit China, bringing his wife, Corinne, along with Freeman and Manton, and their wives.
The PICC embraced this overture and invited the group to come. Ahead of the November 1975 trip to China, Greenberg provided a detailed business plan and proposal. Arriving in Beijing that month, Mao’s Cultural Revolution was everywhere in evidence. Monochrome uniforms of drab blue, brown, or gray were the standard dress. There were few cars but thousands of wobbly bicycles crowding the streets, flanked by dense crowds of pedestrians. Few hotels could be found, certainly no five-star offerings, and only one remotely “Western.” Foreign visitors to China were rare then, and citizens found the white skin of these visitors alien. People stared at the Americans as if they were from another planet.
Late one afternoon, the AIG executives met with Sung Guohua and other state insurance officials designated by the PICC to represent it. In a plain office off Tiananmen Square, the Americans explained the concept of reinsurance, a policy that one insurance company offers another to backstop some of the primary risk. Because China did not grant licenses to write primary insurance policies to foreigners, reinsurance was the only plausible path to launching an insurance enterprise there. A reinsurance franchise would provide a way to learn about the local business, develop knowledge of regional conditions, and build valuable relationships—the essence of successful business.
The Chinese officials seemed open-minded and showed interest in the venture, apparently having decided beforehand to make commitments. Within two hours, AIG had secured an agreement on a mutual reinsurance deal and to handle marine claims for each other. That was a modest business proposition but a symbolic milestone: the new era’s first formal insurance contract between companies of the two countries and a basis for continuing discussion. It was the start of the relationship that would lead to a steadily expanding series of hard-won business deals for AIG in China.
After making that deal, PICC officials escorted the AIG group to dinner and an evening of sightseeing. Sung introduced the AIG team to maotais, the traditional toasting drink in China. R. W. Apple of the New York Times once wrote that the 130-proof beverage “smells a lot like JP-4, the stuff that powers the engines on Air Force One, and it is only slightly more drinkable.”4 Americans became familiar with the drink, too, used in the same period’s toasts between President Nixon and Premier Zhou and between Secretary Kissinger and Vice Premier Deng Xiaoping. On AIG’s outing, hosts and guests took turns making toasts, moving around the table, each time everyone imbibing a full small glass of the stuff. Sobriety was impossible. On the menu, bear paws were offered, thick slabs of animal fat, and other curious foods foreign to the Americans. Into the night, the new friends took in the landmarks of Beijing and its bustling commercial past, which contrasted with its monochrome present, though that was about to change.
Thanks to the U.S. political leadership, including Presidents Ford and Carter as well the chief of the U.S. Liaison Office to China, George H. W. Bush, formal reopening of U.S.-Chinese diplomatic relations occurred in 1978. Throughout this period, Greenberg and Freeman made regular semiannual trips to China, leading to winning AIG’s first representative office there, in Beijing, in 1980. Shortly thereafter, PICC and AIG formed a joint venture, the China America Insurance Company. It would write general insurance for companies involved in U.S.-China trade. AIG operated the joint venture for a decade, while its personnel gained the trust and confidence of their Chinese partners, including high-ranking government officials. The 1980 contracts were important steps in the right direction, though the PICC continued to write all domestic Chinese insurance. More work remained to open China’s insurance markets entirely. “You have to spend as much time trying to open markets for the future as you do running markets for today,” Greenberg advocated at the time.
By the 1980s, Shanghai, once a busy seaport brimming with cosmopolitan life, known as the “Paris of the Orient,” was in disrepair. To help revive it, the Atlanta real estate developer, Jack Portman, formed a joint venture with Kajima Corporation, a Japanese construction and engineering company. They planned to build a world-class downtown complex to anchor what they believed was the great city’s prosperous future. Called the Shanghai Center, and located on Nanjing Road in the heart of town, it would feature a five-star hotel, luxury apartments, offices, shops, restaurants, and a sophisticated conference facility. Slated to be the largest real estate development project in Shanghai, Portman needed $30 million in equity capital for the $175 million project. He turned to AIG, which provided it in exchange for an ownership stake in the joint venture as well as a long-term ground lease of the property.
Construction began in 1986 and continued steadily, with 32 stories completed within the year. At that time, dramatic demonstrations promoting democratic reforms erupted in Beijing’s Tiananmen Square. They were met by government force and ended with a large number of demonstrators dead. Political upheaval rocked the country, along with the international condemnation that followed. Amid these tragedies, many real estate developers halted work on construction projects across China. In Shanghai, Zhu Rongji, the mayor in the late 1980s who would later serve as vice premier and premier of China, gave a nationally televised speech distancing his city from the tragic events and stressing his government’s unwillingness to use military force of this kind. At the Shanghai Center construction site, work proceeded without interruption, as AIG and its partners were assured that, after the temporary interruption, China would continue on its path of gradually reopening.
AIG even increased its equity stake in the project and guided it to its grand opening in March 1990. The hotel, the Portman Ritz-Carlton, was a trailblazer, followed during the 1990s by many more hotels, restaurants, shops, and art galleries. In recognition of AIG’s commitment to China, Greenberg twice obtained extensions of its ground lease on the Shanghai Center, the final expiration date set for 2020.
As mayor of Shanghai, Zhu supported liberalizing the Chinese economy and was particularly interested in attracting foreign private investment. While he was mayor, his efforts included streamlining the approval processes for projects, an enthusiasm that earned him the nickname “one-chop Zhu.” One problem was that the government buildings were spread out across various parts of the city. Getting approvals required documents to be submitted for signature and certification to numerous ministries in different areas, a cumbersome and costly process that turned off many foreign investors. To redress that, just after the Shanghai Center was completed, Mayor Zhu eyed the undeveloped land across the Whampoo River, called Pudong, stretching thousands of acres. He aimed to develop the property and modernize the bureaucracy by consolidating its government offices. Zhu also believed that the development would become an appealing commercial center in his vision of transforming Shanghai into a financial powerhouse on the scale of Hong Kong, rooted in the heart of China’s mainland.
To attract the necessary foreign capital and to plan projects such as the Pudong development, Zhu created the International Business Leaders Advisory Council (IBLAC). He asked Greenberg to be IBLAC’s first chairman to lend it the credibility and leadership it would need, including helping recruit companies as members. Greenberg gladly accepted and served two terms. Subsequent chairmen included Rick Wagoner, former head of General Motors, and Lord James Prior, the British diplomat and businessman whom Greenberg also had tapped to serve on AIG’s International Advisory Board.
Thanks to such leadership, IBLAC remains a formidable force in Shanghai, contributing steadily and significantly to the city’s development over more than two decades. Of greatest importance is how IBLAC concentrated entirely on assessing and helping to meet the needs of Shanghai and its citizens—it was not a forum to define what AIG and other companies wanted, but, instead, what the city required. IBLAC’s meetings, inaugurated in March 1990 in the Shanghai Center, gathered the world’s foremost leaders in business and government. They held a series of meetings in 1990 and 1991 that focused on every aspect of the dream to transform Shanghai into a world-class twenty-first-century city. IBLAC engaged experts to address ports, industrial development, infrastructure, environmental impacts, trade relations, and, of course, financial services. Government officials from across China attended, making copious notes that they would take back to their own cities to stimulate local action plans.
For funding, council members stressed the importance of securing long-term commitments to sustain the ambitious visions they shared for Shanghai. Greenberg highlighted the advantage that AIG brought to this part of the vision. Life insurance is a rich source of long-term capital, he explained, referencing his concept of “patient capital.” Modern China had never encouraged the nation’s life insurance business to fund infrastructure. Before World War II, families tended to be large and essentially self-insured against death; for several decades afterward, the state bore the burden; and more recently, Chinese law limited the size of families, and the state had begun to look to the private sector for solutions. So Greenberg made a win-win proposal: grant AIG a license to sell life insurance in China and it would pool capital collected there to invest in local long-term projects.
Mayor Zhu was receptive to this proposal, which both made clear economic sense and supported his vision. Equally important, it was backed by a man who understood China well and represented a business with ancestry in China dating back to 1919. AIG was years ahead of any other insurance company in going to China—most did not begin to imagine the economic opportunities available there until the mid-1990s, two decades after Greenberg’s first overtures. Even when other companies followed suit, their CEOs made fewer trips to China to meet with officials or executives compared to Greenberg. In addition, many CEOs would dispatch deputies to meetings in China. Though CEOs may not have intended any slight, such gestures profoundly misunderstood important aspects of Chinese culture that Greenberg knew. The Chinese government sought to deal with the top person at any company wishing to do business in China. Seeing the number two or three would not suffice.
In China, Greenberg was so identified with AIG that the two were practically synonymous.5 Greenberg had more autonomy than many CEOs, as AIG’s governance structure gave him latitude that other corporate boards would not routinely grant to their chief executives—Greenberg was a classic “strong CEO.” In addition, Chinese officials saw that Greenberg had considerable influence with their counterparts in Washington policy circles.6 That cachet, combined with two decades of personal presence in China, made AIG an excellent candidate to receive China’s first insurance license issued to a foreign company. As mayor of Shanghai, Zhu reported his support for granting AIG an insurance license at the November 1991 IBLAC meeting. The mayor characterized the grant as a test case. The business would be 100 percent owned and operated by AIG—no need for a joint venture with PICC or another Chinese entity and no imposition of foreign ownership limitations. It would, however, be limited to Shanghai, as that was the only province within Zhu’s jurisdiction as mayor.
Even that influence, of course, was checked by other Chinese officials, including some in the PICC. Many of Zhu’s colleagues believed that his support for awarding a license to AIG, a foreign company, amounted to “selling out China.”7 Unlike during its past, when Mao or another single leader’s declarations bound all, the new China was governed by a more consultative group of nine or so more or less coequal leaders (known as the Politburo Standing Committee). For several months, Zhu had been working back channels in China to win group support for his proposal to grant AIG the license. In that effort he had enlisted China’s ambassador to the United States and United Nations, Zhu Qizhen.
In August 1992, Premier Li Peng was to be in New York to visit Ambassador Qizhen and assorted dignitaries, including David Rockefeller. The ambassador contacted Greenberg, who had just arrived in Switzerland from the United States, and said he could arrange for Greenberg to have five minutes to meet the premier. Few would relish the idea of immediately turning around to fly back across the Atlantic for a five-minute meeting, even with Premier Li. But Ambassador Qizhen persuaded Greenberg to hop the AIG jet back to New York.
Greenberg reiterated to Premier Li how life insurance is a long-term business and related the concept of “patient capital” that AIG offered. In that spirit, he assured the premier that AIG would not take any dividends out of China for at least 10 years. This orientation appealed to the premier because of the long-term view so engrained in Chinese culture. At the end of the meeting, which lasted 45 minutes, Premier Li promised to consider granting AIG its insurance license. True to his word, Li later consulted with the country’s other leaders, and AIG received its license on September 30, 1992.
After receiving the license, AIG opened its new offices in the Shanghai Center. AIG’s reopening of China for business quickly became the most successful AIG start-up venture ever. And, once again, AIG and the United States were in lock-step: 1992 was also the year when the United States conferred “most-favored-nation” status upon China. That endorsement, elevating a trading partner to top rank, was a big step toward China’s eventual entry into the WTO. AIG’s 1992 license, the first granted to a foreign-owned insurance company, allowed it to operate a 100 percent–owned insurance company.
AIG’s business would be regulated by the People’s Bank of China (PBC). AIG executives arranged for PBC’s officials to take a trip with them to see AIG’s operations in other Asian markets: Hong Kong, Malaysia, Singapore, and Thailand. The lesson AIG hoped to convey was how its operations helped local economies and how the added foreign competition aided the domestic insurance industry. After all, for a company to succeed in international business, it must give as well as get, and show the host government that its presence benefits the country’s people.
To launch the new business, American International Assurance Company (AIA) managers were advised by the old China hand, Buck Freeman, on general insurance, and Edmund Tse on life insurance. They recruited experienced underwriters and accountants, brought many AIA employees from Hong Kong, and hired the rest of the staff from among large pools of local applicants. Nysco Shu, a veteran manager from AIG’s Nan Shan subsidiary in Taiwan, trained the new life insurance staff. Nysco and his colleagues had that rare chance, claimed only by true pioneers, of defining the Shanghai life insurance market since it had scarcely existed. Nysco explained his task in historic terms: “We were opening not just the Chinese market; we were opening the Chinese mind.”8
In China, insurance sales teams were paid on salary, a fixed cost that can lock in high expenses. AIG introduced an agency system instead, in which individuals wishing to earn money could learn to sell insurance policies, compensated on a commission basis. That attracted employees from many walks of life, including doctors, engineers, and lawyers. For the company, this approach helped manage costs. The model thus suited both employer and employee and led to expanding business, which spelled new jobs for the economy, profits for the company, coverage for risks and losses of Chinese citizens, and the accumulation of capital for investment.
The team started by selling simple, cheap accidental death policies. Later, they gradually increased the complexity and cost of offerings, ratcheting up the sophistication of both the sales force and customers. Entrepreneurship blossomed. Agents even developed favorite marketing techniques, such as, when pitching life insurance targeted to a particular company, sell it to the boss first; selling to the rest of the staff becomes easy.9 For general insurance, training proved more difficult. The products—which included marine and property and casualty insurance—are more complex and founded on concepts alien to domestic Chinese. The staff needed to be taught to think about and analyze a risk, and then translate that into an insurance policy that could be sold at a price delivering an underwriting profit.
After three years of operation, participants—American and Chinese—saw that the vision was being realized. Carla Hills, the U.S. trade representative from 1989 to 1993 and AIG corporate board member from 1993 to 2006, explained that with its 1992 license, AIG demonstrated that competition in the insurance business—even from foreigners—benefited China and its economy. PICC and other state agencies gradually responded by picking up the slack in their organizations. PICC eventually copied AIG’s incentive compensation programs, so that PICC employees were paid only when they wrote policies. Premier Zhu observed that not only did AIG prosper but “our local insurance companies also learned many operational and management skills from AIG. [T]hey too grew faster than before.”10
In December 1996, AIA moved into offices at the impressive neo-renaissance structure at No. 17 The Bund, the grand North China Daily News building—where Starr had opened his first small agency generations earlier. Then owned by the Shanghai Bund Buildings Transformation Corporation, the asking price for a sale was too high. Greenberg quipped that he was “not prepared to pay $45 million for a museum.” But AIA signed a 30-year lease for the eight-story 102,000-square-foot structure.11 AIA renovated the building and consolidated its many offices around town in the modernized space. A permanent photo exhibition illustrating the early days of the American International companies in China was unveiled at the grand reopening of No. 17, then renamed the AIA Building.12
AIG’s Shanghai success suggested that it was time to expand. Again, of course, AIG met governmental resistance. As Premier Zhu would later recount, despite how AIG prospered and helped Chinese insurance companies prosper:
When AIG wanted to set up branches in other regions, there was still considerable resistance. Even though I was by then already a Vice Premier, I was still unable to meet Mr. Greenberg’s requests. He grumbled that the wait was long enough to turn a young girl into an old lady.13
Waiting was not exactly what Greenberg did, as he persisted actively in seeking ways to gain access to additional Chinese markets. Greenberg pointed to AIG’s success in Shanghai to persuade the authorities to license AIG in Guangzhou, the commercial center of South China, for a life insurance business. Guangzhou was appealing both for its large size and its proximity to Hong Kong, making it easier to move AIG employees between the two cities. AIG repeated the business model that had succeeded in Shanghai: recruiting and training a first-class workforce capable of conducting rigorous underwriting. The Guangzhou business flourished just as the Shanghai business did.
Despite meeting a constant bias in favor of domestic and state-owned businesses in China, AIG continued to leverage its diplomatic channels to push against restrictions and obtain additional licenses. But the best that seemed to be offered were opportunities for AIG to form joint ventures with either SOEs or Chinese-owned insurers. Neither avenue was appealing. What AIG wanted most was a nationwide license for a business that it owned 100 percent. The promise of this outcome arose at the same time that China was courting the international community, and the United States, for accession into the World Trade Organization.
Along with Secretary Kissinger and kindred diplomatic pioneers, Greenberg believed in the future of U.S-China relations. China’s membership in the WTO would increase its sense of responsibility in international affairs, especially in trade. So Greenberg took an active role in bringing China into the WTO. China’s accession into the WTO, according to Kissinger, marked a “crucial” return of China to world affairs and credits Greenberg with playing an “important role” in that feat.14 AIG urged U.S. policy makers to grant China the annual renewal of most-favored nation status, which had become a political ritual during the 1990s. AIG argued that U.S.-China trade was so integral to the U.S. economy and to global peace and security that domestic politicians should separate it from other issues, such as political change and human rights.
Others, notably Kissinger, had long argued that trade should not be held hostage to other objectives because success in promoting other objectives is more likely when the issues are treated separately.15 Kissinger’s experience taught him that it is better to use soft diplomacy than apply formal public pressure. In his service inside and outside of government, Secretary Kissinger said it was easier to persuade officials to undertake reforms, from democracy to human rights, in private discussions than by public hectoring.
After much debate, the U.S. leadership accepted this view, epitomized in May 1994 when President Clinton renewed most-favored-nation status for China and announced that U.S. policy would no longer tie China’s trade status to change in other areas. As chairman of the U.S.-China Business Council, Greenberg cheered: “If we only did business with the countries that share our views, we wouldn’t be doing business in very many places overseas.”
AIG worked tirelessly urging the U.S. government to embrace China openly and urging the Chinese government to reciprocate.16 As chairman of IBLAC and head of AIG, Greenberg coordinated efforts with U.S. Trade Representative Charlene Barshefsky. She firmly backed and actively campaigned for open trade with China throughout her tenure from 1997 to 2001. Other insurers, particularly those in Europe, were suspicious of AIG’s ambitions. They thought that AIG stood a good chance, given its leadership and connections, of being licensed throughout China, rather than merely by province or city, and to have 100 percent ownership. And this seemed to be the case. At a meeting that Greenberg arranged with Zhu, now premier, and Chen Yuan, governor of the China Development Bank, Premier Zhu said he understood that if China were admitted to the WTO, then AIG would receive a nationwide, 100 percent–owned insurance license in China.
By early 1999, the groundwork for China’s admission into the WTO seemed to have been laid as the United States signaled its strong support. Greenberg had been discussing China’s WTO interest with President Clinton’s advisors and successive treasury secretaries, Robert Rubin and Lawrence Summers. It appeared to be U.S. policy to back China’s admission to the WTO. In a speech on April 7, 1999, President Clinton indicated that he endorsed China’s admission. With great expectations and high hopes, Premier Zhu traveled to the United States a few days after that speech. The centerpiece of the trip was a state visit to Washington, where Premier Zhu was the guest of President Clinton at a White House dinner for 224 dignitaries. In the receiving line, President Clinton introduced Premier Zhu to Greenberg, prompting the premier to say, “I know Hank,” as he threw his arms around his old friend. The warm bear hug led the Washington Post to report that Greenberg was “the guest Zhu seemed most pleased to see.”17
A week later, on April 13, Premier Zhu headed north to give a speech at the Economic Club of New York. Greenberg shared the dais with the premier in a roomful of distinguished financial executives, including many from leading international insurance companies. During the speech, Premier Zhu repeated the assurances that he had been giving, that AIG would be granted a national 100 percent–owned license upon China’s entrance into the WTO. The assembled competitors cringed. European executives, in particular, let the premier know the next morning that they would object to such favorable treatment for AIG unless they, too, could win nationwide licenses with 100 percent ownership.
At the same time, the mood in Washington was cooling. Questions arose about whether Congress and even Vice President Al Gore, backed by labor and running for president, would support President Clinton’s decision to champion China’s admission into the WTO. Participants had expected the president to announce a final favorable decision but were disappointed to learn that, in the face of such domestic pressure, Clinton caved. Greenberg and the CEOs of other U.S.-based global companies tried to persuade Rubin and Summers to get the president to reconsider, but by then it was too late, as Zhu had already continued his journey with a stop in Canada before heading home. Premier Zhu returned to China without a final deal. Some months later, at a dinner at Tsinghua University, Premier Zhu informed Greenberg that he was no longer able to assure the national license they had been discussing. He cited the power struggles of Chinese politics and noted that even President Jiang was no longer committed to the issue. President Clinton’s turnabout had made it more difficult for Premier Zhu and President Jiang to maintain party enthusiasm for seeking admission to the WTO, let alone offering concessions to get there. In addition, European insurance companies continued to pressure the Chinese government not to grant anything to AIG unless they were treated the same way.
As WTO negotiations continued, Greenberg maintained the dialogue with Premier Zhu as well as other Chinese officials to support the licenses that AIG preferred—100 percent–owned nationwide licenses. But Greenberg now encountered stronger pushback. In one case, he confronted the good-cop, bad-cop routine, a negotiating technique known worldwide. Playing the bad cop was a senior official overseeing commerce, Madame Wu Yi. A tough negotiator whom Greenberg knew well and admired, Wu firmly delivered to Greenberg the bad news: China could not grant AIG a nationwide license, citing the most-favored-nation principle’s restrictions on the country’s flexibility. Greenberg challenged this stance, recounting the repeated assurances that he had been receiving. To lower the rising temperature in the room, Wu suggested that Greenberg take a walk around the grounds—a common tactic of international negotiations.
Upon returning from the walk, Wu had departed, but Premier Zhu appeared, prepared to play good cop. True, the premier said, Wu was correct about the inability to deliver nationwide licenses. But, he added, it did seem possible that AIG could be awarded some number of additional branch licenses. Greenberg replied by urging Zhu to give the nationwide possibility one last chance, by directing that Chinese trade negotiators have another round of talks with Ambassador Barshefsky. Those discussions, however, quickly hit a wall.
In the end, AIG pressed for and obtained additional provincial licenses, including in the large and valuable market of Beijing, as well as in Dongguan, Jiangmen, and Suzhou. AIG won many unique successes and firsts in China—the first representative office; the first joint venture; the first license; the only 100 percent ownership; the first to receive two, then three, four, five, and six licenses; and so on—but did not get everything it fought for. Of course, Greenberg nevertheless supported China’s joining the WTO, as he personally believed that it was of great value to China and in the national interest of the United States, making it incontestable, even by companies whose own negotiations ended in partial disappointment. In 2001, after 13 years of negotiations, China joined the WTO; the next year, AIG opened offices in Beijing.
In March 2005, Chinese officials bestowed on Greenberg the coveted Marco Polo Award, given to an American businessperson distinguished for contributions to improving relations between the United States and China. Greenberg has also been named an honorary citizen of Shanghai, one of a handful of Americans to be so honored.
Trade and investments between the United States and China have grown substantially since the historic reopening of China to the West.18 As with any relationship between major powers, there is friction and mutual concern about how trade is conducted. The countries have swapped allegations of improper activities. The United States accused China of “dumping” products below their cost and failing to protect property rights. China has accused the United States of unfairly imposing tariffs on selected Chinese imports. Such trading in accusations recurs in international dialogues but often yields the same result: cordial dead-ends and enduring frictions that hamper improving the overall relationship.
A bolder approach is warranted, and both countries are prepared for it today. China and the United States should open negotiations for a free trade agreement between them. Negotiations will be protracted and punctuated by impasses, but instead of trading accusations and meeting dead-ends, by discussing concerns in the context of a formal negotiation driving toward an agreement, the chances of success are substantially improved. While agreement on some issues may prove impossible, progress on others is all but certain and will create a productive trade climate. Greenberg believes that China is prepared for such an agreement and that it is in U.S. national interest. A free trade agreement is far superior to a trade war.
Notes
1. See Jacques Barrère, “Art d’Extrême Orient, Bronze Panels of the Tong Ting Summer Palace, Beijin” (1991) (catalogue description of the bronze panels); Brett Freese, “Bronze Panels Returned to China,” Archaeology 47(4) (July/August 1994): 18.
2. The steps required to arrange for such a transaction are surprisingly complex, entailing more than one year of coordination among lawyers and officials from China, France, and the United States. Among issues, the Starr Foundation followed the standard practice of obtaining a formal written legal opinion of U.S. tax counsel supporting the Foundation’s judgment that a grant to the government of China would be consistent with U.S. federal income tax law. That law proscribes private foundation actions that might constitute “self-dealing,” in the sense of donations that directly benefit affiliated entities. The Starr Foundation always took care that its giving would be consistent with these tax laws by never directly benefiting AIG. The opinion in the case of the window panels was delivered by the well-known firm of Caplin & Drysdale by letter dated December 21, 1992.
3. See K. K. [An Obituary], Contact (July 1964): 12.
4. R. W. Apple Jr., “Drinking Abroad; Diplomacy by Other Means: Getting Stinko on Kerosene,” New York Times (June 28, 1998).
5. Cunningham telephone interview with John Degnan, August 31, 2011.
6. Ibid.
7. Zhu Rongji, Zhu Rongji Meets the Press (New York: Oxford University Press, 2011), 383.
8. “Taking Risks,” chap. 10, p. 5.
9. Seth Faison, “Insurance for China, One Door at a Time,” New York Times (April 4, 1995).
10. Rongji, Zhu Rongji Meets the Press, 383.
11. “Back to the Bund: AIA Leases Historic Building in Shanghai,”Contact (February/March 1997).
12. “AIG Archives: Preserving a Visual Legacy of 17 The Bund and 70 Pine Street,”Contact (November/December 1998): 10.
13. Rongji, Zhu Rongji Meets the Press, 383.
14. Cunningham interview with Henry A. Kissinger, New York, December 6, 2011.
15. Ibid.
16. For a brief summary, see David M. Lampton, Same Bed Different Dreams: Managing U.S.-China Relations 1989–2000 (Berkeley and Los Angeles: University of California Press, 2001), 348–352.
17. Roxanne Roberts and David Montgomery, “The ABC’s of the A-List: How People Wind Up with an Invitation to the White House,” Washington Post (April 14, 1999).
18. See Maurice R. Greenberg, “Time for a China-U.S. Free Trade Agreement,” Wall Street Journal (January 9, 2012).