Final answer:
The "loss" of China to communism was upsetting to Americans as it represented an ideological defeat and failure of containment policy during the Cold War, which led to an escalation of U.S. foreign policy initiatives and increased domestic political criticism. The criticism exploited fears of a monolithic communist threat despite Sino-Soviet rifts.
Step-by-step explanation:
The "loss" of China to communism in 1949 was deeply unsettling to Americans for several reasons. Despite $2 billion in US aid, the Communist victory in China was facilitated by Mao Zedong's promise of equality and land distribution, which appealed to China's landless and impoverished peasants, contrasting with Chiang Kai-shek's repressive and corrupt regime. Thus, the establishment of the People's Republic of China by Mao was viewed as an ideological setback in the context of the Cold War, significantly affecting U.S. foreign policy.
President Truman was heavily criticized for their failure to prevent the spread of communism in China which compromised the containment policy of the United States around the world, thus influencing subsequent U.S. actions, like escalating containment policies globally, formalizing alliances in the Pacific, and engaging in the Korean and Vietnam wars to curb the spread of communism. Moreover, this event occurred concurrent with the USSR's demonstration of nuclear capability, which together, significantly rattled the confidence of Americans in the U.S. ability to contain communism.
Republicans capitalized on the notion that Truman was "soft" on communism, leading to political gains in the U.S. This sentiment persisted despite the independence in pursuits between Communist China and the USSR, highlighted by their lack of cooperation and subsequent conflicts, notably during the late 1960s.