Chapter 2 Trade A New Open Door

The China market attracted countless Americans due to the economic woes of the 1970s.The Arab oil embargo in October 1973 exacerbated the scourge of stagflation, while growing competition with the Western Europeans and the Japanese enervated US firms.Beijing's hefty orders in 1972 alone-$2.3 million for one RCA satellite communication ground station; $150 million for ten Boeing 707 airplanes; and $18 million for three hundred thousand tons of corn-came as an auspicious sign.13 When more and more Americans arrived in China in search of business, they resembled, in the words of John Alioto, CEO of Pacific Far East Line, "a man who has been starving for some time."14 Frederick Dent cautioned the National Council membership, presciently, that the China market would not be "a panacea for our economic difficulties."15 Sino-American trade grew from virtually zero to about $3 billion by the end of the decade, but it remained only a trickle of the total US trade volume ($400 billion in 1979).As had been the case for centuries, however, the future, not the pre sent, of the China market captivated Americans.Chinese businesspeople across ranks-bureaucrats at the Foreign Trade Ministry, officials at the CCPIT, and representatives of the FTCs-were ready to trade with the Americans.Although Beijing cut back foreign trade by 15 percent between 1966 and 1969 in a bid for self-sufficiency, stagnant economic growth, particularly in agriculture, prompted Chinese leaders, Mao included, to abjure autarky.The trade volume bounced back from $4 billion in 1969 to $14.6 billion in 1974.16 A month after Richard Nixon's visit, the Foreign Trade Ministry circulated an urgent notice, declaring the resumption of Sino-American trade "on the basis of equality and mutual benefit."17 The Chinese were trying to kill two birds-economic and political-with one stone.At the National Foreign Trade Work Conference in January 1973, Vice Premier Li Xiannian forecast a "considerable" increase in trade, which would accelerate economic development.He then added: "From the viewpoint of diplomacy, we often trade with cap i tal ist countries first and then establish diplomatic relations."18 Beijing had done so with Canada, Italy, Britain, Japan, West Germany, and Australia; now it turned to the United States.No one could fathom in 1972 what, how, and how much the United States and China would be trading in the next few years.By 1979, however, the idea that economic access across the Pacific would one day accrue a fortune on both sides underpinned bilateral relations.This chapter explains the rise of this idea.The first section analyzes the initial market euphoria, particularly in the US business community, which soon evaporated due to the political and

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