The Origins of Interdependence: U.S.-China Economic Relations, 1979-80

Abstract

The proposed paper examines the economic relationship of the United States and the People’s Republic of China’s (PRC) during the second half of the Carter Administration, 1979-80. The analysis deals with Washington’s role in assisting China in its pursuit of domestic economic reforms as well as Beijing’s efforts to integrate into the post-Bretton Woods economic system that was its ascendency in the late 1970s. The convergence and consequences of these two significant trends of the late 1970s – global economic changes and the onset of China’s reform era – have received little scholarly attention to date. In the wake of achieving full diplomatic relations in January 1979, the anti-Soviet component that had played a key role in drawing Washington and Beijing together began to decrease in importance. For the two nations, geopolitics took a back seat to the opportunities afforded by global economic developments. Hence, this paper examines in depth the full story of the role played by the US government to encourage Beijing to abandon socialism and central planning and embrace market-oriented “Capitalism with Chinese characteristics.” Indeed, while the word globalization remained unfamiliar at the time (becoming commonplace only in the 1990s), it was during these years that the Chinese and American economies started a process of progressive economic interdependence that soon would become irreversible. This paper draws on records held at US Presidential Libraries.