The Financial Silk Road

How it all begun

– On February 21, 1972, President Richard Nixon met with President Mao Zedong in Beijing, staying in China until February 28. Nixon himself described the trip as “the week that changed the world.” On February 27, the two countries issued a joint statement known as the Shanghai Communiqué, outlining the key issues to be addressed in order to normalize diplomatic relations. The document included a brief section on trade, marking the beginning of a commercial exchange between the United States and China that reached approximately $100 million that year. U.S. exports to China included agricultural goods and, more significantly, ten Boeing aircraft. Along with these planes—plus three Concorde jets sold by France—China also acquired the Inertial Navigation System, a sophisticated aviation technology.

The Nixon administration was confronted with a dilemma that would persist in US-China relations: the transfer of technology was both the greatest incentive and the greatest obstacle to expanding trade with China. Washington had to carefully manage this flow of technology to Beijing on multiple fronts. Internationally, it needed to stay ahead of competition from other advanced economies. Domestically, the challenge lay in balancing the role of the federal government—which was tasked with controlling what kind of technological knowledge reached China—and private companies, which were the actual exporters of these high-tech goods.

On certain issues, such as restricting the export of nuclear technology for military use, consensus was relatively easy to reach. However, the public–private relationship in the U.S. became more complicated when it came to exporting dual-use technologies—those with both civilian and military applications—in the energy sector. On one hand, such technologies were essential to support China’s urban development and growing market, as well as to encourage companies to shift production to China. On the other, there was concern that these exports could accelerate China’s transformation into a major exporter of natural resources to other Asian countries, potentially reshaping the geopolitical balance in the Pacific region.

The export of dual-use technologies thus became one of the most contentious issues in both US-China relations and internal U.S. policy debates. The ambiguous relationship between exporting companies and the government agencies meant to regulate them raised concerns about the lack of a clear, coordinated U.S. trade policy toward China. Nevertheless, in 1974, Congress passed the Trade Act, which included the Jackson-Vanik Amendment under Title IV. This amendment linked trade benefits to a country’s human rights policies, particularly targeting communist or former communist states. It effectively codified the U.S. approach of tying access to its market, knowledge, and technology to socioeconomic reforms.

Despite the law, successive U.S. administrations found themselves needing to support domestic companies in maintaining their edge in the emerging Chinese market, especially against strong competition from Japan and some European countries. This competitive pressure made it difficult to extract the political concessions from Beijing that hardliners in Washington had hoped for.

However, the reforms launched in China in 1978 began to signal a genuine opening of the country. These efforts came to be known as a new Open Door Policy, a term deliberately echoing the U.S. strategy first articulated in 1899. At that time, the original Open Door Note, authored by Secretary of State John Hay, had been addressed to European powers with the aim of promoting equal access to China’s markets, preventing any single nation from dominating the country.

In 1979, the two nations signed the US-China Science and Technology Cooperation Agreement, ushering in a new era of official collaboration. Foreign direct investment, as well as knowledge and technology, began flowing into China, where the government, under the leadership of President Deng Xiaoping, had launched a sweeping overhaul of the economic system. One of the most significant changes was the decision to delegate the creation and distribution of money within the economy to newly established commercial banks—institutions that did not previously exist in Maoist China. This marked a profound shift: China began to evolve into a hybrid state, combining capitalist mechanisms with socialist ambitions. During this transformation, Chinese financial institutions also began to look beyond national borders.