Introduction
On 19 July 1974, the Japanese newspaper Yomiuri Shimbun ran a business report titled ‘Computers for China: Western Europe Leads, Japan Chases’. It read: ‘Computer manufacturers worldwide, including International Business Machines (IBM) in the United States and Fujitsu in Japan, were eager to trade with China’.Footnote 1 Scenes like this became increasingly common as China, newly open to the capitalist bloc, emerged as a coveted market in global trade in the early 1970s.Footnote 2 On 14 April 1971, US President Richard Nixon lifted the total embargo on China and permitted US exports of non-strategic goods as part of his efforts for the US-China rapprochement, which would culminate in his visit to China in February 1972.Footnote 3 Soon enough, the United States and its allies, including France, Britain, West Germany, and Japan, were racing to sell the Chinese almost everything, including computers—the ‘last fort’ of the capitalist bloc’s embargo list, according to Yomiuri Shinbum. As Graph 1 suggests, the trade volume between China and capitalist countries skyrocketed in the 1970s, highlighting the potential of China to reposition itself from a peripheral participant in global trade to a central player in East Asia’s trade and production networks.
Graph 1. Trade Volume between China and Major Capitalist Countries, 1950-80. Source: Data from Zhongguo Duiwai Jingji Maoyi Nianjian Editorial Board, Zhongguo Duiwai Jingji Maoyi Nianjian 1984 (1984 Yearbook for Foreign Economy and Trade of China), (Zhongguo Duiwai Jingji Maoyi Chubanshe, 1984), IV-19, IV-57-8, IV-67, IV-82.
This article examines how multilateral negotiations for technology trade between China and capitalist countries helped dissolve the Cold War economic divide in East Asia. The integration of China—a communist country with significant geopolitical importance—into global capitalism marked a watershed. The existing scholarship on this topic tends to focus on the efforts of Western European countries and Japan to gain access to the China market in the mid-1960s or on US strategies for Sino-US rapprochement through trade in the early 1970s.Footnote 4 Scholars have examined Sino-capitalist bloc trade primarily through bilateral lenses, without contextualising it in broader dynamics within the capitalist bloc. Specifically, they have not addressed the multilateral negotiations within the capitalist bloc that led to the relaxation of export controls on China—a process driven by a delicate balance between economic and geopolitical interests. This article fills that gap by underscoring the competition and cooperation among capitalist countries in relaxing export controls on and advancing technology trade with China, thereby illustrating the growing significance of the China market in global trade amid the transformation of the Cold War in East Asia.
This article particularly highlights the significance of the Coordinating Committee for Multilateral Export Controls (COCOM) in Sino-capitalist bloc trade during the Cold War.Footnote 5 In the wake of the Korean War, the United States and its allies, through COCOM, imposed export restrictions on China even stricter than those on the Soviet Union—the so-called ‘China differential’. While COCOM members lifted the original differential in 1957, they introduced a new version in 1969, to hinder China from nuclear weapons testing by halting licensing procedures of 42 items toward China, while simplifying those toward the Soviet Union.Footnote 6 By the late 1960s, however, COCOM had become a curious venue of both competition and cooperation for access to the China market. Capitalist countries vied to sell goods to China, including restricted items, yet collaborated to reduce items on COCOM control lists and approve exception exports, that was, one-time exports of COCOM-embargoed items for civilian purposes. While scholars have studied COCOM’s role in imposing economic divisions and restricting technology transfer to communist countries, they have not fully explored its influence on advancing East-West trade by relaxing export controls.Footnote 7 This article does this by showing how COCOM evolved into a platform for negotiation among capitalist countries to foster Sino-capitalist trade since the late 1960s.
Among hundreds of items controlled by COCOM, the computer was one of the most critical. It was a typical dual-use technology: one that had both civilian and military purposes. Invented and improved before and after World War II, the computer processed vast ballistic information and played a key role in the Manhattan Project to develop the atomic bomb. It also had a wide range of civilian uses, from accelerating product research in electromechanics, and telecommunication industries, to processing data for tumour treatment.Footnote 8 US companies including IBM took the lead in the computer industry. However, Japanese companies like Fujitsu and Hitachi challenged IBM’s dominant position in the global market in the 1970s, by promoting mainframe computers that were as sophisticated as IBM’s. So did Western European companies which heavily invested in computer development with governmental support. The Chinese, meanwhile, eagerly sought sophisticated computers from abroad, viewing them as key to modernisation with applications in weather forecasting, railway design, and oil exploration.
Computers became central to Cold War dynamics in 1958 when COCOM imposed controls on computer sales to communist countries. As historian Mario Daniels noted, the US government developed a ‘special, unusually elaborate international regime’ to restrict computer exports to the Soviet Union despite détente.Footnote 9 Historians have examined the computer’s role in Cold War politics, focusing on tensions between the United States and communist countries over computer trade, but its role in facilitating China’s integration into global capitalism remains underexplored.Footnote 10 The dual-use nature of computers, with both military and civilian applications, made trading them especially complex. Japan and Western European countries were eager to export advanced computers to China for civilian purposes, and yet the United States worried that these systems might bolster China’s military. Export licenses were granted only when COCOM members could collectively ensure that these exports posed no security risks. Capitalist countries, as shown in this article, formed a shared security perception of China in time and cooperated to safeguard computer exports.
Drawing on archival sources in Japan, the United States, China, and Britain, as well as some French materials, this article examines the case of computer trade between China and the capitalist bloc from 1968, when COCOM significantly revised export controls, to 1980, the year after the Soviet invasion of Afghanistan. It argues that the competition and cooperation within the capitalist bloc eroded the restrictive trade regime against China established before the Korean War. Despite capitalist countries’ divergent economic and security interests, they found common ground in selling technology to China through multilateral dialogue. The story of the China-capitalist bloc technology trade thus contributes to global histories of capitalism and technological exchange by illuminating the understudied role of dual-use technology as a lever in dismantling the East-West economic divide. Such technologies often have been viewed in global history as a source of international division, with the Soviet Union and China strongly criticising capitalist countries for their stringent restrictions on the flow of these technologies.Footnote 11 This article, however, demonstrates that when COCOM could balance the security interests of its member countries, the enormous profit generated by dual-use technology trade became a powerful force that promoted new global economic and political interactions, expanding the world trade system and easing geopolitical tensions. This article thus complicates histories of Cold War bipolarity by tracing the transregional spread of increasingly important global commodities despite extant ideological and political divides.
Knocking the Door of the China Market
Long before the 1970s, China was already a lucrative market in the eyes of capitalist countries. Among them, the Japanese government permitted its companies to ship goods to the Chinese mainland in 1952, during the Korean War, partially to revitalise its postwar economy. After two years of complete cut-off following the Nagasaki Flag Incident of 1958, in which a rightist youth damaged a Chinese national flag at an exhibition of Chinese stamps, the Japanese and Chinese governments signed a series of trade deals, including the 1962 L-T (Liao Chengzhi-Takasaki Tatsunosuke) trade agreement, which boosted bilateral trade in agricultural products and minerals, among other fields, and the succeeding MT (Memorandum Trade) agreement of 1969, which reconfirmed the agreement between Japan and China on maintaining bilateral trade in the midst of the smouldering Cold War in East Asia.Footnote 12 The Ministry of International Trade and Industry of Japan, encouraging Japanese companies to localise the production of high-performance computers and explore overseas markets, viewed China as an important trade partner.Footnote 13 In October 1968, the Foreign Ministry of Japan told the US State Department that ‘it was not acceptable to strengthen controls (on computer exports) toward China’.Footnote 14 At the COCOM meeting that month, however, the US delegation disagreed, averring that computer designs and processes had military implications since they could improve the yield and efficiency of nuclear warheads and the delivery accuracy of missiles. ‘In view of the state of technology in China’, the US delegation asserted, ‘no computers as defined by the Coordinating Committee should be exported there’.Footnote 15 Tensions between Japan and the United States over export controls on China were building.
The British government also supported relaxing export controls. In January 1950, it granted recognition to the PRC to protect its commercial interests in China. The British and Chinese governments maintained bilateral trade throughout the 1950s and 1960s through the British crown colony of Hong Kong, which offered the Chinese opportunities to earn much-needed foreign currency through exports and access to international financial markets.Footnote 16 At a November 1968 COCOM meeting, the British delegate put forward a proposal to relax export controls on computers that were not intended for space exploration or weapon development. He cited the widespread use of computers in human activities—from weapon development to industrial manufacture—and the increasing demand for computers for civil purposes such as geological prospecting and population census in both capitalist and communist countries. The US delegate took exception again nonetheless. He maintained that communist countries might use sophisticated computers for nuclear weapon development and missile delivery.Footnote 17 British policymakers were frustrated as they supported British businesspeople in exploring new markets for the burgeoning computer industry. During the 1960s, the British government invested heavily in high-performance computers through the Advanced Computer Technology Project, covering around 50 per cent of private-sector research expenses.Footnote 18 In January 1969, officials in London told the US State Department that it accepted stricter export restrictions on computer component technologies and production equipment but was ‘not in the mood for curtailing of end-items on computer’.Footnote 19 Rapidly catching up with the United States in technological capabilities, Britain zealously promoted computer exports to China.
The French government, supported by its business community, sought to foster commercial ties with China since the early 1960s. In September 1963, a group of French industrial representatives led by Guillaume Georges-Picot, president of the French Far East Study Group of the French National Committee of Employers, visited China via Hong Kong and exchanged ideas with Chinese leaders including Vice Prime Minister Chen Yi and Vice Minister of Foreign Trade Lu Xuzhang to improve Sino-French economic relations.Footnote 20 As the French and Chinese governments established diplomatic relations in January 1964, bilateral trade immediately surpassed US$100 million.Footnote 21 In December 1965, French automotive manufacturer Berliet signed an important contract—‘China License’—with China to supply 1,035 trucks and transfer manufacturing licenses to establish a factory. Another contract followed in November 1966 for Berliet’s provision of another 600 trucks.Footnote 22 In May 1969, about forty French companies exhibited machine tools and civil engineering equipment in Beijing. The Chinese showed great interest in these exhibits. On the last day of that month, Vice Premier Li Xianian inquired about the exhibition’s specifics from the French staff and subsequently attended the event accompanied by the French Ambassador to Beijing Etienne Manac’h.Footnote 23 Following the normalisation of Sino-French diplomatic relations, bilateral trade expanded rapidly owing to a series of commercial negotiations and exhibitions.
Unlike its allies, the US government initially used trade merely as a diplomatic signal to the Chinese government. In December 1969, Nixon approved US companies to import Chinese goods from a third country, including Hong Kong, where Chinese state companies, most notably Chinese Resources (Huarun), had been trading with capitalist countries.Footnote 24 In April 1970, the Nixon administration authorised selective export licensing to China.Footnote 25 Three months later, the Commerce Department extended licenses for General Motors (GM) engines—incorporated in Italian dump trucks—and GM earthmoving equipment through overseas dealerships to China.Footnote 26 In addition to easing US-China tensions, Nixon had a secondary motive to relax trade restrictions on China—to placate its allies, increasingly frustrated with US restrictions, which far exceeded the COCOM requirements. The State Department reported in April 1969 that lowering trade restrictions to the COCOM level would enable US companies to ‘compete with European and Japanese interests for China market’ and ‘eliminate the irritants that the extra aspects of present trade controls represented in relations with allies’, especially Japan and Britain.Footnote 27
For China, the United States was a neglectable trading partner compared to other capitalist countries. At the Spring 1971 Canton Trade Fair, Minister of Foreign Trade Li Shude categorised Western countries into three groups: 1. countries with which China would eagerly trade, including France, Sweden, Finland, Canada, Switzerland, Italy, Denmark, and Norway; 2. countries with which China would trade only to a modest degree, such as Britain and Austria; and 3. countries which, due to political issues, China would increase exports to yet maintain moderate imports from, including West Germany, Belgium, Australia, New Zealand, and the Netherlands. Li instructed municipal and provincial representatives that the American ‘imperialists’ were enemies on par with ‘the Soviet revisionists’, with which they should ‘concentrate all the strength to fight’.Footnote 28 All the capitalist businesspeople who attended the Canton Trade Fair were keen on trading with China. John Denson, a British observer at the fair, reported that the Japanese dominated the China market, and the Canadians zealously advanced wheat trade after the establishment of Sino-Canadian diplomatic relations in October 1970.Footnote 29 American ‘imperialists’ were falling far behind. In April 1972, some forty US businesspeople participated in the Canton Fair for the first time and signed over seventy contracts with the Chinese, but the total value of these transactions was only US$1.78 million, less than one per cent of the total deals made at the fair.Footnote 30 Sino-American trade was overshadowed by Sino-Japanese trade. Until 1978, it even remained smaller than Chinese trade with Britain and France.
Nixon continued to relax trade restrictions on China. In June 1971, two months after lifting the China embargo, he released a list of 47 categories of exportable and nonstrategic items, including farm products, household appliances, automobiles, and basic metals like steel. The Nixon administration also began to review major items of possible strategic value, such as high-grade computers, commercial aircrafts, trucks, and locomotives, on a case-by-case basis and granted special licenses if ‘consistent with the requirements of US national security’.Footnote 31 This move reverberated within the capitalist bloc. The Japanese government applauded the US decision as ‘contributing to alleviating the tension in the Far East’, while the British government immediately sought a special licence from the United States to export John Brown Engineering’s industrial gas turbine generating sets to China, which used know-how and components of General Electric (GE).Footnote 32 The US Commerce Department promised to expedite the review process and respond within two weeks, half the usual time.Footnote 33 The business went smoothly with US approval. John Brown Engineering signed a £3.5-million contract with China National Machinery Import and Export Corporation (CNMIEC) on 21 December 1971 and completed the delivery eight months later.Footnote 34 Owing to Nixon’s new policy, a growing number of technologies from the United States and its allies flooded into the China market.
Capitalist countries began to take bolder action in the COCOM. In December 1971, the Japanese delegate proposed to abolish the China Committee (CHINCOM), a working group in COCOM to administer the Consolidate China Special List, which had long been abolished in 1958.Footnote 35 The Canadian delegate supported the Japanese proposal as the first step toward ending the 1968 ‘China Differential’.Footnote 36 In January 1972, all COCOM members agreed to abolish the CHINCOM.Footnote 37 By March 1975, the COCOM were treating China and the Soviet Union at a similar level in the licensing procedure by removing 41 out of 42 items from the control list, leaving the computer as only one item in the ‘China Differential’.Footnote 38
At the same time, China’s technology imports from capitalist countries were expanding. On the heels of Nixion’s visit, the Chinese government prioritised the purchase of US technology in the Spring 1972 Canton Fair, where the Ministry of Foreign Trade of China hosted US exporters willing to sell advanced technology, including representatives from the San Francisco Chamber of Commerce and Sobin Chemicals Company.Footnote 39 As the Chinese embarked on an orchestrated plan to import modern technology from capitalist countries, however, they prioritised US allies with formal diplomatic ties as trading partners. In March 1973, the State Council of China launched the ‘Four-three Plan’ (Sisan Fang’an) to spend US$4.3 billion on importing whole plants and machines from capitalist countries, particularly Japan and West Germany, a second such project after the Sino-Soviet economic cooperation of the 1950s.Footnote 40 Provincial and municipal authorities emulated the central government’s behaviour. In September 1973, the Shanghai Municipal Bureau of Light Industry conducted thirteen import projects from Japan and Western European countries, ranging from food processing to printing.Footnote 41 Following Mao’s instruction ‘Making the foreign serve China’ (Yangwei Zhongyong), the Chinese government embraced technology from the capitalist bloc.
Western European countries and Japan developed various strategies to market computers in China. A Japanese computer firm, for example, proposed to Prime Minister Tanaka Kakuei’s secretary that the prime minister bring computers as souvenirs when he visited China in September 1972. The Tanaka administration was keen on the idea, but it failed to obtain approval in the COCOM since high-performance computers were on the control list, and even less sophisticated computers were off limits due to the ‘China Differential’.Footnote 42 Japan, France, Britain, and several other capitalist countries also held some ten industrial exhibitions in 1972 and 1973, with promotional videos of their products. The British Industrial Technology Exhibition, for instance, took place in Beijing in March 1973, joined by 349 British companies, covering a wide range of products from aerospace instruments to electronics, industrial plants to scientific tools. Marvelling at the contracts signed at the exhibition, worth more than £1 million, Michael H. Morgan, a counsellor at the British Embassy in Beijing, praised it as ‘a powerful boost to the development of longer-term trade between Britain and China’.Footnote 43
Western European countries and Japan cultivated the China market through another channel: science and technology exchanges. They sent technicians to China to showcase product samples, model machines, and industrial materials for Chinese officials while offering suggestions on specific problems that the Chinese were encountering in factories. In the autumn of 1972, 43 representatives from nineteen Japanese companies toured China and talked with 195 Chinese representatives from nine national ministries and commissions as well as 179 manufacturing and research institutions nationwide. Technicians from Shimadzu Corporation, for example, introduced human resource management in software designing and hardware manufacturing in Japan’s computer industry, emphasizing the importance and necessity of more investment in software development.Footnote 44 Between 1970 and 1973, 2,234 delegates from countries like Japan, West Germany, Britain, France, Italy, and Canada, held 1,746 symposiums on science and technology in China.Footnote 45 The Chinese were mesmerised by the technological prowess of these countries, which seemed to obviate modern US technology. The Ministry of Foreign Trade of China reported in November 1973 that the gap in civilian technology between the United States and other capitalist countries was narrowing—US allies even had competitive edges in certain areas, such as West Germany’s metallurgy, machinery, automobiles, chemical and petrochemical industries, and electronics.Footnote 46 The Chinese always had other reliable partners in technology trade than the United States.
France stood out in the capitalist competition for the China market. Although Sino-French trade in the early 1970s was in a modest volume compared with Sino-Japanese trade, the French were bold in technology exports to China. They bypassed the COCOM export controls to sell military technology to China, for instance, exporting a cine theodolite for missile tracking through a Swiss subsidiary in 1972.Footnote 47 The French also enhanced technological capability to obtain advantages in computer trade. In 1973 alone, the French government invested several times as much in computer research and development as the British government did. British computer companies, exhausted by the competition with other capitalist countries and the diversification of market demands—for both mainframe computers and minicomputers—struggled to survive by cultivating new overseas markets like China, not by relying on government subsidy in the industry.Footnote 48 For French companies, overcoming trade restrictions and leveraging technological advantages were crucial in their technology trade with the Chinese.
US companies, despite their advanced technological capabilities, struggled to export to China due to stringent trade restrictions. In March 1972, the US State Department summarised that the ‘China Differential’ in the COCOM harmed the United States more than its allies because ‘in areas where the United States had a technological lead—namely, avionics, communications equipment, and computers… the more sophisticated US items are caught by the embargo while the products of less advanced producers are not’.Footnote 49 Despite the Defence Department’s resistance, Nixon accepted the State Department’s suggestion of abolishing the ‘China Differential’.Footnote 50 The Nixon administration further relaxed export controls on China, particularly in industries where it had a technological advantage over its allies, including the computer. In July 1973, Nixon appointed Gus W. Weiss Jr., a member of the Council on International Economic Policy, to lead an interagency task force to investigate ways to sell computers to China and to analyse the security risks involved.Footnote 51 Upon recommendations by the task force, Nixon issued the National Security Decision Memorandum 247 on 14 March 1974, which eliminated the differential of US restrictions on computer exports to China and to the Soviet Union.Footnote 52 The United States was anxious to catch up with its allies in the race to the China market.
Opportunities Beneath the Global Crisis
In the mid-1970s, the receding momentum of the US-China rapprochement hindered bilateral trade. US President Gerald Ford gave up advancing the normalisation of relations with China as Congress warned that it would damage US-Taiwan relations.Footnote 53 Chinese leaders also became less passionate about normalisation, partially because they were confident in confronting the Soviet Union without US assistance.Footnote 54 Insisting on normalising US-China relations before expanding bilateral trade, Chinese leaders turned to US allies, with which it had normalised bilateral relations, to purchase advanced technology. For instance, in 1973, Vice Prime Minister Li Xiannian and Chen Yun, who was in charge of foreign trade affairs in the Chinese State Council, approved the import of 1.7-meter steel sheet rolling mills from West Germany and Japan, rejecting a lower-price offer from the United States due to the absence of diplomatic relations.Footnote 55 When Minister of Foreign Trade Bai Xiangguo met with Prime Minister Edward Heath on 15 January 1973, he, on behalf of the Chinese government, conveyed his satisfaction at the burgeoning Sino-British trade, highlighting that ‘the existing good base in political relations was also a positive factor’.Footnote 56 The stagnation in US-China relations left business chances to other capitalist countries.
The British government seized every chance to strengthen economic ties with the Chinese. In June 1973, a group of British officials from the Foreign and Commonwealth Affairs Office including the Secretary of State for Foreign and Commonwealth Affairs Alec Douglas-Home convinced Chinese Foreign Minister Ji Pengfei that the British government would place few export controls on China given that Britain was a member of the European Economic Community (EEC), a regional economic organisation created in 1957 and separate from the COCOM.Footnote 57 The Chinese government was delighted at the British government’s commitment to bilateral trade as well as its statistical data. The trade volume between Britain and China surged to US$632.16 million in 1973, marking a twofold increase from the previous year.Footnote 58 When Vice Premier Deng Xiaoping visited Britain in May 1974, he praised that ‘Britain was more enlightened than some other countries and took a less strict attitude about trade’.Footnote 59
Around the same time, it became increasingly clear that opportunities for the computer trade lay in the oil industry. With abundant onshore and offshore oil reserves, China increasingly demanded advanced computers for oil exploration. The United States had installed eight mainframe computers and 74 medium-sized computers for geological data processing as early as 1957; Daqing, the largest Chinese oilfield in Heilongjiang Province, had only two analogue computers by 1963, which proved insufficient to analyse the complex geological features of the Northeast region. In 1970, the Ministry of Petrochemical Industry of China planned to import digital computers for seismic exploration.Footnote 60
The 1973 oil crisis accelerated technology transfer for oil exploration between capitalist countries and China. Wrecked by the oil shock, Japan was among the most zealous countries to provide technology to explore and develop Chinese oil.Footnote 61 Japan purchased a small amount of Chinese oil in 1973 and set its eyes on a long-term oil trade agreement with China. In November 1975, Japanese Minister of International Trade and Industry Koumoto Toshio convinced Chinese Minister of Foreign Trade Li Qiang that China’s oil exports to Japan were ‘mutually beneficial to both sides’.Footnote 62 At a meeting with Chinese Minister of Petrochemical Industry Kang Shi’en, Komoto promised to provide advanced technology and equipment for China in exchange for oil.Footnote 63 Parallel to Koumoto’s visit, a delegation of Itochu Corporation, one of the largest Japanese ‘general trading companies’ (sogo shosha), treated by Beijing as a ‘friendship trade company’ (youhao shangshe) since the early 1960s, arrived in Beijing to attend technological symposia on liquified natural gas (LNG), state-of-the-art technology that made natural gas a viable substitute for oil, and later visited Shanghai to survey the local industrial development accompanied by representatives from the Shanghai Chemistry Industry Bureau.Footnote 64 In March 1976, a delegation led by Yazawa Eimei, president of the Japanese Scientific Instruments Association, toured research institutes and petroleum refineries around China, touting Japanese instruments designed for oil processing.Footnote 65 Japanese businesspeople and politicians spared no efforts in trading technology for oil with the Chinese.
The British businesspeople hoped to import Chinese oil as well. They strove to transfer oil exploration technology to China to secure access to Chinese oil as a cost-effective alternative to Middle Eastern sources. In October 1975, Eric Drake, chairman of the board of British Petroleum, visited the Ministry of Petrochemical Industry of China, hoping to ‘put Britain on the Chinese map as a future source of oil technology and equipment’. During his trip to China, he also toured the Peking Petrochemical Plant to investigate China’s capacity for oil-related product manufacturing.Footnote 66 Similar to Japan, Britain sought long-term cooperation with China in trading technologies for oil.
French and Canadian companies also competed to sell to the Chinese computers for oil exploration in 1974. That February, CDC France, the French subsidiary of computer giant Control Data Corporation (CDC), and Compagnie Generale Geophysique (CCG), a French oil firm, jointly tried to sell a Cyber computer and associated software designed to process seismic data for offshore oil exploration to the China National Technical Import and Export Corporation (TECHIMPORT), a state-owned company for foreign technology trade. At the same time, a Canadian group led by CDC Canada initiated commercial negotiations with TECHIMPORT for the same product. With six months of negotiations, TECHIMPORT signed a contract valued at US$6.7 million with the French while parallel negotiations with the Canadian broke off.Footnote 67 The lure of Chinese oil business turned even sister subsidiaries of the same computer company into rivals.
US companies did not just sit by. They repeatedly persuaded the Ministry of Foreign Trade of China and the China Council for the Promotion of International Trade, a semi-governmental trade organisation founded in 1952, to advance US-China technology cooperation in oil and gas exploration, including in the South China Sea, which was rumoured to be rich in natural resources.Footnote 68 By May 1976, US oil firm Geospace had exported two computers to China for processing geographical data in oil surveys.Footnote 69 In addition, Geospace arranged a team of field equipment technicians to train the Chinese to operate special vehicles designed for exploratory work.Footnote 70 As noted by the Central Intelligence Agency, however, the United States fell behind its allies in the race for ‘technology for oil’. By August 1975, the Ministry of Fuel and Chemical Industrial of China and CNMIEC had signed contracts with companies from Japan, France, and Denmark for offshore support equipment, and were planning to purchase drilling equipment from West Germany. On the contrary, US companies made little progress.Footnote 71
US export controls were the main culprit, but Ford could not fix them easily. Desperate to maintain détente with Moscow, which railed at the Export-Import Bank Legislation that restricted credits to the Soviet Union and the Johnson-Vanik amendment to the 1974 Trade Act that denied most favoured nation (MFN) status to any country restricting emigration, including the Soviet Union, Ford adhered to an even-handed export control policy—imposing equal restrictions on the Soviet Union and China.Footnote 72 In February 1975, US computer firm Burroughs planned to sell CNMIEC a B-7700 computer. The performance capabilities of B-7700, Burroughs claimed, did not exceed those of computers sold to the Soviet Union.Footnote 73 The State Department took exception nonetheless.Footnote 74 That September, the Export Administration Review Board, an interagency board composed of the Secretaries of Commerce, State, and the Secretary of Defence, rejected Burroughs’ application, viewing B-7700 as too sophisticated for exporting to China.Footnote 75
US policymakers took pains to clarify US even-handed policy to Chinese leaders after the denial of Burroughs’ request. In December 1975, Vice Premier Deng Xiaoping complained to President Ford and Secretary of State Henry Kissinger about the strict restrictions on Chinese imports. Kissinger explained that the US policy did not allow exporting computers with the calculating speed of ten million operations per second to either China or the Soviet Union. ‘Mr. Vice Premier’, Ford added, ‘in principle, we would be very anxious to be helpful in the computer area, and I think we can be’. Kissinger encouraged the Chinese to consult US firms like Burroughs to identify computers that met China’s needs and the standard of approval by the US government and COCOM.Footnote 76 The Ford administration, in other words, insisted on maintaining its export controls.
Nevertheless, US allies pressed the United States to make a change. Thirsty for Chinese oil, the French government sought US cooperation to export Cyber 172, a sophisticated computer for oil exploration, to China. Unlike in the B-7700 case, The US government initially pended, rather than denied, the license application of Cyber 172, which CDC France submitted through its US-based parent company in May 1975.Footnote 77 B-7700, with extensive end-uses like hydraulic engineering and metallurgy, required strict on-site safeguards against potential military diversion, a condition unacceptable to the Chinese. Cyber 172, though as sophisticated as B-7700, was limited to seismic data processing in offshore oil exploration. On-site safeguards were unnecessary.Footnote 78 Cautious about computer exports to China, the US NSC requested a CIA study on the development of the Chinese computer industry and the licensing policy currently implemented by the Commerce Department. In October 1975, five months after CDC’s application, the CIA reported that the computer industry in China was heavily reliant on foreign technology since current domestic computers were ‘only as effective as US computers of ten years ago’. The CIA also noted that the Chinese refused to implement safeguards, such as on-site inspections, which was anticipated by the US government. Disagreements between the US and Chinese governments on safeguards challenged China’s imports of US computers.Footnote 79
Finding mutually acceptable safeguards for all stakeholders—CDC, the US and Chinese governments, and COCOM members—was the key. CNMIEC declined to provide information on imported computers’ end uses and users, but US officials patiently explained that obtaining this information was a routine procedure of international trade, regardless of export destinations.Footnote 80 After several rounds of negotiations, the State Department agreed to forgo ‘more rigorous procedures that [it] required from the USSR’ and to substitute a formal end-user statement with ‘a letter containing most, if not all, of the pertinent information’, provided by CNMIEC.Footnote 81 The licensing process was not yet complete. In September 1975, the French government pressured US officials to expedite a decision on the Cyber 172 case, but the request was delayed due to concerns about safeguards.Footnote 82 The US government shifted the French government’s pressure to CDC and its French subsidiary. In March 1976, the Commerce Department informed CDC of the conditions for US approval, harsher than the CDC had anticipated, including a clause that ‘limited official use at the seismic data centre for at least three years after installation and acceptance of Cyber 172 [in China]’. The Chinese importer would never accept such a condition. Two months later, CDC proposed a technical service agreement to CNMIEC to break the impasse, which assigned a person on site for eighteen months and the possibility of further visits afterwards.Footnote 83 CNMIEC agreed in principle, without granting the technician unrestricted access to the Cyber 172.Footnote 84
The Ford administration accepted CDC’s safeguard arrangement for Cyber 172. On 20 October 1976, the Commerce Department gave official approval to CDC, and the US delegate at the COCOM withdrew its objection to the French request.Footnote 85 Although CDC would deliver the Cyber 172 to China only three years later, in September 1979, due to complicated administrative procedures, it was far greater in size and capacity than any computer previously sold to China by capitalist companies.Footnote 86 US high administration officials asserted that the sale, approved only about a month after the Chairman of the Chinese Communist Party Mao Zedong passed away, represented ‘a gesture of support to the new Chinese leadership’ under Mao’s handpicked successor, Hua Guofeng.Footnote 87 The Cyber 172 case illuminated the intricate relationship among capitalist countries in technology trade with China—the combination of competition for the China market and cooperation in the export control system. Yet the Ford administration’s efforts to facilitate the deal also laid bare the fact that its policy on export controls on China, either at the US Export Administration Review Board or at the COCOM, made technology trade exceedingly difficult.
The ‘China Tilt’
In the second half of the 1970s, France vigorously exported computers to China, partially encouraged by the Cyber 172 case. According to the COCOM records of license requests in 1976, the French government requested five cases of computer exports to China totalling over US$1.22 million, while the British government only requested one.Footnote 88 The French saw little risk in technology transfer to China because they believed that, among the ‘four modernisations’ the Chinese government was aiming to achieve by the year 2000, military modernisation came last, only after modernisations in agriculture, industry, and science and technology. The French government even espoused military technology transfer. French officials told the US State Department in October 1977 that they were ‘seriously and actively’ debating ‘a program of military sales to China’.Footnote 89
The French outshone the British in promoting technology exports to China. For that, Britain needed cooperation from the United States in the COCOM. In October 1977, Governor of the British Broadcasting Corporation Ralph Murray told representatives from the US State Department that disagreements between the US and British governments over export controls on China would cause friction in Anglo-American relations, partly because the British government was under enormous pressure from British tech companies, which expected the relaxation of export controls and might blame the government for losing business chance with China.Footnote 90 Jimmy Carter, however, in his first year of presidency in 1977, prioritised US-Soviet détente and maintained the even-handed export control policy on China and the Soviet Union. Cooperation between Britain and the United States in relaxing COCOM export controls on China did not go smoothly as a result.
At the same time, the new generation of Chinese leaders needed more imports of modern technology, the lever to shift the nation’s goal from revolution to development. The Ministry of Foreign Trade of China refuted the argument that ‘“self-reliance” and “learning from foreign countries” were contradictory’ and proclaimed that ‘doing well in technology imports would facilitate a strong modern socialist country’.Footnote 91 In December 1978, the Third Plenum of the Fourth CCP Central Committee stressed the significance of science and technology and underscored international cooperation and foreign technology absorption, especially in computer science.Footnote 92 In April 1978, the Ministry of Foreign Trade announced its intention to import technologies ‘from other countries with which [we] have established diplomatic relations rather than from the United States under comparable trade conditions’. The Chinese expected that US corporations might be able to persuade the US government to facilitate and expedite export licenses for modern technology. The Ministry of Foreign Trade avowed to ‘purchase necessary products and technologies [from the United States] by fully exploiting the conflict between the US government and US businesspeople, who long to profit from exports to China’.Footnote 93
The Chinese were redoubling their efforts to internalise foreign technology to accelerate economic development. Chinese leaders particularly advocated the development of the electronic industry and promoted the application of electronic products like computers in various fields, such as telecommunication, radar, and medicine. The computer became one of the symbols of modern science and technology in China. In the Science and Technology Development Plan for 1978-85, the Chinese Academy of Sciences and the State Commission on Science and Technology listed computer science as one of eight key areas, whose application could improve industrial productivity, both in physical and mental labour.Footnote 94 The new technology policy necessitated more computer imports.
The Chinese government’s new policy heartened capitalist countries. In October 1977, the Shanghai Bureau of Instrument and Telecommunication Industry applied to purchase complete sets of equipment and prototypes, worth US$305 million—microcomputers, external storage devices, large-scale integrated circuits, and colour picture tubes—from the United States and Japan for the development of the electronics industry.Footnote 95 In March 1978, the National Planning Commission and the National Basic Construction Commission issued the ‘1978 Plan for the Introduction of New Technologies and Complete Sets of Equipment’, allocating US$8.56 billion to technology imports, nearly doubling the US$4.3 billion budget in the Four-three Plan of 1973. As the Chinese spent US$7.8 billion in technology imports, this plan, which covered multiple industries, from petrochemicals to metallurgy to electronics, was called the ‘7.8 billion plan’ (qi ba yi jihua). Meanwhile, exchanges in science and technology burgeoned.Footnote 96 In 1978 alone, the Shanghai Municipal Science and Technology Committee held nearly 200 academic presentations and organised over 100 technological symposiums with foreign technicians, including many overseas Chinese.Footnote 97 Chinese leaders, both at the central and local levels, passionately implemented the policy of technology imports.
China’s imports of US computers, however, encountered difficulties as US allies quibbled over the COCOM license procedure. In July 1978, the Carter administration permitted IBM’s export of a 370/138 computer system to the Shenyang Blower Works and submitted a license application to the COCOM.Footnote 98 The Japanese delegate nonetheless averred that the Japanese government, not the US government, was qualified for the application, for the main parts of IBM 370/138—the control processing unit, power unit, and disk storage and control—were all manufactured outside the United States, and assembled by IBM Japan.Footnote 99 The West Germany government backed the Japanese government, citing similar incidents between IBM’s US headquarters and West German subsidiary.Footnote 100 That September, the US government temporarily withdrew its request for IBM 370/138. IBM Japan then asked the Japanese government to request the COCOM license, and the COCOM approved it.Footnote 101 To the China government’s irritation, however, IBM did not ship IBM 370/138 to China until March 1980 due to administrative delays.Footnote 102
It became increasingly clear that COCOM regulations on technology exports to China were outdated. Capitalist countries applied for COCOM exception exports to China more frequently, including British sales of Harrier fighter jets in 1979. In November 1978, West Germany requested an export of Siemens 7.760-K computer systems to Chinese universities. Japan reluctantly approved this case because it had no compelling reason to oppose it.Footnote 103 As the COCOM export control system became hollow, the Japanese government lamented that ‘countries like the United States and Britain prioritised their diplomatic goals over the COCOM procedures’. It chose to ‘calmly accept’ the US and British position on treating China preferentially in export licence reviewing, seeking ‘flexible measures based on the situation’ while ‘appealing for compliance with COCOM procedures’.Footnote 104
With the normalisation of US-China relations in 1979, the US government increased its efforts to export technologies to China. When Deng Xiaoping visited Washington in January 1979, Carter guaranteed that ‘if an advanced computer… is certified by our Secretary of Commerce, Mrs. Kreps, to be used for civilian purposes only, then there would be no problem with the sale of this type of equipment’. To circumvent the strict controls on computer exports, Carter proposed a long-term lease. Deng found this method acceptable.Footnote 105 During his visit, Deng signed a government-to-government agreement on cooperation in science and technology with Carter, followed by several reciprocal visits in the following months aimed at building the framework for this cooperation.Footnote 106 In July 1979, Secretary of Commerce Juanita Kreps visited China to sign the US-China trade agreement, for which she and Minister of Foreign Trade Li Qiang had negotiated for two months. This agreement, approved by Congress on 14 January 1980, granted China most-favoured-nation status.Footnote 107
The high-level exchanges resulted in numerous specific initiatives involving US tech companies. GE, for example, approached the Shanghai municipal government for cooperation in producing twelve-inch black and white televisions in September 1979. GE also promised to the Shanghai Bureau of Instrument and Telecommunication Industry that it would upgrade factories in Shanghai, many of which operated on outdated Soviet technology, with its modern technology and equipment, and send experts for technical training. In return, GE expected these factories to supply televisions for US customers from 1980.Footnote 108 GE’s deal was just one example of US efforts to develop manufacturing industries in China, rich in cheap labour and capable of producing inexpensive goods for American customers, who suffered from returning inflation after the second oil shock.
At the same time, the US government showed flexibility to its allies’ technology exports to China, as it was concerned that market competition and the absence of cooperation in export controls continuously harmed US-China technology trade. In February 1979, the State Department approved a new policy on third-country sales to China, which suggested that US allies should ‘come to [the United States] bilaterally at the highest political level’ to discuss sales of sensitive items while ‘avoiding discussion in the COCOM or the NATO of any special arrangement for China export controls’.Footnote 109 While maintaining an even-handed policy toward China and the Soviet Union on the surface, the US government, in practice, began to negotiate with its allies on a case-by-case basis to ensure that technology exports to China posed no security risks to the capitalist bloc. The US government emphasised maintaining a low level of technological sophistication in exports and implementing effective safeguards to prevent military applications of the technology.
With the deterioration of US-Soviet relations in 1979, Carter had no reason to maintain the even-handed trade policy. Senator Paul Nitze and numerous other détente critics criticised Carter’s conciliatory attitude toward the SALT II talks and called for reinforced containment of the Soviet Union. Wary of expanding Soviet military power, the Carter administration abandoned détente and embarked on a major military buildup, including construction of bases in the Persian Gulf region in mid-1979.Footnote 110 During his August 1979 visit to China, Vice President Walter Mondale informed Chinese leaders of the US government’s determination to ease export controls in several areas of advanced technologies—tantamount to a ‘China tilt’.Footnote 111 Two months later, the Defence Department revised the internal guidelines to differentiate the handling of export requests for China from those for the Soviet Union. It would review licensing applications case by case, but would now take into account ‘the predictable impact on the military balance and the significance of that impact to the national security of the United States or any other country in which the United States had vital interests’.Footnote 112 The Defence Department, in other words, would agree to export certain sophisticated computers to China, but not to the Soviet Union, for security reasons. China was no longer a security threat, at least on the same level as the Soviet Union.
The ‘China tilt’ assisted US computer exports to China. Chinese officials and scientists prioritised the United States as a partner in developing Chinese computer science, recognising its position at the forefront of global technology. In January 1979, the Chinese National Scientific and Technological Commission proposed establishing computer research centres across the nation. Among regional-level centres, the East China Institute of Computer Technology came to be equipped with two IBM 3032 computers, worth US$15 million, imported from the United States. IBM 3032 boasted a computational speed of three million operations per second, enabling the research centre to deliver high-quality, high-speed data processing services for major engineering and scientific projects.Footnote 113 China’s computer science began to flourish through increased technology imports.
The ‘China tilt’ was also a boon to US allies, particularly Japan. In August 1979, National Security Advisor Zbigniew Brzezinski briefed Director-General of the Japanese Defence Agency Yamashita Ganri about Walter Mondale’s upcoming visit to China, where he would convey the US government’s decision to sell sensitive technologies to the Chinese, which should not be transferred to a third country. To seek support from the Japanese government, Brzezinski emphasised the importance of China to the geopolitical strategy, depicting Sino-American and Sino-Japanese relations as the ‘outer core’ of Far Eastern security, almost as important as US-Japanese relations. Yamashita concurred. He reported that a Chinese delegation led by Liao Chengzhi, an old Japan hand and vice chairman of the standing committee of the National People’s Congress, who dedicated his career to deepening Sino-Japanese relations, had visited Japan two months before to strengthen bilateral economic ties.Footnote 114 Carter’s ‘China-tilt’ ushered in the golden age of the US-China-Japan triangle.Footnote 115
The US government further promoted the ‘China tilt’ in the COCOM. In August 1979, the NSC discussed the possibility of adopting a pro-China differential in the COCOM, which had already been informally suggested by Belgium.Footnote 116 The State Department examined the record of past precedents in the COCOM, including a special exception-export procedure for items in the COCOM industrial list, adopted for Poland in 1957 and later proposed by the US government for Romania in 1978. Secretary of State Cyrus Vance found this procedure feasible for China since it ‘respected the existing COCOM procedures but maintained a case-by-case review’ of exception exports to certain communist countries. He prompted Carter to negotiate the special procedure for China with US allies in February 1980, after Congress approved the US-China Trade Agreement and ratified the SALT II Agreement—although the latter never actually happened.Footnote 117
The Soviet invasion of Afghanistan in December 1979 resulted in a COCOM consensus on adopting the ‘China tilt’. In March 1980, the US government submitted a COCOM proposal to promote the ‘China tilt’ in response to the Soviet aggression.Footnote 118 Other COCOM members like Norway and the Netherlands promptly endorsed the US proposal at the COCOM meeting on 15 April 1980. Although advocating for further discussions on the ‘China tilt’, the French delegate sought the US government’s approval for three export licenses to China, which were previously pended in the COCOM due to the US government’s reservations.Footnote 119 Capitalist countries, in essence, reached a consensus on the ‘China tilt’ as the new guiding principle in the COCOM export control policy.
Conclusion
As data from the US Commerce Department suggests, the percentage of computers in the total export licenses for China processed in 1979 amounted to 22%, ranking first in all high technologies. Two years later, the number doubled as the Reagan administration processed 41% of licenses for computer exports to China.Footnote 120 Japan, a strong competitor to the United States, sought to export more computers to China than it previously did. Despite two-year-long negotiations over export controls, in May 1982, Tokyo and Washington agreed to approve the export of the Hitachi M-180 and the equally advanced IBM-3033 to China, both of which were sophisticated enough to facilitate nuclear development.Footnote 121
China’s integration into global capitalism continued. In April and May 1980, COCOM members debated how to promote the ‘China tilt’. France agreed to treat China favourably in licence reviewing and recommended applying this treatment to the exports of both equipment and technology.Footnote 122 Underscoring the risks of technology diffusion, Japan advocated careful examinations of safeguards in exception exports to China.Footnote 123 Other countries like Denmark, Portugal, and the Netherlands insisted on restricting favourable treatment of export licensing to China alone, with no exception for other export destinations.Footnote 124 COCOM members were searching for a balance between economic benefits and national security in adjusting export controls on China.
Capitalist countries pursued varying strategies in dual-use technology trade with China. Western European countries and Japan sought to dominate the China market with advanced technologies, including computers, and shared methods for mass production through industrial exhibitions and scientific exchanges. The United States, though a latecomer to the China market, leveraged its leadership in COCOM to relax export controls on China. Dual-use technologies like the computers were particularly sought after by the Chinese for their modernisation efforts, but capitalist countries were cautious about exporting these technologies, fearing potential security risks. Capitalist countries’ technology export to China enhanced their mutual trust in strategic and political matters, transcending Cold War divisions.
Dual-use technologies have long played a significant role in shaping global trade and international relations. Historians often depict them as sources of division, emphasising how great powers competed for technological dominance and restricted rivals’ access to advanced technologies for military purposes. However, dual-use technologies have also acted as catalysts for cross-border or cross-bloc collaboration, underscoring the intricate balance between economic ambitions and security concerns. Export controls have been significant in managing these dynamics, functioning as a double-edged sword that can either intensify geopolitical tensions or foster trust and interdependence when relaxed. By regulating the flow of dual-use technologies, countries seek to mitigate security risks while pursuing economic gains, often necessitating multilateral cooperation to align competing interests. These efforts highlight the enduring impact of technologies on trade and geopolitics.
Acknowledgement
I would like to extend my sincere thanks to anonymous reviewers and to Associate Professor Kazushi Minami for their insightful comments, which greatly improved this article. I am also grateful to Professor Pi Cui and to the participants of the 2023 COCOM Workshop at East China Normal University for their valuable suggestions.
Competing Interests
The author declares none.
Financial Support
None to declare.
Bingyi Gong is a lecturer at the School of Foreign Languages and Cultures, Chongqing University, specialising in the history of US foreign relations and China’s foreign policy during the Cold War. She earned her PhD in international public policy from Osaka University in 2024.
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