Why did China Trade with the US?

Hint: Never underestimate the importance of non-digital innovations

“Nixon to China” is one of the most pivotal moments in 20th-century history. It unites the East and West, begins China’s economic rise, sows (some of) the seeds of the American populism to come, and helps bring a billion people out of poverty. It’s a watershed moment in world history, led by the man that would give us Watergate. 

The US case for trading with China seems relatively straightforward. China was an enormous market for US goods and offered cheap labor. Meanwhile, President Nixon sought foreign policy wins anywhere to distract from Vietnam. And, as is often pointed out, his hardline stance on communism made him perhaps the only possible candidate on either side of the aisle who could broach China without being called a communist.

But what did China get out of it? There are lots of reasons you might suspect China was interested in trading with the US: Computers were coming online, and China needed the technology; American pop culture was seeping in, and a new generation of Chinese bureaucrats wanted to give in; China had a plan to become wealthy and saw a healthy relationship with the US as a critical step. 

It turns out that none of these were the key motivation, however. What China wanted was agriculture! More specifically, having survived the famine of the late 1950s, China was desperate to increase its agricultural output to feed its starving people. Doing so required agrichemicals, specifically ammonia, which China could not produce in large numbers - it simply did not have the materials or the know-how. So, when Nixon reached out to China, China’s first order was to the MW Kellogg company in Texas for $200m ($1.2b in today’s dollars) to purchase the equipment needed to create 13 large-scale ammonia plants. 

Though people often think of 1978 as the year China began to open up agriculturally, it started in 1972 with the building of the Kellogg plants. Before 1972, China had gone backward technologically, avoiding using ammonia to create nitrogen fertilizers in favor of ammonium bicarbonate (AB), which could be readily made from coal all over China. Though not as efficient a fertilizer, AB could be produced domestically, and Mao Ze Dong favored it to avoid starvation in the event of war with the US and/or USSR. Consequently, China lagged badly in agricultural production, making people hungry for change (literally).

This is not to say that there weren’t other factors at hand. Tensions between China and the USSR were escalating, and China was not in a position to fight a two-front war. Having the US as an ally against China was becoming more attractive. In the US, Kellogg was not surprised to learn that China might be interested in its plants; it was a strong supporter of Nixon and seems to have been quite active in pursuing foreign lines of business. 

This is fascinating for (at least) two reasons.

First, though we often think of technology as something digital, this is an important reminder that many of the most important technologies are much less exciting. As Vaclav Smil frequently notes, people get very excited about digital technologies, but agriculture is an enormous industry that keeps us all alive. It’s no mystery why the Chinese wanted this most of all. Still, in something of a critique of this blog, we often find digital technologies much more interesting.

Second, this story is an important reminder of just how vital agrichemicals, and the fossil fuels that (still) create them, are. Ammonia is still critical to making the fertilizers needed to keep the world fed. And, as Smil notes in How the World Really Works, there is no sign of this changing in the near future. In terms of climate change, that puts a lot of pressure on things like electric vehicles where we do have technology readily available.

I am deeply indebted to the kind people on Historum who discussed this topic with me.