Deng Xiaoping's reforms of Chinese society brought a wave of renewed interest in democratic processes. Foreign investors and specialists helped to modernize China's economy and trade boomed in all sectors ... including missile and nuclear technology. Even so, economics and not politics governed U.S.-China relations in the modern era.

Deng Xiaoping's reforms of four sectors of the economy - agriculture, industry, the military, and science / technology - were also called "The Second Revolution" because the reforms loosened societal restrictions in every part of Chinese society. In the 1970s and 1980s, communes were disbanded and individual authority was granted to more people, affecting jobs, markets, and schools. These reforms effectively altered China's centralized system and brought in a fledgling "Chinese democracy movement."

As great numbers of Chinese students went abroad to pursue advanced degrees in scientific fields, demands grew at home for more artistic, literary, and political expression. By the mid-1980s, students, teachers, scientists, and journalists were publicly criticizing the Communist Party. The movement was tolerated, even encouraged, for a while.

Re-opening China's doors to the outside world brought in hard cash and technical expertise from the West. Joint ventures with foreign specialists and capitalists were welcomed. New Chinese laws that legitimized private business and land sales encouraged even more foreign investment.

As the U.S.-Soviet rivalry hardened in the 1980s, Washington began to sell sophisticated technological components to Beijing. Limits on technology transfer licenses were relaxed, and military exchange visits were stepped up. President Reagan made his first visit to China in 1984, and by 1985 the two countries had signed a bilateral nuclear energy cooperation agreement.

In 1987, Iran fired Chinese Silkworm missiles against Kuwaiti oil installations, and at Kuwaiti ships flying the U.S. flag. In retaliation, the United States held back additional high-tech transfers, so China reluctantly agreed to stop selling missiles to Iran. In 1988, China exploded its first neutron bomb. Less than ten years later, U.S. scientists suspected that China's technology had been based on top secret data stolen from American laboratories.