The course of Chinese foreign policy since 1949 has, it seems, come full circle. The Sino-Soviet alliance and Sino-American hostility of the 1950s have almost been replaced by their opposites in the 1970s. Though the Chinese government responded to the diplomatic olive branches appropriately — resulting in the Shanghai communique in 1972 — domestic policies were not then in force which allowed for the reintegration of China into the world economy as the United States (US) sought. At the beginning of 1979, China and the US established formal diplomatic relations. More importantly, during the preceding period, China reached an effective accommodation with US strategic and economic policy in most parts of the world. The stability of the post-war economic system, orchestrated at the end of World War II, as well as the pre-eminence of the US within that system, was predicated on the revival and continued growth of the Western European and Japanese economies.