0116 01189 0250 0539 0542 APPENDIX B. ESTIMATING EQUATIONS CS=share of imports from PRC (expressed as a fraction) D=maritime distance (in miles X10-4) WS=share of imports from world (expressed as a fraction) QR quantitative restrictions (0 or 1 for linear equations, 1 or 2 for log linear) t=tariff rate (expressed as a fraction) NOTE-Figures in parentheses are student "" values. SITC: 0545 LnCS-LnWS=-7.423-4.123LnDm 6130 (-1.430) (8.548) (-1.759) R2=0.80 CS=0.305+1.048WS-0.174(1+t) -0.138Dm (4.244) (-2.473) (-4.570) R2=0.80 d.f.=15 LnCS-LnWS=-3.784-3.063 Ln(1+t) −3.203LnD R2=0.32 d.f.=16 LnCS -2.078+1.019LnWS-1.436 LnD. (-3.234) d.f.=16 CS-WS-0.897-0.667(1+1)−0.232Dm R2=0.35 d.f.=16 LnCS -2.283+0.950LnWS-7.403Ln(1+t)-1.513LnD 6513 65213 R2=0.72 65229 65311 65691 6575 6664 CS=0.232+1.048WS-0.548D. (3.177) (-4.024) R2=0.66 d.f.=16 CS=0.268+1.063WS-0.279D.-0.116(1+t) −0.073QR (5.605) (-3.989) (-1.613) d.f.=14 (-2.753) CS-WS=0.340-0.165(1+1) -0.157D-0.103QR (-1.779) (-3.669) (-2.458) R2=0.60 d.f.=15 CS=0.255+0.945 WS-0.213D.−0.135(1+t) (3.802) (-1.879) CS-WS=0.429-0.224(1+t)−0.194D, (-1.601) R2=0.42 d.f.=15 (−2.140) .. (-4.092) R2=0.52 d.f.=16 (6.941) (-2.057) LnCS -0.911+1.270LnWS-1.542LnD. R=0.72 d.f.=16 CS-WS-0.380-0.188(1+t) −0.186D (-2.050) (-3.483) LnCS-LnWS=-1.613-1.573LnDm (-4.444) R=0.51 d.f.=17 84112 LnCS-LnWS=-1.939-2.246LnD 1. China: Economic aid extended to the Third World, 1956–77. I. KEY POINTS Page 851 851 855 857 858 858 853 854 854 859 First. Political turbulence in the People's Republic of China and the slowdown in domestic economic growth led to a decline in economic aid pledges to the Third World in 1975-77, to less than $200 million a year from the $500 million annual commitments of the first 5 years of the decade. Second. Aid disbursements, on the other hand, maintained a brisk pace at $220 million a year in 1975-77, as earlier commitments were carried out and as new countries were added to the list of recipients. Third. The number of Chinese technicians in the Third Woild rose to an all-time high of 24,000 in 1977. Fourth. China gets good marks for its economic aid program, which emphasizes small-scale development programs and tailors projects to the needs and resources of its Third World clients. Fifth. Chinese-LDC trade has become an important source of hard currency for China, at the same time providing new markets for Third World raw materials. Sixth. Military transfers, which are concentrated overwhelmingly in Pakistan, have been a small fraction of the Chinese aid program and are dwindling in the face of Soviet and Western competition. II. FLUCTUATIONS IN ECONOMIC AID The recent lull in the economic aid commitments of the People's Republic of China has as its backdrop a 20-year history of sharply fluctuating annual aid levels. These fluctuations have reflected economic and political developments at home and changing attitudes toward the cost and benefits of aid. In the late 1950's China concentrated about $150 million of aid on neighboring countries in its drive to gain influence in East Asia. 24-427 - 79 - 56 In the early 1960's Chinese economic aid became identified as an African program, as the People's Republic moved to fill the gap left by departing colonial powers and to preempt a corresponding growth in Soviet influence. By 1964, when annual extensions of aid had soared to $300 million-mostly to Africa-Peking was supporting dissident groups in countries that had accepted a Chinese aid presence. In 1965, new pledges fell to $70 million as Peking's subversive activity made many less developed countries (LDC's) wary of Chinese aid offers. The onset of the Chinese Cultural Revolution-1966-69-isolated China from the mainstream of international economic and political life and was reflected in the virtual cessation of new Third World project commitments. In 1970, China reappeared on the international scene determined to assert itself as a major power. Economic aid programs, orginally tailored to serve PRC objectives in the Sino-Soviet conflict of the 1960's, were stripped of their ideological content and were deployed as a major foreign policy weapon in China's campaign to attain leadership among developing countries. In 1970, China pledged more than $700 million of new economic aid to the LDC's, Peking's largest annual commitment-more than 10 times Peking's average aid undertakings in any previous year and equal to two-thirds of all Chinese economic aid extended to the Third World in the previous 14 years of the aid program. (See table 1). In the 5-year period 1970-74, China boosted its commitment to LDC's by $2.7 billion, more than double the $1.1 billion provided in 1956-69. Almost two-thirds of the new assistance went to Africa. In 1974, the economic aid program again fell victim to domestic political infighting. Annual pledges plunged to one-half of the euphoric half-billion dollar average of earlier years. The internal power struggle pitted Madame Mao, leader of the radical "Gang of Four," against comparatively moderate forces that opposed the politicization of Chinese economic policy. The arrest of the radical leaders following Chairman Mao's death in September 1976 was a major step toward the stability needed to reassess and regularize PRC economic policy. In the fall of 1977, the new Hua regime broke China's long public silence on the subject of economic aid to the Third World by pledging to honor Chairman Mao's policy of helping poorer nations. The new leadership has hastened to point out that future aid programs will be limited by China's own status as a poor and developing country. The power struggle of the midseventies disrupted economic planning and cut into industrial growth, while severe earthquakes in the summer of 1976 disrupted industry and transportation. Furthermore, poor weather in 1976 and 1977 prevented any increase in grain production, this despite sizable increases in inputs of fertilizer and machinery. Chinese plans to increase domestic agricultural and industrial productivity, which hinge on imports of technology from the West, compete for some of the same resources needed in foreign aid projects. As they move to harness foreign aid policy to domestic economic realities and international political objectives, Chinese planners are redirecting limited aid assets toward specific immediate goals. With its international reputation for effective aid already secured by its highly publicized aid efforts of the early 1970's, the People's Republic can now afford to use aid more selectively to pursue more parochial aims in the Third World. Chinese officials have hinted that any resources left over from domestic development will go to countries willing to publicly endorse Chinese policies, particularly those contrary to Soviet interests. For example, China was quick to promise further development support to Egypt in 1976 and Somalia and Sudan in 1977 when they renounced their ties with Moscow, although no formal agreements were signed. TABLE 1.-CHINA: ECONOMIC AID EXTENDED TO THE THIRD WORLD, 1956-77 |