A-3. China: Imports by area and country, c.i.f.. 735 A-4. Aggregate dollar price and terms of trade indexes for China's trade with non-Communist countries... 736 A-5. China: Exports to non-Communist countries.. 736 A-6. China: Imports from non-Communist countries, f.o.b_ 737 A-7. China: Commodity composition of exports, f.o.b., by sector of origin 737 A-8. China: Commodity composition of imports, c.i.f., by end use. 738 738 A-10. China: Foreign debt position, 1970–76_ 740 A-11. China: Financial balance with noncommunist countries, 1970–76... 741 I. INTRODUCTION China's foreign trade, although a small component of gross national product, plays an important role in sustaining and modernizing the Chinese economy. A relatively small trade' sector, of course, is expected of a vast and populous country such as China, which has extensive domestic resources and a huge domestic market. Yet, the share of trade in China's GNP, only about 5 percent, is low by world standards reflecting the residual role assigned trade in the centrally planned economy and the conservative attitudes toward trade as a result of historical and more recent experiences. 1 In this paper, the term trade means foreign trade. Trade is the balancing sector in the planning process with imports making up for shortfalls in domestic production and providing goods that cannot be produced in sufficient quantity, or at all, in China. Exports are not viewed as an end in themselves but as a means to pay for imports. Moreover, trade and financial policy has been very cautious, colored by Peking's view of the unhappy experiences with trade in both pre-1949 China and the period of Soviet cooperation in the 1950's. Self-reliance has been the guiding principle although its interpretation has been the subject of some debate in China over the years. Never officially defined, self-reliance has been described in such terms as "maintaining independence," "relying primarily on our own efforts," "keeping the initiative in our own hands," and "learning what is good from foreign countries." In practice, since the SinoSoviet split, self-reliance has meant spreading imports among different suppliers, balancing trade over time, and making only sparing use of credits. Despite its small share and conservative policy, trade has been quite important to the PRC. Imports aided the rebuilding of China's industrial base in the 1950's, have alleviated agricultural failures, and have provided industrial supplies and advanced technology to spur economic growth and modernization. In addition, trade has often provided a useful entree in China's relations with other countries. China's trade since the 1950's has followed the changing fortunes of the economy, rising during periods of economic stability and suffering from the economic setbacks of the Great Leap Forward and the Cultural Revolution. This paper will focus on China's trade sector in the 1970's, a period of rapid trade growth, then setbacks, and policy debate. Trade trends in the 1970-76 period will be examined along with the economic and political influences on the trade sector. For the future, China's trade prospects will be discussed in light of the renewed emphasis on trade by the Hua regime and of China's economic capabilities and limitations. II. TRADE IN PERSPECTIVE-THE FIRST TWO DECADES 2 A. The 1950's-Lean to One Side Economic and political necessity led to heavy dependence on the U.S.S.R. The need to rebuild the economy amid the Western trade embargo imposed during the Korean War impelled Mao Tse-tung to pursue a policy of "leaning to one side," by which China based its industrial and technological growth on a rapid buildup of trade with the Communist countries. As a result of the close economic cooperation with the U.S.S.R. and Eastern Europe, trade between China and the Communist world shot from only $350 million in 1950 to almost $3 billion in 1959. (See Table A-1.) Trade with the West fell off after 1951 and accounted for only 25 percent of China's trade in 1955. (See fig. 1.) With the relaxation of Western trade restrictions in the second half of the decade, trade with the non-Communist countries rose. However, this trade still represented only about 30 percent of total PRC trade in 1959. For a more detailed treatment of this period see Robert L. Price, "International Trade of Communist. China, 1950-65," in U.S. Joint Economic Committee, "An Economic Profile of Mainland China," Washington, D.C. U.S. Government Printing Office, 1967; and A. H. Usack and R. E. Batsavage; "The International Trade of the People's Republic of China," in U.S. Joint Economic Committee, "People's Republic of China: An Economic Assessment," Washington, D.C.: U.S. Government Printing Office, 1972. |