Lesson1ChinaintheMarketPlaceBarryCoulthurstexaminesthedevelopmentofChina’stradepolicyandthepresentstateoftheoverseaseconomiclinks--巴里庫爾塞斯特對中國貿易政策的演變和當前與海外經濟往來狀況的研究ThepatternofChina’sforeigntradehaschangedsubstantiallysincethefoundingofthepeople’sRepublic,Duringthe1950sChinaexportedagriculturalproductstotheUSSRandEastEuropeancountriesinreturnformanufacturedgoodsandthecapitalequipmentrequiredforthecountry’sindustrializationprogrammewhichplacedemphasisonthedevelopmentofheavyindustry.TheGreatLeapForwardof1958-1959initiallyproducedgainsinagriculturalandindustrialproduction, subsequentlyresultedinseriouseconomicimbalances.Economicproblemswereexacerbatedbythreebadharvests(1959-1961)withtheresultthatnationalincomeandthevolumeofforeigntradecontractedduring1960-1962ThewithdrawalofSovieteconomicandtechnicalaidintheearly-1960scausedtradetoshiftawayfromtheUSSRandComeconpartnertowardsJapanandWesternEurope.AconsistentthemeofChina’sforeigntradepolicieshasbeenthestrongemphasiswhichhasbeenplacedondevelopingtraderelationswiththeThirdWorldcountries.ThegrowthofforeigntradewasdisruptedagainduringtheculturalRevolution(1966-1976)whenagriculturalandindustrialproductionfellsharplyandtransportationconstraintsbecamemoreserious.ForeignTrade,whichhasamajorroleinthefourModernizationsprogramme,hasgrownrapidlyoverthepastfewyears.AmajortradeagreementwithJapan,underwhichChinaexportscoalandoilinreturnforindustrialequipmentandtechnologywassignedinFebruary1978.Chinaalsosignedalong-termtradeagreementwiththeEECin1978whiletradewiththeUSAhasincreasedrapidlyinthewakeofthenormalizationofdiplomaticrelationsatthebeginningof1979.TheSino-USAagreementontraderelations,whichcameintoforceinFebruary1980.AccordsChinaMost-favourednationtreatment.BreakdownAcommoditybreakdownofChina’stradeshowsthatfuelsaccountedfor24percentoftotalexportsin1982,foodproductsfor13percent,textilefibresandmineraloresfor7percentandmanufacturedgoods(themostimportantproductsweretextiles,chemicalsandmachineryandtransportequipment)for55percent.Sincethefoundingofthepeople’srepublicstrongemphasishasbeenplacedonimportingcapitalequipmentinordertostrengthentheindustrialsector.Buttheleadingcategoriesofimportsin1982werefood,whichaccountedfor22percentoftotal,lightmanufactureditemswithashareof20percentandmachineryandtransportequipmentwith17percent.DuringthepastfewyearsamajorobjectiveoftheChineseauthoritieshasbeentoreducetheproportionofagriculturalexports,whileincreasingthatofindustrialandmineralproducts.AwidevarietyofindustrialgoodsarenowexportedandChinesecapitalequipmenthasbeenusedbyanumberofdevelopingcountriestoestablishprojectsinareassuchasagriculture,forestry,lightindustry,foodprocessing,waterconservationandtransportandcommunications.TheBalanceShifts.TheUSdollarvalueofChineseexportsincreasedatanaveragerateofalmost18percentperannumbetween1978and1983,whileimportsincreasedbyapproximately11percentpereannum.Asaresult,thevisibletradesurplusrosesharplyfromUS$1.4billionin1981toUS$4.4billionin1982ANDus$3.7billionin1983.ExportsgrewmuchfasterthanimportsthisperiodnotonlybecauseofthestrongemphasisplacedonexportingbyChina’seconomicplanners,butalsobecauseanumberofindustrialprojectswerepostponedin1979.OfficialrecognitionthatforeigntechnologycouldplayamajorroleinmodernizingtheChineseeconomyhadcausedimportstorisebymorethan50percentin1978placingunduestrainonthenationaleconomy.Grainimportshavefallensharplyoverthepastfewyears-Chinabecameanetgrainexporterin194andin1983thecountrystartedtoexportsoyabeansandcotton.Thepatternofforeigntradegrowthwasreversedin1984;thevalueofexportsincreasedby10percent,butimportsjumped38percentwiththeresultthatthevisibletradeaccountwasindeficitbyUS$1.1billion.Thestrongincreaseinimportstyearsdotcyslsoesuccessfesedntpolicies.DirectionofTradeHongKongisChina’smajorexportmarketaccountingforapproximately26percentoftotalexportsin1983(thoughmuchisre-exportedtootherdestinationsfromthere).OtherimportantmarketsincludeJapan,withashareof20percentin1983,andeAhy8.essharefsssynd12percentoverthepastfewyears(theleadingexportmarketswithintheEuropeanCommunityareGermanyandUnitedKingdom),whileproportiondestinedforthecomeconcountriesdeclinedfromalmost15percentin1978to6percentin1983.Thenon-oildevelopingcountries(excludingHongKong)accountedfor23percentofChina’stotalexportsin1983.Insharpcontrastthedevelopingcountriesprovidedlessthan15percentofChina’simportsin1983.ThemostimportantsuppliersamongtheindustrialcountrieswereJapan,withashareof26percent,andtheUSAwith13percent.TheEEC’ssharein1983was15percentandthatofcomecon8.2percent.ThesuccessfuloutcometonegotiationsbetweenBritainandChinaaboutthefutureofHongKongwillstrengthenSino-Britishrelationsandisexpectedtoboosttradebetweenthetwocountries.AlargeBritisheconomicandtradedelegation,headedbyLordYoung,Ministerwithoutportfolio,visitedChinainMarch.ThevalueofChineseexportstoBritain,whichroserapidlybetween1977and1980,declinedin1981-1982,butrecoveredstronglyin1983;importsfromtheUnitedKingdomfollowedasimilarpattern.ThemostimportantChineseexportstoBritainin1983wereclothing,textilefibres,teaandfoodproductswhiletheleadingBritishexportsincludedironandsteel,machineryandtransportequipment,scientificinstruments,chemicalsandtextilefibres.Chineseofficialsstresstheimportanceofintroducingadvancedtechnologytodomesticindustry,buttheneedisfortechnologyofvaryingdegreesofsophistication,notnecessarilyforadvancedtechnologyasthattermisunderstoodintheWest.ReservesRiseTherearenoofficialstatisticscoveringtheinvisibleaccountofthebalanceofpayments,butthesizeofthevisibletradesurplusduring1981-1983andapronouncedincreaseinearningsfromtourismsuggestthatthecurrentaccounthasbeensurplusoverthepastfewyears.ForeignexchangereserveshaverisenrapidlyfromapproximatelyUS$2.5billionatend-1980toUS$17.0billion(sufficientforapproximatelyeightmonths’imports)byOctober1984.ApproximatelyUS$12billionofthecountry’sreservesareheldbythecentralbank,thepeople’sbankofChina,whilethebalanceiscontrolledbythebankofChinawhichspecializesinforeignexchangebusiness.Individualcitiesmusttrytobalancetheirforeignexchangeearningsandrequirements,butthereissomescopeforpurchasingadditionalforeignexchangewithRenminbiyuan.Theauthoritiesarewillingtopermitarun-downisthecountry’sinternationalreservesoverthenextfewyearsasameansofacceleratingtheintroductionofforeigntechnology.Chinahasshownamuchmoreflexibleapproachtoforeigntradeoverthepastfewyearsandhasadoptedaseriesofmeasuresdesignedtostrengtheninternationaleconomicco-operation.ForeigncountriesareencouragedtomountexhibitionsoftheirgoodsandChinaitselfhasparticipatedinanumberoftradefairsandexhibitionsheldabroad.Sincethelate1970sChinahasalsoadoptedforeigntradepracticeslong-establishedinmanyothercountries.Goodsareproducedaccordingtoasampleprovidedbycustomer,whilestrongencouragementisgiventocompensationtradewherebyaforeignsellersuppliesrawmaterialsandequipmentandreceivesmanufacturedgoods,producedbytheequipmentprovided,inreturn.Compensationtradediffersfrombarterorcounter-tradeinsofarasthereisadirectlinkbetweentheequipmentsuppliedfromabroadandmanufacturedproduct.Assemblymanufacturingbeganin1978andparticularformsofforeigntradeareeligibleexemptionfromcustomsdutiesandtaxation.InvestmentEncouragedAseriesofpolicesdesignedtoencourageforeigninvestmenthaveaccompaniedthesetradereforms.Alaoadoptedin1979definestheprinciplesgoverningtherightsandinterestsofparticipantsinjointventures.TheChinaInternationalTrustandInvestmentCorporation(CITIC),establishedin1979,co-ordinatesincomingforeigninvestment,promotesjointventuresbyassistingChineseandforeignenterprisestofindsuitablebusinesspartnersandalsohasresponsibilityfornegotiatingcontractsrelatingto100percentforeign-ownedenterprisesWhennegotiationsarecompleteandajointventurecontractbeenagreed,itissubmittedtotheministryofforeignEconomicRelationsandTradeforfinalapproval.China’scautiousapproachtoforeignborrowingistobemaintained,atleastforthetimebeing.ThedebtproblemsconfrontinganumberofdevelopingcountrieshavereinforcedChina’sdeterminationtointroduceforeigntechnologybymeansofdirectinvestmentandconcessionaryfinanceratherthanbyraisingsubstantialsumsofmoneyontheinternationalcapitalmarkets.Foreigninvestmentsisadvantageousinsofarasitfacilitatesthetransferoftechnologyandskillsandavoidscreatinganoverhangofdebt.Theauthoritiesdonotconsideritappropriatetoincurlargeamountsofex