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China FOREIGN TRADE
History of Chinese Foreign Trade
Chinese foreign trade began as early as the Western Han dynasty
(206 B.C.-A.D. 9), when the famous "silk route" through Central
Asia was pioneered by Chinese envoys
(see The Imperial Era
, ch. 1).
During later dynasties, Chinese ships traded throughout maritime
Asia, reaching as far as the African coast, while caravans extended
trade contacts in Central Asia and into the Middle East. Foreign
trade was never a major economic activity, however, and Chinese
emperors considered the country to be entirely self-sufficient.
During parts of the Ming (1368-1644) and Qing (1644-1911)
dynasties, trade was officially discouraged.
In the nineteenth century, European nations used military force
to initiate sustained trade with China. From the time of the Opium
War (1839-42) until the founding of the People's Republic in 1949,
various Western countries and, starting in the 1890s, Japan
compelled China to agree to a series of unequal treaties that
enabled foreigners to establish essentially autonomous economic
bases and operate with privileged status in China. Foreign
privileges were abolished when the People's Republic came into
being
(see Emergence of Modern China
, ch. 1).
Foreign trade did not account for a large part of the Chinese
economy for the first thirty years of the People's Republic. As in
most large, continental countries, the amount of commerce with
other nations was small relative to domestic economic activity.
During the 1950s and 1960s, the total value of foreign trade was
only about 2 percent of the gross national product (GNP). In the
1970s trade grew rapidly but in 1979 still amounted to only about
6 percent of GNP.
The importance of foreign trade in this period, however, far
exceeded its volume. Foreign imports alleviated temporary but
critical shortages of food, cotton, and other agricultural products
as well as long-term deficiencies in a number of essential items,
including raw materials such as chrome and manufactured goods such
as chemical fertilizer and finished steel products. The acquisition
of foreign plants and equipment enabled China to utilize the more
advanced technology of developed countries to speed its own
technological growth and economic development.
During the 1950s China imported Soviet plants and equipment for
the development program of the First Five-Year Plan (1953-57). At
the same time, the Chinese government expanded exports of
agricultural products to repay loans that financed the imports
(see The First Five-Year Plan
, ch. 5). Total trade peaked at the
equivalent of US$4.3 billion in 1959, but a sudden decline in
agricultural production in 1959-61 required China's leaders to
suspend further imports of machinery to purchase foreign grain.
Under a policy of "self-reliance," in 1962 total trade declined to
US$2.7 billion. As the economy revived in the mid-1960s, plants and
equipment again were ordered from foreign suppliers, and
substantial growth in foreign trade was planned. But in the late
1960s, the chaos and antiforeign activities of the
Cultural Revolution
(1966-76; see Glossary)
caused trade again to decline.
The pragmatic modernization drive led by party leaders Zhou
Enlai and Deng Xiaoping and China's growing contacts with Western
nations resulted in a sharp acceleration of trade in the early
1970s. Imports of modern plants and equipment were particularly
emphasized, and after 1973 oil became an increasingly important
export. Trade more than doubled between 1970 and 1975, reaching
US$13.9 billion. Growth in this period was about 9 percent a year.
As a proportion of GNP, trade grew from 1.7 percent in 1970 to 3.9
percent in 1975. In 1976 the atmosphere of uncertainty resulting
from the death of Mao and pressure from the
Gang of Four (see Glossary),
whose members opposed reliance on foreign technology,
brought another decline in trade.
Beginning in the late 1970s, China reversed the Maoist economic
development strategy and, by the early 1980s, had committed itself
to a policy of being more open to the outside world and widening
foreign economic relations and trade. The opening up policy led to
the reorganization and decentralization of foreign trade
institutions, the adoption of a legal framework to facilitate
foreign economic relations and trade, direct foreign investment,
the creation of
special economic zones (see Glossary)
and "open
cities," the rapid expansion of foreign trade, the importation of
foreign technology and management methods, involvement in
international financial markets, and participation in international
foreign economic organizations. These changes not only benefited
the Chinese economy but also integrated China into the world
economy. In 1979 Chinese trade totaled US$27.7 billion--6 percent
of China's GNP but only 0.7 percent of total world trade. In 1985
Chinese foreign trade rose to US$70.8 billion, representing 20
percent of China's GNP and 2 percent of total world trade and
putting China sixteenth in world trade rankings.
Data as of July 1987
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