The Common Program of the People's Republic of China 1949-1954

The Common Program is formulated in such a way that maximum flexibility regarding the development of the economy is possible. Articles 54-56 stipulate that the PRC can develop friendship with non-Soviet and even imperialist nations. These articles contradict the statement of Mao Zedong that China will not take the middle road, but will ‘lean to one side’. However, the economic, ideological and political reality forces the Chinese leaders to take a more pragmatic view. The political leaders of the CCP have to deviate from traditional Marxist theory. Socialism can only be accomplished by a revolution. Mao Zedong states: "the proportions of industry and agriculture in the entire national economy of China were, modern industry about 10 per cent, and agriculture and handicrafts about 90 per cent. This was the result of imperialist and feudal oppression; this was the economic expression of the semi-colonial and semi-feudal character of the society of old China; and this is our basic point of departure for all questions during the period of the Chinese revolution and for a fairly long period after victory. This gives rise to a series of problems regarding our Party's strategy, tactics and policy…The two basic policies of the state in the economic struggle will be regulation of capital at home and control of foreign trade." In other words, the proletariat class is too small and is not capable of conducting a socialist revolution at this moment.
The economic situation compels the new regime to rely on essential materials from Western countries, because the SU cannot supply them.. On February 16, 1949, the CCP issues an instruction on foreign trade policy: "The basic guideline of our foreign trade is that we should export to and import from the Soviet Union and other new democratic countries so long as they need what we can offer or they can offer what we need. Only in the situation that the Soviet Union and other new democratic countries are not in a position to buy from us or sell to us will we do some business with capitalist countries."
Therefore, Article 57 of the Common Program states: the People's Republic of China may restore and develop commercial relations with foreign governments and peoples on the basis of equality and mutual benefit.
Fig. 37.1: Trade shares of People's Republic of China (%)
Source: Sun (1968). Trade between mainland china and japan under the 'l-t'agreements. Page 59

Some concrete steps are taken. For the time being, private management of the import and export trade is allowed. Foreign firms are allowed to set up offices in China. "To develop a wider range of exportable materials, local governments were directed by the Central Committee to pay attention to developing exportable staple crops and products such as cotton, soy beans, salt, peanuts, tobacco, silk, fur, exportable handicrafts and manufactured goods. Loans and other incentives were to be used to encourage the increased production of exportable goods The GAC of the CPG promulgated the "Interim Rules for the Administration of Foreign Trade" on December 8, 1950, and the Trade Ministry of the Central People's Government (later renamed the Ministry of Foreign Trade) applied the licensing system to all import and export commodities from May 1951.
Right from the start, the new regime decides "... that imports of industrial-related equipment and technology were top priority and that traditional methods, within a new institutional framework, would be sufficient to generate adequate agricultural growth to meet industrial targets. Essentially, the Chinese needed to export enough foodstuff, textiles and light industrial goods to pay for necessary material, equipment and technology imports." Import duties were moderate or nonexisting for industrial equipment, raw materials, and other products essential for the development of heavy industry. Protective tariffs are levied on the imports of consumer goods. Production for exports always presides over production for domestic consumption. However, the government has to import Western grain because the domestic production is too low. Wheat is less expensive and contains higher protein than rice. Therefore, rice is exported and wheat is imported. Mao Zedong wants to become less dependent on these imports and suggests distributing grain rationally and to increase domestic production. The Central government accounts for this grain shortage by blaming black-market sales and hoarding.
On December 22, 1949, while Mao Zedong was in Moscow, he sent a telegram to the CC of the CCP, in which he stressed the necessity of trading with other countries (Germany, GB and the US) besides with the SU.

After the thirty-year Sino-Soviet treaty was signed on February 14, 1950, The Coordinating Committee of the Consultative Group (COCOM) decided in March 1950 to apply the same trade controls on China as on the SU and Eastern Bloc. After China participated in the Korea War, the China Committee (CHICOM) was established with the aim to restrict international trade with China, Hong Kong, and Macau. China, like all other communist countries (except Yugoslavia) lost its US most-favored nation status in 1951.
The CHICOM embargo list was about two times longer than the COCOM list. Neutral countries such as Sweden and Switzerland, as well India, Pakistan, Burma, Indonesia, Afghanistan and the Arabian League were not members of the embargo club. The Chicom embargo seriously affects HK trade to PCR in volume and percentage. However, in the beginning of 1953 West European countries are increasing their export to the PCR The founding of the Sino-Polish Joint shipping company in Tianjin in 1951 was an attempt to undermine the embargo. See Article 36

The new government starts immediately by monopolizing the external trade, and all private elements are disposed of. Former middlemen between the foreign merchants and the Chinese traders could only keep working if they worked on behalf of the state trading companies. On March 10, 1950, the government established 6 state foreign trade corporations: Bristles Corporation, the Native Produce Export Corporation, the Oils and Fats Corporation, the Import Corporation, the Tea Corporation, and the Minerals Corporation. Soon 5 more corporations were established China Petroleum Corporation, the China Egg Products Corporation, the China Silk Corporation, the China Skin and Fur Corporation, and the China Industrial Material and Equipment Corporation. In 1954 the list expanded with 4 corporations: The China National Foodstuffs Export Corporation, the China National Cereals and Oils Export Corporation, the China Silk Export Corporation, and the China Miscellaneous Articles Export Corporation. All of these corporations have offices in important cities throughout the mainland. They are separate legal entities; each corporation is a separate accounting unit and operate as a separate company. the corporation is not a consuming or producing unit-it is a middleman in the planned economy. The Ministry of Foreign Trade supervises and controls the corporations.
In 1950, the government controlled 70% of imports and 54% of exports. In 1953, the numbers had increased to 92%. In the early 50’s, the intention and the organization of foreign trade of the government are distinctly socialist. ownership has still a dual character, however, also going in the direction of collective ownership. On March 10, 1950, the GAC promulgated Decisions on the Procedures Governing the Unification of State-Operated Trade in the Nation, and it describes the objectives of the government. "unifying trade throughout the country, guiding the domestic market, adjusting the supply and demand of commodities at both national and local levels, and promoting the rapid recovery and development of productive enterprises. Thus, economic growth and state control were seen as closely intertwined." In other words, trade should leave the path of free trade and to become unified and support the socialist economy.
In August 1952, the Ministry of Trade was divided into 2 ministries, one for internal and one for external trade. The foreign trade ministry has several corporations under control, like The China national Animal By-Products Imports and Export Corporation, like The China national Arts and Craft Imports and Export Corporation, and The China National Cereals, Oils Imports and Export Corporation.
Skřivan (2017) remarks "This system, however, also demonstrated a clear disadvantage, which became evident particularly in trade relations with democratic countries and to a smaller extent also with communist countries, and that was weak direct ties between the purchasing and selling parties. Companies from Western countries were in effect precluded from direct contact with Chinese producers (or recipients), which along with other factors considerably complicated trade with the PRC. Due to this system the flow of information in trade between the PRC and other communist countries was more complicated and slower.5"
The Committee for the Promotion of International Trade (PIT) is established in 1952 as an independent organ to establish contacts with foreign firms (of countries with no official ties with the PCR), to organize exhibitions of Chinese products in foreign countries, especially in Hong Kong, and inviting non-governmental trade delegations to China. The PIT is allowed to sign contracts and agreements, it is a non-governmental economic and trade organization composed of representatives and experts from the P.R.C.'s economic and trade circles. (Its board of directors includes officials from the MOFERT, the Bank of China, and other relevant departments.) One of the first success is the signing on June 1, 1952 " initial private trade agreement with Japan which provided for £30 million in goods to be bartered before the end of the year. Although only about 5 per cent of this amount was traded because the Japanese refused to sell the Chinese embargoed items such as special steel, tin, locomotives, cranes and trucks, it enabled Beijing to obtain some essential items such as chemical fertilizer in exchange for coal. The agreement sparked greater Japanese interest in the Chinese market, placing Tokyo under pressure to re-examine its China trade Restrictions." See also Article 56

The new government faced an "….ongoing fight against coastal illicit trade, in particular, Kong struck a decidedly more cautious tone that betrayed concern: ‘Although the customs’ anti-smuggling work has achieved much success nationwide, the smuggling situation remains serious.’ 1 Even in the face of ever-tightening state strictures, commodities of all kinds continued flowing freely along the Chinese littoral and filtering into the heartland." However, smuggling "…helped meet the daily needs of many individuals and firms—private, joint state–private, helped meet the daily needs of many individuals and firms—private, joint state–private,… Shortly after the outbreak of the Korean War, for instance, high-level leaders including Zhou Enlai and Bo Yibo called for ‘organized mass smuggling’ (zuzhi qunzhong zousi) in South China to circumvent the United Nations embargo to secure desperately needed materiel including fuel, medicine, and industrial hardware.12" The main smuggling areas are along the coast, with Shanghai, Tianjin, Xiamen, Shantou and Guangzhou, but the primary source of smuggled goods came from the colonial enclaves Hong Kong and Macau.

The newly formed General Customs Administration, founded on October 19, 1949, still kept several employees who had worked for the GMD administration, like the former Deputy Inspector
Ding Guitang,
Ding Guitang (1891-1962). Inspector general (1943-1957) Rev.GMD Member first NPC
. At the beginning they were valued for their technical and administrative expertise. During the Sanfan, several staff members are fired. On April 18, 1951, the Provisional Customs Law was promulgated. The law stressed the importance of differentiating between major and minor cases of smuggling. Major smuggling was seen as counter revolutionary activities. However, most smugglers were not political motivated but by economics. Throughout Wufan, the public was urged to help fight smuggling and the People’s Courts held public trials and rallies for accused smugglers. The government was less lenient to traffickers who were officials.
Two groups are treated with lenience, Overseas Chinese and minorities. Overseas Chinese were allowed to enter China with some personal goods duty free. "Many travellers and returnees thus sought to profit (or even survive) by taking advantage of their politically privileged and separate status as well as their ties to foreign markets. Despite official exhortations that continued well into the 1960s encouraging them to turn instead to state-run units, many Overseas Chinese continued to rely on illicit channels to meet their needs. 60." Minorities are allowed to exchange commodities of daily necessities in small volumes in and out of China tax free.
Despite all measures the administration took, "Smuggled consumer products continued to be openly peddled in Shanghai markets well into the 1960s even after various anti-smuggling campaigns, while similar black markets operated in other cities including Guangzhou and Tianjin.79 They attracted buyers from all walks of life,..."

International trade...

Fig. 37.2: International trade PRC 1950-1954

The nature of the trade is changing from daily necessities to production goods. Production goods needed for the construction of a socialist economy. The Sino-Soviet agreement of 1950 provided the PCR with a credit of $ 300 million "The credits and interest on them would be repayed by the PRC through deliveries of raw materials, tea, gold, and American dollars. Prices for raw materials and tea, quantities and dates of deliveries would be fixed by special agreement, with prices again geared to world market prices." However, a big part of the loan is used for purchase of war material for the Korea War and for expanding and rebuilding of the defense industry. Besides money, the SU also provided technical and technological documentation for the production of military equipment. In the period between 1949-1954 the trade balance of the PCR is negative, the import of production goods exceeds the export, so a part has to be financed by SU loans. On October 12, 1954, the SU and PCR signed a new agreement in which the SU provided China with a credit of 520 million rubles to finance the construction of 15 new industrial enterprises and the expansion of 141 enterprises already under construction. See Summary of 156 projects

"Agricultural produce-ranging from tea, silk and vegetable oils to cereals and hides-continues to dominate Chinese exports, although the proportion of non-ferrous and scarce metals in total exports- antimony, molybdenum, wolfram etc. has increased. Exports of pig iron and coking coal, which formerly went to Japan, are now exported to the USSR and Eastern Europe" The export of PRC is in the first 2 years limited to agricultural products from the north and north-eastern regions. After the gradual restoration of the infrastructure, the export increased and "By 1952, nonferrous metals from the south and south-western areas of China occupied top place in the roster of Soviet imports from the PRC and the list of agricultural products now also expanded as the resources of China's central and southern provinces were tapped. 14" Particularly in a province like Xinjiang, which is close to the border with the SU and rich in minerals, the change in trade volumes which took place, is abundantly clear.
Fig. 37.3: Change in trade SU-China

Region 1

Soviet Union
On April 19, 1950, the first trade agreement between the SU and the PCR is signed, to emphasize the importance of the deal a ceremony was staged in Beijing on September 30, 1950. One of conditions is that prices for goods featured in Soviet-Chinese trade will be set in rubles on the basis of the prices existing on the world market. The preceding year served as an index for fixing prices. See article 4 of the agreement. In September 1949, the first commercial transactions between the SU and China were concluded. The North China Foreign Trade Company and Soviet foreign trade organizations came to an agreement to mutual deliver goods worth 31 million rubles. Given the poor transport situation in 1950, the bulk of the export to the SU were agricultural products from the north and northeast of China, later on, from 1952 onwards when the new regime had full control over the mainland, nonferrous metals from the south and southwest became the main export products. In addition, agricultural products from central and southern China became available for export.
Fig. 37.4: Trade with SU

Hong Kong
Already in February 1949, a group of Chinese merchants in Singapore set up a barter deal with China. Shipments of rubber from Malaya were shipped to Hong Kong in exchange for soya beans from Northeast China.
Fig. 37.5: Trade with Hong Kong

"After 1951, Mainland China reaps an enormous amount of export surplus in her trade with Hong Kong and this surplus forms an important portion of foreign exchange for her to cover her trade deficits elsewhere end to repair her external debts."
On December 3, 1950, the US administration introduced a complete embargo for PRC, Hong Kong and Macau. The US asked her allies to do the same. The UK government tried a different approach for Hong Kong. In the aftermath of the International Economic Conference in Moscow not only the PCR established the PIT (see above ) but also a Chinese Council for the Promotion of International Trade was founded. The members of both councils had close ties with Chinese-British trade companies before 1949. The UK refused to implement shipping controls. "In fact, because of Hong Kong, British business had never severed its ties with mainland China. Shipment companies registered in Hong Kong, Singapore, Liberia, and Panama supported the ‘transformation’ of British or Chinese goods into something else, making it difficult to trace their real origins and allowing trade via Hong Kong to continue. It is true that many of the shipment companies showed the British flag, but around 50 per cent of shipment services for Socialist China’s trade were covered by cargoes and vessels flying the Greek flag.59"
Shao (1991) remarks "By the second half of 1950 it was clear that the Chinese government's trading was well represented in Hong Kong. There were trading, banking and other corporations which the new government took over from the old regime, along with their stock and personnel. Later it also established entirely new firms as branches of Beijing, Tianjin, Shanghai and Guangzhou organisations. Some firms were founded as Hong Kong companies, with or without direct or overt official connections. It appeared that these new organisations had made themselves successfully known and many European firms preferred to deal with them rather than continue with old contacts. "
Fig. 37.6: China's export to Hong Kong 1952-1954 (%)

India Pakistan
The main product India export to China are jute products. The trade with Pakistan consists largely of the export of raw cotton and jute and the import of cotton twist and yarn. Wang (1973) notices a political motive regarding foreign trade " In 1951, when India was facing a severe famine, China supplied India with a large quantity of rice under a barter arrangement. According to the June 8, 1952, issue of Jen min jih pao, an agreement was signed in the fall of 1951 between China and India which stated that China was to supply India with 66,000 tons of rice and 442,000 tons of sorghum. On May 26, 1952, a second agreement was signed for 100,000 tons of rice, and on October 13, 1952, a third agreement was signed for 50,000 tons of rice. From 1952, the volume of trade between the P.R.C. and India increased very rapidly until 1956, when it reached a plateau. It seems likely that this trade had considerable influence on India's position in the international arena in regard to matters affecting the P.R.C."
Fig. 37.7: Trade with India and pakistan

Region 2

In the 1950s, the US government dictated the foreign policy of Japan. The US-Japan Security Treaty signed on September 8, 1951, gave the Japanese few possibilities to make official contacts with the PCR.
In 1952, the Council for Furthering Japanese-Chinese Trade started its activities. This was a private organization organized by Japanese businessmen. On June 1, 1952, and October 29, 1953, trade agreements were concluded with the People's Republic of China. These agreement were valid for one year. The goods China exports are coal, iron ore, but the most important is rice. Japan delivers chemicals, equipment, and transportation media. " Under the terms of each of the first three Sino-Japanese trade agreements, the total volume of twoway trade provided for sixty million pounds sterling,45 but for the first agreement, the actual transactions only amounted to 5.05 per cent of the total sum; for the second, 38.8 per cent; ... Peking blamed the United States for the Japanese failure to fulfill the trade obligations but had no legal recourse to force the Japanese government to remedy the situation.47"
Fig. 37.8: Trade with Japan

Ceylon Singapore
Fig. 37.9: Trade with Ceylon and Singapore

On October4, 1952, Ceylon and PRC made a trade agreement about a rubber-rice barter. Ceylon was affected by a worldwide rice shortage and a severe drop in rubber prices. China had a surplus in rice and a shortage on natural rubber due to the embargo.

Region 3

The Eastern Europe countries did not have an independent policy towards the Chinese government. They acted in line with the directives of the SU. The main directive of this policy is to aid a ‘brotherly’ nation. Skřivan (2012) remarks "In the 1950s, the Beijing government was to some extent aware of this “non-independence” of Czechoslovak politics towards the PRC and clearly did not expect any diversions in the Czechoslovak-Chinese relations from the model of the Sino-Soviet relations. 44 Thus in a way, this state of affairs was convenient for both the Czechoslovaks and Chinese."
This observation can be applied to all Eastern Europe countries under SU control.
Fig. 37.10: Trade with Communist countries

In 1950 the trade balance was positive, 70 million US$, in 1951 it became negative -50; 1952: -105; 1953: -215 and in 1954 -205
Fig. 37.11: Trade with Poland and Czechoslovakia

Poland expands his merchant fleet to export railway equipment, steel and tractors from the SU and other East Bloc countries, on the route to China, the ships load rubber at Ceylon. Officially the China-Polish Joint Shipping Company was established on 29 January 1951 in Beijing and went into effect in June of that year. Each side agreed to contribute six ships and establish head offices in Gdynia and Tianjin (later moved to Shanghai) The ownership of the Chinese ships was kept confidential. Both governments had a 50% share. The company started with 4 old vessels. Poland was placed third after the GDR and Czechoslovakia as trade partner of the PRC.
Like other East Bloc countries, Czechoslovakia helped Beijing overcome the problems arising from the trade embargo. Czechoslovakia became an important trade partner in relatively advanced technologies and in deliveries of military equipment. Machinery, trucks, and pipes were among the main commodities exported to the People's Republic of China. On May 6, 1952, an agreement concerning scientific and technical co-operation was signed.

Region 4

Source: Yamanouchi Kazuo (1965). Changes in markets in Chinese foreign trade and their background. Page 297 The twelve Westem European countries are Austria,Belgium and Luxemburg,Denmark,Finland,France,Italy,Netherlands,Norway,Sweden,Switzerland,UK,and West Gemany. US dollars
Trade with Western countries includes, vegetable oil, oil seeds, tea, wool, silk and foodstuff. Import tractors, electric power equipment, machine tools, chemical products. Wheat is imported from Canada and Australia in 1953 and 1954. In 1953 Belgium, Luxemburg, and FRG export chemical fertilizers. Finland exports paper and wood pulp. Switzerland exports dye, textile machinery, and medicines.
"...both West Germany and China recognized the importance of each other’s products. For the Federal Republic, China was simply too important as a source of raw materials. Some materials such as tungsten and soybean could simply find no comparable substitutes outside China. Others such as bristle and egg yolk could be imported from China at a lower price.62 In China, the quality of the West German products attracted the communist government to do business." Trade between the two countries took place in a indirect way, all goods outbound to and inbound from China had to go through third countries.

Fig. 37.12: Trade with United Kingdom and Federal Republic of Germany

From June 28 till July 9, 1954, a Chinese trade mission visited the UK. "They were given specific instructions by the authorities in Beijing to explain China's good faith and desire to normalise trade with Britain, and to be even-handed towards various British trade groups. The mission held discussions with about 25 trade associations, visited some 19 works, attended two well-arranged exhibitions, and held business talks with 56 firms."
Fig. 37.13: Summary of the value of merchandise consigned from China to UK 1949-1954
Source: Shao Wenguang (1991). China, Britain and businessmen: political and commercial relations, 1949-57. Page 65
Class I: food, drink and tobacco Class II: raw materials and articles mainly unmanufactured Class III: articles wholly or mainly manufactured Total: including miscellaneous items
Belgium France and Italy
Fig. 37.14: Trade with Belgium France and Italy

Wang (1971) considers the deal between France and the PRC in 1954 political motivated. "France sold one million tons of wheat to China, in a transaction which France found economically profitable. This transaction helped pave the way toward French diplomatic recognition of the People's Republic of China."

US Canada
In 1950, after the start of the Korean War, the trade between the PRC and US and Canada is almost nihil.
Fig. 37.15: Trade with US and Canada

Region 5

In 1953 and 1954 Argentina exports wheat to China, it was limited a trade (non-governmental only). "In parallel with the lack of political relations, China's trade relations with the countries of the region in the early 1950s was also limited. Between 1950 and 1955, China's total trade volume with the countries of the region (namely Iran, Iraq, Kuwait, Oman, Saudi Arabia, and Yemen) amounted to only US$1.7 million. Chinese imports constituted over 75 per cent of that Total."

The trade with Egypt consisted mainly of cotton import.
Fig. 37.16: trade with Egypt 1950-1954

The periodic market, the peddler, and the urban shop constituted the basis of the traditional commercial structure in China. Farmers paid in-kind the rents to the landowners. Merchant transported them to market towns. Transportation was difficult, caused by mud-clogged roads, poorly maintained waterways and railways and storage facilities were inadequate. However, the merchants had a monopoly on information about market prices and they had the money to overcome difficult periods and wait for better prices. The lack of standardization in weights and measures, the difference in quality of goods and the absence of fixed prices gave the merchants plenty of possibilities to manipulate the market.
Ecklund (1963) notices Although, "…the relative share of the private sector in total economic activity decreased from 1949 to 1953, there was a substantial increase in the absolute volume of private industrial production and of retail trade. It may be argued that a large part of this increase in private business was the result of recovery from the war. Nevertheless, the fact that the Communists permitted the value of private industrial production to double, and of private retail trade to increase by 40 percent, reveals to some extent their high dependence on the private sector during this period."
To tackle these problem, starting in 1949, the authorities tried to persuade private businessmen to join “joint public-private enterprises” see Article 33. The new regime deployed a divide and rule tactic by making a distinction between reliable traders and those speculating merchants. The latter are punished and during sanfan and wufan eliminated as a group. The shortage of cadres forced the government to employ private merchants as state trade cadres, especially in the southwest. These cadres used their old network and actions. "..., the behavior they employed included the range of 'corrupt practices -monopolizing, manipulating prices, speculating and hoarding, and tampering with weights and quality-that the still unmodernized economic and technological structure in the countryside permitted."
November 14, 1950, the trade department of the GAC issued 'Instructions on Banning Speculative Trade': 'All those who practice the types of behavior listed below must be seen as speculators disturbing the market and such behavior must be severely banned:
(1) Engaging in commerce in goods outside the sphere that has been approved by the people's government;
(2) Doing transactions outside designated markets;
(3) Stockpiling and reselling raw materials, refusing to sell goods that concern the people's livelihood or that are daily necessities, seeking 'usurious profits,' or inducing inflation, thereby influencing the people's production or livelihood;
(4) Buying long and selling short and planning for a "usurious profit";
(5) Intentionally raising prices, creating a shopping rush or selling out certain goods and spreading rumors that will stimulate price inflation;
(6) Not respecting local people's governments' regulations on commercial administration methods and disturbing the market;
(7) Using counterfeit, forged, adulterated or illegal commodity specifications or any other kind of fraudulent behavior in seeking illicit profits;
(8) Engaging in any kind of speculative activities.'
Fig. 37.17: Retail trade 1950-1953

Fig. 37.18: Wholesale trade 1950-1953

On November 23, 1953, the GAC decided to follow the SU example and abolished the free marketing of major crops (grain, cotton and oil-bearing crops). Agriculture and consumer products were bought and sold at fixed prices. The government was the sole buyer of these crops. Production targets fixed basic quotas for a period of 3 to 5 years. All production above the targets shall also be sold to the government after negotiation, the free market being excluded. The authorities started to train and instruct a selected group of cadres in keeping records and began standardization of scales and measures. At the end of 1954 private wholesalers were responsible for only 10.2 percent of the total volume of business on the market. Industries, restaurants and food stands, which relied on grain were also dependent on state supply. They received their supply according to target or production plan.
Age and occupation determined the access to consumer goods, which were rationed on a monthly or annually basis for registered urban citizens. This measure evoked protests: "When informed that some residents would receive more grain than others based on presumed differences in levels of physical exertion required in various occupations, people complained about arbitrary unfairness: workers in large factories with more than one hundred employees would receive nine kilograms of flour per month, while those in smaller factories would get six kilograms. “Since we are all members of the working class,” some party members said, “might two different ration levels affect the unity of the working class?” Others remarked, “After liberation the standard of living went up. Why is it going down now?”25"
Unified purchase includes a second category with a wide range of agricultural products; like sugar, tobacco, pigs, wool, hides and skin. Also, medicinal products belong to this category. Production above the target levels, can be sold to the government after negotiation, and on the free market. The third category with no compulsory quotas for the goods includes vegetables and fruits, and some industrial crops. "However, as long-distance trading was not permitted for producers, government agencies had dominant power in marketing those goods, especially in industrial crops, and hence were able to set price to a large extent."
The Chinese industry has to rely on the internal market, because as seen above, the SU is limited in providing goods, and the Cocom restricts the import of essential goods. "… it is not surprising that the CCP quickly moved from an earlier pattern of regional autarchy on to the plane of relative national autarchy. In the border regions, the CCP advocated "sell native produce and boycott foreign goods" (...), and in the early 1950s the Party held aloft "taking domestic sales as primary and foreign sales for support" (..). ...the primary policy emphasis was on the development of domestic markets as outlets for China's native products."

In 1950, there are about 11 million overseas Chinese. On the mainland, there are about 30 million qiaojuan (Overseas Chinese dependents and/or relatives). Right from the start, the new government takes control over the flow of funds, the ‘foreign exchange market’ and the circulation of gold, silver, diamonds, and foreign currency. Strict rules are introduced. "To encourage citizens to deposit foreign currency into BOC, the government also issued coupons in lieu of remittance receipts which made the holder eligible to buy valuable goods like bicycles, cooking oil, and other consumer products in state-run stores usually reserved for Party officials and foreign visitors."
The Overseas Chinese Affairs Commission (OCAC) chairwoman, He Xiangning seeks the revitalization of huaqiao remittances and tries to persuade them to buy ‘Chinese People’s Victory Bond'.
As of 1952, the Bank of China and the People's Bank of China had the cash flow almost completely under control. The OCAC takes measurement to improve the cashflow of the Overseas Chinese to the homeland. One of these measurements is the establishment of Overseas Chinese investment companies.
These companies increase the supervision on the remittance. "The 1950s also saw a steady stream of Overseas Chinese commercial and industrial delegations visiting China to scout out opportunities for trade and investment. Known officially as ‘sightseeing delegations’ these were usually made up of representatives of what were described as Overseas Chinese ‘commercial and industrial Circles’ Many were from Hong Kong and Macao, but over time an increasing number were from other places as well, especially Indonesia, Singapore, Burma and even the US and Canada (when the Singapore Chamber of Commerce organized one such ‘sightseeing tour' to China in 1956, the delegation was officially received in Beijing by Tan Kah Kee).78"
Fig. 37.19: Remittance 1950-1954

Foreign countries, with the US and Canadian authorities taking the lead, impose restrictions on financial transactions with China. These actions have major effect on the amount of money Overseas Chinese send to the People's Republic of China.
The members of the family who stay behind on the mainland, are often obliged to hire manpower to be able to exploit the farmland. There are considerable differences in the size of the Overseas Chinese agricultural land, ranging from 34 mu to 2500 mu. During the land reform campaign, their class status is determined as “landlord” and they are often the victim of popular fury. "The incidence of violent persecution of Overseas Chinese appears to have risen markedly following the arrival of the northern cadres and the ensuing ‘rectification' of the provincial Party apparatus, which began in April 1952.89 The following month Hong Kong newspapers reported that Taishan county authorities had ordered the execution of some thirty landlords, ‘including many Returned Overseas Chinese’.90 In the following weeks and months, Hong Kong newspapers reported regularly on the execution of Overseas Chinese landlords and suicides committed by distressed Overseas Chinese." See for the position of the women left behind Article 6.
Some local authorities tried to protects these families, but in the early months of 1952, Mao Zedong sent
Tao Zhu
Tao Zhu (1908-1969)
to Guangdong to end this safeguard and to accelerate the Land Reform in South China. More than 6000 cadres are dismissed. Lim (2016) argues "The competition that the qiaowu (Overseas Chinese affairs) practitioners confronted in the 1950s was not so much with ideological factions in the CCP leadership, but with its local membership. For most of the 1950s, the highest-echelons of the Chinese party-state approved of prioritising economic imperatives in qiaowu. Yet, the conflict between qiaowu and the ‘ideological approach’ was mostly at a lower level, because of local cadres and officials who could not accept, or understand youdai (preferential treatment) policies. It was not, therefore, that qiaowu competed with more-ideological factions within the CCP; it was rather that the CCP attempted to practice qiaowu (and youdai) in contradiction to its own ideological impetuses. 48 It was thus not that the CCP had ‘conflicting approaches’ to its qiaowu, as much as the party-state’s qiaowu was in contradiction to its own quest for socialist transformation." December 1954, the class status of the Overseas Chinese families is changed to ‘middle farmers’. February 23, 1955, the government decides to validate the remittance and the acceptance of this money has no consequence for the class status of the recipient.
The political and economic role of the Overseas Chinese has gradually become less important. Partly caused “…Land Reform of 1950-1953 probably had the most far reaching effect because it greatly weakened the binding strength of the community due to the elimination of the ownership of large land holdings, especially clan land, and confiscation of land owned by overseas families. As the lineages began to disintegrate, loyalty among Chinese emigrants towards their families and lineages started to lose its basic foundation.” The Zhenfan (see Article 7), the Sanfan (see Article 18), and the Wufan (see chapter 4) also have a great negative impact on the value of the remittances that are sent to the PRC.

The CCP Central Committee, “Instructions on Problems Concerning Foreign Trade Policy,” February 16, 1949 Cited in Chen (1994). Pages 12-13 [↩] [Cite]
O'Brien (2004). Page 108 [↩] [Cite]
Mitcham (2005). Page 4 [↩] [Cite]
a.k.a. ‘the Paris Group, created in 1949 with the following countries: Belgium, Canada (1950), Denmark (1950), France, West Germany (1950), Greece (1953), Italy, Japan (1953), Luxembourg, Netherlands, Norway (1950), Portugal (1952), Turkey (1953), United Kingdom, and United States. Its purpose is to inhibit the transfer of military or dual use technologies to the SU and Eastern Bloc countries. The counterpart is the Council for Mutual Economic Assistance or Comecon (January 1949). The members included SU, Bulgaria, Czechoslovakia, Hungary, Poland, Romania, Albania and, East Germany. Although the PRC wanted to become a member, Stalin refused. Libbey (2010) remarks "The explanations for Comecon’s birth are only vaguely related to the notion of a common market. First, and most obviously, the group gave substance and organization to the Soviet Union’s economic war with Yugoslavia. This war had a side benefit of providing the institutional means of excluding Yugoslavia’s disease of independence from Eastern Europe’s economic development." Libbey (2010). Page 141 [↩] [Cite]
"The lists were divided into four categories or classes. Class 1 included all military goods such as guns, ammunition or tanks, or machinery for their manufacture, such as special machine tools and extrusion presses, electronic equipment, vacuum tube machinery, blast furnaces, oil drilling equipment, tractors, trucks, merchant ships, and all strategic chemicals such as benzine, sodium, mercury, all nitrates and nitric acid, tin, zinc, lead and copper. Class 1A included military and semi-military items such as radio equipment, ultra-violet equipment, broad-band communication equipment and large pressure vessels. Class 2 contained products of industrial potential to the East such as road-building equipment, excavators, engines, steel, cast-iron and plate glass. In Class 3 were items regarded as important in maintaining the basic economy such as office machinery, plumbing equipment, needles and matches. Class 4 was the catch-all category embracing all items not elsewhere listed." Cain (1995). Page 34 [↩] [Cite]
Most-favored-nation status guarantees a nondiscriminatory US tariff rate to the foreign exporter. [↩]
A large part of the increased imports consisted of steel and iron products and machinery from France and FRG. Synthetic textile, fibers from Italy. The UK exported more industrial and chemical fertilizers and also wool and textile machinery. November 1949: 86, November 1951: 270, January 1952: 285, March 1954: 265, August 1954: 170 items were on the COCOM list.
Fig. 37.20: Volume of import in 1st part of 1952 compared with 1st part of 1953
Wang (1973). Pages 196-197 [↩] [Cite]
Solinger (1980). Page 200 [↩] [Cite]
The China Publication Centre, which is not a corporation, is responsible for the export of books and periodicals. Officially, they are not considered a trading corporation and therefore, not directly under the Ministry of External Trade." Hung (1968). Page 5-10 [↩] [Cite]
Skřivan (2017). Page 167 [↩] [Cite]
In 1952, the China Committee for Promotion of International Trade compiles "New Chinas Economic Achievements 1949-1952." [↩]
Mitcham (2005). Page 6 [↩] [Cite]
Thai (2017). Page 2 [↩] [Cite]
Thai (2017). Pages 2-3 [↩] [Cite]
"...creating the first truly independent customs office in Chinese history – since its establishment in the nineteenth century it had always been under British control." Carrai (2019). Page 156 [↩] [Cite]
Thai (2017). Pages 20 [↩] [Cite]
Thai (2017). Page 25 [↩] [Cite]
Ginsburgs (1976). Page 7 [↩] [Cite]
Scott (1958). Page 157 [↩] [Cite]
Ginsburgs (1976). Pages 26-27 [↩] [Cite]
Hung (1968). Page 3-5 Hung continues "As a matter of fact, Mainland. China does not earn foreign exchange from Hong Kong by merchandise trade only. Part of the foreign exchange which is not shown by the trade statistics is derived from her invisible incomes from Hong Kong … in the forms of oversea remittances and food parcels etc." Page 3-7 see also Article 58 [↩] [Cite]
The conference was held from 3 to 12 April 1952. Despite a boycott by Western governments, it was attended by 471 individuals from 49 states. "As a result of the Conference, Peking entered into $160,000,000 (United States dollars) worth of trade agreements and contracts with England, France, and other European, Latin American, and Asian countries." Hsiao (1968). Page 306 [↩] [Cite]
Peruzzi (2017). Page 32 [↩] [Cite]
Shao (1991). Page 43 [↩] [Cite]
Wang (1973). Page 186 [↩] [Cite]
Hsiao (1968). Pages 631-632. "A memorandum attached to the second agreement, October 29, 1953, stated: "The Contracting Parties agreed to exchange trade missions; Japan will establish her permanent trade mission in China when China's permanent trade mission has been established in Japan."83" Page 638 [↩] [Cite]
Skřivan (2012). Page 740 [↩] [Cite]
"To do so, the venture would appear simply as a shipping brokerage firm and Chipolbrok ships would officially belong to the Polish Ocean Lines, have Polish names, and operate under the Polish flag." Gnoinska (2019). Page 196 See also Pages 197-198 about the difficulties during the embargo period [↩] [Cite]
Ching (2006). Page 185 [↩] [Cite]
Shao (1991). Page 159 [↩] [Cite]
Wang (1973). Page 186 note 12 [↩] [Cite]
Huwaidin (2002). Page 97 [↩] [Cite]
Ecklund (1963). Page 242 [↩] [Cite]
Solinger (1979). Page 186 [↩] [Cite]
Solinger (1979). Page 194 [↩] [Cite]
Brown (2012). Page 35 [↩] [Cite]
Zhong (2004). Page 6 [↩] [Cite]
Keith (1979). Page 281 [↩] [Cite]
Ritenour (2005). Page 5 [↩] [Cite]
He Xiangning in a directive to Tan Kah Kee states: (i) To use many methods to spread the news as broadly and as far as possible to the haiwai huaqiao regarding the underlying principle and motive behind this bond issue. (ii) To encourage the huaqiao to subscribe to the issue and not be casual bystanders. (iii) To use the qiaojuan to approach their family and relatives overseas to subscribe because the dividends can be directed towards their family in China, and so too the bond certificates.91. Cited in Lim (2016). Page 64 [↩] [Cite]
February 1951, the South China Enterprise Company is founded to stimulate investments by businessmen from Hong Kong and Macao. Private capital finances for seventy percent this private-state company. The state controls the firm. [↩]
Peterson (2013). Page 96 [↩] [Cite]
Article 24 of the Land reform law deals with the land and houses of the Overseas Chinese. 30-06-1950 The Agrarian Reform law.30-06-1950 Decisions concerning the differentiation of class status in the countryside. November 6 1950 special measurements are proclaimed to regulate the land reform for Overseas Chinese “…made it difficult to assign class designations to Overseas Chinese. It is not surprising that the practices of dealing with property of Overseas Chinese underwent such fluctuation during the course of land reform.” Vogel (1969). Page 40. [Cite] Peterson states "The CCP view of the Overseas Chinese vacillated, from local capitalists and feudal exploiters" (during the investigation of class status during land reform) to "labouring people" and members of a patriotic united front. Bureaucratic confusion and organizational difficulties paralleled this confusion of image and policymaking: local cadres were unsure of whether to exploit class differences and promote class struggle amongst the domestic Overseas Chinese, or smooth over class divisions in the interests of maintaining the united front. Peterson (1979). Page 167 [↩] [Cite]
"Popular resentment of the privileges enjoyed by transnational families was easily manipulated by village officials who themselves were under considerable pressure from above to make violent class struggle the focal point of Land Reform. Indeed, the experience of transnational families during Land Reform provides one of the earliest examples of how post-1949 Maoist revolutionary culture stigmatised not only private wealth but all forms of social and cultural difference that could be identified as “foreign” [ yang]." Peterson (2007). Page 35.[Cite] See also Ravenholt (1951). [↩] [Cite]
Peterson (2013). Page 51 [↩] [Cite]
Lim (2016). Page 30 [↩] [Cite]
Peterson (1988) Pages 309-335. The families are allowed to use the remittance for traditional marriages and funerals. They are also allowed to buy special consumer goods, which are not generally available. They are a privileged class. This ends in 1957 [↩] [Cite]
Choi (1975). Chinese Migration and Settlement in Australia. Pages 57-58 [↩] [Cite]

27-02-1948 Mao Zedong "On the policy concerning industry and commerce"
16-02-1949 Liu Shaoqi "Start foreign trade immediately"
27-02-1948 Mao Zedong "On the policy concerning industry and commerce"
20-04-1949 Liu Shaoqi Speech with officials responsible for domestic and foreign trade
01-01-1950 Chen Yun "Industry and commerce in Shanghai"
10-03-1950 GAC Decisions on Procedures Governing the Unification of State-Operated Trade
15-06-1950 Chen Yun "The current situation and measures for readjusting industry, commerce and taxation"
12-09-1950 Interim Regulations on Foreign Trade Administration
07-12-1950 State monopoly of the purchase of cotton yarn and cloth
08-12-1950 Interim Regulations on the Administration of Foreign Trade
01-06-1951 Calling upon the peasants to sell cotton to the state
20-07-1951 Chen Yun "Improving the work in the federations of industry and commerce"
25-06-1953 Chen Yun "The system for distributing grain"
02-10-1953 Enlarged PB meeting
10-10-1953 - 12-10-1953 National conference on planned purchasing and marketing of grain
10-10-1953 Chen Yun "Esteblishing state monopoly of the purchase and marketing of grain"
13-10-1953 Chen Yun "Measures to ensure a sufficient supply of cooking oil"
23-11-1953 Decision of the GAC on the Implementation of the Planned Purchase and Planned Supply of Grain
28-11-1953 Chen Yun "Increasing production and sale of non-staple food"
25-07-1954 Constitution of the SMC
13-07-1954 Chen Yun "Thightening control over the market and transforming private commerce"
23-09-1954 Chen Yun "Some ideas about the system of planned purchase and supply

Chapter 4 of Common Program