SOAS Research Online

Abstract

This PhD thesis discusses Chinese trade and financial relations with Canada, Australia, Britain, Japan, France, West Germany, Mexico, Argentina, and the Netherlands in the context of the Beijing government's domestic economic problems and policies and also the US-led trade embargo against China over the period 1957 to 1963. By focussing on key trade negotiations and agreements between the Chinese and these non-Communist nations the thesis demonstrates the importance of these contacts in terms of the grain, agricultural, and petrochemical sectors of the Chinese economy. The thesis also shows the vital importance of this particular period of Chinese trade diplomacy with non-Communist nations. Trade diplomacy precipitated a 'credit race' among participants in the Chinese market and led to the breakdown of US-led trade controls against China. Despite China's grave economic situation, its negotiators were able to exploit competition among suppliers arising from surpluses and overproduction in non-Communist countries. In making use of recently declassified government archives in Canada, Australia, Britain and the US, the thesis examines a topic and period which has received little attention from historians and reaches several new conclusions. First, the 1961 to 1963 Chinese purchases of Western grain were a continuation of 'test purchases' which began in early 1958 in response to serious food shortages and famine that had begun to develop in 1957-58. These 'test purchases' were terminated during the Great Leap Forward from mid-1958. But in late 1960 Chen Yun, Zhou Enlai, and Li Xiannian became the chief architects of a new and expanded grain import policy which was also supported and encouraged by the PLA leadership. Secondly, beginning in April 1961, cash purchases were succeeded by the granting of medium-term credits of increasing duration which were instrumental in arresting deaths from starvation by early 1962, thus allowing the Chinese to implement economic policies aimed at 'readjustment'. Thirdly, beginning in autumn 1961, both the Chinese and US governments became internally divided over the possibility of negotiating Sino-American grain sales. The US government continued to be under pressure from the US 'China Lobby' and the Taiwanese government to maintain a firm stance against those calling for changes to US 'China policy'. With the conflict in Vietnam showing signs of worsening, the US government continued efforts at extraterritorial application of its Foreign Assets Control legislation. Washington's continued inflexibility with respect to the trade embargo against China increasingly caused friction in US-allied relations and contributed to the near breakdown by late 1963 of the US led controls on exports of non-military goods to China. Fourthly, it was necessary to relate China's need for grain imports to its determination in 1962-63 to improve its agricultural productivity on the basis of importing fertiliser, and equipment and technology required for fertiliser production. Fifthly, medium-term and long-term credits obtained to facilitate purchases of grain and fertiliser production equipment and technology respectively were instrumental in stabilising China's economic situation and vital to developing improved trade relations with non-Communist interests. The first chapter discusses Chinese grain shortages and the Chinese economy between 1953 and 1963. Chapters two through eight focus on the Chinese-Western grain trade while the final chapter discusses Chinese purchases of chemical fertiliser and chemical fertiliser production equipment and related technology which involves the larger question of Chinese economic planning in 1962-63.