1. Kreuger, Anne O., Foreign Trade Regimes and Economic Development: Liberalization Attempts and Consequences (Cambridge, Mass.: Ballinger Publishing Company, 1978).World Bank, World Development Report 1987 (New York: Oxford University Press, 1987).Michaely, Michael, Papageorgiou, Demetris and Choksi, Armeane M., Liberalizing Foreign Trade: Lessons of Experience in the Developing World (Cambridge, Mass.: Basil Blackwell, 1991).
2. Tradeable goods are goods that are actually traded or goods that would be traded if it were profitable to do so.
3. Feder, Gershon, “On exports and economic growth,” Journal of Development Economics, Nos. 1–2 (1983), pp. 59–73.
4. The two series also differ in other minor aspects.
5. Sung Yun-wing estimates that value added constitutes 20% of the gross value of export receipts earned in processing activities. “Explaining China's export drive: the only success among command economies,” unpublished paper, 1990, p. 19.
6. The General Agreement on Tariffs and Trade (in the annual International Trade), the International Monetary Fund (in the annual Direction of Trade Statistics Yearbook), and the World Bank (in the annual World Development Report) all use data of the Chinese Customs Administration as the basis for the statistical tables reporting China's trade data.
7. GATT, International Trade 1989–90, Vol. I (Geneva: GATT, 1990), pp. 28–30.
8. Lieberthal, Kenneth and Oksenberg, Michel, Policy Making in China: Leaders, Structures, and Processes (Princeton, New Jersey: Princeton University Press, 1988), p. 262.
9. Lardy, Nicholas R., Foreign Trade and Economic Reform in China, 1978–1990 (Cambridge: Cambridge University Press, 1992), pp. 95–96.
10. Lieberthal, and Oksenberg, , Policy Making in China, p. 260.
11. Editorial Board of the Almanac of China's Foreign Economic Relations and Trade, Almanac of China's Foreign Economic Relations and Trade 1989 (English edition) (Hong Kong: China Resources Advertising Co. Ltd., 1989), p. 361.
12. The average price China received per ton fell 21% from $185 in 1985 to $146 in 1990. State Statistical Bureau, Zhongguo tongji zhaiyao 1991 (A Statistical Survey of China 1991) (Beijing: Statistical Publishing House, 1991), p. 99. The change in the price of oil alone would have reduced the primary product share of exports to 47.8%, thus accounting for only one-tenth of the shrinkage of the share of primary product exports between 1985 and 1990. However, its influence was more significant in the short run. For example, the price per ton fell by 50% in 1986 to $92, contributing significantly to the sharp decline in the share of primary product exports in 1986 compared to the previous year. State Statistical Bureau, Zhongguo tongji zhaiyao 1987 (State Statistical Abstract 1987) (Beijing: Statistical Publishing House, 1987), p. 90.
13. Since the data in Table 4 are derived from Customs statistics in some sense they may overstate the rising share of manufactured goods in total exports. The Customs data on exports, as explained above, include the gross value of processed and assembled exports. These exports grew dramatically in the second half of the 1980s.
14. State Council National Industrial Census Leading Small Group Staff Office, Zhonghua renmin gongheguo 1985 nian gongye pucha ziliao (1985 Industrial Census of the People's Republic of China) (Beijing: Chinese Statistical Publishing House). The data used came from volume 3, pp. 90–121, 128–139, 204–235, published in March 1988. They cover all manufacturing establishments classified as independent accounting units regardless of the form of ownership. In 1988 these enterprises accounted for 85% of manufactured goods output. Rawski, Thomas G., “How fast has Chinese industry grown?” Research Paper Series No. 7, Socialist Economies Reform Unit, World Bank, 03 1991, p. 2.
15. Copies of the concordance are available from the author. It should be noted that the SITC scheme includes category S9, commodities not elsewhere classified, which includes mostly export processing and assembly activities. They cannot be assigned to specific industries. Thus the analysis below does not include them.
16. The only one of the 63 categories of exports more capital intensive was electric power, also classified as a primary product.
17. The correlation coefficient is — 0.29. Regressing the capital/labour ratio in production on the changes in exports of all categories produces a negative coefficient that is statistically different from zero at the 5% level. This relationship would be even stronger if processed and assembled exports, which are highly labour-intensive, could be taken into account. By 1990 re-exports of processed and assembled imports rose to $10.453 billion. The absolute increase in these exports between 1985 and 1990 exceeded that of any of the two-digit export categories analysed.
18. The share of China's export expansion accounted for by these five categories of exports is calculated on the basis of the export data reported by the Ministry of Foreign Economic Relations and Trade. This is the appropriate basis for measurement since, as noted above, the disaggregated export data being analysed excluded processing and assembly activities.
19. Disaggregated analysis cannot be done for the whole period since detailed trade data of the Chinese Customs Administration for the years before 1982 have not been publicly released. For 1982–84 for all export categories the correlation between export performance and capital intensity in production is positive but very weak. The correlation coefficient is +0.08. The estimated coefficient on the capital/labour ratio in alinear regression on changes in exports is positive but not significant, even at the 10% level.
20. Similar findings – that China's trade specialization in the early 1980s was not based on comparative advantage but that by the late 1980s China was exploiting its comparative advantage more fully – have been reported by Xiaogang, Zhang and Warr, Peter G., “China's trade patterns and comparative advantage,” in China: Trade and Reform (Canberra: Australian National University National Center for Development Studies, 1991), pp. 46–72. Their study is based on China's 1981 input-output table, which contains 14 sectors producing traded goods; estimates of relative Chinese domestic prices and world prices for these 14 sectors; and World Bank estimates of the shadow prices of primary factors. Compared to the present study the main advantage is that it takes into account the intermediate goods used in the production of exports. Its disadvantages are that it is based on far more aggregated trade data and that the World Bank estimates of shadow prices are “rough.”
21. Wenxiu, Sun, “A review and forecast of the reforms of the foreign trade system,” Jihua jingji yanjiu (Planned Economy Research), No. 8 (1989), p. 53.
22. World Bank, China: External Trade and Capital (Washington, D.C.: The World Bank, 1988), pp. 102–103.
23. State Council, “Notice concerning the report of opinions on reforming the foreign trade system,” in Bank of China Staff Office, Yijiubasi nian waihui gongzuo zhongyao wenjian xuanbian (A Compilation of Important Documents in 1984 Foreign Exchange Work) (Beijing: Chinese Banking Publishing House, 1986), pp. 173–74. Extracts of this document, which omit much important material, have been published in both Chinese and English. Editorial Board of the Almanac of China's Foreign Economic Relations and Trade, Almanac of China's Foreign Relations and Trade 1986 (Beijing: Ministry of Foreign Economic Relations and Trade Publishing House, 1986), pp. 29–32 and 388–392.
24. Lubman, Stanley, “Investment and export contracts in the People's Republic of China,” Brigham Young University Law Review, No. 3 (1988), p. 557.
25. Reporter, “We must firmly grasp and carry out the work of rectifying the various kinds of foreign trade corporations,” Guoji shangbao (International Business), 21 03 1990, p. 1; “The national work of rectifying foreign trade corporations is almost completed,” ibid. 1 September 1991, p. 1. Of the companies eliminated, 1,083 (36.6% of the original number) were under provincial, municipal or other local jurisdiction, 200 (15.4%) under the jurisdiction of special economic zones, and 119 (14.4%) subordinate to various national ministries.
26. Wenxiu, Sun, “A review and forecast of the reforms of the foreign trade system,” Jihua jingji yanjiu (Planned Economy Research), No. 8 (1989), pp. 53–54.
27. Working Party on China's Status as a Contracting Party, “China's foreign trade regime: note by the Secretariat,” (Geneva: General Agreement on Tariffs and Trade, 1988), p. 21.
28. Yuqing, Zhang and Hejun, Wang, “China's laws and regulations on foreign trade management,” Intertrade (03 1990), p. 7.
29. World Bank, China: Long-Term Issues and Options (Baltimore: The Johns Hopkins University Press, 1985), p. 17.
30. Contemporary China Series Editorial Board, Dangdai zhongguo de wujia (Contemporary China Commodity Prices) (Beijing: Social Sciences Publishing House, 1989), p. 226.
31. Jiaqin, Chen, “Marxist exchange rate theory and China's exchange rate policy,” Jingji lilun yu jingji guanti (Economic Theory and Economic Management), No. 6 (1989), p. 54. State Bureau of Commodity Prices, Ministry of Foreign Economic Relations and Trade, and Ministry of Finance, “Notice on issues in the domestic price formation of centrally financed imports,” in State Bureau of Commodity Prices Foreign Price Office, Zhongguo shewai jiage fagui yu zhengce zhinan (A Handbook of China's Policv and Laws on Foreign Prices) (Hong Kong: Hong Kong Main Culture Company, Ltd., 1988), p. 117.
32. State Bureau of Commodity Prices, Zhongguo wujia nianjian 1990 (Chinese Commodity Price Yearbook 1990) (Beijing: Chinese Commodity Price Publishing House, 1990), pp. 343–44.
33. State Bureau of Commodity Prices Foreign Price Office, “Foreign prices,” in State Bureau of Commodity Prices, Zhongguo wujia nianjian (1989) (Chinese Commodity Price Yearbook 1989) (Beijing: Chinese Commodity Price Publishing House, 1989), p. 162.
34. Lardy, , Foreign Trade and Economic Reform in China, 1978–1990, p. 163.
35. “Regulations concerning price issues,” Jiage lilun yu shijian (Price Theory and Practice), No. 1 (1991), p. 64.
36. Peixin, Yang, “Reform the foreign exchange system to stimulate foreign trade,” Shijiejingji daobao (World Economic Herald), 28 03 1988, p. 3.
37. van Brabant, Josef M., Exchange Rates in Eastern Europe: Types, Derivation and Application, World Bank Staff Working Papers No. 778 (Washington, D.C.: The World Bank, 1985), p. 5.
38. Kueh, Y. Y. and Howe, Christopher, “China's international trade: policy and organizational change and their place in the ‘economic readjustment’,” The China Quarterly, No. 100 (12 1984), pp. 844–45.Lardy, , Foreign Trade and Economic Reform in China, 1978–1990, pp. 25–26.
39. van Brabant, Josef M., The Planned Economies and International Economic Organizations (Cambridge: Cambridge University Press, 1991), pp. 78, 93, 107.
40. Department of the Treasury, “Report to the Congress on international economic and exchange rate policy,” (Washington, D.C.: Department of the Treasury, 05 1991), p. 24.
41. Lardy, , Foreign Trade and Economic Reform in China, 1978–1990, p. 54.
43. Mingshen, Shi, “Wo guo waihui xingshi haozhuan” (“China's foreign exchange situation changes for the better”), Renmin ribao, 23 01 1992, p. 2.
44. Xinhua, , “Central bank increases export oriented loans,” Foreign Broadcast Information Service, China: Daily Report, 22 01 1990, p. 2.
45. Fengying, Hu, “A brief account of China's new foreign trade system,” Shijie jingji yanjiu (World Economy Study), No. 3 (1991), p. 33. Hu also estimated that the volume of market transactions in foreign exchange for the year would be $16 billion, implying an estimate of central government purchases of foreign exchange at the market price but not through the market of $9 billion. Hu's estimate turned out to be low.
46. In the absence of other forms of protection, that provided to domestic producers of goods that compete with imports would have been reduced in many cases since the reforms of import pricing (i.e. shifting to pricing based on the world market) would have more than offset the effect of the higher domestic currency price of foreign exchange. However, in many sectors tariffs, quotas and other barriers still provide significant protection to Chinese impon competing industries.
47. Most published provincial trade data, including that for Guangdong, is compiled on the same principles as those used by the Ministry of Foreign Economic Relations and Trade. Thus in the analysis below where the growth of the province's exports is compared to the nation as a whole and where the province's exports are expressed as a share of national exports the calculations are based on the Ministry data in Table 1.
48. Guangdong Statistical Bureau, Guangdong tongji nianjian 1991 (Statistical Yearbook of Guangdong 1991) (Beijing: Chinese Statistical Publishing House, 1991), p. 303.State Statistical Bureau, Zhongguo tongji nianjian 1991 (Chinese Statistical Yearbook 1991) (Beijing: Statistical Publishing House, 1991), p. 97.Dezhi, Xu, “Guangdong foreign trade rises to all-time high,” China Daily Business Weekly, Spring Trade Fair supplement, 15 04 1992, p. 3. Xu is the director of the Guangdong Provincial Foreign Economic Relations and Trade Commission.
49. Vogel, Ezra F., One Step Ahead in China: Guangdong under Reform (Cambridge, Mass.: Harvard University Press, 1989), pp. 372–384.Lardy, , Foreign Trade and Economic Reform in China 1978–1990, pp. 126–136, 168.
50. The gross value of industrial output in 1988 in Guangdong was 105.077 billion yuan, in 1980 prices. In Shanghai it was 108.270 billion yuan, also in 1980 prices. Guangdong Statistical Bureau, Guangdong tongji nianjian 1991 (Statistical Yearbook of Guangdong 1991) (Beijing: Chinese Statistical Publishing House, 1991), p. 53. Shanghai Statistical Bureau, Shanghai tongji nianjian 1989 (Shanghai Statistical Yearbook 1989) (Beijing: Statistical Publishing House, 1989), p. 127.
51. Vogel, Ezra F., Canton under Communism: Programs and Politics in a Provincial Capital, 1949–1968 (Cambridge, Mass.: Harvard University Press, 1969), pp. 128–132.
52. “Guangdong takes lead in economic reform,” China Daily, 14 02 1992, p. 4.
53. Hong, Li, “Big firms to be forced into market mechanism,” China Daily, 28 02 1992, p. 1.
54. The value of output (measured in constant prices) in the textile and clothing industries fell 1% between 1985 and 1989 in Shanghai. Shanghai Statistical Bureau, Shanghai tongji nianjian 1990 (Shanghai Statistical Yearbook 1990) (Beijing: Chinese Statistical Publishing House, 1990), pp. 96–97. By contrast the value of output of these industries nationally more than tripled from 22.1 billion yuan to 76.8 billion yuan between 1985 and 1989. State Statistical Bureau, Zhongguo tongji zhaiyao 1991 (A Statistical Survey of China 1991) (Beijing: State Statistical Publishing House, 1991), p. 66. The national data are in current prices so overstate the growth of output somewhat. However, there is no doubt that national output grew substantially over this period and the relative role of Shanghai in the industry shrank dramatically.
55. Shujie, Liu, “A research report on the issue of dual track pricing of coal,” Zhongguo wujia (China Price), No. 1 (1991), p. 29.
56. Guangdong and Shanghai respectively paid 148.0 and 39.9 yuan per ton for state allocated coal and 252.0 and 210.0 yuan per ton for coal purchased on the market. Ibid. p. 30.
57. In the mid-1980s, foreign invested firms in Guangdong typically included standby power generation equipment in their plants. By the late 1980s local supplies of power were sufficiently reliable that such facilities were not usually included in new joint venture plants in South China.
58. Among other local sources were bonds specifically issued by Guangzhou municipality to finance electric power projects. Wallich, Christine I., “Recent developments in China's financial sector: financial instruments and markets,” in Dorn, James A. and Xi, Wang (eds.), Economic Reform in China: Problems and Prospects (Chicago: University of Chicago Press, 1989), pp. 140–41.
59. Guangdong's annual electric power outpur rose from 16.7 billion kilowatt hours in 1985 to 34.4 billion kilowatt hours in 1990. Guangdong Statistical Bureau, Guangdong tongji nianjian 1991 (Statistical Yearbook of Guangdong 1991) (Beijing: Chinese Statistical Publishing House, 1991), p. 161. In addition Guangdong imported electric power from Hong Kong.
60. Shanghai's production rose from 25.63 billion kilowatt hours in 1985 to 28.4 billion kilowatt hours in 1990. Shanghai Municipal Statistical Bureau, Shanghai Statistical Yearbook 1991 (Concise edition) (Beijing: China Statistical Publishing House, 1991), p. 73. The municipality may have been able to draw on the East China regional grid to bring in electric power generated in adjacent provinces. Booming industrial production in some of these provinces, notably Jiangsu, may have limited these transfers.
61. Guangdong Statistical Bureau, Statistical Yearbook of Guangdong 1991 (Beijing: Chinese Statistical Publishing House, 1991), p. 53. State Statistical Bureau, Chinese Statistical Yearbook 1991 (Beijing: Statistical Publishing House, 1991), pp. 55.
62. Guangdong Statistical Bureau, Guangdong Statistical Yearbook 1990, p. 384; Statistical Yearbook of Guangdong, 1991, pp. 304, 309.
63. Shanghai Statistical Bureau, Shanghai Statistical Yearbook 1990, pp. 91–92; Shanghai Statistical Yearbook 1991, p. 64.
64. World Bank, China: Between Plan and Market (Washington, D.C.: The World Bank, 1991), pp. 21–22.
65. Hai, Song, “Macroperspective reflections on the reform of China's foreign exchange management system,” Jingji yu guanli yanjiu (Research on Economics and Management), No. 1 (1988) reprinted in Caizheng, jinrong (Finance, Banking), No. 3 (1988), p. 143.
66. The Chinese Economy in 1990 and 1991: Uncertain Recovery (Washington, D.C.: Central Intelligence Agency, 1991), pp. 27–31.
69. Department of the Treasury, “Report to the Congress on international economic and exchange rate policy,” p. 25.
70. Erin Endean, McGuire, “China's foreign commercial relations,” in China's Economic Dilemmas in the 1990s: The Problems of Reforms, Modernization, and Interdependence, Study Papers submitted to the Joint Economic Committee, Congress of the United States, Vol. 2 (Washington, D.C.: United States Government Printing Office, 1991), p. 769 and official U.S. Department of Commerce data on imports from China and data on China's total exports from the General Customs Administration. Chinese data on sales to the United States are of little value since they exclude Chinese goods re-exported to the United States through Hong Kong. In 1989, for example, Chinese data show sales of $4.39 billion whereas the Department of Commerce reported imports from China of $11.989 billion. For more discussion of this problem in analysing bilateral imbalances in U.S.-China trade see Lardy, Nicholas R., “Redefining U.S.-China economic relations,” Analysis Monograph Series No. 5. (Seattle, Washington: National Bureau of Asian and Soviet Research, 06 1991).
71. Japanese External Trade Organization, China Newsletter, No. 61 (03–04 1986), pp. 23–24; No. 91 (March–April 1991), pp. 23–24; No. 97 (March–April 1992), pp. 22–23.
72. Bush, George, letter to Senator Max Baucus, 19 07 1991, p. 3.
73. Lardy, , Foreign Trade and Economic Reform in China, 1978–1990, pp. 136–141.
