China's prereform foreign trade regime, which was borrowed from the Soviet Union in the 1950s, should be regarded as an extreme example of import substitution. This is evident in official policy statements, the organization of foreign trade, the domestic pricing of traded goods, the role of the exchange rate, the system of centralized control of foreign exchange, and in the pattern of imports and exports. The Minister of Foreign Trade summed it up in 1955 when he said “Export is for import and import is for the country's socialist industrialization” (Ye Jizhuang in Mah 1968, 672). The director of the Ministry's Import Bureau was even more specific, stating in 1955 that “the purpose of importing more industrial equipment from the Soviet Union is to lay the foundation of China's industrial independence, so that in the future China can produce all of the producer goods it needs and will not have to rely on imports from the outside” (Zhang Huadong in Mah 1968, 672–3). Seldom has an import substitution strategy been set forth so explicitly.

Organization of foreign trade

The organization of foreign trade reflected the import substitution regime adopted in the 1950s. Foreign trade was heavily controlled by the state even in the early 1950s, because the communist regime took over the foreign trade corporations, which had played a significant role in China's foreign trade under the Nationalist Party.