368 { China’s Quest
didn’t trade much, and not only because of ideological preferences for autarky
and self-reliance. Its entire Soviet-derived economic system was heavily bi-
ased against foreign trade.
China’s new economic engineers understood and sought to emulate the
success of Japan and the Four Tigers, which had promoted exports to gen-
erate foreign currency which was then used to import advanced machinery
and equipment. Decentralization of foreign trade authority to the provinces
was one of the first and most important reforms in the area of foreign trade.^34
In 1979, when reform was beginning, China had twelve foreign trade compa-
nies (FTC) under the Ministry of Foreign Trade and Economic Cooperation
(MOFTEC). Each FTC had a monopoly on trade in a particular range of
products. In 1979, these monopolies were abolished by granting the power
to establish foreign trade companies and conduct foreign trade to provincial
governments and, if the provincial governments desired, to cities under the
province’s administration. Authority to engage in foreign trade went to lower
levels of government, not to private individuals or companies. By decentral-
izing foreign trade authority to provincial and city governments, Deng was,
once again, creating within the state a constituency with a vested interest in
opening and reform. In effect, Deng was going around China’s central organs,
where control-minded planners and state-owned heavy industry dominated,
and empowering provinces and localities to push ahead with reform and
opening as they were able. In 1986, there were about 800 foreign trade compa-
nies. By 1987, there were 5,000.^35 PRC trade began to grow rapidly, as indicated
by Figure 13-1, showing trade from 1950 to 2011. Prior to opening and under
a planned economy, China traded little, and there was little growth in trade.
A revolutionary change began in 1979, when China’s two-way trade began to250000200000150000100000
100 Million Yuan5000001950195419581962196619701974197819821986199019941998200220062010Total TradeF IGU R E 13-1 PRC Foreign Trade, 1950–2011
Source: Xin zhongguo wushi nian tong ji ziliao huibian (Comprehensive statistical data and matierals on 50 years of
new China), (China Statistics Press: Beijing, 1999), p. 60.