Opening to the Outside World } 371
commercially successful, further increasing the economic links between
their new and ancestral homes. Plugged into these powerful currents of
international trade, and far away from China’s imperial capital in Beijing,
Guangdong developed an oceanic and commercial culture distinct from the
more government-centric and continental culture of North China.^40
All this came to a stop with China’s transition to socialism after 1949.
China’s “bourgeoisie,” which had organized earlier trade, was “eliminated as
a class,” and foreign trade was centralized under foreign trade monopolies as
described earlier. Yet, in a strange re-emergence of a practice abandoned after
the First Opium War, Guangzhou was established as the sole venue for trade
between China and the West. An annual Canton Trade Fair was initiated in
1957 with spring and fall sessions of about three weeks each, when foreign
businesses interested in buying or selling could come, examine goods dis-
played in hundreds of stalls, and negotiate with representatives of state-owned
trading companies operating under close party and governmental supervi-
sion. Whatever profits resulted from that trade was taken by the center. The
similarity between the Canton Trade Fair of 1957 to 1979 with the Canton
system of trade that functioned prior to 1842 is striking. Both characterized
periods when China closed itself off from the world.
Guangdong had good reason to seize opportunities offered by the center’s
new approach. Guangdong had received little investment via the central plan-
ning process in the 1950s–1970s. The province was on the front line and vul-
nerable to attack or invasion by the United States or the Chinese Nationalists.
With the Americans ensconced in Taiwan, the Philippines, and South
Vietnam, and with preparation for war with the United States a constant pri-
ority during the pre-1971 era, China’s planners considered it prudent not to lo-
cate new industrial facilities in the vulnerable front line. Other old industrial
areas like Shanghai or Manchuria were also vulnerable to foreign threat, but
they at least had the offsetting advantage of having a large, already established
industrial base that yielded large returns on whatever investment the central
planners chose to allocate there. Guangdong had not been a major indus-
trial area before 1949 and lacked even this advantage. Consequently, under
the planning system, when new investment came via the plan, Guangdong
received very little.^41
Guangdong did have one immense potential advantage: Hong Kong. By
the late 1970s, there was a strong meshing of the comparative advantages of
Hong Kong and Guangdong province. Land and labor costs in Hong Kong
were rising by the late 1970s, putting sharp pressure on Hong Kong businesses
exporting to highly competitive global markets. Just across the border in the
PRC, labor and land were cheap. Guangdong was contiguous with Hong Kong
and linked by a common variety of the Chinese language, the Guangdong di-
alect known as Cantonese, as different from spoken Mandarin as German is
from English.