Foreign Trade and Investment

David J. Pyle
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David J. Pyle: Faculty of Social Sciences

Chapter 5 in China’s Economy, 1997, pp 103-124 from Palgrave Macmillan

Abstract: Abstract Both foreign trade and inward foreign direct investment were literally forced upon the Chinese in the nineteenth century, following the Opium Wars and the Treaty of Nanjing in 1842 (see Chapter 2). After the declaration of a Communist state (1949), involvement in foreign trade and with foreign inward investment changed quite dramatically. During much of the 1950s China was in conflict with the USA and the West generally and turned to the Soviet Union as its main trading partner and for aid with investment. This had a marked effect upon the way that the foreign trade system was developed (see section 5.2). Also, China’s earlier domination by foreign powers had soured Chinese attitudes to foreign direct investment which was essentially discouraged. However, China (or more accurately, Mao) fell out with the Soviet Union in the late 1950s. This caused a shift towards Western European trading partners, a move that was further encouraged by the need to import both foodstuffs and capital following the disastrous events of the Great Leap Forward. Nevertheless, this warming to the West was reversed during the Cultural Revolution, when everything Western (that is, capitalist) was regarded with disdain, if not outright contempt. Indeed, during this period foreign investment was completely outlawed (Howell, 1993) and China essentially turned its back on the rest of the world.

Keywords: Foreign Direct Investment; Foreign Trade; Joint Venturis; Foreign Firm; Chinese Firm (search for similar items in EconPapers)
Date: 1997
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DOI: 10.1007/978-1-349-25802-4_5

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