Brothers in Arms (68 page)

Read Brothers in Arms Online

Authors: Odd Arne Westad

Tags: #Political Science, #International Relations, #General, #test

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other new democratic countries are not in a position to buy from us or sell to us will we do some business with capitalist countries."

24

In instructions to the North China Bureau and the Tianjin and Beiping City committees on the same day, the Central Committee pointed out that "in order to quickly recover and develop new China's national economy, . . . we should start new China's foreign trade immediately." It directed the setting up of a Bureau of Foreign Trade immediately to administer all foreign trade "in accordance with our needs and capabilities." If possible and necessary, the bureau would send representatives to and establish commercial offices in the Soviet Union and other socialist countries. The bureau was also to consider and decide on:
(a) the goods that can be imported, or imported with high tariff, or the goods that are banned to import; (b) the goods that can be exported, or exported with high tariff, or the goods that are banned to export; (c) tax rate for imported and exported goods; (d) how to have our domestic production and trade units adjust so as to meet the special requirement of import and export; (e) how to design an import and export plan to meet the needs of import and export and internal domestic economy, to adjust the trade for the purpose of saving foreign currencies, and to decide with which country such trade relationships should be established.
The new government would announce procedures and rules to regulate "domestic and foreign ships entering harbor; berthing at wharf; loading and unloading goods; renting a wharf, going through customs tariff and receiving examination, currency exchange, punishment on smugglers, tax evaders, and violators." In order to increase exports to the Soviet Union, the Central Committee directed all local governments to "pay [special] attention to the production of such important exportable goods as cotton, soy bean, coal, salt, peanut, tobacco, silk, bristles, fur, and other handicraft products."
25
The Sino-Soviet trade agreement of April 19, 1950, formalized the patterns of trade between the two countries.
26
Having dispersed forever with the "old imperialist trade," the CCP propaganda stressed, New China's foreign trade was "based completely on our country's economic needs" and was under a very "reasonable price system," thus making such a trade "mutually beneficial."
27
However, discontent among the CCP leaders regarding the economic policies existed and grew rather rapidly. As low-price commodities, the Chinese complained, a large amount of Chinese agriculture products and raw materials could

 

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be bartered for only a small number of Soviet machines and other industrial goods. Moreover, all the prices were fixed at the time when contracts were signed and thus would not fluctuate according to the world market. Therefore, according to a customs report in 1951, many Soviet items were merely slightly cheaper than comparable items on the world market.

28
Although the CCP leaders kept reminding the Soviet officials of Stalin's promise, they were somewhat disturbed that China did not receive due compensation from the Soviet government.
29

With regard to economic assistance, the CCP leaders could have asked more from the Soviet Union but chose not to. In early 1950, the Kremlin agreed to provide $300 million in loans over five years at only 1 percent per annum interest. This was what Mao had originally expected. He calculated on January 3, 1950, that "it will be appropriate for our own sake not to borrow too much in [the] next few years."
30
Mao, who came from a Chinese peasant family, believed that loans were debts and that debts ought to be paid back sooner or later. He was also fearful that by providing larger loans, Moscow would be able to expand its influence over China's "domestic" affairs.
31
Pressing economic problems, however, compelled the CCP to take full advantage of the Soviet economic aid. Beijing used the loan to reconstruct energy, machinery, and defense industries mainly in the Northeast (Manchuria). As a first step, it adopted a plan to build or ameliorate a total of fifty projects (later changed to forty-seven) in the spring of 1950, ten were in coal mining, eleven in electric power, three in iron and steel, three in nonferrous metal, five in chemical engineering, seven in machinery, seven in the defense industry, and one in paper manufacturing. As many as thirty-six of these projects were to be located in the Northeast. Complete sets of machines, equipment, materials, and technology would be purchased from the Soviet Union on credit.
32
Nevertheless, the outbreak of the Korean War and subsequent Chinese intervention shattered plans for the implementation of the planned projects. Only in early 1953, when the war stalemated, did Moscow agree to resume the aid program.
33
More disappointing to the Chinese was the fact that during the war, Beijing had to use a huge portion of the Soviet loan to purchase arms, ammunition, and other military equipment needed to sustain China's military intervention in Korea. As the Soviets failed to send troops to Korea, the Chinese felt that Moscow should not have charged them for the military supplies, which, recalled the former People's Liberation Army (PLA) chief of staff, Xu Xiangqian, were always delayed and often too poor in quality to be of any use.
34
Moreover, the Chinese were annoyed that they were being charged for the rebuilding of the damaged heavy industries in the Northeast industries the Soviet Red Army had

 

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ransacked during its occupation there in 1945 and 1946. Moscow, in fact, should return the captured machines and equipment. The CCP leaders felt that the Soviets were riding roughshod over them.

35

The CCP leaders faced a more serious challenge to their nationalist sentiments when the Soviets insisted on the establishment of four joint ventures in China. In March 1950 Moscow agreed to assist in China's oil and nonferrous metal manufacturing, but it wanted at least 50 percent of the ownership, share at least 50 percent of the profits, and take charge of the general management. With little bargaining power, China had to accept all these conditions. Shortly thereafter, two other joint venture projects one on civil aviation, the other on ship manufacturing came into being with the same terms.
36
These "joint ventures" led the Chinese to suspect that the Soviets were trying to take advantage of China's difficult situation. Remembering how imperial Russia had attempted to expand its economic influence in China, Beijing saw the Soviet leaders continuing to practice the old czarist "imperialism" toward China.
37
These feelings developed further during the Korean War. As the West intensified its trade embargo against the Soviet bloc, Moscow was in great need of metals such as tin, zinc, tungsten, antimony, aluminum, and molybdenum. At Moscow's request, China shipped all its rare metals to the Soviet Union. In late summer 1952 Beijing also accepted Stalin's demand that China build a rubber plant on the islands of Hainan to help the Soviet bloc to "crash the imperialist blockade" on strategic materials. At the same time, the CCP purchased for the Soviet Union a large amount of badly needed rubber from Sri Lanka.
38
Although Beijing was doing the Soviet Union great favors, the Chinese felt, Moscow did not appear a bit appreciative.
Another issue that stirred resentment concerned Soviet advisors. The CCP leadership initially had high expectations of Soviet expertise. Its regime needed experienced advisors to assist not only in economic reconstruction but in military upgrading. As early as July 1949, Liu Shaoqi submitted a request directly to Stalin that the Soviet Union dispatch to China both economic and military advisors. With Stalin's endorsement, a large number of Soviet military advisors went to China by the end of that year: as many as 878 air force experts went to train PLA pilots, and a total of 90 naval experts arrived to help the PLA establish a modern navy.
39
Shortly afterward, a small pioneer group of Soviet economic experts went to China to "investigate China's needs for economic aid." After Moscow agreed to help China to build forty-seven industrial projects, as many as sixteen advisory groups arrived in 1950. Another twenty-six groups were sent to China's Northeast in the following year, their main mission to design and manage the "reconstruction-aid [
yuan jian
]" projects.
40

 

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Chinese enjoyment of the help these Soviet advisors offered was diminished because the Soviet comrades required special privileges in China. In response to Liu Shaoqi's request for the Soviet advisors, Stalin personally stipulated that
(a) [China] has to guarantee that all the [Soviet] experts will be provided with full living and working conditions, namely, they must be paid reasonably well and supplied with the best possible houses and offices; (b) the spouses of those advisors working in China (even if they choose to stay in the Soviet Union) will be paid by the Chinese government with a certain amount of stipend; when they go to China to visit, the Chinese side must be responsible for their travel and stay; (c) the length of time for the [Soviet] experts to work in China will be determined on the basis of needs and actual circumstances; (d) if the Soviet personnel commit any errors or violates any [Chinese] rules, they will be subject to the Soviet jurisdiction, and the Chinese side has no [legal] authority over [the Soviet people who are working in China].

41

Stalin repeated these stipulations during his meetings with Mao in Moscow and also stressed that unless China complied with these rules, Moscow would not send advisors. With his staunch determination to abolish the humiliating "imperialistic extraterritoriality" that China had endured in the past, Mao could hardly believe that Stalin would impose such humiliating rules on his regime. He came to believe, his Russian-language interpreter Shi Zhe recalls, that "[although a Georgian,] Stalin's Pan-Russianism is even more strongly expressed than the Russian people. Lenin's criticism of Stalin on this aspect in the past has thus proved absolutely correct." Despite his bitterness, however, Mao chose not to challenge Stalin but to reserve his right to object.
42
Mao's main desire for an alliance relationship with Moscow was to secure a Soviet commitment to China's security. For economic reconstruction, he understood that China could not and, perhaps, should not rely merely on Soviet assistance. To restore and remold the nation's economy, CCP propaganda asserted in March 1950, a combination of three forces would work best: first, "the existing means of production and, especially, the inexhaustible labor [supply] of our country"; second, "the valiant and industrious [Chinese] peasants" whose productivity would "not only guarantee supplies for the cities but provide enough surplus goods to be bartered for the things we need"; and third, "the favorable Soviet loan by which we get a fresh supply of machine parts and equipment."
43
While this was the best that the CCP could hope for, Beijing tried to strike as good a deal as possible with Moscow.

 

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