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A Study of the Rouble-Yuan Exchange Rate

Published online by Cambridge University Press:  17 February 2009

Kang Chao  and
Feng-Hwa Mah
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Extract

It is generally known that the exchange rates in Soviet-type economies are disequilibrium exchange rates in the sense that without controls they do not tend to lead to a balance on the international current accounts. Of the two economies involved, it is also known that these exchange rates are unrealistic, in the sense that they have no relation to the gold content of currencies involved, if the currencies have a gold content, and that these rates do not reflect the relative domestic purchasing power of the two currencies on internationally traded commodities. In the case of the exchange rate between the Soviet rouble and the Communist Chinese yuan, even this disequilibrium and unrealistic exchange rate has in the main been veiled in secrecy since 1950. This secrecy has caused considerable difficulties in working with the Communist foreign trade statistics.

Type
Research Article
Information
The China Quarterly , Volume 17 , March 1964 , pp. 192 - 204
Copyright
Copyright © The China Quarterly 1964

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References

1 For more detailed discussion of the nature of the exchange rates in Soviet-type economics, see Holzman, Franklyn D., “Some Financial Aspects of Soviet Foreign Trade,” in U.S. Congress Joint Economic Committee, Comparisons of the United States and Soviet Economies, Part II, 1962, pp. 427–428Google Scholar; Pryor, Frederic L., The Communist Foreign Trade System(Cambridge: The M.I.T. Press, 1963), pp. 237–240.Google Scholar

2 The precise rate estimated by Li is 1 rouble = 2·177 yuan. See Choh-Ming, Li, Economic Development of Communist China(Berkeley: University of California Press, 1959), pp. 171–173.Google Scholar

3 The source of the alleged 1951 official exchange rate was not given in the U.N. publication; see United Nations, Economic Survey of Asia and the Far East 1958, p. 35.Google Scholar

4 See, for example, United Nations, World Economic Survey 1957, p. 222. The precise rate used there is 1·04 rouble = 1 yuan.Google Scholar

5 The Communist term “non-commercial exchange rate” refers to the exchange rate which applies to foreign exchange transactions outside the “foreign trade” category, such as tourist spendings, expenditures of diplomatic missions and international cultural activities, etc. Chugoku Seijikeizai Sōran (Political and Economic Views on Present Day China)(Tokyo: Ajia Seikei Gakkai [The Association for Asian Political-Economic Studies), 1960edition), p. 590.Google Scholar

6 See this paper, post, p. 199.Google Scholar

7 The tourist rate of 10 roubles = 1 dollar, as compared with the commercial rate of 4 roubles = 1 dollar, was introduced by Moscow on April 1, 1957.Google Scholar

8 Chūgoku Seijikeizai Sōran, 1960 edition, p. 590.Google Scholar

9 Hsin-hua Pan-yueh-kan (New China Semi-Monthly), No. 16, 1957, p. 93.Google Scholar

10 Jen-min Shou-tse 1951 (People's Handbook 1951) Shanghai: Ta Kung Pao, section Shen, pp. 23–24.Google Scholar

11 See Alexander Eckstein, “Sino-Soviet Economic Relations: A Reappraisal” (July 1961, unpublished), p. 34 and note 40Google Scholar. The Soviet source referred to by Eckstein is Netrusov, A. A., The Economic Relations of China with Foreign Countries(in Russian) (Moscow: 1958), pp. 82–83.Google Scholar

12 Oleg Hoeffding, “Research on Communist China's Foreign Trade: Comments on three papers by Shu-hsin Chou, Robert F. Dernberger and Feng-hwa Mah,” Santa Monica: The RAND Corporation (P-2689), 01 1963, pp. 8–9Google Scholar. The Soviet source referred to by Hoeffding is Aizenberg, I. P., Valiutnaia Sistema SSSR (The Soviet Currency System)(Moscow, ? 1962), p. 149.Google Scholar

13 See joint article by Tung, Shu-ping, Li, Tien-to, Shao, Hsi-kuei, Hsu, Hsiu-chingand Li, Yao-chuin Jen-min Tien-yeh (People's Power Industry), No. 1, 1958, p. 14.Google Scholar

14 Yu, Jui-hsiang, Cheng, Hsi-yuanand Lu, Chun-ken, “On the Problem of the Nature and Function of People's Currency,” Hsueh-shu Yueh-kan (Academic Monthly), No. 10, 1957, p. 55.Google Scholar

15 Chi-hua Ching-chi (Planned Economy), No. 12, 12 9, 1957, p. 29.Google Scholar

16 Aizenberg, I. P., Valiutnaia Sistema SSSR, Moscow, 1962, p. 143 et seq. Taken from Oleg Hoeffding, op. cit (RAND P-2689), p. 11.Google Scholar

17 The foreign trade exchange rates and the non-commercial exchange rates between other Communist countries are not influenced by the rouble revaluation.Google Scholar

18 For sources, see Appendix.Google Scholar

19 See Kang, Chao, “Yuan-Dollar Price Ratios in Communist China and the United States,” in Two Studies on Mainland China's Economy(The University of Michigan Center for Chinese Studies, Occasional Papers, No. 2), 07 1963, p. 19.Google Scholar

20 For more detailed discussion of this and related problems, see Kang, Chao, op. cit., in Two Studies on Mainland China's Economy(The University of Michigan Center for Chinese Studies, Occasional Papers, No. 2), pp. 16–25Google Scholar; Feng-hwa Mah, “Some Problems in the Study of Communist China's Foreign Trade” (a paper prepared for the First Research Conference of the Social Science Research Council Committee on the Economy of China, Berkeley, California, January 31–February 2, 1963. Unpublished). Section II, pp. 4–14.Google Scholar