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Published online by Cambridge University Press: 17 February 2009
The development of the ideological controversy between Communist China and the Soviet Union in recent years has aroused increased interest in a more careful evaluation of Sino-Soviet economic relations. In this paper, I attempt to deal with one specific aspect of this broad area, that is the price problem in Sino-Soviet trade.
1 See, for example, Oleg, Hoeffding, “Sino-Soviet Economic Relations in Recent Years,” in Unity and Contradiction: Major Aspects of Sino-Soviet Relations, Kurt, London(ed.) (New York: Frederick A. Praeger, 1962), pp. 295–312;Google ScholarWalter, Galenson, “Economic Relations between the Soviet Union and Communist China,” in Study of the Soviet Economy, Nicolas, Spulber(ed.) (Bloomington: Indiana University, 1961); and Alexander Eckstein, “Sino-Soviet Economic Relations: A Reappraisal” (unpublished), 1961.Google Scholar
2 Horst, Mendershausen, “Terms of Trade between the Soviet Union and Smaller Communist Countries, 1955–57,” Review of Economics and Statistics (RE and S), 05 1959, pp. 106–118;Google Scholar“The Terms of Soviet-Satellite Trade: A Broadened Analysis,” RE and S, 05 1960, pp. 152–163; and The Terms of the Soviet-Satellite Trade: 1955–1959, RAND RM 2507–1–PR (Santa Monica: The RAND Corporation, 03 1962).Google ScholarFranklyn, D. Holzman, “Soviet Foreign Trade Pricing and the Question of Discrimination,” RE and S, 05 1962, pp. 134–147; and the discussions between Mendershausen and Holzman in RE and S, 11 1962, pp. 493–499.Google Scholar
3 Yeh, Chi-chuang, “The Foreign Trade of China,” speech delivered to National People's Congress on 07 11, 1957, Hsin-hua Pan-yueh-k'an (New China Semi-monthly), No. 16, 1957, p. 90.Google Scholar
4 Vneshniaia Torgovlia SSSR za 1956 god—Statisticheskii Obzor (Foreign Trade of the USSR in 1956—Stastical Summary)(Moscow: 1958); and same for later years.Google Scholar
5 U.S. Department of Commerce, International Trade Analysis Division, Country by-Commodity Series.Google Scholar
6 The unit values of selected commodities are derived by dividing the annual trade values of these commodities by their respective quantities as reported in the Soviet and American sources. The unit values thus computed are different from the prices of these commodities as the former may include such non-price elements as transport and insurance costs, etc., depending on the methods of valuation used in the statistical reports.Google Scholar
7 The countries included in my calculations and the abbreviations used for these countries and country groups in this paper are as follows:Google Scholar
CC: Communist China; SU: Soviet Union.Google Scholar
WE: Western Europe (13 countries: Austria, England, Finland, France, West Germany, Greece, Holland, Iceland, Italy, Norway, Sweden, Switzerland and Yugoslavia).Google Scholar
NCA: Non-Communist Asia (7 countries: Burma, India, Indonesia, Japan, Malaya, Pakistan and Hong Kong).Google Scholar
EE: Eastern Europe (7 countries: Albania, Bulgaria, Czechoslovakia, East Germany, Hungary, Poland and Rumania).Google Scholar
ACC: Asian Communist Countries (3 countries: North Korea, Outer Mongolia and North Vietnam).Google Scholar
The following notation is also used in this paper:Google Scholar
SU-WE: (average unit value of) Soviet Union's exports to Western Europe, or WE imports from SU.Google Scholar
WE-CC: (average unit value of) Communist China's imports from Western Europe, or WE exports to CC, etc.Google Scholar
8 The term “advantage” and “disadvantage” used here are in the “comparative” sense. They do not necessarily imply “discrimination in favour of” or “discrimination against,” although such possibilities are not ruled out.Google Scholar
9 Whenever data permits, Hong Kong prices are used to represent “world market prices.” In the absence of Hong Kong prices, the import and export prices of the United Kingdom are used as a second choice and those of Japan as a third choice. Only one “world market price” is used (for 1959) in the import comparison. The number of “world market prices” used in the export comparison are 10 for 1955 and 8 for each of the four subsequent years.Google Scholar
10 The ratios are not presented in this article.Google Scholar
11 For all the following tables, figures in parentheses are alternative estimates based on a smaller and more homogeneous sample, sample C. The difference in the number of comparisons each year is due to the fact that the unit values for some of the commodities in Sino-Soviet trade or Soviet trade with Western Europe are not available for a number of the years under study.Google Scholar
12 This is called “percentage advantage of balanced trade,” or ‘combined import and export relations,” in Frederic, L. Pryor, The Communist Foreign Trade System(Cambridge: M.I.T. Press, 1963), p. 145.Google ScholarThe term “comparative price advantage” was suggested by Joseph Berliner and coined by Franklyn D. Holzman in his article, “Soviet Foreign Trade Pricing and the Question of Discrimination,” Review of Economics and Statistics, 05 1962, p. 137, to contrast with the comparative cost concept.Google Scholar
13 Tiul'panov, S. I., Vozniknovenie i razvitie mirovogo demokraticheskogo rynka (Emergence and Expansion of the Democratic World Market)(Leningrad: 1955), p. 51.Google Scholar
14 Since in our comparison, the rouble figures from the Soviet source are converted into dollars consistently at the then official rate of four roubles to the dollar (however arbitrary the rate may be), any possible exchange rate effect is practically ruled out.Google Scholar
15 Amid the noises of the Moscow-Peking rift, it may be worth mentioning that Mao's “lean-to-one-side” orientation governed China's international economic relations until at least 1957, when Peking's Finance Minister first declared that “we are now in a better position to rely on our own accumulation to carry on material construction.” See Mao, Tse-tung, On the People's Democratic Dictatorship(Shanghai: Hsin Hua Book Store, 1950edition), p. 8 and pp. 10–11;Google ScholarLi, Hsien-nien, “1957 Budget Report,” New China Semi-monthly, No. 14, 1957, p. 21.Google Scholar
16 For 1930 trade volume, see article by Robert, F. Dernbergerin Remer, C. F.(ed.), Three Essays on the International Economics of Communist China(Ann Arbor: University of Michigan Press, 1959), p. 135, Table 2.Google Scholar
17 This point is clearly made by Yeh Chi-chuang in his 1957 speech. See Yeh Chi-chuang, loc. cit., p. 93.Google Scholar
18 Cf. Boone, A., “The Foreign Trade of China,” The China Quarterly, No. 11, July–September 1962, pp. 169–170.CrossRefGoogle Scholar
19 Quotation taken from Li Che-jen “Fraternal Economic Co-operation,” China Reconstructs, 08 1955, p. 7. For some vivid examples of heated price bargaining between the Soviet Union and other Communist countries, see Frederic L. Pryor, op. cit., pp. 136–139.Google Scholar
20 The worsening of the Sino-Soviet relationship since 1958 and the increase of China's import (and overall) price disadvantage in her trade with Russia in 1959, as demonstrated above, may not be just coincidental. Note that the Chinese expressed their anger at Russia's “unfair economic treatment” in a letter from their central committee to the Soviet Party's central committee, dated 06 14, 1963. See New York Times, Western edition, 06 17, 1963.Google Scholar
21 Delivered prices at the border.Google Scholar
22 Sladovskii, M. I., Ocherki ekonomicheskikh otnoshenii SSSR s Kitaem (A Sketch of Economic Relations Between the USSR and China)(Moscow: Vneshtorgizdat[Foreign Trade Publishing House], 1957), p. 350.Google Scholar
23 Sladovskii, M. I., “Soviet-Chinese Economic Collaboration,” in Soong Ching-lin et al, Ten Years of the People's Republic of China(a collection of articles), Moscow, 1959(U.S. Joint Publications Research Service, Translation No. 2825, 08 1960, p. 263).Google Scholar
24 I am indebted to Dr. Oleg Hoeffding for this information.Google Scholar
25 M. I. Sladkovskii, 1957, p. 348.Google Scholar