Grain
grain output (including soya beans and potatoes) was about 285 million tonnes. imports from the West fell to 2.1 million tonnes, the lowest level since they started in 1961, though they rose again in 1977 to 7.2 million tonnes. Increased internal distribution problems, world prices, and the need to restore stock levels depleted by 1976's poor performance probably prompted these purchases. About 4.5 million tonnes were scheduled for delivery from Australia and Canada during the first half of 1978.
The 1977 harvest was about the same as 1976. The Chinese attributed their agricultural difficulties to "serious natural disasters" mainly unseasonal weather, including a widespread drought in north and central China.
Industrial crop production achieved mixed results in 1976. Increases were announced for sugar, tobacco, tea, hemp and jute production, while cotton output probably declined for the third successive year and a decrease in oil seed production is also believed to have occurred. In 1977 production of cotton, tea, hemp and cured tobacco were all above the 1976 level.
Foreign Trade
China's balance of trade improved in both 1976 and 1977. The most striking feature in 1976 was the drop by over one-fifth in imports from non-Communist sources, particularly OECD countries, which account for about 70 per cent of China's non- Communist trade. The import cutback was partly for balance of payments reasons and also to allow time for the assimilation of foreign technology already acquired. Foreign trade officials also seemed reluctant to take initiatives during the period of political contention. Imports began to recover in the second half of 1977. The convertible currency deficit on visible trade of $720 million in 1975 was changed into a surplus of $730 million in 1976. A convertible currency trade surplus of about $1,000 million has been estimated for 1977.
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those in the final
though this was partly The Japan External Trade
The value of exports was maintained throughout 1976 quarter to OECD countries being the highest ever recorded offset by a decline in exports to developing countries. Organisation (JETRO) estimated in May 1978 that China's exports in 1977 rose by 8.3 per cent compared with 1976 while imports rose by 7.3 per cent.
The improved convertible currency trade balance, increased invisible earnings from and through Hong Kong (estimated at about $700 million), and savings on freight (about $300 million) brought about by the expansion of China's merchant fleet made it easier for China to meet debt service payments of $1,300 million on major import contracts in 1976. Liabilities under these contracts were thus reduced by 30 per cent to just over $2,000 million. Debt service in 1977 should be at about half of the 1976 level.
The
China's improved circumstances were also reflected in the increase in its gross assets with certain banks, mainly in Western Europe, from $1,000 million in December 1975 to $1,400 million in December 1976. These assets rose to nearly $2,500 million by June 1977. China's gold holdings in London were boosted at the end of 1976 by over 80 tonnes (then valued at $350 million) shipped from Peking. shipment does not appear to have been required for specific foreign exchange needs, but may have been a preliminary to shifting part of China's reserves out of gold into foreign currencies; China is in any case active in dealing in the gold market for profit. External reserves are currently estimated at well over $4,000 million.
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