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devoted to subsistence agriculture the output of
which is almost certainly under-recorded.
illustrate the case further by a comparison with Hong
Kong; China's national income in 1981 was about 9
times that of Hong Kong but its population was about
200 times, such a discrepancy seems too large to be
credible. Under-estimation in the value of national
income would lead to the estimated relative size and
importance of the external sector being larger than
it actually is. Nevertheless, even with the above
reservations, the size and importance of China's
external sector relative to its economy cannot be
dismissed as insignificant.
20.
(b) China's visible trade balance
In the period 1950 to 1981 (32 years),
China's visible trade balance was in deficit in 14
years.
Deficits were recorded in six consecutive
years (1950 to 1955) immediately after the establishment of the People's Republic. But since
then China has enjoyed visible trade surpluses in the great majority of years throughout the second half of the 1950s, in the 1960s and in early 1970s. This was
because China generally followed a conservative
foreign trade policy with a view to financing imports by exports and if possible, to achieving a small trade surplus. But in the last few years, 1978 to
1981, China's visible trade account has been persistently in deficit. As a consequence of
launching massive development projects which entailed
the substantial
G.F. 326
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