The increasingly complex foreign trade system underwent expansion and decentralization in the late 1970s and 1980s. In 1979 the Ministry of Foreign Trade's nine foreign trade corporations lost their monopoly on import and export transactions as the industrial ministries were permitted to establish their own foreign trade enterprises. The provincial branch corporations of the state foreign trade corporations were granted more autonomy, and some provinces, notably Fujian, Guangdong, and the special municipalities of Beijing, Tianjin, and Shanghai were permitted to set up independent, provincial-level import-export companies. Some selected provincial enterprises were granted autonomy in foreign trade decisions. In 1982 the State Council's Import-Export Control Commission, Foreign Investment and Control Commission, Ministry of Foreign Trade, and Ministry of Foreign Economic Relations were merged to form the Ministry of Foreign Economic Relations and Trade. In 1984 the foreign trade system underwent further decentralization. Foreign trade corporations under this and other ministries and under provincial-level units became independent of their parent organizations and were responsible for their own profits and losses. An agency system for foreign trade also was established, in which imports and exports were handled by specialized enterprises and corporations acting as agents on a commission basis.
Ministry of Foreign Economic Relations and Trade
The main functions of the Ministry of Foreign Economic Relations and Trade were to establish and supervise foreign trade policies; to work with the State Planning Commission in setting long-term foreign trade plans and annual quotas for imports and exports; to control imports and exports through licenses and quotas; to supervise the management of foreign trade corporations and enterprises; and to coordinate economic and trade relations with foreign governments and international economic organizations. The ministry also undertook international market research, led institutes of foreign economic relations and trade, and directed the General Administration of Customs.
Foreign trade corporations and enterprises
In the late 1980s China had numerous specialized national corporations handling import and export transactions in such areas as arts and crafts, textiles, natural produce and animal byproducts, foodstuffs of various kinds, chemicals, light industrial products, metals and minerals technology, industrial machinery and equipment, petrochemical and petroleum products, scientific instruments, aerospace technology and services, ships, and weapons. Although nominally supervised by the Ministry of Foreign Economic Relations and Trade each of these corporations was responsible for its own profits and losses. Included among these enterprises, for example, was the Great Wall Industrial Corporation, which imported and exported transportation vehicles, satellites and other products associated with aerospace programs, mechanical equipment, electrical products, hardware and tools, medical apparatus, and chemicals. China Northern Industrial Corporation, subordinate to the Ministry of Ordnance Industry, used military production facilities to manufacture civilian products for export. The business activities of China Northern Industrial Corporation included the sale of heavy machinery, hardware and tools, and heavy-duty vehicles; light chemical industry products, such as plastic, paints, and coatings; and high-precision machinery and optical and optical-electronic equipment. Other corporations offered a variety of professional consulting services. One of these, the China International Economic Consultants Corporation, provided economic and legal expertise on investment and other economic activities.
Financial transactions and investment
Foreign exchange and reserves were controlled in the mid-1980s by the State Administration of Exchange Control under the People's Bank of China, the central bank. Foreign exchange allocations to banks, ministries, and enterprises were all approved by the State Administration of Exchange Control. The Bank of China, the foreign exchange arm of the People's Bank of China, lost its monopoly on all foreign exchange transactions in 1984 when the Agricultural Bank, People's Construction Bank, China Industrial and Commercial Bank, and China International Trust and Investment Corporation (CITIC) were permitted to deal in foreign currency. The Bank of China remained China's principal foreign exchange bank and provided loans for production and commercial transactions related to exports, set up branches overseas, maintained correspondent relations with foreign banks, and did research on international monetary trends. The Bank of China also was active in international financial markets through such activities as loan syndication and issuing of foreign bonds. CITIC, formed in 1979 to facilitate foreign investment in China, also borrowed and lent internationally and issued foreign bonds in addition to encouraging and participating in joint ventures, importing foreign technology and equipment, and making overseas investments. In 1986 CITIC was renamed CITIC Group and shifted its emphasis to power, metallurgical, and raw materials industries, which had trouble attracting investments. In late 1986 the CITIC Group had set up 47 joint ventures, invested in 114 domestic companies, and issued US$550 million in foreign bonds. The China Investment Bank was established in 1981 as a channel for medium- and long-term loans from international financial institutions such as the World Bank.
Other organizations involved in trade
The State Council's State Planning Commission and State Economic Commission were involved in long-term planning for the development of foreign trade, and they developed national priorities for imports and exports. Several other organizations under the State Council were also involved in foreign trade matters: the Special Economic Zones Office, State Import and Export Commodities Inspection Administration, General Administration of Customs, and China Travel and Tourism Bureau. The China Council for the Promotion of International Trade (CCPIT) assisted the Ministry of Foreign Economic Relations and Trade in foreign trade relations. CCPIT handled trade delegations to and from China, organized foreign trade exhibitions in China and Chinese exhibitions in other countries, and published periodicals promoting Chinese trade. The People's Insurance Company of China expanded its operations in 1980 for the purpose of encouraging foreign trade. New categories of coverage offered to foreign firms included compensatory trade, satellite launching, nuclear power plant safety, offshore oil development insurance, insurance against contract failure, and insurance against political risk.
If you have further enquire, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website www.tannet.net.cn, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com
Previous：China IPO
Next：China Information Agency