On the Expansion of the Czechoslovak Economic Relations with China after the Establishment of the Chinese Communist Regime

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IN THE PERIOD between the world wars, Czechoslovak foreign trade on China in Czechoslovak was quite specific. Official Czechoslovakian statistics clearly indicated that China was not one of the country's most important trade partners. On the other hand, the Chinese market played an important role for some strategic industrial companies, such as Skoda Works. Extensive deliveries of Czechoslovak weapons to an already destabilized China, particularly those from Zbrojovka Brno [Brno Arms Factory] in the latter half of the 1930s, present an especially interesting story.

After the Second World War, the renewal of business ties between Czechoslovakia and China was very slow. (1) At a time of radical changes in the Czechoslovak economy, which involved extensive property transfers and a bevy of problems in transitioning to a peacetime economy, the renewal of business ties with China was generally perceived as of secondary importance. The potential development of the mutual trade was further hampered by the unstable situation in China. After the war with Japan, the growing disputes between the Guomindang and the communists led to another civil war that broke out in China in the middle of 1946; it resulted in yet further deterioration of the Chinese economy, which obviously had a negative impact on Chinese imports and exports. The trade of military material was one of the exceptions, however. New military campaigns resulted in higher demand for weapons in China, including an increasing interest in weapons deliveries from Czechoslovakia. Even before, as well as at the very beginning of, the renewed fighting in China, the Ministry of Foreign Affairs in Prague recorded increased Chinese interest in Czechoslovak weapons. (2) The Czechoslovak industry also voiced recommendations to continue the Interbellum tradition of arms export to China. Arms deliveries to China were presented as a promising trade that was not to be neglected in times of general weak export performance. At the same time, arms manufacturers warned about the growing competition in the Chinese market and potentially negative effects of excessive hesitation concerning the arms trade. (3) Nevertheless, the arguments did not convince the Czechoslovak government, which, primarily due to the political circumstances, opposed Czechoslovak companies' engagement in arms trade with China. In this context, we need to mention the tactics of the Czechoslovak ministry of foreign affairs concerning this issue. For instance, in June 1946, the Chinese mission in Berlin approached the ministry asking if it was possible to purchase ammunition for infantry or even artillery weapons in Czechoslovakia. Internal documents of the ministry show that mainly political reasons stood behind the negative attitude toward the trade. Nevertheless, the official reply from the department in charge contains a different reason: the Chinese request "cannot be met as production does not cover domestic consumption. " (4)

Several negative factors affected Czechoslovak export to China. One of the most important was the Guomindang government's controversial regulation of imports, which was officially justified by an effort to protect domestic producers. The potential expansion of Czechoslovak exports to China was also complicated by the limited Chinese ability to pay for export in US dollars. In a way, Czechoslovak and other exporters were harmed by the fact that Chiang Kai-shek's government was heavily supported by American loans, which yielded the US a dominant position in the Chinese exports market (see Table 1). (5)

The overall unfavorable and rather difficult stage of the Czechoslovak-Chinese trade ended with the communist victory in the civil war. After the 1949 foundation of the People's Republic of China and the end of the civil war, conditions for the development of Czechoslovak-Chinese relations changed considerably. (6) The two countries, which until then had little in common, became "brotherly" countries tied by the same (or at least a very similar) ideology; political, economic, and other circumstances forced them into closer economic co-operation. …