China has traditionally had a low level of exports. Between 1912, the first year of the Republic of China, and 1928, the last year before the depression, exports increased 2.7 times; but at the end of this period they approached only about U.S. $500 million and constituted only 83 per cent of imports. The low level of exports was due to the stagnation in the country's agriculture and the competition suffered by some staple commodities such as tea and silk by similar goods of better quality in world markets.
The world depression beginning in 1929, followed by the United States high silver price policy, not only brought about a substantial decrease of China's principal exports but also resulted in greater imports of foreign agricultural products--some brought in by foreign dumping. This increased the unfavorable balance of trade. Historically, such imbalance had been covered by overseas Chinese remittances and other invisible exports. Now the gap became so great that it could be bridged only by drawing down China's silver reserves. During the 1930's these weaknesses were further aggravated by the loss of Manchurian trade and the loss of other traditional markets: and in 1934 exports were only about half the value of imports. In 1937, following the change of China's currency from a silver standard to a managed exchange standard, accompanied by devaluation, exports recovered to 87 per cent of imports; but their average value during 1934 and 1937 was only 70 per cent of that of 1928.
Foreign trade centered on only a few large coastal cities, particularly Shanghai and Tientsin. Because all the facilities related to foreign