COMMUNIST ECONOMIC POLICY IN SHANGHAI

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00457R007300230014-5
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: December 14, 2016
• Document Release Date: March 12, 2001
• Sequence Number: 14
• Publication Date: April 30, 1951
• Content Type: REPORT

INFORMATION REPORT' CD NO, 25X1 A
Approved For Rele "At/ jgL.LG 7R00730q ,
SUBJECT CerLmunist Economic ?ol:i.cy in S:ianghai
PLACE
ACQUIRED
DATE OF
INFO,
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SUPPLEMENT TO
REPORT NO.
25X1X
i In 2iay L9r'O, the econox a situa ,ion in Shanghai began to improve bwa-,.Lve the
Nationalist blockade ended and the goverment pled large orders vi,a
icTtes for such items as ruble: goods, cnarxol rase, and construction rater. .s~
B JWy the average daily turnover of Shanghai's l.eadi n stores, such as the
Sun, Sun unu, Lai 97ah,, a r4 China Products, was J?iP 3'-59j,997.000 as ec ,ipar ,
nth Wit' l9i,82O,00O in A2ril, In July daily rice shi naents to Shan ;l .
averaged 5,,piculs, an iner;ase of over 200 peix.ex above Apr31.3 In :tune
cat ton yarn and cloth shipments from Shanghai : ot: filed 1,3, OO bales of y
and 33-&0$200 bolts of aloth, , 2ro tely fo'r tirr- the May shipmau4i s. At
the end of June the firr -Tt joimx operation banking group, consistin of the Sin
tiua, xt'ingpo Cor ercial, China. 'Industtial, and Chix.e Commercial banks in
hanghat held overdue loans am)uriting to JLIP 27,80E,,O00,OOO as cor;;x r d with
."ItP 369l0O OO0gi' 0 in Liwo
2,.. The improveeient in shanghai economy is also illusti ted by the redir; tier
h
27
ere ynj.
(`9f cor mercial funds to industrial uses. In earl a tertil er t
iuch cases ? For examples the Jen 1 ~, Development C orporati.on, ,, a.~ i r or*..er
of dyestuffs and other chef i.cal,sx. invested all its avail ible capita `1 P
> 400, , in a near i dus:,rial chezia3.ca1 works bearing its cnTul n ie?
3 fug to icn r ;ti:
,_,00C)000. al ;:ome cloth firs transf ezTed large ~Dunts of coi ex
c
factories, This tendency Is r.ceiving govern font rtes?roves..
The ni,:rnber of factories in operation in Shanghai by type of irxiustr,.r as 3f I
July 1950 vie as follcros:
cotton r:~,ills and T,`cav?rC wrk's
woolen rmlls
paper mills
d er nr factories
:rose and candle factories
T)ra.nting ink factories
,3'kd rtmakers
iron foiuxdries
,e ;tile machi- ei7 and tools
248
45
27
135
37
3
73
31
49
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rubber factories
needle factoi:ies
bicycle and bicycle accessory- factories
enamel ware :actor ies
pant facto s
1,5
3.s
155
13
3)4
14. The following T:1onthly record on the, opening and closing of business ':L rr;.
for the poriod January to Septtamber iilustxote.:, the busi.riess trend i_
hhanhai during this periods
Industrial Establishments :
Month
January
FebruarT
starch
April,
fagy
June
illy
1'Ia.a~t
September
(first half)
New Fir oened Old Firms PLcopened First , Ci aeed
2 1 2.3
t 5 389
21 3 02
37 29 158
105 87 50
.373 93 62
1.96 60 36
b, Connercjal astablis:hmentse
50
January 1,075 3 3363
February 255 4.
i, ar?r h 23,3 3 796
April 57 1. 567
May 72 22 2, 9)47
IMIle 196 U Z-' 780
Ju131 405 1)42 223
August 786 115 235
September 418 57 ;125
(first half)
Balk purchasing of products from factories has beer an effective way of
gelp many private enterprises, The state -operated China Gencr: Goods
company was established for this purpose and operates according to the
following principles.-
a,, Industries with wh:i~ h the con- .ny oonc Lude*5 bulk Purchase agreem?2nt3 must
serve the people and be capable of further dEvel opmerrt,,
b. Industries in the greatest need are to receive prior .4ty over oWlers.
Co Coariodl.ties purchased must be riarketable either at oresent or In the fuvure.
e, Prices at v1 i.ch co: r,,odi ties are ~urthased raict con 'o3,y .1 z in ,en?a ? to
prevailing narket quotations, although a small excess is a.Uovted.,
6e, From April to J aiy 1950 the China General. Goods Coir any spent ~Tl.;i' a-,36 3=YC?,,' 3~i3
for bulk purchases,, over half for ,products of privy tely-operated fact-ori.es0
The East China branch of the, China General Cods Cor ;)w )urchased , odnots
from 502 or 40 percent,, of Shanghai r s ; rivatel ,r eur ted light i ,dui d:r i e:3 i ,.
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In Juno the con-)any p haled products from 313 of Shangh?.i+s private)?-
operated factories. The value of the co, mpanyi is bulk purchases of various
::.rcx3ucts of Shanghai private factories from Larch through July was as follosws:
March JLP 23,500,,000,00
'gyp: JUP 53,6Oo,ooo 00o
May JMP 101 , 700,,OO..1O,,(X)O
June . JLIP 96,,4OO, OC0, O0O
July X -',.P 231,900,000,000
7. As of 1:-May 1950, of 37 cotton toxtil e mills in operation in Shanghai, 90 mercer
had signed processing contracts vith the China General Goods Ccnpany, and -iire
,,11ocated raw cotton for processing. In this way 77.23 percent of the spindles
in Shanghai were put into opooration. The total output of cotton yarn from cotton
textile mills from January to Juice 1950 was 322,0?.6 pieces. By month ara type
of ov ers hip, production was a 3 follows :
Llorh
State-operated ::}xrivately Operated
Mills Mills
Foreign-operated
I::il1a
January
February
11,369
11,173
..
1.00
i,16t.
I.iaxch
24,902
,21o457
April
34,4 8
225,O.t 0
1 365
$ay
34,120
27s,892-
3,0194
June
33,148
-no 717
1,125
1trcrity-three privak,e silk rills including ,':agar Silk Mills, Bong Lee Sit.
I. ills, Kvrong Ming Knitting aiaau cturing Company, and Yu i'ing Silk I l..1.
have signed contracts with the state-operated China Silk.. Corporation, for the
prcductio.a of 7,,710 bolts of silk pickle Coods during the winter of l950.:y.951,,
larger contracts have also been signed vrith Dah Chem,, Dah May Foong,, Dong Loh,
Ching Foong and ten otter silk mills.
9? The, East China : partmentt of Industry signed a contract with the Ministry cf
Iie?;.vy~ industries in Peiping for the manufacture of various kinds of riachLnerry
,at a total value of 13,0CX),000 parity units,*r*s*anci another contract, for
10,000 spindles arO two sets of papery staking machinery at a total value of
1'"'00000O0 parity units.
10. The East China Departs nt of Industry has distribuxC'ed 70 percent of the
i~ac !incry manufacture contracts to privately-opera'-ed factories. The value of
all contracts was 16,600,000 parity units. `The px vatelyy operated Chung Ilva
Iron isorks received an order for three sets of paper making machinery, w-,:rich v~ri.ll
krp its production schedule full for a period of eight months. The Six Chung
Engineering Company, also privately-operated, received orders for pvaas ti-ch
will keep its production schedule full for six months.
IL, The, progress of the machinery industry in Shanghai during 1950 is illustratrl
by a 68 percent increase in business turnover for the period June through
ugust over that of the period March through May. :."from June through Au.Cust
to~;,a_`L business of 10039 machinery works -was JI.IP 142,200,000,,IX00, as compared
with JMP 36 .,300,000,000 for J. machinery -works from March through May.
12.. In addition to aiding private interprises, the gcvenunent is also d'.rect:ing
the remodeling of Shanghai's economy. Small private mills are encouraged to
co mine tirath other mills to fort larger enterprises and t'--us increase p7mtzct,ion.
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The production policy of pr-1vate1,y.-operated factories is to be chanrcd and
the ruznageraent Ildc mocra.tized" in order to coordinate production ri.t3: the
state economic olanningp
13. To inaugurate planned production, a series of ,special national conferences
of representatives of the cigarette, rubber, match;, oil, food processing,,
printing and dyeing and other industries were held in Peiping during !Z)'),
At the co .ferences it was decided ;,o gear production to sales, and production
plans were worked out for t e last six
months of 1950 and for the entire year
1951, Production schedules were d` stributed to various areas for redistribution
,to local factories according to their productive capacity. Allotments of
production quotas were to be decided in a der.,crati.c way , eLthout prep udicep
14. .In line with the government oolicy of encouraging small enterprises to combine
into large enterprises in order to increase production and the scope of
operations, a number of Shanghai enterprises were amalgamating; curing l9'>O
Among these were:
t? Pao Foong Cotton :..ill, Shan hai, and Ching Foong Cotton lilili 1 uhsi,"
bo Chang Sin Cotton Mill., Shanghais, and Lee Sing Cotton I i.ll, hiuhsi..
c, An Leah Cotton I all, Shan ghaai, and the Daly Chong Jeav..ne, and D: e-f r 11111p
Lucl:inga
15. Manny privatelyyopercted heavy industries organized combines to hand e: prey??.
duction, sales and other business transactions jointly, the primary object
being to accept orders for ?tanufactured products jointly and to complete
f,he production schedule on time., By .September the f ollo ling eight.
manufacturers combines had been for :red among Shanghai's -Lndustriesa
ap Shanghai First Small Machine Manufacturers t, Combine
ba Shanghai Second' Small Machine '.Ianufacturers! Ccxnbine
e Shanghai Third Small Machine Manufacturers e Combine
d0 Shanghai First Electric Machine Manufacturers P Combine
e,2 Shanghai First Bicycle LIanu a& urer z a Combine
f p Shanghai First Boiler and I:Iachi.ne ;'arsufactur"er , Q Comb?ine
go Shanghai First Joint Shipbuilding Company
hb Shanghai. First Electric ..'i.-'e Joint, I'ann cturi rg Coral:aany,
TYm last company is a combination of the China, IMei. Shin?;, Teh Foo, the :'ar
Eastern tlectrlc Appliance Manufacturing Companies and the Lee I ua, Ilhan,,a i ,
MMua Kung,, and Ilua Min; Electric .hire manufacturing conpaniesp
if , Between July and September private banks in Shaxtghri famed four loan
syndicates.. The majority of private banks have joined one of these. Since
the for.:hation of these s rndica/tes, deposits and loans have increased and they
have been operating at a prof'it,,
17. Four private shipping comoanies, all heavily in debt,, merged into one "Ctembined
yam tze Shipping Company, Ltd." in. an effort to improve their business and,
eliminate corm o t,i tion among themselves
18. The Cotton Joint Purchase Com ttec of the 'state and privately-operated cot?:,on
textile mills in East China was organized to handle joint purchasix for the .: ills-,
190 The local guild of the vegetable oil pressing; industry, under the ;u,:tdar e of
the Departments of Industry and Trade of East Chin: and the Bureau of Inclu stn
CONFIDENTIKL
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u.nd Coerce in .sa'Yli 1 ;I1?; , h s o `"g+Eiu^_zed a joint 1mrehas-ing board. for Its
a tber faotorietr. both state aid private-llr-operatc c' 3 for the j6 nt pu 4ha.e
of cotton sends? In k ep z.n.~ r:cth `t he policy of -he govo:.,j=ent~ the
'i
,oar'. w1*71 . handle t:T1e ')trrch.,:lSe 3 ~to+:.ordirg to the pr'inoi -La of gearin,
Production to 's;.a1cs m
' nother eca o~ ic, improvement s 3or.;sc.?rcd by the -ovexnrlent _'+_s the ?sdenocra7h.:i.
a>:f on" o: "_iaaar;errent arid the ', de Practice of thrif=t in factoriess .Fc.r
t a 'Ping Faor..g Cotton I',U1f which eras in serious financial
.,a- Ly in 1"95O, Ta a, doing a goof bv.si.nes;3 in mi -195G after removing five Ugh
sf 'yc~ ..LS, d~.si.k:s:~irig t:iii ab` E;: -.tee "a( vise: s'd, e! i rninatirtg surplus labor, a .ad
d , r. tifng `,m?ez: under a iaho -.i .na;';e >ent agreement to recnce waves Cc ? ..a.l.rr
for a r oiato r )ort o t ,- b
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hi is ? not _1.o, .ed in, t . L4 'A -azIghaI t l t hors .
Cem- -n , ','
E_3.rocc. for-T . !oss =_bly it ] s t F it'. 4i on L la D A n: ..,.1C'. . O2V1ng or fir:,
Cot ~,ont,. h:Ls f rt:, not o istec1 in the 1`.9 .17 ?1a11r-x a t:~, 1c.ne
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