19

Trade

Many goods never reached the shops. The Bank of China calculated that some 300 million yuan was missing in Hunan in 1960 as a result of fake receipts, goods lost en route, sold on credit without permission or simply misappropriated. That was just in one province. At a national level the State Council estimated that some 7 billion yuan in funds was held that year by state factories instead of contributing to the circulation of goods.1 At every level of the distribution network, corruption and mismanagement took their share, nibbling away at the supply of goods that the plan had allocated to the people.

When goods actually managed to leave the workshop floor, their first call was in a depot, where special storage companies accredited by the state sorted them according to their final destinations. In the Storage and Transportation Company in Shanghai, hundreds of objects worth well over 100,000 yuan – telephones, refrigerators, medical equipment, cranes – accumulated in boxes because of sloppy paperwork, incorrect accounts and illegible inventories. A hundred vats of shrimp paste rotted outside in the rain for a month, the documents having gone astray and the company having forgotten all about them. But, above all, goods vanished because the profit motive never quite disappeared: what was ‘lost’ could be traded privately on the black market.2

Then there was the wait for a train or a lorry. China was a poor agrarian country that never had the capacity to send goods and supplies from one end of the realm to the other, and the flow was rapidly dislocated by a crumbling transportation system. As early as the end of 1958 the economy ground to a halt, and mountains of goods were heaped everywhere about stations and ports. Each day some 38,000 freight vehicles were required by the plan, but only 28,000 were available. Having inspected only the loading areas along the coast north of Shanghai, the planners found that a million tonnes of material was waiting for transport.3

Lack of equipment, spare parts and fuel only made the situation worse over the next three years. By 1960 in Tianjin, Beijing, Hankou, Guangzhou and other cities, goods entering the railway stations exceeded those leaving by an amount equivalent to 10,000 tonnes each and every day. Much of this was simply piled up in makeshift storage facilities, which reached a quarter of a million tonnes by mid-October. In Dalian 70,000 tonnes of uncollected freight languished in the station, while hundreds of tonnes of expensive imported rubber had been lying around the port of Qinhuangdao for six months. In the transportation hub of Zhengzhou a ditch six metres deep was dug to dump goods, from cement bags to machinery. Much of it was damaged, a forlorn mound of bags and bundles, crates, barrels and drums.4In Shanghai, by the summer of 1961, goods estimated to be worth 280 million yuan had accumulated in canteens, dormitories and even on the streets, including 120 million metres of much-needed cotton. Much of the stock simply rotted or rusted away.5

Such was the breakdown in the transportation system that trains had to queue for their turn to enter a station. Both the tools and the manpower to move cargo were lacking. Brand-new unloading equipment turned out to be defective, a problem compounded by the fact that 100,000 porters and haulers had hastily been made redundant to save on salaries. Logistics and co-ordination were not among the strengths of the planned economy.6 To this had to be added a lack of incentives and downright hunger. Engine drivers, normally pampered by the regime, had generally been entitled to a personal allowance of some 25 kilos of grain a month in the past, but this was lowered to 15 kilos. In Dahushan, Liaoning, the grain was substituted by sorghum or millet, while in Shijiazhuang, Hebei, half of the monthly ration was delivered in sweet potatoes. Workers did the bare minimum, besides being weakened by poor diet.7 The mayhem also affected international shipping. Lost income as a consequence of chartered ships having to wait for days on end in the main ports of China alone amounted to £300,000.8

Local networks also collapsed. In Yunnan before 1958, more than 200,000 mules and donkeys carried food, clothes and supplies to the many villages tucked away in the mountains. They were replaced by horse carts, which grew from a mere 3,000 to well over 30,000. But horses cost far more in fodder, and they were badly managed by state enterprises, many dying during the famine. Carthorses, moreover, were ill suited to negotiate the steep mountain paths and rugged landscapes of the southern province, leaving many of the small villages isolated.9

Lorries foundered. Yunnan was given only half the petrol it needed in 1960, and by September some 1,500 were running on alternative fuels, from charcoal to lignite as well as sugarcane and ethanol.10 In Hunan vegetable oil instead of machine oil was added to engines, causing widespread damage.11 Even in Shanghai motorised rickshaws were taken off the streets while many of the buses changed to gas, some of it carried in enormous improvised gunny bags rather than in cylinders.12 Neglect also undermined deliveries. The Vehicle Transport Company in Guangzhou, for instance, boasted forty cars, most of them acquired since the Great Leap Forward. Of these three had already been ruined by 1961, while an average of twenty-five were in repair around the clock, leaving about a dozen in use.13 As the vehicles were pushed to the limit in the race to fulfil a faltering plan, the actual running costs increased. In 1957, by one estimate, a car cost just 2.2 yuan per 100 kilometres in spare parts and replacements, but 9.7 yuan by 1961. The main reason was constant use and poor maintenance.14

All manner of goods were delivered to the door in pre-revolutionary China, carried in baskets swung from a shoulder pole, carted on wheelbarrows or occasionally in donkey panniers. Itinerant traders reached even isolated villages in the hinterland, carrying cloth, crockery, baskets, coal, toys, candy and nuts as well as cigarettes, soap and lotions. In the cities vendors thronged the streets, offering every possible item from socks, handkerchiefs, towels and soap to women’s underwear.

When hawkers and traders gathered at regular intervals at an agreed location in the countryside, a periodic market emerged: a multitude of farmers, craftsmen and traders, all with their goods on back or cart, swarmed into a silent hamlet which was transformed into a busy scene with wares sold by the wayside or displayed on temporary stalls. In the towns and cities, hundreds of boutiques, shops, bazaars and department stores competed for attention, from hatters, shoemakers and drapers to photographers, all mixing with fortune-tellers, magicians, acrobats and wrestlers to offer amusement and commerce.

While traditional shops were low and open with the living quarters above, new department stores were towers of commerce, monuments of trade standing tall above the surrounding buildings. They could be found in every large city, illuminated at night with rows of electric lights, offering local and imported goods ranging from American canned sardines to child-size motor cars. The striking contrast between the elaborate department stores and traditional single-storey shops, often only next door, was typical of the diversity that ran through the whole structure of everyday life in the republican era.15

Most of this busy, bustling world vanished after 1949. Free trade was replaced by a planned economy. Markets were closed down. Spontaneous gatherings were forbidden. Hawkers and pedlars were taken off the streets, often forced into collective enterprises controlled by the state. The itinerant trader and the once ubiquitous blacksmith became relics of the past. Department stores were nationalised, their steady supply of goods from all over the world drying up and being replaced by state-mandated goods produced in state-owned enterprises to be sold at state-mandated prices. The owners of small shops were forced to become government employees. Mikhail Klochko remembered going to an obscure little store with hardly any goods at all in Beijing. He bought a pencil box out of pity for the wan shopkeeper and his two sickly children.16 The only prosperous shops were near the tourist hotels in cities like Beijing and Shanghai, offering furs, enamelware, watches, jewellery, embroidered silk pictures of landscapes and portraits of Marx, Engels, Lenin and Mao. Called Friendship Stores, they were reserved for foreign visitors and elite party members.

For ordinary people the choice was dire. Take the example of Nanjing, a once flourishing city on the south bank of the Yangzi which had served as the capital of the republic. Although the government clamped down on the free market, there were still well over 700 shops on the eve of the Great Leap Forward, selling their wares directly to the public. By 1961 a mere 130 had survived. Where a sophisticated network of manufacturers, traders and retailers had linked the city with some seventy counties and over forty cities across the country, the advent of rigid collectivisation led to a turning inward, as a mere six counties and three cities contributed to the local handicraft industry. As the plan replaced the market, the range of handicraft products halved to about 1,200. Even well-known heritage brands, from Golden Chicken hairpins to Yangzi River spring locks, buckled under the weight of the state. Variety in design suffered. Whereas some 120 different locks had been available before 1958, by 1961 only a dozen survived. Most were so similar that one key could open several padlocks. But prices for all products were higher, generally by about a third, in some cases double.17 The same could be said of foodstuffs. Since the launch of the Great Leap Forward some 2,000 food pedlars had been forced to change jobs in Nanjing. Previously individual hawkers had an intimate knowledge of complex market conditions and efficiently transported the vegetables to key delivery points in the city, but now a clumsy and rigid command economy only compounded the problems caused by famine in the countryside.18

The trade in surplus goods and waste material, thriving before 1949, also disintegrated. Lauding the widespread practice of recycling every conceivable object, Dyer Ball observed before the fall of the empire that poverty encouraged care to be given to the most insignificant trifle, turning everybody into a merchant.19 But the exact opposite happened during the famine: obsession with a master plan produced mountains of waste on the ground, since few people were given any incentives to recycle. In Guangzhou some 170 tonnes of waste material – from iron oxide to graphite powder – was heaped about the city in the summer of 1959. Before the Great Leap Forward, every scrap of metal or shred of cloth would have been recycled by a small army of independent pedlars, who made sure that rags, cans, plastic, paper and tyres reached a potential buyer. Many abandoned the trade after they had been forced to enrol in a large and unresponsive collective.20

While the rubbish accumulated, shortages of the most basic necessities became endemic. In Nanjing everything was scarce by the summer of 1959, even ordinary objects such as shoes and pots.21 Queues – the hallmark of socialism – were part of everyday life. As famine set in, they grew longer. In Jinan some factory workers took two days off work to wait in line to buy grain. Li Shujun queued for three days but failed even to get a ticket, which had to be exchanged for a number, which in turn had to be exchanged for grain – all in different queues.22 In Shanghai too working men and women had to queue for the few goods which reached the shops. The ritual started before daybreak, as everybody knew that the shops would be empty by the afternoon.23 Patience could wear thin. Fights broke out when some people used bricks to mark their place in a queue and these were then kicked over by others.24In Wuhan, where up to 200 people had to wait in a single queue all night to buy rice towards the end of 1960, tempers flared and scuffles erupted.25

The state rather than the market determined the price of goods. This was supposed to stabilise prices and enhance the purchasing power of the people. But farmers bought manufactured goods at inflated prices, although they were forced to sell grain and other foodstuffs to the state at rock-bottom prices – often so low that they made a loss, as we have seen. A colossal transfer of wealth took place from the countryside to the cities. A sense of the scale of this was indicated by Lan Ling, an official with the inspectorate in Qingdao. By compiling and adjusting the prices paid for food and goods since 1949, he found that the price for coal had increased by 18.5 per cent, soap by 21.4 per cent, shoes by up to 53 per cent, rope by 55 per cent, household goods by up to 157 per cent and ordinary tools by up to 225 per cent. In contrast the price paid by the state for grain had actually decreased, ranging from 4.5 per cent for wheat to 10.5 per cent for maize.26

Prices fixed by the state were rarely respected, if only because all sorts of additional charges could be made. A detailed investigation by the People’s Congress in Guangzhou found that there could be up to forty different transfer prices for the exact same type of metal bar. In the steel and iron industry many of the prices actually charged were 50 per cent higher than those mandated by the state. In some cases the price rocketed by a factor of ten, contributing to a slump in industrial production as company managers had a hard time adjusting a rigid budget to the violent fluctuations in the supply costs. The price of coal, too, was fixed, but private deals struck between different enterprises led to relentless upward pressure. The actual cost of production thus soared, forcing the state to subsidise industries even further by trying to keep the prices of finished goods down. This too failed, as just about everything became more expensive yet increasingly shoddy, from glass bottles and mothballs to hairpins and wooden clogs.27 In Wuhan, as everywhere else, the cost of a water bucket, an iron kettle or a small fruit knife had doubled in a year or so since the launch of the Great Leap Forward. In the smelting capital of the new China, an iron pot cost twenty-two yuan when five yuan would have sufficed in 1957.28 As Li Fuchun acknowledged in the summer of 1961, annual inflation was at least 10 per cent for everything from food and commodities to services, but it reached 40 to 50 per cent in some places. Some 12.5 billion yuan was squandered on goods worth only 7 billion.29

Other side effects of the planned economy appeared, because the profit motive rather than selfless dedication to the people’s needs always lurked just under the surface of the paper plan. In the midst of humanity’s greatest famine, a whole range of deluxe products were sold at a premium, from vegetables, cinema tickets and tea leaves to simple pails. State-owned enterprises used widespread shortages to upgrade some of their goods and boost profits.30 When the People’s Congress of Beijing decided to have a close look at the Beijing Department Store, the Stalinist flagship on Wangfujing, it found out how enterprises responded to inflationary pressure rather than to consumer demand. In 1958 around 10 per cent of all underwear in the store was in the higher price bracket. The bulk, 60 per cent, consisted of mid-range products accessible to most city dwellers. In 1961 more than half were luxury items, with a mere third carrying a mid-range price tag. This structural change came on top of inflation, which was estimated at 2.7 per cent each month.31

As state-owned behemoths replaced small shops, the responsibility for defective goods shifted away from the street towards remote and impenetrable bureaucracies.32 The plan, of course, had an answer to this problem, setting up ‘service stations’ (fuwuzu) for the benefit of the great masses. But they were few and far between, unable to cope with a deluge of shoddy goods and, most of all, utterly uninterested in serving the people. So in a poor country the cost of fixing an object often exceeded the cost of replacing it. In Wuhan the expense of having shoes resoled, pots repaired or keys cut was double the state-mandated prices, as service stations effectively enjoyed a monopoly over repair work. In Xiangtan, Hunan, it cost eight yuan to repair a fire pot but only nine yuan to buy a new one, while in many regions the cost of having socks darned was about the same as buying a new pair.33 Over the winter of 1960–1, as everybody was shivering from fuel shortages and inadequate clothing, repair centres in the capital were buried beneath heaps of defective goods. Apathetic employees merely pushed the stuff around, lacking the incentives, the tools and the supplies to tackle their jobs. Even simple nails to resole a pair of shoes were unavailable. In the Qianmen commune, in the heart of the capital, some sixty stoves lay about rotting. Broken furniture was strewn about the place, which was short of saws, planes and chisels.34

Even when service stations undertook to launder clothes, what should have been a relatively straightforward matter became caught in a hopeless quagmire. A cumbersome bureaucracy involved a whole series of separate steps, from registering the items and issuing a receipt to handing out the washed clothes, all these operations being performed by different people, involving a third of the workforce. Those who actually did the washing rarely managed more than ten items a day. Everything was run at a loss and charged to the state, despite the high prices. On Shantou Road, Shanghai, a small laundry paid 140 yuan in salaries each month, although it made only about 100 yuan a month in income, not counting numerous lost items of clothing that had to be compensated for.35 Of course most ordinary people would have preferred to repair their clothes, shoes and furniture themselves, but their tools had been taken away during the iron and steel campaign. Lao Tian remembered that in Xushui – one of the country’s model communes – for several years his mother had to queue up to borrow the only needle that had not been confiscated in the neighbourhood.36

If you find an error please notify us in the comments. Thank you!