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Old Menace in New China: Coastal smuggling, illicit markets, and symbiotic economies in the early People's Republic*

Published online by Cambridge University Press:  20 June 2017

PHILIP THAI
PHILIP THAI*
Affiliation:
Northeastern University, United States of America Email: p.thai@northeastern.edu
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Abstract

This article explores the ambiguous role of coastal smuggling during the first decade and a half of Communist rule (1949–65). Fearing that the illicit flow of commodities siphoned critical revenues and undermined foreign policy, Communist China repurposed and expanded Nationalist China's war on smuggling while employing novel tactics of mobilization. Yet smuggling was not just a threat; it was also a lifeline that alleviated widespread material shortages and supplied the everyday needs of individuals and firms during the tumultuous transition to central planning. Businesses from ‘underground factories’ to state-owned enterprises relied on black markets to meet ambitious production targets and circumvent bottlenecks in official supply channels. Smuggling was thus more than just ‘corruption’ practised by officials—it was also a ‘creative accommodation’ employed by broad swaths of social actors coping with the enormous changes. This article argues that the nascent command economy and the vibrant underground economy existed symbiotically rather than antagonistically. Exploration into this complex relationship reveals many cross-border connections between Communist China and the capitalist world that both complemented and undermined domestic state consolidation.

Type
Research Article
Information
Modern Asian Studies , Volume 51 , Issue 5 , September 2017 , pp. 1561 - 1597
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Copyright
Copyright © Cambridge University Press 2017 

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Footnotes

*

I thank Emily Baum, Wesley Chaney, Gretchen Heefner, Koji Hirata, Jason Michael Kelly, Steven Pieragastini, Margaret Tillman, and anonymous reviewers of Modern Asian Studies for their critical feedback. I am also grateful for the suggestions I received from participants at the Ohio State University Institute for Chinese Studies lecture series (esp. Christopher Reed and Jeffery Chan); the Boston University ‘Binding Maritime China’ conference (esp. Heather Streets-Salter); the Hagley Museum and Library ‘Doing Business Across Borders’ conference (esp. Philip Scranton); the Association for Asian Studies 2016 annual conference (esp. Karl Gerth and Elizabeth Remick); and the Vanderbilt University Legal History Colloquium (esp. Thomas McGinn and Ruth Rogaski). A Social Science Research Council (SSRC) fellowship and a Northeastern University Hong Liu Asian Studies Fund Award supported the research for this article.

References

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16 See, for example, Neibu Cankao (hereafter NBCK), 2765, 5 May 1959, p. 19. Some officials, however, viewed smuggling as a more innocuous ‘contradiction among the people’ (renmin neibu maodun).

17 Internal reports of repeated coastal incursions by American and Nationalist ‘secret agents’ (tewu) only fed official paranoia. See, for example, Ministry of Foreign Trade to State Council, 27 January 1958, in Zhonghua Renmin Gongheguo jingji dang'an ziliao xuanbian: duiwai maoyi juan, 1958–1965 [Select Documents and Materials on Economic Affairs of the People's Republic of China's Economic Archives: Foreign Trade, 1958–1965] (hereafter JJD), Zhongguo shehui kexue yuan and Zhongyang dang'an guan (eds), Jingji guanli chubanshe, Beijing, 2011, p. 599. NBCK, 101, 7 May 1954, pp. 75–80; and 129, 10 June 1954, pp. 139–41.

18 Dangdai Zhongguo haiguan, pp. 15–16; Song, Y. and Hu, X., ‘Xin Zhongguo di yi ge renmin haiguan—Yantai haiguan’ [‘New China's first People's Customs: the Yantai Customs’], Zhongguo haiguan, no. 6, 2001, pp. 52–3Google Scholar.

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21 A Jiangxi native, Kong (1906–90) joined the Communist Youth League in 1924 and cut his teeth as a political operative during the party's dark days of late 1920s and 1930s. He slowly ascended the party hierarchy in a career that took him from Moscow, to Yan'an, to Chongqing, to Manchuria. Zhongguo haiguan baike quanshu bianzuan weiyuanhui (ed.), Zhongguo haiguan baike quanshu [‘Comprehensive encyclopedia of the Chinese Customs Administration’], Zhongguo da baike quanshu chubanshe, Beijing, 2004, p. 327.

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24 RM, 17 May 1956, p. 4.

25 Zhongguo renmin zhengzhi xieshang huiyi gongtong gangling, article 17, 29 September 1949, in Zhonghua Renmin Gongheguo fagui huibian [Collection of Regulations from the People's Republic of China (1955–2005)], Falü chubanshe, Beijing, 1954/55, vol. 1, p. 21.

26 For minor and major smuggling violations, see zongshu, Haiguan (ed.), Zhonghua Renmin Gongheguo zanxing haiguan fa [The Provisional Customs Law of the People's Republic of China], Renmin chubanshe, Beijing, 1951 Google Scholar, chapter 17, articles 175 and 176, respectively.

27 Haiguan zongshu, Zhonghua Renmin Gongheguo zanxing haiguan fa, chapter 17, article 178.

28 ‘Guanyu fan zousi yundong de xingdong jihua’, Shanghai Municipal Archives, Shanghai (hereafter SHMA), B6-2-330, 23 November 1957.

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31 Kong, Y., ‘Haiguan zhidu de lishi biange yu Zhonghua Renmin Gongheguo zanxing haiguan fa’ [‘The historical transformation of the customs system and the provisional customs law of the People's Republic of China’], in Xin Zhongguo haiguan [New China Customs], guanliju, Haiguan (ed.), Xinhua shudian, Shanghai, 1951.Google Scholar

32 See, for example, Dagongbao (hereafter DG) (Hong Kong), 29 February 1952, p. 2.

33 Nanfang ribao (hereafter NF), 23 December 1957, p. 3; DG, 24 December 1957, p. 3.

34 Jiefang ribao (hereafter JF), 27 March 1958, p. 27.

35 DG, 3 November 1957, p. 3.

36 Guangzhou haiguan bianzhi bangongshi (ed.), Guangzhou haiguan zhi [Gazetteer of the Guangzhou Customs], Guangdong renmin chubanshe, Guangzhou, 1997, p. 286. For typologies of campaigns, see Strauss, J., ‘Morality, coercion and state building by campaign in the early PRC: regime consolidation and after, 1949–1956’, The China Quarterly, no. 188, December 2006, pp. 891–912.CrossRefGoogle Scholar

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38 NF, 19 August 1957, p. 2; Gongshang ribao (hereafter GS), 22 August 1957, p. 3; South China Morning Post (hereafter SC), 21 August 1957, p. 8.

39 ‘Shanghai haiguan zhi’ bianzuan weiyuanhui (ed.), Shanghai haiguan zhi [Gazetteer of the Shanghai Customs], Shanghai shehui kexueyuan chubanshe, Shanghai, 1997, p. 375.

40 Ministry of Foreign Trade to State Council, 27 January 1958, in JJD, p. 600.

41 DG, 26 October 1957, p. 3.

42 Dangdai Zhongguo haiguan, p. 53; ‘Shanghai haiguan zhi’ bianzuan weiyuanhui, Shanghai haiguan zhi, p. 373. JF, 22 March 1958, p. 5; 27 March 1958, p. 2. For description of the Beijing exhibition, see SC, 30 July 1958, p. 20.

43 Guangdong Provincial People's Committee to Various Provincial Organs, 1 November 1957, Guangdong Provincial Archives, Guangzhou (hereafter GDPA), 235–41.

44 Lieberthal, K., Governing China: From Revolution through Reform, 2nd edn, W. W. Norton & Co., New York, 2003, pp. 65–8Google Scholar. For more on the ‘educative function’ of mass trials and ‘paternalistic jurisprudence’, see Mühlhahn, Criminal Justice in China, pp. 180–6.

45 See, for example, Z. Yin, ‘Diguo zhuyi ji canyu feibang de zousi pohuai huodong zuo douzheng’ [‘The struggle against imperialism and smashing smuggling activities by residual bandit gangs’], in Xin Zhongguo haiguan, Haiguan guanliju (ed.), 1951.

46 Ministry of Foreign Trade to State Council, 27 January 1958, in JJD, p. 599.

47 GS, 14 December 1957, p. 3.

48 DG, 11 March 1952, p. 2; and Huaqiao ribao (hereafter HQ), 26 March 1952, p. 4.

49 White, ‘Low power’, p. 58.

50 Shanghai Customs to General Customs Administration, 23 November 1960, SHMA, B170-1-711. One of the partners, however, had already been incarcerated on unrelated charges.

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54 Guangzhou Customs to Guangdong Provincial People's Committee, 29 January 1957, GDPA, 222-2-42. See also NBCK, 2127, 13 February 1957, p. 168.

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56 ‘Youguan waihuo shichang de yixie qingkuang’ [‘Some situations regarding markets for foreign goods’], Shanghai Municipal Industrial and Commercial Administration Bureau to Municipal People's Committee Office and Municipal Finance and Trade Office, 7 November 1962, SHMA, B182-1-1163.

57 NBCK, 2328, 20 October 1957, pp. 14–15.

58 Instructions to Ministry of Foreign Trade, Ministry of Commerce, Ministry of Finance, and State Administration for Industry and Commerce, 22 June 1962, JJD, p. 610.

59 For the Hong Kong-China currency traffic in the immediate years preceding and following 1949, see Schenk, C. R., ‘Another Asian financial crisis: monetary links between Hong Kong and China, 1945–50’, Modern Asian Studies, vol. 34, no. 3, July 2000, pp. 739–64Google Scholar; and Shiroyama, T., ‘The Hong Kong–South China financial nexus: Ma Xuchao and his remittance agency’, in The Capitalist Dilemma in China's Communist Revolution, Cochran, S. (ed.), Cornell East Asia Series, Ithaca, New York, 2014 Google Scholar. Although Shenk does not explicitly say so, China was also a source of gold flowing between Hong Kong and Southeast Asia during the 1950s. See Shenk, C. R., ‘The Hong Kong gold market and the Southeast Asian gold trade in the 1950s’, Modern Asian Studies, vol. 29, no. 2, May 1995, pp. 387–402.CrossRefGoogle Scholar

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61 Aomen xi'nan chubanshe, Huanxiang fan Gang xuzhi [Things to Know When Returning to Native Village and Returning to Hong Kong], Aomen xi'nan chubanshe, Macau, 1956, pp. 30–2.

62 RM, 10 January 1958, p. 4. The accusation had some merit: the guide was certainly pro-Nationalist in its sympathies and makes candid, disparaging remarks about life under Communist rule.

63 For, for example, NF, 16 August 1957, p. 7; and Guangzhou Customs to Guangdong Provincial People's Committee, 29 January 1957, GDPA, 222-2-42.

64 ‘Shanghai haiguan zhi’ bianzuan weiyuanhui’, Shanghai haiguan zhi, p. 352.

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66 For more on the PRC's policies towards minorities during the 1950s and Han chauvinism, see Schwarz, H. G., ‘Ethnic minorities and ethnic policies in China’, International Journal of Comparative Sociology, vol. 20, January 1979, pp. 137–50.CrossRefGoogle Scholar For treatment of minorities regarding criminal matters including smuggling, see Zhao, B., ‘Lun shaoshu minzu gongmin de xingshi zeren wenti’ [‘On the problem of criminal responsibility of ethnic minority citizens’], Zhongguo faxue, no. 5, 1988, pp. 65–72.Google Scholar

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69 ‘Shaoshu minzu danbang fanyun sihuo de gaikuang’ [‘The situation of ethnic minority peddlers selling smuggled goods’], Shanghai Customs to Shanghai Municipal People's Committee, 11 June 1957, SHMA, B6-2-286. ‘Guanyu zousi jinkou de yang zahuo neiyun xiaoshou de qingkuang baogao’ [‘Report on the situation concerning the hidden sales of smuggled assorted foreign goods’], Shanghai Customs to Shanghai Municipal Party Committee, Finance and Trade Work Department, 22 April 1957, SHMA, A65-2-37.

70 NBCK, 52, 8 March 1952, pp. 61–5.

71 SC, 10 July 1951, p. 10. For an anti-Communist exposé of smuggling and corruption in Guangdong, see Ba, D., Yue gong zousi zhenxiang [The True Situation of Smuggling by Communists in Guangdong], Ziyou chubanshe, Hong Kong, 1951.Google Scholar

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73 See, in particular, Bren and Neuburger, Communism Unwrapped; Hessler, J., A Social History of Soviet Trade: Trade Policy, Retail Practices, and Consumption, 1917–1953, Princeton University Press, Princeton, 2004 Google Scholar; Kornai, J., Economics of Shortage (2 vols), North Holland, Amsterdam, 1980 Google Scholar; Kornai, J., The Socialist System: The Political Economy of Communism, Princeton University Press, Princeton, 1992 CrossRefGoogle Scholar; and Łoś, The Second Economy in Marxist States.

74 Lardy, N., ‘Economic recovery and the 1st Five-Year Plan’, in The People's Republic: The Emergence of Revolutionary China 1949–1965, Twitchett, D. and Fairbank, J. K. (eds), Cambridge University Press, Cambridge, 1987 Google Scholar, vol. 14, part 2, p. 175; and Naughton, B., The Chinese Economy: Transitions and Growth, The MIT Press, Cambridge, Massachusetts, 2007 Google Scholar, p. 66. Guangzhou, in particular, was excluded from industrialization under the Five-Year Plan and had to focus on developing its agricultural and commercial sectors instead. See Vogel, E. F., Canton under Communism: Programs and Politics in a Provincial Capital, 1949–1968, Harvard University Press, Cambridge, Massachusetts, 1969 Google Scholar, pp. 128–32.

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76 Kirby, ‘China's internationalization’, p. 883.

77 See, especially, Solinger, D. J., Chinese Business under Socialism: The Politics of Domestic Commerce, 1949–1980, University of California Press, Berkeley, 1984 Google Scholar; and Walder, A. G., China under Mao: A Revolution Derailed, Harvard University Press, Cambridge, Massachusetts, 2015 CrossRefGoogle Scholar.

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79 See, for example, NBCK, 2373, 3 December 1957, pp. 15–19; and NBCK, 3263, 1 September 1961, pp. 7–9.

80 SC, 5 January 1954, p. 13.

81 For pre-1949 status of watches, see Dikötter, F., Exotic Commodities: Modern Objects and Everyday Life in China, Columbia University Press, New York, 2006 Google Scholar, p. 214. The other two of the ‘big three’ were radios and bicycles. Sewing machines was often added to the mix as the ‘big four’. SC, 28 September 1960, p. 14.

82 Aomen xi'nan chubanshe, Huanxiang fan Gang xuzhi, pp. 30–1.

83 ‘Diaocha shoubiao zousi de chubu cailiao’ [‘Preliminary research materials on wristwatch smuggling’], Shanghai Customs to Shanghai Municipal People's Committee, 11 June 1957, SHMA, B6-2-286.

84 The Swiss Watchmakers’ Guild accused the British colony of being ‘the world's center for the nefarious business of applying false trade marks on watches’. See SC, 15 April 1955, p. 16.

85 NBCK, 4, 12 January 1956, pp. 65–6.

86 For Shanghai, see NBCK, 62, 24 March 1956, pp. 562–3. For Tianjin, see NBCK, 92, 24 April 1956, pp. 476–7.

87 ‘Diaocha tanhua wugang daotou zousi de chubu cailiao’ [‘Preliminary research materials on the smuggling of carbonized tungsten cutters’], Shanghai Customs to Shanghai Municipal People's Committee, 11 June 1957, SHMA, B6-2-286.

88 Ibid.

89 Shanghai Customs to Shanghai Municipal People's Committee, 25 January 1957, SHMA, B6-2-286.

90 ‘Diaocha nilongmao zousi de chubu cailiao’ [‘Preliminary research materials on the smuggling of nylon’] and ‘Diaocha kekefen zousi de chubu cailiao’ [‘Preliminary research materials on the smuggling of cocoa’], Shanghai Customs to Shanghai Municipal People's Committee, 11 June 1957, SHMA, B6-2-286.

91 White, ‘Low power’, p. 69.

92 Ministry of Foreign Trade to State Council, 27 January 1958, JJD, p. 599.

93 Shanghai Customs to Shanghai Municipal People's Committee, 25 January 1957, SHMA, B6-2-286.

94 Shanghai Customs to Shanghai Municipal People's Committee, 11 June 1957, SHMA, B6-2-286.

95 See, for example, Brown, J., City versus Countryside in Mao's China: Negotiating the Divide, Cambridge University Press, Cambridge, 2012 CrossRefGoogle Scholar, pp. 40–3, 73–5.

96 See, for example, Guangdong sheng difang shi zhi bianzuan weiyuanhui (ed.), Guangdong sheng zhi: haiguan zhi [Guangdong Provincial Gazetteer: Customs Gazetteer], Guangdong renmin chubanshe, Guangzhou, 2002, p. 260.

97 ‘1962 nian san jidu zousi qingkuang cailiao’ [‘Materials on the smuggling situation of the third quarter of 1962’], Shanghai Customs Anti-Smuggling Department, 16 October 1962, SHMA, B182-1-1163. Similar data were reported elsewhere. See, for example, Guangdong sheng difang shi zhi bianzuan weiyuanhui, Guangdong sheng zhi: haiguan zhi, p. 265.

98 For Chen Yun's ‘high-price policy’, see Solinger, Chinese Business under Socialism, pp. 107–12; and Lardy, N., ‘The Chinese economy under stress, 1958–1965’, in The People's Republic: The Emergence of Revolutionary China 1949–1965, Twitchett, D. and Fairbank, J. K. (eds), Cambridge University Press, Cambridge, 1987 Google Scholar, vol. 14, part 1, p. 394.

99 NBCK, 3263, 1 September 1961, p. 9.

100 The increase of returnees in the early 1960s—who left Indonesia and Malaysia in response to anti-Chinese policies—also led to a corresponding increase in smuggling. See Jiulong haiguan bianzhi bangongshi (ed.), Jiulong haiguan zhi [Kowloon Customs Gazetteer], Guangdong renmin chubanshe, Guangzhou, 1993, p. 288.

101 Dangdai Zhongguo haiguan, p. 225.

102 Ministry of Foreign Trade to State Council, 27 January 1958, JJD, p. 599. NBCK, 2328, 9 October 1957, pp. 3–14.

103 NBCK, 2266, 25 July 1957, pp. 4–5; and NBCK, 2468, 29 April 1958, pp. 14–15.

104 Guangzhou Customs to Guangdong Provincial People's Committee, 18 June 1959, GDPA, 235/241.

105 See, especially, Burns, ‘Rural Guangdong's’; Chan and Unger, ‘Grey and black’; and Oi, State and Peasant.

106 Ministry of Foreign Trade to State Council, 27 January 1958, JJD, p. 599.

107 See, in particular, Muscolino, M. S., Fishing Wars and Environmental Change in Late Imperial and Modern China, Harvard University Asia Center, Cambridge, Massachusetts, 2009 CrossRefGoogle Scholar; and Murray, D. H., Pirates of the South China Coast, 1790–1810, Stanford University Press, Stanford, 1987.Google Scholar

108 NBCK, 139, 19 June 1953, pp. 313–15.

109 NBCK, 2035, 26 October 1956, pp. 1246–8.

110 NBCK, 2468, 29 April 1958, pp. 14–15. For early PRC fishery reforms, see Muscolino, Fishing Wars, pp. 181–6.

111 NBCK, 2855, 26 August 1959, pp. 17–18. Other reports recounted cases of fishermen sailing to Hong Kong to take advantage of foreign-sponsored relief programmes. See, for example, NBCK, 118, 29 May 1956, pp. 505–6.

112 Scott, J. C., The Art of Not Being Governed: An Anarchist History of Upland Southeast Asia, Yale University Press, New Haven, 2009.Google ScholarPubMed

113 Coates, A., ‘Cheung Chau’, in Southern District Officer Reports: Islands and Villages in Rural Hong Kong, 1910–60, Strickland, J. (ed.), Hong Kong University Press, Hong Kong, 2010 Google Scholar [1955], p. 193.

114 NBCK, 90, 20 April 1955, pp. 317–18.

115 Szonyi, M., Cold War Island: Quemoy on the Front Line, Cambridge University Press, Cambridge, 2008 Google Scholar, p. 94.

116 Fishermen were active participants of cross-strait smuggling when hostilities with Taiwan were relaxed during the 1970s and 1980s. See M. Lin, ‘Jieyan shiqi daluhuo zousi Taiwan diqu wenti (1949–1987)’ [‘The problem of smuggling of mainland goods in the Taiwan area during the period of marital law (1949–1987)’], MA thesis, National Taiwan Normal University, 1998; Muscolino, M. S., ‘Underground at sea: fishing and smuggling across the Taiwan Strait, 1970s–1990s’, in Mobile Horizons: Dynamics across the Taiwan Strait, Yeh, W. H. (ed.), Institute of East Asian Studies, University of California, Center for Chinese Studies, Berkeley, 2013 Google Scholar; Szonyi, Cold War Island; and S. Wang, ‘Gaige kaifang chuqi Fujian fan zousi shulun’ [‘A discussion of anti-smuggling in Fujian in the early days of reform and opening’], Zhonggong dangshi yanjiu, no. 5, 2006, pp. 96–104.

117 Łoś, The Second Economy, p. 5.

118 Peterson, Overseas Chinese, p. 7.

119 Esherick, J. W., ‘Ten theses on the Chinese revolution’, Modern China, vol. 21, no. 1, January 1995, p. 48.CrossRefGoogle Scholar

120 See Brown and Pickowicz, The Dilemmas of Victory; and, especially, Dikötter, F., The Tragedy of Liberation: A History of the Chinese Revolution, 1945–1957, Bloomsbury Press, New York, 2013.Google Scholar

121 Ren, X., ‘The second economy in socialist China’, in The Second Economy in Marxist States, Łoś, M. (ed.), St. Martin's Press, New York, 1990 Google Scholar. Scholarship in this vein typically overemphasizes the radical departure of the reform era and overlooks the enduring continuities from pre-1978 and pre-1949 China.

122 Zafanolli, W., ‘A brief outline of China's second economy’, Asian Survey, vol. 25, no. 7, July 1985, p. 736.CrossRefGoogle Scholar