The Press WEDNESDAY, JUNE 6, 1956. Trade With China

Press, Volume XCIII, Issue 27987, 6 June 1956, Page 12

The Press WEDNESDAY, JUNE 6, 1956. Trade With China

Trade between China and Western countries is evidently about to expand substantially The announcement tha the strategic embargo on Malayan sales of rubber is to be waived and that other new' exemptions are being considered follows a report that Canada is about to make a big trade deal with China. China’s sterling balances have grown rapidly-in the last few months, in spite of purchases from Russia and Egypt with sterling and row stand at about £ 100,000.000. China's ability to pay for at least some of the goods it wishes reimport disposes of one of the carriers to trade. Another formidable one is the Western strategic embargo. But this, too, is being lowered in spite of American feeling against concessions. The British Prime Minister (Sir Anthony Eden) made some progress in February when he obtained President Eisenhowers promise that the United States would review the embargo, which is much higher against trade with China than against trade with Russia. Mr Eisenhower could see the force of the argument that goods on the Chinese banned list could be bough* -by China from Russia, which in 'turn would buy them from the West. At the same time, this is one of the reasons why Americans generally are against further concessions. Somewhat reluctantly they agreed to a revision of controlled strategic items in 1954. because other Western rations had made it clear that they were going to trade with Russia in some or all of the-controlled items, with or without American consent. The list of strategic goods was cut in half: but even in those that remained some trading has been cone. According to the United States Battle Act. any country trading with Russia in any of the banned items is denied American foreign aid unless the President has agreed to the transaction. The fact that Mr Eisenhower has consistently agreed irritates Congress, which considers that its law is being regularly evaded by the Administration and its allies. However, the Americans must be conscious that they are in a minority and that other countries feel they should have as much

freedom to trade with China as with Russia. Although trade with China is not likely to be more than a tiny s proportion of world trade, it is an < important proportion to some j countries. The interesting point is China’s . keenness to import goods, particu- ( < larly capital equipment, from the J West. Apparently Russia is unable;; to supply China’s needs in important ; categories. One cf these is the ’ .agricultural tractor. This is still on ■ the banned list, but an exemp- ’ •tion from the embargo has been ' granted. The Chinese Government 5 has estimated its requirements • over the next 12 years at 1,400,000 > tractors, and is chiefly interested in * British and German models. The : figure is probably exaggerated, because the technical ability of ] Chinese agriculture to achieve such ’ a high degree of mechanisation in ; a short time is tioubted. So is: China’s ability to find anything up to £600.000,000 to pay for thej’ tractors. But evidently the Chinese ' wart a good many tractors, and the : ■ ancillary agricultural machinery./ Other opportunities for trade undoubtedly exist. A special difficulty ; of trading with a totalitarian government in any circumstances must •be recognised. The flow’ of business ’ can be cut off at any time to suit • a change in the planned economy. > The supplier of imported goods must 1 know that he cannot rely on a : • permanent market for his wares or . the personal preference of those. ; who use them. The preferences of • individuals have no place in the - Communist system. Accordingly, ! exporters to Communist countries • cannot afford to invest heavily in ; equipment to meet an unpredictable f demand.