REPORT ON KWANGTUNG COMMERCIAL FIRMS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000600320018-6
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: August 30, 2011
• Sequence Number: 18
• Publication Date: June 9, 1950
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/08/31 :CIA-RDP80-00809A000600320018-6
..: ~-
. CENTRAL INTELLIGENCE AGENCY ,, REPORT 50X1-HUM
" INFORh(ATION FROM
cOR~IC3N DOCOJMENTS OR RADIO EsROADGAS'rS CD P:O.
COUNTRY Ch9.,na
SUBJECT Economic -Economic controls
HOW
PUBLISHED Daily newspaper
WHERE
PUBLISHED Canton
DATE
PUBLISHED 5 May 1950
LANGUAGE
rnu ooeurirr coarur~ uroerano~ ~narnre see ;unora~ ovaw
or TM~ urma sr~m nm^ rxw ^ue~re or UM011alit aR ee
annanor
u. ~. e.. ~~ pro a~, Ae anion. m rursnnwM ow rue
iiaiaoi7 ui ~iinroovcnoi o, Txu ioa~i no Ii1ROY?'a /~
Nan-Yang Jih-pao.
DATE OF
iNFORMATfO"! 1g50
DATE DIST. 9 Jun 1950
SUPPLEMENT TO
REPORT N0.
THIS IS UNEVALUATED INFORMATION
REPORT ON KWAIQGTUNG COMMERCIAL FIl2Mu
Despite a number of defects; the nationally operated commercial firms
established aYter the liberation in the eight special districts of Keang-
tung (Tung-Chiang, Chao-shah, Hsing-mei, Chu-Chiang, Pei-Chiang, Nan-1u,
Yueh-thong, and Hsi-Chiang) have made a basically good showing during
their short operational period oY 4 months:
Process of Establishing Agencies
Since the various districts ware liberated at differQnt times, some
commercial e.eencies were established sooner than others, e.g., in Tung-
chiang and Chao-shah. 711 :pril 1~':?, +he ~innopr v,~_rnin Corporation of
the Chao-share Trade Corporation appeared at Ho-p'o and, in September, the
Tung-Chiang Trade Corporation opened in Lao-lung. When all of Kwangtung
had been liberated, the two firms went into Shen-t'ou and Rui-thou, respec-
tively, while trade agencies were continually being set up in various other
districts.
By the middle of Mardi;. it was estimated that there were eight district
trade corporations and ever 30 subsidiary corporations and staff offices in
the whole province.
Goals and Conditions
For several months past, the commercial system in the various districts
has borne the responsibility of promoting the free exchange of goods between
rural and. urban sections, regulating the market, stabilizing com-uodity prices,
and maintaining the people's livelihood. Now that these goals have been
achieved, the following conditions prevail:
U 1. The struggle between people's currency and foreign currencies or
gold yuan has ;yet to be resolved, althoug,n people's currency has already
forced foreign currencies and the gold Yuan out of public circulation into
the black market.
iIFlCATION cONFIDSSTIAL CON~I~EN~1~-~
~w
urt
Sanitized Copy Approved for Release 2011/08/31 :CIA-RDP80-00809A000600320018-6
 Sanitized Copy Approved for Release 2011/08/31 :CIA-RDP80-00809A000600320018-6
2. Internal communications have not recovered completely. Numerous
KMT agents in the various districts continue to sabotsge cc;,~unication: in
town and country. In Shanghai, the remaining KMT Bandits incite riots and
maintain their blockade. All of these things impede the free flow of com-
merce to ell parts.
3. Many cadres lack an adequate grasp of business conditions.
..~.-...1 ..i noi?i n
4. mere 19 neither GCi14i'dl 1C6lLCi'DYiY :ivi ..cow u.~ vrgv..+....-..-....?
Although these elements exist, the trade agencies in the various dis-
tricts have accomplished much, under the careful leadership of the Provin-
cial Trade Office and the local Party.
Commodity Sales Data
In the Tung-chiaag district, the trade corporations sold the following
items between the beginning of January and the middle of March 1950:
20-gauge cotton yarn 109,600 pounds
Rubber-soled shoes 3,108 pairs
Gasoline 335 barrels
Kerosene 6,1+78 pocmds
Milk 1, 502 pounds
A great quantity of consumers` cosawdi.ties and printing materials also
appeared on the market. While these goods were tieing dumped, the following
items were brought in:
Edib?.e amain
Salt
Peanut oil
Native ci.oth
Yello;t soybeans
Firewood
2,547,800 market catties
1,717,748 market catties
65,416 catties
1,329 bolts
15,391 catties
49,730 faggots
There is also some is+;erprovincial trade. The Pei-Chiang Trade Corpora-
tion exchanged 10,000 piculs of salt and a quantity of gasoline for 43,000
piculs of edible grain from Hunan. Salt frcm C'n'ao-nan ancZ native cloth
from Heing-mei can be bartered for provisions from Southern Kiangsi and
Western Fukien. Sugar can be sent from Chu-Chiang to Hunan, Shanghai,
and Tientsin, in exchange for native provisions and essential goods. Salt
from Chan-Chiang is bartered for rice from Kwangsi.
~letween November 1949 and the middle of February 1950, the Chao-shah
district exported a total of over 940,000 market catties in hemp, refined
sugar, peanut oil, prunes, and live pigs. A portion of this was exported
to Hong Hong, priced at 156,343 Hong Kong dollars, and some went to North
China pro-rated at more than 51,000 market piculs of rice. Machinery, cotton
thread, petroleum wax, automotive parts, and printed matter imported during
January an3 February 1950 came to the equivalent value of 70,000 market piculs
of rice.
The Chu-Chiang Trade Corporation exported 450,000 catties of firewood to
Macao .in exchange for kerosene, gasoline, and r..ewsprint.
To help the farmers, trade corporations in the various special districts
are also buying up local products on a temporazy basis, according to local
conditions. In Yueh-thong, 3,~ Piculs of garlic were purchases. In the
~~_chiang district, purchases included 20,000 catties of tungsten and
GON~IliE~6~lAl
Sanitized Copy Approved for Release 2011/08/31 CIA-RDP80-00809A000600320018-6
 Sanitized Copy Approved for Release 2011/08/31 :CIA-RDP80-00809A000600320018-6
vvt~t ~yy,.,..?-
270,000 catties of paper. The Chan-Chiang market in Nan-lu bought 9,499
fodder bage and 1,1;0 horse hi~~a. The Hsing-~?i district bougl.t 2,000
piculs of ceramic bowls. In addition, the various districts purchased
large lots of salt, oil, and sugar.
Importance of Commodity Controls
To stabilize the market effectively, it is necessary first to gain
-ontrol over a larva z?ani;ity of cnimnnclities. During the period itmnadiately
following their establishment, the trade corporations in the various districts
first gained control of provisions. During the past few months, large
quantities of cotton cloth, gasoline, kerosene, salt, and everyday commodi-
ties were bartered for farmers' provisions. After the trade corporations
has been buying in proviaions for several months, the farmers were then able
to avoid being scalped by the commercial middlemen. This also created as
advantageous situation for the corporations to control the market. While
commodity prices fluctuated, especially in the spring of 1950, the people
in all districts became aware of the operations of the trade corporations.
The price of food in Shih-ch'i, Chung-shan Haien, had gone beyond control;
before spring, the price of rice had been 300,000 yuan per picul. After
the Chu-Chiang Trade Corporation unloaded provisions onto the market, food
prices ret~_ned to a point above 50,000 yuan. During that same period, the
price of rice in Ho-p'ing Haien, Tung-Chiang, rose from 200 yuan per market
catty to 1,600 yuan. But when the people saw that the Tuag-Chiang Trade
Corporation Staff Office had food to sell, food prices quickly dropped. These
facts clearly demonstrate the importance of commodity control..
Supporting the Development of Cooperatives
Trade corporations in the various districts are powerfully supporting
the development of the cooper:~tives, since the proper functioning of?coopera-
tives will greatly assist th_ trade corporations in the future. Preliminary
data indicate that there are more than 120 cooperatives in the various dis-
tricts. Twenty percent of these axe production cooperatives and the remainder
are either supply and marketing cooperatives or consumers' operatives. The
membership of the cooperatives consists mainly of workers, farmers, and in-
dependent craftsmen.
Ia fiiu'ag-ciaiaag and Yuchachu:g, cooperatives have been voluntarily o*ganized
by dependent families of overseas Chinese. Many of the trade corporations
supply proviaions and everyday commodities to supply and marketing cooperatives
and conau,uara' coopare,tivea on a wholesale basis, at a 2-percent discount.
In Hsing-mei, formerly famous for its production of cloth, the Hsing-mei
Trade Corporation, devised a system of loans for purchase of goods, designed
to help unemployed weaving-mill .workers. For the loans, it was necessary to
produce collateral; but it was difficult for the workers to find collateral.
Consequently, the trade corporation organized them into a production coopera-
tive so that they could be mutually responsible for collateral. Loans of
foreign cotton yarn were made, according to the quantities to be produced;
then the y.^.rn was woven into marketable material and exchanged a~t the coopera-
tive for mire yarn. In this manner they were able to continue. production.
Durix~ March, the Hsing-mei Trade Corporation loaned 87 skeins of 23-gauge
yarn, organized 27 production cooperatives, and so]'.ved the living problems
of 954 weaving-mill workers and over 200 independent craftsmen.
~IIN~IDENTIAl.
Sanitized Copy Approved for Release 2011/08/31 :CIA-RDP80-00809A000600320018-6
 Sanitized Copy Approved for Release 2011/08/31 :CIA-RDP80-00809A000600320018-6
c,a->nt(I~~I~Tt~~
cox~~m~T1Ar. 50X1-H U M
Problems and Trends
At this time, when peopled currency has not yet ta::en over the market
completely, the trade corporations are encountering obstacles in their use
of cash. During the period when commodity prices were fluctuating, things
were especially difficult, as the people urgently needed goods but the
cooperatives had trouble trying to re-stock. At the same time,~some
agencies would purchase commodities, hold them for a time then sell them
t"""'' t0 the t^?rde n,.nnra+inna
ua~.n ......r--.-___._ .
In addition, 'the organization of these agencies is still imperfect and
their leadership is not yet centralized. The system of reports and instruc-
tions also remains imperfect. ??e hove problems which cannot be solved in a
short time.
The lack of real maturity in business e:.terprises and of clear comprehen-
sion of market conditions rendered the various trade corporations powerless to
take the initiative at the several occasions when fluctuations in the money
market caused prices to skyrocket. Great losses axe caused by the radree'
ignorance of business matters: one ship carrying salt because it had been
loaded beyond capaclty. There is also the problem of avarice. But all of
these faults which should be rectified are now in 'the process of correction. --
Chlen Han-chieh. ( ~ i~ *, )
Sanitized Copy Approved for Release 2011/08/31 :CIA-RDP80-00809A000600320018-6