Socialist Workhorse to Capitalist Powerhouse: Developing a Modern Chinese Commercial Fleet in the Pre-Reform Era

The Riverine Fleet

China’s modern domestic fleet was built upon Nationalist institutions appropriated by the People’s Liberation Army (PLA) during the civil war and shaped by Soviet advice. Development during the 1950s was characterized by co-option of existing organizational structures while others were bought or bullied into a state-controlled “unified Soviet model” by the late 1950s. Fleet development was rapid, but mismanagement, instability, and ideological friction seriously hindered the “socialist development” project.

The PLA established spheres of influence according to its operational zones during the final stages of the Civil War. For example, the South Central Administrative Region was controlled by the Fourth Field Army from Wuhan, and the East China Region by the Third Field Army (Brugger, 1981: 53–54). The armies formed supra-provincial administrative units that managed the sequestration of Nationalist assets like receivers in bankruptcy (Barnett, 1963: 340). During this process, the PLA inherited shipping enterprises such as the (Yangzi) Shipping Bureau, as well as extensive CMSNC and Minsheng Company operations (Luo, 1991: 639).

Under the Nationalists, while the Yangzi bureau was a state organ, the companies were “bureaucrat-capitalist” enterprises. The CMSNC had been established by Li Hongzhang in the late nineteenth century to compete with the hongs. Minsheng was privately controlled, but its shareholders were state institutions, including the Bank of China, which owned 10% of the stock (Luo, 1991: 23). In sequestrating these enterprises, the military took control of the vast majority of provincial steamship operations.

Although the armies altered these organizations according to their own spheres of influence, they also borrowed heavily from the existing system. For example, the Central China Shipping Governance Management Bureau was established using the existing Hankou-based CMSNC operation (Luo, 1991: 24). In Fujian, the PLA created the Fujian Water Transport Company in October 1950, which then became the Huadong Internal River Steamship Company (Fujian) in 1952 (Fujian Steamship, 1997: 182–86). This allowed supra-provincial military control to coexist with the provincial shipping operations established by the Nationalists. These bodies primarily ran shipping services, coordinating with related functions managed by the Ministry of Industry.

The National Steamship Company was formed in March 1950 from the remnants of the CMSNC, the first step in bringing regional shipping organizations under the centralize control of the MoC. The Yangzi bureau became the Yangzi Regional Shipping Services Bureau, a unit within the National Steamship Company. Retaining this supra-regional structure benefitted trunk line management, while sub-bureaus in Hubei, Hunan, and Jiangxi dealt with short-haul, tributary traffic, and provincial junk routes (Luo, 1991: 26).

As Fujian had no existing CMSNC to co-op, the local administration relied on the development of PLA operations. The military organization became the Fujian Provincial Internal River Steamship Company in May 1953 before being renamed the Fujian Provincial Ship Transport Management Bureau and taking on a wider remit the following April. The Fujian bureau managed short-haul steam, but was primarily concerned with the junks dominant on provincial rivers (Fujian Steamship, 1997: 175). Although repeated reshuffling and renaming obscures the fact, the 1950s saw progress in bringing dominant yet dispersed and small-scale commercial operations under centralized collective management. To achieve this, the PRC supported owners willing to integrate with central management and deployed commercial constraints for those not.

A weak fleet was a matter of concern for the state. The People’s Bank initiated a massive loan program to aid reconstruction after 1949, supporting both recently sequestered bureaucrat-capitalist enterprises and junk operations. Funds were used to update and repair the existing fleet, refloat scuttled vessels, and construct new, particularly smaller, vessels to increase fleet capacity. Minsheng required over one trillion RMB to mitigate operational losses. Together with smaller loans, the total program came to more than 1.7 trillion RMB between 1949 and 1952. SOE support of private enterprises accompanied the loan program, demonstrating the possibility of future cooperation and integration (Luo, 1991: 36–39, 135).

State support was accompanied by aggressive commercial practices limiting the feasibility of non-cooperation for private operators. State lines cut Yangzi tariffs by 50% to 70% before 1952 (Luo, 1991: 72–75) and even more elsewhere (Fujian Steamship, 1997: 361), hurting vessel owners who were also the targets of Land Reform (Luo, 1991: 251–52). This process of undercutting prices to damage competition, previously employed by the CMSNC on the Yangzi during the nineteenth century, was reused to push private enterprises into the state fold (McMillan, 2016: 11). Socialist takeovers were imposed using commercial, or capitalist, methods.

The push to have shipping enterprises return assets to the mainland and cooperate with the government was relatively successful. Many enterprises, including CMSNC Hong Kong, returned their assets to mainland control as early as 1950 (Wang, 1989: 7). The minister of communications, Zhang Bojun, and Lu Zuofu, CEO of Minsheng, signed an agreement the following August that brought the latter into a state-run joint venture (Luo, 1991: 644). In June 1951, the MoC brought all ventures managing more than 100 MT under state control, while other firms “requested” similar treatment (Luo, 1991: 45). It is likely that unified management initially engendered improved cargo allocation and increased vessel employment (Luo, 1991: 243–51), as was the case when freight conferences consolidated Yangzi services in the late nineteenth century (McMillan, 2016).

Soviet advisors brought the centralized Soviet management and methods to China to improve efficiency from 1952 to 1960 (Luo, 1991: 644). This strengthened central control under the principle of “unified leadership, split-level management” 统一领导, 分级管理. Responsibility for all Yangzi shipping and associated infrastructure, such as ports and yards, was divided: the Yangzi bureau was responsible for planning, while management remained split according to geography or technical functions. This structure was found to be cumbersome, leading to the separation of auxiliary functions, although these were reintegrated with Yangzi bureau management in 1957 (Luo, 1991: 148–54).

While these shifts may have been the result of policy experimentation, repeated reorganization strongly suggests there was friction between Yangzi or provincial officials seeking to retain local control and the MoC’s ambition to centralize fleet management, a dynamic that pervaded early institutional development. It is also likely that the developing concept of socialism (Gittings, 2006: 22–27) shaped the notion of “socialist organization.”

State pressure forced private enterprises operating on the Yangzi to begin to collectivize in August 1954. Collectivization also occurred among Shanghai’s enterprises, with thirty-three private companies establishing the Shanghai Public-Private Joint Stock Steamship Company (Luo, 1991: 649–54). Further mergers brought all non-junk Yangzi enterprises into a single collective venture which then “formally requested” state management as part of the MoC-controlled Yangzi bureau. This was approved in June 1956, creating a state institution that amalgamated all functions, but retained nominal independence while the state bought out private interests (Luo, 1991: 255–58).

Where elsewhere in the economy collectivization had mixed results, on the Yangzi it effectively created by decree a “conference,” a structure with commercial merit. Since the nineteenth century, Yangzi “conferences” had been created to allocate vessels and coordinate lines, improving service efficiency while sustaining strong pricing. Here, rather than the collective “conferencing” scheme sustaining strong rates as might have been expected (Jansson and Shneerson, 1987: 22–37), the state monopolies used their control to force down freight rates, in some areas by as much as 50% to 70% (Luo, 1991: 71–75). The steep decrease neither reflected fundamentals as the ports, the most expensive part of liner transport, nor did it improve their efficiency in this period. Indeed, Shanghai’s throughput volume in the year 1931 was not exceeded until 1957 (Zhang et al., 2001: 258–60). The artificially enforced remove between supply, demand, and the pricing function demonstrates shipping was conceived as an adjunct service and a cost to be limited, not an industry that should itself be commercially viable.

The Junk Fleet

China’s junkers 船民 managed the majority of domestic fleet capacity and their junks operated in tandem with the modern fleet. ⁴ Peripatetic and uncontrollable, they did not fit comfortably into any Marxist-Maoist social classification. They were peasants who lived on and controlled a means of production, but were emphatically not landowners. Many served industry, but were not managed industrially. They had long been merchants, but were not easily demonized as exploitative because their integral economic function necessitated mercantile activity. They were Chinese but, in the coastal provinces, maintained close historic ties to Southeast Asia, operating between ports in the mainland and Hong Kong, Manila, and other commercial hubs.

Large operations with loose allegiances had once existed in the south, but by 1949 junkers typically owned or managed vessels within small family networks or operated as “boating assistance organizations” 船帮 (Fujian Steamship, 1997: 174). Similarly, junk transport companies 木帆船运输公司 on the Yangzi came under state auspices while joint transport societies 联合运输社 were operated by groups of owners. These were linked to the late Qing guild system described by Worcester, which coordinated vessel and cargo negotiations from teahouses along the Yangzi (Worcester, 1971: 112–13). These forms of collective management predated socialism by centuries, providing junkers access to capital and commercial networks while mitigating operational risk (Luo, 1991: 50).

The PRC quickly expropriated these cooperatives, introducing a pricing structure and forcing their expansion. Unsurprisingly, junkers opposed state interference in their operation, despite policy tailored to provincial dynamics. From 1952, Fujian province attempted to bring 75% of junks into cooperatives, a process that proved more successful on rivers than on the coast. In 1954, junk cooperatives were assigned geographical restrictions and junks specific routes (Fujian Steamship, 1997: 175). In northern Jiangsu a similar approach abjectly failed; of eighty-four cooperative operations established in 1951, over half collapsed within a year.

This hostility led the provincial bureaucracy to bring thousands of cadres to ports from 1952 to engage with and politicize the junkers. On the Yangzi, junks were registered to a home port and assigned set lines. By 1954, 94% of junks had entered into state junk organizations. These were later formalized as cooperative societies 合作班, each of approximately five hundred members. In some provinces, larger vessels were placed under direct central control; in Hubei this applied to all vessels over 50 MT (Luo, 1991: 261–64).

Discerning whether state control of junks was effective is difficult. While registering the great majority of them was possible, managing such a dispersed and peripatetic fleet was more complex, particularly since the PRC lacked sufficient resources to patrol the coast. It is probable that many junks remained unrecorded and unhindered, while large volumes of goods were smuggled into the rugged coast south of Shanghai by long-standing Asian junk networks (Lin, 2015). That the foreign press reported on the use of smaller vessels to penetrate the coast is an indication of their prevalence (Toledo Blade, 1955).

The International Fleet

The development of China’s oceangoing fleet during the First Five-Year Plan was shaped by operations to counter the US-led ChinCom embargo on China. While China sought to “limit dependence on foreign trade” (Reardon, 2002: 4), it recognized that imports remained integral to its early socialist development. This was particularly true for technology transfer and essential commodities (especially fertilizer). China’s leaders understood that interaction with foreign and capitalist powers would promote development (Reardon, 2002: 53) and so should not be prevented, although it should be controlled (Eckstein, 1975: 28).

Oceangoing shipping for international trade was centrally controlled, in contrast to domestic trade in which control was divided between Beijing and the provinces. The state leveraged its relationship with the British, who protested the embargo, in Hong Kong (Economist, 1950, 1957), and the Soviet bloc, particularly Poland. To counter the embargo, the Chinese government employed international cooperation agreements, legal loopholes, and flags of convenience.

China’s strategy was three pronged. First, it collaborated with the Soviet bloc to operate a foreign-flagged fleet, conduct transhipment operations in Baltic ports, and railroad essential cargoes across Siberia. Second, it used the Hong Kong–based Far East Enterprising Company (FARENCO) and existing Hong Kong networks to access the international market. Third, it chartered foreign vessels directly from the market and used them to run the American blockade (Sinotrans, 1990: 66).

Also to get around the embargo, the Chinese-Polish Joint Stock Shipping Company (CHIPOLBROK) was established in 1951. While this was the first Sino-foreign joint venture after 1949 and carried cargoes during the 1950s, its inclusion as a footnote in every text on Mao-era foreign trade exaggerates its importance. The CHIPOLBROK fleet remained very small, with China committing only six vessels in 1951, increasing to twenty (224,000 MT) in 1962 (Jin et al., 1999: 5). According to port data, this was insufficient to carry a meaningful portion of foreign trade (Zhang et al., 2001: 259) and the national chartering operation remained more important.

The establishment of COSCO in 1961 following the end of the embargo demonstrates that CHIPOLBROK was a temporary counter-embargo reflagging operation, rather than a key part of China’s fleet development strategy. From 1961, Bank of China loans for COSCO vessel purchasing (Wang, 1989: 14) and COSCO’s rapid growth show the national fleet took precedence over CHIPOLBROK, which shrunk during the 1960s (Jin et al., 1999: 109–11). While the company still exists today, it is a relic and anomaly distracting scholars from more consequential institutions and from its past significance solely as a proving ground for COSCO’s management in the early years (Shanghai Star, 2001).

The Sino-Polish accord also created a Baltic transhipment operation using vessels fixed in London by Polish brokers to ship cargoes to railheads in Gdansk and Gdynia, from where they crossed the USSR to north China. From here, some cargoes were transhipped in Dalian for delivery to Shanghai, easing traffic on north China’s congested railroads (Zhang et al., 2001: 238). The Chinese also used legal loopholes that allowed cargoes to escape inspection in Swedish and Norwegian ports and played the different restrictions imposed on Soviet bloc states by CoCom, the Western bloc body responsible for enforcing the China embargo, to reroute their imports. This method was reserved for high-value imports at risk of seizure east of Malacca. Shipping through the northern passage was also investigated, but physical and technical restrictions rendered this impossible.

Baltic transhipment was complemented by operations in Southeast Asian ports. The Nationalist interception of Chinese chartered foreign tonnage led to ad hoc transhipment in Manila (Chicago Tribune, 1955), or in Hong Kong, where cargoes were transferred to smaller vessels that could pass undetected from the colony (Sinotrans, 1990: 11, 45).

However, chartered tonnage carried the majority of Chinese foreign trade, perhaps in excess of 90%. Even though the national fleet had grown by 1966, chartered tonnage still accounted for 86% of the total. Only following a policy shift during the 1970s did chartered volumes fall below half of total trade (Sinotrans, 1990: 14, 42). The Hong Kong operations that had been developed through early interaction with the global market were later transferred to Beijing (255).

Chartering operations started with the Dongbei Foreign Trade Transport Company, established by the PLA in April 1949 to manage trade between northeast China 东北, the USSR, and Hong Kong. This was soon complemented by FARENCO, listed in 1953, which managed vessels and sea transport from its headquarters in Hong Kong (China Foreign Trade Economic Yearbook Compilation Committee, 1984: 676). During the centralization process, the Dongbei Company was renamed the China National Overseas Transport Company (COTCO) and became part of the National Steamship Company, managed operationally by the MoC and commercially by the MoT. When the MoT split into the Ministry of Foreign Trade (MoFT) and the Ministry of Commerce (MoCIM) in September 1952, COTCO fell under the umbrella of the MoFT.

The 1955 merger of COTCO and the China Land Transport Company under the auspices of the MoFT that created Sinotrans simplified this arrangement. COTCO became Sinochart, a subsidiary of Sinotrans and China’s global market agent (Sinotrans, 1990: 1–5). This structure unified China’s chartering requirements, creating a global player from diverse industrial operations. Sinotrans’ high volumes gave China a strong position in freight negotiations that protected industries with previously minimal chartering requirements (Sinotrans, 1990: 56; Yang et al., 2001: 73–74).

Sinotrans quickly diversified from the reliance on Soviet partners that early inexperience and lack of contacts had necessitated. Visits to London in 1956 reestablished relationships with the brokering operations of hongs, such as Lambert & Howe Matheson, and increased market exposure (Sinotrans, 1990: 68). From its inception, Sinotrans was heavily involved in the global market and continued to operate without interruption through the GLF and the Cultural Revolution. In short, the autarkic rhetoric of the time did not limit China’s foreign trade or transport capacity.

The Chinese favored non-Soviet, particularly Scandinavian, and open-registry vessels (Sinotrans, 1990: 253). Extensive Greek involvement supplemented this as part of a commercial arrangement that stands in contrast to China’s highly politicized pre-reform international relations (Heine, 1989: 85). Non-political collusion with these fleets contravened Sinotrans’ aim of supporting Chinese diplomatic policy (Sinotrans, 1990: 9) and the principle of using trade as a political tool (Hsiao, 1977: 9). Relationships with hongs were a further contravention, particularly where these firms had been the mainstays of the British colonial operation.

The Chinese recognized the risks associated with their trade, striving to engender the confidence of counterparties. They punctiliously executed contractual obligations (Sinotrans, 1990: 9) and accepted the standard terms of the Baltic Exchange shipping contacts preferred by their Western contemporaries. Anthony Dicks demonstrated that fixing contracts in English law with London arbitration clauses violated the Chinese laws governing the employment of foreign capital by foregoing Beijing arbitration (Dicks, 1974: 425–28). Legal flexibility was coupled with generous commercial terms and operational support of long-term charters that mitigated risk of blacklisting. This extended to bunkering when third-country ports refused to service China-bound vessels (Sinotrans, 1990: 45).

Sinotrans’ operations during the pre-reform era were based on building long-term, functional relationships with capitalist enterprises founded, as in the past, on trust (see Tretiak, 1973: 740–48). In developing relationships and offering generous terms to foreign enterprises, China apparently violated its own principle of trade sovereignty. Although building a shipping operation with a strong reputation for trustworthiness indicates understanding of how the decentralized and poorly regulated shipping market functions, the need for a strong reputation was not allowed to color day-to-day interactions with foreign counterparts. One of my interviewees recalled faceless Chinese operations in Hong Kong holding foreign enterprises at telex length, namelessly yet punctiliously negotiating and executing contracts (Interview).

In contrast to central operations, in the provinces remnants of the Nationalist structure persisted after 1949. For instance, Fujian attempted to continue Xiamen–Hong Kong services despite the blockade of the Taiwan Strait, perhaps owing to its long-standing links with Hong Kong. Provincial authorities established a Hong Kong enterprise called Kiu Lee Company, employing overseas Chinese merchants to charter foreign vessels and fix import cargoes with the hongs (Fujian Steamship, 1997: 335). The fate of this company is unclear, but Hong Kong’s registry suggests it was amalgamated with the PRC-controlled Ocean Tramping, a Hong Kong–based company, during the 1950s (Integrated Companies, n.d.).

Foreign services also continued to operate despite the embargo. China competed with the Far Eastern Freight Conference (FEFC), a prominent shipping conference operating in Asia, in the 1950s. While the Chinese protested that Shanghai-Europe voyages were priced higher than Japan-Europe voyages because of imperialist bias, it is likely that this price difference arose from congestion in Chinese ports. Some non-FEFC companies such as the German Rickmers Linie attempted to maintain regular services in spite of the embargo (Rickmers Linie, n.d.), while the adverse political climate saw Wallem, a shipping concern once prominent in the East Asia, and others abandon China (Wallem, n.d.).

The Domestic Fleet

The sharp spikes in throughput during the GLF produced some lasting benefits, as has been shown elsewhere for large-scale capital projects (Liu and Wu, 1981: 71) and aspects of production capacity (Lippit, 1975: 107–8). However, endemic quota chasing and inflated reporting ought to temper our reading of these statistical peaks. Oversight by central planners, or perhaps an unwillingness to let logistical concerns impede the party line, rapidly created an imbalance between industrial growth and the infrastructure required to support it (Wu, 1981: 34). As pressure on the transport system increased, domestic tonnage capacity became woefully insufficient to supply the industrial campaigns. Moreover, rapidly increasing industrial cargo volumes were problematic for a fleet that traditionally carried agricultural products. Spiraling demand resulted in desperate “backyard furnace” methods to increase capacity (Wang, 1989: 13).

Attempts to increase haul pushed vessels to their operational limits or simply overloaded them (Luo, 1991: 284–46). On the coast, the “one ship, two uses” 一船两用 policy required vessels to carry deck cargoes or pull additional barges (Yan, 1999: 25), overloading and damaging machinery. More rationally, an upgrade and repair program increased the efficiency of existing tonnage. A sweeping shift to “end-to-end” 一条龙 management attempted to reduce transhipment requirements by jointly operating diverse transport modes. In reality, management changes caused chaos as rational and technical operations broke down in a scramble to increase throughput (Fujian Steamship, 1997: 182; Yan, 1999: 352). As Zhao Tiehe has argued, the devolution of economic planning was not itself problematic (Zhao, 1983: 33), rather rapidly merging organizations confused chains of responsibility and worsened chaos by obscuring decision-making authority. This led to neglect of oversight, as spiking accident rates reflect (Luo, 1991: 289, 359).

Schemes to increase available deadweight became increasingly desperate. Junkers were required to offload possessions and family members considered “surplus,” depriving them of full crews and reducing their efficiency (Luo, 1991: 291–92). Ports employed extra manpower to rapidly increase throughput (Luo, 1991: 308), but this was not a useful or sustainable growth and the rate of cargoes mishandled, damaged, or lost increased (Zhang et al., 2001: 94), while increases dissipated by 1960.

In the absence of alternative tonnage sources, Fujian junks were overstretched to meet the demand created by the GLF. From 36,545 MT in 1957, the fleet spiked at 53,122 MT in 1959, a 46% increase in two years (Fujian Steamship, 1997: 128). While the state attempted to further expand collective management, it is unlikely that junkers fully complied, and probable that increases in Fujian represent over-reporting rather than the effectiveness of collective junk management (Fujian Steamship, 1997: 183). Figure 1 contrasts sharp peak haul with relatively limited absolute tonnage growth, suggesting additional tonnage did not fundamentally alter underlying capacity. Additional vessels were likely small, unable to increase haul as annals claim, and scrapped or repurposed following the GLF. Accordingly, aside from short-term utilization of low-quality and technologically backward vessels, the actual effect of the GLF on Fujian’s tonnage growth was minor (Fujian Steamship, 1997: 190–91).

OPEN IN VIEWER

Figure 1.

Yangzi haul increases, 1950–1980.

The coastal fleet’s access to the global charter market alleviated undercapacity, limiting the relatively capital-intensive requirements for new-built vessels and disruptive management changes, insulating it from the Leap’s most egregious effects and demonstrating the benefits of integration into the global market. Between 1958 and 1960, the Shanghai bureau chartered 420,000 MT, and 320,000 MT in 1962 alone (Yan, 1999: 61–62). This was related initially to the carriage of coal cargoes from the north to Nanjing and Shanghai for transhipment onto the internal river system to feed the GLF’s furnaces (Zhang et al., 2001: 236). In the 1960s, increased throughput was perhaps linked to Canadian and Australian grain imports and famine alleviation (Mah, 1971; Barry, 1961). Interestingly, it is unclear from Sinotrans sources whether this tonnage was chartered through established channels (Yang et al., 2001: 6–10).

The effect of the failure of the GLF on shipping mirrored the repercussions in other segments of the economy. Rational investment stalled, management collapsed, and planning was hindered by quota-chasing and over-reporting. Shipping operations broke down from 1960, creating oversupply as the demand peak dissipated. On the coast, the Shanghai bureau mothballed vessels (Yan, 1999: 25), while elsewhere poorly maintained vessels were scrapped. Supply slumped and chronic undercapacity took hold as the degradation of infrastructure and the breakdown of management became apparent, hindering famine alleviation.

Chinese annals agree that the fleet recovered from the Leap by 1965. However, data for this period would rather indicate that the damage done was not severe and as such the "recovery" was rather minor. Carriage volumes recovered to pre-1958 levels as early as 1964 (Luo, 1991: 309–12), while some performance metrics did not fall below 1957–1958 levels following the GLF (Yan, 1999: 140; Luo, 1991: 302). Some infrastructure, such as Fujian’s waterways, actually benefitted from the Leap (Fujian Steamship, 1997: 9).

Obvious structural damage during the GLF created an impetus for reform that would prevent repetition of its most deleterious effects. Post-Leap restructuring concluded early organizational tinkering and marked the commencement of relatively linear institutional development. In the 1960s bureaus were evidently the forbearers of China’s twenty-first-century transport infrastructure. “Consolidation” spanned both of shipping’s developmental modes in the context of the major policy paper “Seventy Points on Industry” 工业七十条, issued in December 1961, which attempted to rationalize industry following the GLF (Luo, 1991: 353–59).

Twelve shipping “trusts” 托拉斯, such as the Yangzi River Transport Company, were established in 1964 as part of a broader effort to link enterprises producing similar goods together in industrial partnerships or companies that could reduce inefficiency through consolidation. The Yangzi company was typical of such trusts, directly supervised by the MoC, responsible for planning and control of central functions, but with management divided according to geographical region (in this case upper, middle, and lower Yangzi) and technical specialization. Measures countering asset degradation were also established. The Yangzi company was the foundation from which the contemporary China Changjiang National Shipping Corporation was developed and is now part of the state giant Sinotrans & CSC following a 2009 merger (Luo, 1991: 372–73; Sinotrans & CSC, n.d.).

The establishment of the Shanghai Steamship Company in 1964 (Yan, 1999: 27) was also part of this process of consolidation. In Fujian, the Shipping Bureau reconsolidated following a GLF split between Fuzhou and Xiamen, taking its modern form, the Fujian Shipping Company (FUSCO), in the 1970s (Fujian Steamship, 1997: 186).

During the Cultural Revolution, prompt state intervention mitigated interruptions to domestic operations. After the start of the Cultural Revolution in July 1966, the Yangzi bureau first suffered disruption at its offices in Wuhan (Luo, 1991: 381), and by December 1966 Wuhan port was a target of the Red Guards from Shanghai (Jin, 1986: 245). The offices of the Shanghai Steamship Company were seized in 1967, immobilizing the company (Yan, 1999: 28). On the Yangzi, the ports of Wuhu and Chongqing both suffered stoppages during the summer of 1967 (Luo, 1991: 665). However, the most serious interruption was to operations in Fujian. Although shipping records from the Cultural Revolution years are sparse because of a breakdown of administrative functions, it appears that 35% of the fleet was non-operational by 1968, although the proximate causes are unclear (Fujian Steamship, 1997: 186, 344).

Initial changes were clearly ideological. Yangzi passenger vessels were given the class name the East Is Red 东方红 and the coastal Peace class vessels became the Struggle 战斗 class (Yan, 1999: 28). On the Yangzi, ideology was more damaging. For instance, the Red Guards reversed port-starboard river buoys to better reflect contemporary political sentiment; rapidly changing “right-red, left-white” to “left-red, right-white” resulted in widespread confusion and accidents. Meanwhile, rigorous examinations for sailors were abolished and shipping bureaus established revolutionary committees (Luo, 1991: 383).

The imposition of military control within ten months of these changes prevented lasting damage. Figure 2 demonstrates the short scope of disruption and shows rapid reconstruction. The Cultural Revolution, in other words, caused stagnation rather than reversal (Luo, 1991: 399–402), something Shanghai port volumes also reflect (Zhang et al., 2001: 259–60). In Fujian, vessel employment fell further, but rapid recovery to normal carriage volumes suggests a lack of fundamental change (Fujian Steamship, 1997: 190–91). Figure 3 further demonstrates that the Shanghai Steamship Company fleet grew steadily, apparently unaffected by the Cultural Revolution.

OPEN IN VIEWER

Figure 2.

Yangzi trunk line throughput, 1966–1969.

OPEN IN VIEWER

Figure 3.

Shanghai Steamship Co. tonnage growth, 1955–1975.

Ports suffered the most severe disruption during the Cultural Revolution. While transiting vessels escaped interference, port calls risked interference from Red Guards. From a throughput peak in 1966, the capacity of ports on the Yangzi fell and vessels were attacked by revolutionaries (Luo, 1991: 378–82). Disruption in Xiamen saw port volumes fall by half (Fujian Steamship, 1997: 57), while Nanping, a Fujian river port, simply has no records, suggesting the Cultural Revolution’s effect was more serious here (Fujian Steamship, 1997: 83).

Table 1 presents instances of military intervention across China to curtail disruption to shipping infrastructure. Under the support and supervision of Zhou Enlai, trunk line operations were stabilized. These lines carried over 70% of China’s bulk commodities, including grain, and central management from Wuhan facilitated PLA control. By early 1968 the vast majority of Yangzi traffic was under military operation (Luo, 1991: 378–81). By 1970, the PLA-managed fleet in Fujian had surpassed 1966 volumes, and was still growing when military control ended in the spring of 1974 (Fujian Steamship, 1997: 668).

OPEN IN VIEWER

Table 1.

Military Intervention in Chinese Ports and Shipping Companies, 1966–1968.

Port/Company	Disruption starts	Military intervenes	Elapsed time (months)
Shanghai Port	December 1966	April 1967	5
Wuhan Port	August 1967	February 1968	7
Yangzi Company	August 1967	January 1968	6
Fujian Bureau	Early 1967	June 1968	~14
Shanghai Steamship Co.	August 1966	June 1967	9
COSCO Shanghai	None	July 1967	0

Source. Jin, 1986: 125; Luo, 1991: 378–81; Fujian Steamship, 1997: 668.

During the Cultural Revolution, disruption, kept in check by the intervention of PLA, was far less of a problem than in the GLF. Vessel management was not fundamentally altered and operations did not degrade the fleet. This allowed swift recovery in the 1970s, particularly as Zhou’s “four modernizations” engendered increased infrastructure spending. In February 1973, Zhou announced a program to “change the face of the ports in three years” 三年改变港口面容 (Jin, 1986: 246), while normalizing Sino-American relations also facilitated post–Cultural Revolution reconstruction.

The Cultural Revolution’s ideological currents resulted in a surge in the use of domestically produced ferrocement vessels. Rejection of foreign designs and support of domestic builds, coupled with abundant concrete and steel, made concrete hulls viable. Although inefficient, they were extensively employed in Hubei, Hunan, and Anhui, with usage spreading to Yangzi trunk lines in the latter part of the Cultural Revolution (Luo, 1991: 410). The widespread use of such vessels exemplifies how restrictive trade policies resulted in ad hoc transport solutions that stymied later development by wasting labor and capital, and reducing the efficiency of the fleet before they were phased out.

After 1970 infrastructure was returned to civilian control and major ports saw only a single disruptive movement, in 1974. In Shanghai, big character posters inspired by the Gang of Four exhorted stevedores to “Be masters of the wharf, not slaves to tonnage” 要当码头的主人, 不做吨位的奴隶 and turned them against management practices that employed quotas to boost productivity, leading to stoppages and congestion in the Yangzi’s ports (Zhang et al., 2001: 260). This movement was more serious than those of the 1960s, although it quickly subsided following the rehabilitation of Deng Xiaoping (Zhang et al., 2001: 133) (see Figure 4).

OPEN IN VIEWER

Figure 4.

Waiting times for Sinotrans vessels, 1960–1975.

Contrary to the view of party historian Tao Kai, who holds that the effects of the Cultural Revolution were more protracted and resistant to correction (Tao, 1982: 141), the Cultural Revolution was less disruptive to the domestic fleet’s development than the GLF. Revolutionaries did not restructure management or cause fundamental technical damage, unlike during the Leap, a state economic project. Military control of infrastructure spurred by political chaos allowed Zhou and supportive cadres to enact a long program of reform, and develop the domestic fleet during the 1960s, rapidly expanding capacity to create the foundation of the country’s modernization during the 1970s. As linear, rational progress would have been difficult without strong central leadership, it is possible that the Cultural Revolution, as a pretext for increased state control, had beneficial effects.

The International Fleet

Anthony Dicks accurately asserted that trade was a “shuttlecock in internal politics” (1974: 391). While this is true of trade values and China’s choice of trading partners during the pre-reform period, the comparison does not extend to shipping. The international mode of development experienced relatively linear growth, without disruption from the “crisis cycles” of China’s trade policies before 1972 (Reardon, 2002). Even during the periods of extremely autarkic state rhetoric, the state, under the control of Zhou Enlai’s faction, protected international shipping.

We have seen above that coastal fleets employed chartered tonnage to meet domestic demand spikes resulting from the GLF’s industrial programs. These spikes had no international element. The port of Shanghai saw small increases in foreign cargo between 1956 and 1959, but within typical annual fluctuations. Only from 1961 was there a substantial increase (8%) in foreign cargo throughput (Jin, 1986: 219), the result of grain imports from Australia and Canada for famine alleviation.

Sinotrans chartering operations increased sharply before 1959 before stagnating, despite more foreign cargoes transiting Shanghai (see Figure 5). Stagnation of overall volumes disguises developing import/export dynamics resulting from a shift in post-Leap grain trades, from aid bound for the developing world before 1960 to the Australian and Canadian imports thereafter.

OPEN IN VIEWER

Figure 5.

Sinotrans seaborne volume growth, 1955–1965.

The absence of a spike in Sinotrans’ activity between 1961 and 1963 indicates that grain purchases were made CIF (cost, insurance, and freight inclusive) and delivered by foreign ships rather than chartered vessels, demonstrating the government desperation for grain. China purchased over 6.5m MT of grain in 1961 alone (Barry, 1961), more than the total volume carried by Sinotrans in the following two years and five times CHIPOLBROK’s carriage in 1962 (Jin et al., 1999: 109–11). Fleet operational limits forced the MoC to contravene its principle of self-reliance and use foreign freight to deliver grain, expediting famine relief from 1960. Without this option, relying on the riverine fleet alone would have made it impossible to increase grain transhipment from the coast. It is probable that inadequate shipping infrastructure extended the suffering of hard-hit internal provinces such as Hunan, despite the availability of grain discharged by foreign vessels on the coast.

The international fleet, like the domestic fleet, underwent a process of post-GLF rationalization. COSCO was formed to centralize vessel management, creating a national fleet institution and commencing diversification away from a chartering operation that drained foreign exchange reserves (Jin et al., 1999: 116). The 1960s famine, by revealing China’s reliance on foreign tonnage and vulnerability without a national fleet, provided an impetus for the MoC to prioritize the development of an oceangoing fleet. Additionally, Zhou’s modernizations necessitated a modern fleet. As a result, the State Council authorized People’s Bank to lend funds to COSCO to purchase tonnage abroad from 1963 (Wang, 1989: 14), expediting fleet growth (Figure 6).

OPEN IN VIEWER

Figure 6.

Shanghai oceangoing fleet development, 1954–1966.

Post-GLF consolidation marks the end of CHIPOLBROK’s relevance. Following the embargo, the need for convoluted operations was reduced, while Sino-Soviet tension removed Soviet influence. From 1961, COSCO managed new tonnage and CHIPOLBROK remained in stasis. Operational problems at the ministerial level arose from splitting shipping and trading functions between respectively the MoC and MoFT and were countered by efforts to increase cooperation (Jin et al., 1999: 135). This consolidation marks the commencement of the relatively linear institutional development that has continued into the twenty-first century.

The Cultural Revolution’s most autarkic phase from 1967 to 1969 saw a reduction in international trade (Reardon, 2002: 143–48), although less on intra-Asian routes (China Foreign Trade Economic Yearbook Compilation Committee, 1984: 833–908). That this decrease did not affect fleet operation is unsurprising; the MoC valued its reputation abroad and ensured that market-facing institutions went unhindered. For instance, the Canton Fair continued with limited disruption (Tretiak, 1973), suggesting that Zhou and other central figures remained concerned with China’s foreign links and image abroad (Gurtov, 1969: 99).

The Shanghai annals record no disruption to the oceangoing fleet. How protection was provided is unclear, but only State Council-authorized military control could have prevented Red Guard interference. The only note in the Shanghai annals referring to the Cultural Revolution corroborates this: “The MoC Military Committee instruct that ocean shipping during the ‘Cultural Revolution’ should maintain proper education, not implement the ‘Four Bigs Campaign’ and not establish any kind of struggle organization” (Jin et al., 1999: 21). This was followed in September by an instruction from Li Fuchun and Li Xiannian, both vice premiers of the State Council, that ocean shipping would remain under the control of the PLA’s political commissars (Jin et al., 1999: 21). These demonstrate that high-level political authorities opposed to the Cultural Revolution also supported shipping.

Operations changed little during the Cultural Revolution. COSCO Shanghai took delivery of foreign vessels in 1967 and expanded its European operations in 1968, evidence that autarkic rhetoric did not influence purchasing or hinder market integration. Ships in the oceangoing fleet, unlike coastal vessels, avoided politicized renaming. Sinotrans’ operations were afforded similar protection. The annals report small declines, but these correlate more closely with port disruption (Figure 4) and do not imply Red Guard interference (Yang et al., 2001: 6–10).

More significantly, fleet development strategy was not swayed by adverse political rhetoric, even where this directly targeted shipping. During the 1974 Fengqing incident 风庆轮事件, the Gang of Four used the success of domestic builds to publicly denounce Zhou Enlai as a slave to foreign technology (Gittings, 2006: 91–92). Yet, foreign vessel purchasing remained unaffected, with COSCO actually purchasing more foreign builds in the aftermath of this furor (Jin et al., 1999: 53).

COSCO’s strategy was informed not by domestic politics but by external market dynamics. With foreign exchange scarce and shipping required for technology transfer and whole-plant delivery, the Chinese purchased heavily in weaker markets, yet had sufficient strategic flexibility to charter when vessel prices recovered. Thomas Moore has demonstrated that COSCO’s vessel purchases abroad increased when global surplus tonnage and yard capacity forced new-build rates down (Moore, 2002: 207–11), creating a politically untenable dichotomy of foreign tonnage import growth while Chinese yards had spare capacity (Heine, 1989: 48). To shelter the oceangoing fleet, the MoC was willing to support an impossible dichotomy regardless of the Cultural Revolution context.

Offshore operations also facilitated strategic continuity in accordance with centrally determined policy. Established enterprises in Hong Kong (FARENCO, Yick Fung, Ocean Tramping) enabled the buying and chartering of vessels from foreign companies and the fixing of essential cargoes without political consequences. Foreign operations actually increased during the Cultural Revolution. For example, the Sino-Tanzanian Shipping Company was established in 1967 to serve Red Sea and Mediterranean routes (Wang, 1989: 173).

The MoC did not protect auxiliary shipping services on the coast, however. The abandonment of the China Ocean Shipping Tally Company (COSTACO) rendered cargo surveying unreliable. This national body, formed during the post-Leap consolidation from provincial operations, was non-operational for over three years before 1971 (Wang, 1989: 197). Without tallying, trade was hindered and China’s global reputation severely tarnished. Tallying remained problematic even following COSTACO’s reestablishment in the 1970s (Robson interview).

Although shipping was protected by central political authorities, in practice foreign ships and crews were not made welcome in port. One master sailing in the early 1970s recalls the unpleasant experience of unloading grain in Dalian. Red Guards boarded the ship and confiscated all “cultural” material (books, films) while navigational tools (radar, sonar, azimuth mirrors) were disabled and the British officers kept under strict guard. The crew of his ship were also aware of an officer, sailing for another British line, imprisoned in China before 1971 for recording the positions of navigational buoys on the ship’s charts (Robson interview). Tales of such interaction in ports were dramatized in revolutionary “port” 海港 operas.

These difficulties dissuaded foreign lines from serving Chinese ports. Of the lines serving China during the 1950s, only five continued after 1967. Of these, Rickmers retained substantial operations (Yang et al., 2001: 80), perhaps owing to the benefit of a personal relationship between Claus Rickmers, a German shipping magnate, and Zhou Enlai (Rickmers Linie, n.d.). The British lines would have also been eager to reestablish their China services, as the China trade was important to Glen Line, Blue Funnel, P&O, and Denholm.

To reiterate, the Leap hindered domestic fleet operations, resulting in a capacity slump and stymieing development by wasting investment and increasing the number of backward vessels under management. However, as a political movement rather than an economic project, the Cultural Revolution was more disruptive than damaging, while military control mitigated its most deleterious economic effects.

The protection of the international fleet during the Cultural Revolution despite an inherent vulnerability evidences high-level political patronage, perhaps stemming from demonstration of its fundamental importance during the GLF. This supports Gao Zhiyu’s argument that, despite the chaos of the Cultural Revolution, the leadership acted cautiously in economic work (Gao, 1981: 68). The result was relatively stable growth from 1961, as rationalization created institutions that could benefit from stable economic policy under a rehabilitated Zhou faction and normalization of China’s international trade relations from 1971.