TRADE AND TRANSPORTATION are the lifeblood of an economy. In the twenty-five years that followed the founding of the People's Republic of China in 1949, China's trade institutions and transportation and communications networks were built into a partially modern but somewhat inefficient system. The drive to modernize the economy that began in 1978 required a sharp acceleration in commodity flows and greatly improved efficiency in economic transactions. In the ensuing years economic reforms were adopted by the government to develop a "socialist planned commodity economy" that combined central planning with market mechanisms. These changes resulted in the decentralization and expansion of domestic and foreign trade institutions, a greatly enlarged role for free markets in the distribution of goods, and a prominent role for foreign trade and investment in economic development. Despite increased investment and development in the 1980s, the transportation and communications sectors were strained by the rapid expansion of production and the exchange of goods.

Transportation, postal services, communications, and trade, including services, employed about 6.3 percent of the national labor force in the mid-1980s--about 22 percent of the nonagricultural labor force. Chinese statistics estimate that these sectors produced about 7.4 percent of the gross national product in 1983.

Data as of July 1987