Abstract
Few would deny that one of the most important factors shaping the Chinese economy in the past hundred years or so was the economic contact between China and the West. This external economic confrontation has been widely held by the Chinese as a factor detrimental to the development of the Chinese economy. First, it is argued that foreign trade and foreign investment in China upset the Chinese economy by ruining handicraft industries and disrupting agriculture. Secondly, foreign trade and investment in China are alleged to have drained the Chinese economy of its wealth because of the secular unfavorable balance of trade of China and the large amount of income made or remitted to their home countries by Western enterprises in China. Thirdly, it is maintained that foreign enterprises in China were so effective in their competitive power or enjoyed so many advantages secured on their behalf by their respective governments that the Chinese-owned modern enterprises were hopelessly oppressed and had little chance, if any, to grow.
