The first ‘China Capital Exodus’ — The withdrawal of the British capital Taikoo from China during the 1950s and the proto-formation of the CCP’s policy to the foreign capitals —

After the Chinese Communist Party achieved its final victory over the Nationalist Party, foreign enterprises operating in China faced a critical choice: whether to remain in China or withdraw. Likewise, the newly established CCP government had to decide whether to utilize foreign capital for national reconstruction or to expel it from the country. Scholarly consensus generally holds that the CCP’s policy initially favored the use of foreign capital during the early “New Democratic” period but shifted toward the expulsion of foreign enterprises and the establishment of a collective economy following the outbreak of the Korean War and the onset of the Cold War. Western scholars have often criticized this process as a form of “hostage capitalism,” whereas Chinese scholars view it as a legitimate strategy to end a century of foreign exploitation. This paper reexamines the withdrawal of foreign capital in the early 1950s, moving beyond the conventional binary interpretation, and focuses on the rhetoric and practice through which the CCP formulated its initial strategies and responses to foreign enterprises. The 1954 case of the British firm Butterfield & Swire (known in Chinese as Taikoo), which withdrew from China after nearly eighty years of operation, illustrates that the CCP’s foreign-capital policy pursued not merely ideological goals but also pragmatic objectives. Through this case, the study demonstrates that the post-1978 policy of simultaneously utilizing and regulating foreign capital in the service of national interests was already germinating in this earlier encounter. In this sense, the origins of China’s reform-era foreign investment strategy can be traced back to the New Democratic period. A reassessment of the Taikoo withdrawal thus offers critical insights into the political and economic structures of China’s contemporary market and contributes to understanding the enduring structural conditions confronting foreign capital within it.