Lanka, China rubber rice pact celebrates 60 years
Lanka has benefitted by supplying rubber:
The historic Rubber-Rice Pact between Sri Lanka (then Ceylon) and the
People’s Republic of China was signed on December 18, 1952 by the
Minister of Commerce, late R. G. Senanayake and his Chinese counterpart
in the presence of then Prime Minister of China, Zhou En Lai in Beijing
(then Peking). This was five years before establishing diplomatic
relations and was the first trade agreement signed by China with a
non-communist country. This year marks the 60th anniversary of the
historic Rubber-Rice Pact between Sri Lanka and China.
In the early 50’s, there was a world shortage of rice which created a
sharp increase in the international market price. That was a period when
the Government of Sri Lanka was committed to provide two measures of
rice per week to every person, at a subsidized price. Despite the
shortage and exorbitantly high price, the Government of Sri Lanka was
compelled to buy her requirements to feed the nation. But, the
Government did not have sufficient foreign funds to continue with the
purchases, and furthermore, the rice obtained from U.S.A. and Ecuador
was not to the taste of the Sri Lankan palate.
During the same period the international demand for natural rubber
decreased due to the introduction of synthetic rubber as a substitute,
which resulted in lowering the price of the natural rubber, on which
export the Sri Lankan economy depended. Thus, Sri Lanka had to face a
severe economic crisis.
This was a period when China had a surplus of rice, whilst
experiencing difficulties in purchasing their requirement of natural
rubber due to competition between the western capitalist countries and
the Asian communist countries. The United Nations imposed a resolution
prohibiting Malaya exporting their natural rubber to China which
aggravated the problem further.
Late R.G. Senanayake, who was the Minister of Commerce at the time,
observed this situation and proposed signing a barter trade agreement
with China under which Sri Lanka would supply natural rubber and China
to reciprocate with rice, which will be beneficial to both countries.
Though this was a period when Sri Lanka was politically favouring the
western countries, the prevailing local conditions made the Sri Lanka
government to take a bold decision to sign the proposed barter
agreement. And the “Ceylon - China Rubber - Rice Pact” was signed
between the two countries on December 18, 1952, in Peking, China.
The Commemorative Stamp issued to mark the 50 years of signing
the Rubber Rice Pact.
The pact was initially made effective for a period of five years,
with the quantities of imports and exports to be balanced annually. The
agreement provided provisions for renewal by mutual consent, and it was
renewed every 5 years, of 6 occasions and was in effect until 1982. The
Sri Lanka-China Rubber Rice Pact was the most beneficial and successful
trade agreement negotiated by Sri Lanka and had been in operation for 30
years. This agreement provided many positive benefits to Sri Lanka,
because China appreciated the bold action taken by Sri Lanka, in
offering to supply natural rubber, during an era, when all other rubber
producing countries declined to supply due to western pressure.
Sri Lanka has benefitted by supplying the rubber at a higher price
than the international price prevailing at the time, and China supplying
the rice at a price lower than the world market price.
We should be grateful to China because they never tried to bargain on
prices or tried to exploit the market to their advantage. China
continued to purchase Sri Lanka’s rubber at a higher price, even when
other producers were prepared to sell them rubber at lower prices.
During the early period of the Rubber – Rice Pact, China even assisted
Sri Lanka to replant the uneconomical rubber plantations, by granting
around Rupees 125 Million to cover a part of the cost.
By early eighties, Sri Lanka became almost self-sufficient in rice
and large imports were not required any further. At the same time, China
was able to purchase their requirement of natural rubber without any
restriction from producing countries. The pact was then considered to be
The Rubber- Rice Pact was the starting point for the expansion of
bilateral trade between Sri Lanka and China, leading its way to closer
and stronger economic cooperation between the two countries. It was
promptly followed by the establishment of diplomatic relations with
China, in 1957.
Late R.G.Senanayake should be given the full credit of establishing
the Rubber – Rice Pact, having foreseen that China will very soon emerge
as a world super power. Sri Lanka-China Business Cooperation Council,
jointly with the Sri Lanka China Society, rightfully remembered and
honoured Late R.G. Senanayake at a public ceremony organized to
commemorate the Golden Jubilee of the signing of the Sri Lanka – China
Rubber-Rice Pact held on December 20, 2002 at the BMICH, Colombo, by
recognizing in person his beloved wife, late Ms. R.G.Senanayake.
The keynote address was made by Dr. J. B. Kelegama on “The
Significance of the Ceylon – China Trade Agreement of 1952”, which
covered all the details pertaining to the Rubber – Rice Pact and its
advantages gained by Sri Lanka. A commemorative stamp and a first day
cover was issued at this event, and a special full page newspaper
supplement was published to mark the occasion.
The Rubber – Rice Pact, though not in effect at present, paved the
way to establish and strengthen the bilateral business relationship
between Sri Lanka and the Peoples’ Republic of China. Late
R.G.Senanayake, should be remembered and given all the credit for
authoring the Rubber Rice Pact. His far sighted vision, foresaw the
emergence of China as a future economic giant of the world, and was
brave enough to pressurize the then government to take a bold step in
signing the pact with China.
The writer Nihal Mallikaaratchi was the President of the Sri Lanka
China Business Cooperation Council from 2002 to 2012.
The Golden Jubilee celebrations to commemorate the 50 years of
signing the Sri Lanka China Rubber Rice Pact was held on December 19,
2002, organized jointly by the Sri Lanka China Business Cooperation
Council and the Sri Lanka China Society.