Industrial history of the People's Republic of China

The technological and industrial history of the People's Republic of China is a long one. China's industrial sector has shown great progress since 1949, but in the late 1980s it remained undeveloped in many respects. Although the country manufactured nuclear weapon

Nuclear weapon

A nuclear weapon is an explosive device that derives its destructive force from nuclear reactions, either fission or a combination of fission and fusion. Both reactions release vast quantities of energy from relatively small amounts of matter. The first fission bomb test released the same amount...

s and delivery systems

Nuclear weapons delivery

Nuclear weapons delivery is the technology and systems used to place a nuclear weapon at the position of detonation, on or near its target. Several methods have been developed to carry out this task....

and could launch domestically-produced satellite

Satellite

In the context of spaceflight, a satellite is an object which has been placed into orbit by human endeavour. Such objects are sometimes called artificial satellites to distinguish them from natural satellites such as the Moon....

s, many of its industries used technologies of the 1950s. Although China was one of the world's largest producers of fuel in the mid-1980s and had the world's largest hydropower potential, frequent energy shortages caused lengthy factory shutdowns. Despite massive coal reserves in north China, transportation deficiencies necessitated coal imports to south China. Research institutes developed sophisticated industrial technologies, but bureaucratic and political obstacles impeded implementation.

To solve these and other problems, the Chinese leadership initiated sweeping economic reforms in the late 1970s. Although specific industrial reforms were not clearly defined, broad goals included loosening bureaucratic controls on enterprises and managers to promote a decentralization

Decentralization

__FORCETOC__Decentralization or decentralisation is the process of dispersing decision-making governance closer to the people and/or citizens. It includes the dispersal of administration or governance in sectors or areas like engineering, management science, political science, political economy,...

of authority. Other broad goals were to increase worker productivity

Productivity

Productivity is a measure of the efficiency of production. Productivity is a ratio of what is produced to what is required to produce it. Usually this ratio is in the form of an average, expressing the total output divided by the total input...

by offering incentive

Incentive

In economics and sociology, an incentive is any factor that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives. It is an expectation that encourages people to behave in a certain way...

s; to give market forces greater influence on output mix, purchases, sales, and hiring; to make enterprises operate more efficiently and be responsible for profits and losses; and to restructure the price system to reflect supply and demand more accurately.

Another major goal of the reform program was development of light industry

Light industry

Light industry is usually less capital intensive than heavy industry, and is more consumer-oriented than business-oriented...

. Beginning with the First Five-Year Plan (1953–57), China adopted the Soviet model of economic development

Economic development

Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...

, stressing a heavy industrial base. However, this emphasis seriously strained China's resources and capital and led the leadership in the late 1970s to shift to development of light industry. Because light industry is labor intensive, this

Overview

By the mid-1980s, industrial reforms had achieved substantial success in some areas. Industrial output was about twenty-five times that of 1952 (see List of countries by GDP sector composition). A wide range of modern industries had been established, and the country was one of the world's leading producers of coal, textiles, and bicycles. There were major plants in almost every key industry, and a strong effort had been made to introduce manufacturing

Manufacturing

Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...

into undeveloped and rural areas. Light-industry output of consumer goods had increased dramatically. In some cases, enterprises reduced operating cost

Operating cost

Operating costs can be described as the expenses which are related to the operation of a business, or to the operation of a device, component, piece of equipment or facility.-Business operating costs:...

s, managers were able to exercise greater autonomy, and technical innovation

Innovation

Innovation is the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets, governments, and society...

s were implemented to increase efficiency.

Despite these bright spots in the 1980s, overall results were disappointing to Chinese economic planners

Planning

Planning in organizations and public policy is both the organizational process of creating and maintaining a plan; and the psychological process of thinking about the activities required to create a desired goal on some scale. As such, it is a fundamental property of intelligent behavior...

. Major problems included failure to reform the price system, interference of local cadres in the managers' operation of enterprises, and perpetuation of the life tenure

Tenure

Tenure commonly refers to life tenure in a job and specifically to a senior academic's contractual right not to have his or her position terminated without just cause.-19th century:...

, "iron rice bowl

Iron rice bowl

"Iron rice bowl" is a Chinese term used to refer to an occupation with guaranteed job security, as well as steady income and benefits. The Chinese term can be compared to the similar English concept of a breadwinner with cradle to grave socialism...

" system for workers. Rapid industrial growth made energy shortages one of the most critical problems facing the economy, limiting industrial enterprises and mines to 70 or 80 percent of capacity. According to China's energy planners

Energy policy of China

The energy policy of the People's Republic of China is a policy decided on by the Central Government with regard to energy and energy resources. The country is currently the world's largest emitter of greenhouse gases according to a Dutch research agency. However, China's per capita emissions are...

, the country would have had to quadruple electricity production to meet the 'gross value of industrial and agricultural output' (GVIAO) target for the year 2000. For a quick increase in output, the industry emphasized short-term development of thermal power plants. In the long term China planned to rely on its vast hydropower potential and nuclear power

Nuclear power in China

, the People's Republic of China has 14 nuclear power reactors spread out over 4 separate sites and 27 under construction. China's National Development and Reform Commission has indicated the intention to raise the percentage of China's electricity produced by nuclear power from the current 1% to...

to meet electricity demand.

In the 1980s large-scale, centrally controlled plants dominated manufacturing. These large plants were supplemented with many small-scale town and township enterprises, which accounted for significant percentages of national output of coal, construction materials, and leather products.

Reform of the industrial economy in the 1980s

The industrial sector employed only about 17 percent of the labor force in 1985 but, as a result of much higher labor productivity

Productivity

than the agricultural sector, accounted for over 46 percent of national income. Industrial units were very diverse in size and technological sophistication, ranging from tiny handicraft manufacturing enterprises to giant modern complexes producing such goods as steel

Steel

Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...

, chemical fertilizer

Fertilizer

Fertilizer is any organic or inorganic material of natural or synthetic origin that is added to a soil to supply one or more plant nutrients essential to the growth of plants. A recent assessment found that about 40 to 60% of crop yields are attributable to commercial fertilizer use...

, and synthetic fiber

Synthetic fiber

Synthetic fibers are the result of extensive research by scientists to improve on naturally occurring animal and plant fibers. In general, synthetic fibers are created by forcing, usually through extrusion, fiber forming materials through holes into the air, forming a thread...

s.

The majority of the country's large industrial units were clustered in the major industrial centers in the northeast, the Beijing-Tianjin

Tianjin

' is a metropolis in northern China and one of the five national central cities of the People's Republic of China. It is governed as a direct-controlled municipality, one of four such designations, and is, thus, under direct administration of the central government...

-Tangshan

Tangshan

"唐山"redirects here. For an alternative name of China, see Names of China#TangTangshan is a largely industrial prefecture-level city in Hebei province, People's Republic of China. It has become known for the 1976 Tangshan earthquake which measured 7.8 on the Richter scale and killed at least...

area, the Yangtze River Valley, and Shanghai. Small and medium-size units were found throughout the country, and a number of first-rank plants were located far from the leading cities. Ownership of industrial enterprises fell into three general categories: state ownership, urban collective ownership, and rural collective ownership. Industry was dominated by the state-owned sector, which included the largest, most technically advanced, and most important enterprises.

In 1985 state-owned enterprises produced 70 percent of national industrial output by value, held 75 percent of fixed industrial assets, and employed 46 percent of the industrial labor force (including rural industrial enterprises). Although all of these units were owned by "the state" in the abstract sense, operational control and effective ownership of specific enterprises were divided among the different levels of government. A few of the largest enterprises were under the direct authority of their respective ministries in the central government. Most major enterprises were owned by the province, autonomous region, or special municipality where they were located or were subject to shared control by the central ministry and the provincial-level government. Small and medium-size units usually were owned by city, prefecture, county, or town governments. Control of some enterprises was shared with higher administrative levels.

Workers in state-owned enterprises were paid regular wages according to an established pay scale, as well as bonuses that were supposed to be related to personal or enterprise performance or both. In addition, they received a number of important benefits, including free health care

Health care

Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...

, subsidized housing

House

A house is a building or structure that has the ability to be occupied for dwelling by human beings or other creatures. The term house includes many kinds of different dwellings ranging from rudimentary huts of nomadic tribes to free standing individual structures...

, and subsidies for such work-related expenses as special clothing and commuting costs. The average income of industrial workers was considerably higher than that of most farmers and was much more stable.

Urban, collectively owned enterprises (owned by the workers) for the most part were small units equipped with relatively little machinery. Many of these units were engaged in handicraft

Handicraft

Handicraft, more precisely expressed as artisanic handicraft, sometimes also called artisanry, is a type of work where useful and decorative devices are made completely by hand or by using only simple tools. It is a traditional main sector of craft. Usually the term is applied to traditional means...

production or other labor-intensive

Labor intensity

Labor intensity is the relative proportion of labor used in a process. Its inverse is capital intensity....

activities, such as manufacturing furniture or assembling simple electrical items. In the late 1970s and early 1980s, the government promoted them as a means of using surplus labor to increase supplies of consumer and export goods. By 1985 urban collective industrial enterprises employed over 17 million people, 20 percent of the total industrial labor force. These enterprises held only 13 percent of all industrial fixed assets but produced 19 percent of total industrial output value.

Rural, collectively owned industrial enterprises – commonly referred to as "township enterprises" – were the most rapidly growing portion of the industrial sector in the mid-1980s. The government regarded them as a means of expanding industrialization (without further tax

Tax

To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...

ing the overcrowded major urban centers), alleviating rural unemployment

Unemployment

Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...

, and increasing supplies of industrial products in rural areas. Most of the township enterprises were operated by township and town governments, but a large number of very small units were operated by private cooperative

Cooperative

A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit...

organizations called "rural economic unions." In 1985 township enterprises employed 30 million workers, over a third of the total industrial labor force. The value of their fixed assets, however, was only 12 percent of the national total, and their output value came to less than 10 percent of the national total. Nonetheless, in 1985 their income grew by 44 percent over the 1984 levels. The most common products of township industries were building materials, agricultural machinery, textiles, and processed foods.

Trends in industrial production

The shifts in economic policy

Economic policy

Economic policy refers to the actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions into the economy.Such policies are often...

typical of the People's Republic since 1949 have strongly affected industrial production

Industrial production

Industrial production is a measure of output of the industrial sector of the economy. The industrial sector includes manufacturing, mining, and utilities. Although these sectors contribute only a small portion of GDP , they are highly sensitive to interest rates and consumer demand...

. In the recovery period from 1949 to 1952, industrial output more than doubled as plants were repaired and employment rose. The First Five-Year Plan (1953–57) concentrated on constructing plants and equipment for heavy industry

Heavy industry

Heavy industry does not have a single fixed meaning as compared to light industry. It can mean production of products which are either heavy in weight or in the processes leading to their production. In general, it is a popular term used within the name of many Japanese and Korean firms, meaning...

, much of it with Soviet assistance. The machinery, iron

Iron

Iron is a chemical element with the symbol Fe and atomic number 26. It is a metal in the first transition series. It is the most common element forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust...

and steel

Steel

, and mining industries all built their foundations in this period. The increases in productive capacity resulted in a second doubling of output.

The Great Leap Forward

Great Leap Forward

The Great Leap Forward of the People's Republic of China was an economic and social campaign of the Communist Party of China , reflected in planning decisions from 1958 to 1961, which aimed to use China's vast population to rapidly transform the country from an agrarian economy into a modern...

(1958–60) saw production surge by 45 percent in 1958 as new plants went into operation, facilities operated beyond capacity, and great numbers of small local plants were established. But the overambitious plan to revamp China's economy soon encountered problems of misallocation and overextension of resources

Factors of production

In economics, factors of production means inputs and finished goods means output. Input determines the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called a production function...

. The demands of the Great Leap Forward left the work force physically exhausted. As the overburdened economy began to collapse, growth fell to 22 percent in 1959 and 4 percent in 1960. Output dropped precipitously in 1961 because of the earlier withdrawal of Soviet technicians, misallocation of resources, and a serious food shortage. In 1962, with the restoration of planning and coordination, production began to recover. Industrial priorities were transferred from production of industrial goods to agricultural inputs and consumer goods. By 1965 most sectors of industry had regained their 1957 production levels.

In the early stages of the Cultural Revolution

Cultural Revolution

The Great Proletarian Cultural Revolution, commonly known as the Cultural Revolution , was a socio-political movement that took place in the People's Republic of China from 1966 through 1976...

(1966–76), production declined when civil disturbances disrupted factories and transport in the big industrial cities. In 1967 output fell, and it remained below the 1966 level in 1968. After order was restored, production recovered in 1969 and grew by 18 percent in 1970. With resumption of growth and the beginning of the Fourth Five-Year Plan (1971–75), output grew by over 10 percent in 1971 and 1972, and by 13 percent in 1973. A wide-ranging program of investment in plants and equipment, including foreign imports, raised industrial capacity. Throughout the 1970s thousands of new, small-scale plants added significantly to levels of production, especially in coal, chemical fertilizer, cement

Cement

In the most general sense of the word, a cement is a binder, a substance that sets and hardens independently, and can bind other materials together. The word "cement" traces to the Romans, who used the term opus caementicium to describe masonry resembling modern concrete that was made from crushed...

, and electricity

Electricity

Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...

, although there were some setbacks. In the mid-1970s the influence of the Gang of Four

Gang of Four

The Gang of Four was the name given to a political faction composed of four Chinese Communist Party officials. They came to prominence during the Cultural Revolution and were subsequently charged with a series of treasonous crimes...

and disruption by the succession struggle again reduced industrial output. Political activities in factories and uncertainty by managers and planners caused growth to fall to 4.4 percent in 1974. Growth recovered to 10.3 percent in 1975 but fell to zero in 1976 in the uncertainty surrounding the deaths of Mao Zedong

Mao Zedong

Mao Zedong, also transliterated as Mao Tse-tung , and commonly referred to as Chairman Mao , was a Chinese Communist revolutionary, guerrilla warfare strategist, Marxist political philosopher, and leader of the Chinese Revolution...

and Zhou Enlai

Zhou Enlai

Zhou Enlai was the first Premier of the People's Republic of China, serving from October 1949 until his death in January 1976...

, the second fall of Deng Xiaoping

Deng Xiaoping

Deng Xiaoping was a Chinese politician, statesman, and diplomat. As leader of the Communist Party of China, Deng was a reformer who led China towards a market economy...

, and the destruction caused by the Tangshan earthquake.

In 1977 and 1978 the Four Modernizations

Four Modernizations

The Four Modernizations were goals, set forth by Zhou Enlai in 1963, to strengthen the fields of agriculture, industry, national defense, science and technology...

effort began in earnest. Growth reached 14 percent in 1977 when political stability was restored and plants resumed full operation. The high growth rate in 1977 and 1978 caused a serious overheating

Overheating (economics)

Overheating of an economy occurs when its productive capacity is unable to keep pace with growing aggregate demand. It is generally characterised by an above-trend rate of economic growth, where growth is occurring at an unsustainable rate...

of the economy, however. At the end of 1978, the leadership introduced a comprehensive economic reform. In 1979 the economy entered a period of readjustment, emphasizing a slower, more rational rate of growth

Economic growth

In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...

. Policy stressed development of light industry

Light industry

Light industry is usually less capital intensive than heavy industry, and is more consumer-oriented than business-oriented...

and gave priority to the textile and consumer industries in supplying raw

Raw material

A raw material or feedstock is the basic material from which a product is manufactured or made, frequently used with an extended meaning. For example, the term is used to denote material that came from nature and is in an unprocessed or minimally processed state. Latex, iron ore, logs, and crude...

and unfinished materials, power, fuel

Fuel

Fuel is any material that stores energy that can later be extracted to perform mechanical work in a controlled manner. Most fuels used by humans undergo combustion, a redox reaction in which a combustible substance releases energy after it ignites and reacts with the oxygen in the air...

, and finances. Capital investment in light industry increased from 5.4 percent in 1978 to about 8 percent in 1980. Between 1978 and 1981 the proportion of light industry in gross industrial output value increased by about 9 percent. The rate of capital construction decreased, and the government initiated a major drive to correct imbalances in the economy by gearing production to consumer needs and improving economic efficiency.

In 1983 the government took measures to economize on fuel, energy, raw materials, and working capital. The policy experimentally granted enterprises more autonomy. It introduced new types of contracts permitting limited competition among enterprises serving the same markets. The government began to allow market forces to determine production. At the Third Plenum of the Twelfth Central Committee of the Chinese Communist Party (CCP), in October 1984, the party officially reiterated its commitment to reform of the urban economy, signalling a high priority for industrial modernization

Modernization

In the social sciences, modernization or modernisation refers to a model of an evolutionary transition from a 'pre-modern' or 'traditional' to a 'modern' society. The teleology of modernization is described in social evolutionism theories, existing as a template that has been generally followed by...

.

The Seventh Five-Year Plan (1986–90) called for greater responsiveness to consumer demand, increased efficiency, and a further assimilation of modern technology. The plan sought to accelerate development of the energy and raw-materials industries and control growth of manufacturing

Manufacturing

industries, making the two sectors develop more proportionately. Development of the transportation and communications sectors received high priority, and plans called for expanding the building industry. The leadership hoped to speed development of tertiary industry, such as restaurants and small shops, to meet consumer needs.

Organization

The government managed industry according to type and level of control, using various State Council

State Council of the People's Republic of China

The State Council of the People's Republic of China , which is largely synonymous with the Central People's Government after 1954, is the chief administrative authority of the People's Republic of China. It is chaired by the Premier and includes the heads of each governmental department and agency...

ministries and commissions. In 1987, there were separate ministries for aeronautics

Aeronautics

Aeronautics is the science involved with the study, design, and manufacturing of airflight-capable machines, or the techniques of operating aircraft and rocketry within the atmosphere...

, astronautics

Astronautics

Astronautics, and related astronautical engineering, is the theory and practice of navigation beyond the Earth's atmosphere. In other words, it is the science and technology of space flight....

, chemicals, coal, electronics

Electronics

Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...

, metallurgy

Metallurgy

Metallurgy is a domain of materials science that studies the physical and chemical behavior of metallic elements, their intermetallic compounds, and their mixtures, which are called alloys. It is also the technology of metals: the way in which science is applied to their practical use...

, nuclear energy

Nuclear power

Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity...

, ordnance, petroleum, and textiles industries, light industry

Light industry

Light industry is usually less capital intensive than heavy industry, and is more consumer-oriented than business-oriented...

, the railways, and water resources

Water resources

Water resources are sources of water that are useful or potentially useful. Uses of water include agricultural, industrial, household, recreational and environmental activities. Virtually all of these human uses require fresh water....

and electric power

Electric power

Electric power is the rate at which electric energy is transferred by an electric circuit. The SI unit of power is the watt.-Circuits:Electric power, like mechanical power, is represented by the letter P in electrical equations...

; there were two commissions – the National Defense Science, Technology, and Industry Commission and the State Machine-Building Industry Commission.

In 1986 the government recognized four types of economic enterprise ownership: "ownership by the whole people" (or state ownership), collective, individual, and other. Under state ownership the productive asset

Asset

In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...

s of an enterprise were owned by the state, activities of the enterprise were determined by national economic plans, and profits or losses accrued to the state budget. Most of the largest modern enterprises were state-owned and directly controlled by the central government. Many other enterprises also were state-owned but were jointly supervised by the central government and authorities at the provincial, prefectural, or county levels. Profits from these enterprises were divided among the central and lower-level units.

Under collective ownership, productive assets were owned by the workers themselves (in the case of an urban enterprise) or by the members of enterprises established by rural units. Profits and losses belonged to the members of the collective, and government authorities directed the enterprise loosely. Collectively owned enterprises were generally small and labor intensive, employing approximately 27 million people in cities and towns in 1983. Individual ownership belonged to the category of individual handicrafts in the 1950s; by the mid-1980s it also included individual enterprises with a maximum of thirty employees. The Chinese authorities left the "other" category undefined.

Geographic distribution of industry

Before 1949 industry was concentrated in the large east-coast cities and in the northeast

Northeast China

Northeast China, historically known in English as Manchuria, is a geographical region of China, consisting of the three provinces of Liaoning, Jilin and Heilongjiang. The region is sometimes called the Three Northeast Provinces...

. Shanghai was the largest industrial center, followed by Anshan, Fushun

Fushun

Fushun is a city in Liaoning, China, about 45 km east from Shenyang, with a population about 2,138 090 inhabitants at the 2010 census and an area of 11,271 km2, including 713 km2 of the city proper. Fushun is situated on the Hun He . It was formerly called Fouchouen in French...

, and Shenyang

Shenyang

Shenyang , or Mukden , is the capital and largest city of Liaoning Province in Northeast China. Currently holding sub-provincial administrative status, the city was once known as Shengjing or Fengtianfu...

, all in Liaoning

Liaoning

' is a province of the People's Republic of China, located in the northeast of the country. Its one-character abbreviation is "辽" , a name taken from the Liao River that flows through the province. "Níng" means "peace"...

. Qingdao

Qingdao

' also known in the West by its postal map spelling Tsingtao, is a major city with a population of over 8.715 million in eastern Shandong province, Eastern China. Its built up area, made of 7 urban districts plus Jimo city, is home to about 4,346,000 inhabitants in 2010.It borders Yantai to the...

, in Shandong

Shandong

' is a Province located on the eastern coast of the People's Republic of China. Shandong has played a major role in Chinese history from the beginning of Chinese civilization along the lower reaches of the Yellow River and served as a pivotal cultural and religious site for Taoism, Chinese...

, and Tianjin

Tianjin

also were important industrial centers. Only a few cities in the interior had any modern industry; they included Wuhan

Wuhan

Wuhan is the capital of Hubei province, People's Republic of China, and is the most populous city in Central China. It lies at the east of the Jianghan Plain, and the intersection of the middle reaches of the Yangtze and Han rivers...

, Chongqing

Chongqing

Chongqing is a major city in Southwest China and one of the five national central cities of China. Administratively, it is one of the PRC's four direct-controlled municipalities , and the only such municipality in inland China.The municipality was created on 14 March 1997, succeeding the...

, and Taiyuan

Taiyuan

Taiyuan is the capital and largest city of Shanxi province in North China. At the 2010 census, it had a total population of 4,201,591 inhabitants on 6959 km² whom 3,212,500 are urban on 1,460 km². The name of the city literally means "Great Plains", referring to the location where the Fen River...

.

During the First Five-Year Plan (1953–57), the government specifically emphasized development of the northeast and areas other than Shanghai, China's most important industrial base. Industrial sites were constructed in the north around the new steel mill

Steel mill

A steel mill or steelworks is an industrial plant for the manufacture of steel.Steel is an alloy of iron and carbon. It is produced in a two-stage process. First, iron ore is reduced or smelted with coke and limestone in a blast furnace, producing molten iron which is either cast into pig iron or...

s at Baotou

Baotou

Baotou is a mid-sized industrial city in the Inner Mongolia Autonomous Region of the People's Republic of China. Governed as a prefecture-level city, its urban areas are home to a population of approximately 1.78 million, with a total population of over 2.65 million accounting for counties under...

, Inner Mongolia, and in central China in Wuhan

Wuhan

, Hubei. Industrial centers also arose in the southwest, mostly in Sichuan

Sichuan

' , known formerly in the West by its postal map spellings of Szechwan or Szechuan is a province in Southwest China with its capital in Chengdu...

.

In the 1950s, industrial centers in east and northeast China accounted for approximately two-thirds of total industrial output. However, by 1983 industrial centers in the north, south, and southwest had increased their share of output to more than 40 percent. This increase was the result of a policy begun in the 1950s to gradually expand existing industrial bases to new areas, to build new bases in the north and south, and to establish a new base in the southwest.

From 1952 to 1983, south, southwest, and northwest China registered higher industrial growth than the east, northeast, and north regions. Total industrial output grew the fastest in the south – from 13.7 percent of total output in 1952 to 18.5 percent in 1983. The government had stressed developing the interior regions since the 1950s, but by 1986 it had abandoned that strategy in order to develop areas with more established infrastructures. According to this plan, the south would continue growing, but the east and northeast would be the main benefactors.

Level of technology

Despite marked improvement over the early years of the People's Republic, the technological level of Chinese industry generally remained quite low in the late 1980s. The Chinese made remarkable technological progress in some areas, such as nuclear weaponry, satellite

Satellite

s, and computers; but overall the industrial sector lagged far behind that of the developed countries. Much of China's machinery and equipment dated from the 1950s and 1960s. The Soviet Union

Soviet Union

The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....

had provided technology assistance during the 1950s, but such aid ended abruptly in the early 1960s with the break in bilateral relations (see Sino-Soviet split

Sino-Soviet split

In political science, the term Sino–Soviet split denotes the worsening of political and ideologic relations between the People's Republic of China and the Union of Soviet Socialist Republics during the Cold War...

).

One of the main reasons for lagging technology was the lack of coordination between research institutes and production enterprises. Between 1979 and 1984, the number of major scientific and technical research discoveries grew from 2,790 to 10,000 and the number of inventions approved by the state from 42 to 264. Most of the discoveries and inventions were never implemented. This was mainly because research institute

Research institute

A research institute is an establishment endowed for doing research. Research institutes may specialize in basic research or may be oriented to applied research...

s and production enterprises operated independently, with little or no exchange of information. Also, most enterprise managers were more concerned with meeting production quotas than with technological innovation

Innovation

Innovation is the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets, governments, and society...

s.

There were no clear goals for research and development

Research and development

The phrase research and development , according to the Organization for Economic Co-operation and Development, refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of...

, and no concept of the importance of research and development to industry. Instead, efforts concentrated on research and development for purely scientific purposes. Therefore, China did not develop a broad base of industrial research and development. By 1981 only 8 percent of the total research and development work force was involved in industrial research compared to 72 percent in the United States. In 1983 only 3.2 persons per 10,000 population were involved in research, compared to 31 per 10,000 in the United States. Institutional obstacles and resource shortages also plagued research institutes.

In 1985 the CPC issued the "Resolution on the Reform of the Science and Technology Management System." The resolution sought to coordinate research and production more closely. Part of the overall strategy of the Four Modernizations

Four Modernizations

The Four Modernizations were goals, set forth by Zhou Enlai in 1963, to strengthen the fields of agriculture, industry, national defense, science and technology...

was to redirect science and technology

Science and technology

Science and technology is a term of art used to encompass the relationship between science and technology. It frequently appears within titles of academic disciplines and government offices.-See also:...

toward economic progress. Research institutes were to compete for contracts from various industries and operate on a fee-for-service basis. Emphasis went to cooperation among factories, universities, and other institutes.

As of 1987, the status of this effort remained unclear. The metallurgical industry had applied more internal technological innovation than the electronics industry

Electronic information industry in China

The electronic information industry in China grew rapidly after the liberalization of the economy under the national strategic policy of accelerating the "informatization" of its industrial development....

because the technologies in the former were more developed than in the latter. The metallurgy industry made a stronger effort to blend research and production in individual enterprises. Also, major metallurgical complexes had internal research facilities for new-product research. On the other hand, electronics was much more compartmentalized; by the late 1980s there was no decisive breaking of the barriers between the technical and production elements.

China's assimilation of imported technology had mixed results in the mid-1980s. There had been some remarkable accomplishments, but they had taken a long time. For example, advanced West German cold-rolling technology had moved into the Anshan iron and steel complex in Liaoning Province. The electronics sector was not as successful, because of shortages of raw materials, lack of a reliable power supply, low manpower skill, and a shortage of service and applications personnel. An exception was the Jiangnan Semiconductor Plant in Wuxi

Wuxi

Wuxi is an old city in Jiangsu province, People's Republic of China. Split in half by Lake Tai, Wuxi borders Changzhou to the west and Suzhou to the east. The northern half looks across to Taizhou across the Yangtze River, while the southern half also borders the province of Zhejiang to the south...

, Jiangsu, which received equipment from numerous Japanese and American companies. By 1987 it was highly productive. However, China's electronics industry, like most other industries, was at the time far from implementing advanced technology, whatever its source.

Capital

Since 1949 China has devoted a large percentage of investment to industry. By 1983 investment in industry was approximately 57 percent of investment in fixed assets. In 1984 about ¥44 billion, or roughly 30 percent of total state expenditures, was slated for capital construction. In 1981 the leadership attempted to limit uncontrolled, excessive investment in capital construction. The results were not especially positive – partly because of reinvestment by enterprises allowed to retain profits

Profit (accounting)

In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...

, and partly because of foreign investment.

To supplement domestic sources of capital

Capital (economics)

In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...

, China's leadership began allowing virtually all forms of foreign loans and credit by the end of 1979. By early 1980, the country had access to the equivalent of almost US$30 billion in foreign loans and credits termed through 1985. China also sought foreign capital by encouraging joint-venture projects between Chinese and foreign enterprises. But, in early 1986, foreign companies viewed China as a high-cost and high-risk investment area. In 1985 US$8.5 billion worth of foreign capital had been committed, compared to only $US500 million in the first quarter of 1986.

Labor

In the mid-1980s about 11 percent of the work force, or 50 million people, was employed by the industrial sector in stateowned units and collective enterprises. In state-owned enterprises, the annual output per worker (the Chinese measure of productivity

Productivity

) rose by 9.4 percent to ¥15,349. In 1987 there was a severe urban unemployment problem, and a virtually unlimited supply of unskilled and semi-skilled labor. Skilled workers, engineers, scientists, technicians, and managerial personnel were in very short supply. During the Cultural Revolution, many specialists were forced to abandon their occupations, and most training and educational programs ceased during the 10-year hiatus in higher education from 1966 to 1976 (see Education in the People's Republic of China

Education in the People's Republic of China

Education in the People's Republic of China is a state-run system of public education run by the Ministry of Education. All citizens must attend school for at least nine years. The government provides primary education for six years, starting at age six or seven, followed by six years of secondary...

). This led to a shortage of skilled personnel that seriously hampered the industrial sector's implementation of imported modern technology and independent development of new management and production forms. In 1980 a modern management

Management

Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...

training center was established in Dalian

Dalian

Dalian is a major city and seaport in the south of Liaoning province, Northeast China. It faces Shandong to the south, the Yellow Sea to the east and the Bohai Sea to the west and south. Holding sub-provincial administrative status, Dalian is the southernmost city of Northeast China and China's...

, Liaoning, with the help of foreign experts. In 1987 many Dalian graduates found it difficult to use their newly acquired skills because managerial autonomy was lacking, and many cadres had a vested interest in maintaining the status quo

Status quo

Statu quo, a commonly used form of the original Latin "statu quo" – literally "the state in which" – is a Latin term meaning the current or existing state of affairs. To maintain the status quo is to keep the things the way they presently are...

. It was then unclear what effect students educated abroad were having on industry.

Raw materials

China is well endowed with most of the important industrial ores, fuels, and other minerals. Only a few raw materials are not present in deposits large enough for domestic needs. Supplies of iron

Iron

and coking coal, although of poor quality, are adequate. By the early to mid-1980s, China was a significant exporter of rare metals necessary for the aerospace

Aerospace

Aerospace comprises the atmosphere of Earth and surrounding space. Typically the term is used to refer to the industry that researches, designs, manufactures, operates, and maintains vehicles moving through air and space...

and electronics

Electronics

industries. Nonetheless, China imported materials such as steel

Steel

, pig iron

Pig iron

Pig iron is the intermediate product of smelting iron ore with a high-carbon fuel such as coke, usually with limestone as a flux. Charcoal and anthracite have also been used as fuel...

, copper

Copper

Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...

, and aluminum because of a large domestic demand, lack of exploitation and an inadequate transportation infrastructure

Infrastructure

Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...

Energy

Although China was the fourth-largest world producer of fuel in 1985, energy shortages remained a major obstacle to industrial growth. Energy waste was considerable; to offset this, some energy prices increased and penalties for waste went into force.

Coal was the primary energy source, accounting in 1985 for more than 70 percent of total fuel consumption. Proven reserves were more than 700 billion tons, and estimated reserves were 3,000 billion tons. Onshore and offshore oil reserves in 1985 were around 5.3 billion tons, mostly untapped. China had the world's seventh-largest electric power generating capacity, but output still fell far short of demand. Total natural gas output for 1985 was 12.7 billion cubic meters, with 15 billion cubic meters the target by 1990. Natural gas and oil received equal weight in the Seventh Five-Year Plan.

Manufacturing industry

China's manufacturing sector developed according to the principle of "walking on two legs," a policy of self-reliance

Self-sufficiency

Self-sufficiency refers to the state of not requiring any outside aid, support, or interaction, for survival; it is therefore a type of personal or collective autonomy...

introduced in the 1950s. In the 1980s one leg consisted of the state-funded and state-controlled large and medium-sized plants with the most qualified personnel and the most advanced equipment. The other leg was small-scale plants using inferior equipment and large amounts of local labor. Together, the two sectors produced a wide range of industrial products. In most cases the larger plants accounted for the bulk of production, but the smaller enterprises were increasing their share and producing a significant percentage of cement

Cement

, fertilizer

Fertilizer

s, and farm machinery.

Iron and steel

Before 1949 the iron

Iron

and steel

Steel

industry was small and dispersed; the Japanese had built the only modern steel facility just after World War I at Anshan, Liaoning. Although Japan eventually built nine blast furnaces in Anshan, total steel output by all plants never exceeded one million tons annually. Much of the Japanese equipment was either damaged in the Chinese civil war

Chinese Civil War

The Chinese Civil War was a civil war fought between the Kuomintang , the governing party of the Republic of China, and the Communist Party of China , for the control of China which eventually led to China's division into two Chinas, Republic of China and People's Republic of...

or removed by the Soviets at the end of World War II.

Since the establishment of the People's Republic, considerable investment has gone consistently to expand steel output. However, steel production has been very sensitive to changes in economic policies and political climate. Steel output rose steadily in the 1950s when Soviet advisers helped establish the basis of the iron and steel industry, installing numerous Soviet-designed blast

Blast furnace

A blast furnace is a type of metallurgical furnace used for smelting to produce industrial metals, generally iron.In a blast furnace, fuel and ore and flux are continuously supplied through the top of the furnace, while air is blown into the bottom of the chamber, so that the chemical reactions...

and open hearth furnace

Open hearth furnace

Open hearth furnaces are one of a number of kinds of furnace where excess carbon and other impurities are burnt out of the pig iron to produce steel. Since steel is difficult to manufacture due to its high melting point, normal fuels and furnaces were insufficient and the open hearth furnace was...

s. The Great Leap Forward

Great Leap Forward

(1958–60) saw great growth of primitive backyard furnaces producing poor-quality pig iron, numerous new, small, modern plants, overuse of large plants, and exaggerated production reports. In 1961 the industry broke down; nearly all small plants were closed, and output fell to less than half the amount reported for 1960. From 1960 to 1965, output gradually recovered with equipment repair and the purchase of basic oxygen furnaces from Austria and electric furnaces

Electric arc furnace

An electric arc furnace is a furnace that heats charged material by means of an electric arc.Arc furnaces range in size from small units of approximately one ton capacity up to about 400 ton units used for secondary steelmaking...

from Japan. Production fell in 1967 and 1968 during the Cultural Revolution

Cultural Revolution

The Great Proletarian Cultural Revolution, commonly known as the Cultural Revolution , was a socio-political movement that took place in the People's Republic of China from 1966 through 1976...

, but it grew rapidly in the relative political stability from 1969 through the early 1970s. In the mid-1970s political upheaval retarded output, as did the catastrophic Tangshan earthquake of 1976. That event severely damaged the Tangshan steel plant and the Kailuan coal mines. The latter are a major source of coking coal. After 1976 output climbed steadily, reaching 34.5 million tons in 1979. Steel production for 1986 was fifty million tons.

Steel was viewed as the cornerstone or "key link" of both the Great Leap Forward and the Four Modernizations

Four Modernizations

The Four Modernizations were goals, set forth by Zhou Enlai in 1963, to strengthen the fields of agriculture, industry, national defense, science and technology...

programs. But the post-Mao leadership was determined not to repeat the economically disastrous Great Leap policies: in 1979 it called for a period of readjustment and a cutback in steel investment

Investment

Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...

. However, it had set a goal of producing 80 million tons of steel by 2000. Production targets were to be met by renovating and improving existing facilities, rather than building new ones. Improvements in existing plants reduced steel-industry energy consumption from 73.8 million tons of coal in 1978 to 69.1 million tons in 1983, and production increased by 26 percent. However, the Chinese realized they would need outside assistance to fully modernize their steel industry. They sought hardware, technology transfer

Technology transfer

Technology Transfer, also called Transfer of Technology and Technology Commercialisation, is the process of skill transferring, knowledge, technologies, methods of manufacturing, samples of manufacturing and facilities among governments or universities and other institutions to ensure that...

, and managerial

Management

Management in all business and organizational activities is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively...

and planning

Planning

assistance.

In 1987 China was the world's fifth-largest producer of iron and steel, but lagged far behind developed countries in production methods and quality. Most steel capacity was in open-hearth furnaces with basic oxygen furnaces, electric furnaces

Electric arc furnace

, and side-blown converters. Much of the iron and coking coal used in making steel was of low quality. Approximately 25 percent of the country's coal went for steel production in 1985. In 1985 capital construction, considered excessive by the Chinese, exacerbated existing shortages of rolled steel, and imports filled 25 percent of domestic demand.

The Ministry of Metallurgical Industry (now defunct) reported in 1985 that China had 13 plants capable of producing at least 1 million tons per year. Accounting for approximately 65 percent of total production, these mills were built mostly during the 1950s. The Anshan plant was the oldest and most productive of all, producing 7 million tons per year. The next largest was in Wuhan

Wuhan

. It was constructed in the 1950s with Soviet aid. China began construction in 1978 on its first integrated steel complex, the Baoshan Iron and Steel Works in Shanghai, but the completion date moved from 1982 to 1985, and finally to 1988.

Besides the larger plants, about 800 smaller mills were dispersed throughout the country in 1985. They ranged from specialty mills producing 500,000 tons per year to very small operations under local jurisdiction or other ministries. Many of the smaller mills were legacies of the Great Leap Forward, when local authorities had hurriedly established their own steel-making facilities. In the mid-1980s the government hoped to phase out these inefficient plants in favor of larger, more productive plants.

In the late 1980s, it was apparent that steel output would remain insufficient to meet the needs of the Four Modernizations

Four Modernizations

The Four Modernizations were goals, set forth by Zhou Enlai in 1963, to strengthen the fields of agriculture, industry, national defense, science and technology...

. During the period covered by the Seventh Five-Year Plan, imports were expected to average 41 percent of domestic output. Thin rolled sheets, used to make such items as vehicle

Vehicle

A vehicle is a device that is designed or used to transport people or cargo. Most often vehicles are manufactured, such as bicycles, cars, motorcycles, trains, ships, boats, and aircraft....

s, washing machine

Washing machine

A washing machine is a machine designed to wash laundry, such as clothing, towels and sheets...

s, and refrigerator

Refrigerator

A refrigerator is a common household appliance that consists of a thermally insulated compartment and a heat pump that transfers heat from the inside of the fridge to its external environment so that the inside of the fridge is cooled to a temperature below the ambient temperature of the room...

s, were in extremely short supply. In 1984 China had to import about half its steel sheet and about 80 percent of its steel plate. Production of tubes and pipes also was inadequate, and approximately 50 percent of all tubes had to be imported. The country was most proficient in the production of steel bars, but it still had to import an estimated 1.8 million tons of rods and bars in 1984. In 1985 China imported a record 15 million tons of steel, more than two-thirds of it from Japan.

Machine building

The machinery industry has been a leading priority since the founding of the People's Republic. The industry expanded from a few small assembly and repair facilities before 1949 to a large, widely distributed machine-building sector producing many types of modern equipment. However, as of 1987 the overall level of technology was still relatively backward. In the late 1970s and early 1980s, China intended to use large-scale imports to modernize the machinery industry, but later decided that limiting imports to critical areas would be less costly. Ministry of Machine-Building Industry planned called for about 60 percent of the industry's products in 1990 to reach the technological level of the industrialized countries during the 1970s and 1980s. Products built to international standards received priority in allocation of funds, materials, and energy.

In 1987 the machinery industry was distributed throughout the country. Nearly all counties and towns had one or more machine factories. Major machinery centers were Shanghai, Tianjin

Tianjin

, Shenyang

Shenyang

, Beijing, Harbin

Harbin

Harbin ; Manchu language: , Harbin; Russian: Харби́н Kharbin ), is the capital and largest city of Heilongjiang Province in Northeast China, lying on the southern bank of the Songhua River...

, Changchun

Changchun

Changchun is the capital and largest city of Jilin province, located in the northeast of the People's Republic of China, in the center of the Songliao Plain. It is administered as a sub-provincial city with a population of 7,677,089 at the 2010 census under its jurisdiction, including counties and...

, Taiyuan

Taiyuan

, Luoyang

Luoyang

Luoyang is a prefecture-level city in western Henan province of Central China. It borders the provincial capital of Zhengzhou to the east, Pingdingshan to the southeast, Nanyang to the south, Sanmenxia to the west, Jiyuan to the north, and Jiaozuo to the northeast.Situated on the central plain of...

, Wuhan

Wuhan

, Chongqing

Chongqing

, Chengdu

Chengdu

Chengdu , formerly transliterated Chengtu, is the capital of Sichuan province in Southwest China. It holds sub-provincial administrative status...

, Xi'an

Xi'an

Xi'an is the capital of the Shaanxi province, and a sub-provincial city in the People's Republic of China. One of the oldest cities in China, with more than 3,100 years of history, the city was known as Chang'an before the Ming Dynasty...

, and Lanzhou

Lanzhou

Lanzhou is the capital and largest city of Gansu Province in Northwest China. A prefecture-level city, it is a key regional transportation hub, allowing areas further west to maintain railroad connections to the eastern half of the country....

.

The machinery industry was selected by the State Council to lead the way in management reform. China's leaders realized that the quality of machinery would determine the success of modernization

Modernization

in all areas of the economy. The industry's extreme compartmentalization (a legacy of the Maoist obsession with self-reliance

Self-sufficiency

Self-sufficiency refers to the state of not requiring any outside aid, support, or interaction, for survival; it is therefore a type of personal or collective autonomy...

) showed a lack of communication among departments or within regions. Skilled managers were also lacking.

Machine tools

In 1986 about 120 major enterprises produced most of China's machine tool

Machine tool

A machine tool is a machine, typically powered other than by human muscle , used to make manufactured parts in various ways that include cutting or certain other kinds of deformation...

s. Many of the large plants were in the east, north, and northeast, particularly in Beijing, Shanghai, Shenyang

Shenyang

, Harbin

Harbin

Harbin ; Manchu language: , Harbin; Russian: Харби́н Kharbin ), is the capital and largest city of Heilongjiang Province in Northeast China, lying on the southern bank of the Songhua River...

, and Tianjin

Tianjin

. In the early and mid-l980s, a number of agreements with foreign manufacturers aimed to help China upgrade its machine tool industry. The Shanghai Municipal Government also asked World Bank

World Bank

The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...

's assistance in preparing and financing a comprehensive modernization

Modernization

scheme for the Shanghai machine-tool industry.

Overall, the machine-tool industry was based on 1960s technology. Many of the tools had a service life of only five to seven years, compared with twelve to fifteen years in industrialized countries. The tools were generally unreliable and ill-suited for precision work because of outdated design, lowquality purchased components, substandard manufacturing facilities, and a lack of production-management expertise.

Electric power equipment

By the early 1970s, major generator production centers in Harbin

Harbin

Harbin ; Manchu language: , Harbin; Russian: Харби́н Kharbin ), is the capital and largest city of Heilongjiang Province in Northeast China, lying on the southern bank of the Songhua River...

, Shanghai, Beijing, and Deyang

Deyang

Deyang is a prefecture-level city in Sichuan province, China. Deyang is a wealthy, mostly industrial city, with the Erzhong Heavy Machinery Company Deyang is a prefecture-level city in Sichuan province, China. Deyang is a wealthy, mostly industrial city, with the Erzhong Heavy Machinery Company...

, had built both hydro and thermal generators as large as 300 megawatts. There also were numerous small and medium-sized plants producing generators in the 3.2 to 80-megawatt range. As of 1986, China manufactured condenser-type turbo-generating units with capacities of 6,000 to 300,000 kilowatts; back-pressure extraction generating units with capacities of 12,000 to 50,000 kilowatts, geothermal facilities with capacities of 1,000 to 3,000 kilowatts; and hydropower equipment consisting of generator equipment with an 18-million-kilowatt capacity. Deficiencies showed in power-generating equipment and transmission technology, and significant problems existed in direct-current transmission, particularly in converter technology. China continued to lack experience in design and production of high-volt-ampere transformers and circuit breakers.

Transportation equipment

The automotive industry, which grew substantially after 1949, did not keep pace with the demands of modernization

Modernization

. In the early 1980s demand was still low. A surge in demand resulted in the production of 400,000 vehicles and the importation of another 300,000 vehicles through early 1985. In the second half of 1985, stringent administrative measures curtailed most imports, and in early 1986 domestic production was reduced to 13 percent of that in early 1985. One cause for this was a large surplus created by high production and importation levels in 1984 and 1985. Although 1986 production levels were considered a short-term slowdown, the targets of the Seventh Five-Year Plan (1986–90) were quite low.

China's investment in the railroad industry during the Seventh Five-Year Plan was higher than that for any previous five-year plan, with an 80-percent increase over the Sixth Five-Year Plan (1981–85). The country allocated ¥10 billion to manufacture and purchase locomotives, with the remainder going to repair and renewal of obsolete equipment. During the Seventh Five-Year Plan, the Ministry of Railways set a production goal of 5,000 locomotive

Locomotive

A locomotive is a railway vehicle that provides the motive power for a train. The word originates from the Latin loco – "from a place", ablative of locus, "place" + Medieval Latin motivus, "causing motion", and is a shortened form of the term locomotive engine, first used in the early 19th...

s, including over 800 electric and over 2,000 diesel locomotive

Diesel locomotive

A diesel locomotive is a type of railroad locomotive in which the prime mover is a diesel engine, a reciprocating engine operating on the Diesel cycle as invented by Dr. Rudolf Diesel...

s. The ministry also planned to manufacture 110,000 freight and 10,000 passenger cars. Despite these ambitious domestic production targets, China had to rely heavily on imported technology to modernize its railroad fleet.

From 1961 to 1987, China's maritime fleet grew faster than that of any other country in the world. During that time, the merchant fleet tonnage increased by an average 13.6 percent per year. From 1982 to 1987, Chinese shipyard

Shipyard

Shipyards and dockyards are places which repair and build ships. These can be yachts, military vessels, cruise liners or other cargo or passenger ships. Dockyards are sometimes more associated with maintenance and basing activities than shipyards, which are sometimes associated more with initial...

s produced fifty-five ships, including bulk cargo vessels, freighters, tankers, container ships, partial container ships, and passenger-cargo vessels, with a total dead-weight tonnage of more than 700,000 million. At the end of 1985, about 17 percent of China's merchant fleet was built domestically.

In the late 1950s, China began developing its own aircraft, known as the Yun, or Y-series. China built 135 civil aircraft between 1981 and 1985 and was scheduled to build hundreds more during the Seventh Five-Year Plan. Civil aircraft and aircraft engines were produced in large plants located primarily in Shanghai, Xi'an, Harbin, and Shenyang. Medium-sized factories produced the necessary test equipment, components, avionics

Avionics

Avionics are electronic systems used on aircraft, artificial satellites and spacecraft.Avionic systems include communications, navigation, the display and management of multiple systems and the hundreds of systems that are fitted to aircraft to meet individual roles...

, and accessories. China hoped for eventual self-reliance in all aircraft production, but it still imported planes in 1987.

Metallurgical equipment

Much equipment in the metallurgical industry was based on Japanese designs

Science and technology in Japan

Presently, science and technology in Japan is mostly focused and prominent in consumer electronics, robotics and the automotive industry.- Electronics :...

of the 1930s and Soviet designs

Science and technology in the Soviet Union

In the Soviet Union, science and technology served as an important part of national politics, practices, and identity. From the time of Lenin until the dissolution of the USSR in the early 1990s, both science and technology were intimately linked to the ideology and practical functioning of the...

of the 1950s. Two-thirds of the major equipment at Anshan, one of the largest plants in China, was built during the 1930s and 1950s. In general, major metallurgical equipment was more technologically advanced than instruments and control systems. Measuring and monitoring instruments, essential to quality control, were in short supply.

Most of the iron- and steel-making equipment in general use was domestically produced. This included blast furnaces based on Chinese improvements to old Soviet designs, ore-beneficiation plants, open-hearth furnaces, sideblown converters, electric furnaces, and a wide range of steel-finishing equipment. To achieve a higher technological level, various pieces of equipment were imported since China had not assimilated the technology necessary for domestic production. In most instances the industry imported only the main equipment, neglecting necessary control instruments and auxiliary technologies.

Electronics

In 1987 China's electronics industry

Electronic information industry in China

was about ten to fifteen years behind those of the industrialized nations. Key problems were the inability to transfer technology from research to production and continued reliance on hand labor. Also, impatience to reach Western standards sometimes proved counterproductive. For example, instead of buying a complex item such as a microprocessor

Microprocessor

A microprocessor incorporates the functions of a computer's central processing unit on a single integrated circuit, or at most a few integrated circuits. It is a multipurpose, programmable device that accepts digital data as input, processes it according to instructions stored in its memory, and...

abroad, China chose to develop its own, at great expense.

In 1985 the electronics industry consisted of approximately 2,400 enterprises, 100 research institutions, 4 institutes of higher learning, and 20 secondary vocational schools. The industry employed some 1.36 million people, including 130,000 technical personnel. Besides the approximately 2,000 types of electronic components and large-scale integrated circuit

Integrated circuit

An integrated circuit or monolithic integrated circuit is an electronic circuit manufactured by the patterned diffusion of trace elements into the surface of a thin substrate of semiconductor material...

s produced by the industry, it made 400 varieties of electronic machinery, including electronic computers, television broadcast transmitters and receivers, and radar and communications equipment. In the 1980s China made great strides in the production of consumer electronic products such as televisions, radios, and tape recorders.

Chemicals

China's chemical industry

Chemical industry

The chemical industry comprises the companies that produce industrial chemicals. Central to the modern world economy, it converts raw materials into more than 70,000 different products.-Products:...

evolved from a negligible base in 1949, grew substantially in the 1950s and early 1960s, and received major emphasis in the late 1960s and 1970s. In 1984 chemical products served primarily agriculture and light industry

Light industry

Light industry is usually less capital intensive than heavy industry, and is more consumer-oriented than business-oriented...

. The three main areas of chemical manufacturing are chemical fertilizers, basic chemicals, and organically synthesized products. Chemical fertilizer

Fertilizer

was consistently regarded as the key to increased agricultural output. The output of many chemical products rose steadily, sometimes dramatically, from 1978 to 1984.

Except for a few items, such as soda ash and synthetic rubber

Synthetic rubber

Synthetic rubber is is any type of artificial elastomer, invariably a polymer. An elastomer is a material with the mechanical property that it can undergo much more elastic deformation under stress than most materials and still return to its previous size without permanent deformation...

, the great majority of chemical products, including fertilizer, came from small factories. Small-scale plants could be built more quickly and inexpensively than large, modern plants

Factory

A factory or manufacturing plant is an industrial building where laborers manufacture goods or supervise machines processing one product into another. Most modern factories have large warehouses or warehouse-like facilities that contain heavy equipment used for assembly line production...

and were designed to use low-quality local resources, such as small deposits of coal or natural gas

Natural gas

Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...

. They also minimized demands on the overworked transportation system.

Larger and more modern fertilizer plants were located in every municipality, province, and autonomous region. In the early 1970s, China negotiated contracts with foreign firms for construction of thirteen large nitrogenous-fertilizer plants. By 1980 all thirteen plants had been completed, and ten were fully operational. From 1980 to 1984 many inefficient fertilizer plants were shut down, and by 1984 additional plants were being built with the most advanced equipment available. To capitalize on China's rich mineral resources, the new plants were being constructed close to coal, phosphate

Phosphate

A phosphate, an inorganic chemical, is a salt of phosphoric acid. In organic chemistry, a phosphate, or organophosphate, is an ester of phosphoric acid. Organic phosphates are important in biochemistry and biogeochemistry or ecology. Inorganic phosphates are mined to obtain phosphorus for use in...

, and potassium

Potassium

Potassium is the chemical element with the symbol K and atomic number 19. Elemental potassium is a soft silvery-white alkali metal that oxidizes rapidly in air and is very reactive with water, generating sufficient heat to ignite the hydrogen emitted in the reaction.Potassium and sodium are...

deposits.

Compared with advanced countries, China's chemical fertilizers lacked phosphate and potassium, and contained too much nitrogen

Nitrogen

Nitrogen is a chemical element that has the symbol N, atomic number of 7 and atomic mass 14.00674 u. Elemental nitrogen is a colorless, odorless, tasteless, and mostly inert diatomic gas at standard conditions, constituting 78.08% by volume of Earth's atmosphere...

. To boost supplies of phosphate and potassium, China relied heavily on imports during the Sixth Five-Year Plan.

Basic chemical production grew rapidly after 1949. In 1983 production of sulfuric acid

Sulfuric acid

Sulfuric acid is a strong mineral acid with the molecular formula . Its historical name is oil of vitriol. Pure sulfuric acid is a highly corrosive, colorless, viscous liquid. The salts of sulfuric acid are called sulfates...

was approximately 8.7 million tons with major production centers in Nanjing

Nanjing

' is the capital of Jiangsu province in China and has a prominent place in Chinese history and culture, having been the capital of China on several occasions...

and Luda, and large plants at many chemical-fertilizer complexes. Soda-ash output in 1984 was 1.88 million tons, with production concentrated near major sources of salt

Salt

In chemistry, salts are ionic compounds that result from the neutralization reaction of an acid and a base. They are composed of cations and anions so that the product is electrically neutral...

, such as large coastal cities, Sichuan

Sichuan

' , known formerly in the West by its postal map spellings of Szechwan or Szechuan is a province in Southwest China with its capital in Chengdu...

and Qinghai

Qinghai

Qinghai ; Oirat Mongolian: ; ; Salar:) is a province of the People's Republic of China, named after Qinghai Lake...

, and Inner Mongolia

Inner Mongolia

Inner Mongolia is an autonomous region of the People's Republic of China, located in the northern region of the country. Inner Mongolia shares an international border with the countries of Mongolia and the Russian Federation...

. Production of caustic soda was scattered at large facilities in Dalian, Tianjin, Shanghai, Taiyuan, Shenyang, and Chongqing. In 1984 output of caustic soda was 2.22 million tons. Nitric acid

Nitric acid

Nitric acid , also known as aqua fortis and spirit of nitre, is a highly corrosive and toxic strong acid.Colorless when pure, older samples tend to acquire a yellow cast due to the accumulation of oxides of nitrogen. If the solution contains more than 86% nitric acid, it is referred to as fuming...

and hydrochloric acid

Hydrochloric acid

Hydrochloric acid is a solution of hydrogen chloride in water, that is a highly corrosive, strong mineral acid with many industrial uses. It is found naturally in gastric acid....

were produced in the northeast, in Shanghai, and in Tianjin.

The chemical industry's organic synthesis

Organic synthesis

Organic synthesis is a special branch of chemical synthesis and is concerned with the construction of organic compounds via organic reactions. Organic molecules can often contain a higher level of complexity compared to purely inorganic compounds, so the synthesis of organic compounds has...

branch manufactured plastics, synthetic rubber

Synthetic rubber

, synthetic fibers, dyes, pharmaceuticals, and paint

Paint

Paint is any liquid, liquefiable, or mastic composition which after application to a substrate in a thin layer is converted to an opaque solid film. One may also consider the digital mimicry thereof...

. Plastics, synthetic rubber, and synthetic fibers such as nylon

Nylon

Nylon is a generic designation for a family of synthetic polymers known generically as polyamides, first produced on February 28, 1935, by Wallace Carothers at DuPont's research facility at the DuPont Experimental Station...

were particularly important in the modernization

Modernization

drive because they were used to produce such basic consumer goods as footwear and clothing. From 1979 to 1983, plastics production grew from 793,000 to 1.1 million tons and chemical fibers from 326,300 to 540,000 tons. The major centers for organic synthesis included Shanghai, Jilin

Jilin

Jilin , is a province of the People's Republic of China located in the northeastern part of the country. Jilin borders North Korea and Russia to the east, Heilongjiang to the north, Liaoning to the south, and Inner Mongolia to the west...

, Beijing, Tianjin, Taiyuan

Taiyuan

, Jinxi

Huludao

Huludao is a prefecture-level city in southwestern Liaoning Province, China. It is one of the two principal cities in the Liaoxi Corridor . Known as Jinxi until 1994, Huludao has a total area of 10,415 square kilometers and a population of 2.87 million, of which some 531,000 live in the city proper...

, and Guangzhou. The industry received large amounts of foreign machinery in the 1970s.

Building materials

Large-scale capital

Capital (economics)

construction

Construction

In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...

dramatically increased the demand for building material

Building material

Building material is any material which is used for a construction purpose. Many naturally occurring substances, such as clay, sand, wood and rocks, even twigs and leaves have been used to construct buildings. Apart from naturally occurring materials, many man-made products are in use, some more...

s. Like the chemical fertilizer industry, cement

Cement

production featured simultaneous development of small-scale plants and large, modern facilities. Widespread construction of small-scale cement plants began in 1958. By the mid-1970s, these plants existed in 80 percent of China's counties; in 1984 they accounted for a major share of national cement output. These local plants varied widely in size and technology. In 1983 China produced approximately 108 million tons of cement, second in the world to the Soviet Union. In 1984 production increased 14 percent, to 123 million tons and, except for Xizang and Ningxia

Ningxia

Ningxia, formerly transliterated as Ningsia, is an autonomous region of the People's Republic of China. Located in Northwest China, on the Loess Plateau, the Yellow River flows through this vast area of land. The Great Wall of China runs along its northeastern boundary...

autonomous regions, every province, autonomous region, and municipality had plants capable of producing 500,000 tons of cement per year.

China's building-materials industry developed rapidly and reached an output value of ¥28.7 billion in 1984. It manufactured over 500 types of products and employed approximately 3.8 million people in 1984. These materials were used in the metallurgy

Metallurgy

, machinery, electronics

Electronics

, aviation

Aviation

Aviation is the design, development, production, operation, and use of aircraft, especially heavier-than-air aircraft. Aviation is derived from avis, the Latin word for bird.-History:...

, and national-defense industries, and civil engineering

Civil engineering

Civil engineering is a professional engineering discipline that deals with the design, construction, and maintenance of the physical and naturally built environment, including works like roads, bridges, canals, dams, and buildings...

projects. The main production centers for building materials were Beijing, Wuhan, and Harbin.

By the mid-1980s, China was one of the world's primary producers of plate glass, a critical building material. Production in 1984 reached 48.3 million cases, and twenty urban glass factories each produced 500,000 cases annually. Three large glass plants, each having a production capacity of 1.2 million standard cases, were scheduled for completion in 1985 in Luoyang

Luoyang

, Qinhuangdao

Qinhuangdao

Qinhuangdao is a port city in northeastern Hebei province of North China. It is about 300 km east of Beijing, on the Bohai Sea, the innermost gulf of the Yellow Sea....

, and Nanning

Nanning

Nanning is the capital of the Guangxi Zhuang Autonomous Region in southern China. It is known as the "Green City" because of its abundance of lush tropical foliage.-History:...

Paper

In the early 1980s, China's serious shortage of productive forest combined with outdated technology to create a pulp-and-paper shortage at a time of increasing demand. From 1981 to 1986 the annual growth rate of paper production was 7.3 percent. However, in 1986 only 20 percent of paper pulp was made of wood

Wood

Wood is a hard, fibrous tissue found in many trees. It has been used for hundreds of thousands of years for both fuel and as a construction material. It is an organic material, a natural composite of cellulose fibers embedded in a matrix of lignin which resists compression...

; the remainder derived from grass fiber.

China's more than 1,500 paper mill

Paper mill

A paper mill is a factory devoted to making paper from vegetable fibres such as wood pulp, old rags and other ingredients using a Fourdrinier machine or other type of paper machine.- History :...

s, produced approximately 45.4 million tons and over 500 different types of machine-made paper in 1986. Approximately 1 million tons of pulp and paper were imported annually. In 1986 China focused on pollution

Pollution

Pollution is the introduction of contaminants into a natural environment that causes instability, disorder, harm or discomfort to the ecosystem i.e. physical systems or living organisms. Pollution can take the form of chemical substances or energy, such as noise, heat or light...

control, increased product variety, less use of fiber and chemical ingredients, and more efficient use of energy

Efficient energy use

Efficient energy use, sometimes simply called energy efficiency, is the goal of efforts to reduce the amount of energy required to provide products and services. For example, insulating a home allows a building to use less heating and cooling energy to achieve and maintain a comfortable temperature...

as measures to improve production. However, China also sought foreign assistance to achieve these goals.

Textiles

China has a long and rich history in production of silk

Silk

Silk is a natural protein fiber, some forms of which can be woven into textiles. The best-known type of silk is obtained from the cocoons of the larvae of the mulberry silkworm Bombyx mori reared in captivity...

, bast fiber, and cotton

Cotton

Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....

textiles. The earliest silk producer, China began exporting to West Asia and Europe around 20 BCE Ramie

Ramie

Ramie is a flowering plant in the nettle family Urticaceae, native to eastern Asia. It is a herbaceous perennial growing to 1–2.5 m tall; the leaves are heart-shaped, 7–15 cm long and 6–12 cm broad, and white on the underside with dense small hairs—this gives it a silvery appearance;...

, a grass used to produce woven fabrics, fish lines, and fish nets, was first cultivated around 1000 BCE and is found in the southern provinces of Hunan

Hunan

' is a province of South-Central China, located to the south of the middle reaches of the Yangtze River and south of Lake Dongting...

, Hubei

Hubei

' Hupeh) is a province in Central China. The name of the province means "north of the lake", referring to its position north of Lake Dongting...

, Sichuan

Sichuan

' , known formerly in the West by its postal map spellings of Szechwan or Szechuan is a province in Southwest China with its capital in Chengdu...

, Guangdong

Guangdong

Guangdong is a province on the South China Sea coast of the People's Republic of China. The province was previously often written with the alternative English name Kwangtung Province...

, and Guizhou

Guizhou

' is a province of the People's Republic of China located in the southwestern part of the country. Its provincial capital city is Guiyang.- History :...

, and Guangxi

Guangxi

Guangxi, formerly romanized Kwangsi, is a province of southern China along its border with Vietnam. In 1958, it became the Guangxi Zhuang Autonomous Region of the People's Republic of China, a region with special privileges created specifically for the Zhuang people.Guangxi's location, in...

. Cotton spinning

Spinning (textiles)

Spinning is a major industry. It is part of the textile manufacturing process where three types of fibre are converted into yarn, then fabric, then textiles. The textiles are then fabricated into clothes or other artifacts. There are three industrial processes available to spin yarn, and a...

and weaving

Weaving

Weaving is a method of fabric production in which two distinct sets of yarns or threads are interlaced at right angles to form a fabric or cloth. The other methods are knitting, lace making and felting. The longitudinal threads are called the warp and the lateral threads are the weft or filling...

was the largest domestic industry in the late nineteenth and early twentieth centuries. After a respectable but inconsistent performance from 1949 to 1978, textile production increased significantly with the introduction of the agricultural responsibility system in 1979. By 1979 supplies of textiles had improved, the cloth-rationing

Rationing

Rationing is the controlled distribution of scarce resources, goods, or services. Rationing controls the size of the ration, one's allotted portion of the resources being distributed on a particular day or at a particular time.- In economics :...

system (in force since 1949) ended, and the industry began to flourish.

From 1979 to 1984, the output value of the textile industry rose approximately 13 percent annually. In 1984 China had about 12,000 enterprises producing cotton and woolen goods, silk, linen, chemical fibers, prints and dyed goods, knitwear, and textile machinery. Textile production was 15.4 percent of the country's total industrial output value in 1984. Textile exports in 1984 (excluding silk goods) totaled US$4.15 billion, up 21.7 percent over 1983, and accounted for 18.7 percent of the nation's total export value. By 1986 textiles had replaced oil as the top foreign-exchange source.

Traditionally, the coastal areas had the most modern textile equipment and facilities. Shanghai Municipality and Jiangsu

Jiangsu

' is a province of the People's Republic of China, located along the east coast of the country. The name comes from jiang, short for the city of Jiangning , and su, for the city of Suzhou. The abbreviation for this province is "苏" , the second character of its name...

Province were the nerve centers of the industry, accounting for 31.6 percent of the total gross-output value for textiles in 1983. Other major textile areas were Shandong, Liaoning, Hubei, Zhejiang, and Hebei provinces.

After 1949 cotton textile production was reorganized and expanded to meet consumer needs. Cotton cultivation increased in the areas around the established spinning centers in the port cities of Shanghai, Qingdao, Tianjin, and Guangzhou. New spinning and weaving facilities opened near the inland cotton-producing regions. In 1983 China produced 4.6 millions tons of cotton, more than double the 1978 total.

China still was the world's largest silk producer in 1983, manufacturing approximately 1 billion meters of silk textiles. Shanghai Municipality and Jiangsu and Zhejiang provinces were the main silk centers. That year China also produced approximately 100,000 tons of knitting

Knitting

Knitting is a method by which thread or yarn may be turned into cloth or other fine crafts. Knitted fabric consists of consecutive rows of loops, called stitches. As each row progresses, a new loop is pulled through an existing loop. The active stitches are held on a needle until another loop can...

wool

Wool

Wool is the textile fiber obtained from sheep and certain other animals, including cashmere from goats, mohair from goats, qiviut from muskoxen, vicuña, alpaca, camel from animals in the camel family, and angora from rabbits....

, 140 million meters of wool

Wool

en piece goods, 3.3 million tons of yarn

Yarn

Yarn is a long continuous length of interlocked fibres, suitable for use in the production of textiles, sewing, crocheting, knitting, weaving, embroidery and ropemaking. Thread is a type of yarn intended for sewing by hand or machine. Modern manufactured sewing threads may be finished with wax or...

, and 541,000 tons of chemical fibers.

Food processing

Food processing is the set of methods and techniques used to transform raw ingredients into food or to transform food into other forms for consumption by humans or animals either in the home or by the food processing industry...

made significant advances in China after 1949. The most basic improvement was nearly universal establishment of mechanized grain-milling facilities in rural production units. The processing of food into finished and packaged products also grew extensively.

Although a growing number of food products were packaged for export, China's food processing capacity was relatively low in the mid-1980s. An immense variety of baked goods and candies was produced for local consumption, and most Chinese continued to resist processed foods. However, rising standards of living increased the demand for processed food because of its nutrition

Nutrition

Nutrition is the provision, to cells and organisms, of the materials necessary to support life. Many common health problems can be prevented or alleviated with a healthy diet....

al and hygienic advantages.

The beverage industry was very large and widespread. All regions had breweries and distilleries producing beer and a variety of domestic and western alcoholic beverage

Alcoholic beverage

An alcoholic beverage is a drink containing ethanol, commonly known as alcohol. Alcoholic beverages are divided into three general classes: beers, wines, and spirits. They are legally consumed in most countries, and over 100 countries have laws regulating their production, sale, and consumption...

s. China successfully exported several varieties of beer

Beer

Beer is the world's most widely consumed andprobably oldest alcoholic beverage; it is the third most popular drink overall, after water and tea. It is produced by the brewing and fermentation of sugars, mainly derived from malted cereal grains, most commonly malted barley and malted wheat...

and liquor, and domestic soft drink

Soft drink

A soft drink is a non-alcoholic beverage that typically contains water , a sweetener, and a flavoring agent...

production was widespread.

Other consumer goods

In the first thirty years of the People's Republic, many basic consumer goods were scarce because of the emphasis on heavy industry

Heavy industry

. However, the 1979 economic reform program

Chinese economic reform

The Chinese economic reform refers to the program of economic reforms called "Socialism with Chinese characteristics" in the People's Republic of China that were started in December 1978 by reformists within the Communist Party of China led by Deng Xiaoping.China had one of the world's largest...

resulted in a consumer goods explosion. For example, television production increased from approximately 0.5 million sets in 1978 to over 10 million by 1984. During the same period, bicycle

Bicycle

A bicycle, also known as a bike, pushbike or cycle, is a human-powered, pedal-driven, single-track vehicle, having two wheels attached to a frame, one behind the other. A person who rides a bicycle is called a cyclist, or bicyclist....

output increased about three and one-half times, production of electric fans increased twelvefold, and the output of radios doubled. In the first half of 1985, compared with the same period in 1984, production of television sets, washing machines, electric fans, and refrigerators increased dramatically. Refrigerators, washing machines, and televisions included imported components. In 1985 economic planners decided to limit production of refrigerators because they estimated that supply would outstrip demand by 5.9 million units in 1990. The following year, authorities curbed production of televisions because of excessive output and an emphasis on quality.

Housing construction

Modern housing has been in chronic shortage in contemporary China. Housing conditions in 1949 were primitive and crowded, and massive population growth

Population growth

Population growth is the change in a population over time, and can be quantified as the change in the number of individuals of any species in a population using "per unit time" for measurement....

since then has placed great strains on the nation's building industry. According to 1985 estimates, 46 million additional units of housing, or about 2.4 billion square meters of floor space, would be needed by the year 2000 to house every urban family. Adequate housing was defined as an average of eight square meters of living space per capita. However, as of 1984, the average per capita living space was only 4.8 square meters. Housing specialists suggested that the housing construction and allocation system be reformed and that the eight-square-meter target be achieved in two stages: six square meters by 1990 and the additional two square meters between 1990 and 2000. To help relieve the situation, urban enterprises were increasing investment in housing for workers. In 1985 housing built by state and collective enterprises in cities and towns totaled 130 million square meters of floor space. In the countryside, housing built by farmers was 700 million square meters.

Capital construction

Since the 1950s, the capital construction industry has been plagued by excessive growth and compartmentalization. There were frequent cost overruns and construction delays, and resources were overtaxed. Project directors often failed to predict accurately the need for such elements as transportation, raw materials, and energy. A large number of small factories were built, providing surplus capacity at the national level but with deficient economies of scale

Economies of scale

Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...

at the plant level. Poor cooperation among ministries and provinces resulted in unnecessary duplication. Because each area strove for self-sufficiency in all phases of construction, specialization suffered. Since the early years of the People's Republic, overinvestment in construction has been a persistent problem. Fiscal reforms in 1979 and 1980 exacerbated overinvestment by allowing local government

Local government

Local government refers collectively to administrative authorities over areas that are smaller than a state.The term is used to contrast with offices at nation-state level, which are referred to as the central government, national government, or federal government...

s to keep a much greater percentage of the revenue from enterprises in their respective areas. Local governments could then use the retained earnings to invest in factories in their areas. These investments, falling outside the national economic plan, interfered with the central government's control of capital investment.

In 1981 the economy underwent a period of "readjustment," during which the investment budget for capital construction was sharply reduced. This administrative solution to overinvestment proved ineffective, and later reforms concentrated on economic measures such as tax

Tax

levies to discourage investment. The issuance of interest-bearing loans instead of grants was also intended to control construction growth. Despite reforms, capital construction continued at a heated pace in 1986. The majority of the new investment was unplanned, coming from loans or enterprises' internal capital.

During the Seventh Five-Year Plan, 925 medium-and large-scale projects were scheduled. The government planned to allocate ¥1.3 trillion for fixed asset

Fixed asset

Fixed assets, also known as a non-current asset or as property, plant, and equipment , is a term used in accounting for assets and property which cannot easily be converted into cash. This can be compared with current assets such as cash or bank accounts, which are described as liquid assets...

s, an increase of 70 percent over the Sixth Five-Year Plan. Forty percent of the funds were allocated for new projects, and the remaining 60 percent for renovation

Renovation

Renovation is the process of improving a structure. Two prominent types of renovations are commercial and residential.-Process:The process of a renovation, however complex, can usually be broken down into several processes...

or expansion of existing facilities. Some of the projects involved were power-generating stations, coal mines, railroads, ports, airports, and raw-material production centers.

Coal

In the first half of the twentieth century, coal mining was more developed than most industries. Such major mines as Fushun

Fushun

, Datong

Datong

Datong is a prefecture-level city in northern Shanxi Province of North China, located a few hundred kilometres west by rail from Beijing with an elevation of...

, and Kailuan produced substantial quantities of coal for railroads, shipping, and industry. Expansion of coal mining was a major goal of the First Five-Year Plan. The state invested heavily in modern mining equipment and in the development of large, mechanized mines. The longwall mining technique was adopted widely, and output reached 130 million tons in 1957.

During the 1960s and 1970s, investment in large mines and modern equipment lagged, and production fell behind the industry's growth. Much of the output growth during this period came from small local mines. A temporary but serious production setback followed the July 1976 Tangshan earthquake, which severely damaged China's most important coal center, the Kailuan mines. It took two years for production at Kailuan to return to the 1975 level.

In 1987 coal was the country's most important source of primary energy

Primary energy

Primary energy is an energy form found in nature that has not been subjected to any conversion or transformation process. It is energy contained in raw fuels, and other forms of energy received as input to a system...

, meeting over 70 percent of total energy demand. The 1984 production level was 789 million tons. More than two-thirds of deposits were bituminous, and a large part of the remainder was anthracite. Approximately 80 percent of the known coal deposits were in the north and northwest, but most of the mines were located in Heilongjiang

Heilongjiang

For the river known in Mandarin as Heilong Jiang, see Amur River' is a province of the People's Republic of China located in the northeastern part of the country. "Heilongjiang" literally means Black Dragon River, which is the Chinese name for the Amur. The one-character abbreviation is 黑...

and east China because of their proximity to the regions of highest demand.

Although China had one of the world's largest coal supplies, there still were shortages in areas of high demand, mainly because of an inadequate transportation infrastructure

Infrastructure

Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...

. The inability to transport domestic coal forced the Chinese to import Australian coal to south China in 1985. The industry also lacked modern equipment and technological expertise. Only 50 percent of tunnelling, extracting, loading, and conveying activities were mechanized

Mechanization

Mechanization or mechanisation is providing human operators with machinery that assists them with the muscular requirements of work or displaces muscular work. In some fields, mechanization includes the use of hand tools...

, compared with the 95-percent mechanization level found in European nations.

Iron ore

China had iron-ore reserves, totalling approximately 44 billion tons, in 1980. However, in the mid-1980s, China relied on imports because of domestic transportation and production problems. Sizable iron ore beds are distributed widely in about two-thirds of China's provinces and autonomous regions. The largest quantities are found in Liaoning

Liaoning

Province, followed by Sichuan

Sichuan

' , known formerly in the West by its postal map spellings of Szechwan or Szechuan is a province in Southwest China with its capital in Chengdu...

, Hebei

Hebei

' is a province of the People's Republic of China in the North China region. Its one-character abbreviation is "" , named after Ji Province, a Han Dynasty province that included what is now southern Hebei...

, Shanxi

Shanxi

' is a province in Northern China. Its one-character abbreviation is "晋" , after the state of Jin that existed here during the Spring and Autumn Period....

, Anhui

Anhui

Anhui is a province in the People's Republic of China. Located in eastern China across the basins of the Yangtze River and the Huai River, it borders Jiangsu to the east, Zhejiang to the southeast, Jiangxi to the south, Hubei to the southwest, Henan to the northwest, and Shandong for a tiny...

, Hubei

Hubei

' Hupeh) is a province in Central China. The name of the province means "north of the lake", referring to its position north of Lake Dongting...

, Gansu

Gansu

' is a province located in the northwest of the People's Republic of China.It lies between the Tibetan and Huangtu plateaus, and borders Mongolia, Inner Mongolia, and Ningxia to the north, Xinjiang and Qinghai to the west, Sichuan to the south, and Shaanxi to the east...

, Shandong

Shandong

, and Yunnan

Yunnan

Yunnan is a province of the People's Republic of China, located in the far southwest of the country spanning approximately and with a population of 45.7 million . The capital of the province is Kunming. The province borders Burma, Laos, and Vietnam.Yunnan is situated in a mountainous area, with...

provinces and Inner Mongolia

Inner Mongolia

.

In the mid-1980s, mines lacked modern excavating, transportation, and ore

Ore

An ore is a type of rock that contains minerals with important elements including metals. The ores are extracted through mining; these are then refined to extract the valuable element....

-beneficiation

Beneficiation

In mining, beneficiation is a variety of processes whereby extracted ore from mining is separated into mineral and gangue, the former suitable for further processing or direct use....

equipment. Most of the ore mined had a low iron content and required substantial refining or beneficiation before use in blast furnace

Blast furnace

s. Most mines lacked modern plants for converting low-grade iron ore into concentrated pellets

Pelletizing

Pelletizing is the process of compressing or molding a material into the shape of a pellet. A wide range of different materials are pelletized including chemicals, iron ore, animal compound feed, and more.- Pelletizing of iron ore :...

Other minerals and metals

After 1949 geological exploration

Exploration

Exploration is the act of searching or traveling around a terrain for the purpose of discovery of resources or information. Exploration occurs in all non-sessile animal species, including humans...

discovered deposits of more than 130 useful minerals. China is among the world leaders in proven deposits of tungsten

Tungsten

Tungsten , also known as wolfram , is a chemical element with the chemical symbol W and atomic number 74.A hard, rare metal under standard conditions when uncombined, tungsten is found naturally on Earth only in chemical compounds. It was identified as a new element in 1781, and first isolated as...

, antimony

Antimony

Antimony is a toxic chemical element with the symbol Sb and an atomic number of 51. A lustrous grey metalloid, it is found in nature mainly as the sulfide mineral stibnite...

, rare earth, molybdenum

Molybdenum

Molybdenum , is a Group 6 chemical element with the symbol Mo and atomic number 42. The name is from Neo-Latin Molybdaenum, from Ancient Greek , meaning lead, itself proposed as a loanword from Anatolian Luvian and Lydian languages, since its ores were confused with lead ores...

, vanadium

Vanadium

Vanadium is a chemical element with the symbol V and atomic number 23. It is a hard, silvery gray, ductile and malleable transition metal. The formation of an oxide layer stabilizes the metal against oxidation. The element is found only in chemically combined form in nature...

, titanium

Titanium

Titanium is a chemical element with the symbol Ti and atomic number 22. It has a low density and is a strong, lustrous, corrosion-resistant transition metal with a silver color....

, pyrite

Pyrite

The mineral pyrite, or iron pyrite, is an iron sulfide with the formula FeS2. This mineral's metallic luster and pale-to-normal, brass-yellow hue have earned it the nickname fool's gold because of its resemblance to gold...

, gypsum

Gypsum

Gypsum is a very soft sulfate mineral composed of calcium sulfate dihydrate, with the chemical formula CaSO4·2H2O. It is found in alabaster, a decorative stone used in Ancient Egypt. It is the second softest mineral on the Mohs Hardness Scale...

, barite

Barite

Baryte, or barite, is a mineral consisting of barium sulfate. The baryte group consists of baryte, celestine, anglesite and anhydrite. Baryte itself is generally white or colorless, and is the main source of barium...

, copper

Copper

, tin

Tin

Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...

, lead

Lead

Lead is a main-group element in the carbon group with the symbol Pb and atomic number 82. Lead is a soft, malleable poor metal. It is also counted as one of the heavy metals. Metallic lead has a bluish-white color after being freshly cut, but it soon tarnishes to a dull grayish color when exposed...

, zinc

Zinc

Zinc , or spelter , is a metallic chemical element; it has the symbol Zn and atomic number 30. It is the first element in group 12 of the periodic table. Zinc is, in some respects, chemically similar to magnesium, because its ion is of similar size and its only common oxidation state is +2...

, aluminum, mercury

Mercury (element)

Mercury is a chemical element with the symbol Hg and atomic number 80. It is also known as quicksilver or hydrargyrum...

, manganese

Manganese

Manganese is a chemical element, designated by the symbol Mn. It has the atomic number 25. It is found as a free element in nature , and in many minerals...

, nickel

Nickel

Nickel is a chemical element with the chemical symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel belongs to the transition metals and is hard and ductile...

, phosphorus

Phosphorus

Phosphorus is the chemical element that has the symbol P and atomic number 15. A multivalent nonmetal of the nitrogen group, phosphorus as a mineral is almost always present in its maximally oxidized state, as inorganic phosphate rocks...

, asbestos

Asbestos

Asbestos is a set of six naturally occurring silicate minerals used commercially for their desirable physical properties. They all have in common their eponymous, asbestiform habit: long, thin fibrous crystals...

, fluorite

Fluorite

Fluorite is a halide mineral composed of calcium fluoride, CaF2. It is an isometric mineral with a cubic habit, though octahedral and more complex isometric forms are not uncommon...

, magnesite

Magnesite

Magnesite is magnesium carbonate, MgCO3. Iron substitutes for magnesium with a complete solution series with siderite, FeCO3. Calcium, manganese, cobalt, and nickel may also occur in small amounts...

, and borax

Borax

Borax, also known as sodium borate, sodium tetraborate, or disodium tetraborate, is an important boron compound, a mineral, and a salt of boric acid. It is usually a white powder consisting of soft colorless crystals that dissolve easily in water.Borax has a wide variety of uses...

. Of these, China exported antimony, tin, and tungsten in significant quantities. In general, mineral extraction was inadequate for industrialization because of transportation bottlenecks and shortages of modern equipment for mining, smelting

Smelting

Smelting is a form of extractive metallurgy; its main use is to produce a metal from its ore. This includes iron extraction from iron ore, and copper extraction and other base metals from their ores...

, and refinement

Refining (metallurgy)

Refining consists of purifying an impure material, in this case a metal. It is to be distinguished from other processes such as smelting and calcining in that those two involve a chemical change to the raw material, whereas in refining, the final material is usually identical chemically to the...

. A number of important mineral products were imported despite large domestic deposits, including aluminum, copper, and zinc.

Among the rare earth metals and ferroalloys, beryllium

Beryllium

Beryllium is the chemical element with the symbol Be and atomic number 4. It is a divalent element which occurs naturally only in combination with other elements in minerals. Notable gemstones which contain beryllium include beryl and chrysoberyl...

, tungsten

Tungsten

, molybdenum

Molybdenum

, barium

Barium

Barium is a chemical element with the symbol Ba and atomic number 56. It is the fifth element in Group 2, a soft silvery metallic alkaline earth metal. Barium is never found in nature in its pure form due to its reactivity with air. Its oxide is historically known as baryta but it reacts with...

, manganese

Manganese

Manganese is a chemical element, designated by the symbol Mn. It has the atomic number 25. It is found as a free element in nature , and in many minerals...

, mercury

Mercury (element)

Mercury is a chemical element with the symbol Hg and atomic number 80. It is also known as quicksilver or hydrargyrum...

, niobium

Niobium

Niobium or columbium , is a chemical element with the symbol Nb and atomic number 41. It's a soft, grey, ductile transition metal, which is often found in the pyrochlore mineral, the main commercial source for niobium, and columbite...

, zirconium

Zirconium

Zirconium is a chemical element with the symbol Zr and atomic number 40. The name of zirconium is taken from the mineral zircon. Its atomic mass is 91.224. It is a lustrous, grey-white, strong transition metal that resembles titanium...

, and titanium

Titanium

Titanium is a chemical element with the symbol Ti and atomic number 22. It has a low density and is a strong, lustrous, corrosion-resistant transition metal with a silver color....

were present in large reserves and were extracted in adequate quantities. Deficiencies existed in chromium

Chromium

Chromium is a chemical element which has the symbol Cr and atomic number 24. It is the first element in Group 6. It is a steely-gray, lustrous, hard metal that takes a high polish and has a high melting point. It is also odorless, tasteless, and malleable...

, platinum

Platinum

Platinum is a chemical element with the chemical symbol Pt and an atomic number of 78. Its name is derived from the Spanish term platina del Pinto, which is literally translated into "little silver of the Pinto River." It is a dense, malleable, ductile, precious, gray-white transition metal...

, and gold

Gold

Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...

.

China produced sufficient quantities of most nonmetallic minerals to meet domestic needs. Barite

Barite

, fluorite

Fluorite

Fluorite is a halide mineral composed of calcium fluoride, CaF2. It is an isometric mineral with a cubic habit, though octahedral and more complex isometric forms are not uncommon...

, salt

Salt

In chemistry, salts are ionic compounds that result from the neutralization reaction of an acid and a base. They are composed of cations and anions so that the product is electrically neutral...

, and talc

Talc

Talc is a mineral composed of hydrated magnesium silicate with the chemical formula H2Mg34 or Mg3Si4O102. In loose form, it is the widely-used substance known as talcum powder. It occurs as foliated to fibrous masses, its crystals being so rare as to be almost unknown...

were available in massive reserves and were exported in large quantities. Graphite

Graphite

The mineral graphite is one of the allotropes of carbon. It was named by Abraham Gottlob Werner in 1789 from the Ancient Greek γράφω , "to draw/write", for its use in pencils, where it is commonly called lead . Unlike diamond , graphite is an electrical conductor, a semimetal...

, magnesite

Magnesite

Magnesite is magnesium carbonate, MgCO3. Iron substitutes for magnesium with a complete solution series with siderite, FeCO3. Calcium, manganese, cobalt, and nickel may also occur in small amounts...

, phosphates, and pyrite

Pyrite

were less abundant but generally satisfied domestic demand. Sulfur

Sulfur

Sulfur or sulphur is the chemical element with atomic number 16. In the periodic table it is represented by the symbol S. It is an abundant, multivalent non-metal. Under normal conditions, sulfur atoms form cyclic octatomic molecules with chemical formula S8. Elemental sulfur is a bright yellow...

deposits were large, but quality was low and imports were necessary.

China is rich in uranium

Uranium

Uranium is a silvery-white metallic chemical element in the actinide series of the periodic table, with atomic number 92. It is assigned the chemical symbol U. A uranium atom has 92 protons and 92 electrons, of which 6 are valence electrons...

and has favorable geological conditions for the formation of uranium deposits. The ore is easy to mine and dress because of its relatively simple physical composition.

Oil

Before 1949 China imported most of its oil. During the First Five-Year Plan it invested heavily in exploration and well

Oil well

An oil well is a general term for any boring through the earth's surface that is designed to find and acquire petroleum oil hydrocarbons. Usually some natural gas is produced along with the oil. A well that is designed to produce mainly or only gas may be termed a gas well.-History:The earliest...

development. In 1959 vast reserves were discovered in Songhua Jiang-Liao He basin in northeast China

Northeast China

. The Daqing

Daqing

Daqing is a prefecture-level city in the west of Heilongjiang province of Northeast China. The name literally means "Great Celebration".Its population is 2,904,532 at the 2010 census whom 1,042,902 in the built up area made of 4 out of 5 urban districts It was founded in 1959 to house workers...

oil field in Heilongjiang

Heilongjiang

became operational in 1960. Daqing was producing about 2.3 million tons of oil by 1963, and it continued to lead the industry through the 1970s. Further important discoveries, including the major oil fields of Shengli, in Shandong

Shandong

, and Dagang, in Tianjin

Tianjin

, enabled China to meet domestic needs and eliminate nearly all imports by the mid-1960s. In 1973, despite a steadily growing internal demand for petroleum products, output was large enough to export 1 million tons of crude oil to Japan. Exports increased to 6.6 million tons in 1974 and reached 13.5 millions tons in 1978. In 1985 exports of crude oil amounted to approximately twenty million tons, roughly 16 percent of total production. The majority of 1985 exports were to Japan, but the government also had released increasing quantities on the spot market and sent some to Singapore

Singapore

Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

for refining

Refining

Refining is the process of purification of a substance or a form. The term is usually used of a natural resource that is almost in a usable form, but which is more useful in its pure form. For instance, most types of natural petroleum will burn straight from the ground, but it will burn poorly...

. Although the government temporarily abandoned its drive to broaden its oil export base in 1986, 131 million tons of crude oil still were produced, an increase of 5.8 million tons over 1985.

Oil reserves

Oil reserves

The total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is...

are large and widely dispersed. In general, development is concentrated on deposits readily accessible from major industrial and population centers. Deposits in remote areas such as the Tarim

Tarim Basin

The Tarim Basin is a large endorheic basin occupying an area of about . It is located in the Xinjiang Uyghur Autonomous Region in China's far west. Its northern boundary is the Tian Shan mountain range and its southern is the Kunlun Mountains on the northern edge of the Tibetan Plateau. The...

, Junggar, and Qaidam

Qaidam

Qaidam Basin, also spelled Tsaidam is an hyperarid basin that occupies a large part of the Haixi Mongol and Tibetan Autonomous Prefecture in Qinghai Province, western China...

basins, remain largely unexplored. The quality of oil from the major deposits varies considerably. A few deposits, like the Shengli field, produce low-quality oil suitable mainly as fuel. Most of the oil produced in China from the big fields in the north and northeast is heavy, low in sulfur

Sulfur

, and has a very high paraffin

Paraffin

In chemistry, paraffin is a term that can be used synonymously with "alkane", indicating hydrocarbons with the general formula CnH2n+2. Paraffin wax refers to a mixture of alkanes that falls within the 20 ≤ n ≤ 40 range; they are found in the solid state at room temperature and begin to enter the...

content, making it difficult and expensive to extract and to refine.

Offshore exploration and drilling were first undertaken in the early 1970s, and it became more widespread and advanced as the decade progressed. Chinese and foreign oil experts believed that offshore deposits were extensive and could equal onshore reserves. Offshore operations relied heavily on foreign technology. In 1982 thirty-three foreign oil companies submitted bids for offshore drilling rights; twenty-seven eventually signed contracts. By the mid-1980s, when offshore exploration results were disappointing and only a handful of wells were actually producing oil, China began to emphasize onshore development. To continue offshore exploration, China established the China National Offshore Oil Corporation

China National Offshore Oil Corporation

China National Offshore Oil Corporation is one of the three major national oil companies of China....

(CNOOC) to assist foreign oil companies in exploring, developing, extracting, and marketing China's oil.

Exploration and drilling was concentrated in areas in the South China Sea

South China Sea

The South China Sea is a marginal sea that is part of the Pacific Ocean, encompassing an area from the Singapore and Malacca Straits to the Strait of Taiwan of around...

, Gulf of Tonkin

Gulf of Tonkin

The Gulf of Tonkin is an arm of the South China Sea, lying off the coast of northeastern Vietnam.-Etymology:The name Tonkin, written "東京" in Hán tự and Đông Kinh in romanised Vietnamese, means "Eastern Capital", and is the former toponym for Hanoi, the capital of Vietnam...

, and Pearl River

Pearl River Delta

The Pearl River Delta , Zhujiang Delta or Zhusanjiao in Guangdong province, People's Republic of China is the low-lying area surrounding the Pearl River estuary where the Pearl River flows into the South China Sea...

Mouth Basin in the south, and Bohai Bay

Bohai Bay

Bohai Bay is one of the three bays forming the Bohai Gulf, the innermost gulf of the Yellow Sea, in northeast China. It borders Hebei province and Tianjin Municipality...

in the north. Disputes between China and several neighboring countries complicated the future of oil development in several promising offshore locations.

Natural gas

was a relatively minor source of energy. Output grew rapidly in the 1960s and 1970s. By 1985 production was approximately 12 billion cubic meters – about 3 percent of China's primary energy supply. The following year, output increased by 13 billion cubic meters. Sichuan

Sichuan

' , known formerly in the West by its postal map spellings of Szechwan or Szechuan is a province in Southwest China with its capital in Chengdu...

Province possesses about half of China's natural gas reserves and annual production. Most of the remaining natural gas is produced at the Daqing and Shengli northeastern oil fields. Other gas-producing areas include the coastal plain in Jiangsu

Jiangsu

, Shanghai, and Zhejiang

Zhejiang

Zhejiang is an eastern coastal province of the People's Republic of China. The word Zhejiang was the old name of the Qiantang River, which passes through Hangzhou, the provincial capital...

; the Huabei complex in Hebei

Hebei

Province; and the Liaohe oil field in Liaoning

Liaoning

Province.

The exact size of China's natural gas reserves was unknown. Estimates ranged from 129 billion to 24.4 trillion cubic meters. China hoped for a major discovery in the Zhongyuan Basin, a 5,180-square-kilometer area along the border of Henan

Henan

Henan , is a province of the People's Republic of China, located in the central part of the country. Its one-character abbreviation is "豫" , named after Yuzhou , a Han Dynasty state that included parts of Henan...

and Shandong

Shandong

provinces. Major offshore reserves have been discovered. The largest unexploited natural gas potential was believed to be in Qinghai

Qinghai

Qinghai ; Oirat Mongolian: ; ; Salar:) is a province of the People's Republic of China, named after Qinghai Lake...

and Xinjiang

Xinjiang

Xinjiang is an autonomous region of the People's Republic of China. It is the largest Chinese administrative division and spans over 1.6 million km2...

.

A rudimentary petroleum-refining industry was established with Soviet aid in the 1950s. In the 1960s and 1970s, this base was modernized and expanded, partially with European and Japanese equipment. In 1986 Chinese refineries were capable of processing about 2.1 million barrels a day. By 1990 China plans to reach 2.5 million barrels a day.

In the 1970s, China constructed oil pipelines and improved ports handling oil tanker

Oil tanker

An oil tanker, also known as a petroleum tanker, is a merchant ship designed for the bulk transport of oil. There are two basic types of oil tankers: the crude tanker and the product tanker. Crude tankers move large quantities of unrefined crude oil from its point of extraction to refineries...

s. The first oil pipeline was laid from Daqing

Daqing

to the port of Qinhuangdao

Qinhuangdao

Qinhuangdao is a port city in northeastern Hebei province of North China. It is about 300 km east of Beijing, on the Bohai Sea, the innermost gulf of the Yellow Sea....

; 1,150 kilometers long, it became operational in 1974. The following year the pipeline was extended to Beijing; a second line connected Daqing to the port of Luda and branched off to the North Korea

North Korea

The Democratic People’s Republic of Korea , , is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea...

. A pipeline from Linyi

Linyi

Linyi is a prefecture-level city in the south of Shandong province, People's Republic of China. The largest prefecture-level city in Shandong both by area and total population, Linyi borders Rizhao to the east, Weifang to the northeast, Zibo to the north, Tai'an to the northwest, Jining to the...

in Shandong Province to Nanjing

Nanjing

' is the capital of Jiangsu province in China and has a prominent place in Chinese history and culture, having been the capital of China on several occasions...

was completed in 1978, linking the oil fields of Shengli and Huabei to ports and refineries of the lower Yangtze River

Yangtze River

The Yangtze, Yangzi or Cháng Jiāng is the longest river in Asia, and the third-longest in the world. It flows for from the glaciers on the Tibetan Plateau in Qinghai eastward across southwest, central and eastern China before emptying into the East China Sea at Shanghai. It is also one of the...

region. In 1986 plans had been made to construct a 105-kilometer pipeline linking

Pipeline transport

Pipeline transport is the transportation of goods through a pipe. Most commonly, liquids and gases are sent, but pneumatic tubes that transport solid capsules using compressed air are also used....

an offshore well with the Chinese mainland via Hainan

Hainan

Hainan is the smallest province of the People's Republic of China . Although the province comprises some two hundred islands scattered among three archipelagos off the southern coast, of its land mass is Hainan Island , from which the province takes its name...

Islands.

Electric and nuclear power

From 1949 to the mid-1980s, China pursued an inconsistent policy on the development of electric power

Electric power

. Significant underinvestment in the readjustment period, starting in 1979, caused serious power shortages into the mid-1980s. Although China's hydroelectric power potential was the world's largest and the power capacity was the sixth largest, 1985 estimates showed that demand exceeding supply by about 40 billion kilowatt hours per year. Because of power shortages, factories and mines routinely operated at 70- to 80-percent capacity, and in some cases factories only ran for 3 or 4 days a week. Whole sections of cities were frequently blacked out for hours. China's leaders began to acknowledge the seriousness of the power shortage in 1979. The government took no positive steps until the mid-1980s, when it announced import of 10,000 megawatts of thermal power-plant capacity to serve the east's large population centers. It also launched a nationwide campaign to create an additional 5,000 megawatts of electric-power capacity. Under the Seventh Five-Year Plan, China planned to add 30,000 to 35,000 megawatts of capacity, a 55-to-80-percent increase over previous five-year plans.

The leadership decided to build thermal power station

Thermal power station

A thermal power station is a power plant in which the prime mover is steam driven. Water is heated, turns into steam and spins a steam turbine which drives an electrical generator. After it passes through the turbine, the steam is condensed in a condenser and recycled to where it was heated; this...

s to meet the country's electricity

Electricity

needs, because such plants were relatively inexpensive and required construction lead-times of only three to six years. In 1985 approximately 68 percent of generating capacity was derived from thermal power, mostly coal-fired, and observers estimated that by 1990 its share would increase to 72 percent. The use of oil-fired plants peaked in the late 1970s, and by the mid-1980s most facilities had been converted back to coal. Only a few thermal plants were fueled by natural gas. Hydropower

Hydropower

Hydropower, hydraulic power, hydrokinetic power or water power is power that is derived from the force or energy of falling water, which may be harnessed for useful purposes. Since ancient times, hydropower has been used for irrigation and the operation of various mechanical devices, such as...

accounted for only about 30 percent of generating capacity. Observers expected that during the Seventh Five-Year Plan, China would continue to emphasize the development of thermal power over hydropower, because of the need to expand the power supply quickly to keep pace industrial growth. However, in the long term, hydropower gradually was to be given priority over thermal power.

In 1986 China's total generating capacity was 76,000 megawatts: 52,000 from thermal plants and 24,000 from hydropower sources. China planned to construct large generators with capacities of 100 to 300 megawatts to increase thermal power capacity. The new, larger generators would be much more efficient than generators with capacities of only 50 megawatts or less. With the larger generators, China would only have to increase coal consumption by 40 percent to achieve a 54-percent increase in generating capacity by 1990. Observers believed that as China increased its grid network it could construct power plants close to coal mines, then run power lines to the cities. This method would eliminate the costly and difficult transportation of coal to smaller urban plants, which had already created a significant pollution

Pollution

problem.

From 1949 to 1986, China built at least 25 large, 130 medium, and about 90,000 small-sized hydropower stations. According to the Ministry of Water Resources and Electric Power, China's 1983 annual power output was 351.4 billion kilowatt hours, of which 86 billion kilowatt hours were generated by hydropower. While construction of thermal plants was designed as a quick remedy for alleviating China's power shortages, the development of hydropower resources was considered a long-term solution. The primary areas for the construction of hydropower plants were the upper Yellow River

Yellow River

The Yellow River or Huang He, formerly known as the Hwang Ho, is the second-longest river in China and the sixth-longest in the world at the estimated length of . Originating in the Bayan Har Mountains in Qinghai Province in western China, it flows through nine provinces of China and empties into...

,the upper and middle stream tributaries and trunk of the Yangtze River

Yangtze River

, and the Hongshui River

Hongshui River

The Hongshui River is a major river in the Guangxi Zhuang Autonomous Region in Southern China. It is one of the main rivers in the basin of the Xi River, which in its turn is one of the main tributaries of the Pearl River....

in the upper region of the Pearl River Basin. The construction of new hydropower plants was a costly and lengthy process, undertaken with assistance from the United States, Canada, Kuwait

Kuwait

The State of Kuwait is a sovereign Arab state situated in the north-east of the Arabian Peninsula in Western Asia. It is bordered by Saudi Arabia to the south at Khafji, and Iraq to the north at Basra. It lies on the north-western shore of the Persian Gulf. The name Kuwait is derived from the...

, Austria, Norway, France, and Japan.

To augment its thermal and hydropower capacity, China was developing a nuclear energy

Nuclear power

capability. (See Nuclear power in China

Nuclear power in China

.) China's nuclear industry began in the 1950s with Soviet assistance. Until the early 1970s, it had primarily military applications. However, in August 1972, reportedly by directive of Premier Zhou Enlai

Zhou Enlai

Zhou Enlai was the first Premier of the People's Republic of China, serving from October 1949 until his death in January 1976...

, China began developing a reactor for civilian energy needs. After Mao Zedong

Mao Zedong

's death in 1976, support for the development of nuclear power increased significantly. Contracts were signed to import two French-built plants, but economic retrenchment and the Three Mile Island incident in the United States abruptly halted the nuclear program. Following three years of "investigation and demonstration," the leadership decided to proceed with nuclear power development. By 1990 China intended to commit between 60 to 70 percent of its nuclear industry to the civilian sector. By 2000 China planned to have a nuclear generating capacity of 10,000 megawatts, accounting for approximately 5 percent of the country's total generating capacity.

In 1989 a 300-megawatt domestically designed nuclear power plant was constructed at Qinshan, Zhejiang. Although most of the equipment in the plant was domestic, a number of key components were imported. The Seventh Five-Year Plan called for constructing two additional 600- megawatt reactors at Qinshan. Another plant, with two 900 megawatt reactors, was constructed at Daya Bay

Daya Bay

Daya Bay , formally known as Bias Bay, is a body of water located east of Hong Kong in Guangdong Province in southern People's Republic of China. Daya Bay is home to four nuclear reactors, two each belonging to the Daya Bay Nuclear Power Plant and the Ling Ao Nuclear Power Plant, as well as the...

in Guangdong

Guangdong

Guangdong is a province on the South China Sea coast of the People's Republic of China. The province was previously often written with the alternative English name Kwangtung Province...

. The Daya Bay Nuclear Power Plant was a joint venture with Hong Kong, with considerable foreign loans and expertise.

Communications industry

Transportation, the postal system

Postage stamps and postal history of the People's Republic of China

Although postal service in China goes back some 2,500 years, modern postal services were not established until 1877 by the Qing government. The postal system of the People's Republic of China was established as the General Postal Administration in Beijing in 1949, growing out of the posts that had...

, and telecommunications

Communications in the People's Republic of China

The People's Republic of China possesses a diversified communications system that links all parts of the country by Internet, telephone, telegraph, radio, and television...

employed over 12 million people in 1985. Long-distance transportation was carried primarily by railroads, inland waterways, and highways. The government-run railroad network was the backbone of the freight system, and rail lines extended to nearly all parts of China. In most areas, however, the rail system had too few feeder lines and was inadequately integrated. Much of the rail system had been improved in the 1980s; many heavily used stretches were converted to double track or upgraded, and several key new lines were constructed to relieve congested areas. Most locomotive

Locomotive

s in use in the early 1980s were picturesque but outdated steam engines. By 1987, however, several railroad districts had converted entirely to more modern and efficient diesel or electric locomotives, and domestic production of modern engines was supplemented by imported models. Within their limitations the railroads functioned fairly efficiently and made intensive use of the rail network. In 1986 the railroads carried 874.5 billion ton-kilometers of freight, 45 percent of the national freight total and a 7.8 percent increase over 1985. They also carried nearly 1.1 billion passengers, 20 percent of the national total. Despite reasonably good performance, the ability of the economy to move goods between cities and regions was severely limited by deficiencies in the system, and improvement of the railroads continued to be a high priority for state investment.

Inland navigation

Navigation

Navigation is the process of monitoring and controlling the movement of a craft or vehicle from one place to another. It is also the term of art used for the specialized knowledge used by navigators to perform navigation tasks...

grew more quickly than the rail system and in 1986 carried 827.8 billion ton-kilometers of freight, nearly as much as the railroads. The principal inland waterway was the Yangtze River

Yangtze River

and its tributaries, which constituted the major artery linking the industrial and agricultural areas of central China and the southwest to the great port and industrial center of Shanghai. Improvements to the water routes enabled larger and faster modern vessels to use them, extended their navigable length, and reduced the amount of time they were closed each year. In addition to modern vessels, the lakes, rivers, and canals were plied by thousands of motorized and nonmotorized traditional craft of all sizes.

Local road networks were extensive, but many were narrow and unpaved, and all were overcrowded with trucks, jeeps, buses, carts pulled by tractors and animals, bicycles, pedestrians, and grain laid out to dry by local farmers. Owing to rapid increases in the volume of private and work unit

Work unit

A work unit or danwei is the name given to a place of employment in the People's Republic of China. While the term danwei remains in use today it is more properly used to refer to a place of employment during the period when the Chinese economy was still more heavily socialist or when used in the...

trucking, highway freight traffic was the fastest growing major portion of the transportation system aside from ocean shipping. In 1986 highway freight traffic totaled 259.6 billion ton-kilometers, an increase of 47 percent over 1985, and 80 percent of the volume was carried by vehicles that were not managed by state highway departments. In 1986 buses served 4.3 billion passengers for relatively short trips.

Civil aviation

Civil aviation

Civil aviation is one of two major categories of flying, representing all non-military aviation, both private and commercial. Most of the countries in the world are members of the International Civil Aviation Organization and work together to establish common standards and recommended practices...

provided important links both to isolated areas of the country and to foreign countries. It carried, however, only a small fraction of total freight and passenger traffic.

Service industry

The service sector expanded quickly during the reform period, making up for major deficiencies that had developed in the preceding quarter century. In the 1950s and 1960s, services were regarded as nonproductive and were therefore neglected. During the Cultural Revolution

Cultural Revolution

The Great Proletarian Cultural Revolution, commonly known as the Cultural Revolution , was a socio-political movement that took place in the People's Republic of China from 1966 through 1976...

(1966–76), they were relentlessly attacked as "remnants of capitalism." By the late 1970s, the service trades, such as food service, barbering, laundering, tailoring, and repair work, were seriously understaffed and were far from able to meet the needs of the population. Furthermore, they were all concentrated in large, inefficient state-owned units. The service occupations requiring advanced training, such as health care

Health care

, education

Education

Education in its broadest, general sense is the means through which the aims and habits of a group of people lives on from one generation to the next. Generally, it occurs through any experience that has a formative effect on the way one thinks, feels, or acts...

, and legal services, were decimated by the breakdown of the education system during the Cultural Revolution decade.

Revival of the service sector was a well-publicized goal of the reform program. Legalization of private and collective enterprise quickly led to the appearance of tinkers, cobblers, tailors, barbers, and small food-service stands, particularly in the free market

Free market

A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...

s. Between 1978 and 1985, the number of people engaged in the service trades, retail sales, and catering grew from only 6.1 million to over 25 million, of whom 21 million were in collective or individual enterprises. In 1986 the government further stimulated the growth of the sector by leasing to private individuals or groups a large number of small, state-owned, service establishments, including restaurants, repair shops, and barber shops, that had consistently been operating at a loss under state management.

Other service sectors that employed significant quantities of labor included health care, education and culture, and government administration. These sectors were important to the national economy and employed over 25 million people.

China produced nearly all of its own medicines and medical equipment

Medical equipment

Medical equipment is designed to aid in the diagnosis, monitoring or treatment of medical conditions.-Types:There are several basic types:* Diagnostic equipment includes medical imaging machines, used to aid in diagnosis...

, but most hospitals were poorly equipped by Western standards. A more serious shortage was the relatively small number of doctors and other highly trained medical personnel. In 1985 some 4.3 million people worked in health-care institutions. Of these, 1.4 million were doctors – including 336,000 doctors of traditional (rather than modern) medicine, 637,000 were nurses, and 1.4 million were midwives, laboratory technicians, pharmacists, and other technical personnel. The number of doctors of modern medicine grew by over 35 percent between 1978 and 1985, and renewed contact with the West opened training

Training

The term training refers to the acquisition of knowledge, skills, and competencies as a result of the teaching of vocational or practical skills and knowledge that relate to specific useful competencies. It forms the core of apprenticeships and provides the backbone of content at institutes of...

opportunities in Europe, the United States, and Japan.

Only a little over 10 percent of all Chinese received free medical care. Free care was provided to government workers, military personnel, teachers, college students, and workers in state-owned enterprises. A portion of the medical expenses incurred by their dependent family members was covered by the work units. Most rural towns and villages operated voluntary cooperative medical systems (see Medicine in China).

Educational and cultural institutions employed 12.7 million people in 1985. This total included 871,000 teachers and staff in institutions of higher education

Higher education

Higher, post-secondary, tertiary, or third level education refers to the stage of learning that occurs at universities, academies, colleges, seminaries, and institutes of technology...

, an increase of 68 percent over the number in 1978, reflecting the intensive reconstruction of the education system in the 1980s. There were nearly 8 million people working in government administration in 1985.

Rural industry

From 1980 to 1986, the number of rural town and township enterprises rose from 1.42 million to more than 12.2 million. There were five types of town and township enterprises: township enterprises, village enterprises, cooperative enterprises, enterprises jointly run by several households, and household enterprises. In 1986 the assets of the enterprises at the township and village levels totaled ¥134 billion.

Their total output value for 1985 was ¥272.8 billion, 17 percent of the gross national output and 44 percent of gross agricultural output. Rural enterprises absorbed a large portion of the surplus agricultural labor displaced by the agricultural responsibility system and the breakdown of the commune system. This absorption helped the state greatly by eliminating state support of millions of displaced workers. In 1986 rural enterprises employed approximately 76 million people, or 20 percent of China's total workforce.

The town and township enterprises made a significant contribution to overall economic growth. In 1985 an estimated 28 percent of coal, 53 percent of construction materials, 30 percent of paper, 20 percent of textile goods, 33 percent of garments, and 75 percent of leather products came from rural enterprises. The enterprises also made extensive progress in the export market, with 8,000 export

Export

The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...

-oriented factories, of which 870 were Chinese-foreign joint venture

Joint venture

A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets...

s. In 1985 town and township enterprises earned about ¥4 billion in foreign currency

Currency

In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...

.

Despite the rapid growth and success of town and township enterprises, continued expansion faced obstacles in 1987. The government was trying to limit production because of economic and environmental concerns. Moreover, financial mismanagement, poor market analysis

Market analysis

A market analysis studies the attractiveness and the dynamics of a special market within a special industry. It is part of the industry analysis and this in turn of the global environmental analysis. Through all these analyses the chances, strengths, weaknesses and risks of a company can be...

, rising energy and raw-material cost, substandard equipment, and constant interference from local government authorities hampered production and expansion. In certain areas, such as Zhejiang

Zhejiang

Zhejiang is an eastern coastal province of the People's Republic of China. The word Zhejiang was the old name of the Qiantang River, which passes through Hangzhou, the provincial capital...

, efforts were made to solve some of the problems facing the rural enterprises. Local governments allowed the enterprises to keep 70 percent of profits, and of the remaining 30 percent remitted to the county government, 70 percent was invested in existing enterprises or used to establish new ones.

Defense industry

China's defense-industrial complex produced weapons and equipment based predominantly on Soviet designs of the 1950s and 1960s. Because of a lack of foreign exchange, a low short-term threat perception, and an emphasis on the three other modernizations

Four Modernizations

The Four Modernizations were goals, set forth by Zhou Enlai in 1963, to strengthen the fields of agriculture, industry, national defense, science and technology...

(agriculture, industry, and science and technology

Science and technology

), China had decided to develop its defense industries gradually. It would rely primarily on domestic production, importing foreign technology only in areas of critical need.

The defense industries produced a wide range of military materiel. Large quantities of small arms and tanks were produced, and many were exported to Third World

Third World

The term Third World arose during the Cold War to define countries that remained non-aligned with either capitalism and NATO , or communism and the Soviet Union...

countries such as Iran

Iran

Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...

. China had upgraded Soviet aircraft and was developing nuclear-powered ballistic-missile submarine

Submarine

A submarine is a watercraft capable of independent operation below the surface of the water. It differs from a submersible, which has more limited underwater capability...

s, intercontinental ballistic missiles, and tank

Tank

A tank is a tracked, armoured fighting vehicle designed for front-line combat which combines operational mobility, tactical offensive, and defensive capabilities...

s equipped with infrared

Infrared

Infrared light is electromagnetic radiation with a wavelength longer than that of visible light, measured from the nominal edge of visible red light at 0.74 micrometres , and extending conventionally to 300 µm...

night-vision gear and laser rangefinders.

Because defense was assigned the lowest priority in the Four Modernizations

Four Modernizations

The Four Modernizations were goals, set forth by Zhou Enlai in 1963, to strengthen the fields of agriculture, industry, national defense, science and technology...

in the 1970s, China's large defense

Defense (military)

Defense has several uses in the sphere of military application.Personal defense implies measures taken by individual soldiers in protecting themselves whether by use of protective materials such as armor, or field construction of trenches or a bunker, or by using weapons that prevent the enemy...

sector has devoted an increasing amount of its resources to civilian production. For example, in the mid-1980s approximately one-third of the ordnance industry's output was allocated to civilian production, and the share was expected to rise to two-thirds by 1990. The defense sector produced a wide variety of products, ranging from furniture

Furniture

Furniture is the mass noun for the movable objects intended to support various human activities such as seating and sleeping in beds, to hold objects at a convenient height for work using horizontal surfaces above the ground, or to store things...

to telescope

Telescope

A telescope is an instrument that aids in the observation of remote objects by collecting electromagnetic radiation . The first known practical telescopes were invented in the Netherlands at the beginning of the 1600s , using glass lenses...

s, camera

Camera

A camera is a device that records and stores images. These images may be still photographs or moving images such as videos or movies. The term camera comes from the camera obscura , an early mechanism for projecting images...

s to heavy machinery.

Despite the military's contribution to the industrial sector, in 1987 Chinese industry lagged far behind that of the industrialized nations. Much of industrial technology

Industrial technology

Industrial technology is the field concerned with the application of basic engineering principles and technical skills in support of industrial engineers and managers...

was severely outdated; severe energy shortages, transportation bottlenecks, and bureaucratic interference also hindered modernization

Modernization

. Although output was high in a number of industries, quality was often poor. However, China's industrial sector has made considerable progress since 1949. Output of most products has increased dramatically since the 1950s, and China now produces computers, satellites, and other high-technology items. The reform program introduced in the late 1970s brought an era of more rational economic planning

Economic planning

Economic planning refers to any directing or planning of economic activity outside the mechanisisms of the market, in an attempt to achieve specific economic or social outcomes. Planning is an economic mechanism for resource allocation and decision-making in contrast with the market mechanism...

and laid the groundwork for more balanced and sustained industrial growth. As of 1987, China's leaders were aware of the need for greater industrial efficiency and productivity

Productivity

, and were striving to achieve these goals.