Changes in the Location of China's Steel Industry Author(s): Ronald Hsia Source: The China Quarterly, No. 17 (Jan.

- Mar., 1964), pp. 125-133 Published by: Cambridge University Press on behalf of the School of Oriental and African Studies Stable URL: http://www.jstor.org/stable/3451145 Accessed: 16/04/2010 07:09
Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=cup. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.

Cambridge University Press and School of Oriental and African Studies are collaborating with JSTOR to digitize, preserve and extend access to The China Quarterly.

http://www.jstor.org

Changes in the Location of China's Steel Industry*

By RONALD HSIA THE importance of examining the location of China's steel development is not confined solely to the steel industry. It reflects to a large extent, the Communist policy on industrial location in general. The new steel centres have been planned to form the nuclei of industrial complexes. To counteract the pre-Communist concentration of industry in the coastal areas,' the Communist regime has emphasised from the beginning that a wide dispersion of industry is desirable from the standpoint of economic development and national defence. In planning new capital construction, therefore, regional development constitutes a keynote while sources of raw materials and fuel supply, consumption centres, future mechanisation of agriculture and national security become the major determinants of industrial locations. As a result of adherence to this policy, a new pattern has emerged for the location of China's steel industry. Changes in location are traced in this article in terms of the distribution of capacity (in the case of blast furnaces) or the distribution of output (in the case of ingot steel) among seven economic regions. These regions, as defined by the Party's Central Committee in March 1958, are given in Table 1. WARTIME CHANGES With the outbreak of the Sino-Japanese hostilities and in anticipation of Japanese occupation smelting equipment was dismantled and removed to the interior. The removal and subsequent wartime construction and expansion of iron and steel plants, particularly in the Japanese occupied areas, resulted in a relative shift of China's steel industry away from Central China to the North-east. Central China's share of the country's aggregate blast furnace capacity declined from the pre-war 8-4 per cent. to 0-3 per cent. at the time of Japanese surrender in August 1945.
* This article is based on a chapter of the author's forthcoming book, Steel in Communist China, a study prepared under the auspices of the Committee on the Economy of China, Social Science Research Council. In pre-Communist China, over three-quarters of the value of industrial output came from the coastal areas, which constituted less than 10 per cent. of the country.

125

THE

CHINA

QUARTERLY

The share of the North-east region, on the other hand, rose from 60*6 to 67-8 per cent. during the same period. For the remaining regions in which iron-smelting capacity existed,2 changes in their shares in the overall capacity distribution were negligible during the war. Table 1
ECONOMIC REGIONS AS DEFINED BY THE CCP CENTRAL COMMI'I-1I'Ji

Economic Region North-east North East Central South North-west South-west

March 1958 or Region) (Province Autonomous Components Heilungkiang, Kirin, Liaoning Inner Mongolia, Hopei, Shansi Shantung, Kiangsu, Anhwei, Chekiang, Kiangsi, Fukien Honan, Hupei, Hunan Kwangtung, Kwangsi Sinkiang, Kansu, Shensi, Chinghai Szechwan, Kweichow, yllnnan

LOCATIONAL CHANGES UNDER PLANNING

The Communists aimed at widening the dispersion of industrial centres by planned capital construction.8 In the restoration period this policy appears to have exerted itself (see Columns 1 and 2 of Table 2). In actual fact, however, the change was brought about through a substantial decrease in the nation's overall blast furnace capacity. This can be attributed primarily to the Soviet Union removing metallurgical equipment and other installations from iron and steel centres in the North-east. The doubling of the share of the South-west in the nation's aggregate blast furnace capacity primarily represented no increase in its absolute capacity. Without Soviet removals the share of the North-east would not have dwindled so much and the dispersion of blast furnace capacity could not have widened so much, in spite of the Communist policy regarding industrial locations. In contrast to the illusory widening of dispersion in the reconstruction phase, the implementation of the First Five-Year Plan brought about a greater concentration, as can be seen from Column 3 of Table 2. This is more or less expected inasmuch as the reconstruction and expansion of Anshan Steel4 was envisaged in the First Five-Year Plan as the
2

8
4

These include the North, the East and the South-west, as no smelting facilities were installed in the South or the North-west. For planning rehabilitation, the policy of industrial dispersion was subservient to the objective of maximising the capital-output ratio. Anshan Steel is the abbreviated form for the Anshan Iron and Steel Corporation. Wuhan Steel, etc., are similar abbreviations.

126

CHANGES

IN LOCATION

OF CHINA'S

STEEL

INDUSTRY

most urgent task, and the building of the two new key steel bases did not get startedtill the latter part of the Plan. While this priority scheme accentuated the concentrationof the steel industry in the North-east, it did not conflict with the long-run policy of widening locationaldispersion.On the contrary, extensionof the existingsteel the of bases was a sine qua non for the establishment new bases in terms of technicalsupportand materialsupply. Anshan Steel was the largest of single supplierof iron and steel for the construction steel bases in the First Five-YearPlan. Thus the shareof the North-eastin the country's overall blast furnacecapacityrose from 59-0 per cent. in 1953 to 79-6 Northper cent. in 1957. This enhancedthe share of the all-important east at the expenseof the other regions. The exceptionally large percenreflecteda negligiblechange tage decreasein the shareof the South-west in its blast furnacecapacity. Table 2
REGIONAL DISTRIBUTIONOF BLAST FURNACE CAPACITY

1945,a 1953 and 1957

Economic Region 1945 a 1953 1957

Figures in percentages

(1)
North-east North East Central South-west Total 67-8 19-7 7-6 0-3 4-6 100-0

(2)
59.1 25-1 5-7 0-8 9-3 100.0

(3)
79-6 14-4 4-0 0-5 1-5 100.0

a Before Soviet dismantling and removal of equipment and installations.

Changes in regional distributionof the steel industry in terms of ingot steel output are shown in Table 3, which presents a somewhat differentpicture from that of blast furnace capacity distribution. The nature of the available data does not permit an examination of regional distributionin terms of ingot steel capacity, but it should be noted that changes in output distributionamong regions can be attributedto variationsin furnace productivityin addition to capital construction. Bearing in mind the discrepancybetween capacity and output,the data given in Table 3 can be examined. in Regional distribution terms of ingot steel output show a slightly wider dispersionin 1953 than in 1945.5 Here again, the percentage redistribution during the rehabilitation phase has little to do with the
s Before Soviet dismantling and removalof equipmentand installations. 127

THE

CHINA

QUARTERLY

Communistpolicy on industriallocation. Speedy restoration output of in Shanghaiand Tayeh accountedespeciallyfor the increasedsharesof East and CentralChina. The virtuallyunchangedshare of the Northeast can be attributedchiefly to difficultiesencounteredin restoring Anshan's No. 2 steel plant which was completely stripped by the Russians.6 Table 3 revealsthat the spreadof ingot steel outputincreasedduring the First Five-YearPlan. The sharesof the East and the Centralregions continuedto increase mainly because capacity expandedand the performance of the steel mills in Shanghaiand Tayeh improved. Ingot steel output in Shanghaiincreasedfrom 75,000 tons in 1952 to 480,000 tons in 1957, as a result of additionalnew facilities the reconstruction and renovationof the existingfacilities(notablyin No. 3 Iron and Steel in Plant) and improvements furnaceproductivity. The constructionof Table 3
OF DISTRIBUTION INGOTSTEELOUTPUT REGIONAL

1945,a 1953 and 1957

Economic Region 1945 a 1953 1957

North-east North East Central South-west Total

Figures in percentages (2) (1) 65-9 65-3 25-4 30-5 5-5 1'7 2-1 0-6 1-1 1-9 1000 100-0

(3) 67-8 10-7 14-7 4-1 2-7 100-0

a Before Soviet dismantling and removal of equipment and installations.

No. 1 Iron and Steel Plant in two new convertershops in Shanghai's for instance, gave East China an additional rated capacity of 1956, 250,000 tons per annum; the installationof six more converters in No. Shanghai's 6 Iron and Steel Plantin 1957 addedanother50,000tons can in of annualrated capacity. Improvements furnaceproductivity be illustratedby Shanghai'sNo. 3 Iron and Steel Plant. The utilisation of coefficients its open hearthsshowedan annualaverageincreaseof 34 cent. during the First Five-Year Plan.7 Tayeh's ingot steel output per was boosted chiefly by the four large open hearths and four electric
6 No. 2 steel plant was rehabilitated betweenNovember1954and December1956. I Computed the basis of data givenin Kang-tieh on Peking, Semi-monthly, (Metallurgy), No. 18, 1959, p. 806.

128

CHANGES

IN

LOCATION

OF

CHINA'S

STEEL

INDUSTRY

furnacesmoved there from Dairenin 1955, in additionto the new open hearthbuilt in 1954. The shareof the North-eastin the country's overallingot steel output in 1957also showeda slightincrease. Chieflyresponsible this increase for were the rehabilitation open hearthsNos. 10-15 in Anshan'sNo. 2 of steel plant and the construction open hearthsNos. 16-19, both comof pleted by the end of 1956. In addition, the average open-hearth coefficientof Anshan Steel rose from 5-17 in 1953 to 6-76 in 1957.8 The more than doubling of the relative importanceof the Southwest in ingot steel productioncan be credited mainly to the rapid reconstruction plants Nos. 101, 102 and 105 in the region. The of fact that these were includedamong the Soviet-aidprojectsof the First Five-Year Plan indicates their importance. Consequently,the 1957 share of the South-westin the nation'stotal was more than restoredto its 1945 level, in spite of its decreasein 1953. The 1957 shares of the four regions were enhancedapparentlyat the expense of North China, where the developmentof steel refiningfacilities during the Plan was confinedto the relativelysmall steel plants at Tangshanand practically Tientsin.
THEEMERGING PATTERN

The location of China's steel industryin 1961 can be seen from the map, and from Table 4. Whereasthe former shows the geographical distributionof the larger iron and steel producers,the table gives the of percentagedistribution blast furnacecapacityand ingot steel output economicregions. Despite the different bases used, a decidedlywider by was attainedin 1961 throughthe rise of iron and steel bases dispersion in regions in which they were hitherto absent, and through a higher rate of growth in regions other than the all-importantNorth-east. Undoubtedlyall this would not have been feasible in a matterof years without the 1958 all-out steel campaignand the subsequentrise of a small-scaleproductionfront. South China and the North-west,neither of which produced any noticeableamount of either steel or iron in 1957, have since become iron and steel producingregions. Whereasthe contributionof South China to the country's overall iron-smeltingcapacity or steel output amountsto not much more than 2 per cent., the relativeimportanceof the North-west surpassed has that of the South-west a sizeablemargin by in iron-smelting, can be seen from Column 1 of Table 4. as particularly Behind the rising importanceof the North-westwas the construction, beginningin 1958,of two sizeablenew iron and steel worksin Sinkiang,
8

Chi-hua ching-chi (Planned Economy), No. 4, 1958, p. 22.

129

THE CHINA

QUARTERLY

the Payi and the Hami. In view of the discovery in 1958 of extensive iron ore deposits in Chingtiehshan,Kansu and the subsequent in of Iron and Steel Corporation comparable organisation the Chiuohuan scale to Paotow Steel, the importanceof the North-Westis likely to
increase.

CentralChina'sshare of the overallblast furnacecapacityincreased 30-fold between 1957 and 1961. For this spectaculargain, while the contributionparticularlyof two new iron and steel combines (the Lienyuanin Hunanand the Anyangin Honan)shouldnot be overlooked, capacityrose majorcreditwas due to WuhanSteel whose iron-smelting from nil in 1957 to more than 8 per cent. of the nationaltotal in 1961. Table 4
REGIONALDISTRIBUTIONOF IRON AND STEEL

Economic Region

1961 BlastFurnace Capacity

IngotSteel Output

North-east North East Central South North-west South-west Total

Figures in percentages (1) 31-8 17-5 15-8 15-6 2-2 13-5 3-6 100-0

(2) 20-7 17-9 29-5 13-3 2-1 9-5 7-0 100-0

Prior to 1958, pig iron productionin East China was more or less Anhwei. The blast furnacecapacityof the region confinedto Maanshan, was under 600 cubic metres in 1957. By 1961, it grew to above 8,000 cubic metres. Consequently,the region's share in the national total (see nearlyquadrupled Column3 of Table 2 and Column1 of Table 4). Althoughin 1961, Anhwei remainedthe provincewith the largestblast was furnacecapacityin the region,its prominence reducedby the rise in provinces. In importanceof Kiangsu and Shantungas iron-producing
Kiangsu, for instance, Shanghai's No. 1 Iron and Steel Plant built two 255

cubic metre furnacesin 1959. In the same year, two blast furnacesof equal size were erectedin the NankingIron and Steel Works. Similarly
in Shantung, four blast furnaces with an aggregate capacity of 710 cubic metres were installed in the Tsinan Iron and Steel Works in 1959. In addition, other provinces in the region such as Kiangsi and Fukien which

130

CHANGES

IN

LOCATION

OF

CHINA'S

STEEL

INDUSTRY

had no iron-smeltingfacilities to speak of during the First Five-Year Plan subsequently became iron producers. For example, the Sanming Iron and Steel Worksin Fukien built in 1959 two blast furnaceswith an Iron and Steel aggregate capacityof 510 cubicmetres,and the Pinghsiang Worksin Kiangsi built in 1960 seven furnaceswith a total capacityof 982 cubic metres. The doublingof South-west China'ssharein the overallblast furnace to capacitybetween 1957 and 1961 was not sufficient elevate the region to prominence.Althoughit surpassed Southin termsof iron-smelting the capacityavailable,it still laggedfar behindthe otherregions. Withinthe South-westregion, the rising importanceof Yunnan is worth noting. Between 1958 and 1961, the KunmingIron and Steel Corporation built four sizeable blast furnaces (Nos. 1-4). By 1961, Yunnan threatened Szechwanas the leading iron-producing provinceof the region, despite the expansionof capacityat the Chungking Iron and Steel Corporation. The shareof North Chinain the overallblast furnacecapacityof the countryrose from 14-4 per cent. in 1957 to 17-9 per cent. in 1961 (see Column 3 of Table 2 and Column 1 of Table 4). This comparatively small increase was attributablenotably to the relatively late start of Paotow Steel9 coupled with the cut-back in industrial capital constructionin 1961. On the other hand, the rising importanceof other producers in the region should not be overlooked, particularlythe in LungyenIron and Steel Corporation Hopei and the TaiyuanIron and Steel Corporationin Shansi, where seventeen blast furnaces with a combinedcapacity of 2,550 cubic metres were built between 1958 and 1961. The substantialdecline in the relativeimportanceof the North-east as revealedin Table 4 should not conceal the absolute increasein its blast furnace capacity between 1957 and 1961. In Anshan, the 1513 cubic metreNo. 10 blast furnacewas completedlate in 1958 in addition to 140 small furnaceswith an aggregatecapacityof 4,440 cubic metres. blast furnaceswere built in Tunghua,Kirin, in Also, two medium-sized
1959.

The geographical centresof steel output in 1961 is shownin Column 2 of Table 4. Whereasthe North-eastremainsthe leadingiron-smelting region, its lead in ingot steel productionhas passed on to East China. The explanationlies chieflyin the speedy rise in the share of converter of steel in the overallingot steel output,togetherwith the concentration hearth steel in the North-east. The share of convertersteel rose open from 14-7 per cent. in 1957 to 51-9 per cent. in 1960, while as late as
9

The blast furnace capacity of Paotow Steel constituted less than 4 per cent. of the 1961 national total.

131

THE

CHINA

QUARTERLY

1961 Anshan alone accounted for more than half of the nation's openhearth steel output. The speedy rise in the importance of converter steel originates from the campaign for small-scale production, which more than the introduction of overall planning has hastened the locational dispersion of China's steel industry.

DIRECTORY COMPANY JAPAN

(Usually out in November, each year)
A most exhaustive collection of " virtual credentials " of Japanese industrial and business firms, "JAPAN COMPANY DIRECTORY" carries the latest reports on nearly 800 major companies and banks with special reference to their past record, present showings and future possibilities. Principal items include: Principal business lines; Date of establishment; Head office and overseas branches; Cable addresses; References; Directors; Number of employees; Employed capital; Net worth and issued capital shares; Major stockholders; Number of stockholders; Share price changes in past several years; Business results; Dividends; Capital changes; Equipment; Production and sales figures; Business prospects; Details of specialized hnes. " Who's Who" as a handy supplement lists the names of 1,000 leaders in Japanese business, industry and finance. 300 pp. 265 x 185 mm. Price: $15 ?5 8s.

THE ORIENTAL ECONOMIST Nihonbashi, Chuoku, Tokyo, Japan

132

IRON

AND

STEEL

CENTRES

IN

CHINA

0 z ^
,, v

133