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China Chapter 7. Industry
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 weapons and delivery
systems and could launch domestically-produced satellites, 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 of authority. Other broad
goals were to increase worker productivity by offering incentives;
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. Beginning with the First Five-Year Plan (1953-57),
China adopted the Soviet model of economic development, 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 shift helped to alleviate
unemployment. It also satisfied growing consumer demand, which had
not been met because of overemphasis on heavy industry. Another
reason for diversification into light industry was the desire to
increase exports to obtain much-needed foreign currency.
By the mid-1980s, industrial reforms had achieved substantial
success in some areas. Industrial output was about twenty-five
times that of 1952. 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 into undeveloped and rural areas
(see fig.
___, Major Industrial Areas and Facilities, 1983). Light-industry
output of consumer goods had increased dramatically. In some cases,
enterprises reduced operating costs, managers were able to exercise
greater autonomy, and technical innovations were implemented to
increase efficiency.
Despite these bright spots in the 1980s, overall results were
disappointing to Chinese economic planners. 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,
"iron rice bowl" system (see Glossary)
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, the country would have 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 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.
Data as of July 1987
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