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China TRENDS IN INDUSTRIAL PRODUCTION
The shifts in economic policy typical of the People's Republic
since 1949 have strongly affected industrial production (see
_____________, ch. 5). 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, much of it
with Soviet assistance. The machinery, iron and 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
(1958-60, see Glossary) 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. The demands of the Great Leap 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
(see The 1950s
, ch. 6). 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
(1966-76, see Glossary),
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, and electricity,
although there were some setbacks. In the mid-1970s the influence
of the
Gang of Four (see Glossary)
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 and Zhou Enlai, the second fall of Deng
Xiaoping, and the destruction caused by the Tangshan earthquake
(see End of the Era of Mao Zedong
, ch. 1).
In 1977 and 1978 the
Four Modernizations effort (see Glossary)
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 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. Policy stressed development of light industry and gave
priority to the textile and consumer industries in supplying raw
and unfinished materials, power, fuel, 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
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.
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 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.
Data as of July 1987
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