The Development and Distribution of Industry: 1840-1949

In the century between the First Opium War (1939~42) and the founding of the People’s Republic of China in 1949, China showed very little modern industrial development. Furthermore, what little industry existed in China at that time was all controlled by the foreign powers. In 1936, foreign investment in China totaled RMB 4.5 billion. Foreign-owned factories and enterprises produced 99% of China’s output of iron, 60% of its cotton cloth, and more than 55% of its coal, electricity, and tobacco products.  During the Sino-Japanese War of 1937-45, foreign capital increased to RMB 9.7 billion; the foreign powers almost monopolized most of industrial productions of China.

Foreign interest in China at this time was largely self-serving. Britain, Germany, Russia, Japan, and the United States were the major foreign powers in China and they had three main purposes in developing China’s industries. First, China’s rich mineral resources and its agricultural products were very attractive to those foreign powers; those could be exploited as raw materials for foreign industries or could be processed and sold at a high profit on the world market. Besides, they established strategic military bases as part of the drive to divide and control China. Also, domination of China’s huge domestic market through the exploitation of its resources and cheap labor was extremely profitable.(Fig 5.1)

Since manufacturing was dominated by foreign powers, Chinese industrialists should fully depend on imported foreign machinery and funds. Therefore, Chinese-owned enterprises were concentrated in the coastal cities where protection could also be sought from the foreign powers against the political strife that was disrupting the country. Even though these economical and political bonds strengthened the concentration of manufacturing in the coastal areas, the relationship between the Chinese- and foreign- owned enterprises was unequal.

Changes in Industrial Distribution

The distribution of industry during the period 1840-1949 can be divided into four main stages. From the time of the First Opium War in 1839 to the start of the First Sino-Japanese War in 1894, industrial enterprises were largely concentrated in southeast China. At the beginning although foreign powers tried to exploit and capture both China’s raw materials and the markets, since foreign-owned businesses were not permitted to open mines or to build railways in China, their business activities were very limited. However, in 1842, the Treaty of Nanjing opened the ports of Guangzhou, Fuzhou, Siamen, Ningbo, and Shanghai, and in 1858, the Treaty of Tianjin opened a further 10 ports. (Fig 5.2) From those two ‘unequal treaties,’ the foreign powers were able to exploit the natural resources of the region and to establish commercial relationships with local industrialists and entrepreneurs. The agricultural processing and textile industries were mainly concentrated in Shanghai, Guangzhou, and Wuhan. These were China’s first industrial centers; 64% of the country’s factories were in these area.

The second stage in the growth of industry extended from 1895 to the First World War. Industries in the southeast expanded and heavy industry developed in the north of China. Foreign imperialism during this time period had as its main focus the export of capital from China. The Treaty of Shimonoseki confirmed the right of the foreign powers to establish factories and their influence was further consolidated by the reliance of the Qing dynasty government on foreign assistance in suppressing for a time what became the Chinese Revolution of 1911. This reliance opened the door even wider for foreign capital to flow into China. It guaranteed the right to build railways as well as the right to open mines. The spheres of influence of the foreign powers increased nonstop, so it made possible the exploitation and export of mineral resources and the expansion of manufacturing industries. Around Shanghai, British influenced light and textile industries; also, around Shansi, Hebei, Huang He and Henan province, the British developed coal-mining industries. German capital controlled coal-mining industries of Shandong province, around Qingdao while Russia and Japan were in charge of mills, oil extraction, light industries, lumber, and coal-mines in the northeast China. Harbin and Dalian developed as manufacturing centers and coal mining was established in Fushun, Shangdon, Kailuan, as well as Jingxing and Benxi. Lastly, Beijing, Hebei, Tianjin, Jinan, and Yantai were center of the light industry at that time. (Table 5.1)

The year from 1914 to 1936 and the post-First World War appeared to be the third stage of the distribution of industry in China. Development in the Chang Jiang delta was revealed. Moreover, Tianjin and Qingdao seemed to be industrial centers in the northeast. In this period, several changes in foreign powers could be seen. The fall of Russian Tsarist government made withdrawal of Russian capital from China. Not only that due to the Sino-German Treaty of 1921, German gave up its special rights and privileges in China. Japan was one of the most crucial foreign powers that affected distribution of industry in China. As Japan’s influence increased, textile industry in China increased, so it became Shanghai’s main industry. Chinese-owned industries moved to smaller cities in Shanghai such as Nantong and Changzhou where textile industries were grew, Wuxi where cotton textiles, silk weaving and flour processing were progressed, and Suzhou where silk weaving was developed.  Heavy industry was also growing in the northeast because of Japan’s intention to establish military base inside China; iron & steel industries, chemical and engineering industries, and energy industries were progressed a lot. In 1937, Qingdao, Tanjin, and Shanghai were China’s largest industrial centers.

The last stage was the period of the second Sino-Japanese War. Northeast heavy industries were increasing while southeast and some west were decreasing.  The majority of industries were under the direct control of the Japanese. Since Japan’s economic aggression were tightly related to military aggression, the power mining, smelting, partial engineering, light, and textile industries were established in Anshan, Fushun, Benxi, Dalian, and Shenyang in the northeast of China for its military purpose. Coal, iron, steel, salt, and bauxite industries were in Beijing, Tianjin, Tangshan, Taiyuan, Datong, and Longyun in the north China.(Fig 5.3)Thus, the redistribution of China’s industries was largely a failure in the west. The economy in China was in the state of collapse.

Characteristics of Industrial Distribution

In the century preceding the founding of the People’s Republic, industrial production in China developed slowly, but its distribution widened. However, the distribution was imbalanced. Uneven distribution led to uneven pace of industrial production development in China. One of the most obvious characteristics of distribution during this period was the remoteness of industrial sites from their sources of raw materials as well as irrational composition of industry in the different areas. Another characteristic that could be mentioned is the overall weakness of industry. Finally, the industrial centers and the rural areas were sharply opposed. A number of conclusions can be drawn from these characteristics of industrial distribution in China before 1949. A rational industrial distribution must be based on a rational social system. Pre-socialist China’s industrial distribution exhibited characteristics of both capitalist and colonial or semi-colonial countries.

The Development and Distribution of Industry since 1949

Changes in the Industrial Structure

Prior to the founding of the People’s Republic in 1949, China’s industry was poorly developed and unbalanced. The textile industry dominated the industrial scene; heavy industry and machine building were backward, with outdated equipment and technology, and they were low in self-sufficiency and manufacturing capacity. (Table 5.2)

The 1^st FYP attempted to transform this situation, which was the legacy of industrial development and distribution up to 1949. The plan focused on further development of the traditional sectors and the establishment of new industries to fill the gaps in the industrial structure.

In the years immediately after 1949, the relative strength of the food-processing and textile industries was indicated. These two sectors accounted for 51.6 % of the gross industrial output value. By 1957, the textile and food-processing industries accounted for only 40 % of the gross output value of industry. (Table 5.3)

In the period after 1958 (excluding the years 1960-2), heavy industry was emphasized and the proportion of investment in light industry compared with heavy industry dropped steadily. By 1979, the industrial structure had changed to the extent that heavy industry was the strongest sector. This rapid development of heavy industry laid firm foundations for production in other sectors by means of improved equipment and technology. Light industry and agriculture have improved their production methods and have developed rapidly in the 1980s. (Table 5.4)

However, there were some problems to achieve the transformation of China’s industrial structure since 1949. First, light industry was neglected in favor of heavy industry to the degree that it created a disproportionate distribution of labor. In addition to this imbalance between heavy and light industry, the growth of the various heavy industrial sectors was unbalanced. The iron, steel, and machine-building industries were stressed, while the development of the coal and building materials industries slowed after 1957. Between 1953 and 1979, the annual average speed of growth of the coal industry was only 9.3 %. This rate of growth was much less than that of the other heavy industrial sectors and of industry as a whole. A third problem was the unbalanced development within individual heavy industrial sectors. For example, in metallurgy, the iron and steel industries grew, while the non-ferrous metals industry remained backward. Furthermore, within the iron and steel industry itself, steel was emphasized, but there were insufficient mines and rolling capacity. In the power industry, thermal power was emphasized and hydroelectric power was undeveloped. In the machine-building industry, ordinary products were over-produced when there were inadequate supplies of new and precision products. Finally, heavy industry tended to be self-servicing rather than capable of servicing agriculture and light industry. Despite increases in the production of farm machinery, chemical fertilizers, and insecticides, heavy industry was unable to provide the required tractors, electricity, diesel oil and petroleum, agriculture steel, and machinery maintenance. Similarly, the supply of raw required materials, fuel, power, and technical equipment to light industry is still below required levels.

China's industrial structure has become significantly more rational since the end of the 1^st FYP period. During the same period, heavy industry expanded its service base and the output of main products increased. Although the trend in heavy industry has been towards a more rational structure, many heavy industrial sectors have experienced an alarming decrease in production output. Thus, they have needed to be dependent on imports of manufactured goods and required materials for heavy industries from foreign countries. (Table 5.5)

Changes in Industrial Distribution

Rationalization of China’s industrial distribution is one of the main tasks in the planned development of the country’s economy.  The distribution of the forces of production needs to be based on local conditions and requirements, unified planning in relation to national defense and the overall development of the national economy and the integration of industry with agriculture and the cities with the rural areas.

The Development of the Hinterland Areas

One of the main problems of industrial distribution in pre-1949 China was the underdevelopment of the hinterland areas. The redistribution of industry would require the opening up of vast areas of land in the interior and border regions, the relocation of key national defense industries in the hinterland, and the gradual establishment of new industrial bases in these regions according to national plans. However, the hinterland areas were poor, and the environment and conditions were hardly conducive to building up modern industries and bases. If a production capability similar to that of the coastal regions was to be built up, huge investments in time and funds would be required as well as the support of the existing bases of production.

The coastal belt was a more suitable choice for development, in some respects, because of the existing industries, transport facilities, technical forces, and public utilities. However, the over-concentration of industry along the coast was irrational because of the serious shortages of raw materials, the outdated equipment, backward processing technology, and the low productivity of the area. The development of the hinterland areas was needed, and it was profitable because of their raw materials and strategic importance. At the same time as the old industrial bases would be reinforced and upgraded to form the foundation of the country’s industrial structure, new bases would be established in hitherto undeveloped areas as part of the overall redistribution plan. In this way, the coastal and hinterland areas would be mutually supportive, with a common goal of rationally distributional industrial bases.

The 1^st FYP period saw the focus of construction begin to shift to the interior. During the period of this plan, the regional allocation of national investment was 41.8 % for the coastal areas and 47.8 % for the hinterland. During the 2^nd FYP period, the industrial bases in the northeast were further strengthened, and industry in north, east, and central China and in the coastal cities was fully utilized. The development of the hinterland remained the main emphasis. During the 3^rd FYP period (1966-70), southwest China was developed. During this period, investment in the hinterland rose dramatically to 2.16 times the investment in the coastal areas. Western Hunan, Henan, and Hubei provinces were a focus for construction and development during the 4^th FYP period. In the period up to the end of the 4^th FYP, investment in the hinterland exceeded investment in the coastal regions. A number of large industrial bases took shape.

On average, industry in the hinterland developed at a rate faster than that of the coastal areas and of the country as a whole. The ratio of fixed assets, the number of workers and staff, and the total industrial output value of state-owned industry were higher in the hinterland areas than in the coastal areas. The output of coal, electricity, oil, and cement was also higher in the hinterland.

The industrial development of the hinterland invigorated and strengthened the country’s industrial base. The scale of exploration and utilization of natural resources expanded. Transport and communications facilities were developed and urban construction was accelerated so that economic and cultural levels rose significantly. Industrial development in the hinterland areas not only gave new force to the strategic rear regions of China and raised the self-sufficiency rate of industrial commodities, but it also eased the pressure on the coastal industrial bases, freeing them for the production of high-grade precision and new products.

However, the distribution of industry in the hinterland areas was uneven, and placed heavy demands on national defense. The hasty establishment of new bases away from the coast diverted emphasis away from the consolidation and upgrading of the existing bases, which had been an important part of the overall rationalization process. From the period of the 3^rd FYP, the investment in the hinterland areas was larger than could be absorbed; many projects were suspended because of insufficient supplies of food, light, and textile industrial products and inadequate public utilities. The situation called for a reduction in the level of investment in the hinterland and in the general scale of construction. An increase in the ratio of investment in the coastal areas was required in order to update equipment and technology, to consolidate existing industries, and to upgrade bases producing raw materials such as fuel. The diversion of investment away from the coastal areas, rather than a redistribution of the limited investment capital between the coastal and hinterland areas, had jeopardized the main task of the existing industrial bases which was to manufacture top-grade precision and new products for export.

The importance of the coastal areas is such that they cannot be discounted in order to divert funds and investment to open up the western area. However, in the long term, the resources in the west are crucial to the development of industry along the coast. A more balanced development of the economy of the whole of China is necessary. The situation at present requires that full use be made of the existing economic bases in the hinterland and border regions that important resources be exploited, transport facilities expanded, and specialized personnel trained. Long-term construction projects need to be initiated now with a mind to the steady industrialization of the west. Although state investment in the hinterland areas will continue, economic and technical collaboration between the west and the advanced areas will be encouraged as a means of exploiting the resources of the west while importing funds, manpower, and advanced technology to quicken the economic development of the backward regions.

Decentralization of Industrial Sites and Enterprises

Modern industry requires adequate concentration of industrial enterprises so as to fully utilize public utilities, manpower, resources, technical expertise, and to facilitate production and distribution. It also restricts the uninhibited spread of industrial sites in cities. However, the overall distribution of industrial enterprises should be dispersed to avoid the over-concentration in large cities of large and medium-sized enterprises. The rational distribution of industry has as one of its characteristics the linking of dispersed industrial sites by well-developed transport networks such as railways and waterways.

Since 1949, a number of provinces and municipalities have been selected as key areas for industrial construction. Large and medium-sized enterprises have been distributed among these centers. At the same time, improvements in transport networks, the discovery of new mineral resources, increased supplies of agricultural raw materials, and the development of power supplies have seen the growth of industry in medium-sized and small cities and in the mineral and agricultural raw material-producing areas. As a result, industry is no longer over-concentrated in large cities; a network of industrial bases of various sizes has been formed over the whole country with the effect of strengthening the country’s industrial base as a whole.

There are still significant differences in industrial development in different parts of China. (Table 5.6) However, in terms of their output value, the backward regions have developed at a faster rate than the advanced areas. In all regions, the industrial capability has exceeded the gross industrial output of China in 1949.

The nationwide distribution of industrial sites facilitates the exploitation of natural resources and bridges that gap between large-scale industrial production bases and the raw material- and fuel-producing areas and markets. However, this decentralization of industrial bases since 1949 has not been smooth. During the first three years of the 2^nd FYP, the expansion of industry in medium-sized and small cities and in the vast rural areas was over-emphasized in order to reduce the dichotomies between industry and agriculture, between the urban and rural areas, and between physical and mental labor. Industries were scattered all over the country. Many completed projects relied on state subsides to overcome location-induced production problems.

By the 1970s, five small industrial bases centered on the iron and steel, coal, chemical fertilizer, cement, and machine-building industries had been developed to meet the country’s needs. There was no consideration of economic returns. AS a result, industrial distribution was too thinly spread. In the hinterland areas, too much emphasis was placed on national defense-related production. Factories were located in inaccessible areas, causing difficulties in transport and supply.

In 1977, small-scale light and textile industrial enterprises began to be decentralized without consideration for the supply of raw materials, fuel, and power supplies, and with no regard to the technical and managerial levels available or even the suitability of products to market demands. Raw materials and power were in short supply and many well-equipped factories were under-productive, while ill-equipped new and small enterprises used quality raw materials to produce high-priced products of poor quality. At the same time as small industries were being excessively decentralized, the country’s large industries were becoming over-concentrated.

The overall situation was one of confusion and uneconomic distribution. The decentralization of small industries created insoluble transport problems and hindered technical and economic co-operation. The established industrial centers became overcrowded with the concomitant problems of insufficient water supply, housing shortages, traffic congestion, poor living conditions, and pollution. They also competed with agriculture for available lands. The solution to these problems appears to lie in the readjustment of the layout of construction of medium-sized and small cities and towns, correction of the tendency in the past to emphasize the development of large cities while neglecting the construction of mall cities and towns, and a shift in emphasis to the gradual construction of mall industrial centers.

Regional Specialization

Modern methods of production, and large-scale of production particularly require a degree of regional specialization. Economic production is based on the large-scale production of appropriate goods which will be sufficient to supply local needs and to export to other regions, while at the same time importing goods from other regions to make up deficits in locally required products which cannot be produced in sufficient quantity or at all.

Regional specialization relies on the rational utilization of resources and infrastructure in order to produce large quantities of high-quality, cheap products for the domestic market. Since 1949, regional specialization has been an important component of China’s rationalization policies. It has been based on the country’s requirements and local conditions favoring various modes of production. At the same time, the establishment of new industries to broaden the economic base has balanced the over-specialization of some regions in the past.

The Development of the Raw Materials- and Fuel- producing Areas

Since 1949, industry has moved west from the coastal areas. (Fig 5.4) The expansion of industrial enterprises and the comprehensive development of regional industry have created favorable conditions for bringing industrial production closer to the raw materials- and fuel-producing areas. New sources of raw materials have been explored and opened up, including the comprehensive utilization of mineral resources and raw materials for the textiles and light industries.

Although the situation has improved to a great extent, there are still some problems relating to the distribution of production and the distribution of raw materials and fuel. The total consumption of raw materials and fuel exceeds that produced. The production of these resources needs to be accelerated in preference to the further development of the processing industries. Also, many of the raw materials and fuel resources are not transportable. This requires that the production of these resources be as close as possible to existing processing industries.

From the point of view of rationalization of production in the raw materials- and fuel-producing areas, the processing industries in areas where raw materials and fuel are in short supply need to have their expansion curtailed, while the potential for further exploitation of reserves is explored in order to raise these areas to a level of self-sufficiency.

Trade

The east and northeast are well served by railroads and highways, and there are now major rail and road links with the interior. There are railroads to North Korea, Russia, Mongolia, and Vietnam, and road connections to Pakistan, India, Nepal, and Myanmar. As part of its continuing effort to become competitive in the global marketplace, China moved toward joining the World Trade Organization in 1999; its major trade partners are the United States, Japan, South Korea, Taiwan, and Germany. China's economy, though strengthened by the more liberal economic policies of the 1980s and 90s, continues to suffer from inadequate transportation, communication, and energy resources. (Table 5.7, Table 5.8, Table 5.9)

Overview

The metallurgy industry is one of the most important sections of China’s materials industry.  It accounts for over 8 percent of the total industrial output value.  It also accounted for one-third of the output value of the mining and raw materials industries.  Between 1949 and 1980, 300 million tons of rolled steel and non-ferrous metals were produced.

China’s metal resources were distributed over a wide area, including a relative concentration of different ores [Fig 5M.1].  The development took place mainly along the coast, with some development in the interior.  The industry is most developed in the east and north-east China, followed by the north and central-south; the south-west and north-west are the least developed.  The ferrous metallurgy industry is predominant in the north and north-east, whereas the non-ferrous metallurgy industry is predominant in the north-west and central-south.  In the north-west, non-ferrous metals account for 60 percent of the industry’s total output value.

China’s metallurgy production is distributed in four main ways [Fig 5M.2].   In regions around Liaoning province and Shanghai, both ferrous and non-ferrous metallurgy industries are well developed.  In provinces such as Gansu, Hunan, Yunnan, Guangdong, and Henan, the metallurgy industry accounts for a small proportion of the country’s total metallurgy production.  However, non-ferrous production dominates the local industry and occupies an important place in national production.  Another distribution pattern is dominated by ferrous production [ Fig 5M.3], which accounts for 70 and 83 percent of this output and between 4.2 and 8 percent of the national total ferrous production.  Other regions, such as Inner Mongolia, Qinghai, Xinjiang, Shandong, etc. had a low level of metallurgy development.  The distribution of the metallurgy industry is determined in part by the availability of resources.

Metallurgy industries in China need to be developed, taking into account local conditions.  The exchange of metals between regions would enable them to meet the requirements of local development.

The Iron and Steel Industry

China is rich in iron reserves.  It’s iron and steel industry has long had priority in national industrial construction and remains today the principal part of its metallurgy industry.  There are 44 billion tons of confirmed iron ore reserves, of which industrial value deposits account for about half, ranking third in the world after Russia and Brazil.  The iron ore grade averages less than 34 percent.  Calculated at an ore-dressing rate of 85 percent, 3.5 tons of ore are required to produce one ton of iron.  China is also rich in coking coal resources, comprising one third of the total coal reserve.  This concentrated but unevenly distribution has largely determined the distribution of the iron and steel industry.  Gas coal accounts for 60 percent of the country’s coking coal; main coking coal accounts for 16 percent; rich coal accounts for 13 percent; and lean coal accounts for 11 percent.  In the south-west, all four types of coking coal are produced; in the north-east and east, gas coal accounts for 70-80 percent of deposits.  A problem that arose is the high dust content of coking coal, which, after washing, produces inferior coke.  Some provinces, regions, and municipalities are rich in both coking coal and iron ore.  Some areas, such as Liaoning, Beijing, Huber, Sichuan, Guangdong, and Tibet, are rich in iron ore but deficient in coking coal; others, such as Shanks, Gizmo, Qinghai, Kingie, and Xinjiang, are rich in coking coal but deficient in iron ore.  Ancillary raw materials necessary to the iron and steel industry are abundant, but their combinations differ in various localities. 

Distribution

The iron and steel industries along the eastern coast have been used successfully to extend the industry into the interior regions [ Fig 5M.4].  During the 1^st FYP period, more than half of the total investment in the iron and steel industry went into the Anshan iron and steel works, which served as a base for expansion of the industry into other parts of the country.  The Anshan iron and steel works eventually grew to China’s largest, possessing several dozen major plants and mines, with 200,000 workers.  In 1980, it produced 6.7 million tons of pig iron, 6.9 million tons of steel and 4.2 million tons of rolled steel.  Its four major mines produce 25 million tons of ore annually.  The plant produces some 1,300 types of steel products and 20,000 specifications of rolled steel.  During the 2^nd FYP period, the Wuhan and Baotou iron and steel works were built as key projects, providing a base in the south-west.  The new Baotou, Wuhan, and Panzhihua iron and steel and the expanded Taiyuan iron and steel works are the main national iron and steel bases.  These companies are the main bases built since 1949.  Wuhan, the largest, produced 2.7 million tons of steel in 1980, 3.4 million tons of pig iron, and 1.8 million tons of rolled steel.  Edong mining area produces 5 million tons of pig iron annually.  In 1980, the Panzhihua and Baotou companies produced 1.6 and 1.2 million tons respectively of steel, 1.9 and 1.2 million tons of pig iron, and 1.1 and 0.3 million tons of rolled steel.  The Panzhihua company possesses China’s largest vanadium-titanium-magnetite mine.  The Bayan Obo mine provided for the Baotou company, being the country’s largest deposits of iron, rare earth, and niobium.  In the east, Shanghai’s iron and steel enterprises formed the base for reconstructing, expanding, and building new enterprises to enlarge its base.  The ratio of investment in the iron and steel industry between the coastal and interior regions is 6:4.  The coastal industrial bases have developed into major iron and steel bases.  Development in the interior regions has proceeded at an even faster rate.  Interior regions account for an increasing percentage of the national total.  In 1949, these regions only produced 13.9 percent of the national total output of steel.  In 1965, the proportion was 22.6 percent.  In 1980, it was 37 percent.  The industry has spread over the whole country, with the exception of Tibet. 

Despite the rapid development of the interior iron and steel industry, per-unit capacity investment in the interior is much higher than for the coastal areas; the per-ton comprehensive investment is three times that of the coastal areas.  Further, the coefficient of return on investment and the ratio of profit-tax to funding are higher in the coastal areas than in the interior.  Most of the iron and steel works in the interior regions are new and the investment in their ancillary projects, public utilities, and welfare facilities is therefore two or three times more than for the reconstruction or expansion of old enterprises.  The industries in the interior regions were less efficient and profitable than those on the coast, mainly due to logistical and structuring factors.  A balance between innovation, expansion, new plants, coastal and inland locations needs to be maintained.  The overemphasis in the past on the inland areas in the allocation of investment produced poor economic results.  In the long-term, China’s iron and steel industry needs to remedy the present situation where production is concentrated mainly in a few coastal areas.  The conditions must be created to enable new iron and steel bases to be opened in the inland areas where the deposits of ore (especially high-grade iron ore and coking coal) are concentrated.

Structure

The iron and steel industry is unbalanced in structure [ Fig 5M.5 & Data Table].  In the mid-south and the east, the mining of iron is low compared with the output of pig iron.  Production of pig iron exceeds that of steel, but more than is needed is produced in the north-east, north, and mid-south.  In the east, especially in Shanghai, insufficient pig iron is produced and almost all of Shanghai’s requirements are imported.  In the north, where there is a surplus of pig iron, Hebei and Beijing have more than they require, while Tianjin and Tangshan have none at all.  In the east, Shanghai’s severe shortages of pig iron are in contrast to the surplus in Anhui and Shandong.  This unbalanced distribution results in high transportation costs, placing a heavy burden on energy and transport facilities.  Steel plants need to be located in areas where there is a developed engineering industry and reliable power sources.  The output and specifications of steel need to be adapted to local demands.  It needs to be balanced in order to avoid the transportation of semi-finished products and steel-rolling materials.  The distribution of ores also needs to be taken into account.  Apart from the north-west, the distribution of iron ore guarantees iron and steel industrial development.  Shanghai produces more than 5 million tons of steel annually, using iron ore and pig iron mainly from Meishan and Ma’anshan.  If, when completed, the Baoshan iron and steel works needs to use local ore, the problem of ore supply to Shanghai will become more sever.  The need for new mining bases is therefore paramount.  Bayan Obo iron ore contains many associated minerals, including rare earth, niobium, manganese, fluorine, and phosphorus, and the rare earth content is very rich.  There is potential for comprehensive exploitation to extract these associated minerals.  The Taigulan iron ore mining area in Shanxi provinces has large reserves, but is as yet largely unexploited.  Its local hydrological and geological conditions made it difficult to exploit on a large scale at present.  The Jiuquan iron mine, situated in high terrain, is difficult to exploit and its ‘red ore’ is of a low extraction value.  Anshan, Benxi, western Panzhihua, and eastern Hebei are the key mining areas for expansion.  The Anshan and Benxi mines provide ore mainly for the Anshan and Benxi iron and steel works, but they have the ability to supply ore to bases along the Chang Jiang.  Panzhihua mine provides not only Panzhihua and Shuicheng iron and steel works, but also supplies Kunming and Chongqing.  The eastern Hebei mine supplies ore to the iron and steel works in Beijing, Tianjin, and Tangshan, and has the potential to meet the demands of a large iron and steel base.

Scale

The concentrated distribution of large and medium-sized works is more economical than the construction of many small, dispersed, and technologically backward works.  Initially, after 1949, much of the nation’s total investment was focused on large and medium scaled plants. However, policies in 1958 resulted in the establishment of many small iron and steel works, which not only dispersed investment but also slowed the construction of the large enterprises.  Small works were inefficient, because of backward techniques and equipment.  The annual increase of steel output dropped to 4.5 percent during the 2^nd FYP period.  Small works continued to be built throughout the 1960s and 1970s, although after 1978, due to poor results, many of these works were closed.  China’s present national conditions, energy resources, management  levels, equipment manufacturing capacity, and technical forces make economical the construction of large scale enterprises with 1-3 million ton capacity.  In certain cases, conditions make feasible the construction of 5-6 million ton enterprises.  Medium-sized enterprises (from 300,000 to 500,000 ton capacity) are the backbone of China’s iron and steel industry.  The concentrated distribution of large and medium-sized works is more economical than the construction of many small, dispersed, and technologically backward works.  There are still many small, technologically backward blast furnaces in China, with a capacity of less than 100 cubic meters, whose efficiency has been steadily raised.  If distributed properly, with reliable support and equipment, such enterprises are a necessary and economical alternative.

Location Factors

A number of factors determine the location of iron and steel enterprises, including energy, water, transport facilities, economic foundations, conditions for cooperation, topography, geology, hydrology, and meteorology.  Different types of enterprises have different location requirements.  Enterprises producing alloy steel and other special kinds of steel need to be near energy supplies, consumer markets, and abundant supplies of scrap iron and steel.  Independent steel rolling plants must be near commercial steel sources and markets.  Independent and complex enterprises that smelt iron depend on ore and need to be close to reserves.  Iron and steel complexes should be located close to deposits of both.  This type of enterprise is resource-based.  Steel and rolled steel industries in Shanghai, Tianjin, and Tangshan have immense capacity, importing several million tons of pig iron, iron ore, and coking coal.  This type is distribution-based.  A third type of enterprise is based on coastal shipping facilities.  The new Baoshan works are of this type.  High-grade coal is imported, as well as coking coal.  Large amounts of its products are exported.  Other types of enterprises are market-based, with emphasis on proximity to local engineering industries. 

The Non-ferrous Metallurgy Industry

Non-ferrous metals are classified as heavy, light, noble, rare, and semi-metallic, not based on iron ore.  China has many non-ferrous metal areas or belts, including the Guixhou-Sihuan-Hunan-Guangxi mercury belt, the Hunan-Guizhou antimony belt, the Nanling tungsten and tin belt, the Hunan-Guizhou antimony belt, and so on.  The country’s deposits of various non-ferrous metals are amongst the largest in the world.  Although heavy metals are found in most provinces, they are concentrated in a few parts of the country.  Rare metals are found in large and concentrated deposits, but are unevenly distributed in the world.  China is especially rich in deposits of rare earth, niobium, vanadium and titanium, which are scarce in the world.  The areas that are rich in non-ferrous metal deposits are close to water resources and large coal mines, which provide cheap energy for smelting.  Some of these deposits are of low grade or in remote areas.  Therefore, despite the superior variety and distribution, backward ore dressing, smelting, and processing techniques prevent comprehensive development of its resources.  The production of copper, aluminum, lead, and zinc accounts for 90 percent of the output of non-ferrous metals [ Table 5M.1].  High-grade ore containing tungsten and molybdenum are comparatively high.  China’s output of the 10 most commonly used non-ferrous metals is sixth in the world.  The world average output of copper, aluminum, lead and zinc in proportion to steel is 1:19.41, compared to 1:33.48 in China.  The greater consumption of non-ferrous metals is an indicator of economic development.  Despite the vast resources, China’s non-ferrous metals industry is unable to meet the demands of its economy, requiring the import of some non-ferrous metals.  This is the result of low ore grade, low quality products, weak industry foundation, and the poor competitive power of China’s non-ferrous metals in the international market.  The largest non-ferrous metals producers are Shanghai, Liaoning, Gansu, Hunan, and Yunnan [ Fig 5M.6, Table 5M.2].  The output value is highest in Shanghai, which has a high technical level and smelting capacity, but limited resources and energy supply.  The industry includes all major production processes, including mining, dressing, smelting, refining, and rolling.  The distribution of the non-ferrous metals industries therefore varies according to their special requirements. 

Heavy Non-ferrous Metals 

Because China’s heavy non-ferrous metal ores are of a low grade, a large volume of ore is required to be transported between mines and dressing plants.  Ores with a low metal content can be crude-smelted near the dressing plant before being refined elsewhere using electrolysis.  This consumes large amounts of electricity, requiring this to be done near power centers.  Also, a comparatively high technical level is required in rolling of pure metals and precious alloys.  Finishing can be generally separated from smelting and is best done in the major consuming area, near machinery industries.  Coordination of the non-ferrous metals and machinery industries will enable production standards to be set according to the specifications required by the machinery industry. 

China’s copper reserves are distributed mainly in the lower reaches of the Chang Jiang, in Yunnan, Gansu, and Shanxi provinces, and in the Changdu area [ Fig 5M.7].   Lead and zinc are mined mostly in the Lingnan range and in the south-west and Gansu province.  Because the ores are of low grade, mining and dressing are closely related.  Refining is carried out for the most part near medium or large cities.  Gejiu country in Yunnan is the largest and oldest tin producer in China.  Its output is 70 percent of the country’s total output.  Long exploitation has reduced both the grade of its ore and its output.  Recent surveys have found 17 deposits in western Yunnan province, some of which is high grade.  Conditions exist therefore for further expansion of the tin industry.  The antimony industry centers mainly on Hunan, it’s output accounts for 80 percent of the country’s total.  The rest is mined in Guangxi, Gansu, Yunnan, and Guizhou.  The Jinchuan nickel mine in Jinchang is the largest deposit in the world.  It’s ranked second for sulphuric nickel.  The reserve is large, the grade high, and it’s rich in associated minerals.  The large-scale exploitation of nickel in Jinchuan has made China complete independent.  New technological extraction processes for rare and precious metals have also raised the recovery rate of platinum from 49 to 75 percent, that of palladium from 3 to 50 percent, and cobalt from 32 to 60 percent, thereby making import unnecessary.  Mercury is produced in Guizhou, China’s largest producer; Hunan is the second largest.  The largest mines in Guizhou are the Wanshan special area and the Xinhuang mine.

Light Non-ferrous Metals

The main minerals of the light non-ferrous metals industry are aluminum and manganese.  The industry is distributed close to electricity resources, requiring high technology and exploitation on a large scale.  It is of considerable importance to national defense.  The production of aluminum by electrolysis consumes large amounts of electricity, some 18,000 kWh per ton. A stable and reliable supply is a priority and plants need to be located near power stations.  Aluminum plants at Lanzhou, Liancheng, and Qingtonxia rely on Huang He hydropower sources.  A large plant set up in Fushun in Liaoning province during the 1^st FYP period as an important part of the development of a heavy industrial base in north-east China is still China’s largest electrolysis aluminum base.  The Baotou aluminum plant is also one of China’s largest.  The main aluminum manufacturing industry centers are in Harbin, western Gansu, and Chongqing.  Bauxite mines are widespread, with the largest deposits in Shanxi, Henan, Guizhou, and Guanxi.  The best conditions for exploitation are at Xin’an in western Henan, Xiaoyi and Yangquan in Shanxi, Xiuwen and Qingzhen in Guizhou, and Pingguo in Guangxi.  The country’s largest deposits of magnetite are in the north-east and east, with the largest in Liaoning.  Refining and production are concentrated in Fushun.  An aluminum processing plant in western Gansu also produces magnesium materials. 

Rare Metals

Deposits of rare metals (including tungsten, molybdenum, titanium, and vanadium) constitute half of the country’s total non-ferrous metals reserves.  China’s reserves, output, and export volume of tungsten are first in the world.  The main producer is the Nan Ling mining area, comprising southern Jiangxi, south-east Hunan, northern Guangdong, eastern Guangxi, and western Fujian provinces.  Tungsten productive potential is equal to the total requirements of the international market.  In fact, about half of the world consumption of tungsten comes from China.  However, poor techniques amounted to low quantity and quality.  The improvement of processing is of an utmost importance in developing the country’s superior tungsten industry.  Molybdenum is produced mainly in Yangjiazhangzi and Jinchengdui, both of which have considerable potential for development.  Titanium and vanadium output is at present small, but has expansion potential.  80-90 percent of the total reserves of titanium and vanadium are found in Panzhihua, which also has the largest iron, nickel, cobalt, and chromium deposit.  The site has an annual production of several thousand tons of vanadium dregs.  Its 45-48 percent grade titanium concentrate can be used to produce titanium dregs, white titanium, sponge titanium, high-quality vanadium dregs, and high-grade vanadium pent oxide. 

Rare Earth

Reserves of rare earth are the richest in the world, with a complete variety of quality, which constitutes 50 percent of the world total, located mainly in Inner Mongolia, Jiangxi, Hunan, Hubei, Guangdong, Guangxi, Sichuan, Shandong, and Gansu.  More than 95 percent of reserves are in Bayan Obo in Inner Mongolia (the largest rare earth deposit in the world).  The content of elements such as samarium and europium is also comparatively high.  Its output in terms of oxide content ranks second only to the United States.  Baotou in Inner Mongolia is the main production base.  It has comprehensive ore-dressing technology that is able to produce high grades of rare earth metals.  The recovery rate is close to 40 percent.  Higher quality products are a prime concern if China is to compete in the international market. 

Understanding the Industrial Economy of China - The Engineering Industry              

Overview

The engineering industry provides the technology and equipment for many different sectors of the national economy.  It is indicative of the level of industrialization of China.  Before 1949, there was very little engineering industry besides repair and assembly shops in coastal cities.  Approximately 80 percent of the machinery was imported.  In 1980, there were 100,000 enterprises with 12 million workers and an output value of RMB 120 million (25 percent of the total industrial output value) [Table 5E.1].  26,000 kinds of equipment were produced, ranging from agricultural machines to precision instruments [Table 5E.2], supplying 80 percent of the country’s basic industries.  The main flaws in the engineering industry are its low level of specialization and technical skill, as well as excess redundancy in production, resulting in a waste of raw materials and resources.

Development

The engineering industry changed significantly after 1949.  Industrial bases began to be established in the middle and western part of the country, beyond the Beijing-Guangzhou rail line.  Between 1957 to 1980, the number of engineering enterprises in these areas increased from 13m to 38 percent of the national total; fixed assets grew from 32 to 40 percent; machine tools rose from 23 to 32 percent; output rose from 18 to 26 percent of the national total value.  Many of these bases are renovated or expanded existing machine-making factories.  Central and western areas of the country were established after 1949 to balance the supply of equipment across the country.  The main reason for this focus on inland industry was for the sake of defense.  In 1952, 14 of 29 provinces, autonomous regions, and municipalities had virtually no modern engineering industry.  Engineering enterprises were concentrated mostly in Liaoning and Shanghai, but development was rapid in Inner Mongolia, Shaanxi, Gansu, Ningxia, Qinghai, Xinjiang, Anhui, Zhejiang, Fujian, Jiangxi, Henan, Guangxi, Yunnan, and Guizhou [ Fig 5E.1].  With the exception of Tibet, every region had, to some degree, a capacity for engineering. 

Small engineering industries are also scattered in communes and brigades throughout the country.  These enterprises’ main occupation was the manufacture and repair of machine tools, serving mostly rural industry and agriculture.  In 1978, the output of these industries was 522,000 pieces of farm machinery, 142,000 machine-drawn farm tools, 719.14 million fittings, and 374.15 million other farm tools.  In addition, 34,000 metal-cutting machine tools and automobile fittings valued at RMB 800 million were produced.  These small enterprises helped build up the strategically important rear areas of the country.

The biggest problem in China’s engineering industry at present is its irrational structure.  There is a lack of large, precision, numerically controlled, highly efficient machine tools.  Too much emphasis is placed on main machinery, so auxiliary machinery and fittings remain in short supply.  For the most part, the engineering industry has serviced the heavy industry.  The distribution of production is also irrational, without a uniform planning and proper division of labor.  There is often unnecessarily repeated construction and production.  For example, only 49 of the 600 factories producing bearings have an annual output of 100 million sets, while the output of the rest is averaging only 100,000 sets.  The manufacturing of automobiles is also scattered.  With seventy such plants in China, the annual production is less than 100 units each.  Such duplication creates waste and limits the region’s development.  Since the 3^rd FYP period, emphasis has been placed on construction in the rear areas, with excessive attention paid to consideration of nation defense, to the neglect of technical and economic effectiveness factors.  Plants were constructed in areas remote from cities and rail lines, resulting in communication and transportation problems.  This produced high costs and low economic efficiency.  The legacy of the irrationality of the engineering industry is a structure unable to serve the needs of modernization.  The engineering industry needs to be upgraded, with better equipment and technology, combined with greater specialization.  One means of promoting specialization is to close or combine factories with inadequate or low production effectiveness.  Regional advantages can also be more exploited to raise the economic effectiveness of the whole industry.  Cooperation between nearby factories in the coastal areas and the development of those with advanced technology into main production bases would raise their productivity levels and develop the country’s export trade.

The Heavy Machine-making Industry

The heavy machine industry includes metallurgical and mining equipment, heavy construction equipment, hoisting equipment, heavy machine tools, and petrochemical equipment.  Heavy machinery plants produce key equipment for heavy industry, thus their location is important to national defense [ Fig 5E.2].   They require large sites and huge equipment.  They also require a solid geological structure and press-resistant soil in areas removed from residential centers.  Excavation machinery, in particular, needs to be close to the consumer area.  Mining machinery plants are located in coal-mining areas.  Today, metallurgy equipment manufacturing is widely scattered, though concentrated mostly in Shanghai, Liaoning, Shanxi, Heilongjiang, Jiangsu, and Sichuan.  The main bases are Fulaerji, Shenyang, Taiyuan, and Deyang.  A group of small and medium-sized factories supplements the production of the key metallurgy machinery plants.  These include metallurgy electrical machinery plants in Shenyang, Suzhou, Changzhou, Jilin, Taiyuan, and Ang’angxi;  a metallurgy bearings plant and hydraulic press plant in Beijing, a metallurgy spare parts plant in Fuxin, and a metallurgy automobile and railway cars plant in Huashan.  On the whole, the distribution of China’s heavy machine-making industry is related to the distribution of the country’s metallurgy and mining industry.  The specialization of many of these plants across the country is very low. 

The Precision and Complicated Machine-making Industry

The manufacturing of precision and complicated machinery requires intensive technology.  The products are often a combination of the most modern technology in a number of different fields.  They require sophisticated technology as well as materials of different specifications, some of which are rare.  Since many products are light weight, long-distance transport costs are small.  In addition, the industry also requires a high technical level of its operators.  The precision machinery industry includes the electronic industry, high-grade instruments and meters, high-precision machine tools, numerically controlled machine tools, precision tools, communications apparatus, and automatic-control equipment.  Such enterprises are located close to industrial and cultural centers [ Fig 5E.3], taking advantage of advanced technology, scientific institutes, and skilled workers.  They are less reliant upon the distribution of raw materials and consumer areas.  The main parts of the complicated machinery industry are located in mainly large industrial centers; supplementary parts are made elsewhere.  The complicated machinery industry can therefore be distributed in the same way as the precision machinery industry.  Beijing, Tianjin, and the Chang Jiang delta produce a great variety and a large portion of the country’s precision and complicated machinery.  Two main automobile bases in China are Changchun and Shiyan.  Harbin, Deyan, Xi’an, Tianshui, and Zunyi are the largest power-generating, transmission equipment, and electrical appliances bases.  Precision meter instrument bases are located at Chongqing, Shenyang, Jinzhou, Guangzhou, Yidu, Hongjiang, and Qingsheng, and important electronics industrials centers are Chengdu, Guangyuan, Duyun, Kaili, Luonan, Tai’nan, Changsha, Shenzhen, Jinan, Guilin, Jingdezhen, and Hefei.  Both industries are distributed along the coastal areas and the interior.  The coastal regions are mainly the original industrial and technical centers.  The interior enterprises are comparatively concentrated in newly developed technical cities, such as Wuhan, Chongqing, Chengdu, Guiyang, Zunyi, Xi’an, and Tianshui.  Although these enterprises have a solid foundation, they lack technology.  Their equipment utilization ration is low and efficiency is lower than the coastal regions.

The Specialized Machine-making Industry

Agricultural Machinery

Specialized machinery (including farm tools, light and textile machinery, automobiles, cars, and locomotives) needs to suit different local conditions.  The agricultural machinery industry in China is fairly well developed.  Its factories are widely scattered in the economic and technical centers of the main agricultural areas, close to convenient transport facilities and sufficient supplies of iron and steel [ Fig 5E.4].  For the most part, the agricultural machinery industry is concentrated in the east, with large factories centered in the north.  The present family responsibility system in China’s rural areas requires large quantities of small agricultural machinery.  Nine districts have been delineated on the basis of differing natural, economic, and technical conditions and the demand for different types of farm machinery.  They are the north-east dry land district, the north China dry land district, the south-east hilly paddy land, the south-west plateau basin district, the loess plateau district, the Hetao-Hexi corridor and southern Xinjiang pastoral district, the Qinghai-Tibet plateau pastoral district, and the south-east hilly tropical farming district.  These districts, with different mechanization requirements, are a more rational determinant of the distribution of agricultural machinery manufacturing than the present distribution.  The product structure of the agricultural machinery industries needs to be adjusted to emphasize the production of small items of machinery.  The quality of such products also needs to be raised and production costs lowered.  Because of the slow pace of development, agriculture in China is expected to remain semi-mechanized for some time. 

Textile Machinery   

The textile machinery manufacturing is based on a system of specialized production.  Where factories producing textile machinery are concentrated, some of the work processes are centered in a few factories that cooperate with one another to achieve higher economic efficiency [ Fig 5E.5].   Different sectors of the industry are located in such a way to best utilize local conditions to facilitate the development of the industry as a whole.  The Chang Jiang delta, Tianjin, and Qingdao are the country’s key textile machinery manufacturing base.  Small, separate, and technologically inferior plants have been reorganized and upgraded.  The city of Shanghai is now an important textile machinery manufacturing base, with complete work departments and advanced technology.  Large textile machinery plants have also been built in the north, central, and north-west China at Yuci, Beijing, Shijiazhuang, Zhengzhou, Yichang, Shaoyang, Handan, Chengde, Wuhan, Xianyang, Weinan, and Lanzhou. 

Ships and Rolling Stock

The production of ships and rolling stocks are unsuited to long-distance transportation.  Therefore, production needs to be close to the main consumer areas [ Fig 5E.6].  The manufacturing of main components requires intensive technology, which restricts efficient manufacturing to industrial technological centers.  Mass-produced components can be produced elsewhere, but the assembly must take place in the main consumer areas.  The system of inland rivers allow for ship-building to take place on the east coast or along the lower and middle reaches of the Chang Jiang.  The Shanghai-Hangzhou-Ningbo area is the country’s largest ship-building base.  Small shipyards and subsidiary factories have also been built further upstream.  In 1980, the area’s output of ships for civilian use accounted for half the country’s total ship output.  The Guangzhou-Zhanjiang area also has two large ports with an important place in the country’s shipping system.  In 1980, Guangdong’s output of civilian ships was second in China.  China’s ship-building industry is now fairly well developed, with specialized sectors.  The country is able to produce 16,000-50,000-ton tankers, 13,000-25,000-ton freighters, 16,000-ton coal cargo ships, and 7,500-ton passenger ships, along with a variety of other ships.  The rolling stock plants in China are located in the main railway hubs.  The country’s largest locomotive manufacturing base is at Datong, where the Beijing-Baotou and Datong-Mengyuan rail lines meet.  It produces a large proportion of the country’s steam locomotives of various types.  Other plants are located at Dalian, Beijing, Qingdao, Ziyang, and Zhuzhou.  The largest freight car manufacturing base is at Qiqihar, with other centers at Dalian, Chengdu, Zhuzhou, Xi’an, Wuhan, Datong, and Beijing.  

Understanding the Industrial Economy of China in Geography – The Chemical Industry

Overview

The chemical industry is reliant upon the availability of raw materials, advanced technology, and energy resources.  The main sectors of the industry concentrate on acid and soda, fertilizer, and organic chemical production.  It is distributed at every corner of the country, except for Tibet.  Its products are used in a wide variety of industries, contributing to the development of the national economy and the raising of living standards.

Development 

China has an abundant reserve of chemical resources, including sodium chemicals, sulphuric acid, fertilizer, and organic chemicals.  Yet, before 1949, the chemical industry was largely undeveloped.  There were a total of eight comparatively large chemical plants in a few coastal cities.  Their output value only comprises 3 percent of the total industrial output in 1949.  Acid and soda production only made 40,000 tons of sulphuric acid, 88,000 tons of soda ash, 15,000 tons of caustic soda, and 6,000 tons of sulphuric ammonia.  Most industrial chemicals were imported and the organic chemical industry was largely non-existent.  Since 1949, the growth rate of the industry is 17 percent, second only to the oil industry.  By 1980, its output had risen to 12 percent of the total output, the third largest industry after engineering and textile.  There are 4,500 state-run chemical industry enterprises, 300 are key enterprises [Table 5C.1].  These plants produce 20,000 kinds of products [Table 5C.2].  The largest of the chemical sectors is the organic chemical industry in terms of output, followed by chemical fertilizers, and rubber and plastics.  The ratio of raw material and processing industries have changed from 1:3 at the start of the 1^st FYP to 1:1.05 in 1979, indicating the solid base of the industry.  Since 1949, emphasis has been placed on the development of large and medium-sized enterprises.  Large integrated complexes were built in Jilin, Lanzhou, and Taiyuan, and a dozen large petro-chemical and fertilizer plants were built in Yanshan and Qilu.  Smaller chemical plants producing mainly fertilizer and synthetic ammonia were built in a number of localities.

Distribution 

In 1952, the chemical industry was concentrated in a few coastal regions.  Liaoning and Shanghai accounted for more than half the country’s chemical output value; Tianjing, Beijing, Jiangsu, Shandong, and Guangdong accounted for a significant part of the remainder.  The only interior region with a significant chemical industry was Sichuan.  The most highly developed bases are Shanghai, Liaoning, Jiangsu, and Beijing.  Between 1952 and 1979, the chemical industry increased from 17.3 percent of the national total to 36 percent, while coastal regions dropped from 82.7 to 64 percent.  Every area had a chemical industry with the exception of Tibet.  The distribution of chemical industrial production ranges from widely scattered with relative concentration, to centralized distribution, to highly concentrated distribution.  These areas produce popular industrial chemicals such as sulphuric acid, caustic soda, calcium carbide, purified petroleum benzene, synthetic ammonia, chemical fertilizers, pesticides, and daily necessity chemical products.  The production of such products is not high concentrated.  The manufacture of products such as plastic goods, concentrated nitric acid, and phosphorous is relatively concentrated because of the distribution of raw materials and consumer areas.  Beijing, for example, produces one-third of the country’s plastics.  Half of the total output of concentrated nitric acid is from Jilin and Gansu provinces, and Yunnan and Hubei produce more than half of the total output of phosphorus.  Some chemical industries are even more highly concentrated in their distribution, such as ethylene, which is mostly produced by Beijing and Shanghai. 

The Acid and Soda Industry 

The most basic of China’s industrial chemical industries is the production of sulphuric acid, sodium carbonate, and caustic soda.  The industry is distributed according to three patterns [ Fig 5C.1 and Data Table].  Production is combined with other chemical industrial enterprises, such as in Nanjing, Guangzhou, Kaifeng, and Beijing.  The production is could be distributed in consumer areas that have a concentration of chemical industries, such as in Dalian, Zhuzhou, and Shanghai.  Thirdly, production is combined with the metallurgy industry that provides raw materials for sulphuric acid production.  Some acid production needs to be close to consumer areas as well as close to its raw material bases, such as the production of sulphuric acid, which needs to be near troilite mines.  Other manufacturing also requires proximity to large power sources, such as the production of sodium carbonate, which takes place mostly along the coast, where power and raw materials are bountiful.  In 1980, the output of these areas accounted for most of the country’s output.  The production of caustic soda is distributed mainly in the large consumer areas that have convenient transport facilities.  It is often associated with the chemical, light, and textile industries, and the factories are usually small.  Large plants produce less than 200,000 tons of caustic acid, as in the Liaoyuan plant in Shanghai.  Other key enterprises only produce between 10,000 and 40,000 tons.  The four main producing areas of caustic acid are the Chang Jiang delta, Beijing-Tianjin area, southern Liaoning area, and the Chongqing-Chengdu area.  These areas account for the country’s total output of caustic acid.

The Chemical Fertilizer Industry  

China’s production of nitrogenous, phosphate, and potash fertilizer is fairly well developed.  Nitrogenous fertilizer is the main product of the chemical fertilizer industry.  The largest plants are located mainly in coal bases or coal industry areas in the north, with a few located in Shanghai, Jiangsu, and Sichuan [ Fig 5C.2 and Data Table].  In 1980, there were 1,500 synthetic ammonia factories in China, 14 were large-sized and 50 medium-sized.  The larger plants accounted for 45 percent of the country’s total output of synthetic ammonia.

Today there are 700 Phosphate fertilizer plants in various regions.  70 percent of the total output of the phosphate fertilizer industry comes from the south.  Hunan, Jiangsu, and Sichuan each account for more than 10 percent of the total; Guangdong, Hubei, Yunnan, Guangxi, and Jiangxi account for 4-6 percent each.  Shandong, Hebei, and Liaoning account for 4-6 percent each of the total output.  Less than 5 percent of the total output phosphate fertilizer is produced by large enterprises; small or medium-sized local plants produce 95 percent.  The largest production bases are Nanjing and Taiyuan, followed by Zhanjiang, Hengyang, Tongguanshan, Jinan, Handan, and Anda. 

The potash fertilizer industry has developed slowly since its establishment, due to inadequate supplies of its main raw material, sylvite. The verified sylvite deposits are very small and located in remote areas.  The technology needed to separate the ore is also lacking.  Thus, only a few factories produce potash fertilizer.  Qinghai is the largest producer, its annual output accounting for 80 percent of the total output.  Other factories with smaller outputs are located in Jiangsu, Hunan, and Sichuan.  

The production of both nitrogenous and phosphate fertilizer ranks third in the world, but the output of nitrogenous, phosphate, and potash fertilizer is unbalanced.  Phosphate and potash fertilizer production fall far short of meeting the demand.  Also, only 30 percent of nitrogenous fertilizers have a high content, and efficient phosphate fertilizer is very rare (less than 1 percent).  The industry therefore fails to meet the requirements of its consumers.  Supplies of phosphate and sulphur ores are also in short supply as raw material for the phosphate fertilizer industry.  The cost of transporting phosphate ore from the south is 2-2.5 times the cost of the ore itself.  There are many small fertilizer plants that lack raw materials, water, power, and the necessary technical and managerial expertise.  Production costs are high, the quality is low, and plants constantly suffer deficits.  The production of phosphate and potash fertilizers needs to be emphasized, and additional mines need to be built.  High-grade phosphate ore, sulphur, and phosphoric acid should be imported and the production of highly concentrated compound phosphate fertilizer emphasized.  Areas with adequate phosphate and water resources should consolidate to produce high-grade fertilizers.  Survey and exploitation of soluble sylvite resources, such as those at Qinghai Lake, could be accelerated.

Organic Chemical Industry

China is rich in raw materials for the organic chemical industry, particularly the petrochemical industry.  Before 1965, key projects were located in Jilin, Taiyuan, and Lanzhou.  A few bases were also located in Shanghai and Nanjing.  Today, organic chemical plants, especially petrochemical plants [ Fig 5C.3], constitute the main part of China’s chemical industry.  The basic raw material of the coal chemical industry is calcium carbide.  Its production consumes large quantities of power and is scatter all over the country.  Twenty provinces and regions have a considerable output, although individual enterprises are small.  In 1980, Jilin, Hebei, and Jiangsu each produced between 7 and 10 percent of the country’s total output; Liaoning, Beijing, Shanxi, Zhejiang, Shanghai, Fujian, Shandong, Hunan, Henan, Sichuan, Anhui, and Tianjin each produced between 3 and 5 percent; and Guizhou, Jiangxi, Helongjiang, Guangdong, and Gansu each produced 2 percent.  The large producers are concentrated in the north.

The organic chemical industry includes plastics, synthetic rubber, synthetic fibers, and ethylene, the basic raw material of the petrochemical industry [ Fig 5C.4].  The ethylene industry is highly concentrated in its distribution, and Beijing and Shanghai account for most of the country’s total production, followed by Gansu, Liaoning, Jiangsu, Tianjin, and Jilin.  Shanghai’s petroleum benzene and synthetic fiber is ranked first China, ethylene and plastics ranked second, and synthetic rubber ranked third.  The Yanshan General Petrochemical Works in Beijing is China’s largest oil refinery, producing 300,000 tons of ethylene each year.  Beijing’s ethylene, plastics, and synthetic rubber is ranked first, petroleum benzene ranked second, and synthetic fiber ranked third.  The eight refineries of southern Liaoning accounts for one-third of the country’s total capacity.  Renovation and upgrade of its equipment will enable southern Liaoning to increase substantially its output of chemical industrial products.