COMMUNIST CHINA: EXPANSION OF THE IRON AND STEEL INDUSTRY 1966-71

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001700020080-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 29
• Document Creation Date: December 22, 2016
• Document Release Date: March 2, 2010
• Sequence Number: 80
• Publication Date: December 1, 1971
• Content Type: IM

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Cl4/ ~~r1 / 1/ I.7 25X1
Secret
DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
Communist China: Expansion of the Iron and Steel Industry
1966.71
Secret
ER IM 71-227
December 1971
cow N! 58
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
GROUP 1
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
December 1971
INTELLIGENCE MEMORANDUM
COMMUNIST CHINA:
EXPANSION OF THE IRON AND STEEL INDUSTRY
1966-71
Summary
1. Communist China has carried out a vigorous expansion and
upgrading of its iron and steel industry over the past six years. As a result,
production of crude steel in 1971 will be about 20 million metric tons,
compared with about 18 million tons in 1970 and 11 million tons in 1965.
China has moved up ahead of Italy to seventh spot among world steel
producers.
2. Most of China's steel is produced in large centrally controlled
plants. Of these the old plant at An-shan in Northeast China is the largest
and produces nearly one-third of the nation's steel. Plants at Wu-han,
Pao-t'ou, and Shanghai together presently account for another third. Most
of the remainder is produced by other large or medium-sized plants. Small
plants, dependent on local resources, produce less than one-tenth of the
total and serve to meet the demands of local industry for minor steel
products such as angle iron and foundry pig.
3. The geographical center of China's iron and steel industry,
originally in the northeast, has continued to shift inland and toward the
south during the past six years. The principal factors in this shift have
been the discovery of new deposits of raw materials, a renewed effort to
industrialize hinterland areas, and a policy of strategic dispersal of basic
industry.
4. China's reserves of iron ore and coking coal seem adequate to
support considerable further growth of the steel industry. Nonetheless,
Note: This memorandum was ,prepared by the Office of Economic Research
and coordinated within CIA.
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investment in iron ore mining and beneficiation must be boosted to keep
up with the continual commissioning of new blast furnaces. Blast furnace
output already is lagging behind the needs of the steel furnaces, and in
1971 China has imported more than one-half million tons of pig iron to
keep its steel furnaces operating.
5. China is both producing and importing steelmaking equipment.
The domestic machine building industry manufactures ordinary furnaces and
rolling equipment. Imports from Japan and Western Europe are relied on
for advanced equipment such as consumable electrode vacuum furnaces for
making superalloys; cold rolling mills; equipment for plating, annealing,
tempering, and grain-orienting sheet steel; and large air reduction plants
for producing oxygen for basic oxygen furnaces.
6. The output of China's iron and steel industry consists mainly of
basic products such as structural steel, reinforcing rod, rail, wire products,
plate, hot-rolled sheet, and carbon steel tubing. In addition, the industry
turns. out small amounts of high-grade products including stainless sheet,
low-alloy shapes, tinplate, superalloy steel, and high-speed tool steel.
7. In 1970, China imported about 2 million tons of steel, primarily
the special types of flat-rolled products and tubing for which domestic
production is inadequate. As for exports, China shipped small amounts of
common grades of steel to less developed countries, principally those
receiving China's economic assistance.
8. The most serious problems of the steel industry are caused by
the uneven growth of the various stages of production and can be
ameliorated by adjustments in the allocation of investment. Although details
on the Fourth Five-Year Plan (1971-75) have not been released, the plan
clearly must call for continued rapid expansion of capacity for producing
both iron and steel products and steelmaking equipment, as well as
supplementary imports of equipment, technology, and specialty steels from
Japan and Western Europe. A larger volume and assortment of steel products
are essential to China's basic plan for the priority growth of
military-industrial strength.
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Discussion
Recent :growth in Perspective
9. When the Communists came to power in China in 1949, they
immediately set to work restoring and expanding the iron and steel industry
as a first step toward industrializing the mainland economy. As indicated
in the Chart, the orderly development of the industry gave way in 1958-60
Estimated Output of Iron and Steel
Mi11io=Mo;rir Tons
22~
C I -L L -J. L 1949 50 51 52 53 54 55 56
51 2556 12-71 CIA
to the frenzied production campaigns of the Great Leap Forward, when
explosive but unsustainable increases were obtained. In 1960, the final year
of the Leap, China's major plants produced twice as much pig iron and
2-1/2 times as much crude and finished steel as in 1957.(1) Moreover, in
1. Pig iron is produced in blast furnaces and is used as an input to cast iron foundries
and steelmaking furnaces. Crude steel is made from pig iron and scrap and is usually
measured in the ladle before being cast into ingots and billets. Finished steel is steel
that has been rolled, drawn, cast, or extruded into the shape in which it is to be used
in manufacturing and construction.
/ /1A%~
Of .
/ ,tt
CRUDE STEEL
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Large-scale production at a major facility: new blooming mill goes into
operation at the Shih-ching-shan Iron and Steel Company near Peking
(September 1969).
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1960 the hundreds of thousands of primitive "backyard" furnaces built
during the Leap turned out as much pig iron and nearly half as much crude
steel as did the major plants. Much of the "backyard" product was unusable,
however, and the overworking of both manpower and machinery in the
major steel plants and iron mines gravely damaged the capacity of the
industry.
10. The principal factors causing the steep decline in iron and steel
production in 1961 were the accelerated wear of equipment resulting from
overly intensive use and neglected maintenance, the withdrawal of Soviet
technical assistance in mid-1960, and the closing of the ill-conceived
"backyard" furnaces. China's iron and steel industry entered a prolonged
slump; production at the major piints did not regain the 1960 levels until
1966. Another, briefer downturn hit the industry in 1967-68, when the
turmoil of the Cultural Revolution disrupted operations at An-sF do and
other major iron and steel plants for weeks or even months at a time.
11. Recovery from the Cultural Revolution was remarkably fast, and
new record levels of production were achieved in 1969 and again in 1970.
The industry has turned in another strong performance in 1971, the first
year of the Fourth Five-Year Plan. Production in 1971 is expected to register
all-time highs of 22 million tons of pig iron, 20 million tons of crude steel,
and 4.5 million tons of finished steel.(2)
12. The. impressive progress of the past few years has resulted from
a program of:
? expanding capacity at major plants and building new
facilities.
? re-establishing the most promising of the small- scale iron
and steel facilities that use local materials; and
? generally upgrading the industry by installing modern
production equipment, establishing appropriate repair and
maintenance cycles, and improving the quality and
assortment of products.
These developments are discussed below.
2. Compared to estimates for 1970, these figures represent increases of 13%, 11%,
and 12%, respectively. In September 1971 the Chinese claimed that increases in these
three items for the first eight months of 1971 comrared with the first eight months
of 1970 were 22%, 19.6%, and 19.1%, respectively, but official comparisons for part
of a year are apt to be abnormally inflated.
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Program for Increasing Capacity
13. Despite the upheavals of the Cultural Revolution, the Chinese
successfully carried out a substantial and relatively steady expansion of the
iron and steel industry during 1966-70. As shown by the following estimates,
China's annual capacity for producing pig iron rose by more than one-third,
crude steel by roughly one-half, and finished steel by about two-thirds:
Million Metric Tons
Year-End Year-End
1965 1970
Pig iron 16 21.5 - 23
Crude steel 14 20.5 - 22
Finished steel 9 - 10 15 - 17
Additional capacity, amounting to several million tons of pig iron and steel,
has been under construction, and a considerable, if as yet unquantifiable,
amount of this capacity almost certainly has come into operation in 1971.
14. 'Nearly all of the new capacity has been added at large or
medium-sized facilities controlled by the central government. Small-scale
facilities are on the increase, however, and promise to aid materially in
the next few years in Peking's goal of developing small "locally self-reliant"
industrial bases in China's vast hinterland. The locations .of the 10 largest
iron and steel facilities are shown on the Map. Total capacity for producing
pig iron and crude steel at year-end 1970 from the different sized plants
is estima`?d as follows:
Million Metric Tons
Pig Iron
Crude Steel
An-shan
5.5
6
Wu"??han
2.5
2.5
Pao-t'ou
1.5
2
Shanghai plants
2.5
Other medium and large
plants
10.5
- 11.5
6
- 7
Total medium and
large plants
20
- 21
19
- 20
Local plants
1.5
- 2.0
1.5
- 2.0
Total
21.5
- 23.0
20.5
- 22.0
a. Roundid to the nearest 500,000 tone.
b. Less than 250,000 tons.
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Modern technology at a local steel plant: general view of integrated plant.
Modern technology at a local steel plant: electric furnace in background;
charging molten pig iron into top-blown oxygen converter (BOF) in
foreground.
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Major Iron and Steel Plants, 1971
KPig Iron
~jCrude steel
,.Finished steel
New Capacity at Major Facilities
15. An-shan was China's first major steel plant and has long been
its largest. However, little new capacity has been added to An-shan in recent
years, probably because it is fully taxing the supplies of raw materials
available in Northeast China and because Peking wants capacity to be
dispersed. Consequently, as the industry expanded elsewhere, An-shan's
share of total capacity declined steadily from nearly one-half at the end
of 1958 to less than one-third at the end of 1970.
16. Both the Wu-han and the Pao-t'ou Iron and Steel Plants, which
are near large coal and ore reserves, are intended eventually to be giant
complexes like An-shan. Wu-han and Pao-t'ou together received about
one-third of China's investment in ferrous metallurgy during 1966-71. Two
large blast furnaces, each with an annual capacity of 850,000 tons of pig
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Modern technology at a local steel plant: cable cars transport ore from
mine.
QDr'D 17rr
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iron, were built at Wu-han in 1969 and 1970. Wu-han's crude steel capacity
was increased to about 2.5 million tons per year by the addition of a new
500-ton per heat (350,000 ton; per year) open-hearth furnace (OHF) and
a new basic oxygen furnace (BOF)(3) with a 250,000-ton per year capacity.
Moreover, L rolling mill for rails and structural shapes and a hot sheet mill
with a combined capacity of 1.5 million tons were installed.
17. Pao-t'ou has added several steelmaking furnaces, including two
BOFs in 1970. A bot; lev. ck at the blooming mill has been removed by
importing ingot soaking _,its from Japan to augment those imported in the
1950s from the USSR. A large tube mill apparently went into production
after 1965, and a rail/structural rolling mill of Soviet design with an annual
capacity of 1.5 million tons appears to have been completed in late 1968.
Moreover, a new blast furnace which might raise pig iron capacity by
one-third from more than 1.5 million tons to a total of about 2.5 million
tons is under construction.
18. At the Shanghai iron and steel complex, the recent addition of
several BOFs will bring crude steel capacity into betty. , a!>:,;; :with steel
rolling capacity. Nonethel-,ss, Shanghai apparently will remain dependent
on outside sources for pig iron. At the T'ai-Swan Iron and Steel Plant, the
steelmaking and rolling capacity both have been expanded since 1965,
mainly with West European assistance, making this plant one of China's
major producers. The Shih-ching-shan Iron and Steel Plant also has been
expanded substantially in recent years.
19. The discovery of major deposits of iron ore and coal in
southwestern China in the Szechwan-Yunnan area suggests that a major iron
and steel center ' s ' y be developed in that region before long. The pattern
of investment is ;'-ifting the center of gravity of China's iron and steel
industry - inland and southward from the original northeastern location.
Local Plant Programs
20. Since 1966 the government has backed a program for the
production of iron and steel in widely distributed small plants that use
local coal, iron ore, and labor. This is a renewal of the Leap Forward
program for "walking on two legs" - i.e., developing both centrally
controlled large-scale industry and small-scale industry that exploits local
resources and initiative. However, in distinction to the unsuccessful earlier
program, the new program appears to give more careful thought to the
selection of sites where adequate supplies of good-quality ore and coal
justify local industrialization. Furthermore, the amount of labor involved
3. The term basic oxygen furnace (BO;') designates a top-blown oxygen converter.
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County-Run
Iron and Steel
Enterprise
Primitive technology at a local steel plant: blast furnace operations.
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is only a fraction of the Leap Forward endeavor and is not decimating
the agricultural labor force.
21. Recently developed processes for steel production in the
industrialized countries are well adapted to efficient small-scale production
of stt:l and have been adopted by China for some local plants. These
processes employ the BOF and the continuous casting technique for
producing billets. Small BOFs can produce sizable amounts of crude steel
because the process permits a large number of heats per furnace per day.
Continuous casting obviates the need for ingot molds, ingot soaking pits,
and blooming mills. Moreover, the BOF, because it provides molten steel
at frequent intervals, is well suited to serving a continuous casting machine.
About 40 small and medium-size Chinese steel plants now operate BOFs,
and at least one small plant at Yen-t'ai operates a continuous casting
machine on the very small scale of about 10,000 tons of billets per year.
These billets are of small cross section, appropriately sized for rolling into
light structural steel such as angles, bars, and small channels.
22. The local plant program will result in widely distributed facilities
able to produce, in addition to pig iron and steel for castings, a supply
of light rolled products for turning out agricultural and other light
machinery. The program may eventually permit the large steel plants to
concentrate on meeting the requirements of centrally planned industrial
priorities. Furthermore, local production of steel reduces transportation
expenditures and permits the formation of a system of widely dispersed,
self-sufficient machine building centers less vulnerable to war or natural
disaster.
Improvements in Technical Levels
23. Most of the rolling mills established by China since 1965 have
been rail/structural or plate/sheet mills. China has also either built or
imported from Japan and Western Europe several cold strip, rod, and tubing
mills and has thereby widened the available assortment of finished steel
products. Most of the crude steel ..apacity added since 1965 has consisted
of basic oxygen converters, now the highest state of the art in industrialized
countries. The few open-hearth furnaces installed since 1965 are probably
those provided for initially under Soviet aegis. Blast furnace practice likewise
has been improved with the construction of larger, more efficient furnaces
and the injection of powdered coal and increased blowing pressure to raise
furnace temperature and thereby output. Moreover, the extensive use of
sintered or pelletized ore has increased the metal content of the charge
and reduced the amount of coke needed to produce a unit of pig iron.
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Supply Problems
Capital Equipment
24. China's machine building industry is not yet able to provide all
the steelfinishing equipment needed for a modern assortment of steel
products. A particularly serious deficiency in domestic production is the
inability to produce (a) wide continuous hot strip mills (b) equipment for
cold rolling thin gage sheet steel, and (c) equipment for plating, galvanizing,
annealing, tempering, and grain-orienting sheet steel.
25. In 1965, China began a major program to import modern steel
production equipment from non-Communist countries, concentrating on
complex rolling mills, heat treating furnaces, furnaces for making specialty
steels, and air separation plants.(4) During 1965-67, China bought steel
production equipment worth nearly $100 million from Japan and Western
Europe (see Table 2).O However, the shipment and installation of this
equipment were delayed by the Cultural Revolution and by protracted
negotiations and disputes with Western suppliers. Moreover, an effort to
purchase additional rolling mill equipment worth nearly $150 million from
a consortium of West European firms failed in the mid-1960s when their
respective governments refused to grant export licenses.
Raw Materials
26. The expansion of iron ore mining has become one of China's
most serious supply problems. The mining sector has been hard pressed
to keep up with the rapid growth of iron and steel production. The
anticipated commissioning of large blast furnaces now under construction
lends urgency to the need for additional investment in iron ore mining.
27. Early in 1971, the Chinese disclosed the seriousness of the supply
problem in a campaign of articles and broadcasts urging greater efforts to
extract ore and collect scrap. A high priority has been assigned to both
the fuller exploitation of existing iron ore mines and the development of
major new deposits. As a result of the speed-up, ores of lower grade are
arriving at the mills and impairing blast furnace efficiency. The Chinese
press claims a 489o increase in iron ore extraction in 1970 compared with
1969. This figure is no doubt an exaggeration and, moreover, is a reflection
of the lower average iron content of the ore. This 48X, claim hardly squares
with (a) the estimate that in the same period blast furnace production rose
only 16%, and (b) reports of shortages of ore at Wu-han.
4. These plants produce oxygen for steel furnaces and blast furnaces.
5. Tables I through 3 are in the Appendix.
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23. Despite mass drives to collect more scrap and to exploit mineral
resources more quickly and fully, the Chinese have had to import scrap
to satisfy the requirements of the iron and steel industry. China's relatively
young industrial sector does not yet generate substantial amounts of scrap
iron, and consequently more pig iron must be charged into the steel furnaces
than is the practice in steel industries of the developed countries. Imports
of scrap in 1971, probably totaling more than 225,000 tons (exclusive of
ships purchased for demolition), will be about double those in 1970 (see
Table 3).
29. China's iron and steel industry is now sufficiently mature to
rapidly recruit and train large numbers of new workers. Short training
courses and on-the-job experience are adequate for the majority of the new
workers. When a now plant is commissioned, a cadre of trained workers
from an existing plant is dispatched 'o get the new plant started. Women
apparently are assigned to practically all jobs, including such jobs as crane
operators and plant engineers.
30. Wages in steel as a branch of heavy industry are moderately higher
than in light industry. Like all industrial wages, steel wages have at best
only held their own since the start of the Cultural Revolution in 1966.
The government claims that welfare benefits have been rising steadily and
exhorts the workers to produce "more and better" for Mao and the
motherland. So far as is known, wage grumbles have not had an appreciable
impact on worker efficiency in the industry.
Product Assortment
Domestic Production
31. China currently is able to produce a broad assor! ment of finished
steel products. Large-scale production is largely limited to ordinary products
such as structural steel, rails, wire products, seamless and welded tubing,
medium plates, and sheets. China also can produce small quantities of a
variety of special steel products, including silicon steel sheets, cold-rolled
strip and sheet, low-alloy shapes and tubes, stainless steel, tinplate, railway
wheels, superalloys, and high-speed tool steels.
32. China's specialty steel products have come into production in
recent years for the most part, and output is well below domestic
requirements for most items. China produces silicon steel sheet for the heavy
electrical industry, although not the grain-oriented type needed for
low-core-loss transformers. The production of low-alloy steel has been
increasing in recent years and has been useful in improving the strength
and lightness of machines and structures.
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33. Since about 1967, China has developed a capability for producing
small amounts of superalloys for aircraft engines, aerospace vehicles, and
other technologically advanced products. Consumable electrode vacuum
furnaces imported from Japan and electron beam smelting equipment from
East Germany probably have enhanced China's production of these alloys.
However, overall domestic production is not yet large enough to satisfy
all of China's requirements.
Imported Products
34. China's principal steel imports are sheet, plate, tubing, and alloy
steels in the form of sheets, shapes, and tubes. Despite continual efforts
to extend self-reliance, the iron and steel industry remained nearly as
dependent upon imports in the late 1960s as in the late 1950s. Following
a contraction of from over 1.6 million tons in 1958 to less than 200,000
tons in 1962, imports rose steadily to about 2 million tons in 1970 (see
Table 3). During the past decade, China has consistently imported about
15% of its steel requirements.
35. China's iron and steel production contains a high proportion of
pig iron. As mentioned earlier, China needs more pig iron than the world's
other large steel producers because it has so little scrap to charge into the
steel furnaces. Until 1970, China had surplus pig iron to export. Exports
of pig iron reached a peak of about 1.25 million tons in 1964 and declined
steadily thereafter (see Table 3). Now China imports pig iron in substantial
quantities.
Exported Products
36. China has established a small but stable market in the less
developed countries for its sheet, structural steel, and other basic steel mill
products. These exports, which have amounted to between 200,000 and
300,000 tons annually since the mid-1950s, go to Albania, Malaysia,
Singapore, Egypt, Pakistan, and other Asian and African countries.
Prospects
Capacity and Output
37. The need to continue to expand and improve the iron and steel
industry in the 1970s was underscored recently by a group in the Chinese
Ministry of the Metallurgical Industry. Writing in the People's Daily of
12 May 1971,(6) these spokesmen denounced an alleged overaliucation of
6. As reported in China Mainland Press, SCMP 71.21, May 1971, p. 64-75.
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investment to the electronics industry in the past and reaffirmed the Maoist
rule of "steel as the key link" in fulfilling China's goal of broad-based
industrialization.(7) 1-leavy emphasis was placed on developing a better
balance between iron ore mining and steel processing, a greater variety of
finished steel products, and a more "strategic disposition" of iron and steel
facilities. The curious juxtaposition of steel and electronics may reflect a
controversy at top levels over how much of China's growing industrial
resources should go, to (a) an immediate acceleration of the production
of complex military equipment at the expense of basic economic growth,
or (b) an emphasis on broadening and deepening of the basic industrial
investment, perhaps coupled with a new push toward agricultural
mechanization.
38. The need for iron and steel will grow rapidly during the remainder
of the Fourth Five-Year Plan (1971-75). Large-scale industrial and defense
construction projects are in progress throughout the country, both in
established industrial areas and in new remote locations. The machine
building industries are expanding output of a variety of machine tools,
trucks, railroad equipment, and armaments. A substantial expansion of the
transportation network is under way. Sc much of this effort is in remote
frontier areas and/or in difficult terrain, that the demand for steel for rails,
bridges, and heavy construction equipment is especially strong. Moreover,
agriculture's mushrooming requirements for iro1i and steel are continually
reiterated in the Chinese press.
39. China's iron and steel industry can produce most of the steel
products needed by these industries - rails, structurals, castings, plates and
sheets, tubing, and some alloys. Ordinary carbon steel suffices in most
applications. However, stainless siieet is required in jet engines and chemical
equipment; electrical generators and transformers perform best when built
with cold-rolled, grain-oriented silicon sheet; precision ball bearing races are
made from special tubing; and high-strength steels are needed in vehicles
and many types of conventional and advanced weapons. China has a small
but growing capacity to produce special steels; for some time to come it
will remain heavily dependent on foreign supplies. Similarly, the Chinese
will produce domestically most of the equipment for making ordinary steel
but will continue to import from Japan and Western Europe much of the
more complex metallurgical equipment for making special steels, as well
as the modern high-speed sheet and strip mills.
7. Similar criticism was voiced by the "revolutionary mass criticism writing group"
of the electronics industry itself (presumably the Fourth Ministry of Machine Building)
in the 12 August 1971 issue of the People's Daily, as reported in FBIS Daily Report:
People's Republic of China, 18 August 1971, p. B-8-14.
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40. Although the shortage of pig iron is worsening in 1971, the
completion of several large blast furnaces and greater investment in iron
ore mining will alleviate this problem. In any case, China appears committed
to the expenditure of foreign exchange for necessary imports of pig iron.
The many steelmaking furnaces and rolling mills already completed and
others that should be finished in late 1971 or 1972 will permit a substantial
increase in the output of crude and finished steel. An additional potential
for expansion lies in improving the operating efficiency of furnaces and
mills.
41. The local plants present only minor opportunities for expansion
of steel output. It is reasonable to assume that only ,ucalities with adequate
coal and iron ore resources will be allowed to engage in iron and steel
production and that further opportunity to expand the local program is
slight. Local plants presently produce several times as much pig iron as
finished steel, and their continued development is likely to stress the
installation of small rolling mills. These will do little to solve the steel supply
problems of China's major machine building plants. On the other hand,
the local plants are significant suppliers of pig iron to the major steel plants.
42. From 1957 through 1970, output of crude steel has more than
tripled and the average annual rate of growth has been 10%. Although details
of the new Fourth Five-Year Plan have not been released, the continued
rapid growth in the capacity and output of the iron and steel industry
and its equipment suppliers is clearly part of the plan. To judge from already
known investment activities, the target for 1975 could lie in the range of
25 million to 30 million tons.
International Ranking
43. Prospects for China to move up in rank among the world's major
steel producers in the 1970s look good. In 1970 the ten leading steel
producing countries ranked as follows in crude steel output:
Million
Metric
Tons
Million
Metric
Tons
United
States
119
France
24
USSR
116
China
18
Japan
93
Italy
17
West Germany 45
Poland
12
United Kingdom 28
Czechoslovakia
11
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Thus, China has already passed Italy in crude steel production and is rapidly
gaining on France and the United Kingdom.
44. Although China is the equal of Italy in annual tonnage of crude
steel, they cannot be compared in product niix and production efficiency.
Italy's machine building industries must compete for business in the
sophisticated markets of the industrialized countries and must operate at
the highest state of the art. Its machine building output is heavily weighted
by such products as consumer durables, motor ve!iicles, office machinery,
modern machine tools, chemical and refining equipment, and many kinds
of precision equipment. These products incorporate large amounts of
cold-rolled sheet and strip and alloy and stainless sheet, plate, and bar stock.
China's steel assortment is very short in sheet and strip of all kinds and
is heavily weighted in plate and structural shapes. In market terms, Italy's
steel product is probably more valuable than China's. However, China's
assortment suits most of China's basic needs.
Use of Labor
45. In few other countries could steel producers use labor as lavishly
as China does.tst The rationale for the local plant program requires labor
to be a very cheap and plentiful input compared with capital. The
labor-intensive methods of mining iron ore and making iron and steel are
clearly apparent in the photographs. The cost to the Chinese economy of
such work methods is probably slight and brings about a redu.;tion in the
hidden unemployment of the royal population. At the same time that
China's steel industry makes optimum use of labor-intensive methods on
a local level, it is incorporating new technology into the equipment of both
its major plants and its small local plants. It can be expected that China
will employ the BOF and the continuous casting process in the further
expansion of the steel industry at the same time that many ancillary tasks
will remain unmechanized. Moreover, China can be expected to expand its
assortment of steel products to alleviate its dependence on imports of'
strategic specialty steels.
8. India with a surplus population and large amounts of both visible and hidden
unemployment would be an exception to this statement.
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Statistical Tables
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Communist China: Estimated Output of Pig Iron,
Crude Steel, and Finished Steel
Million Metric Tons
Year
Pig
Iron
Crude
Steel
Finished
Steel
1952
1.9
-
1.35
1.0
1957
7.0
5.:,5
4.0
1958
9.5 a/
8.0 a/
6.0 a/
1959
10.9 a/
10.0 a/
7.5 a/
1960
14.1 a/
13.0 a/
10.0 a/
1961
9.0
8.0
6.0
1962
9.0
8.0
6.0
1963
10.0
9.0
7.0
1964
11.0
10.0
7.5
1965
12.5
11.0
8.0
1966
14.5
13.0
10.0
1967
12.0
10.0
7.5
1968
14.0
11.5
9.0
1969
17.0
15.0
11.0
1970
19.5
18.0
13.0
1971
22.0
20.0
14.5
a. Output of major plants only. Does not in-
etude an unknown amount of product of the so-
called "backyard furnaces" which was of low
quality, and, for the most part, usable only by
primitive local industry.
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Communist China: Major Imports of Machinery and Equipment
for the Iron and Steel Industry
1964-70
Description
Date of
Contract
Supplying
Country
Value
(Million US $)
Ore Preparation Equipment
Cooling equipment for an iron
ore sintering plant
Cl)
Iron ore pelletizing plant
Steelmaking Equipment
rj
1
Three electric vacuum furnaces
Possibly for processing steel alloys.
H
Vacuum arc furnace
1965
Sweden
1.0
5-ton capacity. Delivered in 1966. Used to produce
high-purity alloy steels and refractory metals.
Two basic oxygen furnaces
1965
Austria
13.4
Capacity of 600,000 tons. Delivered to T'ai-yuan.
Vacuum arc furnace
1966
Japan
0.6
4-1/2-ton capacity. Delivered in 1968.
Air Separation Plants
Air separation plant
1964
Japan
1.7
Delivered to Shih-ching-shan in 1965 or 1966.
Air separation plant
1965
West Germany
3.3
Delivered to T'ai-yuan for the Austrian BOFs.
Air separation plant
1967
Japan
0.5
Delivered to 1969-70.
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Table 2
Communist China: Major Imports of Machinery and Equipment
for the Iron and Steel Industry
1964-70
(Continued)
Description
Date of
Contract
Supplying
Country
Value
(Million US $)
Two air separation plants
1967
Japan
N.A.
Four air separation plants
1967
Japan
2.2
all
Air separation plant
1969
Japan
N.A.
Air separation plant
1970
France
2
Air separation
lant
To be supplied by the Japanese affiliate of a French
company.
M,
0
p
1970
West Germany
N.A.
Contract apparently signed in late 1970
Steelshaping Equipment
.
Bar and wire rod mill
Seamless tube expanding mill
1965
Italy
3.6
Capacity of 68,000 tons.
Capacity of 50,000 tons. Delivered to Shih-
Cold-strip steel r
lli
ching-shan.
o
ng mill
1965
West Germany
11.5
Capacity of 80,000 to 100,000 tons. Delivered to
'
Two 20-cluster she
t
T
ai-yuan.
e
rolling mills
1965
West Germany
2.5
Delivered in 1966-68.
20-cluster temper mill
1965
West Germany
16.0
Delivered to T'ai-yuan in 1966-68
Steel degassing plant
1965
West Germany
0.3
.
Delivered in 1966.
Rod and tube extrusion press
1966
West Germany
3.2
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Communist China: Major Imports of Machinery and Equipment
for the Iron and Steel Industry
1964-70
(Continued)
Description
Date of
Contract
Supplying
Country
Value
(Million US S)
Comments
Tube mill
1966
West Germany
6.0
For rolling stainless steel.
Steel extrusion press
1966
West Germany
4.8
Steel extrusion press
1966
Japan
N.A.
Vacuum annealing furnace
1966
Japan
0.3
Foc treatment of stainless steel.
Soaking pit
1966
Japan
N.A.
Delivered to Pao-t'ou.
Heat treating furnace
1967
Japan
1.2
For use in rolling stainless steel.
Two vacuum annealing furnaces
1968
Japan
0.5
Possibly delivered in 1969.
Seamless steel pipe plant
1970
Japan
2.5
Vacuum annealing furnace
1970
Japan
N.A.
Reportedly the "world's longest."
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Communist China: Trade in Finished Steel,
Pig Iron, and Scrap
Finished Steel
Year
Imports
1955
870
1956
756
1957
529
1958
1,645
1959
732
1960
778
1961
231
1962
186
1963
232
1964
371
1965
722
1966
1,289
1967
1,605
1968
1,671
1969
1,7".3
1970 b/
2,000
Thousand Metric Tons
Pig Iron
Scrap a/
Exports Imports Imports
646 0 -
600 0 -
203 0 -
175 0 -
169 0 -
221 0 -
228 0 -
176 0 -
292 0 -
1,261 0 -
597 0 2
539 0 29
231 0 341
47 1 74
4 4 128
N.A. 32 114
1971 N.A. N.A. 535 c/ 226 c/
a. Excludes ships imported for demolition. ReZa-
tively smaZZ amounts of scrap were imported from
1955 to 1964.
b. Preliminary.
c. Minimum total of siaipments and contracts.
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