LIGHT INDUSTRY IN COMMUNIST CHINA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01141A000700020002-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 94
• Document Creation Date: December 23, 2016
• Document Release Date: June 24, 2013
• Sequence Number: 2
• Publication Date: September 5, 1956
• Content Type: REPORT

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ECONOMIC INTELLIGENCE REPORT
N?
LIGHT INDUSTRY IN COMMUNIST CHINA
CIA/RR 76
5 September 1956
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
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This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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ECONOMIC INTELLIGENCE REPORT-
LIGHT INDUSTRY IN COMMUNIST CHINA-
CIA/RR 76
(ORR Project 38.909),
Office of Research and Reports
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FOREWORD
This report describes the conditions and prospects of light industry.
in Communist China. It deals with an important sector of an economy in
which the process of industrialization is being telescoped into a few
years.- Among the topics discussed are the change in ownership and con-
trol in light industry., the growth in production., and the development
of productive capacity in new industrial centers.,
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Summary . . . . . . . . ` . .. . . .. . . .. . . . . .
Page
I. Survey . . . . . . . .
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CONTENTS
A. Economic Importance-of Light Industry . . . . . . . 3
B. Changes Since 1949. . . . . . . . . . . . 10
C. Foreign Trade . . . . 15
D. Research .. . . . . . . . . . . . . . . . 16
E. Consumer Welfare . . . . . . . 17
II. Textile Industry . . . . . . . . . . . . . . . 19
A. General . . . . . ... . . . . . . 19
1. Expansion Under the First Five Year Plan . . 19
2. Foreign Trade 20
3. -Reliance on Foreign Countries for Textile Machin-
ery . . . . . . . . . . . . . 22
B. Cotton Textiles . . . . . . . . . . . 24
1. Importance . . . . . . . . . . . '24
2. Changes Under Communist Control . . . . . - . 24
3. Value Added 26
4. Supply.of Raw Cotton . . . . . . ..... . . . . 26
5. Problem of Quality . . . . ... 27
6. Inputs . . . . . . . . . . . . . . 28
C. Silk Textiles . . . . .. . . . . ... 36
D . Woolen Textiles . . . . . . ..... . . . . , . . . . 39
.E. Linen Textiles . . . . . . . . . . . . . . . 42.
F. Rayon Textiles . . . . . . . . . . . . . 43
G . Gunny Sacks . . . . . . . . . . . . . . . . . - 43
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III. Food-Processing Industry . . . . . . . . . . . . 144
A. General . . . . . . . . . . . . . . . . 44
B. Flour Milling . . . . . . . . . .. t .'. ... 4+6
C. Tobacco Manufacturing . ... . . . . . . . . . 4+8
D. Vegetable Oil Refining . . . . . . . . 50
E. Sugar Refining . . . . . . ... . . . . . . . . 52
F. Tea Processing . . . . . . 56
G. Salt Refining . . . . . . . . . . . . . . 58
IV . Paper Industry . . . . . . . . . . . . 59
V.' Rubber Products Industry . . . . . . . ... . . . . . 63
VI. Pharmaceutical Industry . . . . . . . .. . . . . . 69'
VII. Other.Branches of Light Industry . . . . . . . . . 72
B.
C.
D.
E.
Soap
Pottery and Porcelain
Medical Equipment . . . . . . . . . . . . .
Fountain Pens- . . . . . . . . . . . . .. . .
VIII. Capabilities, Vulnerabilities, and Intentions . . . .
A. Capabilities . ... . . . . . . . . . .
B. Vulnerabilities . . . . . . . . . . . .
C. Intentions . . . . . . . . . . . . . . . . - .
Appendixes
Appendix A. Methodology . . .-. . . . . . .-. .
72
72
74
75
75
75
75
76
78
79
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Tables
Page.
1. Gross Value of, Agricultural and Industrial Production in Com-
munist China, 1949, 1952-54, and 1957 (Plan) ? ? ? ? ? ? 7
2. Gross Value of Production of Producer and Consumer Goods
in Communist China, 1949,1552-54, and 1957 (Plan)-. . . 8
3. Indexes of Production of Light Industry in Communist China,
Pre-1949, 1949-55, and.1957 (Plan) . . . . . . . . 12
4. Estimated Number of.'Spindles and Power Looms in.Place'and Out=
put of Yarn and Fabrics by the Cotton'Textile Industry in ..
China, 1930-38,_1946-55, and 1956-57 (Plan) . . . . . . . . 30
5.. Estimated Number of-Cotton Spindles in China,.by Area,.1937,
1949, 1952, 1954, and 1957 (Plan) . . . . . . . . . .
6. Estimated Percentage Distribution of Cotton Spindles in Chin'a,'t
by Area, 1937, 1949- 1952, 1954, and 1957 (Plan) 33
7. Major Cotton Textile Construction Projects Under the First.
Five Year Plan of Communist China, 1953-57 . . . . . . . . . 34
8. Estimated Distribution of Spindles Added by.Major Cotton Tex-
tile Construction Projects Under the First Five Year Plan
of Communist China,-1953-57 . . . . . 35
9. Estimated Output of Siilk Fabrics in China, 1936, 1949-55,
and 1957 (Plan)38,
10. Estimated Output of Woolen Yarn and Woolen Fabrics in China,
1936, 1949-55, and-1957 (Plan) :`. 40
11. Estimated Output of Flour from Modern Mills in Communist China,
by Area, 1.954 . . . . . . . . . ... . . . . . 47,
12. E(Output of Flour in China, 1931-37, ? 1946-55: and
1957 (Plan) 48
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13. Estimated Output of Cigarettes in China, 1947, 1949-55, and
1957 (Plan)e . . . . . . . . . ... . . . . . . . . . 49
14. 'Estimated Distribution of the Output of"Vegetable Oils'in Com-
munist China, by Area, 1954 .- . . . . . . . . . . . . . . 52
15. Location and Estimated Productive Capacity of the Ten Large.,
Modern Sugar Refineries in Communist China,.1953 53
16. Estimated Output of Sugar in China,. 1937, 1949-55, and
1957 (Plan) . . . . . . . . .- . . . . . . . . . . . . .
17. Estimated Distribution of the. Output of Sugar in Communist
China, by Province, 1953 ? .
18. Estimated Distribution of the Output of Tea in.Communist China,
by Area, 1952 . . . . . . . . . . . . . . . ... . . .
57
19. Estimated Output of Tea in.China, 1932, 1947, 1950-55, and 1957
(Plan) . . . . . . . . . . . . . . . . . . . . 58
20. Estimated Distribution of Production of Paper by Modern In-
dustry in Communist China, by Area, 1952 . . . . . . . 61
21. Estimated Output of Machine-Made Paper in China, 1943-55,
and 1957 (Plan) . . . . . . . . . . . . . . . . . . . . .63
22. Estimated Output of Motor Vehicle Tires in China.,- by City and
by Factory, 1948-55 . . . . . . . . . . . . . . . . . .
23. Estimated Output of Rubber Footwear in Communist China,
1949-55 and 1957 (Plan) . . . . . . . . . . . . . . . . . 69
24. Estimated Output of Matches in China, 1930-35 Average, 1949-55,
and 1957 (Plan) . . . . . . . . . .
73
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CIA/RR 76 S-E-C-R-E-T
(CRR Project 38.909)
LIGHT INDUSTRY IN COMMUNIST CHINA*
Summary
Before World War II, production of light industry -- textiles, food-
stuffs,.paper,and pulp, rubber products, pharmaceuticals, and the like
constituted 80 percent of the value added in factory production in China.
Under the, Chinese Communist regime, the absolute level of production by
light industry has been rising markedly; but the development of heavy
industry has overshadowed every other'economic objective, and as of early
1956 the proportion of production of light industry to total industrial
production, in terms of value added, had fallen to 4+5 percent. Produc-
tion of light industry proper is augmented by about 75 percent by produc-
tion from individual handicraft enterprises and from peasants, each of
these groups contributing approximately equal proportions. This nonfac-
tory production is declining in relative importance as smaller produc-
tive units are gradually being combined with larger units or are being
eliminated by denial of raw materials.
Since the establishment of the Chinese Communist government in 1949,
private owners and managers in light industry have been reduced system-
atically, first to a position of subservience, then to a position of
impotence. By the beginning of 1956 the formal conversion of private
enterprises to joint.public-private enterprises had been almost com-
pleted. Within the joint enterprises the reduction of the remaining
powers of the former owners and managers will proceed systematically.
The socialization of light industry generally has been carried on
without interruption to production through-the use of formal legal
devices and "voluntary" methods.
In 1950, 1951, and 1952, production of Chinese Communist light
industry was brought back to the prewar level by the restoration and
modernization of the existing capital plant. Because the level of
production in 19+9 was less than two-thirds of the prewar level, high
percentage gains were possible -- 28 percent in 1950, 25 percent in
1951, and 35 percent in 1952.
The estimates and conclusions contained in this report represent
the best judgment of ORR as of 1 June 1956.
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In 1953 and 1954, the first 2 years of the Chinese Communist First
Five Year Plan (1953-57), production of light industry was raised ap
.preciably through the construction of new plants and the imposition of
ever-increasing. quotas for production. The percentage increases in
1953 and 1954 were 14 and 16 percent, respectively. A small decrease
of, 3 percent was experienced in 1955 because.the,disastrous floods of
1954 had reduced supplies of the agricultural raw materials used by
light industry. During 1955, however, expansion of productive capacity
continued at a high level. In April 1956 the government ministers in,
charge of light industry announced that production of. all the important
products of light industry in 1956 would either reach or surpass the
level originally planned for 1957. Their optimism .is explained by the
excellent crops of 1955 and the continued successful expansion of the
capital plant.
If the goals planned for light industry in Communist China in 1957
are to be reached, there must be an annual increase of 12 percent in
production in 1956 and in 1957. The capital plant and labor available
are adequate for the achievement of the Plan goals. The main problem
is the availability of raw materials -- weather conditions can greatly
affect . crop yields, and agricultural production may be lowered during
the present intensive campaign for collectivization of farms in China.
The rates of increase of production given above apply only to the
production of light industry proper: that is, to the production from
modern and handicraft factories. Production from individual and peasant
handicraft operations is declining or is at best increasing less rapidly
than production of light industry proper. The rates of increase in light-
industry therefore overstate the over-all increases in production of the
products of light industry. Fragmentary -information indicates that the
over-all rates of increase are about two-thirds of the rates given above
for light industry proper.
Shanghai has been, and still.is, by far the most important center
of light industry in'Communist China, accounting for from 40 to 70
percent of the production of most light industry products. Light indus-
try in China was originally developed by Western capital and was largely
confined to the treaty ports of-the east coast. The fixed policy of the
Communist government is the location of new light industry plants in the
interior,-nearer the source of raw materials and nearer the consumer. The
productive capacity that existed in Shanghai in.1949 has'been restored, but
practically no new capacity is being located there: Some'plants have been
moved from Shanghai to the interior, but their number is small compared with
the total number of plants in Shanghai.
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The deterioration in the quality of production of light industry is
a serious problem in Communist China. The efforts to obtain the greatest
possible yield from raw materials, the constant.striving to increase pro-
duction per worker, and the absence of effective consumer policing of
quality have all contributed to a lowering of quality. Examples of low-
grade products are shoddy textiles, blemished paper, impure foods, and
poorly constructed rubber products. In fact, a list of low-grade prod-
ucts-cited bykgovernment officials and by people recently come from
China would include all the products of light industry. The problem of
the quality of export goods is unusually serious because China must
meet the standards of foreign'competitors if it is to obtain the for-
eign exchange it prize's so highly.
The increase in production of light industry is designed to further
the industrialization of Communist China, not to raise levels of living.
The government has established a rationing system that leaves only a
bare minimum of goods in. the hands of consumers. The requirements of
foreign trade have an announced priority over domestic needs. China is
exporting increasing amounts of the products,of light industry in order
to obtain additional machinery and industrial raw materials from abroad.
Only 10 percent of its imports are consumer goods, compared with 50 per-
cent before 19+9
The use of products of light industry to obtain producer goods from
abroad is only one reason for the failure of Chinese Communist living
standards to rise significantly in spite of the large increase in pro-
duction by light industry. Other reasons are the relative decline in
production from the nonfactory sector of the economy, the annual in-
crease-in population of 1.5 percent, and the deterioration in the
.quality of products.
I. Survey.
A. Economic Importance of Light Industry.
Modern industry in-China began in the last-decade of the
19th century, when cotton spinning mills were first. established in
'Shanghai. J* In 1913 there was a total of 2115 factories in China;
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in 1920, 673; and in 1930, 1,975. / Light industry was the dominant
form of.Chinese industry until World War II and accounted for 80 per-
cent of the value added in factory production in 1933. J In addition
to cotton mills, light industry establishments included silk mills,
woolen mills, flour mills, sugar refineries, vegetable oil refineries,
tobacco factories, paper mills, rubber factories, and match factories.*
The textile industry was the largest sector of industry in
China and accounted for 40 percent of the value added by factory pro-
duction in 1933. -Almost all of the modern industrial enterprise s$
were concentrated in Shanghai, Tsingtao, Tientsin, Hankow, Dairen,
and Mukden. Shanghai was the largest of these industrial centers,
having more than 40 percent of all Chinese factories, including most
of the large ones.., Industrialization was; confined to these few
large cities in the eastern coastal area because political concessions
and access to international sea routes made business investment attrac-
tive there.. In these cities, industrialization caused marked changes
in a pattern of economic life that had remained undisturbed for cen-
turies. Among these changes were the appearance of modern forms of
business organization and modern financial procedures and the develop-
ment of a proletariat. There were 1 million industrial workers in the
early 1930's, J and a more complete count in 1937 showed 2 million
industrial workers. J Most of the land in China and the'majority of
people, however, remained unaffected by the new economic forces.
From the 'early 1930's to the Communist victory in 1949, the
Chinese economy suffered from a series-of civil and international. wars
which caused widespread destruction and the disorganization of indus-
try and commerce. Among the important developments of these years,
aside from actual physical destruction, were the disruption of the-
traditional international economic relations of China, the partial
industrialization of Manchuria by the Japanese, and the attempts of
the Nationalist government to remove industrial equipment from the
coastal cities to the interior.
The dominance of light industry inthe prewar Chinese economy
was to be expected in a nation in which the industrial revolution had
begun late and had failed to reshape the basic structure of economic
* By the early 1930's, heavy industry had developed on a small scale
in such fields as chemicals, machine building, shipbuilding, metalware,
and electrical equipment.
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life. Another explanation for the dominance of light industry is that
the agricultural raw materials needed for light industry were generally
.available in China, whereas the mineral raw materials needed for heavy
industry would not be available until industrialization was firmly
established in the economy. Finally, as long as industry remained on
a small scale and was dominated by foreign firms, there would be only
a small market for the products of heavy industry.
The cotton textile industry, which was the first to develop
in China, has remained the most important sector of light industry.
In addition to cotton textiles and other branches of the textile indus-
try, light industry in China includes the food-processing, paper, rubber,
pharmaceutical, match, soap, pottery, medical 'equipment, and fountain
pen industries. Other sectors of light industry, which are not dis-
cussed in this report, include the printing, enamelware, woodworking,
leather, fur, and cosmetics industries. The various branches of the
textile industry of Communist China are under the Ministry of the
Textile Industry, and the other sectors of light industry are under
the Ministry of Light Industry.* The dependence of light industry
upon agricultural raw materials, in contrast to the dependence'of heavy
industry upon mineral raw materials, has been mentioned. Light indus-
try is-characterized also by the use of simple rather than complex,
methods of production, by the use of light rather than'heavy capital
equipment, by the employment of large numbers of female workers, and
by the. production of. consumer rather than capital goods. These
characteristics of light industry help to explain why a large part of
its production has been, and still is, produced outside the modern
factory system -- that is, in small establishments or on.farms, by
methods based on ancient crafts and skills, employing primitive types
of tools and machinery.
* A small amount of food processing is under the Ministry of Food.
The pottery industry is under the Ministry of Local Industry, which
also has jurisdiction over numerous small plants producing a wide
variety of products. that ordinarily would fall under'the Ministry of
the Textile Industry or the Ministry of Light Industry.. Since the
completion of this report the government of Communist China has an-
nounced (on 12 May 1956) a 'reorganization of economic ministries,
including some which control light industry. A new Ministry of Food
Industry has been established to control the food-processing industries,
jurisdiction over which was previously. shared by the Ministry of Light
Industry (now reduced in size), the Ministry of Local Industry (now
abolished), and, to a lesser extent, the Ministry of Food.
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Of the total economic activity of Communist China in 1956,
about 15 percent is in industry. For-the purposes of economic
planning and.economic reporting, industry (including light indus
try) is divided into.(1),modern industry, that is, industry using
the power-driven machinery of the industrial revolution, and (2)
factory handicraft industry, which is composed of factories and
workshops in which operations are carried out by hand,!with or with-,
out the assistance of simple machinery and equipment or motive power.
This breakdown of industry does not include individual handicraft
enterprises, in which the owner or his immediate family, assisted
by no more than three hired workers or apprentices, constitutes the
,labor force. Nor'does this breakdown of industry include peasant
handicraft production, by which the peasant supplements his income
in the off-season. Table 1* shows the gross value** of production
from five important agricultural and industrial sectors of the
economy of Communist China but does not cover services, transporta-
tion, government, or trade..
If the gross value of production is taken as the measure,
55 percent of Chinese Communist. industrial production is accounted
for,by consumer goods (see Table 2***). If value is taken as the
measure, however, the figure would be no higher than 4+5 percent.
Although this latter figure for consumer goods may be used'as an
estimate of the place of'light industry in the total industrial
production of Communist China, some producer goods, such as indus-
trial papers, are produced by light industry, and some consumer
goods, such as electric fans, are produced by heavy industry.
In the food-processing industry-of Communist China, where
the value'added in the processing stage is only a small part of
the sales price, the gross value figure overstates the importance
of the-industry'to the economy. High taxes on luxury products of
light industry., such as cigarettes and wine, would lead to over-
stating the importance of light industry. On the other hand, the
prices of some heavy industry products are high compared with prices
in Western countries.and in the USSR, ?/ and this factor would tend
Table 1 follows on p. 7.
Gross value-in Table 1 is given in Chinese Communist yuan.
The conversion. factor for yuan used throughout this report is:
2.367 yuan equal US $1.
Table 2.follows.on p. 8:
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Gross Value of Agricultural and, Industrial- Production in Communist China
1949, 1952-54, and 1957 (Plan)
Value
Percent of `total Agricultural
100 Million Yuan)
and Industrial. Production
? Sector of the Economy
19+9
1952
1953
.195+ '
1957 (Plan)
1949 1952
1953
122L 1957 (Plan)
Modern industry
79.1
220.5
288.1-
339.9
450.0
.17.0 26.7
30.4
32.8 36.0
Factory handicraft industry
28.7
49.6
- 67.7
75.3
85.6
6.2 6.o-
7.2
7.3 6.9
Individual handicraft enterprises J
32.2
70.7
86.3
96.1
85.8
'6.9 8.5
9.1
9.3 6.9
Handicraft. production cooperatives
0.15
2.5
4.9
8.5
31.9
0.03 0.3
0.5
'0.8 - 2.5
Agriculture and subsidiary production
326..0
483.9
499.1
515.6
596.6
69.9 58.5
52.8
49.8 47.7
Total
466..1
827.2
946.1
1,035.4
1,249.9
loo.o - loo.o
100:0
100.0 100.0
a.. For methodology, see Appendix A, p. 79, below. Because of rounding, figures may not add to totals.
b. All figures are expressed in 1952 prices and include commodity taxes.
c. Not including enterprises in handicraft production cooperatives.
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Gross Value of Production of Producer and Consumer Goods in Communist China
1949, 1952-54, and.1957,(Plan)
Gross Value
(100 Million Yuan)
Percent of Total Production
Item
1949
1952 1953
1954
1957 (Plan)
1949
1952
1953
1954
1957 (Plan)
Production of consumer goods
by modern industry /
48.1
113.2 141.4
164.1
207.0
Production of consumer goods
by factory handicraft industry
28.7
49.6 67.7
75.3
85.6
Total production of
by industry
76.8
162..8. 209.1
239.3
292.6
71.2
60.3
58.8
57.7
54.6
Total production of. producer goods
by industry
31.0
107.3 146.7
243.0
28.8
39.7
41.2
42.3
45.4
Total industrial production
107.8
270.1 53 5.8
415.1
535.6
100.0
100.0
100..0
100.0
100.0
a. For methodology, see Appendix A, p. 79, below. Because of rounding, figures may not add to totals.
b. All figures are expressed in 1952 prices and include commodity taxes.
c. - In dividing industrial production of consumer goods between modern industry and factory handicraft industry, it is
assumed that all industrial production of producer.goods comes from modern industry.
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to overstate the importance of heavy industry, assuming that the price
relationships in an industrialized China should, and ultimately will,
approximate those in other industrialized nations.
The various products of light industry in Communist China con-
tributed to value added in 1952 as follows: textiles, 42 percent;
processed foods and tobacco, 25 percent; paper and printing, 10 per
cent; paints, dyes, pharmaceutical products, and other chemical products
included in light industry, 7 percent; rubber products, 5 percent; and
all other products, including matches, ceramics, leather products, and
woodworking products, 11 percent. Production of individual handicraft
enterprises and handicraft production cooperatives amounts to almost
one-half of the total production of light industry (see Table 1* and
Table 2**). One-fifth to one-third of production of individual handi-
craft enterprises and handicraft production cooperatives is made up
.of simple producer goods such as farm tools and construction materials,
with the proportion of producer goods probably rising. Thus produc-
tion of consumer goods by individual handicraft enterprises and handi-
craft production cooperatives is equal in. amount to 35 to 40 percent
,of production of consumer goods by light industry. Food processing is
relatively a much more important part of the economic activity of indi-
vidual handicraft. enterprises and handicraft production cooperatives
than of light industry proper. The more the,state controls-the economy,
.the more likely that enterprises now classed as individual handicraft
enterprises will be included in factory handicraft industry because of
a consolidation and/or renovation of productive facilities.
A further complication in any assessment of production of con-
sumergoods in Communist China is the importance of peasant handicraft
production. Because 80 percent or more of the households in China are
still farm' households, any large change in the amount of peasant handi-
craft production would mean important changes in the availability of
consumer goods. Production of consumer goods from this source likewise
is equal in amount to.35 to 40 percent of production of consumer goods
by light industry, and this figure does not include any home processing
of 'basic. food crops on farms.
* P. 7, above.
** P. 8, above.
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The place of light:-industry in Communist China has been described
in relation to that of heavy: industry and in relation to that of the other
sectors of the economy in which important quantities of, consumer goods are.
produced -- that is, individual handicraft enterprises, handicraft produc-
tion cooperatives, and peasant handicrafts. This report considers only
light industry proper,.but the importance of light industry must be gauged
in part by the changes in-its relationships with the other sectors of the
Chinese, economy that produce consumer goods.-
B. Changes Since 1949.
The most important change in light industry in Communist China
since 1949 has been the complete change in ownership and control. Orig-
inally, Chinese industrialization was financed largely by.Western capital --
mostly UK, US, and French, with increasing Japanese. and Chinese participa-
tion in the later stages., Foreign control was ended in 1949, when the Com-
munists seized power. Since 1949, not only have many new state-owned fac-
tories been constructed, but also there has been a steady transformation
of private enterprises in light industry to either public or public-private
enterprises. The major stages.of transformation are as follows: .(1) an
increase. in the percentage of governmental orders.in the total business
of an enterprise; (2) the.monopolization..by the government of sources of
raw materials , and. of.outlets for.the final product and a subsequent
narrowing of manufacturing margins; (3) an increase in indebtedness to
the government and "voluntary" application to the government for public
participation in the enterprise.; (4) a formal conversion to public-private
status; (5) a continuing increase in governmental control over decisions
regarding such matters as investment, wage rates,, and production quotas;
and (6) an ultimate transformation to a public enterprise. The observance
of formal legal procedures and the employment of."voluntary" means save
face and limit.disruption of production.
In 1955, under pressure from Mao, the transformation of private
enterprises in light industry to public-private enterprises was almost
completed. By the start of 1956, less than 1 percent of the cotton
spindles and power looms in Communist China were still,privately con-
trolled, and only 10 percent of the,woolen textile industry remained
to be converted. J In Shanghai, all private textile mills, flour and
rice mills, paper mills, and tobacco factories were under joint-.public-
private operation. 10 .
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The second'change in light industry in Communist China since
1949 has been the restoration and expansion,of production. By 1951-52,
production in the various sectors of light industry had been restored
to the levels which had been reached before the long period of foreign
and civil wars in. the 1930's"and 1940's (see Table 3*). During 1953,
1954, and 1955, the first 3 years of the First Five Year Plan, important
additions were made to the capital plant of light industry, and the
pace of work in light industry was greatly increased. As a result,
by 1955, production of light industry had risen to levels which were
.11 to 64 percent above those of 1952, depending upon the individual
product (see Table 3).
In July 1955 the Minister of Light Industry said that produc-
tion of consumer goods by Chinese Communist industry would increase
12.4 percent annually during the First Five Year Plan, 11 or 79.7
percent during the entire period. Because production of consumer
goods by industry is generally the same as production of light indus-
try, the minister's statement may be compared with the following plans
announced for individual light industry products:' cotton yarn, to
increase 38 percent in the 5-year period; cotton cloth, 47 percent;
silk fabrics, 78 percent; sugar, 176 percent;. flour, 56 percent;
cigarettes, 77 percent; rubber shoes, 76 percent; matches, 39 per-
cent; and machine-made paper, 76 percent. The-weighted average .of
these planned figures is 61 percent (see Table 3, including methodol-
ogy), or an annual increase of 10 percent for the First Five Year
Plan. The difference between the minister's announcement of a 12.4-per-
cent average annual increase and the calculated increase of 10 percent
lies-in the difference in increases for 1954 over 1952, which the
Chinese Communists give as 47 percent (see Table 2**) and which is
calculated in"Table 3 as-32 percent. The rates of increase for 1957
over. 1954 of 22 percent, are the same in Table 2 and Table 3. These
planned increases for 1954-57 seem to be within the capacity of
Chinese light industry in spite of such setbacks as the serious short-
ages of agricultural raw materials caused by the floods of 1954. As
shown below, however, the increases are not net increases.
In early 1956, leaders of both the Ministry of the Textile
Industry and the Ministry of Light Industry-announced that production
of all the important products of light industry in 1956 would either
reach or surpass the level originally planned for 1957. Many construc-
tion projects originally." planned for completion in 1957 will be finished
* Table 3 follows on p. 12.
** P. 8, above.
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Indexes of Production of Light Industry in Communist China
Pre-1949, 1949-55, and 1957, (Plan)
Cotton
Cotton
Silk
Woolen
Machine-Made .
,Rubber
Total
Light
Percentage
Increase Over
Year
Yarn
Fabrics
Fabrics
Fabrics
Flour
Cigarettes
Sugar
Paper-
Products
Matches
Industry
Previous Year
Pre-1949 b
(1930)
(1936)
(1936)
(1936)
(1935),
(1947)
(1937)
(1943)
68
61
295
270
67
89
45
44
?N.A.
55
78
-1949
49
33
20
81
43
60
43
29
55
74
46
1950
66
50
61
65
40
71
52
37
52
64
59
28
1951
73
64
76
65
46
77
65
64
89
79
74
25
1952
loo
100
- 100
100
100
100
100
100
100
100
100
35
1953
113
114
114
127
100
134?
120
115
100
88
114,
14
1954
127
129
121
135
110
141
139
149
131 .
114
132
16
1955
111
111
135
162
127
132
164
163
147
122
128
-3
1957 (Plan),
138
146
178
203
156
177
276
176
174
139
161
12 d/
a. For methodology, see Appendix A. p. 79, below.
b. Prewar''is taken as the highest pre-1949 level, except for production of silk fabric, which reached its highest levels in the
1920's.
c. 1930-35 average.
d. The average rate of increase needed for 1956 and 1957 if the First Five Year Plan is to be fulfilled.
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in 1956, according to these announcements. 12 In addition, work will
be started on new projects that had not been scheduled at all under the
First Five,Year Plan. In part, these announcements represent the preful-
fillment claims typical of all countries of the Sino-Soviet Bloc; but
the excellent crops of 1955 and the continuing rapid expansion of their
capital plant give the Chinese Communists good reason for optimism con-
cerning production in 1956.
The third change in light industry in Communist China since 19+9
has been the continuing increase in the importance of the urban, market-
oriented sector of light industry as compared with the rural, nonmarket-
oriented sector. Government plans for light industry emphasize the con-
struction of large plants equipped with modern machinery and the expansion
of existing large plants. Some small, unmechanized.enterprises are being
combined into larger units, and their old equipment is being renovated or
replaced. Other small enterprises are being permitted to continue in the
old manner, encouraged by government decrees to increase production, but
discouraged by the channeling of raw materials to the modern sector of
light industry. Individual handicraft and domestic enterprises outside of
light industry proper are feeling the effects of these government policies.
It is claimed, for example, that production of cotton fabrics made in whole
or in part from machine-made yarn will increase by 47 percent during the
period of the First Five Year Plan, whereas production of cloth made
solely from handicraft yarn will decline by 13 percent in the same
period. 13 Production of machine-made paper is also to increase by
76 percent during the period, whereas production of handmade paper
will increase by only 42 percent. 14+ As a third example, production
of sugar processed in factories is planned to increase by 176 percent,
but handicraft sugar will increase by only 105 percent. 15
The growing importance of the market-oriented sector of the
economy is a normal result, of industrialization, whether in a communis-
tic or in a capitalistic society, but for the Chinese Communists the
increased control over the daily livelihood of an increasingly larger
number of people is a desirable political result. One result of the
growth in the importance of the market-oriented sector is.that.govern-
ment claims of increased production, because they.cover only that part
of production which is growing the fastest, overstate the rate of
growth. The extent of overstatement for each industry depends upon the
importance of the nonfactory sector in the total,production of that
industry and upon the degree to which the nonfactory sector has de-
clined in importance. In 1955 when. the Minister of Light Industry
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foresaw an annual increase'in production of consumer goods of 12.4 per-
cent during the period of the First Five Year Plan, 16 he was referring,
only to the production of modern industry and factory handicraft indus-
try (the components of light industry proper). If allowance is made
for the relative decline in production from sources other than light
industry, the annual- increase in production of consumer goods during
the period of the Plan would be considerably less, perhaps two-thirds
of the rate for light industry, judging from the fragmentary informa-
tion in announcements concerning the Plan.* If the annual rate of in-
crease in production calculated in Table 3** for light industry is a
correct estimate for production of consumer goods, then the annual rate
of increase for production of consumer goods from all- sources would-be
about 7 percent. This figure is the rate of increase in production,
not in the consumption-by the Chinese people.
The fourth change in light industry in Communist China since
1949 has been a continuing shift to the west in the' location of plants.
Before 1949, Shanghai was the most important center for almost every
type of production in light industry, having, for example, 45 percent
of Chinese cotton spindles and 70 percent of the wool spindles,
as well as the bulk of the productive capacity for silk, matches, and
cigarettes.- 18/ In,spite of the Chinese Communist policy of locating
new productive capacity in the interior, Shanghai still retains its
historic position as the most important center of light industry,
accounting for from 40 to 70 percent of the; production of most of the
products "of ,Might ? industry, and will remain the chief sector for at
least the next 20'years. Almost all new construction in light indus-
try, however, is in the new industrial centers of the interior, such
as Chengchow,.:Sian, Peiping, Chungking, Shih-chia-chuang, and Wu-han.
This policy of developing industry away from the coast is justified
by the government as bringing productive capacity nearer to the con-
sumers and to the Craw materials and as lessening the vulnerability of
industry. to military attack. Some plants, notably those making
textiles, have been moved from Shanghai to the interior, but the
number of plants moved is'small relative to the totallnumber of
plants in Shanghai.
The fifth change in light industry in Communist. China, since.
1949 has been-a?general decline in quality of product. Instances
are cited in the Chinese Communist press, as well as by people. .
For methodology, see Appendix A, p. 79, below.
* P. 12, below.
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recently come from China, of shoddy textiles, impure processed- foods,
substandard medicines, blemished paper; poorly'constructed rubber
products, and the like. The list includes all the products of
light industry. 'The same factors-which affect other Sino-Soviet Bloc
economies also affect quality adversely in Chinese light industry.
These factors include the constant drives to meet ever-increasing
quotas for production and the absence of an effective way for'the
consumer to police the products of light industry. A special factor
lowering, quality in Chinese-Communist light industry is the unusually
strenuous efforts made to reduce the quantity of raw materials used
per unit of production..
One of the theoretical economic problems discussed by Chinese
Communist leaders is whether the rate of growth Of production must
decline after the initial stages of industrialization. In light indus-
try the rates of growth were 28 percent in 1950, 25 percent in 1951, and
35 percent in 1952'(see Table 3*). The restoration of production in
idle factories and the extension of government control to an increasingly
large part of the economy are in part responsible for the size of these
figures. In contrast, during the'first 2 years of'the First-Five Year
Plan (1953 and 1954), the rates of growth were smaller -1'14 percent in
1953 and 16 percent in 1954 a d'in 1955 there was a decline of'3
percent (see Table 3). The decrease in production 'by light industry
in 1955 was a result of the great floods of 1954'that reduced the
supply of the agricultural raw materials used by-light,industry. For
the last 2 years of the Plan, an..annual increase of 12 percent will
be required to reach the goals planned (see Table D. The'difficul-
ties inherent in rapidly expanding production in agriculture, which
is the source of most of the raw materials of light industry; constitute
an important barrier to continued sizable increases in production by
light industry.
C. Foreign Trade.
Chinese Communist foreign trade is designed to support its
program of industrialization. The export of products of light indus-
try is one way 'to earn-foreign exchange for the purchase of machinery
P. 12, above.
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and industrial raw materials. On the other hand, Communist China is
reluctant to import the products of light industry and raw materials
for light industry. If raw materials for light industry, such as
Egyptian cotton, must be imported, the government makes special efforts
to make China self-sufficient and emphasizes the reduction of waste of
these materials in production.. Other raw materials that are imported
for Chinese light industry are-rubber, cured tobacco, jute, and wool tops.
Only about 10 percent of Chinese Communist imports in 1954 were
consumer goods, whereas before 1949 the proportion was more than 50
percent. 20 The consumer goods currently imported are mostly textiles,
paper, medicines, sugar, and educational materials. Usually they are
special types.of products which are not readily available from domestic
industry, such as rayon yarn, industrial papers, new drugs, and technical
books.
Products of light industry are more important in the exports of
Communist China than in;its imports. Especially important are the products
of the food-processing industry, such as tea and vegetable oils. Raw silk
and silk fabrics are traditional Chinese exports which remain well known
in world markets and are more important in foreign than in domestic trade.
Other products of light industry which are exported are cotton fabrics,
cotton knit goods, cigarettes, newsprint and other paper products, canned
goods, porcelain. products, and fountain pens. Although the products of
agriculture and light industry dominate Chinese export trade, their relative
importance will slowly decline as China becomes able'to export machinery,
chemicals, and-other products of heavy industry. The problem of the de-
terioration of quality in the products of light industry is unusually
serious in the case of export goods because China must meet the standards
of foreign competitors if it is to obtain the foreign exchange it prizes
so highly.
Eighty percent of Chinese Communist foreign trade was with coun-
tries of the Sino-Soviet Bloc in 1954, 21 more-than 50 percent of total
trade with the USSR alone. Products of light industry that were important
exports of China to the USSR in 1955-56 are raw silk and silk fabrics,
jute, woolen textiles, cotton textiles,, newsprint, vegetable oils, and tea.
D. Research.
The research program for light industry in Communist China for .
1956-57 was drawn up at a meeting convened by the Ministry of Light Indus-
try in December 1955. 22 In the drug industry, experimental production
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is planned for a large number of antibiotics, sulfa drugs, and other.
new medicines, and also for many of the ancient Chinese herb medicines'.
The medical equipment industry will experiment with electrical surgical
.knives, equipment needed for surgery using new refrigeration methods,
and new bottles for penicillin. The paper industry will continue its
experiments with new types of industrial paper and with the type of
paper pulp necessary for the production of rayon. In the rubber indus-
try the growing needs of Chinese industries require experimentation
with new types and sizes.of truck, tractor, and automobile tires and
with rubber parts of airplanes, drilling and prospecting equipment,
medical equipment, and motor vehicles. The food-processing industry
is continuously experimenting with the canning and preserving of a
wider variety of meat, fish, fruits, vegetables, and spices. The
great new development in the relatively old and well-established
textile industry will be the start of production of rayon yarn in the
first rayon plant to be built by the Chinese Communists in Heilungkiang
Province.
The research program for light industry includes plans for
both the development of new products and the discovery of raw material
substitutes and the improvement of quality. Furthermore, light indus-
try will participate in the nationwide program of improving industrial
machinery and will cooperate with those institutes engaged in systematic
basic research. All these research activities will emphasize the con-
trast between the modern and the primitive sectors of the light industry
of Communist China.
'E. Consumer Welfare.
The products of light industry are of major importance to any
study of consumer welfare in Communist China. It is from light indus-
try that the consumer gets yarn and cloth, processed foods, cigarettes,
footwear, medicines,-soap, matches, and~many other household goods.
The restoration of production of light industry to prewar
levels by 1952 and the large increases in production during the first
3 years of the First Five.Year'Plan should have led to continued marked
improvement in consumer welfare. This result has not followed, because
the use of additional production for investment rather than for con-
sumption is a guiding principle in all economic planning in Communist
China. The people of a city or province, for example, are publicly
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criticized for "wastefulness" if their monthly intake of food increases.
Ordinarily, when there has been an increase in consumption of food.in an
area, it would have been expected that the government would take credit
for the improvement in living conditions.
The use of production of light industry to acquire foreign ex-
change is given specific priority over domestic needs. Communist
China exports increasing quantities of agricultural and light industry
products in order to import increasing quantities of machinery and
industrial raw materials. Other factors that must be considered in
judging the effects of increases in production of light industry on
consumer well-being are the'annual increase of. 1.5 percent in the popu-
lation, the decreasing importance of production that remains outside .
the market (and thus partly outside the statistics), and the continuing
deterioration' in the quality of products.
Although the development of industrial capacity in Communist
China takes precedence over increases in the grossly inadequate supply
of consumer goods, it might be assumed that some improvement in con-
sumer.welfare would arise through the more even distribution of goods
among the people. In contrast to the chaotic poverty before 1949, the
rigorous system of state procurement arid'rationing would seem to guar=
antee at least a small amount of rice, flour, vegetable oils, and cloth
to each citizen. Continuous tightening of the rationing system, however,
suggests that, instead of being directed toward distributing goods evenly,
the system is designed to control and reduce the use of resources for
nonessential* purposes. Seemingly, the limit on what can be extracted
from the consumer will be reached soon, especially in the case of food,
because further reductions in rations will lessen productive efficiency.
The goal is to leave a minimum of resources in consumer hands, and the
system of controls throughout the entire Chinese Communist society'is
being rapidly extended to achieve this goal.'
The development of the productive capacity of Communist China
would permit rapid increases in consumer welfare'in the near future.
Yet the'further industrialization proceeds, the .greater are the demands
of the leaders for putting more resources into increasing capacity and
* The term nonessential is used here in the Chinese Communist sense
to refer to anything that does not directly'further the program of
industrialization and/or the program of militarization. .
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for economizing on nonessential, or consumption, uses of resources. The
period of the First Five Year Plan was barely half finished when reports
of goals for new construction during the, Second Five Year Plan started.,
to appear. The Chinese people are being forced to make sacrifices
ostensibly for the benefit of future generations, and the end of their
period of hardships is not in sight.
II. Textile Industry.
A.- General.
1. Expansion Under the First Five. Year Plan.
The textile industry is the most important sector of light
industry in Communist China. It accounts for more than 1+0 percent of
the value added by production in light industry and employs 720,000
people out of a total of.2 million to 3 million people employed in
light industry. The program established by the Chinese Communists
for the textile industry provides for the expansion of production,
the construction'of additional mills, in new production centers,: the
more intensive use of existing mills, and the transformation of
privately owned mills to joint.public-private mills., The program is
summarized-in the First Five Year Plan, as follows 2?+ (the summary
is in general a fair, if overenthusiastic, description of what actually
occurred in 1953, 1954, and 1955):
Existing equipment will first be utilized to the
utmost and all necessary adjustments made for its
best use. Privately operated textile mills employing
machinery for production will gradually be converted
to public-private jointly operated enterprises, to
bring all these mills into the orbit. of the-state
plan. To meet the-requirements of the rising standard
of living of the people and the gradual increase in
cotton production, new. mills will be constructed in
those areas whereit.is advantageous to do so, and the
foundations of the cotton textile industry in the
interior will be expanded. The silk, wool, and hemp
textile industries will be restored or developed on
the basis of restoring or developing the production of
silk, wool, and hemp; a synthetic fiber industry will
also be established to lay the foundation for future
expansion of the textile industry in all fields.
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A total of 53 above-norm* construction projects are sched-
uled for the textile industry of Communist China-under the Plan. Twenty-
nine of these projects will be under the jurisdiction of the Ministry of
the Textile Industry, 9 will be under local governmental units, and 15
will be under the joint public-private enterprises that control their
own investment funds. / All but 6 of the 29 projects controlled by
the Ministry of the.Textile Industry are in the cotton branch of the
industry,.the dominant branch. One of the exceptions is the first
rayon plant to be built by the Chinese-Communists. This plant, to be
located in Heilungkiang Province, evidently at Mutanchiang, will have
an annual capacity of 10,000 metric tons** of rayon fiber. 26
Shortages of raw materials, especially of raw cotton, and
the persistent decline in quality of product are the two greatest problems
facing the textile industry.
2. Foreign Trade.
Raw silk, silk yarn, and silk fabrics have long been ex-
ported by China. Their importance to the export trade of Communist
China is far greater than their importance in domestic production.
The relative importance of silk and other textile products in Chinese
Communist foreign trade can be seen in the following list showing the
value of Chinese exports to countries outside the Sino-Soviet Bloc in
1954
* An above-norm construction project is one in which the cost exceeds
a certain set level, regardless of whether the project is new construc-
tion, reconstruction, or rehabilitation. An above-norm construction
project in the textile industry is one in which the cost exceeds 5
million yuan. The limit for the sugar, tobacco, rubber, paper, and
pharmaceutical industries is 4 million yuan. The purpose of the
distinction between above-norm and below-norm projects is to identify
those projects which require special administrative supervision and
special accounting controls.
Tonnages are given in metric tons throughout this report.
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Textile Product
Value
(US $)
Raw silk
9,196,000
Silk yarn and fabrics
6,171,000
Cotton yarn and fabrics
5,11+0,000
Woolen yarn and fabrics
172,000
Hemp, jute, and ramie products
377,000
Textiles not specifically identified
9,685,000*
Total
30,7)41,000
One-half of the exports of Communist China went to Hong
Kong, which in'turn re-exports to countries outside the Sino-Soviet
Bloc. 'China also exports important quantities of textiles to Australia,
West Germany, India (mainly raw silk), Indonesia, Japan (mainly raw
.silk), Malaya, Pakistan, Switzerland, the Union of South Africa, and
the UK.
Communist China exports the same types of textile products
to the USSR and the, European Satellites. Raw silk, silk'fabrics,,
woolen textiles, jute products, cotton textiles, and carpets are
specifically mentioned in Chinese Communist news releases as going
to the USSR. Raw silk and silk fabrics are the-most widely publicized
group of textile exports going to the European Satellites. No specific
figures are available for Chinese trade in textile products with the
countries of the Sino-Soviet Bloc.
At the same time that Communist China`is exporting textile
products, it is also importing textile products, but its imports are
much smaller in dollar value and~are dominated by imports of rayon
yarns from Japan and Italy. The following is a list of Chinese Com-
munist imports of textile products from countries.outside-.the Sino-
Soviet Bloc in 1954 28
* This figure includes exports of US $1+,256,000 of household'linen
to Hong Kong, most of which may have been cotton textiles. (All
dollar values are given in US dollars throughout this report..)
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Textile Product
Value
US
Silk and synthetic fabrics
186,000
Rayon yarn
4,694,000
Cotton yarn and fabrics
1,538,000
Woolen yarn, fabrics, and sewn axticles
281:, 000
Hemp, jute, and ramie products (including gunny bags.)
1,315,000
Textiles not specifically identified
,
306,000
8,320,000
According to the US Department of Commerce, Chinese Com-
munist exports of textile products to countries outside the Sino-Soviet
Bloc in 1954 amounted to $30,741,000, compared with imports of $8,320,000.
Approximately 87 percent of all Chinese imports in 1954 were capital
goods, , and 93.5. percent of Chinese imports from the Bloc were capital
goods. 30 The ratio of exports to imports in Chinese trade. in textile-
products with the Bloc, therefore, is probably much greater than the ratio
of exports to imports in Chinese: trade in textile products with non-Bloc
countries. .
3. Reliance on Foreign Countries for Textile Machinery.
Before?1949, China had to import its textile machinery.
From 1951 to 1954, 1-million spindles and"31,500 power looms were
produced in Communist China, the increase of production of machinery
having received high priority from the government. J By May 1955
the government was asserting that China not only could meet domestic
demand for textile machinery but also could export textile machinery.
The ability to export is confirmed,by other information. First, in
August 1954, China officially opened a new modern textile machinery
plant, the Chingwei Plant in Shansi Province, which can produce 200,000
spindles annually on a 1-shift basis. Second, the rate of expansion
in the dominant cotton branch of. the textile industry has been decreasing
markedly. in the last' years of the First Five Year Plan, which means that
the amount of equipment needed domestically is decreasing. Finally,
between July and the latter part of November 1954, China exported 58,000
spindles to India and Burma ; and in April 1955, China agreed to ex-'
port to Burma complete spinning and weaving mills.
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The Peiping No. 1 Cotton Mill, which-went into operation
in September 1954, is the only new cotton textile mill for which the
reliance on foreign machinery has been given wide publicity. This
mill is equipped with 50,000 spindles made by the Texima Textile .
Machinery Plant of Chemnitz, East Germany. 33 The looms were made
in Communist China.
In spite of the official pronouncement of self-sufficiency
in textile machinery, Communist China is still interested in importing
textile machinery and spare parts from Japan. Contracts with Japan
were made in the amount of 30 million to 40 million yen* between,
1 March and 25 March 1955. Because China is relatively'new in
the field of textile machinery, it still depends for.some types of,
precision machinery upon Japan and European countries. Much of.the,
old machinery is of Japanese or UK manufacture, and it is sensible.
for China to rely on these countries for replacement parts. In 1954,
Chinese Communist foreign trade with countries outside the Sino-Soviet
Bloc involved textile machinery valued as follows 3-5j:
$698,000,. imported from Hong Kong**
$274,000, imported from Japan
$357,000, imported from Switzerland
175,000, imported from the UK
28,000, exported to Hong Kong
$ 1,000, exported.to Malaya
As regards the linen textile industry, the First Five Year
Plan calls for 1 new flax textile mill and 2 flax raw material mills.
All 3 mills, which are equipped with Soviet machinery, are_ now in
operation.
Communist China is building a rayon plant in Heilungkiang
Province under the First Five Year Plan. This plant may be the new
modern textile plant which was announced in 1955 as under construction
in Mutanchiang and which will produce the types of fabric used in.
rubber tires and conveyor belts. The equipment in this plant
reportedly will be Chinese Communist made. If this Mutanchiang
plant is the new rayon plant, this fact is a further indication of
decreasing Chinese reliance on foreign countries for even specialized
textile machinery.
* 360 yen equal US $1.
** The original source of most of-'this machinery probably was the UK.
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B. Cotton Textiles.
1. Importance.
Cotton textiles are the most important branch of the textile
industry of Communist China. In 1955, cotton fabrics made up 98.6 per-
cent, by length, of total production of cotton, silk, woolen, and linen
fabrics. Comparisons-in terms of physical production overstate the
importance of cotton fabrics, but, even if it is assumed that other
fabrics have on the average 4 times the value per unit of cotton fabrics,
cotton.fabrics would still represent over'90 percent of the value of all
fabrics. Most of the attention of the Chinese Communist press and radio
is centered on achievements in the cotton branch of the textile industry.
An incidental indication of the dominance of cotton textiles is the fact
that the uniforms of the Chinese army are made almost exclusively of
cotton.
2. Changes Under Communist Control.
Three major developments have characterized the cotton textile
industry of China under Communist control. First, according to the First
Five Year Plan, the capacity and production of the industry are to be ex-
panded greatly. The number of spindles in place in modern mills is to
increase from 5,660,000 at the end of 1952 to 7,310,000 at the end of
1957, a gain of 29.2 percent (see Table 4*). During the period of the
First Five Year Plan, 1,160 million yuan will be spent on construction
in the textile industry, or 4.4 percent of the total expenditures for
basic industrial construction of 26,620 million Yuan. To judge from
official news releases, which describe progress on individual construc-
tion projects, the expansion of capacity is . proceeding. according to plan.
Production of machine-made yarn will increase by 38 percent during the
5 years, and production of fabrics made in.whole or in part from machine
made yarn will increase by 46 percent in the same period (see Table 4*).
Reports of the Chinese Communist press in April 1956 revealed that produc-
tion of cotton yarn had decreased by 13 percent in 1955 as compared with'
1954 and that production of cotton fabrics-had decreased by 14 percent
because of the poor cotton crop of 1954. These same reports predicted
an increase in production. of 30 percent for'both yarn and fabrics in
1956. ,
* P. 30, below.
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The second major development is the growth of great new
cotton textile centers in the interior of Communist China, away from
the old centers near the east coast. (Of the old centers, Shanghai
alone has had one-half of all the spindles in China.) The new centers
will be closer both to the supply of raw materials and to the consumer.
Of the new capacity that is being added during the period of the. First
Five Year Plan, two-thirds is to be located in the following'four cities:
Peiping and Shih-chia-chuang in Hopeh Province, Chengchow in Honan Prov-
ince, and Sian in Shensi Province. The numbers of spindles to be added
to capacity in these 4 cities are as follows: Peiping, 230,000; Shih-
chia-chuang, 250,000; Chengchow, 280,000; and Sian (including Hsien-yang),
400,000. Although East China will retain almost the same number of spin-
dles that it had before 1949, the percentage of spindles in East China
will decline from 72.3 percent of the total in 1949 to 50.2 percent-at
the end of the First Five Year Plan (see Table 5* and. Table 6**)..
The third major development is the tightening of government
control over both production and consumption of cotton textiles in Com-
munist China. In 1952, 38.2 percent of the 5,660,000 cotton spindles
in China were owned by private industry, but by 1957 there will be no
private. cotton mills. It has been announced, officially that in 1957
about 51.4 percent of the production of cotton yarn will be from public
mills and 48.6 percent from joint public-private mills. 40 By the
beginning of 1956.the transformation was almost complete; less than 1
percent of the spindles and power looms remained privately owned. 41
In September 1954 the government started the centralized procurement
of raw cotton, the centralized distribution of raw cotton among the
mills (whether public, public-private, private, or cooperative mills),
and the centralized distribution of finished fabrics through an elab-
orate rationing system. 42 This thorough system of control did, not
come into existence all at once but was the culmination of ever-in-
creasing government supervision of industry from the producer of raw
materials to the final consumer. Even before the Communists came to
power, the Nationalist, government had formed the state-owned China
Textile Industries Incorporated from 68 Japanese-owned mills that
were seized at the end of World War II.
# P. 31, below.
* P. 33, below.
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3. Value Added.
In the textile industry* state taxes are high in relation
to the taxes, in heavy industry and are one of the main devices for
restricting consumption. Consumers are forced to pay prices which
are greatly above costs, which means that their.expenditures in real
terms are kept low in spite of increases in production per man-hour.
Workers are forced to produce more with little.increase?in wages.*-*
A large part of the difference between the price of products of the
textile, industry and the price of its inputs is not value added by,
its economic activity but may be viewed rather as the financial counter-
part of some of the real resources reserved for the heavy industry pro-
gram. The wholesale value of the 2,330 million linear meters of cotton
.fabrics produced in modern mills in 1955 was 1,820 million yuan,
and the wholesale value of the cotton yarn not used in textiles in the
modern.mills was 1,600 million yuan. 44 The value added in 1955 in
the cotton'textile industry was roughly 1 billion yuan, distributed
as follows: 430 million yuan in wages; 160 million yuan in depreci-
ation; and 480 million yuan in interests,.rents, and profits. The
wage figure was derived by assuming that 90 percent of the 720,000
workers in the textile industry / worked,,inthe cotton textile branch
at an average wage of 55 yuan per month. Capital plant is equal in
value to 4,840 million yuan on the basis of the cost of new investment
under the First Five Year Plan. The depreciation figure in value added
was obtained by assuming an average life of 30 years for plant and equip-
ment. The figure for interest, rents, and profits was, arbitrarily
assumed to be 10 percent of the value of, capital plant.
4. Supply of Raw Cotton. ' I.
The major factor determining the amount of production,of
the Chinese Communist cotton textile industry is the supply of raw
cotton. Incentives given the farmers to increase cotton acreage and
production did not offset the losses caused by the floods of 1954,
and because of the lack of raw materials the production of cotton yarn
* The statements made in this section apply to all light industry of
Communist' China as well as to the textile industry.
In many instances when a private enterprise is transferred to public-
privatei status, the workers are enjoined to accept a substantial reduction
in wages in the interest of national reconstruction.
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in 1955 was reduced about 13 percent compared with that in 1954. 46
In 1955, however, the cotton erop?was excellent, being 360,000 tons
above the total in,1954 of 1,040 million tons, according to govern-
ment claims. YJ/ As for the other factors of production, urban labor
is cheap and plentiful,`and the amount of -capital equipment has ex-
panded rapidly. The original plans for the expansion of the cotton
textile industry under the First Five Year Plan were cut by 800,000
,spindles early in 1955, ~1 partly because of the general economy
drive, but probably also because the.original expansion plans seemed
too ambitious in view of the shortage of raw materials.
5. Problem of Quality..
A second problem of the textile industry of Communist
China is that of the quality of its product. The Minister of the..
Textile Industry in July 1955 admitted that the, products of the
textile industry had been of low quality, mentioning instances of
"impure cotton, yarn and cotton balls, spotty cloth surface, running
,colors, great shrinkage, dull colors of printed cloth, and monotonous
designs." / Reports of individuals, who have left China after many
years of residence confirm the serious deterioration in the quality
of textiles' during the past few years. On the other`hand,,the govern-
ment is trying to improve qualit$r, and there are many announcements
to the effect that various mills.have raised their percentage of
first-class cloth.
Finally, in spite of the great efforts made .to increase.
the capacity and production-of the cotton textile industry, the level
of production remains low, less than 9 linear meters of fabric per
person in 1954, compared with about 26 linear meters per person in,
the USSR and about 60 linear meters per person in the US.
Data on the production of the cotton textile industry
of Communist China, the location of its industrial capacity, and,.
the major construction projects under the First Five. Year Plan.'are,
shown in Tables 4, 5, 6,. 7, and 8.* These tables are based on indus-
try data for the years through 1949 and on.official government stat
`istics for the years after 1949. The government announcements about.
the growth of total capacity are consistent with the official announce-
ments of the -construction and renovation of individual mills. In a
* Tables 14, 5, 6, 7, and 8 follow on pp. 30, 31, 33,'34, and 35,
respectively, below. .
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few instances, mills may not be completed on the dates specified because
of the magnitude of the program, the continuous reassessment and revision
of plans, and the lack of priority for investment ina consumer industry
that is already big enough to use all the available raw materials. In
early 1956, however, government spokesmen stated, that the construction
program in the textile industry'will be almost completed by the end of
1956, a year before the end-of the Five Year Plan.
6. Inputs.
Because cotton textiles account for about 90 percent of the
value of all textiles produced in Communist China, the labor. input in
the cotton textile industry has been estimated-as 90 percent of the
720,000 textile workers, or 650,000 workers. More than 60 percent of
these workers are female. The average wage of textile workers is 55
yuan per month.
The capital'input in the cotton textile industry is in terms
of 50,000-spindle mills, each costing 33 million Yuan, and 100,000-spindle
mills, each costing 66 million yuan. LOJ These costs include the construc-
tion of complementary weaving capacity and the erection'of'cafeterias,
billets, and other subsidiary buildings. In 1955, pressure was being
exerted on the Ministry of the Textile Industry to reduce costs of construc-
tion. These costs can be reduced by relaxation of specifications for
construction; by elimination and reduction of many welfare services, such
as a reduction of sleeping space per worker- in the billets; and by some
genuine economies in operating. techniques. In April 1956 the Minister of
the Textile Industry said that a 100,000-spindle mill could be built at
that time for the same expenditure that was required to build a 50,000-
spindle mill 2 years earlier. Lij
The number of spindles and power looms to be added each year
is shown in Table 4.* As for the depreciation of the present capital
plant, spindles are-used to the limit of their usefulness. Even if an
average life of 30 years for plant'and equipment is assumed to be normal,
it is still impossible to estimate the quantity of equipment being re-
moved from service each year. One factor to be considered is the avail-
ability of new equipment from the Chinese Communist textile machinery
industry. Until 1956, all old prewar equipment had to be kept in use
P. 30, below.
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because the rate of expansion in the cotton textile industry strained
the capacity of the domestic textile machinery industry. The reverse
is true today, and the prospects of replacing a large proportion of
the old equipment are good. In 1956, 250,000 spindles will be added
to capacity in the cotton textile industry, and roughly 200,000 spin-
dles will be available from domestic production for export and re-
placement.
Concerning the input of.raw cotton in the cotton textile
industry, Chinese Communist spokesmen have admitted that production
of cotton yarn in 1955 was 600,000 bales less than in the previous
year because of the 1954 floods. In 1955, production of cotton fabrics
made in whole or in part from machine-made yarn was 4,242 million linear
meters. If 400 million linear meters of fabrics made from handicraft
yarn are added to 4,242 million linear meters, the yarn requirement
for fabrics in 1955 would be 690,000 tons. The yarn requirement for
cotton knit goods was about 100,000 tons, / or a total requirement
for yarn of 790,000 tons. To make 790,000 tons of yarn requires
849,000 tons of ginned cotton, assuming a 7-percent loss in processing.
Additional cotton is needed for cotton padding, an important item in
the making of winter clothing in Communist China. The Chinese Commu-
nist estimate of 1.04 million tons-(ginned basis) as their cotton crop
in 1954 is consistent, therefore, with the input requirements of the
cotton textile industry.
Another important input in the cotton textile industry
is electric power. In the first years of Communist control of China,
shortages of electric power sometimes curtailed the workweek in the
textile industry. No such shortages have been reported recently in
the Chinese Communist press. Only one item hasbeen found on con-
sumption of electric power, a report that the Ta-ch'eng Textile and
Dye Company.located at Chang-chou in Kiangsu Province had reduced
the amount of electricity needed to spin a bale of cotton yarn from
260 to 180 kilowatt-hours in 1954. 53 J*
* Continued on p. 36.
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Table 4
Estimated Number of Spindles and Power Looms in'Place and Output of-Yarn and Fabrics
by the Cotton TextileIndustry in China a
1930-38, 1946-55, and 1956-57 (Plan)
Year
Spindles in Power Looms
Place at in Place at
End of-Year End of Year
(Thousand Units) (Thousand Units)
Output of'Yarn
from Modern Mills
(Thousand Metric Tons)
Output of Fabrics
from Modern Mills
(Million Linear Meters)
1930
3,905
29.6
445
647
1931
4,054
29.2
432
809.
1932
4,493
42.6
414
805
1933
4,640
' 42.8
423
939
'1934
4,777
47.1
415
999
1935
4,952
51.0
413
1,036
1936
5,102
52.4
400
1,115
1937
5,042
58.4
370
N.A.
1938
4,300
N.A.
394
94p-
1946,
4,636
65.0
240
491
1947
N.A.
65.0
353
819
1948
5,117
69.0
335
821
1949
5,144
68.2
321
809
(1,251)
1950
5,228
69.2
430
1,246
(1,927)
1951
5,390
71.2
478 ,
1,594
(2,465)
1952
5,660
75.7
656
1,820
(3,829)
1953
5,881
82.0
741
1,970
(4,365)
1954
6,410
97.1
835
2,330
(4,932)
1955
6,881
11o.6
726
2,330
(4,242)
1956 (Plan)
7,131
117.7
944
2,914
(5,515)
1957 (Plan)
7,310
122.8
907,
2,950
(5,583)
a. For methodology, see Appendix A, p. 79, below. Figures in parentheses represent factory pro-
duction of fabrics plus fabrics made by handicraft enterprises entirely or partially from
machine-made.yarn,. ,
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Table 5
Estimated Number of Cotton Spindles in China, by Area a/
1937, 1949,1952, 1954, and 1957 (Plan),
Thousand Units
Area
1937
1949
1952
1954
1957 (P3 )
Northeast
157
346
481
531
560
North
Hopeh
310
416
500
705
1,085
,Shansi
75
48 .
48
48
98
Total
385
464'
548
753
1,183
East
Shanghai
2,666
2,380
2,380
2,297
2,247
Kiangsu
603
768
768
793
793
Chekiang
58
58
58
58
58
Anhwei,
18
20
20
20,
70
Shantung
6o
67
67 .
71.
71
Tsirigtao
538
427
427
427
427
Total
3,943
3,720
3,720
3,667
3,667
Hupeh
334
145
25,7
312
312
Honan
107
20
158
238
438
Hunan
50
35
35
91
91
Kiangsi
20
30
30
107
107
Kwangtung
20
36
36
36
36
Total
531
266
516
784 ,
984
a. For methodology, see Appendix A, p. 79, below. Figures
may not add to totals because of rounding.
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Table 5
.Estimated Number of Cotton Spindles in China, by Area
1937, 1949, 1952, 1954, and 1957 (Plan)
. (Continued)
Area -
1937,
1949
1952
1954
1957 (Plan)
.
Szechwan
218
218
.218
243
Yunnan
28
53
53
53
Total 1
0
246.
271
2
226
Northwest
Shensi
25
101
.169
389
589
Sinkiang
-1
0
14
14
30
Total
26
101
123
40
619
.Grand total
5,144
x_660
6,410
10
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Table 6
Estimated Percentage Distribution of Cotton Spindles in China, by Area a/
1937, 1945, 1952, 1954, and 1957 (Plan)
1937
1949
1952
i954
1957 (Plan)
Area
Percent
Percent
'(Percent)
(Percent)
(Percent)
Northeast
3.1
6.7
8.5
8.3
7.7
North
7.6
-9.0
9.7
11.7
16.2
East
78.2
72.3
65.7
57.2
50.2
Central and South
10.5
5.2
9.1
12.2
13.5
Southwest
0.0
4.8
4.8
4.2
4.0
Northwest,
0.5
2.0
2.1
6.3
8.5
Total
100.0
100.0
100.0
100.0
100.0
-Number of spindles
(Thousand Units) 5,042 5,144 5,660 - 6,410' 7,310
a. Derived from Table 5, p. 31, above,. Totals may not add because of
rounding.,
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Table 7
Major Cotton Textile Construction Projects Under the First Five Year Plan of Communist China a/
1953-57
11 -
City
Province
Region
Number of Spindles
(Units)
Number of Power Looms
(Units)
-
First Date of Operation
Liao-yuan Cotton Spinning and Weaving Mill
N.A.
Liao-yuan
Northeast
50,000 J
1,000 J.
1954 -
Peiping No. 1 Cotton Mill
Peiping
Hopeh
North
50,000
1,200
September 1954
Peiping No. 2 Cotton Mill -
Peiping
Hopeh
North
100,000
2,500'
2d quarter, 1955
Peiping No. 3 Cotton Mill
Peiping
Hopeh
North
80,000
3,600
1956
Shih-chia-chuang No.. 1 Cotton Mill
Shih-chia-chuang
Hopeh
North.
50,000
1,500
April? 1954
Shih-chia-chuang No. 2 Cotton Mill
Shih-chia-chuang
Hopeh
North
100,000
2,500
3d quarter, 1955
Shih-chia-chuang No. 3 Cotton Mill
Shih-chia-chuang
Hopeh
North
50,000
2,000
1957
Hua-hsin Cotton Mill
Shih-.chic-chuang
Hopeh
North
50,000
2,000
1956 J
Han-tan No. 1 Cotton Mill
Han-tan _
Hopeh
North
50,000 J
.1,500 J
April 1953
Anhwei No. 1 Textile Mill
Ho-fei
Shansi
Anhwei
North
East
50,000
2,000
1956
Chengchow No.
1 Cotton Mill
Chengchow
Ronan
Central and South
50,000
1,500
1954
Chengchow No.
2 Cotton Mill
Chengchow
. Honan-
Central and South
-30,000
1,000
June 1953
Chengchow No.
3 Cotton Mill
Chengchow
Ronan
Central. and South
100,000
2,500
March-1955
Chengchow No.
4 Cotton Mill
Chengchow
Ronan
-Central and South
100,000
2,500
1956 J
Kiangsi Textile Mill
Nan-chuang
-
Kiangsi.
Central and South
50,000
1,500
October 1954
Hsiang-t'an Cotton Mill
Hsiang-t'an
Hunan
Central and South
50,000.
1,000
February 1954
Northwest No.
1 Cotton Mill
Hsien-yang J
Shensi
Northwest
'50,000
1,000
1953
Northwest No.
2 ,Cotton Mill
Hsien-yang J -
Shensi
Northwest -
50,000
2,000
1953
Northwest No.
3 Cotton Mill
Sian
Shensi
Northwest
50,000
1,600
December 1954
Northwest No.
4 Cotton Mill
Sian_
Shensi
Northwest
100,000
2,500
2d quarter, 1955
Northwest No.
5 Cotton Mill
Sian
Shensi
Northwest
100,000
4,600
1957
a. For methodology, see Appendix A, p. 79, below. - -
b. The entry is based on analogy with other mills under construction. - -
c. The city islocated approximately 20 miles from Sian and is included in the present report with Sian in the discussion of the rise of Sian as a great new
textile center-.
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Table 8
Estimated. Distribution of. Spindles Added by Major'Cotton Textile Construction Projects
Under the First Five Year Plan.of Communist China a/
1953-57-
Thousand Units
Area
1953
1954
1955
1956
1957
Total
Northeast
0
50
0 .
0
0
50
North
50
100
.200
180
'50
580
East.
0
0
0
..0
50
. 50-
Central and South
30:
150
100.
100.
0
380
Northwest
100
50
100
0
100
350
Total
180
350
400
280,
200
1,410
a. Derived from table 7, p. 34, above.
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'Silk Textiles.
Raw silk and silk fabrics are the two main products of the
silk textile industry of Communist China. Raw silk is silk yarn made
from combining the filaments of from 35 to 4+0 cocoons. The reels of
raw silk are packed in 133-pound bales, which are the common units of
measurement and sale. A large part of Chinese Communist production
of raw silk is-exported, 63 percent being exported in 1954.
L4j
Most of. the remaining 37 percent went into production of silk fabrics,
which are the second main product of the textile industry and which
also are important in Chinese foreign trade.
Since 1929, the relative importance of raw silk in the Chinese
economy has declined. Output. of raw silk decreased from 252,000 bales
in 1927 to 95,000 bales in 1935 because of the worldwide depression,
the inroads of Japanese silk, and the competition of synthetic fibers.,
During the period of foreign and civil wars in the 1930's and 19140's the
industry suffered further losses. Foreign markets for silk were completely
disarranged, a number of silk filatures (reeling plants) were badly damaged,
and many mulberry trees were destroyed or left untended. / After 1949,
production of raw silk recovered slowly, and output in 1952 was, at the
most, 71,600 bales.
The Chinese Communists have a standing policy which prohibits
the expansion of mulberry tree acreage and relies on more intensive
and efficient use of existing acreage to-increase production. / As
with other textile raw materials, the government urges workers in silk-
reeling-plants to use fewer cocoons. per pound of yarn. Such measures
lessen the quality of product because silk filaments are not uniformly
'strong throughout their length.
Production, of silk cocoons in 1955 is said to have been still
far from the highest level in the nation's history. Output of cultured
cocoons under the First Five Year Plan is scheduled to increase to
93,400 tons in 1957, again of 50.1 percent over that in 1952; and out-
put of wild cocoons is to increase to 61,750 tons in 1957, a gain of 1.1
percent over that in 1952. / The increase of 25.8 percent in produc-
tion of all cocoons is far below the increase of 78.5 percent in produc-
tion planned for silk fabrics, which suggests that a larger part of the
raw silk will be. used domestically. In December 1954, government' leaders
of the silk textile industry decided at a conference that production of
raw silk was to be restored to its highest prewar level by 1962. 60
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East China, notably the Yangtze.delta, is the most important
area producing raw silk, accounting for more than 50 percent of total
production and about 80 percent of exports. 61 The two other impor-
tant producing areas are Kwangtung Province and Szechwan Province.
According to the First Five Year Plan, output of silk fabrics
will be 69.2 million linear meters in 1957, an increase of 78.5 percent
over the 38.8 million linear meters produced in 1952. 62 At the end
of 1955 the Ministry of the Textile Industry was completing allarge
silk mill in Nan-ch'ung in Szechwan Province. Working 2 shifts, this
mill can produce 930,000 linear meters of silk fabrics and 150,000_
pieces of silk tapestry annually. 63 The only other silk mill listed
in the First Five Year Plan is one that will be built in Northeast
China by local industry.
Chinese Communist exports of raw silk and silk fabrics are
important in'acquiring foreign credits for heavy industrial expansion.
In 1950 the USSR.was the best customer of Communist China for raw silk
and silk fabrics, taking 35 percent of Chinese production. 64 Raw
silk and silk fabrics continue to.be mentioned in accounts of Sino-
Soviet Bloc trade, and there is no reason to suspect any change in the
position of the USSR as the leading customer of China. Silk fabrics
are unrationed in China, not because of a plentiful supply, but because
there is so little available domestically that rationing is not worth-
while. Because the government procures at least 70 percent of the
cocoons and either processes or procures all the manufactured silk, L5J
export commitments can readily be satisfied without new controls. The.
austerity program for consumers still discourages the purchase of
costly fabrics like silk although in 1955 the government relaxed its
efforts to enforce simplicity in dress.
Shanghai has always been the great center for the production
manual silk-weaving looms with an estimated total capacity of 95 million 50X1
linear meters of fabric in 19)+8. / Of these looms, 18,000 power looms 50X1
and 40,000 manual looms with a capacity of 55 million linear meters were
in East China. Ninety-one percent of the looms' were concentrated in -
the East China cities of Shanghai, Wu-hsi, Suchow, and Hangchow. 68
Because the only large new mill to be built under the First Five. Year Plan,
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China had about 19,200 power and 61,000
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the plant .at Nan-ch'ung in Szechwan Province, will have about 2 percent
of Chinese-Communist weaving capacity, there will be only a small shift
to the west in the location of the weaving branch of the industry.
Inasmuch as there will be no extensive investment in new mulberry acreage,
the location of the reeling part of the industry also will be stable.
Estimated of the output of silk fabrics in China in 1936, 1949-55,
and 1957 (Plan),: derived principally from official government announce-
ments, are shown in Table 9.'. These estimates include output from both
modern and factory handicraft-industry. ~ By 1957, output of silk fabrics
still will not equal that in 1936.
Table 9
Estimated Output of.Silk Fabrics in China a/
1936, 1949-55, and 1957 (Plan)
Million Linear Meters
Output
1936,
114.3
1949
7.9
1950
23.6-
1951
29.5
1952
38.8
1953
.44.1
1954
47.1
1955
52.3-
1957 (Plan)
69.2
a. For methodology, see Appendix A, p.
,
79, below. Figures include the output.of,
silk fabrics from modern and factory
handicraft mills.
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The silk textile industry ranks second to the cotton textile
industry as an employer of textile workers, with a normal postwar labor
force of 50,000.. This figure includes silk-reeling and silk-weaving
operators but does not include the raisers of silkworms. Most of the
operators in the silk textile industry are female, and wages probably
are the same as in the cotton textile industry -- that is, 55 yuan per
month. The capital inputs are not. known for either construction or
depreciation. A rough estimate of the value of the capital plant,
based on the number of workers and the value of production, would be
5 to 10 percent of the value of the capital plant for cotton textiles.
Only two mills are being built during the period of the First Five Year
Plan, but increases in production are being achieved by the operation
of previously idle capacity. Heat, light, and electric power are other
significant inputs in the industry, but no figures are available.
D. Woolen Textiles.,
There are two branches of the woolen textile industry in Com-
munist China. One branch, devoted principally to production of rugs
and carpets for foreign markets, is centered around Tientsin, and the
other, which produces woolen yarns, piece goods, clothing, and blankets,
is located in the Shanghai area, 70 Seventy percent of the 150,000
woolen spindles in China were located in the Shanghai area in 1955.
Before June 1950 the Chinese Communists gave the restoration
and expansion of the woolen textile industry a low priority, partly
because woolen' products were regarded as luxuries and partly:because
imports of raw wool and woolen yarns would require scarce foreign ex-
change. Domestic wool is largely of inferior quality, suitable only
for making rugs. Consequently, foreign wools and foreign yarns have
historically been relied on for the production of woolen fabrics.
In mid-1950 the Chinese Communist government reversed its
policy and started to promote, the recovery of the woolen textile
industry, believing that with the addition of certain controls. the
industry could be operated without being a drain on foreign exchange.
The new measures were as follows: "Domestic spinning wool was supplied
to woolen mills in the country,'instead of being exported, for the
manufacture of military uniforms and blankets. Wool unfit for mill
consumption was exported in exchange for foreign raw materials to
supply the domestic woolen industry. Taxes on woolen semimanufactures
and finished products were abolished and the import duty on wool and
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wool tops was refunded on the exportation of the finished product." L2J
Intervention in the Korean War provoked foreign economic restrictions
against Communist China so that the expansion of the industry has not
proceeded as rapidly as planned. Imports of high-grade wool continue
although efforts are being made to improve the breed of native sheep
in order to reduce imports.
,One of the few available absolute figures on production of
woolen textiles in Communist China is the announcement in the First
Five Year Plan that output of woolen fabrics in 1957 will be 7.5
million linear meters, or 103 percent above that in 1952.. Esti-
mates of the output of woolen yarn and fabrics in modern and factory
handicraft mills in 1936, 1949-55, and 1957 (Plan)'are shown in Table 10.
Estimated Output of Woolen Yarn and Woolen Fabrics in China a/
1936, 1949-55, and 1957 (Plan)
Woolen Yarn from
Modern and Factory Mills
and Handicraft Factories
(Thousand Metric Tons)
Woolen Fabrics
from Modern and,
Factory Handicraft Mills
(Million Linear Meters)
1936
11.0
10.0
1949
3.3
3.0
1950
2.8
2.4
1951
3.5
2.4
1952
4?.0
3.7
1953
4.7
4.7
1954
5.5
5.0
1955
6.6
6.0
1957 (Plan)
8.3
7.5
a. For methodology) see Appendix A, p. 79, below. This table
includes individual handicraft and peasant handicraft production.
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The small output of woolen fabrics of 6.6 million linear meters
in 1955 means little in the daily lives of the 600 million people in Com-
munist China. The ordinary citizen avoids woolen clothing, not only
because it is high in cost but also because'it is'a dangerous indication
of luxurious living. / Much of the production of woolen fabrics is
used in army blankets and uniforms although most army uniforms are still
made of cotton. The expansion of production of woolen fabrics has been
possible with little addition to the capital plant, because there was
much unused capacity in the woolen textile industry in the first years
after 1949. From the beginning of 1950 to the end of 1953, three woolen
mills were built. JJ In view of the program for greater economy in
capital construction in China and the emphasis on greater production
from existing facilities, probably few if any additional projects to
produce woolen textiles are under way. There is no mention in the First
Five Year Plan of new woolen mills, although new cotton and silk mills
and flax.and rayon plants are mentioned.
All private retail trade in woolen yarn.in the important Shanghai
area as well as all private manufacture of woolen textiles in Shanghai
was brought under joint public-private operation by the end of 1955.
Fifty-two of the mills in Shanghai are being consolidated into 19 integrated
mills, each with its own spinning, :weaving, and dyeing facilities. 76 The
increase of production in modern mills has been accomplished partly at the
expense of local nonfactory production. In the past, herdsmen kept part
of the clip for their own use or for local trade, but now they are to be
educated to the necessity of selling the entire clip to the state pur-
chasing commission so that the industrialization of Communist China can be
accelerated. YJ7 The following three points should be noted about the
campaign to educate peasants and herdsmen: (1) government control over
the livelihood of these independent rural people, has been greatly
strengthened, (2) increased production of woolen fabrics is not to satisfy
consumer needs but to support the government's program for industrialization,
and (3) official figures for production of woolen,fabrics will overstate
the growth in economic activity because-no account will be made of the
loss in local handicraft production (nor can a reliable estimate of net
production be made, perhaps even by the Chinese Communists themselves).
Inputs in the woolen textile industry of Communist China are not
so well known as those for the cotton textile industry. The figures for
the labor force in 1950 probably are little changed in 1956. There are
25,000 workers. in the woolen textile industry, of whom 13,000 are employed
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in Shanghai and 6,000 in the Tientsin area. About 3,700 of the
6,600 tons of woolen yarn produced in 1955 were needed to produce the
6 million linear meters of woolen fabrics produced in 1955, assuming
that China is now able'to produce sufficient amounts of the fine yarn
required for woolen fabrics. The yarn of poorer quality is used for
rugs and carpets, knitted goods, and handicraft and domestic produc-
tion. To produce 6,600 tons of yarn requires 8,300 tons of wool on
a degreased basis, or 16,600 tons on a grease basis. The capital,
input in the industry is small because production has, not reached
the prewar peak. The cost of expansion and of depreciation of
integrated cotton mills has been given by the Chinese Communists
as 660 yuan per spindle, a figure which is usable for wool with the
following caution: the-cotton cost figure refers.to 50,000- and
100,000- spindle mills, and woolen mills are smaller, perhaps 5,000
spindles. The electric power requirements. of the industry are not
known.
E. Linen Textiles.
Construction work on the first large modern linen mill to be
erected by the Chinese Communists began at Harbin in January 1950,
and the mill was put into operation in September 1952. / This mill
is equipped with 15,000 spindles ~.Oj and 1,000 power looms, employs
3,000 workers, ~ji and has a capacity of 20 million linear meters of
all types of linen fabrics. 82 All the equipment of this mill was
supplied by the USSR, and Soviet technicians directed the construction
of the mill and trained the staff and workers. L3/
In April 1955 two new.flax-processing mills at Hu-lan and
j These flax-processing-
A-ch'eng (near Harbin went into operation. 84
mills were designed by Soviet designers and have the latest types of
Soviet-manufactured equipment. ? The production of these mills will
equal the production of the 7 existing mills in Northeast China
and will supply the linen mill at Harbin. ?With 3 shifts, these 2 new
mills together can produce 2,000 tons of long fiber annually and more
than 2,400 tons of short fiber.
The First Five Year Plan states that the Ministry of the
Textile Industry will construct 1 flax textile mill and 2 flax raw
material mills in Northeast China. L8/, Presumably these three mills
are the mills described above inasmuch as no others have been publicized
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in the Chinese Communist press. Output of flax fabrics will reach
18.3 million linear meters in 1957, according to the Plan, compared.
with 283,000 linear meters in 1952. ?- The linen mill at Harbin
alone can supply the quantity of,fabrics planned for. production in 1957.
F. Rayon'Textiles.
Under the First Five Year Plan of?Communist China a new modern
rayon fiber plant will be built by the Ministry of the Textile. Industry
in Heilungkiang Province. / This plant will produce 10,000 tons of
rayon fiber annually. Lij. It was announced in August 1955 that., work
had begun on a new modern textile plant at Mutanchiang in Heilung-
kiang Province. 222 Although the type of textile to-be produced by
the new plant is not given, the statement that the, plant will supply
material for production of auto tires and conveyor belts and the
location of the plant in Northeast China strongly. suggest that this
plant is the new rayon fiber plant. In addition to the building of
this new plant, production at the two old Anlo (Shanghai) and An-tung
rayon fiber plants is being restored. 23 Meanwhile, however, China
imports rayon. yarn' from Japan. For example, an-agreement in August
1955 provided for the import of 500,000 pounds of Japanese rayon yarn
to be shipped in August and September 1955. / As in the case. of
woolen, silk, and linen textiles, the quantities of rayon textiles
available by 1957 will be less than 1 or 2 percent of the amount of
cotton textiles available. Wood pulp is scarce in China, and experi-
ments are being conducted to find new sources of cellulose raw materials,
such as cotton floss, husk cotton, bamboo pulp, and sugar cane dregs.
G. Gunny Sacks.
In 1950 the 11 gunny sack plants in Communist China produced
about 13 million'sacks.. Output in 1951.was almost 30 million sacks
but still fell short of the requirements of the Chinese Communist
economy. 26 By 1957, according to the First Five Year Plan, 68
million gunny sacks will be produced, compared with 67,350,000 produced
in 1952, an increase of only 1 percent. 2V Because sacks are increasingly
in demand for the transportation of many agricultural and industrial products,
the failure to plan for expansion of the industry is difficultto understand.
The explanation lies partly in the shortage of the vegetable fibers -- hemp,
jute, flax, and ramie -- used in making sacking material. / In 1955,
output was 18 million sacks below that in 1954, because the.serious floods
of 1954 caused raw materials to be especially scarce.
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In 1954, Communist China imported through Hong Kong 2,238,000
gunny sacks valued at $698,000 and 902,000 square yards of linen, hemp,
jute, and ramie fabrics valued at $606,000. 100 The imports -- most
of which probably originated in India -- included a broad variety of
fabrics at widely varying prices.
In view of Chinese Communist failure to make full use of
present capacity to produce gunny sacks, 101 no major construction
in this branch of-the textile industry is to be expected. Because
gunny sacks are industrial rather than consumer goods, continued imports
of sacks and sacking material-to meet the demands of an expanding do-
mestic industry may be expected. In addition, efforts will be made to
increase domestic production of hemp, jute, and the other agricultural
raw materials for this industry.
III. Food-Processing Industry..
A. General.
Within light industry in Communist China, the food-processing
industry ranks next in importance to the textile industry. The leading
branches of the food-processing industry are flour milling, tobacco
manufacturing, vegetable oil refining, sugar refining, tea processing,
and salt refining.
Most of the production of the food-processing industry comes
from numerous crudely equipped mills of small capacity located in
rural areas. These mills use agricultural products grown locally,
and their production is consumed locally. The mechanized modern sector
of the industry, located mainly in the important coastal and river port
cities, produces for urban consumption and for export. Shanghai is the
most important center of the modern food-processing industry. The location
of major production centers for the various branches of the industry is
given in the discussions of individual products which follow.
Since 1949, there have been important. changes in the food-processing
industry of Communist China. The foreign influence, mainly US, UK, and
Japanese, which had been largely instrumental in determining the location
of the modern food-processing industry in the cities of the eastern coastal
area, was eliminated. The Chinese Communist regime has adopted the policy
of locating new productive capacity in the interior of the country nearer
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the consumers and the sources of raw material and has relied on the
USSR and the European Satellites for machinery and technical assistance.
Consequently, Shanghai and the other cities of the east coast have been
slowly declining in relative importance as the new industrial centers
in the interior have been increasing capacity and production.
Besides the gradual shift in location of the food-processing
industry of Communist China, a gradual change to modern methods of
production is taking place. The change is slow because old methods
have long been established in the rural areas and because the food-
processing industry has a low priority in the Chinese Communist invest-
ment program'. The increasing importance of the modern sector will be
accentuated as the central government establishes control over supplies
of raw materials at all stages of production. The increase in the
relative importance of the modern sector of an industry means that the
growth rates of the modern sector tend to overstate the growth rate of
the whole industry.
The transformation of the modern sector of the food-processing
industry to public or public-private status has progressed rapidly.
By the end of 1955, 102 for example, all of the private flour mills,
rice mills, and tobacco factories in Shanghai had come under joint
operation, and throughout Communist China the majority of private mills
employing over 100 workers had been put into a public or public-private
status. By the end of 1957, all but 11 percent of the food-processing
industry above the individual handicraft level will be under state con-
trol, according to the First Five Year Plan. 10
In the years immediately preceding 19+9 the modern food-process-
ing industry of Communist China operated at only a fraction of capacity
because of the disruption of domestic and foreign trade. The first step
taken by the Chinese Communist government was to restore operations in
existing mills, and the next step was to build new modern capacity for
the industry. The details of the present building program are given
below in the discussions of the individual products.
At the beginning of 1956, two major problems faced the Chinese
Communist government in the food-processing industry. The first was to
obtain a constantly increasing supply of raw materials at a time when
agriculture is being collectivized. The second was to 'raise standards
of quality, which have fallen so low that they have been openly crit-
icized. 104J
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B. Flour Milling.
Flour milling is one of the most important branches of the food-
processing industry of Communist China. Wheat is significant in the
diet of about one-third of the population, including most of the people
north of the Yangtze River. The government, through the state-owned
China Food Corporation, controls raw materials, prices, and the marketing
of flour, but many of the small mills are still privately owned. Although
milling equipment was reported to be in good condition at the end of the
civil'war in 1949, an inadequate supply of wheat has prevented the mills
from operating'at capacity during the postwar years.
Because of.the poor transportation and distribution systems, the
bulk of the wheat grown in Communist China is processed in small local
mills, and.only-about.20 percent of the crop is processed in the mechanized
mills located in the urban centers. One hundred pounds of wheat are
required to obtain 90 pounds of flour. A higher extraction rate would
cause quality to fall.
In China, the principal flour mills. are located in Shanghai,
Wu-hsi, Suchow, Nanking, Hankow, Tientsin, Ch'ing-tao, Tai-yuan, and
Peiping. Shanghai has the largest and best-equipped mills. In Manchuria
the flour mills are concentrated. primarily in the Harbin area,'but.import-
ant flour-milling capacity is also located, in Chang-ch'un, Ssu-ping,
and T'ieh-ling.
The flour-milling industry of Communist China has been in trouble
ever since the Communists came to power. During the Nationalist period,
flour milling was concentrated chiefly in Shanghai and Tientsin and was
largely dependent upon imported raw materials. After the Communists
came to power, imports were cut off, and the coastal mills found them-
selves far from both domestic sources of raw materials and markets.
Consequently, they have not been working at full capacity.
Estimated output of flour from modern mills is heavily con-
centrated in East China and North China, as shown in Table ll.*
* Table 11 follows on p. 47.
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Estimated Output of Flour from Modern Mills in Communist China,
by Area, 1954 J
Output .
Area
(Thousand Metric Tons)
Percent of Total
Northeast
244
7.4
North
1,079
32.7
East
1,320
40.0
Central and South
208
6.3
Southwest
50,
1.5
Northwest
399
12.1
Total
3,300
100.0
a. For methodology, see Appendix A, p. 79, below.
The total flour-milling capacity of Communist China, including
Manchuria, is estimated to have been about',3.3 million tons in 1952. 105
Output of flour in 1952 was 2.9.9 million tons and is scheduled to in-
crease to 4.67 million tons under the First Five Year Plan, an increase
of 56 percent. 106 In view of the large increase planned, it is
interesting that only one above-norm project is scheduled for the flour-
milling industry under the Plan. Major reliance is being placed on
using idle capacity and on increasing effective capacity by intensive
use of equipment. Estimates of the output of flour in China in 1931-37,
1946-55, and'1957 (Plan) are shown in Table 12.*
* Table 12 follows on p. 48.
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Estimated-Output of Flour in China
1931-37, 1946-55, and 1957 (Plan)
Thousand Metric Tons
From All Mills From Modern Mills
1931-37 average
16,700
2,000
(1935)
1936
1,900
1946
15,500
1,300
1947
16,100
N.A.
1948
17,400
800
1949
13,900
1;300
1950
14,500
1,200'
1951
14,800
1,400
1952
15,700
3,000 J
1953
16,300
3,000
1954
18,400
3,300
1955
17,400
3,800
1957 (Plan)
17,400
4,700
a. For methodology, see Appendix A. p. 79, below.
b. Included in the figure for the 1931-37 average.
c. 107
C. Tobacco Manufacturing.
The tobacco-manufacturing industry of Communist China illustrates
the following characteristics typical of Chinese Communist light industry:
a steady and substantial increase in production from the modern sector of
the industry, a gradual lessening of the historic primacy of Shanghai
as production increases in other centers, and the elimination of private
ownership. This report discusses only production of cigarettes, because
little information about the other products of the industry is available.
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In 1936, China including Manchuria had an annual capacity of
about 2 million cases of cigarettes (50,000 cigarettes to a case), 108
and actual output in 1936 was 1,650,000 cases. 10 In 1949, one-half
of all the facilities for production were located in Shanghai. 110
The economic advantage of Shanghai in tobacco products was a result
of the following facts: first, UK and US capital had been available
for the development of industry in the eastern ports;. and second,
imports of high-quality foreign tobaccos had been an integral part of
the industry's-operation. The Chinese Communist regime, however,
banned imports of tobacco in 1949 in order to conserve foreign exchange.
The decision to ban imports was facilitated by the expansion of produc-
tion of tobacco that had taken place in the distant southwest provinces
after World War II. 111 In 1957, output of cigarettes will be 4 million
cases, according to the First Five Year Plan, an increase of 77 percent
over that in 1952. 112 In,1957, output of cured tobacco will increase
to 390,000 tons under the Plan, 113 also a gain of 77 percent over that
in 1952. No provision is made in the Plan for any major construction
project in the tobacco industry itself. A cigarette paper mill, however,
will be constructed in East China. Estimates of the output of cigarettes
in China in 1947, 1949-55, and 1957 (Plan) are shown in Table 13.
Table 13
Estimated Output of Cigarettes in China
1947, 1949-55, and 1957 (Plan)
Thousand Cases
Year
output
1947
2'.9363
1949
1,6oo
1950
1,885
1951
2,030
1952
2,650
1953
3,552
1954
3,728
1955
3,504
1957 (Plan)
4,700
a. For methodology, see, Appendix A,
p. 79, below.
b. Each case contains 50,000 ciga-
rettes.
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The Chinese Communist government has made radical changes in
the tobacco industry from the growing of the leaf through the sale of
the finished product.' The farmers are encouraged to grow better to-
bacco, especially the flue-cured, Virginia type. All private buying
of leaf tobacco has been eliminated, and the farmer is forced to sell
his tobacco to the China National Native Product Corporation, a govern-
ment agency with branches in every city and town. This corporation
allocates the leaf to tobacco manufacturers. Small and high-cost
factories have been forced out of business by insufficient allocations
of leaf or by excessive taxation. Several factories in Shanghai and
Tsingtao have been moved to interior tobacco-growing provinces such
as Honan and Hunan. The remaining private factories are rapidly being
turned into joint public-private enterprises. The, new regime also has
changed completely the marketing structure for the finished product
through the establishment of a government organization which sells all
the various types of tobacco products to retail outlets. The-'new
system of distribution of tobacco products has eliminated thousands
of private middlemen.
The consumption of raw tobacco'per case of cigarettes is esti-
mated to be 137 pounds. 114 On this basis, 217,000 tons of raw to-
bacco would have been required for the 1955 production of cigarettes.
In 1954 the tobacco crop was seriously affected by the flood, poor
weather conditions, and a shortage of fertilizers,' and this damage
to the crop was the main cause of the anticipated' reduction of 6 per-
cent in production of cigarettes in 1955. 115
No estimates are available on the amount of handicraft produc-
tion in the past. The new system of control, however, probably is
gradually increasing the proportion of production in factories to
total production of tobacco products.
D. Vegetable Oil Refining.
Before World War II, China led the world in production of
vegetable oils with an average annual output of almost 4 million
tons. 116 About one-half of.this tonnage was produced in modern
refineries. Chinese production represented about one-third of the
total world production in terms of oil and contributed about 14 per-
cent of the total international trade in vegetable. oils. Before
World War II the Chinese share in world production was as follows:
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soybean oil, more than 50 percent; tung oil, 80 percent; rapeseed oil,
60 percent; peanut oil, 20 percent; sesame seed oil, 50 percent; and
cotton seed oil, 19 percent. 11 Vegetable oils, traditionally an
important source of foreign exchange for China, accounted for more
than 15 percent of the value of its exports in 1936. 118/
Because of the civil war, production of vegetable oils in
China since 1945 has been below prewar levels. The Chinese Communist
government expects to increase output under the First'Five Year Plan
from 724,000 tons in 1952 to 1,552,000 tons in 1957, an increase of
114 percent. 11 These figures include only production of the modern
sector of the industry. Because the operations of the government
monopoly, the China National Oils and Fats Corporation,' are resulting in
the elimination or modernization of handicraft operations,tit is
unlikely that the real increase in production':.of vegetable oils will
be as high as 114 percent within the 5-year period.
Only one major construction project is scheduled for the.
vegetable oil refining industry under the First Five Year Plan.
Technology in the. industry remains the same as in the prewar period.
It is believed that the chemical solvent method of, producing vege-
table oils has not yet..been employed and that all production is by
presses and expellers. The oil-extracting facilities in Communist
China are as follows 120 :
Large expellers
10
Medium expellers.. ,.
160
Small expellers
.200
Rectangular presses -
200
Cylindrical presses
3,000.
Presses operated manually or by horses
8,000
Most of the large vegetable oil refineries equipped with
modern machinery are located. at Shanghai and Tsingtao, in East China;
Tientsin, in North China; Wu-ch'ang and Hankow, in. Central China;
and Dairen, Harbin, and Ssu-ping, in Northeast China. In Southwest
China and Northwest China there are no-refineries equipped..with large'
machinery. The estimated output of vegetable oils in Communist China
in 1954, by area, is shown in Table 14.*
Table 14 follows on p. 52.
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Table 1#
Estimated Distribution of the Output of Vegetable Oils
in Communist China, by Area a/
195+
Percent of Total Output
Northeast China
13.6
North China
9.2
East China
29.0
Central and South China
31.5
Southwest China
13.6
Northwest China
2.8
Inner Mongolia Autonomous Region
0.3-
100.0
a. For methodology, see Appendix A, p. 79, below.
E. Sugar Refining.
The production of cane sugar in Communist China is concen-
trated in the southern and southwestern provinces, where soil and
climatic conditions are favorable for cane culture. Kwangtung Prov-
ince (including Hainan Island) is the leading sugar-producing prov-
ince, and Szechwan and Kwangsi Provinces, which are next in importance
to Kwangtung, each has about one-third as much acreage in sugar cane.
The areas of sugar-beet cultivation are located primarily in Manchuria.
Although little information has been available on sugar-beet acreage
and production, sugar beets are known to be secondary to cane as a
source of sugar, accounting for roughly 15 percent of the total produc-
tion of sugar. The proportion of beet sugar processed in modern re-
fineries, however, is higher than the proportion of cane so processed
(see Table 15*).
* Table 15 follows. on p. 53
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The processing of raw sugar is generally carried out on a small
scale in Communist China. Only 10 large sugar refineries, which produce
the white type of sugar consumed in the urban centers,'were in operation
in 1953. These 10 refineries could process, even if working at full
capacity, only 25 percent of the sugar produced in China in 1953. The
location and estimated productive capacity of these 10 modern refineries
are shown in Table 15. Three of the refineries, the Tse-nei, Ho-ping,
and La-ha refineries, are new refineries that went into operation in 1953.
Location and Estimated Productive Capacity
of the Ten Large Modern Sugar-Refineries in Communist China a/
1953
Annual Capacity
Refinery and Province (Metric Tons)
Cane-Sugar Refineries
Shuntak (Shun-te), Kwangtung
16,000
Tungkun (Tung-kuan), Kwangtung
14,000
Szetou (Ssu-t'o), Kwangtung
10,000
Kityang (Chieh-yang), Kwangtung
6,000
Tse-nei, Kwangtung
15,000
Kweihsien (Kuei-hsien), Kwangsi
3,000
Beet-Sugar Refineries
64,0oo
Harbin,,Heilungkiang
18,000
A-ch'eng, Heilungkiang
12,000
Ho-p'ing (near Harbin), Heilungkiang
18,000
La-ha, Heilungkiang
15,000 to 25,000
Subtotal
63,000 to 73,,000
Total 127,000 to 137,000
a. For methodology, see Appendix A, p. 79, below.
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The construction of new sugar refineries has been taking place
in.the traditional sugar-producing areas, primarily Kwangtung Province
for cane sugar and Manchuria for beet sugar. During the period of the
First Five Year Plan, 18 modern refineries are scheduled for comple-
tion, 121 3 of which are among the 10 listed in Table 15.* In spite
of the substantial growth of production from these modern refineries,
small establishments will still play an important part,in production
of sugar. In Kwangtung alone there were 25 small, government-owned
refineries and 3 small, joint public-private'refineries, together with
thousands of small handicraft establishments in 1953. 122
In spite of the continued existence of many small refineries,
the Chinese Communist sugar-refining industry has not escaped the
general Communist regimentation of the economy. The following regula-
tions that apply to the main producing province, Kwangtung, may be con-
sidered typical. Private wholesaling of sugar no longer is permitted.
All refineries must register their production with a government commission
and sell their production through this commission. Retailers and fac-
tories using sugar as a raw material must purchase. their supplies
through the state commission. The activities of peasants who sell sugar
produced from their own crop also are regulated by the state.
Estimates of the output of sugar.in China in 1937, 19+9-55,
and 1957 (Plan) are shown in Table 16.** Production of sugar in
both refineries and small handicraft establishments will rise sub-
stantially according to the First Five Year Plan. Sugar produced by
industry, which was 55 percent of.the total production of sugar in
1952, will increase to 62 percent of the total,in 1957, according
to the Plan. Sugar produced by industry includes the output of
factory handicraft refineries as well as that of modern refineries.
The' estimated distribution of the output of sugar in Communist
China in 1953, by province, is shown in Table 17.* Table 17 was
computed from US State Department estimates of provincial crop yields 1_2_31/
before the State Statistical Bureau of China had published the figures
which are the basis of Table 16.**
P. 53, above.
Table 16 follows on p. 55.
Table'17 follows on p. 56.
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Table 16,
Estimated Output of Sugar in China 'a/
1937,. 1949=55, and'1957 (Plan)
Thousand Metric Tons
From'Small Handicraft
From Industry Establishments
Total
r
1937
111
289
4oo b
1949
lo6
277
383
1950
129
247
376
1951
161
247
408
1952
249
202
451
1953
298
226
524.
1954
347
250
.597
1955
409
279 .
'688
1957 (Plan)
686
414
l,lbo
a. Far methodology, see Appendix A, p. 79, below.
b. Before.World War II, Taiwan added another 300,000 metric
tons of sugar to the supply of the mainland.
The Chinese Communist government encouraged raising the sugar
yield per unit of sugar cane. It is reported that,.in contrast to the
10 tons of sugar which were extracted from 100 tons of cane before l9)49,
the Shuntak (Shun-te).and Tungkun (Tung-kuan) mills in Kwangtung can now
extract 11.5 tons.
Because' Communist China does not produce enough sugar to,meet
domestic requirements, China,has had to import sugar during the postwar
period. In 1953, 92,000 tons were imported, and in 1954, 68,000 tons
were imported. Even with imports, sugar is chronically in short supply
in China. -.
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Table 17
Estimated Distribution of the Output of Sugar
in Communist China, by Province J
1953
Output
(Thousand Metric Tons)
Percent of Total
Kwangtung
189.9.
487
Kwangsi
39.8
10.2
Fukien
13.3
3.4
Chekiang
7.8
2.0
Hunan
6.6
1.7
Kiangsi
17.6
4.5
Yunnan and Kweichow
15.2
3.9
Szechwan
49.9
12.8
Manchuria
49.9
12.8
Total
390.0
100.0
a. For methodology, see Appendix A, p. 79, below.
The Plan goals for.1957 seem too high to be realized. There
are many uses competing for the land on which sugar cane and sugar
beets are cultivated, and even under the best condition's, shifts in
crops cannot be accomplished overnight. In the first 3 years of the
Plan, sugar produced by industry increased to 409,000 tons from the
249,000 tons produced in 1952, but this increase is only 37 percent
of the increase of 437,000 tons planned for the 5-year period.
. Tea Processing.
The principal tea-producing areas,in China are Anhwei,
Chekiang, Fukien, Kiangsi, Hupeh, and Hunan Provinces. Next in
order of importance are Kwangtung, Kwangsi, Kiangsu, Szechwan,
Yunnan, Kweichow, and Sikang Provinces.
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The estimated distribution of the output of'tea in Communist
China in 1952, by area, is shown in Table 18.
Estimated Distribution of the Output of Tea
in Communist China, by Area a/
1952
Area
Output
(Metric Tons)
Percent of Total
East
41,250
50
Central and South
31,350
38
Southwest
9,075
11
Northwest
825
1
Total
82,500
100
a. For methodology, see Appendix A, p. 79, below.
Estimates of the output of tea in China in 1932, 1947, 1950-55,
and 1957 (Plan) are shown in Table 19.*
The tea industry of Communist China has been directed since
1949 by the. state-owned China Tea Company, and since 1950 particular
emphasis has been placed on improving the quality and production of
black tea, which'has always been a major item for export. During
1952 the Company had established six tea-processing plants with up-to-.
date machinery in Hupeh, Hunan, and Kiangsi Provinces. These provinces
provide one-third of all Chinese Communist production of tea, and the
6 plants are-said to be' concentrating exclusively on production of the
4 best grades of tea for export. Much attention has been paid to re
placing slow and expensive manual methods by machinery, and more big
processing plants are being built in all parts of China.
Table 19 follows on p. 58.
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Table 19
Estimated Output of Tea in China a/
1932, 1947) 1950-55, and 1957 (Plan)
,Metric Tons
Output
1932
207,350
1947
56,500
1950
62,500
1951
64,960
1952
82,500
1953
95,700
1954
81,250
1955
91,450
1957 (Plan)
111,850
a. For methodology, see Appendix A. p.
79, below.
The annual consumption of tea in Communist China was estimated
at about 40,000 tons in 1950 and in 1951 and .at 50,000 tons in 1952. 124
Exports of tea from China to all destinations were estimated at roughly
20,000 tons in 1950, 25,000 tons in 1951, and 30,000 to 35,000 tons in
1952. 125
G. Salt Refining.
In spite of the important value added by the salt industry to
the Chinese Communist economy,* the salt industry gets slight attention
in official announcements. In.1952, output of salt by industry was
3,460,000 tons and will be 5",932,000 tons in 1957 according to the
First Five Year Plan, an increase of 71 percent. Output of salt from
handicraft establishments will increase by 9 percent in the same period,
from 1,405,000 tons to 1,622,000 tons. Three new salt refineries will
be built under the Plan.
* The salt industry accounts for more than twice the value added by
factory-produced sugar.
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Although organized as a food-processing industry under the
Ministry of Light Industry, the products of the salt industry are
producer as well as consumer goods. Its products are crystallized
sulfate of soda, saltcake, anhydrous sodium sulfide, and bromine.
The four major salt fields in.Communist China are Chang-lu, Liaoning,
Huai-pei, and Shantung.
IV. Paper Industry.
During 1933-37, China consumed about 575,000 ton of paper annually,
which was slightly more than 1 kilogram (kg) per capita as compared with
8 kg per capita in Japan and 50 kg per capita in the US. About 200,000
tons were produced by small handicraft establishments; approximately
100,000 tons, by modern mills; and the balance was imported. 126 The
paper industry in Communist China is now considerably larger than in
the prewar period. The expansion is mainly a result of construction. and
renovation in the modern sector of the industry. In 1952, output of
machine-made paper was 372,000 tons, and output of handmade paper was
167,000 tons. 12 The goal for 1957 is 655,000 tons of machine-made
paper and 237,000 tons of handmade paper. 128 In addition to achieving
this increase in production, the Chinese. Communists expect.to experiment
with grass fibers as raw material, to.develop new types of industrial
papers, and to introduce new low-cost methods of production.
Ten above-norm construction projects are planned for the paper in-
dustry under the First Five Year Plan. Seven of these projects will be
completed by the end of 1957. Eight of the 10 projects will be under
the Ministry of, Light Industry and 2 under the Ministry ,. of. Local Industry.
Five of the 10 projects are listed in the Plan 12 :
1. Northeast: The state-operated Chia-mu-ssu Paper and Pulp
Mill, which was under construction in August 1953 and is to be completed
in 1957. This mill will produce paper for cement bags, insulating paper,
and industrial wrapping paper. 130
2. Central and South: The state-operated Canton (Kuang-.chou)
Paper Mill, which is the result of the renovation and expansion of an
old paper mill. This mill will have an annual capacity of 50,000 tons
of newsprint and, in addition, will produce wrapping paper, pulpboard,
and pulp for other plants. It was started in 1953 and will be completed
in 1956. The first of two phases of construction was completed in
June 1954. 131,
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3. Central and South: A new mill to manufacture pulpboard
from sugar cane. Its exact location is unknown.
4. East China: The state-operated Anhwei Paper Mill at
Huai-nan (T'ien-chia-an), the main product of which is cigarette
paper. The construction of this mill began early in 1952, and produc-
tion began in mid-1954. 132
5. North China: A new mill for the manufacture of high-grade
paper. Its exact location is unknown.
The following mills are'not known specifically to be among the 10
above-norm projects, but they seem to be large enough to be included.
6. Northeast: The local-state-operated Heilunkiang 50X1
Paper Mill. The construction of this mill began in 1953, and produc-
tion started in.January 1954. This mill is comparatively large, having
a reported capacity of 20 to 25 tons of paper per day. Its products
include newsprint, office stationery, and wrapping paper. 13
7. Central and South: A new paper mill in Wu-han. Construc-
tion of this mill was started in 1952 and completed in 1953. It is
designed to supply Central and South China with typewriting, cigarette,
and kraft wrapping paper. 134/' This mill probably is state operated.
The increase in production of paper planned for 1953-57 is not to
be limited to production from newly built state-operated mills. Of
the total increase in 'production of paper of 283,000 tons, for example,
only 66,000 tons will come from the 7 above-norm projects to be com-
pleted by 1957. 135 The old mills, both private and public, are
expected to increase their production. It is claimed that a formerly
privately owned mill, the An-ting Paper Mill in Szechwan Province,
almost tripled its production after becoming a joint private-public
mill in 1953. 136
The estimated distribution of the production of paper by modern
industry in Communist China in 1952, by area, is shown in Table 20.*
* Table 20 follows on p. 61.
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Estimated Distribution of Production of Paper by Modern Industry
in Communist China, by Area a/
1952
Area
Percent
Northeast
1+0.8
North
7.6
East
x+6.8
Central and South
Southwest
4.8
Northwest
Total 100.0
a. For methodology, see Appendix A, p. 79,
below.
.The new paper mills that have been identified in Communist China
are scattered among the old producing areas. The expansion of old
mills tends to perpetuate the existing locational pattern, but the
development of new types of raw material during the First Five Year
Plan may lessen the tie of the industry to its present location.
Private owners in the paper industry are being subjected to .
typical Communist pressure. In 1957, when new state-operated mills
will have begun production and when most privately operated mills
will have been converted to joint public-private mills, the percent
of total production from different mills according to ownership will
be as follows 13 :
Percent
State-operated and local-state-operated mills 61.6
Joint public-private mills 37.3
Cooperatively operated mills 0.1
Privately operated mills 1.0
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The labor force in the modern paper-and-pulp industry in Communist
China probably is between 44,000 and 74,000 workers. The minimum and
maximum figures are based on the following information.. It has been
reported that the Manufacturing Plant of. the Kirin Bureau
of Light Industry has a labor force of 6,000 workers, who produce 150
tons of paper per day. 138 Assuming 300 working days per year, annual
output is 45,000 tons. In 1954, 556,000 tons of paper were produced
in China. Production of this magnitude required 74,000 workers if the
proportion of workers to tons at the Kirin mill were applied to the
whole industry. On the other hand, it has been estimated that a total.
force of 500 to 600 workers produced 30,000 tons per year (300 work-
days) in integrated mills in the US and Western Europe. It has been
further estimated that the efficiency of labor in underdeveloped regions
may be as low as one-third or one-fourth of that in developed areas. 13
If it is assumed that 2,400 workers are required in China to produce
30,000 tons of paper per year, 44,000 workers would have been required
to produce 556,000 tons in 1954.
Estimates of the output of machine-made paper in China in 1943-55
and 1957 (Plan) are shown in Table 21.*
As for papermaking equipment, Communist China can supply its own
needs for simple equipment like boilers, vats, and tubing, but it
must rely on the outside world for more complex equipment. The Canton
Paper Mill, for example, which has been modernized and greatly expanded,
has been equipped with two 70-ton automatic pulp machines of East
German manufacture. 140 The largest of the new mills, the Chia-mu-ssu
Paper and Pulp Mill in Northeast China, will be equipped with machinery
delivered by, and presumably made in, the USSR. Of the countries out-
side the Sino-Soviet Bloc, the UK, Sweden, West Germany, and Finland
supply papermaking equipment. China, however, is producing increasingly
complex papermaking machinery in its own machinery industry and by 1957
will depend very little upon other countries.
* Table 21 follows on p. 63.
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Table 21
Estimated Output of Machine-Made Paper in China a/
1943-55 and 1957 (Plan)
Year
Output
1943
165
1944
N.A.
1945
3.9
1946
93
1947
125
1948
N.A.
1949
107
1950
139
1951
239
1952
372
1953
428
1954
556
1955
606
1957 (Plan)
655
a. For methodology, see Appendix A,
p. 79, below.
V. Rubber Products Industry.
Although consumption of rubber in Communist China is small -- only
1 percent of the per capita consumption in the US -- the industry is
important from a military as well as from an economic point of view.
Because the Communists have made vigorous attempts to modernize both
production methods and end products since 1949, a description of the
industry may be divided into the period before 1949 and the 'develop-_
after 1949.
The first'Chinese factory for production of rubber. products was
established in Canton in 1917, and the second, in.Shanghai in 1921.
The industry developed more rapidly after 1928, encouraged by the
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low prices on imported crude rubber; the increased demand for rubber
footwear, belting, and other rubber products; and the greater protec-
tion afforded the industry by higher Chinese tariffs on finished
goods. 141 By 1931, about 40 plants were operating in Shanghai
alone, which was the center of the industry. Heavy fighting in the
Shanghai area in 1932 resulted in the destruction of most of these
factories. Those which survived and those established after 1932
were demolished,'looted, or seized by the Japanese in 1938. Japan,
in turn, established new factories as subsidiaries of Japanese rubber
companies, equipped them with modern machinery, and used them to supply
strategic goods for its armies. No detailed information is available
on the industry during the period of the Japanese occupation, although
it is known that the end of imports of rubber after the Japanese attack
on Pearl Harbor severely limited the operation of the factories.
After World War II the Chinese Nationalist government immediately
attempted to reestablish the rubber industry., Limited supplies of
foreign exchange impeded this restoration, and it was not until 1947
that the Ministry of Economics could allocate sufficient funds to buy
adequate supplies of rubber and other essential items which had to be
imported. The majority of the rubber factories were privately owned
and operated. The National Resources Commission of the Nationalist
government, however, took over the factories formerly owned by for-
eigners both in China and Manchuria. It is estimated that the total
productive capacity of all rubber factories in China in 1948 was as
follows 142 :
Motor vehicle tires
220,000 units
Motor vehicle inner tubes
220,000 units
Bicycle,
ricksha, and cart tires
4,050;000 units
Bicycle,
ricksha, and cart inner tubes
4,450,000 units
Footwear
90,000 to 100,000 thousand
pairs
Belting
224,000,000_ square inches
V-belting
45,000,000 linear inches
Ample supplies of raw materials did not exist in postwar Nationalist
China. On the basis of the raw materials available, it is believed
that actual production was less than one-half of the capacities listed.
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In 1949, when the Communists had come into power, the rubber in-
dustry almost ceased operations. The output of vehicle tires in 1949
was about 20,000 units, and production of other products probably
suffered proportionally.
Under the Chinese Communist government the Ministry of Light In-
dustry controls the rubber factories through Regional Bureaus. These
Bureaus are divided into Administrative Districts, which exercise
direct supervision over the industrial installations within their
districts.
In 1950, before the Communists had reorganized the rubber industry,
there were 543 rubber establishments in China, employing more than
34,000 workers. 143 Most of these establishments were small, employing
fewer than 50 workers and making rubber footwear and other products by
primitive methods. The Communists have been taking control of the
larger, privately owned factories by various devices. Supplies of raw
materials are withheld from some factories, and other factories are
given large government orders and then taxed out of existence. In
every case, the final result is the formation of a public-private
company which owns the factory, the former owners being allowed to
continue its operation under the supervision of a Party representative.
The smaller, inefficient factories are eliminated by the withholding
of supplies of natural rubber, imports of which are controlled by the
government. Factories which had been taken from foreigners by the
Nationalist government were seized by the Communists and designated
as "state-owned." ? .
Additional changes have been made by the Communists to increase
the efficiency of the rubber industry of Communist China. Equipment
has been'shifted from smaller factories and concentrated in fewer
and larger factories. At least two new modern factories patterned
after those in the USSR are being built. One of these factories is
in Shanghai, the other in Peiping. A third has, already been built
in Mutanchiang. In this new construction program the Chinese Com-
munists have had the help of Soviet specialists whose services have
been supplied under the industrial assistance pact signed between
the USSR and China in 1953. Equipment for the new plants is reported
to be coming from East Germany and Czechoslovakia. The new construc-
tion program probably will not be finished before the end of 1956.
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Another move to increase the efficiency of the rubber industry was
made by the Chinese Communists when they established a factory at Mokden
under the Ministry of Railways for production of special rubber items
required for railroad cars and locomotives. This factory makes heater
hose, packings, gaskets, and similar items, and its entire production
is used by the Ministry of Railways. Its size indicates that it can
easily meet the needs of the Chinese railroads.
The objectives of state planning and statements by Chinese Com-
munist officials regarding the attainment of these objectives give a
fairly accurate basis for estimating Chinese production of motor
vehicle tires. Production in 1954 was announced as being more than
28 times that in 1949, 144 and output in 1955 was 650,000 units. A
recent statement on the First Five Year Plan claimed that Communist
China would produce 760,000 motor vehicle tires in 1957,?or 82 percent
more than were produced in 1952. Estimates of the output of motor
vehicle tires in China in 1948-54, by city and by plant, are shown in
Table 22.*
The primary factor in production of rubber footwear in Communist
China is not the capacity for production but the availability of raw,
materials. As a result of the government's policy of concentrating
production in a few large factories, many small factories have been?
eliminated. Total capacity of all producers of rubber footwear has
been estimated at more than 100 million pairs of shoes per year, 145
if unlimited supplies of raw materials are assumed. On the basis of
available supplies,'output in 1949 probably was about 50 million pairs.
Announcements by various Chinese Communist officials can be converted,
using 1949 as a base year, to give the annual output of rubber footwear
in China in 1949-55 and 1957 (Plan),. as shown in Table 23.**
Modern industrial production of rubber footwear is far more important
than production of leather footwear to the Chinese Communist consumer.
In 1953, Com- 50X1
munist China produced about 3 million pairs of leather shoes in its
plants, 146 or only one-twentieth of its production of rubber shoes.
As is apparent from a comparison of the Chinese population with the
small production of shoes by industry, the rural population depends
heavily upon handicraft and family production for its footwear. Primi-
tive types of footwear, such as clogs and sandals, make up an important
part of local production.
* Table 22 follows on p. 67.
** Table 23 follows on p. 69
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Estimated Output of Motor Vehicle Tires in China, by City and by Factory a
1948-55
output (Units)
City and Factory
Area
Date of
State Control
Number of Workers
1948
1949
1950
1951
1952
1953
1954
1955
Brand Name
Shanghai
Ta Chung H?a
East
21 December 1954
938 (1950)
27,000
5,000
25,000
50,000
67,000
75;000
85,000
100,000
Double Coin
Chung-nan
1 January 1954
N.A.
5,000
10,000
10,000
20,000
Fly-Wheel
Cheng Tai Hsin Chi
1 January 1954
300 (1952)
30,000
50,000
50,000
50,000
50,000
Warrior
Tai Hsin Chi J
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Fu-t'at
N.A.
2,000 (1952)
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Rubber Factory No. 2
December 1950
980 (1952)
3,500
12,000
20,000
25,000
Liberation
Chu-lin Jung-chi
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Red Light
Tien-ching Rubber Distribution
Works
Kuang-dhou Rubber Manufacturing
Works J
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
Diamond
Peiping
Chung-ya Chin Kung-yeh
State-built 1951-53
1,500 (approximate)
30,000
50,000
80,000
100,000
Mukden
Northeast Rubber Goods Factory
(Factory No. 1 and No. 7)
December 1950
6,000
5,800
10,000
12,000
35,000
60,000 .
75,000
75,000
75,000
Red Flag
T'sing Tao East
T'sing Tao Rubber Goods Factory
December 1950
1,000 (1951)
25,000
10,000
25,000
110,000
200,000
200,000
215,000
215,000
New China
Mu-tan-chiang Northeast
State-operated Rubber Factory J
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
N.A.
34,000
65,000
Total
59,000
25,02
62,000
225,000
417,000 J
472,000
569,00o
650,02
a. For methodology, see Appendix A, p. 79, below.
b. Tire producers reported by recent Chinese Communist press reports.
c. Based on announced figuresand partly independent of the other figures for 1952.
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Estimated Output of Rubber Footwear in Communist China a/
1949-55-and 1957 (Plan)
Thousand Pairs
1949
50,000
1950
45,100
1951
67,6oo
1952
63,600
1953
6o,ooo
1954
81, 200
1955
90,000
1957 (Plan)
108,300
a. For methodology, see Appendix A, p. 79, below.
The quality of rubber footwear is often the target of official crit-
icism. Shoddy construction is a common charge. As in other light in-
dustries., rubber factories are ordered to conserve raw materials, and
the attempts to make rubber footwear out of less and less raw rubber
must affect quality adversely. On the other hand,
the Shanghai rubber industry, after adopting the
Soviet method of "gradual temperature rise" for vulcanization, had
succeeded in increasing the strength of its rubber footwear. 14
No estimates can be made of the actual production of other consumer
items produced by the various rubber factories. It may be assumed that
production of industrial goods, such as belting and hose, have been given
priority, because industrial expansion is being emphasized by the govern-
ment.
VI: Pharmaceutical Industry.
Although the Chinese have been compounding native medicines for
thousands of years, the modern pharmaceutical industry has become
important only since World War II. The Chinese Communist government
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is making a great effort to expand production of modern drugs, such as
the antibiotics and sulfa drugs; to replace production from a large number
of small plants with production from new modern plants; and to raise the
notoriously poor standards of quality of the industry. In addition to
these developments, there is the familiar process of the rapid expansion
of state control over production and marketing of the industry's products.
The Ministry of Light'Industry claims to have produced the following
products in 1954: Vitamin C, amino-acid hydrochloride, ergot, aureomycin,
amino-sulfonic urea, and tablets for X-ray treatments. The Ministry's
plans for 1955 include the production of local anesthetic medicines,
hydrochloric acid procaine, phenobarbital, and santonin.
Shanghai is the center of the pharmaceutical industry. Important
plants are also located in Mukden, Peiping, Canton, and Harbin. Lesser
plants have been reported in Ch'iao-t'ou, Chungking, Dairen, Hsin-chu,
Lan-thou, Nan-ning, Nan-tung, Nanking, Sian Tientsin, Tsinan, Tsingtao,
and Yen-chi. The state-operated Shanghai Medical Supply Plant 50X1
produces penicillin and is reported to have succeeded in producing
aureomycin on a small scale under the guidance of the Chinese Academy
of Sciences. Chloromycetin was also produced there in 1955. Sulfathiazole
is produced by the Shanghai Pharmaceutical Plant and ephedrine 50X1
hydrochloride, by the Asiatic Chemical Works Ltd. in Shanghai.
The state-operated Northeast Chemical and Pharmaceutical Company
in Mukden, a major plant, also is reported to have been successful
in the experimental production of chloromycetin. Glucose for injection
and sulfa drugs are produced in plants operated by the Northeast Company,
and it is claimed that expansion of facilities will permit this company
to produce, enough sulfa drugs in 1956 to supply 20 million patients per
year. Penicillin is also produced by the Northeast Chemical and Phar-
maceutical Company.
Research in the field of antibiotics is centered in Peiping.
Harbin is reported to be the principal location for the production
of glass ampoules and bottles in Communist China. It is believed that
bulk pharmaceutical products are shipped to Harbin for packaging in glass
and redelivery. Some pharmaceutical products are-produced in Harbin.
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During the period of the First Five Year Plan, output of penicillin
in Communist China is to rise from 153,000 bottles (300,000 units per
bottle) in 1952 to 29 million bottles in 1957. There will be 6,000
kg of chloromycetin produced in 1957, contrasted with none at all
in 1952. Output of sulfa drugs under the, Plan will be 844,000
kg in 1957, compared with 80,617 kg in 1952. j / These figures illus-
trate the, fact that production of modern pharmaceutical products in
China is only beginning and that plans call for large-scale production
of some items in a, short period of time.
In spite of claims of expanded facilities for production of phar-
maceutical products, the value of,Chinese Communist. imports of phar-
maceutical products during 1950-54 was relatively large, amounting to
between $26 million and $35 million per year. Vitamins, salicylates,
sulfas, barbital, phQnacetin, and antibiotics are included in imports
with penicillin, the most significant import in dollar value.
Estimated imports of pharmaceutical products and penicillin by
Communist China in 1950-54 in thousand US dollars are shown. in the
following tabulation:
1950.
1951,
1952
1953
1954
Pharmaceutical products
32,300
30,500
27,600'
35,200
20,000
Penicillin
8,000
6,000
20,000
15,000
10,000
In 1954 the value of Chinese Communist exports of medicinal. and
pharmaceutical products to Hong Kong amounted to almost $750,000.
Such exports consist chiefly of medicinal herbs and oils which are
transshipped to various parts of the world. The principal medicinal
herbs and oils exported are cassia lignea, matrimony vine seed, dried
orange rind,.ginseng, licorice, rhubarb, camphor, aniseed, tung oil,
peppermint oil, menthol crystals, castor oil, and cassia oil.
In no other light industry in Communist China is quality a more
serious problem than in the pharmaceutical industry. At a national
congress on the First Five Year Plan in mid-1955, it was stated by
the Minister of Light Industry that the proportion of improperly made
medicines for injections generally runs from 20 to 30 percent of total
production and that 45 out of 70 types of commonly used tablets have
been repeatedly reported as being hard to dissolve or too low in
quality. 14
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VII. Other Branches of Light Industry.
A. Matches.
Match factories were established early in the industrial develop-
ment of China. Most factories were small, required little capital, and
used almost no machine power. Before World War II, however, large-scale
and more mechanized methods of production were developed by Swedish and
Japanese interests. Most of the larger. and more mechanized factories
were located-in Shanghai. Notwithstanding the development of these modern
factories, small domestically owned enterprises were able to survive, and
foreign factories accounted for only 10 percent of production. 150 More
than 50 percent of the factories were located in the eastern provinces
of Shantung, Kiangsu, and Kwangtung, a reflection of the industry's
dependence upon foreign sources for raw materials such as splints and
chemicals. 151
Chinese output of matches was stabilized during 1930-35 at 5
million chien per year (1 chien contains. 1,000 boxes of 80 to 100
matches). D21 The estimated output of matches in China, 1930-35
(average.), 1949-55, 1957 (Plan) is shown in Table 24.*
Matches are relatively plentiful in Communist China, as shown
in Table 24, and about 5 matches per capita per day are now produced.
Quality, however, is poor, the matches being made thin and short in
order to conserve materials. The goal for 1957 is easily within the
existing capacity of the industry. No new factories will be built
during the First Five Year Plan, 153 and the concentration of the
industry in the eastern provinces, therefore, will continue.
B. Soap.
Before World War II, soap factories in Shanghai, Tientsin, and
other large cities produced enough household and laundry soap to make
large amounts of imports into China unnecessary. Higher grade luxury
soaps were imported for urban consumption.
* Table 24 follows on p. 73.
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Estimated Output of Matches in China
1930-35 Average, 1949-55, and 1957 (Plan)
Output
(Chien
1930-35 average
5,000,000
1949
6,750,000
1950
5,870,000
1951
7,220,000
1952
9,110,000
1953
8,020,000
1954
10,350,000
1955
11,130,000.
1957 (Plan)
12,700,000
a. For methodology, see. Appendix A, p. 79,
below.
b. One chien contains 1,000 boxes of 80.to
100 matches.
Data on Chinese production of soap before World War II are
lacking and for the years after 1945 are available only for Shanghai,
the center of the industry. At the end of World War II the largest
factory in Shanghai, the British-owned China Soap Company, a subsid-
iary of the Lever interests, had close to one-third of the city's .
capacity of over 500,000 cases a month, of which 420,000 cases were
laundry and household soap. 154 Monthly output of soap in Shanghai
was only 140;000 cases in 19 and 180,000 cases in 1947, because the
disturbances of the civil war and the shortages of raw materials permitted
operations at only a fraction of capacity. 225J
Since 1949, production in Shanghai has continued far below cap-
acity. In June 1949, 130,000 cases-were produced, and an average of
only 60,000 cases per month was. produced from June to August 1950. 156
The decrease in production of the soap industry under the Chinese Com-
munists is in keeping with their program providing for the retrenchment
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of nonessential industry and for the reduction of imports. Thus produc-
tion of high-grade soaps requiring imported raw materials, such as coco-
nut..oils, has been discouraged. The absence of government claims of
rising production in the past few years, together with the reports of a
general scarcity of soap in urban markets, probably means that the priority
of the industry is still low. The only mention of soap in the First Five
Year Plan is in a list. of light industry products. An isolated figure
gives planned production in 195+ as 73.5 percent above that in 1953. The
quality of the product is deteriorating, 50X1
A Tientsin newspaper editorial, for example, stated that two formerly
well-known brands of soap had fallen into public disfavor because of
their poor quality..
C. Pottery and Porcelain.
The pottery and porcelain industry of Communist China makes more
than 3,000 products ranging from coarse earthenware vessels to the finest
of porcelain vases. The principal products of the industry are kitchen-
ware, dinnerware, glazed bathtubs, wash basins, toilet units, wall tiles,
and electrical insulators. Although most of the products are consumer
durable goods, some products, like insulators, are producer goods. The
value of ,production of pottery and-porcelain thr'oughout' Communist China
in 1955 is estimated to have been 31 percent above that in 1954. Produc-
tion in 1955 at the famous ancient porcelain center of Ching-te-chen
(Fou-liang) in Kiangsu Province-is estimated to have been three times
that in 1949. 158 Ching-te-chen has rich reserves of china clay or
kaolin, which will provide a source of raw. material for many centuries.
The control of the pottery and porcelain industry of Communist
China is less centralized than that of the main sectors of light in-
dustry. The pottery and porcelain industry is under the. jurisdiction
of the Ministry of'Local Industry. Since 1950, 60 local.state-operated
enterprises to produce ceramics for daily use have been established,
including some in Ching-te-chen and some in Feng-feng, Li-ling, Tang-
shan, and Peiping, all in Hopeh Province. 122/ One-half of the total
value of the industry's production in 1955 was produced by local state-
operated, joint public-private, and cooperative enterprises. The other
half was produced by private enterprises and widely scattered individual
handicraft enterprises. 160 Most of the newly built and reconstructed
enterprises are mechanized. 161 The increase in importance of the
state-controlled, mechanized sector of the industry is inevitable. . ?
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D. Medical Equipment.
One of the indications of the industrial maturity of Communist
China is the establishment of a medical equipment industry. According
to the Ministry of Light Industry, China could produce more than 500
different types of medical instruments by February 1956. 162 Although
most of the instruments are simple, the Ministry states that among the
instruments and equipment being produced are 200-milliampere diagnostic
X-ray equipment for radiography and fluoroscopy, X-ray fluorescent
screens of all sizes, ultra-shortwave apparatus, universal operating
tables, and high-pressure and electrical sterilizers..
E. Fountain Pens.
Fountain pens are an example of the numerous relatively small
and simple consumer durable goods that the Chinese Communists are-ex-
porting to the markets of Southeast Asia. Chinese exports of fountain
pens to Southeast. Asian markets, such as Burma and Hong Kong, increased
from 3,400 dozen in 195+ to 500,000 dozen in 1955. 163 Exact figures
for domestic sales were not announced, but domestic sales in 1955 were
almost one-fourth above those in 195+ and were expected to
increase
10
percent in 1956. 164+ The.pens shipped abroad seem to be
of fair
quality and are frank imitations of well-known US brands.
The center of the fountain pen industry is Shanghai. In 1954
there were 39 fountain pen companies in Shanghai-, 165 and their-com-
bined production was 9 times larger than production before 1949. 166
These companies are rapidly being'changed to public-private enterprises.
VIII. Capabilities, Vulnerabilities, and Intentions.
A. Capabilities.
Communist China can raise the productive capacity of light in-
dustry to the levels called for by the First Five.Year Plan. The new
capacity, located in the interior, represents part of the government's
efforts to establish great new industrial areas in parts of the country
that previously had been scarcely affected by the industrial revolution.
China can equip its light industry from its own machinery industry except
for complex equipment, such as automatic machines for making paper.
China is rapidly making progress toward its goal of complete independence
from foreign sources, aided by the fact that the machinery for most of
light industry is simple compared with that used in heavy industry, trans-
portation, and communications.
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Communist China can raise production of light industry to the
levels called for by the First Five Year Plan, if agricultural produc-
tion does not suffer from bad weather conditions or from the process
of collectivization. Urban labor and capital plant will not be limit-
ing factors.
Communist China can increase the extent and effectiveness of
its centralized control of light industry. As a result, China will
be even better able to direct the energies of light industry toward
meeting the requirements of industrialization, such as acquiring
additional machinery from abroad rather than raising the standard of
living.
Communist China can make large technical advances in light
industry by adopting Soviet methods and by making use of its own
growing research facilities. Because so much of its light industry
is still operating with primitive methods and equipment, China con-
tinues to have wide opportunities to increase productivity. The
declining rate of increase in production by light industry indicates,
however, that China will soon enter a period when large'increases
will be difficult to achieve.
Chinese Communist standards of living cannot be raised by
1957 or probably even by 1962 if Communist China continues its policy 50X1
of concentrating on industrialization. The government leaders have
resolutely denied resources to the consumer-sector of the economy and
are using the rationing system in an attempt to extract more resources
from the already hard-pressed consumer. There are no indications
that this general policy will be abandoned in the next 20 years.
B. Vulnerabilities.
The. building of new productive capacity in the interior,
near supplies of raw materials and consumers, has decreased the
vulnerability of light industry in Communist China. This decentral-
ization of light industry is lessening the importance of interruptions
of transportation. As the Chinese Communist machinery industry becomes
better able to supply light industry with the types of equipment that
China formerly imported, the vulnerability of light industry is further
decreased.
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On the other hand, the vulnerability of light industry in Com-
munist China is increased by the consolidation of small units into
large units and by the decline in importance of local production.
Greater interdependence in a physical and organizational sense means
greater vulnerability. As Chinese Communist industries become modern-
ized, China will become less and less an amorphous economy and will
develop increasingly complex nerve centers that can be damaged.
Tensions resulting from the forced-draft industrialization
of Communist China increase the. vulnerability of light industry.
Deterioration in the quality of products, for example,.has been
caused by the increased pace of work and the strict conservation
of'raw materials. The very success of the Communist government in
rapidly increasing production by light industry creates problems
of insuring supplies of raw materials, of training large groups
of workers in the use of modern equipment, and of conducting research
in new products. At the same time, the usual economic incentives
given to workers for increasing production are absent because of
the industrialization program. That serious ruptures have not occurred
in the Chinese Communist economy is a tribute to the determination of
the Chinese leaders and to the stamina of the people.
The. vulnerability of light industry in.Communist China varies,
depending upon the branch of light industry concerned. Some industries
have many small scattered productive facilities; others are more con-
centrated. For instance, there will be only one major rayon plant
in 1957. and, in contrast, several dozen small woolen mills. Several
of the branches of light industry produce the types of goods for which
consumers have built up inventories, such as textiles, whereas in
other branches, such as the food-processing industry, a decrease in
production would be felt immediately. Some branches of. light industry
produce goods of direct use to the armed forces, such as footwear and
pharmaceutical products, and the maintenance of production in these
industries would be more important to the government than the mainten-
ance of production in. industries supplying goods of less direct
military use.
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C. Intentions.
Communist China intends to use the increase in production
by light industry to develop industrial capacity, not to raise
living standards. As a corollary, China will force workers to in-
crease output per man-hour and to use less raw materials per unit
of production without an increase in wages..
The expansion of the productive capacity of light industry
is planned through 1957 and on into the period of the Second Five
Year Plan, but at a declining rate. These expansion plans will be
accompanied by calls for economy and reductions in original construc-
tion plans, especially for nonessential construction like workers'
canteens and dormitories. The inability to expand rapidly produc-
tion of agricultural raw materials is the main reason that the govern-
ment_does not intend to maintain the rate of growth of facilities
for production in light industry.
The Chinese Communist government, within the framework,of
the joint public-private enterprise, intends to maintain even more
rigid forms of control over light industry and to reduce still
further the decision-making power of former owners. Concurrently,
the government intends to modernize and' consolidate existing handi-
craft enterprises, not'only to increase production but also to
insure the flow of materials through controlled channels. The effect
of increased control'over light industry will be the strengthening
of control over the livelihood of the individual 'worker. Ultimately,
the large public-private enterprises will be transformed to public
enterprises.
The government also intends to enlarge and strengthen the
rationing system in Communist China. More production by light in-
dustry can then be used to acquire foreign credits.
The quality of production by light industry in Communist
China is to be improved. Success in the improvement of quality
will be limited, however, by the emphasis placed on quantity'and
.on the reduction in the amount of raw materials allowed per unit
of production.
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APPENDIX A
METHODOLOGY
A. General.
Before 1955 there were few absolute figures on production of light
industry in Communist China. The situation changed. completely in 1955
with the publication of the First Five Year Plan and commentary on the
Plan. These official government releases have been relied on to as-
semble the figures on production, capacity, and extent of nationaliza-
tion that are presented in this report. Internal. checks on the con-
sistency of the data have been available in.some instances: for example,
the announcements of the construction of individual cotton mills as,
contrasted with the announcement of the over-all increase in cotton
textile 'capacity, and the announcement of.sugar-cane and sugar-beet
acreage as contrasted with the announcement of sugar production.
B. Methodology for the Tables.
Table 1: The original. source of the figures for 1949, 1952, 1953,
and 1954 is an official. publication of the Chinese Communist govern-
ment. The immediate source is a translation. 16 The figures for
1957 are taken from the First Five Year Plan. 16-/
Table 2: The sources for Table 2 are the same as those for
Table 1. It was assumed that all industrial production of producer
goods comes from modern (as opposed to factory handicraft) industry.
Table 3: The production series for individual light industry
products were put into index number form, with 1952 equaling 100.
In order to obtain a.composite,series for light industry, the series
for individual-products were.weighted in proportion to the importance
of each product in the gross national product in 1952, as measured by
estimates.. of the value added?_in the various branches. The series for
cotton yarn used in the computation of the composite series for light
industry excluded yarn used in making fabrics, whereas the series for,
cotton yarn given in Table 3 is for all'machi.ne-made .yarn. The series
for cotton fabrics used in the computation of the composite series was
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for fabrics made by modern-industry, whereas the series for cotton
fabrics given in Table 3 is for all cotton fabrics made in whole or
in part from machine-made yarn. The Plan figure for 1957 given in
Table 3 for cotton fabrics is 146 percent of production in 1952, but
the First Five Year Plan gives this 1957 figure as 147 percent.
16
The explanation of this difference is that the figure of 147 percent
refers to bales, while the figure of 146 percent refers to metric
length (the 1952 and 1957 totals convert from bales to meters at
different rates because of differing proportions of nonfactory produc-
tion to total production. 1 0 ). The weight used for the paper and
printing industry was applied to the series which represents produc-
tion of machine-made paper. The series for rubber products is a
composite of series for rubber footwear and for motor vehicle tires,
in which the footwear is given twice the weight of tires, because
twice as much rubber is used in production of footwear as in that of
tires.
Table 4: Figures for years before 1949 are the figures of private
trade associations in the particular industry. Figures for 1949 and
later years are based, with some exceptions, on official Chinese Com-
munist government announcements. In the case of spindles, the First
Five Year Plan states that the 5,660,000 spindles in place at the
beginning of 1953 will'be increased by 1,650,000 by the end of 1957?
The increase of 1,650,000 spindles has been distributed among the 5
years covered by the Plan on the basis of official reports on the
progress of construction of individual mills. The individual mill
announcements have been consistent with the goal of 1,650,000 new
spindles. In the case of power looms, the 47,100 new looms announced
in the Plan have been distributed among the 5 years in proportion to
the number of new spindles added. This method was used because the
Chinese Communists usually build integrated spinning and weaving cap-
acity in relatively constant proportions. Production of yarn for 1949
and subsequent years is based on official government announcements,
including the admission that output would decline by 109,000 tons in
1955 because of the floods in 1954. 171/ The figures for fabrics not
in parentheses are for production of fabrics from modern mills. Produc-
tion in 1949 is given as 72.6 percent of peak production before 1949.
The figures of 1950 and 1951 are based on officially announced per-
centage increases. For the years 1952-54 and 1957, production of
fabrics from modern mills is taken as equal to loom capacity, based
on 4 meters per loom per hour and 300 working days of 20 hours each.
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Production in 1955 is assumed to be equal to production.in 1954, in
spite of the decrease of 14 percent in total production of fabrics,
on the assumption that modern mills are being favored at the expense
of other mills.. Production in 1956 is assumed to bear the same rela-
tionship to production in 1957 that production of all cotton fabrics
in 1956 is expected to bear to production in 1957. The first official
figures to be published on production of fabrics include all cloth
that is made in whole or in part from machine-made yarn. It is, this
definition of production of fabrics. which. is reflected in the series
in parentheses.
Table 5: The geographic distribution of cotton spindles in 1937
and 1949 are figures of private trade associations in the particular
industry. The distribution in 1952, 1954, and 1957 (Plan) is based on
a study of official reports on the progress of construction of indivi-
dual mills. For example, a Peiping broadcast might report the comple-
tion of a 100,000-spindle mill in Sian.
Table 6: Table 6 is derived from Table 5.
Table 7: Table 7 is. based on official Chinese Communist announce-
ments about the progress being made in the construction of individual
mills. These announcements concerning mills appear in various (Hong
Kong) reports, the.most important single compilation of such announce-
ments being found in a report of June 1955. 172
Table 8: Table 8 is derived from Table 7.
Table 9: The figure for 1936 is derived from information that
Shanghai, which has 72 percent of the spindles in Communist China,
produced 150,000 bolts of silk fabrics per month (50 yards each). ~Uj
The figures for 19+9 and later years are based on official Chinese
Communist announcements.
Table 10: The figure for 1936, which.is assumed to represent
capacity, is derived from a statement that in 1949 the woolen textile
industry was operating at 30 percent of capacity. 174/ The figures
for 1949 and subsequent. years are based on official Chinese Commu-
nist announcements.
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mills. are taken from official Chinese Communist government announce-
ments. Figures for total output before 1955 also are based on official
Chinese Communist government announcements. Total output in 1955 is
estimated to be halfway between that in 1953 and that in 1954, and out-
put in 1957 is estimated to be no greater than that in 1955, because
the anticipated growth in the supply of wheat is expected to be ex-
tremely small.
including the Plan for 1957) for the output of flour from modern
Table 13: Table 13 is based on official Chinese Communist govern-
ment announcements.
Table 14: The figures were estimated by taking the oil equivalent
of the soybean, peanut, sesame, rapeseed, and cotton seed crops.
Table 15: Table.15 is based on official Chinese Communist govern-
ment announcements. 178/
Table-16: The figure for total production-in 1937 is contained
in a State Department report from Shanghai. The total for 1937
is assumed to have been divided between. refinery and small handicraft
production in the same proportions as in 1949. The postwar figures
are from official Chinese Communist government announcements. For
1953, 1954, and 1955 the amount of sugar processed in factories is the
only figure available, and the total output of sugar in these years
has been estimated by assuming that refinery sugar and sugar from small
handicraft establishments would, approach their. goals for 1957 at the
same proportionate rates. For 1949, 1950, and 1951 the amount of sugar
produced by industry is the only figure available, and the total output
of sugar in these years has been estimated from figures given by a
commercial information service. 180 This service overstated the official
Chinese. Communist figure for 1952 by-25 percent,-and this factor of 25
percent was used to reduce the estimates of the service for 1949, 1950,
and 1951.
Table 17: Table 17 is based on official Chinese Communist govern-
ment announcements concerning provincial production. 181
figures
50X1
50X1
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Table 19: Table 19 is taken from official figures 183 except for
1955, for which the increase-is estimated-by prorating the increase
necessary between 1954 and 1957 if the goal of the Plan is to be achieved.
Table 20: Table 20 is taken from announcements by the Chinese Com-
munist Ministry of Light Industry. 184
Table 21: Table 21 is based on various official announcements of
the Chinese Communist government, including the First Five Year Plan 185
and official statistical tables. 186
Table 22: Table 22 is based on official-Chinese Communist announce-'
ments concerning the capacity and production of individual'tire plants.
Table 23: Table 23 is based on official Chinese Communist announce-
ments concerning achievements in production and goals under the Plan.
Table 24: The prewar figure comes from a private study of prewar
industry in China. 187 The other figures are from various official
Chinese Communist reports, including the First Five Year Plan: 188
Table 25:r Table 25 is based on a comparison of rates of growth
,in production of four light industry products, with and without non-
factory production. The four products have been assigned weights
which reflect their respective importance in light industry.
C. Conversion Factors.
1. Cotton Textiles.
a. 100 kg of ginned cotton yield 93 kg of cotton yarn.
b. 14.9 kg of cotton yarn yield 100 linear meters of cotton
c. 40 yards make I bolt of cotton fabric produced in modern
mills. Bolts of fabric made outside modern mills vary in length,
averaging slightly less. than 40 yards.
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d. 5 linear meters of cotton fabric yield 1 standard suit
(probably the Chinese people's standard uniform).
e. 60 pounds of.cotton yarn are produced per 1,000 spindle-
f. 4 linear meters of cotton fabric are produced per 1 loom-
2. Silk Textiles.
a. 300 kg of dried cocoons yield 100 kg of reeled silk (based
on scanty information).
b. 13.5 kg of silk yarn yield 100 linear meters of silk
fabric (based on scanty information).
c. 40 linear meters make 1 bolt of silk fabric produced in
modern mills. The width of this silk fabric ranges from 70 to 114
centimeters.
3. Woolen Textiles.
. a. 2 kg of raw wool yield 1 kg of scoured wool. (There is a
wide range of from 0.7 to 1.3 kg, depending upon the breed*of the sheep
supplying the.wool.)
b. 100 kg of scoured wool yield 80 kg of woolen yarn.
c. 62 kg of woolen yarn yield 100 linear meters of woolen
4. Flour Milling.
100 kg of wheat yield 90 kg of,flour.
5. Tobacco Manufacturing.
137 pounds of tobacco yield 1 case (50,000 units) of cigarettes.
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6. Sugar Refining.
100 tons of sugar cane yield 11.5 tons of sugar (based on
scanty information).
7. Rubber Products.
a. 33 pounds of raw rubber are required for a tire casing.
and 8.5 pounds for a tire tube. (Averages cover a wide variety of
tires.)
b. 3/4+ pound of raw rubber is required for an average unit
of footwear, 1/2 pound for a pair of rubber shoes, and up to 3 pounds
for a pair of heavy boots.
D. Estimates of Nonfactory:Production.
Throughout this report it has been stressed that, in order to
assess the significance of rates of growth in light industry in Com-
munist China, some account must be taken of the decline in importance
of nonfactory production. The modernization and collectivization of
light industry has resulted.in the inclusion of an increasing share
of production in official statistical reports. These statistical
reports give Plan and Plan fulfillment data in terms of light industry
proper -- that is, in terms of production from modern and factory
handicraft mills. In studying Chinese Communist announcements, care
must be taken to distinguish between actual and statistical gains.
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