REGULATIONS, PROBLEMS, AND CRITICISMS CONCERNING CAPITAL CONSTRUCTION IN NORTHEAST CHINA. 1950

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700150304-6
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 9
• Document Creation Date: December 22, 2016
• Document Release Date: September 13, 2011
• Sequence Number: 304
• Publication Date: December 11, 1953
• Content Type: REPORT

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CENTRALN L I E E-Cl' REPORT
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
COUNTRY China
SUBJECT Economic - Capital construction
REGULATIONS. PROBLEMS, AND CRITICISMS
CONCERNING CAPITAL CONSTRUCTION IN NORTHEAST CHINA. 1950
LComment and Summary: The following report, in three parts,
presents (1) the Provisional Regulations Concerning Capital Con-
struct,ion in Northeast China, (2) the report of investigations
conducted by the Ministry of Industry, Northeast People's Govern-
ment, criticizing the slow progress and inferior quality of capital
construction in that area for 1950, and (3) a newspaper article
which discusses inadequacies in planning, fund management, and
supply of construction projects in the Northeast in 1950.
Parts I and II are taken from the book Chi-Chien-she
(Capital Construction); published by the Northeast China Branch
of the Hsin-hua Shu-teen (New China Bookstores), September 1950
Part III is from an article b Fu I-kang
in the 1 June 1950 issue of the Tung-poi Jih paoj
I. PROVISIONAL REGULATIONS CONCERNING
CAPITAL CONSTRUCTION IN NORTHEAST CHINA
(Issued by the Ministry of Industry,
Northeast People's Government, 5 April 1950)
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General
1. These regulations have been issued by the Ministry of Industry,
Northeast People's Government, to insure the successful completion of capital
construction, through the most efficient use of workers and materials, in the
highest quality of engineering work, so as to get the maximum result from
each capital construction.
LANGUAGE Chinese, L -REPORT NO.
F
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5 n. a for
t'rsthe c hethonofialo construction Office and its contractors are responsi
pital construction to be undertaken by the contractile
is responsible for maintenance g ch capital
ent
Quality of engineeria of work schedules construction unit
g work, and the ' attainment of the highest
Proper use of construction materials,
7? The head of the materials section of each capital con
is responsible for the uninterrupted supply of construction
ing to the work sched construction unit
ales. materials accord-
Each bureau
Only when a or compa4, will handle the construction of it, Only when
bureau or a company does not have the capacity will it be Pacity to carry ? Protect.
y be sought in the follows Slowed to obtain a contractor, our the
contractor
contractors s Places, but Only in order:
from the following o(1)
from contracting by this ministry; Y the
B companies; and (3) from the Privately fro
cm the ontractinglyo wnedPanies
9 Each capital construction to be underta ~.
must be in accordance with the national a onomickcons
allocation of by a bureau or a company
capital investments, traction policy and the au or 1 Each names e?f Personnel must submit to this minisry a report
listing the
progress of engineering work. gaged in each capital cot
ital cot nstruction, and the
-11= L?1w construction fund will be disbursed by this ministry Project
ecttforprogress funds.
of engineering work and depending upon the
12" The main portion of the engineering work of each
project started until it is approved by this ministry, the comple not be
be put into operation until it is and passed by ins may not
project may
each bureau or company-
Plans
belonging to thjs ,l construction to be undertaken by each
to the other exist ngireguls l be overned by these re ratns, in company
atioons
addin
3? All capital g ca r Pital construction. constru belonging to this ministry mu iomnake be undertaken by each bureau or company
the following Preparations for each
Plans
b. Designs
dc"En" Collection of materials
Engineering work
e. Inspection, transfer, and conclusion
4? of project the The Cap! -al Coost
n of all nuctton Office of this ministry is responsibl
completio capital consffic o
,i JAL
11 Plans for capital construction must be prepared in conjunction the construction by this ministry, Policy and the amount of capital investments as determinedh
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2.? Plans for capital construction for any year mist be prepared in con-
3. with the production plans of that year.
3. Plans for each capital construction, together with four copies of
charts and explanations, must be submitted to this ministry for approval
4. Plans fIr capital construction must include the following,;
a? Building material quoin i the construction of buildings.
tions b. Earth and stone material quota for the construction of installs-
C- Building material quota for the construction of installations.
5. Capital
actual which must be
folios approved by this ministry before
a. Construction of industrial plants.
b. Construction of workers- quarters which are not designed by this
C. Construction of hospitals
restaura
t
l
,
n
s, c
ubhouses, nurseries,
cooperatives,
floor space. schools, etc., which have more than 1,000 square meters of
.
d. Construction of permanent-type bridges more than 15 meters long.
e. Construction of power transmission lines, or major repairs to
hydroelectric and thermal-electric power plants.
f. Construction of a project costing more than 5 billion yuan.
g. Construction, by a privately owned contracting company, of a
project costing more than one billion yuan.
6. All necessary changes to be made in capital construction because of
changes in productions plans will be determined by this ministry.
7. No changes in engineering work will be permitted until they have
been reported to and approved by this ministry. All changes in engineering
work which would increase the c:,st of a project by more than 10 percent of
the entire cost of construction must he reported to this ministry for approval.
Designs
All plans for capital construction must accord with the following:
1. Current economic conditions, end standards of durability and safety.
2. The local climate, geological conditions, and environment, and the
availability of local construction materials and manpower.
The building codes issued by:the local or regional government.
4. All plans for the construction of workers' quarters aunt accord with
the designs and specifications determined by this ministry.
C 611l, IDEI'1 T ML
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a. Name of project
b. Location of project
c. Starting and finishing dates of project
d. Work schedules
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5.. All plans for capital construction which will cost more than 5 billion
Yuan must be submitted to this ministry, together with four copies of the
following, foe approval.
a. Site plan, floor plan, foundation plan, side elevations, cross-
section views of the project, geological map of the construction area, and
plans showing thc. location of water pipes, electric wiring, heating systems,
sanitation systems, etc. The plans and maps must be drawn up in appropriate
scales, with the exception of building plans, for which the scale must not be
smaller than one to 100.
b. Plans for th3 construction of important parts of a building,
such as the foundation, roof, beams, supports, stairways, etc., and the parts
which are to be built with steel-reinforced concrete. The scale for these
plans must not be smaller than one to 20.
c. Estimated cost for the construction of each important part of a
d. Plans indicating location, dimensions, etc., of sewer and drainage
6. For all capital construction costing less than 5 billion yuan, four
copies of floor plans, or layouts, of the project must be submitted to this
ministry upon completion of the project.
Collection of Materials
1. Each bureau or company will handle the collection of construction
materials for its own project.
2. If necessary, the personnel of this ministry will give advice on the
quality, quantity, specifications, and other matters concerning construction
materials.
3. Each bureau or company must submit to this ministry a report listing
the name, type, quantity, and price of each material; the source of materials;
the type of transportation to be used for the collection of materials; the
amount of materials to be stocked; the estimated consumption of materials per
certain period; etc.
4. The amount of construction materials on hand, if the source of materials
is nearby, must be sufficient to provide for 15 days of normal operation; if
the source of materials is distant, the amount must be sufficient to provide..
for 30 days of normal operation.
1. All capital construction to be undertaken within a city limit must be
carried out according to the building :odes of that city.
2.. Before starting actual engineering work, each bureau or company must
submit to this ministry a detailed report containing the following information:
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a? Construction-material quota
f. Source of construction materials
or by a B? Whether the work is to be undertaken by the bureau or company,
contractor
h. Estimated amount of work to be completed during 195
i? C
0
apacities and capabilities of construction machine
ry
j? Total cost of construction
k. Disbursement schedules of .,onstructicn fund
1. Plans and charts of project
m? All other information rel
ating to project
A
3
.
ll capital construction must be carried out accordi
and specifications
.
ng to the
plans
4? This ministry will assign personnel to inspect each
construction.
Project during
5. Each bureau or company must set up regulations concerning the adminis-
tration of capital construction to be undertaken by a contractor:
~? Each bureau o: company must set up regulations concerning the adminis-
tration of capital construction to be undertaken by itself.
7? All matters concerning the organization, administration, recruiting,
and welfare of workers will be handled individually by each bureau or company.
Each bureau or company will also set up its own regulations concerning the
mPanY?
administration Cf workers,
approval. and send these regulations to this ministry for
8. Each bureau or company must set up work schedules and schedules for
materials,
9. This ministry will determine the assignment and allocation of techni-
cians and engineers according to the work schedules, progress, and needs of
each project.
Inspection Transfer, -~- and Conlusion of Project
constructee d buildings ofr e
lestthans1,0 0lsquarh meterslof lion
oor a all newly
all completed repair work must be inspected and a floureau and
company which had undertaken the capital constructionve o by the bhe bureau ne
this ministry. However, each bureau or co, an or t the result of
of
its inspection to this ministry.
Y must submit the rsulof
2. Requests for the inspection of completed projects costing more
than 5 billion yuan and of newly square meters of floor sPcewillcbes handled inlonenof threerways , an
fol
as follows:
Y a. The bureau or company may request the inspection of the project
by the personnel of this ministry by submitting to this ministry the date of
completion of the project.
CONFIDENTIAL
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b. The bureau or company may conduct preliminary inspection by
using its own inspectors and representatives of various sections, and it may
then request the inspection and approval by this ministry of the result of
such preliminary inspection.
C. Preliminary inspection may be conducted bys thi inspe the ctors of this
ministry, together with the representatives of variou, sectons of bureau
or company which had undertaken the project, in order to prepare a report to
this ministry requesting final inspectior by the personnel of
this ministry.
and capitalTraconstructionsfer of by the production
tion on such transfers must be reported to this ministry ry for approvalalppro. in;orma-
.
4. Transfer of completed projects will be documented in four copies of
certificates signed by the parties involved. Two copies will be kept by each
bureau or company and two copies will be sent to this ministry.
5. Each contractor must prepare four copies of the construction guarantee
for each project completed by him. Two copies will be kept by each bureau or
company and two copies will be sent to this ministry.
6. At the end 'f each month each bureau or company must prepare and submit
to this ministry a construction expense-account sheet.
7. Within one month after the completion of each project each bureau or
company must prepare and submit to this ministry a final expense-account sheet.
3. With one month after the end of each year, each bureau or company'must
prepare and submit to this ministry an annual report on the completed portion
of a project.
II. REPORT OF INVESTIGATION BY TIM MINISTRY OF INJSTRY
O CONDITION OF CAPITAL CONSTRUCTION
IN NORTHEAST CHINA (14 June 1950)
The investigation, by the lA+n+~+,, r T,"h nt J, Northeast People's Govern-
ment, of several capital construction projects which are not in progress has t1ait the deficient.the quality of engineering work in capital construc-
According to incomplete statistics as of the end of April 1950, of the
total of 4,254 capital construction projects to be undertaken by the Ministry
of Industry during 1950, only 37 had been completed, and only 493 were in
progress.
Another investigation made since May 1950 disclosed the existence of
numerous cases of inferior engineering work, exec sive waste of materials,
funds, and manpower, and lack of responsibility among the leaders of
organizations in charge of capital construction work. According to the
investigation, the inferior engineering work resulted from imperfect plans
and preparations, careless workmanship on the part of workers and technicians,
and lack of responsibility and supervision on the tart of leaders.
In many places, inferior construction materials also produced inferior
engineering work. In many cases, the materials received by the construction
units were not made or cut to specifications, were damaged or broken in transit,
or were not carefully inspected for defects.
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The investigation found that besides the inf arior engineering work, there
were frequent layoffs of workers
i
n various projects as a result of inadequate
supply or preparation
of materials, lack of necessary tools and machinery, etc.,
which caused unnecessary delays in engineering work.
The reports of the investigations have shown the extremely serious condi-
tion of nearly all phases of capital construction, and have demanded immediate
improvement of this situation. Improvement depends upon the leaders of the
organizations engaged in capital construction. In the past, many bureau, plant,
and mine chiefs did not clearly understand all the phases or problems of capital
construction This situation must be cmiected mmediately. Henceforth, the
leaders of all organizations engaged in capital construction must concentrate
their efforts on attaining (1) the highest quality of engineering work, (2) wor oinc
control andfficinspectiiency of constructsn elimination materials, and waste, (4) (3) strrigic' ict complies et
in all phases of capital construction with the Provisional Regulations Concerning
Capital Construction, issued by this ministry 5 Aril 1950 See I, above7.
Since 5 months have already passed in 1950, only by our diligent efforts
will we be able to complete the plans for this year. June through Octobe,! is
the most productive period of the year; then comes the rainy season. Therefore,
we must not lose any time in organizing and undertaking all capital construction
projects which are to be completed during 1950.
III. PROBLEMS CONCERNING CAPITAL CONSTRUCTION IN NORTHEAST CHINA
During May 1950, four investigation teams, each consisting of representa-
tives of the Economic Planning Committee, Ministry of Industry, and Ministryof
Finance and Economics of the Northeast People's Government, carried out investi-
gations of capital construction projects being undertaken at the An-shan Steel
Mill, the Pen-chi Iron and Coal Company, and various plants under the Textile
Control Bureau and the Machinery Control Bureau. The investigations revealed
the existence of the following problems concerning capital construction, all
of which need immediate attention by all concerned.
A. Problems of Plannfn
1. Plans for capital construction of industrial plants in Northeast China
for 1950 are creating serious problems in the execution of engineering work,
in the use of capital investments, and in the collection of construction
materials, thereby seriously affc.",,ag the progress of construction work.
These problems result mainly from the lack of thoroughness and perfection in
planning. Ordinarily, no plan car..` be drawn up without an actual survey of
the construction site, or an actual estimate of the number of workers and the
amount of materials needed for the project. The fact is that many plans had
been drawn up without these two basic steps in the planning of a construction
project. The following are examples n? how some of the plans were prepared:
The plans for, capital construction of the Ta-shih-ch' iao Manganese
Ore Processing Plant of An-shan Steel Mill called for the installation of
12 new automatic winches, and the repair of one narrow-gauge railway trank.
The estimated number of workers needed for this work was 414. The actual
work, however, called for the repair of two railway tracks and some railway
equipment, and of four existing winches, besides the installation of 12 new
winches. This work required 2,369 workers instead of 444.
A plan was drawn up for the repair of e lnr,r;e wooden bridge at the
iron mill at East An-shan. Actually, it needed tc he completely ebuilt.
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The plan foI the restoration of a building at the No 5 plant of the
Machinery Control Bureau called ror partial repairs of the building at a
total cost of 7,500,000,000 yuan. Actually, a new building at ,a cost of
15-billion Yuan, was needed.
The building of 54 ovens at the Ta-shih-ch'ieo Manganese Ore
Processing Plant was estimated to require 506 tons of fire resistant bricks
and 540 tons of cement; it actually needed 1,347 tons of bricks and only 110
tons of cement. Such discrepancies in the estimation of cost and amount of
materials needed were very cc=on in various projects.
2. The prices of construction materials listed in the plans varied
greatly from the actual market prices. For instance, the prices of metal
products and electrical equiprsnt listed in the plans were less than half
the prices of these products in the open market. The price of brick in one
plan was listed at 800 Yuan, compared with 1,600-2,000 yuan in the open
market. The price of concrete tile in another plan was listed at 700 yuan,
compared with 8,000 yuan in the open market. Again, the price of one cubic
meter of sand was
Yuan in the open market in a Plen at 100,000 Yuan, compared with 250,00^
3. The workers' wages, on the other hand, were listed much lower than
the current wage standard. Plans for a rubber plant listed the daily wage of
a carpenter at 120,000 yuan, compared with 140,000 yuan at the current wage
standard, and the daily wage of unskilled labor ?:t 60,000 Yuan, compared with
80000 an. The total wages for the entire project were estimated at
200,000,000 yuan, compared with the actual wages of 1,900,000,000 Yuan,
B. Use and Control of Funds
1? Tlr imvestigaticns also disclosed that the amount of capital construction
funds actually used for the construction is too low, and the amount of accumu-
lated funds is too high. For instance, as of the end of April 1950, the
An-shah Steel Mill received a total of 1,950,000,000,000 yuan of construction
funds; of which only 700 billion yuan was spent on construction.
balance of the fund was set aside as follows: 470 billion yuan The
for materials,
bbnds, 400 billion yuan for wages, 170 billion yuan deposited in bank or invested in
and 60 billion yuan for materials not yet on hand.
A rubber plant belonging to the Light Industry Control Bureau received
a total of 7,270,000,000 yuan of construction funds as of The end of ;pril
1950, of which only 1,250,000,000 yuan was spent for the construction; the
balance is still deposited in a bank.
Unless this excess accumulation of funds is immediately reduced, it
will be impossible for the government to plan for he smooth circulation of
construction funds.
2. The wasteful use of funds is also corrnon in many projects. For
instance, most of 650 rolls of oil paper purchased by the Textile Control Bureau
was unusable because the paper was of inferior quality; the loss was more
than 400 billion yuan. Most of ?0,000 pieces of asbestos shingles purchased
by the Pen-chi Iron and Coal Company was unusable; the loss was 30 billion yuan.
When materials are not supplied as scheduled, work must stop at the
construction site. For example when about 1,100 ,porkers of the Shen-yang
Construction Unit arrived at An-shan to work on the project the preparation of
materials and equipr..ent had not yet been completed, and the construction had to
be held up for 5 days; the loss was more than 3,000 man-days and 200 million
yuan in rages.
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3? Control of cash funds is not strictly nforced. Ordinarily, cash pay-
ment is made only for materials distributed by the state-owned companies;
however, the An-Shan Steel Mill, far instance, paid out the railway transporta-
tion fees with cash during March 1950.
4? Illegal use of construction funds was also disc over?d in the recent
investiga
tions. For instance, the chief of a textile machinery plait was
paying the wages and the entertainment expenses of the plant guards out of
the construction funds..
5? The proper management of construction funds is not unified, and there
is no definite policy for keeping expense accounts of each project. Some
projects have neither definite budgets nor the personnel to maintain expense
accounts it is absolutely necessary for each person in charge of a construc-
tion project to realize that all construction projects must have budgets pre-
pared before the beginning of construction work, that all construction projects
must prepare monthly expense accounts during construction, and that all completed
projects must prepare final expense accounts.
C? Sunply of Materials
1- The most serious nrobi.err. in capital construction is supply of construc-
tion materials. Inadequate supply of materials immediately disrupts the engi-
neering work. Inadequate supply of materials also creates excessive stock-
piling of unnecessary materials, and makes the coordination of supply and work
schedules impossible The following are examples of this defective supply:
Although the own capital construction, it An-shan
was Steel
once Mill, with produces e storage oftsteesmatfor its
erials
because the materials it had produced were not made to specifications.
The Kirin Paper Mill, which belongs to the Light Industry Control
Bureau, had to wait 4 months to install 28 papernaking machines at the mill
because it took that long to get the needed steel materials from the An-shah
Steel Mill.
2. Defects in specifications of materials were found most commonly in
lumber. For instance, the Electrical Industry Control Bureau, which needed
lumber 12 meters in length or longer received all of them in 12 meters or
shorter. Also, of the 330 cubic meters of lumber received by the bureau
during April 1950, about one half of the total amount was received was unusable
because tt was of inferior auality. These problems, however, can be solved
by the Forestry Control Bureau.
3. Most of the bricks being used in capital construction are not only too
expensive but of poor quality. For instance, about 40 percent of the bricks
purchased by the Machinery Control Bureau were unusable. These problems can
be solved by government standardization of the :ize and quality of bricks
produced at all privately owed and publicly owned brick factories.
4. The most critical shortage in construction materials is in various
sizes and types of metal products and electrical equipment. To remedy this
shortage, the foreign-trade sections of the government must inc ease the import
of collection of these critical items.
5, To eliminate the waste of construction materials, each construction
project must establish systems for keeping records of all materials received and
consumed and for coL,rolling, distributing. and inspecting all materials.