THE CONSTRUCITON INDUSTRY IN COMMUNIST CHINA DURING THE FIRST FIVE YEAR PLAN (1953-57) AND THE OUTLOOK FOR THE SECOND FIVE YEAR PLAN (1958-62)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01141A001300090002-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 105
• Document Creation Date: December 27, 2016
• Document Release Date: May 6, 2013
• Sequence Number: 2
• Publication Date: March 1, 1959
• Content Type: REPORT

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SECRET
ECONOMIC INTELLIGENCE REPORT
N? 69
THE CONSTRUCTION INDUSTRY
IN COMMUNIST CHINA
DURING THE FIRST FIVE YEAR PLAN
(1953-57)
AND THE OUTLOOK
FOR THE SECOND FIVE YEAR PLAN
(1958-62)
CIA/RR 59-6
March 1959
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
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SECRET
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WARNING
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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5-E -C -R -E -T
ECONOMIC INTELLIGENCE REPORT
THE CONSTRUCTION INDUSTRY IN
DURING THE FIRST FIVE YEAR
AND
THE OUTLOOK FCR THE SECOND FIVE
CIA/RR 59-6
COMMUNIST CHINA
PLAN (1953-57)
YEAR PLAN (1958-62)
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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Summary
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CONTENTS
I. Introduction
II. Organization of the Construction Effort
III. Performance During the First Five Year Plan
(1953-57)
Page
3.
3
7
A. Share of Construction in Capital Investment . 8
B. Annual Volume of Capital Investment 9
C. Fulfillment of Annual Plans for Capital
Construction 9
D. Starts and Completions of Above-Norm Projects . . 9
E. Soviet Bloc Assistance 10
F. Performance in 1953-56 12
G. Retrenchment in 1957 14
IV. Problems in Construction During the First Five Year
Plan (1953-57) 14
A. Geological Survey 15
B. Geographic Distribution of Construction Activity 15
C. Reduction of Costs of Capital Construction 17
D. Reduction of Construction Time 18
E. Improvement of Design and Technology 19
F. Mechanization and Construction Equipment 21
G. Labor Force 22
H. Seasonal Variation of Construction 24
I. Local Construction and the Size of Projects 25
V. Construction in Major Economic Sectors During the First
Five Year Plan (1953-57)
A. Industrial
26
26
1. Metallurgical 27
2. Electric Power 29
3. Coal Industry 33
4. Machine Building 36
5. Construction Materials 39
a. General
b. Cement Industry
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39
40
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6. Petroleum
7. Chemical
8. Light Industry
a. Textiles
b. Food, Paper, and. Other
B. Nonindustrial
Page
41
43
44
45
46
46
1. General
46
2. Agriculture
47
3. Water Conservancy
47
a. Huai River
48
b. Yellow River
48
C. Transportation
49
1. New Railroads
49
2. Highways
51
3. Waterways and Other
54
D. Post and Telecommunications
54
E. Nonproductive Construction
56
1. General
56
2. New Housing
57
VI.
Outlook for the Second Five Year Plan (1958-62) ? .
?
?
58
A. Developments in 1958
58
1. Reorganization of Economic Ministries
59
2. Reduction of Costs of Capital Construction
59
3. Increased Local Construction
60
4. Progress
61
B. Selected Economic Sectors
62
1. Metallurgical
62
2. Electric Power
64
3. Coal
65
4. Machine Building
65
5. Construction Materials
66
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Page
6. Petroleum 68
7. Chemical 68
8. Light Industry 70
9. Agriculture and Water Conservancy 70
10. Transportation 71
a. New Railroads
b. Other
Appendixes
Appendix A. Statistical Tables
Appendix B. Methodology
71
72
75
83
Tables
1. Above-Norm and Below-Norm Starts and Completions in
Communist China, 1953-57
2. Estimated Investment in Construction-Installation,
Machinery and Equipment, and Survey and Design in
Communist China, 1953-57
10
76
3. Planned, Actual, and Estimated Capital Investment,
Capacity, and Equipment of Facilities Controlled by
the Ministry of the Electric Power Industry in
Communist China, 1953-57 77
4. Construction Of Hydroelectric Power Stations in Com-
munist China, 1953-57 78
5. Sizes of Coal Mines Constructed in Communist China,
1950-56 79
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6. Starts in Coal Mine Construction During
the First Five Year Plan in Communist
China, 1953-57
Page
80
7. Cement Plants Under Construction in Com-
munist China, 1953-57 81
Illustrations
Figure 1. Communist China: Organization of the
Ministry of Construction and Engineer-
ing, October 1958 (Chart)
Figure 2. Communist China: Estimated Allocation
of Capital Investment to Various
Parts of Capital Construction and
Breakdown of Estimated Construction-
Installation Costs, 1953-57 (Chart)
Figure 3. Communist China: Planned and Actual
Capital Investment and Estimated
Construction-Installation Portion
of Capital Investment, 1953-57
(Chart)
Following Page
2
8
10
Figure U. Communist China: Principal Soviet Aid Inside
Projects, 1949-57 (Map) Back Cover
Figure 5. Communist China: Above-Norm Projects
in Industrial Construction, 1953-57
(Chart) 26
Figure 6. Communist China: Construction of Hydro-
electric Power Stations, 1953-57
(Map) 32
Figure 7. Communist China: Cement Production,
1952-57 (Chart) 4o
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Figure 8.
Figure
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Communist China. Construction of
Major Reservoirs, 1953-57 (Map) . . .
9. Communist China: Major New Railroad
Construction, 1953-57 (Map)
Figure 10.
Figure 11.
Figure 12.
Communist China: Major New Highway
Construction, 1953-57 (Map)
Communist China: Proposed Expansion
of the Iron and Steel Industry,
September 1958 (Map)
Communist China: Proposed Expansion
of the Chemical Fertilizer Industry,
September 1958 (Map)
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Following Page
48
50
52
62
70
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THE CONSTRUCTION INDUSTRY IN COMMUNIST CHINA
DURING THE FIRST FIVE YEAR PLAN (1953-57)
AND
THE OUTLOOK FOR THE SECOND FIVE YEAR PLAN (1958-62)*
Summary
During the First Five Year Plan'(1953-57)
try of Communist China showed a rapid rate of
of output and in variety of projects handled,
mitted blunders and suffered from inefficient
and antiquated working methods. Progress was
of the fact that China had to rely greatly on
assistance in the construction of large-scale
the construction indus-
growth both in volume
althougb it often corn-
organizational policies
considerable in spite
the Soviet Bloc for
and complex projects.
Since 1953 the organization of the industry has been directed
along increasingly efficient lines (see the chart, Figure 1**).
The Ministry of Construction and Engineering was established in 1952.
Although it was organized nominally on a regional basis, its bureaus
reflected industrial sectors and, like the construction units of
various ministries, moved from project to project irrespective of
geographic location. This practice led to excessive costs and im-
peded a regional orientation. During the First Five Year Plan, local
construction organs also grew in numbers and capability.
The bulk of construction by 1955 was performed by state-operated
construction enterprises which worked under contract. By the end of
1957, coordination between design and construction elements had im-
proved considerably, and this improvement was reflected in better
quantitative and qualitative performance. As more complex projects
were undertaken, specialized construction enterprises evolved. To
speed construction, units of the Peoples Liberation Army assisted in
the national effort, most conspicuously in the construction of new
railroads.
Most of the construction targets of the First Five Year Plan were
surpassed. The First Five Year Plan scheduled 1,600 above-norm con-
struction starts*** and 1,271 above-norm construction completions by
the end of 1957. About 1,731 above-norm projects were started, and
1,265 were completed during the period. About 825 of the starts and
* The estimates and conclusions in this report represent the best
judgment of this Office as of 1 December 1958.
** Following p. 2.
*** See the second footnote, p. 9, below.
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449 of the completions were industrial (see Table 1*). Of these in-
dustrial projects, 131 starts and 67 completions were made on pro-
jects designed and equipped with Soviet assistance.
The Chinese Communists were forced to cope with many new problems
in the field of construction during the First Five Year Plan. Vast
improvement in both output and techniques was made during the period.
The more significant developments in these respects were as follows:
1. A start was made on a more general distribution of in-
dustrial facilities throughout the 'country.
2. Construction costs and construction periods for specific
jobs were reduced.
3. Geological survey and construction design were improved.
4. More use was made of mechanical equipment in the con-
struction industry.
5. There was an increase in construction employment and
labor productivity.
6. There was a substantial reduction in seasonality of
construction.
7. Local construction effort increased, and by 1957 the
local labor force was being more fully utilized on the construction
of small facilities to augment the larger (above-norm) projects.
8. Production of major construction materials (cement, steel,
and lumber) increased rapidly, and these materials were in tight but
adequate supply except in 1956.
Construction was not uniform in all sectors of the Chinese Com-
munist economy during the First Five Year Plan. Construction for
heavy industry had the highest priority, although construction for
light industry and for most nonindustrial fields met or overfulfilled
the original plans. The construction of highway and waterway facili-
ties was generally neglected in favor of the construction of new rail-
road lines, about 4,900 kilometers of which were built during the 5-
year period. Nonproductive construction** (housing, cultural-educa-
tional facilities, and public utilities) consumed nearly 30 percent
of total capital investment during the First Five Year Plan. The
* P. 10, below.
** See the first footnote, p. 56, below.
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SECRET COMMUNIST CHINA
ORGANIZATION OF THE MINISTRY OF CONSTRUCTION AND ENGINEERING*
OCTOBER 1958
STATE COUNCIL
COMMISSION FOR
NATIONAL PUNNING
NATIONAL TECHNOLOGICAL
COMMISSION
NATIONAL ECONOMIC
COMMISSION
TN RD
STAFF OFFICE
INISTRY OF CONSTRUCTION
AND ENGINEERING
PEOPLE'S
CONSTRUCTION BANK'.
URBAN CONSTRUCTION
BUREAU
Central Design
Office
General Planning
Office
Stan ardizat
Office
Finance Office
Technical Office
Administrative Office
P ad ti Off
Supervision Office
Political Office
Personnel Office
Mechanization
Office
Co struction
Materials Office
MUNICIPAL CONSTRUCTION
ENGINEERING BUREAUS
27271 12-58
CONSTRUCTION MATERIALS
INDUSTRY CONTROL BUREAU
LDesign Office
Planning OffIce
fl Offic
General Research
Institute
ICEMENT, BRICK.
AND GLASS FACTORIES
'Ibis as tentative aid Sffitpilfted dart of (he probable numstenal
??Under the Miantry Cl Fiume
SECRET
MAIN BUREAU
OF CONSTRUCTION AND
ENGINEERING
Central Design
Office
Figure I
General Planning
Office
Technical Office
Finance Office
Production Office
Administrative
Office
Political Office
Supervision Offi e
Mechanization
Office
Pe !Circe
Scientific Research
Office
Standardization
Office
Construction Materials
Office
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Industrial Construction
Designing Office
REGIONAL CONSTRUCTION
ENGINEERING BUREAUS
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Chinese reduced this expenditure during the plan period but insisted
at its conclusion that nonproductive investment was excessive, point-
ing out that the USSR allocated only 15 percent of total capital in-
vestment to nonproductive investment during its First Five Year
Plan.
Preliminary announcements on the Second Five Year Plan (1958-62)
Indicate that investment in capital construction will double the
42.74 billion yuan* planned in the First Five Year Plan. The "leap
forward" movement, which was based on mass small-scale construction,
Implemented at the local level and combined with increased above-
norm construction at the central level, puts this figure within
easy reach. Although the movement is still too young to evaluate
fully, the utilization of large labor and material resources at the
local level (resources which were utilized but slightly during the
First Five Year Plan) promises economic gains of some magnitude by
1962.
I. Introduction.
On 1 July 1955, midway in the First Five Year Plan, Po 1-pa, head
of the National Economic Commission of Communist China, stated,
"Capital construction** is the most important factor in the realiza-
tion of socialist industrialization of our state and in the solution
of our economic problems for a long period of time." 1/*** The
emergence of China as an industrial power in the Far East has de-
pended to a great extent on its construction industry.
Inasmuch as the Chinese Communists seldom announce construction-
installation figures, capital investment data are often used in this
report to describe construction activity. Also, because the Chinese
allocate capital construction funds and announce the volume of capi-
tal construction work in terms of current prices, investment data
are given in terms of current prices. The use of constant or fixed
prices more accurately reflects the scale and rate of increase of
capital investment than does the use of current prices. In spite
of the fact that the use of current prices understates the physical
* See the second footnote, p. 7, below.
** The term capital construction, which refers to all construction
that increases fixed assets and expands production, is used synony-
mously with capital investment in this report.
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volume of capital construction (because of price changes), it is
believed that prices have not fluctuated so much as to invalidate
the investment data announced by the Chinese Communists and used
in this report.
II. Organization of the Construction Effort.*
The national, regional, and local organization of construction
activity in Communist China has improved considerably since 1953.
Before that year the construction industry consisted of small pri-
vate contracting firms and brigades of masons, carpenters, and
other skilled artisans which went from job to job as one unit.
These construction firms had little experience in large-scale modern
building techniques, the use of mechanical equipment, planning, and
organization. In late 1952, along with the creation of the Minis-
try of Construction and Engineering, the central government estab-
lished state-operated construction enterprises. Within this frame-
work, new specialized enterprises of various kinds were developed
to cope with the more complex construction work encountered during
the plan. The percentage of the total amount of work completed by
the specialized enterprises increased from 21 percent in 1953 to
36 percent in 1955. The growth of these enterprises, distributed
throughout the economy on both the national and the local levels,
was as follows
Specialized Total State-Operated
Year Construction Enterprises Construction Enterprises
1953
92
402
1954
109
421
1955
169
530
1956
224
602
Although these enterprises, which work by contract, showed rapid
growth and by 1955 surpassed the self-operated enterprises in the
percent of total labor force in construction and in the percent of
work completed, they did not supplant the self-operated enterprises,
which continued to exert a substantial influence on construction
performance throughout the plan period.
The construction goals of the First Five Year Plan called forth
more efficient organizational practices at all levels. Initially,
organizational effort led to a rapid extension of national control.
* See the chart, Figure 1, following p. 2.
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In 1954 a Peoples Construction Bank and a Commission for National
Construction were established. In 1956, two new ministries, the
Ministry of City Construction and the Ministry of the Building
Materials Industry, were set up to meet the increased requirements
of the growing economy. 3/ The Commission for National Construc-
tion and the Ministries of City Construction and of the Building
Materials Industry were abolished early in 1958, however, in a
general move designed to eliminate overlapping functions and to
increase the area of local responsibility. II/
The Peoples Construction Bank was established in September 1954
to supervise the allocation of funds for capital construction. Most
of the accounts of various construction units and enterprises origi-
nally held by the Bank of Communications have been transferred to
this Bank under the Ministry of Finance. The change created closer
high-level control over investment funds. The Bank has branches in
all the leading cities.
The Third Staff Office, 1 of 8 staff offices in the State Council,
was established in September 1954. It supervises, coordinates, and
reviews the work of ministries in the construction field as well as
those in the heavy industrial and machine building fields. Along
with the Commission for National Planning and the National Economic
Commission, it exercises a broad coordinating function over the
national construction effort.
The Commission for National Construction was established in
September 1954, probably as a result of the rapid development of
construction sectors in various ministries, and was abolished in
the consolidation of organizations of February 1958. Although its
exact functions were never defined, apparently it coordinated con-
struction plans of the various industrial ministries and their sub-
ordinate organs; of the numerous local and provincial construction
enterprises; and of the Ministries of Construction and Engineering,
City Construction, and the Building Materials Industry. It also
assisted the Commission for National Planning in detailed planning
of the capital construction program and in establishing national
construction norms. Since the reorganization of February 1958, part
of the Commission's planning functions have been transferred to the
two planning commissions, the National Economic Commission and the
Commission for National Planning. Some planning responsibility and
all of the Commission's coordination activities have passed to the
Ministry of Construction and Engineering.
The Ministry of Construction and Engineering was originally
established to construct public buildings such as schools, offices,
hospitals, and some housing. In 1955 its 29 enterprises, which often
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worked under contract to other ministries, moved into the industrial
construction sphere. 2/ More than 4o percent of the Ministry's work
plan for 1956 was devoted to factory construction, and the Ministry
is reported to be responsible for the construction of more than one-
half of the initial 156 Soviet aid projects. ?./
The administrative reorganization of February 1958 subordinated
the functions of the defunct Ministries of City Construction and of
the Building Materials Industry to the Ministry of Construction and
Engineering and permitted better control of construction activities
from the production of materials to the installation of equipment.
Currently, the Ministry has several regional construction engineering
bureaus that oversee numerous construction and installation enter-
prises as well as central design and administrative offices, the
counterparts of which are found under the functional regional engineer-
ing bureaus. The Ministry also controls the major plants that produce
prefabricated construction parts.* Although the Ministry of Con-
struction and Engineering is organized nominally on a regional basis,
its general construction units in many cases are actually aligned to
sectors of industry, making for a mobile labor force, excessive moving
costs, and a general instability of regional construction activity.
Other ministries have little or no regional orientation in their con-
struction organizations, which move from project to project irrespec-
tive of geographic location.
The organization of the construction industry in 1958, although
still unwieldy and in need of streamlining as a result of the over-
rapid growth of the sector, is much better than that which existed
In 1953. The current and future goals for construction will be met
more adequately as waste, confusion, and duplication of functions
are reduced and the organization is more precisely geared to the con-
struction effort. The reorganization of February 1958 indicates that
steps are being taken toward this end.
Nearly every state ministry has construction components respon-
sible for construction in their respective sectors. Some are highly
developed -- for example, those under the Ministry of the Metallurgi-
cal Industry and the Ministry of Railroads Others are small and
merely subcontract work to elements of the Ministry of Construction
and Engineering or to others. Under the various ministries, there
are also 140 special design institutes which are charged with the
survey, planning, and design of structures and facilities in their
sectors. I/
* See IV, E, p. 19, below.
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Construction organs of the Peoples Liberation Army (PLA) have
played an important role in the construction effort, particularly
In construction on railroads and other construction in frontier
areas such as the Northwest and Southeast.* Since 1949, PLA units
have furnished labor worth 400 million yuan** in state construction,
have laid more than 2,000 kilometers (km) of railroad track, have
constructed or repaired 4,300 km of highways, have built more than
40 mechanized farms and 100 factories, and have been active in water
conservancy construction. fi During the plan, some military units
were converted to civilian construction uses en masse.
During the First Five Year Plan the nutber of construction enter-
prises under local, municipal, and provincial governments increased
greatly. At the beginning of 1955, there we 183 local construction
enterprises, 8 installation enterprises, 50 planning and drafting
units, and 178 other local organs in the construction industry. 2/
There was increased local investment for capital construction and a
willingness on the part of central organs to permit construction
standards) norms, and costs to be modified and controlled by local
organs, and the number of local construction enterprises probably
doubled by the end of 1957 over the number that existed in 1955. At
Wu-han in June 1956, there were at work construction units of the
central government, of Hupeh Province, and of Wu-ban municipality.
Nearly every ministry of the central government was represented.
Such asprofusion of construction units serving under three jurisdic-
tions in one area points up the need for efficient organization and
coordination. Also under provincial and local organizational control
are the millions of workers engaged in part-time construction activi-
ties connected with water conservancy and road maintenance.
III. Performance During the First Five Year Plan (1953-57).
Construction activity was vital to all sectors of the Chinese
Communist economy during the First Five Year Plan: The plan called
for a total of 150 million square meters (sq m) of floorspace to be
constructed. An official announcement stated that by the end of June
1957 more than 200 million sq m had been constructed.*** 10/ Another
* The names of geographic areas in this report are those of the
Chinese Communist administrative divisions defined on Map 25333
(3-56), Communist China: Administrative Divisions, March 1956.
** Current yuan values in this report may be converted to US dollars
at the rate of 2.46 yuan to US $1. This exchange rate, however, does
not necessarily reflect the true dollar value.
*** It is believed that this figure represents an estimate of con-
struction expected to be achieved during the First Five Year Plan
period ending 31 DeceMber 1957 rather than an announcement of actual
construction achieved in the 4-1/2 years ending 30 June 1957.
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indicator of achievement, the amount of earth, masonry, and concrete
work completed, reached 8.3 billion cubic meters (Cu m) by the end
of 1957, although at the end of 1955 the amount of this work com-
pleted was only a little above 3 billion cu m. The much greater ac-
complishment on this front in 1956 and 1957 coupled with the general
success of water conservancy constructibn during the First Five Year
Plan* suggests that the accomplishment of 8.3 billion cu m is a sub-
stantial overflafiLlment of the unannounced original goal.
A. Share of Construction in Capital Investment.
The Chinese Communists, lacking previous experience in large-
scale construction, have relied greatly on the USSR for assistance
at all levels. The Chinese have noted that i- the USSR investment in
construction-installation work constitutes about 6o percent of total
investment in capital construction and investment in machinery and
equipment constitutes from 30 to 32 percent. In China, however,
there has been some divergence from the Soviet model. The First
Five Year Plan set 38 percent of total investment in capital con-
struction to go to purchases of machinery and equipment. 11/ If this
plan were achieved, construction-installation work, which is the other
major component of capital construction, would be allocated about 52
percent of total capital investment. The remaining 10 percent would
go to survey, design, and miscellaneous expenditure. The Chinese
have released few data on actual components of investment in capital
construction. The statements made, for the most part as planning
figures, do permit the construction of Table 2** and Figure 2,***
both of which must be considered tentative at this time.
Expenditures for construction materials in Communist China
(eXclusive of transportation costs) generally make up 4o percent of
the costs of construction-installation work, transportation makes up
23 percent of such costs, and wages and overhead costs represent the
remaining 37 percent. 12/ The allocation of investment to various
portions of construction-installation work during the First Five Year
Plan is shown in Figure 2.***
About 48.78 billion yuan were invested in capital construc-
tion in Communist China during the First Five Year Plan, roughly
14 percent above the original plan. 11/ It is estimated that 26.4
billion plan (54 percent) of this amount went to construction-installa-
tion and the remainder to purchases of machinery and equipment and to
other expenditures (see Table 2** and the chart, Figure 2***).
* *
***
See V, B, 3, p. 47, below.
P. 76, below.
Following p. 8.
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CONFIDENTIAL
Figure 2
COMMUNIST CHINA
ESTIMATED ALLOCATION OF CAPITAL INVESTMENT
TO VARIOUS PARTS OF CAPITAL CONSTRUCTION AND BREAKDOWN OF
ESTIMATED CONSTRUCTION-INSTALLATION COSTS, 1953-57
(Billion Yuan)
Construction-Installation
26.4
54%
,
Design, and Miscellaneous
Machinery
and Equipment
18.5
38%
ALLOCATION OF CAPITAL INVESTMENT
CONSTRUCTION-INSTALLATION COSTS
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B. Annual Volume of Capital Investment.
The annual volume of capital investment in the First Five Year
Plan in Communist China is shown on the accompanying chart (Figure 3*).
During 1954-55, most of the above-norm industrial projects** were in
the initial low-value phases of capital construction,*** survey-design
and excavation. In 19560 when the level of capital investment rose
62 percent above that of 1955, the majority of above-norm industrial
projects were in the high-value phases of erection and instplla-
tion. Capital investment in 1957 dropped 13 percent below the level
of 1956, Chiefly because of the retrenchment program but also be-
cause of the fact that many projects had entered the low-value phase
of capital investment in which the project is put into operation.
C. Fulfillment of Annual Plans for Capital Construction.
As capital construction progressed during the First Five Year
Plan in Communist China, the gap between actual performance and the
annual plans was narrowed until 1956, when virtual fulfillment of the
plan was achieved. In 1957 the annual capital construction plan was
overfulfilled by 9.5 percent 2.1i (see Figure 3*).
D. Starts and Completions of Above-Norm Projects.
During the First Five Year Plan the Chinese Communists origi-
nally planned to start construction of 1,600 above-norm and 6,000
below-norm projects throughout the economy. About 1,271 above-norm
projects and all the below-norm projects were slated for completion
by the end of 1957. Table 1**** illustrates the achievement in pro-
ject construction.t
* Following p. 10.
** A limit or norm in construction costs has been established in
Communist China for both new construction projects and reconstruction
projects. The norm for heavy industry generally lies between 5 million
and 10 million yuan and that for light industry between 3 million and
5 million yuan.
*** There are five phases of the capital construction of an indus-
trial project, as follows: survey and design, grading and excava-
tion, erection, installation of machinery and equipment, and putting
the project into operation. The value of capital construction is
much lower per unit of time in the survey-design and excavation phases
than in the erection and installation phases and is lower again in the
final phase of putting the project into operation. The curve reaches
Its peak in the erection and installation phases, when skilled labor
and processed construction materials are utilized at high rates. Also,
the installation phase has a high value of capital investment.
**** Table 1 follows on p. 10.
t For a further treatment of project construction) see VI A, p. 26)
below.
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Table 1
Above-Norm and Below-Norm Starts and Completions
in Communist China h/
1953-57
Above-Norm Projects Below-Norm Projects
Type of Project Starts Completions Starts Completions
Industrial 825 449 3,000
Nonindustrial
and other h/ 906 816 3,700
Total
1,731 1,265 6,700
2,300
3,700
6,000
b. This category includes nonindustrial items such aa
agriculture, forestry, water conservancy, urban public
utilities, and education as well as transportation and
communications.
E. Soviet Bloc Assistance.
Soviet Bloc assistance to the economy of Communist China since
1949 has been both extensive and intensive. The Bloc has given sub-
stantial assistance in the construction of railroads and water con-
servancy installations as well as in methods of geological prospect-
ing, survey and design, statistical reporting, and basic construction
practices. The most important contribution made by the Bloc has been
its intensive assistance on individual industrial construction pro-
jects.
Soviet assistance has taken the form of two economic credits
totaling 1,720 million rubles* against which the Chinese Communists
* Foreign trade rubles may be converted to dollars at the official
exchange rate of 4 to 1, which is believed to be a good approxima-
tion of the dollar value.
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COMMUNIST CHINA
PLANNED AND ACTUAL CAPITAL INVESTMENT
AND ESTIMATED CONSTRUCTION- INSTALLATION PORTION
OF CAPITAL INVESTMENT, 1953-57
Billion Yuan
20
15
10
Planned Capital Investment
Actual Capital Investment
Estimated Construction-Installation Portion
of Capital Investment
0
1953
27272 12-58
1954
1955
1956
1957
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have drawn to help pay for imports from the USSR. These imports in-
clude equipment for the construction of 211 major projects.* The
equipment which the USSR has promised to deliver to China during
1949-62 is valued at 8.1 billion rubles and includes all technical
assistance relating to the 211 projects. 12/
These projects are chiefly in the field of heavy industry
and include construction of metallurgical, power, machine building,
Chemical, defense, automobile, and tractor-manufacturing plants;
petroleum installations; and the like. Assistance by the USSR in-
cludes geological surveying, selection of construction sites, de-
sign, supervision of construction-installation work, and, on com-
pletion of construction, assistance in the production process of
the new plant. Besides furnishing complete sets of equipment for
these projects, the USSR by mid-1957 had supplied Communist China
with 4.9 million metric tons** of ferrous metals, 300,000 tons of
nonferrous metals, 6.6 million tons of petroleum products, and more
than 2,500 sets of metal-cutting machine tools. 22/ The Chinese
originally planned to start construction of 145 projects in the First
Five Year Plan, but by the end of 1957 no more than 131 were begun.
By the end of 1957, 57 projects had been fully completed and 10 others
partially completed. With the full completion of these 67 projects,
.144 of the 211 projects remained to be completed.
Although the bulk of intra-Bloc assistance has come from the
USSR, the aid given by the European Satellites to Communist China
also has been significant. It is estimated that one-third of the
total exports of the European Satellites to China have been in the
form of equipment and services for complete industrial installations,
amounting in 1956 to as much as 300 million rubles.*** 22/ The lar-
gest single project was a radio parts combine supplied by East
Germany, the equipment for which was valued at almost 400 million
rubles. Nearly every European Satellite furthered the industrializa-
tion of China by specialized assistance. Althougb the majority of the
projects were electric power stations, cement plants, and sugar re-
fineries, the remaining projects covered a wide range of industrial
* Only 205 of the 211 Soviet aid projects are considered by the
Chinese Communists to be industrial construction projects. The re-
maining six projects involve the construction of research institutes
and the renovation or expansion of previously constructed projects.
Announcements indicate that agreements have been signed by which the
USSR will assist China on 205 industrial projects and 21 "individual
workshops." (See the map, Figure 4, inside back cover.)
** Tonnages are given in metric tons throughout this report.
*** In contrast) Soviet exports of such equipment to Communist China
amounted to 868 million rubles in 1956. 21/
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installations. Generally, East Germany and Czechoslovakia assisted
on electric power and cement enterprises, Poland on sugar and mining
enterprises, Rumania on petroleum-prospecting enterprises, and Hungary
on metallurgical and other industrial installations.
During the First Five Year Plan the Chinese Communists were
able to produce only about 60 percent of their requirements for equip-
ment. They plan to produce 70 to 80 percent of such requirements by
the end of 1962. In 1957 the Fu-la-erh-chi Heavy Machine Building
Plant revised its annual investment plan, canceling orders from the
Soviet Bloc for equipment valued at 32 million yuan in favor of
domestically produced lathes and cranes. 23/ Other factories did the
same when it was learned that certain kinds of equipment could be
supplied from domestic sources. Although the Chinese publicly extol
the part played by the Bloc in the economic development of China
since 1949, they are dispensing with Bloc assistance as quickly as
they achieve the technical skills and production capability with
which to replace it.
F. Performance in 1953-56.
The first 2 years (1953-54) of the First Five Year Plan in
Communist China were years in which reconstruction activities were
gradually displaced by new construction. During 1949-52, capital
investment had been channeled to the reconstruction and improvement
of existing facilities, with proportionally less investment being
allocated to new construction. Since the start of the First Five Year
Plan in 1953, however, the emphasis has shifted gradually to new
construction. A comparison of the percentage of capital investment
allocated to reconstruction-improvement projects and to new con-
struction in 1952 and 1955 is as follows ELV:
Percent
1952
1955
Reconstruction and
improvement
65.7
36.3
New construction
32.7
57.4
The Chinese state that the actual amount of capital investment during
1953-55 was 3.4 times that during the 1949-52 reconstruction period.
As the First Five Year Plan progressed, there was also a shift
from simple civil construction to the construction of more complex
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Industrial installations. This shift is demonstrated organizationally
by the growth in the number of specialized construction-installation
enterprises* and functionally by the growth in the number of actual
projects completed. A Chinese Communist announcement provides the
following index of the construction of more complex steel and rein-
forced concrete factory structures compared with less complex non-
productive structures Eiji:
1953
= 100
1954
1955
Steel and reinforced concrete structures
126.9
186.2
General nonproductive structures
108.5
115.8
Because excessive spending on elaborate structures and non-
productive construction impinged on productive construction in 1953
and 1954, a campaign to economize on capital investment was started
in the spring of 1955. This campaign, designed to save 680 million
yuan in 1955 and a total of about 2.5 billion yuan in the last 3
years of the First Five Year Plan, consisted of two parts, as follows:
(1) the reduction of the cost of construction inputs and (2) the
cancellation of "unnecessary" subprojects. The reduction of costs
was applied to both productive and nonproductive projects, whereas
cancellation was applied almost wholly to nonproductive investments.
The overzealousness of the drive resulted in widespread disruption.
Total floorspace constructed is estimated to have fallen below the
1954 figure to the level of 1953.** Cement plant capacity was under-
utilized, and other construction materials were tied up by the cut-
back in nonproductive construction. The extravagant practice of
overordering construction materials -- often considerably in advance
of use -- and the frequent revisions in design required by the cam-
paign were the chief disruptive elements.
The management of construction improved considerably as a re-
sult of the lessons learned in 1955. The economies achieved in
capital construction in 1955 alone enabled Communist China to add
60 above-norm industrial construction projects to the original list
of 694.xxx
27 The construction program picked up momentum in 1956,
* See II, p. 4, above.
** The state constructed a total of 30 million sq m of floorspace
In 1953 and 47 million in 1954 and planned only 30 million in 1955. gy
*** Subsequently, another 71 projects were added, making a total of
825 above-norm industrial construction projects. See Table 1, p. 10,
above.
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and total investment in capital construction was 62 percent greater
than in 1955. Seasonal work was better balanced than in preceding
years, and the plan for capital construction was 99.9-percent ful-
filled -- the best performance during the period 1953-56. Industrial
sectors of the economy benefited most from this construction upsurge.
The construction of railroads and water conservancy projects, how-
ever, exceeded that of any preceding year, and local construction
began to pick up as well.
The tempo of construction in 1956 was so great that budgeted
investment funds were exceeded, and 1.5 billion to 2 billion yuan had
to be withdrawn from other sources, including even state reserves.
Overspending in 1956 has been given as one of the prime causes of
the retrenchment in 1957. The accumulation of capital in the form
of machinery, equipment, and materials not put in place was also ex-
cessive.
G. Retrenchment in 1957.
The overextension of construction activity in Communist China
during 1956 brought an immediate and strong reaction. Total capital
investment for 1957 was scheduled to be reduced by more than 20 per-
cent, and industrial investment was planned to be on a par with 1956,
but nonindustrial and nonproductive investment were to be cut
sharply. 22/ Capital investment was to be concentrated on the fuel,
metallurgical, and construction materials industries as well as on
those industries (such as the chemical fertilizer industry) likely
to benefit agricultural production. Construction schedules for
machine building, light industry, new rail lines, and large water
conservancy projects were reduced.
Within this framework, construction activity in 1957 proved
eminently successful. Productive capacities in most industries were
increased, local construction continued to gain momentum, and starts
on many small-scale and medium-scale installations were made. A
total capital investment of 12.155 billion yuan was achieved, 9.5
percent above the 11.1 billion yuan planned. Thus capital invest-
ment in 1957 fell under the 1956 total by only 13 percent rather than
by the 20 percent planned. This achievement plus the amount invested
during 1953-56 permitted the capital investment target of the First
Five Year Plan of 42.74 billion yuan to be increased to 48.78 billion
yuan, an overfulfillment of 14 percent.
IV. Problems in Construction During the First Five Year Plan (1953-57).
During the First Five Year Plan the Chinese Communists faced several
major construction problems. The ability of the industry to achieve
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and overfulfill goals in spite of these problems indicates a rela-
tively high level of competence.
A. Geological Survey.
Before 1955, all expenditures for geological prospecting
work in Communist China were budgeted under capital construction.
In that year, however, the State Planning Commission decided that,
except for geological survey directly related to specific project
construction and to drilling work for petroleum and natural gas,
funds for geological prospecting would be expended from the state
budget as a form of operating expense. 19/ During 1953-55, survey
data often were not completed until after actual construction had
begun, this problem was largely elimi-
nated in 1956-57.
In 1957, there were 240,000 workers in the survey field.
About 26,000 of the total were classified as engineers and tech-
nicians, and 8,000 were college-trained geologists. More than
100 Soviet experts assisted the Chinese Communists in this effort.
The labor force was equipped with more than 4,000 units of drill-
ing and allied equipment. In contrast, there were only 19,393
geological prospecting workers (including few engineers or tech-
nicians) and little equipment in 1952. During 1952-56 the state
invested 2.45 billion yuan in geological prospecting. The target
of 9.2 million meters (n) of test drilling in the First Five Year
Plan was overfulfilled, and about 10 million m actually were
achieved.
Geological survey plans for locating and confirming new
reserves for most minerals were exceeded. The achievement with
respect to coal and iron ore reserves was as follows
Million Metric Tons
Reserves First Five Year Plan Goal Actual Achievement
Coal 20,270 32,500
.Iron ore 2,470 4,554
B. Geographic Distribution of Construction Activity.
In 1949, 77 percent of the total industrial output in Com-
munist China originated in the coastal provinces, whereas the vast
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hinterland (containing nearly 70 percent of the total land area of
the country and including the frontier regions of the Southwest,
the Northwest, and Tibet and the Inner Mongolian and Sinkiang Uighur
Autonomous Regions) accounted for only about 8 percent of the
national industrial production in the same year. 12/ The government
planned to reduce this concentration of industry within three 5-
year plans. The First Five Year Plan enunciated the following
general principles: industrial capacity must be distributed appro-
priately to all regions of the country, industries must be placed
near areas producing raw materials and fuels as well as consumer
areas, distribution of industry must be aligned to the requirements
of national defense, economic standards of backward areas must be
gradually raised, and reconstruction and expansion of existing
facilities in established areas must precede construction of new
industrial bases.
During the First Five Year Plan, Communist China concentrated
on rebuilding and expanding existing industrial bases in the North-
east and along the coast in order to secure quick increases in pro-
duction, to supply current needs, and to provide capital equipment
for future construction. Four-fifths of the total investment in
China's iron and steel industry during the plan, half of the 156
key projects receiving Soviet assistance,* and one-third of the total
above-norm industrial completions were allocated to the Northeast. 11/
More than 70 percent of total industrial investment during
the period 1953-55 was channeled into the Northeast and the North,
which regions together accounted for 85 and 66 percent, respectively,
of coal and electric power production in Communist China. Approxi-
mately 45 percent of all capital investment during the same period
was allocated to the existing industrial bases in the coastal pro-
vinces, and a considerably higher proportion of industrial invest-
ment was given to these areas than to the inland areas.
Concurrently, however, a'substantial start was made in carry-
ing construction into the hinterland. More than 500 of the 825 above-
norm industrial projects started during the First Five Year Plan were
inland, and by the end of 1957 the value of fixed assets in these
regions had doubled 34/ (presumably since 1952). Most of these pro-
jects, however, started construction relatively late in the plan
period and will not be completed until the Second Five Year Plan.
One harbinger of the future shift to inland construction has been
the program for construction of new rail lines in the First Five Year
* For the concentration of the locations of the key Soviet aid proj-
ects, see the map, Figure )4. inside back cover.
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Plan,* which has been concentrated in the underdeveloped regions of
western China. The completion of metallurgical combines at Pao-t'ou
and Wu-han and of hydroelectric facilities at San-men Gorge and on
the I-11 River in Yunnan are examples of construction outside estab-
lished industrial areas in locations which will be nuclei for future
economic expansion.
C. Reduction of Costs of Capital Construction.**
Abundant data on the construction of specific plants and
projects in Communist China have come to hand indicating reduced
costs, but reliable data permitting an aggregative assessment are
lacking. A reduction of nearly 1 billion yuan in construction
costs was made in 8 major industrial ministries during 1953-55, and
another reduction of 1.8 billion yuan was planned in 1956-57, making
a total reduction in construction costs of 2.8 billion yuan during
the First Five Year Plan. 5.2/ Even if this goal had been met, the
figures' would not indicate true reductions in construction costs,
because a good proportion of the total so-called cost reduction con-
sisted of canceled projects.*** The organizational efficiency of
the construction industry plus the successful reductions reported
on specific projects and in ministerial statements**** do indicate
that construction costs have been lowered, althouqh the extent of
this reduction cannot be measured at present.
* See V, C, 1, p. 49, below.
** Hereafter referred to as construction costs. The Chinese Com-
munists do not define what they mean by reduced construction costs
(that is, whether costs are reduced below original estimated costs
for a given project or whether actual costs are reduced from year
to year for given projects), but it is believed that they generally
refer to costs reduced below estimated figures for a given project.
Moreover, the context of their statements makes it clear that in
speaking of reduced construction costs the Chinese are not speaking
of the costs of construction-installation work but rather of capital
construction as a whole.
*** See III, F, p. 12, above.
**** Recently Chao Erh-lu, Minister of the First Ministry of Machine
Building, stated, "By the end of 1957 ? the machine building Indus-
tr27 ... it was possible to cut building costs by 30 to 50 percent
and to shorten the construction time by half." ly Also, the Chinese
Communists state that the average cost of construction per kilometer
of new railroads was lowered from a planned figure of 578,000 yuan to
an actual figure of 566,000 yuan during the First Five Year Plan.
?
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D. Reduction of Construction Time.
An intensive effort has been made by the Chinese Communists
to shorten the time period of construction for various projects.
The building process can be accelerated with rational planning, de-
sign, and coordination as well as with more efficient use of labor,
materials, and equipment. During the First Five Year Plan an iron
and steel combine having an annual capacity of 1.5 million tons re-
quired 8 to 10 years for construction, nearly half of this time being
spent on survey and design. .31/ A construction period of 4 years
was required for the construction of the small-scale Shou-wang-kung
copper mine, 3 years for a small ore-dressing plant at Kan-chou, and
3 years for a "small" cement plant. "E_i/ In 1956 the renovation of a
blast furnace with a capacity of 900 cu m required 10 to 13 months
in Communist China, whereas the building of a new blast furnace with
a capacity of from 1,000 to 1,300 cu m required only 4 to 6 months
in the USSR. In the same year the construction of a new thermal
electric power station of 50,000-kw capacity required 20 to 22 months
in China but only 18 months in the USSR, and the building of a new
fertilizer plant of 50,000 tons' annual capacity required 30 months
in China but only 14 months in Bulgaria.
Considerable progress on this front was made in the First
Five Year Plan. The construction time necessary to dig a pair of
vertical coal shafts was reduced by 6 to 12 months, and the construc-
tion time of a chemical fertilizer plant, a nonferrous metals pro-
cessing plant, and a high-grade steel plant was reduced, in some in-
stances by 12 months.
Although the Chinese Communists have made progress in re-
ducing construction periods, some of this achievement must be as-
cribed to the method used rather than to speed. The so-called "one-
plan multiphase" method of construction is being used increasingly
throughout China. ._2/ This method envisages expeditious construc-
tion on key projects and, after partial production has started, the
expansion of these projects up to and often beyond the capacity called
for in the original plan. The Kirin Nitrogenous Fertilizer Plant is
a good example of this method. Originally scheduled for full com-
pletion in 1958, it was announced to be partially completed in May
1957 and fully completed in October 1957. Before the end of 1957,
however, preparations were under way to expand the plant. Although
this method of construction may cost more in the long run, the Chinese
are increasing its use so as to achieve speedy production of key
items -- in this case chemical fertilizers, which are currently in
very short supply.
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E. Improvement of Design and Technology.
By the end of 1957, there were more than 116,000. design
workers employed by the more than 140 special design institutes
attached to the various ministries in Communist China.122/ About
half of the total were employed in industry, but only about half
of these were trained technicians. More than 400 above-norm in-
dustrial projects as well as many transportation-communications and
water conservancy projects were designed by these units, which leaned
heavily on Soviet assistance throughout the First Five Year Plan. 341/
The increased standardization of designs and the reuse of blueprints
have been major factors in the improvement of over-all design work.
As early as 1951 the Chinese Communists began drawing up
standard designs for civil and industrial construction. During
1954-56, approximately 4o percent of the blueprints designed were
used on more than 1 project.* The reuse of blueprints (the Ch'eng-tu
Cutting Tools and Measuring Instruments Plant was constructed on the
basis of Soviet-designed blueprints previously used at its Harbin
counterpart) and of existing structures and machinery, plus pro-
gressively better designing, has contributed to increased efficiency.
There remains room for improvement, however -- at least 10 percent
of all the blueprints used during 1954-56 were completed behind
schedule, and many were returned to the designers for correction of
Imperfections. LT/
The Chinese Communists stated in 1957 that their design or-
ganizations had the capability to design all blueprints for the follow-
ing projects L3./:
Type of Installation
Aluminum plant
Copper refinery
Lead refinery
Tin refinery
Zinc refinery
Coal mines
Coal-washing plant
Metallurgical plant
Petroleum refinery
Hydroelectric power station
Steam power station
Annual Capacity
50,000 to 100,000 metric tons
50,000 metric tons
100,000 metric tons
30,000 metric tons
100,000 metric tons
2 million metric tons
1.5 million metric tons
1.5 million metric tons
1 million metric tons
1 million kilowatts
400,000 kilowatts
* The Chinese Communists announced that in 1956 standard designs and
reused blueprints were used for about 60 percent of civil construction
and 31 percent of industrial construction.
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There has been considerable technological progress along with
Improvement in design in the construction industry in Communist China.
In the First Five Year Plan the technical measures introduced were in-
tended to effect economies in the use of steel, cement, and lumber.
The trend toward general adoption in industrial construction of re-
inforced-concrete structures and components of the assembly type is
evident in the fact that early in 1957 there were 20 permanent and
60 relatively large temporary prefabrication plants as well as pre-
fabrication yards at nearly every large-scale project site in China.
These plants produce concrete and reinforced concrete components for
speedy assembly at the site, and their total capacity early in 1957
was 1.1 million cu m.* The Chinese estimate that by the end of 1957,
20 percent of the structures being erected would be of prefabricated
elements.
Even prestressed reinforced concrete structural elements were
produced in the First Five Year Plan.** Although the volume of pre-
stressed reinforced concrete was less than 2 percent of the total
volume of reinforced concrete in 1957, the fact that actual produc-
tion using the process was begun in the First Five Year Plan speaks
for the increased capability of the construction industry. Pre-
stressed reinforced concrete elements produced included roof trusses
and girders, floor slabs, mine props, and railroad ties and bridges.
Other new techniques were introduced during the First Five
Year Plan in Communist China. Bamboo was used extensively instead
of steel rods in reinforced concrete in 1956 and was reported to
have reduced reinforcement costs 45 percent. Bamboo also gained
acceptance as a substitute for wood in roof supports. In erecting
* Actual and planned production figures of enterprises subordinate
to the Ministry of Construction and Engineering show that the in-
creased output of prefabricated structural elements during 1954-56
was as follows
Cubic Meters
1954 1955 1956
(Actual) (Actual) (Planned)
Steel reinforced-concrete
prefabricated elements 47,000 111,000 376,000
Foam concrete prefabricated
elements N.A. 56,000 174,000
** Prestressed reinforced concrete is concrete in which the rein-
forcing steel is tensioned or stretched before being encased in
the concrete. Prestressing imparts added strength to the rein-
forced concrete, saves steel, and reduces costs.
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electric transmission lines, reinforced concrete towers were sub-
stituted successfully for steel towers. This substitution was
planned to effect a saving of 7,000 tons of steel in 1956. Rein-
forced concrete railroad ties and pit props in coal mines were in-
troduced, but large-scale usage was delayed until the Second Five
Year Plan.*)2y Lastly, newly designed steel frames replaced conven-
tional frames for certain types of buildings, with a consequent
saving of steel, and foundations of some civil buildings were con-
structed of natural cement rather than concrete.
The rise in the technological level of the construction In-
dustry has been retarded, however, by low-quality workmanship at
many sites. Too few competent supervisors, poor coordination be-
tween contractors, and sporadic deliveries of equipment and ma-
terials combined to cause shoddy workmanship and thousands of "qual-
ity accidents" during the First Five Year Plan.
F. Mechanization and Construction Equipment.
More and better construction equipment permitted a reduction
of building costs and the completion of a large volume of construc-
tion in Communist China during the First Five Year Plan. The fixed
assets of construction-installation enterprises under the State
Council grew rapidly in the First Five Year Plan. The value of fixed
assets held by these units during 1953-55 follows Li:
Machinery and Equipment
Total Fixed Assets
Year Million Yuan Percent of Total (Million Yuan)
1953
220
46
48o
1954
400
50
8o6
1955
528
49
1,078
The increase in the number of important types of construction
equipment available to the state-operated contract construction en-
terprises in 1953-55 was as follows .11?/:
* In 1957, at least 3 permanent factories were being constructed
that were scheduled to produce from 2.2 million to 2.5 million pre-
stressed reinforced concrete railroad ties annuAlly by the end of
1959. One of these factories, located near T'ien-shui, was ex-
perimenting with the production of prestressed steel reinforced
concrete bridge spans late in 1957. ill/
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Equipment 1953 1954 1955
Cranes, derricks,
and
the like
513
955
1,379
Power shovels
45
112
159
Concrete mixers
1,676
2,249
2,443
Dump trucks
3,237
5,238
5,871
In 1957 it was announced that this inventory had been increased to
about 20,000 units. 1[2/ The relatively rapid rate of mechanization
In certain aspects of construction activity solved some problems
but created others. The rate of mechanization outstripped the rate
of increase in the level of organizational control and in the tech-
nical level of workers. The result of this was that construction
equipment was utilized at a low rate, which further aggravated the
problem of inadequate stocks.
Mechanization during the First Five Year Plan was restricted
to heavy industrial construction. Most construction equipment was
concentrated in those ministries having the responsibility for the
key Soviet aid projects. In 1956, 76 percent of the cranes, 87 per-
cent of the power shovels, 62 percent of the concrete mixers, and
79 percent of the trucks in the nation were held by the Ministries
of Construction and Engineering, Heavy Industry, the Coal Industry,
the Electric Power Industry, and Railroads. 22/ &Most of the nonin-
dustrial and nonproductive construction was performed through hand
labor. As the heavier construction loads of the Second Five Year
Plan are assumed, the rate of mechanization will increase, but the
concentration will remain on key projects, and the bulk of construc-
tion will be carried on through intensive use of manpower.
G. Labor Force.
More than half of the annual increase in the volume of capital
construction during the First Five Year Plan in Communist China was
caused by the increase in the size of the labor force, although more
than 4o percent of the increase in output during 1952-56 has been
ascribed by the Chinese to increased labor productivity. 21/
Although there is a good deal of contradiction in reports on
the level of employment, the following tabulation gives an approxi-
mation of recent Changes.* 2i/
* Data on construction-installation workers are announced
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Million Workers
Year
Construction-Installation Total Workers
Workers in Construction*
1953
1.54
1.80
1955
1.60
2.08
1956
1.80
2.31
1957
2.00
2.67
With the increased volume of work and the improvement in mechaniza-
tion and technology, the proportion of workers in subsidiary produc-
tion activities (such as those working in prefabrication plants
under the Ministry of Construction and Engineering) has increased,
while that of construction-installation workers has declined. Those
workers engaged in geological survey and prospecting** and in pro-
ducing basic construction materials (cement, brick, and glass) as
well as the millions of workers engaged on water conservancy and
military projects are not included in the totals.
Within the construction-installation segment of capital con-
struction, the proportion of engineers and technicians rose steadily
In the First Five Year Plan, but more recently there has been a de-
cline in the proportion of administrative personnel. The structure of
construction-installation workers and employees was as follows 22/:
Percent
Construction-Installation
Workers and Employees
1953
1954
1955
1956
Workers
81.8
80.3
78.6
81.9
Engineers and technicians
3.0
4.2
5.5
5.5
Administrative personnel
15.2
15.5
15.9
12.6
Total
100.0
100.0
100.0
100.0
The construction labor force of Communist China is predomi-
nantly young, male, and mobile. Its mobility is illustrated by the
* Besides those workers employed directly in construction-installa-
tion work, this category includes those in subsidiary production
(prefabrication yards, carpentering shops, and the like); transporta-
tion; and service agencies on site. Survey-design workers, who num-
bered 39,000 in 1952, 85,000 in 1955, 110,000 in 1956, and 116,000 in
1957, Probably are included in the totals. 2L/
** See IV, A, p. 15, above.
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fact that during the First Five Year Plan nearly 300,000 civilian
workers left Shanghai for construction sites throughout China. 2.6./
Organizational instability has caused a large proportion of the
total labor force in construction to be made up of temporary workers.
Because of the nature of construction work and the extensive under-
employed population of China, a large part of the construction labor
force will continue to be temporary. There has been an urgent need,
however, to recruit or train skilled workers from the temporary force
and to make them permanent construction workers.
Additions to the semiskilled and skilled segment of the con-
struction labor force were made at an increasing rate during the
First Five Year Plan. On-the-job training courses under the direc-
tion of Soviet Bloc advisers at An-shan, Pao-t'ou, Wu-han, and other
major sites helped to shape an increased worker capability in con-
struction. Also, construction was probably represented by a sizable
group among the 7,100 leading cadres sent to Soviet Bloc nations for
study during the First Five Year Plan. 21/
Wage increases have been slow and have not been proportional
with the announced increase in labor productivity. Wages are neither
stable nor uniform, being differentiated by location, industry, and
the seasonal aspect of construction. 2l3/ This instability has been
a cause of absenteeism, which in turn has adversely affected labor
productivity. Other factors, such as poor labor utilization at the
site and work stoppages, impeded labor productivity. Excessive hir-
ing of workers to meet short-run goals (as in 1956) diluted the
achievements in labor productivity even further. All of these aspects
must be corrected if the higher construction targets for the Second
Five Year Plan are to be met.
H. Seasonal Variation of Construction.
A major problem in the management of construction work in
Communist China has been the extreme seasonal variation in the
physical volume of work completed. The proportion of the annual
amount of work completed during each quarter for the years 1953-56
was as follows 22/:
Percent
1953
1954
1955
1956
First quarter
5.7
8.1
12.5
13.4
Second quarter
20.9
23.3
24.8
22.8
Third quarter
36.7
33.1
27.7
27.5
Fourth quarter
36.7
35.5
35.0
36.3
Entire year
100.0
100.0
100.0
100.0
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More than 67 percent of the annual amount of work was per-
formed in the last 6 months of each year during the First Five Year
Plan. ?2/ Also, the amount of work completed in the first quarter
of each year was about 28 percent of that completed in the fourth
quarter. In the USSR during 1952-54 the amount of work completed
in the first quarter of each year was roughly three-fourths as great
as that accomplished during the fourth quarter, ?1/ in spite of
greater variations in mean temperature and rainfall than in Communist
China.
I. Local Construction and the Size of Projects.
The First Five Year Plan in Communist China called for ad-
ministration at the local, provincial, and municipal levels* of 82
of the above-norm projects and 1,400 of the below-norm projects.
About 64 of the above-norm projects and about 879 of the below-norm
projects were for local state-operated industries, and the remainder
In both categories were for local public-private jointly operated
industries or for nonindustrial local groups. The local share of
total capital investment amounted to roughly 20 percent during the
First Five Year Plan. a2/
In early 1957 a movement began which foreshadowed astonish-
ingly heavy construction activity at the local level. The metal-
lurgical and coal industries announced in April 1957 that the con-
struction of small-scale and medium-scale plants and mines would be
emphasized during the Second and Third Five Year Plans (1958-67) in
order to stretch construction funds, obtain quick financial and
physical returns, and improve the geographical balance of the over-
concentrated industries.** Such facilities save investment, reduce
the need for importing equipment and technical assistance from the
Soviet Bloc, and are able to tap local productive potential and sur-
plus manpower. Although no great effect was wrought by these pro-
nouncements in 1957, the results were far reaching during the first
half of 1958. An indication of the shift to increased local con-
struction was apparent in 1957, however, when the state urged local
construction organs to construct light industrial plants and con-
currently indicated that, starting in 1958, these organs would be
granted more power in construction matters.
* Hereafter referred to as the local level. All above-norm projects
undertaken at the local level must be approved by the Commission for
National Planning. Below.-norm projects are reported for record to
the National Economic Commission and the relevant ministry. When
projects financed by local investments are included in state plans,
all construction materials and equipment are supplied by the state
through unified distribution.
** See also V, A, 1 and 3, pp. 27 and 33, respectively, below.
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The Chinese Communists believe that there has been too much
emphasis on constructing large-scale industrial projects, large
schools, and administrative buildings. Li Fu-chun, in evaluating
the problem in June 1957, stressed the need to construct plants with
a low ratio of investment to production and stated that capital con-
struction could best be served by constructing predominantly small-
scale and medium-scale projects that could be integrated where pos-
sible with large-scale projects. China in its present stage, he
asserted, should build fewer modern automatic installations. Pushing
rudimentary construction to an operating condition would permit
plants to be expanded and modernized later with profits accrued from
production. Lastly, he said that nonproductive construction should
emphasize the building of schools, hospitals, administrative facili-
ties, and the like in large numbers but on a smaller individual scale
than had been done previously. 61/
V. Construction in Major Economic Sectors During the First Five
Year Plan (1953-57).
A. Industrial.
Investment in capital construction in industry during the
First Five Year Plan in Communist China was 27.38 billion yuan,
representing 56 percent of total capital investment. LI/ This in-
vestment (2.53 billion yuan above the original planned amount) was
concentrated on the 825 above-norm industrial construction projects,*
with emphasis on the Soviet aid projects.** Although there were
considerably more above-norm industrial starts than the 694 originally
planned, only 449 of an originally planned total of 455 (subsequently
raised to 500) were completed. Even with the shortfall in comple-
tions, achievement in industrial construction was considerable. On
the average, an above-norm industrial project was begun every other
day and one completed every 4 days during the 5-year period. Total
above-norm industrial starts and continuations and completions in
the First Five Year Plan were as follows:
Inclunflanoiectli
yegu-
Total. Stowt?
wirleontthuestima
Tot.
Completione..
1953 /
114
36
1951W
64
1955
M
8.
1956j
625
89
1957W
642
178
Total 42i2
See III, D, p. 9, above.
** See III, E, p. 10, above.
*** Completions include both full and partial completions. Because
of ambiguous data announced by the Chinese Communists, the above
figures are not cumulative, and only the total completions column is
additive. See Figure 5, following P. 26, for above-norm projects in
industrial construction during 1953-57, by major industries.
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CONFIDENTIAL
PETROLEUM
CONSTRUCTION
MATERIALS
CHEMICAL
METALLURGY
MACHINE
BUILDING
LIGHT
INDUSTRY
ELECTRIC
POWER
COAL
TOTAL
INDUSTRIAL
COMMUNIST CHINA
ABOVE -NORM -PROJECTS
IN INDUSTRIAL CONSTRUCTION, 1953-57
)10
12
2 (Est.)
26
(Est.)
43
40
50
3
1104
100 (Est.)
147
152
115
?
200
177:1
Completions
1
Starts
-1449
Figure 5
1825
27269 12-58 CONFIDENTIAL
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1. Metallurgical.
The metallurgical industry accounted for about 15 percent
of capital investment in industry during the First Five Year Plan in
Communist China. By the end of 1957 the Ministry of the Metallurgical
Industry had 44 construction-installation enterprises, 9 design in-
stitutes, and 77 geological survey units, with a total labor force of
200,000. More than 400 million yuan (approximately 10 percent of
total capital investment in the metallurgical industry) were spent
on the construction base of the industry. 12/ About 10 million sq m
of industrial and nonindustrial buildings were constructed and more
than 500,000 tons of equipment installed during the First Five Year
Plan.* Of the more than 50 above-norm construction projects** started
during the period, at least 40 were completed.
The emphasis in construction in the metallurgical industry
has been on ferrous metallurgical installations. The Chinese Com-
munists themselves estimate that 62 percent of total capital invest-
ment in the metallurgical industry during the plan went into construc-
tion of the An-shan, Pao-t'ou, and Wu-han iron and steel combines. 12/
The increased production capacity resulting from construction for
ferrous metallurgy in the First Five Year Plan was 3.27 million tons
of pig iron and 2.35 million tons of crude steel. During the plan,
An-shan was made a national economic model. By September 1957, 32 of
the 48 major projects scheduled for construction at An-shan in the
period 1953-60 were completed, and 5 more were slated for completion
by the end of the year. Two-thirds of the projects at An-than were
of Soviet design and were modern, largely automatic facilities. In
late 1956 and in 1957 the Chinese, however, were able to undertake
some of the more advanced projects on their own. By the end of the
plan a blast furnace, a firebrick plant, and an ore-sintering plant
were constructed at Wu-han, and formal construction was begun at
Pao-tIou. Facilities at Pen-ch'i, Ma-an-shan, Urumchi, Chungking,
Tai-yuan, and Ta-yeh were expanded considerably, and construction
continued on most of them in 1958. 11/
In addition to the great amount of Soviet aid and the
focus of construction on An-shan, two other factors developed in
the construction for the metallurgical sector in the First Five Year
Plan. Both came to a head in 1957. The first factor was the
* By the end of 1956, more than 300,000 tons of equipment were fur-
nished the metallurgical industry by the USSR, and by October 1957
more than 100,000 tons of equipment from the USSR were installed at
An-shan. 11/
** The term above-norm project in the ferrous metallurgical indus-
try refers to a project requiring an investment of 10 million yuan
or more and in the nonferrous metallurgical industry to a project
requiring 6 million yuan or more.
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beginning of construction of small-scale projects concurrent with
construction of large-scale and medium-scale plants. In August 1957
the Chinese Communists announced that 18 new small-scale iron and
steel plants under construction or slated to begin construction in
1957-58 would be completed by 1962 and on completion would have a
combined capacity of 2.4 million tons of pig iron, 1.6 million tons
of steel, and 1.1 million tons of steel products.* IL/ These widely
dispersed plants, located near adequate but small resources of iron
ore, would be furnished partially with equipment from a number of
small plants that have fallen into disuse since 1950. Because of
their lower technological level, they can be supplied with domes-
tically produced equipment, require a much shorter construction
period, and can utilize local labor and materials, and (the Chinese
claim) each small plant will cost less per ton of annual capacity
than a large integrated plant. The start of small-scale construc-
tion was predicated on the desire of the Chinese to obtain fast in-
creases in production with a minimum outlay of capital. One result
of the movement is that it will improve the geographical balance of
the heavily concentrated metallurgical industry. This trend in
construction was gaining momentum in 1958 and had pervaded non-
ferrous metallurgy and every other industry.**
The second factor was concerned with iron-smelting capac-
ity versus mining capacity. Iron smelting developed at a faster rate
than iron ore mining and beneficiation during 1953-56. To correct
this situation, the Ministry of the Metallurgical Industry in 1957
planned to start or continue construction of 30 mines (15 of which
were iron mines and the remainder manganese and other nonferrous
metal mines) and 12 plants for selecting and sintering ores. 15/
Six of the mines were planned to be completed in 1957-58 and would
then increase capacity for the production of iron ore 2 million tons.
Extensive geological surveys*** were carried out during the First
Five Year Plan, and by the end of 1957 several large reserves had
been found. The most notable find was at P'an-chih-hua in southwest
Szechwan, where the deposits are reputed to be sufficient for an
iron and steel combine with a total production of 2 million tons
annually. 2?_/
More than 32 abovernorm nonferrous metal projects
started construction during the First Five Year Plan. Aluminum,
tin, and copper installations received the greater share of capital
investment. Newly added production capacity under the First Five
* Subsequently, the capacity figure was increased and the con-
struction period shortened. See VI, B, 1, p. 62, below.
** See VI, p. 58 ff., below.
*** See IV, A, p. 15, above.
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Year Plan accounted for 36 percent of the copper, 90 percent of the
lead, 28 percent of the tungsten, and 48 percent of the molybdenum
production in 1957. 21/ Among the notable completions during the
plan were a tin combine at Ko-chiu (Yunnan), an aluminum reduction
plant and alumina plant at Fu-shun, an alumina plant at Nan-ting
(Shantung), and an aluminum-fabricating plant at Harbin.
2. Electric Power.
Construction in the electric power industry of Communist
China, as in most other industries, began from a low base. The
restoration period, 1949-52, was characterized by renovation of
existing electric power facilities in order to bring them closer to
design capacity. The capacity of generating equipment was increased
150,000 kilowatts (kw) in this period, and at the end of 1952 total
electric-power-generating capacity was only 1.96 million kw. 78/
The First Five Year Plan set 3.3 billion yuan for capital
investment in the electric power sector and called for 122 above-norm
construction projects* to be started during 1953-57. About 107 of
these starts were to be power stations, and the remaining 15 were to
be transmission and transformer projects. Of the 107 stations (total
planned capacity, 3.76 million kw), 24 were scheduled for Soviet
assistance. The plan stated further that by the end of 1957, 54 power
stations, including 22 Soviet aid projects, could be completed. These
54 completions plus below-norm completions were. scheduled to raise
the generating capacity of the electric power industry by 2.05 mil-
lion kw. 12/ It is estimated that 100,000 workers (of which 30,000
worked exclusively on hydroelectric projects), organized in special-
ized construction enterprises supported by 9 design institutes, com-
prised the construction labor force undertaking this work for the
electric power industry. L80/
At least 152 above-norm projects were started during
the First Five Year Plan and more than 111 completed.** LI About
3,000 km of high-tension transmission lines (110 to 220 kilo-
volts -- kv) were constructed and 15 networks established. Invest-
ment by the Ministry of the Electric Power Industry was about 3 bil-
lion yuan, and total capacity added by its components is estimated
to have been 2,164,000 kw. Numerous other ministerial, provincial,
and local projects were constructed, and these increased capacity
* The term above-norm project for electric power stations refers
to a plant requiring an investment of 5 million yuan or more.
** See Appendix A, Table 3, p. 77, below, for data on capital in-
vestment, increased capacity, and equipment of facilities in the
electric power industry in Communist China during 1953-57.
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by 170,000 kw before December 1957.* 12/ Roughly 57 percent of the
total capacity added during the plan came from restored and expanded
plants and 43 percent from new plants. f,l/
Although the distribution of construction in the sector
was geared toward providing facilities for servicing existing indus-
trial centers, it trended toward underdeveloped regions as the plan
progressed. In 1947, more than 90 percent of total generating capac-
ity was located in 8 large cities, only one of which, Chungking, was
inland; the others being in the Northeast and along the east coast.** 1L./
More than 4o percent of the estimated 2.34-million-kw capacity added
during the First Five Year Plan was installed in the Northeast. Of
24 Soviet aid projects begun by late 1957, 14 were located in the
North, Northwest, and Central China. Electric power generated in the
Sinkiang Uighur Autonomous Region and the Northwest was 19 times that
generated in 1952, and production in Chungking in 1957 had doubled
since 1952.
Thermal electric powerplants newly constructed and ex-
panded by the central government added a capacity of about 1.6 mil-
lion kw (of a total of 2.2 million kw) to the electric power indus-
try during the First Five Year Plan. The plan called for 76 above-
norm thermal electric projects to be started. These facilities were
built chiefly in industrial centers, and design and technology for
them was furnished by the Soviet Bloc, primarily the USSR. At least
44 thermal electric projects, of which 20 were constructed with Soviet
aid, were completed by the end of 1957. 2'2/ Many of the thermal
electric plants were high-temperature, high-pressure facilities with
automatic controls of the latest Soviet manufacture. The most impor-
tant thermal electric power construction has occurred at Cheng-chou,
Fou-hsin, Fu-la-erh-chi, Kirin, Lan-thou, Lo-yang, Peking, Shih-chia-
chuang, and Sian. In December 1957 the most significant thermal
electric project in the plan, a 600,000-kw plant, officially started
construction in Liaoning Province. The Chinese Communists copied well
from their Soviet Bloc teachers and now claim to have the capacity to
build 50,000-kw and larger thermal electric plants.
* This figure, when added to the estimated 2,164,000-kw additional
capacity installed by ministerial components, totals 2,334,000 kw,
which corresponds to the figure of 2,335,000 kw given in the Peking
Review of March 1958.
** The original First Five Year Plan recognized the concentration
of generating capacity in coastal provinces and planned that by the
end of 1957 these provinces would have only about 50 percent rather
than more than 65 percent of the total capacity.
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The First Filie Year Plan called for 11 hydroelectric con-
struction starts and 8 completions and for 469,000 kw of capacity to
be added to the 170,000-kw hydroelectric capacity existing in 1952.*
Although immediate industrial needs prescribed that thermal electric
construction (characterized by being located near industrial centers
and by shorter construction periods) be given higher priority in the
plan, the hydroelectric construction program was overfulfilled in
every important aspect. Capital investment in the sector was 592
million yuan, 28 percent above the planned level; 20 above-norm
projects were started and 9 completed; and a capacity estimated to
be 609,000 kw was installed in hydroelectric power construction
during the First Five Year Plan. LSY
Extensive surveys raised the estimate of the national
hydroelectric potential from 150 million kw to 540 million kw. As
a result of these findings, considerable increases in capital in-
vestment, geological survey, and construction were achieved during
the plan. These are shown in the following index:
1953 = loo
1954
1955
1956
1957
Total investment in hydro-
electric power construction
150
214
286
334
Earth and stone work
542
1,200
1,720
4,000
Pouring of concrete
327
1,155
1,650
1,560
Drilling
118
286
880
670
Geological survey
235
185
477
1,405
The most important hydroelectric power construction pro-
jects** of the First Five Year Plan were the expansion of the Feng-
man station in the Northeast (capacity on full completion, 568,000 kw)
and the start of construction at San-men Gorge (capacity, 1.1 mil-
lion kw). Several factors point to a greatly increased capability
of construction in this sector, as follows:
a. The Chinese Communists claim that, except for
San-men Gorge and Feng-man, all hydroelectric power stations under-
taken to date were designed by themselves and were equipped with
machinery manufactured in China.
* See the map, Figure 6, following p. 32, which shows the hydro-
electric power construction program during the First Five Year Plan.
** See Appendix A, Table 4, p. 78, below, in which specific projects
are listed.
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b. Generators of 15,000 kw are now in production in
Communist China, and larger ones of 72,500 kw and 100,000 kw are
being designed and tested.
c. Because geological conditions and the availability
of construction materials vary with the location, the construction
performed was highly diverse and difficult. Even with this impediment,
construction schedules were overfulfilled and costs lowered.
d. Many of the stations are multipurpose and were
constructed in conjunction with water conservation units where, be-
sides generating power, they will help to alleviate floods and to
increase irrigation and navigation. Multipurpose use of power fa-
cilities bespeaks long-term planning, for wh:1-h the Chinese acknowl-
edge a debt to the USSR.
The priorities established by the First Five Year Plan in
Communist China favored the construction of thermal electric power-
plants over hydroelectric powerplants for at least two reasons, shorter
construction periods and lower construction costs. By the end of 1957,
however, the Chinese had been so successful in hydroelectric power
construction that both points of difference were nearly erased. To
achieve speed, construction was maintained at a pace of 3 shifts per
day and 7 days per week; Soviet winter work methods were adopted; and
local labor rather than machinery was used for most of the earthwork,
loading, and transportation. Abundant water and labor resources* plus
geological conditions permit hydroelectric construction costs to be
nearly as low as thermal electric construction costs. A comparison
of 8 major hydroelectric and 5 thermal electric stations completed
during the plan shows that the derived average cost was 1,305 yuan
per kilowatt for the hydroelectric stations and 1,210 yuan for the
thermal electric stations.** Generally, in the more advanced coun-
tries of the world, the average construction cost per kilowatt for
hydroelectric stations is at least twice that of thermal electric
stations. Speedy construction at a minimal cost per kilowatt is a
prime factor in the huge hydroelectric construction program now under
way.
* Roughly two-thirds of hydroelectric construction costs are repre-
sented by earthwork, the bulk of which is done by low-cost hand
labor.
** The hydroelectric stations embraced in this comparison are Kuan-
t'ing, Mo-shih-k'ou, Ku-t'ien, Shang-yu, Shih-tzu-t'an, Shang-t'ung,
Sh1h-lung-chu, and Wu-la-po; and the thermal electric stations are
Cheng-chou, Lo-yang, Pao-t'ou, Sian, and Tsingtao.
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Declassified
Ficiure 6
.
n
m
Part - Sanitized Copy Approved for Release 2013/05/07:
COM:AUNib-1 UL?LINA
Construction of Hydroelectric Power
Stations 1953-1957
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