[THE CHINA LETTER - AUGUST 1976 - COPYRIGHT 1976 BY THE ASIA LETTER LTD.]

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88-01314R000100190042-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 10
• Document Creation Date: December 16, 2016
• Document Release Date: September 2, 2004
• Sequence Number: 42
• Publication Date: August 1, 1976
• Content Type: LETTER

August 1976
Dear Sir:
NOBODY WILL EVER KNOW, at least outside China for the foreseeable future, the
full extent of the damage caused by the July 28 earthquake in Tangshan.
But, this we do know:
--- China's coal Production suffered severely. Damage to the Kailuan mines
alone will cost China at least a million but probably closer to two million tons of
coal production this year. (And don't believe for a moment that China saved "all
but a few" of the 10,000 miners underground at the time of the quake.)
---Damage to the steel plant in Tangshan and disruptions at other steel mills
due to the quake and the disruption of coal supplies will result in a loss of up to
400,000 tons of steel production.
---An estimated loss of 500,000 tons of cement production will result from
damaged or destroyed plants.
---As much as 25-50 million pieces of ceramic products, mainly household og ods,.
will not be produced this year because of the quake.
--It's impossible to put a quantitative figure on agricultural losses. But
the affected area is an important agricultural region. The losses were not so much
in terms of production but in terms of the drain on reserves and the damage to water
conservancy works.
---In addition to the direct damage to rail, road, pipeline and port facilities
in the immediate quake area, transportation in various other parts of the country
has been disrupted. Trucks, trains and aircraft from all over China have been sent
to the quake area. All of this is going to cost the Chinese economy millions of
dollars in lost or disrupted production.
---Transportation delays and the need to divert goods intended for export to
meet domestic requirements will result in a loss of a minimum of US$100 million in
foreign trade.
That's just. some of the impact of the quake in the Peking-Tientsin-Tangshan area..
Don't forget that two other severe quakes rocked Yunnan and Szechuan provinces.
Those quakes didn't cause as much direct damage as the one in Tangshan. But
they did cause a further drain on supplies and transport facilities.
So...our estimate is that the damage and disruptions caused by those quakes
will result in a decline of as much as 5`/: in China's total Gross National Product
performance this year.
THE CONTINUING POWER STRUGGLE in Peking is beginning to have some serious polit-
ical and social effects throughout China.
We're talking about the growing signs of a breakdown in discipline, rising crime,
a tendency towards factional fighting like that which took place during the more
violent phases of the Cultural Revolution.
This isn't speculation. Reports from China's provinces that we've monitored
speak in surprisingly frank terms about the breakdown in discIp line and the resulting
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And the reason for this development also is clear: Because of the continuing
uncertainty over which way the wind is blowing in Peking, lower level officials are
reluctant to take a firm stand on issues for fear of later being criticized and
purged.
Thus there is weakening of authority which is directly leading to a breakdown
in discipline.
Higher level 'authorities---especially those at the provincial level and the
people they support in Peking---may even be letting this situation develop
deliberately.
It's fairly obvious that the factional struggle in Peking has reached a stalemate,
with neither side being able to completely seize power.
The so-called "radicals" continue to control the media. They are strongest in
Peking. But out in the provinces power rests in the hands of those who mainly support
the so-called "pragmatists".
What is happening right now may well be a case of the "pragmatists" letting the
country get somewhat out of control so that they can later move in to control the
situation, pick up the pieces and the process put the "radicals" down once and for all.
Something is going to have to give before too long. The economic problems
created by the earthquake in North China and the growing tendency towards a breakdown
in discipline cry out for a strong leadership.
Several important central government, Party and military posts remain vacant.
They probably can't be filled until the power struggle is resolved.
A showdown is coming-probably before the end of this year.
IF YOU WANT AN ADVANCE PEEK at some of the policies that China likely will be
pursuing in three or four years from now, read what is being written about the policies
that were being pushed by ousted Vice Premier TENG HSIAO-PING.
Although Teng's policies and programs now are the subject of intense criticism
in China's press, their basic thrust is almost certainly going to be revived at some
future date.
Those policies and programs were laid out by Teng in three documents:~i
1. "On the General Program for all Work of the Party and the Country."
2. "Some Problems Concerning the Work of Science and Technology."
3. "Some Problems in Accelerating Industrial Development."
The full texts of those documents have not been published outside China. But
the gist of Teng's message is clear.
Basically, Teng formulated new policies to deal with what he saw as major manage-
ment problems affecting all sectors of China's development.
Politically, he wanted an end to a lot of the political activities that tend to
affect production.
He wanted a change in the educational system to favor brighter students and
provide them with a solid education, especially in the sciences..
He wanted the country's limited number of scientists and technicians to be freed
from political interference so that they could devote full time to their specialized
tasks.
Economically, Teng wanted to tighten up management control. One way was to place
the nationally important industries under the direct control of the central government
ministries.
He proposed stepping up China's exports of minerals (mainly coal and oil) to a_y
for much expanded imports of foreign plant, equipment and technology. This, he
argued, would make it possible for China to achieve a technical transformation and
to absorb the country's huge and growing labor force.
Teng also was in favor of seeking more foreign assistance to help develop certain
areas of the economy. He wanted to use more material incentives to stimulate worker
enthusiasm and production.
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All of these policies pushed by Teng Hsiao-ping are now labelled as heresies in
terms of the doctrines of MAO TSE-TUNG.
Much of what Teng was advocating, however, has been badly distorted by those
who are behind the criticism campaign. The problems that his policies were designed
to tackle certainly are real, disregarding whether or not those licies would have
been effective in coping with them.
There's a lot to be learned from the three documents produced-in the name of
Teng about China's development problems and possible solutions to them. We'll be
taking a much more detailed look at those documents next month.
LIBRARY CORNER: You might be interested in adding to your commercial library on
China a series of pamphlets called "China In Development" produced by the Chita
Council for the Promotion of International Trade.
Some of the titles produced so far in English include "An Introduction to China",
"China's Textile Industry", "Water Conservancy in New China" and "Self-Reliance and
Independence in Developing Foreign Trade"'.
These pamphlets give a good, brief look at how China sees various aspects of its
development effort.
You can get free copies of the "China In Development" series by writing: Guozi
Shudian, P.O. Box 399, Peking, China. Or you can ask Guozi Shudian to give you the
name of its agent in the country where you live.
The Other Chinese
ONE OF THE MOST SERIOUS CHALLENGES so far to Taiwan's membership in
an international organization will take place at the forthcoming meeting'
in Nairobi of the International Satellite Corp. (Intelsat).
China has been quietly maneuvering for months to get Taiwan, one of
Intelsat's original members, kicked out of the organization and replaced
by China. Peking at present has only observer status, although it is
allowed to use Intelsat satellites for international communications.
If Peking's game plan is successful, it will force Taiwan to leave
the Nairobi meeting, claim jurisdiction over the island and thus Taiwan's
interests in and access to Intelsat.
And if that happens, there is no way that Taiwan will be able to
continue using the Intelsat facilities which are so important to its
economic and commercial activities around the world.
There also is some concern that a successful Peking move to oust
Taiwan will mean the politicization of Intelsat, which up to now has
accepted as a member any country that agrees to go along with its rules
and requirements.
The whole issue poses an especially sticky problem for the United
States.
As the country that launched the Intelsat satellites, it bears a
great deal of responsibility for how the organization operates. It thus
will be extremely difficult for the U.S. not to back Taiwan. And that,
of course, won't go down well with Peking.
Taiwan may have compounded the problem it faces by opting some time
ago to avoid giving public attention to China's challenge.
Having failed to create a public uproar over the issue, some Taiwan
supporters now fear, China may be able to go into the Nairobi meeting
claiming little or no opposition to its move.
We'll keep you_posted_on_what_haj pens.
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JUST AS WE PREDICTED would happen (TCL 53), the growth rate of China's petroleum
industry is now dropping back to a more modest level.
Oil output expanded by an annual average of some 20% between 1965 and 1975.
That was largely the result of the fact that production 10 years ago was at such a
low level that high output growth rates could be relatively easily achieved.
But now China's oil output is so muc'n higher that tremendous amounts of capital
are needed to sustin that earlier growth rate.
And China simply does not have the available capital and skilled manpower
resources needed to meet the various demands placed on them.
The'result: During the first half of this year petroleum output increased by a
more reasonable 10% over the same period of 1975.
Gi,ren the heavy demands on China's available capital and other resources in the
wake of the destructive North China quake, it is unlikely that total oil production
for all of 1976 will be up by much more than 10%.
What all this means is what we've been telling you for some time now: Those
earlier estimates of China becoming an oil producer the size of Saudi Arabia by 1985,.
and thus becoming a more important factor in the world oil picture, have been reatly
exaggerated.
CHINA'S FOREIGN TRADE is the area that is feeling the greatest immediate impact
of recent political developments and natural disasters in the People's Republic.
Unless there is a marked improvement in the situation during the remaining months
of this year, China's 1976 foreign trade figure is almost certainly going to be well
below that of last year.
Although the Spring Canton Fair (April 15-May 15) was a disappointment for many
foreign businessmen, all the indications up to that time were that China's foreign
trade was running well ahead of the figures for the same period of 1975.
But since June, there has been a considerable fall-off in China's trade.
That's particularly true of Chinese imports. But foreign businessmen also are
having trouble buying from China.
A major reason for this is the campaign against former Vice Premier TENG HSIAO-
PING. Among other things, Teng is now being criticized for putting too much stress
on foreign imports and attempting to sell Chinese resources to pay for them.
The effect that has is that Chinese officials are being very wary about trade
decisions lest they become targets for criticism.
Then came the disastrous earthquake in North China that has had a serious impact
on foreign trade.
We're not talking just about the disruption of export industries and of trans-
portation, or the need to divert supplies to the disaster area. Another important
factor is that the quake and the relief effort have disrupted the Chinese bureaucracy.
Many trading officials are now preoccupied with other things.
These developments, combined with a sizeable reduction in Chinese grain imports
this year (see TCL 56), are creating serious problems and considerable concern for
China traders.
Japan's two-way trade with China this year is expected to be 6%-8% below that of
last year. Because of the declining grain imports, China's trade with Canada is
running at only half the level of last year. Sino-U.S. trade is likely to be off by
as much as 25%. West Germany is experiencing a similar fall.
There are exceptions to this. Britain's trade, for example, is running ahead of
last year. So is Hong Kong's.
But a check of China's major trading partners by THE CHINA LETTER reveals that
most of them are experiencing trade declines.
Whether there will be an improvement in this situation will depend to a large
extent on the coming Autumn session of the Canton Fair, The results of that Fair
thus will be tfpLgdnf Ret%% j;094/ 9/g? j lA-RDP88-01314R000100190042-9
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BLACKBOARD NOTES: Among the few foreigners who are allowed to live
and work in China on a longer term basis are those who are hired by Peking
to teach foreign languages.
These foreigners see, as much as any foreigner can, the real China
and the real problems that face the country.
The problem of how to teach is one that continues to be heatedly
debated in China. And for good reason, as this experience of one foreign
teacher who worked in Tientsin well illustrates:
"The level of the students was low---because they had spent their
first two weeks repeating isolated sounds after a teacher or tape
recorder, which ensured that they would never again regard language as a
means of communication.
"This has something to do with their political training, I'm sure.
They earnestly assent in every new movement and shout the new and correct
slogans, which may be diametrically opposed to the slogans of yesterday
and to the practice of today, but it makes not the slightest difference
to their actual practice.
"Teaching the students rubbed my nose in the suspicion and disrespect
with which the authorities regarded me. Everything had to be vetted. In
one of my examples I once had CHOU EN-LAI and LIU SHAO-CHI in the same
sentence, contrasted and differentiated. The officials brought it back
to me and had it changed 'because the masses wouldn't like it', 'because-
the students wouldn't agree' etc. That decision was made without actually
consulting the masses---typical of the formalism, empty phrase mongering,
that afflicts the cadres.
"They were insisting on using teaching material from Peking Foreign
Language Institute No. 1, which as usual was ungraded and not written
according to teaching points. I wanted to use some of the useful skills
I'd picked up in my teaching course, and teach them methodically.
"'No!', came the answer. 'We must have respect for our brother
institute'. The answer was not surprising, since it came from the top
leaders who had never taught or studied language.
"But later there were no oral texts provided, and they didn't notice.
So I made up my own material, and then got the students to discuss the
good points and bad points of my teaching. The answer was unanimous:
They liked my material, and in turn I went to the leaders and said, 'Look
what the masses say!'. From then on I wrote my own material, though it
was still. thoroughly vetted.
"A very striking feature of Chinese life is the importance of the
written word. It makes teaching language impossible: Pupils will pick up
a copy of Peking Review and you will have the damnedest job persuading
them that it's better to say the thing correctly, not as it is written
simply because it is written.
"And students would absolutely demand that everything I said in class
should be printed, or they felt that they had learned nothing. Try to
correct their pronunciation and they would say: 'But write it for me!'
"It was useless to explain that oral skills only come with oral
practice. The result: My students could recite dialogues beginning to
end---but they could never respond to a key question from the dialogue."
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ONE THING,CHINA HAS GOING for it at a time of growing political uncertainty
and mounting signs of a breakdown in discipline is that 1976 looks like being another
year of excellent agricultural performance.
That means there will be no food shortages to aggravate the situation.
Despite a halting start due to erratic weather, China is expected to have
another record grain harvest this year.
Our estimates indicate grain output could near the 290 million ton figure this
year, a healthy 4% to 5% up from last year's output of some 280 million tons.
Spring and summer harvests, including the important winter wheat crop, were very
good, topping both total and per hectare yields of previous years.
Estimates are that the early rice crop was some 60 million tons, up about 5%
over the early crop last year. Early rice accounts for some 40% of total production.
The more important late rice crop is, by all accounts, growing very well.
The winter wheat production---which accounts for the bulk of total wheat output---
was an estimated 37 million tons, also a record.
Barring a bad turn of weather before the harvests in October and November, the
late crops also are expected to be bountiful.
Due credit has to be given China for the fine job it has done in coping with the
vagaries of the weather and insuring good harvests.
We've told you before (TCL 53) about the extensive water conservancy work that
has been undertaken over the years to better control the effects of weather on produc-
tion. That work undoubtedly is a key factor in the continuing good harvests.
The mechanization drive launched last year is continuing. That, too, will have
a positive impact on future agricultural production.
WHILE THE WORK CHINA HAS DONE to guarantee good harvests is for the most part
very positive, there is one area of activity that could create serious difficulties
in the future.
That is the sinking of large numbers of wells in the northern China area to
provide water for crops during dry spells.
Today there are an estimated 2 million pump wells in use in that area. And they
have been vital in guaranteeing good harvests over the past three to four years.
But...andthis is something China is beginning to show some concern abouty the
prolonged drought and the continuing large-scale use of wells for irrigation are
beginning to affect the water tables in the northern China area.
We've received numerous reports of China having to use deeper and deeper wells
because of the lowering of water tables.
A few years of normal or near normal rainfall in the dry areas of the.North
might well raise the water table levels. But if the moisture patterns of the past
few years continue, the prospect of increasingly lower water tables is a real---
and potentially dangerous possibility.
BACKGROUND BRIEFING: One of the often overlooked developments of China's agri-
culture is livestock, and especially hog production.
China's animal population is huge---certainly well over 400 million head, and
probably approaching 500 million.
There are currently an estimated 260 million pigs, 90 million sheep, 48 million
beef cattle, 18 million water buffalo and nearly 1.5 million dairy cattle in the
country. In addition, there are large numbers of domesticated herds of deer, yak and
smaller animals such as rabbits.
In recent ye_irs, communes and production brigades have been ordered to quickly
increase livestock numbers ...and to do so on a collective basis. Individual ownership-
or sideline production --of livestock also is continuing.
While the greatest emphasis has been on .expansion of the pig population, other
livestock have not been neglected. A massive effort to sow new grasslands for sheep
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New breeds also are being introduced. France, Canada, Britain and Australia
all have supplied China with better breeds.
Dairy herds are being enlarged, particularly near larger cities, backed by
modern milking, processing and canning facilities.
Pigs are stressed for a number of reasons: They can be increased in numbers
rapidly with a minimum of effort, they lend themselves to collective breeding and
care, and they are a significant source of natural fertilizer.
A key problem in all this livestock expansion is fodder. Collective piggeries
undoubtedly consume far greater quantities of grain than sideline production--- -
including corn, wheat, sorghum and sweet potatoes. Various substitutes also are fed,
such as cassava in the South, wheat and rice husks, and waterlilies elsewhere.
Just how much of a drain on available food supplies this large animal population
causes is one of the great mysteries about China's agricultural scene. But it must
be large.
Greater consumption of meats and dairy products can only partially offset the
grain feed loss, although giving the Chinese diet a better protein balance..
The expansion of China's livestock industry is not simply for domestic purposes.
Livestock is becoming increasingly important in China's foreign trade.
Last year, for example, China shipped 1.5 million live head (mostly hogs) into
the Hong Kong market. Bristles, hides, bone and other animal by-products are among
China's cheapest export bargains. Canned meat products are highly rated overseas.
As China continues its effort to expand its livestock industry, there is going
to be a growing need for modern processing facilities and equipment. There have been
some imports of this equipment already, and more are very likely in the.not-too-distant
future.
SIGN OF THE TIMES: There's no
better indication of the breakdown
in discipline in China than the
fact that beggars have reap eared
in many parts of the country.
Reports of beggars being seen
in various cities around the
country were originally greeted
with skepticism by some foreign
observers in Peking. No more.
Reason: Some foreigners re-
siding in the Chinese capital have
not only seen beggars in that city
but have been on the receiving
end of pleas for alms.
WHO'S HELPING CHINA develop
its off-shore oil potential?
American off-shore oil tech-
nicians recently hired by Peking
on a contract basis.
Insiders in the oil industry
tell us that the first ones that
have been signed up are oil r
workers who have been laid off
because of the slowdown in explora-
tion in Indonesia.
They say Peking is offering
very attractive terms, but is
having some difficulty in getting
takers because the oilman are wary
of China's puritan lifestyle.
a travel ban on top scientists in-
volved in the country's defense
industries---nuclear energy and
missiles in particular.
That ban applies especially to
those Chinese scientists who have
studied in the United States. As a
result, they have been unable to
accept invitations to visit the
U.S.
More important, such invita-
tions at this time are a source of
embarrassment and could be politi-
cally troublesome.
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. China Chronology
July 1---55th anniversary of founding of Chinese Communist Party.
July 6---National People's Congress Standing Committee Chairman and Chinese
"Red Army" founder CHU TEH dies at age 90.
July 10---U.S. Senate Republican leader HUGH SCOTT arrives in Peking.
July 25---Former Australian Prime Minister GOUGH WHITLAN arrives in Peking.
July 28---Earthquake of 8.2 on Richter scale, world's worst in 12 years, hits
Tangshan-Fengnan area of Hopei Province, causing serious damage and affecting Peking,
Tientsin.
The Fortune Teller
IT WON'T BE TOO LONG before you'll be able to use one of your American credit
cards in China.
Negotiations were moving along very rapidly and agreement probably would have
been reached already except for the anti-TENG HSIAO-PING campaign and the anti-foreign
turn it took.
The criticism of Teng for his "slavish compradore philosophy" put the negotia-
tions on use of American credit cards in China temporarily off the tracks.
But word we get is that China is still very much interested in the idea.. And
agreement is likely to be forthcoming fairly soon.
YOU CAN LOOK FOR a marked upturn in real tourism in China next year.
This will be the first time since 1964 that China has seriously tried to tap
its tourism potential.
We're not talking about "special" groups of people who are allowed to visit
China but people who have no other interest in China except that of sightseeing and
tourism.
Major cities that will be opened initially to these pure tourist visitors will
be Canton, Kweilin and Shanghai.
ONE WAY YOU'RE GOING to be able to tell who's getting the upper hand in the on-
going power struggle in Peking is how seriously provincial Communist Party officials
come under criticism.
The so-called "radicals" are going to have to move against those provincial
leaders if they hope to gain ultimate power, since those officials are providing the
main support for.the so-called."pragmatists".
Some provincial officials already have come under attack. And this could be the
signal that a showdown is nearing.
DON'T BE SURPRISED TO SEE Peking getting a lot tougher with companies that are
trying to maintain business relations with both China and Taiwan.
This is going to be especially true with American firms. But it also will
involve companies from other countries as well.
Up to now, Peking has generally turned a blind eye to the practice of many firms
of having business dealings with both Taiwan and China.
Reason for the change of attitude: A Chinese decision to take a harder stand on
the Taiwan issue in preparation for the expected start of talks with the U.S., after
the November elections, on full normalization of relations.
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A few such plants were built (at Anshan, Wuhan, Maanshan and Paotow) but there
was not a major push towards such modernization.
The total impact of this neglect of beneficiation facilities became apparent by
1974 when failures within the industry led to a sharp decline in steel output.
During early 1975, a top-level decision was made to switch the development.
orientation of the iron and steel industry to that of raw materials.
A new "unified State plan" was developed and launched in September of that year.
Few details of the plan are known, but the emphasis clearly appears to be on providij
modern beneficiation plants at consolidated mining centers.
Recent political developments in China (especially the ouster of former Vice
Premier TENG HSIAO-PING) may slow down the iron mining modernization effort, since
the industry is unlikely to develop as needed without the import of increasing amounts
of Western technology and equipment.
Teng favored such imports. He was a major backer of the industry reorientation
plan. But now his policies are being criticized.
China has imported a limited amount of equipment and technology for mining and
ore beneficiation. It purchased one pelletizing plant in 1966 from Japan to gain
German technology, which-it has copied. It has purchased some shovels and other
equipment more recently from the U.S. and Britain.
But much more will be needed to bring China's iron mines and beneficiation plants
up to the levels needed both to support the current steel industry and its expansion..
China has a tremendous base to work from in developing its iron mining. Deposits
are scattered throughout the country, with only the Southeast lacking in reserves.
The major mines continue to be concentrated north of the Yangtze. They are:
Anshan---Old mining area. New open cast mine, Takushan, can supply ore con-
centrates up to 60% iron content. A large sintering plant has been added.
Wuhan---Two new mines, both underground, recently opened at Chengchao and
Tahungshan. Huge Tayeh open cast mine is producing more than 3.5 million tons of 60%
ore per year. Large sintering plant installed. Raw material demand will soar when
new German-Japanese mill comes on stream in 1978.
Taiyuan---In Shensi Province, major iron mines being developed. Large sintering
plant installed in 1970.
Peking---New mine closer to huge Capital Iron and Steel Planc opened with major
beneficiation plant attached. Producing 60% ore concentrates. Older mine at Lunayen
still functioning.
Paotow---Mines some distance from steel complex causing problems. A pelletizing
plant capable of 1.1 million tons a year has been added to upgrade ores.
Penchi---In Liaoning Province, a large iron producing center. But ore very low
grade. New Waitoshan mine can produce 3 million tons a year. Older Nanfen mine has
7 million ton output. Large beneficiation plant installed at Waitoshan.
Maanshan---One of best iron ore mining areas, in. Anhwei province. Received good
deal of investment since mid-1960s. Supports Shanghai steel mills.
China also has a widespread local iron mining industry supplying small blast
furnaces in nearly every province.
China produces about 60 million tons of -iron ore-per year, with output. growing
only modestly each year. The country thus continues to import more than 1 million
tons of high grade ore a year.
The other shortcoming of the industry, that of scrap, is a serious problem. It
is estimated that China could use twice as much scrap as it can obtain domestically..
Some of this shortfall is made up through imports.
Our estimate is that China will have to import out 3 mill_ion tons annually of
scrap, pig ix on and high-grade ore until 1980. ~! ^
Or it will have to begin investin more in the beneficiation equipment needed
to make bet ru~veet~FoTAelpfpp, OQ?/ 81bpi TRPL?8?rQI31#B9OQ4QOl9OQ42t9 China will, in
the not-too-distant future, choose the latter course.
 SPECIAL REPORT
(Supplement to
Issue No. 58)
CHINA PULLED A CLASSIC EXAMPLE of getting the cart before the horse when it set
about in the early 1950s to develop a large and modern steel industry.
That error involved a concentration of effort on developing iron and steel
plants to the neglect of developing modern mining, ore treatment and other raw
material facilities.
The result is that China's iron and steel industry has developed only slowly
(see our Special Report with TCL 56). And it will take some years yet---assuming the
investment in modern mining and ore beneficiation facilities is made---before the
imbalance can be rectified.
What happened is that China assumed it had more than enough iron ore to feed any
size industry. And it is true that the country's iron ore reserves are immense...
sufficient for major iron and steel production until well into the 21st Century.
But most of that ore is of very low grade and needs major beneficiation processes
before it can be efficiently utilized.
Another shortcoming on the part of the Chinese was the lack of attention paid
to securing adequate supplies of scrap. China's use of steel products simply has not
been on an extensive enough scale to provide the volume of scrap necessary for a
large steel industry.
Over the past few years, there have been indications that China's industrial
planners have recognized these mistakes. Efforts are now underway to correct them.
But it is not likely to be before the early 1980s that the iron ore mining
industry can catch up with the iron and steel plant capacity already installed or
soon coming on stream. Shortages of domestically gathered scrap will probably con-
tinue even longer.
That means that if China is to maintain even a modest growth in its iron and
steel production, it will have to continue importing fairly sizeable amounts of iron
ore and scrap in thears ahead or begin investing mare in modern mining equipment.
That's the general picture of China's iron ore mining situation. Let's take a
more detailed look at this problem area in our SPECIAL REPORT: CHINA INDUSTRY PROFILES
MINING: PART IT, IRON ORE.
When the Communists came to power in China in 1949 they were delighted to dis-
cover that the nation had enormous deposits of key minerals such as coal and iron ore.
From an initial estimate of 2 billion tons of iron ore reserves in 1949, the
reserve figure has now soared to an unbelievable 100 billion tons. And many areas of
China that may contain iron ore reserves have yet to be surveyed.
With only a few exceptions, however, that ore is "lean", containing only around
one-fourth to one-third iron (fe) content. Richer ores from nations like Japan and
Australia have one-half iron content.
Soviet ar4l' for(Release 2 O9 lc dClAcR@p8a%OtB$4EQ9QlQQ39QO42ii China of
beneficiation---including fine-grinding and pelletization---plants
.