Article 35 of the Common Program

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Fig. 35.: Capital construction investment 1953-1955 (million Yuan)

Fig. 35.2:

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Industralization

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Established on April 17, 1951, the Aviation Industry Corporation of China (AVIC) is the country's largest aviation enterprise, primarily responsible for producing all of China’s domestic military aircraft. Initially, AVIC was part of the Ministry of Machine Industry (MMI) under the Ministry of Defense. During the First Five-Year Plan (1953-1957), the MMI expanded to include several aviation colleges, universities, and 13 supporting enterprises. This expansion enabled China’s fledgling aviation industry to transition from merely maintaining existing aircraft to producing their own equipment and aircraft. For example, the state-owned Weijian Machinery Manufacturing Plant and Harbin Aircraft Manufacturing Company. On April 1, 1952, Factory 122 was officially established as one of the first six main engine factories of the aviation industry. Significant assistance from the SU facilitated this shift, with many aircraft and equipment being copies of Soviet models like the MiG-19.
The Bureau of Aviation Industry (BAI) was established in 1951 as the first authority overseeing aircraft production in China. In 1953, the PRC launched its first Five-Year Economic Development Plan, which included constructing several aircraft factories primarily for military aircraft production for the PLAAF and the air component of the PLAN. With Soviet support, aircraft factories were built and commissioned in Nanchang, Shenyang (formerly Mukden), Chengdu, Harbin, and Xi’an. However, actual production did not commence until 1954, a year after the Korean War had ended.

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By October 1949, the Communists had firmly taken control of the cities, a notable achievement given their limited experience in managing large urban areas. This control was significantly influenced by their efforts to dominate the electrical industries, which laid the foundation for their grasp on the urban economy. By gaining the support of Western-educated engineer-bureaucrats who had served the Guomindang regime, the CCP were able to inherit the existing power infrastructure with minimal damage. Contrary to the common narrative that the PLA simply surrounded and seized the cities from the countryside, a closer examination reveals that their economic management strategies, particularly concerning electricity, helped them secure popular support among urban residents. The controlover power stations was an important part of the strategy to conquer cities. See Part 3
The North Hebei Power Company, which had grown into the largest state-owned electric utility under the GMD, became the central battlefield in the struggle to control China's electrical industry. Under the command of generals Peng Zhen, Nie Rongzhen, Lin Biao, and Luo Ronghuan, the PLA executed the first successful power blockade in Beijing between December 1948 and January 1949, trapping Nationalist forces under Fu Zuoyi. By securing the support of the engineering elite at the power station, the CCP took control of the station that supplied most of Beijing's electricity before encircling the city in December 1948.
The "power blockade," which had previously been a blunt instrument, was transformed into a precision strike weapon. The PLA managed to briefly restore power for a few hours to alleviate the inconvenience for Beiping’s residents. By forging an alliance between the military, workers, and the engineering elite, the Communists used the blockade to facilitate Beiping's "peaceful liberation" in January 1949. They replicated this strategy elsewhere, allowing them to inherit the electrical infrastructure intact following a bloody civil war. Fig. 35.: Electriciy capacity 1949-1954 (million KW)

The ongoing state of war following the establishment of the People’s Republic in October 1949 fostered a siege mentality within the electric power sector. Recognizing the strategic importance of electrical power, military representatives took control of the industry. However, military power alone was insufficient to assert authority. During this period, technical experts ceded decision-making powers to nonexperts, with increases in electrical output achieved through industrial reorganization rather than the installation of additional generating capacity. In line with the ideal of workers seizing the means of production, electrical workers without formal engineering training replaced engineers as power plant superintendents. Fig. 35.: Power output figures for Shanghai, 1949–1954

The electrical industry reflected the Leninist and Maoist principle of “development as a unity of opposites.” Despite the presence of Soviet advisers, China’s power sector operated independently of foreign influence. Determined to forge their own path, the Chinese went beyond their “Soviet Big Brother” by entrusting the means of production to rank-and-file workers rather than highly educated technocrats.

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On the eve of the Communist takeover in late 1949, the coal industry, like many other industries and the railways, was semi-paralyzed due to bombings and looting. Although significant reconstruction and re-equipping were necessary, a relatively swift restoration of the previously profitable coal industry was feasible. Abundant cheap labor had kept mechanization at a low level, resulting in a largely unskilled workforce, and the coal quality was poor due to inadequate washing and sorting. As in many countries, the location of coal deposits significantly influenced the development of the railways, with several lines built before 1911 becoming main transport arteries.
The government promptly initiated repairs on existing railway lines and bridges and began constructing new lines in the northwest, south-central, and southwest regions. At that time, the northwest and southwest had few railway lines, and there were no lines at all in Qinghai, Ningxia, or Xinjiang. The existing lines were of non-uniform gauge, and the equipment was outdated. By the end of 1952, the government had centralized railway management and claimed that 22,900 km of lines were operational. See Article 36 Fig. 35.: Coal production in modern mines, by province, 1936

Since 1949, as the deposits close to the east coast have become exhausted, the centre of gravity of production has shifted from north-east China to become heavily concentrated in the north, particularly the provinces of Shanxi and Inner Mongolia. Small rural mines were common in the pre-Communist period but after 1949 most were closed down by the new authorities, both for safety reasons and to protect the State Owned Enterprises’ monopoly.
During 1949–52, the major objectives were to gain control of coal supplies, reconstruct the existing mines, and concentrate all new coal mine construction in the northeast. In 1949, the Chinese initially estimated that around 175 coal shafts would need to be closed or abandoned by 1955. However, after consulting with Soviet advisers in 1952, this estimate was revised to no more than 60 shafts by 1957. As part of their loan package, the Soviets provided nearly all the rolling stock required for the industry's startup. Among the 156 projects supported by the SU and other Eastern Bloc countries at the time, 24 were coal projects, with a focus on large mines and preparation plants. Additionally, the Poles delivered at least five plants and contracted to supply complete equipment for two coal mines, three coal dressing plants, and several smaller projects. By 1952 production had recovered to the pre-1949 peak. In 1952 the largest concentration of coal production was in Liaoning (17.7 per cent), followed by Shanxi (16.3 per cent), and Hebei (15.2 per cent). Together the north and northeast regions produced almost 70 per cent of total output, 36 per cent in the north and 33.2 per cent in the north- east.Investment in coal production as a proportion of total investment in energy decreased from 51.9 per cent in 1953 to 34.2 per cent in 1957
Throughout the 1950s, China's predominantly rural population relied heavily on coal and biomass as primary energy sources. Coal accounted for 96 percent of the country's energy production and 94 percent of its consumption. However, between 1949 and 1954, as China began its industrialization process and pursued energy independence, its commercial energy industry grew rapidly. Primary energy consumption increased from 24 million tonnes of coal equivalent (mtce) in 1949 to 50 mtce in 1952. Fig. 35.: Coal production 1949-1954

The central authorities divided the country into three zones: heated, transition, and non-heated. Consumption was much higher in all the provinces and autonomous regions north of the Changjiang River because they were allocated coal for winter heating, unlike those to the south. This government-decreed demarcation caused significant hardship for people living in the middle transition zone, such as in Shanghai, who lacked the desired quantities of fuel for heating during winter. In 1952, Shanghai alone accounted for nearly one-fifth of the nation’s coal consumption. The eastern region as a whole accounted for 36.3 percent, with Jiangsu and Shandong also having sizable shares. The second-largest concentration of consumption was in Liaoning. Overall, the northeast region accounted for 29 percent, the north for 14.2 percent, the south-central for 12 percent, the southwest for 6.1 percent, and the northwest for 2.4 percent.

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From the start, crude oil was regarded as a ‘strategic material’ and the oil industry was regarded as a ‘strategic industry’. However, in 1949, the Yumen Oil Field in Gansu province was the only domestic oil field able to support industrial production and it fell far short of China's oil needs. Shipping millions of tons of crude oil from the west to the east exhausted the only railroads serving these regions. After the collapse of the GMD government, most of the geologists and engineers remained in mainland China and worked for the PRC. After the retreat, more than a hundred heavy industrial enterprises; nearly one thousand manufacturing, mining, and power generation units; thirty-two thousand staff members, and more than 600,000 skilled workers remained on the mainland. This continuity contributed greatly to the post-1949 production successes. From 1950 to 1957, China's total crude oil output was less than 6 million tonnes, leading to a reliance on oil imports. To achieve self-sufficiency in crude oil for industrialization, the central government adopted a quasi-military "massive campaign" model for exploring and developing oil resources. The government provided the necessary funds and quickly mobilized human and material resources nationwide to the targeted areas for exploration and development. The required massive human resources were supplied by the PLA. In 1952, Mao Zedong ordered the reorganization of the 57th Division of the 19th Army of the PLA (8000 soldiers who receives simple drilling training) into the 1st Division of Oil. Starting in 1955, several oil fields were discovered.
Comprehensive prospecting for natural resources was a top priority during the First Five-Year Plan. At the National Geology Planning Work Conference in Beijing near the end of 1952, Chen Yun declared, “The geology industry is the most important industry in the national economy.” The conference set a goal to increase "technical" human geological resources tenfold by 1953 compared to their 1952 levels. Significant investments were made in mining-resource prospecting and workforce training, with 1.7 billion yuan allocated solely for geological prospecting. Mining-machine factories were established in the early 1950s, and the number of geology students in higher education and technical schools was planned to increase by 70 percent annually during the First Five-Year Plan. By 1957, the number of geological technicians had surged to over 19,000, up from just 644 in 1952. In 1949, only eighteen petroleum geologists with eight drilling machines, including two previously abandoned by Standard Oil, were engaged in oil exploration. By 1955, over six thousand geological workers had access to several hundred drilling machines. March 1950, Sinochem (China Chemical Import and Export Company) was established and monopolised the import and export businesses of the oil industry. On March 1, 1951, the company officially opened for business in Tianjin, with the main task of breaking the "blockade" and "embargo" imposed by Western countries on China and developing trade with capitalist countries. Shell remained in China after 1950 and became the only western oil company trading in the PRC and was allowed to retain its Shanghai head office.

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During his visit in May 1949, Liu Shaoqi inspected the Tanggu Alkali Factory in Tianjin and invited Hou Debang, the chief engineer of the company, who was in India at the time, to return to China. Zhou Enlai said in a meeting with Hou Debang that the company needed him to come back to preside over it, Hou Debang raised the problems of insufficient raw materials, limited sales of products, and slow capital turnover in Yongli Gu (soda ash factory) and Ning factories in Nanjing (nitrogen fertilizers, phosphate fertilizers and synthetic fiber raw materials). Zhou Enlai immediately said that the government could purchase products, provide working capital, and would do its best to help with raw material supply after transportation was unblocked. Zhou Enlai also told Hou Debang that as long as it was beneficial to the development of production, he hoped that he would tell him at any time no matter what difficulties there were, and the government would definitely provide full assistance. In October 1949, Zhou Enlai met another chemical industrialist Wu Yunchu in Beijing. In contrast to Hou Debang, who became a CCP member in 1957, Wu Yunchu over the course of the Three Anti, Five Anti campaign, gradually surrendered control over his enterprises. On Jun1, 1950 the Chemical Industry Bureau was founded as a part of the Ministry of Heavy Industry. Shenyang Research Institute of Chemical Industry（SYRICI）is founded on January 8th, 1949, it is the earliest comprehensive chemical research institute established in China. In 1951, the Chemical Industry Bureau of the Northeast Industry Ministry took over the Dalian Soda Factory (i.e. Dalian Manchuria Soda Co., Ltd.) and renamed it Dalian Soda Factory. Its output exceeded the highest annual output during the Japanese occupation period. The State-owned First Rubber Factory developed a bulletproof self-repairing tire and produced 600 of them for use by the Chinese People's Volunteer Army. The 100th Executive Meeting of the State Council passed the "Decision on the Cultivation of Rubber Trees", and rubber trees were planted in Guangdong, Guangxi, Yunnan and Fujian. In Hainan, the military and civilians began to work together to engage in the planting and processing of natural rubber. The Ministry of Heavy Industry held a national working conference on acids, alkalis and dyes in Beijing and passed the "Draft Resolution on Three Acids", "Draft Resolution on Alkali and Bleaching Powder" and "Draft Resolution on Dye Issues". The successful production of 666 by Shanghai Insecticide Machinery Factory marked the formation of my country's organic synthetic pesticide industry. Jinxi Chemical Plant built my country's first mercury-based caustic soda production facility, and my country began to have caustic soda of higher purity. 1952The central government decided to abolish the major administrative regions. The factories and mines that were previously under the leadership of the Northeast, Southwest, and East China Chemical Bureaus were transferred to the leadership of the Chemical Bureau of the Ministry of Heavy Industry. The Northeast Petroleum Administration Bureau of the Ministry of Fuel reorganized the man-made oil and oil refining enterprises in the Northeast into 10 oil plants. The following year, the Northeast Petroleum Administration Bureau was abolished and the oil plants in the Northeast were transferred to the General Administration of Petroleum Administration of the Ministry of Fuel. In 1953, the Chemical Industry Bureau of the Ministry of Heavy Industry was renamed the Chemical Industry Administration Bureau of the Ministry of Heavy Industry of the People's Republic of China (abbreviated as the Central Chemical Industry Bureau). The Central Administration for Industry and Commerce issued an invention certificate to Hou’s alkali method with “Document No. 1”, which was valid for 5 years. The inventor was Hou Debang. Factory 401 pioneered the low-concentration acid-making process from smelting flue gas in China. China and the Soviet Union signed the Agreement on the Assistance of the Government of the Union of Soviet Socialist Republics to the Central People's Government of the People's Republic of China in Developing the National Economy in Moscow. In 1954, the Soviet government added 15 more projects. Among the 156 aid projects, there were 13 projects in the chemical industry, oil refining, chemical industry and oil equipment manufacturing. The first professional scientific research institution in China's petroleum refining industry, Fushun Petroleum Research Institute, was established, mainly engaged in scientific research on synthetic petroleum and petroleum refining. In 1954, the Chemical Industry Bureau of the Ministry of Heavy Industry proposed the first five-year development plan for the chemical industry. The Ministry of Heavy Industry established the Chemical Geology and Mineral Resources Company, which was responsible for leading the geology, exploration and mining production construction of the chemical industry. The Shanghai Institute of Organic Chemistry (SIOC) was founded in 1950 and covers all aspects of organic chemistry. Basf managed to maintain its offices in Shanghai and Tianjin during the early years of the People’s Republic In 1949, China produced only 27000 tons of chemical fertilizers, in 1941 the record production was 227000tons. This was surpassed in 1953. China remained the world's largest importer of fertilizers until the 1970's. Production mainly serves agriculture and the light and textile industries. Over the period 1949-79, 52 percent of investment in the chemical industry was directed at products for agricultural use and 20 percent at textile production. Fig. 35.: Supply of chemical fertilizers 1949-1954 (million metric tons)

Phosphorus is produced in 1955, potassium not before 1966.

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Chapter 4 of Common Program