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Growth of the Construction Industry in Communist China

  • Kang Chao

Extract

As Western observers generally know, China achieved very impressive progress in most sectors of its economy during the first ten years (1949–59) of the Communist régime. The rapid rise in production was mainly a result of the intensive investment programme under their five-year plans aimed at raising the productive capacity for the country as a whole.

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2 Such as provision of designs, blueprints or even engineering staff. Before 1949 foreign construction companies had been invited, on a contract basis, to build bridges and railways in China.

3 See Liu, T. C. and Yeh, K. C. assisted by Chong, Twanmo, The Economy of the Chinese Mainland: National Income and Economic Development, 1933–1959, RM-3519-PR, RAND Corporation, 04 1963, Vol. 1, p. 94.

4 See Lung, Hua-jung, Chi, Hsi-yung and Chen, Ming-kai, “Several Problems Concerning the Calculation of the Production Value of the Construction Industry,” Tung-chi Kung-tso (Statistical Work), No. 8, 1957, pp. 1416.

5 Most construction series in United Nations' statistical publications are stated in square metres of either floor area or ground area. See various issues of United Nations' Monthly Bulletin of Statistics (New York: Section VIII, Construction).

6 It is a miscellaneous item including stores, theatres, other public buildings for non-productive purposes, and even military barracks. See People's Handbook (Peking: Ta Kung Pao, 1955), p. 426.

7 It includes primarily workshops and office buildings of factories, warehouses and other buildings for production purposes.

8 The units of the three types of work are clearly defined in the standard design and budget handbooks for the construction industry, for instance, a cubic metre of earth work is defined as digging earth of one cubic metre and thereafter removing earth for, on the average, an elevation of 2 metres and a horizontal distance of 70 metres. See the Engineering Department of the Water Conservation Ministry, “The Compilation and Application of the Water Conservation Ministry's Unified Work Norms for 1958,” Chung-kuo Shui-li (China's Water Conservation), No. 2, 1958, p. 9.

9 Li, Fu-chun's speech in the People's Daily, 07 14, 1955; Chien-she Yueh-kan (Construction Monthly), No. 7, 1957, p. 20; “Economic Norms of Civil Buildings,” Compilation of Financial Regulations and Laws, 1955 (Peking: Financial Publishing House, 1956), p. 615; and Li, Yun-chung and Chang, Cheng-po, “Minimising Investment in Non-Productive Construction,” Chi-hua Ching-chi (Planned Economy), No. 3, 1958, pp. 1719.

10 The Construction Industry in the Great Leap Forward,” Chien-chu (Architecture), No. 17, 1958, pp. 2021.

11 This procedure of adjustment apparently ignores the improvement over time in technology and labour productivity in the construction industry. As a result, we may have understated the two adjusted output-component series for the years from 1955 to 1958.

12 More detailed explanation of the building material price index will be given later in this section.

13 Hsin-hua Yueh-pao (New China Monthly), III, No. 5, p. 1087.

14 The Ministry of Railway, Standard Railway Design and Budget Handbook, translated in U.S. Joint Publications Research Service, 10913, 10 31, 1961, p. 42. The earth works done by work brigades in railway and highway construction are valued at the imputed full compensation rate, i.e., the wage rate a regular construction worker would receive if he were assigned to do the earth work.

15 See Chung-kuo Shui-li, No. 2, 1958, p. 7; Economic Achievements in the Past Three Years (Peking: People's Publishing House, 1952), p. 134, and Directives of the Water Conservation Ministry Concerning Construction Propects,” People's Daily, 04 30, 1950.

16 There is no way to compute the proportion of the covered items in the total production value of construction because the latter is not known for any year.

17 Chung-kuo Shui-li, No. 2, 1958, p. 9.

18 See Hsin-hua Yueh-pao, No. 8, 1953, p. 173.

19 This somewhat overstates the total amount of earth works done because a part of earth works in railway construction had been undertaken by the railway construction engineering corps. See Hsin-hua Yueh-pao, Vol. 1, No. 4, p. 347.

19a However, it does not take into account the used building materials to be employed in the new construction projects.

20 “Basic construction” in the Communist terminology means investment in fixed capital plus some ancillary expenses. For detailed explanation of this term, the reader is referred to Choh-ming Li, Economic Development of Communist China (Berkeley: University of California Press, 1959), pp. 7677 and 113115.

21 Li, Yung, “Schedules of Construction and Installation Plans,” Chi-hua Ching-chi, No. 6, 1957, p. 28; and Data Office, “The Basic Situation of the Construction Industry in Our Country,” Tung-chi Kung-tso Tung-hsun (Statistical Bulletin), No. 24, 1956, p. 31.

22 Tung-chi Kung-tso, No. 1, 1957, p. 12.

23 Ibid. No. 8, p. 16.

24 Peng, Jung-chuan, “Schedules of Basic Construction Plans,” Chi-hua Ching-chi, No. 5, 1957, p. 30.

25 They were first set in 1953 and put in use in 1954. See Fan Jo-i, “Price Policy and the Law of Value,” Ching-chi Yen-chiu (Economic Research), No. 5, 1958, p. 45.

26 Chang, I-fei, “The Development and Dying Away of the Inter-Enterprise Commodity Relationship within the System of Ownership by the Whole People,” Ching-chi Yen-chiu, No. 3, 1959, p. 2.

27 Before 1956 transfer prices of producer goods were much lower than their wholesale prices in the market. See Fan Jo-i, op. cit.

28 See Appendix Table A-7. The official index numbers are given in Chi-hua Ching-chi, No. 2, 1958, p. 30, Chien-she Yueh-kan, No. 6, 1957, p. 34, and Budgetary Norms for Civil Engineering (Peking: Civil Engineering Publishing House, 1958), Vol. 1, p. 2.

29 It is reported that the transfer prices of producer goods declined more than 20 per cent. in the period 1953–57. See Hsu, I, “A Few Problems Concerning Economic Accounting,” Ching-chi Yen-chiu, No. 4, 1958, p. 70.

30 The implied index has been calculated from the information given in the State Statistical Bureau, Ten Great Years: Statistics of the Economic and Cultural Achievement of the People's Republic of China (Peking: Foreign Languages Press, 1960), p. 20; Lu, Kuang, “China's National Income,” People's China, No. 6, 1958, and Hsu, Ti-hsin, An Analysis of the Chinese Economy of the Transition Period (Peking: 1959), p. 262. The index numbers for 1952–56 are the following: 1952—100·0; 1953—95·5; 1954—94·5; 1955—90·8; 1956—86·8. The decline at a slightly slower rate than in our price index, which is given in the Appendix, may be attributed to the fact that the former covers a category including inventory changes of consumer goods whose prices declined very little or even rose during this period.

31 Chien-chu Tsai-liao Kung-yeh (Building Material Industry), No. 3, 1958, p. 15.

33 Tung-chi Kung-tso, No. 8, 1957, p. 16. A profit margin of 2·5 per cent. of the total construction costs was marked up for all construction projects carried out by state construction enterprises. See Li, Yun-chung and Chang, Cheng-po, “Minimising Investment in Non-Productive Construction,” Chi-hua Ching-chi, No. 3, 1958, p. 19.

34 For detailed explanations of these terms, see Choh-ming Li, op. cit., Chapters IV and V.

35 There are, however, two complicating factors. First, according to the definition before 1956, any equipment with a life span of more than one year and worth more than 500 yüan was considered as a fixed asset, but the definition was changed in 1956 to include all assets worth more than 200 yüan with life spans of more than one year. See Industrial Statistical Work Handbook (Peking: Statistical Publishing House, 1956), p. 37. This changed definition has in effect boosted the amount of “new fixed assets” and “basic construction” for the years from 1956 on. In other words, an upward bias has been introduced in these two measures by this factor. On the other hand, beginning in 1955, expenses of geological surveys and prospecting were no longer included in “basic construction.” This becomes a downward biasing factor for the amount of “basic construction.” See State Statistical Bureau, “Explanations Concerning a Few Points in the 1955 Periodical Statistical Reports of Basic Construction,” Tung-chi Kung-tso Tung-hsun, No. 3, 1955.

36 Data Office, “The Distribution Situation of the Centrally Distributed Materials in the Past Years,” Tung-chi Kung-tso, No. 3, 1957.

1 I am very grateful to the Center for Chinese Studies of the University of Michigan and the Committee on the Economy of China of the Social Science Research Council for their financial support in carrying out this research.

Growth of the Construction Industry in Communist China

  • Kang Chao

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