The present situation in China's heavy industry is a strange sequel to the programme for rapid industrialisation that took place from 1950 to 1960. Production of steel and other heavy industrial products were once proudly broadcast to show China's progress. Now the Chinese planners stress only the ways in which heavy industry can support agriculture. The priority once given to heavy industry is now a political liability rather than a basis for feelings of national pride. Behind the euphemistic description of present objectives in industry as “work to readjust, consolidate, fill out and raise standards” is a situation where the planners show little interest in maximising production in heavy industry. This serious setback to the programme for rapid industrialisation needs to be interpreted in the light of the trends in capital formation that have occurred since 1950.