CONSTRUCTION TRENDS IN CHINA, 1949-74 By IAN H. MACFARLANE CONTENTS I. Introduction. II. Trends in Construction and Other Economic Aggregates.. III. Methodology Used in Estimating the Building Materials Index of A. Cement.. IV. Physical Volume of Building Materials. C. Finished Steel. D. Price Weights. B. Timber. V. The Building Materials Index of Construction Activity. TABLES 1. China: Estimated Cement Supplied to Construction. 2. China: Estimated Timber Supplied to Construction __ 3. China: Estimated Finished Steel Supplies to Construction_ 4. China: Ratio of Steel to Cement Used in Construction _ _ 5. China: The Building Materials Index of Construction Activity. 6. China: Comparison of the Present Index and Kang Chao's Index_. Figure 1. China: Indexes of Construction, Industrial Output, and GNP... INTRODUCTION Page 311 312 314 314 314 316 318 319 319 319 320 321 315 316 317 318 319 320 321 313 A comprehensive index of construction activity should employ estimates for the entire output of the construction sector or for all inputs to the constructor sector (building materials, labor, and transportation). In the case of the Peoples Republic of China, gaps and deficiencies in the available data do not permit the calculation of either type of construction index. However, an index can be calculated from the information available on inputs of major building materials. The resulting index is believed to represent correctly the general trends in activity of the organized construction sector. Definition of Construction The term "construction" as used in this paper refers to activity that results in additions to productive capacity under the economic plans of major political entities. Rural construction, which is not included in the index, is construction undertaken and funded by smaller units in the countryside, primarily communes, production brigades, production teams, and households. Rural construction sometimes uses labor as signed on a regular basis from the production teams: the laborers receive credit in the form of work points that are the basis of the yearend distribution of the collective's income. In other cases, unpaid labor is extracted from the members of the economic unit involved. Rural construction consists mainly of repair and construction of farm buildings, small-scale irrigation and water conservancy works, and small industrial facilities of various types. Households are especially important in contributing to the building, expansion, and maintenance of dwelling units, normally on an afterhours basis, with the use of local materials. Funds accumulated for rural construction activity are small on a project-by-project accounting but large in the aggregate. Organization of the Construction Industry The responsibility for construction in China is diffused among numerous governmental organizations. The lines of authority cross regional and functional boundaries, and there is much overlapping of responsibility. Reorganizations of the control structure have occurred at the highest level. The State Capital Construction Commission was abolished in 1961 and merged with the State Planning Commission. In 1965, a second reorganization took place when the Construction Commission was reestablished and the Ministry of Construction was divided into the Ministry of Construction and the Ministry of Construction Materials. In 1971-72, the two were again combined as the Ministry of Construction to enhance coordination between the planning of construction and the availability of construction materials. The National Peoples Congress in January 1975 reaffirmed the existence of the State Capital Construction Commission; the reports of the Congress unaccountably did not list either a Ministry of Construction or a Ministry of Building Materials. The actual construction of large, modern industrial plants is performed by the construction and design bureaus of the various industrial ministries. Provincial construction bureaus handle smaller projects. Railroad engineering divisions of the Peoples Liberation Army construct portions of the expanding rail network, while other sections are the responsibility of civilian engineering bureaus. II. TRENDS IN CONSTRUCTION AND OTHER ECONOMIC AGGREGATES This paper presents a weighted index of the three major material inputs (cement, timber, and steel) used in construction in 1949-74.1 A major problem is to determine what proportion of total supplies is assigned to the construction sector. Another problem, relative weights, is handled by the use of 1957 Chinese wholesale prices. The use of 1957 prices implies that the commodity mix within each major input, that is of grades of cement, qualities of timber, and types of steel, is constant for all years. A further assumption is that changes in inventories of these building materials are negligible. These assumptions, although distorting the index somewhat for individual years, almost certainly have little effect on the long-term trends indicated by the index. 1 For a chronology of construction activity, see the appendix. The trend in construction closely resembles the trend in industrial output (see the chart). Construction increased when industry boomed, and it declined when hard times hit the economy. From 1949 through 1957, construction increased at a higher rate than industrial output. From 1958 through 1965, overall, construction grew at about the same rate as industrial output. Since 1965, industrial output has forged ahead at a rate of increase exceeding that of construction. In a developing country, construction typically grows faster than GNP. This trend holds true for the Peoples Republic. China's reverses, attributable to the Great Leap Forward (1958-60) and the Cultural Revolution (1966–68), depressed all indexes. Construction and industrial output were more volatile than GNP: both fell further than GNP in bad times and grew faster in good times. III. METHODOLOGY USED IN ESTIMATING THE BUILDING MATERIALS INDEX OF CONSTRUCTION ACTIVITY The following methodological statement discusses the estimates of the physical volume of the building materials used in construction, the price weights, and the full index of building materials. A final section compares the building materials index for 1950-58 with an independent index of construction inputs for that period and discusses the effect on the building materials index of including data on glass and bricks. In the remaining discussion, the following abbreviations for periodicals are used: CHCC. CKLY. FBIS- JEC. JMJP. JPRS_ NCNA SCMP. SLFT. Chi-hua ching-chi (Planned Economy), Peking. Foreign Broadcast Information Service, Daily Report, Peo- Joint Economic Committee, U.S. Congress, Washington, D.C. U.S. Joint Publications Research Service, Washington, D.C. Survey of China Mainland Press, Hong Kong, U.S. Consulate Shui-li fa-tien (Hydroelectricity), Peking. Summary of World Broadcasts, BBC, Great Britain. State Statistical Bureau, Ten Great Years, Foreign Languages Press, Peking, 1960. IV. PHYSICAL VOLUME OF BUILDING MATERIALS A. Cement Estimates of cement production of both the modern sector and the small plant sector are given in table 1. A time series for cement exports-which go principally to Hong Kong-was compiled from a variety of sources. Cement exports were deducted from total cement production to derive a time series of cement supplied to the construction sector. Cement cannot be stored easily for long periods and is generally used in the vicinity of manufacture owing to its low valueto-weight ratio. Thus the time lag between production and use of cement is small for most years. 1949-57: Total cement production: TGY, p. 96. 1958: JPRS No. 981-D, Oct. 23, 1959, p. 44. 1959: SCMP No. 2191, February 1960, p. 8. 1960-61: Estimate based on 25 percent of cement produced in small plants (reduced from 33 percent in FBIS, Nov. 22, 1960, p. BBB-7) and a reduction in modern plant output to 9 million tons in 1960 and 6 million tons in 1961. See: Robert Michael Field, "Chinese Industrial Development: 1949-70", People's Republic of China: An Economic Assessment, JEC, U.S. Government Printing Office, May 1972, p. 83. 1962: Chien-chu Ts'ai-liao Kung-yeh, No. 5, Mar. 7, 1964, p. 2. 1963: JMJP, May 3, 1964, p. 1. 1964: JPRS 29, 626, Mar. 16, 1965, p. 59. 1965: NCNA, Peking, Dec. 23, 1965. 1966: Assumes modern plant output increased 15 percent over 1965 and that small plants continued to produce 26 percent of total output. 1967: Assumes modern plant output dropped 15 percent and the small plant output proportion declined to 25 percent. 1968: Small plant output interpolated between 1967 and 1969 output and an increase in the small plant output proportion to 27 percent. 1969: Small plants output: SWB FE/W707/A/13, Jan. 17, 1973. 1969: Modern plants: Derived from small plant output assuming that small plant output proportion was about 30 percent of total output. 1970: FBIS, Jan. 3, 1972, B-10. Peking Review, No. 2, Jan. 11, 1974, p. 23. 1971: JMJP, Nov. 29, 1971, 1972 total output was 16.5 percent above 1971 and small plant output in 1971 was 40 percent of total output. 1972: Peking Review, No. 2, Jan. 11, 1974, p. 23. SWB FE/W707/A/13 Jan. 17, 1973. 1973: NCNA, Dec. 22, 1973. Peking Review, No. 2, Jan. 11, 1974, p. 23. 1974: Assumes a 10 percent increase in small plant output and that 52 percent of total output is from small plants. |