As the supplier of intermediate inputs for many industries, the iron and steel industry occupies an important position in the mainland Chinese economy. This study discusses the supply and demand problems found in the iron and steel industry and also its connections with the national economy.
The study begins by introducing mainland China’s industrial statistics system, Marxist production process, economic index, and output value statistics. Because the exact meaning of the latter is unclear, the material balance method (the physical input-output method) is used to analyze the supply side. On the demand side, the circulation of iron and steel is examined, as are changes that have taken place in circulation channels. To explain the relationship between the industry and the national economy a table that sets forth the degree of inter-industry relations is adopted.
Iron and steel products in mainland China are primarily for the domestic market; export volume is relatively small. In the paper the period from 1949 through the first half of 1982 is broken down into eight subperiods of iron and steel production. The subperiod 1949–1952 demonstrated the fastest growth, followed by the Great Leap Forward” period (1958-1960). However, growth during the “Great Leap” was mainly d?e to rapid increase in small, local production units and wasn’t realistic. On the contrary, growth during 1953-1957 was slower than that during the “Great Leap”, but was more beneficial because of large advances made in establishing modern production facilities. Production during the remaining five subperiods grew relatively slowly.
In terms of output categories, the rate of growth of pig iron and iron ore continuously declined, crude steel and finished steel products declined until the 1971-75 subperiod after which growth accelerated.
Some technological changes have taken place within the industry. There is a new technologically advanced coking process. Iron production techniques are also more mature. On the other hand, steel smelting and steel rolling remain backward.
On the material supply side, deficiencies in iron ore production and in scrap iron and scrap steel are the major bottlenecks to iron and steel production.
The regional distribution of iron and steel is rational in terms of allocations to up- and down-stream industries. The industry has also maintained continuous production with a high concentration rate, that is, certain major production complexes have continuously produced the bulk of output. Distribution of iron and steel also matches the regional distribution of coal production. Nevertheless, in the long-run, regional distribution will have to be rearranged if transportation bottlenecks are to be offset.
The heaviest demand for iron and steel comes mainly from the machine and metal processing industries and from basic construction. In recent years steel imports have been increasing; the extent of self sufficiency has therefore decreased. But because of mismatched production and marketing plans, the volume of stockpiled steel is very large and represents a very serious problem. In the past few years, the government has encouraged producers to promote and sell their own products to help balance the market and to break through ponderous marketing channels.
Finally, the paper addresses the relation of the iron and steel industry to the national economy. Output of the iron and steel industry typically serves as inputs for down-stream industrial producers (forward linkage effect). The industry’s role as a market for the products of other domestic industries (backward linkage effect) is relatively minor. The industry’s effect on national investment is also not sufficient and needs to be improved.
