Rebirth: I am in Jin-Cha-Ji

"First, the Second Five-Year Plan saw a significant increase in infrastructure projects. The first of these was the sudden surge in the Ministry of Railways' railway construction projects. Furthermore, many of the projects planned by the Ministry of Railways were highly challenging railway projects in the northwest and southwest. Let's just take the Chengdu-Kunming Railway project, not to mention the steel consumption elsewhere. The Chengdu-Kunming Railway alone required over 1000 bridges, requiring a preliminary estimate of over 200 million tons of steel. Actual demand may exceed this figure. In addition to bridges, the Chengdu-Kunming Railway also required numerous tunnels, using heavy-duty rails, requiring significant quantities of steel. To ensure construction of the Chengdu-Kunming Railway, we allocated 1957 million tons of steel to the project in 1958 and 100."

"In addition to the Chengdu-Kunming Railway, the Lanzhou-Xinjiang Railway, the Baotou-Lanzhou Railway, the Lanzhou-Qinghai Railway, the Anhui-Ganzhou Railway, the Taiyuan-Jiaotong Railway, and the Guiyang-Kunming Railway are currently under construction. In recent years, the Yingxia Railway, the Baotou-Chengdu Railway, and the Beijing-Chengde Railway have all been completed. Furthermore, the Ministry of Railways is currently planning even more railways. The Ministry of Railways has become the largest steel producer."

In fact, many of the railways planned by the Ministry of Railways today were not planned after the founding of the People's Republic of China. Many can even be traced back to the late Qing Dynasty. However, the Qing Dynasty and the Republic of China had poor execution capabilities, and many railway lines were planned but could not be built.

After the founding of the People's Republic of China, these railway lines began to be built in earnest. Consider the Chengdu-Chongqing Railway, which was planned in the late Qing Dynasty but never built a single kilometer despite repeated construction. The Southwest Railway Bureau successfully built it in just two years.

The Chinese government, in particular, had a powerful railway corps under its wing. Half of the railway lines built in China were constructed by the Ministry of Railways, especially those that were particularly difficult to construct.

As for laying railways in some plains areas, tens of thousands or even hundreds of thousands of people can be mobilized to participate in a short period of time.

However, the demand for steel in railway construction is staggering. If bridges are to be built along the railway, even more steel will be consumed.

However, no one can oppose railway construction. With the development of the national economy, the demand for transportation is increasing. Large quantities of goods need to be moved across provinces. And for China today, long-distance transportation still relies on railways.

"The second aspect of infrastructure projects is urban and factory construction, which has a very high demand for steel. One reason is that with economic development and the increase in urban population, the demand for urban construction is increasing. Another reason is that after the central government decentralized a number of factories and approved some industrial investment plans in local provinces, national industrial investment increased by 33% this year."

Since the decision to hand over some industrial construction to local governments, the central government has predicted that national industrial investment will increase.

As a result, by September 1958, national industrial investment had increased by 33% compared with the same period last year, which shows the enthusiasm of local governments to develop industry.

This is the growth rate after the central government imposed restrictions on local industrial investment. If there were no central government restrictions, these local governments could have doubled their industrial investment.

However, 33% is still a very high growth rate. Such a large increase in industrial investment will also lead to a huge demand for steel.

"The second factor is that my country's industrial output has increased rapidly in the past two years. For example, FAW's steel demand this year was 20 tons, but it ultimately allocated only 17 tons."

"20 tons? Does FAW need that much steel in a year?"

Someone raised doubts.

Your factory alone needs 20 tons of steel? That's almost one-fiftieth of the country's total steel production, and you're the only one using it? Many provinces don't even use 20 tons of steel in a year.

Li Fuchun replied, "In recent years, my country has had a huge demand for automobiles, especially trucks. Therefore, FAW has focused its main efforts on truck production. FAW's truck production plan for 1958 is 17000 units. Besides trucks, FAW also has production tasks for cars and a small number of motorcycles. At the same time, under the guidance of Soviet experts, FAW is constructing its second phase project, an upgrade project with an annual production capacity of 80000 units. All of this requires a large amount of steel."

After China and the Soviet Union strengthened their cooperation in 1957, FAW, the cradle of China's automobile industry, gained recognition. The central government allocated over 3000 million RMB, FAW raised over 4000 million RMB on its own, and with Soviet technical support, it prepared for a comprehensive upgrade, increasing annual production to 80000 vehicles.

Although FAW also produces cars and a small number of motorcycles, its main production is trucks. This upgrade project is also aimed at producing more trucks.

After Li Fuchun's explanation, Deng Xixian continued, "This isn't just the case at FAW; it's also the case at many machinery manufacturers in my country. During the Second Five-Year Plan, we decided to use our own machinery and equipment for many projects, rather than importing it. As a result, demand for steel from many machinery manufacturers has surged."

"Also, in recent years, our light industrial products have developed rapidly. Take bicycle production, for example. In 1957, my country's bicycle production exceeded 200 million units for the first time. This year, based on current conditions, my country's bicycle production is expected to increase by 70 units. It's a foregone conclusion that my country's bicycle production will exceed 300 million units next year."

"The bicycle is just a typical example. The production of many other light industrial products has also increased significantly in recent years. For example, the production of sewing machines reached 1957 million in 120."

"If you take each of these light industrial products individually, it might seem that their demand for steel isn't high. For example, a sewing machine only requires a few dozen kilograms of steel. However, these light industrial products are produced in high volumes. The sewing machine industry consumes tens of thousands of tons of steel annually just to produce these sewing machines. Furthermore, there are many different types of light industrial products, and each one requires steel, so the total demand is enormous."

"The bigger problem now is that light industrial products are selling very well in the market. Light industrial factories want to increase production, but they are unable to do so due to a lack of steel. So they all hope that the central government will allocate more steel to them."

Minister of Light Industry, Jatov, said: "The growth in light industry output in recent years is due to rising sales. The public's purchasing power has increased significantly in recent years, and demand for light industrial products is very strong. It can be said that light industry requires little investment but accumulates rapidly. The rapid growth of light industry in recent years has brought astonishing tax and profit growth to the country."

This suddenly became a contradiction between heavy industry and light industry.

Both sides are competing for resources.

There's no other way around it. New China suppressed the development of light industry in order to reinvest most of its capital in heavy industry. Now that light industry is booming, they have the power to speak out. They hope the central government will allocate more resources to light industry.

Li Fuchun shook his head and said, "Heavy industry is fundamental. Without it, light industry cannot develop. We need to coordinate the development of heavy and light industries, but we must not focus solely on light industry while neglecting the development of heavy industry."

"But only with the development of light industry can the country obtain more tax revenue and profits. With money, we can continue to develop heavy industry."

Jatov disagreed with Li Fuchun's statement. Their Ministry of Light Industry had achieved its current development with great difficulty.

When Wei Hongjun was in charge of the Ministry of Light Industry, the state invested very little in it, so the Ministry had to find funds for its development on its own.

To secure funding, they borrowed from foreign financial institutions. These included loans from the Soviet Union, Hong Kong banks, and later, British banks. However, this wasn't enough; they also established numerous joint ventures with Chinese and foreign businesses.

Of course, the fastest growing industry in recent years is the processing of supplied materials. Although the income is not much, after these years of development, a large amount of capital has been accumulated.

Now that light industry is developing so well, we should keep up the good work, continue to expand the market and continue to increase production.

"The current problem is that our heavy industry is backward and cannot provide more resources. If we do not address the problem of backward heavy industry at this time and instead use more resources to support the development of light industry, then the fundamental problem will not be solved. I would like to ask Comrade Jatov, if we do not develop heavy industry, where will the resources for light industry come from?"

Wang Heshou, former Minister of Heavy Industry and current member of the Finance and Economics Committee and Minister of Metallurgical Industry, criticized Jatov.

Seeing the debate, Deng Xixian said, "Comrades, this is all about steel shortages. I think what we need to do now is to increase steel production as quickly as possible. As long as steel production increases, these problems will be easily solved."

The issue of heavy industry and light industry could not be resolved in just a few words. So Deng Xixian immediately interrupted their argument and brought the topic back to the steel issue.

"Correct."

“Steel is the priority.”

Zeng Xisheng, who had just been transferred to the Ministry of Rural Affairs as Vice Minister, said, "When I was in Anhui, we discussed the issue of steel mills. Some provinces lacked steelmaking experience, so building large or even medium-sized steel mills was out of the question. However, they could adopt the path of small steel mills, with blast furnaces of two to three cubic meters, five to six cubic meters, or 10 to 20 cubic meters. These small steel mills require low investment and simple technical expertise, making them within the reach of cities and counties. They could easily produce tens of thousands of tons annually."

"We calculated that if every city and county under the provincial government could participate and establish these small steel mills, it would be possible for each province to increase production by hundreds of thousands or even millions of tons. If a medium-sized steel mill was built on this basis, the output could reach millions of tons."

"It requires little investment, doesn't require advanced technology, and can be built in less than a year. If we start now, by this time next year, the nation's steel production will have increased by several million tons."

Some people's eyes lit up after hearing Zeng Xisheng's words.

Indeed.

Large and medium-sized steel mills not only require large investments, but also have high technical standards, so it is not easy to build them.

But small steel mills are different. They can be built using simple methods, even with a few cubic meters, 10 cubic meters, or even 20 cubic meters. Some cities and counties can afford them.

During previous wars, some military regions built small steel mills like this. Blast furnaces at those times were a few cubic meters or even 10 cubic meters. Many cadres had experience with this.

Moreover, the construction period of this type of small steel plant is short. It can be set up in half a year or seven or eight months and can produce steel.

This is indeed a good idea. It can quickly increase steel production by several million tons in a short period of time.

Lin Dafeng, a member of the Finance and Economics Working Committee and Minister of the Ministry of Electric Power Industry, objected: "Fifteen or sixteen years ago, during the Anti-Japanese War, the small blast furnaces at Xuanhua Iron and Steel Plant were all 54 cubic meters. After the liberation of Xuanhua, Zhangjiakou, the Xuanhua Iron and Steel Plant was expanded, and the new blast furnaces built by the Shanxi-Chahar-Hebei Military Region were all over 100 cubic meters. Later, after the founding of the People's Republic of China, under the guidance of Soviet experts, Xuanhua Iron and Steel Plant built several new blast furnaces, the smallest of which were all 1000 cubic meters. The blast furnaces at Anshan Iron and Steel are generally 1500 cubic meters. The situation is the same at Wuhan Iron and Steel and Baotou Iron and Steel: most of the new blast furnaces are 1500 cubic meters, with a few being 1000 cubic meters."

"Our steel industry has developed very well in recent years, and technical standards have been established. Can the steel produced by traditional steelmaking methods, such as blast furnaces that produce a few cubic meters or even 10 cubic meters, meet the national steel standards?"

"I think this approach is bad. It's easy to produce a lot of substandard steel just for the sake of quantity. Our current steel technology already has a very good foundation, and we shouldn't go back to the old ways just for the sake of a short-term increase in steel production. If we lack technical capabilities, the blast furnace can be smaller, but it can't be a crude blast furnace of a few cubic meters."

Lin Dafeng participated in the takeover and expansion of Xuanhua Iron and Steel Plant. Later, when he moved to Northeast China, he participated in the takeover and expansion of Anshan Iron and Steel Plant.

So when he heard about the traditional steelmaking method, he immediately expressed his opposition.

Zeng Xisheng, unfamiliar with Lin Dafeng, disagreed with his point, retorting, "my country began developing its steel industry in the late Qing Dynasty, and since then, many steel mills have had small blast furnaces. Yet, the quality of the steel they produced was flawless. Now, when we build some small steel mills, how can we expect quality issues to arise?"

"Vice Premier Deng, if these small steel mills can meet the steel needs of some surrounding areas, it will be of great help to the national steel problem."

Deng Xixian didn't immediately express his opinion, but Zeng Xisheng's suggestion wasn't impossible.

This type of small blast furnace has been used by some small steel mills in the past, and the steel produced is also usable.

"I don't think it's appropriate. Once steel mills are decentralized to the city and county levels, it will be difficult to supervise quality. If some substandard steel products enter the market, it will only exacerbate the steel market problem."

Lin Dafeng expressed his disagreement again.

Minister of Light Industry Jatov said, "I'm worried too. Currently, many of our factories, in addition to state-allocated steel, also purchase steel from the market. If there are any problems with the steel's quality, it will directly affect the quality of the factory's products."

"Another point is that many of our products are exported. If the quality of the products is affected due to steel quality issues, it will not only be a matter of money. It will seriously affect the reputation of our products and directly lead to the decline of our exports."

“Quality can be taken seriously, there is no need to worry.”

Zeng Xisheng felt that cadres in central government ministries such as Lin Dafeng and Jatov were too conservative.

Now that the national economy is developing so well, it's time to make great strides forward. We must mobilize all forces and encourage everyone, from top to bottom, to strive for industrialization.

Chen Yun listened to everyone's arguments and looked at Wei Hongjun, who had been silent since the beginning of the meeting. So he said, "Comrade Hongjun, what do you think?"

Wei Hongjun put down his pen, glanced at everyone, and said, "Comrades, I think there is one issue we must clarify. The current shortage of steel supply is not due to any problems with our steel development plan, but simply because our country's economic development is very good. So, we must first make it clear that there is no problem with the steel development plan formulated by the central government. However, if we allow city and county governments to open small steel mills, it will directly tell the people of the whole country that there is a serious shortage of steel in our country, and therefore we need to make steel nationwide."

"Conveying this message would cause great trouble for grassroots governments. After the founding of New China, people across the country enthusiastically participated in socialist construction. At this time, if we announced the country's severe steel shortage, requiring a nationwide steelmaking campaign, then county-level governments across the country would quickly participate in the steelmaking effort. There would be no need for mobilization; everyone would automatically participate."

"The result is that grassroots governments, lacking technical expertise and experience in steelmaking, resort to a variety of crude methods to produce steel on a large scale. For them, simply producing steel is a success. But who can guarantee the quality of this steel?"

"The bigger problem is, once we start this fire, the whole country will be involved in steelmaking. What about other industries? Will other industries and agriculture stop developing? Will the whole country only focus on steelmaking? Once the whole country starts steelmaking, how can we extinguish it? Local governments and the people are mobilized to solve the country's steel shortage problem. Can the central government say they are wrong? Since there is no mistake, how can we correct this problem?"

"And from the beginning to the end, how much local government funds will be wasted, how much manpower and material resources will be wasted, and how many other things will be delayed. More importantly, how great will the blow to grassroots cadres and the masses be? What do the grassroots cadres and the masses think?"

"Comrades, don't be afraid of problems. We can solve them in a planned and step-by-step manner. But we can't just use one solution to solve all problems because they arise. There is no such universal solution in the world."

Is Zeng Xisheng's approach completely wrong? Not really.

Setting up a small steel mill in such a place is actually a very good idea. However, the biggest problem is that once such a small steel mill is opened up, these earthen blast furnaces with a capacity of several cubic meters will not be able to be taken back.

Even some powerful rural cooperatives could build small blast furnaces like these. By then, the entire country would be in a frenzy of steelmaking.

"I agree with Comrade Wei Hongjun's opinion. We should set limits on steel mills across the country. New blast furnaces cannot be smaller than 50 square meters or 100 cubic meters. Where there is no technology to build a 50- or 100-cubic-meter blast furnace, there should be no need to build a steel mill."

Zhou Bin spoke out in support of Wei Hongjun. If the central government agreed to the local government's construction of a steel plant with a blast furnace, chaos would really ensue.

"I also think Comrade Wei Hongjun is right. There is a shortage of steel in the market, but it's not so severe that we need to force local governments to resort to crude steelmaking methods. All we need to do is increase support for steel production on the basis of the Second Five-Year Plan."

"Of course, Comrade Zeng Xisheng's opinion makes sense, and Comrade Zhou Bin's just-mentioned suggestion is also very good. Given the current state of my country's steel industry, I believe the 100-cubic-meter blast furnace is a very suitable standard. A 100-cubic-meter blast furnace is also a small steel plant. Compared to larger blast furnaces, it requires less investment and presents fewer technical challenges, making it suitable for local steel plants. However, a blast furnace of this standard is not a traditional blast furnace, and it cannot be built without certain technical expertise. This will prevent the problem of local governments rushing into construction without any prior experience."

Li Fuchun expressed his opinion. China's steel industry now has a solid foundation and its technological capabilities have greatly developed. Integrating traditional steelmaking methods at this time is completely putting the cart before the horse.

Chen Yun nodded.

Chen Yun was a very steady cadre in economic development. Although he sometimes seemed overly cautious and lacked decisiveness, as the helmsman of China's economy, he dared not be careless in the slightest.

Therefore, he supports the prudent ideas of Wei Hongjun, Li Fuchun, Zhou Bin and others.

"To address the steel shortage, in addition to adjusting the central steel industry's production plan, we must also support the development of local steel industries. However, this support must be planned, not blindly rushed. Furthermore, steel is the foundation of industry, and quality is paramount. We cannot compromise steel quality for the sake of showing good steel production numbers."

"We must support the development of the local steel industry, but we also need to standardize the technical standards for steel mills. We are now focusing on discussing how to support the development of the local steel industry."

1049 Prepare for a rainy day

The first topic of this financial meeting finally became how to support the local steel industry.

Comrade Chen Yun had his own ideas on this matter, and he had a draft in mind before the meeting. However, he wasn't the type of leader to set the tone right after the meeting began. So, he waited until everyone had spoken, especially Wei Hongjun, Zhou Bin, and Li Fuchun, before finally setting the tone.

After all, Chen Yun was the person in charge of China's economic field. After he set the tone, the subsequent meetings went smoothly.

Zeng Xisheng's suggestion has many problems and has been rejected by many people. However, his idea is worth learning from.

The subsequent meeting concluded that there were no overall problems with my country's steel production plan. The current steel shortage is due to economic development exceeding expectations.

At this time, compared with the central government's big moves, it is more realistic to mobilize the subjective initiative of local governments, pool local government funds and invest them in the steel industry, accelerate the development of local steel industry, and solve the current shortage of steel in the market.

Local steel mills didn't need to build the massive 1000- or 1500-cubic-meter blast furnaces of large steel mills like Angang, Baotou Steel, Xuanwu Steel, and Wuhan Iron and Steel. These large steel mills were state-owned projects, funded by massive state investment. Because the technical requirements were so high, these mills employed numerous Soviet experts and Chinese technicians. Currently, these large blast furnaces in China were largely Soviet-aided projects. A key project in the Second Five-Year Plan was for China to independently build these large blast furnaces.

Only when China independently masters everything in this regard will it be able to build large blast furnaces and large steel mills on its own without relying on the Soviet Union.

However, local governments lack the central government's wealth and technological expertise. Even a blast furnace of a few hundred cubic meters isn't easy to build for local steel mills. However, a lack of technological expertise shouldn't deter us from resorting to traditional steelmaking methods. Steel is the foundation of industry, and quality must be prioritized.

Therefore, the meeting decided to support local governments in establishing small steel mills based on their own circumstances. However, the blast furnaces of these small steel mills must be larger than 100 cubic meters. The central government would absolutely not allow local steel mills to privately build blast furnaces smaller than 100 cubic meters.

This is to prevent the indiscriminate development of steel mills in local areas. Therefore, a standard must be established first, and only steel mills that meet this standard can be built. In fact, the 100-cubic-meter blast furnace standard has basically eliminated most prefecture-level cities. Even some provinces with very poor technical capabilities face a host of technical challenges in building a 100-cubic-meter blast furnace.