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National factor endowments

Natural material resources
The basic physical resources of China - natural resources and existing production capabilities for important products- are shown in tables 5 and 6.

Table 3. Natural scientific and technological personnel in state-owned units (unit: 104 persons)

a. Figure in parentheses are percentages of total.

Table 4. Development of education system

Table 5. Feature of some selected Chinese natural resources

a. Source: Statistical Yearbook of China 1985.

Table 6a. Output of main industrial products

Table 6b. Output of main farm products (106 tons)

Although China has a fair amount of natural resources, in per capita terms they are low, and unevenly distributed. A proper locational policy for industry is necessary in order to manage correctly the country's transportation and resource distribution problems. China world ranking for certain products is shown in table 7.

Human resources

China is rich in human resources. Her population was 1.045 billion in 1985. The educational level of the population has improved, but figures on a percentage basis still fall short of those of other countries, particularly the gross enrolment ratio in higher education.

China's factor endowments vary widely between regions. At the initial stage of development, human resources and sociocultural factors play a more critical role than natural factor endowments. But factor endowments are also important as a potential source of development.

Table 7. World ranking in production capability of selected products in 1985

After 1949, with the emphasis on local self-sufficiency rather than specialization, the comparative advantages of different regions were not fully explored. A comparative study between Shanghai (a formerly relatively developed metropolis) and the North-west region (which was underdeveloped before 1949) was carried out and this illustrates some of the problems.

Shanghai was a large metropolis before 1949. It had begun to develop modern industry in 1865, when the Jiangnan Bureau of Manufacture was established. By the time of the First World War there were more than 100 enterprises. The first electric power plant was constructed in 1882, and the Shanghai-Nanjing and the Shanghai-Hanchow railways were completed in 1908 and 1909 respectively. Banking and financial services were also developed in the early twentieth century. Therefore, although Shanghai had hardly any mineral resources, its industrial output was quite high owing to its skilled labour force, convenient transportation, and sociocultural factors: before 1949, there were around 200,000 privately owned enterprises and a total number of employees of 428,000, constituting respectively 36.01 per cent and 26.06 per cent of the total for the whole nation.

The North-west region of China comprises five provinces: Shannxi, Gansu, Ningxia, Qinghai and Xinjiang. Here, many nationalities live together. Lying on China's north-west border, it forms an arid and semi-arid belt. Its area is vast and its population sparse, but it is resource-rich (table 8). Historically, it was the birthplace of Chinese culture and the place where occidental and oriental civilizations once converged. None the less, communication and transportation in this region are poor, with some places difficult to access. Furthermore, the ecological environment is quite fragile. Although huge strides have been made in economic and social progress since 1949, the region's level of development is comparatively low.

Table 8. Natural resources and factor endowments in North-west region, 1985

a. Ha per capita available.

Table 8 shows the natural factor endowments of the North-west region, and table 9 selected data for comparative purposes. It can be seen that the North-west is rich in natural resources, but also that its Gross Value of Industrial Output (GVIAO) is far behind that of Shanghai. Table 8 also shows the economies of scale and comparative advantages of Shanghai and the region, and reveals that different areas (provinces or municipalities) have nearly the same industrial structure. While the efforts made by different provinces and regions towards "self-reliance" are evident, it is also clear that the comparative advantages of the regions have not been fully explored.

Agricultural sector

Through their long experience of farming, the Chinese have developed a whole series of traditional methods with intensive cultivation as the key link. Internal upheavals and warfare in the first half of the twentieth century weakened the limited development of agricultural services and led to the widespread destruction of the rural infrastructure. After liberation, a socialist managerial system was adopted in China's countryside and remuneration by workpoints was popularized. The collective economy of China's agriculture for years was affected by an overconcentration of managerial powers and a unitary form of operation, both of which dampened peasant enthusiasm. But considerable development of irrigation and drainage systems to regulate the water supply, the provision of chemical fertilizers by the government, and the very high input of labour promoted agricultural growth. The rural reform also stimulated exceptionally rapid growth in agricultural production. Rural incomes and food consumption rose as a result of rapidly rising yields.

Industrial sector

Nearly the entire range of modern industry has now been set up, with much emphasis on the manufacture of capital equipment. In the past three decades, China has manufactured much new equipment unaided. In almost every industry, through self-reliance, plants large and small have been created. Special efforts have been made to spread manufacturing to backward regions. Meanwhile, industrial research institutes and the more advanced factories have striven to make new products and to master new technologies.

Table 9. Selected data for comparison

a. In billions of yuan.

As a result, a solid foundation of engineering experience and a wide range of technical capabilities have been established. But owing to the rigidity of the economic and S&T system, advances have been made mainly through extensive growth. Technological self-reliance was sought not just at the national level, but also in individual ministries, provinces, localities, and even enterprises. The result of this was a wasteful allocation of scarce resources and slowness in product innovation and utility improvement.

The links between industry and agriculture were weakened in the past by the "grain first" policy. Cash crops were neglected for a relatively long period and this affected the development of agrofood and other agro-related industries. The linkage was unilateral in the past, industries providing the major inputs to agriculture, such as chemical fertilizers, diesel oil, farm machinery, etc., while the agricultural sector only provided primary products- the basic food for industrial workers.

There were 7,816,680 scientific and technical personnel at the end of 1985. The design capability of a country is an important measure of S&T capability. Science's impact on society is mediated through those professions concerned with design and construction. In 1981, there were 2,654 design institutes with more than 346,000 staff, and the construction industry's manpower had increased to more than 5 million. China had also established a large R&D force.

Theoretically, the country had already established a scientific and technological capability. Yet, industrial technology in China generally lagged behind that of the industrialized and newly industrializing countries. The current status of S&T and its rigid structure were derived from two sources: first, the Soviet model of S&T, inherited from the institutions and organizations that were set up in the first Five-Year Plan period, and, second, that derived from the political environment of the Cultural Revolution period. Modification of the Soviet-derived rigid structure took great effort and time, while the effect of the Cultural Revolution created an S&T gap with advanced countries, which also would take time to close.

Before 1949, there were just over 600 persons engaged in scientific research. Furthermore, research that was closely linked with production was practically non-existent. Yet, during more than 35 years of effort, through ups and downs, R&D has played an important role in

China's socio-economic development. R&D institutions were unable to realize their potential fully owing to the lack of horizontal linkages, the overcentralization of R&D forces in the Academy of Natural Sciences, the existence of different ministries, and the segregation of the civilian and defence sectors. Moreover, the traditional organization of R&D in China put too much emphasis on "technology-push" rather than on responding to demand. Consequently, exploitation of the technology market was proposed in the reform of the S&T management system.

There are six types of R&D institutions, as follows:

1. The Chinese Academy of Sciences. This has at present around 154 institutes under its organization.

2. Ministerial and provincial research units. These are scientific research organizations that function under various ministries of the State Council or those at the local level. For example, the Ministry of Water Resources and Electric Power has eight research institutes: the Electric Power Research Institute in Beijing; the Institute of Water Conservancy and Hydroelectric Power Research Institute in Beijing, which is jointly governed by the Academia Sinica and the Ministry; the Xian Thermal Power Engineering Research Institute; the Nanjing Automation Research Institute; the Electric Power Construction Research Institute; and the Nanjing Hydraulic Research Institute and Scientific and Technical Information Institute.

Another example is the railways. The Railway Ministry established the China Academy of Railway Science in 1950. This consists of 10 research institutes; Railway Transportation; Locomotive and Rolling Stock; Railway Engineering; Signalling and Communication; Metals and Chemistry; Computer Technology; Technical Information; Standards and Metrology; and South-west and North-west regions.

3. The university sphere. Research organizations in colleges and universities amount to around 1,400 units with 30,000 S&T personnel.

4. The Factory Research Force. These are research organizations run by factories and mines. Their main concerns are project-connected.

5. Research Force in National Defence. These are research organizations of national defence. The role of R&D in atomic research achievements, as well as in rockets and satellites, is well known.

6. The Chinese Academy of Social Science (CASS). This had 31 research institutes and 2,431 researchers in 1985.

In China, it should also be noted that there are very few private R&D institutions.

Table 10. Distribution of institutions and S&T personnel

Table 10 gives the distribution of S&T personnel and institutions under the various authorities.

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