Agriculture, forestry, and fishing in China

As a result of topographic and climatic features, the area suitable for cultivation is small: only about 10 percent of China’s total land area. Of this, slightly more than half is unirrigated, and the remainder is divided roughly equally between paddy fields and irrigated areas; good progress has been made in improving water conservancy. In addition, the quality of the soil in cultivated regions varies around the country, and environmental problems such as floods, drought, and erosion pose serious threats in many areas.

Nevertheless, about two-thirds of the population lives in the countryside, and until the 1980s a large proportion of them made their living directly from farming. Since then many have been encouraged to leave the fields and pursue other activities, such as handicrafts, commerce, factory work, and transport; and by the mid-1980s farming had dropped to less than half of the value of rural output. Although the use of farm machinery has been increasing, for the most part the Chinese peasant depends on simple, nonmechanized farming implements.

Western China, comprising Tibet, Xinjiang, and Qinghai, has little agricultural significance except for areas of oasis farming and cattle raising. Rice, China’s most important crop, is dominant in the southern provinces, many of which yield two harvests per year. In North China wheat is of the greatest importance, while in the central provinces wheat and rice vie with each other for the top place. Millet and kaoliang (a variety of grain sorghum) are grown mainly in the Northeast and some central provinces, which—together with some northern areas—also produce considerable quantities of barley. Most of the soybean crop is derived from the North and the Northeast, and corn (maize) is grown in the centre and the North. Tea comes mainly from the hilly areas of the southeast. Cotton is grown extensively in the central provinces, but it is also found to a lesser extent in the southeast and in the North. Tobacco comes from the center and parts of the South. Other important crops are potatoes, sugar beets, and oilseeds.

Animal husbandry constitutes the second most important component of agricultural production. China is the world’s leading producer of pigs, chickens, and eggs, and it also has sizable herds of sheep and cattle. Since the mid-1970s, greater emphasis has been placed on increasing the livestock output.

Forestry and fishing

Wholesale destruction of China’s accessible forests over a long period of time gave way to an energetic reforestation program that has proved to be inadequate; forest resources are still fairly meagre. The principal forests are found in the Qin (Tsinling) Mountains and the central mountain ranges and in the uplands of Sichuan and Yunnan. Because they are inaccessible, the Qin forests are not worked extensively, and much of the country’s timber comes from Heilongjiang, Jilin, Sichuan, and Yunnan.

Guangxi: fishing in the Li River

China has a long tradition of ocean and freshwater fishing and of aquaculture, and it is the world’s leading producer in both categories. The bulk of the catch comes from Pacific fisheries, with nearly all of the remainder from inland freshwater sources. Pond raising has always been important and has been increasingly emphasized to supplement coastal and inland fisheries threatened by overfishing and to provide valuable export commodities such as prawns. Aquaculture surpassed capture, in terms of overall tonnage, in the early 1990s.

Resources and power

China is well endowed with mineral resources, and more than three dozen minerals have proven economically important reserves. The country has rich overall energy potential, but most of it remains to be developed. In addition, the geographical distribution of energy places most of these resources far from their major industrial users. Basically, the Northeast is rich in coal and petroleum, the central part of North China has abundant coal, and the southwest has great hydroelectric potential. However, the industrialized regions around Guangzhou (Canton) and the lower Yangtze region around Shanghai have too little energy, while there is little industry located near major energy resource areas other than in the southern part of the Northeast. Thus, although energy production has expanded rapidly, it has continued to fall short of demand, and China has been purchasing increasing quantities of foreign petroleum and natural gas.

Mining accounts for a small portion of China’s overall gross domestic product (GDP) and employs only a tiny fraction of the country’s workforce. It likewise represents a small—though significant—part of the annual value of industrial output. However, several problems have also emerged regarding mineral extraction. One concern is that finds of new proven reserves have fallen short of the country’s long-term development needs. In addition, productivity has been low in a great majority of mining operations through mismanagement and the use of obsolete equipment, and the recovery ratio of commodity to ore has been low in many cases, resulting in considerable waste.

The environment has been adversely affected both by the vast accumulations of waste rock and other mining debris that have been left on huge tracts of land and by the great volume of polluted wastewater produced by mining operations, which has fouled rivers and farm fields.

Minerals of China

Lanzhou, Gansu province, China: petroleum refineryMarc Riboud/Magnum
China’s most important mineral resources are hydrocarbons, of which coal is the most abundant. Although deposits are widely scattered (some coal is found in every province), most of the total is located in the northern part of the country. The province of Shanxi is thought to contain about half of the total; other important coal-bearing provinces include Heilongjiang, Liaoning, Jilin, Hebei, and Shandong. Apart from these Northern provinces, significant quantities of coal are present in Sichuan, and there are some deposits of importance in Guangdong, Guangxi, Yunnan, and Guizhou. A large part of the country’s reserves consists of good bituminous coal, but there are also large deposits of lignite. Anthracite is present in several places (especially Liaoning, Guizhou, and Henan), but overall it is not significant.

At the government’s instigation, hundreds of small, locally run mines have been developed throughout China in order to ensure a more even distribution of coal supplies and to reduce the strain on the country’s inadequate transport network. These operations produce about two-fifths of the country’s coal, although their output typically is expensive and used largely for local consumption.

China’s onshore petroleum resources are located mainly in the Northeast—notably at the Daqing oil field— and in the northwestern provinces of Xinjiang (particularly in the Tarim Basin), Gansu, and Qinghai; there are also reserves in Sichuan, Shandong, and Henan provinces. Shale oil is found in a number of places, especially at Fushun in Liaoning, where the deposits overlie the coal reserves, as well as in Guangdong. Light oil of high quality has been found in the Pearl River estuary of the South China Sea, the Qaidam Basin in Qinghai, and the Tarim Basin in Xinjiang. China contracted with Western oil companies to jointly explore and develop oil deposits in the China Sea, Yellow Sea, Gulf of Tonkin, and Bo Hai.

The country consumes the bulk of its oil output and imports but does export some crude oil and oil products.
The true extent of China’s natural gas reserves is unknown. It has proven reserves of some 42 trillion cubic feet (1.2 trillion cubic metres), but estimates have ranged as high as 187 trillion cubic feet (5.3 trillion cubic metres). Exploration for natural gas, long at only modest levels, has been increasing. Sichuan province accounts for almost half of the known reserves and production. Most of the rest of China’s natural gas is associated gas produced in the Northeast’s major oil fields, especially Daqing. Other gas deposits have been found in Inner Mongolia, the Qaidam Basin, Shaanxi, Hebei, Jiangsu, Shanghai, and Zhejiang and offshore to the southwest of Hainan Island.

Iron ore reserves are also extensive and are found in most provinces, with Hainan, Gansu, Guizhou, southern Sichuan, and Guangdong having the richest deposits. The largest mined reserves are located north of the Yangtze River and supply neighbouring iron and steel enterprises. With the exception of nickel, chromium, and cobalt, China is well supplied with ferroalloys and manganese. Reserves of tungsten are also known to be fairly large. Copper resources are moderate, and high-quality ore is present only in a few deposits. Discoveries have been reported from the Hui Autonomous Region of Ningxia. Lead and zinc are available, and bauxite resources are thought to be plentiful. China’s antimony reserves are the largest in the world. Tin resources are plentiful, and there are fairly rich deposits of gold. There are important deposits of phosphate rock in a number of areas. Pyrites occur in several places, the most important of which are found in Liaoning, Hebei, Shandong, and Shanxi. China also has large resources of fluorite (fluorspar), gypsum, asbestos, and cement.

In addition, China produces a fairly wide range of nonmetallic minerals. One of the most important of these is salt, which is derived from coastal evaporation sites in Jiangsu, Hebei, Shandong, and Liaoning, as well as from extensive salt fields in Sichuan, Ningxia, and the Qaidam Basin.
Hydroelectric potential

Three Gorges DamYao YilongImaginechina/AP Images

China’s extensive river network and mountainous terrain provide ample potential for the production of hydroelectric power. Most of the total hydroelectric capacity is in the southwest—notably in Sichuan, Yunnan, Tibet, and Hubei—where coal supplies are poor but demand for energy is rapidly growing. The potential in the Northeast is fairly small; however, it was there that the first hydroelectric stations were built (by the Japanese). As a result of considerable seasonal fluctuations in rainfall, the flow of rivers tends to drop during the winter, forcing many power stations to operate at less than normal capacity, while in the summer, on the other hand, floods often interfere with production. The massive Three Gorges project on the Yangtze River east of Chongqing, involving the construction of a dam and reservoir, began limited hydroelectric production in 2003 and reached its full generating capacity in 2012.

Energy production
China’s energy production has grown rapidly since 1980, but it has continued to fall considerably short of demand. This is partly because energy prices were long held so low that industries had few incentives to conserve. Increasingly, however, demand has outstripped supply. In addition, it has often been necessary to transport fuels (notably coal) great distances from points of production to consumption. Coal provides about two-thirds of China’s energy consumption, although its proportion is slowly declining. Petroleum production, which grew rapidly from an extremely low base in the early 1960s, has increased much more gradually from 1980. Natural gas production still constitutes only a small (though increasing) fraction of overall energy production, but gas is supplanting coal as a domestic fuel in the major cities.

China: Breakdown of renewable energy by sourceEncyclopædia Britannica, Inc.
China’s electric-generating capacity has expanded dramatically since 1980, and the proportion allocated to domestic consumption also has grown considerably. Some four-fifths of all power generated is at thermal plants, with nearly all the rest at hydroelectric installations; only a tiny proportion is from nuclear energy, from plants located near Shanghai and Guangzhou.

Manufacturing of China

Anshan, Liaoning province, China: rolling millGreenhill/Black Star
The development of industry has been given considerable attention since the advent of the communist regime. Overall industrial output often has grown at an annual rate of more than 10 percent, and China’s industrial workforce probably exceeds the combined total for all other developing countries. Industry has surpassed all other sectors in economic growth and degree of modernization. Most heavy industries and products deemed to be of national strategic importance remain state-owned, but an increasing proportion of lighter and consumer-oriented manufacturing firms are privately held or are private-state joint ventures.
Among the various manufacturing branches, the metallurgical and machine-building industries have received high priority.

These two branches alone now account for about two-fifths of the total gross value of industrial output. In these, as in most other areas of state-owned industry, however, innovation has generally suffered at the hands of a system that has rewarded increases in gross output rather than improvements in variety and quality. China, therefore, still imports significant quantities of specialized steels. Much of the country’s steel output comes from a small number of producing centres, the largest being Anshan in Liaoning.
The principal preoccupation of authorities in chemical and petrochemical manufacturing is to expand the output of chemical fertilizers, plastics, and synthetic fibres.

The growth of this industry has placed China among the world’s leading producers of nitrogenous fertilizers. In the consumer goods sector the main emphasis is on textiles, clothing, shoes, processed foods, and toys, all of which also form an important part of China’s exports. Textile production, a rapidly growing proportion of which consists of synthetics, continues to be important, but less so than before. The industry tends to be scattered throughout the country, but there are a number of important textile centres, including Shanghai, Guangzhou, and Harbin.

The pace of industrialization quickened and diversified after 1990. Notable were the development of automobile, aircraft, and aerospace manufacturing. In addition, China expanded rapidly into the production of electronics, semiconductors, software, and precision equipment, often in conjunction with foreign firms.
Overall, the distribution of industry has remained uneven, despite serious efforts from the mid-1950s to the late 1970s to build up manufacturing in the interior at the cost of the major cities on the east coast. While percentage growth of industry in the interior provinces generally greatly exceeded that of the coastal areas, the far larger initial industrial base of the latter meant that a few coastal regions have continued to dominate China’s industrial economy.

The establishment of special economic zones in coastal areas only enhanced this disparity. Thus, Shanghai alone produces about 10 percent of China’s gross value of industrial output, and the east coast accounts for about 60 percent of the national manufacturing output.
Finance

Currency Courtesy of Frank Feng

China’s financial institutions are owned by the state. The principal instruments of fiscal and financial control are the People’s Bank of China and the Ministry of Finance, both subject to the authority of the State Council. The People’s Bank, which replaced the Central Bank of China in 1950 and gradually took over private banks, fulfills many of the functions of Western central and commercial banks. It issues the renminbi (yuan; the national currency), controls circulation, and plays an important role in disbursing budgetary expenditures. Furthermore, it handles the accounts, payments, and receipts of government organizations and other bodies, which enables it to exercise detailed supervision over their financial and general performance in the light of the state’s economic plans.

Bank of China Tower 

The People’s Bank is also responsible for foreign trade and other overseas transactions (including remittances by overseas Chinese), but these functions are exercised through the Bank of China, which maintains branch offices in a number of European and Asian countries.
Other important financial institutions include the China Construction Bank (formerly People’s Construction Bank of China), responsible for capitalizing a portion of overall investment and for providing capital funds for certain industrial and construction enterprises; the Industrial and Commercial Bank of China, which conducts ordinary commercial transactions and acts as a savings bank for the public; the Agricultural Bank of China, which serves the agricultural sector; and the China Investment Bank, which handles foreign investment. Many foreign banks maintain offices in China’s larger cities and the special economic zones. In 2005 the China Construction Bank became the first of China’s “big four” banks to be publicly traded. The Bank of China and the Industrial and Commercial Bank followed in step soon thereafter. When the last of the four, the Agricultural Bank of China, went public in 2010, it was the world’s largest initial public offering (IPO) to date.
China’s economic reforms greatly increased the economic role of the banking system. Whereas virtually all investment capital was previously provided on a grant basis in the state plan, policy has shifted to a loan basis through the various state financial institutions. More generally, increasing amounts of funds are made available through the banks for economic purposes. Enterprises and individuals can go to the banks to obtain loans outside the state plan, and this has proved to be a major source of financing both for new firms and for the expansion and modernization of older enterprises.

Foreign sources of capital also have become increasingly important. China has received loans from the World Bank and several United Nations programs, as well as from several countries (particularly Japan) and from commercial banks. Hong Kong and Taiwan have become major conduits for—as well as sources of—this investment. Stock exchanges have been operating at Shanghai and Shenzhen since 1990, and the government began allowing the first foreign firms to trade in the market in 2003.

Trade of China

Trade has become an increasingly important part of China’s overall economy, and it has been a significant tool used for economic modernization. The direction of China’s foreign trade has undergone marked changes since the early 1950s. In 1950 some three-fourths of the total was accounted for by trade with noncommunist countries, but by 1954—one year after the end of hostilities during the Korean War—the situation was completely reversed, and communist countries accounted for about 
Three-fourths. During the next few years, the communist world lost some of its former importance, but it was only after the Sino-Soviet breach of 1960—which resulted in the cancellation of Soviet credits and the withdrawal of Soviet technicians—that the noncommunist world began to see a rapid improvement in its position. In 1965 China’s trade with other socialist countries made up only about one-third of the total.

A significant part of China’s trade with the developing countries has been financed through credits, grants, and other forms of assistance. At first, from 1953 to 1955, aid went mainly to North Korea and North Vietnam and some other communist states; but from the mid-1950s large amounts—mainly grants and long-term interest-free loans—were promised to politically uncommitted developing countries. The principal efforts were made in Asia—especially to Indonesia, Burma (Myanmar), Pakistan, and Ceylon (Sri Lanka)—but large loans were also granted in Africa (Ghana, Algeria, Tanzania) and in the Middle East (Egypt). After Mao Zedong’s death in 1976, however, the Chinese scaled back such efforts.

During the 1980s and ’90s, China’s foreign trade came full cycle. Trade with all communist countries diminished to insignificance, especially with the demise of most socialist states. By contrast, trade with noncommunist developed and developing countries became predominant. In general, China has had a positive balance of trade with its trading partners since 1990. Hong Kong became one of China’s major partners prior to its reincorporation into the country; it remains prominent in domestic trade, notably in its reliance on the mainland for agricultural products. Taiwan also has become an important trading partner.

China: Major import sources 

Most of China’s imports consist of machinery and apparatus (including semiconductors, computers, and office machines), chemicals, and fuels. The main import sources are Japan, Taiwan, South Korea, Australia, the countries of the European Union (EU), and the United States. Regionally, almost half of China’s imports come from East and Southeast Asia, and some one-fourth of its exports go to the same countries.

China: Major export destinations 

The great bulk of China’s exports consists of manufactured goods, of which electrical and electronic machinery and equipment and clothing, textiles, and footwear are by far the most important. Agricultural products, chemicals, and fuels are also significant exports. The United States, Hong Kong, Japan, EU countries, and South Korea are the principal export destinations.

Services

The service sector constitutes about one-third of China’s annual GDP, second only to manufacturing; likewise, only agriculture employs a larger share of the workforce than services. However, its proportion of GDP is still low compared with the ratio in more-developed countries. Public administration has long been a main component of the sector, as has wholesale and retail trade. Tourism has become a significant factor in employment and as a source of foreign exchange.

Labour and taxation

Agriculture has remained the largest employer, though its proportion of the workforce has steadily declined; between 1991 and 2001 it dropped from three-fifths to two-fifths of the total. The manufacturing labour force has also shrunk at a slower rate, in part because of reforms implemented at many of the state-run enterprises. Such reforms and other factors have increased unemployment and underemployment in both urban and rural areas. Women have been a major labour presence in China since the People’s Republic was established. Some two-fifths of all women over age 15 are employed.

Chinese trade unions are organized on a broad industrial basis. Membership is open to those who rely on wages for the whole or a large part of their income—a qualification that excludes most agricultural workers. In theory, membership is not compulsory, but in view of the unions’ longtime role in distributing social benefits, the economic pressure to join is considerable. The lowest unit is the enterprise union committee. Individual trade unions also operate at the provincial level, and there are trade union councils that coordinate all union activities within a particular area and operate at county, municipal, and provincial levels. At the top of the movement is the All-China Federation of Trade Unions, which discharges its functions through a number of regional federations.

In theory the appropriate trade union organizations have been consulted on the level of wages as well as on wage differentials, but in practice their role in these and similar matters has been insignificant. They have not engaged in collective bargaining—not at all surprising, since their principal duties have included assisting the party and promoting production. In fulfilling these tasks, they have had a role in enforcing labour discipline. From the point of view of the membership, the most important activities have concerned the social and welfare services. Thus, the unions have looked after industrial safety; organized social and cultural activities; provided services such as clinics, rest and holiday homes, hostels, libraries, and clubs; and administered old-age pensions, workers’ insurance, disability benefits, and other welfare schemes. More recently, however, reforms of the social security system have involved moving the responsibility for pensions and other welfare to the provinces.

From the 1950s to the ’80s, the central government’s revenues derived chiefly from the profits of the state enterprises, which were remitted to the state. Some government revenues also came from taxes, of which the most important was the general industrial and commercial tax. The trend, however, has been for remitted profits of the state enterprises to be replaced with taxes on those profits. Initially, this tax system was adjusted so as to allow for differences in the capitalization and pricing situations of various firms, but more-uniform tax schedules were introduced in the early 1990s. In addition, personal income and value-added taxes were implemented at that time.

Transportation and telecommunications

Great emphasis has been placed on developing the country’s transport infrastructure because it is so closely related to developing the national economy, consolidating the national defense system, and strengthening national unification. Nevertheless, China’s domestic transport system continues to constitute a major constraint on economic growth and the efficient movement of goods and people. Railroads, some still employing steam locomotives, provide the major means for freight haulage, but their capacity cannot meet demand for the shipment of coal and other goods. In addition, roads and waterways are providing an increasing proportion of China’s overall transport.

Since 1949 China’s transport and communications policies, influenced by political, military, and economic considerations, have experienced changes of emphasis in different periods. Thus, just after 1949 the primary concern was to repair existing lines of communication, to give priority to military transport needs, and to strengthen political control. During most of the 1950s, new lines were built, while at the same time old lines were improved. During the Great Leap Forward much of the improvement of regional transportation became the responsibility of the general population, and many small railways were constructed. After 1963, emphasis was placed on developing transportation in rural, mountainous, and, especially, forested areas in order to help promote agricultural production; simultaneously the development of international communications was energetically pursued, and the scope of ocean transport was broadened considerably.

Initially, as China’s railways and highways were mostly concentrated in the coastal regions, access to the interior was difficult. This situation has been improved considerably, as railways and highways have been built in the remote border areas of the northwest and southwest. All parts of China, except certain remote areas of Tibet, are accessible by rail, road, water, or air.

Railways of China

Railway construction began in China in 1876. Because railways can conveniently carry a large volume of goods over long distances, they are of especial importance in China’s transportation system. All trunk railways in China are under the administration of the Ministry of Railways. The central government operates a major rail network in the Northeast built on a base constructed by the Russians and Japanese during the decades before 1949 and an additional large system inside (that is, to the south or east of) the Great Wall. The framework for the railways inside the wall consists of several north-south and east-west lines.
Apart from those operated by the central government, there is also a network of small, state-owned local railways that link mines, factories, farms, and forested areas.

The construction of these smaller railways is encouraged by the central government, and technical assistance is provided by the state railway system when it is thought that the smaller railways can stimulate regional economic development.
Coal has long been the principal railway cargo.

The rather uneven distribution of coalfields in China makes it necessary to transport coal over long distances, especially between the North and South. The increase in the production of petroleum and natural gas has made necessary the construction of both pipelines and additional railways.

Since the late 1950s there has been a change in railway-construction policy. Prior to that time, most attention was paid to the needs of the eastern half of China, where most of the coal network is found; but since then, more emphasis has been given to extending the rail system into the western provinces and improving the original railway system, including such measures as building bridges, laying double tracks, and using continuous welded rail. In addition, certain important rail links have been electrified.
Since 1960 hundreds of thousands of workers have been mobilized to construct major lines in the northwest and southwest. In the 1970s new lines were extended into previously unopened parts of the country. In the 1980s new regions in the northwest were linked to the national market and opened up for development. 

The best example was the line built from Lanzhou in Gansu province westward into the oil fields of the Qaidam Basin. These projects, which were coordinated on a national level, contrast to the pattern prevailing before World War II, when foreign-financed railroads were built in different places without any attempt to coordinate or standardize the transport and communications system.
Even greater effort has been made since 1990 to speed up new railway construction and improve the existing network. A major new line runs southward from Beijing to Kowloon (Hong Kong) via Fuyang and Nanchang and eases strain on the other north-south trunk lines. The main east-west trunk line from Lianyungang on the east coast to Lanzhou now extends northwestward through Ürümqi (Urumchi) to the Xinjiang-Kazakhstan border, linking China to Central Asia and Russia. A third line, constructed southeastward from Kunming in Yunnan to the port of Beihai in Guangxi, greatly improves southwestern China’s access to the sea, as does a new line that connects Lhasa in Tibet with Qinghai province. In addition, upgrades to track and equipment have facilitated high-speed passenger rail service between Beijing and Shanghai, Guangzhou, and Harbin.

Road networks
The first modern highway in China was built in 1913 in Hunan province. The highways of China may be divided into three categories: state, provincial, or regional highways of political, economic, or military importance; local highways of secondary importance, operated by counties or communes; and special-purpose highways, mostly managed by factories, mines, state farms, forestry units, or the military forces.
The most striking achievement in highway construction has been the road system built on the cold and high Qinghai-Tibetan plateau. Workers, after overcoming various physical obstacles, within a few years built three of the highest and longest highways in the world, thus markedly changing the transport pattern in the western border regions of China and strengthening the national defense system. Of the three highways, one runs westward across Sichuan into Tibet; another extends southwestward from Qinghai to Tibet; and the third runs southward from Xinjiang to Tibet.
Another early objective was to build a rural road network in order to open up commercial routes to the villages and to facilitate the transport of locally produced 

goods. The wide dispersion and seasonal and variable nature of agricultural production, as well as the large numbers of relatively small shipments involved, explain why trucks are preferred for shipping. Similarly, trucks best bring consumer goods, fertilizers, and farm machinery and equipment to rural areas.

China: highway construction
From the 1980s and especially since 1990, the emphasis has shifted to creating a nationwide network of major highways. Thousands of miles of multilane express highways have been constructed in and around the largest cities, and older two-lane roads have been widened to accommodate multiple lanes of traffic. Overall road mileage has roughly doubled since the early 1980s. Nonetheless, motor vehicle use has expanded much more rapidly than road construction, particularly in the major cities. In addition, a large proportion of China’s road network is either unpaved or badly in need of reconstruction.

Large-scale highway construction spurred China to develop its motor vehicle industry. The first vehicle manufacturing plant dates to the mid-1950s, and by 1970 localized production was widespread in the country.

The basis of the early industry was generally simple, usually an extension of repair shops in which vehicles of various types were produced to serve the needs of the locality. Vehicles produced by large state automotive factories generally were distributed only to state enterprises and military units. By the 1980s many vehicles, especially automobiles, were imported. Domestic automobile manufacture grew rapidly after 1990 as individual car ownership became increasingly possible, and it emerged as one of China’s major industries. Several foreign companies have established joint ventures with Chinese firms.
 

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