Growing Mineral Production Proves China's Resource Potetial

As 1979 drew to a close, it was obvious that China would have another good year with output of most industrial products at 3-9% above levels attained in 1978. Most increases were registered on the basis of maximum utilization of existing capacities and nationalization of procedures and methods. There were also distinct improvements in the quality and variety of products. Coal output probably surpassed the 650-Mt level in 1979. Steel output was expected to reach the 35-Mt level, an increase of nearly 10% over 1978. Based on the vast amount of housing and road and project construction, cement production more than likely surpassed 70 Mt. The nonferrous base metal industries improved somewhat in 1978, but actual output levels in recent years may have been a little higher than previously estimated by the outside world. Stagnate world demand slowed growth in the "export metals" sector. Minerals like magnesite and talc were produced at tonnages much larger than previously thought, with gold also falling into this category. Sulfur and pyrite production are still short, although a big pyrite mine was being brought into production. Barite out-put was reportedly up and fluorspar output held its own. Westerners generally concede that difficulties in transportation and power supply are holding back mineral production. Throughout 1979, basic construction continued on the majority of projects started by the Chinese and those few foreign projects contracted before the adjustment of industrial priorities. Foreign Ventures Perspective The foreign connection looms large in China's plan for modernization. In effect, it is an extension of what China wants to do in terms of "walking on two legs"-that is, develop what can be done locally to the fullest extent, then rely on international technology to move into the bigger and more complicated projects. Foreign projects are designed to complement domestic projects rather than replace them. Many foreign projects were started or continued by the Chinese in 1979. Building the necessary infrastructure for the projects is usually a Chinese endeavor and requires Chinese technicians and money. In areas with a strong economic base, this activity proceeds without foreign aid. In other areas, added funds are requested. Foreign funds can come in many forms-equipment technology, low interest loans, equity capital, advance-of-funds on the basis of future delivery in kind, and joint venture money. The Chinese are exploring all these avenues, with the strategy of minimizing foreign exchange needs for individual projects. They feel very uncomfortable with high interest rates, even though interest can be treated as operating ex¬pense rather than capital expense. Then there's the question of rights. Will Chinese sovereignty be affected? Can foreigners own land, in addition