The Traditional Chinese Iron Industry and its Modern Fate (review)

The Traditional Chinese Iron Industry and Its Modern Fate. By Donald B. Wagner. Surrey: Curzon Press, 1997. Pp. xii+106; illustrations, figures, tables, notes/references, bibliography, index. $29.

Donald Wagner is an acknowledged authority on the Chinese iron industry, having already written two books on the subject, one on ancient China, the other on traditional production methods in Henan province in the twentieth century. He is thus well qualified to write this brief, synthetic treatment, which will become a chapter in a future volume of Science and Civilization in China. Structurally, the book comprises two essays, one enclosing the other. The interior essay is a detailed description of local iron technology in four areas: the provinces of Sichuan, Shanxi, Guangdong, and the Dabieshan region of Henan, Hubei, and Anhui provinces, depicting the regional variation of technologies, from relatively labor-intensive to relatively capital-intensive. Here the author displays a solid command of the technologies and geography, and has made thorough use of his historical sources (travelogues and gazetteers, as well as occasional commercial information).

The exterior essay, contained in the opening chapters and the conclusion, is perhaps of greater interest to others besides specialists in metallurgy. Here Wagner presents an economic interpretation of the development of the industry over time. As he notes, the history of China's iron industry has been a puzzle, with no linear pattern of ever-increasing technical sophistication. He argues that the puzzle's solution lies in examining both a technology's "appropriateness" (optimizing use of available labor and capital) and the intrusion of highly competitive Western iron products. Before the Western arrival, larger markets (those with better transport networks and more population) had more capital-intensive industries to meet their greater demand for iron. However, the same transport network and population density that favored capital-intensive production also would facilitate penetration of these markets by Western imports, produced even more cheaply, and displacing local Chinese production.

Rather than invest in still more capital-intensive production methods, both the Chinese government and Chinese merchants chose to invest in enterprises made more lucrative by contact with the West. Consequently, where the traditional Chinese iron industry ("traditional" apparently meaning "non-Western") survived in smaller, more remote markets, it remained more labor-intensive and less technically sophisticated. Where it expanded it remained labor-intensive--or became even more so--because capital was now scarcer. Though technologically a step backward, this adaptation was economically rational. Wagner's economic interpretation is sound, even if still conjectural (as he himself notes); one needs price data, both of iron and of other Chinese industries competing for capital, in order to fully gauge the effect of the Western arrival. One also needs to examine entrepreneurial and official behavior.

Equally sound is Wagner's application of these ideas to the Great Leap Forward of 1958-61. He argues that it succeeded where traditional, labor-intensive techniques were still in use--that the "great error of the [backyard steel] campaign was the attempt to reintroduce the traditional techniques in places where they were long forgotten, and where there also were better uses for labor." The successful regions had low opportunity costs and a pool of skilled labor that could expand local industry without much cost to other local industries. Unfortunately, while Wagner briefly notes in the interior essay that these techniques were still in use at the time, one needs more production data to evaluate the economic interpretation.

Finally, in a book dealing with the "modern fate" of the traditional Chinese iron industry, one wonders why the narrative stops with the Great Leap Forward, forty years past. Unless it destroyed the industry (and if it did that would be worth noting, too), should not an explanation of technical change based on market size, opportunity cost, and economies of scale include the subsequent years of increasingly market-oriented reforms?

Wagner himself says that to do justice to his topic would require four monographs...