problem and a handicap to economic growth.
It was reported that steel output rose 11.5 per cent during the first 11 months of 1977 over the corresponding period in 1976. But China will continue to rely on imports for some time to compensate for domestic shortfalls.
The rate of expansion in chemical fertiliser production in 1975 was not maintained in 1976, and total output is estimated to have reached 32 million tonnes (30 million tonnes in 1975). Imports also declined in 1976 due to economic disruption and the absence of new contracts. Imports from Japan, the main supplier, fell by 53 per cent to 1.7 million tonnes, though this partly reflected a switch to cheaper suppliers in Eastern Europe; imports from Japan increased to 3.1 million tonnes in 1977. Production recovered in 1977 - reportedly increasing by 31.9 per cent. The rapid growth rate of the early 1970s was apparently restored as the imported urea plants came into operation and began to reach full working capacity.
Production in engineering probably increased little in 1976 (but recovered in 1977) and it was simply stated that productive capacity for capital construction in many sectors grew considerably during 1976. Agricultural support industries, fuels and energy, transportation, light industry and urban construction were singled out. By the end of 1976 economies were being sought through tighter central control of projects and funds. At a national capital construction conference in April 1977, the gang of four were accused of wasting funds, implementing non-productive projects, interfering with labour productivity and sabotaging building programmes, particularly those using imported equipment.
No annual production claim for light industry in 1976 was reported. Production at some factories like the Hangchow embroidery plant (important for exports) was affected by political disturbances so that growth in total output was probably relatively small. In 1977, however, growth rates seemed to have returned to those experienced before 1976; the 1977 rate was probably about 12 per cent.
The perennial problems of shortage of capacity, inefficiency, and factional and labour disputes continued to affect transport in 1976, the railways being particularly affected. The earthquake probably put additional strain on the overloaded system as relief and reconstruction supplies were brought into the disaster area,
China resumed purchasing second-hand merchant ships in May 1977 after a lull during most of 1976, and had bought over 30 vessels (mainly bulk carriers and dry cargo ships) amounting to about 550,000 dwt by the end of August. Total Chinese merchant shipping tonnage is now estimated to be approaching 8 million dwt or about 1 per cent of total world capacity. Port congestion caused primarily by inadequate storage and loading facilities remains a major problem.
Energy
Natural gas was one of the fastest growing sectors of the economy and a 22.3 per cent rise in production was claimed for 1977. The oil industry performed well in 1976 compared with other major industrial sectors. Crude oil output increased by 13 per cent from 76 million tonnes in 1975 to about 86 million tonnes in 1976 but grew at a markedly lower rate than in previous years. Production at Taching, China's largest field responsible for about 40 per cent of total output, increased by 8.7 per cent, while Shengli overfulfilled its production plan. In January 1977 the existence of a new high-yielding oil field in North China was announced, but oil production in the first 11 months was reported to be only 8 per
-2-