PROGRESS OF ECONOMIC CONSTRUCTION IN MANCHOUKUO
Board of Manchurian Affairs
Progress in planning for the comprehensive expansion of productive power throughout Japan, Manchoukuo and North China was publicly and fully explained by the Government at the last session of the Diet. The essence of the plan is to ensure raw-material resources for the designated 15 industries of iron and steel, coal, light metals, non-ferrous metals, liquid fuel, soda and industrial salt, sulphate of ammonia, pulp, gold, wool, machine tools, railway vehicles, shipping, automobiles, and electric power. Failing this basic step, even the successful expansion of the equipment for production would not mean much in time of emergency. Fortunately, Manchoukuo possesses abundant resources for all of these industries; herein lies the fact that the plan for the expansion of productive power in Manchoukuo forms a most important part in the comprehensive programme centring around Japan. In the following pages is explained in outline the actual state of progress in the more important of those industries, progress which has been made in accordance with the five-year plan, beginning with 1937.
Iron and Steel Industry
Industrial plants forming the centre of the plan for the increased production of steel are the Showa Steel Works at Anshan, capitalized at 200,000,000 yen and the Penhsihu Colliery and Iron Works, capitalized at 100,000,000 yen1. The former establishment had a productive capacity only of 300,000 metric tons of pig iron before the Manchurian Incident. However, with the completion of the equipment for increase of production carried out from 1933 to 1935, it came to possess, in 1938, equipment for production of 750,000 metric tons of pig iron, 580,000 metric tons of ingot steel, and 300,000 metric tons of steel materials. Furthermore, a plan for the 1,000,000-ton increase of pig iron, has been completed recently as the first step in the five-year plan, constituting a great asset to the iron and steel industry in Japan under the current emergency. Ten factories have also been established lately near the Showa Iron
Works for the purpose of producing manufactured goods out of the semi-finished materials supplied by that iron works. Thus Manchuria which had not produced a single ton of steel materials before the Incident of 1931 has now developed into a full-fledged steel producing country.
The Penhsihu Colliery and Iron Works, which have hitherto been producing a special kind of pig iron containing a low percentage of phosphorus, have been charged with an important task along with the Showa Works under the five-year plan. Thus, the Penhsihu Works are constructing a blast furnace with an annual productive capacity of 500,000 tons in Miyanohara situated to the south of Penhsihu, expecting to complete it by the end of 1940. Its capital will also be increased shortly to 100,000,000 yen.
Coal Industry
Prior to 1931, the annual production of coal in Manchoukuo averaged about 8,500,000 metric tons, more than 80 per cent of which represented the output of the Fushun Coal Mine operated by the South Manchuria Railway Company. And even this amount, which can by no means be regarded as very large, could not be consumed within Manchuria; some 3,000,000 tons had to be exported to Japan proper. It happened, therefore, that the necessity of prohibiting the importation of Fushun coal was seriously discussed during the period of depression in the Japanese coal industry, the period from 1931 to 1932. The state of things, however, has now undergone a radical change; with the progress in the economic development of Manchoukuo, the demand for coal began suddenly to increase. In 1934 the Manchuria Coal Mining Company with a capital of 80,000,000 yen was established with a view to taking positive steps for the development and increased production of coal fields throughout the whole of Manchoukuo. The output has increased by leaps and bounds until it reached in 1938 to the amount twice as large as that before the Incident, of which 50 per cent was Fushun coal. In the current year the plan for increase of production will be in full swing, so that an increase of several millions will be expected.
This increase, however, is counteracted by such factors as the growth of transportation facilities, rise of industries, and increase of population, resulting in the decreasing trend in the exportation to Japan proper. To overcome this difficulty coal interests are making endeavours for further increases.
Electric Power Industry
Electric power in Manchoukuo is all produced by thermal generation. For that country, though blessed with an abundance of coal resources, has no small rivers rich in head, as in the case of Japan, and consequently no place fit for small-scale hydraulic generation plants such as those with the productive capacity of 10,000 to 20,000 kilowatts. The generating equipment for the whole of Manchuria before the upheaval in 1931 had a productive capacity of no more than 200,000 odd kilowatts. At present, it has been expanded to a capacity of more than 500,000 kilowatts, keeping pace with increased demands. This expansion of the productive capacity, however, is far from being sufficient to meet demands on the basis of the vast five-year plan. Accordingly the construction of thermal generation plants has been started in various places throughout the country; and at the same time the necessity for introduction of the hydraulic generation system has been urgently felt. It is fortunate, in this connection, that great rivers in Manchoukuo, such as the Sungari and the Yalu, are by far richer than Japanese rivers in the volume of water. Thus it has been made clear that the construction of hydraulic generation plants is feasible if large-scale power utilization is developed. In the five-year plan, therefore, the plan for hydraulic generation is included, and two large generation plants have accordingly been in construction, since 1937, on the Sungari and Yalu Rivers. The plant on the Sungari is being constructed under the direct management of the Manchoukuo Government in Tafengman situated 21 kilometres above Kirin. With the completion of a dam 81 metres high, a great lake of 545 square kilometers will emerge, enabling the production of power up to the maximum of 600,000 kilowatts. The first part of the plan, according to which power of 480,000 kilowatts will be produced, will be completed by 1941. Since this construction work includes part of the conservation work of the Sungari, the downstream area covering 160,000 chobu2 will become safe from the threat of flood and that covering 72,000 chobu will be reclaimed.
On the Yalu River, generating stations with total power of 1,600,000 kilowatts will be constructed. The plant which is being constructed in Shuifeng, situated 60 kilometres upstream from Antung, by the Yalu Hydraulic Electric Power Company is estimated to produce the maximum power of 600,000 kilowatts. This company is capitalized at 100,000,000 yen, invested in jointly by the Manchoukuo Government and Korean interests, and legally in the form
of two companies.
When these great power plants are completed, power rates will be considerably lowered with the result that electro-chemical industries, such as electrolytic and electric furnace industries, will become active. Already in Kirin the Manchuria Electro-Chemical Industry Company, with a capital of 30,000,000 yen, was established in 1938, while in Antung the construction of an aluminium factory under the management of the Manchuria Light Metal Company is being planned. Mention should be made here of the Manchuria Electrical Industry Company established in 1934. The concern is operating in thermal generation, excepting that operated directly by the South Manchuria Railway Company, transmission, and distribution of electricity for the whole of Manchoukuo.
Light Metal Industry
The Fushun Factory of the Manchuria Light Metal Company, which is capitalized at 50,000,000 yen, completed the first part of its construction programme last fall, and has now started the second part of the programme. The plant is manufacturing aluminium out of Manchuria aluminium shale, which is found in abundance around Fushun, by the dry smelting process successfully studied by the Central Laboratory of the South Manchuria Railway Company. The strength of this industry in Manchoukuo lies in the fact that not only the raw material, aluminium shale, but also the materials used in its manufacturing, cryolite and electrode, can be supplied from within the country. The completion of the first part of the plant has enabled it to produce annually 4,000 metric tons of the metal.
The future of the Manchuria Magnesium Industry Company established in July, 1938, with a capital of 10,000,000 yen, which is a subsidiary concern of the Manchuria Industrial Development Corporation, is also to be watched with expectation. For the company has command of one of the world's greatest deposits of magnesite, found in the Tashihchiao and Haicheng districts. Its plant is now in the course of construction at Yingkow.
Liquid Fuel Industry
Manufacture of oil by the dry distillation of oil shale which covers the coal seams of the Fushun coal field, famous for open-cut mining, was started in 1930 on the basis of the successful studies and experimentations carried out by the South Manchuria Railway Company since 1925. It has now developed into a paying enterprise.
The present equipment has the capacity to produce 150,000 metric tons of crude oil, which is mainly refined as heavy oil. Volatile oil, sulphate of ammonia and crude wax are also manufactured out of it as by-products. The new equipment with capacity of 200,000 metric tons is now under construction and its main part will be completed within 1939.
In the coal-liquefying industry Manchoukuo is somewhat ahead of Japan; and the three companies to operate in this important enterprise, namely, the South Manchuria Railway Company, the Manchuria Synthetic Fuel Company and the Manchuria Artificial Oil Industry Company, will shortly start activities. The first named company has nearly completed the construction, in Fushun, of a plant employing the direct liquefying process; the second named is constructing, in Chinchow, a plant employing the gas synthetic (Fischer's) process; and the last named has nearly completed the construction, in Ssupingkai, of a plant employing the dry hydrogenation process. Of these concerns, the Manchuria Synthetic Fuel Company and the Manchuria Artificial Oil Industry Company are capitalized at 50,000,000 yen and 20,000,000 yen respectively.
Pulp Industry
The pulp industry founded on the vast forest resources in North-eastern Manchoukuo has attracted the attention of Japanese interests ever since the founding of the new State. Plans for the undertaking have accordingly been in progress for some time, and a few companies have been able to complete the construction of their plants, getting ready for starting operations. They are: the Tobo Pulp Company with a capital of 30,000,000 yen and a plant in Kaishutun; the Manchuria Pulp Company with a capital of 10,000,000 yen and a plant in Hualin; the Japan-Manchuria Pulp Company with a capital of 10,000,000 yen and a plant in Tunhua; and the Oriental Pulp Company with a capital of 10,000,000 yen and a plant in Shihhsien. These plants each have an annual productive capacity of 15,000 metric tons.
There are also in Manchoukuo special pulp industries, such as the bean-straw pulp and reed pulp industries. The Kangteh Reed Pulp Company in Yinkow, capitalized at 5,000,000 yen, has already produced goods and the Manchuria Bean-Straw Pulp Company, capitalized at 10,000,000 yen, has nearly completed its plant in Kaiyuan. Besides, plans for large-scale enterprises in the pulp industry based on the utilization of resources in the Great and Little Khingan Range districts are now under way.
Other Industries
With regard to industries relating to non-ferrous metals, the Manchuria Lead Mine Company, which was established in 1935 with a capital of 4,000,000 yen, is producing lead and zinc from its Yangchiachantze Mine in Chinchow Province. With regard to copper, the Manchuria Mining Company, established in 1938 with a capital of 50,000,000 yen as subsidiary concern of the Manchuria Industrial Development Corporation, and the Tienpaoshan Mining Company, capitalized at 7,000,000 yen, are producing the metal. With regard to the production of gold, the mining of alluvial gold in North Manchuria has been increasing year by year through the activities of the Manchuria Gold Mining Company established in 1934 with a capital of 12,000,000 yen. The aforementioned mining companies are also making plans for mining the yellow metal in various places.
Another important industry to be given account of is the salt industry. This industry in Manchoukuo has been operated in conformity with the comprehensive Japanese plan for increasing the production of inshore salt throughout Japan proper and the Kwantung Leased Territory. For this purpose the Manchuria Salt Industry Company was established in 1936 with a capital of 5,000,000 yen. Besides, there is in operation the Manchuria Soda Company, capitalized at 5,000,000 yen, for manufacturing soda ash by utilizing raw salt produced abundantly in the country. The plant of this company in Dairen is supplying the whole country with the ash.
No less important an industry now being operated in Manchoukuo is the chemical industry. The Manchuria Chemical Industry Company, capitalized at 25,000,000 yen and having an annual productive capacity of 240,000 metric tons, is supplying the agricultural industry in Japan proper and Korea with sulphate of ammonia. This chemical fertilizer produced as a by-product in Anshan and Fushun amounts to no negligible quantity. Furthermore, in January the Manchuria Sulphate-of-Ammonia Industry Company, capitalized at 50,000,000 yen, was established through the joint investment of the Manchoukuo Government and the rural cooperatives in Japan, with the objective of an annual production of 200,000 metric tons.
With regard to the machine, and railway vehicle industries, the Dairen Machine Company, Manchuria Engineering Works, Manchuria Vehicle Company, and Dairen Dockyards and Iron Works have been active. Plans for the manufacture of automobiles and aircraft have also been in progress; certain plants are already in operation.
Business Conditions
In reviewing the progress in the economic construction of Manchoukuo, the practical and important question is whether those enterprises are being operated at a fair profit. According to an investigation conducted of the business conditions of 160 major business concerns in Manchoukuo by the Dairen Chamber of Commerce and Industry in 1937, against 1,280 million odd yen of the total paid-up capital, the total net profit amounted to 143 million odd yen, representing a profit rate of 11.2 per cent. During the period of 7 years ending in 1937 the total Japanese investment in enterprises in Manchoukuo was estimated at more than 1,900,000,000 yen. Of this amount about half was invested in transportation and communication enterprises, such as the South Manchuria Railway Company and Manchuria Telegraph and Telephone Company. Approximately 700,000,000 yen, however, is estimated to have been invested in mining and electrical enterprises. Since the industrial development programme was carried out in 1937, investments in mining and industrial enterprises have suddenly increased. These investments have been made in forms of paid-up capital and subscriptions to debentures, and more than 100,000,000 yen is annually returning to Japan as dividends and interests on them.
Development of the Eastern Border Districts
Districts lying in the southeastern border of Manchoukuo, centring around Tunghua, which is known as Tungpientao, are mountainous and sparsely populated, and consequently were somewhat backward in establishing peace and order. They have, however, been long regarded as districts possessing rich deposits of various minerals. The recent establishment of peace and order and the development of transportation facilities have rendered possible the conducting of large-scale investigations, which have revealed the fact that the deposits of mineral resources are more abundant than expected. In particular, the iron ore deposited in Talitzekow is a very rich ore containing 65 per cent or more of iron. In respect of quantity also, the Chitaokow and Laoling Iron Mines and the Tiehchangtze, Wutaochiang and Yentungkow Coal Mines have been ascertained to hold considerable amounts of deposits. With a view to comprehensive development of these resources, the Manchuria Industrial Development Corporation established in August, 1938, as its subsidiary concern, the Tungpientao Development Company with a capital of 30,000,000 yen. The Manchoukuo Government
too created a few years ago, Tunghua Province, separating the districts from Antung Province, for the purpose of facilitating the development of the districts. With the completion of transportation facilities, these great resources will certainly prove to be the essential factor in establishing Manchoukuo industry, which will, in turn, contribute greatly to the augmentation of productive power in Japan.
The former country of soya beans has developed into a modern country of industry.
1 All figures of capitalization in this article refer to authorized capital.
2 A Japanese measure of area equal to 2.4507 acres.