PLANNING AND CONSTRUCTION HISTORY OF PANZHIHUA DURING THE THREE-FRONT STRATEGY PERIOD: BACKGROUNDS, PROCESS, AND MECHANISM

BIN XU, LINXING XIAO

Address: School of Architecture, Tsinghua University, , , 100084. e-mail: [email protected]

ABSTRACT:

The western region, which contains 60% of the nation’s land and also is rich in natural resources, always holds an important strategic position in China. In the Republican period, Sun Yat-sen proposed the “National Development Strategy” aiming to bring China into the world capitalism system based on the development of the western region. During the War of Resistance against Japan, key industries were forced to move into inland China. Therefore the Republican government determined the strategy concentrating on the development of and .

After the establishment of the People’s Republic of China, Mao’s government accepted the aid from the Soviet Union. During the “First Five-year Plan”, 156 key projects were carried out in the northwestern region close to the Soviet Union. That was the first time the P.R.C government changed the industrial layout from eastern coastal region to western inland areas. Later in the 1960’s, both northern and southern borders of China were under the military threats from the Soviet Union, the U.S.A, Indian and Vietnam. In that situation, the government adopted a regional policy called the “Three-Front Strategy”. Its aim is to render China’s fledgling industries immune from attack by hiding them “in the mountains, in dispersion and in caves” of the western regions, such as Sichuan, and Guizhou provinces. From then on, in southwest China, a 14-year-long period of national defense, industry and infrastructure construction began.

Panzhihua, a city in the mountainous area of southwest Sichuan, is the most important construction project of the Three-Front Strategy because of its abundant mineral resources. From 1964 to 1978, the investment to Panzhihua exceeded 20 billion yuan. With the entire nation’s efforts, an industrial city with one million people spanning over 50 km emerged along the . However, after 1978, the government of Deng gradually switched its policy to the Market Economy. Without the continuous aid from the central government, Panzhihua soon lost its central position.

In this paper, firstly, we review the history of western development and the political environment in 1960’s to set a historical-geographical axes of Panzhihua. Secondly, we dig into the construction history and summarize the characters in the process, at different scales of national, regional and local. Thirdly, the theory of “Production of Space” is being used to analyze the underlying mechanism of construction in the specific period. Finally, we try to figure out why the city declined in the post-reform ear. This paper fills the gap in the research of the Three-Front Strategy period, attempting to sum up the experience of western region development in Mao’s time, and explores the mechanism of the production of urban space under the planned economy. We believe the paper is able to help today’s Western Region Development strategy in an significant way.

Key words: Western Region Development, Three-Front Strategy, Production of Space, Panzhihua, China

1. INTRODUCTION

The neo-liberalism represented by “Washington Consensus” has been controversial in the economic reform of Latin American countries, and suffered an unexpected defeat in the Eastern European countries. Moreover, the financial crisis in 2008 and European debt crisis in 2011 prompted more in-depth introspection to neo-liberalism (Harvey, 2010). Meanwhile, during the last several decades, the government-led model of economic development effectively helped several Eastern Asian countries such as Japan and South Korea to catch up with developed countries (Luo, 2009). Nowadays, the persistent rapid development of China attracts a lot of interest on the “China Model”.

To explore the “China Model”, it is necessary to trace back to the Planned Economy era from 1949 to 1979, during which China had to face the shortage of production resource and the threaten of local war (Lu, 2006). Although both the internal and external environment was not good, China still met two growing peaks. In the First Five-Year Plan from 1953 to 1957, with the assistance from the Soviet Union, the GDP growth rate had reached 9% because of the achievements in heavy industry area (Hu, 2009). During the Three-Front construction period from 1964 to 1978, confronted with the U.S.A and Soviet Union, China has established a relatively integrated system of national defense industry in its western region without any help of foreign countries. From then on, the unbalanced industry distribution between eastern and western region was changed.

The Three-Front construction aimed to establish a comprehensive system of defense, industry, energy, transportation and etc. in the Three-Front area centered at Sichuan province, to avoid the threaten from potential local war (Chen, 2003). The Three-Front area which located at the most interior position of China was the most safe but least developed area. During the 14-year-long period, more than 200 billion yuan national investment gave birth to a number of modern industrial cities in . Panzhihua city was the most representative one.

Panzhihua located in the mountainous areas of Sichuan and Yunnan provinces at the junction of the Jinsha River and . Because of its rich iron ore resources, Mao Zedong’s government determined to build the most important steel based in Panzhihua. The development of Panzhihua from a small village to a new industrial city with a million people became one of the greatest miracles in the planned economy period (Qian, 2001).

Except for the iron ore resources, there was no industrial foundation in Panzhihua before 1964. In conditions of extreme shortage of materials, how did Panzhihua achieve the developing miracle? To figure out this question, we will analyze the background of the construction by using the historical-geographical method, summarize the characteristics of the construction and employ the theory of “Capital Circulation” and “Production of Space” to explore the internal mechanism of Panzhihua’s development. Our ultimate goal is to theoretically explain the government-led development model in planned economy era. In the future, our findings could give some significance to the western region development in China, the economic transition in developing countries and the urban planning and construction in post financial crisis era.

Not only has it a background of national defense, but also overlap with the specific period of the , the document during the Three-Front Strategy period are scattered in the country's five-year plan and annual economic report, as well as the recalls of some leaders (Bo, 2008). Chen Donglin (2003) gives an overall and detailed description of the political background of the Three-Front Strategy, the growing process and the main achievements in the fields of economy and national defense. It is a shortcut to understand the three-front construction; Fairbank (1978-2002), in his masterpiece on modern China’s history, provides reliable data of the urban construction achievements during the period of Three-Front Strategy; Friedmann (2005) sums up the urbanization policy in the three-front construction in his work of studying the process of China’s urbanization; Bao Shixing (2000, 2005) reviewed the two master plan of Panzhihua in the planned economy time, which provided background information for analyzing the construction theory of Panzhihua. The works of the aforementioned scholars, restored a clear history of the developing background and process of Panzhihua, but were lack of exploring the mechanism under the surface. Therefore, by studying the case of Panzhihua, we will summarize the characters in the construction process and analyze the underlying mechanism of the process. We believe the work will be able to sum up the urban planning and construction experience during the Three-Front Strategy period, to fill the blank of research of China's modern urban planning history, and to develop the theory of urbanization in Socialist China.

2. THE CONSTRUCTION BACKGROUND OF PANZHIHUA: HISTORICAL -GEOGRAPHICAL ANALYSIS

During the Three-Front construction period, Panzhihua has developed from a deserted village to one of the nation's largest iron and steel industrial base. The decisions made by the central government, considering the timing (combat readiness period) and the space (Panzhihua’s location) elements, has a historical inevitability. Figure 1 shows Panzhihua’s location and some typical landscapes.

Figure 1- Panzhihua’s location in the Three-Front Area . [CNG, 2006(6), p.99]

From a national perspective, Panzhihua belongs to China's western region. Although the western region was rich in land and mineral resources, the poor geographical and climatic conditions made it far less developed than the eastern region. Since the Republican period, exploring the western mineral resources has become an important developing strategy of China. In 1912, Sun Yat-sen proposed a program of exploring the western region based on its railway network construction, mentioned in his book “National Development Strategy”. However, due to the weak government of the Republic of China during the Civil War, this plan has not been able to achieve.

From a regional perspective, Panzhihua belongs to Sichuan Province. During the War of Resistance Against Japan, the Republican government was forced to move the central government to inland Chongqing, the capital of Sichuan Province, and to implement a plan called “The Industrial Development of Southwest and Northwest”. During the implementation of the scheme, more than 250 industrial enterprises and their technical staff moved into Sichuan from the eastern region, which greatly improved the industrial level in Sichuan. According to statistics, from 1937 to 1944, the number of factories in Sichuan increased by more than 20 times, and the growth in total capital reached an astonishing one thousand times (Chen, 2003).

From a local perspective, Panzhihua has two evident features: one is the abundant mineral resources of iron, the other is the distant location in the inland mountainous area, with complicated landform and inconvenient traffic shown in Figure 1. This paradox happened to meet the war-time industrial layout principal of hiding them “in the mountains, in dispersion and in caves"(Friedmann. 2005).

After the establishment of People’s Republic of China, Mao’s government was eager to improve the power of nation through industrialization, especially by developing the heavy industry. However, the environment of the new country has never been stable. The potential threat of war has strained the growth of economy. In the 1960s, China and the Soviet Union had come close to war in northern frontier. In the southern and southeastern frontier, under the support of the U.S. government, the situation of Vietnam War escalated, and Chiang Kai-shek’s government in Taiwan clamored to "retaking the mainland". In the southwestern frontier, the government needed to deal with the Sino-Indian Conflict. At that time, 70 percent of China's industrial factories were distributed in the northern and eastern coastal areas. The heavy industrial facilities were within the range of bombers and short-range missiles of the United Soviet in the north, and completely exposed to the range of aircraft carrier’s attack of the U.S. Once the war began, China's industries will soon be paralyzed.

The strategic decision of building a new iron and steel base in Panzhihua was made in such a special historical - geographical environment. Premier Zhou Enlai made a speech at the National Defense Industry and Plan Work conference in August 1964: "In addition to Panzhihua, frontier provinces and cities of China all belong to the first frontier. To the southeastern coast ... several southeast provinces are the first frontier, To Southeast Asia, south provinces are the first frontier. To India, Tibet is the first frontier. To the Revisionism, northwest and northeast provinces are the first frontier ... The true third frontier are Qinghai, southern Shanxi, southern , and Panzhihua." (Jin, 1998). In the particularly historical-geographical condition, it is the only option to locate the nation’s significant industrial base in Panzhihua.

3. PANZHIHUA’S PLANNING AND CONSTRUCTION WITH CHARACTERISTICS OF SOCIALISM AND PLANNED ECONOMY

As mentioned above, attributes as the rich mineral resource and unique geographic location, made Panzhihua a place of strategic significance. After two investigations carried out in 1958 and 1964 respectively, the central government made the decision to construct the steal base in Panzhihua. In 1966, the construction started based on “The Master Plan of Panzhihua Industrial " approved in 1965, which was shown in Figure 2.

Figure 2- Comprehensive Plan of Dukou (Panzhihua) City . [Bao, 2000, p.11]

Since the resource was scattered and there were lots of mountains in Panzhihua, the small town was employed as the unit of the master plan. As highlighted in the dash ellipses in Figure 2, Panzhihua was mainly consisted of seven towns, of which four laid on the northern side of the river and three on the south. Each town was fully functioned for production and living, therefore in each ellipse there were lands for both factory and residence. Towns were closely connected via transportation system including railway and road, so that the material of production could be delivered from mines to factories as soon as possible.

Another characteristic of this plan is that, it tried to optimize the usage of the land according to the terrain. In Panzhihua, major workshops were built on the hills with slopes up to 10% gradient, and the plain ground was preserved for agricultural production to guarantee the food supply. The main road in the city was built along the river to reduce the slope and intersections. Figure 3 demonstrates some examples of the factory and main road.

Figure 3- Typical examples of factory and main road. During the period of the Three-Front construction, the dominant economic system in China was the planned economy. The notable characteristics of the planned economy were completely demonstrated in the process of Panzhihua’s planning and construction.

3.1 DIRECT LED BY CENTRAL GOVERNMENT

As one of the most important projects of the Three-Front construction, the project of Panzhihua was directly taken charge by officials of central government. The construction materials were allocated to Panzhihua from other cities in China through administrative means, which minimized the “transaction cost” in the production process.

To effectively execute the strategy of the central authorities, a “Central Working Group” established by the temporal vice ministers of the State Planning Commission1, took charge of investigation, planning and management of the project. Moreover, some important decisions such as the location of steel base must be approved by top leaders such as Mao Zedong and Zhou Enlai.

In June 1964, the “Central Working Group” proposed two options for the location of steal base according to the field survey: Panzhihua and . Panzhihua was rich in mineral and water resources, but poor in land and transportation condition. Leshan was just the opposite. After listened to the report, Mao Zedong pointed out that the layout of the plant should be close to raw materials, "just nail the nail in Panzhihua” (Bo, 1993).

In 1965, the State Council approved the planning to construct the steel base in Panzhihua and to establish Panzhihua Special Administrative Region which was publically called Dukou city. With the establishment of Special Administrative Region, Panzhihua became directly subordinate to central government. The construction fund was allocated from National Finance Capital and the materials were deployed from anywhere else in China.

3.2 INPUT PRODUCTION FACTORS WITH WHOLE NATION’S EFFORT

Panzhihua’s leaping development was mainly due to the concentrated input of production factors. During the Three-Front construction period, the central government made the investment of capital, technology and labor through three means respectively: fiscal allotment, construction with counterpart and political mobilization.

Through the mean of fiscal allotment, in the period of Three-Front construction, the total capital investment to Panzhihua reached 352.7 billion yuan which was close to 10% of the total investment in Sichuan province (Chen, 2003). The most remarkable achievement of Panzhihua’s construction was the Panzhihua Iron & Steel Base, which was the largest project of the Three-Front Construction.

“Construction with Counterpart(dui kou yuan jian)”, means to choose several particular industry bases in the eastern coastal region and northern region, to help built the new industry base in Panzhihua. The professional equipments and technicians were transferred from the old industry base to Panzhihua. The administrative order of “one divided into two(yi fen wei er)” required that, if there were two sets of equipments, transfer one to Panzhihua; if there was only one set, move it to Panzhihua.

The labor force required for project construction, was gathered through Mao Zedong’s mobilization of “capable people take part into the Three-Front construction” (“hao ren hao ma shang san xian”).

1State Planning Commission was the most authoritative department in charge of planning and managing both the micro and macroeconomic activities, from 1949 to 1979. Responding to the mobilization, people from all over the country went to Panzhihua and voluntarily joint the construction. Statistics shows that, Panzhihua’s construction brought together more than one million workers consisting of selected cadres, scientific researchers, engineers, project managers, production workers as well as soldiers.

3.3 THE CONSTRUCTION GUIDELINES OF “PRODUCTION PRIORI TO LIVING”

When the material was delimited, it was quite common in less developed socialism country with planned economic system, to guarantee the production activities by compressing the living resources of workers. In Panzhihua’s construction process, the guideline of “Production priori to Living（xian sheng chan, hou sheng huo)” was effectively executed by formulating the plan of industrial district.

In “The Master Plan of Panzhihua Industrial District" prepared in 1965, a very low standard called “Dry Brick Building(gan da lei)” was applied to residential houses so that materials and costs can be saved for industrial production (Bao, 2000).

At the beginning of construction, the guideline of “Production Priori to Living” ensured the materials will be served for the production activities; therefore promoted the development of the industrial district. However, at the end of the first stage of the construction project, the scale of industrial land had increased substantially. Furthermore, the productive land had squeezed the area of living land. The fact that the condition of living area had long been at a very low standard negatively affected the production activities. In 1974, to solve this problem, the government prepared a “Framework of Comprehensive Plan of Dukou (Panzhihua) City”, which mainly focused on the construction of living quarters, central district and bridges along the Jinsha River to solve the problem of inconvenience caused by chaotic urban layout. (Bao Shixing, 2000).

During the period of Three-Front construction, the investments with whole nation’s effort greatly contributed to the industrial development of Panzhihua. Figure 3 shows the annually growth rate of industrial output value from 1966 to 1984. We can see that, before 1978, most of the time the growth rate was high, with an average number of 65%, except for individual valleys caused by the volatile situation of the Cultural Revolution. More detailed, the surge of growth rate in 1966 was due to the extremely low industrial level before national investment. In 1969, because of the tension of local war at the Sino-Soviet border, China once again increased the investment to Panzhihua. The negative growth rate in 1968 and 1976, coincided with the military fight in Sichuan province and the crush of the “Gang of Four”2.

The other interesting fact is that, after 1978, the growth rate significantly reduced and maintained at about 8%. The reason to the fact is that, after 1978, China entered the era of “Reform and Open up” led by Deng Xiaoping, during which the international tension gradually abated. Since the possibility of local war was becoming smaller and smaller, the central government gradually ceased the funding and policy support to Panzhihua. Workers from other cities began to go back to their hometown. As the emerging industrial city in western region, Panzhihua had to face the crisis of industrial restructuring.

2 The four leaders of Cultural Revolution: Jiang Qing, Wang Hongwen, Yao Wenyuan and Zhang Chunqiao.

Figure 4- Annual growth rate of the gross industrial output value. [Panzhihua Statistical Yearbook, 1999]

4. ANALYSIS OF PANZHIHUA DEVELOPMENT IN THE FRAMEWORK OF CAPITAL CIRCULATION AND PRODUCTION OF SPACE

During the period of Three-Front construction, Panzhihua was the spatial projection of the regional resources, state capital and socialist spirit. Under the establishment of its urban form, was the logic of production of space which could theoretically reveal the internal mechanism of Panzhihua’s development starting from scratch, declining after its heyday. The finding of the internal mechanism could be helpful for the research of urban construction in the era of planned economy.

4.1 THE SPACE PRODUCTION PROCESS OF PANZHIHUA

As shown in Figure 5, the space production process of Panzhihua has been painted with the color of planned economy. The process could be divided into four levels: global, national, regional and local levels.

At the global level, the threat of nuclear war against the U.S.A and the Soviet Union prompted the leaders of China to make the decision of constructing the Panzhihua Iron & Steel base.

At the national level, the state ensured the investment and reinvestment capital for production from fiscal allotment every year. The central government utilized the means of administrative command and political mobilization, to transfer the necessary technology including the equipments and technicians to Panzhihua from the eastern region, and to gather the human resources of more than one million people from all over the country to voluntarily join the construction of Panzhihua.

At the regional level, as a respond to the central government’s decision to establish the Special Administrative Region of Panzhihua city, Sichuan and Yunnan Provinces collaboratively guaranteed the iron ore and land resources which were crucial to the construction.

At the local level, the massive production factors of capital, technology and labor were concentrated to the mineral resource and land. Two kinds of products were created: the steel and the built environment. The steel was delivered to arsenals at Chongqing to produce weapons which were transported to the war front.

Figure 5- The procee of the production of space in Panzhihua.

4. 2 THE PRODUCTION OF SPACE AND THREE CIRCUITS OF CAPITAL

In the 1960s, Henry Lefebvre proposed the theory called “Production of Space”. It was the first time to treat space as product, and to change the concept of “production in space” to “production of space” (Lefebvre, 1991). David Harvey developed Lefebvre’s work to the theory of “Three Circuits of Capital”, in which “Production of Space” was in the secondary circuit. Harvey’s work revealed how capital accumulates and turns to pursue as much profit as possible. The primary circuit of capital exists in the production process of common goods. When the excessive production reduces the margin to the minimum level, the capital flows to the secondary circuit to invest on fixed assets. Once the profit in the secondary circuit declines, the capital turns to the tertiary circuit to invest on scientific research and consumption of public goods, such as education, health, defense and etc. In this article, we propose three characteristics of the capital accumulation which could be deduced from the theory of “Three Circuits of Capital”.

Firstly, in the capitalist society, the capital turns level by level. The capital will turn to the next level only when it’s unable to reap excess profits in current circuit. This is mainly because the higher the level of circulation, the more the requirement for capital. For example, in the primary circuit, small and medium enterprises can afford the investment of the production of common commodities; in the secondary circuit, only group company can afford the investment to built environment, which can be further divided into productive built environment (plant) and consuming built environment (residential houses); in the last circuit, the investments to scientific research, education, health and defense require so much capital that only state government can afford it.

Secondly, in each circuit, there is a balance between the amount of productive products and consuming products. The consuming products need to meet the workers’ demand in order to stimulate the labor to continue investing in the production of value and surplus value.

Thirdly, at each level, the capital flow must be able to form a cycle, in order to maintain the autogenous capacity of the production process.

4.3 ANALYSIS OF PANZHIHUA’S SPACE PRODUCTION PROCESS IN THE FRAMEWORK OF CAPITAL CYCLE

With the comparison between Panzhihua’s space production process and the characteristics of capital accumulation, we can reveal the internal mechanism of its urban construction.

First of all, the government-led urban construction can break through the threshold of capital scale at different level. The state investment is able to make the capital start cycling at all levels. This mechanism reduces the time to accumulate capital at the lower level; therefore speeds up the development process. For developing countries, this is a feasible way to achieve catch-up strategy which aims to shorten the distance with the developed countries. With the state investment of whole nation’s effort, Panzhihua simultaneously carried out the constructions in the levels of common goods, built environment and defense, therefore obtained an extraordinary achievement during the period of Three-Front construction.

Second, at the initial phase of the catch-up strategy, investment to production will inevitably be greater than the investment to consumption. At this stage, the overall national materials are delimited. Thus, in order to guarantee the rapid development of the productive sectors, the only way is to compress the investment to consumer sector. In the early stage of Panzhihua’s city construction, the guideline “Production priori to Living” expressed this mechanism well.

Thirdly, long-term disorders of the productive investment and consuming investment will negatively affect the development. After long-term productive investment, the marginal growth rate of the production sector has slowed down. Instead, the workers' enthusiasm for production has become a major factor affecting production efficiency. Low standard consuming products will reduce the workers’ enthusiasm and further reduce production efficiency. In 1974, Panzhihua started the second urban planning which changed the construction guidelines of the "Production priori to Living". In this plan, the increasing investment to the consumption built environment was aimed to improve the productivity growth. Finally, in planned economy system, government-led urban construction may cause the ignorance of the capital circulation, which could lead to the unsustainability of urban development. During the Three-Front construction, the iron and steel products of Panzhihua were delivered to military enterprises without any currency flowing back. Since the initial capital investment cannot cycle, the required capital for reproduction can only be appropriated for the state once again. After the end of the Three-Front construction in 1978, the state investment to Panzhihua gradually ceased, resulting in the significant decrease of the industrial output growth rate.

5. CONCLUSION

In this paper, we analyzed the construction of Panzhihua, in the period of Three-Front construction, to figure out the spatial feature, the urban construction characteristics and the urban construction mechanism of socialist society with planned economy.

The background of Panzhihua’s construction revealed two factors affecting the decision of the Three-Front construction. The explicit one is to avoid the damage to industry cause by local war. The implicit one is the spatial character of socialist society: balance. The Three-Front construction strategically changed the unbalanced productivity distribution between eastern and western regions, by establishing a series of technology and industry bases in the southwestern region of China.

Moreover, the construction process of Panzhihua demonstrated notable characteristics of socialism and planned economy. During the construction project, a central working group was established by high level officials of central government in order to ensure the efficiency in all construction process. Using administrative means, the leading institute can allocate massive productivity factors including capital, technology and labor to Panzhihua. The state investment with whole nation’s effort created the leap of Panzhihua’s development. However, once the state investment ceased, the city’s growth rate significantly reduced.

By analyzing the construction process of Panzhihua from the aspect of space production and capital circuit, we find some internal mechanisms of government-led urban construction. First of all, the government-led urban construction can make the capital start cycling at all levels. This mechanism reduces the time to accumulate capital at the lower level; therefore speeds up the development process. For developing countries, this is a feasible way to achieve catch-up strategy which aims to reduce the gap with the developed countries. Secondly, at the initial phase of the catch-up strategy, investment to production will inevitably be greater than the investment to consumption. Thirdly, however, long-term disorders of the productive investment and consuming investment will put negative impact on the development, since low standard consuming products will reduce the workers’ enthusiasm and further reduce production efficiency. Finally, in planned economy system, government-led urban construction may cause the ignorance of the capital circulation, which could lead to the unsustainability of urban development.

We think our findings about the internal mechanisms could be used to design the development strategy of less developed area. For example, to better explore China’s western region, government-led investment is required. However, the government should avoid the model of simply delivering local resource to external region, since such model violated the mechanism of capital circuit. In the aspect of urban construction, one important issue is the balance between productive investment and consuming investment. Furthermore, the capital circulation in the secondary and tertiary level should be ensured, in order to sustainably keep the development of local built environment. REFERENCES

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