China’s centralized planned economy delivers half of the world’s steel

China’s dominates the world raw steel production and displays an historically unprecedented exponential growth

What is the current state of Chinese raw steel production?

China produced more than half of the world’s steel over that last 6 years. The treemap below breaks down steel production per each advanced steel producer country and the rest of the world. From 2016-2022, China produced 52.54% of the world’s raw steel, seconded by Japan at 5.34%.

In China, who produced all this steel? The great majority is directly produced by the Chinese state. From the 2.46 billion tons of raw steel produced by the 24 top steel producing enterprises in China, 68.87% was produced the Chinese state¹.

Top 10 Producers of Chinese Steel from 2015-2020

China’s Ranking	Wolrd Ranking	Company	Type	Owner	State Owned %	Total Steel Produced 2015-2020
1	1	China Baowu Steel Group	State-owned	Central Government (100%)	100%	407,400,000
2	3	Hesteel Group	State-owned	Hebei Providence (100%)	100%	229,000,000
3	4	Shagang Group	Privately-owned	Shen Wenrong (29.32%)	0%	195,100,000
4	7	Ansteel Group	State-owned	Central Government (100%)	100%	248,100,000
5	9	Shougang	State-owned	Beiging Capital Management Center (100%)	100%	145,100,000
6	11	Shandong Iron and Steel Group	State-owned	Shandong Providence (100%)	100%	126,400,000
7	8	Jianlong Steel	Privately-owned	Beijing Jialong Investment Co. Ltd. (94%)	0%	132,400,000
8	14	Valin Steel Group	State-owned	Hunan Providence (97.26%)	100%	109,800,000
9	19	Benxi Steel Group	State-owned	Liaoning Providence (100%)	100%	79,700,000
10	17	Fangda Steel	Privately-owned	Beiging Fanga International Industrial Investment Co. Ltd. (99.20%)	0%	79,600,000
					Totals	1,752,600,000.00

Seven out the top 10 steel producer entities are state owned. Percentage under the “Owners” column represents the percentage that the identified entity owns of the steel enterprise. “China’s ranking” represents the national ranking that the steel enterprise holds in relation to its steel production. Similarly, “World Ranking” assess the position of each steel enterprise internationally.

From the top 10 producers of raw steel, 76.77% of steel is produced by the state. The remaining 23.23% privately produced steel is not insignificant. However, the political intermingling of the Chinese steel private enterprises with the Communist Party of China (CPC) ties industrial steel capitalists to state central planning. Shen Wenrong is the largest individual owner of stocks in Jiangsu Group, the biggest private raw steel produce. Wenrong was a deputy party secretary of the Zhangjiagang municipality and representative of the 16th and 17^th Communist Party of China National Congress. In Jianlong Steel, the second largest private producer of raw steel in China, Zhang Zhixiang is the main stockholders of the firm through the Beijing Jianlong Investment Co. Ltd. Zhixiang was a deputy of the 10^th National People’s Congress of Hebei Province in 2003-2008. He was also deputy of the 12^th National People’s Congress of Heilongjiang Providence in 2013².

What does the rate of production of steel tell us about the economic basis of China?

The stream graph below displays the production of raw steel in tonnages by the most advanced producers from 1917-2022 (each bracket is represents tonnages in billions). It also displays the periods of economic crisis during this time period. We can observe that China was the main anchor of the growth of the world’s steel productive forces. Also, observe that China’s steel production is not regulated by the oscillating dynamics of the market unlike the rest of the capitalist word.

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In every economic crisis, you can see that the capitalist world contracts its steel production and its growth is stunted by the prospects of profitability dependent on the dynamics of demand and supply. China, exerting its state planning, manifests a degree of immunity to the depressive effects of the market unlike any other capitalist country. This is particularly true for the World Economic Crisis of 2008, where China kept increasing production while the rest of the world reduced steel production.^{3 4}

The linear graph above displays China’s raw steel production growing exponentially at a rate of 16.36% per year from 1949 to 2022. No other country in the history of steel production from 1917 until today has displayed this exponential growth behavior. The only other country that has display a significant form of regularized growth in the raw steel production industry has been the Soviet Union. The Soviet Union was able to maintain an uninterrupted linear progression of development from 1947 to 1978. During this period, the Soviet Union increased steel production by 4.42 million tonnes per year before it met a plateau of ten years and then a collapse after the fall of the Soviet Union⁵.

Analysis

The exponential growth and dominance of the Chinese steel industry is indicative of two things:

1. China is a deformed worker’s state.
2. I hypothesize that the main economic regulator of China is the Law of Bureaucratic Socialist Accumulation.

Firstly, how do determine the class nature of a state? We do so by answering the following question:

What property form does the observed state protect: Private property or collectivized property?

The state ownership and control of the steel industry indicates that the Chinese deformed worker’s state is in control of the heights of the economy, that it defends the collectivized property form.

It is only through a collectivized economy that its possible for humanity to establish the Planning Principle in human production. What we mean by the Planning Principle is the role of human consciousness, foresight and calculation in regularizing the economy into equilibrium.

This is counterposed to the anarchic and planless nature of capitalist production, which is regulated by the Law of Value⁶, in which individual capitalists and monopolists compete against each other for the highest profit margin to stay alive. Capitalist competition over-produces when its profitable and under-produces what society needs if its deemed unprofitable. In other words, the prospect of profits is what drives investment and the allocation of the workforce, resources and, when necessary, military force to assure profits.

Property	Capitalism	Planned Economy
Investment	Demands of the market determine investment	Demands of expanded socialist reproduction determine investment.
Reproduction (extension) of the means of production	Capitalist reproduction (or its regression) is subordinate to the task of obtaining maximum profits for the capitalists.	Socialist reproduction is subordinate to securing the satisfaction of material and cultural needs of society.
Labor expenditure	Labor expenditure is determined by the potential of profitability in the market. Thus, labor used for production and delivery of services are produced on the basis of demand and supply.	Labor expenditure becomes more socially proportional. That is, labor is expended in the output of products and services that are socially necessary/valuable.
Law of survival	The Law of Capitalist Competition is the “Darwanian struggle of the individual [capitalists] for existance transfered from nature to society with intensified violence” (Engels, Anti-Dühring, Ch. II. Link). It compels capitalists to compete against each other to improve technique in production and methods of exploitation of labor to transform surplus-value into further capital. At the stage of monopoly capitalism, imperialism becomes a means for monopolies to compete against other monopolies.	Socialist Accumulation becomes the struggle to expand socialist reproduction relations, which in itself is the fight to increase the means of production belonging to the worker’s state. This unites the around the means of production the masses of workers (increasing its density and mass), which in itself has the function to increase the productivity of labor throughout the system. This is the essense of the the struggle against the entropy of capitalist restoration. 7

This planning principle, in worker’s states like China, manifests through state planning, which is the reorganization of the productive forces of society to answer the needs of the economy as a whole corpus and to foresee as far as possible the proportions of reproduction of the means of production over a number of years.

Some critics will assert that one cannot assert the class nature of the state by solely indicators of industrial development and ownership in steel. Granted. The physician does not diagnoses diabetes based solely on the detection abnormal lost of weight and vision. But she/he recognizes strong indicators and carries further tests to determine the source of such changes. Now…

What do I mean that I am hypothesizing the existence of the Law of Bureaucratic Socialist Accumulation?

It simply means that we are recognizing the existence of a tendency for the worker’s state to concentrate production and investment towards reproducing (i.e. expanding) the socialized means of production in the form of collectivized property, although in a bureaucratic manner. In other words, its the force behind the concentration of production at the hands of the worker’s state.

The Law of Bureaucratic Socialist Accumulation is the struggle to accumulate investment for the reproduction of socialized industry at the hands of the deformed workers state at a higher level of development of the productive forces. By concentrating production it concentrates workers, industry and increases labor productivity.

The Chinese steel industry is simply one of the manifestations of the tendency towards socialist accumulation of production, wealth and workers which is recomposed in an industry that pushes forward the continued development of the means of production, transportation, energy generation, and infrastructure development.

Socialist accumulation also entails that human production can start maintaining a compounded development over the long term. This compounded effect in production cannot be sustained in the capitalist world for the capitalist mode of production necessitates the destruction of the productive forces of humanity periodically through economic crises and wars (The linear graph “World Steel Production 1917-2022” displays the historically erratic oscillations of the capitalist world contrasted with the consistently linear and exponential development of the the steel industry in planned economies). By compound effect, in economics, it simply means that the Chinese state decides to re-invest its economic output back into society, either by increasing quality of consumer products & services (which, in a way, can be seen as a re-investment in society’s human capital by the elevation of their standards of living, culture and technical capacity) or in the further development of the means of production.

This does not deny the parasitic usurpation of resources of the CPC Stalinist buraucracy and the waste produced by bureaucratic mismanagement. However, we cannot compare bureaucratic parasitism with the gigantic usurpation of resources emanating from capitalist exploitation. This is because, in capitalism, a great portion of humanity’s labor becomes unproductive capital, which is capital usurped by the capitalists through exploitation that is withdrawn from production and is consumed to meet the private needs of the ruling class. This is aside of the periodic implosions caused by over-production which compels the organism of the capitalist world to destroy it’s own productive forces. This is know as the fundamental contradiction of the capitalist system, based on the contradiction between the private ownership of the means of production and the socialized character of production, worsened as the economic system monopolizes ⁸and the historical rate of profit decreases.⁹

But why? Why do the privileged upper echelons of the CPC bother with the extraneous expenditures of the steel industry?

Socialist Accumulation is a necessary precondition to survive the pressures that the worker’s state faces from within and without:

• Worker consumer from within the worker’s state. China has the biggest working-class in the history of humanity, an incomparable social force, and the CPC is not in the likes of provoking this giant.
• Peasants and other petty-bourgeoisie consumers working in the private sector.
• And foreign capital, manifesting itself through cheaply produced commodities and military imperialist threats in the South China Sea.

In this way, Socialist Accumulation is the compelling law of existance for a worker’s state. In this tendency, however, we have a corrupted planning principle, which is unable to effectively manage its economy. This is because the organism of the deformed worker’s state was born deformed without the oxygen-producing organs of the Soviets, worker’s democratic rule. A bureaucratic top-down political central nervous system, without being able to receive effective feedback from its other organs is predisposed to bureaucratic mismanagement. Therefore, to “resolve” this contradiction, the Chinese Stalinist bureaucracy opts for the anaerobic process of using the whip of the market in order to incentivize the development of technique and economic growth. The private industry is able to satisfy consumer demands where state industry has not been able to develop around or has not been able to produce at the same level of quality and productivity of labor. Additionally, under the discipline of the market, private enterprises bring and develop advanced technique in production that is then transposable to the state industry.

In other words, the Law of Bureaucratic Socialist Accumulation can be said to be the dialectical opposition and unification of the Law of Value and the Planning Principle. However, this is a struggle that is predisposed towards capitalist restoration, since an isolated centralized planned system that is bureaucratized and with dangerous capitalist inroads is inevitably placed on the path towards two outcomes:

• Proletariat political revolution (internal force), in which the working-class of China would take political control over socialist production and oust the CPC bureaucracy.
• Capitalist restoration (external force), which would dismember China’s industrial and living-standards historical achievements.

The Stalinist CPC bureaucracy attempts to fight off against these threats within and without through a balancing act of appeasing its masses and trying to “peacefully” co-exist with the capitalist world. That is, it tries to maintain the collectivized social base that allows the bureaucracy to maintain their privileges.

Methodology and Other

Theoretical Methodology

I cannot assert that I have used political economy as the sole scientific basis in the analysis of this article. In the attempt to analyze the organism of a worker’s state, healthy or deformed, I base myself on political economy as the science that studies the laws of social production and distribution of material wealth. However, Marx systematized political economy specifically as a science to study the laws of development and decay (see Lenin’s Imperialism, the Highest Stage of Capitalism and Trotsky’s Fascism: What It Is and How to Fight It to understand the decaying tendencies of monopoly capitalism) of the commodity-capitalist mode of production as an erratically planless and unorganized anarchic system.

What we are dealing with studying the organization of the Chinese deformed worker’s state is the studying of a qualitatively different organization. As such, specific abstract-analytical tools, like the definition of the Law of Bureaucratic Socialist Accumulation (although not formally embraced by the orthodox Marxists), are necessary conceptual blocks to help us engage in even higher levels of abstract thinking. In any case, laws in nature are simply tendencies in behavior that nature displays when approximately the same cause are reproduced in approximately the same environmental/social situation. In economics, laws are consistencies of results following from the reproduction of certain types of production relations. And when I refer to the Law of Bureaucratic Socialist Accumulation, I simply refer that there is a tendency for worker’s states to concentrate production, investment, labor, wealth at the hands of the worker’s state itself in the form of collectivized property, although in a bureaucratic manner.

I developed the term from Preobrazhensky’s theoretical development around the Law of Primitive Socialist Accumulation, which remarks the tendency of worker’s states at lower levels of the development of the forces of production to go through a process of accumulating investment towards the reproduction of the socialized means of production through the peasantry (i.e. the private sector, where the Law of Value dominated in the young Soviet Union). The primitive industry of the worker’s state pushes for non-equivalent exchange with private market of the peasantry and, to a lesser extent, to foreign capital. There are limitations with comparing the young Soviet republic Preobrazhensky was studying at the time, which, although exhausted by years of imperialist and civil war, was a politically healthy worker’s state in which the working-class held political power, until the Stalinist bureaucratic political counter-revolution. Therefore, the current regulator of the Chinese planned economy cannot be qualified as primitive for it has a far superior industry than that of the USSR in the 1920’s and it has the deformity of lacking the oxygen-producing organs of workers democracy¹⁰.

Technical Methodology

The raw data to analyze world raw steel production was obtained from the World Steel Organization through a direct information request and was delivered through an Excel file. This data was the basis for the development of my treemap, stream-graph, and line-plot using Excel, Python Pandas data frames, and Plotly libraries in a Jupyter Notebook.¹¹

Limitations

• Information on ownership of the major Chinese steel producing enterprises is relatively old, as of 2016. However, this is one of the best documents that I was able to find that summarizes the ownership structure of the each of the major steel producing companies in China. Furthermore, the producers of the document are the American steel producing associations, representing the most upfront opinion and position of industrial and finance capital in regards to the Chinese steel industry.
• The article does not comprehensively explain how the Chinese Stalinist bureaucracy uses the whip of the market to incentivize technical and economic development.
• The article does not explain why the CPC bureaucracy is in control of the political apparatus of the state as opposed to the working-class having democratic control over the political body.
• The article does not define bureaucratic mismagement and does not explain how this property operate within the Chinese planned economy.
• The article only analyzes one metric of industrial and economic performance, steel. Admitedly, though, it is a really important indicator.

1. Data collected on world and China’s steel production from World Steel Organization through information requests.
2. Steel Industry Coalition. “Report on Market Research into the Peoples Republic of China Steel Industry.” June 30, 2016. Link.
3. The stream chart seems to have a deep indention on China’s category of raw production during the 2008 World Economic Crisis, but this is only the reflection of symmetrical effect of the stream chart from top to bottom. If you observe the upper part of China’s stream you can see a compensatory protruding spike demonstrating that China continue its exponential steel production growth despite the collapse of the world market.
4. Also, notice the drastic shrinkage of the steel production capacity of the former USSR  around 1991 after capitalist restoration that lead to the a drastic deindustrialization of Russia.
5. To see the development behavior of the Soviet Union or any other country, note that you can filter out countries by clicking legend categories and zoom in by dragging your mouse around the time period of interest
6. By the Law of Value, we mean the Labor Theory of Value, which states that “the exchange-value of a commodity is determined by the quantity of socially necessary labor to produce it.” Axiomatically, in this article, we use this term to discuss the market prices, exchange & production relations under capitalism as contrary to the planning principle under a planned economy.
7. Its important to note that the law of survival for a workers state can manifest in the form of the defense of the possibility for socialist reconstruction, such was the in the case of the economy form of War Communism, where socialist reconstruction was not only impossible but all available resources had to be expended to the front, therefore, setting a retarding regression for socialist reconstruction and accumulation.
8. According to V.I. Lenin’s Imperialism, the Highest Stage of Capitalism, monopolization is the process through which free capitalist competition becomes monopoly imperialism driven by the concentration of production on the basis on private property. It has the following features: 1) The concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life 2) The merging of bank capital and industrial capital, which results in finance capital. Finance capital is the basis of the financial oligarchy 3) The export of capital as distinguished from the export of commodities acquires exceptional importance 4) The formation of international capitalist associations and cartels, which share the world markets among themselves
9. Also known as the Law of Profitability, its the tendency for the rate of profit to fall over time in a capitalist system. The source of this tendency is the drive to increase the productivity of the exploitation of labor, itself driven by the obtainment of profits. The means to increase the efficiency of the exploitation of labor is through investment in technology and the means of production. The reason why investment in the means of production leads to a decrease of profitability is the subject of a different article. Careful readers can refer to Ernerst Mandel’s Introduction to Marxist Economic Theory, Ch. II, Sec. “Tendency of the Average Rate of Profit to Decline” (Link)
10. Preobrazhensky, Yevgeni, The New Economics. Introduction. 1926. Link.
11. Juacho. “China’s Steel Production Analysis for Blog.” Feb. 2023.Github.com. Link.