Section E: Industries and Mining

Preliminary Report on the Trip Undertaken by Imperial Order Across Chinese Turkestan and the Northern Provinces of China to Peking in 1906–07 and 1908 by Col. Baron Mannerheim

Pages 151-156

In implementing its extensive planned reforms, the central government increasingly confronts a persistent need to find new sources of income. The lack of decisiveness in implementation of bold reforms in the financial field and fear of dependence on foreign loans means it has to raise funds within the Empire.* The immense mineral wealth was exploited using the concession method before, which inevitably resulted in foreign influence in the state economy. Now the government must find the necessary manpower and sufficient funds on its own. To reach the goal viceroys and governors are told to start up and develop industries and mining at the expense of state funds.

* Even now there is a tendency among the Chinese to favour foreign loans though this has not acquired a definite form yet.

Inventories of horses are being made as well as projects for their utilization at the expense of the government. But here, as is the case with railways, the governmental initiative faces a lack of experienced personnel, money and trust. Merchants are not familiar with such enterprises and are wary to invest their capital in them; there is a dearth of people with the necessary technical background, and provincial funds are intended for other more urgent needs. And finally, poverty and low population density due to lack of satisfactory roads result in a situation when industries and mining enterprises are entirely dependent on the building of railways.

The reasons listed have not only delayed and complicated the implementation of the reforms but it can be safely said they will remain great obstacles for a long, long time.

As I traveled through the Xinjiang province political power struggles in the province were taking place between the canzan and the governor. Both of them demonstrated great energy in administrative activity, but their hesitation to invite foreign technicians and their limited funds prevented them from obtaining satisfactory results. The first of the two officials I met was old and his high rank gave him an active part in construction of a cotton plant in Turfan, which was stopped several months later due to some trading miscalculations.

The second official sent mandarins to survey numerous mines. I happened to meet such an “inspector” in Aksu and that unhappy mandarin, having no technical knowledge, asked me for some advice, which I unfortunately was unable to give him.

One can make some judgment about the activities of the management board during the first 1.5 to 2 years of its existence if we note that the only measures undertaken in this field were placing orders for a steam engine to refine oil, for manufacturing matches and for manufacturing candles.

This business was carried out with far greater success in Gansu. Viceroy Sheng who worked in the Chinese missions in St. Petersburg and Berlin for several years did not hesitate in hiring foreigners with technical education. Being supported by Daotai Ping, a very energetic man who had an opportunity to see the superiority of European weapons and equipment used during the last war, he worked out an extensive program for the exploitation of industrial and mining riches. Now they started work on a textile factory in Lanzhou and have imported machine tools from Belgium to be installed in gold and copper mines. One chemist, two engineers and about 12 specialists in various fields – all of them Belgians – are serving the viceroy and are quite capable to continue the businesses launched.

A metal bridge is being constructed across the Huanghe [Yellow River] to the city. In the northern part of the province, not far from the city of Yumen, they are going to begin oil exploration. They also have a proposal for the erection of a sugar plant; a steam tug to carry out regular voyages across the Huanghe was ordered; a decision was taken to pave the main streets in the city and now they are thinking about the installation of electric lighting and some other improvements. Thanks to the availability of competent manpower the work is proceeding well, but the funds allocated are definitely insufficient. They have 1.5 to 2 million lans for all the activities. The difficulties confronted in implementing reforms and the extreme caution of the authorities can be illustrated by the following example. In Lanzhou, situated on the banks of the Yellow River, they do not dare to build a city water pipe in spite of the viceroy’s desire as they are afraid of disturbances that might occur among 300 citizens of Sichuan who earn their living in water transportation. The Daotai [mayor] explained that to me himself, adding that the people of Sichuan are well known as incredibly violent people.

A lot of things are done mere for show, e.g., once according to the Daotai’s command they sent articles imported from Japan or other foreign countries to the court saying they were made in a local vocational school. Restricted fixed capital, lack of satisfactory roads and the poverty of the local market can compromise the success of business activities. The great expenses incurred, however, make one think that the businesses launched in Gansu will not stop, although it may not be developed on a large scale until the construction of a railway to Lanzhou is complete.

In Shaanxi, the Japanese were the governor’s closest collaborators in technical issues. They undertook research work for the future railway. The oilfields not far from the city of Enchan in northern Shaanxi (about eight passages to the north of Xi’an) were begun on their initiative. Two or three wells have already been drilled there. The oil is found at a depth of 200 feet. The annual output of oil is about 200 pounds for now, but undoubtedly it will increase as soon as the market expands. They say that the area of oilfields is extensive. It can be assumed to extend as far as the Huang He as explorers found signs of oil in the southwestern district of Shaanxi near the river. At present, refining is unsatisfactory and the major problem is that transportation is so expensive that they have to sell oil in Xi’an for a price equal to that imported from America. The enterprise is headed by three Japanese working for the Chinese government. It is the only one of its kind operating in Shaanxi.

In Henan province, they began extracting coal not far from the new railroad of Zhengzhou-Hewanfu. The business is owned by high-ranking mandarins of the province who understood the benefit of such an enterprise situated close to the railway and decided to set it up using their own money rather than the funds of the province. Kaifeng has a textile factory built out of state funds. In addition to the activities mentioned a number of other measures should be mentioned which were undertaken by local authorities to make obstacles for a rich English stock company mining coal north of the Huang He. They have strong support from the public to buy out all foreign concessions and get rid of the independent activities of foreigners in their economic life. These measures are characteristic of Chinese policy.

Following the state program, visible results have been achieved in Shanxi province. Facing the population’s hostility and the obstacles made by the authorities, the English company Peking Syndicate, one of the largest in China, was almost forced to sell its concession for mining. Except for the mines situated not far from the city of Pingding which have been mined by the German-Chinese company for a long time, the authorities of the province are the owners of all mining riches in Shanxi province.

Their exploitation has not been started yet but the invitation of two English engineers and the placing of an order for imported machines makes one think that they are making a good foundation for the business. As Shanxi is connected with the Peking-Hankow line by two railroads, its location is excellent. In the future, its material riches will be an inexhaustible source for the state treasury.

Unfortunately till present, mandarins carrying out activities were guided by their own interests. Will the old guard be replaced by new persons with a more honest outlook and a greater awareness of their duties? Will the awaking public opinion be able to make the ruling class put the interests of the nation higher than its own interests? If these two closely connected problems are resolved successfully the further exploitation of the mining riches of the country will be possible at the expense of state funds and due to extensive initiatives of the government in the development of the economical life of the Empire and the generation of new sources of state finance. Otherwise, the new activity will be only a new source for the insatiable greed of the ruling class. At present, no signs of drastic change in the field of the state economy can be seen. Traditions are strong and the new generation has failed to get rid of them or perhaps has not undertaken a serious attempt to do that.

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CITATION: Mannerheim, Col. C.G.E. (transl. Eric Walberg and Anatoli Koroteyev, and ed. Eric Enno Tamm) “Preliminary Report on the Trip Undertaken by Imperial Order Across Chinese Turkestan and the Northern Provinces of China to Peking in 1906–07 and 1908.” In Collection of Geographical, Topographical and Statistical Materials for Asia 81. St. Petersburg: Military Publishing House, 1909.