20 million RMB in a desulphurization unit with an efficiency of more than 90%. In 1999 the company produced 120 thousand metric tons of paper with daily wastewater emissions of 100 thousand metric tons. Because of investments in water saving and water recycling, daily wastewater discharge remained at this level even as enterprise production rose to nearly 800 thousand metric tons of paper in 2010. In addition, the company invested roughly 600 million RMB to integrate wastewater treatment<sup>75</sup> .

Our interviews indicated that the energy intensity of pulp and paper production at Yueyang declined by nearly 20% between 2005 and 2010. This decline was achieved largely through a number of relatively minor process and minor technology changes such as improving the heat efficiency of boilers, adjusting the composition of pulping materials so a mechanical pulping line could be converted to a chemical-mechanical line; and generating power from chemical recovery.

# **4. Technological Learning in Steel**<sup>**76**</sup>

Baosteel began as a large, turnkey, integrated iron and steel enterprise conceived in the early days of the post-Mao era.<sup>77</sup> It was one of some 120 large-scale projects that was part of a Ten Year Plan to modernize China’s industrial sector. Each of these projects was expected to rely on state of the art imported technologies and they were to be financed by rising exports of oil. While many of the planned projects were cancelled or scaled back once expected oil exports failed to materialize, Baosteel’s integrated iron and steel facilities were completed in three phases (Sun 2005).

The project marked a radical departure in steelmaking in China. Instead of relying on indigenous technology, Baosteel’s production facilities were designed, installed, and commissioned by Japan’s Nippon Steel Corporation.<sup>78</sup> The size and scale of this project dwarfed that of China’s First Five Year Plan when the Soviet Union provided iron and steel factory designs but few pieces of equipment (Jackson 1994: 114). In addition, unlike the rest of the industry, Baosteel was located on China’s coast in Shanghai so it could take advantage of imported high quality iron ore.

From the very beginning, China used the Baosteel project to build its technological capabilities in modern iron and steel-making. To insure this, the Vice Minister of the Ministry of Metallurgical Industry was sent to oversee the project. He was joined by the country’s top iron and steel engineers, including those from the Shanghai Metallurgical Design and Research

> 75 Currently, Yuyang’s wastewater treatment system consists of 2 anaerobic systems with treatment capacities of 9,600 m<sup>3</sup> per day and 8,400 m<sup>3</sup> per day to treat organic waste from a poplar chemical-mechanical pulping line and wastepaper de-inking for a wastepaper pulping line. Yueyang also has an aerobic system with a capacity of 42,000 m<sup>3</sup> per day for bio-chemical treatment of whitewater. And it has an aeration system with a capacity of 60,,000 m<sup>3</sup> per day for middle-stage treatment of wastewater and anaerobic effluent from papermaking.

> 76 What follows draws on Rock and Jiang (2011).

> 77 Unless otherwise noted what follows in this and the next paragraph draws on Jackson (1994).

> 78 Prior to the Baosteel project, China’s national metallurgical design and research institutes designed new steel mills based on modifications of designs provided by the Soviet Union. Designs were then passed on to machinery enterprises who manufactured iron and steel making equipment.

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