AS documented in the previous chapter, China's shipbuilding industry achieved an impressive record of industrial restructuring in coping with severe GSC in the world market for ships. This chapter proceeds by asking the following question: How was all this change accomplished? In particular, what was the nature of the policy response and why was this strategy adopted by CSSC? As its title suggests, this chapter documents the changing pattern of state intervention in Chinese shipbuilding. The first section examines how pressures from the international market contributed to the decline of central planning in the industry. The second section investigates the limited financial decentralization that followed when dilemmas generated by the first wave of reform in the industry created incentives for further change. The third section focuses explicitly on how the industry's export experience led to market-oriented solutions for industrial adjustment. The chapter concludes with an evaluation of reform accomplishments in shipbuilding, as well as a discussion of the changing role played by CSSC's national office (hereafter, CSSC Beijing) in the industry.

THE FIRST WAVE OF REFORM: THE EROSION OF CENTRAL PLANNING

For all the talk about fundamental changes that surrounded CSSC's creation in 1982, including the claim that the “regional corporations and subsidiaries [yards] are fully empowered to negotiate with foreign companies, sign contracts and agreements, organize technological exchanges, and offer technical services,” reform in the industry was nothing short of glacial until the mid-1980s.