Readers of the People’s Daily on May 5th, 1965 saw the hardline proclaiming “China’s mass production of diesel locomotives shows that the revolution of the traction power of China’s railway transport has begun.” This was no mere propaganda gimmick of the Communist party; in 1964, China stopped importing locomotives from abroad, and each new locomotive was designed and produced entirely in the PRC. How did China develop this locomotive industry capable of complete locomotive production in just fifteen years?
In this paper, I argue that this situation, referred to by economists as import substitution, was a result of the Ministry of Railways innovation of technologies transferred from the Soviet Union. Previous historiography has taken the view that the Chinese merely copied Soviet technologies and remained wedded to these technologies. In contrast, I demonstrate that these developments are not imitations of Soviet technology but were the result of Chinese-led technological innovations. The Chinese locomotive industry began with technologies both inherited from colonial powers, and transferred from the Soviet Union, and used this knowledge as a springboard for innovation. This Chinese innovation resulted in locomotive technology advancing from 19th century steam locomotives to a state-of-art diesels in a decade. Furthermore, the Ministry centrally managed inter-factory competition as a technological development strategy to promote innovation via hybridization of imported technologies. By 1964, locomotive production no longer depended on foreign inputs and this import substitution was demonstrated by the continued production of Soviet inspired, Chinese designed locomotives after the Sino-Soviet split ended technological transfer.