The machinery industry has been a leading priority since the founding of the People's Republic. The industry expanded from a few small assembly and repair facilities before 1949 to a large, widely distributed machine-building sector producing many types of modern equipment. However, as of 1987 the overall level of technology was still relatively backward. In the late 1970s and early 1980s, China intended to use large-scale imports to modernize the machinery industry, but later decided that limiting imports to critical areas would be less costly. Ministry of Machine-Building Industry plans called for about 60 percent of the industry's products in 1990 to reach the technological level of the industrialized countries during the 1970s and 1980s. Products built to international standards received priority in allocation of funds, materials, and energy.

In 1987 the machinery industry was distributed throughout the country. Nearly all counties and towns had one or more machine factories. Major machinery centers were Shanghai, Tianjin, Shenyang, Beijing, Harbin, Changchun, Taiyuan, Luoyang, Wuhan, Chongqing, Chengdu, Xi'an, and Lanzhou.

The machinery industry was selected by the State Council to lead the way in management reform. China's leaders realized that the quality of machinery would determine the success of modernization in all areas of the economy. The industry's extreme compartmentalization (a legacy of the Maoist obsession with selfreliance ) showed a lack of communication among departments or within regions. Skilled managers were also lacking.

Data as of July 1987