China Steel: The Iron-Head Minister and the Steel Legend of the Ten Major Construction Projects

30-Second Overview

China Steel Corporation (CSC) was established in 1971 as the crown jewel of Chiang Ching-kuo's Ten Major Construction Projects. Its first general manager, Zhao Yaodong (who later served as Minister of Economic Affairs from 1981 to 1984, earning the nickname "Iron-Head Minister"), pursued a strategy of technology self-reliance through negotiation. In 1972, CSC signed a technology cooperation agreement with the U.S. firm McLouth Steel, and in 1977, the first blast furnace was lit at Xiaogang in Kaohsiung. Over 50 years, CSC grew from scratch to become the world's 22nd-largest steelmaker, with 2024 revenue of NT$360.5 billion.¹

Technology Self-Reliance Negotiations: From Europe to America

In the early 1970s, as the CSC preparatory office negotiated technology cooperation for integrated steelmaking, it approached several European steelmakers. However, the terms they offered came bundled with requirements to purchase designated equipment and restrictions on Taiwan's future technological development. Zhao Yaodong deemed the conditions excessively onerous and proactively broke off the European negotiations, turning instead to the United States for a more equitable cooperation model.²

Technology Cooperation with America's McLouth Steel

Zhao Yaodong decided to leave Europe and seek cooperation in the United States. The American steel industry was initially skeptical of Taiwan's industrial capabilities, believing that a newly industrialized East Asian economy — just emerging from an import-substitution policy — would be hard-pressed to operate integrated steelmaking facilities, a capital-intensive, long-supply-chain industrial undertaking.²

At this critical juncture, Zhao Yaodong demonstrated the rigor of an engineer and the wisdom of a businessman. He spoke neither of sentiment nor of politics, but presented precise data sets to prove Taiwan's industrial foundation and workforce quality. He proposed a deal that gave the Americans a reason to come to the table: technology transfer and long-term cooperation, rather than a simple equipment purchase.

In 1972, CSC signed a technology cooperation agreement with McLouth Steel of Michigan, an integrated steelmaker, and engaged the American consulting firm C.E. Lummus for engineering design support. The negotiation not only saved Taiwan a substantial sum of money but, more importantly, secured technological autonomy. Zhao Yaodong's strategy ensured that CSC would from the outset possess the capacity to absorb, improve, and independently develop technology — rather than merely serve as an equipment buyer.

The First Wisp of White Smoke Over Xiaogang

In 1977, the Xiaogang Industrial Zone in Kaohsiung completed construction of CSC's first blast furnace and conducted its ignition test run, marking the official commissioning of Taiwan's first integrated steel mill.¹

But the early days were fraught with difficulty. The fledgling CSC faced countless technical challenges: raw material ratios had to be worked out from scratch, operating parameters required repeated adjustment, and product quality standards had to meet international benchmarks. Zhao Yaodong's technical team practically lived on-site, monitoring every production link around the clock.

The most difficult problem was talent. Taiwan had no prior experience with integrated steelmaking; all operational know-how had to be learned from zero. CSC sent hundreds of engineers to the United States for training, and upon their return they trained their colleagues in turn. Through hands-on practice, CSC's technical team built up Taiwan's indigenous operational expertise in integrated steelmaking.

From Import Substitution to Export Earnings

In 1983, CSC began exporting large volumes of product to steel to Japan. As one of the world's most technologically advanced steelmaking nations, Japan represented a demanding market; CSC's ability to enter it demonstrated that its product quality had reached internationally competitive levels.

Even more impressive was the export price. Thanks to disciplined cost control, CSC's products held a clear competitive advantage on the international market. By the mid-1980s, CSC had become a major steel-export base in Asia, shipping to Japan, South Korea, Southeast Asia, and beyond.

This transformation was significant. CSC had evolved from a tool of "import substitution" policy into an "export earnings" economic engine. More importantly, it proved that Taiwan could compete with advanced nations in technology-intensive heavy industry.

The Steel Power Behind the Numbers

Over 50 years of development, CSC's scale has grown markedly. 2024 revenue reached NT$360.5 billion, with after-tax net income of NT$3.875 billion.³ It ranks as the world's 22nd-largest steel producer, with an annual capacity of approximately 10 million metric tons.⁴

However, in 2022–2023, amid a global steel demand slump and a flood of low-priced Chinese steel dumped on the market, CSE suffered consecutive sharp profit declines or losses: 2022 after-tax net income plummeted from a peak of NT$22.6 billion, and 2023 recorded a loss of NT$6.4 billion — its first annual loss in nearly a decade.³ 2024 saw a modest recovery, but profitability remained well below the 2021–2022 peak.

Taiwan's highways, MRT systems, Taipei 101, and high-speed rail construction all used large volumes of CSC products, making the domestic downstream market one of CSC's most important.

CSC is also one of Taiwan's most successful cases of state-owned enterprise privatization. After its conversion to a private company in 1995, it retained its national strategic role while gaining greater market agility. This "mixed economy" model became a benchmark studied by other Asian countries.

Challenges and Transformation: Toward Green Steel

Entering the 21st century, CSC faces an entirely new set of challenges. Global steel overcapacity, low-price competition from mainland China, and increasingly stringent environmental standards all test CSC's adaptability.

The greatest challenge comes from carbon-neutrality pressure. Steelmaking is a high-energy, high-emission industry, and in the face of the 2050 carbon-neutrality target, CSC must undergo a fundamental transformation.

CSC's response strategy is investment in green steel technology: developing hydrogen-based direct reduction steelmaking, increasing scrap steel utilization ratios, investing in carbon capture equipment, and more. In 2024, CSC received the 21st Century Foundation's Net-Zero Industrial Competitiveness Award, signaling that its green-transition efforts have been recognized.

The Brightest Jewel of the Ten Major Construction Projects

CSC stands as one of the more commercially successful outcomes of the Ten Major Construction Projects. After privatization in 1995, it retained its national strategic steel-supply function while gaining market responsiveness. CSC's development path of "technology licensing → absorption → independent R&D" also became a model referenced by many subsequent Taiwanese manufacturing firms when introducing foreign technology.

Current Leadership

CSC's current chairman is Huang Chien-chih (assumed office in 2024), succeeding Weng Chao-tung (served 2022–2024).³

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