Created: 5/13/1958

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The loHovtao irJetHpenee argantratlans pailtcipatrd In thr preparation of (M* ejffmoM: Tht Central InUUIgtnce Agency and the inttWoenee cvaanUetUns of the DepartmtKts ol State, the Array, vut Haw, the Atr Porte, and The Joint Stag.

Concurred tn bp the INmUGXMCE ADT1SOBX COMMITTEE on ISoncurring were The Director of tnleKi-gence and Ss/tarah, Departmenttate; th* Assistant Chtel of Stag. /jtWBffenec, Department of the Anna; the Dtrectcr of Natal Intentgenet; the Assistant Chief of Stag, InteiH-otnee, VSAP; and tht Depaty Diroctar tor MeKeence, The Joint Staff. The Atomic tnergy COmaVulon iteprt&eritatlvt to the 1AC tnd the Aittttant Director, federal BureaunoaUgaiton, abitalnta. the rubied being outeUe of OWIT



estimate waa disseminatedhe Central Intelllgi nee Agency, Thislor the inicjrnatlon and me cf the recipient Indicated on the front cover and ofunderrUdictlor.eed to know basis. Additional essentia!be authorised by the following officials within their respecUve departments:

of Intelligence and Research, for the Department cf Stale

Chief of Staff, Intelligence, for the Department of the Army

of Naval Intelligence, for tbe Department of the Navy

ef Intelligence, USAF, for the Department of the Air Force

Director for Intelligence, Joint Staff, for the Joint Staff

of Intelligence, ABC, for the Atomic Energy Commission

Director, FBI, for the Federal Bureau of Investigation

Director for Central Reference, CIA, for any other Department

TrTTs-wonymay be retained, or destroyed by burning in accordance withsecurity regtnaitfni, or retained to the Central Intelligence Agency bywith the Office cftsaoirai Reference, CIA.

When an estimate ttcloverseaa. the overseas recipients may retain Iteriod not In excess of one yeaf/swihead of thu period, the estimate should either be destroyed, returned to thaor pagafaaiuu should be rerjuested of the forwarding agency to retain it in with2

title of this estimate, when used separately from the text.aL'ied:

prvtt ftf-mr-Hif-

White House

National Security Council

ot partf State

Department of Defease

Opa ratten* CooxdlnaUng Board

Atomic Kneigy CncurJuiloa

Federal Bureau of InvestigaUoo







of the Chinese

in Eliciting Popular

Regime's Ability to Control Mainland Chinastrengthening Ita Military


i A. The




B. The

O Popular

D. The Military


ith the

B. Relations with the Non-Communist



Machine ind Equipment

Iron and



Regional Dispersion ol



Foreign Trade and Economic

Population, Manpower, and





Following Page

Communist China and the USSRProductionDuring Their Ftrst Five-Year

Communist ChinaEstimate? Gross National Product and Production of Principal Commodities Compared wilh Those

of Selected

,2 6

Communist ChinaGross National Product, By Sector of2 22

Communist ChinaBudget Revenues and2



' I. Estimated Production of Selected


if. Transportationestimated total freight ton kilometers .

ui.breakdown of

IV. Ground

V. Air

VI. Naval


Communist ChinaCommunistand Mining

Communist ChinaAir Defense Districts and Disposition of Combat Jet Aircraft

Communist ChinaCurrent Military Districts and Disposition of Ground Forces

communist china

the problem

To analyze- Chinese Communist domestic developments and external relations during the period of the First Five Year, and to estimatetrends during the next Ave years.


believe that the Chineseability to exercise firm and effective control of mainland China will continue. The leadership ol the party continues to demonstrate cohesion and determination and, at the sameonsiderable degree of flexibility. Itpportedarty membership of aboutillior. andargo and efficient military and public security apparatus. Wethat the death or Incapacitation of Macould not endanger the regime's control of tee country, although it might complicate the achieving of some objective* and reduce the party's policy flexibility. )

The regime apparently has madeprogress in Its efforts to recast the traditional structure of Chinesein the Communist mold. It hasalmost all the peasants and has virtually eliminated private ownership in industry and commerce. Although the Chinese people have viewed with favor some of the regime's acWevemonts, the regime's stringent curtailment ofand the constant pressures to conform and to work harder havemuch dissatisfaction andespecially among the peasants. The party's experiments during the past two years to gain wider popular support by admitting problems and encouraginglowers bloom and diverse thoughts contend"been sharply cut back.)

n its efforts toore positive popular response, the regime, because of its determination to achieve rapid indus-trialuiation, will have little to offer in the way of material inducements.and occasional popular outbursts will continue, especially among theand certain minority groups, but we believe the net effect on the regime's programs will be no more than aor retarding one. Mostconscious of the regime's power and seeing no alternative, will probablyto acquiesce in Communist rule.)

The Chinese Communistsigh rate of economic growth during their First Five Year, demonstrating their capability toresources for investment despite the backward nature of theital factor in their economic program was the assistance rendered by the USSR intrade, credits, and technical aid. Startingery small base, theannual rate of growth of industrial output was aboutercent, butoutput at the end7 was still small compared to the industrial output of Japan or the UK- Agriculturalwas adequate to meet basic needs, but its expansion fell far short of that in other sectors of the economy.)

During the next five years, the regime will have to cope with difficult economic problems stemming from the forced pace of Industrial development. However, the basic problem will continue to be the race between population growth and foodTho Chinese population is now probablyillion and increasing atercent per year;output during the next five years will, at best, probably not exceedercent per annum increase achieved during the First Five Year Plan. In the eventeries of bad crop years and of widespread lack of cooperation among the peasants, the regime would face grave difficulties. However, even ta thesethe regime, because of its control apparatus, probably coulditself in power and, at the same time, maintain industrial growth, althougheduced rate. ;

We believe that Communist Chloathe next five years will probably be able toate of economic growth roughly comparable to that oi the past five years.2 its GrossProduct will probably be on the order of7 billion, as compared withillionhe contribution of the industrial sector will probably have increased to aboutercent, asto aboutercent

Communist China's military power in the Far East will bulk even larger2 than it does at present. The army will probably be somewhat smaller, but it will be better equipped and more mobile. The air force and navy will have increased in size and effectiveness. The Chinesearmament industry, with Soviet technological assistance, will probably be able to meet most, if not all, armyfor small arms, artillery, transport, and ammunition.and aircraft production will probably have increased considerably.Communist China will still beon the USSR for heavy andmilitary equipment and for many components. )

munlst China willcertainly not have developed aor nuclear weapons productionof its owne believe that the Chinese Communists will press the USSR for such advanced weapons. By that time the USSR will probably have provided it with some varieties of missiles and other weapons adaptable to nuclear use, but with non-nuclear warheads.barred by an effective international agreement, the USSR may introduceweapons into Communist Chinalthough they will almost certainly remain under Soviet control. In any


event, even though nuclear warheads were not deployed in Communist China, they would be readily available if Sino-Soviet interests required them.

China will almostremain firmly aligned with thewill continue toas the leader of worldbut as Communist China growsand stature, it will probablyincreasingly important role inof general Bloc policy.there will almost certainlyfrictions, these are unlikely toSino-Soviet cooperation duringof this estimate. )

its efforts to reduce andinfluence Ln Asia,will probably proceed primarilymeans. Its foreignprobably display more initiativewhile continuing tocoexistenceeadiness toeconomic and politicalother states. Withoutits stand on basic issues,will continue to portray itselftoapprochementUS. At the same time, thewill almost certainlytheir subversive effortsFar East, They will almosttheir efforts to undermineof the Nationalists on Taiwan, andthem internationally. Theynot resort to overt military'as long as they believe itthem in military action withAlthough their attitude towardsIslands may become morea decision to initiateto seize these Islands wouldbe contingent on an estimate tnat tbe US would not intervene militarily.)

Japan will continue to be one ofmost important targets, especially because thererowing area ofbetween Communist China and Japan. Peiping will continue to seek to reduce conservative strength and USin Japan by exploiting Japanese fears of becoming involveduclear war, any areas of friction with the US, and Japan's eagerness to expand trade with mainland China. In pursuit of these objectives, Communist China will continue to employ both conciliatory and tough tactics. Trade betweenChina and Japan will probablyand Peiping will probably be able to gain at least quasi-diplomatic statusrade mission in Japan.

eneral continuance of present Bloc and Western policies, wethat intercourse betweenChina and the Free World willconsiderably during the next five years. This trend will probably involve added diplomatic recognition of Peipingumber of states, but will occur whether or not formal diplomatic ties are established. It will also involve greater difficulty In excluding Communist China from the UN. )

If Communist China continues its present international policy, we believe that its prestige in Asia will continue to grow during the next five years. This will occur whether or not additionalrecognize Communist China, or it is

admitted to the UN. But it dees not necessarily follow thatesult ofprestige the Chinese Communists will be able to induce non-Communist Asian countries to adopt internal orpolicies desired by Communist China. Communist China's future role In Asia will be determined to anextent by developments In five fields, in varying degrees beyond the control of tbe Chinese Communists:

course of events In therelationship and in the broadof the cold war.

within the Blocspectacular scientific achievementspolitical upheavals.

extent to whichhose in Indonesia,India, gain or lose political strength,

extent to which the growthChina's power gives riseapprehensions amongas to Communistintentions and thus causestake increasingly effectiveleast to counter their own

extent to which the US hasand trust ofgovernments, and in turngovernments not only to resistbut also to meet theiraspirations.



The Chinese Communist regime during the period erf its First Five Yearade considerable progress toward Its long-run goal of transforming Communist Chinaackward agricultural country Into an industrtaltoed nation. Withfrom the USSR, the Chinese Communists haveigh rate of Increase In their Gross National Product, and especially In the output of heavy Industry. The imposition of Communist institutions on societyapid rateesult of theelimination of private enterprise Incommerce, and agriculture. These domestic achievements and the growingpower of Communist China contributed to Its Increased impact abroad, both in the Free World end in the Communist Bloc.

At the same time, the forced pace of change has created interna! stresses and strains which are substantial and widespread. These stresses and strains have been produced by the rigidities and repressions which are essential features of Communist methods and programs and which hinder the development of general popular support for the regime. They were inevitable In view of the regime's efforts quickly to mold the Chineseisciplined Communist society. Tensions have also developed out of the Intervention, at all levels of society and in all activities, of party workers who have the power to command, but who In most cases have Inadequate training and experience In their duties of supervising the specific educational, social, or economic organisation. Moreover, the regime's efforts to restrict consumption in order to increase investment have been felt particularly by the peasants, whose Incentive to produce has been reduced. Nevertheless, as far as we can see, these tensions are not critical in the sense of threatening tne position of the Communist leaders or of being likely to hamperto the extent of seriously limiting tha further growth of the Chinese Communist economy.

lfl. Tlw Chinese Communists, after goingeriod of pessimism engendered by the economic problems which cameeadow appear confident that they canapid rate of economic expansion


the next five years. This confidence is tempered by the extent of popular criticism of the regime as revealed by the recent but short-lived experiment in relaxing controls on public discussion, by the evidence that thererowing separation between the party and the people, and by the widespreaddissatisfaction when collectivization failed to bring increased Income, The regimesIs also temperedore realistic appreciation of the magnitude ol Its basic problems, particularly that of agriculture,


A. The Economy"

he Chinese Communists, during the period of their First Fire Year Plan,igh rate of economic growth whichfavorably with that of the Soviet Union in its First Five Year. (Seehis progress was achieved despite relatively crude and rudimentary planning, resulting from such factors as the limited technical personnel, the lack of reliable and comprehensive statistics, the backward state of the economy, and the rapid Imposition o? social change. Although the regime hssretense of proceeding according to anfive year plan, it has actually operated from year to year on annua) plans which have generally been aimed at correcting the ox-cesses and defects of the previous year.the regime demonstrated itsto control the economy sufficiently to limit consumption and to marshal resources

'Seeors detailed discussion of tht First Five vsar Plan.

'Chinese Communist aUUstlca upon which the data and analyses throughout this eitlmate ars based aro subject to the same reservations as those ot other Blcc countries, butomewhat Greater extent. In flew ol the Inexperience on the part of the newly established Chinese Com-munlet statistical collection system. Thisprobably accounti lor the majority of stch ateltetlcal detects as have been noted.Communist statistics are the basts for the regime's planning and we believe are not, to. general, misrepresented.

'See maps for Communist China's railroadand major industrial and mining centers.

for investment, despite the backward nature of the economy and tho necessity of obtaining the funds for Investment largely from the agricultural sector, lite output of whichwidely from year to year.

startingmall base, the average annual rate of growth of industrial output during the period was high, probably aboutercent This growth wu uneven, exceedingercent3ut dropping sharplyuring theyear period, production of such basic Items as steel more than tripled, while the output cf coal, electric power, and cement more than doubled Despite this cotuudrrahle progress, the Chinese Communist Industrial output at the endT was still small compared to that of Japan or the UK. (See Figure 2)

The increased industrial output was to an Important degiee obtained from Uie recon-stiucUon. expansion, and more intensiveof existing plant, although aInvestment was made In new plant, much of which will come into production. The regime has directed aboutercent of total investment Into ihe industrial sector and has favored heavy over lightby about eight to one. Industrymore diversified with the addition of new plant, and by the end of the periodfacilities for trucks, sea-going ships, aircraft, and more complicated machine tools were put Into operation, although theCommunist" ere still dependent onsources for many components

Tbe growth of industrial output wasby uneven dce-opmenl among various parts of the Industrial sector, which resulted In serious imbalances The most Important of these was the failure of the output of raw materials lo keep In phase wilh the expansion of manufacturing capacity, especially in the machine and equipment building Industries. In same cases, however, the deficiencies of raw materials arose from the difficulties innatural resources; for example, thehas been unable to develop sufficient sources ol crude oil and copper, accessible to existing rail lines, to meet lequiroments. The output of light Industry, dependent largely on




I im tuun




j -


agricultural raw materials, has not beenfully to utilise present plant capacity.

Technical assistance from the Blcc bas been of paramount importance to Communist China's Industrialisation. The majorprojects, accounting for aboutercent of total Industrial investment, were designed, supervised, and placed In Initial operation by Soviet technicians. In addition. Bloc, largely Soviet, advisors and technicians have worked with virtually every ministry in theand with many individual enterprises. Technician] have provided on-the-jobfor Chinese workers andhave been sent to the USSR for haloing. Soviet bloc technical data have been usedarge scale

The growth of agricultural output was adequate to meet basic needs, but itsfell far short of that In other sectors of the economy. Serious natural calamities46 and bumper crops5 caused wide fluctuations in output during the five year period. Moreover, production was adversely affected by the disruption andwhich accompanied tha rapidof agriculture5gricultural growth was also hamperedirect result of the regime's decision to mini-mire stale investment in this sector and to depend on Its ability to squeeze the bulk of agricultural Investment funds directly from the earnings of the collectives. The large flood control and IrrlgaUon projects,by the state, were not sufficientlyto Increase materially the acreageirrigation, even though the amount spent exceeded the plan byercent.State Investment in the chemicalwas inadequate to increasethe availability of chemical fertiliser. The increases In grain and cotton production that were achieved were largely the result of direct investment by the collectives in small irrigation projects which permitted anof double-cropping.

Economic progress during the First Five Year Plan, to an Important extent, wason the Importation oi vitalequipment, and Industrial rawBlcc countries were Communist China's major trading partners, accounting for nearlyercent of total trade. There was semein trade with non-Communistbut this increase was limited to someby Western trade controls. The Chinese Communists were able to maintain an import surplus over thehole. This was made possible by Soviet credits, largelyilitary' nature, which accounted tor aboutercent ot total imports, and.esser extent, by remittances from Overseas Chinese. However, during the period, balance of payments pressures increased.oubling of exports. Import* rose by only one-third, and the trade balance shifted from an Import to an export surplus. This shiftfrom the exhaustion of foreign credits, mounting foreign debt service, reducedChinese remittances, reduced Sovietin China after thend the Chinese Communist foreign aid program. (See

espite this slim margin on which they have been operating, tho Chinese Communis tacries of offers or pants of economic aid. The largest portion of Chineseforeign aid has gone to other Communist countries: grants in goods and services5 million eacii to North Korea and Northillion to Outer Mongolia,6 million to Hungary:oanillion to Hungary. In addition, to non-Communist countries. Communist China has extended grantsillion, and has extended in7 and8 loans totalling anf the total of0 million in grants and loans. Bloc and non-Bloc0 million had actually been expended by the end"

'Oram* (in millions ot USSl:;;. Loans(In millions o!; Yemen. 1SS-

loans and giants to Bloe conntile* were In yuan currency to North Korea end Northand in rubles to Hnncnry. Yuan data have been converted Into US dollar equnaicnU at the rateB yuan per US Si and rubleser US $i. The use of the yuan-dollar exchange rate may overstate considerably the value of aid to Wort* Korea and North Vietnam.

he total Increase In GNP during the past five years has probably been great enough to register an average annual growth in per capita output of five to six percent, even though the population expanded at anannual rate of about two percent. Aboutercent of the Increase in outputwas channeled into investment orpurchases of goods and services. While the remainder was absorbed by anin personal consumption, probably more than three-fifths of this Increase went to the non-agricultural population, which comprised Jess than one-flfth ofesult, per capita consumption of the peasant population was probably improved little, if any.

fact that population growthkept pace with the increase inoutput hasatter ofto the regime. During the pastthe number of mouths to feed hasincreased by someillionillion.esult ofsanitation, hygiene and publicbetter distribution of food, andof peace within the country,of Increase of the population hasrisen sornewhat over the period of theyears, averagingercent.average annual increase induring the past Ave years ofpercent, the margin of safety isIn an effort to deal with thisregime is developing programs whichwill, in time, reduce the birth rate.

b. Reorganization of the Chinese Society

regime apparently madein its efforts to recast theof Chinese society in themold. These efforts sprang fromdoctrine and from thetoigh degree ofand control in order that asmall groupthe Chinesecould dominate the vast

he power of the landlords and well-to-do peasants which had beenIn rural areas was virtually eliminated. Subordination at youth to their elders was weakened by placing the former in positions of responsibility. Women were given equal status in society. Through centralisedof a3 media of communicationsadre network, the Communists weakened the clan and regional loyalties which still existed among many Chinese The regime sought to convince all Chinese that the welfare of the individual and of the family must be surjordl-nated to the general good of the nationhole.

he regime has intensified its efforts to reorganise traditional ChineseBy persuasion, pressure, and, in some Instances, terror, the Communists Increased their efforts to impose the Communist way of life on the intellectuals and the middle class. Tbe most radical changes ln tbe old ways of life during the past live years, however,from the regime's programs to socialise all terras of economic activity. The success of these programs was surprising because of the rapidity with which the millions ofwere shuffled into collective groupings and business enterprises were brought under government control. Moreover, there were relatively few outward manifestations ofat least Initially.

y the end, sociatlxation hadeliminated all private control ofand commercial enterprises. The regime continued to utilize many former owners as managers and technicians, paying themdividends which may be continuedew more years. It has also introduced measures designed to Increase party control of managementbor.

y the endhe Chineseclaimed thatercent of peasant households were In coUecUve farms, and that an additional four peccant were In crnpera-ttves. The remaining small fraction, except in Tibet and certain other exempted areas, had been placed under the guidance cf the nearest collective.

Although the, organisational phase ofwaa quickly accompllaaed, the Communists have not realized the majorwhich they had anticipated. Despite an increase in the output of major food crops, the4 collection declined, is pan because many peasants dlaecvered that even tn coll cell res they could circumventcontrols, especially when the local cadres sided with the peasants. Agricultural output was also adversely affected by thewhich accompanied the actualof the collectives, and by thewhich were encountered Ineffective management of tlie largerunits.

The Communists also had to cope with peasant disillusionment which became In* creasingly apparentany peasants were unhappy because their Incomes had not Increased as promised, or because tbey had not been adequately remunerated for theirof land and Implements. Into evading government efforts to procure grain, substantial numbers of peasantsfrom collective- farms, although most of them were famed to return. The higher urban incomes continued to attract largeof peasants into cities wherewuritical problem. Strong measures hare been taken to force these dissatisfied peasants to return home, but the problem still exists.

C. Problems in Eliciting Popular Support

regime's progress In changingof Chinese society apparently wasIn the realm of popularChinesehole appearsambivalent feelings toward theregime has bad considerable successefforts toense of commonthe population at large. In part becausegroundwork of nationalist)een stimulated by Suathe Kuoralr.tang, and In pari becauseown achievements. There hasa favorable response lo specificas public health and education which

Improve the lot of the individual, or road building, irrigation, and flood control which are visible community improvements. There has probably alsoavorable, but less general, response to developments which boost national pride such as the production of planes and trucks, bridging tho Yangtse, and the increased world prestige of Communist China.

But in most Chinese these effects have in varying degrees almost certainly been offset by negative reactions to other aspects of the regime. The intellectuals have been resentful of the pressures to conform and theon discussion. The urban workers have disliked the constant orders to produce more goods faster, the compulsory attendance at innumerable Indoctrination meetings In their free time, and tho shortages of consumer goods. The peasants have been dissatisfied with the failure of their personal incomes to rise in proportion to their increased output, and with the regimentation ot the collective system. In general, tbe regime has madeprogress in gaining popular acceptance of the Communist dogma or In substituting, as an Incentive, the prospectuture mil-lenium In place of more food and clothing for the present generation. Moreover, theand centralization of control have probably caused previously diffusedto be directed against the regime. But regardless of dissatisfaction orthe Chinese are aware of the power of the regime and see no alternative; theirto the regime is, for the most part, one of acquiescence.

To elicit greater popular support for the regime and to improve the effectiveness of the party organization, the regimeenturesome experiment in the springt admitted the existence of problems,restrictions on public discussion, andcriticism of the operations of the party and its programs. Although some elements within the party were apparently opposed to relaxing controls, Mao and other leaders seemed to see many advantages. Publicin their view, mightafety valve, giye thereater sense ofin party affairs, and create the

pression that tho regime was modifying its authorltarlflii procedures. They apparenUy feared that the party had become separated from theeakness they believed hadrincipal causa of tha outbursts In Hungary and Poland. Mrjreover. publicthey thought, would reveal to tbethe weaknesses in the operations of the party and provide the basis for corrective measures. They must also have estimated that rule by the Chinese Communist regime had been generally accepted and thatwould be directed at theof policy rather than at the basicof the regime itself.

his program grew outargelyeffort ln early IBM toore positive response to IU programs by acc" Came*lie tensions and by promising an improvement rn the harsh conditions cf Ufa However, the promises and incentives directed initially to the Intellectusls. and laterto the peasants and workers, failed toignificant response, and in the spring7 Mao broadened the scope of thepolicy. As part ofntellectuals had been encouraged todifferences on non-political subjects; Mao now encouraged tha population in general to participate in the greater freedom to discuss and extended the subjects of discussion to the cperaboo of the party and its programs. At the same time he forrnailred his policyoctrinal statement which recognized that evenommunist state there wereuUook between the leaders and the people, and within and between various groups. But these contradictions, he Insisted, were largely non-antagonistic because of tne disappearance of exploitation of one class by another, and. therefore, could be resolved by discussion and persuasion, rather than by force.

he extent and intensity of the criticism appears to have surprised the regime- It found that neither the Communist system, the parly's monopoly of leadership, nor the Soviet orientation had been as fully accepted in China as It had apparenUy believed,among tbe very intellectual* it had courted. The regime's critics were numerous and came from many select groups, including even the party. Their criticisms almostreflected the viewsody of opinion much larger than the regime has admitted.

in7 the regime reacted bycutting off criticism, and Mao's con-tradlctions formula was rewritten to point out clearly the categories cf Communist truth which were above criticism. Thesubsequently conducted an intensive campaign against its critics and has dismissed accused "rightists" from their positions, It has apparenUy not felt It necessary toits sometimes explicit threat of puruBh-ing its critics on harshgrounds, however, and the erring ones have been told that they will behance lo redeem themselves. To counteract the criticism, the regime alsoassive campaign designed to convince tne people of the superiority of the Communist system.

Nevertheless, the regime did notall crittcism, and has taken steps tothe operation of the party and itswith the people generally. The regime hasontinuation of public discussion, although, as might be expected, the response has been guarded and concerned largely with details of aarnlnistralion and production. The party also continued the "rectification" program which had been launched as part of Mao's original program and which seeks by persuasion and education to createtighten discipline, correct errors, andinvlgorate the party.

One major source of difficulty within the party was that it had apparenUy grown too fast for proper indoctdnaUon of members. Total party membershipt present aboutillion. About two-thirds of Its members had been recruited9 and about two molten sinceesult there were many who were free-riders, dead-wood, or "not steeled throughraditional localtst sentiments also still existed In the parry, as exemplified by the many rural cadres who supported the grievances of the peasants rather than enforced edicts of the regime or who resented party personnel of

new-local origin. Moreover, tho exercise or au-hartty and tbe enjoyment of specialledeterioration of tne party'swith tne people.

lthough the main emphasis cfhas been upon reeducatingumber of paity officials and deputies to the National Peoples Congress have beenfrom the party for "rightist"and further dismissals of cadres foror unreliability are probable. There has alsoholesale transfer of party and government cadre* to lower levels, particularly to rural areas where largewere assigned to agricultural collectives. This program seems to haveumber of cbjecUvua: strengthening of the partyin the crucial agricultural field;cf non-productive personnel in party, government, and industrial organs;cf bueaucraUc tendencies in these organs. inculcating members with anof manual labcr; and punishment of errant members. It probably was alsoto meet criticisms ot the materialenjoyed by party mombcia. There are indications that many of these transferredihe shifts.

D. The) Ragima't Ability fo Control Mare China

e believe that the regime has the ability to exercise firm control of mainland China. Despite the fact that problems andwithin the party have been revealed by the rectification program, the partyits basic elements of strength' aand resourcefularge mem-berahip organised to act as an instrument of control and policy implementation, and anand ability toigh degree of discipline and conformity. Tho partycontinues to be backed up by large and well-dbclpllncd police, miatia, and security organiraticnii. supplementedetwork of informers and local "residents committees" which provide surveillance over mdrridual family groups. Party control Is reinforced by mass organizations which mobilise variousand occupational groups In thebehind Communist programs and which serve as channels for propaganda andThe authority of the party isenhanced by ita control of all media of communication and of the distribution of Ihe bulk of food supplies in urban areas, and by Its success in corralling most peasants into collectives.

Behind this control mechanism stand Ihe large Chinese Communist military forces which are effectively under tbe control of the party. During the revolution the party and the army were,arge extent, an integral unit- Military personnel and veteransto makearge part of the party. The regime claims that aboutercent of the rank and file of the armed forces are members of the Chinese Communist Party or of the Young Communist League, and allintense political indoctrination.of the close identity of the party and army in the past, many senior party membersilitary background; thus0 enlargement of the Politburo and the Central Committeeignificant number of such persons into the top levels of partyHowever, there is no Indication that theyilitary bloc within the party leadership, orilitary group withambitions has emerged within the armed forces. The party appears to be fully aware of the Importance of maintainingover the military and the military appears to accept the dominant role of the party. At the time Marshal Zhukov was ousted from his positions in the Soviet Union, Chinesemilitary spokesmen publicly stated their supporttrong party role In the armed forces.

The regime has been able to dealwith sporadic outbursts of resistance which have for the most part been localized and poorly organized. Probably in part to demonstrate its power, the regime has carried out two nationwide drives againsthe security forces have also dealt with several student riots andagainst the regime, and with some civil disturbances growing out ofresentment against collectives. There have been indications of continuing

tent in minority areas, recently includingfor genuine autonomy, out larga-scate aimed uprisings have been reported only in Tibet. Strong anti-Chinese sentiment in Tibet cuurdnated in an outburst6 and induced the regime to announce that theof soda] "wfonai" Into Tibet would bt poalpcned for six years. Despite this concession, sporadic incldecta continue in Tibet

E. Strengthening Its Military Establish* monl*-'

The capabilities cf the armed forces to fulfill their Internal and external functions have increased significantly during the past several years. The Korean War gave great impetus to the development and mcderntta-tlon of Communist China's armed forces and stimulated large-scale Soviet aid. Since the war, the trend has continued toward further modernisationore balanced military establishment.

round force personnel nnd infantry division strength have remained at an estimatedmillion menrespectively. However, overallhave been increased by continuedAnU-aircraft and anti-tankare now Included In mostodivisions,ank-assault gunhas been added lo at leastf thedivisions.5 the regimea new military conscription ond reserve program which is now providing an armyhe main of selected conscripts The army's effectiveness ln modern warfare,esult cf current training programs, has been ccfudderably increased In addition, the reserves will include,onUnuIng basis, about two million men who will haveactive military service within thethree years.

, Communist China's combined air arm has increased00

'Seeor more complete discussion. 'Sec maps for the disposition ot ground forces

nnd combat ]et aircraft, and for the location ot

naval bases.

officers and men while total aircraft lnunits have increasedore significant indicator oftoward modernisation is the Increaseet aircraft, ofre flghlersre light bombers.China has also developed an extensive radar detection system which covers thecoast and major inland industrial centers. This system has fair to good detectionexcept for aircraft at low altitudes. Its high altitude OC1 capability has not beento Include all areas.

The navy has gradually increased itsstrength0 and its general service personnel strength0 officers end men. This growth was accompanied by aincrease in offensive and defensiveIta major surface units include four destroyers,ubmarines, four escort vessels,mphibious ships andine warfareas wellaval Air Armombat aircraft

Although still dependentarge degree upon the Soviet Union for heavy and complex equipment, aircraft, and many component and spare parts, Communist China has made progress in its effort to achieve militaryo* produces small arms,through leo-ram, and artillerym howitzers. In addition, Communist China nowumber of airframe andparts plants, Including an aircraftplant at Mukden capable of scries assembly of jet fighter aircraft, Mukden's monthly assembly capacity will probablyet lightersommunist Chinaapidly growing shipbuildingnow assembling submarines andhulls for escort vessels, submarine chasers, mine warfare vessels, and motorboats. However, practically allfor these vesselsubstantial part of components, equipment, and machinety is obtained from the Bloc The Chinesecontinue to be handicappedhortage of technological skills in both the aimed forces and the armaments industry. We believe that the country has no guided missiles or nuclear weapons and, at present, lacks the capability to produce them.

high cost of maintaining suchmilitary establishment and ofa muniuona Industry has been aon Communist China's economy.Communists have reduced theof expenditures budgetedercent3 to II percent inthis has not ir.vo'.red aIn the absolute amount spent,has probably been an increase inhi plants for prouucinE military


bellevo that during the next AveChinese Communists will continue toto exercise effective control ofand wll) gain some success inCommunist social Institutionscn the Chinese people. Theprobably be able toategrowth roughly comparable tothe last five years, but this wtHstringent co.Trol cftn view of the IncreasingIts efforts to gain Increasedwin be severely limited by Itsto maintain the pace of economicand social change. There willtoidespread but fluctuatingof dissatisfaction and discontentChinese people which, whilethe regime's programs, willnot be translated Into effective resistance.

A. The Economy

the Second Five Year PlanIn process of formulation, theof thisnnouncedppear to be tbe basis of theplarmmg. These Indications areclear to enable uoutput will probably Increaseannually during the period of theYear Plan, or about as rapidly as InFive Year Plan. The Increments towill probably cost more in termsrequired, since gains fromutilisation of existing plants willless. However, investment during the Second Five Year Plan will probably continue to Increase relative to total output. Thewill continue to be on Industrialand2 the industrial sector will probably contribute nearlyercent of total gross product as againstercent7 andercent

Agricultural Production. In theirto the Second Five Year Plan, theCommunists have been forced to give greater priority to the expansion ofproduction in order to provide for the minimum consumption needs of its growing population, agricultural raw materials,cotton, for its expanding industry, and exports with which to repay loans and to finance the Import of vital capital equipment. This greater priority for agriculture willsome reorientation ofreater share of Investment allotted to those heavy industries whichfertilizers, agricultural chemicals,equipment, and implements forFor example. Investment in thefertilizer industry will probably rise from one percent of total state Investment in the First Five Year Plan to about three percent In the second plan period.

The Chinese Communists have announced that,4 percent of the state's capital investment willgriculture, suggesting that such Investment for the entire Second Five Year Plan may be as much as four times the amount allocated for this purpose during the First Five Year Plan when It amounted toercentmaller total investment. The state's Investment In agriculture is used primarily on large-scale water conservation projects. However, direct investment by the collectives In Irrigation and drainagefertilizers, farm tools and machinery, livestock, and other production requisites will continue to provide the major source of funds for agricultural development. Suchand the related technologicalare considered by the regime to be the most effective way of Immediately Increasing agricultural production.


In8 the regime2 agricultural goalsillion tons of grainillion tons of cotton, butecognising that these goals were far too am-bltious. It lowered the targetsillion tons of grain5 million tons of cotton, while increasing substantially the proposed agricultural development effort. However, we believe that these goals are still too optimistic. In view of the limited amount ol fertilisers that win be available and the modestincreases in both irrigated areas and sown area obtained through reclamation and multiple cropping.72 grain production will probably only riseillion tonsillion tons and -otton4 million tonsillion tons. About one-fourth of these production increases are expected to result from Increased application of chemical fertilizer.

he above estimatesate ofof agricultural production of about three percent annually. This Increase wouldmall margin over the probableIncrease of populationercent.umber of contingencies couldthtaajor Imponderable Ss the willingness of the peasants to maintain their efforts to produce under collectivization. Weather and its effect on crops are alsoFinally, we cannot completely discount the possibility that the present rate of population growth might Increase. Under the worst combination of thesefor ilie Chinesea scries of bad crop years, peasant apathy,ising rate of population growththe regime would face grave difficulties.with its Internal security system and its control of food distribution the regime could almost certainly maintain Itself In power. Furthermore, other stopgap measures open to Peiping would include loans or aid from the Soviet Bloc,eduction inand some Increase in Imports ofproducts. At the same time, the regime would have sufficient production capacity tn heavy industry and construction to enable it to maintain industrial growth, thougheduced rate.

ood supply for its enormous and growing population will be communist China's number one economic problem ior the Indefinite future. Arable land Is relatively limited, and by far the major share of the land area is too high, dry, or hilly to beAt present aboutercent of the land Is under cultivation. Marginal lands could be brought under cultivation and double cropping extended through heavy investment and modern techniques which would increase the sown area by possibly half. With awater supplyong growing season In the most important farm areas, yields can be raised through improvements in floodirrigation, pest control, crop types, and fertilization. In the long run and with more Investment, we believe the Chinesecan probably double agricultural output. However, present population growth, ifwould double tho population inoears, malting difficult any Improvement In living standards even if all agriculturalwere realized.

Industrial Production. Ho finalizedFive Year Plan has been prepared, but the preliminary proposals put before the Eighth Congress of the Chinese Communist Party inrovided for anrn gross value of Industrial production of aboutercent during tbe Second Plan, comparedise ofercent achieved during the First Plan. Heavywill continue to receive priority.there is evidence of considerable change In the individual Lndustral goals, the attainment of the overall industrial goal, as proposed, appears likely In view of thelevel of industrial Investment. (See

n increasing proportion of heavyInvestment will be In new Industrial areas in northern Manchuria and in north-central and northwest China, based upon the location of raw materials and upen strategicIncreased production during thePlan will rely greatly on completion of new capacity, much of which was startedthe First Plan. In contrast wilh the Fust Five Year Plan, In which emphasis was on large seals plants, significant proportions of







over 57





trie generators


Ml Wat. ti Syn.)



cloth [fastory)




tloel. bufla:o>



2 onpplies also to this table. "Hot available.

Increased output ol Iron, steel, and coal will coma from newly constructed or renovated small and medium site units, To the extent that this program Is implemented, It willmore employment, conserve scarceand require leas machinery Imports.

6i. The variety of products made by Chinese industry will continue to increase rapidly, but there will continue to be shortages, especially in chemical fertilisers and crude ML During the Second Five Tear Plan, the machine building Industry will probably be able toat leastercent of machinerycompared to aboutercent In the First Five Tear Plan, hi addition to tbedevelopment of the chemical fertiliser and machinery Industries, II Is expected that Increased attention will be given to merchant shipbuilding, copper, and crude oil. Even if the regime achieves its crude oil2 It will still be heavily dependent on Imports to meet Its rapidly increasing


Shortages of trained technicians andwill continue to exist In an effort to solve this problem, the regime plans to have one third ottudents, who wfj! graduate from colleges and universitiesthe next Ave years, go into teaching in all Delds. Of those who will not go Into teaching, one half will behird will be in medicine, science, agriculture, or forestry, andixth In law, the social sciences, and other fields. During this period thealso plans to double Its presentic primary and middle schools. Rven If these goals are metowever, the regime will still be far short of the highly trained personnel needed ln the scientific and technical fields.

Fortlyn Trade. Total exports In the Sec-end Five Year Plan are estimateduan, and Importsillion yuan Thls compares32 billion yuan, respectively, during the First Five Year Plan. We believe that the bulk of Communist


trade will continue to be with the ether Bloc countries, especially the Soviet Union. However, the proportion of total trade with the non^Cornrnunist world will probably increase in tbe Second Five Year Plan,from aboutercent to possiblyercent of total trade. We believe that the most Important elements of this Increase will be an expansion of Communist China'sof iron ore and coal to Japan andRoods lo South and Southeast Asia, and Imports of fertilisers, industrialand steel from Japan and capital goods irom Western Europe. Cornrriumst China wfll probably increase the use of Its growingmarine In international trade.

he maintenance of the present level of multilateral trade controls will complicate Chinese Communist economic and military development by creating Impart problems,costs, and reducing flexibility.present unilateral US financialwill deny Communist China anexport market, as well as reduce dollar remlUances.

Chinese Communists apparentlyahead with their Second Five Yearno provision for new long termthe USSR. Communist China willfinance through exports the importsfor Industrialization, as well as toSoviet credits advanced during theYear Plan and to finance their owncf which total anbillion yuan. With their presentthe Chinese Communists canout their planned industrialwithout further Soviet credits.In the event of serious economiclhe Chinese might seek andassistance on credit from the USSR

B. The Forty

party will probably continue toIn maintaining vigor,internal discipline. The strainsrecent massive shifts of cadres toand the difficulty of absorbing themembership will continue.lhat will inevitably arise in formulating


the regime's program will almost certainly create policy differences at various party levels. Although these problems may force theccasionally to resort to repressive measures, in the main the regime willbe able, through periodic rectification programs, to resolve mtra-party conflicts by discussion, persuasion, and administrative disciplinary procedures. Moreover, we believe that the party willignificant degree of flexibility in Its policies.

problems would be aggravateddeath or incapacitation of Mao. Shouldquestion arise In the next liveauthority would probably initiallya group, with Liu Shao-chl, ChouHsiao-plng, and Ch'en Yun as Itsmembers, and with Chu Teh asof state. Policy disagreementsrivalries would probably sharpen inof Mao. The temptation toposition would be great, and coulda struggle for dominance within tbebelieve thattruggle wouldthe achieving of certain of theand reduce its policy flexibility,net threaten the regime's abilitythe country.

C. Popular Attitudes

see little prospect that popularcan or will be translated intoactive resistance In the near future.will probably continue at about itslevel, and sporadic cases of isolated,active resistance will probablyin rural and ethnicReactions to the increasingausterity and industrialization may,cause the regime to clamp down,Chinese Communist leadership, whileon the people's recognition ofwillingness to utilise severelymeasures if necessary, will probablyor systematic use ofThere will continue to bebut wc believe the netlhe regime's programs will be noa complicating or retarding one.the regime will continue to seek


positive support, it wilt have Limited success because of Its determination to carry out Its economic and social programs. The response ol tbe bulk of the Chinese people to the regime wll! probably remain one of acqul. escence.

The regime will continue to havewith intellectuals. The outspokenwhich cams from the universities In the spring7 showed the regime that its efforts at indoctrination failed to force many students and professors into accepting the Communist way. The problems of winning the student generation will be made moreby the shortage of facilities for higher education, the limited urban employment op* portuniues for graduates, and the need to sharpen disciplinary measures and political controls over students. Furthermore, thewill probably continue to force great numbers of middle school graduates to accept long-term agricultural assignments In the countryside.

The pees ants will almost certainlyto give the regime trouble. The regime recognisesajor problem during the Second Five Tear Period will be to improve the management of the collective farms and to obtain horn thereaterof the collective system. The regime will probably be able to keep the peasants in line by enforcement of tighter controls, and, in good crop years, by allowing some increases In consumption.

D. The Military Establishment

China's militaryalmost certainly continue to improvenext five years. Although the armybe reduced in size, it wDl benewer and better weapons, and willmobile and better trained than atThe air force and navy will increaseand effectiveness. Although thewill be somewhat betterarge ground army will stillTbe Chinese Communists willa large standing army which,to its offensive and defensivewill provide the basic forceainland China and will continue to have an intimidating effect in Asia.

2 the combined air forces willhaveircraft, an increase of more than TOO. The Chinese Communists probably will have completed converting their fighters and light bombers to Jets, and may by that time have some jet medium bombers. The navy will probably continue Its rapid development, with principal emphasis ondefense capability within home waters. There will probablyignificant Increase In submarine strength, and the probableof overage ships will Increase tbe navy'3 operating effectiveness.

The armaments industry will increase in she and efficiency, but during tbe period of this estimate, Communist China will continue to be heavily dependent upon the Soviet Union for many kinds of heavy snd complex military equipment and for technological assistance.t will probably be able to meet armed force needs for small arms and for nearly all artillery, transport, andbut will sull be unable to meet the needs for armored fighting vehicles and more complex fire control systems. TheIndustry will also continue its rapidDomestic aircraft production will probably increase considerably, butChina wDl continue bo be dependent on the USSR for many components.

Although Communist China will almost certainly not haveissile orweapons production capability of its own2 because of the conUnuing shortage of technicians and the demands of otherand economic programs upon its limited resources, we believe that the Chinesewill press the USSR for such advanced weapons. It Is probable that during the next five years the USSR wDl provide the Chinese Communists with some varieties of missiles and other weapons adaptable to nuclear use, but with conventional warhoads. TbeCommunist and Soviet views on theof nuclear warheads" intoChina ore less certain. Unless barred by an effective international agreement, the



may introduce nuclear weapons into Communist China by iocs. although they will almost certainly remain under Soviet control. In any event, even though nuclear warheads were not deployed in Communist China, they would be readily available If Sino-Sovietrequired them.


A. With the Bloc

Communist China's close relations with the USSR are based on mutual objectives,on Soviet military power and economicommon ideology,onviction that Bloc unity is essential in the faceommon enemy. In the Chinese Communist view, unity is crucial to the expulsion ofparticularly US, influence from Asia and Africa, and to the ultimate achievement of economic and military supcriorilv over the West The Chinese Communists appear to accept the Soviet Union as the head of the Bloc because of its experience and leadership In the doctrinal, economic and technological fields, and because oi its military power. They have supported Soviet policy on allquestions. Communist China has ir. turn sought and gained Bloc acceptance as the second major Communist power and, probably,articipant with the Soviet Union In the formulation of general Bloc policy.

The Chinese Communists insist that the strength and unip of the Bloc against the West must be ma'..talned and that theCommunist character of each Bloc state be preserved. To the extent that it willto, or Is compatible with, theseconsiderations, the Chinesefavor flexibility In tntra-Bloc relations, desiring particularly that the Chinese partyide area of doctrinal and policyAlthough there have been differences In the emphasis which the Chinesehave placed on various aspects of intra-BIoc relations over the past two years, their basic concept of Intra-Bloc relations hasthe USSR Is the head of the socialist camp and the member states should at all times place the interests of unity among the Socialist countries above everything else; but the USSR should. In turn, refrain fromintervention in the internal affairs of each Communist state. These views of unity and diversity were substantially reflected in theh Anniversary communique, probably of joint Sino-Sorlet authorship.

lose Sino-Soviet alignment does notto have been affected by the cessation of Soviet credits, although the Chinesemay hate hoped for new credits or for more lenient repayment terms on past credits. Whatever the nature of the Pniping-MoEcou1 discussions an this subject, the Chineseappear to have accomracdatedto the situation, and7 theytheir planning for the Second Five year Plan to take account of reduced estimates of import availabilities The Soviet Union is still extending technical assistance and hasong-term agreement which Is believed to provide for an Increased level of Sino-Soviet trade, including the bulk of the essential import needs of Communist China's Industrial development program. Moreover, the Chinese Communists probably believe that the USSRource of aid ta the eventerious crisis.

7B. Sino-Soviet relations as they concern guidance to the Asian Communist partiesto have been governedutually acceptable division of responsibilitiesillingness to cooperate. Despite occasional differences of nuance In the statements of Asian Communist parties, we have littleof any Sino-Soviet disagreement on the character of Communist activities In Asia. Communist leaders of North Korea and North Vietnam, as well as those in non-Communist Asian countries, visit both Moscow andfor consultation. The policy line, as given in newspapers and radio broadcasts of both countries, varies little If any.

ith respect to the border areas, the USSR and Communist China apparently have overcome, or at least suppressed, theirconflict of interests, and in Sinidang and Outer Mongolia are cooperating taprograms. The Soviet Union Is


building loo portion ol theail line from the Soviet line in Kazakhstan to Wusu In Slnklang Province, and theCommunists have accepted Sovietin the area to assist in itsThe USSR, by constructing the trans-Mcngolian railroad to China, has facilitated Increased Chinese Communist cultural and economic relations with Outer Mongolia.

During the five year period of theit does not appear likely that there will be any appreciable changeneor tbe Slno-Sovlet relationship or in China's status and role therein. Though there will almost certainly be frictions. Ccm-munlst China and the USSR wDl probably be able to work out satisfactory solutions toarising out of China's status in the Bloc, its economic relations with the USSR, and the division of Communist responsibilities In Asia. Nevertheless, because of Communist China's growing stature and strength, It Is possible that problems may arise which would beto resolve.

A source of disagreement may beChina's possible desire to exert greater Influerce on general Bloc policy, both internal and external. Because of tho immense value of the Sino-Soviet alliance to both partners, Soviet and Chinese Communist leaderscertainly will consider that they must meet certain of each other's requests, benot to offend each other's sensibilities, and defer, at times, to the other partner.the Soviet leaders will almost certainly be apprehensivetrengthened China seriously challenge the USSR for Communist primacy at some distant date, there is nothat this is affecting present policy. External policy disagreements, if any, would be more likely to occur with respect to areas where the interests of one party might begreater, such as the Taiwan straits, or where they dinered as to the risks involved Inpecific action.

With respect to high level Sovietwith the West, the Chinese Communists probably feel that it would be Inadvisable at present to press for the introduction of topics which are of primary Interest to Communist

China and which would require itsntrance into the UK and the acquisition of Taiwan. It Is possible, however, thatbetween Peiping and Moscow may arise in the future with respect to theor the mechanics of negotiations with the West.

cohesion would probablysignificantly affected by aor by Communist China's entryUN or recognition by the US.would probablyetente because its leaders wouldthis would Increase Communistin Asia. They would probablya limitation of armamentswhich convinced them that theyreduce their expenditures for arms,they would probably take thothey would not be bound to anyIn which they did not formallyas the representative of China.would almost certainly welcomeChina's representation In the UNrecognition by the US, although tholeaders might have some misgivingsdevelopments might reducepolitical dependence on the USSR.

B. Relations with the Non-Communist World*

China's loaders appearthe present world position of theBloc with considerableseem convinced that the worldpower has shifted to the Bloc and thatWind" is prevailing over the West.Communist optimism is based on ahistory that assumes that Communismtriumph and on specificsuch as recent Soviet weaponsCommunist gains in the NearAfrica, and the rapid economic growthBloc While the Chinesedo not consider that the Westany decisive defeat in the Farthe French were forced out ofappear confident that the trend in Asia

'Bee. "OomxnUDUt China's Role'.


is running against the West. Peiping almost certainly considers the growth of Communist political strength and Influence In Indonesia and of neutralism snd anti-American feeling tn some Asian countries as indications of this trend.

eriod of lessecade. Pelplng's leaders have seen their country become the strongest Asian power and achieve substantial progress In making its impact felt hi Asia and the world, They are cogrJaant ofpressure in the Free World for expanded economic and political relations withCommunist China Is not handicapped by Asian racial antagonisms against the white man and it can claim common experience with the former colonial areas. The Chinesealmost certainly believe theirprogress can be used in their efforts to convince the underdeveloped Asianthat Communism is the best way

The Chinese Communists have given no indications of undue Impatience in the pursuit of theirsia. They appear aware of the many problems of internalfacing Communist China, theneed to adjust and reconcile intra-Bloc relations, and the suspicions of Communist China which exist tn much of Asia. Most importantly, they almost certainly consider the presence of US influence and military forces In Asia to be the major obstacle in their path. They almost certainly estimate that any attempt to speed up the process of com-munudng Asia by military aggression would involve serious risk of war with the US, but at the same time probably believe that over the long run the US wQl not be ableto counter the forces which theyto be working to the advantage ofChina,

Given these views, Communist Chinato be directing Its energies toward the intermediate objective of weakening theand influence of the US In Asia. To this end it Is seeking to Induce Asian countries toolicy of friendship toward the Bloc, to strengthen, and if possible bring to power, indigenous Communist movements without tho use of external force, and tothe will of the Nationalists onto resist. Since Indochina, thethrust of Communist China's policy has been reasonableness and peaceful coexistence, though It has been adamant on certain basic issues, particularly Taiwan.

We believe that Communist China will continue essentially the outlines of its present flexible course in Asia, though displaying more assertivenesseightened readiness to take advantage of opportune situations. It will probably Intensify its efforts toother nations of Its peaceiuiness and reasonableness, and even of Its willingnessapprochement with the US. believing that an apparent readiness to makewill add significantly to Free World pressures to accept Communist Chinaember of the community of nations and to bringhange in Us policy.

Communist China win continue to seek admission to the UN and the expansion of economic and political relations with meet states. It will probably make additionalof economic assistance to other Asian countries. At the same time, it will continue Its subversive efforts throughout the Far Bast. In its propaganda overtures, it will attempt to create an exaggerated impression of Itsgrowth, and, while stressing itsIntentions, wll) do nothing to dim itereputation In Asiailitary power. In relations with Asian states its military power will be an operating but silent factor. It will probably not resort to overt military aggression which It believes would Involve It In military action with the US.

SO. Peiping is probably concerned that, as an unwanted by-product of peaceful coexistence, thererowing acceptancetwo-Chinas" concept The Chinese Communists will continue their efforts to disabuse the world, and especially other Asian leaders, of any Idea that Communist China will renounce its intention to gain control of Taiwan. They will almost certainly not resort to military action to seise Taiwan, so long as this would involve risk or war with the US. They will almost certainly continue their present efforts

undermine Nationalist will and to discredit the Republic ot China abroad. Thecannot be excluded that the Chinesewillore aggressive policy toward the Offshore Islands, in part because of intense irritationense ot affront, in part to emphasise their determination to destroy the Nationalist government, and In part to test US intentions in the Taiwan area If they should become convinced thai the US would not Intervene militarily, they would seek to cac'ure these islands by mOtarr

he Chinese Communists will probably complete the announced withdrawal of their forces from Korea In order to bring pressure on the US to do the same, to enhanceChina's chances lor UN entry, and to support Moscow's efforts to create Free World pressures for summit negotiations andschemes. However, Peiping will almost certainly maintain Ita military torsesosition to relntsrvene rapidly In caseesumption of hosLUIUea, The Chinesein concert with the Soviet Cnkm. will prcbabivthe North Koreanto buSd cover, strength In South Korea and to press for thefand economic contacts across tbeline. The Chinese Communists will probably publicly support North Koreanfor nationwide elections under "neutral" supervision, but will continue to oppose direct UN supervision. The Chinese Communists will almost certainly not agree to unification on terms which they estimate would lead to an anti-Communist Korea.

eiping's objectives In Vietnam willbe to strengthen tha Communist regime in the north while attempting to undermine the government In the south. Peiping wai cor, tin ne to support Communist agitation for nation-wide elections under conditions that would favor the Communists. The Chinese Communists may believe that should South Vietnam be deprived of President Dicm's leadership, tbe Communists might gala sunV cient strength to seise control from within.

apan will continue to be one of Peiping's most Important targets, especially because

sec thererowing arte of competition between Communist China and Japan. Chinese Communist policies will ba directed toward reducing the degree of cooperation between Japan and the US, particularly In thefield, toward mining the Japanese gcr*eiTunent's snt: Communist poaiuon.destroying the friendly relations between Japan and the ORC. and towardthe influence in Japan ofeft-King Socialists, and theCommunist Party. Pelping will connr.ue to exploit Japan's desire for peace, its rears of becoming Involveduclear war, any areas ol friction with the US, and Japan's eagerness to expand trade with mainland China. Peiping will probably be able to gain at least quasi-diplomatic statushinese Commuolst trade mission. In pursuit of these objectives, Commuulsl China will continue to employ both conciliatory and lough tactics.

lthough the majority of the Overseas Chinese will probably continue to seek to avoid entanglement in the poliucal activities of both Communist and NaUonaust China, Peipmg will neveiUtcless continue Itsse the Overseas Chinese as instruments for both overt and covert activities- At the same time, these corruaunlUes will continue toource of friction between Peiping and the host government* The nature andof Chinese Communist policy towards Overseas Chinese will ronUnue to vary from country to country, but there are indications that Pelping will Increase Its efforts to allay Southeast Asian suspicions by emphasizing in Its propaganda the responsibilities of the Overseas Chinese to the host country.

ssuming no significant change In the basic policies of the Bloc or of the West, in particular the US. we believe that Intercourse between Communist China and the Free World wm increase considerably duringxt five years. This will come aboutumber of reasons, includinggrowing belief that normal relations with Communist China should beope that suchwculd reduce tendons in Asia,esire tc exploit what many aeeajor trading potential. For these reasons,

tional countries will probably recognise Corn-muntst China, pcsslbty Including Canada, New Zealand, Belgium, France, and Japan.

It is probable that the DS will experience more difficulty in seeking to exch'deChina from the UN.the effect of the UN's censure In generating opposition to Communist China will probably decrease with the passage of time and with theof Chinese Communist troops from Korea. Should Communist Chinaeat In the UN, it would be taken, inark of international acceptance of Communist China, and many of thenot already recognizing Peiping would probably do ho. Particularly in Asia,and other forms of intercourse with Communist China would almost certainlysubstantially. Communist China'sin Asian countries for subversion, for Influencing the Overseas Chinese, and for giving covert support to Indigenousparties would increase.

if Communist China continues its present international policy, we believe that itsin Asia will continue to grow during the next five years. This will occur whether or not additional countries recognizeChina, or it is admitted to the UN. But it does not necessarily follow thatesult of increased prestige the Chinese Communists will be able to induce non-Communist Asian countries to adopt Internal or external policies desired by Communist China- Communist China's future role In Asia win be determined to an important extent by developments In five fields, in varying degrees beyond theof the Chinese Communists:

course of events in the US-USSRand in the broad aspects of the

within the Bloc suchscientific achievements orupheavals.

e. The extent to which local Communisthose ta Indonesia, Laos, and India, gain or lose political strength.

extent to which the growth ofChina's power gives rise toamong Asian governmentsCommunist China's future intentionscauses them to take increasinglymeasures at least to counter theirCommunists.

extent to which the US has tbeand trust of non-Communist Asianand in tum helps thesenot only to resist the Communists,to meet their national aspirations.


The Chinese Communis Is madeeconomic progress during their First Five Year. Gross National Product Increased at an average annual rate ofercent/ which compared favorably with recent ratesittle over three percent In India, eight percent In Japan, and sevenIn the Soviet Union. While the average rate of growth was fairly rapid, increases from year to year were uneven. In large part because agricultural output, which provides aboutercent of total national income and the raw materials that determine the output of light Industry, depends upon uncertain weather conditions (Seeor Gross National Product, by sector of origin.)

o achieve this rate of growth, totalaveragedercent of the GNP for the five yearroportion roughlyto that In the US. Investment in capital construction accounted for aboutercent of gross Investment during the five year period; of total Investment inercent went into Industry,ercent into transportation andand onlyercent IntoNevertheless, overercent of total Investment funds were derived directly orfrom agricultural output.

ommunist China's budget revenues rose sharply up4 as the regime consolidated

' Chinese Communist statistics upon which the data and analyses throughout this estimate are based are subject to the same reservations as those ef other Bloc countries, totomewhat greater extent. In view ot Ihe Inexperience on the part ol the newly established Chinese Com-launiat statistical eolteeUon system. Wiprobably account* for the majority of such statistical defects as have been rioted.communist statistics are the basis for the regime's planning and we believe are not, general- mis rec resented.

ita controls over the economy, but have since risen more gradually and.roportion of the GNP, actually declined slightly fromoercent4hefiscal policies have been to maximize revenues and to tailor its expenditures to Its expected receipts. The regime's flexibleover expenriiw-ea has generallybudgetary balance aad economicexcept6 when the government resorted to currency issue toudget deficiturplus In state revenues was reestablishedargelyesultutback in investment (Seeor state revenues and expenditures.)

Industrial Production

uring the Firat Five Year Plan.China, with substantial Sovietmade considerable progress tn laying the foundations formall base, the gross value ofoutput increased about ISS percent with heavy Industry Increasing moreercent and light Industry someer-cenl Although tbe average annual rate of growth of industrial output during the period wast waa uneven, being reducedercenthichear of consolidation and rebuilding of Inventories after the overaroblUous construction activity

Howcm, in lnUinatJcnnl compartment, uccount should be taken of Communist china's price structure, which In terras of world pricesindustrialtlie fastest growingthus overstates the rate of growth, if Oamraorilst China's Industrial manufactures were re-valued at world market prices, the rate ot growth would dropercent


gross national product, by sector of origin


MfMCgMM IMS' Brim;

UonbillienWlio* rU<*i


Machine and Equipment Building. One of the most Important developments ot the Ave year period was tht rapid development of machine and equipment buildmgWhereas Communist China washeavily dependent upon foreignfor machinery, as well as for much of the industry's raw materials, its machine building Industry probably was able to satisfy aboutercent of the machineryof the First Five Year Plan.China now is able toortion of Its requirements for more complicatedtools, mining and metallurgicalequipment, power station equipment for medium site plants, motor trucks, aircraft, and locomotives. Tbe naval and civilIndustries, the electronics industry, and related ferrous and non-ferrousindustries have also achieveddevelopment. Although much of theadvance has Involved imitation ofequipment from Russian plans withRussian component, Communist China now is Independently able to design many items. The rapid development ofindustries in relation to other industries and services created imbalances in product demand and raw material availability which led to production cutbacks and under-uQllza-Uon of capacityumber of machineindustries7rucks,freight cars, machine tools, andand textile machinery),

ron and Steel. During the past five year's, pig iron output Increased from IStons toillion tons and crude steel rose5 million tons4 million tons. Increased production was obtained mainly through the development of existing facilities, but in the next five year^ the plan Is to establish new iron and steel bases and to improve facilities to provide an increased variety of steels. Construction is under-way on two large Integrated plants, one at Pao* t'ou and one at Wuhan, and on somemall and medium sire non-integrated plants based on nearby coal and ore deposits.

on-Fenout Metals. China has become EeW-sufficlent In most non-ferrous metals, with exports of these commodities increasing.


A significant aspect of non-ferrous mineral production has been the rapid development of the aluminum industry which will support aircraft production andartialfor copper. Further development of non-ferrous metal production is planned, with particular emphasis on the expansion ofoutput, presently inadequate in the Bloc.

AS. Chemicals. Production in the chemical industry tripled during the Fire Year Plan. Important commodities now produced in China Include basic industrial chemicals, chemical fertilisers, insecticides, antibiotics, plastics, and organic syntheslsed dyestuffs. However, the industry still Is far fromthe needs of agriculture and otherin either volume or variety of products. Development of the chemical industry during the Second Five Year Plan appears toigh priority. As an integral part of the drive to solve China's pressing agriculturalproblem, the chemical fertiliser Industry is to be developed as fast as possible and, to aid the light situation in the supply cf raw cotton, the synthetic fiber Industry is also to be emphasised.

etroleum. Prcductlon of crude oil,underfuifliung the Plan goal by someercent, still achieved the high growth rateercent during the Plan period.of existing and new producing fields, and construction of new processing andfacilities daring the Plan, have laid the groundwork tor future large Increases InHowever, the Chinese Communists are planning large-scale investment in high cost prcductlon of oil from shale and coal, suggesting that they are pessimistic over the potential crude oil output. Whatever theease in production that Is achieved, it will almost certainly be iiuromclent to meet the increased requirements for petroleumand Communist China will remaindependent upon imposts.

oal. Coal production nearly doubled during the First Five Year Plan and generally kept pace with industrial and powerHowever, urban and rural household demand increased faster than anticipated and the regime was forced to Introduce rationing


6ncreased emphasis on small and medium size workings should help to meet the increasing demand for household use-All, tight Industry. Light Industry,becoming more diversified, progressed much more slowly than heavy industry during the First Five Year Flan, although mostgoals were attained- Most increases in light industry production during the First Five Year Plan camereater utHuia-tlon of existing faculties. Althoughcapacity has been developed ln thetextile industry, there has beenunder-utlUsaUon of capacity during the last three years because of shortages of raw materials.

egional Dhpettion of Industry. The Chinese Communistsom balanced distribution of economic activity throughout the territory of Chinaeriod of three Five Year. But they made relatively little headway toward this goalthe First Five Year Plan. There was an even greater concentration of industrialrn the old industrial areasesult of reconstruction of existing industrial plant and of building of new industry in these areas. New construction was apparently guided largely by the fact that these areas have known sources of raw materials and fuel,transportation facilities,upply of skilled labor. More thanercent of total investment in China's iron and steel Industry was allocated to northeast China during the Flan and half ofndustrial projects carried out with Soviet aid are being located in this one region.

roTtsporrfltion. Despite recurrentcongestion, the transport system has been able to support the growth of the economy. The transportation system has been utilised at close to capacity, and all branches of the sector have experienced high growth rates. The railroads have been primarily responsible for the support of the industrial sector but the other types of carriers are increasing their proportionate share ot the load. Thetabulation of estimated total freight ton-kilometers carried exclude Inland and coastal Junks and carts and pack animals:

y domestic merchant ship construction and acquisition from Poland and elsewhere, the Chinese Communists are continuing to expand their shipping fleetubstantial rate. The Chinese Communists probablynot only to expand their coastalmarine operation, but also to enterimited extent into the carriage of theirtrade, especially with other Asian countries. Tbe regime is also apparently planning an expansion of Yangtze Riverand Yellow Sea coastal shipping to relieve strain on the railroads.

hinese Communists nowivil air system which provides direct connections between Peiping and most of the major cities, Tbe Chinese Communists have mademvestment In civil aviation and there has been an almost complete rnodernizaUon and cliangeover of planes and equipment. During the next five years, the network will probably be expanded to Include the other major cities, but the goalatkm-widc air network to not expected to be reached until the third Five-Year Plan.

uring the first four years of the First Five Year Plan emphasis was placed onnew rail lines, particularly in the West and Northwest. (Seehe rait line to the Soviet Union through Sinkiang province has progressed beyond Yu-men, the area which contains the largest proved Indigenous source of crude oil. The trans-Mongolian line to the Soviet Union has been completed, which In addition tohorter railbetween China proper and the European USSR, has permitted an Increase in Chinese economic relations with Outer Mongolia. Another portion of the future noi'th-south



Una In tbe west has been completed between Pao-chi, on the Larichow line, and Cheng-tu in Ssechwan Province. The regime also completed the strategic ran line from Ylng-tan (on the rail line between Shanghai and Changsba) to the east coast port of Amoy. However, the regime was forced to curtail work7 on new lines and to put emphasis on repairing and Increasing the capacity of existing ones In tbe high density use sectors In the North and Northeast. In part, this was done to alleviate the critical tie-ups which had developed In certain sections of the systemnd in part because of the necessityto reduce investment spending

be supporting role of native transport In China remains veryecent article by the Minister of River Fleet of the Soviet Union, reporting on his Inspection of Chinese inland waterways, presents abreakdown of freight carried by all of the various types of transport







and Pack Animals

table emphasises tbe Important part Junks, carts, and pack animals play In short-haul local movement of goods.6 carried overercent of the freight tonnage, but Msercent of the ton-kilometers.

AejricuHurol Production

Alft During the First Five Year Plan, wethe output of food roseercent1 to ISS motion tons grain equivalent, with grain crop area increasingercentdouble cropping) and per hectare yields risingercent. Cotton production in-

The official Chinese Commuotat figure la Mwhich we believe overstates the actual rate ut growth.

creased by about 3r> percent, with the area planted in cotton expanding by about 3and the yields per hectare Increasing by aboutercent.

he main factor to which thisexpansion Is credited has been theof Idle and underemployed rural tabor for Increased cultivation work and land Improvements, which was accelerated after collectivization. Irrigated land reportedlyby one-fifth0 hectares, and extensive flood control and soilmeasures were undertaken. In addition, chemical fertiliser supplies were raisedonseekonsmall but Importantto soil fertility. Rural coal supplies were more than tripledeak of0 tonsermitting greater use of straw and other by-products as feed and fertilizer. Improved seeds were developed and7 were reportedly sown onercent of the grain acreage,ercent of the cottonandercent of the oil seed acreage. There has also been an increase in the supply of farm tools, and some progress was made in controlling crop pests.

he growth of agricultural production was adversely affected in certain respects by the collectivization of the peasants. It upset the production and market organisation in the farm areas and reduced the production of certain subsidiary products. Moreover, there hasharp decline in draft animal power per crop hectare, due to an Increase in the acreage under cultivation without aincrease in draft animals, and to the lack of care given them by the collectives.

he Chinese Communists have haddifficulty in raising livestockCattle ore the major source of draft power on China's farms and hogs are the major source of meat In the diet of theOfficial concern has been great, but planned increases have not been realised. Although the number of hogs increasedow ofillion6illion int still fell short of7 targetillion.

Foreign Trade and Economic. Foreign trade has been an Important factor In Communist China's First Five year Plan, and has supplied important quantities of military equipment, capital goods, and essential raw materials. To obtain tbeImports, the foreign trade policy was to expand exports as rapidly as possible in order toreater volume of imports, and to limit Imports to essential cenrmoditjes-During the3alance of payments pressures increased, reflecting the cessation of Sovietise In foreign debt service, continuing high foreign-aidand declining receipts from foreign expenditures In China and from Overseasremittances.esult, althoughapproximately doubled2mports rose byhird. Trade with the Bloc accounted for aboutercent of total trade.

mports during this periodillion yuan. Of thisillion yuan was financed bycredits accountedillion yuan, orercent of total imports, and economic credits accounted forillion yuan,ercent of total imports. Tbe composition of Imports Lsapproximately as follows: machinery and equipment (includingercent; raw materials, SO percent; and consumer goods,ercent.

xports are estimated at3 billion yuanroducts and products processed from agricultural raw materials accounted for aboutercent of total exports, withof mining products, machines, andproducts contributing the remainingercent. The small decline in exports, which apparently caused theCommunists to decrease imports in some degreeas partially duerop in exports of foodstuffs, exports which largely would have gone to the USSR-Population, Manpower, and Consumption

ccording to the Chinese Communists, the population of China at the end7illion, compared toat the endt was not until6 that recognition of thenarrow margin between tbe rates of growth of agricultural output and population caused Communist China's leaders to change their doctrinal outlook from one ol pride in greater population to the need for population control. Tbey are now developing programs to reduce the birth rate. We expectgrowth rate to level off atercent. At this rate the population2 would beillion and,illion. In any event, theIncrease during the Second Plan period will continue to press heavily on the supply of food end consumer gcods.

his population growth not onlyroblem of food supply but also the problem cf maintaining full employment withincome distribution. The employment category of factory workers and office staffthe only category open to majorIncreaseis still limitednd onlyillion persons were added to these categories during the First Five Year Planotal population Increase ofillion. The Communists have evidenced awareness of their growing employmentand have plans to use more mvestment funds on projects which maximizeVarious steps have been taken tothe policy preventing peasant migration into the does and even to transfer largeof present urban residents back to the countryside. The latter policies will serve to lower average Income of the rural population but will not increase agricultural output since rural labor is already excessive.

Scientific Development

uring the past year Communist China has reemphastaed its policy of vigorousof scientific research Although there was retrenchment in most other fieldshe Chinese Academy of Sciences budget was raised one third, and it establishedown new research Institutes andSuch emphasis has also been expressed in organizational changes, expansion, and ln

it rxi ii t-


policies in higher education andol researchers. However, the amount ol significant research work continues to be small. Scientific manpower resources have improved only slightly, and the regime has acknowledged that educational policies have not produced sufficient numbers of graduates qualified for advanced scientific training.

ducational policies in higher education have been revised to place more emphasis on quality. Curricula are expected to betoroader and moreeducation rather than the present highly specialized type. The Chineseof Sciencestudents to the USSRS. In addition, the Ministry of Htgher Education sentost-graduates hut year, of whomay be trained as potential researchers.

raining prograrns tn the Academy of Sciences, the universities, and the USSR will probably expand gradually so as to produce by the end of the estimate periodew people with potential for being productive in scientrflc research andThis gradual expansion would double tbe number now believed to be of research and development caliber. Highly competent scientists will, however, emerge much more slowly; the present estimate Is thatew hundred will be added2 to the less0 now available.

e believeransition period has now arrived in which the utilization ofChina's scientific resources in support of economic and military development will gradually change. Whereas the scientific effort Is now concerned with low-leveltesting, trouble shooting, andof imported foreign technology, wc expect that Communist China's2 will be compatible with the level of its imported foreign technologicalThis work will be concentrated In the applied fields listed Inyear plan for research and development: nuclear energy, electronics, metallurgy, power, etc.2 we may also expect some basic researchwhich will go somewhat beyond the backlog of research experience brought back by Chinese scientists from Western



Ground Forces

Bl. During tbeommunist China's system of internal military regions was reorganized to provide twelve, rather than the previous she regions, and to orient them strategically and functionally to present day requirements. Thisonsiderable improvement in the administrative andstructure, Also during the past year there hasrend toward creating abalanced army through an Increase in the proportion of support units to Infantry units. There are continued indicationsossible shift In tactical doctrine to meet problems of modem military operations. For example, continuing atomic and some chemicalexercises emphasize individual and unit protective measures similar to those of the Soviet army, and there appears to beemphasis on mobility and dispersion and somewhat decreased emphasis on thedoctrine of mass attack. It is unlikely that there is any significant degree ofIntegration or coordination between the Soviet and Chinese ground command except In the logistical fields, where it is required because of Communist China's continued dependence on the Soviet Union for much of Its military equipment.

nboutercent of Communist China's ground force strength was In Korea and Manchuria,ercent In the area bounded by Shanghai, Hankow, Canton, and the coast, and about If percent in the north China plain area. The remaindercoastal defense in the areas north of Shanghai and south of Canton or was disposed in the central, western and northwestern areas as internal and border security forces. This general deployment represented little change from that of the previous year. (See map.)

owever, in February the Chineseannounced their intention toall their forces from North Korea by the endwo armies have already been withdrawn, and it appeal's probable that tho remaining forces, which include three armies and totalen, will3 asurvey of present troop dispositions indicates south and central China as feasible locations for at least part of the forces withdrawn. Strategic con-slderatloas suggest the probable retentionignificant part of the force In north and northeast China However, there Is no firm evidence as to where withdrawing forces will actually be stationed. Although immediate Communist defensive capabilities in Korea are weakened by the withdrawal of Chinesetroops, the apeed with which forces in Korea could be reinforced from China leaves the relative capabilities of UN and Communist forces in Korea essentially unchanged*

here hasonsiderable turnover of ground force personnel as older andunfit men have been replaced byThe military Service Law6 provideshree-year term of service under the military conscription system and the establishmenteserve. The ground force enlisted personnel, with the exceptionucleus of non-commissioned officers, now consists cf selected conscripts, who are trained In modem warfare with modern weapons. The training cycle begins with basic training in the spring and appears to progress toand divisional sfee maneuvers by the following winter. The service school system for officers and non-conunissioned officersto be concentrating on retraining In the refinements of modem warfare. Higher-level staff colleges are also in operation and both junior and senior officers may be detailed to




Unite faumated0 Total




3 InfantryrtTJery Reguaeritight ft medium field.

tutlileiy piecesediumA batlaean

AAAA machine gun.1!

1 AT Battalion

lSxM-mtn AT gun*tank-attacK gun regimentaudiurn tonka



(possibly: each









SO medium tanks

eavyeif-prop guns Parachute Cavalry Art Dory

Fieldieces upm

Bociaini multiple rocket launcher*

Antl-lank T2 AT guns

edium guns

To data enlyrnfantry divisions are believed to hava tbe tank-assault gun regiment

!lr. addition, -lie ground forcnt arr believed to Includejmher of public security awl artillery divisions not yet identified, and approximatelyndependent regl-mer.te InctudlnR ertUcry, engineer, motor transport, and public security.)

Public Security

military schools In the Soviet Union- Tbe reserve Includes conscripts who have completed their military service,of reserve training programs In the high schools and universities, and officers released from active duty.he reserve will contain at all times about two million men who have had active military service within the previous three years. Trie Chineseare probably capable of effectively and rapidly mobilizing this reserve for active duty.


B. Air Forces

ommunist China's sir arm Is heavilyupon the Soviet Union for planes, equipment, supplies and training.Its tactical doctrines and command and logistic relation closely resemble those of the Soviet Union. The air force and the naval air forceeasonably developed and improving air arm. Their personnel are young and vigorous. Morale is high. The air forces are organised Into bomber, tighter,and transport units which could operate


many points on Communist China's periphery. The Chinese Communists nowirfields suitable tor Jet operationsther bases. They haveeconnaissance capability, at least in thefield. In equipment, training, and deployment, the air forces are oriented toward defensive and tactical operations.

he Chinese Communist air defense is concentrated in areas containing majorand Industrial targets, with (hearea the most heavily defended. Theyadar systementral control, which covers the entire coast as well as these major centers. This systemair to good capability to detect penetration of coastal and major target arcss, except byat low altitudes: however there are still some areas not adequately covered by OCI. Air interception capability is hamperedhortage of adequate GCI radars,erious shortage of alrborno intercept equipment, by inadequate pilot experience In night and all-weather flying, and by only fair butstandards in ground controlledprocedures. (See map.)

he air arm is gradually Increasing In store and converting rap!dry to jet aircraft. During the past year, the total number ofincreasednd the number of jets increased. Piston fighters willbe phased out entirely by the end8 aod we estimate that2 the Chinese Communists will haveet fighters. Byiston light bombers willbe completely replaced. The pistonbombers will probably increase to aboutnd2 the Chinesemayew jet medium bombers. Communist Chinese air interceptionwill improve during the next five years as the programs are carried out to improve communications, to acquire additional high altitude GCI, and to develop further their all-weather interception capabilities. However, the effectiveness of Communist China's aircould still be substantially reduced by well planned and coordinated multipleand by electronic countermeasures. Air force ability to support ground operations la being enhanced through operationalOperational effectiveness of the bomber force is reduced by such factors as electronic equipment of limited capability, which under other than visual or Ideal radar conditions affects bombing accuracy, and by the lack of combat experience.










SO (Blightbomber;ighters)



Total0 warnersighter Light bomber Medium toolbars Transport Helicopter, large Reooanalmtice UUUty/Llaleen Trainer, tighter





u. Hava! Air Force





TotalO0 Fighter Light bomber Transport Helicopter. large



uaUty/Ualson Trainer, fighter TOTAL



C Navy

he principal strength of the Chinese Communist Navy conilstg of four destroyers andubmarines. All of these vessels, with the exception of three submarines assembled In China, were transferred from the Soviet navy. Large-scaleincluding anti-submarine and probably amphibious operations, hava been held In the YeDov Sea.nits of the fleet were at sea more often and for longer periods of time than previously,robable Increase In operating cffecUvemesa. Rocket


on landing craft bare been con-firmed, and there is evidence that training in atomic, biological and chemical warfare has been initiated.

ommunist China has begun ashipbuilding program with large-scale technical assistance from the Soviet Union. At first, component sectionshe Soviet Union were assembled inshipyards; however, increasingof component parts are being produced in China, including propulsion equipment, steel plates, and electronic gear. Five classes of new ship construe Uon, all based on basic Soviet designs, have been Identified. By far the largest and most Important of these ships are the "W" class submarines (SS) and the "Riga" class escort vesselsther identified new construction Includes "Krcn-stadt" class submarine chasers3 class fleet minesweepersndlass motor torpedo boatsearly all of this new construction is concentrated In tbe Shanghai shipbuilding complex. The only known naval shipbuilding outside of the Shanghai area is submarine chaserat Wharapoa and possible PT boatat Wuchang on the Yangtze River and Whainpoa. In addition, the Chineseare rapidly increasing the numbers and size of merchant ships under construction.


O tlncladcfiatalS



' Pot naval air strength

Table V.


Original document.

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