Created: 1/5/1956

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Tha /tkOofaortr mraUfnt* orvaidaattom yarttetpaUd ta lAa preparation Cf IhU hOmU: Tht Central tnUlUgwie AffoKj and th4aeyarraattatu ol DU DtpartmenU of Stile, tha Ami. um Meet, the Air roree. and TTm /atnl Staff. Concurred, tn ot the

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Atomic Snern Com, Antrummaamact

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anuary iHt. Conearrlny warespectit .urttenf,atpart-urieaa ajriifaa* atttf o/ Slag, inttatyeaea. Department oj tha Army; tha Director ol Naval rtrattfanoi, Iha Dbaetor ol InURloence, OSAF; ana the Depaty Director for InteDiaenct. The Joint Stat. The

antalita tcttolAC and the of InveatteaUcm. abataned. their InrtmVetton.




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White Bouse National Security Coarual Department of State DflpaztmBDt of Defease Operations Coordinating Board Atomic Energy Corrankorlon Ftderal Bureau ol larwUgaUon






PoUUcal Situation

Party Under

Popular Attitude* and Support


Tht Five Year Plan

The Industrial Outlook

Manpower Problems

Agricultural . . .

Outlook in Transport FacUUtti

Foreign Trade and Soviet .

Military Situation



Communist China In



The Chinese Communist Estimate of the.

Mam Lines of Chinese Communist Foreign Policy

Specific Courses of Action


chinese communist capabilities and probable courses of action0


To estiinate: (a) the political, ecxxiomic, and military strengths andof Communist China; (b) Sino-Soviet relations; and (c) Criiriesecourses of action0


Chinese CommtinlitH have flrrniy established their coctrol throughout mainland China, and are eneigeUcallv attempting to reorganize econarruc and social lnatitutions and build military power along the Lines of the Soviet model. With Soviet help, the armed forces hare been greatly strengthened andarge extent modernised, and econarntc output has far the most part reached orprevious peaks.esult of IU achievements and growing power,China's prestige and Influence ln Asia have greatly Increased)

The Chineae Communist regime Is determined to convert Its primarilyeconomy into an industrialized Soviet -style state To this end It has scheduled, large investments over the next few years and, to mobilize resources for the program, has taken measures to restrain consumption and to step up Its program tor socializing agriculture In pursuit of its goals, the government will encounter serious problems in the lack of trained personnel, in peasant resistance to government control, and In growing apathy or opposition among the people to the regime's austerity Mping confronts these problems and attempts to deal with the difficulties of socialisation, shifts ln the mfluence of leaders may occur and purges may be expected, esr^etnally at lower kveis.we believe tbat Peiping's control apparatus will be adequate to maintain the stability of the regime.

e estimate that7 the Chinese Conunimistj will attain many of the goals of their first Five Year Plan, whteh emphasises heavy mdustry, though there wiH be shortfalls in steel, pig iron, trucks, petroleum products, and food crops. {See table and note on) They will probably not be able to developof their planned capacities. The gruea value of industrial output willIncrease aboutercent during the

Plan period as against the goal0 the Chinese Cooimuniat industrial base, which2 was less than one-third that of Japanimited range ofgoods, will have greatly expanded, though production tn key industries will still be well below that of Japanrarraunrst China wlU still requireBloc assistance to meet Its economic needa Wc believe ihatoutput will increase by aboutercent instead of theercent planned by the Chinese Cornmunlsts but that this will not necessarily affect their industrial goats. However, should agriculturalfail to make this limited increase, industrial goals will almost certainly be adversely affected, and Chart II,

ommunist China, with extensiveaid, will have further strengthened and modernized its armed forcesn the absence of extensive USPeiping will retain tbe capability to overran South Korea, Taiwan, and mainland Southeast Asia. However, Communist China will still suffer from military weaknesses, particularly airdeficiencies and lack of an adequate indigenous armaments base. We have no evidence that Communist Chinaany nuclear weapons, and it hasrimitive nuclear researchHowever, if the USSR were to provide the necessary eennprnent and technicians, the Chinese Corrununists couldhort time achieve theto use nuclear weapons.

he relationship between Communist China and the USSR has become one of an alliance bound together not only by ideological ties, but by common hostility to the US, military interdependence, and the mutual advantages of concertedand "revoluUonary" activities. Peiping's military and economicon tbe USSR will cause it toto give Moscow's views great weight on major questions of globalHowever, Peiping's tactical position in many areas gives It considerablefor influencing Moscow. Although potential conflicts of Interest exist, we believe that crjmmon objectives andadvantage, and Peiping's continuing dependence on Moscow, will serve toany significant weakening of Sino-Soviet ties at least)

hinese CommimiM foreign policy will continue to be focused on gaining control of Taiwan, reducing Western (andUS) influence in Asia, andtheir own in the area. Peiping will continue to pursue policies emphasizing political rather than military action as long as Its objectives are acceptably served by this means. The major factor in this consideration will be theirof the risk of US militarythus Communist China will probably emphasise political action over the next two or three years. Tbemay again resort to military action at any time they estimate that the benefits to be obtained will outweigh the military* consequence* of such action In behalf of tlte Joint Sino-Soviet policy of "competitive coexistence witheiping is likely to play up to neutralist and nationalist sentiment in Asia, manipulate the Indochina andissues to divide the West, and exploit such vulnerable situations as ROK-Japa-


and Indian-Pakistani tensions to win further Asian support for the Bloc. The Chinese Communists will probably endeavor to have their approach toproblems characterized as conciliatory and flexible, but Bloc policy win probably permit no major concessions to the West and its Asian allies. At times, in fact, Peiping will probably assert its power ostentatiously, but within thelimits of Bloc strategy, in order to reaffirm its particular claims and)

he Chinese Communists willcontinue their buildup in the area opposite Taiwan and the offshore islands in order to increase pressure on the OS and Nationalist positions. They probably do not intend to attack Taiwan so long as tbe US maintains its commitments to the NaUonalists, but they may expect toradual erosion of theposition. Moreover, unless Peiping comes to believe that it can obtain the onshore islands by negotiation, it will almost certainly conduct probingagainst them. If the Chinesebecame convinced that the US would not assist In defense of the islands with Its own forces, or react in strength elsewhere, they probably would attempt to seize them. Should Peiping's forces successfully occupy the Nationalist-held onshore islands without incurring US military retaliation, there would be an intensification of the campaign to obtain Taiwan.)

Peiping wil! continue Its efforts, inwith the Hanoi regime, toCommunist Influence andouth Vietnam by attempting toand undermine the authority of the Diem government throughand diplomacy Even if the Viet Minn are delayed in extending theirover South Vietnam. Peiping will probably not encourage the Viet Minh to renew open hostilities. However, at some point Peiping probably will encourage increased Viet Minh guerrilla activity In South Vietnam. Actions beyond that phase would probably depend upon the effectiveness of Dkun's counteraction and the response of the U8 and tbe SEATO powers. )

The possibility of awar in the Taiwan Straits, "iet-nam. Laos, and even Korea will continue to exist. Moreover, Peiping would al nost certainly react wtth force if Communist control of North Kore. or North Vietnam were seriously threatened. It wouldcertainly retaliate lo any aharpIn the level of Nationalist attacks against the mainland. )


The bade objectives of the Chineseappear to be: (a) tooviet-style state in Chinatrong ind us trial economyodem military(b) to eliminate Western (andUS) Influence and power and to achieve dominance in Bast Asia; (c) to establishover Taiwan and other areas which they regard as traditionally Chinese; (d) to achieve recognitionajor world power; and (e) in general, to promote the goals ofcommunism.

ince its formal establishment in Peipinghe Communist regime has shown flexibility, skill, and ruthless determination


haa made significant progress toward the achievement of IU gaols. Its authority la flnnly estshllsbed and Its control eflectfre throughout the mainland area. War-torn and neglected industry and cmrmunicaUont were largely rehabilitatedroduction in most Important sectors has reached orprewar peaks, andon on the Soviet model Is weP advanced in all fields except agriculture and retail trade. The armed forces base made greatbe evolution from lightly armed forma lions toregular units with modern Soviet equipment.

The regime has also greatly enhanced the Influence and prestige of Communist China in Asia, lu power and ability to influence Asian developments were demonstrated in Korea and Inrlocfnna. Its stature among Asian states bas been enhanced by its skillful diplomacy at Bapdong and by the ment of contact with the US on the dorlel level. Strong pressures bare developed In the Free Worldeduction of controls on trade with Communist Chins and for Its entry into the UN. Meanwhile, the BlnoSovict alliance bos given Peiptng considerablesecurity and access to the materialof ihe Bloc, both of which have greatly reduceduinerabltlly topressures

However, during the period of thisPelping almost certainly will notthe momentum of its first Ave rears The Chinese Communists have only recently come to grips with the basic problems involved in the creationocialised national economy, and these will be difficult to resolve even with the benefit of Soviet experience.


Chinese CcmmurusU define thestage of Iheir internal developrnsnttransition tohile theyon Soviet experience, iheir tacticsto be modified by Chineseand by flexibility towardthey regard as basically hostile.has sought to utilise the party"of power and the state's direct controlkey points to coerce the remaining private producers of goods and services Into accepting socialist economic forms. Periods of pressure and social change have beenby brief respites This tactic ofand release" has beenecent years both to unnerve tbe populace and to destroy whatever eoheslveneas andleadership the Intellectuals, privateand well-to-do peasants may have

Political Siluoiion

The government of Communist China haa recently been reorganised, withelping. although the ronstltution of September ISM vests formal governmental responsibility in the National Peoples' Congress this body taorum for publicising already decided pohcj. Between the Infrequent sessions of themost of iU functions are exercised by Us Standing Comralttee. The Standinghas nominal supervision over the State Council, which ln turn dlrecU all the central government minis tries, including the Ministry of Defense, and supervises tbe operation of provincial and Vocal goverrunenU and tbe gov-ernrnenU of 'autonomous" minority arras. (See Chart I, page ft.)

Porta Uaatnhtp. The Chinese Ccrnmu-rust party dominates and controls Ihc gov-erriment structure. Although we have Httk information on the cBacrtbutlon of powerthe party, the supremacy of partyMao Tse-tung appears absolute. Mao Is Chairman ot the party Politburo and of the Secretariat of tbe Central Cornrnlttee, as well as formal head of the government.

Mao's position under tbe new constituUoneu active role In the formalof governmental affairs, and Important areas of Influence appear to have beento other leaders. Liu Shao-chi. who ranks next to Mao in the party hierarchy, seems to control the party organisation; Chou En-iai, who ranks third Ln the Politburo, has become the dominant figure ln government BdmlnUlratlon and foreign affairs; and Chen


seems to have the largest role la economic sSalrs. Although Cbu Tabenerated military leader and Vice Chairman of the "Peoples Republic ofe Isnd Peng Te-hual. newly appointed asof Mease, has assumed active leadership of the armed forcea

The first high-level party purge* took place during IBM when Kao Rang, state planning chief and sUth-rsnkmg member of the Potltbnro, and Jao Shu-shlh. party or-ganfsaOonal chief, were resnoved from the party and Imprisoned together with aof their aseoctatea Kao'e death has since been announced, but Jao's fate Is unknown Rao and Jao had both been veteran members of the Central Committee and had been the ranking party leaders In Northeast snd East China respectively3

While the actual details of the KaoJao affair still remain shrouded In mystery, the chief reason for the purge was probably an effort by Kao, Jao. and their supporters to broaden their own power. Despite officialsome differences over Issues of dcrnestkr policy may have been involved. Kao and Jao may also have attempted lo make cranmon cause with some of the military leaders, but apparently with Utile success, since nomilitary men have yet been involved in their disgrace.

In any event, there Is no evidence that the purges have had any lasting effect on the stability of the inner core or party leadership or its ability to control the party.with the purge announcement inhe partyewcommission to check on party discipline. As the regime confronts the problems ofshifts in the influence of leaders may occur and purges may be expected,at lower kwtts.

The question of Mao's successor will grow In importance since Mao is nowndin poor health. It Is doubtful if any Individual In the event of Mao's death would beosition for some Lime to assume the full authority held by bun, and an effort would probably be made to establish some sort of collective leadership.

iu and Chou would probably be In the best positions to bid for pre-eminence. Lin, second only to Mao In formal party listings. Is knownheorist whose attention has bean largely focused on Internal partyChou hasroader range ofand contacts andeputation for tactical elasticity However, their expressed views on major pnhrloi have not been InBarring any major setbacks to thethe differing backgrounds of these and other leaders appear mom likely to serve as complementary forces tn Implementing agreed pobcy than ss causes of serious conflict.

lthough the prestige of the army and Ihc role of Its leaders remain great, the direct role of the army in planning and policy has been stesdlly curtailed, particularly since the dissolution ol the regional governments. The newly created NationalCouncil appears to be largely anbody leas powerful than its predecessor, the People's Revolutionary Military Council Control of most of the Internal security forces has been taken away from the armed forces and placed under the Minister of PufahCThere appears to be awreaslngof tbend military elements cf the government.

There IS firm evidence of actual conflict between professional military leaders and the primarily political group. It Is possible that there may have been some sympathy among military commanders for the alleged belief of Kao Kong that "the party was created by the army" and thai those with party experience In the old revolutionary base areas should take precedence over DOnmllltary leaders. However, the high party status of manycommanders glveaested Interest in tbe regime, and the long establishedof poflucal officers within the armya constant check on the activities of military leaders We believe that there Is little prospect of differences which would seriously affect the cohesion or stability of the regime during the period of this estimate.

The Chinese Communist Party,embership of over eight millionof the population. Is substantially smaller

m proportion to population than Communist parties ln other Bloc countries. Althougho shortage of potential thereerious problem In quality sodreliability, an eight year program ef systematic political lrsdoctnmsUon5 for scene flee million party members and nonparty Intellectuals. Despite these efforts to taprore the quality of the perry, invenrmental efficiency will continue to be hampered by low levels of literacy and by friction between old revolutionaries and new bureaucrats

Popular arfrfudea end iupvorteries of repressive campaigns1 have dissipated scene of the support the regime initially enjoyed, leaving much of the populace disillusioned or disaffected.mounted4 and dvllal the local leml increased, official armouncerncnU allege that thereases of "subversion" and "economic sabotage" from4 toheseoccurred in both urban and rural areas throughout Corrarasust Chins The principal causae appear to have been local food abortages resulting from the floods and droughtshe poshing of grstnand agricultural social Ira tion. and the forced austerity program. Discontent seems to be particularly marked among theand at least one open "peasant molt" Is admitted to have taken place In

Communist efforts to remold theQilnese social system nave also met with considerable resistance. Their sttempta to destroy family proprietorship and family cohesion have generated widespreadThe regime has slackened Its efforts to enforce Ite marriage law, and reform of the family Is now being attempted primarily by the Indoctrination of youth.

Chinese Intellectuals, many of whom have been educated in the West or exposed lo Western thought, alsoerious problem to the regime, which It still dependent on their stalls The campaign to obtain trarfr eonformlty was accelerated In5 when Huriter who pressed for greater freedom of expression, was accused ofast conspiracy against the state. Abject confessions by Intellectuals were published organised toand expunge "the remnants of Hu Feng thought" in such widelymedicine and plant

t present, popular discontent Is tooand disorganised toerious threai to the stability of ths Pelping regime. The recent emrnaets on security and theof vigilance during the past year may bare been partly intended to provide afor continued austerity and stringent economic controls by creating an atmosphere of fear and tendon. The regime nowarge and effective control system, including an internal security force ofen in addition to tbe army. Al the localystem of "security ckdense"urban reatoenta'nd other mass organfasUons provides additional control* which extend into every street and small community As the process of accialfaa-too prcgressea over the next five years,discontent, particularly Ln rural areas. Is ablest sure to Increase. However, the regime will almost certainly be able to repress such discontent.

The Economy

SO. Tbe Peiptag regime has slated tbat the creationodern. Industrialized economy wiH, despite maximum efforts, require the rest of the century. It regards this development as essential to the transformation ofChinareet power. To this end. It le seeking to create an economy which wm eventually be capable ofull range of military and capital goods, and which would reduce Communist China's dependence on the USSR. The Chinese1 toive Year Plan for channeling their resources to the development of industry, especially heavy industry.

helM!ehabilitation period during which the regime was able to obtain wllh relaUvety smallubstantial increase In output and generally to raise production levels lo or above pre-Cernmuruat peeks. However, even after the


period tbe industrial bueextremely smaU.2 CommunUt Chin* produced no trucks, tractors,or airplanes; only an Insignificantof tucb Important items aa locomotives, electric mown, and turbines; andmall number of the simplest types of machine tools Its output in tbe basic sted and electric poster Industries was only about coe-ciith that of Japan. Moreover, while the Chinesehave tremendous human resources and substantial power and mineral resources with which totrong industrial base, the quality and utility of these resources sreBorneercent of the people areand aboutercent are peasants or Use tn backward rural cesnmunltfce.China has one of the greatest land areas tn the world, bat only shootercentunder cultivation and almost all theu unsuitable for culUvaLon It has substantial mineral resources, but smcs many are of poorer grades or tn ansa distant from railroads and industrial centers, theirand processing will be very costly.

inally, theaced with thelong term problem of stretching Its limited resources to meet the requirements for capital Investment and the minimum needs of awhich is growingate estimated lo be atercent annually, inhe population was precededillion In an afEciaJ census, snd It willtotalillion

he rise year Kan. Inhe regime, after considerable delay,omprehensive Five Year. (See Chart II, pageor maiorheairly rudimentary, modifiesUons have been introduced since its poblKaUon, andmodifications can probably be expected. Bvsn though the Rutttsni have given arten-stwj technical assistance, the Chineseadmittedly have encountered greatIn drafting their plan Its delayedwas omdally attributed to the lack of resource data, difficulties In theof statistics, lack of skilled personnel, and Inexperience In handling the problems arising out of rapid development.

he Plan callsotal state economic and social expenditureOhonunds for capital. io vestment to fixed assets, amount7 billionill km) and are to be apportioned as follows:



Puri and Power


IS)teel. CbaaUcals.

BuUdlnc Ua


a Transport. Poata, aad


eti-ulton, Water Crtoeer-

eaOcex ace Poreetry

t. CaUura. Edna Una.

a leanKlpal


Oocanaodlty SvodnatBaei


The mam Investmenteing made In heavy Industry. To support the industrial program, the regime plans substantialon transportation and,esser extent, on health, education, and other social projects. To achUve Its goals in the otheragricullure, light Industry, andthe regime apparenUy plans to rely chiefly on organUatlunal changes and, in the case of agriculture. on stimulated investment by the peasant and the cooperatives.

Basic lo the fulfillment of psngram goals will be tbebility to control theof Communist China's economicparticularly those in agriculture. To this end, the "transltkm to socialism" has been entered Into aggressively Stale-controlled cooperatives in agriculture, trade, and credit have been organised, and most of modern

1 Converted at tb* ofnelal7 yuenl which, because of probable otervataaUoD ol toe yaan, overstates tbe value of the Invretment by possibly TO to SO percent.


has beenard line hu been adopted toward the coriaurner, and strict control measures, Including forced grain procurement, control of cotton production, and food rationing have been Instituted

he regime appears to bare based itsplanealistic appraisal of Its control of mainland economic resources and of the availability of Soviet credits.06 It appears that ONP Increased by over one-half In constant prices, while budgetary revenues more than tripled and reached one-third of tbe ONP. Theevenues reflected "prof-Its" from riatlonaUsed enterprises However, the regime's future program0 appean touch slower rise tn the ONP and budgetary revenues, though they wOl continue to Increase relative to ONP, wul do solower rate. (See Chart HI, page


According to Chinese Communist budget data, defense and economic construction have accounted for aboutercent of totaleach year. However, thedevoted to each of these categories has been almost exactly reversed during the past flve yearsefense accounted forercent and econornic construction6 defense accounted forercent and economic constructionercent.the percentage decline, budgeted military expenditures6 were at the highest level since the regime gained power. Theof military expenditures at theproportion of the budget would appear to be consistent with the planned rate ofgrowth.

aaautrrtsl outlook. During the first Five Year Plan, the Chinese Communis ta plan to concentrate on developing the capacity and production of heavy industry. Consumer goods Ind as tries are to receive only aboutercent of the total Industrial capital oon-

'"Modtrr, industry" Is used by the Chineseto mean factory and mine production, larger/ Bxctustve of the output of handicraft

structlon funds.ndustrial projects for which the Soviets have announced that they will supply equipment and technical guidance constitute, tn cost, nearly half of the Industrialisation program. Almost all are In heavy Industry and have been assigned top priori lies In the supply of domestic resources. While planned targets tn other sectors may undergo subsequent major revisions, thksof the Plan is the least likely to be changed substantially.

Although most ofrojects will not be completer! during the first Five Year Plan, and some of the most important will not be completed untilhedescriptions of certain planned major developments In heavy industry are given for illustrative purposes. Tbe heavy Industry program calls for major construction Ln Ihe Anahsn Iron and steel complex and theof construction of large Iron and steel combines ln the Wuhan area in central Chins, and at Paotou in Inner Mongolia. Only the first stage of development of the latter two projects will have been completed7 the Chinese COrnmunists also plan to complete their first aluminum plant (exceptmail pilot plant built by the NaUonal-lstaj and to double power generaUng capacity

We believe the Communist control of Ihe industrial sector of the economy at sufficiently well developed to Insure that whateverare available will be directed to heavy industrial projects. Aboutercent ofoutput comes from nationalisedand the regime directly controls anotherercent through cooperatives or Joint public-private industries. Through tbe placing of orders, control of banking, rawallocation, and product distribution, the government effectively controls the output of the remaining privately owned sector. Only In tha case of the individual handicraftwhich engage aboutillion people full-time, has the extenaioo of stale control been delayed. During the period of thisthe regime will almost certainly further extend Its control over industry.



chxnbsiTT selected CXlMMOUmia


With UU (xcepUon of pig Iran, met, tracks, and food exopa, our estimate*7 production tre of the approzliDato order ot magnUuil* of the Cbmeae Cornmonlati' soali. With nupact lo oruda oil and gow-Una. wi.ilr preduetloD eanmatM are presently under revision, wc beUere thai the Oommutuat goali are

of the Tirelan arc given la parentheaea





















Trnlele Tlraa











Cloth (excluding

Dada from hand-



tnaehtn* made)





ta. tit

We believe that the Chinese Communists will not achieve some of the specific Industrial goals of the Five Year Plan, particularly in pig iron, crude steel, trucks, erode oil snd gasoline, and advance machine fabricating. They will probably not be able to developof their planned capacities The regime has not been able to maintain the planned


of lnieatmenl In fixed aaaeta,emains to be made In the last two years of the Plan period. Furthermore, unit costs for new plant construction hare beenestimates, and further sharp economies will have to be effectedl""f< Investment Is to prove adequate to reallre construction goals, atdreover, becauserobableof output of light, we beUm that the planned rate of hTtTcasT1 of production In light Industry Is inadequate to realise the planned level afof consumernless tbe regime Is successful In increasing theof cotton and othir commercial crops. It win probably also fall short of some of its consumer goods Industry goals. We believe that the gross value of Industrial output will increase aboutercent during tbe Brat Five Year Plan rather thanercent as planned by the Communists

Tne growth of output haa, In manybeen accompanied by high costs of production, deterioration of quality,imited range of products, resulting in high prices for Industrial goods, shoddyand overproduction combined with shortages tn various industrial lines. These conditions reflect the deficiencies existing in skills, plant, and materials at current levels of production, and the limited flexibility of Chines* Communist Industrial output. In view of the present official pressure to expand the volume of output, we believe problems of waste will continue to plague the regime for many years to come.

afempoieer prooiewu. The labor force Is believed to totalillion, which would Include aroundercent of the males, andercent of the females overears of age. The nonfann labor force numbers only aboutillion, of whomillion are governmentinion are tn the army and securityre employed by busman and Industrial enterprises, and the remainder areIn trade, services, and handicraft ln-dustrtts. Someillion of the nonfann labor force are directly employed by the State in the military, government administration, and economic enterprises. The regime claimsillion of the factory workers are currently employed In the industrial sector, an Increase of moreillion

Despite such basic problems as control of its huge population and of underemployment, tbe regime's most pressingor tags ol trained managerial and technical personnel Tbe Communists tend to complicate this problem by seeking topolitical reliability as well as technical competence In their trained personnel

TheCommunists are continuing their efforts to overcome ebortsaye* of trained personnel by employing many thousands of Soviet advisors and technicians. Many of these teach in universities and in trainingcom in-ted with factories or with specific development projects Under the Five Year Plan.0 students0 skilled workers lo theorMost Important, the regime has sought to eipand the educational system andstudent Interest In technical subjects. The speed-up has produced poorly trained engineers, end there are still too few qualified secondary school graduates to satisfy tbe needs of the economy and the growingof higher educational facilities. Peiping now recognises the need for more thorough training, and has adopted the Soviet five-year currlcoJnm in most technical Deeds beyond the secondary school level

Although at both secondary and higher levels ofonsiderable percentage of graduates will be drained off to staff the expanding educational system, large numbers of reasonably well qualified graduates will eventually be available to help the regime carry out ils programs. We estimate that0 CommunUt China will0 college graduates, an Increase of more0he recent development and planned expansion of the educational system may be seen In theestimated enrollment figures, derived in large part from Chinese CommunUt


W- 5 1KB a m'ousaadi)

UKOtt Education IM

11 U 31

M 95

AulCTflunrorotU-y It IS edicine and Public

Health M

tt M 88


Seeondary Ed-cation .Education 'In


cientific research activity In Communist China iaery tow level. The basic policy for utilising Communist China's limitedIn the scientific field has been toon training and on technical activity related to industrial expansion. Whileactivity will probably increase slowly, scientific research and development willnotery significant contribution to the Communist Chinese effort to attain economic and military sail-sufficiency during the period of this estimate.

espite the expansion in education,China will continue during the period of this estimate to experience deficiencies ln skilled labor and management and in trained technicians. These deficiencies wiH beIn errors, waste, end losses in produc-tton, and willimiting factor In Chinese Communist progress toward Plan goals.It Is unlikely that the shortage of skilled personnel willajor setback ln the program

grtcuUvral outlook.illion acres, someercent of Communist China's land area, is under cultivation. Although the Chinese Communists claim that anotherercent of their land is arable, this figure iscertainly too high. In any event, the bulk of such land would require extensiveor would be relatively unproductiveof short growing seasons, poor soils, or low rainfall. Counting double-croppedthe total area under crops isillion acres, ofillion acres are in basic food crops andillion acres aie in technical and other miscellaneous crops. In addition Communist China has large grazing areas which are not efficiently utilized, and extensive fresh water fishing and coastal fishing grounds- Communist China has largely been deforested However, tbe Umber reserves in northern Manchuria and Inner Mongolia are believed to be adequate to meet requirements beyond the period of this estimate, although their remotenessdifficult transport problems.

In the crop, we estimate that the Chinese Communists producedillion tons of basic food crops andillion tons of cotton, aa against Chinese Communist claimsillion tons respectively. These crops plus fish, livestock, and other technical or commercial products, provided the Chinese peoplearestandard of living, and the bulk o! the raw fibers for the domestic production of dothing. Nevertheless, the Chineseexported aboutillion worth ofcommodities which accounted for about two-thirds of total Chinese Communist

The regime was facedremendous problem in establishing control over theof Individual peasants. Sinceproducts directly or indirectly provide the major source of capital, the regime bas toaximum contribution from the peasant to support Its Industrialisation

During the period while it was stillits control, the regime sought to maxim tie its take from the peasant pnmarlty by taxes and marketing policies,he regime Increased Its pressure on the peasants. Compulsory sales to the state were Imposed, accompaniedontinuation of acampaign to form mutual-aid teams In order to pool labor and equipment on abasis. By the end of the year about one-belt ofillion peasant households had been organized into such groups. These teams were presented to the peasantsethod for increasing output by mutual seir-help, but to the regime they represented the first step toward agricultural socialization.

ressure on tha peasants Increased still further4 and hi tbe springompulsory sales quotas vent up. Massof small producers cooperatives (In which land, equipment, and labor are uti-IWd collectively though private landis retained) began, and by tne spring5 the Communists announced that someercent of peasant households bad been organised0 cooperatives. However, there was some uncertainty In agricultural policy. Thushe regime,esult of peasant resentment to Increased fined] salesoor crop year, fixed the quota at4 levelhree-year period. At the same time,0 of the newwere disbanded because of poortoo hasty organisation, ot member noncooperatlon

period of ambiguity Inwu apparently ended in JulyMao called for acceleratedcastigated those who had urged aHe attributed the difficulties Into errors In ImplexnenUtion. Beon energetic leadership tocooperation and recommendedof several thousand cadres fromcenters to superviseIn setting up cooperatives.

aoime-table under which half of the rural population vould be organ-bred In cooperatives by the springof the cooperatives are to be consolidated into larger units by this time. All of the farm population Is to be Integrated Into at least small cooperativesao stated,that agriculture would not be fully ool-lectlvised until the

regime has probably accepted theand economic risks of relativelyhi agriculture both becauseectnriubdans and because ofneed to control productionto meet Industrial raw material, export,consumption requirements. Taxessales imposed on individualcould not perform this task.appears to believe that, contrary to

Soviet and Satellite experience, socUllxation csn be accomplished without adverse effects on production

be Five Tear Plan callsinimum of central government investment InOnlytfflon yuanercent of capital cesastructlon wUl be allocatedto agriculture, with some portion ofillion yuan having Indirect benefits to agriculture through flood control,and other projects. The largestin agriculture wil be by the peasants themselves. The Plan calculates peasantfor the five-year period atillion yuan for new tools, replacement of fixed assets, and expendable assets such as seeds sndThe regime Intends to undertake such low cost programs as the distribution of disease resistant seeds, insect control, double cropping, planting of high yield crops, andthe use of natural fertilisers. In addition, the regime Intends to manufacture new-type farm implements, to increaseof chemical fertilisers, snd to make modest Increases in acreage under cultivation and irrigation.

e believe that the Chinese Communists will not achieve their major agricultural goals, particularly hi basic food crops. Although thelanning to3 percent Increase tn total agricultural productionthe Fhre Year Plan period, we believe ft will be doing well to0 percentIn bsstc food crops, we believe the CMneoe Communists will increase production over the Plan period byercent rather than theercent they sre seeking, This failure to achieve planned goals will be the resultumber of factors tbe most important of which are: the regime willnot be able to insure that the peasants make the Investment expected of (hem;Investment will be probablyand the cohecUvliauon program win probablyepressing effect on produc-Uon.

he estimated Increase in food outputthe estimated population growth, but since agricultural exports constitute lessercent of total farm output, the re-


can probably meet lis expect teals, the proceeds of which are vital to the Industrial program, though this might require further squeezing of domestic subsistenceherefore, failure of the regime lo achieve its agTfoirtural production goals by the margin indicated will not necessarily affect Itsgoals However, the regime will be handicapped by its inability to employincentives to obtain planned increases la productivity and continuing rapid urban growth, where costs and standards of living are higher, may rnake It difficult to restrain rises ln coeisumptxm Moreover, should farm output fall to mate the limited Increases we have estimated, Industrial goals would almost certainly be adversely affected.





tifloo* In transport facultiesChina lacks country-wideail net exists in theareas of Northeast China and railroads extend to almost all other industriallysections of the country. In most other areas, primitive forms of transport are relied upon to meet dlstributtonough measure of the state of transport facilities in Communist China Is apparent from awith India:



Bali lines Motor roads Inland

(Ares: ijeo,ooo sq. mi. i


0 ml.



owever, Chinese Communist railroads, on which the industrial sector of the economy primarily depends. apparenUy have been able to meet the growing military and ecccawnfc requirements. Based on estimatedfigures' sod estimates of percentages of production carried by rail, we believe thatnllhon tons of such bulk commodities as coal, construction materials, food crops. Umber, and ferrous metals would

'These estimates are aub)ect to the quail Mention prefaced to Uie table on

have been moved by rail4 In soVhUon to the foregoing, the railroadstransported substantia) quantities of other goods such as machinery, military equipment, POL, and consumers genets. It should be noted that large quantities of heavy bulk cargo, such as coal, were moved relatively short distances'

xisting rail faculties were used to near maxlmum capacity. The Chineaehave apparentlyonsiderably higher level of ear utilization than it current in US practice and slightly above lhat aUained by the USSR, in so doing, rolling stock was probably overloaded and underrnaintalned, with reserves apparently cutinimum, although the Communists have increased the capacity of rolling stock repair and roanufac-turlng facilities.

he Chinese Communists claim that the extensive Inland water systemons4 by modern waterwayexclusive of junks, rt is estimated that river Junksarge portion of the naudn's total freightarticularly in the Yangtze and Pearl River systems. Inland waterways, although not fully exploited,ajor transport facility for bulk traffic.mall portion of the rudimentary road net it of all-weather type. Roads providesupport for the area opposite Taiwan and the main support for eccetornieLn the northwest. Civil air transport Is

'Tba Director ofT. aod the Deputy Director mr inUlHgrnce. The Joint Staff, do net beBeve that there is eedrkseril lnleihayoce lo esUaasse wtth accaraey Use tormeere carried try Chinees Communist rallroada Fragraeniary and often unOigooiM Chinese Communist aa-nounceriMnU Indicate thai the railroadst-Jiinaies as hkrhillion metric loosowever, rail opemUocal laUl^ienea as rrtSerprvted by the Director of. aad the Deputy Dtreett- for Intelhjence, The Jotnt Staff, Indicate* aId terras of freight cars, kaxaaoUvsa, and other facilities sufficient only to orktinats sof about halt this figure or about so snUocn metric teas. ODU1 better inleBtcenee la available, we beBeve It can only be estimated that tbt actualriginaled tn itM was lomewher* between these wWe extremes

limited to flights between Peiping andew other cities, the civil air fleetsomeight tracsporU

he Chinese communis: merchant fleet Is small and relatively obsolete, and Communist China must rely on foreign flag shipping to carry aQ of lis overseas trade as wellmall but strategically important portion of Its seaborne coastal freight. Coartal shipping, Including both Inshore Junkndtrekehters, provides the cheapest method for moving bulk cargoes between the major ports of Darren, Tientsin. Shanghai, andHowever, because of Chinese Nationalist operations, all coastal freighters calling at ports from Swatow north to Wonchow are of non-Communist registry. In the Yellow Sea area coastal shipping offers an alternate transport facility to ease the pressure on the single rail connection between Manchuria and North China. Along the southeast coast ft Is the principal means of transport. It isthat Chliwe Communist registered ocean-going coastal shippingRT) carried approximatelyercent and foreign flag shipping engaged In coastal trade carried aboutercentotalmetric tons> are unable to estimate the tonnage carried by the Inshore junk trahV.


Tho first Five Year Planillion yuan, orercent of tbe total investment In ftaed assets, forh theshare going to railroads.of new trunk and branch rail line are scheduled for eonttructJon during tbe Five Year Plan. (See Map i, for majorn addition, approximately tbe same amount of trackage Is scheduled for logging lines, spurs, yards, and double tracking. Aproportion of this construction was probably motivated by strategic aa well asconsiderations. In addition, the Plan callsotal productionocomotives0 freight cars during the Ave year period.

Plan goals for production of freight cars sre probably realizable, though there may be scene shortfall in the VxcsnoUva program This production of rolling stock, and theof trackage exparnaen thatlikely to be attainable, will probably, unless aproportion of these faculties is diverted for purely military purposes, be adequate, or nearly so, to support the Chinese Communist development program. The Trans-Mongolian railroad,apacity when fully operative ofillion metric tons each way per year, which will probably go Into operation earlyill also lessen Communist China's preaent dependence on seaborne trade. However, even wtth One new line theof seaborne trade would reduceChina's foreign trade sufficiently to cause serious delays in Its development

foreign trade and Soviet auistance. Communist China is dependeot on imports for essential elements of its Industrial andprograms. Fifteen percent,ll-hon, of capital construction expendituresthe Five Year Plan are allocated forof machinery snd equipment, while expanding Industrial output Is Increasingneeds for raw materials and otherrequisites. However, except for grants and credits supplied by the Soviet Bloc,China's ability to obtain such reeds Is presently limited by Its dependence onexports. Agricultural commodities accounted for about two-thirds of total Chl-

Communist exportsability to trade is alsoby the cetaratta ekaure of theand by lesser restrictionsother Free World countries on exportsChina. Phi ally, Bloc markets are

apparently having difficulties absorbingChinese Communist exports.

J The Chinese Commuruste announced that

their total foreign trade4 amountedequivalent of4 union Al-

though tbey claim that tbeir foreign trade was -fundamentally int believe there was probably an excess of imports covered by Soviet Bkx credits While the nature of such Imparts and Soviet property acquired by such creditsot known, there are Lrahca-tloos that the total value could have been as high00 million.

Communist China's trade becameoriented toward the Blocrade with the Asian and European Satellitessignificantly3 levels andat approximately the same level with ths USSR, raxhadmg lhat covered by Soviet credits Evan after taking Into accountresalei of Chineae Corrimunlst goods to non-Bloc countries, tbe Bloc still accounted for about three-fourths of Communist China's trade.

4 the value of Chinese Communist total trade with the Free World was greater than2 and probably approximately the same as3 However, there were sharp Increases In trade with Japan and Pakistan Tbe recorded exports of Ihe principal non-Communist countries lo Communist China4 were:

Kom ST



WestOeraianr .at






The tonnage of free World exports toChina has Increased steadilyons in 1BK2ndons

The Chinese Communists have stated that their foreign trade4 totalled over 9tons We believe that this Is sn lncom-plete figure, and that the total may have amounted to betweenndillion tons.inion tons moved by eea compared toillion tonslmost all ofCrunss trade with the non-Cttnmu-mst countries, and aboutercent of its trade with Bloc countries, was carried by sea. The bulk of Communist Chines trade with the Bloc was carried overland

To meet requirements of the Fire Year Plan, the Chinese Communist* process tototal foreign trade byercent during the period, primarily through expandedof minerals, handicraft products, and agricultural products It Is estimated that Communist Chins could readily expand lis exports of coking coal and Iron oreo Japan) without substantial new mvattrncnt. However, Communist China may have trouble marketing increased quantities of handicraft and higher priced agricultural products to Bloc countries because thereuestion of the ability of the latter to absorb suchor profitably to re-export mem- The decline of Chinese Communist exports to the Pre* Work) has stimulated Free Worldand use of substitutes for some traditional Chinese Communist products

Although increased trade With the Free World would ahnost certainly Ckrveiop iftrade controls were relaxed to the ami maintained with the European Bkx. suchwould probably not constitute areorientation of Chinese Coromonift trade.elaxation of trade controls, If It included those of the US, would not greatly increase Coram un 1st China's ability to secure commodities not now available throughbut would permit an Increase in exports to markets not now open and would reduce import costs on certain items. Wethatelaxation of controls could Increase Communist China's annual Import

capabilities by0 million, of which about two-thirds would be due to the reduction of US controls. The total0 million is roughly equal touarter ofChina's Imports of capital goods,iron and steel, andoercent of the adjusted value of Communist China's capital Investment programo that extent, the buildup of Cocranunlst China's economic and military potential could beThere would alsoedaction tn internal Bloc transport costs,to0 minion equivalent. It Is Impossible for us to allocate such savings as between Coram unlit China and the other Blocelaxation of controls wouldflexibility in planning, procurement, and shipment. However, it probably would not result in any significant changes inChina's basic foreign or domestic poll-

Peiping has exploited the Issue of trade controls to divide tbe US from its allies and has charged that US insistence on controls is responsible for economic difficulties In Japan, Thailand, the Philippines, and other Asian countries. Ii controls were relaxed, Peiping would continue Its propaganda campaign against the US, but would seek to expand trade contacts with other Asian states,Japan, and would continue to use tradeeans of penetration and trade offers as an instrument for polilical warfare.'

An increase in bade controls onChina alone would probably increase the volume of transshipped goods but would not appreciably retard Ccmmuulat China'sdevelopment. However, If all Western countries now applying controls were to apply an embargo on Chinese Imports similar to that now observed by the US, Communist China would lose markets now taking almostercent of total exports. Since Blocare not believed to be readily expandable. It Is probable that Communist China's Import capabilities would be reduced proportionately,

'The political effects of reducing trade controls are considered InPolitical Effectselaxation cf Controls on Trade withChina,'*anuary IBM.

unless Soviet Bloc credits were increased.eduction in export earnings would probably atgnlAcantly retard Communist China's internal development

credits nave been anin helping Communist China obtainThe value of announced Sovietaid0 million, made up ofmillion credit extended duringrehabilitation and reconstruction, andmillion credit extendednChinese Communist0 have indicated thatcredits have been givenhe amount amountwas larger, with the majorfor military purchases.

Wrriory SrrucnSon

The power of the Chinese CommunistIs raised on the strength of Its armed forces and Its great reservoir of potentialmanpower. Since the end of the Korean War, Communist China has strengthened andarge extent modernized its military establishment. However, it continues toon the USSR for heavy armaments,equipment, POL, and almost all naval and air equipment.

Army. Tbe Chinese Communist army consists ofen organizednfantry,rmored,irborne divisions, as well as other miscellaneous unite.f army strength Is located In North snd Northeast China and Korea, and sootherercent In East snd Central South China, with relatively few troops In the interior. (See Maps.)

Improvements Inequipment, and training have been made since the end of the Korean War. Actual strength of most infantry divisions0 men, and divisionincludes sn artillery regiment ofield pieces. Tank regiments are believed to be organic to the army troopsf thermies and tofnfantry dlvkdona


armored crMsion equlpenen'. ln-cludet SO mediumeavy tanra,eU-propelled guns. Twelve of Ibe artillery divisions are field artillery, standard equlp-rnent of whichsecea ef ceifberi up to IBS mm. Boverer, tbe amount of equipment actually present In ennored and artillery units Is believed to be somewhat less than TO*R

oi. General army morale is believed to be high because of Increased professions lira Uori and Ideological kwtoctrlnalian as wad aa the privileged aocial statu* accorded the so-aier The adoption of urirrerxal conscription an5 will probably tramesse aervice morale by firing the terras of service and rsuonalbring Induction methods.igrUflcantin general popular disaffection, par-Uculaily among the peasants, might adversely affect the morale of many servicemen

he numerical strength of tht Chinese Communist army win probably not Increase0 unless tbe Chinese Cccrmsunlsts feel therrsatfeee faced with bmmlnent large-scale war. However, beginningbe conscription law will Increase the body of trained reserves by requiring reserve duty Of most of theroops to be discharged annually and an unspecified number of men underith no previous sarvlcc.

0 the army is expected to havethe process ofank regiment and taereesed artillery aad heavy weapons Into each Infantry division.of light weapons of Chinesemanufacture and heavy armaments of Soviet manufacture win be virtually complete.

hinese Communist vulnerability to ah attack has caused them to place considerable emphasis on antiaircraft defense. Mostdivisions now include antiaircraftfor local protection. Five antiaircraft divisions and somendependent.Tglmenls have been Identified Fire centra] equipment, especially radar, appears to be In short supply With expected Increases tn equipment and further training during Uie period of this estimate, the Chinese Cornmu-nlsta will probablyubstantialcapability

Air rarest. Ounese Communist airnaval air) fceres have an estimated total strengthlanesets) and aboutpersonnel0 the principal offersrhre sir weapon will be the Jet fight bomber force, which presently consists of anEAGLES and which will probably reachlthough presently stationed mainly in bases near Korea and Taiwan, this bomber force could be redeployed so as to reach any target in Asia north of the Malay Peninsula and the southern Philippines. (Seet Is handicapped by lack of combat experience and fighter escort capability.China has onlyiston medium bombersnd la expected to have no more trainhese could reach targets as far away ss Guam and Singapore. It will probably not acquire Its first Jet medium bombers

Communist Chinai air defense capability lies mainly In Itset fighters, and Its core of combat veteran pilots. This force Is considered combat-ready under visual operating condi tions Replacement of the few remaining piston fightera with Soviet Jets should be completed bynd theof an all-weather force will rarob-ebfy begin shortly thereafter.ll-weather fightera may be added to the air force byotal fighter strengtheak of0 Jet fighters inespite difficulties Inand supply, Communisl China hasImproved Its basehe coastal area opposite Taiwan.

with the sld and technical advice of the USSR, the Chinese Cornmunist navy basresent modest strengthestroyers,ubmarines,atrol escorts andotor torpedo boats.ining vessels, andmphibiousumber of small Soviet vessels may recently have been delivered to Uie Chineseotcng with the transfer of Port Arthur.

l though there are indications that the USSR may have recently helped the Chinese

of naval construction, the development of the navy0 will probably continue to depend primarily on material received from the USSR The Chinese Communists will continue to possess sufficient air and naval strength to control the air and sea spaces necessary for amphibious operations In the Taiwan Straits end offshore Island areasthe US does not intervene. They willapability for medium rangeoperations and win probably further develop their mine warfare and surfacefor conducting defensive operations In coastal waters. These factors, coupled with existing air power, will probably give them during the period of thisignificant capability to oppose hostile forces operating in coastal waters.

Naval ah* force strength (Included InlanesThe (levelcpmant of Chinesenaval aviation has recently received considerable emphasis, probablyeed to perform standard naval missions such as support of amphibious landings,patrol, convoy escort, search and rescue, reconnaissance, and mining. It Is also possible that, following the Soviet pattern, the defense of certain coastal areas and bases Is assigned to naval air. Tn any event. It is known that re-equipment of the naval air force with Jet aircraft is being given high

The Chinese Communists have sufficient conventional amphibious type ships to provide lift00 troops with some armor, supporting weapons, andaximum3 lightly armed Infantry troops. As ofhe Chinese Communist merchant marineill0 ORTross tons with an estimatedcapacityong tons. Utilization Of this shipping could provide additional lift forroops. However,the special problems of phasing, control, and protection of forces peculiar lo anoperation and the necessity forresupply and reinforcement lift capacity, it is estimatedhinese Communist initial assault force would be limitedroops.

capabilities. We have dothat Communist China possessesweapons, and It has only aresearch capability. However, ifwere to provide the necessaryand technicians, the Chinesecouldhort time achieve theto use nuclearecenttoilowatt nucleara laboratory for handlingand an unspecified number ofcyclotrons to Communist China Infew years and to train Chineseatomic scientists could. Ifmall Chinese Communistprogramhis aidbe of most use in such fields asbiology, and additional Sovieta different nature andcalethan announced would be requireda nuclear weapons or power program.

Communbt China0

he Chinesebarring suchajor wareries ofwill probably have continued toalthoughower rate thanfirst Five Year Plan. The bulk ofwill probably be state-ownedpeasants will be In some formommunistprobably have about tripled lbsoutput, more than doubled its coaland increased the value of itsindustry some two and one-halfeven with these substantialCommunist China's Industrialremain small. Crude steelwill not be moreillion tons below JapansIts estimated electric powerillion KWH will beilliontheapanese output. Moreover,

not* to tattle on

at best the rate of Increase of agricultural production will only approximate the growth of population. Under these circumstances, the regime will continue to hare greatIn meeting lu increasing Investment and export requirements Finally, continuedon the sources outside Communist Chinaide range of complex Industrial itemshortage ot skilled technicians wDJ complicate planned economic

The Chinese Communists will have greatly Increased their military capabilities. Against Indigenous military lorces, Peiping willcapable of overrunning South Korea, Taiwan and the offshore Islands, andSoutheast Asia. However, Communist China will still suffer frotn militaryparticularly air defense defsrtrndes and lack of an adequate Indigenousbase. Chinese Communist dependence on the USSR for vehicles, POL, and almost all complex military equipment will continueommunist China wtnbe self-sufficient only In light weapons and Individual equipment

The control aystem will be underpressure. In particular, Increasedfor food will conflict wtth the regime's program to develop large reserves and toexports of foodstuffs and the acreage devoted to Indus trial crops Although themight make scene roodlfkatlcns of Its mvestmect program in tha eventeries of bad crop years to Increase the availability of consumption goods, it probably would not make major concessions. Its controlwill probably be adequate to enforcetoward lis economic goals, but thewill probably have to resort to purges and to terror, particularly against thePopular support for the regime Isto decline further among peasants and In-teller teals, and the party Itself may lose much of the esprit that characterised theperiod.


uring the past five years the relationship between Communist China and the USSR hasoncert of Interest and action Inubstantial degree of mutualhas developed. The two allies are linked not only by Ideological bonds, but by common hostility to the US,ilitaryInvolving Cornmurdst China's manpower and strategic location and the USSR'sand technical capabilities, snd by the mutual advantages of concerted diplomatic and "revolutionary" activities. While wethat pnlirlrs of mutual concern are mutually determined. Peiping's dependence on Moscow for arms. Industrial resources, snd technical assistance will cause It to continue to gtve Moscow's views great weight on raejor queetions of global policy. But PWptngJposition In many areas probably gives it considerable potential for influencing Moscow.

tccd the beginning, the Chineseregime escaped Satellite status bothof tbe else and remoteness of China and because the regime rose to power primarily through IU own efforts The Communist Chinese role In the Korean War gaveChins additional bargaining strength In dealing wilh the USSR.

Since0 Soviet writers haveMao special honor for his contributions to theofn the field of strategy and tactics for revolutions in "colonial and eemicolonbsr countries There were Indications In the late summer4 of unusual Soviet sohctlousness towards the Chinese Communists Inublic reference to the "new situation in Aafet"by tbe emergence of Communist China, and In the unprecedented visit to PeCptng of Khruebebev and Bulgarun Communist China'she Bloc was furtherby Moiotovs subsequent reference la6 toorld camp of socialism and democracy" as 'headed by the USSRor more correctly saidheaded by the Soviet Union and the Chinese People's Republic."

Traditional Slno-Russlan territorialalongile common borderotential source of friction between theSince the IBlh century, Chins hasTannu Tuva and Outer Mongolia as Chinese territory. Although the Chinese Com-



now appear to have accepted Soviet control ol these areas, they may still beabout Soviet influence tn ankleng and pceaibly about Uie recent Sovieteveloping previously neglected regfcxss adjacent to Slruuang and Manchuria.the well-oubueised Soviet vrtthdiawal trorn Dalren arid Port Arthur indicates that the Soviet leadership has taken steps to reduce Chinese Communist lensltlvlty in the border

economic relations arearea of potential friction. There hatebeen disagreements over the level ofaid to Communist China'sand the Chinese Communis Is havecertainly pressed for much greaterthe USSH is willing to grant.

Although there Is no evidence of serious friction or lack of coordination in Chinese Communist and Soviet relations with other Communist parties in Asia, thereatent possibility of strains developing in theseIn North Korea the Chineseincreased their Influence during the Korean War, but Soviet-trained figures still hold the most Important positions. In North Vietnam, geographic proximity has fostered Chinese Communist influence, and the volume of Chinese Communist propaganda support and projected aid exceeds that of the USSR. Chinese Communist Influence on Japanese Communism may also have increased with the recent return of some Japaneseleaders from Communist China. The Chinese Communists apparently control the Malayan Communist Party, but theiron the Indonesian Communist Party rosy be offset by long established channels leading to Moscow.

The Intensity of the "liberate Taiwan" movement In Communist Chinaumber of occasions may have created apprehensions among Soviet leaders. Chinese Communist wlUlngness since the Bandung Conference lo use cyplomatle tactics to furtlier theirin Taiwan probably indicates that this possible difference of emphasis is noterious source of Sino-Soviet friction.

uring the period of this estimate.China's power and Its potential for pursuing courses of action which couldwith Soviet interests or desires will probably mcrease. Communist cidna win probably exert an Increasing Influence on Asian opinion independent of that exercised by the USSR. The growth in Chinese Cnm-raiina- prestige might encourage someCommunist leaders to attempt to extend Chinese! influence over other Asian Communist parties beyond the point desired by the USSR However, no major differences of Interest ln Asia seem likely to develop during the period of this estimate.

onsiderable time to come mutual advantage, the existence of common enemies,ingle ideology will almost certainlyover lesser considerations to preserve close Sino-Soviet Ues which will probably continue to be relatively Impervious to outsidePelping probably believes that Itswith the USSR prevented UN forces from broadening the Korean War and restrains the US from action against the mainland. The Chinese Communists will almost certainly feel the need for continued protection until their own power in the Far East Is much further developed.

Therefore, at leastelping will almost certainly adhere to theessening of East-West tensions wouldnot significantly affect Pciping's estimate of the continued need for the alliance, and might ease pressure in Sino-Soviet economic and mililaryeightening of tensions could create new problems for the alliance, but would strengthen Pelplng'sfor solidarity, unless the USSR proved unwilling to Insure the security of the Pelping

III. PROBABLE CHINESEOURSES OF ACTION IN. In pursuit of its basic foreign policy aims, Peiping win, during the next Ave years,concentrate on eliminating thegovernment and gaining control of all Nationalist-held territory, eliminating(and especially US) influence and power in Asia, extending its own Influence in the

area, and achieving acceptance at thegovernment of China. The Chinese CommunUte probably believe that time is oo their aide. This conviction la baaedelief both In the ultimate victory of the world Coto-muniat movement and in the power of China under strong central government. Leninist doctrine and their own Interpretation ofevents have probably convinced them that flexibility and tven tactical retreats will not seriously compromise their long term prospects.

The Chinese) Corrtmunist Estimate of Hie Slhfcmon

be primary factor tn determining the manner in which Peiping will pursue itspolicy objectives Is Its estimatections and reactions It probably considers tbe ultimate US objective In Asia to be tha elimination of the Chmese Communist regime, but probably estlmatee that the US does not mtend. onpsnvoked, to attackChina within the next several years.

eiping almost certainly estimates that open aggression on its part against eitheror the ROK would lead to strong US counteraction, probably including action against mainland China and possiblythe use of nuclear weapons, it probably further estimates that sn overt Chineseattack on any other non<ommunist Asian state would also entail risk of UScounteraction against the ChinaIt probably also estimates Ihat an overt attack by the Viet Minh against any of the Indcchlnese states might result in at least local US military reaction, with such reaction particularly likely la the ease of SouthThe Chinese Communists probably also estimate that US military capabilities for the concentration and effective application of force In the areas of Korea, Taiwan,and even tbe China mainland are still superior to their own. However, these almost certainly remain twilight areas In which they are uncertain as to the intention or the ability of the US to react, ss In the event of attacks on the Nationalist offshore Islands orsubversive efforts in non-Communist states.


Moreover, tbe Chinese Communistsestimate that they have certainover the US in any primarily political struggle in Asia. They almost certainlythat the prestige of Communist China In Asia will Increase along with the military and economic strength of their regime. They probably estimate that the indigenousparties and,esser extent,verseas Chinese In Southeast Asia provide them with unique Instruments fornon-Communist governments. In their view differences among tbepowers on Asian policy will make It difficult for the US to take effective measures against Communist expansion conducted through measures short ofMoreover, they probably estimate that anti-colonial, neutralist, snd nationalist sentiment will continue lo aid their efforts to discredit US motives in Asia. They probably alsothat American dlpkroacy Is complicated by commitments in other areas and byand internal political pressures which make it lees flexible than their own.'

At the seme time, the Chinesemay recognise that serious obstacles exist to the extension of their power: (a) In roost non-Communist states in Asia,Is the dominant force and most leaders of these stales recognize the threat of aCommunist movement to their(b) despite occasional weJl-pubilclsed offers of technical and material aid, Chinese

to help these countries gratify their desires for Industrial development: and (c) leesIn several of these same countries, the influential local Chinese community as still regarded with envy and suspicion

he Chinese Communists are probably not as concerned with the present strength of SEATO as with the future possibility of an expanded and strengthened anti-Communist bloc In Asia. Their apprehensions on this score probably center on lapan. In their view the only Aatau power which mightaugment anti-Communist power in Asia during the period of this estimate. The Chinese Communists probably also view India

as is rival (or Asian leadership. Tbey ably also estimate that India wouldubstantial extension ol Ccsnmoroat mnueoce tn South and Southeast Asa and be alienated by overt Chinese Communist aggression Ln these aress. Pelping apparently feels that an attitude of outward reaped lor the positions of Japan. India, and other Asian powers will encourage their passivityendency to think tn terms of Asian solidarity, it appears to believe that such ostentatious rnaneuvers as mutual declarations of fealty to the five principles"are nasty to help allay Asianof Pelplng's motives.

n Communist China's view the probable basic hostility of France, the Netherlands, Portugal, and probably even the UK Isto be effectively rnajurested because of their podUcal and military weaknesses and.easer degree, because of their desire for trade with Communist Chins. Chinesehostility to these countries hasbeen subordinated to hostility to the US. The Crttnese Communist regime probablythat so long as it eserclsas restraint toward these countries, they can be ofvalue to it. both ln trade and in inducing the US to modify its policlea in the Far Bast.

AAdin Unas of Chinese Communist Foreign Policy

uring the period of Uua estimate,will almost certainly wish ia avoid serious military Involvement with the US. For this

'The "Ovairst nbscrlbvd te Br Ohc* ids (Mm in April IBS* atnUoe rilrie-radian iihltos esse ew&ned asrespect far each other* territorialand interference Intr andlthough rtporlMIr blurted al Nehru's Insistence, th* principles are ttandard Ooaununlstoeerj resembllnt Utoie used In Boriil treallee both with IMS and wtth rant-list, lb* arrivistes ban been aisjor tkaran* of Peklrif diplenMcr and bav* bean sMastnked icta of Bonne aad Alf skekeSesl* in Joint coanBaaSsvse vrW Chened as bv Ho Chi Mlnh and th* USSR


reason, we believe tbat Pelping is urulkely to initiate open hostilities with Its own forces, except perhaps against the offshore Islands. Helping prUaUy would also be anfikeJy Uj en-courage tbe H"oreans or the Viet ktmh to undertake large-scale military action because it would probably estimate that such action could not be carried out without ultimate large-scale involvement of Communist China with tbe US. However, during the period Peiping wmccur age expanded guerrillandochina Althocgh Pelping will probably continue to sanction other guerrilla movements now tn existence It Is unlikely, at least In the early pert of the period, to provide the support necaeaary for large-scale expansion of these activities

lis. although the CommunlsU may againte military action whenever tbey estimate thai the benefits will outweigh thes ad vantages of such action, Pelping will continue to pursue policies emphasisingrather than military action as long as Its objectives are acceptably served by this means. The major factor In thiswill be their estimate of the risk of US mililary counteraction: thus Communist Chins will probably emphasise political action over the next two or three years. Inwith tbe USSR, Communist China winolicy of "competitive coexistencethe capitalistbe ChinesewOl endeavor to have their approach to International problems characterised as conciliatory and flexible, but Joint Smo-Soviet policy will In fact permit no major concessions lo the West. Moreover, both parties may feel that the development of occasional crisis situ-aUons would weaken the diplomatic position of tbe US and strengthen neutralism, without senwusly prejueaclng their own "coexistence'* posture. Communist China will also be under acme pressure, more so lhan Ihe USSR, lo manufacture crises In lis external affairs toretext for imposing new production and austerity drives al home. For thesewe believe thai although Pelping will continue to profess support for the "fivethere will be times when It will assart Its power ostentatiously, but within tha gsn-

era! limits of Bloc strategy, In order toits particular claims and pretensfams-

Byf Ccmmunlit Chinsourse of political rather than military action, most iion-oommunisi countries wlD probably nave recognised Peiping and establishedeconomic relations with Communist China, and it will probably have been accepted into the community of TratlTTrf as the major Asian power. In this situation, lis position in the SUno-Soviet Bloc will have beenand the Chinese Communists win probablyreater degree of flexibility hi their relationship with the Soviet Onion.

Peiping's diplomatic activities on behalf of the Bloc policy of "competitive coexistence" win be concentrated In Asia and the Middle East, where thereeposition to accept Communist Chinaformer victim of Imperialist and capitalist oppression.1'China's rota In this effort will be to play up to neutralist and naUonshstIn Asia; to manipulate the Indochina and Taiwan Issues to divide the West; and to exploit vulnerable aspects of intra-Aslansuch as RQK-Japanese andtensions. The Chinese Communists wOl almost certainly continue their efforts toOS actions and motives throughout Asia, insisting that US policy Is disguised colonialism and ti directedar in which "Asians will be used to fightn particular, they will attempt to frustrate US efforts toasis for militaryamong free Asian states. Peiping will emphasise the advantages of technical and economic assistance from Communist countries as well as "mutual self-help" among underdeveloped countries Tbey wUl alsoeduction in Western military, commercial, and other prtvUegas In the area. Chinese Communist propaganda on these themes will seek primarily to keep anti-Communist Asians on the defensive over the issues of "colonial-Ism" while the base for future Comrrrunist advances Is strengthened. Communist China win encourage wherevei possible theof popular-front type governments In which the Communist Influence would beand tb* Chinese CommunUt pattern of antlcolonlal "people's democracy" studied and admired. While to the US Peiping policy may sppear uncompromising, to many Asian states it may appear conciliatory and flexible.

he possibilityommunist-initiated war in tbe Taiwan Straits, Vietnam, Laos, and even Korea will continue to exist.Peiping would almost certainly react with force if Communlsl control of North Korea or North Vietnam were seriouslyThey would almost certainly retaliate to any sharp Increase In the level ofattacks against the mainland.

Specific Courses of Action

aiwan. Peiping Is committed to the -liberation" of all Nationalist-held territory, snd defines the Taiwan Issue as an internal one in which foreign interference will not be tolerated. For the period of this estimate, however, Chinese Communist courses oftoward the offshore Islands and Taiwan will be determined largely by their estimate of L'

Since the Bandung Conference inhe Chinese Communists have attempted to advance their claims to Nationalist-held territories more by diplomacy than by military action. However, Peiping has emphasized that its current willingness to take over"peacefully, ifhould not be Interpreted as an abandonment of its basic objective. Chinese Communist efforts will be concentrated on reducing morale within the Chinese National government and within the mainland Chinese community on Taiwan, in the expectation that Nationalist leaders may ultimately be induced to negotiate withover Taiwan's assimilation IntoChina. The Chinese Communists willcontinue trying to force US agreementilateral or multilateral conference, at which their object would be to Induce the removal of OS military protection from Taiwan.

The Chinese Communists will probably continue theirhe area opposite Taiwan and the offshore islands in order to Increase pressure on the US and to weaken morale on Taiwan. While the Chinese Ccm-

munis ts probably do not intend to attackso long as the US maintains lb comrnit-menta to the Hallonallita, they will almost certainly conduct probing operaUons against the offshore islands. If the Chinese became convinced that the US would not assist in the defense of these Islands with Its own forces, they probably would attempt to seise them. Should Pelplngi lorces successfully occupy the Nationalist-held offshore islands without Incurring US military retaliation, there would be an IntenaUVatlon of the campaign toTaiwan.

UO. Indochina. We behave that theChinese Cornmunurt objective inwas secured at Oeneva when tbe Viet Minh were granted full control of NorthPeiping may hare behaved that it also received an Implied commitment for theof South Vietnam Innd that In any event conditions had been created which would make it difficult for the US to intervene. However, we believe that theCommunists now estimate that the US wouldtrong effort to frustrate an extension of Communist control to the south.

n conjunction with the Hanoi regime, Peiping will continue Its efforts to expand Communist influence and control hi South Vietnam. Through coercion, subversion, and propaganda the two Cornmunurt regimes will attempt to discredit and undermine theof the Diem government, and tothat government and the US on the Question of nationwide elections. In addition, the Chinese Communists will continueefforts to isolate the Diem government from the Western nstiona snd the Asian neutrals. Even if the Viet Minh are delayed toettlement, by elections or otherwise, favorable to the extension of their control over all of Vietnam, the Chineseprobably will not encourage the Viet Minh to renew open has unties However, at some point they probably will encourageViet Minh guenills activity in South Vietnam. Their actions beyond that phase would probably depend on the effectiveness ofounteraction and the response of the US and the SEATO powers.

n Cambodia and Laos, tbe Chinese Com-muriufU will combine pressure andto encourage neutralist sentiment, tn weaken ties wtth the West, and to stimulate subversion of the free governments Wethat if the Pathet Lao position were threatened by Royal Qcnernraent action,would encourage the Viet Minh to assist tbe Pathet Lao to the extent necessary tothe Pathet position It Is less likely that tbe Chinese Communists will encourage the Pathet Lao to undertake aggressiveaction outside of their presentarea, at least while the International Control Commission remains in being and in the absence of greater evidence of popular support for the Pathet Lao within Laos-Should South Vietnam fall to the Viet Minh, Communist support for subversion andoperations in Laos and Cambodia would almost certainly be. Korea. The Chinese Communists, in common with the USSR, hope to secure aof UK forces from Korea and aof US influence there and eventually to subvert the BOS-eans of putting pressure on the US to withdraw its troops, the Bloc win probably urge new negotiations on unification and 'relaxation ofo further that end, there may be additionalof Chinese Communist forces. The Communists will almost certainly refuse any settlement In Korea which endangerscontrol of North Korea or falls to offer better prospects than at present for eventual Communist control of all Korea

apan. Communist China seeks tothe re-emergence of Japanajor military and political power In Asia and, in the short run, to weaken Japan's links with tbe US by exploiting US-Japanese policyPeiping'i tactics win probablyto rely upon the manipulation ofopposition to the potsnes of the Japanese conservatives, tbe mducements of Stho-Japa-neae trade, and the application of directupon the Japanese government Corn-numist China will probably be able to Increase semiofficial contact with Japan through trade and cultural missions and will probably step up its campaign to normallte relations.

Communis! China will probably continue to aupport tba currant line of the Japanese Communist Party in avoiding acta of violence and workingopular front. However, should any Japanese government undertake an extensive reannarnent program or reverse the present policy o( permlUlng the expansion of unofficial relations with Pelping, Cornmn-rusrt China might publicly revert to thethat Japanajor threat to peace andampaign of threats and mtlmi-daUon designed to reinforce leftist opposition within Japan

India. Although Communist Chinacertainly regards Indiaival, it will, at least during the next two or three years, probably seek to encourage India's present neutralist stand, which hu furthered the alms of Slno-Sovlet diplomacy by bolsteringsentiment generally throughout Asia and the Middle East. Thus, Communist China will stress those interests it shares wllh India, and will probably keep Its attempts to expand Its influence in the Indo Tibetan bonier area lust short of the point where the Indianantagonism could no longer be con-cealed-

anaa. In the next two or three years it will prorxshry be Pelplng's minim tun ob-lectlve to prevent Burma from atjandcrilng Its present neutral position. Beyond that, Communist China will be worsting to distort Burma's neutrality, by encouraging tighter Burmese bonds with Communist nations. The threat of lbs military power will continue to reinforce Communist Cnlna's diplomaticemphasizing offers of friendship and peaceful cooperation. Pelping will almost certainly attempt to exploit Burma's financial and ecortomic problems to bring about closer Burmese Chinese Communist ties. Moreover, the Chinees communists will retain their capabilities for subverting the minorityalong Burma's eastern frontier.

ndmesia. The Indonesian Ccsnmunlat Party (PKI) is the strongeston-Communist Asia and the Chineae Communists probably estimate that Its capabilities will continue to be maximized bypeaceful" attitudethe Indonesian government- Corarau nlst China will probably continue its efforts to enhance thet PKI participationational front government by itselfto support Indonesian nationalist objectives. Even if the PKI were excluded from the new government which will come Into office ln tht springheCommunists would probably beby tbe Cluhese Communists toworkingopular front primarily by penetraUdn, propaganda, and organise-Tdonai wort.

alaya Communist China probably hopes, by encouraging Malayan nationalism, toritish withdrawal from Malaya under conditions that would Increase local Communisl prestige, Pelping probably call-mates that Its capability to achieve ibis end is enhanced by the continued colonial status of Ihe area, and hi (Singapore by theoverseas Chinese population. Pelping will "'fT* certainly continue to encourage Mai ay ar. CommunlsU to work for popular front governments, to extend control over Chinese youth and the labor movement, and to maintain their guerrilla organlraUon.


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