SCIENCE AND TECHNOLOGY IN CHINA'S MODERNIZATION

Created: 6/1/1986

OCR scan of the original document, errors are possible

t Central 5 Intelliscnce

Science and Technology in China's Modernization

National Intelligence hstitiuiic

THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL INTELLIGENCE.

THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS, EXCEPT AS NOTED IN THE TEXT.

Theing intelligence organitatioiM participated in the preparation ot the Estimate-

'rol InlolligciVB Agenty,Dulurti* Intelligence AgcMty, the Nadolol Secelly Agency,1 loliomho DepoilmenU ol Stole, 'hr Treomry. ond Energy.

Also Participating:

Ihe Aiwi'onr Chart ot*C" iMetge've Deporrmenl o* thehe Dmio ol Novol InTellirjence.lhe Altit'ori Chief ol Staff. Infelligenc* Oeoorrrnent of the A> Fort* The Director olHeodqwoneri. Marine Corps

NATION AT^Jfettdfi^YIN FORMATION

Unauthorized Disclosure Ti* Sanctions

science and technology in china's modernization

volumejudgments and discussion

Informationlrnl*e prrrMiaOon ot thahirli "Si ant*ond by Ihretan iMcllnmr Ikuid on that dale.

CONTENTS

SCOPE NOTE

KEY JUDGMENTS

DISCUSSION

The Changing Environment

Perceptions, Coals, and Priorities

Key Variables

Polilical Stability

ersonnel

Access lo Foreign Technology

Management

Infraslruclure

Funding

Assimilation of Science and Technoloi

The Sum of the Variables

Prospectschievements

Scientific Frontiers

Technological Advances

Consequencesodernization

scope note

the united states,atter of policy, supports tlie moderniza-tiou of china. the principal assumptions underlying this policy areore modernized china will be more open to western ideas and influence, willarger stake in global stability, will be less prone to actestabilizing manner, and will be better able to withstand pressures from the ussr. at the same time. chinese leaders believe that advances in science and technology are critical tofurthermore, they conclude that the success of theirprograms will dependery large extent on how effectively they can acquire and master foreign technology.

this estimate dealsentral issue in both us policy and china's modernization plans: the outlook for science and technology) the estimate assessesnvironment, the prospects for significant advances in priority areas over the nextears, andchievements and failures on both china and the outside world, in reaching these judgments, the estimate assumes both political and social stability and general continuity in modernization policies in china based on the conclusions of the recently completed national intelligence estimate, China's Second Revolution. it also assumes thai china will not gain control over ihe scientific and technical resources in taiwan.

while science and technology ate widely usedingle term, they embody two different concepls. science refers to the pursuit of knowledge through the systematic study of the physical world and its phenomena, while technology refers to the application of suchfor practical purposes. chinese officials have found it increasingly importanl to emphasize the distinction, because the objectives of science and technology differ, as do iheir results. science, with its obiective of understanding what happens in nature and why, generally involves long-term, open-ended research. technologyore short-term focus on how to achieve specific results, usually involving direct economic benefits. the emphasis in china has clearly shifted to technology. likewise, this estimate focuses mainly on technology along with the institutional structure that conducts research and acquires

technology for china's industry.1

St^ftET

key judgments

overall, the outlook for ihe modernization of science and teclinol-ogy in china is favorable:

polilical supportodernization is strong, consistent, and growing.

foreign technology is being acquired on an unprecedented scale, and large numbers of chinese are being educated abroad in science and engineering.

research facilities are being better equipped, and management is improving.

direct links are being established between research centers and the industrial establishments that are to benefit from the research.

the paceodernization, however, will be slow for atecade because of continuing difficulties in assimilating technologies. for the most part, the labor force is unskilled and poorly motivated, and managers are inefficient. in addition, the infrastructure of technical support, communications, transportation, and energy is inadequate. these problems are compoundedumbersome bureaucracyenchant to overcontrol society through central planning. this results in low productivity, poor quality control, and slow absorption of new technologies. cumulatively, theyormidable obstacle tochina's technology levels, upgrading industries, and closing the technology gap with the west.

while these limitations affect the pace at which moderncan beore agile andystem is nonetheless evolving. individual scientists and engineers enjoyattractive opportunities and incentives, betteranagers are pushing more relevant research, and overall funding for research and development is increasing. the supporting infrastructure is improving the flow ofournals are flourishing, and research facilities are becoming more independent. out of thisweo provide important contributions to increased productivity in china, which is the basic objective of modernization.

inodernization will probably accelerate military research and development programs. important beneficiaries include

China's ground, naval, air, ancl liallistic missileoreign tirehnol-ogy. in particular, is likrly toey role in reducing by several years the time it takes to solve critical developmental pn>bJems- China already has reached agreements for the purchase of military equipment and technology withountries (see annex i) for details).

China may be able to narrow somewhat the gap in selected industrial technologies uilh (he industrialized world over the next decade. The degree of any such narrowing is uncertain, but catching up fully with the West in any of these areas is very unlikely. The general outlook for progress in high-priority areas is summarized belo*

will widen.

"'I' widen.

will mallen

AmountedHWv

-ill remain (airl* uniform

-ill narrow

Special ilmcluralmay narrow.

narrow

Foreign technological assistance is likely to be instrumental in overcoming critical obstacles in both mililary and civil modernization programs. Demandsrom both military' and civil users will increase, and China will step up efforts lo acquire foreign technology, particularly from the United States This situation will provide both risks and opportunities.

Of course, China will try to avoid becoming overly dependent for technological assistance on ihe United States or any other country. To that end, Beijing isroad networkelationships. Although China currently acts mainlyonsumer of high technology, eventually. Beijing maytronger competitor in certain world marketsodernization results in more efficient production.

elations are also likely to expand somewhat as China seeks toelationships. At the same time. Soviet-trained scholars in ibeir midfifties may increasingly assume leadership positions within China's scientific community However, the extent of improvedelations is likely Io be limited because high technology tends to be more accessible in the West. Also, many of China'seaders are highly critical ofanagement and Ihey have pressed lor reforms along Western lines, despite their

Soviet training. Furthermore, China is moving away from theodel in many respects and may narrow much of the technology gap IxHween them and perhaps even surpass the USSR in some areas, such as certain types of computers. These developments are possible because Beijing enjoys far better access to foreign technology than Moscownd because China's leadership hasar greater willingness to introduce bold changes.

Large numbers of Chinese students will be studying in the United States as part of the growingelationship. This can be an impetus to better mutual understanding, despite reservations by some party ideologues about the danger of "spiritual pollution" from foreign education and more general concerns al>out Chinese students who go abroad to study but do not return.

The leadership in Beijing is trying to anticipate the full scope of consequencesodernization Ls likely to bring. Theeducation nf Chinese abroad and the rise of scientists to more influential positions may increasingly influence thinking on political issues. We already see signsuch more "open" China. While such trends are not likely to undermine the fundamental control exercised by the Communist Party, thinking within the party may increasingly be openider set of influences.

odernization is contributing to China's economic and military strength, and,esult, China is becoming more open to selected Western Ideas and influence, isarger stake in global stability, and, at the moment, remains disinclined to actestabilizing manner. While enhancing China's military capabilities, we do not foreseeodernization will lead to any substantial shifts in China's military balance with the USSR. The balance of forces with other potential adversaries in East Asia is also unlikely to change dramatically over the nextears. Despite China's development of new weapons based on foreign technology or purchase of some Western arms, it is unlikely that China can either absorb the technology or Geld sufficient numbers of more advanced weapons before the.

DISCUSSION

Changing Environment

oali. one! Priorities

I The stone em prism on wiener andthe highest politicalhina is hlHvThua mi on thethatsap etislt between ('hint and thepowers, and that this up urirrunb is due toand growing disparity in trehrrototty The leaderalto shareiIn reverse thends

that have ledeak and vulnerable China,on outude tourers lot an increasing variety of

important productd

2 In response to thetc percent ioniarge and growing gap between China and the world, the "Four Mcdcrnirations" bestan in rwinest8 focusing on agriculture, industry,and technology (SAT) and defense. The goali of thn prore* are loosely defined, usually catlinguadrupling of economic output3 and iheAccotdinc to Chinesr lUlrmrWi ji much at half of the gain in productivity over the neil few derndei Is to coene from science and technolng* The anils, however, are lest important than Ihe pfocess oflion in which the Chlnete leaders have demonstrated ato introduce substantial changes lo theand research systems f

3 Although the mot lemi rat Ion process has been remarkably open to iilcws from the West, the goalore modern und efficient socialist system, with the Communist l'arty In lull political conlrol But the party is no (miner commit led to Maoist notions ol cgalitariantvm that proved particularly stifling to the scientific community in thr past Instead, market forces are being introducedean* lobut not at the end olneclfve.)

4 As part of the modernization process, thousands of technologies have been identified as Important in various Chinese modernization studies, plans, and programs. But for the most part, efforts to upgradeapabilities and acquire foreignare focused on eight areas. These areashave broad industrial and military applications, such asr addrrvt particularly weak links in China's modernization, such at energy and transportation Currently, the highest priorities are accorded to

n

Computers

TesWoosrnunicaltcen

Automated manufacturing

TransporUtlofi

Energy

Special structural materia It'

Biotech no

Key Voriobles

hina's leadership is increasingly well informed on the requirementsodernization, and, accordingly, their objectives have become moreIn particular, their main purpose is to more closely link research and production, thus strengtheningagriculture, and the military. China beganeforms in theoIhe management and organization of research and development. The5 Central Commit-too decisioneform ami several associated measures provide the basic guidanceThe success of these efforts will depend largely on the seven variables discussed in the following para graphs I

6 Polilical Slobilitv. Political instability disrupted two previous attemptsodernization62 and poses the greatest threat to the current program. Bul the prospects (or political continuity areolitical supports likely to continue to

' Include) advanced cranptafte nuivrlub, metib. and ceramics well i' huh'rtrenalh carbon tibrn and hoih-lenirierslurr miilsnl alloti (o)

SEr3fJET

for al least the next several years. Nevertheless,odernization proem will Im* lone, and the politi iai leaill change substantially over Ihe net! decade. |

7 OpyautKHi to China) rnodernizalron ptocram has been minimal Scene tenror partytuehet to the pace of reform and some of ihe details They argue lhat opening China to Western influence has had unacceptable side effects. including increased corruption. But overall, ihc leadership it Incrcasingly uniletl on lite ncctltodernlzii-lion and Ihc direction lhal reforms should lake.

process of increasing ihe quantityersonnel In China will be slow (see (able Imajor shortfall ittudy in liteby the State Planning CommrssionChina's univrrtilirt were ptc-ducing only aboutof the engineers tr-yuircd. whereas Iheyto satisfy annulercent of the currentK-tertcisls. This situation is compounded byof qualified family and (he rapidtudents In addition, the costscience and engineering al existingand opening new universities will be expensiveIhe World Dank is making loansroatarru- In additioni> seeling foreign scholtry particularly fromStates, to improve toence andin China

alleviate some of ihete domesticChina will continue Io send large numbersabroad. Educational exchange programsestablished wtlh overountries. allh(iui[liof Chinese sludrnit come lo iheCurrently,0re studying in ihe US andAboutercent of these stiadesMsand engint-eiing (see insetj. Whileabroad has hrlprd fill irnporlanl gaps,lane of mid level lechtiiclans will continue lo

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US already hu trained over twice ai many Chinese at wore Iralned by the USSR, all hough ihc US training hat lendod to be lor thorter periods

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Cd thnar aho ha>r- returned, many to bar* lo their learner IranThru numbm are beconiiag taanrbcaat al heading ucaveetrtsrt and re-tearch center* Sonne prob-hreat icirararenng. particular I* il abroad for owe two yean Theae who no not no abroad often are lealous Irie-tamreaultt

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evelopment. Faced with suchmore factories are being cnoouraired to increase vocationalograrm al home and abroad Management Iraitting has arai become more popular, and several managcnenl irainmst cenlers have been evtablishcd in cooperation with loreagn countries, such as the Uisjipporled management training center at DahanJ

Foreign education will continue- Inritical part oln China Despite reservations by some party ideolc-gurs about the danger of 'spiritu-alrom1ami concerns about sTutaerMs who do not return lo China, the leaderthip will continue Io rend stud-nut and tcholarsow everSolars now aecount for aboutoer cent ol the Chinese who study abroad, and this share will probably decline as the government Iries Iu shifl more of the financial burden ol education lo local aulhorrties in China, lo overseas Chinesend In foreign universities and foundations Such efforts to Imiaden training and education will urtr-rlheless expand China's pool ofersonnel In the long run In iheChina will continue lohortlallalenl.| |

Access lo Foreign Ttchnatouu. China cannot close Ibe lochtvolnuy gap alone, so lorcign technology willritical role Inderniration effort for al leas! tlwr nestaricly ol mechanisms will continue lo becquire foreignBusiness arrangements, including directforeign investment, and joinl ventures, provide one maior avenue lor leriusnirsgv danders These arrariicemrtilt oflen include provltiom for training workers and managets in rnraiern production tcch-niques. In addition, trehnologt gained Ihrcaagh visiting scientific delegations. UucVntt and tcrtolar* studying abroad, and foreign publi atsuot lhal are incorporatedata bases will, in ihe lorat term, contribute to China's nicelrn-nijatietnjj "|

IS Access lo foreign technology requires favorable policies and practice* bolh on the part of China and Beijing's trading partners For its part. China has taken several steps to facilitate the acquisition of foreign technology. Including new legislation, such as the patent law, lo protect foreign Investors. Abo. special economir /ones have been created wiih preferential lax tieatmenl and land ate provisions lo attract foreign businesses The results have been somewhatthus far in terms of technology Iransfer lo ihese zones, mainly la-cause Investment has been lower than anticipaled. and participation has mainly Involved assembly of relatively simple products lor export Never!helets. China continues to seek way* lo provide attractive rjajrvnrtunstiei Inr foreign investor* For esample, recently tVi-iug promised tome fear-tan firm* more access lo China's large domestic market in return foe technology, but limited access is hkeH toerious obstacle lo improved commercialoreover. Beigng has begun Io penalize

firmso not nlrei know-how and lechnical assistance with their hardware. In5 ihe Stale Council formally tied future purchases of advanced CQuipmrnt to technical cooperation, and Beijingadded midlevel technology sectors such .is motor vehliles.l

From the business perspective, much of ihe initial enlhiiMasm for trade with China lias declined because many firms are noi making profits that can be repatriated In addition, they are finding that the cost of clour* business inery huh. and they are often frustrated in dealing with thr CTrUnreeConsequently, some hnro mav be less likely to make technology available on attractive term* But, on balance. China ihould continue to enjoy good access to foreign technology. Foreign trade MHrecment* arc increasing, and new ioint venture* continue to be chartered In moid numbers Thr: relaxation uf export controb by the United States and COCOM has also improved China's chances for gaining advanced lech-neaogv through legal charmers-1

An additional way to acquire foreigninvolves covert and illegal methods. Thi* approach probably accountsmall percentage of the total volume, but, il is used both to acquire priority items expeditiously and to gain controlled tecbrKilogiev.

ey focusodt-rniza-lion is tu reform research management Tlie Chinese Academy of Sciences (CASL universities, andwith Urge RAD compi>nentsare targets of efforts lo motivate scientists and better integralr iheir rc-wjrih with the production process In particular, research institutes are being encouraged to seekwith industry. Already these contracts account for an average of aboutercent of the operaling budgets of research institutes. As part of thb effort,eehoology trade tain were held duringthat led lo research contract' valued at more0 million Reforms also call for research institutes In become nioie independent and competitive CAS mav divest Itself uf some of thrnstitutes that il currently inariagrs. but this it likely Ioontention? issue In any event, the Academyosed to give up day-to-day rnariagensenl of (he institutes as more responsibility is shifted to llirdirectors. Under ihe reforms, directors In bolh military and civil research facilities arc to have greater control over their budgets and personnel, including authority to hire and fur staff members These and other changes in the scientific communitylear move away from the Soviet model, which has not served China well over thr past SO years. In thr view of thr leadership!

|VYc believe covert and illegal methods ot acquiring technology will very likely continue, despite the generally good access China enjoys using legal means. This is because Beijing fears thattechnologies could be denied in the future.

IH. lapan and the United States are likely to remain the focus of China's efforts to acquire advanced technology Japan has established an extensivenetwork In China, aggressively pursued sales, and offered attractive financing packages But Japan lias been rather protective of its know-how The United Stale* has been more forthecening with technology and has become an increasingly important source of Chinas imports, particularly high-Iethnology items (see figure I) While the United Slate* hasarger share of tin* Chinese market. Beijing Is being careful In avoid becoming overly dependentingle source by diversifying foreign purchases to Western Europe and elsewhere!

"oeen In

hese reforms have been In varying stages ot discussion and implementation for nearly six years. Thus, to overcome Inertia and bureaurralic inhghting.series of "Leading Croups" have been (earned with high-level political cloutanding Croup headed by Premiervang.designed to cut through the many layers of the bureaucracy, which often stifle innovation and change. Another Leading Group, under IJ Peng, coordinates tlre> development of the high-priority elect tonics Industry This coordlna-lioo includes electronics research, production, and applications The proliferation of these ctversight groups, however, suggests that they too may he having trouble implementing reforms. Ley organizations inommunity are depicted in figurendescribes the organizations and keyin more delall-|

cience and technology policy In China ismainly by the State Science and Technology Ccenmissson (SSTC) lor civil matters and by the National Defense Science. Technology, and Industry Commission (NDSTTC) for military Issues Together, these supra ministerial oisrantzatinnt are responsible forodernization. They are particularly concerned that ihe modernization process be smooth

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thes Mtr-n- lhal lim rapid iiiotlctniaallonbr ilisnuimr Tn improve maiuiucnini! of thisa itmipVlr census nl ihr SAT cramnunitt will lakon miln:1k- hisl censusli. In- finished In, In acMllinti OTC has insl rioted srmianniial starst-ssihrn tatnais rv-nes tilth a> ph ;'i.'iinii This surtnsrn.drt an .Mk-otrtdarit dire* <wir|WtEdijl (lialttsch Thmr ami simlla'ritavmrl't

a-aileislup nl SAT ir China isroupHM'ntisl*heir lair sixties ami early sv* critics, aho hate liar) tulitUntlal training In ihr Wot,roup in (lien hltirt aho air primarily Smirt (raitird. Interest malt this Hamilton also has miin nl.ilvotr eady titan lite Smartn China Thr new leaikViUiip. iia asdincItan andltaarard csakMftrv has hern rrstscal ol Smart SAT iiia'M.viwti and ikev hater tefi-rms alias* WatSteena rwwih ihe .merging sctenre- are teey wl two hcood

research and dcvekxmsenl Uutrctf are apparent The traditional, highly centralized vlistcgy still character-ire* much research ami drtrlimiiienl in China. This approachhe iiceviurv resources io achieve rather narrow, specifichis approach hu* ir-tulted in notable successe* irieludim! thermonuclear weapons and ihe Calaiy supercomputer. Al ihe same rime. Beijing intendsore decentralizedwjl evolve and foster SAT advances incompulerv and other areas. This sir aire* emphasizes compel ilson among mote inde-pendcnl re-veaich (acdtlics.^

l the individual level, providing incentives Io scientistsaior focus of SAT reform, and from live perspeclive of the Chinese scientist, ihe plans are encouraging. Living conditions ami opportunities. mobility should improve, albeit slowly Scientists are now able lo obtain pelratt on their discoveries and do private consulting work lor proof. Abo. more direct rewards for excellence in research are to be granted Special incentive award funds are being euJJishcd.ational Natural Science Foundation (NNSF) has been formed that will provide scientistsreater voice in the allocation of research funds. The NNSF. once it becomes fully functional, should also enhance the quality ol researcheer review process rather than relying entirely on administrators io make funding decisions Promotionso coene quicker, and Beijing tt trying to increase opportunities fot job mobility Research facilities are beingto compete for scientists and engineers, bul competition and mh mobility are not developing a* Belling planned The lob mobility initiative is one of the more controversial aspects of reform because institutes do not want to lose key scientists and tlie older scientists enjoy ibe security of the current system lhal provides lifetime tenure Other conlioiersial measures include an emphasis on youth. Overl the CAS institute directors have been replaced in the Us( three to four yean by younger, better trained scientist* In some cases, the new directors were selected from outside the imtttiiteajorfrom traditional practices. |

nother major change In management style Is the general opening to ihe West. For example, several laboratories are to be opened lo foreign researchers Also, foreign scientists frequently serve in important rcverch advisory poutiom Similarly, an association with overseas Chinese members of iheeing formed to help monitor research abroad In addition, returning Chinese students are being urged to retain their foreign contacts These efforts to open the SAT system to outside influence are likely lo continue and have lamelyurtu^urrtcrs for the paceof research in China Furl her in ore thelikely to exlend brvond the immediateil y.

n/rasfrircfure. For the most pari, the research environment in China has not been conducive to technological progress Many research facilities in China were outdated and fieqiRiilly lacked equip-merit and related infrastructure to support lesrauh and devesorament iRADl Abo. there geiwrally -ai little sharing of information between research organi-These conditions oftenheof work as well us poor qualify research Such problems and their main cuuscs arc well understood in China and are the tinge)eform anil other measuies to upgrade the SAT infiaslructure For example.

Xtddern research oquipmcnl and sesrtitibi mews-uiernenl devices have been accorded highfor scqumtmo. both from abroad and from upgraded domestic production facihtiet

An internaiional scientific and technicalsystem at the Institute for Science and Technology in Beijing has been expanded to include access lo several foreign SAT data haul Plans also call for cstrnding tins service to other cities in the nest lew years

SAT pubbcatiorn have protifrratedS. and the quality is improving

China has Joinednternational SAT organizations lo gam better access to information and foreign scientists. This also providesto Irain Chinese researcher* through piirlic-ipalion In multinational research projects

High-technology centers are being eslaMlshed around Betting and Shanghai to concent rale ad-vanced research and production resources. | ]

These and other rffocli should improve the SAT Infrastructure, although results will be uneven. The largest concentration of major research facilities will continue to be in the Boiling and Shanghai areas (tee figureey research facilities will leceive pilorilv infusions of personnel and equipment Despiteoldagainston sharing may be reinforced bv the Increasingly competitive nature of research in China Thus, diffusion of informal-jn will continue lo be slow

Funding. The cost of modernization is high and funding for SAT will be an important factor in determining the pace ol modernization Coverrniu-iit

tpe-ndingas increased al agreater rale lhan the expansion isf the overallIn addition. Ihe central government it rm our aai rat more tpendingy local enterprise* Al the same time, research mrtitutesmorefinancially and will offer employees incentives, such as improved housing. Hut putting researchreforms into practice- will prove difficult bemuse oihjtiiratIons have litlle experience in treatingami technologyommodity, andto delerrriiisf- iheir value arc notesult, tbe cost of research may rise Also, conflict between central and local Interests that char-acterirr bureaucratic politic* in China may male implementation of thr refosmi difficult Arrolher seri-caai problem will arise when detttsratniakeri are faced with ihe issue of how to deal with "unnrnfilable'* research centers. In theory, ihey should go outincv% ilc Kan*allowed lail to date

Export trends will also have an imporlant elfcci on the paceodernl/alinn lietause China will continue lo rely on hard currency holdings In purchase advanced technology5 our preliminaryIndicate aboutillion trade deficit,ignificant drop In foreign ncl-anseThis has caused Bcding lo slow importv which couldoderntration because China re maim highly ck-pendent ooeboot**technology imports wdligh priority tor funding. | |

Aisimirnlion of Scienceof ihc progress withinommunity, translating research and technologv acquisilions into production continues toajor weakness. Delays in new projects are common, and, once new facilities come on line, prcyductivily often is well below ihcdue to low laborand poor project management Oualily control ptxblems. poorack ol tperc parts, and similar pecWerrss are pervasive Increases in industrial production abo will be closely linked lo China's ability lo narrow the scope of central planning and gradually allow market forces tn determine mote economic activity However, the ability la carrv out suchwithout undermining tbe parly's mrsnopoly of power may prove to be the single most vexing problem Ihe leadership will face These and other difficulties in absorbing new lechiiolngv have been altribulcdariety of basic conditions llml include;

Low labor pwducltotly Skilled labor is in short supply. Educational standards are low. andare unlemilar with modern technology Abteigreism is high, and workers are nourly motivated

Poor uttnntn* and mawgemenluiidcrslandiiui uf Ihc market potenlial for new products They often lack authority ami are not Icclinoliniicallt comprtent

Bun,iuijrtyrV The locus of authority and respomibilily often is uncte-r, and the bureau -craov lends to overcontrol to ihe poinl nf stilling initiative.

mmuniialiofis and compart men ted or goiiMisnns The Bow of ideas has been very rest ruled both on an interpersonal basts and at (he societal level Information sharing between niaiuf organisations has been minimal

/nrtppropTMir technologies. In some cases, lech-noleajics hate been imported lhal proved too advanced fnr China lo master.

Poor support Enemy and transportation have been liiadequutr Some factories operate only part-lime because of electricity shortages Spate paiti and niainienance often arc not available

Poor aueiUw control Products often are of poorest and mewvurerrtent rvjuiprnent are inadequate, and high standards are not invested upon by managers. | |

Progress in overcoming ihe asarnibttonis likely lo be slow. In some areas, we expect loeducllon in the time it lakes loew technology lo mass production as tbe quality nf the work forca null management improves. Progress will be most evident In lliose industries in which China has long experience wiih imported plants 3itd oquipnient, such as petroleum refining and extraction, trxliles. aluminum, and chemical fertilizer. Somewhat slowri atsimilalton will charactenxe detvdopmcnts in ihe high lechnotety arena. | |

The Sum of the Variable* Treads in the key SATre generally favorable, ah hough prog-

is likely lo be slo-aer than elesired Even though improvingelatively slow pace, theystem probably will gradually becomeider range of end user demands, primarily because of morn deceritra lira tion and less isolation of the research community. The system also willllv be moie agile as information begins lo spread more rapidly and lescarch centers are able to react more quickly lo promising newpe-

cially wilh ihe infusion of computers, modorn scientific equipment, and foreign-educatedNevertheless. China is likely to become increasingly dependent on foreign technicalto suslain positive trends through tbe end of the century. | |

nevitably, some setbacks will occurodernization. In some cases, imported technology will be inappropriate for China'sforce or energy resources, in others, raised public expectations aboult ion will be dashed But such problems have already been anticipated. Articles have appeared cautioning people not tomooth transition lo high

Icclinoloey. In nnebathtub curve" is described in which high failure rates are to be expected both during the early stagesrocess, when new lethnoloBies arc introduced, andlater stages, as equipment wears out and the technology becomes obsolescent In between, though, shouldustained period in which failure rates are low. The intended message is; "Don't change policy prematurely because of early failures."! I

ver the next several years, selectedwill suggest whether the paceodernization is likely to be sustained (see inset).

n

Prospectschievements Scientific Frontiers

hina's emphasis on applied research and oVvrlopmeiil work threatens to hinderin wk-iicc TV kadcrship is aware oland is increasing (unds for basic research But basic research in China includes that which may be quickly applied to national needs. Thus, in general, fewer resources will be available for theoretical work, and experimental research -which already account*ery low share of scientific work -probably will fall even further behind Western standards. Thus tlie results are mure likely lo be evolutionary advances, rather than revolutionary breakthroughs Nevertheless, the scale of research in China, involving about

laei ihes. probably will produce somescientific results However, wc cannot predict in which fields these arc inosl likely to occur |

lthough Ihe quality of science in China has in general not beenar with thepw Chinese scholars have gained international prominence Particularly strong research Wds in China irtclude magnetic materials, mathematics, high explosives, medicine, plant genetics, and virology Similarly, ihe top research Institutes in China are doing workew hlgh-priiirilv areas thai compares favorably with that of research facilities in llie West. Several of China's top research centers arc noted in the inset below and undoubtedly there are morel

Centers

Centers

Fudan UniverUty.

Oinghuu University.

Shanghai linolonu University.

Helei Institute ol Plasma Physics.

Beuing Institute of Physics.

Xian Institute of Optics and Precision Mechanics

Soft-ate TeehncaWv Institute

Shanghai Institute of Brochernrslry

Belling Institute nf Genetic*

National Defense SaT University.

Shanghai Institute of Metallurgy.

Shanghai Institute of Ceramics of Research in China

Areas of Fterllence

lasers, optics, ekctronics

Mlcroclrcl routes.

Computers, telecommunications.

Physics.

Molecular beam research. Lasers, high-speed photography Computer vx; ware. Biotechnc4ogy Plant genetics. Supercomputers, software. Seinlcondiietors. Silicon crystal growth

Ntsfutn

Technological Aetvoneet

lthoughery early stagedevelopmentared with substantial dietaries, concerted efforts to locus the best talent and sufficient resources, along with the Introduction of luirlan tech-nology. should increase the levehof technologyin China in several areas (see annea Al (Unas efforts to close the technology gap with the West, however, are hampered by such factors as the low level of indigenous RaD and continued technological advances lu ihr Wet Among ihe priority lechnol-ogara,eiperl China to narrow the gap in thipouild ing and air iramporl. energy, special structuraland biotechnology. Wc believe the gap will widen, however, in mlcrooleclronics, computers. Irlecom-munMatksnv aulornalrd manulacturing, and mail Iramporl The general oolluoe. for prcerrrss In high priority areas is summarucd in the insel and disclosed in more detail in aunei A.

Microelectronics

Computers

Micsocompotcri

ainframes Supercool pu ten

Tr leconicat ions Switching

Fiber Optics

Satellites

Automated Manufacturing

Technology Gop

Nine tornii behind now Making itfogrefc twit much dora then Ihe West Cap mill widen

Appro ornately fire years brfiind bow. leant imputed

components Cap will widen.

More thanears behind Cap will widen.

Five toears behind, utiiig Imported components.

Cap will widen

Docr-olk nstesnsoean behind, importedthere lo Bve years behind dp will remain Research three to bve years behind, prodisrtton Bve lo seven yean behind Imported technology will allow progress but slower than Wfh Cap will remain ivi widen Five loears behind on lomiminicatioiii satrilitrs. tnScg tome imported cornponrnn Cap will narrow as Chiru reogrvwrsu band, thenrst moves lo hrener fieviumciea

Cap likely to persist.

Rail

Shipping

Road

Ale

Energy Coal mining

Petroleum ctplonitloii and production

Hydroelectric

Vucrear

Special Structural Mater tab

Biotech .inks y

Moir thanears behind. Cap will remain fairly uniform

tisriina and srttunc rtairrmer

More thar>ears belaid I will wniro

Five toears behind Cap wiD reman fairly

or narrow derhlly.

Five toean behind. Cap will narrow

More lhatiears behind. Cap will narrow

Fne Inears behind Cap will narrow.

o IS veers brf-nd Cap nil prot-bl, narrow ibghtlt

Five to II) years bdioid Cap may narrow Threeears behind (Jap will narrow

f.il.

he ctrlenl lo which Ihe leehnologv gap will be rurrowed also is related ro the tucte-ss of economic reforms While wc view (he ptospecli for ihe "ic reform) as positive, on balance, it is alsotltouithlonus will unravel Such an outcome would likely lead In setback) atmi* the board tnentifM and technical crsctprra-tkoti with the West and may aho contributeidening of the technological nap with tin- West.

i ogress relative to ihe Soviet Union should be notable, particularly in computers and biotochnolngy. This Is because China enioys better access to foreign lechrscaogv lhan (he Sovset Into* and stanch, lo benefit considerably from sending large numbers of sludents abroad. China also has undertaken mote sweeping reforms lhan Moscow In ihe ortumiulion and managc-ment ot* science and trxhsvoangv Rcrarjre lo ruber developing countries, China will abo make subsiantial gains Vol, on balance, China willet importer of high technology Irom Ihe West.q

Consequencesodern!ration

he main consequenceswill be in the technological transformationenterprise* in China. TraditionalIncreasingly benefitide variety ofFor eiample.

boilers will fadliiate rnore eAcsent use of energy resources, while computers will avsut scheduling,and inventory control. The net resull will be incrtutslng productivity in some areas, which Is Ihe primary objectiveodernization ^

n addition to gaining from increased(he military sector will abo bothbenefit from (hr acquisition of foreignthe enhancement of domesticros-rams already in progressto be accelerated (see irraetl" Foreignasslslance probably will reduce by several yearsIt lakes to solve critical problems, such asencountered In ict engine manufacturing.lo foreign technology probably will be theSingle factor in ihc ntociexni rationmilitary

Military ond Space Piogromi Thai Could Benefitodernization *

Space

i. iiIt

New ii is iiutim.ecdelic sji* ilti-i.

Newatellite

New warning end ocean firvciUeiaw tatrllltc*

latpmed photo ind ELINT

IdlrlllTct.fellit'-i

Ballittio Missile Force*

New valid-incpc Haul It IIM

New. reentry

L gaadaacc systems

General Purpose Force*

main battle tank

New atuiorrdcarrirr/inlantrv bghl tac >ehlctr

New ant tank gtaded aanslle.

New low altitude luildic-io-air titlwlle

New truck.

I ui pi oved munition*

Imprn.rd karlvtlet tyvlem.

Naval Force*

New daw ti..r.

New cruise mlittle

New dslpboard tuilace- to-air mballr

. warfare, elrctrtBuc

warfare, aad tmpboard mranand end reattrol

Air Forcei

fnhter-borobet

New air-to-air mnulr

radar, bre (ontrot armament*,and (uselane*

hik-lheoVveloianenlalprorTOwrHheipced ed up in many areas, the production of new weapons and equipment by China Is not likely lo substantially alter the Si no-Sot ict mililary balance Soviet ground, naval, and air forces in the Far East already posses* we*porn more sophiuicaled lhan (hoar currently being fseldnl by China, and Moscow* continuingtnui of Us forces In the Far East make il highly

unlikely ihat Beijing will erode Soviel inililary superi-uiily. The balance ol forces wilh oilier noreniul adversaries iu East Asia is also unlikely to changi-dramatically Over the nextuan. Despite China's development of new weapons based on foreign lech-nology or purchase ol some Western aims, il is unlikely that China can either absorb the Iccbnology or 6eld sufficient numbers nf more advanced weapons before the. q

Although ihe pace of modernization will be slow, successful use of technology will createdemands for research and development Increasing demandsill lead Reijing to intensify efforts to acquire foreign technology, while attempting to avoid becoming oveily dependent on any particular foreign source. China has generally found technology more accessible in the Uniled States than anywhere ebe.ies to tlte United States willomentum that will be difficuU for Beiiing to change

In addilion to pressing for better access to technology, Beiiing will seek help to encourage Chinese students lo return home The leadership has expressed increasing concern about the percentage of the0 studenls who have gone abroad for study8 and have not returned to China. Some have remained in Ihe West, particularly in the Uniled Slates, and accepted high-paying, technical jobs.ew may be engaged in some form of industrial espionage, most have simply been attracted by US prosperity and freedom. These trends have caused Chinese officials, to becomebrain drain" that Ihey can ill afford. I I

For theotleini/ation in China poses some risks and opportunities. Noi only is- Beijing clearly moving away from the Soviet model, it is establishingelalioas wilh Fasiern Kuiope that may (rouble Moscow. Should Beijing's reform efforts be even relatively successful, the Soviet model would be further discredited in the eyes of the Third World. On the other hand. Moscow can use Chinas desire for lechnology to improve relationsxchanges. Some Chinese studenls may even go to study in Ihe USSR where Beijing can be assured that few are likely to remain. In addition, some Chinese enterprises are anxious to expand trade relations with tlie USSR because it is much easier to compete in the Soviet market Their products sell for three to four times the value that they can command in the Western market. In addition, they can save hard currency by countertrade arrangements. But improvements Inelations are likely to be limited because Ihe Westuch bctlrr souic* of advanced technology. ^

or the rest of the world.the extent that it contributes to significant industrialthat Beijing mayarger role in the world market, bothonsumer amiompetitor. China's ability to expoit bolh raw materials and products involving low to medium levels of technology, such as machine tools, will beby lechnolngical impiovemenli As Chinese goods improve in duality, they will becomecompelilive on the world market. q

eyond these economic and militaryodernization may also have unintended social and political consequences ins at the leading edge of reform and has cnnlributed in large measure to the increased openness noted in China. Scientists and engineers in particular have been granted exceptional opportunilies for Iravel and study abroad. This broad exposure encourages freedom of thought and could increase pressure for social and political changes in China. It also may raisethat similar opportunities and freedoms should be made available to other groups. While suchare not likely to undermine the fundamental control exercised by the Communist Party, suchwill contribute to the broader problems Beijing's leaders will face; how to openeconomic and technologicalseriouslythe party's monopoly of power.

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tine of this document when used seporotery from the lexlloiTffcf*!^

/ fib. t. Centralffr 9 Intclliaiwe

Science and Technology in China's Modernization

National [nU-lliijence Estimate

NIEII

THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL INTELLIGENCE.

THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS, EXCEPT AS NOTED IN THE TEXT.

The foNovring intelligent? Ofgoniiations participated in the peepoeotioei of the Ettimott;

The Central Intelligence Agency, the Defeme Intelligence Agency, the NenSonci Security Agency, ond theorgoniiotioni of the Department! of State, the Ireotury, ond Energy.

Aho Participating:

The Atiiilonl Chiel ol Staff lot Intelligence, Department ol the Aimy The Director ol Naval InteDigenre. Deportment ol the Navytont Chiel of Staff, Intelligence. Department of the Air Force The Director ol Inteevgence. Kwoauorters. Marine Corpt

1

science and technology in china's modernization

volume ii: annexes

Intotmallin avj.UUIcnlur* 1W* *t< nmltl*

uijt>:iit ol (lidt In the NationalInti-lh^ntr IfeurtlOml tiifi"

riority Technologies

Ironies

iiitoo priority in Chine's SAT

modern* zalson hrcausehc- hua fatleletommunicatio'is equipment, andpioducli that are vital lo China"mililatv modernIzatinn China's investmentproduction Imhnologics in theyears has been significantr lerl rooks industry will be built almoalforesgi technology Because of thispace of oVseiopenent inet crirvtwill bearge pari by thracquire and assimilate ihe necessary

urrently the microelectronics industryhine can moduceRAM (dynamic retrdom access memory) devices. This capability reoectslines capable of processing iniegraled circuit (ICI designs down toicron level China's current production is bised largely on two- and three-inch wafers, although the yields are relallvelv low. Within tlte next few years China may begin producingRAMRAM (static random access memory) devices. By Iheew of (he better semiconductor production facilities mat process four-inch wafers and be capable of pridueing ICs with design rules aticron level

icroelectronics production equipment isand difficult lo install and operate, so progressto be slow- Even after the new equipmentseveral years often are required beforefacility in China reaches fullpotential Shortages nf skilled personnel,sources, and inadequate quality controlthe major impediments to progress.current domestic production focuses onfor consumer products, to the detrimentcapabilities lo lenduce more advancedfactories will be reluctant loquipment frequently enough to adopttechnologies.

Ihe Leading Group lor the InvuioraElnn ofed tonics Industry Is working to establish wver.il main* centers for Ihc development of semicondiictori and computers, buthas been slow- in perl due lo funding problems and bureaucratic rivalry among the cities wishing lo host tlie centers In the meantime, several CAS lacihties including the Insli-lute of Electronics, the Institute for Semiconductors, the Institute of Electrical Engineering, and theof Electronics Industry iMEl) cany out electronics research The MEI. with 2enterprises.irun ages the devesoprnrnt snd productof electronics prorliirts for both civilian and military needs Howes ei. most of the new micrcelcctionics technology mlrn-duced in China wilhin Ihe nrvtears probably will come from foreign sources|

Computers ond Sot two re

vhina's modernization programs will begin lo realize important rsrrsefits from the Strong emphasis on de^vesoprng computer canal*lit>ei Deng Xiaoping Premier Zhao Zfyang, Party Chairman Hu Yaohang. and other senior officab have yprcificallv endorsed Ihe production and use of computers in China. Also. Chinese access to technical literature hasey role in developing com peters in China Even at this early stage, progress has been impressive In ithe Chinese unveiled the Gabuyit reflectsechnology and may operale al onlyercent ofan achievement that continues to elude ihetiion.

6 Much of China's success is due to access to foreign technology China has been able toide variety of Western computers, andundred foreign firms have been involved in negotiations to set up computet pioduetlon lines in China These lines contributed in particiihir lo China's production of microcomputers, which are three to five yean behind the West Also, access to lechnical literature hasey role in develop*o< compulert in China For clamper, kriowlrdgr of parallel arclniecture from such publications probably was critical in producing the Galaxy. In addition, large numbers of Chinese

I

Srtjftti

student* have ctiIovcxI atx'rtn to the Ises! schools and research farilUitit in the Wrst. Wc cslimate dial rouehly two-third* of China's comptilermported Mosl of ihr domestically produced com* putthanIKK) Lis!heavily onails.rim inn compuier Industry abeady numbers0 employee* in several dozen researchanuixlurina* plants, andervsrv Q

owever, the industry has been char adornedattentiondelays lo estab-

lishing production lines, and relatively tot* leveb of productivity once they are operational Foricrocomputer production line unpolled from France9 did not go into productiony the time compuier lines become operational, tbey often are obsolete. China has yd lo make the transition in mass productionitbit microcomputers-Chinese computers also lend lo lie more expensive and less reliable llian similar inudeb available in the VVest In addition to problems In ilomestic production,imports were drastically curtailed5 ailer several years of sharply rising purchases, in part lo protectnergirsg dome-site industry and tohard ciirrertcv |

S Tbe use of computers abo is srrrnrirsg rather slowly0 compuier* are silting inand as many as HO percent of iheomputers In China are not being used efiectively The lack of trained personnel, software, peripheral equipment, and supplies contribute to this poor utilization of computer*.|

hinese software may drvelop somewhat faster than hardware because ll involves primarily mental labor rather than the sophisticated etiuipmenlfor hardware, production One rnaior software application is Chinese character representation and translation Two major centers for software dcselop-inent are being established, each wiihs parthinese ob>cctivo lo increase the number of software specialists frotn0 rsow lo0 | |

hile Cluncse computers probably will rtocnaior factor on Ihe world market in the nest decade. China may narrow teenibVantly Ihe cap with the Soviet Union in computer technologies in, if present trends continue (seel. These trends include encouragement of the proliferation ofby Ihe lop polllkal leadership, access lo foreign technology, and thousands of students studyingscience abroad.]

Computers in China and the

s* iiunalien- note.'!

USSR

outer! ,'ma Inl ratm*

tlie output

nt

i

y>0

..il.

i -i, :km.

VS3I

II China's relatively slow progress In ihcand use of computers should not lead loon our part, however Subslantial resources and taienled people are. no doubt, working on projects that we are not aware of and could athlete rnaior break-throus-h* The Caluvn example of the typeuccessful pro-ret (he Chinese were ableeep secret, despite (he uiv.Nemeiit of overacilities workingive-sear period and (be use of many foreignrobably includingntegrated circuits from tlie United States. I

on computers and software isalacilities operoltxl by ihc CAS.factories, and RtVf> facilities of the BureauIndustryl the Ministry olIndustry. Among (hracilities areof Compuier Techunlngv, (lie NationalSeVT Univerwtv at Cbangsha lhal worked onsupercomputer, and tlie Belting Researchof Electronic Application! Despite thecomputer and> facilities, Chinato depend heavily on foreign technologyadvance* over the nest deeade Q

T decons

research is conductedby (he Ministry of Postshend CAS Among Ha-research fucililsrs are Ihe Fourth Radio

2

TTPfSai

Research Institute in Xian. the ReiiiiitiResearch Institute, the Shanghai MicrowaveInstitute, Xian Electromechanical Laboratory, and the Communications, Telemetry, and Telecontrol Research Institute in Hebeisronducl-orl largely by the Chinese Academy ul Snaresubordinate to Ihe Ministry ol AstronauticsThe militaryriving force behind both filter optics and communications satellite programs.j

Modernization efforts in this high-priority area are focused on acquiring the manufacturingneeded for production of modernsystems, including high-capacity digitaland switching equipment, satellite components, fiber optics, and mililary command and controlDomestic production capabilities have lagged well behind rapidly increasing demands. Chinamostly analog equipment, for example, but plans to convert to digital systems for high-speed ilala transmission and secure telecommunications. Chinas indigenous research and development inare hampered by poor quality andavailability of components, inadequate technical knowledge, lack of test equipment, and manuallines. In the pasl several years. China has purchased advanced systems and some production technology that will considerably improveservices offered, although it will continue to be dependent on foreign technology. | |

Domestic production capabilities for telephone switching gear are largely limited to electromechanical systems basedechnology and some eleclron-ic controls. The Chinese press announced the firstproduced microprocessor-coiilrolleil swilch tnut no further information on this claim ishinese joint ventureelgian

'subsidiaryS firm began nperations innd has the potential for significantly enhancingswitching capabilities.|

hina has made progress in developingsatellites, bul some problems have emerged China has launched two communicationsignificant accomplishment, bul tbey have limiled capabilities and are experiencing operationalWe believe the satellites include some foreign compunenls despite Chinese claims of beingproduced. China also has given conflicting signals on procuremenl of foreign satellites. Beiiing recently indicated that plans to purchase foreign satellites,irect broadcast satellite, have been But wo believe that the many problems lacing

Chinese communicationsill eventually lead Beiiing to reenter Ihe irihrrnational maikei andpurchase or lease transponders, or buy an entire sateltile. perhaps even one already in orbit. | |

rogress also hasslow inirect broadiasl communications system Negotiations on the purchaseiliiect broadcast satellites have been drawn out over several years, In part becausen inability to decide which type of system should be used (Ku, C.lflering views on the preferred source, or Ihe need lor loreign procurement

(BMP)

he Chinese have made progress in Iheir re-seanh on fiber oplics, although they arc experiencing problems in key areas such as single-mode optical fibers, transmission devices, and large-scaleChina has several dozen short fiber optic lines in operation. According to Chinese pressostegabits per second, although they do claim some areegabits per second systems China has signed agreements wilh several foreign suppliers lor the purchase ofegabits per second fiber optic transmission systems for both inlercity and inlracity use. The sale to China ol technology for fiber optics and fiber optic transmission systems requites COCOM approval, which slows ihe acquisitionNevertheless, China has purchased, with COCOM approval, tin- technology, equipment, and training to ptcduce fiber optic cable and some components. By ihe, fiber optic systems probably will link Beiiing, Shanghai. Shenyang. Nanjing Wuhan. Guangzhou,ew ether major cities.l

Automated Manufacturing

hina is in the very early stages of developing aiitomaled manufacturing capabilities.5 there were onlyobots in China, located mostly in research facilities, such as the Shenyang Institute of Automation (SIAX Oinghua University. Chengduof Science and Technology, and JiaolongThe Ministry ol Machine Building Industry also conductsational center for robotics is to be established at SIAul to date most of the robots have been imported and iher so Ihat have been assembled in China involve largely foreign components. Thcv represent first-generalion robotics for the most part, capable ol point-lo-iminl Iransler operations. Work is just beginning on second-generation robotics that involve continuous computer control of spatial motion for light assembly andSome comolledare being produced, while considerable computer-aided design, manufacturing, and

testing (CAD. CAM. CAT.echnology i* Iseing imported Joint ventures in these areas arc being sought and some research on robotics is beginning

Tablerouse*'

China: Energy

The gap in automated manufacturingbetween China and ihe West Ls likely to persist. China will have to master microelectronics andtechnologies before substantial advances inare likely Despite the many Chinese students abroad studying key subtields. such as softwareand programming, assimilation of newprobably will be slow. I

Transportation

ndigenous research on transportation systems is weak. Much of it is conducted by research components of factories under the various ministries. The resulting Chinese designs for vehicles, aircraft, and ships draw heavily on foreign models. This situation is unlikely to change in the foreseeable future. Thus the vastof technological improvements in thesector over the nest decade will be Ihe result of technology transferred from abroad In particular, joint ventures and licensing arrangements will be critical to upgrading both the methods of produciion and the vehicles produced!

Energy

nergy research and development Is conducted by facilities under the CAS. the Ministry of Coal Industry, the Ministry of Petroleum Industry, the Ministry of Water Resources and Eleclric Power, the Ministry of Nuclear Industry, the Ministry of Machine Building Industries, plus several universities. Theof Atomic Energy in Beijing, the Institute of Energy Resources, and the Shanghai Institute ofResearch arc among the kev CAShis broad research base,wiih active programs to acquire foreign technology, should improve the overall energy picture in China. Nevertheless, the demand for energy is outstripping Chinas ability to increase production.

hina's severe shortage of electric power will continue to limit the pace ol economic expansion and modernization for at least another decade. Existing shortages thai result in many factories operating well below capacity are compounded by ihe rapidlydemand for power ihat exceeds China'sto expand power production. Efforts to reduce this gapide variety of technologies necessary to more efficiently convert China's abundant natural resourceseliable, widespread supply of energy.

Most of these technologies are readily available from abroad, bul live Chinese preference to producerather than buy end items, lias delayedof the energy sector. |

Coal will continue to account for overercent of China's primary energy (seeroduciion iiKTeasedillion metric tons of raw coalurpassing the coal output of the Soviet Union. About half of the production is from the more modem large-scale mines, which are only about one-third mechanized. The other half Is provided by small mines that usually lack modem equipment. To meel increasing demands, Ihe coal-mining process will need to be increasingly mechanized. But. progress has been slow in establishing manufacturing lines to produce modern mining equipment In addition to the shortage of mining equipment, transportationeriousChina's railroads cannot currently move the coal as fast as it can be mined. |

Oil exports are essential to modernizationthey provide more thanercent of China's foreign exchange. But offshore exploration has been disappointing, and onshore exploration has onlyincreased However, foreign technology has improved both production and exploration. More sur-veying technology is being incorporated, along with computers to process the large volume of seismic data collected. As exploration shifts lo more difficultadvanced technology will be increasingly in demand To help attract this technology, China is now

"SrMfcJ.

willing In allnw foreign involvement in onshoreChina is also upeiaduw drill bit manufacturing and other importantbnnhajtiri At the same time. Chinese crews are laecoming rnorr proooent at using modern dulling methods To keep pace wilh rxpect-improvements In drilling. Chinas refining laimtitv is lo increase byercent over the nest live years, according to plans. Much of this expansion willforeign technology. However, the declining price of oil may cause Rciitna to scale back some of these planselated development. China plans to convert ml-burning electrical power plants to coal This will allow additionalil to be further refined lo more valuable, lighter products, such as gasoline

ydroelectric power has tremendous potentialChina, although the main sources are kwated in thereat distance from power-short areas One maior emphasis in hydroelectric power has been onarge number of smaller generating plants to supply primarily rural users. Overall,power output has grown al overercent over the last five years. Further Increases inpower probably will involve substantial imports of foreign technology, including generators andproduction lines for large generators q

lans to develop nucleai power lo supplement existing energy sources have been delayed. Although China is attracted by several features of nuclear power Including the ability to locate plants near therequiring the power, the high cost of developing nuclear power hat limited the scale and progress of development Completion of China's first nuclear power plant has bren postponed several times and now is delayed0egawatt (MW) leactor will rely heavily on foreign parts and technology. Plans also call for about six more irariors In-W range to begin construction in the next few years, but two of these are likely to be shelved irtdefinifely Fven if all these plants come on line, ihey will contnbute lessercent of (Ihlnaby the end of the century China's plans to produce- to "in MW reactors for sale to Third World countries are alio unlikely to maleilalfrr in the next five toears ^

Special Structural Mate'iah

esearch on special structural materials isunder ihe auspices of the CAS. severalincluding the Ministry of Aeronautics Industry, and unlveisllirs Among the more important CAS researchn this field are ihe Belling Institute of Chemistry, the Shanghai Institute nl Metallurgy, the Beiiing Invliiute nf Chemical Metallurgy, the Shanghai Siln-uii- Inslilule. and ihe Shenyang Imtilutr of Metab. Chinese research in metallurgy, ceramics, and corn-prone materials appears to lie unite good based on published research and papers presented alconference! Translation the research into pro-duiiioii. however,aior problem |

ilitary applications of advanced composite materials -including reentry vehicles and rocketcasings for ballistichave been anmotivation behind China's intensive efforts to establish capabilities lo produce carbon-carbon and other ads .mini materials. Considerable progress along these lines has hern achieved in laboratory research, but the manufacturing technology for volumehas not vet been mastered. ^

everal of China's efforts to acquire advanced maleriah technology have paid off For euro pie. Ke-vtar-typr high-tensile-strength aramtd fibers were producedAS laboratorynd limited production wai undertakenlso, the most significant progress has been made in carbon-carbonj

But, in most cases, theses arc produced in small quantities, and quality control is notTherefore, foreign fibers and production fines will continue lo be sought after I

nteresl in metal matrix composite materials has been high, possibly for high-temperature applications such as pet engine turbine blades. Although several complex titanium and nickel-hased alloys suitable for high-temperature applications have been developed in China, production problems still are prevalent.esult. China's interest in acquiring casting andproduction lines remains high q

or Ibe most part, ceramics research in China

probably lags ihe West by five loears, particularly when it comet lo production technologies Much of the [tnwars* achieved over the last live years has involved Chinese scholars Undying abroad and Chinese scientists during viiilx to foreign research facilitiesimportant new developments will he iiicreasingiy possible from scientists working al research facilities within China lhal are being upgraded

Biotechnology

In biotechnology, basic research lends to be more advanced than applied research. Advancedhas been noted in microbiology, proteinand genetic cneinccring to produce interferon and other advanced pharmaceuticals. Productionhowever, significantly lags research capabilities Problems that result from the gap between research and production facilities arc exemplified by Ihe recenl development by ihe Shanghai Instituteenetically engineered vaccine,train of hepatitis prevalent in East Asia. Even with ihisbreakthrough from China's premierresearch institute, thereack of Icchnology and marketing expertise needed to produce the vaccines in sufficiently high volume and quality for theChina, realizing lhat this gap exists, is taking measures to close it by entering into Joint ventures with foreign firms.

Agricultural applications of biotechnologyigh priority of lite Chinese Government. The Chinese agricultural science community, composed of the CAS and tlie Chinese Academyrin ill unil Sciences. [CAASltrong base in traditional agricultural research, wliicli it exploited lot bintecriimingyThe major factor pretenlinsi rapidis the gap between baste and applied researrli and ihe product too and held support infrastiucture to exploit Ihecapability CAAS allemptrd. with trtoderale suceess. lo obtain ice even lecbnrjtogy to coerrxt tla-tr problems via iotnl ventures and targeted collaboration protects with foreign governntrnt and corporal awn Bul anii-cultural production technology, suchplanters,and other machinery, remains primitive.pesticides and other agricultural chemicals have tended lo be neglectedliicsc research

ANNEX C

China's International Science And TechnologyJune)

2

033

5

9012

3

55

04

890

026

ooperation

Antigua and Barbuda

Technology agreement

Argentina

ooperation Programcientific and technological

Agreement on peaceful use of nuclear energy

Australia

ooperation agreement Technical cooperation program Memorandum of understandingState Science and Technology Commission (SSTC) and Academy of Technological Sciences of Australia Memorandum of

Agreement on scientificyears

Austria

Long-term agreement on economic Industrial and technicalooperation

Bangladesh

ooperation

Protocol on economic and technical

Protocolcoperatton Protocolooperation Economic and technical cooperation

90

8

2344

44

8

8

9

0

1

2

Sepl9S3

44

5

5

Ecoriomic.oopcra-tion

Economic,

greement Botswana

Economic and technical cooperation Brazil

ooperation Technical cooperation Prtfocolooperation Memorandum of understanding on cooperation in nuclear energy Cooperative use of nuclear energy Peaceful use ol nuclear energy coop-

Bulgaria

Extension of scientific and technical cooperation agreement5 Protocolh bilateral sessionooperation

Protocolh bilateral sessionooperation

Protocolh bilateral sessioncooperalion

Protocolh bilateral sessionooperation

Protocolh bilateral sessionooperation

Protocolt bilateral sessionooperation

Economic and technical cooperation Protocold bilateral sessionooperation

Protocold bilateral sessionooperalioii

S&T. economic and trade

Burkina

Novand technical cooperation

Burma

Juland technical cooperation

Julon economic and technical

cooperation

Junand technical cooperation

Burundi

Marand technical cooperation

Cape Verde

Julon economic and technical

cooperation

Central African Republic

Juland technical cooperation

Chad

Sepon economic and technical

cooperation

Julon economic and technical

cooperation

Chile

Octcooperation

cooperation

Congo

Augon economic and technical

cooperation

luland technical coopcralion

Novprolocols on economic and tech-

nicaltrade, and technical coop-

eration

Cuba

Augcultural, and technical coop-

eration

Cyprus

ooperation

80

1

3

4456

91

5

9

45

93

4

4

90

88

Prolocolooperation Protocold session of bilateral committeeooperation Prolocold session of bilateral committeeooperation Protocol on ecoitoinic andcooperation Economicoopctnitioti Agreemenlrojects Protocolgreemenl

Denmark

Economic and technical cooperalion Educational, sctenlific, and cultural

Protocolooperation Djibouti

Economic and technical cooperation Ecuador

Economic and technical cooperation Protocol on economic cooperation

Egypt

ooperation

Extensionooperation

Equatorial Guinea

Economic and technical cooperation

Ethiopia

Protocols on economic and lechnical cooperalion

Finland

Economicooperation Protocol of first session ol jointt tee on economic and ooperation

France

ooperalion

ooperation between theInstitute of Petrochemistry and the French Petrochemistry Institute

Oclprotocolx-

change, also scientific cooperation between Chinese Academy of(CAS) and five French State Center of Science and Research

Janscientific cooperation on

basic research between ihe CAS and the French Atomic Enemy

9 ooperationooperation

ooperation

Julbetween Biological De-

partment o[ CAS and theInstitute ol Healthapplication of nuclear coopera-

tion

84

Aprminutesooperalion

ooperation talks

Maysafely agreement

Gabon

Decon economic and technical

cooperation

East Germany

Junand telecommunications coop-

eration

ooperation

Apr between SSTC and

CDR Ministryooperation

ooperalion

West Germany

Sepcooperation belween CAS

and the German Max Planck Society

Octcooperation

Maybetween bilateral stan-

dardization institutes

ooperation be-

tween CAS and Fraunhofer Society

Junin

Novon scientific cooperation

Sepcooperation belween the

CAS and the German Max Planck Society

Novand agricultural cooperalion

41

4

4

66

93

4

801234

4

44

46

35

1

ooperation Peaceful use of nuclear energy

Scientific and cultural

Summary of fourlh meetingooperalion

Protocol on economic and scientific cooperation

Nuclear cooperalionooperation

Greece

ooperation

Ecunoniic and technical cooperation Guinea

Economic and technical cooperation Hungary

Protocolh bilateral sessionooperation

Protocolh bilateral sessionooperation

Protocolh bilateral sessionooperation

Protocolt bilateral sessionooperation

Protocold bilateral sessionooperation

Cooperation between Association of Hungarian Technical and Natural Scientific Societies and Chinese Academy of Spaceooperation, establishment of bilateral committee for economicooperation Protocold session of thecommissionooperation Executive program on scientific, educational and cultural

Public health and medical science

cooperation

ooperation

Iran

oorseration Protocol of ioint committee ontrade,

Iraq

Economic and technical cooperation

3

6

89

9013

901

44

55

0

1

B

2

ol first session ol biUieial trade exchange, technical, and eco-

cooperalion.it,nd lechrncal coce^etatlnn

Italy

ooperation

Scientific cooperation between lite CAS and the Italian Research

Program nl cultural1

Protocolooperalion lor peaceful uses of nuclearnd agricultural protocol for

Oopetatson program cm science and technology

Japan

Bilateral cultural educational, and scientific exchanges Expansion ol

Nuclear cooperalion and exchanges of exports and engineeti. nuclear seminars andooperation between MilsuiHshi andxchange Ccnler Cooperation between Japanese No-clear Fuel Devekgwnent Corporation and the Uranium Geology Bureau of the Chinese Ministry of Nuclear

Nuclear cooperationooperation

Kenya

Economic and technical cooperalion Lesotho

Economic and technical cooperation Liberia

Economic and technical cooperation Libya

Bilateral economic, trade,ooperalion

S

14

94

0

3

93

S4

2

0

11

88

Agreement on economic andjl cooperation

Maldives

Economic and lechnical cooperation Economic and Irchnical cooperalion

Mali

Protocol on economic and technical cooperation

Economic and technical cooperation Mauritania

Economic and technical cooperation Mauritius

F-sUblishiiieoiilateral ioint commission for economic andcooperation

Mexico

Protocol of the fourthooperation Summary of minutes on technology cooperation

Mozambique

Economic and technical cooperation Economic and technical cooperation

Nepal

Economic and technical csxiperation Netherlands

Eccesornie and technical cooperation Nigeria

Fconomicooperation Protocols on economic ond technical cooperation

North Korea

Protocol of meetingooperation

Cooperalion in hydrological workChinese Ministry ol Water Conservancy and Electric Power and tbe Korean Meteorological and Hy-drographical Bureau

8

900

112344

45

90

0

0

5

800

1

2

6

3

cooperation between the Chinese and Korean Academies of Sciencerotncolh bilateral sessionooperation

Protocolh bilateral sessionooperalion

Scientific cooperation between CAS and the Korean Academy of Sciences

Prolocol on leaching scientific re-

Protocolt bilateral sessionooperation

Protocold bilateral sessionooperation

Protocold bilateral sessionooperation

Protocolh bilateral sessionooperation

Plan on exchange and cooperation in scismological sciences and

Scientificrolocolh bilateral sessionooperation

Norway

Scientific cooperationconomic, industrial, and technical cooperation

Economic, industrial, and technical cooperation

Program on cultural, education, and scientificigned minute* of talks on

Pakistan

Protocolooperation Protocolrotocol on economic and technical cooperation

Protocol of 4lh bilateral sessionooperation

Establislimenl of bilateral committee for economicooperation Protocolooperation

Papua New Guinea

Technical cooperation

889 Dec

1245

9012

3

44

5

55

6

22

88

89 May IS80

ooperation Prolocolooperation Economic and technical cooperation Prolocol of 3rd bilateral sessionooperalion

Prolocol of 4th bilateral sessionooperalion

Protocol of 5th bilateral sessionooperalion Protocol of 6thooperalion Prolocol of 7thooperalion

Poland

Protocolooperation Protocol1 Prolocolrolocolh bilateral sessionooperalion

Prolocolh bilateral sessionooperalion

Economic and technical cooperation Prolocolh bilateral sessionooperalion

Summary ofmeeting of Sino-Polish Commission for Economic. Trade,ooperation Prolocolooperalion Protocol on trade exchanges,and technical cooperation Prolocolooperation

Portugal

Culturalooperation Economic and technical cooperation

Economic and technicallablishmentilateralon economic and technicalabo protocolsrotocolh bilateral sessionooperation

Protocol of 1st bilateral meeting of economicooperalion Scientific cooperation between the CAS and the Romanian National Council

0

11

1

2

3

4

5

6

83

3

83

56

86

3

456

1

0

of 2nd bilateral sc-ssiriti on economicooperation

Protocol of 3rd bilateral session on economicuperttion Prolocol of 4th bilateral session on economicooperation Expansion on economic

Protocol of 5th bilateral sessionooperation

Scientific cooperation between the CAS and the Academy of Rumania Protocol of 6th bilateral session on economicooperation Protocolooperation

Rawanda

Economic and technical cooperation Cultural and scientific cooperation

Sao Tome and Principe

Economic and technological

Seychelles

Economic and technicalooperation

Sierra Leone

Economic and technical cooperation Economic and technical cooperation

Somalia

Economic and technical cooperation Economicooperation

Soviet Union

Improvement of Joint meteorological operations

Economicooperation Economicooperalion Economicooperalion

Spain

Five-year cultural, edueational, and scientific cooperation

Sri Lanka

Economic and technical cooperation

4G

8

89

14

6

803

868

34

16

58

ilateralfor economicooperation

Protocol on economic and technical cooperation

Economic and technical cooperation Sweden

ooperation between CAS and ihe Royal Swedish Academy ofSettees

Ten year cooperalion in industry.

science and technology

Scientific cooperation between the

CAS and the Royal Swedish

Academy

Protocolooperation Prolocol of 5th session onooperation Prolocol of 6th sessionooperalion

Protocol on economic and technical cooperation

Protocol un economic and technical

cooperalion

Technical cooperalion

Thailand

ooperation

Planooperalionunisia

Establishment of bilateralfor economic and technical cooperation

Economic and technical cooiwralion Turkey

Economic. Industrial, and technical cooperalion

Economic and technical cooperalion

United Arab Emirates

Agreement on economic trade and technical cooperation

United Kingdom

Scientific cooperalion between the CAS and the British Royal Society

Novcooperalion

Nmand SAT cooperation

DecIm cooperalion in SAT

Marcooprtalionthe CAS

and ihr Btilish Il<al Society

I mtrd Nations

JulCAS and

United Nations Iterns .

Mayol icienlil cooperation

belween CAS and United Nations Univrn.lv

United Males

OclOD studenl exchanees

Novami ing nn agricultural ex-

changes

Decon apace technology

Janagreement; implementing ac-

cord on high-energy physics

Aprfor academic exchange to

coopeiete in science

Mavbetween SSTC and the US

Department of Comrnetce forin SAT manacrmrnt. protocol on atmospheric SAT; protocol oo metrology and standards

Juncooperalion In medicine and

public heellh between Departs ist ofEducation and WrHare. end Chinese Ministry of Pabbc Health

Augon hydroelectric power and

lelatrd resources management

Ianon Earth sciences and on

null- ttudics

Janand technical cooperation

Febprotection SAT coop-

eration

OclIwlween Chinese Nucle-

ar Society ami American Nuclear Society

Nov nn SAT cooperation in

medicine and public health

Decon hauc sciences

Dec reoperation between CAS

and Sintthtonian

Octon nuclear safety matters.

protocol on surface water hsdrologv

Mayphysio, biomedical traro-

portatton aeronautical (lourv)

444

4 Imm

1

4S55

3

1088

8

99

nl technical experts and indentation

Industrial and lechnical cooperalion aoord

Coopnation agreement nn nuclear energy

Indurfrial SAT. SAT cooperari-i

Work urograms forhon in metallurgical, telecommunications, and electronics ind ml lie* Scientific and nuclear lonperalion Work program for industrial and technical cooperation in the aero-tpace industry

Aurerment wilh Ceonjia Tech for join! venture in research and technology

Cooperative pnaiium lor high-energy physics

Agci-mcnl extruding0

Earth science* agreements

Extension of9 medicine snd

public heallh agreement

Protocol on SAT cooperation if our

agreements)

Protocol on ecoMornrc and technical cooperation

Venezuela

SAT cooperation

Western Samna

Economic and technical cooperation Soulh Yemen

Economic ami technical cooperation Yugodavin

Establishmentilateralon economic andung-term agreement on SAT cooperalion

Scientific cooperationAS and the Yugoslav Commimon of Academiesenors and Arts Protocol on SAT9 SAT cooperation and protocol (or 1st tula trial session of committee (or economic and SAT cooperation

Aprin research ol Instli volt-

age switches

Maron 2nd bllaieial session on

economicooperation

Apr lor peaceful to* of

atomic energy, eschangc

2

Marof 3rd tub-trial trsaaon on

economicooper atof 4th bilateral session on

economicooperation

Zaire

Deccooperation

90

Zambia

ooperation

Kcoiiomie ami livhniral cooperation Zimbabwe

Economic and technical cooperation Protocol on economic and technical

Economic and technical cooperation Agreement on economic andooperation

greements;ountries (not including -

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