THE CONTRIBUTION OF IMPORTS TO COMMUNIST CHINA'S ADVANCED WEAPON

Created: 5/1/1967

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DIRECTORATE OF INTELLIGENCE

Intelligence Memorandum

The Contribution of Imports to Communist China's Advanced Weapons Program

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oc. CONTENTS

" * General Progress in Industrialization

Period of Soviet Assistance

Disastrous Leap and the Withdrawal

of Soviet Support

Up the Pieces

New Menace the "Cultural Revolution" .

n. Broad Problems in the Development of Modern

Weapons Systems

to Update Technology

Shortage of Skilled Manpower - - .

Deficiencies of Importance to Advanced

Equipment

MetalB

of the Weapons Program

V. Importance of Assistance from Japan and Western

Europe

Imporis

Equipment

Tools

Materials

of Controls . . .

Importance of Assistance

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THE CONTRIBUTION OF IMPORTS TO COMMUNIST CHINA'S ADVANCED WEAPONS PROGRAM^

Summary

Imports from Japan and WesternEurope of key industrial equipment, materials, and technology play an important role in Comrnunasfr, China's advanced weapons program. These imports help to overcome critical deficienciesin domestic supplyand lessen the impact of the withdrawal of Soviet technical support. Over the next few years, China will facedifficulties when itsD. engineering, and industrial capacity will be taxed severely to support production and deployment of advanced weapons. Thus the degree of industrial and technical support from Japan and Western Europe will more than ever determine the pace, scope, and effectiveness of China's military production programs.

In spite of economic difficulties caused by the excesses of the Greatsupport, Peking has resolutely pushed forward the development of modernes that arc of importance to modern weaponsfall into four categories: machineryarticularly special-purpose and precision machinery; electronic equipment; special, metals; and certain key chemicals. In all four the Chinese feadership has been succc ssfuT'in' expanding domestic capacity and productionhisadvance, however, has beenarrow front and has beenachicved only by concentrating the best manpower and equipment on these high-priority tasks. Imports from JapAQJUld_We_sjLejp.X. iraportantioJbcsc_fpurjirgas.

Modern weapons systems now under development in Communist China are based on Soviet systems and consequently have the bulk of the research already proved--and paid for. China almost certainly is going ahead with its own independentfforls, such as those needed for ar. ICBMand thisapid increase in the complexity and cost.

memorandum was produced solely by CIA. It was prepared by the Office of Research and Reports and was coordinated with the Office of Scientific Intelligence; the estimates and conclusions represent the best judgment of the Directorate of Intelligence as of

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Over the next few years. Communist China will depend even more.heavily onJapanand Western Europe to supplement domestic efforts to expandits modern industrial capacity (seend imports of key industrial equipmentand technology will serve not only to supportthe modernprogram but alsoto relievethe pressure on supplies of manpower and equipment in industryhole.

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COMMUNIST CHINA 'ALUE OF IMPORTS FROM JAPAN AND WESTERN EUROPE OF MACHINERY AND EQUIPMENT AND SCIENTIFIC INSTRUMENTS'

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SRC11ET

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1. GENERAL PROGRESS IN INDUSTRIALIZATION

A. The Period of Soviet Assistanec

The Chinese Communist leadership has emphasized from lhe very beginning the development of heavy industry, including mill-lary production facilities. The Soviet-style system of rapidwas adopted, and large-scale domestic investment was supplemented by extensive material and technical support from other Communist countries.

eries of agreements signed0he USSR agreed to supply Chinaodern industrial pUnts worth about Si billion. These plants included almost the entire range ofindustrial installationsteel mills, electric power stations, machine building facilities, aircraft plants, chemical facilities, and the like. The Communist countries of Eastern Europe also agreed toa substantial number of industrial projects to China's ambitious development program. China could have produced these facilities domestically only after much delay andremendously high cost. In effect, the USSR and Eastern Europe were offering Chinaindustrialization.11 China was able to and did pay for this industrialization through exports of goods that it could produceat homeextiles. Ores, and specialty foodstuffs.

esult of increases in domestic production and assistance from other Communist countries, Communist China greatly expanded its industrial base in the first five-year plan. Production of major items increased as follows:

Produc'.ien

2 7

- Crude'steel -Million metric

Coal - Killloo nctrie

-- -Patrblcuo illion metric

Electric power Billion

Cement Million metric

Sulfuric acid Thousand metric

D. The Disastrous Leap and the Withdrawal of Soviet Support

During the Grea: Leap,isastrous change occurred in Chinese Communist economic policy. The tempo of production was accelerated to intolerable rates. Manpowor and

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raw materials were wasted on primitive industrial schemes such as backyard pig iron furnaces. In agriculture,he "communes"ere established and quickly led to disruptions in agricultural production and in the distribution of food; the weather, too, was unfavorable for agriculture Economic planning and statistical control were dismissed as obsolete attitudes under the slogan, "Let politics command economics."

The Soviet authorities took few pains to conceal their anxiety over the economic policies of the Leap Forward. The USSRarge political and economic investment in China that was in jeopardy. oreover, increasing political and ideological differencesontinuing deterioration in relations between the two .Communist. iants. Finally in- and this was perhaps the mostsingle event in the economic history of Communist Chinahe USSR peremptorily withdrew theoviet engineers and technicians and broughtalt practically all of its economic assistance. The massive program of Soviet support groundalt. At this time, only about one-half of theoviet-aided plants had been completed. Aid from Eastern Europe, too, was reducedrickle.

During the winterhe Chinese economy reached its lowest ebb. Industrial production was severely reduced,was widespread, and discontent extended even to the army.

C. Picking Up the Pieces

In spite of the collapse of the Leap Forward, Communistthe legacy of Soviet and Eastern European assistancethe technology, and the trained workers. And it was notChinalow but steady recovery from the depthsit had plunged at the turn of the decade. uch ofindustrial capacity had been put back in Operation, buthad not yet recovered0 peak. Agriculturaland the food supply had recovered from the low pointopulation has grown considerably faster thanproduction. To help offstt the consequent decline inproduction, China hasillionillion tonseach year since

During this period of recovery, China's trade with the Communist countries fell sharply, whereas trade with the non-Communist world rose, not only because of large grain purchases but also because of growing imports of machinery and industrial materials from Japan

and Western Europe. When China was industriatixing under theof the USSR, more than two-thirds of Chinese trade was with the Communist countries. 0 the situation has been reversed; ow two-thirds of China's trade is with non-Communist countries. (See Figure 2)

BIUION USS

I Total Tr;,cJe

2

IBIf WOSHD

2

COMMUMST COUNTRIES

3 9 0 1 ' 7 3 * 5 6

D. ew Menacehe "Cultural Revolution".

, economic recovery in Communist China is being menacedew developmenthe "Great Proletarian Cultural Revolution. " This campaign isinal attempt by the aging Mao to rekindle the flame of "permanent revolution"eople whose main desire is economic betterment. Among the earliest targets were writers, professors, scientists, research directors, and other intellectuals and experts, especially those with Western training and contacts, But protection is said to have been granted to experts in high-priority defense industries. This protection apparently has been fairly effective.

Inao extended the revolution into industrial and agricultural enterprises. Production and research were disruptedarge number ol major industrial plants, but the disruptions were not critical or prolonged. The movement of imports and exports was hampered, and trade negotiations were delayed in some cases. Again, these developments probably have not seriously affected Chinese

The cultural revolution is not in harmony either with the needs of modern industry or the wishes of the population for improvement in living conditions. At the moment the regime seems to .be cautious in pressing the revolution throughout the economy. Although theapparently has not yett could become so violent as to cripple seriously the advance of industry and technology.

II. BROAD PROBLEMS IN THE DEVELOPMENT OF MODERN WEAPONS SYSTEMS

A. Need to Update Technology

Communist China has made rapid progress in the development of some modern weapons systems in spite of the disruptions of the Leap Forward and the withdrawal of Soviet support. The Chinese have been able to explode five nuclear devices, toiversified weapons program, and to embark on other military research and development activities. The Chinese programs probably relyarge extent on technology supplied by the USSRlthough attempts clearly are under way to push beyond this level. The precise status of Chinese progress is not known, but activity is particularly great in the nuclear, missile, aircraft, and naval fields.

Communist China lags far behind the major industrial nations of the world in industrial production and technology. Yet by concentratingscientific, and technical resources on weapons development and by purchasing key equipment and materials from abroad, China has steadily progressed in the development of high-priority military hardware. This progress has been achieved, however, only by withholding resources from the civilian economy and by delaying the growtheneral industrial basefor the broader needs of the economy. Delays in the development of aindustrial base will, of course, in turn influence the future pace, scope, and effectiveness of weapons programs.

During the period of Soviet support, emphasis was placed on the growth of basic industries. owever, efforts have focused on theof facilities to produce more complex commodities such as certain electronics items, special metals, plastics, synthetic fibers, and other chemical products. Expansion of the key machine building sector has alsoigh priority. The need toomplex modern industryhas been made more imperative by the ever-rising requirements of weapons programs. Since the withdrawal of Soviet support, China has been turning to Free World countries as the only alternative source of advanced machinery, scientific equipment, critical raw materials, and technical ata.

B. Chronic Shortage of Skilled Manpowsr

A continuing key weakness in China's industrial technology is the shortage of well-trained engineers and technicians at the middle and upper levels. The Chinese leadership has had to choose which types

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of technical work are to be supported and which neglected. At present, Chinese scientific research work is concerned largely with urgent practical problems, as opposed to general scientific research, and is probably concentrated to an important degree in the military area. The regime can assemble teams of researchers and engineers lo focusmall number of high-priority problems, but its efforts on military programs are at the expense of basic Industrial programs.

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in. INDUSTRIAL. DEFICIENCIES OF IMPORTANCE TO ADVANCED WEAPONS

Generally speaking, CommunitI China's principal industrial deficiencies that arc of importance to modern weapons development fall into four categories: electronics equipment; certain key chemicals; special metals; and machineryarticularly special-purpose and precision machinery.

Equipment

Among all the inputs neededodern weapons program. Communist China is probably in the best position in military electronics equipment. The Chinese profiled as much from Soviet assistance in buildingomestic electronics industry as in any other field of modern industry. owever, new military needs began to be met chiefly by China's ownof foreign-designed equipment. In addition, many varieties of Western electronics equipment can now be purchased by the Chinese, and much of the current Chinese effort is devoted to adapting this equipment to meet specific Chinese military requirements.

esult of earlier Soviet assistance and of its own extensive research and development, China is believed to be capable of producing much of the control and instrumentation equipmentncluding radars, computers, and gyroscopesneeded for guidance and control of surface-to-surfacesurface-to-air missiles, and short-range cruise missiles.

China currently produces enough communications equipment to meet most of the minimum requirements of it6 ground, naval, and air forces. Most of its deployed ground radar is of domestic manufacture. As the need for more complex equipment develops, however, the Chinese are seeking imports of more electronics and communications equipment,

including prototypes, as well as technical data from Japan.aM

Europe. The electronics industry also is heavily dependent on imported raw and semi-finished materials (for" example, mica, quartz, and high-purity copper) and on high-quality production machinery and testing equipment.

The technological development of Communist China's chemical industry lagged behind that of other heavy industries up Since then, considerable progress has been made In the production of baoic chemicals, fertilizers, and plastics, and5 the Chinese have

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igh priority on the development of petrochemical*. China's output of chemicals evidently is adequate to meet most of the needs of its advanced weapons programs. Fragmentary information indicates that imports of weapons-related chemicals and equipment have been limited in type and quantity.

China is capable ofmall number of solid and liquid propellants for missiles and rockets. In the case of solid propellants, the munitions complex at T'ai-yuan produces traditional types of double-base propellants in sufficient amounts for test and development purposes. Of the liquid propellants, .China.produces alcohol, kcrosine, liquid oxygen, and concentrated,nitric acidhina, however, probably produces only small amounts of high-strength liquid propellants such as liquid hydrogen, nitrogen telroxide, hydrazine, and other amines.

Many plastics are useful in military weapons. The plastics industry of China, however, is relatively new and underdeveloped. Chinesechemists have succeeded in producing some of the more common types of polymers but cannot mass.produce the specialized types that arein military weapons. hina claimed to haveomestic capability to produce Teflon; production is limited, however, and quality probably is below Western standards. Teflonumber of strategic uses in the aircraft and electronics industries and is extremely important (because of its resistance to corrosion)asket material in the gaseous diffusion process for the production.

Specialized types of synthetic rubbers are needed for military programs, yet China produces very little rubber andariety of types. China still lacks processes capable of mass-producing silicone rubbers, modern stereorubbers, and oil-resistant synthetic rubbers. Inon synthetic rubber plant was built by the USSR at Lan-chou; production from this plant still remains far below capacity. Imported plant and technology would be required for expansion of China's synthetic rubber industry.

pecial Metals

f the serious Chinese deficiencies in materials for the modern weapons program is the inadequate domestic capacity to produce many alloy and special steels and certain nonferrous metals. China probably has sufficient metallurgical competence and the necessary equipment, including vacuum melting equipment, to produce small quantities of superalloys, electrical steels, and stainless steels, including special types needed for research and development. Substantial increases in

high-grade alloy steel production, however, will depend onan expansion of capacity. In recent years the Chinese have intensified their efforts to develop the production of stainless steel to support the expansion of the chemical industry as well as to supply new military needs such as in construction of nuclear reactors.

China's metallurgical industry probably has sufficient capacity for producing most of the present requirements for commonly used metals and alloys, with the exception of chrome, nickel, copper, and cobalt^ Expansion will be required in rolling mill capacity, however, if China is toarge part of its requirements for finished steelarticularly sheet and strip from domestic production. Expansion in rollingwould requiro imports of equipment and complete plants.

Little is known of China's ability to produce and fabricate such metals as titanium, tungsten, tantalum, beryllium, columbium, and molybdenum. China's problems with steel processing and its efforts to obtain technology for certain of these metals from abroad suggest that it would have difficulty with the more complicated problems of producing and fabricating these metals.

The principal requirements in increasing the supply, variety, and quality of metallurgical products in the near future are: (a) modern finishing mills, (b) additional metallurgists and skilled production workers, (c) additional equipment and technology needed for the production of the more advanced metals and alloys, and (d) certain mineral raw materials.

D. Machinery

The machine building industry carries the heaviest load in support of China's military programs. 0 this sector of industry has beenoor position to support simultaneously the development of modern weapons systems and the most pressing civilianoss of Soviet aid has forced the machine building-industry to use its scarce resources to develop greater self-sufficiency in the manufacture and design of new equipment. This industry has had toarger share of its production to the manufacture of specialized equipment required in such facilities as aircraft plants, nuclear reactors, metallurgical plants, and oil refineries. Compounding the problem has been the need for China to obtain from domestic or Free World sources most of the instrumentation and controls and other specialized components formerly obtained from the USSR.

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Even bo, over the last two or three years, China has made progress by concentrating the industry's best manpower and equipment to meet these requirements. The Chinese have been able to "supplement their domestic efforts by purchases from the West of precision andtypes of machine toots such as jig-borers, gear-making machines, and precision grinders. Chinese imports of machine tools such as these have risen steadily

Imports of Free World equipment not only contribute to the filling of large gaps in Chinese capabilities but also provide the Chinese with prototypes for native designs. Imports such as whole machine building plants'involve purchase'of readymade technology andraining ground for Chinese technicians, especially in those instances where contracts include provisions for training by the supplier.

Over the next several years, production In the Chinese machine building Industry is likely to increase in amount and variety and should be better able to support, forodern jet aircraft industry. Available resources for jet aircraft production, however, will remain scarce because this line of production requires many of tho same engineering skills, metals, and machine processes as missile production. igher level of competition may occur between these two weapons programs than between these and other programs for example, submarine production or the development of nuclear

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IV. BURDEN OF THE WEAPONS PROGRAM

Communist China's military and military-related programs may take as much asercent of China's CNP. Thisomewhat higher share of GNPuch larger share of industrialthan in France and the United Kingdom. Of greater importance, China's weapons program uses manpower, equipment, and materials of the highest qualitycarce resources that otherwise could be used to build up the civilian sector of the economy. onversation with visitors Premier Chou En-lai acknowledged that China's pursuituclear capability had imposed an enormous burden on the economy.

The experience of other countries indicates thot military costs will become even greater in the years ahead, especially when Communist China attempts to move various weapons systems into production and deployment. Weapons systems now being developed are based on Soviet designs and hence have most of the basic research already proven. The Chinese would be able to lessenut notises inosts If they were willing to settle only for theof proved Soviet systems and thus the technology ofs. China almost certainly is going ahead with its ownfforts, such as those needed for an ICBM program, and this means rapidlyosts.

Total costs will mount even faster as China attempts to place various weapons systems in scries production and to deploy them in the field. Even if in the next few years China produces only improved copies of Soviet systems, serious problems will bs faced in mastering the production techniques and reproducing specialised parts or Production costs relative toosts are likely lo be higher for China than they were for the United States or Franca because those countries already had in existence the industrial machinery, processes, and skills needed to support their production programs. In addition, China will have to meet the heavy annual operating and maintenance oxpenses of the deployed units.

In the absence of extensive foreign assistance, China's supply of skilled manpower almost certainly will prove to be inadequate to pursueigh-priority modern weapons program and provide adequately for the civilian economy. Over the next several years, China will continue to be faced with an acute shortage of scientific, managerial, andpersonnel and will be forced to concentrate its effortsarrow range of high-priority industries.

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V. IMPORTANCE OF ASSISTANCE FROM JAPAN AND WESTERN EUROPE

A. Total Imports

China's imports of equipment and technical data from the Free Worldajor contribution to its military programs. hina has purchased more thanillion dollars worth of machinery, equipment, and scientific instruments from Japan and Western Europe.* This figure does not include purchases of transportation equipment or the total value of technical data acquired from abroad, The following tabulation shows the sharp rise3 In Imports from Japan and Western Europe of machinery, equipment, and scientific instruments:

Million HE $

Year

lal

and Eoulpment

. Scientific Instruments

a

b/

Excluding imports of transportation plants.

and complete

Annual estimate based on data for first six months.

China has been purchasing increasing quantities of such items aa rolling mills, special-purpose lathes and other machine tools, scientific instruments, computers, and other electronics equipment. The shopping list for future imports not only is becoming longer but alsoarger proportion of items relatedither directly or Indirectly to the advanced weapons program.

*elected list of some of the more important purchases made, see the Appendix.

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Many items of Strategic equipment included in China's shopping lists fall within COCOM regulations, and the regime has hadin purchasing all the types or quantities of machinery required. However, the COCOM list docs not include many items of both direct and indirect importance to China's military program, and some of those items covered by COCOM have been obtained throughof the controls.

Plants

Sincehina's purchases of complete plants from Japan and Western Europe have expanded considerably. The value of these plants totals0 million. Most of the purchases have been in-support of the civilian economyor example, chemical fiber,and plastics plants. However, some of these installations,steel and other metallurgical plants, will supply important inputs to the buildup of China's military-industrial base. Furthermore, the purchase of advanced Western technology and equipment for priority sectors of the civilian economy. Such as chemicals and petroleum, releasesanpower for use in weapons programs.

When purchasing complex plants or equipment involving newthe Chinese usually obtain agreement from the manufacturer to supervise installation of the equipment in China, to train Chinesein its use. and to guarantee its continued operation and repair. In some cases the Chinese purchase technical knowhow rather than equipment. For example, in5 the Chinese made suchontract entered intoarge Swiss producer of diesel engines.

Equipment

ommunist China took steps to widen the range of products produced in its steel industry, particularly to reduce imports of flat-roiled and tubular steel products. Since6 the Chinese have been negotiatingestern European consortium headed by the West German DEMAG Corporation for the purchase of: ahigh-speed hot stripontinuous high-speed cold stripube extrusion facility, andlanetary strip mill. The proposed facilities would increase China's capacity to produce sheet and plate byillion tons annually.

hinese imports of finished steel amounted to0 million, roughly double the levelnd imports probably were

1

higher Most of the imports consisted of flat-rolled and tubular productsypes of steel that would be produced by the rolling mill equipment under negotiation.

Over the past few years, contracts have been concluded and negotiations have been startod for the import of equipment required for production and processing of "space age" metals. Chinesein the important field of high-temperature and corrosion-resistant materials have been increased primarily by the purchase of foreign equipment and technology.

D. Machine Tools

In general, the machine tools currently being developed in China are not the type suitable for production of the large-dimensioned precise parts required to fill weapons fabrication requirements. Thus as the demand for precision machinery becomes greater, China must of necessity rely on imports from tho industrialized nations of the Free

Imports of high-grade machine tools for all purposes, military and civilian, have come primarily from West Germany, Switzerland, the United Kingdom, Japan, and, more recently, France and Italy. The increasing importance of Free World supplies is reflected by the following tabulation, which gives the value of imports from principal Free World

.. ..

US $

Germany

Kingdom

from these countries have continued to increase,evel of upillion Purchases include jig-borers, heavy-duty horizontal boring and milling machines, high-speed internal grinders, fine-pitch precision gear machines, and others. Virtually

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all of the machine tools being purchased in the West ostensibly are for nondefensc end uses; however, most probably are intended to be used directly in support of military industries.

Materials

Imports of industrial materials also contribute to modern weapons production. Total imports of industrial materials have been rising sharply and were0 millionxcluding imports of fertilizer. Small quantities of certain materials critical to the devel-opment of China's advanced weapons programs have beenor example. Teflon, ion-exchange resins, high-purity copper, special steels, refractory metals (such as titanium, beryllium, andnd high-purity graphite needed in atomic research.

Data

A distinct contribution to Communist China's weapons production program comes from the acquisition of foreign technical data. China is constantly gathering technical documentary information through open sources in Japan and the West, such as libraries, bookstores,and scientific publishing houses. Chinese scientific and technical delegations obtain technical data from visits to Free World factories, laboratories, and universities, as well as through other direct personal contacts. Scientists and engineers visiting China often undergo intensive questioning about technical matters. Some technical information also is purchased directly by the Chinese or is transmitted in connection with negotiations or sales of equipment.

of Controls

Finally, of course, the Chinese are able to acquire invaluable technology through clandestine channels: contract negotiations and shipments are carried out covertly in violation of COCOM and other controls! there are false declarations regarding the end use of the equipment; and deception is employedy shippingieceime (to avoidy hiding the fact that China is the ultimate destination, and by falsifying export documents.

Importance of Assistance

Over the next few years China will depend more heavily on Japan and Western Europe to supplement domestic efforts to support its modern industrial capacity. As the production of modern weapons

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, -and modern technology will have to be acquired from theof modern equipment and technology will serve notsupport weapons programs but also to relieve the pressure onskilled manpower and equipment in industryhole. Thusincreases in imports of this type andTquipment and materials arc likely. This trsndwill continue unless China either has an unexpectedwith tho USSR or suffers an economic breakdown from thelta present cultural

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