Created: 6/29/1962

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Prospects for Communist China


Concurred In by UNITED STATES INTELLIGENCE BOARD At indico:ad ovtrkal2


The following intelligence orgonizeliont participated in lhe preparation of this estimatei

The Ctn'rolAgency ond thtotoonliortoni ol trul tMM,he An"t, tho Novy. ond Iht Air Forte.

Concurring i

Director ol IrMellioffice om) Rewardi, Deccrtmcni ol

Chitf of SrofT for Infeflioeneo. Deportinent of Ik* Anny

AiiUiam CSiof of Novo) Operation*Deportment of lit* Navy

AuUieM CWof el Staff. InWKgtnc. USAF

Director for totolBgortee, Jo*nt Stall

Director of ihoSecurity Aoency


Tho Atomic Energy CoMloieD (UpvioMoiivah*nd iht Auoloni Dwoctor, Federal Bureau ef Inveitigobon. tho Mbyte* being ov'iidt of tr>t*

Informrrion offoctbfl tht Notlonol

, rh* rron*-

wjthln tha m

in ony manner to on unoulhorlred per


national intelligence estimate


Prospects for Communist China


The text of,iscussed the economic problems, military situation, and internalof Communist Chinaelatively brief compass. The following three annexes amplify these discussions and provide backup information for the estimates made therein.

Significant changes in the deployment of Chinesemilitary forces which have occurred since theof, "Prospects for Communistave been discussed in, "Chinese Communist Short-Range Militaryated2 (TOP SECRET.n this set of annexes addresses itself to analysis of Conununist China's overall military strength and basic capabilities, which have not been affected by the recent and current redeployments. With this exception, the annexes include the latest available information.






prospects for communist china




Hie fundamental economic problem faced by the policymakers ot Communisthe pressureuge and rapidly growing populationelatively small acreage of arable land Onlyl the land area of China, can becultivated today. The margin between food supply and ihe population's nutritional requirements has long been slim.

However, beginning immediately after the takeover Inhe Communist leaders embarkedolicy of forced-draft industrialization by channeling the maximum possible amount of fundi Into the development of heavy industry. The correlative policywas to skimp on agriculturalChina's farms became In effect aclaimant, on resources In spite of this policy, agriculture was able through most of the first decade of Communist rule to supply the population with an uninspiring butdiet andurplus for export. These exports went largely to pay for Imports of industrial goods and lo provide debt service on the loans which the Soviet Union had made available to China to assist her in teaching great power status.

The party leadership, however, was not satisfied with the very considerable progress being made. Theyhortcut tooor, backward agricultural coun-tryodernised Industrialized nation withinoears. The policy adopted was the so-called "great leaphis program was designed to take advantage of China's enormous resources of manpower and to work every man, woman, and child, every freight car. every machine, and every plot of farmlandrantic pace. In agriculture. It was characterized by the establishment ofcollectives which comprised tens of thousands of people and endeavored to combine economic, political, and socialand authorityingleSoviet advice was Ignored as the Cbinese leadership carried out Its ownin Ideology and economics,

Despite mounting dislocations, theCommunists stubbornly persisted In this leap-forward program until It collapsed Inith the nation on the verge of starvation, and the regime's fiscal andcontrolstate of near chAOs, Peiping Inood yearon survival, and, apart fromharp drop In Industrial output and

structlon, made only wen minor organization reforms as could be easily effected.light Improvement In the food supply Inoodfrom Imports and privatehas attempted more basic reforms to restore peasant incentive and initiative in agriculture, to rationalizeand to relocate surplus urban population.


The Chinese economy is fundamentally dependent upon agriculture.ercent of thedirectly dependentiving Agriculture must not only provide food for China's large and rapidly growing population, but also exports to pay for Imported machinery and equipment, and raw materials for light industry. It alsodirectly or indirectly to the capital required to expand industry. Budget revenue, retail trade, investment, and industrial(particularly in light Industry) all fluctuate with good or bad harvests.

In the first year of the "greathina achieved the greatestoutput in tts history. Oramwhich we estimate atillion tons, was aboutillion tons greater thanhis success, however, was notin succeeding years. While available data, and hence our estimates of cropare very Imprecise, we beUcvt that the annual grain harvest9 throughas no better thanillion tons recorded7 and probablyopulation probablyby at leastillion0 to IS percent decrease ln per capita availability of foodstuffs.

The agricultural failure, which preceded the Industrial slump by about two years,largely from lU-concelved andImplemented agriculturalrincipal manifestation of this was theprogramhe effort toa totally new and all-pervasive form of rural organisationingle season destroyed the old organization without an effectiveMany administrative functions broke down, including much of the work in statistics, coUecUon, and distribution. At lhe same time, politically reliable cadres with little or no farrnlng experience Imposed Peiplng-ln-splred techniques such as extremely close planting and extravagantly deep plowing,time-tested planting and rotationand dissipated much manpower onindustrial projects, including the now notorious backyard Iron furnaces. Theeffect of the policy errors and arbitrary methods of the regime were not as great as they might have been because of theinertiaarming system involving hundreds of millions of tradition-bound peasants.

he peasants resented the bureaucratic interference with their established practices. They were confused and upset by abrupt and unpredictable vacillations of policy andby the reduced living standard which followed their exhausting labor efforts In the early leap-forward period.they found that in large-scale collective fanning there was no clearly discerniblebetween their livelihood and the quality and quantity of their labor. Then, as food shortages developed, sheer physical weakness was added to apathy and bitterness, further reducing labor productivity.

S. Although we do not know Its extent and cannot estimate IU Importance, some material damage was also done to China's farms. Co aim unity-owned tools and machines often did not receive the care normally afforded to those owned by individuals, and replacements were Inadequate. The number of draftfell sharply, and the soli Itself hasfrom various malpractices. In some places poor Irrigation practices have caused

either leaching or laltnliatlon. In others, overuse, especially close planting, hassoil fertility.

Bad weather has seriously added toagricultural problems. During the past three years there hare been serious droughts in various parts of the country Host of the North China plain was drought striker,0 and smalleruch ofprovince, have continued to have below normal moisture. The great "rice bowl" of Szechuan was hard hitlthough weather, without doubt, contributed to the recent agricultural failures, It is growingevident that, Peiping hasIts effect to cover up Its ownormal year In China Includes bad crop weather in some parts of the country. The sise and geographic complexity ol the country combined with the marginal nature of much of the farming Insures that there will be crop failures in some parts of the country almost every year.

Because agricultural statistics reported to Peiping were falsified under the slogan, "let politics leadhe regime did not realise the seriousness of Its agriculturaluntil late0 The massive labor drives, under which peasants were mobilized into large battalions and shifted from onetask {such as the backyard Iron furnaces) to the next, then camealt Subsequently, the authority of the communes, was drastically curtailed, and Its functions taken on by production brigades and later by production teams and. In some areas, even by families. Incentives to tha peasantry were increased by restoring private plots and free markets and by tying grain distribution more closely to individual effort.

Any estimate of th* prospects forChinese agriculture7 rests heavily on the probable effectiveness of these and other measures that the Chinese can take.

However, because theere lost to agricultural advancement, and because the regime decidedolicy of keeping the maximum number of people alive rather than reverting to the traditional corrective of mass starvation, the task todayost difficult one. Merely to restoreer capita level of grain production equal to that7 wouldour percent annual Increase in output.

Although the Chinese Communists have often paid lipservlce to the fundamentalof agriculture, they have been very reluctant toignificant portion of total investment to agricultural needs. They have operated agricultureort of holding operation hoping that domestic peace, better organization, and "peasant enthusiasm" along with local Investment by the peasantry would raise the level of agricultural outputate sufficient to meet Increasing demands.the attention of Peiping was focused on the struggle for triumphs In heavy industry. In the wisdom of hindsight everyone,Peiping. now knows that the margin of agricultural output over absolute minimum needs was inadequate toerious drop in production.

0 Peiping has had forced uponuch deeper appreciation of theof its agricultural problem and the need toreater share of its resources to the development of agriculture. Chinese leaders have indicated that agriculture is to receive priority over other parts of theand that Investment In new industrial projects Is to be suspended. The limitedindustrial Investment is to be focused upon those industries that serveertilizer plants and factories to produce pumps and tractors. Since12 budget has been published, weJudge to what extent the emphasis of Investment has actually been shifted.

n the short run, gains must come from increased production per acre. Communist China mustpproximately one-fourth of the world's population on about one-fifteenth of the earth's land surface. Only aboutercent of mainlandsquare roiies is underone-half acre per capita. Estimates ofcultivable acreage vary widely, but it is probable that very little land can be added without considerable investment in long-range programs, especially Irrigation. Thus Chinese success during tbe next few years will depend mainly upon measures to increase yields, including water conservancy, land Improvement, chemical fertihscrs. higher yield crops, and unproved tools, as well as on increases In peasant incentives. The prospect for each of these Is discussed In the following paragraphs.

ne of the great boasts of theregime has been Its waters the regime calls It. During the winterndesser scale in the next tworemendous input of corvee labor builtof miles of levees and ditches forand drainage. Dams were built and many thousands of wells were dug. Although some dams and levees crumbled under the pressure of floods and aome ill-conceivedprojects did more harm than good, in general these projects apparenUy did much to reduce damage by floods and drought in the past few years. But by now many ot the more easily accomplished projects have beenand the willingness and physical ability of the peasant to tackle mass work projects has been greatly reduced since the peak7e believe that waterwork can makemallto production in the next two or three years, but that better use of existing facilities and resumption of investment in large-scale projects could substantially increaseproduction over the long run.

he prospects for land reclamation and soli Improvement are limited, and even at best are likely to contribute lessneannual Increase to farm official claims, land reclamation fcss added five percent to the cultivated acreageach major additional increment will require more time and investment for Its accomplishment. Soli improvement Involves various measures such as Unproved drainage, fallowing, and green manure crops. Material shortages and the need to keep all land in production severely limit what can beby these methods in the next two or three years. Inampaign was launchedne-shot Increase in tilled acreage by cultivating factory yards and the ground In uncompleted constructionto the extent of plowing uproads01 railwayfor suspended double tracking projects were planted to crops. There will probably be some slight increase Inobtained from these programs and the return to culUvatlon of marginal lands which had been abandoned In previous years.

IB. The greatest potential increase infrom material or technical means would come through greatly Increased use of chemical fertilisers. The effective fertilizer applied to the soil in Communist China Israction of lhat applied Ln other areas ofeuitlTetlon. To apply fertiliser on the Japanese scale over Its whole sown acreage. China would need aboutillionear



Denmart IM

* Data tor China art IHO eatlmaUi, fors-1ss9 Oeurei.


is terms ai nutrient contentillion tons In terms of gross quantity. The Twelve-Yearalls for production of onlyercent of that amount6 million tons comparedroduction ofillion tonshe last year for which weigure. We cannot be certain whetner theillion-ton goal will be reached on schedule, but considering the rats oftill now and the kind of equipment and technology the industry requires, we think this achievement unlikely. If the regime isto reverse its current policy andarge part of Its limited foreign exchange to import fertilizer in great quantities,production in China could makegains In the next few yearsesult of the use of chemical fertilizers. We estimate that the Chinese could getons of additional grain for each ton of fertilizer (gross basis) added.

he Twelve-Year program provides for Increasing the proportion of high-yield crops, such as rice, maize, and sweet potatoes. Temperature and water supply limit the areas to which rtce cultivation can be extended, and maize and sweet potatoes are consideredfoods by the Chinese people.cropping has been extended under the Communists but appears to have been reversed in recent yearsesult of drough; and rural disruption.eriod of. stability and good weather. Increased multiple cropping could again add to China's total food output.

he Chinese Communists appear togreat things from Increasedof agriculture. We believe that theseare Ill-founded. In the first place.

'The Twelve-Year proaramit not been mentioned In the pressone lime and it has apparently been largely,total It. scrapped la th* absence of any other plan Scares wesed the IS million Ions ot Useprogram. The retime probably hu no7re at present.

only about half of China's tilled acreage is adaptable to mechanized ploughing andMoreover, machinery will probably not increase per acre productivity very much over present levels because Its primary effect Is on yields per unit of labor rather than per unit of land. In any case, the rate ofof farm machinery in China is nottoajor Impact In the next few years Moreover, as the use of farmIncreases, so will the consumption of POL. which. In China's economy, is costly in relation to manpower. The biggest boost thatmight supply in the next few years is powered pumps to increase the efficacy of small, local irrigation efforts.

None of these material or technical methods will sufficiently vitalize Communist China's agriculture, however, unless, thecan be induced to work effectively Communist China's leaders obviouslytrong Ideological compulsion toward Marxist collectivization. It will be difficult for them to make the widespread and sustained gestures toward individual responsibility and rewards that are probably necessary to provideand sufficient motivation to theof mainland China.

As the preceding paragraphs indicate, there is no quick and easy solution to China's agriculture problem. Weather can produce sharp annual variations,eason of good weather2 could bringig boost in output; but toontinuing rise In output will require great Increases in theallocated to agriculture as well asmanagement practices. Assuming an average run of weatherhe rate of Increase in production will be determined largely by investment and motivation of theairly substantial achievement in both of these would be required to achieve the four percent average annual increase over1 production that would7 per capita output levels


grain importseyof Ita short-range agriculturalyear itillion tons ofdomesticnd as of Junecontracted for about four million tonsThese purchases have been fromcountries and have to date0 million ofPelping is continuing to seeksources of grain, but because of Itsexchange shortage It Is forced tobulk of its grain imports by credits.credits It used in buyingAustralian grain last year have beenas due, and further short-term creditto be available. The quantitieshowever, only take some of thethe food shortage; they do not nearlygap1


and projections of thoof Communist China arebecause of Inadequate data.estimates are based on (a) thereportede censusestimates of growth rates based onof Chinese statements, and onabout the food supply.disease, and olher demographicChina,. the projectionon the arbitrary assumption thatannual rale of naturalopulation and thatbe no significant mlgraUon.



Mid-year Population (millions!

'In addlUon. aboutillion tons ot train was bought br Corfununlst China (or shipment to other countries.

1 at the end ot thU Annex ihowi thefood deficits for recent rear*.





these demographic estimates arecorrect, every yeareople are being added to the population of Communist China. Each year of delay in resuming the economic advanceonsiderably smaller margin between total national output and the minimum amount necessary to keep the population alive and reasonably productive. This margin represents resources available for investraent-

Measures to limit populationsterilisation, contraception, abortion, and evenbe adopted to solve the population problem. Currently, thereevival of discussion In the Chinesepress of birththeof latethis discussion could be the forerunnerew national campaign. Indeed, In the cities there Isevidence of Increased practice of birth control. However, It would Lake Draconian measures for any such program toignificant effect on the growth of population in the next few years.


severity of the currentIn China, makes tt difflcult to recallthe future seemed to beIll-fated leap-forward began. Chinaembarked on well-conceived, highlyprograms to Industrialise and totechnology. Effective supportreceived from the USSR and tbeSatellites, and additional supportscheduled. The prospects seemed excel-


for creating ar. Industrial establishment7 which would exceed that ofhe gross production of basic Industrialand be technically self-sufficient In many of these industries. The short-run successes achieved wereof crude steel went upillion tons7 toillion tons9 and even moreut these short-runwere achieved at the expense of long-run development.

n the struggle for maximum output inaugurated6 under the "great leaproduction goals were unlimited and rational planning was practically abandoned. As one result most producers concentrated on the production of finished products to theof replacement parts. Equipment was worked at sustained top capacity:and repair were neglected.material and enormous amounts of labor were dissipated in such primitive enterprises as the notorious "backyard furnaces'* which turned out three million tons of largelyIron. Not only the primitive enterprises but many of the small modern plants which were erected in great numbers were found to be uneconomic producers and have been shut down.

ith Its agricultural andproblems already mounting dangerously. Peiping challenged Moscow on the question of the proper leadership of world communism This led in the summer of that year to the abrupt withdrawal of nearly all ofr so Soviet technicians from Communist China. The departure of the technicians, who tn soma cases took vital blueprints with them, halted progress on the construction of major new factories and power plants and led to reduced production in many plants which had been recently completed Subsequentalso Indicated that the unaided Chinese lacked the experience and knowledge necessary for successfully coordinating aIndustrial economy.

he agricultural crisis has also played an important part in depressing industry. Light industry. In particular has been hard hit by shortages of agricultural raw materials; cotton textile production was downercenteavy Industry, too, has beenIndlnscUy. The marked reduction In exports, which stems from agriculturalhas reduced the regime's ability to finance the import of capital equipment,and Industrial raw rriaterials for heavy Industry. Imports of1 were substantially below7 level. The general result hasrastic curtailment in investment snd inproduction, possibly backlthough it is Impossible to specify current production. Whether th* leap-forwardshortages of raw materials,and apathy of the workers, or the slash In Soviet support played the greatest role in the collapse of industrial growth cannot be determined at present, but all were Important factors.

he decline of industrial outputbeganisorganized collapse. As the regime finally realized th* magnitude of Its errors and problems. It attempted,o turn the rout into an organised retreat Th* two-yearas been set aside for plant rehabilitation and the reins ti tut ion of planning and coordination in industry. Emphasis has been shifted from quantity to quality snd variety of products-Abandoning th* policy of "letting politics takeeiping has returnedto the experienced managers andUneconomic plants have been closed down and an attempt has been made to gear output to the effective needs of the economy.

The slowdown In Industry has been striking. We hare Insufficient data toany comparative figures, but directof Industrial difficulties includeby travelers that the majority ofIn Peiping. Tientsin. Shanghai, and other accessible cities appear to be either closed or operatingmall fraction ofConstruction of many buildings and factories has stood still even In the sbow-place capital city.

The industrial slump has causedunemployment and underemployment. The regime has been trying vigorously to send the unemployed to collective or slate farms, apparently In the belief that they will be easier to feed and control in the countryside The propaganda has stressed the need In rural areas for more manpower. This need Ishowever, and there Is considerable evidence that the peasants do not welcome extra city dwellers to share rations with them.

Early prospects for resuming industrial growth are not bright. In light industry, where considerable capacity Is idle, output is heavily dependent upon an increased Sow of agricultural raw materials, particularlyProspects for heavy industry are more complex. Not only are the necessary rawnot being received in adequatebut Chinese technical capabilitiesto be less than we had previouslyIn general, industrial production seems to be drifting lower, and there Is no evidence that the bottom has beena development which we previously thought likelyumerous current reports chronicle new shutdowns of IndustrialVisitors to Chinese plants also are struck by the number of workers who areidle.

Further, the margin between totaland current consumption is probably so thin that the leadership is finding It veryto accumulate resources for Investment

Wfth the revival of Industry so heavilyupon agricultural recovery, we see little prospectsesumption of industrial growth over the next few years.


In the first decade of Communist rule, the primary function of the foreign trade of China was to export agricultural products In exchange for equipment for the militaryand machinery for the rapidof heavy industry. Peiping.has often placed political Interests ahead of economic rationality In Its conduct of foreign relations. Its stubbornlyideological dispute with Moscowaused the loss of essential Soviet economic and technical cooperation; its politicalon trade with Japan has denied China an excellent and convenient source or equipment and technical know-how; and. In tbe face of serious domestic economicIt hasostly program of foreign economic aid.

The fluctuations In the volume ofChina's foreign tradehe sharp changes in tempo ofIn the domestic economy. Total trade rose1 billion72 billion9 and fell sharply9 billionecause of continuing serious economic problems, we believe that China's foreign trade2 will be no higher than the level1 and probably lower.

The decline In foreign tradearked change In the direction and commodity composition ofrade with Bloc countries1 fell sharply toercent of Communist China's total trade, compared to an average of aboutercent In the; this is the first time

t the end of this Annexreakdown of Communist cnina.'* trade by eom-Ckodltlei.

0 that the Bloc countries accounted for less than one-half of total Chinese trade. Exports of agricultural products were cut back sharplynd import priorities were shifted from inTestment goods to grain and sugar. In theood comprised lessercent of imports; in

proportion Jumped tomports Of Industrial anddroppedercento. Imports of Industrial rawpetroleum products,rubber, fertilizer, andfor roughly the same proportionimports as previously, althoughsharply in absolute termslevels.

has continued to concludefor grain imports2 and Isother contracts. As of earlygrain purchased for shipment during

loillionmillion tons of grainillion in scarce Western

the field of machinery andPelping evidently intends to reduceon the Bloc and has beengreater imports from the Westchange has not yet been reflectedtrade statistics, but there haveillustrationsrowingIn Western equipment andThose have Included discussionsJapan, and the UKydroelectric projectbeing built with Soviet assistance,with British and Frenchand the purchase of six transportsUK last year, probes for possibleof stee(making equipment fromincreased visits of Chinese trademissions to Western Europe andcommercial delegations lo China.

In May and June of this year, for example, two Chinese Communist missions Interested in buying heavy machinery visited France; they toured ports, shipyards, power plants, scientific installations,atural gas field.

Despite adverse economic fortunes, Pelping has continued firm In itsto an economic aid program designed to expand Its political Influence abroad.hen Communist China began aaid program. Pelping has signedfor5 bUUon in economic aid. of which0 million had actually been expended by the endbout half of this foreign aid was offered0ndercent of aid offeredas to North Vietnam. NorthMongolia, and Albania,onsiderable extent in competition with Moscow.

While China's reserves of gold and Western currencies are believed to beIts export earnings are still substantial and It will probably continue to have access to short-term credithina should be able to buy as much grain as It dideet the annual debt repayment to the USSR0ustain its foreign aid deliveries at the same level0nd maintainimports at about1illion) If Pelping makes all theseImports of Industrial raw materials and semimanufactured goods and producersparticularly tho latter, probably will decline.

Locking Immediatelyof the difficulties faced by thesector and the need to retain foodstuffs and cotton textiles to sustain theand to rebuild minimum stores, wecurrent export levels will prove difficult to Increase. Expansion of exports willlargely on the ability of the Chinese to develop surpluses of Industrial raw

coal, lion ore,hich would find markets In the Free Work).

long-term credits would bethere seems Uttle likelihood thatbe supplied, either by Bloc orA further restraint on importsfact that net debt repayments wUIrise sharply3credits on grain purchases in theprobably continue.


to the general trend,petroleum products probably IncreasedThe estimated production.consumption of petroleum productsis presented In the followingmetric tons):


Products from domestic

:.'> . 13 li ti ne

Imported prod act* and products from Imported

crude II SS

Total producti. Although direct evidence Is limited, domestic production of petroleum may not have fallenhe high level of imports Indicates that sustaining the supply ofriority objective. We know of no technical difficulties experienced by'theIndustryhe oilfields areshallow, and the refinery processesare relatively simple AlthoughChina reportedly has produced both aviation gasoline and Jet fuelrial basis, there is no evidence of production of these fuels In quantity.

"We do have evidence that the bUj new oil shale plant at Miomlnj. southwest or Canton, suspended producuoo towards Use end ef 1M0 and hasnot resumed output. Kirn before the leap.

i speedup, this plant was scheduled to pro 3uce one million tons of petroleum

shortages of petroleumnoted1 than Inthat availability had generallyIn large cities largely stopped usinga cumbersome fuel substitute adoptedfallnd returned lofuel. Training and patrol activityair force has reclamedow level,of Jet fuel by all militaryamounted toons inImported from thehe needPOL remains an area of economicvulnerability for China


of maintenance records thaton the sides of freight cars reveals that

a program to repair the fleet began Innd was largely completed earlyxpansion of the railroad system, speeded up. had been drastically slowed through sharp cutbacks In tracklaying and addition to rolling stock. The absence ofof freight cars sinceeflects reduced traffic requirements.

A strategic raiUlne is now being built southward from Kunming toward Burma and Laos. If Peiping decided to do so, the trans-Sinkaang railroad, construction of which seems to ba suspended, could reach Urumchl this year (if It has not already done so) and could Join the Soviet railhead at the border by the end

There Is the probability of someof Chinese Communist International air and maritime services. British Viscount aircraft, scheduled for deliveryre well adapted to the medium distances ofChina and, with an Intermediate stop, could be used on the proposed service1 Peipinghipping service from south China to the Bay of Bengal with several way stops, the first extension of Chinese Communist hag service beyond North Vietnam.



Grill riedMlion -

imtvfc iMl

Serptuo or Yitr^End Ptr Cipiu DeficitPeiptnc'* Our Eo<i< "Rt- Populufon Production {mfflior*r Qilnii mtu (million*) (mirk Ivml mttrie tow)









i >


ttnOA groin production in Comrrwnrttubtrt mi't Uit rolouh of tuberson of (fiin.

on thff iKfrotoniblr


pOpuUtlOn Ifd: ior-.Mfi^ JJi

throtffh Ji*i'fbcf ovtorfiM tofirtw on (IHO'IMIK

Our rtttmtrteiiOA"rtq-tirecr products


' H I t minuted ronje ui*rd>

of obeutillion01omptntottd for he luchoduoinj rotiono.dovr* reoervre. reducing lb* pcoporitoo of giolr* goingeed andor Imporle of griln. ondtht cipetidlture of eneffcy reouiretl of tht population.



7 4 9 0 1

(Million L'S Dcluva)


and mcUd.




Agricultural product*.

and metal*


, tcatilc*

Data have been rounded to tbeillion.

soybeani. oihceda, ment. foh.iogar.ila. and lata; aome of th*nd fata mayan.

Include*citile fibers, bides and tklnt, plant* andnd roaio.

Include* tin. Unuten, coal, ironantimony, and allvei.

annex b



The Chinese Communistworld'sa tested capability for prolonged, large-scale offensive action. The capabilities of the air forces are primarily oriented toward air defense and tactical and logistical support of ground forces. The navy Isefensive arm, designed for relatively short-range operations. TheCommunist armed forces do not now possess nuclear arms or most other advancedevertheless, they are capable of mounting large-scale ground campaigns, and could almost certainly seize most ofAsia and the entire Korean peninsulaopposed by very substantialincluding

The post-Korea trend ln the armedtoward modernizing equipment andforces has been retarded by thein heavy industry, the suddenof the Soviet technicians and advisers, and the virtual cessation of Soviet' militaryIn the first half1 domestic deliveries of military construction materials and spare parts had fallen far below planned amounts. By mid-year the top level Military Affairs Committee was forced to order acutback In budgeted defensein which military construction was slashed by over half. Subsequent evidence

omanalysis of Communist China's advanced weapons capabilities and prospect* will be founda. "Chinese CommunistWeaponipril 1H2 rrea.

has indicated chronic maintenance andproblems with deteriorationccident rates. Moreover,of POL and other supplies havereduced flight training for theunder way training for the navy,maneuvers for the

There la little evidence that the health and stamina of Chinese Communist troops have been significantly affected by thefood shortages, primarily because the rations of the armed forces appear to have been maintained at substantially higher levels than those for the general population.the winter ofthere wasive percent incidence of edema among some militaryres ul ling at least In part from an overoptixnlstlc plan to expand production by the military ofand other foods. During the late spring and summer1 this situation was corrected.

Issuesecret magazine published by the General Political Department reveal that high-level investigations of various units had exposed considerable Ideological confusion among the troops, mental anguish over the condition of relatives back home, and some outright distrust of the party's leadership. Corruption among cadres and Rear Services personnel In the distribution of food andwas reported. Although measures were taken which apparently restored health and moraleevel acceptable to Pelping. the effectiveness of such measures may have been significantly reduced by continued food short-

ages and economic rJtfflcuJUes In the winter.

The slash in Soviet aid and theeconomic slump have accentuated previous ihortcomlngs In the armed forces and the limits these place on their capabilities for engaging In protracted, large-scaleHowever, we believe the armed forces' ability to discharge their important Internal security mission remains substantiallyAn above-average standard ofcareful selection of conscripts, andpolitical Indoctrination will probablytroop moraleand discipline from saggJTay to dangerous levels. On the other hand,deterioration of the economy andpublic unrest might eventually causedamage to morale and discipline.

Tibet continues to be the army's only principal area of active hostilities. Sporadic armed dlssidence continues there, buthinese regulars have establishedcontrol and are systematicallylogistical facilities, particularly the road net Chinese Communist Army units engaged In joint operations with Burmese forces against Chinese Nationalist irregulars in Burma In0 and some of Pelplng's troops may still be in Burma Peiping has recently unveiled ambitious plans for strengthening lines of communication ail along Its southern border; It has begun to build roads Into Laos and Burma and has made preliminary surveysoad toin Nepal.

The regime continues to rely primarily upon conscription to maintain the strength of its forces.owever. It formalised procedures for retaining up toercent of the troops (Including, particularly, keyofficers) beyond the regular term of service. At tht lime they also began to place emphasis upon recruitment of better educated, urban rather than rural youth. These measures are probably designed to meet the army's need for higher technical skills required by modernisation and to provide greater continuity In Its cadres.


The standing army hasearly constant strength ofillion men for the past several years. Its principal elements arendndependent divisions, altogetherombathirteen of the armies have now been Identified as having organic artillery regiments andfnfantry divisions ant accepted as having tank-assault gun regiments. There areirborne, andorder Defense andMilitary Security divisions. Over two-thirds of the total ground forces are currently disposed in critical frontier areas or strategic zones, including those adjacent to Korea, the Taiwan Strait, and southeast Asia. Thecombat unitstrategic reserve which is available for deployment to any area In the event of operations'

At present Communist China has acapability for most types of Infantry weapons, artillery, ammunition, armoredand the simpler kinds of electronic

'This represent*redaction ot two armies since our last scheduled estimate IKIC lJ-flD. "Communist. The Stft Army in Slnjrjane. was dropped from the com Oat order of battle foUoarfnga ram Ul fry pro-due Hon. cons true'.Ion type orjanliatlon. Tbe J'lh. Army Id Tibet waa deactivated and reorganised mto nine reinforced regiments directly under the Tibet Military Region Headquarters.

'Foe further detail* seet Use end of UUs Annex.

'Chinese Com railitary capabilities aremora fully In. "Chinese Com-munlit Capablllllii and Intention* la the Farovember IfSI.

utput Is small, but seems to be generally adequate for replacement of equipment lost by attrition. Recentof small arms has been sufficient to meet the army's demand, and output of medium tanksas made possible theof armored units. However, the Chinese Communis Is relied heavily on the USSR for weapons design and machinery for ordnance producUon and have not emphasizedresearch and development Thishas restricted Independent research and development capabilities in this field.


The Chinese Communist Navy, with an estimated strength00 navalsefensive force, butimited capability for short-rangeand supportt hasits capability for hit-and-run motor torpedo boat operations In coastal waters. Among its major assets ate an extensivecapability (nearly every ship Is fitted for mtnelaylng)otential capability, as yet untested, for submarine operations against lines of communications Ln the Western Pacific.

The troop lift capacity of conventional landing ships under direct naval control Is estimated to be three infantry divisions0 troops) with organic armor and artillery. Any major amphibious operation would also be supported by employment of some portion of Communist0

t end of this Annex for details of weapons produciion for (round forces0 and for an Inventory ol current military equipment together with remarks oa domestic producUon capabilities.

'Seet end of this Annex for estimated ship strength.

motorized Junks to embark large numbers of troops with hand-carried weapons. However, lack of major support craft would seriously hamper full-scale amphibious operations. An assault could be launched against the offshore Islands with small assault craft, but thedepth of surrounding waters would limit the use of the larger amphibious ships to selected areas.

half of current naval tonnageof obsolete or obsolescent shipsto the Chinese Nationalistsduring or before World War ITpercent of the tonnage consists ofor assembled In Communist ChinaSoviet assistance. The lattergenerally in good condition, but theyof the capabilities of modernpresent, high-speed propulsion systemselectronic equipment constitutethe most critical bottlenecks in theof modern naval vessels.China will probably need at leasttoomestic productionfor ihese Items. Barring theof substantial Soviet assistance toCommunist naval program, it isChinese Communist navaldecline somewhat over the near term.


Chinese Communist Air ForceAir Forceotal strengthircraft of all types,'many as possessed by allIn the Far East combined.arc capable of conductingtactical and supportare not sufficiently trained or equipped

Seet the end of this Annex.

to engage first-line opposition successfully. About three-fourths of the aircraft areof which less thanercent have an all-weather capability. The offensive andcapability of the air forces suffers from scarcity of modern aircraft,ime for combat proficiency, lack of air-to-air missiles and nuclear weapons capability, and logistical weaknesses In POL and aircraft engines and parts for sustained combat.

Seet the end of this Annex

t present the Chinese aircraft Industry is probably touted to the production of less sophisticated Soviet Jet fighters (ther possiblymall transports, and helicopters* Jet engines and electroniccontinue to be the most formidable barriers to the developmentativecapability for rnilltary aircraft



Estimated Strength

Dt visions Infantry






Infantryrtilleryank-assault funAT battalion Principal weapons:

f ht and medium field artillery pieces

- jt/lt-aun AT funi

ight and medium mortars

light AA peacesedium taaki

aeU-pcepellect assault guns

Armored 4'

1 arraorednfsnUy refrtUJery ragJneot Principal weapons:

medium Unas

propelled assault fans

lOUgnt and medium field artillery pieces


ght and medium mottara

Airborne >'






Field artillery

or (run-howluer regimeaa battalion

m toUf ht AA


mmm AT

AA reglmcnta

edium .indight AA3 AAA regimcnU

oight and/or medium AADefense and Military Internal Securitynumber of combat divisions

sj each




figure has been rounded to the nearert thousand- It Includes sup* port and miscellaneous elements not shown In this table.

* Counted tor purposes of comparison or measurement of line division strength. We consider, on this basis, that the Chinese Communists have an estimated total of UB line divisions.

date.fnfantry divisions are believed to have tht tank-assault gun regiment. (In addition, the ground forces Include approaJ-mately tt Independent combat regiments Uidudlng artillery, cavalry, tank, and border defense/internal security J




Production ol Major Heats0

Armored Vehicles


Infantry Weapons


Artillery and Mortar SheJLi

Small Armi Ammunition

Major Ground Fores Items In Current Inventory








mm rclmm rclmm ATn AT RL

Held Artillery

m AT gun

m Oeld/AT iun

m fleld/AT gun lOO-nun fleld/AT gun

m-mm How

m gun

ra gun .. .

IS?-mm How



Domestic productionlor current needs.

DoraeiUc producUonfor current needs.

Domestic productiontruck adequate to replace attrition leases.

No current production of compteW weapons, butinventory can be maintained byrod uced spare parts. Output could be reiumedtceaaary.

No current producUon of complete weapons, but existing Inventory can be maintained by Chinese-produced spar* parts. No new productionas Item* arebeing phased out of the Inventory.

No current producUon but Inventory can beby Chinesespares.

Dependant upon DS9R.

DotneitlC producUonfor current needs.

Dependent upon USSR.

Dependent upon USSR.

DomeiUc producUonfor current needs.

Dependent upon USSR.




Beary Unkrmored car BA-64




Rem arks

Dependent upon USSR Dependent upon USSR Dependent upon USSR.

No production but moat Unk tparti can be made, except formm gan.

Domestic production ade-quaU for current needs.

Dependent upon USSR. Dependent upon USSR.

No current production bul Inventory can be main uined by spares Domestic producUonfor current needi. Dependant upon USSR Dependent upon USSR DornctUc production net ten Armed bul believed probable and It should supply current needs.





PATROL Pa trot Escort/Various Classes

River Ounboat





Tank Landing Ship (LSTI

Medium Landing Ship (LSM1



4 Sovieloviet transfers

aken OTer la IMS

nits Soviet transfers;nits CMlnese-bullt SO Chinese-builtoviet transfershinese-built4 Chinese,akeo overaken over la 1M9

2oriet transfers

4 Taken over9

ome Chinese-built; some taken over In

aken over9

aken over9

Obsolescent; built In MIL

Extenalve Sovietand material assistance Involved.

Extensive Soviet tech-njcal and material assistance Involved. Completion of 1units has been delayed since0 because of the withdrawal of

Soviet aid. Obsolescent; built

Coaslal sub marine-All of ww.n (or

earlier) design. Soviet aid needed for

Chinese-built units.

Soviet aid needed for Chinese-bul It units.

Chinese design

Some Sovielused fort units

Suitable for river use only.

Soviet aid involved In Chinese program


Obsolescent; USesign-

Obsolescent; USdesign.

Llmlled to inshore mine sweep log


NAVAL FORCES (Continued)


(ContiRtMST) Landing snip Infantry UBA

Utility Landing Craft (LCU) 10

Landinge na ruledLCU) SUPPORT Auxiliaries/Various Clauca SS

Service Craft/Varloul Classes

Taken over

aken over

1MB Ctviseae-bvilil

Allaken over in 1M9

Mostly Chinese-built

Obsolescent; USdesign. Obsolescent.

AllfOt earlier} design.

Limited to inshore patroL



Eaiieuird Cuerrai StrengthOO CCAF,CNAF)

t April


Fighter (Jet)


:.iv. Bomber laO



Tranape'1 Prop CO


Helicopter *0

Reeonnalwanre AtW Prop

atlali aeprexieiatelytrainer aireralt per

Tlua Igureaaed on nliaialtd produelion. Tneel these helicopctri ia unknown.




INVENTORY Quantity and Type




ULL (TU-4)

Light Bombers


AT (TU-3)





Domestic. USSR, poulbly Poland

probable country ol origin USSR, though tome could hare come from Caecno-Slovakia.

Communist China has produced aboutercent of currentOf FRESCO. Rest of inventory probably from USSR, though some eould have come from




AB (Ll-11


RATE UL-U) Medium Turooprops

; COOT. Helicopters (Ught)







Domestic (Soviet design)

Taken trom

Taken from

Current Communist Chineseer month. Subordination Is

W/Reconnaissance,MADOE (BF-a;






SW/OCI EelBhtflnder



AIR CONTROL AND WAR kino KAPAR SETS tConfUmcd OnlT) (Continued)

. quantity and


Originally US; copied and modified by Doth tbe USSR andChina

EW quantities of oriel nals and copies un known. Obsolescen or obsolete (deper.t: Ing on modlflca tlonsl.but still most numerous of sets Li use by Cblcoms.



AC HI 10


In both design and manufacture



Originally Jap* anese: copiedmodified by both USSR and Comma-nisi China

EW Quantities otand eeplfl) un. known. Obsolescent or obsolete.




A Nolo On Evidenco

Our source* of information on popular morale and discipline ln China are relatively few In number, uneven in geographicand, frequently very subjective in quality. The movements of foreign diplomats have long been limited and closely supervised by the regime. Foreign travelers In China are often casual in observation and lack the background to make informed Judgments. Social attitudes and trends are extremely difficult to assess even under the best of circumstances and even the most competent for-elgn observers have differed considerably In their Interpretations. When Pelping placed an official ban on the export of regional and local newspapers Lne were forced to rely mainly on interrogation of refugees, defectors, and Overseas Chinese visitors to the mainland for most of our informatioa on internal

The value of this evidence is limited by Its incomplete geographic coverage of China and also by the personal inadequacies or bias of most observers. Almostercent of the reports we receive are concerned with Kwangtung province, the coastal areas of Fuklen. and the major cities of Pelping, Shanghai, and Canton. We believe that this sample probably does not seriously misrepresent the attitudes of the Chinese populationhole. The quality of reporting, however, is extremely uneven and probably tends to exaggerate negative factors ui popular attitudes and publicThe great bulk of refugees are from the poorer social classes, extremely few are educated, and moat are illiterate and UHnformed even about conditions around them. No persons of high rank In the party, government, or army have defected,ew medium or low level cadres have Joined the refugee stream. The observations of Overseas Chinese visitors to the mainland have proved generally very helpful, but their contacts are usually with elements of the population (especially business and commercial classes) which are untypicaily cosmopolitan or have suffered most from Communist rule.



In the first sevem) years of IU rule Ihe Chinese Communist regime built anbase of popular support with substantial political and economic achievements China was unifiedtable and effectiveand the massesreater sense of security than had been the case In many decades. Land reform policies won widespread peasant enthusiasm despite the bloodshed they entailed. Rapidaccompanied by greatly Improved wages and laboring conditions attracted the urban working class. Oreatly expandedopportunities were made available to youlh and IntellecluaU. The managerial class, though often harassed, generally tookIn the regime's early steps towardExceptmall minority of former officials, landlords, businessmen, and traditionalisU. the people generally were content with the regime. There appeared toidespread feeling of purpose, pride, and hope in the future.

While striving to win popular lupport, Peiping also devoted attention toa highly centralised and effective control system. Traditional sources of dlssidence such as the local landlord-gentry, familyand secret societies were destroyed or undermined and mass organizations under Communist control were established toindividuals In various social groups. Pervasive propaganda operations and mass campaigns of Indoctrination and studythe party to Identify and control popular attitudesonsiderable extent. Where coercion became necessary, the army andforces proved loyal and efficientof the party'sthe value of careful selection of personnel and intensive political indoctilnation.

5 Ihe Communist regime embarkedourse of rapid, forced agricultural collecUviaatton which began gradually to dampen the mass enthusiasm previously built up In tha countryside.8 Ptiplng called upon all sections of the population for three years of maximum labor effort and personal austerity to permit China to leap forwardew stage of industrial modernity. The population was reorganized into hugeDespite heroic popular efforts,adverse weather, and aflagging In initial popular zeal combined toajor depression In bothandeduced rations led to widespread edema, hepatitis, and diseases associated with malnutrition. Peasants and laborers frequently were too weak to work effectively.

Three successive years of economicand food shortages have substantially increased popular disillusionment, resentment, and disaffection. The regime has virtuallythe credits of enthusiasm and popular approval built up in the early years of its rule. Despite Peiping's intensive efforts toopular sense of national pride and an expectation of greater rewards in thethe current mood of the Chinese people is predominantly characterized by apathy and hopelessness. Discontent has spread from the masses to local officials and low level cadres who have borne most of the load ot exhorting the people and received the brunt of the blame for the regime's failures. In general, however, dlssidence has remained passive, nor political, and unorganised. Mure-over, the regime hasirm control over the military and police forces.evidence Indicates that the regime has apparently been able thus far to deal swiftly

of toe economic crisis see

Annex A.

and effectively with any serious incidentsr resistance.


A. Popular AffifWei ond Conduct

Public morale and discipline ln China probably have fallen to the lowest level since the Communist regime came to power. Food supplies have been little better2 than last year and may have declined in May and June below1 level Each year in late spring and early summer, food stocks declineritical low prior lo the new harvest, and popular dissidence usually reaches its annual peak. Accordingly, reports are now frequent of further deterioration in the appearance and behavior of the population There is evidence of widespread lethargy resulting fromand physical exhaustion.

A general decline In standards ofis evinced In numerous reports of work slowdowns, petty corruption, and criminalIn the countryside, stealing of crops, clothing, and ration coupons and robbery of travelers are often reported. In the cities begging, b'.ackrna.-keting. theft, andare once again becoming evident. Open grumbling and complaining have become more commonplace and antlreglme wall slogans have frequently appeared The recent rush of refugees on the Hong Kong'border and subsequent disturbances at Cantonterminals underscore the popularIn general, however, dissidence has been muted and nonviolent.

7 The peasantry, constitutingf the total population, has endured three years of increasing privation andwith traditional passivity, for the most part. Gross official mismanagement In agriculture has generated growing bitterness, but resentment has generally been focused more on the rural cadres or local officials than on Peiping. The regime's retreat from the commune system, relaxation of politicaland attempts to stimulate Individualhave been only partially successful in overcoming peasant apathy and discontent. There Is evidence that the peasants distrust the regime's motives and have not responded as enthusiastically to Its appeals, incentive-measures, and threats as the ruling group had hoped. Relaxation of controls over private plots last year helped boost food stocks but did not improve "collectivebstinate and evasive resistance to state grain purchases has made more difflcult Peiping's efforts to provide grain for cities and deficit rural areas.esult of increasing hunger and privation, individuals, groups, and even cadres have narrowed the scope of thetrfeeling no responsibility beyond their own family or agricultural unit. The growth of localism is manifested by such popular phrases as "each brigade forrain shipments between districts and provinces appear to have slowedrickle in some parts of Chins. In sum. there has been an erosion of discipline and order in the countryside which gravely impairs the organization of production and distribution

8 Thus far the urban masses havefared somewhat better than thePeiping undoubtedly appreciates the potential of these concentrated groups for organising rebellion should their livingbecome unbearable. Nevertheless,morale in the cities is low. due lounemployment and fear of being returned to the countryside. The regime'sprogram has ledrastic shutdown of facto tn-.'. and curtailment of production. Efforts to move unemployed workers to rural areas have been unpopular both with the peasants and the unemployed workersand have failed to reduce substantially the size of urban population. Some of the unemployed have turned to petty corruption and crime to ekeiving after their

ration cards were withdrawn The flood cf refugees which attempted to enter Hong Kong and Macao2 Included many recently expelled city dwellers who wereunable to find work or food in the countryside. After the Communists relm-posed border controls, at least two Incidents were reported in Canton of police having to use force to disperse unruly mobs demanding tickets to return to the border. Except for the rootless unemployed, however, the urban working class remains, by and large, either politically complacent or passivelyIt Ix notable that few refugees leave China for political reasons; most areprimarily by the desire to Improve their economic situation and many probably intend to return when they have recovered their health and well-being.

iscontent among the urban bv linen, professional, and intellectual classes, although seldom overtly expressed, Is currently one of the regime's most difficult problems Today It desperately needs their technical andskills to achieve economic recovery, yet It must seek their renewed cooperation after the harsh repression of recenl years Various low-keyed programs of politicalhave been employed by the regime to win over "bourgeois" elements and there has recentlyeneral upswing In United Front activities. Moreover. Peiping has moved to strengthen the power of technicians and plant managers and has at least temporarily relaxed its Ideological assault uponThere Is evidence of some restlessness and declining respect for authority among intellectuals, but they remainaptive class, fearful o( being accused ofthe consequent loss ofor more severe punishment. While reiterating0 flowers" theme. Peiping has been alert to prevent any repetition of the runaway "blooming and contending" which occurred

youth of China, once the mostand enthusiastic supporters of theappear In large measure to beconfused. There basotablein idealistic feelings of socialand increasing manifestations of theof self-interest. The latteralong with the regime now foradvancement, but latentcome to the surface should apresent itself In theopposition remains unorganisedIneffective.

pen Resistance ono* Serious Diilurboncai

Acts of overt opposition to theIn contrast with passivebeen surprisingly few and relatively unimportant, according to our information. While isolated incidents in remote areas might have been hushed up by the regime, it is doubtful that the pattern for Chinahole differsfrom that Indicated by our evidence. Anti-Communist wall slogans and posters have been regularly reportednd there has been an apparent increase of them In re-cent months There have alio been reports of antlregime leaflets. Accordingecent defector, the Canton Public Security forces handled more cases1 than In anyyear andercent of them involved anti-Communist wall slogans.

There has been no evidenceerious rise in incidents of mass violence despite worsening economic conditions over the past two years or so. From time to time there are reports of Isolated attacks on cadres, raids on government granaries, and minor sabotage, but such reports are usually based on hearsay. Refugees are the primary source and their knowledge of the event, memory for detail, and objectivity often leave much to be desired. Some of the most serious disturbances reported since the leap forward began to falter were uprisings of peasants and minority ethnic

groups in the comparatively "good" yearecret army documents refer in away to the collapse of public order and discipline in certain disaster areasin Honan and Shantung) duiing the winter. In some instances armed militiamen apparently engaged in banditry.

One of the best documented incidents of violence leadingloodshed andood riot in Harbin Lnfter It was put down, the food shortage worsened to the point that grass and leaves regularly supplemented the diet, but there has been no wordecurrence of violence The recent flood of refugees across the Hong Kong border was stemmed without violence, so far as we know. Subsequent reports of ticket riots at transportation terminals In Canton apparently involved only one section of theunemployed, homelessdesiring to reach Hong Kong rather than resettle In the countryside. Although fuzzy In detail, the reports arc probably accurate. They indicate that the situation never got out of control and did not result in large-scale bloodshed.

The only sustained armed resistance to the regime has come from outside Chinaguerrilla harassment continues, but poses no serious threat tocontrol. Small groups 'of Tibetans, probably operating independently of each other, are continuing to disruptraid supply trucks, and attack Isolated Chinese outposts.1 therearked relaxation in Chinese Communist rule in the area and. toward the end of the year, some indication of reduced popular discontent. However, the recent severance of tradebetween India and China willurther hardship on the Tibetan people and has already led to near rioting ln one border town, according to press accounts

ationalism among the minoritiesan explosive but limited force not only ln Tibet but in the entire frontier areafrom Inner Mongolia to Sinkiang on Lhe north and from Tsinghal to Yunnan on the west. Strong religious beliefs, such asand distinct cultural patterns havetrong antipathy for Chinese communism among these people. Most of the serious uprisings against the regime9 have occurred among ethnic and religious minorities resisting Peiping's pressures for rapid acculturation and socialization.of Tibet, the last of these for which we have evidence were the Muslim revoltsn Sinkiang. Tsinghal. and King-hsia. One of the strongest forces behind minority dissidence Is economic Peiping's policy of favoring grain production overhusbandry has seriously disrupted the pastoral economy of Inner Mongolia. He-cently the regime has Indicated concern that its policies not be so strictly implemented as to create severe economic hardship. It has alsoeries of high-level conferences with minority nationality representatives to strengthen Communist ties with these groups.


o long as the regime maintains Its monopoly of weapons, organization, andpopular dissidence can beand violent opposition dispersed.cannot be transformed into serious organized resistance so long as the partycentral leadership and the armed forces remain strong and obedient to its commands. The most serious threat to the regime would come not from the rising discontent of the masses, but from divisions withinreakdown in the machinery of control. Accordingly, the stability of the Chinese Communist regime dependsupon the unity and effectiveness of

the primary organs through which ttthe party and the armed forces.

At present the party leadershipto be firmly united and determined toath of caution and moderation. Mao Tsc-tung apparently retains the positron of ultimate authority which be has held foruarter century, although he hasmore active leadership to hislieutenants: Liu Shao-ch'l, Chou En-lai. Teng Hslao-p'lng. and others. We have been unable to discern any significant factionalism In the upper ranks since the removal of P'eng Tehhuai and the so-called "antiparty" grouporsening economic troubles and the dispute with the USSR must have produced lively debates behind the scenes between those who urge cautious,policies with concessions to the people and those who press impatiently for moresolutions. However, there Is still noof an attempt to blame currenton any top leader or grouphereto be no opposition to the general policy of adjustment and recovery.

In the face of worsening conditions Peiping hasealistic retreat from the commune system and adopted flexibleto curb dissidence and gain popularIn an effort to revive peasant incentives, the regime has allowed far-reachingwith forms of rural organization, reducing the primary level of productionfrom the brigade to the team in some places and, according to recent reports,land to families In one province. The party has cautioned against exhausting popular strength and tolerance by holdingpolitical meetings. The NationalCongress of2 andnational congresses of various parties and groups have focused increasingon the United Front theme and sought to cultivate important segments of thewhose support the regime nownationalreligious bodies, and even "patriotic

Although the party appears to remain united in leadership and policy, there hasignificant demoralization among the rank and fileesult of the repeatedfailures of the past three years. At the upper levels the shock has been lessAlthough morale, pride, andcareers have suffered, higher cadresdevoted -to trying to make the system work, rather than questioning It. Lower-level cadres appear to be considerably moreand dispirited. They have become the scapegoats for the leaders, who claim that Chinas Ills are due not to faulty policy but to bad weather or maladministration of cadres. Our evidence Indicates that lower-level cadres receive no preferential rations and often fare worse than the masses who may more openly reap the benefits of tree markets and private plots. Many are tired,and apathetic. Corruption andamong cadres isroblem of great concern for Pelping.

Nevertheless, we believe that the cadres remain basically loyal to the regime andtoeliable, albeit less effective,of control. Peiping's main political problem is to lift cadres out of their present confusion and indifference and to rekindle their enthusiasm for the tasks of economic recovery. The regime hu strengthenedto combat serious Ideological opposition within the party. After the purity of cadres Is assured by party Indoctrination campaigns, they are used to lead mass campaigns tothe ideological conformity of theThe transfer of thousands of cadres from urban and bureaucratic posts to the countryside Is continuing in order to strengthen the party's leadership on the vital agricultural front.

The regime's Interne] tecurltythe army, militia, andtoey stabilizing role In society,Peiping's policies and assisting localto maintainhere islhat the security forces have not been completely isolated fromfTering of the civilian population and probably share to some extent the disillusionment andwhich this has produced. Secret army documents detail considerable menial anguish among troops during the winterver the conditions of relatives back borne. However, we believe their loyalty andhave not been seriously Impaired There have been remarkably few defections from the armed forces or police. There are some reports of disaffection. "Ideologicalcorruption, and violations of discipline within individual units. Eowcver. there ks no evidence that these conditions are serious and general or that their incidence is increasing. The militia performs important securityIn some localities (especially inut has been little moreaperin others. In Honan during the winterome militia units reportedly turned to banditry until brought underby the army.

Peiping hasumber ofmeasures to sustain morale andin the security forces The armytotandard of living well above that of the populace. Sincendoctrination has been intensiflrd and greater care exercised in selecting conscripts. In recent months the regime has stepped up efforts to build popular support for military and police forces, emphasizing the conlrlbu-

'Included la the It million man regular army are IS0 troops eeehl andndependent0 man each) of border defense and Internal security forces- Our evidence lito allow an estimate of the current sUe of mllltla forces or other police and security troops not under the Ministry of National Defense.

tlons to production and general well-being made by each. In contrast with the regular army and police, Peiping has done little for the militia, few units of which have beenmilitary forces.

effectiveness of the internalforces is difficult to Judge except interms because direct evidence isin the large cities (except,appears to remain tight withResident's Committees keeping closeon.all Inhabitants. On the border,business-like re imposition ofHong Kong appears to signifyIn the countryside security Isbut we have no evidence of anydisturbances. Census, and ration tickets continue topopulation movement, but regulationsless rigidly enforced thanWe believe that privation andwithin the armed forces andcadres must go well beyondexperienced before there willweakening In the control apparatus.


morale and discipline willcertainly continue to be low untilsituation Improves. Theahead will be especiallyfood stocks decline to their annualthe first fruits of the newpoor crop would confront theonly with Increased passiveas attempts to withhold grain frombut also with more frequent anddemonstrations of openlocalized Incidents of violentpresent general discontent andbecome acute in the areas ofand those most remote fromby the regimeinorityIn the great western provinces anddistricts of thetra-

dltlonal hotbeds oie believe there is little prospectpontaneous mass revolt would spread uncontrollably or become sufficiently entrenched to topple the Communist regime; Peiping almost certainly could isolate and repress any localizedHowever, it Is possibleeneral erosion of public order could develop and spread, seriously hampering effectiveof the nation from Peiping.

Although we can see no immediate threat to the regime's stability under present conditions, it would be rash to project this estimate into the indefinitearked worsening of economic conditionsrecipitate departure from presentpolicies would increase .the possibilityhift in the leadership or,'less likely, ainternal revolt. While our evidence does not support the conclusion either thattolerance is closereaking point or that there are serious weaknesses inontinuation of poor crops or an impetuous return to forcedand leap-forward demands would change the prospects for Internal stability.

Although our evidence is inadequate toorewarning of specific smallor local breakdowns in the security apparatus, we, believe it is sufficient to allow

prospects tor Internal stability in case of an externally supported challenge are considered In, "Probable Consequences of Cbinese Notionalist Military Operations on the Chinadated

foreknowledgeeneral collapse. We would expect to hear of widespread localand food riots which the security forces were unable or unwilling to contain and repress. Moreover, it Is likely that the regime would realize well in advance theof dangers of this magnitude and the actions It would take to forestall such an event would be likely to come to our notice.

part from the variables of economic fortune and rational leadership, the regime must face several severe tests. It must soon decide whether to force the resettlementubstantial portion of the urban population (perhapsillion people) In theagainst their wish and to the disruption of agriculture. This rootless, unwanted mass of unemployed peopleotentially explosive force. Revolts of ethnic andminorities may erupt again despite the new United Front emphasis, but there is little likelihood that disturbances in theminority areas would affect the bulk of the Chinese population before they wereAlthough the leadership in Peiping is likely to remain united for the next few years. It is aging rapidly and the problem of successionong-run threat to thestability of the regime. Finally, the last three years have proved that political activity alone cannot persuade the peasantry to work strenuously to raise production. To achieve Its goals Peiping may sooner or later have to decide whether to resort to force to overcome peasant apathy and resistance. The Communist regime in its present form could founder on any of these tests.



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Original document.

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