PROSPECTS FOR COMMUNIST CHINA
THE PROBLEM
To estimate the prospects for Communist China over the next several years with emphasis on the viability of the regime and trends in its foreign policy.
CONCLUSIONS
The future course of events in Communist China will be shaped largely by three highly unpredictable variables: the wisdom and realism of the leadership, the level ofoutput, and the nature and extent of foreignrelations. During the past few years all threehave worked against China.8 the leadershiperies of ill-conceived and extremist economic and social programs;9 there occurred the first of three years of bad crop weather; and0 Soviet economic and technical cooperation was largely suspended. Theof these three factors has brought economic chaos to the country. Malnutrition is widespread, foreign trade is down, and industrial production and development have dropped sharply. No quick recovery from the regime'stroubles is in sight.
Economic disasters have brought widespreadand disaffection in their wake, but we believe thatorganized resistance to the regime is unlikely toIn any case, the regime's monoply on arms,and communications is probably sufficient to crush any incipient uprising. Communist China's armed forces have experienced setbacks in their modernization program and logistical capabilities, but, although there has been some decline in morale, they will probably remain loyal to the
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regime. We believe that by the end of the decade the Chinese Communistg willimited nuclear weapons and missile capabilitflf)
e believe that over the next few years Communist China will follow relatively conservative and rational policies of the kind recently instituted, that the odds favor improved crop weather, and that increased trade with Western Europe and Japan will partially compensate for the severe reduction in Soviet economic and technical cooperation. We therefore believe that the most likely prospect is for slow recoveryradual resumption of economic growth. However, there isossibility that the economic depression will continue, bringing increasing problems for the regime, and therelimmer possibility of fairly rapid recovery and economic expansion. In any case, over the longer run, given com-muniam's demonstrated inefficiency in agriculture, it isthat the regime will founderailure to solve China's chronic food problem. )
e believe that tlie US will continue toostile Communist China which will be constantly probing fortrying to push the US out of the Western Pacific, and causing trouble wherever else it can. Meanwhile China will probably continue to promote the image oftrong but peaceful nation, while covertly providing tactical guidance and material aid, to the extent of its capabilities, to leftist revolutionary movements in Asia. Africa, and Latin America. Outside the Far East these capabilities are limited by China's poverty, relative international isolation, and difficulties with the USSR. Communist China almost certainly does not intend to attempt the open military conquest of any Far Eastern country during the period of thia estimate, although it would almost certainly be willing to take military action to defend Communist interests in North Vietnam and Northobably in Laos. )
SEpJRET
DISCUSSION
INTRODUCTION
Communist China contains the greatest masseople ever ruledingleItimited amount or arable land and plentiful but underdeveloped natural resources When the Communists took power9 they set out to mold this raw materialeading modern stateingleFor the firstears, It seemed as If they might achieve this aim; the wholewas placed firmly under the control of Peiping. Industrial output wasowerful military machine was established, and education and science were developing rapidly.
8 the Chinese Communistsconfident that within two decades they would be one of the dominant powers of the world. They accelerated the tempo ofdevelopment by launching the "great leapelieving that, with their vast population, effective organization, greatsupposedly infallible leadership, andsupport, success was assured.returned from China profoundlywith the Industrial progress and the almost frightening dynamism and fanaticism they had observed. By the endthe picture was strikingly different. Ag-gricultural output had dropped, factories had closed, education and scientific development had been disrupted, severe rationing had been instituted and many millions of people were suffering from serious malnutrition. Thechange in the mood and outlook of the Chinese people and their leaders has been startling. Travelers, especially those who had seen the country8 or before, were amazed at the widespread lethargy and sul-lenness. confidence was gone, morale was low, petty corruption had become relatively com-
mon, and disillusionment with the regime was expressed openly Obviously the regime has lost much ground, some of which it may never recover.
Peiping's almost complete silence onresults01 and on the plans12 obscures the causes and extent of this reversal. It Is clear that overambltlous plans obstinately persisted In by Peiping's leaders disrupted economicand production, overworked plant and equipment, and demoralized the people. Also. Inhe exhaustion of grain and otheralance of payments crisis. and the sudden withdrawal of most Sovietseriously disrupted its IndustrialMoreover, adverse weather.programs, and faulty managementIn three successivef poor harvests
1 there was probably less output from China's farms than there was In the "normal"et population hadby aroundillion. The result has been widespread hunger and malnutrition. The improved transportation facilities and the more effective control which the regime had developed over the past decade or so have made It possible to spread the suffering so that, although allavored few) are underfed, there has been no localized mass starvation of the sort traditional In China
Industrial production began to fall sharply In the latter part0 and haslow since Raw material shortages affected some sectors, chiefly cotton textiles, where ration dataalving of outputesult of the0 cottton crop Also, the halt In expansion eliminated the market for some. freight car
production was reducedercent0eiping ordered the concentration of output In plants meeting cost and quality standards, more reasonable rates of operation, and increased maintenance efforts. Western diplomats and travelers Inside China have reported that the majority of factories they liave seen In Peiping, Tientsin. Shanghai,ew other accessible cities, appear to be either closed or operatingmall part of capacity, Even the armed forces appear to have had toull share of production cutbacks. We have good evidence only for the first halfut during that period the military receivedmall percentage of scheduled deliveries of constructionand maintenance parts.
believe that the gross national(GNP) decreased by morenfirst decrease since thecame to power. Foreign tradefell aboutercent9 high, and with thelarge grain Imports, capital goodssharply reduced- Foreign exchangewere badly depleted.
people of China, who hadand pushed into prodigious effortsby the promise of wondrousthe three-year "leapowworse off than they wereare understandably bitter andwith the Communist leadership, countryside, pilfering of crops,ration coupons, and even highwayhave been reported. In many citiesblackmarketing, theft, andonce again evident. Open grumblingmore commonplace andslogans have appeared on walls have been no large uprisingsthe sustained rebellion ofnd the regime hassuch small local disturbances as h
he external relations of the regime have also given Peiping little cause for cheer In recent years. For example.China's trade embargo failed in its objective to Influence Japanese policy. Despite improved relations with Burma and Nepal, the continued border dispute with India has drastically reduced Peiping's influence in India and Is anfor Peiping in its relations with the rest of the world. The resounding vote against Communist China's admission lo the UN1 wasurpriseisappointment. Peiping's severe domestic difficulties have done much to weaken the carefully cultivated image of Chineseas the model for othercountries. Most importantly, thewith Moscow, which had beenpapered over by the0 Moscow communique, intensified in the latter part of
he Chinese Communist leaders were apparently stunned by this accumulation of setbacks. The annual meeting of thePeople's Congress was cancelled1 and the Ninth Communist Party Congress which was due1 was not called. debates have evidently taken place within the upper echelons of the partythe best means to regain rapid There are those who urge conservative, go-slow policies and concessions to the people and those who believe that the present need is for more and better political Indoctrination and tighter regime discipline. In any case the two12 have been set aside as years of rehabilitation and Peiping has retreated markedly, in practice, from such grandiose programs as the "leap forward" and the giant communes. However, there appears lo be no unanimity as to the best policy to extricate China from its
present great depression; policies adopted in the past year or so are cautious and tentative and lack countrywide uniformity.
II. PROSPECTS
Whether Communist China can regain its forward momentum depends upon three fundamental, but uncertain, considerations: the wisdom and realism of the leadership, the nature and extent of foreign economicand the level of agricultural production During the past few years all of these factors have worked to China's disadvantage
If these three factors continue toadversely for Communist China, thecould be extremely grave forhole and, indeed, for the regime itself. The lowering of an already inadequate level of foodailure of the regime toealistic development program, and the hamstringing of industrial growth because of insufficient foreign economicwouldeepening pessimism and an increasingly brittle political situation. In this circumstance the regime might be changedpalace coup" or It mightin power rulingiserable,country through privileged military and security forces. In the latter situation, the regime might eventually be overthrown with the aid of defecting military force? or China might be split by contending military factions.
f, on the other hand, these three basic variables developanner favorable to theIs, If the regime's policies are realistically conceived and intelligentlyif there is several years succession of better than average crop weather andand If Soviet or Western technicians, machinery, and credits become available inwould probably recover rapidly from its current depression. Industrialwould again rise, aided by greater supplies of agricultural raw materialsore productive labor force. onsider-
able extent the regime would regain ils lest dynamism. However, even under the best of conditions. China, with its basic problem cf limited land and expanding population, willhin line between economic sufflcier.cy and economic shortage.
he manner in which the threelikely to develop cannot be estimatedconfidence. The regime appears toof the gross planning andof the recent past and is likely toprogram in the future.
China's weather, as it affects sgriculture. tends to be erratic, but it is unlikely that the cxtrcmily bad weather of the past three years will persist over the period of this estimate. On the other hand, we believe it unlikely that Soviet economic and technical cooperation will return to past high levels or that Peiping can fully meet its needs from the West orsources. Thus, it appears to us that Communist China will probably avoideconomic failure and political collapse, and that it will recover gradually from its present severe depression. However, even if agricultural production is increasedChina will almost certainly notin the next few years the dramatic rate of economic growth achieved during the first decade of Communist rule.
omestic Prospects. The close raceChinas population growth and food production will probably continue toall other problems facing the regime. Until recently Peiping has tended to neglect agriculture while concentrating on theof heavy industry in the traditional Communist pattern. Public pronouncements of the regime, Including the statements from the recent National Peoples Congress,emporary reversal in economic priorities: the restoration and expansion of agricultural production is to have precedence. Theof heavy industry is practicallyfor the time being, and production
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in those segments of industry servingis apparently being maintained and expanded to the extent that the presentsituation permits. Concessions have been made to peasant individualism and methods have been adopted which attempt to relate the peasant's income directly to his achievement.
f the regime's policies continue along these lines for the period of the estimate, therehanceairly rapid increase In agricultural output. Assuming no worse than average weather over the neat several years, farm output will probably increaseto keep ahead of population growth and permit some improvement in the diet. In the longer run. mainland China must seek much greater yields per acre. The regime will probably seek to do this throughinstitutions both because of itsbias and its need to hold downThe narrow margin between foodand the minimum needs of aand apathetic population gives thelittle room for error In top-levelpolicy. Thus, we can foresee noin agricultural output In the next several years sufficient toealto the regime's chronic food problem
ver the next few years Industrial growth will probably be Inhibited It will probably be necessary to continue gramand restrict farm exports for the next year or two, and this together withtrade deficits will reduce the amount of Torelgn exchange available for the import of capital goods for Industry. Agricultural materials for light Industry will continue to be In short supply, and inadequate diet will continue to limit the vigor and enthusiasm of the workers. On the other hand.China has an impressive long-termfor industrial growth. China has an abundance of natural resources necessary for industrialonsiderable indus-
trial capacity built upabor force of unequalled size with an increasing number of skilled workers and technicians,rowing managerial class In addition Peiping has begun to broaden its tradewith the West in order to open up new sources of capital equipment. Finally, the country Is ruledtrong regime which ts determined to makeodempower. On balance we believe that over the next few years. Communist China'soutput will make appreciable gains from present law levels. At first this willmainly from merely returning presently idle plant capacity to production. Inthere willradually Increasing amount of new plant construction. However, the goal of "overtaking England"uchew years ago. is notream today.
f the regime can get the countryforward again. It will probablyeasure of popular support. This will be far short of what It enjoyed9t will no longer be able to countigh degree of revolutionary, almost frenetic enthusiasm. It willontinuing problem of finding sufficient consumer goods to provide worker Incentives and minimise discontent. In the short run. while reconstruction is getting underway, the present high level ofagainst the regime could intensify, especially if the food supply Is not improved and further sacrifices are demanded from the population generally. Even in this case, we do not believe there woulderious internal threat to the regime. On the one hand, the Chinese people have demonstrated an almost unlimited ability to bear suffering withand resignation, and malnutritionto have inspired apathy and lethargy rather than violence. On the other hand, the state, with Its monopoly on arms,and communications will probably be able easily to Isolate and mop up any local pockets of resistance that might develop.
Political stability In China restsopular support than on the unity of the ruling group and the efficacy of theParty as an instrument ofThe top leadership still presents aappearance of overall stability and unity, although we assume there have been divergencies of viewpoint. We believe this unity will be maintained essentially intacttherearked worsening of economic conditions or an impetuous shift away from the present policy of moderation and recovery However. Mao and most of his colleagues in the highest echelons will be increasinglyto the physical and mental infirmities of old age. and It would be rash to discount entirely the possibilityop-level shake up resulting from the death or retirement of one or more of the top leaders
Should divisions or factions appear in the top leadership there might wellreak-down in the party's effective control over the country. Numbering overercent of whom Joined after the Communist seizure of power, the party has continuing problems of organization andRectification campaignsigh rate of political expulsionspproximately one millionwere dropped from party rolls. Many cadres are already confused and dispirited by the failure of the "leap forward" and would be profoundly disorientedreakdown of unity at the top.
Communist China's armed forcessetbscks in their modernizationand logistical capabilities as aof material shortages. Moreover there has been some decline in morale.Communist China continues lo have by far the strongest indigenous armed fore in the Far East During the next two or three years there is likely to be littlein their capabilities, but before thedecade has ended they will probably have
acquired so and missl
This capability will be restricted by the weakness of China's economic base andindustries. The well-conceived but an realisticallyyear program in science and technology, launchedade impressive progress, but any prospects for reaching its goals have been wiped out by the excesses of the "great leap forward" and the drastic cut in Sino-Sovietesult, scientific andprogress over the next few yean will be generally slow and erratic. Five years from now. in spite of impressive advances.Chinese science and technology will be further behind that of the most advanced countries than it is now Around that time, however, new scientists and technicians will be graduating in greater numbers and China's relative positioncientific power should begin to improve. Its potential Is great.
Outlook for Communist Chirm's Foreign Policy Communist China's leaders must be aware of the weakness of China's present situation, but they appear to be confident that their policy is in line with the forces of the future and that China's difficulties andisolation are only temporary. Theythat anti-imperialism will dominate the international scene for some years to come, and they plan to capitalize on this movement, and as far as possible, guide and control it. According to theirontinuing and spreading revolutionary movement in the underdeveloped areas will sap and eventually destroy the strength of the "Western The Chinese leaders are apparently
convinced that the Soviets will in time be forced to return to the Leninist "truths" and provide more militant leadership to the world Communist movement in supporting andthis historic development. It Is Peiping's faith in its ideological vision and in China's future greatness that leads It to remain unyielding in the pursuit of the main lines of Its foreign policy: implacable anti-Americanismwo-level campaign to spread Communist influence.
eiping's two-level campaign consists of overt seduction and covert subversion. Overtly the regime poseseaceful giant who helps its friends but strikes backat those who conspire against It.for some brief lapses which occurred mainly during the manic "leap forward"Peiping has consistently maintained this pose. It has given aid to "neutralist" regimes In Burma, Cambodia, and Indonesia, and it has vociferously voiced its pursuit of peace, the Bandung spirit, and various schemes for an "atom-free" Pacific. Peiping insists that its armed forces are strictly defensive and will never be used tooreign(thus their slogan: "communismbehis does not. in their logic, preclude the overt use of military forces to "complete the unification of China"onquer Taiwan) or toriend who Is"ravished by imperialist invaders"orea0 and, potentially. NorthI Communist China almost certainly does not intend to attempt the open military conquest of any other Far Eastern, country during the period of this estimate. However, it would almost certainly be willing to take military action to defend Communistin North Vietnam and North Korea and, probably, in Laos
n the long pull Peiping apparently places its chief hopes upon action on thelevel. The Communist Chinesebelieve that much of the underdeveloped
world Is ripe for revolution, that anticolonlal-ist revolts should be encouraged and aided wherever possible, and that Communists should guide and take over these revolutions whenever practicable. According to Peiping, Moscow greatly overrates the danger that such local wars might escalate into World War III. and Peiping holds that Soviet talk ofand the horrors of nuclear war tend to weaken the militancy of "the people."
The Chinese leaders must be frustrated by their extremely limited capability totheir policy of subversion and the encouragement of revolution in areas outside the Far East because of their own poverty, relative International isolation, and their difficulties with the Soviet Union. However, they do what they can. For example, Polpmg has trained natives for subversive activities in Asia, Africa, and Latin America, and it recognized and overtly supported the Algerian rebel regime long before the USSR was ready to take such steps. In the Far East Peiping's capabilities for subversive action are increased by the accessibuitxand vulnerability of nelgh-boring countrieslj^For the foreseeable future Peiping will almost certainly continue these policies to the limit of Its capabilities
The anti-American aspect of Peiping's foreign policy is deeply grounded. Theleaders see in the US the epitome of all that is evil in the "bourgeois capitalistOn the purely practical level they recognize that US strength and determination is the chief obstacle to the seizure of Taiwan and the realization of their plans to achieve hegemony in East and Southeast Asia.also uses the US bogey to rally the people behind the Communist regime. Thus every unpopular occurrence in the world, including France'somb tests and theoflgeria, is t
Washington. Wherever Pelptng can strike at the US itanti-Eisenhower riots in Japan, wooing the disgruntled textile exporters in Hong Kong, supporting anti-US action in South Vietnam and Laos.
We do not believe that thia policy will significantly change under the presentregardless of what policies the US might adopt. This does not preclude temporary gestures of reasonableness by Peiping forpurposes.
There are signshird andominous motif in Communist China's foreign policy. This is racism Although Peiping has not promoted the race Issue openly or officially, racism occasionally Alters through in their propaganda. We do notracism willajor Chinesetheme during the next few years, but it may grow with time partlyeans of capitalizing on the antiwhite resentment of the Africans.
the essential guidelinesto remain fixed, within thatchanges and gradual shifts inChina's foreign policy appear to beDuring the next few yearstoward lessening dependenceBloc will almost certainly lead PeipingIncreasingly to Western Europefor technology and equipment as itturned to Canada and AustraliaThis could also bring with Itand cultural contacts. Anon trade with the West woulddisincline the Chinese from moving
irect confrontation with thePowers, but it would not change their fundamental aims nor would it preventfrom bitterly attacking the policies of its free world trading partners should it find this suits its political interests. Peiping probably estimates that unless its policy directly and physically conflicts with that of Westernthe latter are unlikely to permit their trade relations to be seriously affected by political differences.
Although Hong Kong and Taiwan come within Peiping's definition of Chineseand are therefore proper objects for the use of military force we do not believe that an attempt will be made upon either during the next few years. The offshore islands will probably be subjected to harassment, but we do not believe that Peiping will feel strong enough to accept the risks entailed ln anto seize them. We believeeizure of Macao is also unlikely but less so than ln the case of Hong Kong.
Peiping will continue to support theleftists in Japan, but it will be prepared toore friendly attitude toward the government if Itossibility ofor some other means of complicating US-Japanese relations. Peiping apparently desires to improve relations with India but it will be very difficult to resolve the border differences. In Southeast Asia Peiping will probably try toirect confrontation with the US but its Interests are too closely identified with North Vietnam and theposition in Laos.for tt to be able to tolerate serious reverses in these areas.
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Original document.
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