2
APPROVED
NATIONAL INTELLIGENCE ESTIMATE
Prospects forhina
Sub-mKri by Iha DIRECTOR Of CENTRAL INTELLIGENCE
Concurred fn by the UNITED STATES INTELLIGENCE BOARD Ai indicated2
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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.
CONaUSHONS
The future course of events ln 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 dctelopment have dropped sharply. No quick recovery from the regime'stroubles Is in sight.
Economic disasters have brought widespreadnd disaffection in their wake, but we believe thatorganised resistance to the regime Is unlikely toIn any case, the regime's monoply on arms,and coinmunlcations 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
regime We believe that by the end of the decade the Chinese CommunlsU willimited nuclear weapons and missile capability.1 )
We believe that over the next few years Communist China will follow relatively conservative and rational policies of the kind recently instituted, that the ottos 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, givendemonstrated inefficiency in agriculture, it isthat the regime will founderailure to solve China's chronic food problem. (Par)
We believe that the 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 rt can. Meanwhile China will probably continue to promote the Image oftrong but peaceful nation, while covertly prc^ding tactical guidance and material aid, to the extent of Its capabihtlee, 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 Fax Eastern country during the period of this estimate, although It would almost certainly be willing to take military action to defend Communist interests In North Vietnam and North Korea and, probably in Laos. )
' Be* NTSt, "Ottoest Coramur.nlWeapons CapabDJaai.-dated ISSCt TOO asuiunt CT.nr of Xseal Opcra'Jocj. gneel. Department of tbe Karj. betkn-eaeuabU animate of the Chinese Communist prosrara In Ihoof nuclear weapons can. not yet beii footnote to paragraph SS of Kit3 contains the rationale for bis position.
DISCUSSION
INTRODUCTION
ommunist China contains the greatest mas* of people 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 tbe firstean, it seemed as if Ihey might achieve this aim; the wholewas placed firmly under the control of Pelping, industrial output wasowerful military machine was established, and education and science were developing rapidly.
8 the Chinese Communistsconfident tbat within two decades they would be one of the dominant powers of tbe world They accelerated tbe tempo ofdevelopment by launching the "great leapelieving that, with their vast population, effective organization, great en-ergy, supposedly 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-grteultural output bad dropped, factories had closed, education and scientific development had been disrupted, severe rationing had been Instituted aod many millions of people were suffering from serious mslnutrtUoiL Thechange ln the mood and outlook of the Chinese people and their leaders has been startling. Travelers, especially those who had seen the country6 or before, were amazed at Ihc widespread lethargy and sul-lenness; confidence was gone, morale was low, petty corruption had become relativelyand disillusionment with the regime was expressed openly. Obviously the regime has lost much ground, some of which It may never recover.
Pelplng's almost complete silence onresults01 and on the plans13 obscures the causes and extent of this reversal. It is clear that overambltious plans obstinately persisted in by Pelping's leaders disrupted economicand production, overworked plant and equipment, and demoralised the people. Also, tnhe 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 Chinas farms than there was lo the "normal"e) population hadby aroundill ton. The result bas been widespread hunger and malnutrition. The Improved transportation facilities and tbe more effective control which the regime tod developed over the past decade ot SOade it possible to spread the suffering so that, although allavored few) are underfed, there has been no localised mass starvation of the sort traditional in China.
Industrial production began to fall sharply ln the latter part0 and hashvw since. Raw material shortages affected some sectors, chiefly cotton textiles, where ration dataalving of outputesult of the0 cotlton crop. Also, thexpansion eliminated the market for somereight car
production was reduced BO percent0 Peiping ordered Iho concentration
ol output In plants meeting cost end quality standards, more reasonable ratea of operation, and Incrcaaed maintenance efforts. Western diplomats and travelers inside Chins bare reported that the ma)ortty of faetartaa they haveIn Pelientsin, Shanghai, sndtew other accessible dUes, Appear lo be either dosed or operatingmall part of capacity. Ertn the armed foicet appear to have had toull share of production cutbacks. Weood evidence only for the first half ofut during Ihat period the military receivedmall percentage of scheduled deliveries of constructionand maintenance parts.
W* beUere that the gross national(ONP) decreased by moranBrat decrease since thecame to power, foreign trade1 fell aboutercent (around II union) from8 high, and with the Initiation of large grain Imports, capital goods Imports were- sharply reduced Foreign exchangewere badly depleted.
The) people of China, who had been urged and pushed toto prodigious efforts and sacrifices by the premise at wondrous pi Ogress under Uir three-year -leapow And themwives wont* off than they were before. They are understandably bitter andwith the Communist leadership. In the countryside, pilfering of crops, clothing, and ration coupons, aad even highwayhave been reported. In many citiesbistffcmerketlng, theft, and prostitution are once again evident. Open grumbling has become more commonplace andslogans have appeared on walla Vet there have been no large uprisings {except for the sustained rebellion of tht Isolated Tibetannd the regime haa quickly crushed such small local disturbances as have arisen.
he external relations of the regime have also given Peiping Utile cause for cheer in recent years For example, China's trade embargo failed In lis 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 andan err. oairassment for Peiping In Its relations with the rest of tbe world The resounding vote against CommunUt China's admission to the1 wasurprisejappoln troent. Peiping's severe domestic difficulties have done much to weaken the carefully cultivated Image of Chineseas the mode) for othercountries. Most Importantly, tbewith Moscow, which had beenpapered over by tha0 Moscow communique, intensified in the latter part'
he Chinese Communist leaders wen apparently stunned by this accumulation ot 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 rapidThere are those who urge conservative, go-slow pollcks and concessions to the people and those who belkm that the present need Is for more and better political Indoctrination and tighter regime discipline. In any case tbe two13 have been set aside as years of rehabilitation andPetplng has retreatedractice, from such grandiose programs as the "leap forward" and the giant communes. However, there appears to be no unanimity as to the best policy to extricate China from Its
' Suto-8cvtet relations are dlacusifl inPolitical Developments In the USSR and the Com-muntatatedeorusry IMS.
secret"
great depression, policies adopted In the past year or to we cautious and tentative and lack countrywide uniformity.
IL 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 Chinas disadvantage.
if these three factors continue toadversely for Comrnunlit 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 forces or China might be split by eon lending mUltary factions.
If. oo the other hand. Ihese three basic variables developanner favorable to theIs, If the regime's pedicles are realistically conceived and intelligently iro-psBtnentfd, Ifeveral yeais 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. To aextent tho regime would regain Its lost dynamism. However, even under the best of conditions, China, with Its basic problem of limited lund and expanding population, willhin line between economic sufficiency and economic shortage
he manner In which the three variables are likely to develop cannot be estimated with much confidence The regime appears to be aware of the gross planning and management errors of the recent past and is likely toore realistic program in the future. China's weather, as It "fleets agriculture, tends to be erratic, but It is unlikely that tbe extremely bad weather of the past three years will persist over the period of this estimate. On the other hand, we be here it unlikely that Soviet economic and technical cooperation will return to past high levels or that Pelping 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 ts IncreasedChina will almost certainly notin the next few years the dramatic rate of economic growth achieved during the first decade of Communist rule.
Xtt-ietiic Prorpecfj. The close raceChinas population growth and food production will probably continue tosal ether problems facing the regime. Until recently Pelping 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
In those segments o( Industry servingIs apparently being maintained and expanded to the extent that tbe preaentsituation 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.
IS.he regime'" policies continue along these lines for the period of the estimate, tbereairly rapid increase in agricultural output. Assuming no worse than average weather om the next savers! years, farm output will probably increaseto keep ahead of population growth and permit some improvement in tbe 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 downTbe narrow margin between foodand tbe minimum needs of aand apathe'lc population gives thelittle room for error tn top-level agrtcul-tural policy. Thus, we can foresee noIn agricultural output in the next several years sufficient toealto the regime's chronic rood problem.
ver the next few years Industrial growth will probably be Inhibited. It will probably be recessary to continue grainand restrict farm experts for the next year or two,his together withtrade deficits will reduce tbe amount of foreign 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 band.China has an impressive long-termfor Industrial growth. China has an abundance of natural resources necessary for industrialonsiderablecapacity built upabor force of unequalled arse with an increasing number of skilled workers and technicians,lowing managerial class. In addition Peiping has begun lo broaden Its tradewith the West la order to open up new sources of capital equipment Finally, the country is ruledtrong regime which Is determined to makeodernpower. On balance we bellova that over the next few years. Communist China'soutput will make appreciable gains from preaent low levels. At first this willmainly from merely returning presently Idle plant capacity to production, inthere willradually increasing amount of nsw plant construction. However, the goal of "overtsdung 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 enjoyed9 to ISM It 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 snort run, while reconstruction Is getting underway, tbe present high lave) 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 lo 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 band, tba 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.
olitical stability fn China rests less on popular 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 tbe top leaders.
hould divisions or (actions appear in the top leadership there might well be ain the party's effective control over the country. Numbering overercent of whom leaned after the Communist sttture of power, the party bas continuing rrroblems of organisation andRectification campaignsigh rate of political expulsionspproximately one millionwere dropped from party rolls. Many cadres are already confused and disputed by the failure of the "leap forward" and would be profoundly disorientedreakdown ot unity at the top.
ommunist China's armed forcessetbacks In their modemraatkmand logistical capabilities as aofru.gei Moreover there has been some decline Inr.ut China continue* to have by far the strongest indigenous armed forces In the Far East. During the next two or three years there la likely to be ilttiem their capabilities, but before thedecade has ended they will probably have acquired some capability fn nuclear weapons and missiles.*
2fi. This capability will be restricted by the weakness of China's economic base andIndustries. The well-conceived but unrealistlcallyyear 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 Sine-Sovietesult, scientific andprogress over tho next lew years 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 bereater numbers and China's relative positioncientific power should begin to improve. Its potential is great.
utlook for Communist China's Foreign Poticy. 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 antl-Imperial ism will dominate the International scene for some years lo come, and they plan to capitalise 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 tbe "Western The Chinese leaders are apparently
NIEChinese Communist Advanced WeaponsatedApril IMS. The assist oat Chief of Naval Operationsepartment o( the Navy, believeseliable estimate of the Chineae Coi-muntK program in tbe development of nuclear weapons cannot yet be made. His footnote to paragraphlontains the rationale for his position.
convinced that the Soviels will In time be forced lo return lo tbe Leninist "truths" and provide more militant leadership to the world Communist movement In supporting andthis historic development, it is Peiping's faith In hs Ideological vision and tn China's future greatness that leads it to remain unyielding In the pursuit of tha 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 tlioae who conspire against It.for some brief lapses whfch 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 Hs pursuit of peace, the Bandung spirit, and various schemes for an "atom-free" Pacific. Pel plug 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. NorthCommunist China almost certainly does not Intend to attempt the open military conquest of any other Par Eastern country during the period of this estlnuite. 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 anUcolonlal-Ist revolts should be encouraged and aided wherever possible, and that Communists should guide and take over these rsraohltaOM whenever practicable. According to Pelpmg, Moscow greatly overrates the danger that such local wars might escalate Into World War HI, and Peiping holds that Soviet talk ofand Ihe horrors of nuclear war tend to weaken tho militancy of "the people."
he Chinese leaders must be frustrated by their extremely limited capability totheir policy of subversion and the encouragement of revolution tn areas outside the Par Bait because of their own poverty, relative International Isolation, and their difficulties with the Soviet Union. However, they do what they can. For example, Peiping haa trained natives (or subversive activities in Asia, Africa, and Latin Anseriea, andeccynlted and overtly supported the Algerian rebel regime long before the USSR was ready to take such steps. In the Par East Peiping's capabilities for subversive action are increased by the accessibility and vulnerabilityor the foreseeable future Peiping will almost certainly continue these policies to the limit of Its capabilities.
he anti-American aspect of Peiping's foreign poucy is deeply grounded. Theleaders tee in the US the eplf all that Is evil In the "bourgeois capitalistOn the purely practical level tbey recognise that US strength and determination Is the chief obstacle to tbe seisure of Taiwan and the realisation ol their plans to achieve hegemony tn East and Southeast Asia.also uses the US bogey to rally tho people behind the Communist regime. Thus every unpopular occurrence In the world, tnclisdtng Prance'somb tests and theof the OAS in Algeria, is blamed on
NIEChinese Communistand Intentions in tbe Faratedovember
Washington. Wherever Peiping can strike at the US Itanti-Elsenhower riots In Japan, wooing the disgruntled textile exporters In Hong Kong, supporting anti-US action in South Vietnam and Laos
e do not btileva that thla policy will significantly change under the presentregardless of what potlciea the US might adopt This dose not preclude temporary gestures of reasonableness by Pelping forpurposes.
There are signshird andominous motif In Communist China's foreign policy. This is racism. Although Pelping has not promoted the race issue openly or officially, racism occasionally niters through In their propaganda We do notracism willajor Chinesetheme during the next few years, but it may grow with Ume partlyeans of capitalising on the antlwhite resentment of the Africans.
Athough tha essential guidelines are likely to remain fixed, within that framework lesser changes and gradual shifts inChina's foreign policy appear to be almost Inevitable. During tbe next few years tbe tendency toward lessening dependence upon the Bloc will almost certainly lead Peiping to turn Increasingly to Western Europe and Japan for technology and equipment as It has already turned to Canada and Australia for food. This could also bring with it Increased political and cultural contacts. An increased reliance on trade with the West would almost certainly disincline the Chinese from movingirect confrontation with thePowers, but It would not change their fundamental alms nor would It preventfrom bitterly attacking tho policies of Its free world trading partners should it find thb suits its political Interests. Pelping 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 dlflerencea.
Although Hong Kong and Tahvan come withindefinition of Chineseand are therefore proper objects for the use of military force we do nol believe that an attempt win be made upon either during Ihe next tew years. The onshore Islands will probably be subjected to harassment, but we do not believe that Pelping will feel strong enough to accept the risks entailed in anto seise them. We believeerrure of Macao is also unlikely but less so than ln tbe 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. Pelping apparency desires to Improve relations with India but It will be very difficult to reaolve the border differences. In Southeast Asia Peiping will probabiy try toirect confrontation with the US but lis Interests are too closely Identified with North Vietnam and theposition In Laos for ll to be able to tolerate serious reverses In these areas.
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