A SURVEY OF DEVELOPMENTS IN THE CHEMICAL INDUSTRIES OF THE SINO-SOVIET BLOC, JA

Created: 6/24/1959

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MEMORANDUM

A SURVEY OF DEVELOPMENTS INTHE CHEMICALTHE SINO-SOVIET

-

CIA/RR49

contains Information theof Uic^Onlled States within tbetaws. TlUe IB.nde trans-missiojijir-rtVelatloii ot which In _.

unauthorized person U. prohibited oy

CENTRAL INTELLIGENCE AGENCY Office of Research and Reports

H)REWORD

This memorandum surveys developments in the chemical industries of the Sino-Soviet Bloc8 and theonthshe European Satellites are discussed in the order of their importance. Countries in vhlch the chemical industries are not significant are not diecussed.

covreifrs

Page.

Summary and Conclusions

I. Bloc-Wide Developments

Coordination

from the Free World

Production0

II. Developments In Each Country .

.

of the Seven Year

a.. Introduction

15

.V.

of the

^ 18

20

1. New

Emphasis on Chemical

Aspects of the Third Five Year Plan

2. Other'..

3-

Page

Production in

Mew 26

Production in

Nev 28

B.

F.

Developmente in

Nev

Production in

New

H. Communist

in

of the Plan for

for Production of Fertiliser

Trade In

/

Tables

in the Value of Chemical Production and

Total Industrial Production in Selected Countries

of the Sino-Sovlot Bloc,

Production of Selected Chemical Products In

the USSR,

A SURVEY OrKCHEMICAL INUJSTRIES-. IHO-SOVIETQJj9

.

v ,ummary and Conclusions

Development- of chemical^industxieB comparable* tonytheWorld became an economic"Increased/ImportanceSino-Soviet Bloc- In.striving to reach;thisthe USSR and other countries, of-the Bloc have .int ens Hied.their.to obtain aid in. the .form'-OP 'Chemical' technology**from the US, Western Europe, and Japan.; Within ithC-Bloc-ian.is being made to utilize all available .research/;facilities for producing, equipment, in support-.of-ithc .program forthe .chemical 'industry^

* The estimates and conclusions In this ccmorandum represent theJudgment of this Office asune ;

** jn this context the term technology generally includes design Information, drawings, licenses, knowledge of processes, supervision of the erection of plants snd their initial, operation, and theof personnel.

*** The term synthetics in thio memorandum refers principally to synthetic fibers, synthetic rubber, and plastics but may also Include certain other synthetic products uuch as paints, detergents, and antifreeze compounds.

in this memorandum the term fertilizer excludes organic

The increased emphasis, onoxticulorlys evident in the Soviet Seven Yearnd alsoisclosed by the European Satellites and Communistnvestment in the Soviet chemical industrys scheduled. to-be ^fivel..', times thatven though total. Industrial .investment^-iv; is to be only tvice asTwenty percenthe chemical Industry will.go to production ofceivedercent, and large,rc planned for. expanding production of syntheticubber, andhe planned increases in total..chemlcaln production by the European Satellites: range fromercent in East Germany, where the program Is. being given top priority,ercent inhe Satellites also, are/. emphasizing production of synthetics. In Comsunist China, where*reased priority for the chemical industry was noticeable-latehe main emphasis during the Second Five Year

will be on expanding production of fertilizer, although ambitious goals also have been autobllshed for synthetic fibers end plastics. The goal for production of fertilizer2 vasillionillion metricut8 it waDincreasedleap forward" target ofillionqual to the Soviet goalbeing discussed.

In an effort to mako maximum use of resources, theifl attempting through the Council for Mutual Economic(CEMA) and through bilateral agreements to coordinateplans relating to' chemicaland development andof chemicalhemicals, and chemical raw ma- The USSR and East Germany will collaborate in chemicalandgreements have been concluded forequipment to.the USSR by the Satellites, and. In turn, thedeliver crude oil by pipeline to East Germany, Poland,and Hungary toource of raw materials for pro-:ion oflans have been drawn up to insuresupplies of other chemical raw materials such bepotassium ores, sulfur, and cellulose. Varying degreesin production are planned In basic chemicalsproducts. *

Along vith the effort to exploit internal resources, theoviet Bloc has been seeking -increased assistance In the formhemical technology and equipment from the Free World. The need for Western aid is most acute In production of synthetics, port leu-larly those derived from petroleum and natural gas,eneral chortuge of chemical equipment is evident. From US firms, whichmuch of-the petrochemical technology, the USSR, Poland, and nyjfcii" Rumania have attempted, largely unsuccessfully, to obtain technology for producing various typeB of plastics, synthetic rubber, and in-crmedlates from petroleum and natural gas. Prom Western European nd Japanese firms, tbe Bloc has been seeking, and obtaining Inases, technology and equipment foride variety of -chemical intermediates ando help finance suchthe USSR has been actively seeking credits, particularly In Western Europe*. These efforts evidently have met with some success the President of the British Board of Trade announced, following the signing of the new Anglo-Soviet trade agreement onhat the Board of Trade is prepared toimited amount of credit extended to the USSR by private British companies.

Tonnages are given In metric tono throughout this memorandum. ** Throughout thla memorandum, tonnages given for fertilizer ore on on adjusted gross weight basis unless otherwise stated.

Increases ln tho value of chemical production lnanged'fronercent In Eaflt Germanyommuniot China. Ae In prevlouo years, these Increases were*"greater than those for total Industrial production. Inthe value of production of the chemical andercent compared with an Increase ofercent lnof -total Industrial production. In the USSR andnotable Increases in production of tires were reported/ Incases accompanied by increased imports of natural rubber..increase in production of fertiliier in the USSRut elsewhere in the Bloc some Impressive in-were reported/ partlyesult of Sovietjr'>:iwi

In view of the problems faced by planners In the. Bloc in their attempts "to accelerate thc development ofroduction, underfulflllaent of long-range goals isextent to which the new expansion programs will be implementedln part on the results of efforts to obtain technology and equipment from the Free World. Although the Bloc has already arranged for purchase of much technology and equipment, efforts to obtain sorely needed petrochemical technology have not been notablynless the uiLuatlon changes radically, under fulfillment of goals for synthetics derived from petrochemicals Is likely both ln tho USSR and in the European Satellites. An indication of the dependence onree World for chemical technology and of other problems connected v> with the new programs is the report that the construction planhe Soviet chemical industry8 was substantially underfulfilled, the greatest failures apparently occurring ln the construction of plants for producing 'synthetic 6'. Formidable problems arcalso In Communist China, Where progress8 toward theoal for production of. fertilizer? was limited.: At this stage the goal appears Impossible of attainment. In the USSR,oncern about the progress 'in implementing the program for the chemical industryuggested by the facteport on this eubject is scheduled to be presented in9 to the: "of the Communist Party by the State Committee for Chemistry.

A. Hew

Although chemical production ln the Sino-Sovlet Bloc expended rapidly between lgVjrthc pattern of development within the Industry was uneven- Investment in thc chemical industry during this period was centered chiefly in Inorganic chemlcals^-lncludinglliter. Some attention vas devoted to-expanding the output ofar chemicals, dyes, butadiene rubber, and other organicut, in contrast with the Free World,>iittlear devotedeveloping new types of synthetic rubber,'plastics,1gents, and other chemicals. Closely related to the failure of the Bloc to develop new types of synthetics was the' failure to exploit natural gas and petroleum as rawevelopment whichell under way in the US and beginning'in Western

Thus, by latelanners ln the Sino-Sovlet Blocituation which demanded action.' esult of the previewsInvestment policy, the chemical Industry was not ablea sufflclent volume of low cost synthetic productsIn many cases, the' superior or unique properties needed byn thc age of nuclear energy, guided missiles, and supersonicraft. Furthermore, much of the chemical processing in the Bloc was by obsolete high-cost methods which consumed vast quantities. -scarce resourcco, notably agricultural products and electric power.'

In order to correct this unfavorable situation, new orpiano for the expansion of the chemical industry havesince late7 by almost all of the countries/ofBloc. The major objectives of the-nev plans are to iup thc development of synthetics, fertilizer, andeft and to effect smaller but substantial- increases In The Soviet economicpercent

increase in investment in the chemical Industry. Under theear, investment is scheduled to be about five time* -thatomparedoubling in total Industrial Investment. Production la scheduled to Increase almost POO percent compared withpercent increase in total industrial production. About three-fourths of the investment funds allocated to thehave been earmarked for expanding production of synthetics and fertilizer. Plastics alone will getercent of total investment in tho chemical industry, compared withercent ineriod.

Taking their cue from the USSR, the European Satelliteo alsohave announced ambitious plans for the chemical industryEMA conference ln8 It was stated ln the

press:

Continued industrial development ncces- an even more rapid rate of growthchemical industry In the CEMAparticularly In production of mineralplastic materials, syntheticand chemical

.

Subsequently, ln- the following planned levelsproduction5 relative8 vere announced;.times;imes;imes;tlmeB; Hungary and East Germany, two times. In Communistthe Second Fire Yearery rapid expansionproduction is scheduled, particularly ln production ofand synthetics. . *

-

B. Intra-Bloc Coordination

The Increased emphasis on chemicals In national economic plana has been accompanied by efforts to achieve closer coordination within the Sino-Soviet Bloc ln this field. These efforts culminatedlenary meeting or CEMA In Prague fromhrought which the councileport of its permanent commission on chemicals" dealing with "development, sped slit atlon andion in the production of plastic materials, synthetic rubber,fibers, andarge number of planning -conferences were held, including conferences between the chemical and machine building commissions on the question of supplying chemical equipment. Bilateral agreements have been concluded between tbe USSR and the key Satellites, especially East Germany, for coordination of activities relating to chemical production. The importance of the Soviet-East German agreement and the over-all plans for development of the chemical industries of the Bloc was emphasizedpeech by Khrushchev In6 at the Bitterfeld Chemical Combine ln East

* The commission, known officially as the Permanent Commission for Economic, Scientific, and Technical Cooperation in the Chemicalheld Its first conference Earlier efforts ln the chemicals field had been confined mostly to coordinating plans for foreign trade, but7 an Increasing interest ln theof production of plastics was evident.

Germany. Full details on tbe ucv Bloc program for collaborationchemical Industry have not been released, but evidentlybeen drawn up for increased coordination of production, rer nd development, and supply of

The most publicized aspect of the collaboration Inwithin the Sino-Soviet Bloc is the plan to beginof petrochemical industries, based on Soviet oilpipeline, in Bast Germany, Czechoslovakia, Poland, andof petroleum refining shouldorethan calcium carbidefrom coal or agriculturalfor the manufacture of plastics, synthetic fibers, synthetic and other products. arge portion of thehowever, will have to be obtained from the Free World.also vlll be taken to Insure adequate supplies of other cheal-raw materials in the Bloc. The USSR vlll Increase deliveriesa source of phosphorus, for production of fertilizer. olish radiobroadcast reported that an enterprisebe built on the Kola Peninsula to serve the needs ofGermany, and Czechoslovakia. Poland will supply sulfur, theand East Germany will increase shipments of potassium iwl'.^Rumania will export cellulose. Varying degrees of speclaliza-.in production are planned in basic, chemicals .and chemicaldepending on technical capabilities, requirements, andof rawn viewhe great variety ofmaterials, .coordination of plans for production ' -*

. ?v r-s-

- With respect, to researcherious attempt will be made to pool-n particular,-the USSR wuntsake'greater use of the.East.German, potential. Khrushchev,peech at the Bitterfeld- Chemical Combine In East Germany, iniscussed the.question of."uniting our efforts. In .thef development'of. science and technology, in the field ofing, technicalndhere is. evidence alsoungarianA recent report stated that;ad been little or no cooperation between Hungary and the USSR, in chemical research and development but that the USSR now wants to make use of Hungarian chemical research Institutes and engineering acilities. Hungary reportedly Isumber offor the USSR, in one easerocess developedungarian researchers. - -

In Rumania the development of a- petrochemical industry basedndigenous resources is already under vay. In Westernery rapid expansion of production of petrochemicals has taken placehe last few years.

- TheIn the drive to developBloc, and it is evident that effortsavailable capacity In the Bloc fortheas well as -the.Planning Conmlssion, 'in .discuE&lny.

Placingn :Soc ialistdifficult natter, due.to .the ,facthose .countries envisage a- considerableevelopment _of .their ovn;chomic For- this; reaBonyproductlonspeci and cooperation between member-countriet ofn^thevfield of producing! stallatlons "and ^equipment- fbrY"includingill bo all theolving .that,jaj:

Concern with the developing shortagein the CEMA meetings heldS&fllfcH

-mphasis, is'evident'on'the:delivery-tbepeechQ'outlinlng?plQns >for,7Soviet chemical*industry, ^saldo get Increased quantities of chemical, equlpment/fros the Satellites, Czechoslovakia has signed an agreement*toillion:*rulilcs* worth of chemical: equipment to the USSRast Germany, Poland,.and Hungary also are scheduled.to' supply -chemical"'equipments

In Bloc technology hasn referring to this problem, Khrushchev stated in

Ve vlllarge amount ofvhlch must be designed andnev. It would also be expedient to order - art of this equipment In capitalist

*ood example of the lag in petrochemical technology in the Sino-Soviet Bloc and the economic significance of this lag is in theof synthetic rubber, specifically those types derived from butadiene. According to Soviet estimates, the cost of producing butadiene-styrcne rubber from calcium carbide laoercent more, and from ethyl alcohol obtained from agricultural products Itercent more, than the cost of producing it from petroleum by the nev so-called direct processes. When ethyl alcohol Isfrom petroleum rather than from agricultural products, the cost of the rubber probably is aboutercent greater than the cost by the direct processes. With the exceptionill quantity of butadiene produced from calcium carbide in West Germany, the butadiene produced In the Free World is by tbe direct processes from petroleum or natural gas.

In the USSR, which along with Germany led the world in production of synthetic rubber before World War II, much of the butadiene still is produced from ethyl alcohol derived from grain, potatoes, and 1molasses, although conversioness costly process using alcohol derived from petroleum is now under way. The USSR has not yet been able to complete and put- into operation its first plant that is to'irect process at Sumgait. This process presumably Is one developed by Soviet chemical engineers because the USSR has nota direct process from the US.

- In East Germany, all production of butadiene Is based on calcium/ carbide, vhlch requires large inputs of electric pover for its Obsolescent Soviet and East German technology ispassed on to other countries of the Bloc. Calcium carbide is to be the starting material in two plants now under construction, one in Poland and the other in Communist China. Alcohol derived fromis to be used In two additional plants, one in Czechoslovakia and tbe other in Communist China. On the other hand, tbe USSRis helping Rumania tolantirect process, presumably similar or identical to that at Sumgait. For further details on developments In the synthetic rubber Industry of the Bloc, see II,elow.

countries, primarily the US, West Germany, .

and

:r.

ollovup to Ms speech In Hay, Khrushchev mentionedin his letter of8 to President Elsenhower ontrade between the US and the

Following Khrushchev's policy pronouncements, the efforts of the Sino-Soviet Bloc to obtain technology and equipment from the Free World were accelerated. The countries of the Bloc have been attempting to buy petrochemical technology from the US because US firms have proprietary control over much of the advanced technology, but their efforts have been largely unsuccessful. The USSR, Poland, and,esser extent, Rumania have tried to obtain technology for producing various types of plastics, synthetic rubber, andchemicals from petroleum and natural gas. The USSR, Poland, Rumania, and Czechoslovakia have been seeking and, in some cases, obtaining assistance from Western European firms in the form ofcomplete plants, and miscellaneous equipment foride range of chemicals, and chemical products. Including basic and intermediate petrochemicals, chlorine, caustic soda, cellulose, rayon, cellophane, plastics, synthetic fibers, synthetic rubber, and tires. The USSR and more recently Poland have been negotiating for theof Japanese chemical equipment and technology.

* ess publicizedonth before, the Soviet delegate to the Economic Commission for Europe, taking the same approach taken by Khrushchev, appealed for an exchange of technology in tbe synthetics field, strongly emphasizing the importance of synthetics for consumer goods.

In order to pay for growing imports of chemical equipment, r' and goods, the USSR has stepped up its exports to Westernotably of petroleum. The demand for equipment from the Free World, however, is evidently greater than the ability of the USSR to finance such purchases through exports, and the USSR is actively seeking credits, particularly in Western Europe. These effortsave met with some success) as the President of the British Board of Trade announced after the signing of the new Anglo-Soviet trade agreement onhat the Board of Trade, through itsfacilities, is prepared toimited amount of credit extended to tho USSR by private British companies.

:" V: -t -

per--.

'less than'Tthe 'percentage iu

The chemical industries of tbe Sino-Soviet Bloc madeprogressncreases in the value of chemical production rangedercent In East Germany to

ae'i;Vln'East'Germany "'end-North'Korea the per- ?

China/ as shovn.'ln'Table'" centage Increase .in chemical .production'

-'. Increases* ln*-th'e'-Value .'of .Chemical* ProductionTotal Industrial' Production in-Selected Countries

Country vtra^Prcduc'tlong Je?loo

chemical; production above tbe average for all industry have been characteristic feature of economic development in the postwarn both the Bloc and the Free World.

- Increases in production of fertilizer in the Sino-Soviet Bloc varied widely In the USSR, production increasedenth million tons, less than the reported increasesent7 andercent In the first'quarter ofroduction of fertilizer increasedercent. The' currentf expansion is far out of line with an original goal55 million tons of capacity9 and the newly announced goal' for production ofillion tons Elsewhere ln the Bloc, some notable increases in production of fertilizer were recorded. In East Germany and Poland the increases were modest, but In theaining countries of Eastern Europe and in the Far East increases' ranged fromercent In Czechoslovakia toercent in Communist China. These Impressive increases, in many cases from low levels of production, are partly the result of Soviet aid programs.

In the rubber industry, Soviet production of tirespercent, the largest Increase reported for any majorand Ccennunist Chinese production reportedlyncreases ln production of tires have beenIncreased Imports of natural rubber by both countries." Anoted thatesult of.expansion in the rubberdemand for natural rubber increased more thanercent In the USSR, Increased imports of natural rubber maylogging program for production of synthetic rubber in addition torequirements for'current use and stockpiling. "Ofthis connection is the .'Soviet plan to producerubber almost.identical to natural rubber, inso that5 Imports of natural rubber will not be

Rotable achievements in production of synthetics in the Slno-Soviet Bloc8 were few. From the Soviet announcement of plan fulfillment, shortcomings in production of plastics andfibers can be Inferred. ercentage increaseroduction of synthetic rubber was not reported, and seriousmay have been encountered ln this sector. Asidepercent increase in production of synthetic rubber ln East Germanyevel above the goaleports ofadvances were absent. In Poland, unsuccessful attempts were

* Communist China reexports seme natural rubber to other countries of the Sino-Soviet Bloc, Including the USSR.

ln the US, production of polyisopreneimited scale began

- 11

made to get production of synthetic rubber under wayargewith Soviet V*':

Reflecting thc lag in the production of synthetics ln the ino-Sovlet Bloc, exports by tbe USSR and Poland of benzene andother basic organic coal chemicals used in productionhetlcs continuedigh level Soviet exports.of.ben-iy. zene to tbe US, which accountubstantial share of tbe'totalH-value of Soviet exports to the US, werereat deal of pub-llclty In the US press following the announcementS chemical firm of plans to buy large quantities of Soviet benzene.

. -

II. Developments ln'V *

A. USSR

'

1. Announcement of the Seven Year5

a. !

- * T i' '

Thc Seven Yearighto the rapid expansion of chemical production,peech by Khrushchev ln Maybefore the Central--'- The plan cnlls for production of chemicalshree timco that8 comparedercent in total industrial production. Although theof growth in the chemical industry is not strikinglythat achieved under the Fifth Five Year, itambitious when compared with the rather modest achievements illionillion rubles ere to be in-*. in the chemical industry, five times theduring theear, Ininvestment In Industry is scheduled to double. Key aspects the new plan for chemicals Include rapid development ofsynthetics and fertilizer and exploitation of petroleum andas chemical raw

b. Synthetics

* On thc basisecent articleoviet Journal, it isthatillionillion rubles will be invested in facilities for producing synthetics (including artificial fibers) andillion more rubles in facilities for processing these materials.

More than half the planned capital investmentillionillion rubles In the chemical Industry hoB been allocated to the expansion of production of synthetics." Although it

possesses the world's secondlargest^chcnicuMnd^ ranks only fifth in production off cheKlcal fibers* and produces lesa than one-third as suchthetic rubber as does thehe scheduled Investment Is expected to raise production of plasticso more 'than seven timesthatfl; of chemical fibers;-four times; and of synthetic?-rubber, aoreroduction of polyethylene-and polypropylene, versatile plastics with broad consumer/nd military uses, is scheduled to Increase'-2k6 times inear period. These goals, even if achieved/ would not; result ingreater than that of thelthough production of theynthetic products might approach the level attained in the US in -

r

The plan for production of synthetic rubbera change In Soviet foreign trade. which has properties very similar to those of naturalis scheduled to constitute almostercent of the totalof synthetic rubber, and Kcdorovj Chairman of thefor Chemistry, stated that fulfillment of the plan would the USSR to eliminate the importation of naturalsources emphasize, however, that considerable technicalmust still be overcome before-commercial productionattained In the

'1jlljy'^u"

From the Soviet point of view the emphasis onof production of synthetics is clearly Justified. More and better synthetic materials are required to improve the range and quality of products for consumers andlso, in recent years, synthetic materials have received Increased attention from the military forces, which can use the heat resistance, light weight, and electrical properties of many synthetics to good advantage in the manufacture of radar, missiles, and high-speed aircraft. In/ addition, some types of synthetic rubber and plastic arc now used as fuel-binders in solid pro pellor missiles. Tn connection

The term chemical fibers in this memorandum includes synthetic and artificial fibers. The term artificial, fibers refers to the ype produced from regenerated cellulose, generally called rayon.

** This goal for production of synthetic rubber was given in8peech by Khrushchev to the Central Committee. to the drafts of the Seven Year Plan, the capacity forof synthetic rubber5 la toimes thatndicating that the goal announced by Khrushchev may have been raised when the Seven Year Plan vas drawn up.

*** In the US, production of polyisopreneimited commercial scale began

vith missilesy Khrushchev stated that it vould have, been impossibleto launch the .sputniks and-the first artificial planet without'; synthetic polymeric materiale.and: synthetic fuels. Furthermore, thc lack,of. adequate synthetic-materials has been .costly, to the Soviet economy.-Foreported annual savingillionillion.rubles.could*be effected by. the use of improved types, of syntheticand.the. substitution of synthetic cord for cotton -In the inanufacture ofLack of synthetics also has necessitated the use of expensive metals, in many applications for which the .cheaper-synthetics, particularly plastics,-are ideally suited. ecent articleoviet 'Journal reports that the use of synthetic materials under the Seven Year Plan could resultaving of kk billion rubles in capital investments andillion rubles in operational outlays, with attendant savings of moreons of nonfer-rous metals and moreons of ferrous metals.

-v

he Seven Year Plan calls for vastly expanded use of petroleum and natural gas -as raw' materials for the chemical industry. In contrast with the US chemical-industry, the Sovietoroduced-only/limited quantitiesewals, notably ethylrom petrochemical raws . an indication of the magnitude of the new program, annual consump-tion of liquified gases, natural gasoline, and natural gas* by the chemical industry is schedulcd'to increase aboutimes during the period9 to'.

Among the basic: and.intermediate chemicals which are.

scheduled to: be derived wholly or .partially'from petrochemical ources are ^ethylene, propylene, acetylene, butadiene, phenol, am-onlo, 'ethyl.alcohol, and acetone.vFrora these chemicBls will be ;produced such.items asynthetic rubber, synthetic, fibers, fertilizer, andThe dramatic- nature of the change-lh{ thc raw material base is illustrated ln the following tabulation, which gives the planned changes in the use of raw materials for synthetic rubber in percentages of Synthetic rubber to be derived froQ each raw material.**

* Excluding natural gas produced in association with crude5 the chemical industry is scheduled toillion cubic meters of naturalncluding associated gas, outotal planned production0 billion cubic meters. ** Data are approximations only. Hlnor amounts of some rawevidently are not included.

- u

will save moremwn*-

moreillion tons of high-cost edible products* vere used tc produce industrial ethyl alcohol (used In the manufacture of eynthctind-OCO tons of edible vegetable, oils :were. used .

to v

ertilizerc

ti&aQ Renewed emphasis on the fertilizersector of the Soviet chemical. industry, is evidentnev SevenWhereas production-in. recent'yearsincreasingate far less than that requiredgoals5 million5 million tons of capacity9illion toillion tonshe goal under theisillion tons Attainment of this nev goalan investment ofillion toillion rubles,one-quarter of the total Investment planned for the. The boosted goal for production'ofhave been the resultct-mi mite decision; Inasmuch ashas Indicated that supplemental funds vlll be required forproduction of fertilizer. .-

In spite of the ambitious goal, agriculturalfor fertilizer5 vill not be satisfied even if tho plan is fulfilled. Agriculture is scheduled to receiveillion tons of fertilizer Reportedly,ill loo tons of fertilizer would satisfy requirements for the basic technical and subtropical crops andivefold increase in consumption of fertilizer for other crops.** However, Soviet agricultural specialists have estimated

* in terms of grain. Ten million tons of fertilizer reportedly vill be needed5

for the basic technical crops.

-

that optimum needs for fertilizer vill be considerably greatermillion tons. The All-Union Academy ofenin estimated, before the announcement of the newproduction of fertilizer, that "minimum" requirements wouldmillion tons Other Soviet institutes have"potential" requirements would beillion to i

Ultimate satisfaction of agricultural requirements for fertilizer will depend not only on increased production but also on improved distribution and storage facilities. ack of adequate storage has led to large losses of fertilizer, in some casestoercent of-the amount delivered.

1 . Other Developacntc

. Reorganization

_

The reorganization of the administrative apparatusSoviet chemical.industry alsoignificant development lnMinistry of the Chemical Industry had been retainedreorganization of Soviet industry inlthoughcontrol of its producing, plants was transferred.to thethe National Economy. Subsequently, In, tbereorganized into.the;State Committee for Chemistry underCouncl| of MinistersLittle is known of-the new Stateexcept that it is responsible for technical guidancetated function of.its ImmediateJtm

, w*

erformance-of. .theIndustry ..

-. cv:v..v. j 1-

The value oUproductlon.by the Soviet chemical in- ustry reportedly, increasedercent Preterm fulfill-"ent of the plan6 was reported for fertiliser, sulfuric acid, synthetic ammonia, caustic soda, soda ash, synthetic rubber, -and motor vehicle tires. Overfulfillment of the plan was reported for the basic types of plastics and chemical fibers, but theused suggests that the plan for total production of these Items may have been underfill filled. ercent increase lnof fertilizer is to be comparedercent increase7pcrcent increase In the first quarter9 the increase wasercent. The reported Soviet production of selected chemical products6 is shown in

ollows on

Table 2

Reported Production of Selected Chemical Products in the6

Fertilizer Sulfuric acid Chemical fibers Motor vehiclethyl alcohol

production

Unit

Thousand metric tons Thousand metric tons Thousand metric tons

.. Million units Million decaliters

Amount

of Production

ercent)

112 ..

113

. IOV

- The plan for Investment vas underfulfilled byais, centnd only one-third of the Installations' scheduled to be put into operation8 actually vent Into operation. The greatest failure apparently occurred in the construction of plants forof synthetics. The major causes of the underfulfillment were tho Inadequate provision of equipment, supplies, and technicalthe lack of advanced technology, and the unsatinfactory work of contractors. ontributing factor probably was Insufficient coordination between the chemical and petroleum Industries.

Soviet progress8 in the development of the petrochemical industry was slow. Lack of equipment delayedof petrochemical facilities for production of synthetic rubber at Sumgait and Voronezh. Similarly, lack of both equipment anddata retarded construction of facilities for production of polyethylene. Most of the completed petrochemical units wereor pilot plants. An experimental shop for production offrom natural gas was completed at Saratov, and en experimental unit for production of caprolactam from oil by photosynthesis was installed at Klrovakan. Inew experimental polyethylone shops vere commissioned. The introduction of petrochemical processesommercial scale8 apparently was limited to theof part of the Stalinogorok Chemical Combine to the use of natural gasource of hydrogen for the manufacture of ammonia and to the initiation of production of synthetic ethyl alcohol at-Croznyy.

A move which probably will result in improved coordination between petroleum and chemical industries was the replacement. Tikhomlrov, Chairman of the newly formed StateChemistry,.ormer Deputy Minister of"If'Z

Notable developments in Soviet trade in chemicalsmaterials8 Included'a raipid increase'in importsrubber from Southeast Asiaontinuing high level ofof benzene to the US. he USSR has rapidlyImports of natural rubber, probably to replace depletedto atone for the failure to expand synthetic rubber capacitydesired levels. From lossons* importsrubber rose to more0 tons67 andto haveonseport fromearly9 notes that the USSR has shifted its buying toof rubber. Since high-grade rubber usually would be usedthis shift may mean that Soviet stockpiles of naturalare nowatisfactory,

According to thc US Department of Commerce, Sovietof benzene to the US, which0 tons annually,0 tons LateS firm announced that it would0 tons of benzene annually from therice somewhat less than that of US producers. nitial press reports, which exaggerated the price differential and which generally did not mention previous shipments of Sovieto the US, suggested that the Soviet motive was economic penetration. In fact, the USSR currentlyubstantial surplus of benzeneause the quantities which are recoveredyproduct of coking operations are substantially in excess of Soviet requirements for the lagging synthetic organic chemical industry. Although Soviet exportsof benzene will decline eventually unless additional quantities of enzene are produced from petroleumecent report indicates that exports to the US9 "HIons.

3- Outlook

Lagging construction probably will continue to harass the Soviet chemical industryhen Investment is scheduled to beercent greater than Major delays again can bein the construction of plants to produce synthetics. Although imports of chemical plants and equipment probably willontinuing shortage of equipment can be anticipated. Nevertheless, production probably will increase9ate approximately the same as that

B.Bast' -Hew Piano

-. . . .

a. Incrcnaed Emphasis on Chemical Production

' While addressing an East German audience Inhrushchev publicly called for the support and cooperation ofGermany with tbe USSR In the expansion of the chemical Industries of both countries. Ho spoke of "the necessity of uniting the efforts of the German people with those of the people of the USSR" and added:

'ir^fh^rT'

. To coordinate our efforts, to use more rationally the material resources ofountriesiew topeedy development of the chemical Industry, we'ive careful thought to and specialization of production.

East German Deputy. Premier Walter Ulbrlcbt was more specific in his report on the following day to tho Fifth Partyof the Socialist Unity (Communist) Partyhen hean ambitious program for expansion of the chemical industry under the Third Five Tear* According to hisgross production of the chemical industry was to Increase by more thanercent during the period, with particular emphasis on plastics. Later statements in the East German press noted that eyn-thet'lc fibers also were toey item in tbe expansion.

Ulbrlcbt also mentioned that the USSR was going to important materials to East Germany to aid In theprogram andlan to build both an oilEast Germanyev refinery to process Soviet oil intochemical raw materials. This announcement vas the firstof the intention to shift the Bast German chemicalavay from the use of calcium carbidetartingproduction of Bynthetlcs and toodernfor this type of production.

During the months which followed these two speeches, the chemical industry, the supporting industries such as the machine building Industry, and the Party organizations began to work out the concrete details of the program. In November, Ulbrlcbt gave another speech, in which he spelled out in considerable detail the tasks to

be accomplished. By the end8 the' initial stages of theappnared to be in full.-'

*

b. Key Aspects of the Third Five Year Plan

In production of plastics and syntheticIs among the leading producers in.theIt claimsfourth in production of plastics per capita and first Inof cellulose-base (rayon) fibers per capita. In theBloc, only the USSR produces more synthetics. .acknowledged inhis: speech in Nov ember, that, tho Eastindustry was lagging behind the Free World-inof plastics and synthetic fibers and noted .also .that theof these products needed to bee alsoplastics and fibers were "of decisive Importance in theof the national economy for satisfying the needs ofand the population." Consequently, primary attention is beingon synthetics In the expansion program of the chemical

roduction of plastics in East Germany is;to botons,ercent The plastic ^expected .to: show the greatest increase is polyvinyl chloride,production of whichons, twice that plannedolyethylene is fore-.among the plastics that are to be made for the first timeGermany, and an optimistic goal0 tons has Production of other types of plastics also is to benot only in order to expand exports to other countries ofBloc but also toreater supply and variety offor the machine building industry, especially thequipmentn addition, the increasedplastics Is expected to benefit the construction industrythe lot of the East German populace by supplying more con-goods and furnishing packaging materials for food and other

* By9 the East Germans were talking In termseven Year Planatherive Year Plan. Ho major changes in the goals for production of chemicals5 have been noted.

Production of synthetic fibers is to0 tons0 percent of that planned Expansion plans enphaslte production of wool-like synthetic fibers, Prelana and tfolerylon, which resemble Orion, and of Lenon, which is similar to Dacron. Combined production of wool-like fibers is to0 tons.

an increase ofercent more than that planned forof Dederon, the nylon fiber formerly called Porlon,to increase0 tons,ercent of the Tbe additional production of Dederon will beto Increase production of tire cord, to increase exportsto other countries of the Bloc, and to provide morematerials for the East German people. Bo increase lnartificial fibers is planned, but more of the output is to be to produce rayon cord for

. a

The basic chemicals for production of plastics-and synthetic fibers could be produced far more economically ln East Germany from petroleum than from calcium carbide. Consequently, the. plan callsreat increase ln the availability ofhe new pipeline from the USSR Is scheduled to provide nearly'million tons of petroleum per yearrimarilymfi refinery to be built at Schvedt.

Because considerable time will elapse beforebecome available, it will be necessary during theexpand production of calcium carbide to meet increasedthe manufacture of synthetics. Plans call for production ofcarbide to Increase fromonsillion tons Four new carbide furnaces are to beVEB Chemiuchc Verse Buna ln Schkopau and two at VEB StickstoffverkIn

Production of fertilizer in East Germany Isoillion tons*rercent more than that planned. This modest Increase is understandable because total pro--duct ion of fertilizer is alreadyigh level. Emphasis will be placed chiefly on phosphorus fertilizer. Production of this fertilizer has lagged seriously since World War II, and It has been necessary to/ Import large quantities. The goal for production5r an Increase ofercent more than thc goal creased quantities of phosphorus ores are to be delivered by the USSR:

Production of nitrogen fertilizer is to Increase only aboutercent05evelhere are two principal reasons for this relatively small Increase. First, agriculture in East Germany Is currently better supplied with nitrogen fertilizer than with phosphorus fertilizer. Second, East Germany exports nitrogen fertilizer to other countries of the Bloc, but because these countriesonsiderable increase ln their own

* In terms of pure nutrient content.

-

productiontheir- imports from East'Germany ore expected to decline'J. Mii'llne-with agricultural requirements for more concentrated and multipurposeeduction is-planned In production of aoBonlum sulfate, the principal type-produced at present, and tvo revar-types will, beammonium sulfate-nitratendixed fertiliser containing-both-nitrogen and

Extensive deposits of rich potash salts have madefor East Germany to become -the third largest producerfertiliser in the.world.-'Aboutercent of Eastisore than half of it to the Freeexports are particularly important to the economyurthermore, East Germany is the chiefpotaoslum fertiliser to the.Europeann spite ofexports. East German agriculture is well supplied withproduction is to:incrcaflc:topercent more than that planned forlittle doubt.that mont of the- Increase in production will - - -

'. exports of, chemical, products byrEasttoercent moreCandImportsercent more than- imports inAt the samehereis tohance In the types of traded. The percentage of basic chemicals in totalnd the percentage <of.refined products Is to increase.importation of *raw materials'is;to increase more than theofisemifinishediand'.finished goodB,-and there Is also to be;shift, insofar.as possible/;from the Free World to otherthe Sino-Soviet Bloc, as

'.is ttu1 Other Developments

a. Production

In achieving an over-all increase in the value of productionercent* the East Cerman chemicalustry shoved marked advances in production of nearly all basic roduction of these same products in East Germany showed only small Increasesnd the over-all production of the industry Increased onlyercent. Tbe increased rate

* In terms of pure nutrloot content. hemicals accounted for aboutercent of total

*** The value of total industrial production8 percent

of growth can be attributed primarily to two factors: (l) theIn7 of the definitive law of the Secondearfter the industry had operated for theears of the plan period with makeshift plans,8 of construction or modernisation projects which'had. been pendingear orhe latter factor probably applied particularly in the case of calcium carbide and synthetic rubber. Synthetic rubber made the most rapid progress of allpercent increase above productionringing production8igher level than that planned0 in the Second Five Year Plan.

. Construction of new plants for the East Germanindustry proceeded rather slowly6ndlittle evidence that activity was stepped up appreciably insome construction work which had been started previouslyduring the year. For example, new capacity forboth calcium carbide and synthetic rubber was put Intothe Buna chemical works in Schkopau. New capacity foracid at Salzwedel, Oranlenburg, and Premnitz wasin8 and was expected to be finished byof the year. Work also continued8 on anotheracid plant, the anhydrite plant at Coswig, which is thesingle chemical project under the Second Five Yearplant Is scheduled to begin partial operation0 andfinal completion Work also began8 on theplanning and designing for the major projects scheduledThird Five Year, Including the new plantsfibers at Premnitz and Guben, and an additionalplant of the same size as the Coswig plant, to be builtz Irk

Oneorganization of thestructure of the chemical industry of East Germany, which had been in progress forear, became final. The functions of the former Ministry of the Chemical Industry were dividedew Department of Chemistry In the State Planning Commission and seven "Associations of People-Owned Enterprises"ach of which exercises administrative control over groups of plants having roughly similar types of production. This arrangementreater degree of central control of the Industry in thc StateCoamission, at the same time providing more latitude for the

Individual plants ln operational natters. The new organisational structure should facilitate Implementation of the ambitious program for expanding the chemical Industry, Inasmuch as the State Planning Commission lo the key point for coordinating tbe activities of themany branches of industry which necessarily will be involved..

3. r

There is no doubt that the new program for the chemical Industry has been accepted in earnest by the East German economy and that an all-out effort is being made ln many branches of industry to push through the program. Thc Investment allocations forercent of investment under the Second Five Tear, appear adequate, and all phases of expanding tbe program are to enjoy top priority. Beverthelesa, the prospects ofthe plan do not appear bright. The lack of petrochemicaland shortcomings in the supply of chemical equipment, ofpower (notably for the production of calciumnd of manpower arc among the major problems.

The East German government has acknowledged that it will be necessary to obtain from the Free World petrochemical technology, particularly technology for producing ethylene (for polyethyleneplastic) and propylene (for polypropylene plastic and for phenolecause none of the member nations of CEMA canuch technology. If the requisite technology is not obtainedhe program will be seriously delayed, for it Is necessary to startconotruction of the new plants90 if the scheduled goals are to be met.

The chemical industry of East Germany has frequentlyof slow deliveries of chemicalnd in8 Ulbrlcht outlined measures to Improve coordination between the chemical and machine building industries. Among other things, he -notedpecial enterprise was to be set up to handle procurement of complete chemical installations from thc machine building enter-prlseo. The result may be Improvement ln the flow of chemicalbut It is expected that shortages will continue, especially in view of the Bast German commitments to deliver chemical equipment to the USSR and other countries of tbe Sino-Soviet Bloc.

The main source of starting materials for production of organic chemicals in East Germany is calcium carbide, production of whichery large unit Input of electric power. Inasmuch as electric power hasottleneck for chemical production In the past und inasmuchonsiderable expansion of calcium carbide production has been scheduled, it Is questionable that the powerwill be adequate in the next few years.

i Manpower -has' already,erious problem ln .East Germany because' of defections, to the West' and fever additionsfV the labor force as a' result of-the low birth rate during World Warne measure helng taken to deal with this problemrogramtrainhemical-worker,'eecond.o that 'hoxample, maintain as well as operate equipment.Although the program mayartial solution to the manpowerontinuing, difficulties can be expected during the next several years, especially as newre' scheduled toibe built' in the eastern areas of.ountry where no pool of .'skilled' chemical ;workcrB-"existBInrecogr ition of tMB"problejn;Ttho';'expansion:program collsgBfdft-^tot'Vof automation"in" new.chemicalfclf*

C. Poland . i-i

,

roduction8

ccording to published statistics/ the value oftioc of chemicals ln Poland Increasedercent8 compared<-withercent for total industrialeported Increases in mujor product's :were asotor vehicleercent;lansoal which probably, will boerccnt;-lncreaseroduction of tires partly reflects the factas seriously hampered by shortageo of tire. cord,hjfy increases were rocorded for steelon (nylon)inyl chlorideut production of these -items- has been';initiated only recently. Of the basic chemicals, production of soda ash-in-creasedercent, chieflyew plant was put In he Initiation of produetion of butadiene-styrene rubberat Oswiecim/ thc site of Poland's first commercial-synthetic rubberplant, was delayed because of processhisD* -which is of Soviet designapacity0 tons, will em-igh-coot, roundabout process of obtaining butadienecetylene derived from calcium carbide. Ethylene for production> styrene also is obtained from this sameroduction ofhctic rubber is scheduled to0 tonsut this goal probably will not be reached.

2.' Hew Plans

In recent months the Poles have released information on che goals for the chemical industry under the new Five Year Plan

In terms ofpure nutrient content.

apid expansion In production of. synthetic's increased utilization of domestic raw materials such* asyi' Poland hopes to reduce its currently heavy import balance; in; eel products, chemical raw materials, end related items such aaii.-ni-i. natural fibers and natural rubber. However, In expanding production: of synthetics, Poland will be heavily dependent, on .countries otino-Soviet Bloc and the Free World for technical aid and-equipment.-.

D. Czechoslovakia -

8

The value of production of chemicals lneportedlyercentr the godo percentage-asotal industrial production. Under the Secondear) production of chemicals is scheduled to increase 6lcent, an over ago of aboutercent annually compared with ancrease ofercent for total industriali-jr*,.

Nitrogen fertilizer scored the largest gain inion in Czechoslovakia6esult of theletion of additional capacity for productionons'/of ammonia at Most and expanded^ capacity'for production* of 5'ljOOOf fertilizer atproduction of nitrogen0 tons and of phosphorusons.* Production of artificial fibers Increasedercent0 tons and of polyvinyl chlorideonsons,--

Plans - :

zechoslovskia revealed over-all objectives of thc chemical industry Chemical production is toreaseercent comparedeportedly the largest/ increase for any industrial sector. Production ofuadruple, and production of plastics will increaseons, more than four times the production0 tons- Production of artificial fibers will be increased0 tons, twice the production in the past, expansion of thechemical Industry has been hampered by shortages of chemicaland the increased commitments to export chemical equipment to the USSR mayerious effect on the domestic chemical industry.

* In terms of pure nutrient content.

zechoslovakia is planning to exploitand natural"gas;as; raw materials to support expansion,ateonstructionuge petro-vK,combine based on-indigenous natural gas was begun, at: ome of-the technology to be employed,purchased fromhe combine will-produce nitrogenandrganic, chemicals. ;iThe regime also beganor the use of crude oil: from tbe USSR to be delivered by.At the.Stalin Works in Zalusi (near tfost),from the refining.of .crude oil!-will be used as the rawsynthesizing, ethyl alcohol'v-v. Draft plans for. pilot-plantf. synthetic alcohol; were drawn up recently by Sovietalcohol-produced.at.Zalusi.will be used at Kralupy-nad-for production of .eynthetic'-rubber. (butadiene-styreneis scheduled to beginThe: second section oflant, which is scheduledompletionutadiene directly from.byproductrocess whichhas been trying;toipurxhasejfrom theoviet crude oil alsobe used as the: starting-material for the production *

.. Rumania .

'^.i'. Rapid expansion of the Rumanian chemical In duencluding the developmentiversified petrochemicals sector, has beenunder tbe Second Five Year. : the value of production of chemicals reportedly increasedercent" -compared withercent for.total*industrial production.'.hemical production -Is.urther increaseent,-and investment.Is scheduled to. cent greater thanill.amount to aboutercent of- total industrialproduction is scheduled to be fourtimes thc level- an average annual increasehe rapid expansion of -the chemical1 industry is being accomplished 'LiV with assistance from both the Free World and the Sino-Soviet Bloc,-particularly the USSR. From the West, Rumania is assiduously seek-.', ing aid in the building of facilities for producing tires, plastics, synthetic fibers and Intermediate chemicals, including petrochemicals.ontract was signedelgian firm for purchaselant to produce acetylene from natural gas. negotiations are under way for purchase of tire mid rayon plants. Interest has been expreased ln purchasing all types of petrochemical processes.

Thc very substantial increase in chemical production in Rumania8 resulted in part from an increase ofercent in production of fertilizerons. Production of soda ashercent0 tons and that of causticoons.

Production.of fertilizer In Rumania will continue to expand rapidly9 and inyears. The plana9 call for productionons, and the goalhich prob-be acMcvcd'roduction Is expected to

nd 2'5 mUllonilliony iy/o All the new capacity for production of nitrogen ferti-v. -atf xizer win-be based.on hydrogen .derived from natural

Production of synthetic materials, mostly formaldehyde resins TrJ?lyvlnyl CQloride, is scheduled to increaseons toumania is expected to begin production-of synthetic rubber (butadiene-styrene copolymer) with butadienealned directly from byproduct gases from the refining of crude oil. using the latestlansynthetic rubber combine -located at Borzesti reportedly have been drawn up by Sovietst sy and the USSR is supplying much of the equipment and training umanian cadres. Til if; development is interesting in view of Soviet problems with this process at the-Sumgait plant and the currentho USS* to purchaserocess from the US. At Borzesti the USSR also isnit for synthesizing phenol withoneoint product by the modern cumene peroxidation process

from benzene and propylene.

P. Hungary:

evelopmente6

ccording to official indexes, the value ofthe-chemical industry in Hungary increasodercent inwith an increaseercent for total Industrial pro-.The-increase for .chemicals was well above theofercent required to fulfill the Three Year Planinterim plan drafted to replace the discarded Secondhe substantial increase in chemical productionin part through large increases in the productlon.ofacd pharmaceuticals. - . ..

* By state-owned industryccording to Hungarian definition, the chemical industry also includes the refining of petroleum, the manufacture of aluminum, and the fabrication of rubber products.

Production of fertilizer in Bungary increased from.tonsons, an increase of percent. of nitrogen fertilizer increased0 tonsons, largelyesult of the reinitiation of production at the oreod nitrogen products plant (Kazlncbarcika) in of additional capacity toonsons of nitrogen fertilizer is now under vay.

ably superseptyl, papaverln hydrochloride, and Chloromycetinmarkedly The increases reflect the newto develop the pharmaceutical sector. Pharmaceuticalis scheduled toercent, andlargest pharmaceutical plants In Hungary oreungary has been an important producer andpharmaceuticals for more thanears, but during thethe.facilities of the industry have been allowed to grow

* .

In8 the first unit in Hungary for production of refinedtarting material for the production of plastics, synthetic fibers, and many other organic chemicals,was completed at tbe Stalinvaros Metallurgical Combine. Nearing completion at this Same Bite are units for production of other coke chemicals such as toluol, phenol, and naphthalene.

A petrochemicals combine which will operate on natural gas from Rumania and which will.produce plastics, fertilizers, and other products has been under.construction at Tlezapalkonya since - Technology and equipment.for producing acetylene from natural gas have,been sought from West Germany. ortion of the remaining: equipment .will be supplied by the USSR and Eastittleprogress in construction has been evident,ilometers long to transport natural gas from Rumania No concrete plans for producing chemicals fromgases from the refining of crude oil have been announced as

yet, but this source will no doubt be tapped after completion of the pipeline to .deliver crude oil from the USSR

New Flans

* Including Investment ln inorganic, coal processing, organic, pharmaceutical, and rubber sectors.

Under the new Five.Tear, annual Investment in the chemical Industry In Hungary is to be more than twice therate." Production by the Industry Is scheduled to increaseercent. arge chare of the allocated funds will be used to expand production of synthetics,nd pharmaceuticals. Production of plastics is scheduled to increase from the current levelons per year0 tons, and synthetic fibersonsotons.

1*

0. Bulgaria

Production8

portedly Increasedercent8 compared with an increase ofercent In total .industrial production. Of the major chemical products, fertilizer showed the largest percentage increaseons. This increase was mostly in the production of superphosphate fertilizer, which Bulgaria did not begin to produce' Increases in production of caustic soda and calcium carbide were modest.

2. Sew.

. Under the new plan to fulfill the Third Five Yearears, production of chemicals In Bulgaria is scheduled to triple2 rather thanimes production7 as originally planned.By comparison, total industrialis now scheduled.to.double rather than increase by 62 hemical production Is to be at least four to five times the level of production Among tbe goals5 ere the following: illion tons of0 toons of plastics (including polyvinyl chloride andons of artificial fibers.. Plans call for production of plastics from petroleum byproducts

H. Communist China .

total may be high, for production may not haveillion units according to estimates of this Office.

compared with an estimated increase in total Industrial production of ko percent. According to official statistics, productionercent totons; soda ash,ercent to ons; caustic soda,ercentons; and sulfuric acid,ercent0 tons. According to press reports based on "preliminaryroduction of motor vehicle tires increasedercentillionnd to support this increasefor natural rubber reportedly increased more than 80 Production of fertilizer is estimated to have increasedillion tonsillion tons.

b. Program for Production of

The key aspect of the Second Five Yearor the chemical Industry in Communist China is expanded productionof fertilizer. The original goal2illionion tons, an impressive increase above production ofion tons In successive revisions, however,-the goal maf-gig raisedillionillion tons, toillion tone,^to'lS-mil-V. lion toillion tons, and toillion tens, and-most, recently') goal ofillion tons has been discussed.

v "'

A novel feature of the latest version of the'plan: for production of fertilizer is-the intention to construct anensive network of small plants with capacitiesndons to produce ammoniumew type of chemical fer-tlllzer which is almostercent as effective as the ammonium sul-fate traditionally useditrogen fertilizer in China. At least.on plant is to be built In each ofslen'ndon plant in each ofro-ductlon from these plants would add, all told, aboutillion tonsannually to the supply of chemical fertilizer in Communistii'

here bad been increasing evidencewith the program for ammonium bicarbonate. First,has been forthcoming from Chinese Ccemiunist sources, in re- months with respect to the highly publicized prototypein axanghal in Because of the attentionon this plant, at which successful trial production wasnecessary before similar plants could be builtthe omission of subsequent comment isice minister of the chemical Industry didammonium bicarbonateist of chemical productsindicated vere scheduled for large-scale development Ininhinese Ccmmtunlat trade missionEurope expressed interest in purchasinglants for making nltrophosphate fertilizer, an inquirysuggests that the program for ammonium bicarbonate may have

The Chinese Communists have stated thatercent' of the equipment to be used in expanding production of fertilizer would be produced domestically, and the regime has claimed thefor serial production of complex high-pressure converters for synthetic ammonia by using newly developed techniques of welding and casting. Inowever, trial manufacture of equipment to produce fertilizer wsb described as "unprecedentodly cumbrous,"

-

Chinese news reports reflect the skepticism- of {some: of-the'; ners nbout China's ability to produce' the' required/ equipments <i

In an attempt to augment the program- for; increasing production of fertilizer In Communistassivc'campalgn: on the local level vas Inaugurated8 to collect.ai terlals and to produce fertilizerTh0^progranT^ was credited with considerablen'the This program probably will continue for. some time1 as. gap -measure, but the regime has emphasized that: the'fundaMntal^blu tlon to the problem of the shortage of soil nutrients inn tbe developmentarge-scale fertilizer industry. '

ynthetic Materialsv

Although the program for production'.of;.fertilizer:hai received most of the publicity, Ckmrminlst China has plans 'to^produee substantial quantities of plastics and chemicalhina produced only0 tons of plastic nolics. Production of synthetic rubberigible. The announced goals for productionf plasticsons of chemical fibers, most]

umber of plants for/producing*nd chemical fibers were under construction in Communist CMna,*with'; substantial aid from East Germany and the USSR. 'Inrubberlant for the production ofrubber from calcium carbide is being built at Kirih^Atr Lancliow, constructionecond plant forsmo|jfB of syntheticn this case based on ethyl alccholderive* from petroleum byproducts, is scheduled to beginC. Bothi these plants arc being built with Soviet1d. Foreign Trade In Chemicals

* Estimates of production of fertilizer8 as well as the goals2 exclude such so-calledfertilizer. Communist China imports more nitrogen fertilizer than any other country in the world and8 reportedly succeeded in obtaining preferential prices on Imports of ammonium sulfate and calcium monium nitrate from Western European suppliers.

With the rapid growth of the chemical industry theependence of Cotflmunist China on Imports has gradually lessened, and limited but increasing quantities of certain chemical products*eing exported. harmaceuticals were sold in Southeast Asia, and dyes were offered for sale in Western Europe, but China continued to depend heavily on foreign sources for fertilizer.- Im- :ports of fertilizer amounted toillion tons

Chineoo Communist imports of natural rubber are estimated to0 tons50 tonsto tonsndons In

2. Outlook

Lateommunist China acknowledged that tbeindustry was the fourth moot important industry after coal,nd steel, and petroleum. With its current high priority tho chemical industry Is expected to become one of tbe main producers of heavy chemicals in the Sino-Soviet Bloc However, the specific goals establishedarticularly the goals for production of fertiliser and synthetics, appear to be far too ambitious in view of China's limited technical and equipment-producing capabilities.

I. Worth Korea

The value of production of chemicals in North Korea isto have increased aboutercent8 comparedeported increase of about kO percent In total Industrial production. Production of fertiliserercent0 tons, and production of caustic soda increasedercentons. The increase in production of fertilizer resulted primarily from the openingoviet-built ammonium nitrate unit at tho HungnamPlant.

Continued rapid grovth of the chemical Industry is planned under the current Five Year, which north Korea now claims will be fulfilled well ahead of schedule. Production by the Ministry of the Chemical Industry is to increaseorcentnd, according to proos statements, achievement of this increase would mean that9 the original goal1 would beexceeded. The revised goal for production of fertiliserIons, and the goal5illionillion tons. Substantial increases are planned in production of artificial fibers,ons800 tonsI. Plants for0 tons of0 tons of polyvinyl chloride are to be in partial operation/ Increased production of artificial fibers is expected toeduction in imports of cotton and vool.

May be polyvinyl alcohol plastic.

Original document.

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