NIE 13-59 - COMMUNIST CHINA

Created: 7/28/1959

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APPUCVEE FOP- PEIEA-^E

NATIONAL INTELLIGENCE ESTIMATESupersedesnd)

communist china

Sulmllled by tht DIRECTOR OF CENTRAL ISTP.UAC.tSC.f.

The fottOKtag Intelligence oroanttatloiu yartlelpated In the preparation of (At* fttmott; The Central Intelligence Agency ani tht Inttlltgtnee erganltatlani of thi Dtpartmentttate, the Army, the Haey. the Air rone, and The Joint Staff.

Concurred tn by tha UNITED STATES INTEILIGENCE BOARD

onuly 1WJ. Cosctinins veri the Director ol Intttllgenee and Bttearch. Department of Statt; the AttUtaal Chief ot Stag lor Inlelltjtnct. Department of the Army; tht Awlitant Chief ol Naval Open flow lor Inttlllgt*et. Department ot the Haey; the AuUlaiif Chief ot Stag. Intelligence, USAF; Ihe DUcctoe far Inltlllgtnce, Tht Joint Staff; the AltUtant to the Secretary Of Detente, Special OperaJfonj; and tht Director of the Natlanal Security Agency. The Atomic Snergy Com-tnlttten Itepretentatlee to the OSIB, ana the AitUlanlremeral Bureau ot Inetillgation. abttatned. thtbeing ouftlde of Weir loruatcllo*.

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TABIE OF CONTENTS

Page

THE

CONCLUSIONS

H EAT LEAP

COMMUNES AND THE. 13

Motlration* for the Commune

The Record ot the

. 14

16

Party Leadership and

The Party and the

The Party and the

The Party and the Ethnic

The Party and .the Military .

MILITARY

Mnjor

Outlook for the Military

Missiles and nuclearIB

WITH THE COMMUNIST

The Slno-Sorlet19

WITH THE NON-COMMUNIST. 21

ProbriDle

foot

APPENDIX I: THB CHINESE COMMUNIST ARMEDS

Ground

Air

. 29

APPENDIX II: CHINESE COMMUNIST SCIENCE AND

APPENDIX III: THE CHINESE COMMUNIST. 13

Background of

The Form and Functioning of the

APPENDIX IV: THE NEW CHINESE COMMUNIeT STATISTICS .

APPENDIX V: TRANSPORTATION

TE T

COMMUNIST CHINA

THE PROBLEM

To analyze Chinese Communist domestic developments and external relations, and to estimate probable trends during the next five years.

CONCLUSIONS

In this, Its tenth year of power, the Chinese Communist regime exercises firm control over mainland China, the country's economy is rapidly expanding, and Communist China's weight in world affairs is on the Increase. At the same time, Its greatly accelerated domesticof the past year have brought it some of the greatest economic and social difficulties if has yet encountered. There Is also growing awareness in Asia of the ruthless character of the Chineseregime and the aggressive designs ol its foreign policy. Such problems will make the next Ave yws rough onesfor Communist China. However, wc believe that the regime will be able to cope with Its domestic problems and that the power of Communist China willconsiderably In the next five years. In spite of Communist China'showever, its notional power will remain far less than that of the US or the USSR.

lthough production Increases8 were far less than Peiping's extravagant claims. Impressive gains In economicwere achieved. We believeecord Increase of aboutercent was achieved In Gross National Product (ONP)ith industrial output rising aboutercent, and agricultural output about IS percent (due in part to unusually favorableowever, these production records were achieved at considerable economic and human cost.)

n attempting to achieve continued sizable production increases over the next five years, the regime will encounterproblems with respect to incentives, dislocations In production andfaulty statistical data, andpressures- Nevertheless, wethat Communist China will be able to increase its GNP by aboutnd about sevenn each of tlie three succeeding. These increases will probably resultotal increase in GNPndercent for the Second Five-Year Plan. The annual growth rate for industry willaverage aboutercent higher than

S E

remarkableercent rote achieved. The most dramaticIn output over the next Ave years will probably be In basic industrialfor example. Communist China may be able to raise production of crude steel, commercially usable though not fully up to Western standards, toillion tons)

Agricultural production, on the other hand, will probably not Increaseduring the period of the estimate. Theercent increase achievedft is unlikely to be repeated. Total Increase ore' the full Five-Year Planill probably be betweenndercent. Such an increase will probably be adequate to auataln economicbut will not permit significantIn consumption.

Tht commune system has provided the regimeore elective means of moblllring and Directing Communist China's vast labor potential. However, the regime will face serious difficulties over the next five years in attempting to establish the commune as the basic unit of Chinese Communist society. It isthat the commune program has generated extensive bitterness toward the regime. This bitterness, together with economic dislocations, has already led the regime to modify certain of the morefeatures ol tlw communes. Wethat Peiping will continue theprogram, Introducingas they become economically or politically necessary. The ceaselesson the people will probably resultopulace that for the most pert is no

SE( better than grudgingly acquiescent. However, giw the regime's flexibility and controls, it is unlikely that popular resistance will reach the point wliere the regime will have to chooselood bath or an abandonment of the communal experunent. (Poms

e believe that Mao Tse-tung willto be the dominant figure inChina, even though there arethat the party's unique cohesion of the past quarterentury has begun to feel the erosion of time. Tbe selection of Liu Shao-ch'i as Mao's successor as gOTemment Chairman is probablyto confirm him as Mao's heir to party leadership as well. In the event of Mao's death or incapacitation, an initial transfer of power to Liu would probably occur without challenge, but the party's effectiveness, vigor, and its prestige within the Communist world might)

here willubstantial growth in Communist China's capability toor produce complex militaryover the next five years. However, Cornmunist China probably will not haveignificant native guidedprogram during the period of thisThe USSR will probablyor help the Chinese Communists to produce, relatively unsophisticatedWithin the period of this estimate. Chinese Communist forces will probably have one or more of the following types of missiles of Soviet design: surface-to-air, air-to-air, alr-to-surface, short-range surface-to-surface. Communist China has probablyuclear weapons development program, but will almost certainly not haveuclear

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producUon capability of Its own' {Paras.

We believe that Soviet and Chinese Communist interests with respect toweapons are In some degreeThe USSR Is almost certainly reluctant to see the Chineseacquire nuclear weapons under their own control. For its part, Communist China almost certainly wants nuclear weapons and recognizes that its chances ofroduction capability would be seriously Impairedesv ban agreement should be reached. There is no reliable evidence regarding theof nuclear weapons In Communist China. We believe it highly unlikely that the Soviets have transferred nuclear weapons to Chinese Communist control. It is possible, however, that they havevldcd the Chinese Communists with some surface-to-surfaceto nuclear use and of sufficient range to tench Tolwon, It is even possible that nuclear warheads for these missiles may be stationed on Chinese Communistbut If so they are almost certainly in Soviet custody. In any event, unless barred by on effective International agreement, nuclear weapons are likely to be stationed in Communist China within Ihe period of this estimate, althoughcertainly under Soviet custody.)

The Sino-Sovlet alliance will almost certainly remain firmly united against the West during the period of this esti-

1Development ot Nuclear Capnbtll-Ue* by Fourthikelihood ond Cortw-riulymnlM rpnraarnph 7S> Hut Comnmnlxt China, with *ome Soviet nipport.probablym.ill rnde-prmlent nurlrar wenpnn capability within the nestate, with the USSR retaining its senior position in that alliance. As Communist China grows in strength and stature, however. It will probably exert aninfluence on general Bloc policy and Communist ideology, and theof Sino-Soviet interests will probably become Increasingly difficult. Indifferences of view will probably arise with respect to nuclear weapons,and tactics toward the West, and patterns of economic and socialWe also believe that, whilewelcomes Communist China'scontribution to Bloc strength, it will become Increasingly concerned over the long-range Implications ofChina's growing power.both partners will undoubtedlythat their problems are theconsequence of the allianceand that there Is no feasibleto maintaining it ln essentially its present form. Over the next five years, therefore, the main effect of thesewill be an increasing need for the two countries to make accommodations to each other in policy matters,eakening of the alliance itself.)

he aggressiveness which the Chinese Communist regime has displayed inprograms, In the Tibetanand In foreign policy has causedapprehension throughout Asia of Communist China's strength andDespite the foreign policy set-backs the Chinese Communists haveduring the past year, they probably view the future with considerableand optimism. Wc believe that lliore will continue to be frequentof Chinese Communist truca-

SEC-WET

lencc and or ar impatience to emerge as an acknowledgtd major power. World pressures will increase for Communist China's admission into the UN and Into other International organizations. The Chinese Communists will probably seek to gain their objectives principally by political and subversive means. They will also continue their trade and aidbut this effort will probablyrestricted and selective because of economic limitations. However, theon nonmllltary means will notthe use of force to exploit some target of opportunity or to respond to some situation which theyerious threat to their position in Asia. )

he Chinese Communists will almost certainly not let the situation in theStrait area remain quiescentAn invasion of the major offshore Islands is unlikely, at least during- the next year or so, unless Peiping comes to believe that US determination to help the Government of the Republic of China (GRC) defend the islands has weakened. The Chinese Communists will probably continue sporadic military pressures in the area, such as shellings and occasional naval and air sorties. The chances of some kind of major military probings in the Taiwan Strait area to test USwill increase as time passes. Anagainst one or more of the smaller Nationalist-held islands is possible at any time. )

DISCUSSION

INTRODUCTION

ommunist China greatly accelerated Its rote of economic growth and social change during the past year, butesult ran into some of the greatest difficulties It has yet experienced In its decade of existence. The greatly Increased output led to serious production Imbalances and maldistribution of supplies, and the forced pace of thedrive resultedecline In the morale of the underfed nnd overworked population. The commune innovations further Increased the regime's control over the population, but, together with the "leap forward" program,In confused administration and added to the many problems already facing theOther difficulties came as reactions to Communist China's renrwed asscrllvencw In relations with other slates: Chinese Idcologl-col pretensions incurred Soviet displeasure, and foreign policy setbacks were experienced In connection with the Taiwan Strait. Japan.

and Tibet. The road Peiping has chosenhortcut to world power Isugh one, but the difficulties which have beentntcred do not appear likely to prevent the Chinese Communists from making progress along this path.

he frenetic leap forward and commune programs are the latest and most radicaleries of experiments which the ChineseParty (CCP) has undertaken. until that time there hadather steady line ot national development, pretty much on the Soviet model. Since that time, however, the CCP leaders havebecome Increasingly convinced that this scheme of development could not result In fast enough economic growth, and thatand radical experimentation would be nccensnry If Peiping's basic objective of rapidlyackward countryreat world power was to be realized.

The problems were many. Population growth had nearly equaled the increase In agricultural output. The regime, relyingon tax and marketing controls, was finding It difficult to mobilise supplies to feed the raptdlr expending urban population and to obtain products for export. Rapid tndus-trialiialton required Increased Imports oigoods. The modest Soviet credits had meanwhile come to an end. and Ihe Increased import needs could be financed only by ea-panding exports. Moreover, It fad become ncccssaiy once aga'n to stir up revolutionary spirit in the CCP Th; regime had lost much of tiu. popular sup-wrt It had Inlllally been given. Meanwhile. It had made no great off-selling paychoJocKai gains abroad; Commii-nKl China had not succeeded in gainingor replacing Nationalist China In the UN. Lastly, relations with the USSR had become more complicatedesult of turmoil ln Soviet leadership. de-StaIir.;aallon. theRevolution. Communist China's own growth in power, and Its almost certain desire Inr Soviet assistance In the field of nuclear weapons.

The radical shifts In Chinese Communist economic and political programs since earlyone experiment afterall sought toreater effort from Use people.a there werea considerable number of differences within the CCP on economic and political questions, particularly with respect to the rate of advance. Byowever, the party seemed toettledet of daring and drastic approaches. The undertaking ol Ihc commune and the leap forward programs appeared to haveictory for amore aggressiveof view within CCP leadership These programs wereby Ihe publication of politicallystatlUlcs and economic goals andarked Increase In foreign policy truculence.

in doctrinal nsscrllvcncss within the Bloc, and In demands for Ideological conformity within Communist China. Dy the endstrains had forced some retreats, bul these have been in the nature of readjustments rather than changes of course, and the general economic and political patterns for the near future, at least, seem tc have been established.

elping* moves In Ihe past year underline the determination of Communis'. China'sto press rapidly and relenUessly toward their ambitious objectives of Induslrialiaing their underdeveloped country andItreat world power and lisInto "new Communislne of the moat important factors molding the pattern of Chinese Communist rife Is the (act lhat the present CCP leaders are first generationdeadly serious about their brand of Communist dogma and their conceptowever, theirajon contains strong nationalisticthe "new Communist man" la definitely toiineie Communist man. ThisIngredient contributes lo thepace Communist China's leaders have set, but the problem of reconciling this Chinese nationalism with the demands of the Soviet alliance may become Increasingly difficult

the period of this estimate, thedifficulties the Chinese leaders willbe those Involved in maintainingpaee of economic developmentcontinue flexible in Improvising waysof meeting these difficulties, butcertainly not alter their baik

II. THE "GREAT LEA" FORWAltD" A. Background

China has two principalproblems Tlse first and mealIs Ihe pressa vast and rapidly In-

5*

creasing populallon against Its limited food production. The Increase in food production achieved during the First Fire-Year Plan was barely enough to match population growth. Th* reglro? hu extracted the necessaryol agricultural producti for theurban population and for exports only by steadily Increasing controls over the rural areas and by restricting consumption.althoughtput of Industrial crops has suoalantlally Increased, severefrom year to year still cause serious disruptions in the plans for light Industry and for exports.

he second problem Is the difficulty ofigh level of capitalTo raise Communist China from Its backward status to 'hatodernnation calls for vast amounts of capital and eoruaoerable import of advances types of equipment. The failure of agriculturalto Increase substantially above severely restricted levels of consumptionthe amount of capital which could be generated outakie thai produced by theIndu-trtal sector. The Soviet Bloc has met Communist China's need for Import of capital goods, butmall pari of this was on credit, and there is no evidence that Communist China hasingle red kopek of economic grants from Its relatively opulent Soviet ally. Aside from military Icons, all that Peiping has received fromIn the past decade Is two economic loans0 million.llImports from the USSK have beenay-as-you-go basic, and In addition It has been necessary to generate an export surplus In order to service the Soviet loans of previous yeors.

7 the Imbalances from theurlve0 led the regime to Institute

a period of economic consolidation snd aof development policies. II had become clear that the Soviet pattern otby concentration of investment in big Industry alone wasolution to theof Capital-short, labor-surplusChina. In Ihe flnt place,rogram rcqulreC massive Imports of capital goods which Communist China was hard pressed to pay for from it* own resources. Secondly, it did not adequately utilize the large andlabor force. There was underemployment in the cities, and during some months of each yearillion peasants were relatively unproductive. At the same time, economic developments7 prepared the way for greater productionven with no "leap forward" drive, ma's rate of increase in GNP would probably haveecord levelercent.

lthough Communist China's leaders had InlUally announced relatively conservative goalsS, they apparenUy decided during the first half or that yearuch faster rate of increase was possible than had been initially foreseen in their planning. They determined togreet leap forward-on all fronts by capitalizing on the laborof China's vast populallon. Theframework of Investment and fiscal and price policies established during the First

utput of ex Ion en* ether industrialwhah eenrtiiuitd Use iwpry ot rawfee Bfht Industry In ISM-had Increasedith tbe sliaht reduction ofand Use decline In capital Investment In ltM.ol both eonmiroerandeood* had Increased fubiUnUally. more than enough la offset the drawlni down of slocks In 1MB. Decauae the level of Male Investment in ISM andsrai mssth hither than In Use yean IK1-IMJ uenlfleari Mwreears In capacity for kry innu-uw. could be eap.-ctrd In ISMancr number otn erhrtuled ror comptfuom

SEOrfET

Plan wu to continue,ew efloct was to be undertaken In addition lo existing program*

b. Choracterliilcs

rlndpel feature of the leap forward was tne increased attention given to small and medium Industry, which required less capital Investment, technical knowledge, and skill, and could org in producing and earning moreur. large and complexResponsibility lor the management of most ol the small and medium Industries wu transferred to local administration. This promoted the expansion of local Industry and local construction, and made fuller use of the labor force and local resources. The growth of production In heavy Industry was also accelerated by overworking both plant and tabor force Worker* worked multiple shifts, and were constantlyo cutr;uif.il ever higher norma.

he special characteristic of Communisteap forward, however, was the astounding outpouring of human energy for agriculturalrrigation projects,the construction ol hundreds ofof native-style "backyard" Industrie* These Utter were typified by the multitude of small blast furnace* that appeared on farms. In schoolyards, and In office buildingail over the country. Operated by students, housewives, clerks, and peasants who -volunteered" their spare time, these homemade furnaces, using every available piece or scrap Iron (including cooking pots of the peasants) and locally produced ore and coal, turned out aboutercent of the pig Iron andercent of the at eel producrdhe bulk of this output, however, wu or inferior quolily and of questionable utility.

'The oesanlaUon and exptoiuuen

U aw.urt la use section on ceea-mutir* bcalnnlna In paragraph (I.

sec.

veryone wu putork: JUndergartners pulled weeds, grade school children made shoes, housewives dug ditches and stoked iron furnaces, and the aged vended hogs and watched after children. Hours of Ubor were very long and holidays were given over to "volunteer'* labor. Always there wasfor "more, faster, better, moreTo have Uunched and sustelocd thU unprecedented work orgyour de force of Chinese Communist motivation,and regimentation.

C Ach^vemenh'

ommunistroduction recordn impressive one, even if it Is far short o* Peiping's production claims It was the first year In which both agriculture andmade big mcreases. We estimate that ONP6 was aboutercent above thatell above the previous recordof aboutercent

he official elatms for agriculture are that productionA wuercent higher by value than7 and that the production of oaslc food cropsercent. These figures are patently nonsense, unsupported by available intelligence and Incredible in terms of the intensive agriculture already practiced in Communist Chins. We neverthelessthere was an Impressive Increase inproduction, probablyver-all andercent in basic

'Oar economic eaUmnie* are leas Arm than those Of prevwui years. Thi* result* from the rapid expansion and radical chana* of Communist Chinaaad from the pronouncedofommunist eUUiUea tnWc consider Uvat the ever-aD description of the Chinese Communist economy laaccurate, but the sprelrk iUUiUcb)should not be viewed as precise,for the BSTtclaMl and handleUwsstsion.o' thU preSMem appear* In Appen. dl* IV. Tbe Hew Chinese Communist StausUci

foodbout one-lhird of this increase Is attributable to favorable weather.of cotton and ionic olher Industrial crops, under development programsumber of years standing, increaaedmore lhan during the entire First Five-Year Ptan. However, the production of vegetables, meat, and other supplementary foods, gener-

factor* ronlrlbwtlnc lo thu Incmua Incrop* afr nii'.-uiollow]acreage for bail' loud crop* Is nothave increased mnlfleantlyronounced mill Is claimedaterlo coin,n to wheat and otherwith lower averaia yields. Tneicshifts alone would result In anof ntarty lour percent over IrSI withIrom averai* yields lor theIn addition, crop weather wasmure InvorsbSe in ItSI than In 1SST.the Chi new Comma mats haveIn order lo play up tbetheir production measures. This factor*oIncreased prodacUonfire percent. me re-

maining factor. Ihe Increase in jirldi from the production aw-aaare*retnendcus Irritation profraoi was oraanltea wMt* was claimed lo .'in Increased Uve Irrigated am from SO penf tba land under cuKtvauon Us aboal SO pert oil UtIncrrav more than double the incrcaae claimed loe the flee yeanThe application ot organicsuch aa manure and pond mad, was claimed lo bare been Increased to more thanlotea lhat olHowever,raction of the etnlm'd newly imisled land could have drawn benefits during nil. and Ut" tddlUonni organic letUllser was ot lo* srs'V' Chemical femitter availabilities increaw.one million tonsola) olillion torn, jut tills smsll amount probably contributed lewwo percent Inereaae In bask loodramatic results were alao reporled from deep plowlose planting. Improvednd Ihe appllca-Uon ot oUtrr new technique, but (hone appeared to bt :argrij limited ts small acreatea and aome of these messum wera earrted to oar-lesitrraea Mcreoier. the ertett of (neae prod action measure* was lo tome tsUnl offset by the (all-are, due to eeanpeunge mareprevUMn foe harveal. rrvulufif In above normaln net, we estimate tbatroduction meaaurea probably contributedeven loercentn basic lood crops, tn conjunction wttb the other (actors, this Made to tn eUlmalcd total In?real* of about IS toercent la basic load crops In ISSIideline enterprise ol individualwas neglected and probably actually iecllned,

apparent anomaly5ncrease In food productionne hand, and serious food shortageson the other Is explained by aof factors: (a) food requirementsneeds were subalanllaily increasedgreatly Intensified labor effort;as at first overly generous intn cm Ileal of food through the(c) the percentage of foodUt nonfood uses probablythe Increased seed and feedof the farm'program, as well asmanufacturing uses; andhortages hindered shipment of foodto deficit areas, especially theaddition, thereualitativein the diet resulting from thesupplementary foods (meat andthe Increased substitution of potatoesTho state food collectiono9 washat ot the precedingonths, butadmits that collection for thaose enlye.cent. It ts likelyfor the entireonthstolthough possiblyof the Increase In food output,far short of the target. Slate foodthe last six .nontha8 rose aboutover the same periodprevented planned Increases Inhaseduction In exports.

Communist Industrialless exaggerated lhan those Inand available data ere more firmfor Ihe agriculturaletotal Industrial outputpproximatelyercent, aboutthe amount claimed. This Is theIncrease lo date and by farabsolute Increase. LlghlIncreased aboutercentIndustry aboutercent. Whileexpansion occurredroad front.

Appendix IV: The New Cblneie Communist Blatluica

S t

main emphasis was on steel. Wc believe that loUl ilecl production may have been about as claimed.illion tons, more than double thaiven If the more thanmillion tons of substandard products, mostly Irom Ihe native and small-scale plants, arc subtracted, IBM's sleetincreased aboutpercent over lhatevertheless, to help meet expanding needs, steel Imports had to be doubled, reach-ing more than one million Ions, andof all modern Iron and steel mills was accelerated The Increase ln coal output may have been nearly as much as theercent, bul aboutercent ofow-grade coai produced from native workings. Communist China has probably become the ihlrd largest coalIn the world, ranking after the US and USSR The machine tool and chemicalalso made large Increases.

he production records8 were achieved at considerable economic and human cost The obsession wllh quantity and the spread ot the backyard factory movement ledreat amount of economic svaste. In particular, labor was often dissipatedin wort of little productive value;onsiderable amount of crops went un harvested, were harvested too late, or sooiled while waiting shipment. Hard pressed manager* of Ihe overworked industrial plant were reluctant to withdraw equipment for maintenance and repair, and repair shops were diverted lo production li

During the Aral year ol the leap forward, conservatism became anathema and planning gave way lo improvisation and hastyof production. Byelping slill had nol lormaliyecond Five-Year Plan, and the tentative five year targets that had been announced ln6 had been rendered obsolete by tbe great leapTbe realm* Is commuted to nof the driving paceut at the same time recognizes that It must correctImbalances and improve the newarrangements, particularly byup" the (ommune system. There Is noat present that the ChineseIntend lo abandon their original plana to pcolonu Ihc leap forward for three years.Ihey have already had to relax pressures tomewhat. and It Is almost certain that they cannot re-establish and maintain either the rate of increase or the intensity of human effort attained

Indeed, the regimeurntier ofin attempting to sustain even the present pace o* the leaprincipal problem will be that of malnU!ning Incentives for the peasants and workers. The increases lnshould makeodestIn consumption, but this may In part be offset by continuing distribution difficulties and Imbalances In supplies. Moreover, the workers and peasanta will probably consider that such Increases In consumption as they may get are disproportionately small In rela* tion to the efforteing demanded of them 8uch dUialh.'aclloos ertl] be intensified

lien

ONP

Agricultural Production Production ot rood '

Industrial Production Production af llenvy Industry Production ol Usht Indu-lry

Intresaei in PredacUen-ISM over

COM-

aiaatatol (riven

at

Maw

O 80

aaal

/neremt. mt-iitt Our*

s

11

10

10

thr rcelrnc continues to make exaggerated agricultural production cUlms.

he rale of economic growth ta the neat tew years will also depend upon the ability of the planners lo redrew the Imbalances created8 The leap forward in productiondemands for transportation considerably Ii. excess o( the rapacity of the transportA large part of the increase in traffic consisted of coal and ore for the mushrooming steel Industry. Demand on distribution and Iransportabon will continue to be In excess of capacity for some time Recognition of this problem has led the regime to raise theol lotal capital inreslment devoted to transportation and communications fromercent8 to almcatercenthe goal for freight ear production9 Is just about twoalf tunes that achievedt will be necessary toinreslment In transportation at this Increased rateumber of years ta order to make up the existing gapo keep up with increasing demand. The rise In demandeeult of Increased productionIn steel and Ils rawncreased Interdependence of Industries, and Increased interdependence of city and countryside as the economy develops. The railroads, which are the prime means of transport, are planned to increase their performanceercentven i: this goal is achieved, which we believe unUkely. some transportation jams will occurequiring strict shipping

.ran.porUlien

ndustrial Imbalances are also forcing production cutbacks In some sectors of Ihe economy and costly shifts In investment. By the endecognition of the very poor quality of "native' and local coal, pig Iron, and steel ledrastic reduction inaadequacy of raw materiallor the modem steel program caused some drop even ta the production ot commercial quality steel In the first quarterwith the last quarterhe ca-iMdly to finish steel has lagged behind output ot crude steel, and steel output, restricted ta types and shapes, is unbalanced. Peiping Is concentrating ils efforts on modernising as well as csmandlng ils facilities, and there hasubstantial Increase in Investment In steel and related Industries at the expense cf other Industries Machinery output greatly expandedartly by selling up large production runs with little regard forbut ifie Industry has since beento limit Ils main effort lo Ihe new priority needs. This has resullrd in retooling and in cutbacks in production of many kinds of cqulprnent, thus restricting growth inover the rale obtained at the end8 These imbalances do not appear susceptible to quick or easy solutions and will persist In one sector or another as the regime presses for large Increases ta output

he regime will also have trouble InIts radically reorganised economicwork effectively, particularly the communes and the local governments which have been given increased authority andIn this the Chinese Communists will be handicapped by faulty statistical data and by strong ideological pressures lo plunge ahead regardless of cost and confusion,ng politicsheir economicwill also be further complicated with the Increasing complexiUea that accompany rapid economic growth.

espite these difficulties, we believe that Communist China's GNP will Increase during the pesod cf the Second Five-Year Plan at an average rate of aboutoear. ThU Is about one-third to one-half greater than the rate ol increase during the First Five-Year Plan, and will multotal Increasendercent2his judgment Is derived from theercent Increase we believe to have been achievedrobable Increases of aboutnd about seven toercent tn each of the three. Wethat these latter four years will be marked by consolidation of the unusual gains

he fast growth during the period of the Becond Five-Year Plan will be possible because an Increasingly large proportion of the ONP can be devoted to Investment. This can be accomplished because ot the rapid growth ot

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industry and the regime's ability and willingness to deny to the consumers allery small portion of the Increases InWhereas wc estimate that aboutercent or the ONP was devoted to grossInvestmenthe percentage probably Increased to aboutnd we believe the level will reach ate believe that the total volume of investment during the Second Five-Year Plan period will be approximately three times that of the First Five-Year Plan perlod-

8 pattern o^ funnellngercent ot slate budgeted Investment Into Industryate of nine for heavy Industry to one for light industry will probably continue for the next few years. Growth In total Industrial production during the Second Five-Year period will probably be aboutercent higher than the remarkableercent annual rate achieved. The most dramatic feature of iheay prove to be substantial increases in the output ol basic industrial commodities. Increases which would have been dismissed by Western observers as inconceivable before Ihe leap forwardor example, we now believe that Communist China may be able to raise production ofusable crude steel toons9 and toillion ionsompared5 million tons7 and an original plan goal5 toillion tonst must be realised, however, that In terms of variety and quality of finished steel, the industry will beInferior to those of Japan and the West. Moreover, not all branches of Industry will be able to expand at this dizzying pace.

While the regime will continue its stepped up agricultural development efforts, we do not believe thathe next five years agricultural production will Increase dramaticallythe remarkableerccnl increasehe amblllous goals for multiplying the output nf chemical ferllllxers. If met. would besuinckmt forive percent Increase In agricultural output. Some Increases inare probable as the programs forand better crop practices are Implemented nnd wasteful leap forward practicesThese programs, if carried out, should raise agricultural output2evelercentr about double thein the First Five-Year Plan. However, failure to stabilise the communes or anor unwUiingncss lo carry through some current programs might limit the Increase In output to possiblyuccession of bad crop years would confront the regime with graveowever, the regime could almost certainly maintain Itself Inand would be able to maintain Industrial growth, thougheduced rate.

Growth. If populationat the present estimatedercent annually. Communisthave moreillion peopleboutillion more thanThe Chinese Coramunislsthat the vastness of their populationasset ratheriability, and thatshould be placed on people asthan as consumers. Nevertheless,torowing population withliving standard from China'sland willajor problemregime.7 the regime launchedcontrol campaign, and although Itsubmerged in the leap forward,control programs still continue onand unpubllclzed scale. In theto alleviate population pressure, thewill probably have to resortprograms! however disguised, that willreduce the birth rate. It will also beto decrease net exports of foodIncrease Imports of fcrtiliter inmanufactured goods.

- Although theor this year may have ciuixd *cnous locale believe that their effect on total aatlcuttaral production for the year will bo slight

Trade. During the nextCommunist China will probablyforeign trade by an average of abouta year, generally In slep with Itsover-all economic output.will be Irregular, as difficultiesand In production affect theCommunist China's exports. Imports from

COMMUNIST CHINA * .

GROSS NATIONAL PRODUCT, RAILROAD FREIGHT TRAFFIC, AND PRODUCTION OF SELECTED COMMODITIES, COMPARED WITH THOSE OF SELECTED

BUDGET REVENUES AND EXPENDITURES

t

illion yuon

jeceo itt

' ] UMillll | |

countries were accelerated Ininanced In large part by nearlyforeign exchange reserves. At the end8 and through the first halfeiping failed to meet certain exportto Western Europe and for tome time refused even lo sign further trade contracts. Although some recovery In non-Bloc trade Is likely in the latter half of the year. It9 willropince trade with Bloc countries has Increased9 nnd long-term trade agreements with many Bloc countries have been concluded. Communist Chlci'i trade pattern willcontinue to jc oriented principallythe Bloc during thishinas major problem In foreign trade will be to expand exports sufficiently to meet the fast-growing demands of Its investment program. Minerals and Ught Industrialwill Increasingly replace agricultural products as exports.

ercent of Communist Chinasillion total trod* was with theercent with the European and Asian Satellites, andercent wtth the Pre* World. Thrcuoh lass communist China receivedfrom the USSR thon it exported in return, but the pattern hu been the opposite since that time, asChina has had to sqaeeic an exportfrom iu people. In February ISM the two countries signed an oeveement which calls for Ihcrovide Stbillion worth ofand technical awutancc for the building of It maior new factories In Commumsl China, in the0 throuthhebHtslctl toimilar value of foetU and .crrten. lo the USSR durln* the period No loans nr ennts are Involved In this anrcenvnl.

-Sec alio Appendix III: The Chinese Communis! Commune.

IH. THE COMMUNES AND THEotivation! /or the Commune Program. To Implement the new leap forward program decided upon Inhe regimeorm of organisation and control that would cut across the confining boundaries of the agricultural collectives andnit strong enough to generate Its own capital and utilize the available manpower with maximum effectiveness.6 onward there had been sporadic experiments In groupingInto larger units, and antrend toward suchew provinces In the springne such unit in Honan. subsequently named the Sputnik commune, was clledodel for the later commune drive. Theof the new form of organization were: (a) all the Agricultural Producers'(APC's) of one hsianrt (township! were combined; <b) the hsiang government was merged with the commune management and givenl virtually every activity, agricultural or otherwise, within Its area; (c) the residue of private ownership was further reduced by expanding the scope of coJlecttvl-ratlon; (d) children were placed In public nurseries or schc-ds and meals were eaten In mcsshalls. thus releasing the women from household duties to take part in the laborand (e) workers were organised along military lines and deployed to the fields or small Industries.

The experiments apparently convinced the party leaders that they had at lasteans of organisation which fully employed Communist China's laborwomen and even children and thewhich answered the economic needsby the leap forward undertaldnga.the Intensive drive to organise the country into communes was suddenly launched in

Ideological considerations almostainly also played an Important part In the undertaking of the communal experiment. The rectification campaign7 hadthat there was some feeling among Chinese Communist leaders that thowas losing momentum andtep toward communism was needed. By the middleheand optimism stimulated by the leap forward psychology were reflectedave of Ideological revivalism. The urge to move forward rapidly on the Ideological front found oil apparently perfect answer in the radical concept of Ihc commune. In one stroke the establishment of the communewould hasten liic achievement ofand even introduce some aspectsure

socelv Communis: Chin* would be In Ihe vanguard of Ideological advance.

oreover. Ibe eei rolbaOon of all polltl-ul. economic, and social authorityncle administrative unit and the militarised regl-menlallon of all the members would greatly ease the problem of con.lnuous surveillance and physical control of every Individual. The mass militia drive wlthlt the communes would abet this process The collective livingof the commune svould hasten theol the family, the only remainingthat could eompete svith the stale and party for loyalty Finally, the communalof care and control of the clllaen from infancy would permit continuous

lie strategic dispersal Implkaltoni of the economic and political decentralisation Inherent In the commune system may have also motivated Peiping. though probablyecondary eonslderallon. The Chinesepress has espUeitly stated that Ihe nation will be less vulnerable to disruption under therganisation should war come. However, this Is probably essentially an at* tempt lo gain additional support for awhich had been undertaken largely for other reasons.

he Record of the Communes. By earlyeiping claimedf the rural population had0 communes, averagingouseholds each. The available evidence indicates that the actual degree of communal organisation achieved by lhal time ranged from little more than thataper organisation at one extreme,ighlycommunal society at thepeople living In barracks, the children reared by the community, and food, clothing, and most other necessities supplied by the stale Byowever, few communes are at ellher of these rxlrcmc* Mast of the paper organizations have been at least partlyand some of the moie radical features of the advanced communes hove been modified following the CCP directive ot

Before the commune program was four months old. Its promoters wererop of stubborn problems. From theold forms were abandoned faster than new ones could be cerfccled. The result was considerable chaos In admlmstration,tax collection, and domestic commerce The Increased regimentation of the peasants and the additional demands levied on their time resultedrastic reduction offood crops (which In Communist China means substantially everything but grain andm of much traditionalproduction of clothing, tools, etc Even those who aie better fed must find It difficult to perform the long hours of hard workof them And though the maximum work day In tho communes at present Isto iwours, with eight hoursfor sleep, there l* evidence that at least Ui some caseshour work day to still required. Under these circumstances. It Isthat the commune program has generated extensive bilterr.ru toward the

Although there has been no wave ofrevolts across the countryside,mple evidenceubstantial part of the pcase-.itry bitterly resents the effect which the communes have had on their lives Many who dwell nearn-Communist borders have fled, someem at very great risk and with the knowledge that relatives or friends left behind would be subject lo severeUtters lorcUtlves outside Communist territory reflect this dissatisfaction wilhlife. But whatever overt resistance has appeared has almost certainly been crushed mercilessly. Other types olsuch as minor pUfcrage of messand withholding grain from the state have occurredometimes with theof partyut as the administrative machinery Improves, even thus become* pro-hl&llively risky

onspicuous failure In the commune program has probably been the system ofeehat Is. the practice ot distributing jnrt nf the commune member's Income In the form of mexshnll meals and other goods

services according tohe bumper crops of the fim halfed the rep me to believe that the lood problem had been solved and lhat lltherefore possible lo provide ample loodthrough communal messes while at the same time assuring maximum accumulation of surplus for ihe state. II appears thathile the peasants, on the average, were eating better under the free supply system lhan they were before. But then the slight Increase In consumption overlook the Inflated statistics or food production. Complaints aboul cold and tasteless food began lo beby complaints about too little food. Many communes closed their kitchens In0 and "allowed" the peasants lo esl at home. More recently, oftlclal spokesmen have staled thai commune members may withdraw from the nsesshalLs. The regime has also been concerned with ihe loss of Incentive which the Iree supply system haa entailed In the past few months it has had lo caution the commune cadres against providing: tooroportion of the member'she form of free supply, and recently Ihe issuance ol meashall tickets has been lied In wllh the type and quantity of work performed.

The original three-month "tidying up" campaign launched In Decembere still going on. and modification and consolidation ot the communes will continue during IBM. Many or the extreme practices have been sloppedumber of practices of the old APC's have been reintroduced. Emphasis has been shifting back to Incentive rewards, some subsidiary food production (Including hog raising) has been returned to tht Individual, and Inroads on the family system have been reduced The widespread Introduction ofcommunes has been postponed. Empha-sia on the mass aspect of the mllltla system appears to have been reduced.

Proipccti. These adluslrncnU do no* mean the end of the communes, however. The lop leadership is still firmly and expressly committed lo the belle! thaiural and urban, are the best way lor China to speed up lla socialist construction and bring

Ihe transition to communism We believealthough there will be many modifications of the system, including some tactical retreats, the commune will probably remain the bask form of organization for the countryside Forms and practices are likely to become more standardised and more bureaucratic amonc Ihe communes, and Incentive pay systems will be further developed- The present program of consolluallrrg communes Into largerwill probably conlimie. Urbanarc now being tested, mainly In Honan province, and some lype of urban commune may be adoptedationwide scale

n carryingommunal program. Ihe regime will face numerous and difficult problems. There win probably be costly blunders In planning and administration. The ceaseless and Ill-rewarded sacrifices will probably drive some of ihe peasants lo open revolt, bul such cases will be smsahedand wllh little or no publicity Most peasants apparently consider lhat overtto the commune system Is houeieea. passive resistance will probably be the re-time's main difficulty. However, pastshows lhat the regime has the oblllty to be flexible when necessary, and It has Ihe whole spectrum or totalitarian pressures and controls lo use wherever needed.

he commune program directly involvesillion people and entails drastic changes in almost every aspect of Ihclr lives. II Is the most audacious attempt In history to rapidly transform society. Although many of Ihe program's features may be changed, Pelping has committed Its prestige to the communal experiment; It neither wants nor can aflord to abandon ihc program In itsNational prideense ofwill work for the benefit of thebut ihe necessary, ceaseless pressure upon the people will probably result In athat Is. al best, snudglngly acquiescent Thisar erynm the "new Communist man" Iheupposed to create. Thla rsllure lo sUmulate enthusiasticwill probably contribute lo greater eau-'kin in tlie ruturc. Nevertheless, given ihencxlbitlly and controls, ll Is unlikely

that popular resistance will reach the point where the regime will have to chooseood bath or an abandonment ot theexperiment

iv. party pro bums

Porta Leadership and Cohesion. Although, we believe that CCP leadership Is atlU basically unified, there are indications that the unique cohesion ot the past quarterentury Is beginning to feci the erosion of time. During the past twoumber of Important new programs and theses appeared toopposition within the CCP leadership. These Included collectivization, "blooming andhe nature of "contradictions" in Communist society, rectification, and the communes. There have also apparently been divergent opinions concerning the pace to be set lor economic development and the degree of risk the regime should accept In pushing its foreign policy goals. In addition, thehas probably not been unanimous In some questions of Sino-Sovtct relations.

Mao Tse-lung was personally identified with many ol* the programs which causedin the CCP. To some party members, al least, his conduct of policy may haveerratic and unwise II'. ever, there Is no evidence that Mao was pushed when he retired as government Chairman. Wo believe it more likely that Mao himself took theIn resigning from his lesser post In order to devote more time lo his more Important post as party Chairman and to basic policy and Ideological matters. Moreover. Mao wasconcerned over th- question ofa clear order of succession lo the top party leadership post. Mao's position ofhas apparently not been challenged. He Is receiving far more attention andat present then Is Liu Shao-ch'l, hisas governmentao is still boss of the party, and wc bcilw that he will continue to be the dominant figure Incommunism.

he selection of Uu. already number two man in the party, as government Chairman Is probably designed lo confirm him a* Mao's heir to party leadership. Policy trends over the past two years appear to have beenIn line wilh Liu's views, and sev-eral men who apparently share these views have moved into Influential party posts,secretary-general Teng Hslao-p'ing. Chou En-lal continues to maintain hisas the third man In the party and as the principal link between the party and the government machinery."

If Mao should die or become incapacitated during the period of this estimate, the initial transfer of power to Liu would probably occur without challenge- However, the cohesion of the party might suffer, and the absence of Mao might cause theffectiveness, vigor, and its prestige within worldto decline.

The Party and the People. The CCPhave shown deterrriination to arrest any sag in the party's revolutionary vigor which might weaken the spartan spirit which the nation must maintain if Its goals are to be met. And the top leadership has been keenly concerned, especially since the object lesson of the Hungarian Revolution, that the CCP not permit Itself to become even morefrom the people. The CCP has sought, through various means, to preventrivileged "newlienated from the people These have included party rectification, the mass shipping of bureaucrats and parly activists to the countryside, themanual labor done by Mao and other leaders, and the sending of Officers lo serve In the ranks.

The party will probably continue lothe flexibility shown to date into maintain Its Identification with the people. However, the regime's programs have already alienated much of theand effort* to redress the situation will be hampered by the limited material rewards the regime can offer the people. Orcat steel produciion figures cannot be eaten, andizable percentage of economic return will probably not be funnclod Into consumption. It Is almost certainungry, exhausted

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populace will notlose sense of Menu-flcallcn with the patty.

he Party and tht-.oil. To meet iu ambitious coals. Communist China must rully utilise Its Intdlectuali and highly trained personnel, yet the majority ol these people, by the regime's own admission, ere non-Marxists and only lukewarm toward the CCP. These people are needed butilemma which has been evident In the regime'seflorts lo command their full sursport.

his need was one of the principal reasons which Impelled Mao to launchffort. in apparentthat the Communist system had won general acceptance In China andreer atmosphere would Induce the Intellectuals lo give the reeime more enthusiastic support. There was apparently considerable doubt within the party as In the wisdom of thiskepticism which proved justified when the Inteurcluels accepted Ihe CCP"sto air criticismsndto attack the foundations of the regime Itself. This resulted In their being attacked asent lo duly In the countryside, and subjected to olher repressive measures. Although the party still employs0 Flowers" slogan and has at least nominally rehabilitated some accusedisseems clearly one of only tolerating theand exploiting their skills.every effort Is bemg made toew generation of "red and expert"

The Party and tht Ethnic Minorities. The generally aggressive attitude which the CCP displayed In almost every phase of en-denvor In the past year was also reflected In Its treatment or Communist China's minority pcoplea Not only tn Tibet, butn Kansu. Binkiang. Tsmghau. and Yunnan, thepressures of the past year sparkedresistance lo what was ceeuddcredHan (Chinese) domination and an effort to destroy local customs andThe outbreak of resistance In Tibetfrom the -rumulatlve effect or successive pressures against tlie Tibetans' religious and political separaleness. and from the spark

IE

ot an Incident which appearedhreaten the Dalai Lama While the foreefulneas of the Chineae Communist rrspons* resulted from Ihe dlrecl challenge posed In Tibet. It almost certainly also reflected Pelping* concern for Its authority ininority areas ofChlna.

Il Is unlikely lhat the CCP willmoderate Its now heavy pressures,Ihey may be adjusted lo localIt is equally unlikely that minority dlseonlent will diminish, though It la doubtful that resistance forces will have Iheot^smlration. weapons, and foodto permit them lo mount more than scattered guerrilla operations in Tibet, the CCP will elmost certainly attempt lo destroy the position of the Dalai Lam*ibetan leader, especially if he presses Tibetan desires for independence. The CCP will attempt to maintain the facade of autonomy andfreedom, but will accelerate the pace of "reforms" Ln an effort to make Tibet an integral part of Communist China as rapidly as possible

Tht Party and the Military. RelattcnsIhe party and the mililary continue generally close;arshal Lin Plao was elevated to membership In the CCP'sbody, the six-man Standing Committee of the Politburo. Nevertheless, the creationodernised, professional military force has probably had some disruptive effect on Ihe unity of view which hu IradluonaUy marked relations between the perty and the mililary From the fall7 through the fallumber of articles and speechesby the Peiping radio and press criticised "some among the mililary" who had anmilitaryhe need for absolute party control was strongly-separatists" were criticised lo:lhal the "suddenness and complexity- of modem warfare bad made Ihe dual party/ military pattern of authorily In the armed forces dangerously inefficient, or for over-atrcaslnc the Importance of modem weapons and neglecting Hie "role ol the people" In war. Corrective measures haverogram of study of Mao's military writingse-

SECeTTT

SEPTET

lhal officers must periodically serve short periods In Ihc ranks. Such party/military difference* will probably not become acute, but the attempt torofessionally qualified military force thai will remain as fully responsive as In the past lo party control ts librly al times to lead lo differences between the party and military leadership.

V. THe MILITARY ESIABllSHMENI"

A. Ma,or Developments

There have been few changes of major significance In Ihe sire, equipment, orof Communist China's armed forces since our last estimate. dated. However, the over-all capabilities of the ormed forces to fulfill their Internal and eilemal (unctions have continuedesull of training. reorganlsaUon. the conscription program, and thetransition lo newer weapons. We believe that the morale of the armedood, although thai of Ibe air force is probably somewhat loweresult of lu poor showing against the Chineseduring the Taiwan Strait crisis. Army iroous are being used lo an Increasing extent on agricultural and Industrial projects lo help the leap forward program.

elieve lhat the air force has recently acquired some MIO-lOs from the Soviet Union. This is In addition lo an eailmaied increase ofn olhcr Jet aircraft strength during the past year. The number of lank-assault gun regiments ln Communistnfantry divisions Is estimated lo havefromix new submarines have been added lo the navy, bringing the totalhe withdrawal of Chinesetroops from Korea8 was probably based on propaganda and political considerations,esire lo reduce logistiche Chinese Communists probablythai their continued presence was nol necessary lo deter the Republic of Korea IROKI or the US from attacking. Urge numbers of Chinese Communist troops are

"See Appcndls I) The Chtiiriw Communist Armed Forte* sllli stationed close by and could be rapidly dispatched to Korea.

The Chinese Communists continue lo base their mililary effort primarily on the concept of large ground forces. The military program appear lo be emphasising the improvement of logistic support, mobility, communications, and fire power. At present there Is nrthat the Chinese Communis ts have started or Intend toasic ruorganua-tlon of their forces for nuclear warfare.some Chinese Communist militaryapparently are receiving training wllh nuclear weapons in the USSR. Soviet nuclear and missile prugress has strengthened Pei-plnga confidence in the growing power of the Communist Bloc, but It has probably alsoPeiping* sense of militaryupon the USSR and stimulated Pelpings desire touclear capability of lis own.

Some recent statements from Peiping. however, hava tended toown theof nuclear weapons In determining the outcomear, and have stressedand political factors. This Is probablyationalisation for the lark of nuclear weapons,eflection of confidence that CommunM China, with lis vast population and relatively simple economic structure, could survive nuclear attack. Morehowever. It may atsooviet failure to agree to the transfer of nuclear weapon* lo the Chinese Communist*

There has been UlUe direct evidence of ihe arrival In Communist China of largeof Soviet weapons and equipment over the past two years: except for ammunition. It Ls probable that such deliveries, while stillave fallen offthe Chinese Communlits have obtained from the USSR Increasing quantities ofmachinery and technical assistance for the development of their own munitions industry. Wiih this help, Communisl China has been able during the pail two years lo undertake production of Sortct-type artillery. Jet aircraft, submarines and escort vessels, trucks, rind electronic equipment. Anproportion of the component part* lor

E OffET

these items Is now being produced

cost of maintaining such aestablishment and of developingIndustry continues to be aon Communist China's economy.development, of course, canthe military and nonmllitoryas Ihe country's Industrial complexrapid and significant modernizationmilitary con be expected. Theallocated for national defense Inbudget ishan lhats the totalaboutercent, the Increase lnsector does not appear to Involveshift in the allocation of nationalbutetermination toli, both the economic and

B. Outlook, for tha Military Establishment

Communist China's military capability will almost certainly conUnuc lo Brow over tho next five years The transition lo more modern weapons will continue. However, Ihe rale of modernization will be moderateof the demands of Ihe over-all economic development program on Communisl Chlnr.'s resources and the limited pool of trainedpersonnel. The ground forces will be better equipped and trained, although their numbers will probably remain about the same as they are today. The ground forces will be supplementedarge organizedesult of conscription and mllltlahe concept of the mass army will probably still prevail, but modernisation will have led to Improvements in tactics and

The offensive and defensive capabilities of the air forces will probably have Improved considerablyoth the air force and the naval air arm will have more advanced alrcmft (probably Including someeapons, and electronic equipment,acklog of qualified air crew members and ground technicians by that lime. There will probably be considerable progress In developing an all-wealher fighter capability, and Communist China's airsystem will have become substantially more difficult to penetrate.heair forces (CCAF-CCNAF) willhaveircraft operational> increase of. The Chinese Communisl Navy will Increase in size and Improve ils capabilities especially for long-range submarine operations andefense. The navy, now largely concentrated north of the Taiwan Strait, will probably be deployed more evenly along the China coast. Including small units in the Taiwan Strait.

Development of Ihe munitions industry will receive considerable emphasis over the next five years, and we believe that there will be substantial growth in Communist China's capability to assemble or produce complex military equipment. However. Communisl China will continue lo be heavily dependent upon the Soviet Union. Communist China will probably expand considerably Ils present limited efforts In basic research andbut will remain heavily dependent upon the Soviets for technological assistance.'*

Missiles and Nuclear Weapons."China almost certainly desires to develop an independent nuclear weapons capability, and probably haseaponsprogram. However, Communist China will almost certainly not haveuclear weapons production capability of its own"

Communist China probably will not haveignificant native guided missile program during the period of this estimate.

Appendix II: Chinese Communist ScienceTechnology.

"Bee Slno-Sovlet seeUon,es.iscussion of: 'at Chinese CommunUl and Soviet atlilodc* wllh respect to Chinese Communist acquisitionuclear meapons capability, andthe prospects ot the Soviets at unaChina nuclear weapons or station! nr their own on Communistory.

Development of Nuclearby rourih Countries: Likelihooduly 1SW. esUmnUs tpnracraph lai thai Communisl China, wllh some Soviet support, "will probablymall Independent nuclear weapon capobllit* wllhln the nexlears."

The USSR will probably provide,lst the Chinese Communists lo produce, rcletlvely un-sophistlcalcd missiles. During the period of this estimate, Chinese Communlsl forces will probably have one or more of the following types of missile* of Soviet ueslgn: surfacc-to-alr. air-lo-alr. olr-lo-surface. short-range sur-face-to-sutfacc.

e believe the chances are better than even lhal an t'.tempi will be rnade to launch an earth satellite from Chineseory during the pertOu of this estimate. Chinese Communist spokesmen havesuch an Intention, and Moscow and Peiping probably believe that considerable political ond propaganda gain would accrue from such nn exploit. Any launching from Communist China will be the direct resull of Soviet participation. With Soviet equipment and guidance throughout the project, the Chinese Communists could probably launch an earth satellite in about one or two years after taltUtkm of the project. The USSR itself has the capabillly. with about six months preparation, to place an certhin orbit from Chinese CommunistThere Is as yet no firm evidence of the initiation ot any such projects.

VI. RELATIONS WITH THE COMMUNISThe Sino-Soviet Partnership. Theears of alliance wilh Moscow has brought Communist China considerable gain: Soviet support has afforded II protection and enabled It to become tbe strongest indigenous power In Ihe Far East. In many aspects of theCommunist China over the pestyears has emergedearly-equal partner ot the USSR wllommunist world. Theence Is sUllln Moscow, but this appears to operate through discussion and persuasion rather tnan by cxcrcL-sc of authority or control. Theof Peiping's alliance wilh the USSR remain Arm: II shares with Moscowommonutual rieisendence. and. olmostutual realisation of the grave consequence*ollapse of the aUlanee would have for thm ant! for world communism. Thiscontinues to mark many of the policies of the two countries.

owever, agreement onucsnot prevented the growth of divergentand interestsecade's time has brought change in the context of the Sino-Soviet reUllocishlp. Communist China'sactlvUsre. and ambitions have become worldw.de. There has been continuity and cohesion In CCP leadership during the decade, considerable upheaval In that of theParly of the Soviet Unionain thaw has occurred in Soviet society since the death of Stalin, while the Chinese Communlsl outlook In the past two yearscome even more rigid. The pcwl-Stolin USSR hasroader and moierange of tactics In dealing wilh the West.

ver the past three years there have been various differences between Communist China and the USSR concerning de-SUIintaatlon, Soviet "great powerarious points of Communist doctrine, and the degree of risk to run In dealing with the West. Strains were especially pronounced in the past year's unprecedented sharpness and fronkness of Chinese Communist ideologicaland of Sovietcommunes and ihe best paths toSome of these differences have probably been resolved and some papered over, but the Moscow-Pelping relationship Is becoming Increasingly complex and theof mteresU probably more difficult.

onsequently, we believe that dincrenccs of Mew between Moscow andan- more likely to grow than to diminish over the next lew years, we also believe that while Moscow welcomes Communist China's Increasing contribution to Bloc strength. It will become Increasingly concerned over Die long-range Implications of Communist China's growing power. It Is probable that theof rreoncUIng differences between the two will Involve more compromises on the part of the USSR than in the post. Nevertheless, the Sino-Soviet alliance will almost certainlyfirmly united against Ihe West, wilh the

SEf>rrET

retaining Its senior position In trie

umberofdltTcrenceswUl probably arise during the period of this estimate Irom the general question of Communist China'sas on Ideological and political force within the Bloc. Wc do not feel, that Chinese Communist leadership will attempt to moke Mao's doctrines, or China, uppermost In the Bloc. Nor do we believe it likely that theCommunists will attempt to take sides In any disputes within Soviet leadership. But. regardless of any design on the port of the CCP. Communist China Is emergingival center of Communist Ideology, andwill almost cerlalnly accompany lis further growth of strength and scU-confl-dence.

Disagreements will probably arise out of the differing Internal requirements andof the USSR and Communist China. The very fact of Chinese departure fromSoviet patterns will have the effect of diluting the authority and cxcluslvoness of Soviet leadership. Any accompanyingCommunist assertlvcness will aggravate the situation. And any Chinese Communist success will make It even worse. The com-munes may continue to be an important source of such dimcultles. even though the past year's frictions on this score appear to have diminished.

We believe that nuclear weapons questions will constitute one of the most difficult areas for Slno-Sovlet reconciliation of interests. Proolcms concerning Soviet release of missiles und nuclear weapons, and of the amount and kind of Soviet assistance in Communisl China's missile and nuclear weapons research and development programs will be Issues of considerable delicacy and hard bargaining,

Wc believe lhat Soviet ond Chinese Com-munisi Interests wllh respect to nuclearnre In some degree lncom|>ntiblc. Tlie USSR is almost certainly reluctant lo see Ihe Chinese Communists acquire nuclearunder their own control. The Soviets probably considerhinese Communist nuclear weapons ca|iablllty is unnecessary.

since Ihc Soviets almost certainly rely chiefly on their own capabilities to deter the US from using nuclear weapons In the Far East. Moreover, the Soviets probably also fear that If Ihe Chinese Communists were lo ollnlnimited nuclear weapons capability. Iheydesign oro nuclear confllel In the Far East which would involve the US. Depending on the course of this conflict, Ihc Soviet leaders might bewith the dilemma of whether lo come lo Communist China's assistance at the risk of general war wllh the US, or to stand by while the Peiping regime was gravely scl back or even destroyed. The Sovietsubstantial Chinese Communist nuclear weapons capability would detract from Soviet leadership of the Bloc. Finally. Ihey may even consider thatapability might, over the long-run,hreat lo the USSR Itself.

For Its part. Communist China almost certainly wants nuclear weapons andthat Its chances of developing acapability would be seriously impairedest ban agreement should bo reached. Pelping has echoed the Soviet propaganda position on the nuclear test ban question, but has so for refrained from discussing whether or nol it would Join an agreement and permit the establishment of inspection facilities on Its territory. If agreementest ban eventuates. Pelping might be unwilling toHowever. Pelping would probablylo Soviel pressure to Join, especially if In return It could obtain greater international recognition from the West and possibly some additional Soviel assistance lo compensate for Communist China's Inability to conduct nuclear testa. Neither Moscow nor Pelping has vigorously pushed the proposal for an Asian atom-free -one, revived by Khrushchev Inerhaps bolh partners now regard the proposal primarily as agnmbll ngair.il the West.

There Is no reliable evidence regarding ihe presence of nuclear weapons InChina. Wc believe ll liighly unlikely lhat the Soviets hove transferred nuclear weapons to Chinese Communist control. It

I* possible, nowcver.er hare prorkkd Ihc Chinese CommunlsU wllh some surface-lo-sur!*ceto nuclear use and oi sufQcient ranee tn reach Taiwan. Itven possible lhal nuclear warheads for IIiokc mtollcs may be stationed on Chinese Communisl territory, but If so Ihey are almost certainly in Soviet custody. In any evcni. unless barred by en effective International agreement, nuclear weapons are likely ton Communisl China within the period of this estimate, although almostunder Soviet custody.

There will probably also be Important differences In Slno-Sovlet views concerning the West. The Chinese Communists may assess Western power less realistically lhan ihc USSH because of Iheir inexperience in moderneemingly strongermotivation to push world revolution, frustration at not making dramatic foreign policy gains, and the fact that Ihey have not cunlronied the West In Its principal theaters ol power. ConsoquenUy. occasions may arts* where Pelping may be prone lo push higher risk policies lhan Moscow mighl feel prudent In addition. Ihc Chinese CommunlsU'toward the US may remain more intense Ihon ihe Soviets', and Pelping may have more doubts lhan Moscowar wllh the West can be avoided. The Chinese Communists may feel that, under certainrns tanoviet detente with the West would be damaging to Pelplng's Interests.

Other differences will probably also be present. With respect to economic relations, Iho Soviets may be Irked by the necessity to put up with Chinese delays and confusion In repayment and to accept some Chinese goods of limited utility in exchange for capital goods in short supply in the USSR. The Chinese CommunlsU may be dissatisfied at Ihe rollure ol Ihe USSR to gram additional credits. Some rivalry between ihe Sovleu and the Chinese Communists may develop in their economic oflenslve ln the urvkrdrvclopcd countries. We do not anticipate thai Ifle-llmv* or much consequence will develop eon-cerning respective Chineae and Soviet roles In Ihe Chinese-MongolUrn-Korean borderlands.

or guidance lo Communisl parties In the undcruevcloped world Mao's drain might lessen the CCPs status, but would probably nol algniflcanUy change Slno-Sovlcl relations.

believe thai Communist Chinaan increasing influence onpolicy and Communist Ideology overseveral yeurs. To Ihe extent matIhc emergence oT an aclual rival.willautiously lo minimiseInfluence within the Bloc. OnChina's side, gradual reductionon the Soviet Union will givemore freedom ot action.assertiveness in internationalprobAbly continue and IU outlookremain more revolutionaryHowever, bolh partners willrecognize that their problemsinevitable consequence ol ihe allianceand thai there ta no feasiblemaintaining the alliance In essentiallyform Over the next five years,the main effect of these difTrrcr.cnan increasing nerd for the two countriesaccommodations lo each othereakening or ihe

VII. RELATIONS WITH THE NON.COMMUNlST WORID

r Trends

Tibetan revolt and thewith India, Pelplng's radicalthe Taiwan Strait crisis, andIn relations with Japan have hadeffect, particularly In Asia,the carefully cultivated ImageChinaeaceful,lolcranl nation. Throughout AsiaIncreased apprehension ofstrength and In ten lions, andthe admiration and sympathy whkh ilhas been lost.esult, theare now more circumscribedIheir foreign policy objectives,relyreater extent uponand fear.

SE

The shiftore truculent and militant foreign policyBo have been basedixture of confidence.and miscalculation. The confidence of the Chinese Communist leaders probablybased in partelief that the West was seriously divided in Asia and generally out of tune wilh the trend of events in the area- More importantly, they had gained confidence from recent Soviet advances tn science and weapons technology and from their belief that the Bloc was rapidlythe West In economic strength. Theirprobably stemmed fromwith the lack of tangible foreign policy rewards which Communist Chinas leaders apparently believed were due their country. They probably also believed that the Bloc's political gains In recent years had not kept pace with the marked improvement In Its power position. ThU assessment might well have led the Chinese Communist leaderselief that an increased exploitation of this power, even Ifwere no* actually employed, would further Communist China's foreign policy objectives.

M Communist China's leaders seem to poorly interpret the developments and trends In the non-Communist world. Their views are clr-cumscribed by Communlsl dogma and by the fact that very few of them hare lived or even traveled outside of she Bloc. Most Chinese who have had extensive contact with the West are generally suspect or lack influence Inpolicy. TheCommunist leaders probably miscalculated Chinese Nationalist lORC) morale and capabilities and theUS-GRC response lo their militarytn the Taiwan Strait. They also appear to have been surprised and disappointed at world reactions. They probably misjudged how the Japanese Government and public would react to their efforts lo use trade as aweapon, and how the Indianond public would respond to Peiping's attack* on India over the Tibet Issue. They appear also to have overestimated the extent of the animosity of the ex-eolonlal countries toward the Western Pcnvers.

Communist China continues lo view Ihe US presence in Asia as the principal obslaole to its own ambitions. Consequently,foreign policy is directed msinly toward weakening the position and influence of the US In Ihe area. The Chinese Corr.munlsls appear to believe that US political, economic, and military strength is overextended and that frequent opportunities to exploitpoints in the US position will arise or can be created Despiteesire for friendly relations, their overwhelming antagonism toward the US has led the Chinese Communists to place the US outside Ihe pale of "peaceful coexistence"on terms that wouldSfrom Asia. This attitude. In addition to Its dramalle manifestation during theislands crisis, hadajor motif in most of Peiping's recent foreign policy movea

minalien of the GRC alsoigh priority objective. Peiping's attitude is basedelief thai the continued existence of the GRCational affrontotential threat, hampers the expansion of Peiping's international influence, and la the main symbol of US determination to resist Peiping's advance In Asia. The Chineseprobably calculate that the short-run prospects for eliminating the GRC are less than Ihey had estimated before last year's crisis In the Taiwanhile Iheyhope that their negotiation offers and their propaganda will have an unsettling effect within the ORC and on GRC-US rela-tions, it is unlikely that they expect major immediate gains from these political moves. They probably view their long-term prnspects with more hopefulness, probably Ulmatlng that there willeterioration or thenternational position, some change In US policy, or an Internal collapse of the ORC.

In Ihc Asian area, Communist China seeks lo play lo advantage the ideas of common Asian Identity and common problemsfrom Western colonial imperialismPeiping faces serious problems In the area, and Use gains It has achieved during Ihe past year were probably more than bal-

anted by Ihe setbacks. Peking's problems are largely due lo the wowing dUTkully ofplaying the dual roleseaceful, friendly Allan neighbor ready lo lend ahand, and of an ambitious, powerfulnation.

robably Ihe most BlBnlflcantrecenldcvel-onmen's In Pelplng's relations wllh Asian cDunliK* concern India and Japan. There hasonsidcinblc cooling of Sino-Indian relations over Ihe past year or twoesult of divergencies in Ihc outlook and interests ol ihe iwo countries. These relntlons have been badly strained by the Tibetan revolt. Although Ihe Chinese Communist leaders un-doubttdly hope that India will eonllnue lo use Ils influence lo promote wideracceptance or Communist China, the importance they attach lo the alllludes oT Indian leaders seema to be decreasing.

apan Is clearly one of the Bloc's major political targets. Pelpingrosperous and democraticaligned with the Wertival economic and political power and as the principal base ol the US militarytn Asia. These considerations, along wllh sensitivity over Japans lies with Ihe ORGWJudgment of Japanese alllludes. were probably rear.cris.ble lor Pelpmgs decision lo break with Japan over trade matters9 The Chinese Communist leaders apparently nrc willing lo sacrifice possible shorl-run gains in pursuit of their major goals of weakening Japan's nllgnmcnl with the US. They appear to be seeking the downfall of the Kishlby playing upon the Issues of trade wiih Ihe mainland; Japanese senslUvlly to nuclear weapons, rearmament, and war; and fear of domlnailon by the US. In this effort, Pelping Is assisted by the activities of IheCommunist and Socialist Parties and various Japanese peace and friendship fronts

M, Pelping is also attempting lo Increase lis Influence throughout Ihe underdeveloped areas. During the pail year. Communist China has expanded Ils propaganda, economic, and cultural activities In ihe Middle East and Africa. It galnce> recognition from Iraq.and Sudan, and ll iccognlxcd and ngrreil lo extend -omr mililary aid lo the

Algerian Provisional Government. Althoughn American country recognises Cora-munut China. Pelplng's trade andcontacts and subversive aeUV.ly In lhat area have increased sharply. In addition, the Chinese CommunlsU appear to have acquired an Increased role in Ihe guidance of Iho Latin American Communist parties.

B bob'a CWopmanU

China's foreign policyhave become more sober and defensiveresult or the setbacks of Ihe past year.the .Chinese Communistview the future withand optimism. We believewill continue to be frequentor Chinese Communisl impailcneeas an acknowledged major power.lhal the Chinese CommunlsU willgain this objective principally bysubversive means. They wUI alsotrade and aidut thisprobably remain restricted andof economic limitations. However,cm nonmllllary means will notIhe use of force to exploit someopportunity or to respond to somethey might Interpreterioustheir position In Asia.

China has profited frombetween many of the formercountries of Aale and Ihe West.leaders ere finding It Increasinglyto capitalize upon the nationalisticIn the area and to camouflage the di-

SEf>rTET

Interests ol Asian nationalism and of communism. In this illuallon. the Chinese Communists may. in some instances,place leu emphasis on maintaining good relations with the governments and leaders now In power ond more emphasis uponleft wing or Communist movements. While the "peaceful ccolstcnee" line may be played down. Peipingot Ukely lo reverse abruptly Its policies toward neutralistand It will attempt lo repair the damage to Its relations with these countries,India

Peiping will probably not changeIts adamant position toward the present Japanese Government, unless the latter makes some major concession, such as diplomatic recognition. The Chineseprobably regard tht Korean unlfsca'.lcn Issue as relatively static. We believe that they will continue to reject Western proposalsKorea, but will probably not Initiate, directly or Indirectly, major military action against South Korea. Communist China's relations with Indonesia have Improved In the last Iwo years, largelyesult of offers of aid and exploitation of Indonesian suspicions of the US and the GRC aroused by Iherebellion. Peiping will probablythese lines of action. However. If the Indonesian Government makes serious efforts to curb the Influence and activities of the Indonesian Communists. Peiping might place lets emphasis on maintaining cordial relations with the Indonesian Government and more on support of the local Communist movement.

There is little llkcllhcod of any significant change in Chinese Communist attitude and policy toward the US. In view of the UScommitment. Peiping will probably not attempt to seise by force Taiwan or the Pcng-hus. On Ihc Other hand the Chinesewill almost certainly not let the situation In the Taiwan Strait area remain quiescent Indefinitely. An invasion of the major offshore islands is unlikely, at least during the next year or so. unless Peiping comes to believe lhal US determination to help the GRC defend the Islands has weakened. The Chinesewill probably continue sporadlapressures In the area, such as shellings and occasions) naval and air socUcs. The chances of some kind of major military prob-Ings in the Taiwan Strait area to test US In ten lions will Increase as lime posses. An allack ogalnsl one or more of Ihc smaller Nallonullsl-lield Islands is possible al any lime.

eiping Is currenUy charging that in Asia the US Is concentrating its "aggressive: efforts In Laos. Cambodia, ond Vietnam, and may demand further Internationalof the IBS* Geneva Accords on Indochina. Laotian action against rxro-Coramunlst groups and the Lao Government's more openwith the US have prompted the Chinese Communis Is to make thieotenlng statements and to demand the resumption ofControl Commission (ICC) activities in Laos. Peiping and Hanoi will continue their political pressure on Laos and might take more forceful action, such as military pressure on the borders and relnsUtullng guerrillr. warfare by the Communists in Laos, if they thought their assets In Laos were seriously threatened. Peiping undoubtedly views with satisfaction the foothold It has gained In Cam bed laesult of iu aid program.recogniiion of Peipingnd the recent exploitation of Cambodia's disputes with Vietnam and Thailand. The Chinese Communists propably plan to continue their present tactics In an attempt to consolidate and expand these gams. lfM. The Chinese Communists probably do not foresee any satisfactory short-term solution to the Vietnam unification problem, but forpurposes win keep It alive. They will continue lo iirvti-:ihcn North Vietnam, and lo encourage the t; srth Vietnamese lo expand their subversive.inabilities In the south. If the dispute wild outh Vietnam over the Para-cela flares up ap in. Peiping may use force In that area to lawts claim to sovereignty.

VIII. COMMUNIST CHINA3

ommuni- China3 will haveahTVcuH live years and will atlll be facedast number of problems, but will nlmosl P'i iinly be Communist, powerful, and hostile lu Ihe US The enforced pace and

BECJWTT

will have caused considcrsiblc public disaffection and occasional local uprisings, which In lum wll) have caused the regime to modify certain of Its programs ond pressures. Nevertheless, tlie CCP will probably have been reasonably successful In Its efforts to discipline the national energies and to achieve arate of economic growth; theorganization of society and the forcedf industrialisation will probably have succeeded well enough to have become fined features of life. Ertueulloii. science, andwill have made considerable progress. However, in spite of Communist China's achievements, lis national power will remain far less than that of the US or the USSR.

ommunist China's IntemaUonal stature will have grown, and pressures will hovefor admission of Communist China Into the UN and Into other InternationalHowever. Communlsl China's truculcnce and xenophobia will probablyto hold II somewhat more apart than the rest of the Bloc from the world, and non-Cum-raunlst Asians will almost certainlyreater fear of Communist China than now exists. Communist Chin*'a alliance with the USSR will not be basically weakened, but thereood chanceautiousdly will probably both be restraining Peiping's for-elgn policy assortiveness and limiting lisof Peiping's efforts to acquire annuclear weapon capability.China may behrow its weight around, and couldhronic threat to peace.

THE CHINESE COMMUNIST ARMED FORCES

Ground reret*"

uring IBM the Chinese Communiststo Improve their ground forces, through rwgaraJatkm and rrsedfrrusalaon, and through Improved training andhe reorganisation programs have continued the trend which began4 to Increase supply and supply facilitiestactical units and In administrativeTne transition to newer weapons has also continued.

ver the past year several programs were Introduced which were Intended to raise the level of military proficiency in the officer corps, to tighten the bonds between officers and enlisted men. and lo ensure thoroughindoctrination, particularly ot thosewho have tended to regard themselves first as military men and only secondarily as Communists. The long-term result willorps or officers better qualified professionally and probably more reliable politically.

Although no figures have been announced, it is believed that something lessen Inge group were called Into military service this year under thersrearmm. The majority of "this group probably wereears oM and, as tn previous years, overercent are probably destined for Ihc ground forces

The militia program was given greatduring the Taiwan Stroll crisis8 and the concurrent Institution of thesystem. Under the slogan, "Everyone a

Table,V

illions joined the militia, whose total strength is claimed by the Communists tohird of Communist China'spopulation However, we believe thatmall percentage of this vasthas received actual mllltaiy training, and even fewer are armed. Probably0 have undergone some rudimentary military training. The backbone of Iheconsists orx-servicemen. Otherwise, It is an amorphous paramilllary organisation, consisting largely of uneducated peasants It does not contribute Immediately to the offensive potential of the Chinesearmed forces. It Is capable, however, of aiding tne armed forces and security police In the maintenance of Internal security and alsoool of organised and partially trained personnel capable of bring absorbed quickly Into the armed forces.

he armed forces Increased theirlabor" programndoverillion man days In support of the nation's agricultural and IndustrialThks figure Is well over twice the number ef days donated by the armed forces in9 program calls for one or two months Ubor annually by each miliury unit. In which every raTlccr andoonsiderable portion ofservice tt now being spent in political Indoctrination, voluntary labor, and othernot designed to Improve military skills, but such programs arc coordinated withtraining and do not Interfere seriously with the over-all training program.

27

Armies

CHINESE COMMUNIST OROUND FORCES

Uniti

30

Strength

otal -

00

Infantry

0 SI0

Infantryrtillery Regimentight and medium nekl artillery piecesediumA battalionight AA piece*A machineT battalion

m ATank-assault gun regiment'edium tankself-prcpeued assault guns Armored

fril medium tankseavy tanks gguns Airborne Cavalry Artillery Field Artillery

ieces upm Rocket Launcher

m multiple rocket Uursehers Antitank

T guns Antiaircraft

14 light and medium guns fl ight and medium guns Public Security

TOTAL NUMBER OF DIVISIONS

i iInclude! support and mlicillaneeue element* not Uievn in this Table.

'Ta date tl of tne IM Inlintrr SlvUMfu axe betlesvd to haw ine tanh-aoaaM sun rrjimtnL .in.

Hon. the sewnd foreea arc MMeved toeenMr of psvSUe eeeerltj and arUUerv CivMoni net

en lifted, andndependent refUnenU tne ledlnf arUllcrj.Tarry, tank, ensjneer.

mnlec trannpert, andounted for purposes ol eomparlwn or measurement ot one divtstco rtrerilh. svr eonalder. on this

Dasli. IhM the Chinese CommunliU have an estimated total of IIS combat dIvMlens

SEC

6 Air Foecei

ft. The Chir.ce Communist Air Force (CCAF) und Iheommunist Naval Air Force iCCNAFi together ere estimated lo hare0 iieraonnclircraft of nil type* In Durational unlla.et".'* Their equipment, training nndere orlenlcd toward air defense and tactical support opera Ikms The air forces arc organised Into bomber; fighter, attack, and Iran-port unlU. and operatearge complex of air bases which would permit the luunchlng of attack* from many points along Communist China's borders. While iheir fighter unIL* hnve nt presentimited of-rrrwlw and defensive eajwhlllly as demon-si ruled by Ihe recent Taiwan Strait crisis. Ihe Chinese Communist Air Forces continue toignificant air threat lo Asia

ir Interruption capability is limited by pour pilot techniques,hortage ofOCI rndars ond airborne Intercept equipment, and by only fair standarda In ground controlled interception procedures. Tlie Taiwan Strait crisis pointedumber or vrlous weaknesses In Chineae Communist fighter unils. They were shown le lack ag-greN>|reneaa. air discipline, and eventration. In combat, they conaUiently failed lo extract maximum performance from their aircraft and displayed faulty range estimation and uncoordinated control movements whichIn poor gunnery. Fighter capabilities are also limited by Ihc fact lhat the CCAF at present possesses only aboutail-wealner

"Present CCAF-CCNAF total aircrafta follows:

Owmllenal

Jel

piston

Jet UahlLIsM Bomber/TiietleBl'

Und Dated

Phtmi Mrdlorn

Flalnn

Jel

Other

In neldltlnn then- nr*ircraft in noil-nperntlonaiterate, or obso-lc*cent fighterand FI and la believed toery llmllrd capability In ull-wealhere believe lhat some MIG-lSa liare recently been given tlie ChineseThe nb!Mv of the CCAP lo support groundol knownapsi*robably being developed through oji-rnillonnl training

he Chinese Communisladargenerally follows the pattern ofntegra led Into It. and serves a* an extension of this network. The greatest dcrully of deployment Is along Ihe coastal area, wllh coverage extending Inland In some arena as fariles. The rodnrin tho network Include* Snvlrt, ruiUve ailneae Communisl. and lypes whkh arelo be modified and/or improved from original WorldS and Japanese sets left In China. There hasefinite trend toward higher performance radars both ihrouch Increasing the performance of the World War II types, and through Ihc iniroduc-Uon of Sovici lypes and native ChineseseU, such as CROSS SLOT. These higher performance seU now represent about half of tho total EW/OCI type radars and Ihe proportion seems lo be steadily Increasing,arked tncrrase In ihe number of CROSS SLOTa being noted. In terms ofand tracking, the Chinese CommunlsU are believed to bear with the USSR, although hclghlflndlng Is not as accurate. In general, due lo the very small number ofhclghlflndCT radars known lo be In Communist China. Against multiple raids and of en ilve tactics designed to confuse, ihe Chinese Communistadar network would probably deteriorate rapidly. While the OCI capability Is Improving, It sllll falls lo match Soviet performance. The Chinese CommunlsU are Improving steadily andnew native equipment fairlyHowever. It Is unlikely thai Ihey will overtake the SovleU In over-all syslrm per-tormonce. although the gap will be reduced.

esult of Ihe high tosses suffered In the Tnlwnn Slrall crista. Pelping has taken steps to improve nlr force training lhal should resull In on Increased level of eflleleiicy. The

SEC,

of CCAF training however, remains well brlow that of Chinese Nji.jnaiiii. US. or Soviet forccs.

C. Novy

principal strength of UseNavy consuls ofubmarines All of thes, vessels,exception ofubmarinesCommunUt China, were transferredSoviet NavylfM During

IMS. unlU of tne fleet were atmore often and for longer periods ot limecviously.robable increase a. operaung efTectlvcncas.

Chinaignificantprogram wlih large-scaleassistance from the Soviet Unionall component sections wtreIn the Soviet Union for finalChinese CommunUt shipyards.of parts are now being produced probably Including plating, piping and wiring for hulls and deckhouses, bul the Chinese continue to be largely dependent on the USSR for mostelectronics, andccFive classes of new ship comuuctkei. all based on basic Soviet designs, have been Identified. By'far Ihc largest and mostoitant of these ships are the "W" class(SS) and theclass escort vtsmUther Identified newincludes "Kronstadt" class submarine chasers3 class fleet minesweepersndl" class motor torpedon addition to naval ships, there are Increasing numbers of oceangoing merchant vessels being construe led in CommunUt China.

THE CHINESE tXWMtTNlSTand< inducing UU

naval aui

Unclwllne lis FT.

IDE. 2TPC>

Mine

Air. phi

APPENDIX II

CHINESE COMMUNIST SCIENCE AND TECHNOLOGY

China's acute shortage otscientists and techniciansajorIn Its drive for industrial and military might. The Chinese Communists attach great Importance to scientific and technological progress, and in Iheir official doctrinesresearch and development.heyyear research andplan and have increasedeach annual budget allocation Inrt of the plan. Thus far, however, littleresearch has been done. At this slate of developrnent. the time and energy of most of Communist China's few qualified scientists is being devoted to immediateneeds arising from Communist China's effort to speed up mdustrUlrsatlon, increase agricultural production, and modernize the armed forces

lte regime Initiated anprogram to indoctrinate the scientists nnu to popularise science. The regime Isto increase its control over the scientists, particularly those who are Wcslem trained. In order to make party control of research more palatable lo theew well-known and respected scientists were made party memberso popularise the science program, the regime Is promoting the establishment of so-called researchnt focal government levels. In communes, and In small Industrial plants. Recently, there hasast extension of education by day. night, spare time, ond correspondence courses. Innumerable "universities" andorgans" have been set up, but becausehortage of qualified teachers we believe most, if not all, of these activitieselatively low technical level.

As ofutotalollege graduates In all fields, Communist China had ann scientific and technical fields. Of these,0 persons probably arc engaged Inactivities In Communist China'sestablishments and universities.onlyrc capable ofresearch projects, the remainder being technicians, research assistants, and trainees. Of, onlyre capable of planning and carrying out researchto the quality of work done in the West. Onlyold scientific anddegrees at the doctorate level,mainly In. Included in thisarehinese PhD's who haveto the mainland from the US and other western countries since the Communist takeover.

Undergraduate training8 was poor, and despite the expected large Increase In college graduates, the rate of expansion of the research force, In terms of well qualified scientific rersonncl, will not be great du-!ng the period of this estimate. The Increase3 In researchers over and aboveresently capable of undertaking research will probably be. These new scientists will be advanced-degree (Kan-dldat) level, trained both In Communist China and In other Bloc countries.

APPENDIX

THE CHINESE COMMUNIST COMMUNE

Chineae Communist communeadical system of reorganizing; society Into giant, semUutarkie cells enulling the highest degree ol regimentation of human life that has been seen In modem times. IheIs designed to simplify and unify local administration and to provide an effective means of exploiting Ihc labor potential of the countryside. As parly Vlec-Chalrman Liuaid, oni, knows lhal the people's communes arc no longer simply organisers of production among the propie. They are organisers of Ihe life of Ihe people."

Background ol Communaluatton. The agricultural program of the Chinesehaseries of drastic changes since the regime gained control of the countryhe first stage was the violentof land reform, which2 had largely stripped the landlords and the more wcll-lo-do peasants of their Und and parcelled it out among the poor peasanu. Mutual aid teams quickly followed, and Ihe first tentative moves toward cu-opcrailvtaatlon were begun. Al Mao Tse-lung's direction In Ihe summerhe movement toward co-opcrallvcs nnd "higher co-Dpcrotlves" (collective farms) began, and before the end8 nearly all of the peasaiiU In the country had been swept inln Agricultural Producers CooperativesC's).

The APC's were nol popular with thenor were Ihey producing sufficiently lo sallsfy Pelping. tnumber of APC's dissolved and many more showed signs of wanting to follow suit. The party tried numerous modifications to stabiliseirective In7 to reduce the site of the APC's toamilies each. This, of course,ove In exactly the opposite direction from lhat which was to be followed In the commune program just nine months later.

omewhat parallel development, there werearma In operation in which the land was owned by the state and the peasants were wage-earning employees. As ute ashinese Communist propaganda was sllll referring to the state farm as the highest form of agriculturalThis situation also was reversed by Ihe8 announcement onwhich proffered the commune as the Ideal and ultimate form of organisation. Thus Ihe Idea of the communes, which began lo take shape In8 and became the official and universal policy Inecided change In the party line.

5 The Form and Fund toning of thtAlthoughhe peasantry was rcpoctcdry herded Into communes byumber of modifications of ihe program have since occurred. The first big changes came when the movement was barely four months old. Varied andproblems. Including serious peasant discontent, had resulted from the rapidof the communes In extreme form. To deal wllh theselenary session of the Central Committee of the ChineseParly met. and onecember issued

a directive modifying the horshcr practices of the communes, al least temporarily. In sn apparent attempt lo lessen peasantand encourage greater productivity. Partly In response to Soviel objections, the directive also reduced some of lb* theoretical claims whkh had been made for Ihe system. Sinceumber of other piece meal modifkalions have been mode. The bask outline* of the communal effort continue, bul. ai described below. Ihc movement Is stilllate of flux.

6 Inhe commune usuallywith Use township (hslang) boundaries and incorporated all of the former APC'a of the area. In the year or so preceding the commu no Illation program, there were many mergers of townships and the number had been reducedohe towns) up-srred communes In Octoberouseholds each. Theond odmlnlstrallve machinery of the APC's was completely amalgamated with the political machinery of the township lo form the administration of the commune. Thus, all polilical. social, and economicand control Is lodged ln the commune This largely eliminates the langlc and overlap or responsibility and authority which formerly prevailed ai ihc local lcvrl.

ventually, there mayove toward ihc county lhskn> as the proper slac lor Ihe commune. There wereounties In October, but there is some evidence that these will be merged so that eventually there will beounty-sited communes averagingair-million members each and largely self-sufficient except for some heavy industry and products lhat arcby geography.onsiderable number of counties. Ihe towruhip-slxedhave been organised Into countyendeaser number of Instances Ihey hove been fully Integrated into county commune*.

a Wllhln Ihe commune. Ihe labor force Is organised aking mililary line* intoompanies, and various subunlls. Theirnpower l* disposed nf under the direction of Ihe commune choir man and the various functional departments under which the commune Is oiwralcdearns of appropriate site ore senl oul lo labor In the fields, or on Industrial production, or In public works, as the occasion demands. The commune provides Ubor not only for iu own projecu but also for such national projeeu as come wllhln lu range. Foroppanntly all of the grading andwork for the new second track of Ihck'ou railroad Is being done by the communes, each commune building ihe port lhathrough IU territory.ingle commune the system or organisation makes it possible lo call labor teams off other jobs and qukkly eoncenirste thousands ol workers uponajor project.

only Is the work hard, but tlielong, days of! are few, andThe social services of thedesigned to increase the labor powerunit. The creches and boardingchildren, ihe drab communal messes,community housecleanlng teams allfree the housewife for productive workfields, mines, and workshops.homes'" into which the aged arcmake It possible for learns of ok)put In productive days doing workphyskal capabilities Theart of thesometimeslabor, and even IhcloU contribute by sperwling anmore per day pulling weeds orThese moves lending to break uphave proved lo be ihe mostof the communes to many orand to the overseas Chinese.December directive gave tacitthis reaction in supposedly banningseparation of fomilies-

this extensive and intensiveof the availabletenllal hassjmclcnl to perform 1'ie occuniiiUtionlhat the leap forwnrd imposed uponAlthough nrjrlculluralwas ocknowledgcd by ihe party tocentral task of the people's communespresenthe drive lo fulfillgoals and public works projects

some of Ihc peasant labor urgently necded in autumn harvesting and eulllvallon work. Some food crops spoiled in the fields and some cottonnot picked on time, and there were other signs of Ubor shortage. Since last autumn, the party has directed -hat at leastercent of commune labor-power should be reserved for agriculturalThen; lias alsoore toward setting more realistic production goals so that ihc jwasanls canope of fulfilling them.

ne of the typical and most controversial characteristics of thehat Prl-plng calU -freehU refers to tlie prjcllcc of feeding all the members of the cciiimune In public messhalls on the principle of -to each according lo hisn some communes other goods and services were also suppl.rU on thisoncomitantly,wages were correspondingly reduced. This system reputedly Introduced the seeds of purr communism and was loudly heralded by Peiping's theoreticians. Apparently, when the fire supply system was Introduced in8 the party leaders believed that rood production hod actually been Increased to the point where it was possible toeasonably ample dirt to everyone, which would have made the system. If not welcome, at least aecrr-tablo to the people. Asin many communes began to run out in Uie springeals became poor and infrequenteavy onus fell upon the system. In some communes the messhalU were completely shut down, perhaps towlien0 crops replenished theore intrinsic weakness that revealed Itself, however, was that. Just as the Soviets had earlier warned the Chinese, the free supply system reduced labor Incentive. As early as, Peiping began backing oft from Its initial emphasis on the free supply system In recent months, al-Uiough Use name free supply Is retained, the communes have been directed lo issue meal lirki'ls on Ihc basis ol work performed.the parly iheorctKUns cannotthat the seeds of communism proved sterile. Ihey are forced lo admit that they had been planted on Ill-prepared ground.

IJ. Tlte combined revenue from agricultural, Industrial, and commercial activities In the rural areas Is now collected by thexcept for the recently re-established private income from subsidiary occjpations For tlie communehole the followingfor Ihe distribution of Income have beenuaranteed share of ncl income for the staleuable common reserve fund for the commune, and the distribution of the remaining product to members of the commune. The common reserve fund Is to be used primarily for the expansion ofThe ability to accumulate large sums of capital for Investmcnl In agricultural.and construction activity is one of the main advantages claimed for communes. Public welfare funds arc not lo exceed five percent of total commune income.

esponsibility of theIn the larger communes thUnow extends beyond the secondary school level and will presumably be assumed by the enlarged county-sized communes when they are developed. The commune wlUthe education and Indoctrination of Its members from birth lo burla:.

Another feature of the communeU theahis was organizedrash campaign that coincided with the Taiwan Strait crisis and was partly Justified In propaganda by Ihe warning that the country must be prepared to meet "UShe main rose of the mllltla drive may, in fact, have been non-military, since It substantially assisted In the creationeneral atmosphere of mllilancy and discipline which the Cnineac Communists deaue. The mass aspect of the millllahas been diminished since the Initial period of the drive. However, the mllltla may become of real value In time,ast system of scndtialord military reserves designed, as theecember party resolution staled, to "cooperate with the People* Liberation Army" and at any time replenish It"

All of the puns and operations of thearc. Inevitably, monitored and guided by Ihc CommunUt Party. The parly org.inl-

APPENDIX IV

THE NEW CHINESE COMMUNIST STATISTICS

Communist statistics, which are based on Soviet concepts, have alwaysthe general limitations thatBloc statistical data. In addition, there have been weaknesses arising Irom Chinese Communist Inexperience, faulty organization, ond lack of statUlic'ans. However, thesewere being steadily overcome prior4 the statistical system was operatingonsiderably higher level of competence and sophistication than In previous years, and an appreciably greater proportion of economic activity came within the purview of thetherefore, data covering theere relatively good.

8 thereronouncedin the reliability of Chinese Communist statistics, particularly those from the local government level which largely concern agrl-cultural and small-scalen the leap forward campaign, statistical reporting units at the local level apparently came under new. political pressures. Under the slogan "let politics lead economics" statisticalwas prostituted to propaganda In order to support emulation drives and dramatizeachievements.

ertain sense the regime became the victim of its own statistical malpractice. Local leaders were encouraged to set high goals In order to encourage "production cn-

-Dala apparently eonUnue to be rcnswinbljfor the rclaUvety larae-eeale enterprise" onSernd fairly Hood for retail and wholewtle trade and fn* theprocurement ofigh crop yields secured onplots were apparently adopted as standard goals, and local reportingsfailed subsequently to show any diner-ences between these goals and actualbecause local leaders were afraid of criticism. Reports of production achievements were apparently made Inof actual results. Under theIt is not strange that the central statistical authorities lost what ability they had previously acquired to check theof figures coming in from "the field."

he new emphasis on rapid expansion of agricultural output and local industrialaffected Just those economic sectors where relloble statistics are Intrinsically mostto obtain. Tremendous numbers of small reporting units that had no establishedfor keeping records on output or income were Involved. Tne extension oi state control into these areas facilitated the measurement of output that previously was measuredor not at all.esult,procedures8 tended to measure not only increases in output, but also output not Included In previous statistics, or output which was achieved at the expenseecline In farm home Industry or other household activities not previously measured. Inthere hashronic general lack of sufficient statistical workers to cover rural areas In detail and there also have beenin selling up the planning and statistical deportments ofhese problems were further Intensified by the fact that at

J7

very time the overburdened statistical workers were under pressure to turn outmore quickly than ever before they were also forced to divert some of their lime and energy to performing such "productive tabor" as stoking backyard Iron smelters orcrops.

esult of the fantastic figures for food productionhe regime has held forth prospects for considerable gains In foodwhich were not realized. Indeed, actual shortages of food were experienced In some areas. These exaggerations made It more difficult to keep light control over the limited supplies of food and presumablyInterfered with the program of stale procurement and distribution of foodstuffs. Another consequence was the establishment of unrealistic targets established9

The deterioration In the quality of statistics in the agriculture and handicraftandicap to the planners. Is not necessarily disastrous for successful economic planning, because the more modem, highly organized sectors of the economy have soresisted the pressures that broke the system In these other sectors. The allocation andof Investment goods for the national investment program still depend largely on production In relatively large-scale enterprises where the statistics are still relatively reliable. In short, the authorities are probablyand sometimes confronted with serious problems in their planning as tho result of faulty data, but they ore able to carry onthe central core of the economy is the area least affected by the deterioration In

Even If the regime was initially deceived by its own statistical system, reports on actual levels of peasant consumption, reports from procurement agencies, and other dataIn8 and9 must haveserious Inconsistencies lo the central statistical authorities between the claims for Increases In foodcrops and the actualWc believe lhal Ihc central statistical ind planning officlaUs: fa) realize that many claims of huge Increases In agricultural and handicraft produciion are exaggerated, and (b) scale down Ihcse claims In those Instances where they affect plans for such Interrelated activities as Uansrsortatlon, Investment In food-processing industries, and the honoring of export commitments. These considerations suggest that the planners In their operations distinguish between reliable and unrclioblc figures and discount those which have been exaggerated for political purposes. They also suggest that over the next year or two some of the most notorious leap forwardasillion MT ot foodlip service from the economic planners but will hare little effect on the planning Itself.

he problems of interpreting Chinesestalls lies become more difficult, but produciion figures from the agricultural and handicraft sectors can be checked with related figures from the sectors which have more trustworthy data. For example, figures for the production of grain can be compared with figures for the procurement of grain, theof grain, and the rationing of groin products In urban areas. "Reasonable man" checks are necessary. Is it reasonable, for instance, that the Chinese Communists8 could get the same yield of rice perthat Is achieved by highly efficientfarmers who use far greater quantities of fertilizers? In many cases the best that can be done is toange of values In which the actual quantity is thought to He. One set of dimcullles that is likely lo persist over the next few years stems from thoof the communes ond the resultingor previous statistical methods,of categories, and channels of reporting.

SBC-RET

EECITET

iTLAJJSPOtlTATION

m$ Perlormanee.8 the "leap forward"eavy burden on thesystem o( Communist China. The Chinese claimed lhal record breakingwere achieved by all forms ofbolh primitive and modern. Railroads -nd other modern means of transportation allegedlyillion ton-kllomelcra, an increase ofercentillion tons of freight, an Increase ofercent comparednnounced performancey lype of modernis indicated In the following tabulation

of earner

Rallrosdi Motor tracks Inland1

TOTAL*

Ton-Kuometet*

Inerea*

Ortamated

Inert***

Billion

on)

these flgu.ra may not have been completely achieved, performance8 undoubtedly was substantiallyven pertormonce of this magnitude, however, proved Inadequate lo handle all the demands which resulted from the tremendous Increase in production

In the face of the over-all transportation shortageriority waa given to heavy Industry In the use of transportation facilities Thb contributed to serious food shortages in some urban areas, and probably lo the decline In exports which look place at ihe very end8 and the beginning9 Tr*shortage rereclcd the disruption of the economy allcndanl on all ihc "leaps" in various directions. The movement of good* for normal supply of Uic economy becamebecause nr ihc various extraordinary movements taking place.esultwhich wereart of one of Ihe priority movements, such as the Iron and slcel drive, frequently did not gel moved. Late In the year the Chinese went back and picked up some of Ihe freight which had previously been slighted,

he effort put forth by native transport8 was truly staggering. According lo Minister or Communications Wang Shou-too:

"On Ihe steel and Iron iransportallcei line there were not only the professional ranks of the communications and transportation departments bul also minions of peasants and people of both sexes and all ages coming from vartoui peofeaslona and enterprises The ermy, nary, and air force also mobilised mo lor vehicles, fleets of vessels, andto render assistance. Theyig army of tranaporlatlon which had never been In existenceuring the entire year, native land transport facilities nllogcdlyillion tons of goods, an inerrnse of more than ISO percent

T. Junk* and drier native craft (both inland and coastal) moved anillion tons, an Increase of abouter-

centortion or tlie Increase In IBM may be sccounlcd lor by increased sln-tuiiccl reporting which has given the Chinese

a fuller count ot the amount of Irafflc carried

hc forms of transport.

he waste Involved was no less staggering than the Increase in performance. Tliecostliness of air transport of finished Iron and steel products did not add up to much in absolute terms, bul the prodisal dissipation ol manpower certainly did. There were millions of people moving over the Und withor wheelbarrows full of coal and Iron ore. The Minister of Com mun lea lions said that in many rural areas transportationfarms during the latter part* absorbed aboutercent nnd sometimesercent cf the labor twee and that there were cases In whichercent of the loUl available labor was used In transportation to support the small native blast (unmeet, II In not surprising that some crops went unharveslcd. In addition, many o( the commodities which were moveduch as native Ironprobably should not have beenin the first place. Doth the production and transport of these com modules proved to be an extra and largely unprofitable burden on Ihe economy.

8 There was also considerable waste8 in the abuse of equipment This was impor-Unt in all sectors of transportation, but It was moalcorwp'cuous In truck transport00 In the truck park was onlyercent, while the performance forced out of the available equipment In terms of ton-kilometers increasedercent. Thus vehicle ulllleullen had to Increase byercent. This was achieved mainly by multiple driver shifts, use of trailers behind the trucks, and overloading. The damage done by over-use nnd by unskilled drivers was mode more serious by the deterioration ofand maintenance as garages were diverted lo production of trailers andof new trucks. National figures are not available, bul the official press recentlylhat In Yunnan. Kwclchow. and Ssceh-wan nearlyercent of0 available trucks were inoperable.

Prvspccfr. The government'" decision lo devole nearlyercent ofudget lo transportation andcompared withercentolid allack onajor part of thU Investment will undoubtedly go lo ihe rallroeds. as IsIn pUru loeUon of freight cars9 byimes and tothe capacity of existing facilitieswllh some new construction. Inlhe Increase In output of commodities9 will not equal the Incteasr which occurredhus, the actual increase in demand for transportation service will nol bo as great9 o*he planned increase ofercent in railroad Ions originated should be sufficient to take care of the Increases In output In the Industrial and agriculturalA further reduction of native Ironand perhaps olhcr types of nativewill ease the burden oo Ihe Lranspor-UUon system. Many serious problems will remainowever. Ihecutely aware of these tn contrastear ago. and will pay more attention to transportwhen production plans are made

In order lo meet further demands of Ihe economy, transportation will require higher rates of Investment than in the past The Vice Minister of Railways has promised only thatew years of bitter struggle, China* railways can catch up lo the needs of stalether forms ofuch smaller share of Investment, however, will be even slower lo close Ihc gap. Al leasl for the next few years allocation o( transportation priorities wUlerious problem.

BTJfftF.T

COMMUNIST CHINA

Original document.

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