OFFICE OF SECRETARY OF DEFENSE SUGGESTION FOR REIMPOSITION OF TRADE CONTROLS

Created: 11/6/1958

OCR scan of the original document, errors are possible

CENTRAL INTELLIGENCE AGENCY. C

v , nalysis DeparOoent of State

John C. Oliver

of Secretary of Defense Suggestion for

Belnposltlon of Trade Controls

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tne following which ir. inl'll

action tooraa*us froa Act log Secretary of Defease Queries suggesting that certain Multilateral esbargoea be reimposed againsthina.

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The controls proposed in the OGD nenorandun would, we fool, in no way deter the present level of activity In the Taiwan Strait. The disposition of forces in being and of supplies accumulated through earlier Russian shipments of military equipment are more thanto sustain the present or higher level of activity In this for some time to come.

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Is of course possibleigh level of air activity In the Taiwan arcs might be reduced to sons extent in tho future by an effective restriction of tanker tonnage available to Coamunist China. China's present demand for petroleum fuels apparently exceeds the capability for overland supply froa the USOKi the bottleneck is principally the Chinese rail system. On the other hand, even If seaborne shipments of POL areairly modest reallocation of existing supplies would permit tha Of such Halted action as that in the Taiwan Straits.

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of limited capability of overland supply,Increase in present levels of China's demand forrequire either charter of Western tankers or the employmenttankers. Even in this canepointed out that the

nunborn of tankers required would not be great. For example, the

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estimated probable awj.nloa* of Serial petroleum to China by tea la could bara been moved la only four Soviet tankers. Of tha total ofhips In tho Soviet tanJcex fleet,of then are of the typo required for ouch voyagea.

He think it la important to oapbaaUe that the partial embargo of aclocted strategic good* could be expected to have no significant Impact on Coiaiualat Chinese military effectiveness.ontrolled economy tbe also of Conaunlat China's, particularly when bached by the combined economies of the rest of tbe Bloc, the inconvenience resulting fron selected trade controls such ma those proposed could be easily nc-xnnodeted. the Chinese nilitarydepends rath or on: (l) Chinese decision to divert domestic economic resources away froa other programs to defense,tua.nl an willingness to eugneat Chinese resources by unrequited exports of Soviet strategic supplies.

6. The Chlneae economy although growing rapidlyill

relatively underdeveloped by Western standards. Berortheless, tha

rate of accretion to Chlneae nilitary strength has been considerable

In tha past few years sod may be expected to grow with Increased Chinese industrial growth.

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