CHINA'S GROWING RELATIONS WITH THE USSR: BEIJING'S AGENDA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP04T00907R000200070001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 22, 2016
• Document Release Date: May 18, 2012
• Sequence Number: 1
• Publication Date: March 1, 1987
• Content Type: REPORT

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Directorate of Secret
Intelligence
China's Growing Relations
With the USSR:
Beijing's Agenda
EA 87-10009
March 1987
Copy ,)AC,
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Directorate of Secret
Intelligence
With the USSR:
Beijing's Agenda
China's Growing Relations
This paper was written by
25X1
25X1
of East Asian Analysis. Comments and queries are
welcome and may be directed to the Chief, China
Division, OE
Secret
EA 87-10009
March 1987
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Secret
China's Growing Relations
With the USSR:
Beijing's Agenda
Scope Note This paper examines only a portion of the complex Sino-Soviet relation-
ship, and only from Beijing's perspective. It focuses on those areas where
we have seen significant movement in the last two years and offers an
Secret
EA 87-10009
March 1987
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Secret
With the USSR:
Beijing's Agenda
China's Growing Relations
Key Judgments Although China continues to insist that political relations with the Soviet
Information available Union cannot improve until Moscow reduces its threat to Chinese security
as of 9 March 1987
was used in this eort (the so-called three obstacles), the last two years have seen a sharp growth
r
in economic and scientific-technological ties.
Sino-Soviet economic ties are showing the greatest growth. Sino-Soviet
trade has doubled in the last two years to reach $2.4 billion in 1986, and
three Soviet economic delegations met with senior Chinese in 1986. Recent
agreements to exchange trade exhibitions, build additional rail links, and
open reciprocal trading and shipping offices could help boost Sino-Soviet
trade to a $3 billion average annual figure for the rest of the term of a five-
year trade agreement that extends to 1990. Although this is sufficient to
raise the Soviet Union to the position of China's sixth-largest trading
partner, Moscow's nearly 4-percent share of total trade falls well behind
the shares of Japan (27 percent), Hon Kong (22 percent), and the United
States (11 percent).
years-signed by the Chinese since 1979.
China's scientific and technical contacts with the Soviet Union are also
increasing, although less rapidly than in the trade sphere. In 1986 the
Soviets agreed to renovate 17 factories and construct seven new facilities,
most in northeastern China. Several hundred Soviet technicians ultimately
will be sent to China for these and other industrial programs and an equal
number of Chinese personnel will be sent to the USSR for training. In our
judgment, Beijing will seek greater Soviet assistance over the next few
years, particularly in the energy and heavy-industry sectors, where Soviet
technology is often on a par with that available from the West. Nonethe-
less, Sino-Soviet projects number fewer than 30 and will continue to be
dwarfed by thousands of major contracts for Western assistance-involv-
ing more than 10,000 Western technicians in China over the past two
Even in the political arena, where movement is not as striking, changes are
evident. The number of venues and levels of contact suggest that, although
Moscow and Beijing continue to have sharp disagreements, the sessions are
no longer the "dialogue of the deaf" described by a Chinese diplomat early
last year. We see signs, moreover, that China has decided to maintain an at-
mosphere conducive to greater contacts and to pass up opportunities to score
propaganda points on the Soviet Union. Beijing, for example, did not play up
a shooting incident between Soviet and Chinese patrols in July 1986 or the
errant landing, probably in China, of an unarmed Soviet submarine-
launched missile the following September, even after the incidents were
v Secret
EA 87-10009
March 1987
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widely publicized in the Western press. Moreover, the Chinese have not
reacted to Soviet reconnaissance flights over the Yellow Sea since October
1986 or publicized a recent Soviet violation of Chinese airspace.
We do not believe China has changed its assessment that the Soviet Union
poses a long-term military threat to China. Articles in China's restricted
publications argue that Moscow is attempting to reform its economy to
confront China and the United States more effectively early in the next
century. China continues to devote great resources to improving its military
forces along the Sino-Soviet border, and Beijing has shown no indication of
backing away from its relationship with Washington. Indeed, it is most
interested in expanding US-China military ties.
What has changed, in our judgment, is how China has chosen to manage
the Soviet threat. We believe a number of things account for Beijing's
decision to move forward without real Soviet concessions on the three
obstacles. Among them are China's need for reduced tensions as it reforms
and modernizes, the obvious economic and S&T benefit to China, and
China's belief that some improvement in Sino-Soviet relations increases its
leverage in Washington and creates tension in Soviet-Vietnamese relations.
Perhaps more important, we believe Beijing is reacting to the rise of
General Secretary Gorbachev, his interest in Asia, and his different style.
Chinese leaders apparently believe that Gorbachev sincerely desires better
relations, and we see the expansion of the political venues, in particular, as
an effort to probe the limits of Gorbachev's flexibility. Finally, deeper,
more visible US ties increase the pressure on Beijing to demonstrate to the
Third World-by increasing ties to Moscow where it can-that, despite
appearances, it pursues an independent foreign policy.
We believe Sino-Soviet relations are entering a period that will see
additional movement in the trade and S&T areas, and the political
dialogue will also broaden. Progress is likely to be unsteady, and affected
by two factors:
? China's perception of Gorbachev's motives and power.
? The reaction in the West, particularly in the United States. Continued
stress on the three obstacles, vigorous criticism of Soviet foreign policy,
and repeated assurances by Chinese leaders of the permanence of China's
opening to the West suggest that concern about a negative US reaction
will act as a brake on the development of Sino-Soviet ties.
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Growing Trade Ties
Expanding Scientific and Technical Cooperation
8
What Has Changed
14
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China's Growing Relations
With the USSR:
Beijing's Agenda
China continues to insist that there can be no funda-
mental improvement in relations with the Soviet
Union until Moscow reduces its threat to Chinese
security. Specifically, China is demanding a reduction
of the Soviet military presence along its border to
1950s' levels, an end to Soviet support for Vietnam,
and a Soviet withdrawal from Afghanistan. Not
mentioned specifically, but of evident concern as
Is the continuing Soviet naval
build-up in the Pacific and Moscow's warming rela-
tions with P'yongyang.
While continuing to press Moscow to address its
security concerns, Beijing nonetheless has permitted a
significant expansion of Sino-Soviet contacts over the
last two years as part of its efforts to assuage the
tensions in the relationship.' Trade and scientific and
technological exchanges have expanded the most, but
even political contacts have grown, although the
Chinese do not characterize them positively.
Trade is the most active area in China's evolving
relations with the Soviet Union. Trade with Moscow
accounts for less than 4 percent of Beijing's total
trade, but the dollar value has doubled in the last two
years (see table). Under the goods exchange and
payments agreement that began in 1986, bilateral
trade is set to total $14 billion for the five-year period
ending in 1990. We estimate that the total trade for
1986 was slightly above the average annual rate of
increase implicit in the $14 billion goal. Moreover, we
believe an increasing level of border trade and the
recent moves toward technical cooperation will fur-
ther accelerate trade growth and the five-year target
will be easily met.
Diversification in the composition of trade to include
new categories of goods is also an indication of the
expanding bilateral trade relationship. In 1982 chemi-
cals and crude materials represented more than four-
fifths of Chinese imports from the Soviet Union. By
1985, however, manufactured products and machin-
ery and transportation equipment represented two- 25X1
thirds of total Soviet exports to China. At the same 25X1
time, Chinese exports to the Soviet Union shifted
from being heavily weighted toward crude materials 25X1
to being almost 50 percent food and live animals.
More significant for the atmosphere, in our judgment,
is the growth in high-level economic exchanges. In
1985, Chinese Vice Premier Yao Yilin led an econom-
ic delegation to Moscow, reciprocating a visit in late
1984 by Soviet First Deputy Premier Ivan Arkhipov;
both visits resulted in new trade agreements. In 1986 25X1
the Soviets sent three separate economic delegations
to Beijing and in each case met with senior Chinese
economic officials, including Premier Zhao Ziyang,
who has since become General Secretary of the
Chinese Communist Party as well:
? In January, Soviet First Vice Minister of Foreign
Trade G. K. Zhuravlev headed a transport and
trade delegation to Beijing, and met with Vice
Premier Li Peng and Minister of Foreign Economic
Relations and Trade Zheng Tuobin.
? In March, Arkhipov visited Beijing to cochair the
inaugural session of the Joint Commission on Trade,
Economics, Science, and Technology, created to
manage overall economic contacts. According to the
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Year Chinese Chinese Total Percent
Exports to Imports of
the USSR From the PRC
USSR Trade
1961
551
367
918
30.4
1962
516
233
749
28.1
1963
413
187
600
21.6
1964
314
135
449
13.9
1965
226
192
418
10.8
1966
143
175
318
7.5
1967
57
50
107
2.7
1968
37
59
96
2.5
1969
29
28
57
1.5
1970
22
25
47
1.1
1971
76
78
154
3.3
1972
134
121
255
4.4
1973
136
136
272
2.8
1974
139
143
282
2.1
1975
150
129
279
2.0
1976
179
238
417
3.2
1977
178
162
340
2.3
241
268
509
1.8
1980
230
294
524
1.4
1981
132
116
248
0.6
165
308
0.8
340
648
1.5
1984
625
575
1,200
2.3
1985
994
937
1,931
2.7
1986-
1,100
1,300
2,400
3.8
Soviet Embassy in Beijing, a special committee to
examine transportation problems and the obstacles
they present to increased trade was created. The
visit also included meetings with Zhao Ziyang, Li
Peng, and Vice Premier Wan Li.
? In September, Soviet First Deputy Premier and
Chairman of the State Planning Committee Niko-
lay Talyzin met with Chinese officials in Beijing
and signed a cooperation agreement providing a
formal framework for trade, commercial, and tech-
nical exchanges that will take place through 1990.
Accompanying Talyzin were the Chairman of the
Soviet State Committee for Foreign Economic Re-
lations, the Minister of Timber, and Deputy Foreign
Minister Igor' Rogachev. The Soviets met with
Zhao Ziyang, Yao Yilin, Li Peng, Vice Foreign
Minister Qian Qichen, and head of the Chinese
State Planning Commission Song Ping.
The visits have led to new economic agreements (see
inset "Recent Sino-Soviet Economic Exchanges"). In
addition to those noted above, China and the Soviet
Union agreed to set up a committee to guide planning
for the comprehensive use of the water resources of
the Argun and Amur Rivers (Ergun and Heilong
Rivers in Chinese). In March 1986, Moscow was
allowed not only to open an economic office in
Beijing, but also to locate it outside the Soviet
diplomatic compound-the first time since the Sino-
Soviet rift. According to the US Embassy, the office
is ably staffed and taking a businesslike, outgoing
approach that contrasts sharply with traditional Sovi-
et practices in developing Sino-Soviet contacts. The
two sides also resumed cooperation in commodity
shipping, opening shipping offices in Shanghai and
Odessa.
And, for the first time in more than three decades,
Beijing and Moscow in 1986 exchanged trade and
industry exhibitions under a new protocol calling for
reciprocal exhibitions through 1990. The Chinese
exhibition in Moscow featured a model of China's
Long March 3 space booster, communications satel-
lites, computers, televisions, textiles, and handicrafts,
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When Did the Thaw Begin?
? December 1984. Arkhipov visited Beijing and
signed a significantly expanded trade agreement
plus new agreements on economic cooperation and
exchanges in culture and science and technology.
Originally scheduled for May 1984 but delayed
because of a Chinese military attack on Vietnam,
this was the highest ranking direct Sino-Soviet
contact in 15 years.
? March 1985. Chinese Vice Premier Li Peng repre-
sented China at the funeral for Soviet General
Secretary Konstantin Chernenko. Li personally
conveyed to new General Secretary Gorbachev the
congratulations of Chinese General Secretary Hu
Yaobang on being elected General Secretary.
? July 1985. Chinese Vice Premier Yao Yilin recipro-
cated the Arkhipov visit of December 1984 with a
visit to Moscow. Yao signed a goods-and-payments
agreement for the period 1986-90 as well as a
separate agreement on technical cooperation and
was received by Soviet Premier Nikolay Tikhonov.
The new economic relationship is an outgrowth of
Beijing's reassessment of its foreign policy strategy
during the period 1980-82. The Chinese-disturbed
by differences with the United States over Taiwan
and other issues and seeking to increase China's
room to maneuver in the strategic triangle-pro-
claimed an "independent "foreign policy and in 1982
agreed to open "consultative talks" with Moscow.
Visits by Soviet and Chinese deputy/vice premiers in
1984 and 1985 set the stage for the expansion of
economic ties:
while the Soviet show in Beijing displayed models of a
Tokamak 15 nuclear fusion reactor, a Salyut orbital
space station, and a Vega scientific satellite, in addi-
tion to the latest automobiles, aircraft, and other
sophisticated hardware.
Trade Constraints
Sino-Soviet trade is constrained by two major factors.
First, the cumbersome barter arrangement requires
trade to be balanced and involves arduous and pro-
longed negotiations. Although both sides acquire
needed goods without drawing down foreign reserves,
? December 1985. Li Peng, on his way home from
Eastern Europe, stopped over in Moscow at Gorba-
chev's invitation. Xinhua reported that the two
discussed "bilateral relations and some interna-
tional issues. "
Chinese and Soviet officials admit that first priority
goes to earning hard currency and the barter system
gets the leftovers, according the the US Embassy in
Beijing. Often this means that both sides approach the
barter negotiations with the intent to dump their 25X1
second-rate goods on one another, while saving their
best export commodities for Western and Japanese
markets. Some barter sales to the Soviet Union have
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Works, July /985.
? Agreements on trade and economic cooperation for
the period 1986-90 signed. The goods exchange and
payments agreement-under which two-way trade
is to total $14 billion over the five-year period-
establishes the framework for negotiating annual
trade protocols. The cooperation agreement, the
first in more than 25 years, permits China to pay
over a multiyear period for imports of capital goods
and technical assistance acquired under that pact.
The agreements specify that all payments for both
trade and technical cooperation will be in barter.
January 1986
? Annual trade protocol for 1986 signed.
? Summary signed of talks on transport of foreign
trade for the period 1986-90.
? Exchange of letters initiating border trade between
China's Xinjiang Autonomous Region and the Sovi-
et republics of Kazakh, Kirgiz, Tadzhik, Turkmen,
and Uzbek, as well as the Krasnoyarsk Oblast and
Altay Kray.
? Accord boosting bilateral trade and technical coop-
eration signed at the close of the first meeting of the
Joint Commission on Trade, Economics, Science
and Technology.
? Delegations representing foreign trading companies
from Heilongjiang Province and the Nei Mongol
Autonomous Region visit a trade and industry
exhibition held in Khabarovsk at which trade orga-
nizations from the Soviet Far East exhibit a wide
range of commodities available for export to China.
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? Agreements signed to facilitate the use of border
rivers and ports for trade.
? Chinese officials acknowledge to US Embassy offi-
cers that direct talks between the Chinese and
Soviet national airlines are planned.
? Soviets sign an agreement with the Ocean Shipping
Agency in Beijing that permits Soviet and Chinese
shipping offices to be set up in Odessa and Shang-
hai, respectively. Accord also stipulates that logis-
tic services for Soviet merchant vessels will be
initiated in all Chinese ports and that Soviet mer-
chant ships' nonproductive berthing time in Chinese
ports will be greatly reduced.
? Protocol on exchanges of trade exhibitions signed
at the opening of the Beijing trade and industry
exhibition in Moscow.
? A Xinjiang trade delegation visits Alma-Ata in the
Soviet Union to stage a trade fair for the first time.
Over 3,000 products displayed, mostly consumer
goods. Agreement on the export and import of
commodities signed.
? Cooperation accord signed between the Chinese and
Soviet state planning commissions that establishes
a framework for and an endorsement of the pro-
gram drawn up for trade and technical exchanges
during 1986-90.
? Agreement to liberalize cross-border trade signed,
allowing border provinces to trade directly in local-
ly made goods.
? Agreement signed establishing a committee to over-
see joint development of the Argun and Amur
Rivers where they form the boundary between
China and the Soviet Union. Projects will include
joint planning for cooperation in power generation,
flood prevention, navigation, and water utilization.
? Protocol signed calling for scientific research coop-
eration in a number offields, including agriculture,
energy, machine building, metallurgy, and trans-
portation. A meeting of experts will be convened in
the first half of 1987 to decide on specific projects.
? Soviet trade and industry exhibition opened in
Beijing.
? Protocol for 1987 trade signed in Moscow.
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The second major constraint is the poor transportation
infrastructure at the major border transshipment
points in the northeast and the west. To alleviate this,
the two sides are cooperating on railroad projects.
Construction on the extension of the railroad in
Heilongjiang Province northward to Heihe on the
Soviet border is scheduled for completion next year,
and the railroad ending at Urumqi in the Xinjiang
Autonomous Region is also being extended west to the
Soviet border (see figure 1).
Trade Outlook
These problems notwithstanding, we expect China's
trade with the Soviet Union to grow over the next
three years, perhaps reaching 5 percent of China's
total trade. Fueling the growth will be China's desire
to offset potential market losses as a result of growing
protectionism in the West and new policies that allow
Chinese enterprises to use countertrade to acquire
Soviet technology. According to US Consulate offi-
cials in Shanghai, enterprises there that export to the
Soviet Union can even earn foreign exchange alloca-
tions on the basis of the amount of hard currency
saved.
these countertrade
arrangements are often very profitable, with Chinese-
manufactured products selling for three to four times
the value they could command on the international
market. Moreover, the US Embassy in Beijing reports
that in some cases China appears to have been able to
mesh its barter trade with hard currency trade to gain
advantages from both sides. Some traders in Beijing
believe that China has been able to get such a good
rate on the soybeans that it exports to the Soviet
Union that it has been able to justify hard currency
imports of soybeans from the United States.
We expect border trade will continue to rise and could
offer a significant new source of trade growth if
China's relatively less-developed western provinces-
which cannot compete with the exports of the coastal
cities-take full advantage of increased trading au-
tonomy.' Border trade is still relatively small-ac-
counting for approximately 3 percent of total trade-
but has grown rapidly since it was permitted to
resume in 1982. Reciprocal trading offices opened in
Heilongjiang Province and Siberia in 1985 and will
help expand the trade and-despite an apparent
impasse-additional offices in Xinjiang Autonomous
Region and Kazakhstan appear to be in the offing.
In the next few years, we believe China may look
outside the barter mechanism in its trade with the
Soviet Union if it encounters difficulty supplying the
enormous volume of goods-at quality and prices
acceptable to Moscow-that will be needed to pay for
both trade and planned Soviet technical assistance.
Although theoretically balanced, the recent growth in
Sino-Soviet trade provided Beijing with a surplus until
1986, when imports of Soviet goods outweighed Chi-
nese exports to the Soviet Union by an estimated $200
million. The planned import of capital goods and
technical assistance most likely will continue this
trend. Although the current five-year goods exchange
and payments agreement permits Beijing to balance
the import of capital goods and technical assistance
over a multiyear period, the Chinese approached
Talyzin during his September visit about the possibili-
ty of obtaining Soviet concessionary loans. According
to Soviet Deputy Counselor for Economic Affairs
A. V. Goryunov, the Soviet side responded that,
although in principle such loans are possible, they
could only be discussed in a specific context
2 Border trade represents trading over and above that controlled by
the annual bilateral agreements. During Talyzin's visit in Septem-
ber 1986, both sides agreed to liberalize border trade to allow trade
of locally produced goods. Previously, most trade was channeled
through central trade organizations that concentrated on delivering
manufactured goods from factories in the interior areas. Now,
according to the Soviet Embassy in Beijing, border areas are
allowed to trade directly at the provincial /autonomous region level.
Provinces not on the border are also permitted to trade goods
through the border provinces.
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Figure 1
Planned Railroad Extensions to the Soviet Border
Cease-prce
tine
Extension
under
construction
Chinese tine
of control
Ka mand1Thi
Ota ./
Bay of Bengal
Province-level boundary
0 500 Kilometers
0 500 Miles
Raang
China
)Lake
Baikal
"aft
P'. gfang
So
Korea
4 -, Yellow Sea
rw
Hong Kong
Thailand
Macau WA.)
(Port.)
South China
Sea
Mani
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We estimate that Sino-Soviet trade reached $2.4
billion in 1986, sufficient to raise the Soviet Union to
the position of China's sixth-largest trading partner.
Moscow's nearly 4 -percent share of total trade still
falls well behind the shares of Japan (27 percent),
Hong Kong (22 percent), and the United States (11
percent), however. China's share of total Soviet trade
is even lower; in 1985 it amounted to slightly over 1
percent.
Under annual trade protocols, the Chinese exchange
nonferrous metals, agricultural goods, textiles, and
light industrial products with the Soviets for other
nonferrous metals, steel, pig iron, urea, automobiles,
logs, aircraft, and helicopters. The Soviets, presum-
ably with low-priced equipment, are now entering the
extremely competitive market for locomotive sales to
China. A Soviet official told US Embassy officers in
Beijing that China recently agreed to buy 200 Soviet
electric locomotives for about $250 million.
Sino-Soviet trade is conducted almost entirely on a
barter basis. Negotiators from both sides meet annu-
ally at yearend to determine any imbalances in trade,
which must then be settled by the end of the first
quarter of the subsequent year.
China is also increasing its science and technology
contacts ' with the Soviet Union, although movement
in this sphere has been less rapid than in the trade
area. Many of the bilateral S&T activities are also
managed by the Joint Commission on Trade, Eco-
nomics, Science, and Technology (JCTEST)-the
same commission that oversees Sino-Soviet trade-
but negotiators have had more difficulty agreeing on
the scope and direction of technical and scientific
exchanges than on commodity trade. An indication of
' Chinese statements use the term technology loosely, generally
referring to both the knowledge and equipment used in production
processes-separately referred to as technology software and hard-
the strong prospects for bilateral S&T activities,
however, is the separate Soviet office opened in
Beijing in March 1986 to oversee technical coopera-
tion projects between the two countries. The office,
headed by Deputy Counselor for Economic Affairs A.
V. Goryunov, has a staff of eight and may be
expanded to 20 as technical cooperation develops. In
discussions with US Embassy officials, Goryunov
sharply distinguished his office's activities from those
of the Soviet Embassy Trade Representative's Office,
which handles bilateral barter trade.
The Soviets have also beefed up the staff of the
science section of their Embassy, which generally
handles cooperation between the Soviet and Chinese
Academies of Science and between the countries'
State Science and Technology Commissions. Moscow
increased the number of officers in the science section
from three to seven, and reportedly intends to further
enlarge the staff to 10 persons when space and
housing become available. Even more significant,
Moscow dispatched a new Science Counselor to head
the section. The counselor, A. N. Bykov, has impres-
sive educational credentials (including work at Massa-
chusetts Institute of Technology and Columbia Uni-
versity) as well as important connections in the Soviet
bureaucracy; he has pushed the evolving Sino-Soviet
S&T relationship much more energetically than his
predecessor, according to the US Embassy in Beijing,
and appears to be targeting areas for future coopera-
tion that will yield scientific as well as political
benefits for Moscow.
Beijing and Moscow signed a broad agreement on
technical cooperation through 1990 during Yao's
visit, and subsequent contacts have filled in the
specifics:
? During Arkhipov's visit in March 1986, Soviet and
Chinese officials discussed general sectors rather
than specific projects in which the Soviets would
provide equipment and technical advice for the
renovation of 17 Chinese factories and the construc-
tion of seven new facilities.
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? In September 1986, during Talyzin's trip to Beijing,
specific projects were tentatively agreed upon, ac-
cording to Goryunov. According to the Soviet diplo-
mat, details, timetables, and locations have been
worked out for all but 10 of the projects. Most are in
energy or heavy industry and are located in north-
east China.
According to the Soviet Embassy in Beijing, Talyzin
also discussed the possibility of Sino-Soviet joint
ventures directly between enterprises, rather than
managed by the two governments. Although no spe-
cific projects were raised, the scope for such joint
ventures appears limited to Soviet provision of raw
materials for the Chinese to process into finished
goods for reexport to the Soviet Union, according to
the US Embassy in Beijing.
Apart from the technical cooperation covered by the
1985 accord, Beijing and Moscow have agreed to
several other joint projects. In the largest Sino-Soviet
contract in recent years, China is buying 10 Soviet
coal-fired thermal power generators for $500 million
for use in four power stations. Two other projects may
be independent of the accord as well: a coal mine in
Heilongjiang and an electric transmission line along
the Beijing-Tianjin corridor. According to Goryunov,
100 Soviet technicians have been sent to China for the
latter project."
Cooperation in the nuclear energy field, however, has
not materialized, although the Soviets continue to
play up the possibility. In June 1986, Chinese nuclear
energy officials visited Moscow to discuss possible
bilateral activities. The trip, agreed to in March 1986,
did not yield any concrete accords, no doubt reflecting
diminished Chinese interest following the Chernobyl'
accident.
Progress was also made in 1986 in planning for future
cooperative scientific exchanges and joint research:
? In June, the Chinese and Soviet Academies of
Science signed a five-year cooperation agreement
that provides for exchanges of research personnel
The Soviets and the Chinese are discussing technical cooperation
in up to 28 projects in such sectors as energy (15), metallurgy (5),
transportation (1), chemicals (3), and general industry (4).F_
and publications in the natural and physical sci-
ences. The Soviet Science Counselor in Beijing
mentioned biotechnology as one area of cooperative
activities, according to US Embassy reporting.
? In October, at the first meeting of the S&T Cooper-
ation Subcommittee of the JCTEST, the Soviet and
Chinese State Committees for Science and Technol-
ogy signed a protocol specifying fields for S&T
cooperation under the general agreement signed
during Arkhipov's trip in December 1984. Scientists
from the two countries will work together on agri-
culture, fisheries, meteorology, nonferrous metallur-
gy, petrochemicals, machine building, oil and natu-
ral gas, and railways. The protocol made no mention
of joint research in two areas earlier proposed by the
Soviets-space sciences and seismology-indicating 25X1
Chinese rejection. Bilateral scientific exchanges had
been taking place for several years before they were
formalized in the protocol; press reports indicate
that the two countries exchanged nearly 30 groups
of specialists between 1982 and 1985.
? In October, the Soviet Chamber of Commerce and
Industry and the Chinese Center for International
S&T Exchanges signed a memorandum outlining
future exchanges of information on inventions and
patents.
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2bAl
Several of the trade agreements signed in 1986 will
also contribute to the expansion of S&T exchanges
between the two countries. In March, during Arkhi-
pov's visit, a countertrade agreement was signed that
included a provision for China-for the first time in
30 years-to repair Soviet merchant and scientific
research ships in Chinese shipyards. Trade exhibits
have also provided a forum for exchanges of scientific
and technical information; the Soviet exhibit in Beij- 25X1
ing in December included a series of lectures for
Chinese technical audiences even though the Chinese
exhibit in Moscow several months earlier had not.
Finally, the agreement to set up a committee to
examine the use of common waterways provided a
framework for technical feasibility studies for possible
joint projects such as power generation, flood preven-
tion, and pollution control, according to a Chinese
diplomat. 25X1
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S&T Cooperation in Context
Sino-Soviet cooperation in industrial technology is
dwarfed by Chinese cooperation with the West in this
field. The 24 to 28 Sino-Soviet technical cooperation
projects represent only a fraction of a percent of
China's foreign technology-assisted projects. Since
1979 central Chinese trading corporations alone have
signed approximately 2,500 major contracts for
Western equipment and technical assistance; together
with those signed by provincial and municipal au-
thorities, technology import contracts exceeded
13,000.
Sino-Soviet technical cooperation also involves a
comparatively small number of technical personnel.
Several hundred Soviet technicians will probably
work in China on the new projects; more than 10,000
Western technicians have supervised China's use of
imported Western technology in the last two years
alone.
In dollar terms, however, Sino-Soviet technical co-
operation may be more significant. In 1986 the Soviet
Union became China's fourth-largest technology sup-
plier, after France, Japan, and the United States,
according to Ministry of Foreign Economic Relations
and Trade Statistics. The value of Sino-Soviet tech-
nology contracts signed in 1986 reached $512 million
and accounted for 11.5 percent of China's total
technology contracts. If Soviet estimates are correct
and the USSR supplies China with more than $2
billion worth of equipment and technical services
under the 1985 accord by the end of the decade-and
if additional contracts outside the accord are
signed-Soviet technology will account for roughly
10 percent of China's technology imports through
1990.
Sino-Soviet scientific cooperation is similarly dwarf-
ed by China's formal S& T cooperation with Western
countries. Beijing has signed 27 S& T protocols with
the United States alone, covering such fields as
telecommunications, nuclear safety, high-energy
physics, and seismology. China has similarly exten-
sive bilateral S& T protocol arrangements with the
United Kingdom, West Germany, Sweden, and many
other Western countries.
Although recent agreements on Sino-Soviet technical
cooperation are a major upswing from the bilateral
economic relationship of the last 25 years, they
remain modest by 1950s'standards. During the hey-
day of Sino-Soviet cooperation, the Soviets assisted
in the construction of several hundred Chinese indus-
trial and energy facilities, in contrast with the 24 to
28 planned over the next five years. Similarly, be-
tween 1950 and 1960, Moscow sent 11,000 techni-
cians to work or teach in China, compared to the
several hundred likely to assist with Chinese projects
over the next five years; Beijing sent nearly 30,000
scientists, technicians, and workers to the USSR
during the 1950s, but will probably send only several
hundred for current projects.
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Future Growth
We believe scientific and technical cooperation will
grow as these agreements are implemented. Accord-
ing to a Soviet diplomat, roughly one-third of the
value of Sino-Soviet trade from 1986 through 1990
will be related to technical cooperation. Bilateral
technical cooperation will probably involve several
hundred Soviet advisers sent to China and an equal
number of Chinese technicians sent to the USSR for
training.
In our judgment, Beijing will be particularly interest-
ed in Soviet technology in the energy and heavy
industry sectors. In some areas-for example thermal
power, open pit mining, hydroelectric generation, and
long-distance electric transmission-Soviet technol-
ogy is on a par with that available from Western
countries. Beijing also is likely to seek Soviet assis-
tance in modernizing Soviet-designed heavy industry
facilities where it has been unable to attract Western
investment. Water resource management is another
area where joint activities are likely to develop.F_
Beijing and Moscow will probably continue to sign
contracts for bilateral technical cooperation projects
outside of the 1985 accord. Moscow will probably
reiterate its interest in joint ventures directly between
Chinese and Soviet enterprises, but we believe Beijing
will want Sino-Soviet technical cooperation to remain
scientific cooperation. Beijing has, for example, ex-
pressed interest in Soviet mathematics, physics, and
geophysics. We believe, however, that Beijing will
continue to refuse Soviet overtures to cooperate in the
space sciences and seismology, areas in which military
and civilian research are intertwined. Similarly, Chi-
na will closely monitor the exchange of scientists to
ensure that Soviet experts are kept away from sensi-
tive areas.
Constraints. In our opinion, two other factors will
constrain cooperation in the S&T area. First, China is
reevaluating its policy on the import and use of
foreign technology, becoming more selective in the
process.' Beijing still prefers Western technology, and
considers Soviet technology not only inferior, but also
no easier to absorb in cases where it is incompatible
with Western equipment introduced in recent years.
Second, China does not want to create concern in the
West about Sino-Soviet cooperation in this area.
China calculates that such fears would jeopardize its
access to the technology it seeks and delay, if not
reverse, the gradual easing of US and multilateral
export controls. To allay concerns in the West, China
has been careful to restrict Soviet access to sophisti-
cated Western hardware it already has.'
subject to government oversight.
Exchanges of research literature and patent informa-
tion will grow as a result of the agreement concluded
in 1986, and China may pursue additional areas of
A Soviet consular official in December 1986 anticipated his country
would send 2,000 technicians by 1990. And a Western newspaper
Movement in this area has not been as striking as the
growth of trade and S&T ties, but we believe that
atmospheric changes are taking place here as well.
The number of venues and the level of contact suggest
that, although Moscow and Beijing may be agreeing
on very little, the sessions are no longer quite the
"dialogue of the deaf" that a Chinese diplomat
citing Soviet sources indicated 100 Soviet experts would be sent to
China over the next few years. We believe this latter figure is
conservative, especially if the Soviet diplomat's contention that 100
Soviets are already working on construction of the electric trans-
mission line is true. More moderate Soviet estimates have suggested
that 500 to 600 Soviet technicians will go to China, with the bulk
going in the period 1988-89. Beijing has said only that it expects
"several hundred" Soviet technicians to be involved in the technical
cooperation program.
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described following the frosty eighth round of normal-
ization talks in Moscow in April 1986. Although both
parties have an interest in keeping Washington uncer-
tain about where their relationship is going (without,
however, disrupting relations with client states and
important friends), more than posturing seems to be
going on.
Old Venues
The Chinese and Soviet Foreign Ministers have held
annual consultations at the opening of the United
Nations General Assembly in September for the past
three years. At the most recent session, Chinese
Foreign Minister Wu Xueqian reportedly surprised
Soviet Foreign Minister Shevardnadze by proposing
and authorizing the announcement of a resumption in
February 1987 of border talks suspended in 1978.
Wu's move followed Gorbachev's unprecedented pub-
lic statement in Vladivostok of Moscow's willingness
to use the main channel of the Heilong/Amur River
as the line of demarcation along one stretch of the
border. The vice foreign ministerial-level border talks
are expected to be protracted and difficult, because of
differences over defining main channels for the
Heilong/Amur and Wusuli/Ussuri Rivers, resolving
ownership of the islands at the confluence of the rivers
opposite the Soviet city of Khabarovsk, and deciding
which ridge in the Pamir Mountains was agreed to as
the border in a 19th-century treaty. Beijing's proposal
to resume the talks despite the absence of progress on
the three obstacles, however, suggests the Chinese
have decided at least to appear flexible to encourage
additional Soviet concessions.
Gorbachev's hints of flexibility in his Vladivostok
speech of 28 July 1986, plus the announcement of
plans to unilaterally withdraw one division along with
some smaller units from Mongolia, breathes new life
into the normalization talks, which after eight rounds
had become stale. At the ninth round, held in Beijing
in October 1986, the new Soviet chief negotiator,
Deputy Foreign Minister Rogachev, agreed to place
the Cambodian obstacle on the agenda for the first
time, but no progress was made as Moscow insisted
that the Chinese must take the matter up with the
Vietnamese directly. We do not expect any significant
developments in the 10th round, which begins in April
1987 in Moscow, but the talks are now the prime
venue at which Beijing can probe the limits of Soviet
flexibility in eliminating the first of the three
obstacles
New Wrinkles
These two developments are supplemented by three
others. In September 1986, China and the Soviet
Union concluded the first new consular agreement
since 1962, when each side closed all its consulates in
the other country. The agreement paved the way for
the reopening in December of consulates in Leningrad
and Shanghai. It also set the stage for negotiations to
improve visa reciprocity and better protection for the
rights of Soviet citizens in China-both of which
should make life easier for Soviet technicians assigned
to help with Chinese development projects. Beijing
will probably allow Moscow to open a new consulate
in the northeast in 1988 (with China opening a
consulate in the Soviet Far East in return), but is
tying Soviet requests to reopen its consulate in
Guangzhou to a general improvement in political
relations. China has refused even to discuss Moscow's
request to reopen its old post in Urumqi.
In May 1986, China and the Soviet Union signed a
two-year cultural cooperation agreement calling for
exchanges in the fields of science, education, culture,
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Figure 3
Disputed Areas Along the Sino-Soviet Border
Soviet Union
Treaty of Nerchinsk yL Jt
_ { a B
(1689) B
M~ggo Us
China
Beiong*
Nort
Floc a
Sea
of Japan
Yellow Sea '$W'
~' O Japan
u?n9
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Secret
art, information, radiobroadcasting, and television.
Under this accord, the two nations' official news
agencies, Xinhua and TASS, concluded a journalistic
exchange agreement in December. In addition, recip-
rocal visits by special touring groups of friendship,
medical, theatrical, cinematic, and musical officials
have picked up over the past year. The two sides in
1987 plan to exchange 200 students, the same number
as in 1986. The cultural exchanges will probably
increase, and the heightened concern in Beijing about
the spread of Western values in China may lead to
some increase in the number of students sent to the
Soviet Union.
Perhaps the most interesting development is the ex-
panding bilateral dialogue. For the first time, high-
level Soviet officials in 1986 visited Beijing-on three
separate occasions-to present Moscow's position on
US-Soviet arms control negotiations. The Chinese
subsequently informed the US Embassy in Beijing
that the first two briefings were "empty and long,"
and characterized the third as not overly informative.
At the same time, however, the Chinese took care to
say that both US and Soviet briefings have been
useful. This characterization of the briefing may have
been offered to encourage Washington to expand its
own briefing program for China. Meanwhile, the
Chinese have noted to the US Embassy that both
Rogachev and new Soviet Ambassador Oleg Troyan-
ovskiy are more open-but no more flexible-than
their predecessors.
According to Chinese foreign ministry officials speak-
ing to US Embassy officers in Beijing, the Chinese
and Soviets have held "frank" discussions of regional
issues and-as recently as January 1987-consulta-
tions on the Middle East at the senior working level.
The director's of Moscow's Institute of the USA and
Canada (IUSAC) and Beijing's Institute of Contem-
porary International Relations (ICIR) lectured at one
another's institutes in October 1985 and September
1986, respectively, in an exchange of visits. The
deputy director of IUSAC subsequently visited Beij-
ing in November 1986, and we expect ICIR's deputy
director to reciprocate. The Chinese, however, have
expressed reservations about collaborating on a regu-
lar basis.
We believe Beijing has also decided to maintain an
atmosphere conducive to its broadened contacts, pass-
ing up opportunities to blacken the Soviet eye. For
instance, Beijing chose not to play up either the killing
of a Chinese officer in a shooting incident between
Soviet and Chinese patrols in July 1986 on the Soviet
border with Xinjiang Autonomous Region or the
errant landing of an unarmed Soviet submarine-
launched missile near the Heilong/Amur River in
September, even after the incidents were widely publi-
All of these developments over the last two years raise
questions about whether Beijing has changed or is
changing its assessment that the Soviet Union poses
the principal threat to China. For a variety of reasons
beyond the frequent reassurances offered by top
Beijing believes the Soviet Union is concentrating on
rebuilding its economy and defending the gains it
made in the 1970s before resuming the offensive early
in the next century. At that time, Moscow will once
again increase the military pressure on China to bend
Beijing's policies to Moscow's will. This Chinese
10 The turmoil in the Chinese leadership caused by the forced
resignation of General Secretary Hu Yaobang, moreover, is unlike-
ly to lead to a reassessment of Soviet policy. The charges against
Hu include that his rash statements complicated relations with
Japan and the United States and that he was pro-Soviet. Whatever
the merit of these accusations, they indicate that Beijing still does
not see its strategic interests running parallel with Moscow, and
China will continue to share with the United States a common view
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A US Ace: Growing Defense Cooperation
With Beijing
No single element better exemplifies the qualitative
difference in Sino-Soviet and Sino-US relations than
the deepening military ties between Beijing and
Washington:
? Senior Soviet and Chinese military exchanges end-
ed in 1958, whereas, since 1983, the Chinese have
hosted two visits by the US Secretary of Defense
and sent their Minister of Defense in 1984 and
Chief of General Staff in 1986---as well as numer-
ous lower ranking officers-to visit Washington
and tour the United States.
? The last Soviet naval port call to China occurred in
1956; whereas, US and Chinese warships steamed
together in January 1986, Beijing hosted its first
US port call at Qingdao in November 1986 and the
Chinese Navy may pay its first American port call
to Honolulu in 1988.
contract for artillery-locating radars.
? Beijing buys a few military transport helicopters
from the Soviet Union each year but recently
contracted its first major Foreign Military Sales
(FMS) purchases from the United States, signing a
$500 million deal for 55 avionics packages for
China's F-8 fighter aircraft and a $62 million
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judgment is given substance in Beijing's continuing
and determined military modernization program de-
signed to meet the long-term Soviet threat." More-
over, China has shown no indication of backing away
from its relationship with the United States, which is
deeper and growing faster than Sino-Soviet ties.
Indeed, it is the military relationship with Washing-
ton-and its attendant military technology transfer
component-that Beijing is most interested in
expanding."
What has changed is how China has chosen to
manage the threat posed by the Soviet Union. We
think a number of things account for Beijing's deci-
sion to move forward without real Soviet concessions
on the three obstacles. Underlying everything, of
course, is Beijing's judgment that its reform program,
including the ambitious military modernization drive,
cannot succeed unless tensions with Moscow are
lowered and China is left free to concentrate on
rebuilding the country. Thus the recent growth is to
some degree an attempt to manage tensions by allow-
ing movement in selected areas while continuing to
improve China's military capabilities against the
Soviet Union. On another level, there is also obvious
economic and S&T benefit to China in expanding
relations in these areas. And, we believe China calcu-
lates that measured improvements in Sino-Soviet rela-
tions increases leverage with Washington in the stra-
tegic triangle, and, perhaps more important, creates
tension in Soviet-Vietnamese relations by feeding
existing fears in Hanoi about Soviet reliability.
In our opinion, these reasons do not adequately
explain the changes we have seen in the last two years,
and we believe there are more powerful explanations.
We believe China is reacting to the rise of Gorbachev
and his interest in Asian issues and his new style.
Under Brezhnev and Gromyko, China knew there was
little prospect for improvement, and Soviet style and
behavior made it easy to rebuff Moscow without
appearing to be intransigent. Gorbachev's style calls
for a different tactic, but Chinese leaders also believe
that Gorbachev sincerely desires better relations. We
believe the expansion of the political venues, in partic-
ular, represents a Chinese effort to probe the limits of
Gorbachev's flexibility.
The other force that we believe is driving Sino-Soviet
relations is the expansion of US-China relations,
particularly the growth of military ties. It does so in
two ways. More visible, deeper Sino-US relations
increase the pressure on Beijing to demonstrate to the
Third World that it truly pursues an independent
foreign policy. Beijing does so by roughly balancing
US and Soviet visits, and increasing ties to Moscow
where it can. And, we believe, China calculates that
the bounds of what is permissible in Sino-Soviet
relations also grow as the Sino-US ties deepen.
For all these reasons, we believe Sino-Soviet relations
are entering a period that will see additional move-
ment. In particular, we would expect to see further
growth in economic relations, and the political dia-
logue may also broaden. As with China's relations
with the West, progress is likely to be uneven and
unsteady. We believe China's perception of Gorba-
chev, his motives, and power will be a key factor in
how Sino-Soviet relations unfold.
changed.
Perhaps even more important in this regard will be
China's perception of the reaction in the West and the
United States in particular. Repeated efforts by
Chinese leaders to reassure Washington that Beijing
continues to view Moscow as a threat indicate to the
United States that Chinese concern about a possible
negative US reaction inhibits Sino-Soviet relations.
Deng Xiaoping, for example, chose to air his hardline
response to Gorbachev's Vladivostok initiatives on
American television in an interview with Mike
Wallace, and expressions of concern about Sino-
Soviet relations made by US Congressmen have made
an impression on Chinese leaders. Vigorous criticism
of Soviet foreign policy and the continued stress on
the three obstacles are also meant to reassure the
West that China's view of the Soviet threat has not
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Secret
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