INTELLIGENCE EVAULATIUON OF JAPANESE PROPOSALS FOR DELEGATIONS FROM INTERNATIONAL CHINA EMBARGO LIST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62-00647A000200110001-8
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 74
• Document Creation Date: December 9, 2016
• Document Release Date: October 27, 1999
• Sequence Number: 1
• Publication Date: December 20, 1955
• Content Type: REPORT

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PITIP.;4'sPiJ
INTELLIGENCE EVALUATION OF JAPANESE PROPOSALS
FOR DELETIONS FROM INTERNATIONAL CHINA EMBARGO LIST
Economic Defense Division
Office of Research and Reports
Central Intelligence Agency
Project 111,119
20 December 1955
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utk,1,2_0Ssgiae t
an
Introduction .0 .0 0 0 0 0 0 .0 .0 .0 0 00 i
Summary 0 . . . . 0 0 0 0 0 0 0 0 0 0 0 0 0 ii
gomm2kitix Zritelligence Revift
Group Os Metal-Working Machinery 0 0 0 0 0 0 0 1
Group is Chemical and Petroleum Equipment 0 0 . 4
Group 2s Electrical and Power-Generating Equipment 7
I
Group 3: General Industrial Equipment 0 . 0 0 0 12
Group 44 Transportation Equipment 0 0 0 0 0 15
Group 5: Electronics and Precision Instruments 24
Group 6s Metals, Minerals, and Their Manufacture 27
Group 7; Chemicals and Petroleum Products 0 0 0 33
Group 8: Rubber and Rubber Products. 0 0
0 0 0 38
Group 9s Miscellaneous . 0 0 . . di o o o o o o 40
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7
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TatA,e an*:.1 loari.4.1(A VIINJ, tlAn
7 fai,epr'%et t ea Ln C;InmAunlat
?oars, 1-J52-1960
Table V.Atimatod IlAicnt-, and rlanned rg
Urgr..nal!-.-ed %n 01.1)!;a.? by Typea
Tirtirtt(s,?
. .
twttma'Red '1,.o.v,att and 'elw.,,n,e.e (Targ4
Y:n by Type
I' P,t!';(?21 I7
, - -
and.12.41-:sr.':.-..!.T.,e1
Metal _
3lected Yaz1
Table 87, lapd
5 "I! t? Worx-Yerrt,us AeLot13 111-4
rh/ne.,. $4,14,-..4ted Years 195?2-,..?.1-74(i;
Tab".J.,e %1,2ent tnA z2lf
zielected ebemll'/ala in Communist China,
tactteare 1952-1960 . .
Table 10 Rezent and Pmjected PrMuction f Sie
Selected Rubber Nanufa4Anre8 in emmun:tIlt
for :;elected Yeara 1952-1960
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Urtrgalctiqp
On 5 October l9550 the Japanese Government submitted to the
US Embassy in Tokyo a list of items which the former desired to
delete from the International China Embargo List.
Pursuant to a request from the Executive Committee of the
Daonomic Derence Advisory Committeey the Japanese list has been
examined in the light of present intelligence information in
order to determine tbe relative strategic and economic importance
of each item proposed for decontrolc,
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SMEARY AND CONMIT SIGNS
tti .neee 131_21.a.)
The list of 112 items proposed by Japan for deletion from control
appears to be a careful selection of goods for -which Coeetunist China
would present a ready market and shieh Japanese induatryi, for the most
part, could promptly and profitably supply. 3ome caution seems to have
prevented the inclusion of certain obviously strategie ceenodities in
the list. But if carefully examined against current Intelligence indica-
tions and estimatosy most of the goods on the Japanoee liety if made
freely avai/able to inay would directly facilitate the meeting of
presently planned goals. Neu of the proposed items aro not only needed
by Minsky but are in short supply also in the rest of the Blec. It is
not within the purview of this study to determine whether centrols
ahould be revised downward in the absence of prior aeaarance that China2s
public policy is no longer aggressive.
The items proposed by Japan are not produced in email or eedium
establishments, which in the Japanese submission were said to be "desper-
ately competing -with each other in the narrow and depressed doeeatic
market and suffering from snbenployment" and which were te benefit
directly by control reductions' They are produced in large or postly
smaller plants. Coetrol reductions are also eagerly sought by other
COMM PC0 and the benefit which any particular PC might envivage as
resulting from the freeing of a tertain item for trade with China might
have to be shared with other PCa and non-PC free world produeere on a
highly competitive basia. Tor many of the proposed itemo?? Ceine has
already :let contracts in the free world and delivery enly awaits revi-
sion of the controls.
In some of the proposed items, 2/ problems of knowehow protection
and patent licensing are also involved. For example, the production of
some decontrolled eqeipment for sale to Communist China may require
assent, say from a US licensor. At the present time, the majority af
US firms licensing use of their patents abroad still dew themselves
deliveries to Bloc destinations. Depending on the extent to which -Stems
are decontrolled, it may become necessary to determine whether US firms
Should let their foreign 2.icensees trade with the use of their patents
in a manner denied to themeelves or whether US licensees abroad should
be induced to reflect current US public policy at any court. Decontrol
of certain items of complex design also accentuate the preblem of accu-
rate identification of items for customs and enforcameet purposes
particularly in cases where other types of that same commodity remain
under control. It maybe necessary for sellers of hielly eeeplex
apparatus to exchange type or serial designations in the other PCe to
permit proper recognition of items that could teen be legally supplied
to China.
'11112.M????????????Im.OWNIIRION,FM........11
For exempley Item C-509: Radar and radio navigati-n equiement,
including direction finders, vecos,
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Communist China's Position by Commodity Croups
? China's current supply is inadequate in the following categories, in
which the Soviet Bloc cannot assist China materially except by reallocation
of critical resources owing to internal shortages: Met forming madhinery
and advanced industrial equipment of all kinds, chemical equipment, ships*,
electric power generating equipment, electronic and precision instruments,
motels such as copper and.aloninum certain admirals, a large group of
Chemicals and rubber and rubber prOducts..
. ,
?
Th b rest of the Soviet Bloc could supplement China's inadequate supply ?
in the following categories with fewer difficulties or without major reallo-
cation of resouzaeaz lietal-cutting machinery, fairly simple'petrolenm equip-
ment, y general industrial equipment of simpler specifications, locomotives,
? rolling stock, and automotive vehicles.
Chinese capability at .present is beat developed for production of the.
followings Mital-autting tools, rails, steam locomotives, ordinary freight
care, simPle construction and mining machinery, selected consumer's goods. '
seeing mechines, haUdtoolt, bicycles), iron ore, steel (ordinary,
but net alloyed steel), tin, wolfram, and coal.
Covvetuxiat admits .nve Year lobo
The brosd,objective of Communist China's first Pia Tear Plan is the
Oreation abode industry ebich will Permit further expansion from Chinals
? own resource.. .thia plan, however, can be used only as a general expretsion
of future goals. In July 1955, the first Comprehensive announcement was.
made ooncerning the plan which spans the period 1952 1-, 2957. Sinceithers:-
. have since been bother, annoUncements of plan Changes in the product mix
and further scaling down'of:origbaall4rprojected goals.
The projected trend for annual increase in the GNP of Communist China
for the period 1954.1. 2957 is eboutip5 Percent Per Swirl, me: IP itself
is difficult to calculate: for 1952, in terms of. US dollars at 1952 prices,
it is about $65 billion in terms of the official rate of exchange, it ii
about $33 billion (67 billion Chinese yuan)-j. The rata of GO gratb pro-,
jeoted for 3954 - 1957 is lover than the rat. achieved during the period
3.950 -.1953, owing to the very law level of the economy in 1950. But the'
presently applies** growth does noise= beyond Chinese sepal:catty,
judging from past perforoisnost In 1955, th? GNP mil oboPit 19..rareatt sum,
1954 To soomoplish this growth and lirreelamont. lausterite (Chinese style):
is being imposed on the ,pspu1sti t Tooteonscoptioc- is being Lialitid..
00111Wher goods industries are de-sphasised and some-of the goods.- anah
textiles, are being sold abroad to esquire 'foreign exchangei
.
simple dri.11ing mod *straight rano refinintequigetent but not
? Iseraokimg* unite for poigmerisitiOn prodisses or lubricating oil
reining mita.
, The 190 avorege daily colerie intaksis estimated to be 1,781 as
? eellislirOdlidth 4961 in tbi prewar period. China has 'currently the
? .towest per capita caloric intake.dslatis countries exeept berth
?.rietnas and ?
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Aside from "political reeducation" and propaganda projects, the major
effort in the current Five Year Plan is directed toward the development of
heavy industry. The plan calls for an expenditure equivalent to $33.3
billion and an overall plan investment in capital construction equivalent
to $18.1 billion (At official rate of exchange for 1953.) I/ The relative
amounts assigned to various sectors are as follows:
Industry 58 percent
Transport, telecommunication 19 percent
Agriculture, forestry, consrva-
tion
All others
8 percent
15 percent
Within the industrial portion of the plan about 89 percent ($9e3
billion) is to be invested in heavy producer's goods industries and 11
percent in consulters goods industries. The largest Share of this expendi-
ture is to go to the engineering industries (which require machine tools,
bearings, motors, engines and industrial equipment of all kinds), followed
by iron and steel, electric power and coal.
The Role of the USSR and European Satellites in the Fulfillment of China's
Economic Plans
The officially announced foreign trade of Communist China for 2954
(the only year for which such an announcement has been made) was 8.4
billion yuan or About $394 billion. It is estimated that total imports
amounted to $1.98 million and exports to $1.49 million. This estimate
dee not conflict with Chinese statements that trade in fundamentally
in balance if military deliveries under the secret loan from USSR and
capital transfers are regarded as credit items. A secret Soviet mili-
tary loan of about $400-500 million was reported in 1954. In addition,
there have been large industrialisation loans although the total amount
is not known. In October 1954, the USSR announced the extension of one
of these loans in the amount of $130 million.
Communist China at present conducts About 75 percent of it. foreign
trade with the Soviet Union. The USSR has agreed to provide help forth.
principal 159 projects of the 694 projects scheduled for reconstruction
or renovation during the 'current 0hinete Five Year Plan. The European
satellites are contributing a small Chars but their help is nonetheless
substantial. For example, Rumania is currently producing electric genera..
tors for Communist China.
? The Soviet contribution in terms of materials actually supplied to
China has not been accurately estimated. Early reports suggested that
the USSR would furnish from 50 to 70 percent of the materials required
.1/ 76.64 and 42.74 billions yuan respectively, oonverted at 2.367 per $1.
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for the 159 key projects but later indications are that actual deliveries
may be somewhat less. On an overall basis, Chinese leaders have stated
that China will have to import over 40 percent of the equipment and
machinery required to fulfill the goals of the current Five Year Flan.
But, as previously indicated, in such items as electric power generating
equipment, telecommunications, marine engines, military and other specialised
equipment China will depend to a far greater extent an imports.
China's current annual requirements of industrial equipment amount
to about 1/2 percent of the Soviet GNP or 14/2 percent of Soviet produc-
tion, a very sizable amount. Moreover, the burden is more significant for
an economy whose resources are already heavily committed to internal expan-
sion.
Recent reports describe specific difficulties encountered by the USSR
in supplying China: Soviet officials have attempted to procure goods from
Germany for export to China to relieve the pressure on Russian resources.
In 1955, Chinese buyers seeking to obtain equipment for a chemical factory
were unable to secure from delivery commitments in the USSR, European
satellite producers were able to supply the equipment but pleaded inability
to erect the actual plant without western technical help. Finally, it has
been reported that the USSR and the European satellites have developed
secretly a list of items, the export of which to China is limited or
prohibited, in order to conserve the available supply for their own use.
On this list are chemicals, pharmaceuticals, rubber and rubber goods.
Evaluation of the "Strategic Importance" of Items Proposed for Decontrol
In order to determine Communist China's vulnerability to denial of
items included in the Japanese list and to estimate the consequences of
decontrol, the individual items of the Japanese proposal have been examined
and rated in the light of intelligence chiefly on the follewing points:
a. Strategic importance, i.e. direct usefulness in military
operations or for build-up of military potential;
b. Significance in Communist Mina's current and long-range
industrialization plans;
c. Currant and future availability in China (production and
trade); and,
d. Capacity of the Soviet Bloc to supply China.
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Tables 1 3 represent a somary of the acre detailed eaniodity
intelligase review in the latter part of this paper. The fo.Umuing
provisionel meocrimal ratios, have been used in judging each it an
the Japanese list as to its relativ* presentIctrategie inportanas"
in terns of free-world security:
Rating 3 - Strategically nest important and/or would remove
nailer *stage in Minim plan !Willow*
Rating 2 - Strategically important items strong Chinese drat,
but noels out resolves* could fifl large pests at
requiramat
Rating 1 - &trate...ally least important among it ineluded in
Jeponeee proposal
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8
9
TABLE I
'..162a,m4.111mgmx.' ca.zsziaLua,s,...1=1,..aLlatax...um
ELQIUMZ,
7 'Malkaliii qttantal
Groun peyr
Met0-4orking Eachinary
Chemical and Petrolcium:Equiiment
,Electrical and PcweAenerating Eqn*
?-, $ . ? ? ? - . & ,.. vo .: ? are,. -
* Al ' 4 ?*...41%
t.1..
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General Industrial Equipment
Transportation Equipment
Electronics and Precision.instrgmentp ,
Metals hinerals and their ManufactUr
Chemicals and Petroleum Products
Rubber and Rubber Products
Aiscellaneous
Grand Total 70
29
13
8-1?0001.1.00ZOOOVLP900-Z9dCltl-
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SCR-1T
_ -
TABLE 2
'STRATEGIC alPORTJOW RATINGS FOR CHINA LIST fl/III 0 and 14/1a ITEMS
PROPOSED BY JAPAN FOR DECONTROL BY ITEMS UNDER RESPECTIVE RATINGS
Item Nos.
BagNalEssiImportant
Group 0: Metal World:1g Machinerz
C-001 Metal working machinery, machine tools and accessories
n.e.s. (a) metal cutting, (b) metal forming
3010 External cylindrical grinders
3011 Internal cylindrical grinders
30/7 Single spindle grinders2n.e.s. with table 12" or more
3067 Metal cutting and working tools
3068 Carbide and carbide tipped tools or dies
3072 Presses (mechanical or hydraulic) with pressure of 1,000
tons or less
2003 Horizontal combination boring, drilling and milling machines
/ Commodity definitions have been abbreviated for convenience
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TABLE 2
(Continued)
"STRATEGIC IITOCANCE" RATIEGS FOR CHINA LISILLIZILLLnd III ITEiS
PIOPOSED 7Y JiPAN 1'3R D7CONTROL BY ITgES UNDER R3SPECTIVE-RATINGS
Item Nos.
Commodity
Growl 1: Chemical and Pet_1292._.euTLnylar_ient
C-107 Driers for chemical processes
C-113 Chemical process vessels, tanks, vatsoiping - lined with
corrosion - resistant material
C-121 Evaporators, multiple-effect
C-131 Pumps (except vacuum), (a) corrosion resistant,
(b) high-temperature, (c) working pressure 75 Posoi.
(d) parts
C-132 Vacuum pumps (and parts) mechanical noe.s.
C-140 Storage or transportation containers (special characteristics)
3120 Processing equipment operating at pressures over 450 posei.
3132 Vacuum pumpsIn0e0s0 and parts
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S4 CR1T
Thai;
(Continued',
"STRATEGIC .11:PORTANCE" RATINGS FOR CHINAi,ISIIidn, rras
PROPOSED BY JAPAN FOR DECONTROL BY rra:s UNDER RESPECTIVE RATINGS
Item Nos.
Commodity 6i
Group 2: :Electric and Power Generating Equipment
C-255 Diesel engines 25 hop0 and over, n.e.s.
C-256 Internal combustion engines, n.e.s.
C-260 Electric motors n.e.s.
C-266 Power equipment n.e.s" (a) equipment for electric generating,
transforming, ectifying and converting, substation equipment,
(b) plant for production, (c) Boiler-house plant for above
3256 Diesel enginessn.e.s. (a) 300 to 800 h.p. k9 400 rpm or over.
(b) 800 hop0 or over @ 200 rpm or over
(c) 1500 h.p or over @ 200 rpm up to but not including 400 rpm
3265 Electric motors n.e.s. of 500 h.p but not including 5,000 h.p0
and automatic controls
????????111????
2265 Electric motors of 50000 hop0 but not including 12,500 hop?
and automatic controls
2266 Electric generators turbo-generators, turbines designed
for turbo generators, -- and motor generator sets o:
5,000 'cow0 and ovein.e.s and parts
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SECRET
TABLE 2
(Continued)
"STRATEGIC IFPORTANCE" 'RATINGS FOR CHINA LIST, IL/III, and,WII_ITEES
PROPOSND BY JAPAN FOR DECONTROL BY ITaS UNDNR RESPECTIVE RATINGS'
Item Nos.
Commodity
Group 3: General Industrial Emlamk
C-330 Calendars (rubber-working) with 3 or more rolls and capable
of handling fabric 55" or over
C-375 Abrasives (Silicon carbide, wheels, corundum, emery etc.)
Ofto(g)
C-380 Compressors and blowers,meose (a) (b)
0-384 Conveyor belting
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TABLE 2
(Continued)
P/O?SED 3Y JAPAN FOR DECONTROL BY ITaS UNDER RESPECTIVE RATINGS
Item ros.
Commodity
Group 4: Transportation Equipment
3416 Fishing vessels (a) steel bonito 50 - 130 feet,
(b) cutters, motor driven, 50 - 87 feet
2416 Fishing vessels and hulls with length over 50 feet
(note: those with hulls of wood can be rated 0111
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TABLE 2
(Continued)
"STRATEGIC IMPORTANCE* RATINGS FCR CHINA LIST, 11/111t and IL/II ITEMS
PROPOSED BY JAPAN FOR DECONTROL BY ITEMS UNDER RESPECTIVE RATINGS
Item Noe. Commodity
Group 5: Electronic and Precision Instruments
C-501 Telecommunications equipment
C-504 Subminiature electronic circuit components
C-509 Radar and radio navigation equipment
C-561 Bridges
C-566 Measuring and Testing equipment
C-567 Metallurgical microscopes
C-568 pH meters
C-571 Precision, scientifiand optical instruments
C-572 Pyrometers
c-574 Spectographs, spectrometersmonochrometer
c477 Voltmeters, ammeters, microammeters
C481 Densitometers
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TABLE 2
(Continued)
"STRATEGIC IMPORTANCE* RATINGS FOR OHINALIST, IL/III and ITEMS
PROPOSED BY JAPAN FOR DECONTROL BY ITEMS UNDER RESPECTIVE RATINGS
Item No? Commodity
Group 61 Metals and Minerals
C-617 Single and multicore electric power cable insulated, with
or without armour
C-620 .Platinum products (provisional-part c - thermocouples
rated *1")
C-265 Tin plave
c_630 aluminum or aluminum alloys (as defined)
C-664 Sulfur bearing pyrites
3601 Antifriction bearings (a) law carbon unground steel lwallt,
(b) carbon steel balls and rollers
2031 Antifriction bearings and parts (intermediate sizes, all
types as defined)
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TABLE 2
(Continued)
"STRATEGIC IMPORTANCE" RATINGS FOR CHINA USTI IL1III, and IL/II ITENS
PROPOSED BY JAPAN FCR DECONTROL BY ITEMS UNDER RESPECTIVE RATINGS
Item No, Commiiditz
Group 7: Chemical and Petroleum Products
C-703, Ships bottom composition
0.706 Rubber. compounding agents
C-710 Acetic acid and acetic anhydride
C711 Acetone
C-717 Calcium carbide
C..716 Carbon bieck1r6e0s0
0-721 Chlorates and preparations thereof
0-725 NN - Dlmethylaniline
Cd.728 Formaldehyde
C-73 5 Nethylmethacrylates n.e0s.as defined
0.737 Nitric acid, ammonium nitrate, potassium nitrate
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TABLE 2
(Continued)
"STRATEGIC IMPORTANCE" RATINGS FOR CHINA LIST,. IL/III, and 11111 ITEMS
PROPO&D BY JAPAN FOR DECONTROL BY ITEMS UNDER RESPECTIVE RATINGS
Item No. Commodiy
Group 7: Chemical and Petroleum Products (Continued)
C-742 Permanganates: calcium and potassium
C-744 Phosporus all kinds (note: Red phosphorus may be rated sr)
c.753 Sulfuric acid: 93 percent H2S?4 and stronger; including oleum
C-756 Tricresylphosphate ?
0-758 Vinyls and resins
3720 Fluorinated hydrocarbons: (as defined)
3761 Sulphur
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TABLE 2
(Continued)
"STRA.TE:GIC rPORTAIICE" RATINGS FOR CHINA LIE 114/III, and min ITTi24S
PROPOSED BY JAPAN FOR DECCEITROL BY ITEMS UNUER RESPECTIVE RATINGS
Item No0 Commodity
Grad') 8: Rubber and Rubber Products
0.820 Tires and tubes n.eas. (as defined)
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TAMA
(Continued)
nSTRATEGIC DiNIRTANCEft RATINGS PCB CUM LIST. IL/III. add II ITEMS
PROPOSED
Javass.
Commoslity
Rating 28 Important
Group 0: Metal Working Machinery
3008 Mtlti-station tools
3055 Rorisonta19 draw cut, shapers
3034 Axle lathes (borderline case for rating 3)
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?4-27,R7irT
TABLE 2
(Continued)
"STRaTEGIC IMPORT&NCE" WINGS FOR CHINA LIST. IL/III, and IL/II ITEMS
pROPOSED BY JaPAN FC. _DENNTROL BY ITEMS UNDER RESPECTIVE WINGS
Item Noe. Commodity
. Group Ls Chemical and Petroleum Eouipment
C-117 Water treatment equipment (industrial)
Group 2g Electric Power Generating Eouipment
C-210 Welding machines and equipmenttn.e.s. and parts
(see item 3202)
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TABLE 2
(Continued)
1,STRaTC IMPORTANCE" RATINGS FOR CHINA LIST. and IL/II ITEM
PROPOSED Br JAPAN F0R DECONTROL BI ITEMS UNDER RESPECTIVE RATINGS
Item Nos. Commodity
Group 3's General Industrial Eouinment
C-303 Cruicbles? artificial and natural graphite
C-331 Masterbatch mixers with automatically controlled time cycle,
chamber volume 130,000 cuocmoor more
C-351 ? Mining equipment and machinery, no e so
C-383 Crushing equipment
(a) Crushers, grinders, and pulverizers
(all types except for food processing)
(b) Colloid mills
C-385 Core drills
C-390 Graphite
(a) artificial and amorphous
(b) powder
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TABLE 2
(Continued)
"bTRATEGIC IIIPORTANCE" RATINGS Fat CHINA LIST III and IL II TrEMS
PROPOSED BY JAPAN FOR DECONTROL BY ITEMS UNDER RESPECTIVE RATINGS
Item_Noso
Commodity
Group 4: Ilmsortation E9uipment
coat%
Motor vehicles, parts and equipment .- trucks trailers
and motorcycles,n,e0. (except scooters, tricycles under
1/2 ton and prItlate touring cars) (Note: certain vehicles
such as firefighting and buses can be Fited "1")
C4470 Locomotives and partspnoeos (general service, switching,
industrial, mine)
0-471 Railway rolling stockIn.e.s0 and parts
0.472 Railway railso.esso
3477 Railway rails of 70 lbs. or more per linear ydo
xxi
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TABLE 2
(Continued)
"STRAMIC ]PORTA-CE" RATINGS 73R OPM LIST, and ITTIS
PROWS& BY JAPAN FOR mammal, BY =MIS UNDER RESPECTIVE RATINGS
Item NO80
Group 5: Electronic and Precision Instruments
CO2 Detection apparatus
C475 Surveying instruments
C-M Micro-hardness testers
C-586 Strain usige equipment
2568 Electronic automatic controlling units (provisional because
of present narrow definition - potentially a 03' rating)
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TAME 2
(Continued)
"STRATEGIC lriPORTAXE" RATINGS FOR CHINA LIST and IL II rals
PROPOSED BY JAPAN FOR DECONTROL BY ITEMS UNDER RESPECTIVE RATINGS
Item Nos.
Commodit,
Group 61 Metals and Minerals
C-601 Antifriction bearings and parts (as defined)
(a) balls (law quality) (b) unground
C-635 Iron and steel productstn.e.s0 as defined (part rb" - alloy
steel rated "3")
C-650 Lead in semi-fabricated and other such forms4n.e.s.
C-662 Sodium (metallic) (provisional rating)
Group 7: Chemical and Petroleum Products
C-733 Methanol
C-752 Sodium cyanide
C-771 Petroleum asphalt (provisional)
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TABLE 2
(Continued)
._"STRATMICEMMMICEuRKrITEMS
PROPOSED BY JAPAN 'DR DECONTROL 3Y ITVIS UNDER RESPECTIVE RATINGS
Item Nos.
Commodity,
Group 9 Miscellaneous
0-901 Abaca and sisal, fibres and cordage
xxiv
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TABLE 2
(Continued)
"STRATEGIC II1P1RTANCEn RATINGS FOR CHINA LIS'.sj._V_W:z_EsLWLIL'_TEMS
PROPOSED BY JAPAN FOR DECONTROL BY ITEMS UNDER RESPiCTIVE RATINGS
Item No. CommodiIE
221121.1' 11.221.ItEnn
GToup3t General Industrial Equipirent
C.320 Haterials-handling equipments (a) Forltraift trucks, f,b) platform
trucks, (c) ther trucks, stackers, trailers
C.321 Civil engineering and building equipment (a) to (j)
G-376 Air.-conditioning units (self-contained, capacity over %GO
BTU per hour)
C-381 Portable handheld tools, (a) metal working, (b) mining and
quarrying, (c) transportation and servicing
C-395 Precipitators (electrostatic)
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TABLE 2
(Continued)
"STRATEGIC IMPORTANCE" RATINGS FOR CHINA LIST I III and a II ITEMS
PROPOSED BY JAPAN FOR DECONTROL BY ITEMS UNDER RESPECTIVE RATINGS
Item Noe
INIIIMOROMIRMEN.."????
2oimaodity
Group its 32.c.anme.:4o1...2ta t
Ce401 Watercraftyn eo 0 and important components
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TABLE 2
(Continued)
"STRATEGIC INPORTMICE" RATINGS FOR CHINA LIST, and WIT ITENS
PROPOSED BY JAPAN FOR DECON7ROL BY rrEms UNDER RESPECTIVE RATINGS
Item Noo Commodity
Group 5t Electronic and Precision Instruments
C.576 Telescopes
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TABLE 2
(Continued)
"STRATEGIC IMPORTANCE" RATINGS rce CHINA LIST, and IL/Il
IMPOSED By JAPAN FOR DECONTROL BY nuts UNDER RESPECTIVE RATINGS
Item No p
Commodity
Group 6: metals and Minerals
C.669 Zino (all forms except manufactures)
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TABLE 2
(Continued)
'STRATEGIC DIPORTANCE" RATINGS FOR 07INLEELJEZZaand il/li ITEMS
PROPOS M BY JAPAN FOR DECONTROL ny ITEMS UNDER RESPECTIVE RATINGS
Noo
CommodiV
Group 7s Chemical and Petroleum Products
C-720 Cellulose nitrate containing not more than 12.3 percent
nitrogen
C-722 Chromium compounds as defined
C-730 Glycerine
C-73I liydrosuinone
C.738 Paraffin war Twrbroleum jelly
-xxviv-
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a-ferara-Z.-T.
TABLE 3
MareEtnallenaliELTZLQUitaZtalaMI
Ronal; liet 4pAp RpEQONTROL
Baja&
C most Important)
2 (Important)
1 (Least Important
70
29
13
63
25
12
Total
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kfra-11-k.1'
Cmni,sUa==9.1tUALXe ev e
i;-,rgrQ-Brk-T.
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GROUP 0
METAL WORKING MACHIERT
Japan has proposed 1 China List, 9 and 1 IL-II items for
decontrol.
These items cover metal-forming machinery (presses), metal-cutting
machines of medium size, and tools (bits, drills, etc.). This machinery
is needed by Communist China to develop production of other machine tools
as well as to develop production of critical components of such end items
as freight cars and locomotives, tractors, motor vehicles, and general
industrial equipment.
Some of the items proposed for decontrol were formerly rated IL-I
and ware downgraded during the list review of 1954. the items the larger
sizes of combination horizontal boring, drilling, and milling machines
(Item 2003)9 is now disagreed in 0000M and the U.S. is currently seeking
to have a part of it upgraded to IL-I.
At the present time, most of the machinery suggested for decontrol
by the Japanese is either not being produced in China or is produced in
small quantities and in very limited sizes. In the production of some items:
however, such as tungsten carbide tipped tools, China appears to be making
progress, although the indigenous supply is believed to be inadequate.
China ,s current production of machine tools is still relatively small
although recent increases have been large. Total Chinese production was
estimated at about 150000 units for 1955 as compared with only about 6,000
units in 1951. l/ Most of the machine tool types. now in production are
fairly simple. Current development plans have been altered recent];
for the next two years they no longer seem to stress rapi4A4aihtitative
increase in production but improvement of quality, modernizatiori-ina
greater diversification of types. Thus, the previously announced annual
production goal of 300000 machine tools for 1960 probably is of doubtful
validity. By 1957, on the other hand, the assortment of machines then
in production is now planned to encompass 142 types of tools of modern
design; currently only about 70 types are being built, many of them of
obsolete design.
? Several new factories will have to be built to 'achieve the planned
expansion. The principal construction prolects call for erection of at
least four machine tool plants and reconstruction of existing facilities.
The Soviet Union is to assist China on this project but the exact extent
of Soviet participation has not been disclosed.
y It is recognized that a count of numbers without reference to value is
inadequate statistical procedure, but it is the only guide available at
the present time.
-1-
sliK-ErEL
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S-E-C-R-E.T
Recent reports indicate that good progress is being made at some of
the Chinese machine tool plants, and at one accessories plant in the
production of items which formerly were in extremely short supply. For
example, pleelsion grinders were being produced to the following speci-
fications!:
Surface grinders
300-1000 mm
Internal grinders
80- 160 mm
External grinders
600-1000 mm
At one tool plant, the following items were reported in production:
18 percent tungsten drills
Reamers (taper and parallel)
Taps end dies (all threads)
Side and end milling cutters with inserted teeth
Slittelg saws, plain and segmented with renewable teeth
(maximum 720 mm)
Carbide tipped tools and gear cutting hobs
The above mentioned plants reportedly had both old and new equipment. The
old equipment was of European and U.S. makes. The new equ'lpment was Czecho-
slovakian, East German, and Russian. Significant shortcomings still persist
in the machine tool industry, however. Minister Li Fu-Shun stated on 6 July
1955 that at the important Mukden Lathe Plant No. 2, all of the drilling
lathes produced in the first quarter of 1955, numbering 3800 were returned
"due to wrong procedures in manufacturing; the item of wasted parts alone
cost 1.2 million yuan". As a result, the plant made no progress in volume
production from September 1954 to the first quarter of 1955.
From a supply and strategic point of view the following items proposed
for decontrol by China probably would be the most important: presses,
carbide and tungsten tools, gear cutting machines, broaching machines, and
finally horizontal combination boring drilling and milling machines (in
the larger :sizes only i.e., above 4" spindle). The remaining items pro-
posed for decontrol (or their substitutes) Such as various grinders and
lathes0 probably could be obtained by China from the rest of the Soviet
bloc. Their strategic significance to China, at its present stage of
development would be high (e.g. Item 3034 for the production of railroad
axles with a'high degree of efficiency). :
The machine tool production of the rest ofthe Soviet bloc is very
large, exceeding that of the U.S., in terms of nembere and value. Certain
-2-
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types of tools, Oovevee? are in short supply - particularly metal-forming
machines such ae pressee and precision casting machirery. SCAO types of
grinders are also in short supply. In the general subgroup of metal'
cutting machineey, however, the Bloc is in a fairly strong position to
fill ehinags needs with a minimum of inconvenience although not in all
types. Some metal cutting machines are being exported by the European
satellites to the fres worldo
Data on over-all imports of machine tools into Communist China are
not available, In the case of imperts of Machine tools from the European
satellites onayo it is estimated that their value in 1954 was roughly ,
t24 million or about 10 percent of total imports from this soerce.
(Trade with the eatellites amounts to about 20 percent of (oloads total
fereigo trade of China),
During the fit half of 1955s the Chinese attempted to obtain from
the free world vorieus types of milling machines s a medium-sized press,
and die casting equipment. 1/ It is noteworthy that the latter two items
are 'in the categero of metal forming machinery (ns e27o9sd to the metal
tett:mg maehineril, otich is also in short supply eve in the USSR0 the
lergest machine ecol producer in the Bloc.
The suceess of China us Five tear Plan to a coeeidereble extent will
,Oopeod oo the ovaileJility of machine toolsowhiche in the long run, will
depend on the completion of a nuMber of key plants on schedule. It is also
believed that the quality .at China 9s reeohiee beildioe wilR be largeay depen-
Pelt on the eeaOlabootty of teebnical eed material aid eoteelea to it by the
rest of the Sboiet Bloc., Even when present plans hay e boon completed,
CYLna will continue to depend on import e of many kinde of ;motel working
maChxory for many years to come.
1! A recent report states that China has placed an order for 2,,000
grinders in a western country (non-COCOM member). These -machines
wore of the smaller type which would be useful in a wage or a
maintenance Shop. The value of the order is not kaown9 but if
it is assumed that each machine would be worth $500 which is a
minimal figure, the total order would amount to tl millione
making it one of the largest placed recently.
--e
S -EeCoR -E-T
or" or.. me. mor
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b-L,O-R-E.T
GROUP I
kU!4IGaL ,ND
The Japanese propose 7 China List and 2 IL-III items for decontrol.
No petroleum equipment iteMe have been nominated for decontrol, but some of
the items included in the Japanese proposal (e.g., pumps and vessels) could
be used by the petroleum industry,.
gaggea.kalbagat
These items cover equipment of mid-range complexity but often
incorporate corrosion-resistant qualities. Included are driers, evaporators,
pumps, storage equipment, etc., which together with certain electronic items
similarly proposed for decontrol would greatly assist China in building up
production facilities to meet some of the deficiences in explosives,
chemicals, rubber products, and pharmaceuticals,
The current shortage of chemicals is one of the main vulnerabilities
of China's economy. Unconfirmed reports indicate that other Bloc countries
have restricted exports of chemicals and pharmaceuticals to China to
conserve such products for use elsewhere, The current plans call for almost
a doubling of the output of basic chemicals and pharmaceuticals.
China currently produces practically no chemical equipment, Reports
indicate that some chemical producers have had to resort to crude and primitive
improvisations te maintain production.
Current plans for increasing the output of Chemicals call for the
construction and renovation of five Chemical production plants with Russian
assistance. Two of these plants are scheduled for completion in the period
1958-60. A carbide factory and a soda factory are to be constructed later,
and an existing oil-paint factory is to be renovated. While no specific
information is available on the extent of the Russian assistance, a high
Chineee official has stated that only a part of the acpzipment needed for
these plant projeas will actually coma from the WER,
The current Chinese Five Year Flan also cakes for the building
of a chemical iedustrial machinery and repair plant and an oil-refining
machinery plant. When these two plants are completed, probably only in
0609 the country will be able to start production of some of its own
chemical equipment of the simpler type. However, the plans are not
given in detail and it is apparent that China is faced with the creation
of an entirely new industry. In this task it also will be almost entirely
dependent on imports of technical know-how as well as equipment,
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irtreErke2,
In addition the country will have to learn to produce (or will have to
import) the proper types of corrosionecesistant raw stock (steel, ceramics,
glass, etc.) and precision-controlling equipment used in the production
of chemical producing equipment.
The 1166R and the Luropean satellites, owing to internal shortages,
cannot easily supply China with the required quantities of chemical
equipment incorporating corrosion-resistant materials and advanced know-how.
These materials are in short supply in the entire bloc.
The USSR has already encountered difficulties in fulfilling
specific delivery emmitments for chemical equipment to China. It has been
reported that a Chinese delegation to the UR was referred to a satellite
country es e source of equipment for a chemical factory The satellite
country also mac unable to furnish the desired maChinery without western
tethnical assistaneo.
There have been persistent efforts by the Chinese to Obtain
Chemical and pharmaceutical production equipment from the free world.
A conspicuous example is China es recent effort to procure through clandes-
tine Channels a water treatment plant of a type that the Japanese have now
proposed for decontrol..
C. Petroleum Bouiement
The very severe shortage of petroleum products in Chime will be
a source of indirect pressure for procurement of dual use chemical'
petroleum equipment proposed for decontrol by the Japanese.
The country currently produces only a part or the crude oil and
refined products that it needs. The delivery of petroleum products to
China by other members of the Bloc is a costly and difficult operation
(running of the blockade by sea or costly railroad transport with empty
tank cars returning for distances of thousands of miles). China is
scheduled to expand production of refined products during the current Five
Tear Plan especially when full production begins in the Yuman oil fields.,
Currently China is virtually unableto produce the geological, drilling,
prospecting or oil refining equipment or accessories that are required for
this development.
The required types of petroleum equipment have been made in the
USSR, Rumania and Czechoslovakia for many years. Although the Bloc position
is not one of abundance (the more complex types of equipment and corrosion
resistant materials also are in short supply), it is believed that the Bloc
could meet China's relatively modest needs with less difficulty than the
chemical equipment items.
.5.
S-E-C-R-L-T
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For the type of equipment that Japan has proposed for decontrol9
a ready markA should it in China for manr years to COMO. The acquisition
of the equipment from the free world would relieve one of the main bottle-
necks in China's deveopment plans for chemical and petroleum production
Th n foregoing chould be read in context with the comments supplied
for Group 79 below,
-6-
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GROUP fp.
ELECTR:CCAL AND FOWER-nENERATMG EQT:PMENT
A. The Japanese Proposal
The Japanese propose 5 China 'List, 2 and 2 IL/II items
for decontrol. Thisdecontrol proposal covers eqpipment rated up to
60?000 kw and under, n.e. virtually all electric power generating items
except thoye on IL/I. e These items include electric power equipment for
uch hi Communist Chine has now the greatest need, e.g., equipment for
generating, transforanng? rectifying and converting electric current, its
transmiesien and disteiblAel,on; control gear and accessories; substation
equipment; parts for all of the foregoing; end boiler house plant equip-
ment and prime movers for use with the aforementioned installations.
13, Eleptric Pouer Generatinasiy/Liinina
Currently China is severely short of electric power. The develop.
ment of electric powee and of an industry to produce electric power equipment
aro among the principal goals of Chinacs present plan And the cornerstone of
the future industrial development of the country 2/
Chit-tags small electric power generating cepacity, consisting of
electric power generating machinery supplied by many different countries
(Germany, Japan, UK, .1.JS)? suffered heavy damage dueing World War II. It
was partly dismantled by invading Soviet armies which took some installa-
tions as booty. Some of the latter equipment was eubsequently returned,
but in poor oondition. Finally, during the ensuing civil war between the
Nationalists and the cnemmunists still further damp was inflicted on the
power capacity. Some of the stations were rebuilt after 1948 but the
equipment remains obsolete and in poor condition.
Communist Cenmaps present (1955). installed electric ;ewer generating.
capacity is epprnximately 3,000,000 kw and is concentrated in a few industrial
=Ws in the East and in Mandhurie. This is approximately
equal to the electric power generating capacity of North Carolina. Most Of
thf3 stations are mar" a few exceeding15,000 kw in capacity.
The much re7ised first Five Year Plan neer calls for an addition
to installed electric power generating capacity of 1,060,000 1w an increase
of approximately 33 percent, to bring total installed capacity up to about
140600000 kw by the aid of 1957.
Specificalle? the current Five Year Plan calls for the completion of
y On 1411 are alecteic generators of 609000 kw and over.
2/ Lenin said that "commenism is socialism plus electricity"; China
appears to be following clesely the experience of the USSR 3s
industrialization pattern of the late twenties WhiCh emphasized
first and foremost the creation of electric power for industry.
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54 new electric pewee. etations, of which nine are to DO uesigned by Euselan
engineers. The majority of the station's gill be thermelestatiens. According
to Chinese announcements) work will also begin on another 38 stations,
apparently of larger siee? Which are net scheduled for completion until later.
Since Chinags plane call fer devell_eemene, ee industry eeaftered
throughout the countrys interieen where teeel im little or no electric power
at present, the current plan emphaciees naeit and middle sized thermal etatiens
(59000-15,000 kws) with equipment of the type thet an ha c propeeed for de-
control. The full harreesing of Chinags vast 4drooleetric pcmer petential
and the centrel ef EChinege eterewq alaitn turther induetrinl develop'
ment of the ceuntry. Eogever, aix hydreelectric pee-or plants are being coee
etrueted oe rencmated et present whieh will rvi2.1-ra ie-tpment of elcut 50,000 kw,
e
_
Chine is just begiening to build up an industry for the peeduetion
of electric, power equipment. ID 1955; China produced generators with e tetal
estimated capacity of 3,40?000 kw, eteam turbleee eith a total estimate
capacity of 149500 kw, and water turbines with a total ebtiMated Capacity of
299300 kw. By 1957t China may be able to preduce annually electric gemerators
with a total capacity ct 2279000 kw, eta= turbines with a total capacity of
84?500 and water turbihes totalling 799500 kg in capacity. Still further
expansion of production is planned for 1960 Generater output, tar example,
is planned to reach 32,000 kw in tetal capacity by that year. -
T reach these preduction gala? the Vellouing nag falterie are
scheduled to be built in the 1955-1961 periods 2 boiler factories, 2 steam
turbine factories, 2 electric generator faeteeien? I electrical eqedpment
factory, 1 electric wire end cable factory, 1 earben brueh factery? 1 electrical
equipment renovatien fectery? 1 lew-veltage egitchfactery, anA 1 traneformer
factory. Thins, a whole new industry is to ba created. Chine cannot build up
this industry without large imparts and technical afA. Even if the 1960 goals
are met9 China us capacity to produce electric power equipment will be medest
in terms cf the power readu of the stenemye
In all likeliheed, the growing demeade free the planned increases in
industry in general will easily abserb the inorease in electric power output,
even if the planned increases for the latter are realized. or exemple, if
China succeeds in producing by 1960 aluminum at the rate of 309000 tons per
yearD as planed9 this indumtry alone wouldTequitv an installation of about
1759000 kw,
E GA if it is assumed that damestic production of equipment will rise
according to plan, the data suggest that China will nevertheleee have to
port generators generators with a total capacity of 5080000 kw and turbines with a tubal
capacity of 925,000 kw in order to aohieve noir current Five Year Flan goal
for installed capacity,
Chinese efforte to procure electric power onerating equipment in
quentit,r fraa other Bice countries have it only 1.411(1 all uuccess. Ineerelia
and other Earepean se:Unites have produced eame eqeipeent for China. But the
USSR and the European eAtellites themselvee have continued attempts to procure
1,1 Calculated at the rate of 10 kwh per 1 lb of aluminum and an operating
factor of 3,800 hours per year.
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some of this equipment from the free world.,il To some extent, this aay reflect
the pressure on the supply of suoh input materials as copper, steelst. and bearings
within the Soviet Bloc.
China has made persistent and vigorous atteepts to contract with free'
world suppliers for complete power unite and. spare parts. For example, con-
tracts were concluded with Brown-Boveri (Switzerland) in 1954 for one 25,000 kw
power plant and five other plants reportedly with a capacity of 100000 kw each.
Other contracts with free-world suppliers have been Signed or are in an ad.-
wowed stage of negotiation, with actual deliveries aontingent only on the
deletions proposed in the Japanese list.
The continuing series of requests to COCOMILLINCOM (by UK, Belgium,
France, Japan, and West Germany) for permission to ship replacement parts for
electric power generating equipment to China reflects China's continued de-
pendence in this category on free-world suppliers. Owing to the multi-national
origin of installed equipment, free-world parts are especially needed to reclaim,
rehabilitate, or maintain aging plants installed in the course of the indus-
trialisation following World War I.
A relaxation in COMM/CHINOOK controls on this equipment might not only
remove a major bottleneck for Chinese procurement of equipment and parts0 but
might cause China to revise her power and consequent industrialisation goals
upward. In any event, the Oemand for free-world equipment and parts Is strong
and voluminous and is expected to continue for at least two decades.
D. Ristagatagamt
Included in the list of items proposed .b, Japan for decontrol in this
category are two items (severing diesel engine6.2( If these items are decon-
trolled, all diesel engines except those on would be available for export
to Comunist China. The engines on IL-I (Item 1255) are those of (a) 1,500 with
a rtary apeed of over 600 rpmr is high speek.rather light-weight large .
2/This overall conclusion seems justified notwithstanding the fact that
the Soviet Bloc has exported some power equipment to the free world, for example0
to some underdeveloped areas as part of barter arrangements and for propaganda
purposes.
3/ The Japanese proposal covers the following two items:
/tame-255, Diesel engines 25 hp and over.
Item, 3256 Diesel engines letm.s.0 as follows:
(a) 300 to 800 bp with rotary speeds of 630 rpm or over;
(b) 800 hp or over, with rotary speeds of 400 rpm or over;
(c) 1,500 bp or over, with rotary speeds of 200 rpm pp to but
not including:400 rpm.
The ConsolidatedChina Special List, as published by the US Department of
Commerce an 13 July 19550 does not show an entry for an item C-255. The Japanese
proposal apparently accepts the existence of such a listing pursuant to CHINOOK
Document 373 and sub-docs. 1, 30 and 5. See also State Incoming Tel, Tekyo
1370, 15 December 19550 Secret.
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neine,1?_ of -eh etrat eeit: importancei, La industry end: for neva cr,et'ta and,
? ard ova!, whce a aleenetic contet exceeds 5(1j percent of their total
ebe ep::1 a.13,oy Ultra lieF,Ateweight deleeel engines for use in
eurpeee neval (aline sweepers).
Thee the japax:.,sue pre:penal, if impl ramented., would erad colitteele e'n all
tte3 :,,rery: highly epeoirlized types el,' engines a. permit export to China of
eU kl.ntisof (rfig :WW1 re-eded for industria1 and miliary uses.
Chun9s eurrent productien and production 4.-tpacity of diesel engines
La Diesel engieen have been made in at least, three plants in Dairen.,
7:singtze and Shanghai.; there are several other plan';es where diesel engines could
eafe3 en ustem beeite It ba: been :reported the the largest engine built
leeest,:Leelly: ee date hes ye rating of a.tetat 250 hp, but it is not kete.m whether
ie roNduction. Smaller engines have been made for various
agrieelture are iedustry, but it is doubtful that serial pro-
lueUen hate been eicthieved,,,
The preeent Fe /oar Plan gives little irWerreation ors China gn program
dieeel cnine prothetion beyond the statement that experimenta3. production
-et cc dieuel engine of hp is to start, during the Current plan. This type of
an engine wee:j.d be adeemate for .pewerini4 small mead-going veseels and smell
eleeteie pouee etetime. There in no specific info,,mation on the eapitral ex-
eeqeired, to inereeze the produetion of these dieeel engines in China.
Chine win coetilele to need a 7e1de variety of engines for industry and
agricel-eare, However, the .Lighter weights of erginee, mostly under 100 hpa
tre twee in the Bice te power heavy trusks and tractyors, and China its plans call
pleeluction, of 150110 trecters in 13&3. At presInt, no such vehicles are
eeing ie.'odused in Chl.n7,:e It is very liesly that piens for future production of
-eeaey eeeicke end treeters in China incleie the constyruction of shops making
dieee eelginee for thie purpose. Small :diesel engines also will be needed to
EAjilhirdutrin1.:-.e.setainery as pneumatic drills mining DoichIneryt pumpso
pultps f), 'CCITT e Boni and portable e2.ectric generators. Plans for
expeneleaf ebe clientele pewee geneiiii?ana3 equlpeitei; Industry also may include
1,T.ita for diesel engtecia. 31,1170 to achieve a large output tef diesel
cethee Lava towk.e stAbsteneial importn oi fairly large fotakdry and
It /43 bele? theracre,, that for a nuirth,cr of years to we Chinas
iedeseeeee e?eeducCelen k-1.13. be emaU.? even when pr,seset plane for industiral
.Expangilon are forplantni:4y,L, Irternal dnZ. probablr will continue to exceed
3oaitprpiuctivn t a considerable 0
The ::est of the Se7,Piet Bloc has been prodtv3ing diesel engines fqr
tayand hat; ''zbe know-hz4 approximately equal to that of the
.lece .'khe most advanced experimental trpes:, Sone difficulties have
in the peccluetien of crankshafts and }lighespeed fuel 1,njectors9
?,-.rtatin :iie eoeventeteeee typos Bloo know-how is c:Idevatec, On the other hand,
the si7sly ,r)f dice-a seg.-Luee, cepecially marine di.eaelea has not been adequate
In the :elm ad cleanse end parte have teen Sought y the European satellites
weeteen event,eies. Machinery to make tipecial parts also has been
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5cught,
it is believed that the rest of the Sriviet Bl? T Tmln furnish re,Ime types
engines to China? but only in limited amounts.
As regards free-world suppliers, China has actively sought diesel en-
Ones and parts since the imposition of controls. Contracts for delivery of
presently to/afro:lied types of marine diesel engines have been signed sometime
ago and delivery awaits relaxation of export controls.
It is believed that a very large market for all types of diesel engines
will continue 6o exist in China far a number of years,
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?474444
GROUP 3
G101414:4 labballIaL kAttlitniLliT
a. Ijalus'asugaisagga
The Japanese have proposed that 15 China List items in the general
industrial equipment category be decontrolledu There are no proposals for
decontroling IL-II or IL-III in this group0
although the items proposed for decontrol are dissimilar and cover
equipment for a number of industries, most of these may be grouped approxi-
mately as follows:
metallurgical industry - crucibles, graphite, abrasives
construction industry - platform trucks, lift trucks, concrete
mixers, paving equipment, hand tools, etc,.
mining equipment industry - general mining equipment, crushers
rubber processing industry callendars, masterbatch mixers.
In general, the production in Communist China of the items proposed
for decontrol either has not begun or is at a low level as regards quantity
and quality. China requires substantial imports of this equipment in order
to implement the construction, mining, and rubber production sectors of the
current Five Year Plan.
Most of this equipment proposed for decontrol is relatively simple
and has been manufactured in other parts of the Bloc for many years Some
of it has been offered by Bloc producers for export to the free world. The
equipment probably could los provided to Communist China by the rest of the
Bloc with relatively minor inconvenience, By the same token, China should
also be a good market for obsolete or secondhand machinery. But there are
also a few items in this category such as three-roll-type callendars and
masterbatch mixers (which require considerable precision in manufacture) and
abrasives (which are not in abundant supply in the Soviet Bloc), where the
Bloc would have difficulties in supplying China from its own resources;
On several of the items proposed for uecontrol in this category,
some additional comments can be supplied,
B. blIalluzkagUtligla
Graphite crucibles and graphite to make crucibles are used in the
making of fine grade tool steel. Graphite is also used to male electric motor
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brusbee% as a letrteante puiro.
of the inpute for he oetallueeica7
eignificenee in tnie epylIcetiee_
to be inadeeleete
Tbe eeeply of a netueee h
' inadequate, Let the ertifclai erele
some of the veteliitee actuale.i s,
in the Soviet bloc of thie eaeeeltel
could possible he Klee witeoet letee,a
Iee tsepee nf ee_ree,ee
procurement ?ItAf:Mt.A-5 have neee oede
of high-grade abrasietee and gradine
not abundant and it weeld he dtffice
considerable replaneng
4 h
eer, ,e eee
tneestr, eeeeeee :0' ,ie utreteei:
nine's c trere eeppl, ef graphite eele
'
,te whiee 1
eperior ee
e not wee
en utee,
,ee reef, o the-ee io
3 prooucee tbe And e
L-VA neture ehile tl. seppe4
eiene, CUlina'e limited eemende
euroen
C '
' 1,r
41118
?-ter he
TIna i tee
,,Jestee et-mends Tie sepeej
reet of tele Seget ie
liloc ie sueeje Chine aout
a, aceelzuction ane Goaveyiee Just'
Tho current Ocellet bloe peectiee ,:envey eeierle es ne
adequate to permit substantial alleeeeions fer eepeee eeeee
The procuetion of even the stmplest type of eonetracteu eqepmeni;
in China is negligiele and the park ef exestieg equipment Is also 'Jere smali
The equipment proposed for decontrol ie required for the large reservoir
projects currently under eonetructiee, for building strateger roads an rail
waye and for the erection of numerees new plants firmly scheduled for
completion in the period 1955-1960,
There are no speeifie (Wel
this type of equipmen' Yt could be
manufaeturine railway rolling stock
how to produce simpler types of this
expense of tying up facilities now a
on Communist Chinese plans to proeuce
produced, for example, in plants
China has the plant capacity and Know-
equipment but could do so only ae the
eslgned to the predeetion of other items
ell of the equipment in t4is sat-coup le available in the rest of
the Soviet Bloc, but the bloc supply situation is not one of abundance
Communist China has made receet efforleto obtain caneeructiofl.
machinery from free world suppliers and fulfillment of negotiated contracts
for such machinery awaits only the lifting of the GoCOM/Gdetia0M restrictions,
Miang_km1Rment Industry
Current Chinese production of mining machinery is inadequate as
regards both quality and quantity.. Considerable progress has been made by
China in restoring a number of small .and heavily cannibalized) plants and
some production of mining machinery has been reenmedvbut the country is still
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faced with the creation of virtually e new industry. Only the simplest types
of tools are made, e,g, hammers, drills and small crushers, Been these items
are copies of obsolete US and Soviet equipment but at the present stage of its
development, the Chinese mini**, inouatry probably could not utilise more
complex types of equipment, There have been numerous reports of waste and
difficulties in the production of machinery and excessive breakage and other
shortcomings in the use of it. The current supply of machinery is tosufficient
to permit the country to carry out the very ambitious expansion of the
production of coal, iron ore, noneferroue wetal ores, cement and other raw
materials projected for the current five Year Plan,
Several plants producing mining machinery are scheduled for
renovation during the current Five Year Plan Furthermore a new mining
machinery plant, desiened by the Ueelt, is te be completed In China in 1960
when production is scheduled to begin at that plant,. This will be the first
indigenous source of supply for more complex types of mining machinery.
Mining machinery of all types has been manufactured in other parts
of the Soviet Bloc for many years. While the bloc supply has not always been
adequate, particularly with regard to crushers, it is believed that machinery
of the simpler types could be furnished China in limited quantities, Some
mining machiner, has recently been advertised by Bloc countries as available
for export, but the exact volume of actual aeliveries in the free world is
not known,
Chloe has soueht to obtain mining machinery from the free world far
several jears. Actual contracts have been concluded for the delivery of such
machinery as soon as present cucomictincom restrictions are relaxed,
BADIE_ErsoulDAJOIREILI
The supply of rubber products in Communiet China is inadeeuate to
meet current demands for tires, tubes and rubber footwear. The plans for
development call for approximately doubling the present output by 1960,
Rubber manufacturing machinery is not currently produced in China
and the country depends on imports of such equipment, Thus, the priority
assigned for such imports is very high, On the other hand, China is under
pressure to improve the supply of rubber manufactures by expanding indigenous
production. The rest of the Bloc is short of rubber products (and of rubber)
and exports of rubber products to Chime have allegedly been restricted,
Of the two machines proposed for decontrol (mixers and callendare)?
wasterbatch mixers are the simpler type. Callendars are more complex,
requiring precise tolerances under heavy strain, It is questionable if the
Soviet Bloc can supply China with larger numbers of this equipment without
seriously retaraing scheduled production elsewhere. The demand for this
equipment from free world sources therefore is likely to be strong if controls
are removed.
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GROUP 4
ILAMERULITPU EguumENT1/
The internal transport requirements of Ccemmunist China are met, at the
present time? chiefly by railroads. These were estimated to have accounted for
72% of the total Cargo tonnage originated in Cemmunist China in 1955 (Table 5)p
and 86% of the total ton-kilometer performance (Table 6) in Communist Chinaws
transportation system. Highway transport, in 1955o was estimated to have
accounted for about 17% of the total cargo tonnage originated in Communist China.
In terms of ton-kilometers, hewever, highway transport reflected the predominance
of urban traffic and absence of long hauls, chiefly due to the inadequate road-
network and limited automotive park. The more traditional modes of transport
in China, inland waterway and coastal shipping, were estimated to have accounted
in 1955 for a lower performance than highway traffic in terms of total tonnage
carried, but for a higher performance in terms of ton-kilometera.
The foreign trade of Communist China is now carriedriroportimately half by
sea and half overland, largely over the Trans-Siberian railway. To date, China
has not been in a position to make a significant contribution to the fulfill-
ment of her requirement for near-seas and ocean-going shipping. Bottlenecks
in port through-puts and at overland transloading points are rapidly being
remedied apace with the progressive development of Chinawa internal transpor-
tation system. The construction of two major wide-gauge rail lines linking
China with the Russian railway system will make a major contribution to ex-
pediting the international overland traffic.
A. ThiLiszymuumma
The Japanese propose five China list, 2 IL-III and 1 IL-II items
for decontrol.
The railroad items proposed for decontrol represent items now in
actual production in Ccumunist China as well as other parts of the Bloc. To a
limited extent, these items cover equipment for the production of which the
free world has a comparative advantage of technological know-how, quality eon-
trol, and assembly-line output. Deletion of these items would free all rail-
road equipment from international restrictions.
The shipping items proposed for decontrol would free small size
watercraft and seagoing fishing vessels of limited strategic usefulness. For
China, however, the removal of restrictions on the latter might be a distinct
boon in view of the fact that domestic ship construction facilities for other
types than junks are still limited (also as regards the provision of input
materials) and that even "non-strategic? fishing craft have been assured and
used for naval patrol and transport duties.
),/ This discussion is limited to surface and water transport)
?7grgkloi.
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?r4-U7trilek
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The single automotive item, proposed for deletion from the China
list would permit China to import virtosOly all non-military types of passenger
vehicles9 trucks, and parts therefor? At the present stage of development9
haoever, there would be many military and strategic applications in which
even non-specialised equipment could be employed.
B. gailroads
10
Wakaga
By the end of 19559 approximately 169000 miles of railroad lines
were operable in Communist China as compared to less than 149000 miles estimated
to have been in service in 1949. The railroad network was originally largely
concentrated in the industrial northeastern sections and provided only very
limited service to the important southern coastal areas. Similarly there was
inadequate access to Chinais interior and western provinces, hampering the
exploitation of major raw material resources.
In order to remove the transportation bottleneck to continued
economic expansion and political consolidation9 the current Five Year Plan
allocated about 70 of the funds earmarked for transportation to the improve-
ment and expansion of the railroads. During the current plan9 69250 miles of
track are to be laid of which 29500 miles represent new lines.
The foliating are the principal new projects under developments
Work an this line has been in progress for eometime: it is to be
extended another 175 miles in 1956 to the Kansu-Sinkising border. The Yuman
oil-fields9 Chinags main domestic petroleum source, are to be reached early in
1956. This line will connect with the Soviet Turk-Sib line from Alma Ata.
agidajappatuitailroads
Work on this line has been in progress for some time; currently
is reported that the 12 9000 foot high passes of the Chinling mountains are being
traversed and the goal is about 100 miles away. This line will link the
agricultural Ssechwan province with the eastern coast.
Liaketen-Amarbillroad;
Work on this line of some 390 miles length appears to be ahead of
schedule according to Peiping statements. Amoy (opposite Formosa) may be
reached by the end of 1957.
gunnime.lejablfind SURO4an-bm44hou ablIroads;
Therm lines in the southwest part of the country, are projected only
and work on them is to begin in 1956. The survey for these lines is reported
to have been completed. Laying of track for new railroad lines in Communist
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China appears to have progressed more rapidly in the past 2 years than was
anticipated in the formulation of the original Five Year Plan goals.
. Annual production of railway rails of all types and sizes in
Communist China is currently estimated at approximately 1809000 tons, ic.e.0 the
equivalent of 1600 miles of trackage using ?a lbs/yd rails. At the current
output rate of domestic rolling mill capacity, Communist China is not meeting
the requirements, particularly for heavy rails specified in recently stepped-
upjconstruction plans. For the next several yearsp Communist China is likely to
show stronginterest in imports of rails of all typesp andp in the event of 4e-
controlp COmmunist Chinas probably would rely to a considerableettent on free
world supplies. The USSR can easily absorb its current output of rails in
Russian'projectap and satellite 'manufacturers such as East Germany are. still
reported encountering quality-control and quantity production problemh. The
rails proposed by.Japakfor'decontroll (Item 3477 70 lbs or over/linear.Yardp
35 kg/Meter) include precisely the typei of heavier, rails used for construction
of strategic railroads in the Bloc including COmmunist China.
2.litstglatjakr jark_susijugaug_usla
In l955, the Communist Chinese locomotive perk was estiMated
.to consist of some 3000 units (chiefly steam engines) and the Chinese rolling
stoak was estimated to number,apprOimately 68,000 unite in the same year. The
remarkable increases that are reported to have occurred in the ton-kilometer
performance of Communist Chinese railroadsp particularly following the end of
the EoreanWarp were due not only to'. increased utilization of existing equip-
ment, but also to improved mainteingnoe permitting such utilization and the
greatly increased production of new equipment.
. Further inoreesei in the production of ntrd equipment0 as scheduled
threugh 1960 in Five Year PlenAnnouncementsp are shown in Table 4. In order
to reach these goals, one plant for locomotive construction and one railroad
car repair shop-are to be built before 'l99 and six existing locomotive repair
shomand two existing railroid oar repairehops are to be renovated. The in-
puts required for these plant construction and renovation projedtap And the
increased rid 'which the now plant/ will make On supplies once they ,are in
operation; highlight also the importance of materials' covered under various
other categories in this analysis.
Bien with the planned augmentation of construction end repair
facilities Communist China probably will continue to import locomotives, pat-
tionlar1y Lose of advanced design, in order to meet their ambitions equipment
and traffic goals While the European Soviet Bloc potentially could supply
much of the additional locomotive equipment required by Communist China there
is little evidence that it has in fact done So.
Decontrol of :Item C-470 would' make it possible for Commn6ist
,
China to acquire from free-world suppliers both general service (line) and in
duatrialjacometivee (and parts therefore) of 411 principal types and sizes.
not required. In view of the country of originof existing Communist Chinese
equipment, Japan might anticipate orders for such general service locomotives
asp e.g., the MIKADO type, if the Communist Chinese decide to promote uniformity
. .
-17-
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of equipment in order to preserve widest possible interchangeability of parts.
On the other hand, it would also be important to determine whether any general
service locomotives sought by Communist China in the event of decontrol, are
ordered in wide gauge for possible use on the new Sinkiang and Outer Mongolia
trunk lines. Such wide-gauge equipment would in effect augment not only
Communist Chinese transport capabilities but would directly contribute to their
further integration with those of the USLa. in the Far East.
C. Kadro.TAIMPS2Z1
1. QuamsaingA and Coastal Vessels
At the end of 1955, Communist Chinaos merchant fleet consisted
of some 120 ships of 1,000 GAT or over totaling approximately 2950000 GIG, as
compared with 1950 when Communist China had 79 oceangoing vessels totaling
175900U GEC. The increase in the merchant fleet was accomplished by salvage
entermises? acquisition of new and used ships from abroad, and some domestic
construction. Participating countries have not furnished ships to Communist
China since the imposition of COMM controls, but other free-world countries,
n tehly Finland, have sold new and used ships to Communist China. Finnish ship
sales to Coca:mist China thus far include 1 second hand vessel of 1959 GAT
and 3 new cargo vessels totaling approximately 6,981 ORT. At the present time
firm Sine-Finnish trade agreement commitments call for the construction of 3
additional ships of 2;130 GM each for Communist China by 1956.. In 1957, Sino-
Finnish trade agreement commitments call for the delivery of 2 tankers of 3000
GaT each to Communist China. /n addition to these vessels acquired or to be
acquired from Finland, Communist China was also able to retain control over
some 25 vessels totaling approximately 55,000 G1 which bad engaged in Communist
China trade under the Panamanian flag,
It should be noted that at present the Chinese merchant fleet is
employed in some near-seas traffic but chiefly in the coastal traffic, There
is still a dearth of good harbors along the China coast. Of the hundred or
more ports and landings along the coast only a handful are of major importance
to foreign and domestic traffic. Rather ambitious plans have been announced,
however? for the enlargement of this branch of transport.
Communist China os ocean-borne transport requirements have been
met chiefly by other Bloc and non-Bloc flag tonnage. Bloc tonnage involved in
trade with Communist China increased from a total of approximately 835,000 GET
in 1952 to a total of 1,163,000 CRT in 1956. The restoration of numerous
free-world liner services to China follading the end of the Korean Wars, in
addition to chartered free-world shipping involved in trade with Communist China
increased total free-world shipping engaged in Communist China trade from
2,692,000 GRT in 1912 to 50461,000 GAT in 1954. It is possible that for
strategic and prestige reasons China may resort to more far-flung overseas
shipping operationa, if freeworld bunker and ship repair controls are relaxed.
In that event some ships acquired by European satellites for the China trade
(in some instances with Chinese aid) might be transferred to the Chinese flag.
But otherwise even the free-world liner and tramp tonnage now engaged in trade
with China could go far toward meeting additional ocean transport requirements
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of a liberalized Chinese foreign trade pattern for the immediate future,
Japan9 however, has not proposed decontrol of items covering
oaean-going merchant ships. On the other hand9 increased availability of such
items as ship p1ate9 boiler tube, and diesel engines, which have been proposed
for decontrol, will provide considerable aid to Chinese shipbuilding and ship
repair programs.
Communist China has some 10,000 ocean going junks with a total
cargo carrying capacity of approximately 4029000 tons. Seep .of these junks9
sampans and fishing vessels have been armed for patrol and coastal escort duty;
others are used as naval auxiliary units9 e.g0 as radar pickets. Chinese
Communist junks operate largely along the southern coastal areas and generally
represent substantial military transport reserve capacity.
Fishing vessels have been a popular trade agreement item in
free world trade negotiations with the Soviet Bloc in view of their high value
per ton.
Japan specializes in the construction of certain types of fishing
vessels covered by items 3416 and 24169 proposed for decontrol. While Communist
China does have shipbuilding capacity for the same type of &hippie it is now
devoted almost entirely to naval construction. Decontrol therefore would permit
continuation of Communist Chinese naval construction programs unhampered.
2. 112,1mLlistgrEttarsaaliad,
China has about 609000 miles of navigable inland waterways, but
e large part of the system is suitable only for shallow draft vessels. As
shown in Table 5. This mode of transport has exceeded the ton-kilometer per-
formance of both coastal shipping and highway in the recent .past and is ex-
pected to continue doing so in the future. In temp of care originated in
Communist China9 inland waterway traffic occupies a much more prominent position
in Chinese shipping services than coastal traffic (see Table 6).
The China list shipping item_propoied by Japan for decontrol
=vows ala. craft -.1kmable chiefly for inland waterway traffic. This should be
judged in terms of overall military build up and Chines announced intention
to seize off-shore territories such as Formosa,
D. hatgattyst.LeAalsk
The Communist Chinese inventory of motor vehicles (passenger cars and
trucks) grew from about 409000 units in 1950 to 679000 units in 1954. Chines
goal is an inventory of 250 9000 vehicles at the me of 19630 The larger
part of present motor transport in China is required for short-haul urban,
and semi-urban transport,
The need for vehicles, particularly trucks9 will increase as highwevo
are improved. At present9 highway transport of the long-haul type is almost
entirely absent in areas served by river, coastal, and rail transport. Important
commercial roads represent about 509000 miles of the 86000 miles of highways
now open to traffic. Most of the 69000 miles of new highways built since 1949 have
linked remote regions with the existing road system of south-central China.
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During the current Five Year Pian, a total of 459000 miles of new highwaye was
to be added to the Chinese road netwcrk,
Current plan goals for the automotive vehicle parts for 19579 eseleell
wee for later years, cannot be met without subatantial imports from abroad
becanee China ,s present production capacity for motor vehicles is only a few
thousand units; increases in production cannot take place until new plants
are built; Aubstantial production is not scheduled until 1960 (see Table 4),
In view of the backlog of unfilled delivery commitments for motor vehicles
of all types within the USSR and some of the satellites, only vehicles required
for urgent military needs and key construction projects are being made
available to China by the rest of the Bloc, Strong attempts to procure
automotive equipment and parte he free-world countries are continuing0
larger consignment of British passenger automobiles to China in 1954
received considerable notice from the Communist press,
The proposed deletion of Item C-450 would permit free-world producers
to supply to China the tyre of automotive equipnent urgently required for
fulfillment of urban and normal h;shway transport needs, It may also eventually
release planned Chinese fecilities for concentratiee on the production of
military-type vehicle and, in time, relieve Chinese pressure On Russian pro-
duction facilities for such /ersatile military-type vehicles as GAZ-690s
and heavier allewheel drive models now covered by Items 1450 and 2450.
-20-
a?grErkl.
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TABLE 4.
ESTIMATED RECENT AND PANNED PRODUCTION
OF TRANSPORTATION FAG ILITIEL3 IN COMMUNXT CHINA 9
FOR 1J ELiC D YEARS I.952-1960
(in unite)
(eat)
(,'est)
, plan)
19E0
L wonotti t-, 3
20
100
20C
930 teeTacity)
Frelght Cam
800
8i,500
9,000piatity)
Paeeenger RR 'Gears
6
3,59
TrUtke ;
4 .,000 ?)
(capaAty)
Ships (it. -mit)
84
1,4rl
by GET
21,000
1'?9,000
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TABLE 5
rilialaza-MCIMAISLULEP- CERIO-SKIZMUM2IWZ. CI---LT?SA 9
TRMFIC19E..,4 LUAU
(i-1.1icala of taria)
test) esb)
12,2_7-1.90.
(Plan)
131an)
Rail
156
208
245
300
7n:fax' Waterways
(exciveling wertden
craft)
25
35
48
CI can t atppth
excliading WOW An
craft)
6
8
9
Highway
51
68
86
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3-
TABLE 6
SST-MATED az TENT AND PLANNED CARGO MOW:RENT IN COMMUNIST CHINA,
SY TYPILB OF TRAFFIC FOR S MECTED YEARS t 1953-1960
(billion of ton - kilometers)
Rail
1953
76
(est)
1955
102
(plan)
1957
IP.
(P2 an)
1960
16C
Inland Watervays
6
9
12
2.6
C std SteLpring
4
5
6
7
Highvy
1
2
5
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cfr
- GROUP 5
LAZRAIL 4g. 410.-MrigKIaLl MU
The Japanese have proposed that sixteen items on the China Special
List and two items on International List III in the electronics and precision
instruments category be deleted from control to Communist China. The proposed
deletions would afford Communist China an opportunity to buy the radio and land
line equipment needod for a swift buildup of an internal and external communi-
cations system and would make available a complete line of precision instru-
ments welch would enable Communist China to construct, service, and
maintain a modern industrial plant. The items proposed for deletion can be
grouped roughly under "Ccomunicationeni and "Instruments".
B, Qmmunicativo,
The Japanese propose decontrol of the following telephone and tele-
graph (landline) equipment: (i) carrier frequency telephone terminal equipment
operating at 10 Ws and under (3-7 channel equipment); (ii) intermediate
repeater and amplifier equipment; (iii) parts and subassemblies; (iv) automatic,
magnetic and battery switchboard equipment; (v) inter-phone systems; (vi) toll
and switchboard cable; (vii) bare wire line; and (viii) paver supply line.
This equipment would give Communist China a modern efficient telephone system,
The following telegraph equipment would be deleted (i) all voice
frequency telegraph terminal equipment; (ii) teleprinters. and (iii) teletype
equipment (the latter operating at 200 words or less a minute) this equipment
would give China a modern, efficient telegraph system,
All radio transmitters? subassemblies, and components, except the
specialised military types listed under International List Item 1517, would be
decontrolled, Acquisition of this equipment would give China radio broadcasting
facilities equal to those in free-world countries.
In addition the Japanese have proposed that certain electronic bridges,
voltmeters ammeters and micrometers be decontrolled. This equipment is used
to test and maintain communications equipment.
Communist Chinava needs for both wireline and radio communications
systems is critical. At present, communications facilities are concentrated
in the eastern part of the country. Industry and government consume about 80
percent of the existing communications service. China's stated telecommunication
policy is (a) to push wireline constructio4 as fast as possible to insure
security of state and military messages, and (b) to give priority to the
national defense, military , and political, tasks of the state since communications
facilities are not adequate to meet other needs.
For 19549 37 major construction and expansion projects for long dis-
tance telegraph lines were planned. The telegraph system itself has been
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expanding at the rate of about 1). 00O km a year, In 1955 it was annnuneed
that telephone lines weuld be extended by 12,000 km and that 33,000 switch.
berds weuld be added tn the telephnne system. These figures give an in-
dication of the magnitude of expansion being undertaken in wireln,no communi-
eatinns-
Communist- China plans to increase radin brat statnnns by 10 par-
-cent a yearn, It is not knven fulw many radio transmitters China has at the
present time-.
Generally speaking it is estimated that investment and operating
expenditures for teleenmmunication will increase 20 percent by 1957 and will
double by 1960,
Communist China preduces little or no radio or land line communications
equipment, At present one signal equipment plant is under no)structien which
was designed and is being built by East German tethnicisns, his plant,
scheduled for eompletien in 1957 will manufacture radinc. telephone and tele,
greph equipment and seme precision instruments Projected annual prnduction
rates for this plant are estimated to run as fnlltwEn
450000 loudspeakers, from 1 te 25 watts and cerrespoading trans-
formers
150.000 bedetones of sapphire and. agate for measurirg instruments
300,000 rotary cendenzers for radio
150,000 earphones of 4,000 ohms impedanee
100,000 speakers for telephone operators
60,000 headsets fnr tele on nperatnrs
WHOM measuring tnetruments fnr switnhbnards atci lebneateries
42J)00 minrephenes
Such preductien is almost neglegible in terms of China's eeeds,
At presents China is importing almost all of hen renuirements in radio
and land line communicatiene equipment, Most of it comes from the European
satellites and some of it from the free world. Although 30M6 sectors of the
communications system probably will shnw a large grawth b;72- 1960j nnailmunicat,iaan
facilities in Communist China will still be only barely adequate unless
purchases frnm free world produning countries are increased considerably in
the meantime,
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C? precisian Ingtemsette
Canmunist China ia in eritisal need of all types of precision instrue
manta and control apparatus necessare to the bug/I-up of a modern induetry?
The Japanese have proposed that preetienr?measuring, testing and o tieal in-
struments suitable for use in the enowering industry and fGr IWO in the
development, production, and testing i military equipment be decentrolled?
They have also proposed that pH metwe, and spectographic equipment berde-
controlled, along with densitometers, eitcroehardness teeters, and strain gauge
equipment?
The Japanese have further .moposed the deletion of International List
Item 2568, which covers electronic eutometic controlling units and associated
regulating units ? Electronic contrcUinr, and regulating equipment, the key
to "automation", harnesses electronic breins to mechanical muscle to the
point where even modern mass preducton eechniques ire becoming obsolete,
Automated machines, such as these using ieviee. covered in Item 25689 can ad-
just to variable productive conditiuns, serrect their own mistakes, inspect
the finished pr uct, and even change thfir ewe parts as they break or wear
out Automation in the United State ia applied in refining oil and in the
production of armaments, weapons, planes, military electronic devices, enginee
of all types, chemicals and explosives, tie generating of electric power, ete?
As Cammuniat China industrializes, ie is reasonable to believe that the Chinese
will want to equip their industry with as such precision, measuring, testing
and automatic equipment as feasible
At the present time Cemmunist Chiaa, canne build precision instru-
ments or electronic automatic equipment, leither the skilled labor nor the
production experience in available and it eakes decades to deve].op0 The USSR
and the European satellites ara not in a position te furnish such equipment
to the Chinese since by their ewn admissiee a critical shortage of these in-
struMents exists in their own countries and since only a beginning has been
made in the development of auteratic equipment for use in their min industries,
The Director of the Russian Autemation and Remote Central Institute stated in
May 1955:
"Technical equipment is the material base without which auto-
mation is not possible? Since the war, our industry has
developed new types of automatic equipment and increased its
production several times. However, current production does
net meet the needs of industry either in terms of volume
or in terms of variety of equipment, and this is one of the
main factors impeding development of autematien,,"
It is believed that if the devices covered by Item 2568 along
with other precision instruments becom6 available to Commtmiet Chinas
they will plan for substantial purchabes of this equipment from the free
world over the next 20 to 30 years.
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?
METALS MINLIALEND ThE4 MalTRAGTUW
kL Ihmjapaneee Propos4
Japan has proposed ten China Special List iter, one ILIII and
one IL-II item tor decontrol These items can be grouped as follows
2 ferrous metals items -
( 1) tinplate,
(ii) iron and steel products including illoy steel, n.e-? s.
(pig iron; GI sheets, plates, girders, pipes, tubes,
powder, etc),
All of these items are on the China Special List,
7 nonferrous metals items -
( i) electric power cable,
( ii) platinum thermocouples,
(iii) aluminum and aluminum alloys (n.e,s,>)
( kr) lead pipe,
( v) zinc,
( vi) sodium,
(vii) sulphur-bearing pyritee,-*
All of these items are on the China special Lists,
3 antl-friction bearings items -
All types of bearings are covered by these three items, except
those on IL-L** One item each is on the China Special, IL-III
and IL-II lists,
ARKOUS KETAL6
The ferrous metal items proposed for decontrol by Japan include
some products which Communist China produces in very limited quantities and
others of which Chinese output is of inferior quality? A sufficient supply
**
cmonftordass,..
Since pyrites are probably processed for sulphur rather than iron content,
remarks under sulphuric acid apply to this item (see Group?)
Generally speaking, IL-I covers the very small and the very large, special
and ultra light weight bearings all have very high military application,
The bearings on IL-II are the "i&-between size" and are also important
from a strategic point of view but have "dual use",,
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or iron and steel products is basic to any industrial expansion program
as well as to mobilization plans. For example,such products are needed
for anip repair, steam boilers, and oonetructico of faceeries projected
under the current Chinese Five-Year Plan. Tinplate is needed for the
veaservation of (military) supplies ohiefly foods whiob must be stock-
pOed or stored so as to reoist rougn. handling
China currenake is expanding les prodimtion of iron and steel
products in terms of both quantity and variety. This is one of the main
objectives of the current plan. The country hao a raw materials base
that will more than support the planned expansiont, but a substantial amount
of assistance is being obeained from the USSR and East Germany in order to
make possible the enlargemont. of the iron and steel processing industry.
An early plan to produes 10 million tons of steel in 19629 has
been revised downward L The most recent reaUstie estiaatea of pre-Plan,
current and likely future production is given in Table 7 3
TABLE
RECENT AND PROJECTED PRODUCTION OF FERROUS NiETALS
IN COMMUNIST CHINA,
M. SELECTED !LARS 1952 - 1960
-TAIIlions of metric
Material
___
Pig iron
.......z_
1.9
3,3
Crude steel
1.4
2,6
38f'?
8
Finished steel
1.1
1,,9
3,0
4 ?
Iron ore
4,,0
10.5
15,0
21 4
The Chinese Government has Identified the following large projects
which are to be completed at intervals in the future, with Russian assis-
tanoei
a. Restoration and enlargement of An-shan Steel Works proceeding
rapidly, although behind schedule, will increase its capacity to three
or four times its pre-Plan size, to a point where it will be producing
cver half of all Chinese steel, mill products.
b, Wuhan and Pao-Vou Steel Works - the Wuhan project, located in
central China9 is entirely new as is the Pao-Tiou project in Inner Mongolia.
First phases of these projects are to be completed in 1961-1962. The "world ss
finest'' open-hearth furnaces are envisaged for this development.
?A? anr
3Re-Bei!:
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=I?? 41?00 MM. MI/
c. In addition, four nfirst-rate" steel works will be constructed
or reconstructed during the 5-'year period.
d. Smeller enterprises, including the Chunkinr, Tientsin, Toang-shan
Steel Works, are to be renovated and expanded by 1957.
The recent emphasis on quantity appears to have orevented the necessary
improvement in the quality of Chinese finished steel. Modernization of steel
mills has 24ade possible the manufacture of pig iron of reasonably good quality
although it has been admitted that among the enterprinas affiliated with the
Heavy Industry Ministry during the first quarter of )4;55 a large amount of
pig iron fell below specifications due to high sulphur. content. Thirty
percent of the output of heavy steel and steel for building bridges of the
An,shan Iron and Steel Company did not meet the specifications. The planned
expansion calls for a great deal of capital equipment Which China probably
cannot provide indigenously, for example: 6 automatii; blast furnaces;
3 modern steel smelting plants; 16 steel rolling mil)f_e and 4 new fire
refractories plants.
At the present time China is not self-sufficleot in iron and steel
products and imports perhaps 5009000 tons of steel +old steel products per
year. In terms of value, imports of iron and 'steel po>ducts form 5.5 percent
of total estimated imports into China in 19545.. Theo come chiefly from other
parts of the Soviet Bloc but also to a significant degree from the free
world (by transshipment and through clandestine channels). Imports in 1954
included plates; various forms of sheet, such at OI and tin plate; rails,
and other finished and semi-finished steel products, Exceptions requests
in CHINCOM-COCOM for GI sheets have been substantial.
Although steel products are not plentiful in toa rest of the Soviet
Bloc, the USSR, because of its large steel production (about 55 million
tone per year), is in a position to provide many items to China. This
source, however, does not fully satisfy Chimes current import needs. It
is believed that a large market for steel products eiil exist in China for
many years to come.
Currently, Communist China furnishes tin to the USSR and probably
obtains tinplate in return. There are also clandestine shipments of
tinplate from the free world. If tinplate should be removed from embargo,
it is possible that Japan would take the place of the USSR in receiving
tin from Cana and Shipping tinplate in return.
C. Non-Ferrous Metals
The situation with respect to non-ferroue metals in China is
highly selective and may change with the passage of time as the geological
exploration of the country is still in progress, indeed has a high priority
in the current plan program.
SeE-C.RA-T
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Currently the country has an exportable surplus of tin, zinc, antimony,
eercury and of wolfram (tungsten ore), but is critically short of copper and
aluminum. Even if the ambitious expansion plans for 1952-1957 would be fully
implemented, copper and aluminum deficiencies would be expected to remain.
If the plans of expansion are realized (Which will depend on a continued
Influx of capital equipment from abroad), Communist China by 1960 may be self-
sufficient in pyrites, fluorspar and possibly lead, Other metals and minerals
of ehich Chinese supply is limited or non-existent are frequently those for
which the country also has small, if aey, need, making the shortage of re1a-
tive:4 little sigeificance.
Eseimates of recent and current Chinese production of selected non-
ferrous metas (or their source minerals) and projections for the future
are given in the eable belcw:
TABLE 8
RECINT iND PROJECTED PRODUCTION OF SELECTED NON-FERROUS METALS
IN COMMUNIST CHINA,
FOit SEUCTED YEARS.l2 - 19t0
kthoueend of metric tons,) metal equivalent)
Item
1952
1955
1957
1960
Tungseen (wolfram)
15,8
20.5
23.7
N.A.
Copper
8.0
12.9
/3,6
2406
Zinc
4.4
10.3
13.6
18.7
Lead
7.0
22,5
23.1
24.0
Tin
9.0
13.0
17.0
22.0
It will be seen from thls table that increases are expected to vary from
60 to over 2C0 percent eetween 1952 and 1957.
The text of China Five-Year .Plan recognizes that the nonferrous
metals industry is the ,eeeek-link" of Chines heavy- industry; the develop-
ment of resources and preduction facilities of these metals is one of the
important tasks of the c-erent plan. An emphasis is being placed not only
on modernization of the existing mines and opening up of new ones, but also
on geological expleratia, Probably the largest single project currently
underway is the Ko-eaee Tea Mine (Yunan Province) which produces about
80 percent of Chinaes tire In the case of other metals, a shortage of
smelting capacity seems to exist as well as a shortage of skilled labor.
The quality of the metal, produced, especially that of copper and aluminum,
appears to be sub-standarl, as may be expected in the initial stage of
operation.
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Tae rest of the Soviet Bloc is also critically short of copper, is
currently attempting to import significant amounts of mercury, and is
importing approximately as much aluminum and bauxite as it is exporting.
China has sought to obtain copper, aluminum and several oaner non-
ferrous metals and their products from the Sateilitoes? from the USSR and
through clandestine sources from the free world. Premium prices have
been paid for some of these items.
Commodities of high production cost in the Bloc, as compared with
the US include most non-ferrous metals and minerals, coaxial cable (made
of copper, steel, lead, etc.), magnetic materials (cobalt, etc.), aluminum,
cobalt, columbium, copper, mercury, molybdenum, nickel, and bismuth. These
high Bloc costs are believed to be explained- by low-quality ores? inconvenient
geographic locations, low-rate of capital equipment amila relatively -inefficient
use of maChinery.
The Japanese proposal, therefore, if implemented, would decontrol some
of the critically needed non-ferrous metals in China. The decontrol of
electric cable, for examples, would tend to nullify the existing controls
on copper, the embargo of wnich has been 'an objective of the US economic
defense policy for several years. It would also make possiblo the acqui-
sition of wire of a much better quality than China can produce.
From a strategic point of view, decontrol of electric cable would
-be undesirable also because it would permit a rapid improvement in Chines
weak communications system.
The decontrol of plantinum thermocouples would put important laboratory
and electronic components at Chines disposal. Although there is no shortage
of raw platinum in the Bloc (the USSR is one of the largest producers in the
world), thermocouples are not in adequate supply in the Bloc, although the
need of China, itself, or these items is probably negliEible
D. Anti-Friction Bearings
Chinaus present output of bearings is inadequate from a qualitative
and quantitative point of view. It is estimated veri roupdav that in 1955
production of bearings probably exceeded one mi3lion Uflt3c. tt is prohibly
ecricantrated in tt',7. 11mnlnr types and only a limited !rimbnr of stsen.
Under the current plans of development the three existing ball bearings
factories will be renovated -- apparently no new construction is envisaged.
There is little doubt that much of the new equipment, eapecially the key
-precision grinding machinery, will have to be obtained from abroad. Since
some of the European satellites are still short of bearings and their own
indigenous production is not fully developed, such machinery could be
? furnished to China only at the sacrifice of production elsewhere in the
Bloc. China may also have difficulty in prodnoing steel and semi-finiebed
products of sufficient uniformity and quality to permit expanded production
of bearings in the near future.
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Currently bearings have been sought from the free world through legal
and other sources They have been a preferred item in clardestine trade.
Bearings and parts of all types and sizes, but mainly of the middle (IL-II)
ranges have figured in this trade. They can be used in tru&is, heavy machine
tools, and railroad rolling stock,
As communist China's industrialization advances, an even greater market
will develop for bearings and parts of all types including unmounted balls.
S-E-C-R-E-T
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CHEMICAL AND PETROLEUM PRODUCTS
A. Chemicals
Japan has proposed 24 China List and 2 Chemical items for
decontrol. These chemicals in most cases have dual uses and prior to the
list review of l954, a number of them had been rated IL-I. Most of the items
proposed for decontrol by Japan have a number of military uses i they else
have "peacetime" Application in "peacetime" industry (metallurgy, rubber
manufacture, plastics, dyes). The "sinister" uses of some of these chemicals
are as follows:
acetone (solvent for smokeless powder)
acetylene (for military welding)
carbon black (to make military tires and footwear)
chlorates (to make explosives)
N-Dimethylaniline (to make propellants for guided missiles and
explosives)
Formaldehyde (to make RDX - an explosive)
methanol (to make anti-freese, formaldehyde and high explosives)
methyl methacrylate resins (to make "bubbles for airplanes)
nitric acid (to maks basio exploaives)
permanganates(can be used as catalysts for rocket fuel)
phosphorus (can be used in chemical warfare And plastics)
sulfuric acid (to make basic explosives)
sulfur and pyrites (base to make many Chemicals and sulfuric acid
and rubber goods)
At the present time China produces very little or none of_ths_ahemicals
proposed for decontrol by Japan, except possible glyeert*iiilfur and methanoli
nearly all of these chemicals are being imported from the rest of the I?
or from the West.
China ,s present production of basic chemicals is inadequate to meet
the military, industrial, and agricultural needs of the country. The
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development plan calls for approximately doubling the 1955 output by 1960
in several basic chemicals. In broad terms they may be grouped as follows:
(a)
rubber chemicals which are related to the planned increase of
output of tires and rubber foot wear, the basic item of wear
in China even for the military;
(b) sulfuric and nitric acid, related to the planned increase in
output of steel, metals and industry generally;
coal tar chemicals (naphtalene, benzol, toluol, phenol), which
are titermediate products for dyes for the textile industry,
plasticizers or explosives; and
(d) ammonium sulfate, a basic fertilizer, probably intended for use
in increased cotton production but which also has a wide appli-
cation in industry.
(c)
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TABLE 9
RECENT AND PROJECTED PRODUCTION OF SELECTED CHEMICALS
IN COMMUNIST CHINA1,
FOR SELEVTED IgAR5, 1952 - 1960
Commodity 1952 1.2.55 1957 1960
Calcium Carbide 8.0 15.0 21.0 30.0
Synthetic Ammonia 28.8 62.0 82.2 112.5
(as N)
8200.
N.A.
23.8
5.8
Refined Naphtalene
3.400
5.300
6.500
Chlorine
6.9
N.A.
N.A.
Refined Benzol
9.8
15.0
18.4
Toluol
2.4
3.8
4.6
Xylol
Phenol
Cresol
Caustic Soda
sumuticAcid
Soda As
Nitric Acid
Ammonium Sulfate
0.800
1.300
1.500
0.200
0.300
0.400
0.400
0.700
0.800
2.100
0.500
1.100
32.2
44e5
52.5
65o
150.0
267.0
335.0
435.0
192.00
365.1
476.0
690.0
9.4
20.6
28.2
40.0
211.4
360.0
455.0
600.0
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Even if the plans can be met (which was described as questionable
for reasons explained in the comment for Group I above), China vs growing
industry will have a large need for many different types of chemicals.
Problems of quality control also will plague the country for many years
to come',
At the present time, the rest of the Soviet Bloc ic not in a strong
position to export chemicals to China, In many basic chemicals, particu-
larly in sulfuric acid, there is no exportable surplus in the Soviet Bloc. 1/
Corm-mist China has increased reliance on the free world for supply of cheat,-
cale, In Chinats trade with free world countries, the share of chemical
imports des risen frei e percent in 1950 to nearly 30 percent in 1954.
Chemicals have been sought in many trade agreements with the free world.
Dyes have figured as one of the preferred items in clandestine procure-
ment efforts and some continue to command a premium price. Chemicals
also figured prominently in CHUICOM exceptions,
There should be a ready market in China for many of the chemicals
proposed for decontrol for at least the next decade,
Br. Petroleum and Petroleum Products
. The only pet'eletun products or derivatives Which Japan has
proposed for decontrol are paraffin wax and petroleum asOhalto Both are
on the China Special List. Certain forms of petroleum wax are included
in the International Atomic Energy List and therefore must be continued
under control for China as well aa for other Bloc areas. There IA no
evidence of special Chinese interest in this item. When petroleum asphalt
was proposed for deletion frail IL-III, its addition to the Special China
List was important because Chinese production was believed to be negligible
or nonexistent and procurement attempts from the free world were considered
to be substantial. Those attempts have been lest, evident recently, although
small quantities of asphalt are believed to have reached Communist China
by clandestine means.
There haa. been an increase in the contribution of the petroleum industry
to the eeonomic potential of Communist Ceina during the past five years.
The output of refined products, only 400,000 tonsin1951, reacted about
7159000 tons in 1954o This supply, however, provided only one-third of
the country9s requirements the remainder is imported, primarily from
other Bloc countries.
The crude oil resources of China will suppprt increases in production,
but transportation difficulties - both great distances and lack of equip-
ment - together with a Shortage of refining facilities, impose restrictions
on expansion of the industry. If the railroads currently under construction
to Chinaws interior are completed in 1957, as planned, the principal oil-
producing region will be linked to the industrial centers of the East.
1/ An unconfirmed report indicates that export of chemicals to China is
- being restricted by the rest of the Soviet bloc.
.36.,
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There is a possibility that petroleum refinery output (including synthetic
oil operations) may reach 1,000,000 tons by 1960, Even then, however, China
would remain dependent upon imports for a substantial part of her require-
ments of petroleum products.
The rest of the Soviet Bloc produces a sufficient]' large amount of
petroleum products to furnish Chines restricted needs. However, here
again the problem of transportation is one that presents very considerable
difficulty. Petroleum products have been so scarce that they have been
moved even by truck. Kerosene and gasoline are a preferred item in illicit
trade with free world supplies at the two main Asian ports --Hong Kong and
Macao? Moreover, Russian tank cars, Which deliver oil to China, have to
return empty on a run of several thousand miles. Thum POL is available
only at very considerable economic cost to China as well as the rest of
the Bloc.
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OOP 8
arlarkLAIBLBWOUNMEW.
Japan has proposed that only 1 China list item in this group be de-
controlled. The item c-a2op "Tires not elsewhere specified (except those
for scooter sand pedal cycles)," anew:passes all motor vehicle tires except
those covered by the IL-I degnition which control military truck tires of
certain size and ply rating.if Tires of the same rim size as those on IL-I?
but in lesser ply rating or with now-military treads? could be exported to
China if the Japanese proposal is accepted. All tires in rim sizes not
covered by IL-1 also could then be exported, In substance, therefore, the
Japanese proposal would affect the decontrol of most types and sizes of tires
for motor vehicles, including same useful for military purposes in an emer-
geney- Ther) era ecutelly very few types covered by the IL-I definition,.
As mentioned in the comment for group 3, Chines production of rubber
products is inadequate. In fact, it hae been the target of considerable
criticiam and even ridicule. With a few exceptions tires are produced by
handicraft methods at smell planto. The quality is poor. Under Chinas plans
of development, the domestic output of rubber products is to be expanded, as
indicated in the following table although this expansion an only take place
if additional machinery is obtained from abroad,
1/ IL-1820 - Pneumatic tire easings (exelqpine tractor and farm implement
types), as follows:
(a) of a kind specially constructed to be bullet proof
or to run when deflated,
(b) in the following sizes and ply ratings:
(1) 8 ply rating and over in the size 9.00 x 16
() 10 ply rating and over in the size 34 x 7;
0) 12 ply rating and over in the sizes 14.00 x 20 and
12,00 x 20;
(a) with off-the-road treads in the following sixes ga
ply ratings;
(1) 6 ply rating and over in the sizes 7.00 x 16, 6,50 x
20 and 6.50 x 19;
(2) 8 ply rating and over in the sises 9,,00 x 209
7.50 x 20 and 7,00 x 20.
.36.
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TABLZ 10
hhChNT eNI) PROjECTEL PRODUCTIUb OF belICTL0 RUB14R HaNUFACTURLS
Lb CQHMUNIbT CHM,
_12124.MWPTIMOTARS, 1952 1960
Motor Vehicle Tires
(in thousands of units)
Rubber footwear
(millions of pairs)
195
/25.1 1952
600 700
12?2
19000
55 65 75 90
Rubber products are not in ample supply ln tae rest of the Bloc
which is unable to furnish such products to China ex: apt by seriously
neglecting commitments in other Communist areas, There are unconfirmed
reports that other Bloc countries have restricted exports of rubber and
rubber products to China as a conservation meawLre.
There have been unrelenting attempts to procure from the free
world tires of all types and sizes through clandestine channels; premium
prices have often been paid,
It is believed that a substantial market for tires of all types
will exist in China for many years to come The motor vehicle park of the
country is scheduled to increase considerably, be poor quality of Chinese
roads will require for many years to come a greater than average replacement
of tire, tven considerably increased indigenous production will continue to
be outdistanced by demand for the next decade?
ApprCJtT
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s-t7g-R-E-1
onnTip
tok.44^Niwus
Japaa has proposed one item on the China Spenial List for decontrol
in this group: ataca and siaal, fibers and cordage.
CommAnist China's supply of technical fibers is not adequate, B-ut
since the rest of the Bloc: also has a fiber shortage and imports henequin
hemp sisal and other fibers at every opporunity, China cannot expect much
assistance from this source China will be a moderately good market for
technical fiba.,7e for :many years-
Sihre the other it,3ms in this group are highly dissimilar no
further discussion appears indicated here.
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