NIE-32: EFFECTS OF OPERATIONS IN KOREA ON THE INTERNAL SITUATION IN COMMUNIST CHINA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A000800050035-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 20, 2016
• Document Release Date: February 6, 2006
• Sequence Number: 35
• Publication Date: June 27, 1951
• Content Type: REPORT

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CENTRAL INTELLIGENCE AGENCY
ARMY, USAF reviews completed
27 June 1951
SUBJECT: NIE-32: TS OF OPT' 2ATIONS 331 IMIZEA ON THE
II3TIMULL STflI&TION IN COL LItJN T CHThA
To estimate the effects of the Korean operations upon the
internal political$ econcrmte,, and military position of the
Chinese Canmmist regime,
1. We estimate that:
a. Daring the Korean war increasingly drastic control
measures have been instituted and there has been
an intensification of popular dissatisfaction; to
date the Chinese Ccmnunist regime has shun ability
to control the population and check the development
of an effective opposition.
Im"
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bo 1hile the Korean war has not yet poised a critical
threat to the economic stability of the Chinese
Ccmnnunist regime,, the war has subjected and will
continue to subject the regime to increasingly
serious economic difficulties,, These difficulties
are almost certain to increase during the next
year if "'(estern trade restrictions are rigorously
applied,
co Without Soviet aid the Chinese Communist regime
is unable to replace the stocks of materiel now
being expended in Korean
d, During the Korean war the size of the Chinese Com-
munist military establishment has been increased.
ea By reason of personnel losses alone,, the over-all
military capabilities of the Chinese Communists
have probably not been seriously affected.
fo However, deployment to Korea and Manchuria of major
portions of their best forces, increased internal
police requirements, and the logistic strain of the
Korean war have reduced present Chinese Co=mist
capabilities for additional external military operations.
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gm The Korean war has increased the dependence
of the Chinese Communists on the USSR, but
apparently has not materially changed Sinom
Soviet relationso There are areas of conflicting
interests which make rumors of mutual die-
satisfaction plausible, but we have no firm
evidence to substantiate these rumorso
ho The Korean war has placed strains upon the
political, military and economic position
of the Chinese Communist regimeo Internal
developments have not yet, in themselves,
become so critical as to compel that regime
to end the waro*
We have rezexsmined the Conclusions of this paper with reference
to the Malik statement and do not find that his eta mGnt in any
nySR
way affects the validity of this paper's
and st Ching dog in fact, desire a ceasefire along the,38th
Parallels they area probably motivated by considerations which
include the military situation of Communist forces in Korea but which
undoubtedly also take into account important factors above and beyond
the scope of this papero
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DISCUSSION
I, EFFECTS ON CHINESE COMMUNIST POLITICAL STABILITY
20 No have no reliable evidence that reverses in the
Korean war have created a rift among the higher Chinese Com-
munist political and military leaders. Rumors suggest, how-
ever, that dissatisfaction with the course of events in Korea
may have accentuated differences of view that already existed
among them. There is fairly reliable evidence that military
and political figures of secondary importance have become
uueasy over Ghinals involvement in Korea and its isolation from
the West? On the other hand, several factors have tended to
insure party solidarity, such as the lifelong isolation from
non-Communist 'Western influences and the common ideological
conditioning of most Chinese Cormmuniat leaders, the mutual
interest they have in maintaining a united front among them-
solves and with the Soviet Union, and the strength of party
disciplined
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3o The Initial Chinese popular reaction to intervention
in Korea appears to have been one of pride in victory., and even
the'later holding actions were viewed as triumphs when compared
with the long series of Chinese humiliations in the past, As
the war has gone on, popular dissatisfaction with the regime,
already in evidence before the struggle began, has been intensi-
fied by heavier taxes and levies in kind, increased conscription
and militia duties imposed on an already war-weary people, purges,
further disruption of the traditional Chinese family system, and
other harsh repressive measureso In addition, there is evidence
from reliable sources that among certain of the more educated
groups, including some ardent supporters of the regimes mis-
givings have developed about the regime?s relations with the USSR
and the U t?s intentions with respect to China and Korean
b0 The decline of popular support and the apparent necessity
to impose greater restrictions and demands upon the home front
have resulted in the regime?s speeding up its efforts to co&-
solidato further its control of the countryo Terroristic measures
to suppress "counter-revolutionary activity" have. been reinforced
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by positive steps to strengthen the public security systems to
ctralize and expand militia unites and to increase membership
in the Communist=directed "people?s organizationo" The regime
has also been required and probably will have to continue to
maintain large military forces within China to assist in pre-
serving ordero While the control measures have thus far been
successful in checking the development of an effective oppositions
their harshness has lost to the regime the willing cooperation of
at least some community leaders, educators, engineers, and others
whose prestige, training, and technical skills the regime has
regarded as essential to the furtherance of longer range politer
toal and economic planning. In the long runs these develop-
ments might have serious effects on the stability of the regimen
IIo ECONOMIC EFFECTS OF THE KOREAN VIAR
5 There is insufficient evidence upon which to base a
complete estimate of the effect of the Korean conflict on the
Chinese Communist economgr, which, though it has to support an
urban population of over 60 million, is undeveloped industrially
and preponderantly agrariono It is entirely possible that any
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such effect would not be apparent within as short a period as
has elapsed and it is improbable that satisfactory statistical
evidence of such effects would be quickly or reader available
to use
6o It seems almost certain that the demands of the Korean
war have limited the Peiping regime?s reconstruction efforts
to those projects requiring only the investment of labor,, such
as the building of dykes., irrigation systems airfields,, and
7o Although the regime has been successful in preventing
the prices of domestic goods from rising sharply,, inflationary
pressures have built up since aid-19509 and Western trade re-
strictions and rising world prices have resulted in precipitous
price rises for certain imported strategic raw materials and
manufactured produatse
80 Foreign trade with the West was at high levels in
1950o We estimate that during the first quarter of 1951 this
trade at least remained at the 1950 is s primarily because
of the sharp increase in imports chiefly of strategic materials
through Hong Kongo Data on Western flag shipping with Hong Kong
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and Chinese Communist ports since 1 April indicate that such
shipping has fallen off significantly and we believe that the
volume of trade has correspondingly declinedo We believe that
Western trade restrictions are almost entirely responsible for
this decline in shipping and that these restrictions will have
an increasingly adverse effect an Co?unist China?s import
capabilities during the remainder of the yearn Smuggling and
trade from Catnrnunfi st and non,-Cooperating non..Ccamaunist nations
will probably increase and will offset to same extent the
effect of these restrictions.
9, Since the industrial sector of the Chinese Communist
economy operates virtually on a day-to-day basis, both in terms
of raw materials and plant maintenance, effective curtailment
of imports is likely seriously to affect Chinese Communist inn'
dustryo There have been shortages for some months of petroleum
for civilian use and of certain fairly important specialised
Industrial items. Very recently as a result of raw cotton
shortages textile mills have shut donna The Communists assert
that they are related to import difficulties as well an to the
failure of the cotton collection program in China itself.
However, we believe the munitions industry., in spite of reports of
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plant dispersals and raw materials shortages, is producing at
capacity and expanding0
109 During the large initial troop movements northeastward
in the summer and autumn of 1950, there were serious interruptions
in the rail movement of non-military goads throughout China, Since
that time, although military traffic has presumably interfered
with the general distribution of goods throughout China, and
particularly in Manchuria,, and although there have been recent
indications of delay in the movement of individual non-military
shipments, there is no evidence that the aggregate volume of traffic
outside Manchuria in essential non-military items has been sharply
curtailed,,
11o The diversion of draft animals and manpower to military
purposes has impeded agricultural production In China, but the
country is not likely to face a critical over-all food situation
In 19510
l20 Although such evidence as we have does not suggest that
the Korean conflict has as yet posed a critical threat to the
economic stability of the Chinese Carmnaiast regime, the Korean
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war has forced the Chinese Communists to modify their program
of long range economic development and to place their economy
cc a war footings has subjected the nation to economic sanctions
imposed by the 1J astern world, has increased inflationary pressures?
and has strained the economic relations between urban and rural
areas, These factors are likely to increase the economic dIf
faculties of the government during the next yearn
13o The Korean war has increased Peipinggs present
economic dependence on the USSR from two points of viewo In
the first places we believe that the Chinese Communists do not
have the industriai resources to meet their requirements for
continued operations on the scale of the Korean campaign over
an extended period for even the type of military equipment now
being used by them in Korean i the second place,, the increased
East-West tension that followed the outbreak of hostilities in
Korea is resulting in more effective Vostern trade restrictionso
TIIo MILITARY EFFECTS OF KQUEAN U R
140 The Korean war has resulted in the deployment of
major portions of Co munist Chinaae best military forces in
Korea andfor Manchurian Supply requirements of the war are
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axing heavily Communist Chinase 1i::ited logistic capabilitieso
In addition, guerrilla activity and increased unrest have re-
quired the commitment of large military forces within China
for the maintenance of internal security, We estimate, there-
fore, that present Chinese Cammuaist capabilities for military
operations in Southeast Asia or against Taiwan have decreased
as a result of their participation in the Korean warn
15, The Chinese Communists had an estimated 277,000
troops deployed in Korea on 19 June 1951, In addition, it is
estimated that they had U armies and elements of 4 armies and
special units in j~anchuria totalling 358,000 men, These units
constituted a major portion of their best forces,
16, Chinese casualties in Korea are estimated to have
been 577,000 as of 16 June 1951, including roughly 73,000
ncn-battle casualties and 16,500 prisoners of war, Among
these casualties have been an undetermined but considerable number
of the better trained and politically more reliable troops, in-
cluding officers and non-comsissioned officers who will be
especially hard to replaced There are indications that the units
committed earlier were of a higher caliber than those recently
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encountered by the United Nations forces. Morale appears to be
lower among Chinese forces in Korea than it was initially and the
rate of capture of prisoners of war has increased greatly. How-
ever, Chinese Communist personnel losses in Korea probably have
not yet seriously affected their over-all military capabilities0
17. Despite heavy losses, the total estimated strength
of the Chinese Communist Field Forces increased from 1,770,000
on 1 October 1950 to 189147,000 on 9 June 19Sl0 Military District
units and the Militia have also been strengthened,)
1$: Losses of materiel in Korea have been considerable,
Most of the equipment which was not Chlnesede was of US
and Japanese origin. Communist China?S output of high explosives
and military equipment, including artillery, is insufficient
to keep up with the expenditures and losses of materiel in
Korea and Communist China has no motor vehicle and aircraft
industries. Consequently, as the original stocks become des
pleted9 the Peiping regime is becoming increasingly dependent
upon the USSR for logistic support*
19? Relatively few Soviet ground force weapons and little
ground force equipment have been found in the hands of Chinese
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Communists in Korean There are a number of fairly reliable
indications, however$ that tanks and heavy equipment are
being supplied and that some training in their use is being
afforded to Chinese Communist units in Manchuria; additional
reports, probably with some basis in fact, state that the
Soviets have agreed to equip and train Chinese Communist
divisions. We estimate that there are 109000 Soviet military
advisers throughout China, and that there are some 3,000
such advisers with the Communist forces in Korea.
20. The Chinese Communist Air Force has been steadily
expanded, especially by the addition of jet fighters supplied
by the USSR. The Chinese Communists, with a total of approxi-
mately 1,9000 aircraft available to them, now possess a far
greater air capability than they had at the outset of the
Korean operation0
21. The USSR has provided almost all the aircraft, avia-
tion equipment, and supplies now available to the Chinese
Communist Air Force? and there is substantial evidence that it
is now supplying the CCAF with radar, antiaircraft equipment,
and technical personnel. It is probable that Soviet or other
non-Chinese "?volunteer"? personnel are operating many of the
aircraft currently available to the Chinese Communists.
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22t, The USSR has provided the Chinese Communist Navy with
advisers, technicians, and training personnel, and possibly a
few old submarines of the smaller types.
IV0 EFFECTS ON SINO-SOVIET NEIATIONS
23o Official pronouncements and propaganda indicate no
appreciable friction between Communist China and the USSR,
but on the contrary suggest that the coordination of foreign
policy and propaganda and of military, economic, and social
planning between the two countries has continued and perhaps
increased during the Korean warn However, reports from sources
of unknown reliability indicate dissatisfaction on the part of
both Soviets and Chinese with the SinooSoviet alliance. As
there would appear to be many areas of conflicting interest
and potential friction between the Chinese Communist and Soviet
regimes,, including possible rivalry for control of Korea, these
indications are not inherently improbable. Any genuine Sinop
Soviet friction would doubtless be concealed as long as possibleo
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