PROBABLE EFFECTS ON THE SOVIET BLOC OF CERTAIN COURSES OF ACTION DIRECTED AT THE INTERNAL AND EXTERNAL COMMERCE OF COMMUNIST CHINA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79S01011A000900010028-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 22
• Document Creation Date: December 20, 2016
• Document Release Date: February 15, 2007
• Sequence Number: 28
• Publication Date: March 9, 1953
• Content Type: SE

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Arrn, Navy, USAF review
ARMY- NAVY AND USAF
Decllassifi cati on/Release
Instructions on File
Page
THE PROBLEM . . . . . . . . . . . . . . . . . . 1
CONCLUSIONS . . . . . . . . . . . . . . . . . . . 1
DISCUSSION . . . . . . . . . . . . . . . . . . . . 3
EXTENT OF PRESENT CONTROLS ON TRADE WITH COMMU-
NIST CHINA . . . . . . . . . . . . . . . . . . . 3
THE EFFECT OF PRESENT CONTROLS ON COMMUNIST CHINA 4
Effect on Foreign Trade . . . . . . . . . . . . . . . . 4
Imports from non-Soviet Bloc Countries . . . . . . . . . 4
Exports to non-Soviet Bloc Countries . . . . . . . . . . 4
Imports from Soviet Bloc Countries . . . . . . . . . . . 5
Exports to the Soviet Bloc . . . . . . . . . . . . . . 5
Over-all Effects . . . . . . . . . . . . . . . . . . 5
ECONOMIC EFFECTS . . . . . . . . . . . . . . . . 5
Industrial Effects . . . . . . . . . . . . . . . . . 5
Effect on the Railroads . . . . . . . . . . . . . . . 6
Effect on Other Internal Transportation . . . . . . . . . 6
Over-all Economic Effects . . . . . . . . . . . . . . 6
MILITARY EFFECTS . . . . . . . . . . . . . . . . . 6
Ground Forces . . . . . . . . . . . . . . . . . . 6
Air Force . . . . . . . . . . . . . . . . . . . . 6
Navy . . . . . . . . . . . . . . . . . . . . . . 6
INTERNAL POLITICAL EFFECTS . . . . . . . . . . . 7
PROBABLE EFFECT OF A TOTAL EMBARGO ON NON-COMMU-
NIST TRADE WITH COMMUNIST CHINA ON CHINESE COM-
MUNIST ECONOMIC AND POLITICAL STRENGTH, AND MIL-
ITARY CAPABILITIES . . . . . . . . . . . . . . . 7
Introductory Note . . . . . . . . . . . . . . . . . 7
SHORT-RUN EFFECTS . . . . . . . . . . . . . . 7
Effect on Trade . . . . . . . . . . . . . . . . . . 7
Economic Effects . . . . . . . . . . . . . . . . . 9
Military Effects . . . . . . . . . . . . . . . . . . 9
Internal Political Effects . . . . . . . . . . . . . . . 9
Burden on the Rest of the Bloc . . . . . . . . . . . . . 9
LONG-RUN EFFECTS . . . . . . . . . . . . . . . . 9
Economic Effects . . . . . . . . . . . . . . . . . . 9
Military Effects . . . . . . . . . . . . . . ~.. 1p
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TABLE OF CONTENTS (Continued)
Page
Internal Political Effects . . . . . . . . . . . . . . . 10
Effect on Sino-Soviet Relations . . . . . . . . . . . . . 10
PROBABLE EFFECT OF A NAVAL BLOCKADE ON CHINESE
COMMUNIST ECONOMIC AND POLITICAL STRENGTH AND
MILITARY CAPABILITIES . . . . . . . . . . . . 10
Including Port Arthur and Dairen . . . . . . . . . . . . 10
Effect on Chinese Communist Trade . . . . . . . . . . . 10
Soviet Bloc Exports to Communist China . . . . . . . . . 11
Capacity of the Trans-Siberian Railroad . . . . . . . . . 11
Capacity of Communist Chinese Inland Transportation Facilities 11
Economic Effects . . . . . . . . . . . . . . . . . 12
Political Effects . . . . . . . . . . . . . . . . . . 12
Military Effects . . . . . . . . . . . . . . . . . 12
Effect on Sino-Soviet Relations . . . . . . . . . . . . . 12
Excluding Port Arthur, Dairen, Hong Kong, and Macau . . . . 13
PROBABLE EFFECTS OF BOMBARDMENT OF LINES OF COM-
MUNICATIONS IN CONJUNCTION WITH THE BLOCKADE . 13
Vulnerable Elements of the Chinese Communications System . . 13
Rail and water links with the Trans-Siberian Railway . . . . 13
The rail link between Dairen and Port Arthur and central
Manchuria . . . . . . . . . . . . . . . . . . . 13
The rail link between Manchuria and North China . . . . . 14
The Chu-chou-Heng-yang rail link in South China . . . . . 14
Rail and water targets in central China . . . . . . . . . 14
RESULTS OF A LARGE SCALE AND SUSTAINED AIR AND NAVAL
BOMBARDMENT CAMPAIGN AGAINST INLAND TRANSPOR-
TATION FACILITIES . . . . . . . . . . . . . . . . 14
CHINESE NATIONALIST CAPABILITIES TO BLOCKADE THE
CHINA COAST AND TO CONDUCT AIR STRIKES AGAINST
LINES OF COMMUNICATIONS ON THE CHINA MAINLAND . 15
NATIONALIST CAPABILITIES . . . . . . . . . . . . . 15
Blockade . . . . . . . . . . . . . . . . . . . . 15
Air Strikes . . . . . . . . . . . . . . . . . . . . 15
PROBABLE COMMUNIST REACTION TO THE IMPLEMENTA-
TION OF THESE MEASURES . . . . . . . . . . . . . 15
COMPLETE EMBARGO . . . . . . . . . . . . . . . 15
NAVAL BLOCKADE . . . . . . . . . . . . . . . . . 16
AIR AND NAVAL BOMBARDMENT OF INLAND TRANSPORTA-
TION FACILITIES . . . . . . . . . . . . . . . . . 16
CHINESE NATIONALIST BLOCKADE AND BOMBARDMENT . . 16
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THE PROBLEM
To examine the current status and effectiveness of controls on trade with Com-
munist China.
To examine the short and long term effects on the capabilities of the Chinese
Communist regime of: (a) a complete embargo; (b) a naval blockade, alone or com-
bined with bombardment of transportation facilities in Communist China; and
(c) a Chinese Nationalist effort at blockade and aerial bombardment.
To estimate Communist reactions to these measures.
This estimate does not consider whether the UN would cooperate in these meas-
ures, or what the reaction of other non-Communist powers would be if the
US adopted these measures unilaterally.
This estimate does not consider the probable consequences of substantially in-
tensified US or US/UN military operations in Korea or Communist China under-
taken in conjunction with some or all of these courses of action.
This estimate assumes that a blockade of Communist China would not involve
interference with shipping to ports of the Soviet Far East.
CONCLUSIONS
PROBABLE EFFECTS ON THE SOVIET BLOC OF CERTAIN
COURSES OF ACTION DIRECTED AT THE INTERNAL AND
EXTERNAL COMMERCE OF COMMUNIST CHINA
1. Present controls on trade with Com-
munist China have not prevented the
build-up of Chinese Communist military
strength. Moreover, Communist China's
industrial and internal transportation
systems have continued to expand since
1950, but at a greater cost to the Soviet
Bloc and at a lower rate than if Western
controls had not been in effect.
2. A total embargo on non-Communist
trade with Communist China would prob-
Arrrj\r, Navy, USAF review
ably have no significant effect on Chinese
Communist capabilities to sustain mili-
tary operations in Korea or to undertake
military operations elsewhere, but would
retard the expansion of Chinese Commu-
nist industry. An embargo would make
Communist China economically more de-
pendent on the USSR. An embargo would
probably not induce the Communists to
embark on new aggression ut would
probably lead them tQ i tensify political
warfare.
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3. A naval blockade of Communist China'
would increase the difficulty of Chinese
Communist military operations requiring
large expenditures of materiel, either in
Korea or elsewhere. The present esti-
mated maximum capacity of the inland
transportation facilities serving Commu-
nist China is probably adequate to carry
essential tonnage now seaborne plus the
essential traffic now carried by land.2
However, a blockade would create serious
economic problems. For instance, rail-
roads do not serve all parts of Communist
China now served by coastal shipping.
A blockade would make Communist
China economically more dependent on
the USSR and would retard the expan-
sion of Chinese Communist industry to a
greater extent than an embargo. We be-
lieve that the political controls within
Communist China are now so strong that
their effectiveness would not be jeopard-
ize by these economic difficulties.
4. In reaction to a naval blockade, the
Chinese Communists would almost cer-
tainly attack the blockading forces, with
covert Soviet assistance, and might
launch new acts of aggression, such as
the seizure of Hong Kong and Macau.
The USSR might react to a naval block-
ade by attempting to bring merchant
ships into Port Arthur and Dairen under
Soviet naval escort, by attempting to
force the blockade at other points, or by
waging mine and submarine warfare
The effects of a naval blockade of Communist
China would be materially lessened if trade with
Communist China through Port Arthur and
Dairen, Hong Kong and Macau were not
prevented.
a The Director of Naval Intelligence and the Dep-
uty Director for Intelligence, The Joint Staff,
believe that the transportation burdens imposed
upon Communist China by a naval blockade may
well be considerably greater than is indicated by
this paragraph.
against the blockading forces. However,
we believe that the USSR would be un-
likely to initiate general war solely be-
cause of incidents arising out of attempts
to force the blockade. We believe that
the blockade would not in itself induce
the Communists to accept a Korean set-
tlement on UN terms.
5. Large scale and sustained air and
naval bombardment of key Chinese Com-
munist transportation lines, in conjunc-
tion with a naval blockade, could sharply
reduce Chinese Communist military ca-
pabilities. Communist China's economic
potential would be seriously affected, and
the physical problems of the regime in
maintaining control would be increased.
6. In reaction to a blockade and bombard-
ment, the Chinese Communists would
make a maximum air defense effort in
China and Manchuria. Units of the So-
viet Air Force in the Far East would
covertly participate in the air defense ef-
fort, particularly in Manchuria. The
Chinese Communists would probably also
employ their air capability against some
US/UN bases in the Far East. We believe
that a blockade and bombardment would
not in itself induce the Communists to
accept a Korean settlement on UN terms.
7. In the unlikely event that, the blockade
and bombardment should threaten the
existence of the Chinese Communist re-
gime, the USSR would increase its aid to
Communist China, possibly even to the
point of openly committing Soviet forces
against US forces in US/UN held terri-
tory and adjacent waters in the Far East.
8. Blockade and bombardment by the
Chinese Nationalists alone would not un-
der present conditions of Chinese Nation-
alist strength and operational efficiency,
have a major effect. In reaction to a
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Chinese Nationalist blockade and bom-
bardment, the Chinese Communists
would almost certainly attack the block-
ading and bombarding forces and might
retaliate by air against Nationalist-held
territory.
DISCUSSION
EXTENT OF PRESENT CONTROLS ON
TRADE WITH COMMUNIST CHINA
9. Most of the nations outside the Soviet Bloc
apply some form of export controls over trade
with Communist China. The US has main-
tained a total trade and shipping embargo
against Communist China, as well as controls
over the dollar assets of Communist China,
since December 1950. Canada, Japan, Na-
tionalist China, and the Philippines have im-
posed trade restrictions almost as severe,
while Costa Rica, Honduras, Liberia, and
Panama have imposed strict controls over the
movement of their vessels to Communist
China. The UK has embargoed or restricted
the export of a wide variety of strategic items
including natural rubber. In July 1950, the
Western European countries which are
members of the Coordinating Committee
The Director of Naval Intelligence and the Dep-
uty Director for Intelligence, The Joint Staff,
believe that, if given US materiel and training
support and complete US staff planning for all
blockading operations, the Chinese Nationalists
could probably impose a blockade which would
substantially reduce seaborne traffic and coastal
traffic south of Shanghai and through the Straits
of Formosa. This probably could be accom-
plished within a period of six months after re-
ceipt of US assistance and despite Chinese Com-
munist air and surface operations. The degree
of US materiel and training support needed to
achieve this result would be at the minimum:
(a) Increasing US aid (including spare parts and
equipment) to the extent that the vessels now
commissioned in the Nationalist Navy would be
capable of operating effectively at least 50% of
the time; (b) Instituting a vigorous training
program which would include vessels operating
with US underway training groups; (c) Insisting
that the Chinese Nationalist Air Force exert
maximum effort to provide air search and cover
for blockading units; (d) Insuring that Na-
tionalist crews receive a proportionate share of
all prizes.
(COCOM) 4 on East-West trade applied to
Communist China the selective controls
earlier put into effect against the rest of the
Soviet Bloc. After Communist China was
declared an aggressor by the UN, these coun-
tries instituted controls over trade with Com-
munist China more severe than the controls
over trade with the rest of the Bloc. At the
present time, the COCOM countries embargo
to Communist China all items included on
the three International Lists plus some 16
additional items of particular strategic sig-
nificance to Communist China. A China
Committee (CHINCOM) parallel to COCOM
was set up in the fall of 1952 for the purpose
of working out international export controls
to be applied in the Far East. A great num-
ber of other nations have also taken action
to restrict strategic shipments to Communist
China in accordance with the UN Additional
Measures Resolution of May 1951. The Bat-
tle Act, enacted in the fall of 1951, has served
to reinforce the COCOM and UN embargo by
making the continuation of US assistance
conditional upon the recipient country's co-
operation in supplying controls over strategic
shipments to the Soviet Bloc, including Com-
munist China.
10. There has been a wide variation, however,
in the contraband lists and enforcement
measures used by individual countries. Al-
though the controls imposed by the UK and
the continental COCOM countries are fairly
comprehensive, they fall short of the total
embargo imposed by the US. Other nations,
which are largely non-industrialized and do
not produce strategic equipment, have shown
little uniformity in their interpretation of the
UN Resolution, which covers transportation
Participants in the COCOM include Belgium,
Denmark, France, West Germany, Italy, Japan,
Luxembourg, the Netherlands, Norway, and Por-
tugal as well as the US, the U.K, and Canada.
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materials of strategic value and items useful
in the production of military materiel as well
as petroleum and purely military items. A
number of Middle Eastern and Southeast
Asian countries have made a general com-
mitment to deny strategic items to the Chi-
nese Communists, while India, Pakistan, and
Burma have not been willing to go on record
as supporting the UN Resolution, although
they have been cooperating informally in pre-
venting re-export of strategic items to the
Chinese Communists. Ceylon, which is not
a member of the UN, has refused to comply
with the UN Resolution so far as shipments
of rubber to Communist China are concerned.
11. Shipping controls have been particularly
weak. The COCOM countries prohibit the
sale of ships to Communist China and impose
restrictions on the sale of merchant ships to
the rest of the Bloc. Since October 1950 at
least 33 vessels have been transferred to So-
viet Bloc flags. However, COCOM restrictions
on sales were tightened somewhat in Decem-
ber 1951. The US alone has imposed com-
prehensive formal controls on ship sales, re-
pairs, and bunkering. During the past year,
61 Bloc ships, totalling 300,000 gross regis-
tered tonnage, received 30 days or more of
repair work each in Western shipyards. Only
the US, Costa Rica, Honduras, and Panama
prohibit vessels of their registry from enter-
ing Chinese ports, although Liberia prohibits
vessels of its registry from carrying strategic
cargo to Communist China. Present COCOM
controls do not prohibit the chartering of
merchant vessels other than tankers to the
Soviet Bloc and this prohibition has not been
effective. Although the greater percentage
by far of chartered vessels do not touch Chi-
nese Communist ports, these vessels are used
by the Soviet Bloc in Western European,
South Atlantic and Indian Ocean trade and
make possible the release of Communist flag
vessels for direct service to Communist China.
Communist countries by Communist China
rose to a peak in the first half of 1951 but
then dropped sharply during the second half
of 1951, when trade controls became more
stringent, and have remained at a relatively
low level through 1952. These imports are
estimated at $382 million in the first half of
1951, $148 million in the second half of 1951,
and $135 million and $155 million respec-
tively in the first and second halves of 1952.
The volume of imports from non-Communist
countries fell from 746,000 tons in the first
half of 1951 to 242,000 tons in the second
half of 1951, and then rose to 270,000 tons in
the first half of 1952 and 330,000 tons in the
second half of 1952.5
13. The rise in tonnage reflects the increased
import of such bulky commodities as am-
monium sulphate and chemicals for heavy
industry. A decline occurred in the import
of goods on which most non-Communist
countries have imposed control, notably
metals and machinery, and crude rubber.
(Crude rubber imports have continued to
come principally from Ceylon.) During the
18 months ending December 1952, raw cotton
accounted for one-quarter, and crude rubber,
pharmaceuticals, fertilizers, dyestuffs, and
heavy industrial chemicals for one-half of
Communist China's imports from non-Com-
munist countries. Except for the decline in
imports of metal and machinery from $125
million in 1950 to $14 million in 1952, the
level and pattern of imports in 1950 and 1952
were roughly the same.
14. Exports to non-Soviet Bloc Countries.
Foreign exchange earnings from exports to
non-Communist countries have declined
steadily since their peak in the last half of
1950. These exports are estimated at $400
THE EFFECT OF PRESENT CONTROLS
ON COMMUNIST CHINA
Effect on Foreign Trade
12. Imports from non-Soviet Bloc Countries.
The value of the goods imported from non-
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million in 1950, $335 million in 1951, and $270
million in 1952. The volume of exports to
non-Communist countries in 1952 is roughly
estimated at 1.7 million tons (2.4 million tons
in 1951), consisting largely of low-value
bulky items such as coarse grains and soy
beans. With the loss of markets for special-
ized items such as tung oil, bristles, egg prod-
ucts, and handicrafts, Communist China's
exports to non-Communist countries have in-
creasingly been limited to foodstuffs for Hong
Kong and Malaya, and grains and oilseeds for
South Asia and Western Europe.
15. Imports from Soviet Bloc Countries. On
the basis of Chinese Communist data which
are generally consistent with other informa-
tion, imports from the Soviet Bloc rose from
$100 million in 1950 to nearly $1 billion in
1951. Chinese Communist data also indi-
cate that imports in 1952 remained at rough-
ly the same level as in 1951. Imports in both
1951 and 1952 consisted largely of military
equipment and of commodities unavailable
from non-Communist countries, notably
petroleum, vehicles, machinery, metals, and
metal manufactures. However, there were
some imports from the Bloc of items cur-
rently being imported from the West, such as
drugs, fertilizers, chemicals, and sugar.
16. Soviet Bloc shipments to Communist
China by sea are estimated at 700,000 tons in
1952 s as against 350,000 tons in 1951. On
the basis of partial cargo data, it is estimated
that roughly one-fifth of this tonnage in 1952
consisted of petroleum products and two-
fifths of metals and machinery. The value
of seaborne imports from the Soviet Bloc is
estimated at approximately $200 million.
17. Overland imports from the Soviet Bloc
are roughly estimated at $800 million for
1952. The total volume of overland imports
during 1952 is estimated to be 3.4 million
tons. Military equipment and POL ac-
counted for a large part of these overland
Exclusive of approximately 50,000 tons of cargo
picked up by Bloc vessels in non-Communist
countries and shipped to Communist China.
This cargo has been counted in Communist
China's imports from non-Communist countries.
shipments; in addition, there were substan-
tial commercial imports of machinery, met-
als, and motor vehicles.
18. Exports to the Soviet Bloc. It is esti-
mated that Chinese Communist exports to the
Soviet Bloc were $175 million in 1950 and
$350 million in 1951. These exports are be-
lieved to have risen sharply in 1952 and are
very roughly estimated at $500 million. It is
believed that the Chinese Communists are
attempting to increase these exports still
further in 1953, apparently in an effort to
reduce the trade deficit with the Soviet Bloc.
Seaborne exports to the Bloc during 1952 are
estimated roughly at 800,000 tons and appar-
ently consisted largely of grain, soy beans,
and ores. On the basis of partial evidence,
we estimate the volume of overland exports
to the Soviet Bloc during 1952 at three million
tons.
19. Over-All Effects. Present trade controls
appear to have been an important factor in
the sharp change that has occurred in Com-
munist China's foreign trade. In 1950, only
one-fourth of Communist Chinese foreign
trade was with the Soviet Bloc while three-
fourths was with the West; in 1952, these
proportions were almost reversed. However,
other factors would have tended to increase
Soviet Bloc exports to Communist China even
if Western trade controls had not existed.
These factors are: (a) movement of Soviet
military supplies in support of the Commu-
nist war effort in Korea; (b) shipment of non-
military items to Communist China in ful-
fillment of Soviet commitments in the Sino-
Soviet agreements of 1950 to provide economic
assistance; and (c) the avowed policy of the
Communist Bloc to achieve economic self-
sufficiency.
ECONOMIC EFFECTS
20. Industrial Effects. The restriction of
imports into Communist China as a result
of present controls has not curtailed indus-
trial output. In fact, because of the greatly
increased level of commercial imports from
the Soviet Bloc and the more effective use of
available equipment and stocks in Commu-
nist China, industrial output has continued
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to expand. However, this expansion would
probably have been greater if the present
trade controls were not in effect.
21. Effect on the Railroads. The railroad
transportation system of Communist China,
while not expanding to the extent it would
have without present Western controls, has
steadily improved in capacity and perform-
ance. Control measures have stopped im-
ports from the West of locomotives, freight
cars, parts for rolling stock, and rails. How-
ever, the Soviet Bloc has supplied limited
quantities of these items which, together with
local production, has permitted the mainte-
nance of existing equipment and continued
expansion of the rail network, despite the
losses in Korea.
22. Effect on Other Internal Transportation.
The expansion of motor freight movements
which has occurred in Communist China dur-
ing 1952 has been made possible largely by
imports of Soviet trucks and petroleum.
However, the traffic in smuggling of parts for
motor vehicles continues to be considerable,
indicating that Soviet Bloc assistance has not
kept pace with expanding Chinese Commu-
nist requirements and that Western controls
are imposing some cost on Communist China
in this regard. Coastal shipping has not
been appreciably affected by Western con-
trols since most non-Communist countries
permit their flag vessels to operate in the
Chinese Communist coastal trade. More-
over, during the last year the Chinese Com-
munist demand for foreign coastal shipping
seems to have slackened, and it is possible
that an increasing part of Chinese Commu-
nist requirements for river and coastal ship-
ping capacity is being met by their own fleet.
23. Over-All Economic Effects. Despite the
curtailment of trade with the West, during
the last two years the Chinese Communist
regime has made rapid progress in economic
reconstruction, particularly in the restora-
tion and expansion of its industrial capacity.
However, the reduction in Communist China's
net receipts from foreign trade must be viewed
as a deduction from the resources that other-
wise would have been available to the gov-
ernment for investment. Without Western
trade restrictions, Communist China's eco-
nomic progress probably would have been
greater than it actually was, and it certainly
could have been accomplished. at less cost to
the Soviet Bloc.
MILITARY EFFECTS
24. Ground Forces. Although. Western trade
controls have made it difficult for the Com-
munists to acquire certain important items
such as antibiotics and other medical sup-
plies, communications equipment, and rub-
ber products, the Chinese Communist ground
forces have not been adversely affected by
Western trade controls. Communist China
produces only a part of its own light ground
force equipment and supplies. The mate-
rials required for Communist China's muni-
tions industry are relatively small in tonnage
and are for the most part produced domesti-
cally. The only important import require-
ments are for copper and zinc, which are sup-
plied in adequate quantities for the most
essential uses by the USSR. In addition, the
USSR is providing most of the heavy military
equipment, virtually all POL, and a large
share of the light equipment and supplies
used in Korea.
25. Air Force. Since the USSR provides
Communist China with virtually all aviation
equipment and supplies including avgas and
jet fuel, present Western controls on strategic
materials have not affected the capabilities of
the Chinese Communist Air Force. The Air
Force has continued to expand in aircraft
strength and capabilities throughout the
period of present Western controls.
26. Navy. Since a large part of the Chinese
Communist Navy is composed of former for-
eign naval vessels, present Western controls
on strategic materials have almost certainly
hindered the Chinese Communists in their
efforts to put back into service and maintain
their naval vessels. As far as is known, the
USSR has supplied at most only a few small
warships to the Chinese Communists, forcing
them to rely almost entirely on those ships
taken over from the Nationalists.
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INTERNAL POLITICAL EFFECTS
27. Western trade restrictions have not ap-
preciably affected the ? Chinese Communist
regime's ability to consolidate its political
position. In fact, the restrictions have been
cited by the Communists in domestic propa-
ganda as an additional indication of the im-
placable hostility of the West, and thus have
provided the Chinese Communists with a pre-
text for applying further stringent political
controls.
PROBABLE EFFECT OF A TOTAL EMBARGO
ON NON-COMMUNIST TRADE WITH COM-
MUNIST CHINA ON CHINESE COMMUNIST
ECONOMIC AND POLITICAL STRENGTH, AND
MILITARY CAPABILITIES
28. Introductory Note. The imposition of a
total embargo by the entire non-Communist
world would presumably extend to both trade
and shipping. The implementation of such
an embargo would presumably include meas-
ures to prevent the transfer or charter of
non-Communist shipping for the Communist
China trade, the denial of bunkering, servic-
ing, and repair in non-Communist ports of
ships bound for and returning from Chinese
Communist ports, and the transshipment of
non-Communist goods directly or indirectly
to Communist China from other countries in
the Soviet Bloc. The following factors would
prevent effective enforcement of a complete
embargo :
a. Although transshipment might be con-
trolled to a limited extent by placing quanti-
tative controls on goods exported from the
West to Eastern Europe and the USSR, effec-
tive prevention of transshipment would be
impossible so long as trade controls applied
against these countries are less rigid than
those applied against Communist China.
Such transshipment could only be stopped
completely and Communist China denied all
non-Communist commodities if trade with the
entire Bloc were embargoed.
b. As indicated above, several countries are
not now cooperating with the limited embargo
declared by the UN, and most Western na-
tions are now strongly opposed to further ex-
tension of trade and shipping controls against
the Soviet Bloc and Communist China. Even
should the UN recommend a full embargo on
trade with Communist China, it is probable
that various Asian and Middle Eastern na-
tions would not cooperate because of their
"neutralist" foreign policies and the economic
importance of trade with Communist China.
SHORT-RUN EFFECTS
29. Effect on Trade. The direct impact on
imports of a total embargo would depend on
the extent to which the Soviet Bloc was able
and willing to: (a) make up for the loss of
Western shipping (including that now char-
tered by the- Communists) now serving the
China trade; and (b) supply the specific
commodities denied by the West.
30. In view of the incomplete data on
Communist China's foreign trade and on
the Soviet Bloc's capabilities, it is impossible
to estimate with precision' the impact of a
total embargo on Communist China. The
following projection is based on the estimated
level of trade during 1952:
a. Assuming a continuation of present
controls, it is estimated that the total value
of Communist China's legitimate imports
from the non-Communist world in 1953 will
remain at the 1952 level, $260 million. As
compared with 1952, however, imports are ex-
pected to include a higher proportion of heavy
bulk goods, particularly chemical fertilizer.
As a result of these changes in composition,
the volume of Communist China's legitimate
imports from the non-Communist world in
1953 is projected at 660,000 tons as compared
with 560,000 tons in 1952.7
? (1) Raw cotton imports are expected to decline
in value from $103 million to $50 million and
in volume from 86,000 tons to 50,000 tons.
World prices are lower and production in
Communist China is increasing.
(2) Imports of rubber are estimated to increase
from $22 million to $45 million, or the level
called for in the Ceylon-Communist China
barter agreement.
(3) Imports of fertilizer are estimated to increase
by 50 percent in volume and value in view of
Chinese Communist efforts to increase pro-
duction of industrial crops.
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b. Exports to the West from Communist
China are expected to be the same as in 1952,
or 1.7 million tons valued at $270 million.
c. It is unlikely that the present rate of
smuggling could be increased significantly
inasmuch as a complete embargo would
necessarily involve a general strengthening of
controls. Clandestine imports would tend
increasingly to consist of items of small bulk
and high value, such as drugs and motor
vehicle parts, but the total volume may be
assumed to be about 40,000 tons, the level
projected for 1953 under the assumption of
existing controls.8
On the basis of the above projections, the
theoretical annual loss to Communist China
as a result of a complete embargo would be
660,000 tons of imports valued at $260 million
and the earnings from 1.7 million tons of
exports valued at $270 million.
31. The Soviet Bloc could assume the entire
burden imposed by an embargo and supply to
Communist China all of the commodities it
otherwise would have received from the West.
Such commodities are available in the Bloc
and transport facilities would not impose an
absolute limit on their shipment. However,
the degree to which the Soviet Bloc would
compensate for the loss of imports from the
West would depend in general on the Soviet
appraisal of the relative advantages of using
these resources in Communist China as op-
posed to using them elsewhere in the Soviet
Bloc, including the USSR itself.
a. The Soviet Union has a strong interest
in maintaining Chinese Communist strength
and for this reason would probably assign a
high priority to those Chinese Communist
import requirements that have a significant
effect on Chinese Communist military capa-
bilities. Much lower priorities would be as-
signed to supplying the remaining commodi-
ties Communist China formerly imported
from the West. It is probable, therefore, that
such commodities would be supplied only to
the degree that the burden thus imposed on
the rest of the Soviet Orbit would be relatively
small. On the basis of these considerations,
'See paragraph 12.
it is roughly estimated that the Bloc would
supply virtually all the iron and steel, ma-
chinery and metals, and drugs; most of the
heavy industrial chemicals, dyes, and paper;
and only part of the crude rubber, chemical
fertilizer, and other miscellaneous commodi-
ties. The Soviet Bloc would probably not
compensate for any of the raw cotton, gunny
bags, and some miscellaneous commodities.
We estimate, therefore, that in making up
the imports lost through imposition of an
embargo, the Soviet Bloc would probably in-
crease its annual exports to Communist China
by about 350,000 tons valued at $130 million,
reducing the net import loss to about 300,000
tons.
b. If these additional imports from the
Bloc were carried by sea, total seaborne im-
ports from the Bloc in Bloc vessels would
amount to approximately 1,050,000 tons in
1953.
Controls on bunkering and other services to
ships engaged in trade with Communist
China would reduce the cargo-carrying ca-
pacity of the Soviet Bloc merchant fleet. It
would require the Soviet Bloc to fuel vessels
from tankers at sea and require the Bloc to
transport additional fuel to the Far East,
either over the Trans-Siberian Railroad or by
tankers. Bloc tankers are presently carrying
essential POL.9
32. An embargo would also result in an in-
crease in the value of Communist China's
exports to the Soviet Bloc but a decrease in
the value of its total exports. Because of
the increased transport costs involved and the
nature of the commodities, it is probable that
it would not be worthwhile for the Commu-
nists to divert to the European Soviet Bloc
a large part of the 1.7 million tons of com-
modities that Communist China now exports
to the West. However, Communist China
'The Soviet Bloc has the ship capacity to carry
the total seaborne imports to Communist China,
even without chartering Western vessels. How-
ever, under these circumstances the USSR would
have to use some lend-lease vessels in this trade,
thus risking their seizure by the US. In addi-
tion, the Soviet Bloc would have to find alterna-
tive and more costly means for carrying on its
trade with the West.
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plans to increase its production of strategic
minerals with which to pay for its imports
from the Soviet Bloc, and other exports from
Communist China could be increased so that
there would be little or no net effect on
Communist China's debtor position in the
Bloc.
33. On the basis of the above highly specula-
tive estimates, an embargo would reduce the
volume of Communist China's total imports
in 1953 by 300,000 tons and the value by $130
million. This would represent a reduction of
approximately 10 percent in the value of Com-
munist China's total imports and perhaps as
much as 20 percent of non-military imports.
It is evident, therefore, that imposition of a
complete embargo on Western imports would
not effect a major reduction in the present
total volume of imports. Communist China's
total exports would be reduced by $130
million, or by more than 15 percent. The
proportionate reduction in the volume of ex-
ports would be greater.
34. A total embargo on non-Communist trade
with Communist China would not affect the
flow of purely military items and petroleum,
all of which (except for limited quantities
brought in by smuggling) now come from the
Soviet Bloc. Military considerations would
almost certainly determine the relative pri-
ority of compensating shipments from the
Soviet Bloc and, consequently, goods related
to military operations would probably be
least affected by a complete embargo.
35. Economic Effects. The Chinese Commu-
nist economy has already made considerable
progress in adjusting to decreased availabil-
ity of western goods. The main effect on
the Chinese Communist economy of a com-
plete embargo would be, therefore, to force
more rapid adjustments to a pattern already
being developed. Although the reduction in
imports resulting from the embargo probably
would retard the planned expansion of Chi-
nese Communist industry, principally with
regard to planned increases in the produc-
tion of consumers' goods, these losses in out-
put would in part be offset by the increased
availability for domestic consumption of some
commodities that formerly were exported to
the West. The loss of foreign flag shipping
for domestic coastal services would reduce
coastal shipping capacity. However, Chi-
nese Communist shipping, which now carries
the bulk of this trade, and the North-South
rail lines could absorb the load now handled
by foreign flag ships.1? Finally, with imports
and production of some consumer goods re-
duced and non-Communist markets virtually
eliminated, the government would be con-
fronted with a sizable loss of revenue. These
losses, however, would be minor in relation to
the total national income and to total Chi-
nese Communist budgetary expenditures.
36. Military Effects. A total embargo would
probably have no significant effect on the
capabilities of the Chinese Communists to
sustain military operations in :Korea and very
limited effects on their capabilities to under-
take military operations elsewhere.
37. Internal Political Effects. A total em-
bargo would not appreciably affect the in-
ternal political strength of the Chinese Com-
munist regime.
38. Burden on the Rest of the Bloc. A total
embargo would not seriously increase the eco-
nomic burden that Communist China cur-
rently imposes on the rest of the Soviet Bloc.
However, the rest of the Soviet Bloc, to an
even greater extent than before, would be ex-
porting to Communist China many commodi-
ties that the Soviet Bloc normally imports for
its own use. There would also be some diffi-
culties arising from a trade deficit and an
increase in transportation costs, but they
would not assume serious proportions.
LONG-RUN EFFECTS
39. Economic Effects. The adverse economic
effects of a complete embargo on Communist
China would probably decrease rather than
10 The Director of Naval Intelligence desires to
point out that a considerable portion of Chinese
Communist shipping would have to be diverted
from North China ports to supply the South
China coastal area. Such diversion would re-
duce the shipping available in the industrial
North for the distribution of coal and POL and
manufactured products.
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increase with the passage of time. The loss
of cotton and other raw materials would be
made up in large part through the develop-
ment of domestic production or of domes-
tically produced substitutes. Chinese Com-
munist plans for the continued expansion of
heavy industry would not be appreciably af-
fected since such plans even now are depend-
ent almost wholly on imports of capital goods
from the Soviet Bloc and on increased domes-
tic production of capital goods. However,
greater emphasis probably would be placed on
the expansion of rail transport links with the
Soviet Union at some expense to other aspects
of the development program. Finally, in view
of current estimates of the rates of growth of
the gross national products of the USSR and
European Satellites, the ability of the Soviet
Bloc to provide capital goods and to bear the
costs of providing such goods will increase
significantly over the next 2-5 years.
40. The capacity and efficiency of the Chinese
Communist railway system have apparently
improved to the point where it could handle
any additional burden which might be im-
posed by a total embargo. The planned ex-
tension of Chinese Communist railway lines
and the possible increased load under condi-
tions of an embargo would require additional
equipment and supplies. This would place
some burden on the Soviet Bloc, whether it
sought to supply the necessary rails, locomo-
tives, and freight cars itself, or attempted to
restore Manchurian capacity for rolling stock
and steel rails and to expand the production
of freight cars and locomotives in China.
However, it is probable that the Soviet Bloc
would be able to supply minimum Chinese
Communist requirements without serious
repercussions in other portions of the Soviet
Bloc economy.
41. Military Effects. Over a longer period, a
total embargo would not reduce present Chi-
nese Communist military capabilities but it
might hinder an expansion of those capa-
bilities.
42. Internal Political Effects. Over a longer
period, the embargo would probably not sig-
nificantly reduce ' the effectiveness of the re-
gime's control over the Chinese people.
43. Effect on Sino-Soviet Relations. A total
embargo would tend to increase the possibili-
ties of Sino-Soviet friction. Should the So-
viet Union be unwilling to continue to supply
Communist China's essential requirements in-
definitely, the adverse effect of the embargo
on Communist China would be increased.
Even under the projected level of Soviet ex-
ports to Communist China, the Chinese Com-
munists might feel that their needs should
.be given higher priority. On the other hand,
Communist China's complete military and
economic dependence on the Soviet Bloc would
result in a progressive integration of Com-
munist China's economic and military plan-
ning with over-all Bloc planning and develop-
ment and thus tend to reduce Chinese
Communist capabilities to disagree with the
USSR.
PROBABLE EFFECT OF A NAVAL BLOCKADE
ON CHINESE COMMUNIST POLITICAL AND
ECONOMIC STRENGTH, AND MILITARY
CAPABILITIES
Including Port Arthur and Dairen
44. Effect on Chinese Communist Trade.
Whereas an embargo would operate only
against non-Communist trade and shipping,
a naval blockade would interdict smuggling
and Soviet Bloc seaborne shipments as well,
thus restricting Communist China's imports
to those which could be brought overland from
the European Soviet Bloc." However, Com-
munist China could obtain some essential
Western items overland from the Bloc. On
the basis of our tentative projection of Com-
munist China's imports under present con-
trols, a naval blockade would cut off 700,000
tons of seaborne imports from non-Commu-
nist countries, both legitimate and. smuggled,
plus 700,000 tons seaborne imports from So-
viet Bloc sources, or a total of 1.4 million tons
valued at $490 million. Likewise, the block-
ade would stop Communist China's seaborne
export trade, estimated in 1952 to have been
If Communist shipping attempted to run the
blockade under naval escort - a possibility dis-
cussed in Paragraph 66 - achievement of the
interdiction effect estimated here would obvi-
ously depend on the willingness of the US and
other blockading powers to risk an open clash.
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about 2.5 million tons, of which 1.7 million
tons were exported to non-Communist coun-
tries and .8 million tons to the Soviet Bloc.
45. A naval blockade would also presumably
operate against Communist China's coastal
trade. Although a blockade would not be
effective against local inshore coastal ship-
ping, it would virtually eliminate Communist
China's ocean-going coastal traffic which is
estimated to be 9,100 tons of cargo per day or
3.3 million tons per year. The most impor-
tant components of this traffic are the move-
ments of coal, POL,' and manufactured goods
between Dairen, North China, and Shanghai;
the movement of soybean cake from Dairen to
South China; and the exchange trade of
manufactures for foodstuffs between Shang-
hai and South China.
46. A naval blockade would cut off Chinese
Communist total seaborne imports, which
amount to 1.4 million tons per year. The
amount by which Communist China's total
imports would be reduced thereby would de-
pend primarily on the extent to which the
Soviet Bloc increased its present level of ex-
ports to Communist China. Secondarily, the
amount by which total imports were reduced
would depend on the capacities of the Trans-
Siberian railway and of Communist China's
inland transportation facilities.
47. Soviet Bloc Exports to Communist China.
Although the Soviet Bloc would probably pro-
vide Communist China's essential import re-
quirements, the Bloc probably would not re-
place all of Communist China's imports lost
because of a blockade. Of the projected 1953
seaborne import tonnage of 1.4 million tons,
about one-third consists of controlled com-
modities, such as petroleum, metals, and ma-
chinery, while two-thirds consist of commodi-
ties which can now be imported from
non-Bloc countries. It is roughly estimated
that the Soviet Bloc would continue to supply
all of the controlled commodities but only
about one-third of the other commodities, or
a total of about 800,000 tons. Of the non-
controlled materials, the Soviet Bloc would re-
place in part Communist China's imports of
rubber, industrial chemicals, and drugs but
would replace little or none of the imports of
raw cotton, ammonium sulphate, paper, sug-
ar, and gunny bags. On this basis, the total
of Communist China's imports over the Trans-
Siberian railway primarily from the East
would probably be on the order of 4.2 million
tons per year compared with the present 3.4
million tons. Communist China would prob-
ably be able to increase its exports to the
Soviet Bloc sufficiently to avoid any significant
increase in its trade deficit with the Bloc.
48. Capacity of the Trans-Siberian Railroad.
Overland Soviet imports to Communist China
in 1952 were estimated to total 3.4 million
tons (9,300 tons per day), the bulk of which
came eastward over the Trans-Siberian Rail-
road. We believe that the Trans-Siberian
Railroad has the capacity to carry the total
projected seaborne imports (1.4 million tons
per year or 3,900 per day) plus the minimum
needs of the Soviet Far East. In this event,
however, the cost to the Soviet Bloc of supply-
ing these commodities would be substantially
increased. The movement of this tonnage
could be accomplished by: (a) a diversion of
additional rolling stock from other rail lines
in the Soviet Union; (b) a reduction in the
peacetime volume of commodities moving to
the Soviet Far East; and/or (c) movement of
freight by sea to Vladivostok to be on-carried
to connecting Manchurian railways.
49. Capacity of Communist Chinese Inland
Transportation Facilities. The additional
burden imposed by a blockade would add ap-
proximately 3.8 percent to the total volume of
freight currently carried by the railroads of
Communist China. It is estimated that be-
cause of the long average haul involved, the
transportation overland of the freight cut off
by a blockade would require about 10 percent
of the freight car park and about 8 percent of
the locomotive park. We believe the Chinese
Communist railroads have the capacity to
carry this additional freight, but it should be
noted that some parts of mainland China now
served by coastal shipping are not served by
rail lines.
50. Since the additional burden of essential
tonnage placed on both the Trans-Siberian
Railroad and the internal transportation sys-
tem of Communist China could probably be
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carried with existing capacity, we believe that
the reliance on overland transportation facili-
ties would not limit the extent to which Com-
munist China's essential seaborne imports
could be replaced. Moreover, it should be
pointed out that it would be possible for the
USSR to ship goods to China by sea to Vladi-
vostok and thence by rail to China .1-2
51. Economic Effects. A naval blockade
would have a greater effect on the Chinese
Communist economy than would an embargo.
The planned economic growth would be seri-
ously retarded, additional strains would be
placed on internal transport, and further
gains from trade and further budgetary rev-
enues would be lost. In those areas which
are now served by coastal shipping and which
are not served by rail lines, particularly
South China, a reversion to more primitive
means of transport would result. The reduc-
tion in imports of fertilizer and industrial
chemicals would adversely affect plans to in-
crease output of industrial crops and some
"The Director of Naval Intelligence and the Dep-
uty Director for Intelligence, The Joint Staff,
believe that paragraphs 49-51 do not adequately
reflect the probable effects of a naval blockade
upon inland transportation. This belief is based
upon the following considerations: (a) Estimates
of capacity of the inland transportation sys-
tems serving Communist China are predicated to
a large extent upon incomplete and insufficiently
corroborated evidence. For this reason, these
estimates should be regarded with reserve as
being subject to a possible large margin of error.
On the other hand, the minimum amount of sea-
borne tonnage entering and leaving Communist
China is known from reliable information, in-
cluding ship movements, visual observations, and
masters reports. (b) The seaborne tonnages de-
rived as above represent a minimum. It is be-
lieved that the actual figure is larger, but the
extent of the increase cannot be determined due
to inability to determine all cargo tonnage actu-
ally carried. The capacity of the shipping serv-
ing Communist China is many times larger than
the known cargo tonnage. (c) In arriving at an
estimate of the ability of the inland transporta-
tion system to absorb the tonnages now sea-
borne, this paper therefore deals on the one
hand with estimated figures of rail capacity, of
questionable reliability, and on the other hand,
with actual minimum figures of seaborne ton-
nage. It does not attempt to compare estimated
rail capacity with known shipping capacity.
consumers' goods. The sum of these losses
would, however, be small in relation to Com-
munist China's total national income or total
budgetary expenditures.
52. Political Effects. Internal controls, al-
ready strong in Communist China, could pre-
vent any serious increase in political opposi-
tion to the regime. However, the adminis-
trative burden of these controls would in-
crease. On the other hand, a blockade would
provide the regime with a plausible excuse
for its failures and a new propaganda theme
to mobilize popular support for its policies.
The net political effect within Communist
China of a blockade would probably not be
significant.
53. Military Effects. A naval blockade would
not directly affect the movement of military
supplies from the USSR, most of which are
being brought in by overland routes. Never-
theless, the denial of seaborne imports and
of coastal shipping facilities would probably
impose some curbs on the importation and
internal distribution of military supplies be-
cause of congestion of land routes. Mean-
while, the impact of a naval blockade on the
economy as a whole would reduce the totality
of domestic resources which could be mobi-
lized in support of the war effort. The re-
duction in Chinese Communist military capa-
bilities would not be great enough to force
a reduction of the Chinese Communist mili-
tary commitment in Korea. It would, how-
ever, make more difficult offensive operations
requiring large expenditures of materiel,
either in Korea or elsewhere.
54. Effect on Sino-Soviet Relations. A naval
blockade would tend to increase the possibili-
ties of Sino-Soviet friction to a greater extent
than would an embargo. Although Soviet
exports to Communist China would be re-
duced under a blockade, as compared with
an embargo, the cost of providing these com-
modities, because of transport difficulties,
would be greater and the possibility of obtain-
ing increased imports from Communist China
would be less. On the other hand, a block-
ade would decrease Communist China's capa-
bilities for independent action as a conse-
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quence of the increased dependence upon the
Soviet Bloc for economic and military sup-
port.
Excluding Port Arthur, Dairen, Hong Kong,
and Macau
55. The effects of a naval blockade of Com-
munist China would be materially lessened if
Dairen and Port Arthur were excluded.
These ports together are believed capable of
handling about 45,000 tons a day, or many
times the estimated total daily seaborne im-
ports of all of Communist China at present.
The readjustment of internal distribution
necessitated by the blockade of all other sea-
ports would impose additional strains on the
Chinese Communist railway system.13
56. The effects of a naval blockade of Com-
munist China would be materially lessened if
trade with Communist China through Hong
Kong and Macau were not prevented. These
ports, together with their road and rail con-
nections with Communist China, could handle
a large part of the projected seaborne imports
of Communist China. The readjustment of
internal distribution necessitated by a block-
ade of all other seaports would impose addi-
tional strains on the Chinese Communist rail-
way system.
PROBABLE EFFECTS OF BOMBARDMENT OF
LINES OF COMMUNICATIONS IN CONJUNC-
TION WITH THE BLOCKADE
Vulnerable Elements of the Chinese
Communications System
57. Communist China is heavily dependent
on certain critical rail and inland waterways
facilities for the execution of military move-
ments and the maintenance of the indus-
trialized and cash crop sector of its economy.
This dependence is less within Manchuria,
where the existence of a well-integrated and
fairly diversified rail net and of a number of
good highways and waterways provides some
flexibility in transportation arrangements,
and, at the other extreme, in vast areas of
rural China, notably in the West, which have
such poor communications with the outside
world as perforce to remain largely self-suffi-
cient. In general, however, the maintenance
of the present level of Chinese Communist
military and economic activities depends on
continued availability of a heavily utilized
rail and water network which contains a num-
ber of bottlenecks and lacks a supplementary
road system capable of carrying heavy traffic
on an all-weather basis. These bottlenecks,
all within bombing range of US land and
carrier-based aircraft, provide some 200 rail
targets for bombing and some 26 water tar-
gets for aerial mining.
58. These potential targets can be divided
into five general categories, as follows: 14
a. Rail and water links with the Trans-
Siberian Railway. At present there are only
three routes by which heavy overland ship-
ments from the USSR can be brought into
Communist China and over which Commu-
nist Chinese shipments can move to the
USSR: (1) the rail line from Man-chou-li on
the Western border; (2) the rail line from Sui-
fen-ho on the east to the rail net around Har-
bin in central Manchuria; and (3) the Sun-
gari River, which links Harbin with the Trans-
Siberian Railway on Manchuria's north-
ern border. An additional rail line is in oper-
ation from the Trans-Siberian Railway near
Vladivostok in North Korea, where it joins the
Korean rail net, which in turn has a connec-
tion at Tu-Men with the Manchurian rail sys-
tem. In the event of a naval blockade of the
China coast, these already important routes
would obviously be of critical significance.
No alternate rail routing is possible over the
first 400 miles from Man-thou-Ii to Harbin,
while the first junction point on the Sui-fen-
ho-Harbin line is 50 miles from the border.
b. The rail link between Dairen and Port
Arthur and central Manchuria. The rail line
linking Port Arthur and Dairen with Mukden
and Harbin would be of critical importance
in the event that a naval blockade was estab-
lished excluding these ports. Although a
supplementary road system is available, this
14 See attached map.
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road system accounts for less than a quarter
of a haulage capacity out of these two ports,
all of which would be required to compensate
for the blockade of other Chinese seaports.
No alternate rail routes are available for the
first 150 miles from the terminus at Port
Arthur.
c. The rail link between Manchuria and
North China. Nearly all rail traffic between
Manchuria and the rest of China must travel
over a 275-mile stretch of coastal trackage
between Chin-chou and Tientsin. Effective
interdiction of this route would sever the
main transportation link between Man-
churia and the rest of China.
d. The Chu-chow - Heng-yang rail link in
South China. All rail traffic into south China
from the rest of the country must pass over
a 75-mile stretch of railroad between Chu-
chou and Heng-yang. Effective interdiction
of this stretch would not only sever the major
inland transport route between Canton and
central and northern China, but would also
cut the only rail line which would permit the
movement of supplies from north and central
China in support of the Viet Minh forces in
Indochina.
e. Rail and water targets in central China.
There are a number of important rail and
water transport targets in central China. A
70-mile stretch of trackage between Ta-hsien
and Chinan, including an important rail
bridge over the Yellow River, is used by east-
west traffic as well as by the main coastal
railway. Other rail targets include the Yel-
low River bridge north of Cheng-hsien on the
Peiping-Hankow-Kowloon route, the Pu-chen-
Nanking railroad ferry on the Peiping-Shang-
hai route, and the Yangtze River ferry cross-
ing at Wu-chang. The most important
waterway targets are along the Yangtze and
Hsi (West) Rivers, which together with the
Sungari River in Manchuria are estimated to
carry three-quarters of the 25 to 35 million
tons of cargo carried annually on Chinese
waterways. Although these targets are not
individually as important as those noted pre-
viously, their effective interdiction would
place a heavy strain on the transportation
system.
RESULTS OF A LARGE-SCALE AND SUS-
TAINED AIR AND NAVAL BOMBARDMENT
CAMPAIGN AGAINST INLAND TRANSPOR-
TATION FACILITIES
59. If a naval blockade of the China coast in-
cluding Port Arthur and Dairen were in opera-
tion, large-scale and sustained air and naval
bombardment of this target system would
have an extremely serious effect on Commu-
nist China's military and economic potential.
It is probable that a prolonged disruption of
the main surface routes in Manchuria leading
from the USSR would critically reduce Chi-
nese Communist offensive capabilities in Ko-
rea, and seriously reduce their defensive capa-
bilities in Korea. Some supplies could be sent
from the USSR directly into North Korea by
means of the important alternate route from
the Soviet Maritime Province into Northeast
Korea at Hongui. However, large-scale and
sustained air bombardment of all bridge cross-
ings over the Yalu and Tumen rivers, in con-
junction with air bombardment of transporta-
tion facilities in Manchuria and China, would
impose a severe strain upon Communist logis-
tic capabilities in Korea to the point where
their offensive capabilities would be severely
curtailed, if not eliminated. Air bombard-
ment of the key Chu-chou - Heng-yang rail
link into south China would gravely handicap
Communist military operations in Southeast
Asia. Large-scale and sustained bombard-
ment of the vital rail link between Manchuria
and China proper, coupled with attacks on
selected targets within central China would
put severe pressures on the Communist Chi-
nese economy. There are indications that
the Mukden-Shanhaikuan line has been sup-
plemented by the restitution of the Chinhsien-
Kupeikou line, creating a double link between
China and Manchuria. Taken together,
large-scale and sustained bombardment of all
these routes could progressively undermine
Communist China to a point where its mili-
tary capabilities would be sharply reduced
and the physical problems of maintaining the
regime's controls would be increased.
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CHINESE NATIONALIST CAPABILITIES TO
BLOCKADE THE CHINA COAST AND TO
CONDUCT AIR STRIKES AGAINST LINES
OF COMMUNICATIONS ON THE CHINA
MAINLAND
NATIONALIST CAPABILITIES
60. Blockade. The Chinese Nationalist Navy
currently has a total of 38 sea-going vessels
suitable for blockading operations. In addi-
tion, there are more than 100 smaller types
that could be used in blockading a coastal
area within a range of 400 miles of Taiwan.
The Nationalist Navy now possesses a low com-
bat capability because of poor staff planning,
spoor maintenance of vessels and equipment,
and serious deficiencies in communications,
surface-firing, AA-firing, and radar and sonar
detection.
61. At present, the Nationalist Navy, sup-
ported by aerial surveillance, air cover, and
aerial mining of Chinese Communist ports by
the Chinese Nationalist Air Force (CNAF),
probably has the capability to intercept about
20 percent of all sea-going trade,15 even if no
Chinese Communist naval or air resistance
were offered. If the Chinese Communist
Navy offered resistance to a Nationalist block-
ade, the Nationalist Navy would be forced to
withdraw from the Yangtze River area to a
point south of Ningpo, thus drastically reduc-
ing the Nationalist Navy's blockade effective-
ness. If the Communist Air Force in China
were committed to nullifying the blockade,
the Nationalist Navy would probably be un-
If the Chinese Nationalists devoted all efforts
toward maintaining a blockade and stationed
and operated their forces in such a manner as to
(a) blockade nine mainland ports capable of
handling vessels of 1,000 GRT or larger in the
area between Pearl River and the Yangtze River,
and (b) interdict coastal traffic in the area be-
tween Hong Kong and Hangchow, it is estimated
that they could intercept about 45 percent of
seagoing traffic. It is not believed, however, that
the Chinese Nationalists now possess the neces-
sary efficiency in planning and operations to
accomplish this result.
able to maintain even a blockade of the For-
mosa straits.16
62. The total effects of a Chinese Nationalist
blockade on Communist China's seaborne for-
eign trade might be considerably greater, ini-
tially at least, than suggested by their capa-
bilities listed above. Charter and insurance
rates would rise and non-Communist ship
owners would be unlikely to charter their
ships for trade with the blockaded ports. So
long as the blockading effort demonstrated its
effectiveness, therefore, the Chinese Commu-
nists would suffer both a reduction in ships
available to carry their foreign trade and an
increase in shipping costs.
63. Air Strikes. The Chinese Nationalist Air
Force (CNAF) currently has a total of 167
combat aircraft (70 F-47 fighters; 56 F-51
fighters; 21 B-25 light bombers; and 20 B-24
medium bombers). The CNAF hay a low
combat capability because it lacks jet aircraft,
has shortages of spare parts, equipment, and
supplies, including POL, and has had limited
operational experience and training.
64. If its total combat air strength were com-
mitted to air strikes against the mainland, the
CNAF initially could inflict some damage on
Chinese Communist rail lines and other LOC's
in East China.17 However, because of CNAF
logistic and maintenance deficiencies and Chi-
nese Communist capability for counter-air
operations, CNAF air attacks against the
mainland would be limited in duration and
effectiveness.
PROBABLE COMMUNIST REACTION TO THE
IMPLEMENTATION OF THESE MEASURES
COMPLETE EMBARGO
65. A complete embargo on non-Communist
trade with Communist China would have no
significant effect on Communist China's mili-
tary capabilities and only limited effects on its
civilian economy. The Communists would
18 See footnote of the Director of Naval Intelligence
and the Deputy Director for Intelligence, The
Joint Staff, to paragraph 8.
Shanghai, Canton, and the entire rail system be-
tween these cities, including the vital Chu-chou-
Heng-yang rail link, is within the range of all
CNAF combat aircraft.
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probably launch an intense campaign of po-
litical and economic warfare designed to
weaken the unity and resolution of the em-
bargoing powers. This campaign would prob-
ably stop short of new identifiable aggression,
but might include (a) efforts to precipitate
strikes and internal disorder within the terri-
tories of the embargoing powers, and (b) in-
creased military pressure on the borders of
Hong Kong, Macau, Indochina, and possibly
Burma.
NAVAL BLOCKADE
66. Imposition of a blockade would increase
the difficulty of military operations requiring
large expenditures of materiel, either in Ko-
rea or elsewhere, but the blockade in itself
would probably not induce the Communists
to accept a Korean settlement on UN terms.
Communist reaction to a naval blockade
would almost certainly include an intense
campaign of political warfare that would
probably include any or all of the measures
noted above in the case of an embargo. In
addition, Communist China would almost
certainly commit its air and naval forces
against the blockading forces with covert So-
viet assistance and might launch attacks
against Hong Kong and/or Macau, particu-
larly if these territories were in any way assist-
ing the blockading powers. The USSR might
react to a naval blockade by attempting to
bring merchant ships into Port Arthur and
Dairen under Soviet naval escort, by attempt-
ing to force the blockade at other points, or
by waging mine and submarine warfare
against the blockading forces. However, we
believe that the USSR would be unlikely to
initiate general war solely because of incidents
arising out of attempts to force the blockade,
but the USSR would exploit such incidents to
create dissension among the non-Communist
powers.
AIR AND NAVAL BOMBARDMENT OF
INLAND TRANSPORTATION FACILITIES
67. Large-scale and sustained air and naval
bombardment of key Chinese Communist
transportation lines, in 'conjunction with a
naval blockade, could sharply reduce Chinese
Communist military capabilities, but would
probably not in itself induce the Communists
to accept a Korean settlement on UN terms.
Communist China's economic potential would
be seriously affected, and the physical prob-
lems of the regime in maintaining political
control would be increased. In reaction to a
blockade and bombardment, the Chinese
Communists would make a maximum air de-
fense effort in China and Manchuria. Units
of the Soviet Air Force in the Far East would
covertly participate in the air defense effort,
particularly in Manchuria. The Chinese
Communists would probably also employ their
air capability against some US/U.N bases in
the Far East. If, in the unlikely event the
blockade and bombardment should threaten
the existence of the Communist Chinese re-
gime, the USSR would increase its aid to Com-
munist China, possibly even to the point of
openly committing Soviet forces against US
forces in US/UN held territory and adjacent
waters in the Far East.
CHINESE NATIONALIST BLOCKADE
AND BOMBARDMENT
68. Communist China would almost certainly
react to a Chinese Nationalist blockade effort
by committing its air and naval forces against
Chinese Nationalist blockading forces, and
might launch air strikes against naval and air
installations of Nationalist China. The Com-
munist Chinese would probably react to a
Chinese Nationalist effort to bombard lines of
communications by strengthening their air
defenses in East China and might retaliate by
air action against territory held by Nationalist
China.
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T COPY Nb.
ASSISTANT DIRECTOR,ONE
RITYINFORMATION
030548
SPECIAL ESTIMATE
PROBABLE EFFECTS ON THE SOVIET BLOC OF
CERTAIN COURSES OF ACTION DIRECTED AT
THE INTERNAL AND EXTERNAL COMMERCE
OF COMMUNIST CHINA
SE-37
Published 9 March 1953
The following member organizations of the intelligence
Advisory Committee participated with the Central Intelli-
gence Agency in the preparation of this estimate: The
intelligence organizations of the Departments of State,
the Army, the Navy, the Air Force, and the Joint Staff.
All members of the Intelligence Advisory Committee con-
curred in this estimate on 5 March 1953. See, however,
the comment of the Director of Naval Intelligence and
the Deputy Director for Intelligence, The Joint Staff, on
paragraphs 3, 8, and 50. Also the comment of the
Director of Naval Intelligence on paragraph 35.
CENTRAL INTELLIGENCE AGENCY
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DISSEMINATION NOTICE
1. This copy of this publication is for the information and use of the recipient
designated on the front cover and of individuals under the jurisdiction of the recipient's
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ther dissemination elsewhere in the department to other offices which require the in-
formation for the performance of official duties may be authorized by the following:
a. Special Assistant to the Secretary of State for Intelligence, for the Depart-
ment of State
b. Assistant Chief of Staff, G-2, for the Department of the Army
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d. Director of Intelligence, USAF, for the Department of the Air Force
e. Deputy Director for Intelligence, Joint Staff, for the Joint Staff
f. Director of Intelligence, AEC, for the Atomic Energy Commission
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partment or Agency
2. This copy may be either retained or destroyed by burning in accordance with
applicable security regulations, or returned to the Central Intelligence Agency by ar-
rangement with the Office of Collection and Dissemination, CIA.
WARNING
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the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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RAILROADS IN CHINA
October 1952
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