INCREASED CHINESE COMMUNIST AID TO CEYLON: FACT OR FICTION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01003A001900200001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: November 16, 2016
• Document Release Date: January 18, 2000
• Sequence Number: 1
• Publication Date: April 1, 1964
• Content Type: BRIEF

SECRET Approved For Release 2000/05/12 : CIA-RDP79TO1003AO01900200001-8
FOREIGN DISSEM
Current Support Brief
INCREASED CHINESE COMMUNIST AID TO CEYLON:
FACT OR FICTION
CIA/RR CB 64-25
April 1964
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
NO FOREIGN DISSEM
SECRET
GROUP 1
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WARNING
This material contains information affecting
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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INCREASED CHINESE COMMUNIST AID TO CEYLON:
FACT OR FICTION
Recent Chinese Communist proposals to grant Ceylon $7 million" in aid probably represented mere window dressing for Chou En-lai's
visit in February. In spite of Chou En-lai's announcement that addi-
tional aid would be forthcoming if needed, the "new" proposals appear
to be included within the framework of the existing (but little imple-
mented) Chinese aid program, and no new aid commitments are ex-
pected. The proposed grant of $7 million includes $4. 2 million for
textile imports in 1964 and $2. 8 million for the construction of an
international conference hall. The Chinese also have agreed to in-
crease exports of rice in 1964 beyond the 200, 000 metric tons to be
exchanged for 35, 000 metric tons of rubber under the existing rice-for-
rubber barter agreement -- the net addition to be covered by Chinese
credit. 1 /
Chinese Communist aid proposals have a large propaganda con-
tent, and actual implementation proceeds at a slow pace. Of the
$36. 8 million in Chinese economic aid commitments to Ceylon extended
in 1957, 1958, and 1962, $26.1 million remains unused, including
$21 million in economic grants and $5.1 million in commodity credits
for flood relief. The Chinese generally fulfill commitments for tech-
nical assistance and commodities at a faster rate than those for ma-
chinery and equipment. They probably will supply the $4. 2 million
worth of textiles and the additional supplies of rice during 1964, but
it is doubtful whether drawings for those projects already on the books
will be stepped up.
The Chinese Communists often have attempted to evade Ceylonese
criticism of lagging aid programs by subsequent extensions or enlarge-
ments. In October 1962, in the face of negligible shipments under the
5-year Chinese aid grant of September 1957, the schedule was extended
5 more years (to 1967). The 1958 commodity credit for flood relief,
also unused, likewise was extended until 1967. In the same year the
Chinese, rather than adopt firm measures for improving the timetable
for existing aid commitments, chose to increase their aid commitment
by giving Ceylon an additional grant of $10. 5 million -- none of which.
has yet been used. 2/ Although Ceylon's current economic problems
are severe -- (1) the lowest foreign exchange reserves in two decades
Dollar values are given in current US dollars throughout this
publication.
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(only $78 million compared with more than $200 million in 1958);
(2) steadily rising consumer prices, reaching an all-time high in
February; and (3) a number of crippling strikes that led to the decla-
ration by the government of Ceylon of a state of emergency and the
proroguing of Parliament -- Chinese economic aid is not expected to
make a significant contribution toward solving them. 3/
The following tabulation provides a summary of Chinese Com-
munist economic grants and credits to Ceylon:
Million US $
Projects Extended Drawn Status
September 1957 grant --? com- 15.8 5.3
modity credit chargeable to
rubber rehabilitation
Textile mill, Pagoda
($4.2 million)
Railroad coaches and other
rolling stock ($5.0 million)
Tires for the Ceylon Trans-
port Board ($1.0 million)
Textile manufacturing equip-
ment ($1.1 million)
Fountain pen factory
Being surveyed
Completed
Being implemented
No known progress
Proposed late in 1963;
no known progress
September 1958 line of credit -- 10.5 5.4
flood-relief measure
Rice ($5.4 million) Completed
Rice (dollar value not Proposed in February
known) 1964
October 1962 grant -- com- 10.5 0
modity credit chargeable to
rubber rehabilitation
Textile imports for 1964 Proposed in February
($4.2 million) 1964
International conference
hall ($2.8 million)
Total 36.8 10.7
Proposed in February
1964
- 2 -
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In addition to economic aid, Ceylon signed a maritime agree -
ment with the Chinese Communists in August 1963, permitting the
reciprocal use of the ports of both countries for the transport of
cargo and passengers. The agreement grants the Chinese trans-
shipment rights in Ceylonese ports, which may facilitate their trade
in many areas, notably Africa. The Chinese reportedly also have
agreed to provide some technical training in textile production under
their aid program. 4/
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C ainese Communist Aid to Ceylon: Fact or -fiction --- April 196?
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It is requested that the attached copies of CLA/RR CB 64-25,
Increased Chinese Communist Aid to Ceylon: Fact or Fiction, April
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