COMMUNIST CHINA: THE SIGNIFICANCE OF LOWER GRAIN IMPORTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500220013-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 16, 2016
• Document Release Date: December 28, 2004
• Sequence Number: 13
• Publication Date: February 1, 1968
• Content Type: REPORT

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Secret
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DIRECTORATE OF
INTELLIGENCE
Intelligence Memorandum
Communist China:
The Significance of Lower Grain Imports
Secret
Copy No- 37
ER IM 68-11
February 1968
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WARNING
This document contains information affecting the national
defense of the United States, within the meaning of Title
18, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an unauthorized person is prohibited by law.
aeour I
EXCLUDED YIIOM AUTOMATIC
DOA NIUTAUINn AND
D[CLAASlrICATION
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
February 1968
INTELLIGENCE MEMORANDUM
Communist China: The Significance
of Lower Grain Imports
Summary
It now appears that Communist China will import
from 1.5 million to 2 million metric tons less wheat
in the 1967/68 grain year than in the preceding year-*
China has been cutting back recently on grain
imports, despite the need for 4 million additional
tons of grain to feed the annual population increate.
This is the strongest evidence that production of
grain must have increased substantially in 1967,
the Cultural Revolution notwithstanding.: Preliminary
data also show that the Chinese exported about $1.80
million more of foodstuffs than they imported last
* Grain years run from 1 July to 30 June.
Note: This memorandum was produced by CIA. It was
prepared by the Office of Economic Research.
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SECRET
year. Hence, 1967 was a second year of modest
progress for China in meeting its food-population
problem. Continued improvement in China's holdings
of gold and foreign exchange make it most unlikely
that the cutback in grain purchases is a reflection
of "belt-tightening." Since the cutback in grain
purchases during the 1.967/68 grain year was made
possible by unusually favorable weather conditions,
China may again require larger grain imports in
1968/69. If so, the availability of foreign exchange
would not constrain the Chinese in negotiating for
wheat imports.
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Recent Grain Imports
4. Over the six grain years from 1961/62, Com-
munist China's imports were relatively steady, as
shown in Table 1.
Communist China: Imports of Grain
Grain Years 1961/62 - 1966/67
Thousand Metri
c Tons
Grain Years
Amount
1961/62
5,996
1962/63
5,425
1963/64
5,799
1964/65
5,466
1965/66
6,173
1966/67
5,103
5. Total grain consumption requirements are
estimated to increase about 4 million tons a year
in order to maintain the same nutritional level for
the growing population. Table 1, then, does not
imply that grain output in China was static, but
that the net deficit, requiring purchases of grain
abroad, remained almost constant.
6. Improvement in domestic production in 1967,
however, must have been marked, if import data for
consumption year 1967/68 are a valid reflection of
crop performance. Table 2 gives a statistical
measurement of this development.*
7. It seems unlikely that much more grain, if
I efore the a se o
e necessary negotiating and shipping times that
Consumption years run from 1 JuZy to 30 June.
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Communist China: Imports of Grain
Consumption Years 1966/67 and Projected 1967/68
Quarter 1966/67
Jul-Sep
Oct-Dec
Jan-Mar
Apr-Jun
1,209
1,303
].,239
1,352
5, 103
Thousand Metr:,.c Tons
1967/68
884
823
600 a/
600 to 1,200 a/ b/
2,907 to 3, 507
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Trade in Agricultural Products
8. China's exports of foodstuffs are largely
high-value items -- livestock products, rice, fruit,
and vegetables. In exchange, it imports low-value
grains -- primarily wheat. Food. exports go to Hong
Kong, to the overseas Chinese living in Southeast
Asia, and to Japan and Western Europe. Grain
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imports are largely from Canada and Australia,
although China has also imported smaller amounts
from Argentina and France in recent years.
9. In the late 1950':;, China had net earnings
of from $600 million to $800 million per year from
the food trade. The disorganization imposed by the
Leap Forward resulted in a deficit of $310 million
in 1961, which was the low point. Since that time,
China has shown gradual improvement in her net trade
in foodstuffs. It probably achieved a surplus of
about $180 million in 1967, which indicates the
rate of improvement in the short run has been faster
than the rate of population increase (see Table 3).
a. Pre iminary estimate.
China's Foreign Exchange Position
10. It is most unlikely that the current low
level of grain purchases is a reflection of financial
stringency on the part of China. China's gold
holdings are estimated to have increased to an all-
time high of at least $430 million at the end of
1967 and because of the uncertainty of calculation
may actually have been somewhat more than $500
million.
Communist China:
Exports and Imports of Foodstuffs
1965-67
Million us $
1965
1966
1967 a7
Exports
515
630
600
Imports
530
500
420
Balance
-15
130
180
11. While China's exports to the Free World
declined significantly in 1967, largely as a result
of the Cultural Revolution, its holdings of Western
currencies may have been maintainn_d at adequate
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levels, aided by a windfall of at least $30 million
as a result of the devaluation of the pound sterling,
because most of China's debts in the West were in
UK pounds with no gold value guarantee.
12. Because the cutback in grain purchases
during the 1967/68 grain year was made possible by
unusually favorable weather conditions, China may
again require larger grain imports in 1968/69. If
so, the availability of foreign exchange would not
constrain the Chinese in negotiating for wheat
imports.
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