THE CHINESE ECONOMY AT MID-1974

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001700070009-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 20
• Document Creation Date: November 16, 2016
• Document Release Date: January 7, 2000
• Sequence Number: 9
• Publication Date: July 1, 1974
• Content Type: IM

C I A o t:1 \ I / 4- Lb Cl
pproved For ReT~as 200Y04/78 : A-RDP85TOO875R001
the Chinese Economy at Mid-1974:
 Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
Confidential
intelligence Memorandurn
The Chinese Economy at Mid 1974
Confidential
ER IM 74-9
July 1974
Copy N2 84
Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
 Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
Classified by, 015319
Exempt from goneraI docossification schedule
of E.O. 11652, exemption category:
? 3B(1), (2), and (3)
Automaticall dedasslftled ont
Dato Impossyy iblo to Determine
Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
 Approved For Release 2000/04/18 : dR3085T00875R001700070009-4
The Chinese Economy
at Mid-1974
A. At mid-1974, the Chinese economy is marked by below-average prospects
in agriculture, moderate expansion in industrial capacity and output, booming
foreign trade, and palpable improvements in the austere standard of' living.
B. The anti-Confucius campaign and the retrenchment in the workpace of
Premier Chou En-lai thus far have caused no appreciable slowdown in the pace
of economic activity.
C. In agriculture, the erratic spring monsoon and unusually low temperatures
have hurt early crops and disturbed acreage patterns for the imp'rtant fall-harvested
crops. Grain production for 1974 seemingly will fall short of the 2% growth trend,
although future developments in the weather will determine final results for the
year.
D. Purchases of grain will reach a new peak in 1974. Contracts for delivery
this year now total 9.4 million metric tons - nearly half from the United States --
compared with 7.5 million tons in 1973.
E. Growth in industrial production continues at a respectable 8% to 9%
rate, with oil and chemical fertilizer among the front runners.
F. Production of military hardware in the past 18 months has been 25%
below the peak levels of 1970-71, possibly the combined result of the priority
of the agriculture-support program, the changeover to later model weapons, and
the reassertion of Party control over the military.
G. As for foreign trade, soaring world prices and major currency revaluations,
as well as substantial increases in physical volume, are accounting for sizable gains
in both exports and imports. Exports probably will rise by 30% in 1974 to more
than $6 billion, and imports by about 35% to more than $6.5 billion.
H. From the vantage point of mid-1974, the Chinese have good prospects
for feeding the growing population at reasonable minimum levels, adding to capacity
and output in industry, and strengthening military capabilities. These general
indicators of short-term economic momentum must be weighed against deep-seated
problems stemming from the low level of per capita output, the massive annual
increments to population, the struggle to catch up technologically, and recurrent
ideological flareups.
Note: Comments and queries regarding this memorandum are welcomed. They
ma y be directed to , of the Office of Economic Research,
25X1A
25X1A
Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
Confidential July 1974
 Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
0)150
In
D
N
N
0)100
r.
0
.0 50
China: major economic Ocr da"c tors
great leap
forward
cultural
revolution
01 I I I I I I I I I I I I I __( I I ( I I I I i I
rain production and popugatoon
1949 55
50I I I I I I I 11 I I I I I
--foreign trade
( I I I L .j I I I I
70
total
non-communist
-communist
Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
 Approved For Release 2000/04/18 : lA-R
n tppP85T00875R001700070009-4
Background: Long-Term Forces
1. In 1974, the fourth year of the Fourth Five-Year Plan, the Chinese
economy reflects the experience of a quarter of a century of development under
Communist rule. Approximate long-term economic growth rates have been as
follows, calculated on the years 1952 and 1957:
Average Annual Rates
of Growth (Percent)
GNP
4.8
4.3
Population
2.2
2.1
GNP per capita
2.6
2.1
Grain production
2.3
1.9
Industrial output
9.1
7.5
2. Whereas the long-term rate of growth of GNP has been 4% to 5%, the
short-term course of GNP has been highly erratic because of two great economic
and political upheavals - the Great Leap Forward (1958-60) and the Cultural
Revolution (1966-69). As shown in the first section of the chart, GNP plunged
in the aftermath of the Leap Forward and dipped, less severely, when the Cultural
Revolution interrupted industrial production.
3. The composition of GNP growth mirrors the fundamental economic
priorities of the Communist leadership. Once a reasonable minimum amount of
food has been provided for the growing population, the energies of the economy
are to go to the expansion of industrial output and capacity. Thus agricultural
production and population have been advancing over the long run at 2%, while
industrial production has been growing at 8% to 9%. As shown in the second section
of the chart, population has moved steadily upward whereas agricultural production
has fluctuated widely. In particular, in the three disaster years of 1959-61,
agricultural output dropped by one-fifth through a combination of man-made and
natural disasters. Beginning in 1961, the PRC has imported several million tons
of grain annually to supplement domestic production.
4. In absolute amount, China's foreign trade is small compared with
domestic production. China is a huge continental nation with the domestic potential
for practically all kinds of agricultural and industrial output and with an oft-stated
aspiration for economic self-sufficiency. Trade is viewed as a temporary vehicle
for obtaining foreign machinery, technology, and grain. As shown in the third
section of the chart, China has made a critically important switch in trading partners
Approved For Release 2000/04/18 : &I,tlaW85T00875R001700070009-4
 Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
Confidential
after the Leap Forward. Whereas the PRC conducted two-thirds of its trade with
other Communist countries in the late 1950s, it now conducts four-fifths of its
trade with non-Communist countries.
5. To summarize, in mid-1974 the status of the Chinese economy has been
determined largely by the working out of four long-term factors:
o GNP growth that provides a substantial margin for building up the
capacity of the economy;
o agricultural growth that, supplemented by imports, has sufficed to
feed the growing population;
o industrial growth that, starting from a small base, has provided rapid
increases in capacity and output of basic industrial materials,
machinery, and military equipment; and
o expanded foreign trade that now is geared to acquiring advanced
industrial equipment and grain from non-Communist trading
partners.
Planning: Uncertainty at the Helm
6. The economic planning system, which was partly paralyzed during the
Cultural Revolution, recovered much of its forcefulness in 1970-72, only to be
subject to new political buffeting in the past 12 months. During the Cultural
Revoiution, a large slice of the ranking Party and government leaders lost their
jobs. Heads of economic ministries and planning agencies dropped from sight, and
in many cases their posts remained vacant for years. (Indeed, several top economic
positions apparently still remain without a permanent occupant.) Farther down
the hierarchy the disruptions of the Cultural Revolution were comparatively mild.
The day-to-day activities of the economy - the collection and distribution of grain,
the operation of factories and communes, and the carrying out of financial
transactions - continued on the basis of institutional roots established over the
first 17 years of Communist rule.
7. After the Cultural Revolution subsided, a certain amount of economic
policy initiatives became possible at the top.
e In the fall of 1970, Premier Chou En-lai announced the Fourth
Five-Year Plan for 1971-75;
o A number of formerly discredited bureaucrats began to reappear;
and
o In 1972-73, agreement was reached within the top leadership on
important changes in long-term economic strategy, as discussed later.
Approved For Release 2000/040 idenfill -RDP85T00875R001700070009-4
 Approved For Release 2000/04/18 : gIyQPj85T00875R001700070009-4
8. In mid-1973, new political ferment began to raise questions regarding
the balance in the continuing radical-versus-moderate confrontation. Attacks have
been launched against undue reliance on material incentives, foreign technology,
and the leadership of rehabilitated bureaucrats. Additional questions about the
political future came to the fore in early May 1974 when Premier Chou En-lai
reduced his grueling workpace, ostensibly because of advancing years and growing
physical ailments. Despite the heightened political rhetoric, the PRC continues to
push forward the economic policies adopted in 1972-73 and is currently preparing
for a Fifth Five-Year Plan (1976-80).
Agriculture: Groundwork for Breakthrough
9. The agricultural sector is entering the third great stage of its development
since the Communists came to power:
e In the 1950s, when the Soviets were the economic mentors of the
PRC, the agricultural sector was left largely dependent on its own
material resources. Tight control over production and distribution
of agricultural output, collectivization, and use of rural labor to
improve the soil and water control facilities were counted upon to
provide needed food, raw materials for industry, and export
products. The strategy became bankrupt in the Leap Forward when
the leadership established the unwieldly communes, abolished the
private plots, and wasted vast resources on ill-conceived programs.
o After having taken emergency measures to bring China back from
the verge of mass starvation and political disintegration, the
leadership in 1962 adopted a new agricultural policy, which provided
substantial and growing support from the modern industrial sector.
For more than a decade now, chemical fertilizer, pesticides, irrigation
equipment, tractors, and improved seeds have been flowing to the
agricultural sector in growing volume. This support has been
supplemented by the output of a host of small plants established
in outlying areas.
o Then in late 1972, in a third great policy decision, the leadership
embarked on a long-term agricultural improvement program to free
China of the necessity of importing grain and chemical fertilizers.
In the past 18 months, Peking has contracted for 13 large urea plants
from Japanese, West European,' and US sources at a total cost of
$500 million. Output from these plants, if expeditiously
supplemented by improved water control facilities and increased
supplies of other types of fertilizer, gives the potential for
substantially higher agricultural production by 1980. Production of
grain in 1980 could be 30% above the 1973 level and could eliminate
the need for imports of grain and nitrogen fertilizers.
3
Approved For Release 2000/04/18 : Q1AfiRDR85T00875R001700070009-4
 Approved For Release 2000/04/18 dCl ArRDP85TO0875RO01700070009-4
10. In the meantime, Peking must continue to import sizable quantities of
grain. In 1972, grain imports were prematurely reduced -- to 3.5 million tons from
the previous 5 million to 6 million tons - in a year when grain output fell 4%
to a disappointing level of 236 millions tons.1 Thus, in 1973, imports were a record
7.5 million tons while production recovered to the long-term trend line, at 250
million tons. Purchases of grain in 1974 will reach a new peak. Contracts for delivery
this year now total 9.4 million tons, as follows:
Total
7,650
1,730
9,380
United States
3,000
1,100
4,100
Canada
3,000
....
3,000
Australia
1,200
....
1,200
Argentina
250
630
880
France
200
....
200
11. As of mid-1974, the domestic crop seems to be falling in the "below
average" range, although essentially unpredictable developments in the weather will
ultimately determine the final results for the year. The 2% trend-line growth --
a 5 million ton increase over last year's 250 million tons - probably will not be
realized. Early-harvested grain crops - which normally account for two-fifths of
China's grain output - have been set back by drought and unseasonable frost in
the south. One high-level Chinese government official is reported to have said that
the winter wheat crop this year will turn out to be less than the 1973 crop. The
late and erratic behavior of the monsoons this spring, together with unusually low
temperatures, has disturbed acreage patterns for the important fall-harvested crops.
For example, in double-cropped rice areas where seed for the early rice crop did
not germinate and had to be replanted, the planned sLcond rice crop might have
been replaced with a lower yielding dry crop in many instances.
12. Other fa,c-tors in agriculture are favorable or at least neutral. Once again,
the volume of chemical fertilizer and machinery going into the agricultural sector
will establish a new record. Improvements in flood control and irrigation facilities
continue at a vigorous pace. These improvements still yield considerable returns
in output in some areas because most water control projects are only partly finished,
and major rivers and large tributaries remain to be harnessed. At the same time
that new acreage is being reclaimed from the hillsides, the desert, and even the
sea, farmland is being taken for factories, urban housing, and military installations.
We have no data to determine the extent to which these forces are offsetting.
1. For figures on gain production and other important economic indicators, see the table. A second copy
of the table, which may be detached and used on an unclassified basis, is provided following the text.
4
Approved For Release 2000/04/dAf;d QA-RDP85T00875 R001700070009-4
 Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
Confidential
In any case, the net change in total acreage is small. As for seeds, China is gradually
taking advantage of the opportunities for combining improved seed,; with advances
in fertilization and water control.
13. The availability of manpower is another plus factor. Numbers are no
problem, of course; indeed, average output would markedly rise if China had a
more favorable labor/land ratio. The issues have been the level of skill, the
disruption among various rural tasks, and motivation:
o Agriculture in mid-1974 is benefiting from the broadening of
education and training in r.+ral areas, the increased experience of
the work force with fertilizers and mac; finery, the assignment to
the countryside of thousands of educated people from urban areas,
and programs for the systematic introduction of new seed varieties
and production techniques.
o The leadership in mid-1974 is taking a moderate and reasonable
approach toward the distribution of rural labor. The small plants
program can absorb no more than 5% of the labor force of any
county. The smaller rural units -- the production brigade and the
production team -- apparently have leeway within this guideline to
allocate man-power on the basis of local conditions.
o Significant changes in motivatiun in rural areas in mid-1974 are hard
to identify. Motivation probably should be set down as a neutral
factor. Rural living standards continue to edge up. Health care and
educational standards are rising markedly if unevenly. The political
rumblings of the past 12 months have not taken a great dial of
extra time from work or leisure in the countryside. Of paramount
importance, the political wrangling has not, so far as we can tell,
had any effect on the pragmatic attitude toward the private plots
and petty private trade. The most serious cases of disaffection
continue to be among youth, notably the city youth transferred
to the countryside for rural labor.
Industry: Swing Toward Support of Agriculture
14. Growth of industrial output in China continues at approximately the
long-term rate of 8%-9%, with oil and chemical fertilizer among the front runners.
This rate, although not so high as in the catch-up years following the Cultural
Revolution, is entirely respectable and represents a doubling of output every decade.
The shift in economic strategy of the past two years - in which the grou',tdwork
for a long-term breakthrough in agriculture is being laid - has i;nportant
implications for the course of industrial development.
o Much of the tremendous increase in the contracts for Western
industrial plants - $1.2 billion in contracts in 1973, compared with
Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
Confidential
 Approved For Release 2000/04/1?z ,,,QLA-I DP85T00875R001700070009-4
only $60 million in 1972, with another billion plus year anticipated
in 1974 - is not designed to increase the machine building capacity
of the PRC but rather to expand severalfold the capacity to produce
chemical fertilizer and artificial fibers.
e Tae pressures in mid-1974 on supplies of coal and electric power
are the result of the failure to open large new coal mines in recent
years. The attempt to raise production from existing mines by more
intensive application of labor has increasingly run into diminishing
returns. The skimping on investment in new capacity implicitly is
tied to the priority of investment in industrial branches that directly
support agriculture.
o Military production in the first half of 1974 has continued at about
the same level as 1972-73 - about 25% below the peak of 1970-71.
Although the explanation for curtailed military production is not
clear, it probably stems from a combination of: the priority accorded
the "agriculture first" policy, the cutting back of production of
obsolescent aircraft models while new models are being readied, and
the relative eclipse since 1971 of the political strength of the
military.
15. A striking feature of the industrial scene in mid-1974 is the small plants
program. As used in this memorandum, the term small plants refers to Chinese
enterprises distinguished by (a) simple technology, (b) location in rural areas, (c)
production in d?rect or indirect support of agriculture, (d) dependence on local
resources, and (e) local (usually sub-provincial) administration. The program - as
the following table indicates - is broadening the base of important industrial
branches. The cost in resources is small compared with the benefits. The program
makes maximum use of local labor, materials, and transport, whose contribution
in other uses generally would be much less valuable. Difficulties with the program
in the past have come mainly from overzealous implementation during periods of
political upheaval - e.g., the Leap Forward. The current anti-Confucius campaign
so far has not resulted in any hurried expansion of the program.
16. Another striking feature of the industrial scene is the great percentage
increase in oil output from its small beginnings ir, the 1950s and early 1960s.
Production of crude oil has advanced as follows:
Million
Metric
Tons
Thousand
Barrels
per Day
Million
Metric
Tons
Thousand
Barrels
per Day
1957
1.46
29.2
1970
28.5
570.0
1971
36.7
734.0
1960
5.3
106.0
1972
43
860.0
1973
53
1
060.0
1965
10.8
216.0
1974 (proj.)
65
,
1,300.0
6
Approved For Release 2000/041*fi fA-RDP85T00875R001700070009-4
 Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
Confidential
China: Contribution of Small Pants
to Industrial Output, Mid- 1974
Agricultural machinery Almost all the simple farm tools and a substantial portion
of basic farm machinery.
Chemical fertilizers Mori' than S0% of nitrogen fertilizer output (by weight) and
75% of phosphate fertilizer output (by weight); vital to the
agricultural sector, even if not top quality.
Cement 50% of national output; sufficient in quantity and quality for
practically all local needs!
Hydroelectric power About 5% of national elects c power capacity and a large part
of rural needs, especially fo irrigation.
CeJal 30% of national output; use(l' 10stly for local industry,
cooking, and heating.
Iron and steel 20%.3nd 15%, respectively, of national output; used in rural
industry and construction.
17. Beginning in 1973, when I million tons (20,000 b/d) were exported to
Japan, oil has become a major earner of hard currency. Shipments to Japan --
a nearby and insatiable market - will reach 4 million tons (80,000 b/d) in 1974.
Earnings from oil, only $35 million in 1973, probably will exceed $30G million
in 1974 and will cont,:-ue to mount through the remainder of the decade - to
as much as $3 billion by 1980. The boom in oil production and exports can be
viewed as suppc? '.ve of the "agriculture first" strategy because oil earnings will
help to pay for the new chemical fertilizer and artificial fiber plants.
18. In the steel industry, recent increases in output have not been sufficient
to satisfy growing domestic requirements. Imports of finished steel may rise to
4 million tons in 1974, and s`zable increases in imports of iron ore, pig iron, and
steel scrap continue. After several years of tough negotiations, China recently signed
contracts with Ja-nnese and West German consortiums for a $430 million sheet
steel rolling and finishing mill to be built at Wu-han. The new facility, when
commissioned in 1977, will boost annual production of finished steel by more
than 3 million tons, still short of China's needs.
Foreign Trade: Off the Chart
19. Foreign trade in 1973 soar, ,J to more than $9 billion, an increase in
dollar vale of some 60% over 1972. Revaluations of world currencies and
worldwide inflation contributed heavily to the jump in the dollar figure; the gain
in real terms was 20% to 25%. Scattered returns for the first quarter of '1974
en[P85T00875R001700070009-4
Approved For Release 2000/04/18 : CIArF
 Approved For Release 2000/04/18cpi4t-RDP85T00875R001700070009-4
show that another jump, of 30% to 40%, is likely again this year, and again more
than hall' the increase probably ;viii be attributable to monetary elements. The
broad trend in trade is as follows:
Exports
Imports
1970
2.05
2.24
1971
2.41
2.31
1972
3.06
2.77
1973
4.64
4.74
1974 (prospective)
6+
6.5+
20. Other trends in China's foreign trade as seen at mid-1974 are2:
? Imports o~ grain, sugar, cotton, vegetable oils, and other agricultural
products `iould increase from a record $1.3 billion in 1973 to $2
billion in 1974, roughly half coming from the United States.
o Orders for industrial plants and other machinery and equipment
from non-Communist suppliers - which totaled almost $2.5 billion
in 1973 - continue strong in 1974 despite the growing internal
debate over the reliance on foreign sources.
? The relaxation of Peking's conservative attitude toward debt carries
over in 1974, with the trade deficit with non-Communist nations
expected to reach $1 billion (compared with $425 million in 1973).
? Japan will remain the leading trading partner, with two-way trade
approaching $3 billion ($2 billion in 1973). Exports to Japan will
cover all but a small proportion of imports.
? Trade with the United States will likely total $1.2 billion ($870
million in 1973); China's trade deficit p,obably will exceed
$1 billion.
Net hard curiency earnings from Hong Kong of $1.5 billion will
provide the major offset to China's deficit with the developed West.
? Trade with the other Communist countries will consist largely of
(a) the exchange of Chinese foodstuffs, textiles, and other consumer
goods for Soviet and East European industrial equipment and (b)
Chinese aid deliveries to North Vietnam, Albania, and North Korea.
2. For data on China';; foreign trade by geographical area and commodity composition, see the Appendix.
8
Approved For Release 2000/04/1 'nfi ALRDP85T00875R001700070009-4
 Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
Confidontial
Transportation: Squeezing in More Traffic
21. At ntid-1974, the key transportation system for the modern portion of
the economy remains the rail network, supplemented by waterways for the
movement of bulk commodities. The rise in oil production is bringing the
construction of pipelines and port facilities to center stage. Rural areas continue
to make do with age-old water and road transport; some rural areas, however,
are being suddenly transformed by the extension of rail routes into hither'o isolated
regions.
22. In the past three years, the Chinese rail network has grown by 10%,
to approximately twice the size of the pre-Communist network. Progress has
included (a) the double-tacking of important segments of line in the populous
East; (b) the completion of several trunklines; (c) fast-paced work on new segments
now being pushed into the hinterland; (d) additional electrification of trackage,
mainly in the mountainous areas of Szechwan and Shensi; and (e) construction
of industrial spurs, new expanded rail yards and transfer facilities, and additional
repair facilities.
23. For the past 18 months, growth in freight traffic has exceeded the growth
in rail transport capacity. railroad authorities are now contending with
widespread - but not crippling - shortages of freight cars, especially tank cars.
24. So far in 1974, Chinese ports have been able to handle increasing
shipments from Free World countries with only a relatively small amount of
congestion. Some sources have reported numerous ships waiting for berths at
Chinese harbors, but few ships have been reported waiting for long periods of
time. Meanwhile, the Chinese have continued to improve their ports and harbors
by dredging, construction of new facilities, purchases of additional materials
handling equipment, and improved cargo loading and unloading procedures.
Consumer: Making It Gradually
25. The rank-and-file consumer so far in the Fourth Five-Year Plan has been
benefitting from a series of small improvements in his austere living standards. The
quality, variety, and availability of foods continue the slow but perceptible long-run
rise. Although rationing of cotton cloth persists, clothing standards are generally
perking up. Synthetic fabrics are becoming more widely available, for example,
and adult garb is gradually departing from monotonic blue or gray. Housing also
shows improvement, especially in rural areas; members of successful communes
are moving up in large numbers to brick and stone houses through the use of
local materials and their own labor. The pace of improvement is probably most
noticeable in the ownership of consumer durables - bicycles especially, and
watches, transistor radios, cameras, and sewing machines. Rudimentary health
services are being extended to back areas through "barefoot doctors" (young
medical corpsmen). The number of small freedoms of choice is gradually
Approved For Release 2000/04/18 c CfIA-tRDP85T00875R001700070009-4
 Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
Confidential
expanding, although the basic pattern of consumption continues to be closely
regulated by a host of government and quasi-government bodies.
Population: No Surcease
26. Data oil China's population and on the current population control
program remain so fragmentary that precise numerical estimates are impossible.
The figure of 920 million people, used in this memorandum for mid-I974, implies
,in annual average growth of 2.2"x, since 1952. To illustrate the wide range of
uncertainty in population figures, Vice-Premier Li 1-Isien-nicn's oft-quoted statement
made in 1971 to a Cairo journalist is worth repeating:
... We have been racing against time to cope with the enonuous increase
in population. Some people estimate the population at 800 million and
some at 750 million. Unfortunately, there are no accurate statistics in
this connection. Nevertheless, the officials at the supply and grain
department are saying confidently, "The number is 800 million people."
Officials outside the grain department say the population is "750 million
only" while the Ministry of Commerce affirms that the "number is 830
million." However, the planning department insists that the number is
"less than 750 million." The Ministry of Commerce insists on the bigger
number in order to be able' to provide goods in large quantities. The
planning men reduce the figure in order to strike a balance in the plans
of the various state departments.
27. Strong factors favoring high fertility are at work in present-day China:
improved nutrition; continued gains in public health, now aided and abetted by
the legions of barefoot doctors; the large number of ivu:Yrca already in or entering
the younger child-bearing ages, a result of the baby boom, of the 1950s and 1960s;
the settled societal conditions of the Fourth Five-Year Plan period in comparison
with, say, the Cultural Revolution and 'traditional attitudes favoring large families,
which the immensely improved Ion: of children in contemporary China presumably
has strengthened. The present population control program, the most determined
effort to date to cut back the rate of growth, has been in effect only since the
Cultural Revolution and has only begun to penetrate rural areas. We doubt that
it has had appreciable effects on demographic rates. At the same time, we feel
that the combination of a strong government program and a changed popular
attitude toward large families could lead to marked demographic changes by the
end of a decade. The account by Djerassi3 of the amazing progress made by the
PRC in developing and distributing oral contraceptives suggests a considerable
potential for central planning of population within the not-too-distant future. In
similar vein, the accounts by author Han Suyin of the impact of "baby quotas"
for low-level social units, while exaggerated, illuminate the possible future course
of China's population contrcl program.
3. Carl Djcrassi, "Some Observations on Current Fertility Control in China," China Quarterly, No. 57,
January-March 1974, pp. 40-62.
Approved For Release 2000/24118 : CIA-RDP85T00875R001700070009-4
onfidential
 Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
Confidential
28. 13ecause of the short lifespan of past population control efforts in the
PRC, the chances for survival of the current program should be viewed cautiously.
The anti?Conlucius spearhead could still be directed against the program or a radical
post-Mao administration could find the program a ready target.
Prospects: Odds on the Technocrats
29. The immediate future for the economy will be largely determined by
the conditions under which Chairman Mao Tse-tung and Premier Chou En-Iai
disappear from the scene.4 Various issues are involved:
o radical versus moderate economic policy;
? civilian versus military use of resources;
o industry-first versus agriculture-first economic strategy;
o autarkic versus interdependent foreign economic policy; and
? centralized versus local control of production.
30. Some of the revolutionary impetus that presently shapes Chinese policies
will inevitably be lost when the initial generation of Communist leaders is replaced.
Most of the people in China today have a vested interest in working to improve
their lot within existing institutions under existing rules of the, game. Thus, while
radical departures in policy or militar; juntas are possible, on balance the future
probably belongs to the government bureaucrats, the technicians, the Party
bureaucrats, and the professional military men -- i.e., the technocrats. This kind
of succession fits in with China's economic problems of achieving the breakthrough
in agriculture, moving ahead to petrochemicals and offshore oil, manufacturing and
deploying sizable numbers of nuclear-armed missiles, and curbing the growth of
population. Nonetheless, the past history of unexpected political upheavals in the
People's Republic of China serves as a warning against basing predictions on
straight-line assessments of economic rationality. Perhaps, a reasonably solid
minimum argument may be made - i.e., that economic institutions and vested
interests are now so deeply rooted as to serve as a great counterweight to radical
forces in the post-Mao era.
31. For the more distant future, the underlying problems of low per capita
output, population pressure, and technological lag will keep China from greatly
accelerating the present moderate pace of growth. Over the next decade, China
will further outdistance the other large LDCs such as India, Pakistan, and Indonesia,
yet wit.: be hard put to gain ground on Japan and Western Europe. China will
still be a big poor nation with the potential and ambition for - but not the
realization of - economic superpower status.
4. For an authoritative analysis of critical issues in the transitional period, see A. Doak Barnett, Uncertain
Passage: China's Transition to the Post-Mao Era, Washington, Brookings Institution, 1974.
11
Approved For Release 2000/04/1$-nee ;rDP85T00875R001700070009-4
 Approved, For Release 2000/04/18 : CIA-RDP85T00875RO01700070009-4
t,.
r- N o, vd N ,O tX] O) 00 .w n 6 O NO 0, 1? 1 m N fn .- n Oro ;O ..y-, ell 1 rl
O
U
N
10
~ ST
C3
a
T
t`
,D
O,
O rl
N
O
N
r1
O
N
C,1 ---~
%D %0
M1
M1 m O
t v) ..+
M1
en In
O M er O,
In en CD
Ch - ,p
M1 W O
v) In O
00
oo 't m 00
N :O
0'
t>n
rn t- m m
Ch rv In m -r
N r+)
- oV~f
r- rl m o0 rn
rl m
M M
Ot. O rl 01) M
-r ?-+ r- rl
N
N v, 00 7 O
O - r ,O N
ell r1
,.D r-+1 O
- N
O 0 In It
O,
ON
.-r
m O, O m
N O M
M M 0
%0 - 00
O 1f` 00
N m
O O
00 M
,D aD
00 ,O
n Ki
M1 b
,O O O rl m
M M
00 N ON
N
0 h O a .-v I'D
o; rl
r~ o M v?
N 1'0 +1' 'n "t
n 00 O .-1 11
rl
rr~OM
00 -f -It
V M .-+
In tr
rt N O
N 00 el
ti
m Pi -+
vi v;0
M ell .-+
cz~ .? %0
,D O r1
rv
O a0 rl
to e- 00 -y
rn
in a 0
It ,ON
N O~ rn
viM O 7O
V m O
00 n C oOq
V M O 00 4 M ?~ .~
N
O 'd; v) O r N O
N r1 00 NN O r- er rV N
oo v1 N It It . N
ar. ul
N M1 O; N n
If; o vl 'n ` ? M M .-a
CIS In r- V- CD
rl~ W? c!
r' M D,
n O v) 7
M V M --i
M O
00 O M
m -y O N
b
O~ N ?Y H
) - .-. m O~ 0 M1 N
M _ O -r
O~OO
m -+ ,n
m
00 N M1 b M1
ti
of N N M1
C O 0 M O O
-r N
VO M1
O\ a d
m
cq C7 M1
'r m N
r?.f m
7 N N
,O M m
00 O
1D m N
W 0, Oin In
, 1r
O, ,D M
00 o' O~ O
v) M N
O, m ,D
N O
- N N
M1 M1 O, 00
H M r
v) 'O N M
J
v) M - 1 H
O, 00
00 00
-2 1-4 N u n tO O n 'G' rte- O L^ O :3 O O
v,ti E a a.~
0 .6.4
G' ~ N.SZ P. h .r in G p N b d d G .~ ? 7 'N 7 ~" N H p
o d$C7rn a G o G c m o O o d N ?'b i
of `" o~ wt.
? o N .~. c_ F; ?~ t ~~ _ v m o v o o a Z o fR :+
Q b, . c a a e d a " O e + v C o o D b O O u q o ? w
Approved AI.W
I se&O O P w A O~ '
N
00
M1
CO ?-~
ON
N ut
.~..
rn 00
00
M1
t- w
M ti
O O
O
N ON
~
e1
ni-i
00 .
00
00 r -
47N It M1 '-4
000 vrv
)
M1 -
 Approved For Release 2000/04/18 : CA6aR85T00875R001700070009-4
APPENDIX
STATISTICAL 1ABLES
China: Trade, by Area and Cuuntryl
Million US S
Total
Exports
Imports
Total
Exports
Imports
Total all countries
5,830
3,055
2,775
9,380
4,640
4,740
Non-Communist
countries
4,560
2,305
2,255
7,805
3,690
4,115
Developed countries
2,735
1,065
1,670
5,200
1,780
3,420
Western Europe
1,060
460
600
1,690
660
1,030
Japan
1,110
470
640
2,015
920
1,095
Australia
105
55
50
220
85
135
United States
110
30
80
870
65
805
Canada
345
50
295
405
50
355
Less developed
countries
1,295
715
580
1,795
1,110
685
Southeast Asia
375
285
90
720
590
130
Near East and
South Asia
325
180
145
375
205
170
Africa
340
210
130
390
240
150
Latin America
240
25
215
280
50
230
Other
I
15
Negl.
30
23
5
I long Kong and Macao
530
525
5
810
800
10
Communist countries
1,270
750
520
1,575
950
625
USSR
255
135
120
270
135
135
Eastern Europe
490
240
250
535
285
250
Yugoslavia
25
5
15
65
15
50
Other
505
370
135
705
515
190
I. Data are rounded to the nearest $5 million. The statistics were adjusted to show China's imports c.i.f. and
exports f.o.b.
2. Preliminary.
Approved For Release 2000/04/18 : GtAdRDP85T00875R001700070009-4
 Approved For Release 2000/04MfidoqtIA-RD P85T00875R001700070009-4
Table 2
China: Commodity Composition of.'1 radcl
Million US $
Commodity Group
1972
19732
Tota! imports
2,775
4,740
Foodstuffs
4i0
1,080
Crude materials, fuels,
and edible oils
520
860
Chemicals
355
490
Manufactures
1,435
2,270
Of' Which:
Machinery and
equipment
525
730
Metals
730
1.270
Other
15
40
Total exports
3,055
4,640
Foodstuff's
950
1,450
Crude materials, fuels,
and edible oils
610
925
Chemicals
155
230
Manufactures
!,315
1,990
Other
25
45
1. Data are rounded to the nearest $5 million. The statistics
were adjusted to show China's imports c.i.f. and exports
f.o.b.
2. Preliminary.
Approved For Release 2000/04/4 de,Q A-RDP85TOO875ROO1700070009-4
 Approved For Release 2000/04/18 : CIA-RDP85T00875R001700070009-4
r. ?r,
If, 00
00
00
O It N n
Ci In It .-.
C' .-1 ..r O
.0 h M h1
g Or 4 O G 7 b "~ tV '~ C CUi N E
Approved
rr! O rn
00 It .r
?Y M .-.
Iri - It
CZ N O I M
O N O 00 vj ri
r+
O O O ^ 1
vl n C1CIO
1 -
r
00 %0 I1
M rl N
N h n
N n e}
rry N r+
N M a'
O O N 7
O ~+ O M et cn ~? .?