IMPLICATIONS OF THE RELAXATION PROPOSALS TO MILITARY POTENTIAL OF COMMUNIST CHINA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64-00014A000100040003-5
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 50
• Document Creation Date: December 9, 2016
• Document Release Date: January 8, 1999
• Sequence Number: 3
• Content Type: REPORT

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Implications of the'Relaxation Proposals to
Mi lita y Potential' of Communist China
U
,Baolcground
The military potential of Communist China is severely limited by
its primitive industrial economy and by serious deficiencies in transport
and other services essential to both economic growth and military ex-
pansion. The Communist regime has ambitious plans and programs for
broadening the industrial base for military potential, but can meet their
planned goals only by substantially increasing imports. Current plans
emphasize the heavy industry, power, communication, and transport sectors.
The European Soviet Bloc is the principal source of essential imports
in line with the basic Sino-Soviet Bloc policy of self-sufficiency.
However, this policy is modified when important requirements can be
fulfilled more feasibly through importation from the Free World. Trade
and financial controls of the Free World, and inability of the Communist
regime to significantly increase exports have greatly limited their use
of Free-World products to improve communist military potential.
Composition of China Trade Control Lists
The international control lists applying to Communist China trade
(combined COCOM and CHINCCM Lists) cover all munitions,, atomic energy
items, and comprehensive coverage of capital equipment, industrial raw
materials, electronics, and service equipment indispensable to an expanding
economy and the growth of military potential. Except for a few basic raw
materials, such as copper, items comprising the differential between the
CCCCf and CHINCOM lists are probably of greater current utility to the
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Chinese Connmunists than the more complex products on the 000(JM Lists.
There are 305 listings in the differential area. At least 6 listings
are in themselves key categories, such as machine tools, n.e.s., while
others are narrowly defined items. This heterogenous situation
results from the piecemeal manner in which the differential developed.
Initially the differential listings were purposely broad, but as items
or parts of items were deleted from the COCOM List, they were added,
as deleted,'to the CHINCOM List.
Anal lysis of the Deletion groposalis
Both the UK and Japanese proposals would, if agreed to wholly or
in substantial part, denude the differential lists of meaningful content.
The UK proposed for deletion 87. items, and the Japanese 119 items (there
+$ _ a high
degree of duplication) out of a total of 305 items on the
differential lists. These statistics are grossly misleading, however.
Both proposals include all the listings, which are in fact categories,
so that. even on an "item" basis the deletions proposed would-amount to
far more than 50 percent of the total differential Moreover, deletion
of these "category" or broad definition listings would encroach on many
"item" listings because of. overlapping definitions. In addition, when
the items proposed for deletion are grouped functionally, it becomes
apparent. that all the key functional sectors (that is, construction,
transport
communications, etc.).would be weakened to the point where.
re of the remaining portions of these sectors could not be
justified.
SECRET
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Evaluation of Importance of Differential Listings
to Communist Chinese Military Potential
The announced objectives of the Chinese Communists place heavy
emphasis on expanding the industrial base as well as the essential
services or "logistic" sectors of the economy; little importance
is attached to consumer interests. The differential lists are important
.to military potential because of their relationship both to the
expansion of the industrial base, and to the logistic sectors of the
economy. Development of the industrial base has longer run implica-
tions, since creation of the production capacity essential to a modern
military machine will require an extended period of growth. Develop-
mont of the logistic sectors. is of more immediate importance to military
potential because any current improvement adds to the maneuverability
of troops. and materiel in support of military operations, as well as
-~,a4 d e.
to the expansion of the industrial base. No judgment is paim&e as
to whether the "long-term" or "short-term' implications are more important.
However, in TAB A the differential lists are arranged in these two.
broad categories.
The importance of the differential listings to military potential
can also be analyzed on the basis of their functional relationships.
The purpose of the controls is to deter expansion of those sectors of
the Chinese Communist economy which are of key importance to military
potential, either long-term or short-term. TAB A arranges the dif-
ferential lists into functional sectors, some listings falling into
more than one sector. xsttai
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ECPE
-4-
These sectors are all considered to be of key importance because the
announced planning goals give them high priority and intelligence
analysis shows them to be in critical short supply. (See TAB A".
Selection of Listings of Least Advantage to the
Military Potential of Communist China
Selection of listings of least advantage is largely a matter of
eliminating those which are not an important component of a .key sector
of the economy. The importance of the listings may be either because
they are the major or sole listing in the functional sector, or
because their deletion would weaken the effect of the remainder of the
functional sector, (for example, deletion of motor vehicles listing
1 would. weaken the entire land transport sector).
In addition, clear evidence that.the supply position in the Bloc
is such that all estimated requirements for rapidly expanding the
military potential, could be met internally either through direct pr
duotion or substitution, is considered a reason for deletion.
In. TAB A listings from the entire. differential are arranged in a
"rleaat advantage"'.category, distinguished according -to whether they were
eliminated for "functional sector" or "supply" reasons* The listings
which appear on the UK. and Japanese deletion lists are so marked.
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*Epp
-5-
Selection of Differential Listings of Greatest Advantage
to the Communist China Military Potentials,,,
All the remaining listings are considered to be of great advantage
to the Communist Chinese military potential, and there is no meaningful
basis on which to distinquish their relative importance. The listings
cover the entire differential with notation of whether they appear
on the UK or. Japanese differential list. The listings are arranged in
TAB A according to whether they relate to the industrial base (long-term)
or the logistics sector (short-term) of the Communist China economy.
Also, within these broad groups, the listings are arranged according
to functional relationship. There is no valid basis. for distinguishing
the relative advantage to the Communist Chinese military potential of
the designated sectors.
kn, S?j['-j
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EVALUATION OF THE RELATION OF ITEMS PROPOSh;D FOR
DECONTROL TO CONTINUED IMPROVEMENT IN COMMUNIST
CH.T.NEgSE MtLt TARX POTENTIAL
In order to determine the implications of denial of items on the
United Kingdom deletion proposal to the military potential of dommurd. st
China, the items where feasible have been functionally grouped and
presented in relation to a like grouping of the total China trade
(differential) embargo list. The list of 119 items proposed by Japan
for deletion from control is also shown as a matter of interest' and
to portray the similarity in scope and effect of the two lists.
For the purpose of brevity short titles have been used to identify
items in the groupings which follow. It should be noted, however, that
numerous definitions for China differential. items are very broad and,
strictly or by strong implication,, could be interpreted to cover also
items which actually have not been proposed for deletion. To this
extent, the current item definitions are not alwas r, susceptible '"en Coto'
to strategic review. For example, one item not proposed for deletion by
either the U.K. or Japan (Item C-4.05) "Steel castings and forgings ?for
railroad equipment" can be interpreted as being included in the
proposal to decontrol (Item C-471) "Railway rolling stock and parts"
and, (Item C-470) "Locomotives and locomotive parts." Deletion of key
items covered by broad definition might thus have a broacimplieation
Land should be subjected to further careful scrutiny.prior to any
multilateral negoid,ations
In order to afford an overall impression of the relationship of the
U.K, and Japanese proposals for deletion from the China differential as
a wholes the following recapitulation is given,
Proposals for Deletion
Not Proposed
Total
UK
Japan
UK & Japan
by Either
7btal Number of
List Items and
Item Portions
rated
305
87
319
Same
item)
55
154
Less Split-off
Item Portions..
Number of Actual
List Items Affected 297
.80
iii
154
U ~,q
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LOGES'xIC FUNCTIONS
Construction Function
440a~ 401rw
(1) Intelligence,,
The production of even the simplest type of construction equipment
in China is negligible and the park of existing equipment is also very
limited. Such equipment is essential to the large reservoir projects
currently under construction, for building strategic roads., railways
and airfields, and for Industrial expansion, scheduled for completion
in the period 1955-1960e
while equipment of this group is produced in the European Soviet
blocs its resources are already heavily committed to its internal
expansion. Communist China has made recent efforts to obtain listed
construction equipment from free world suppliers and has let contracts
in anticipation of the lifting of embargo restrictions.
(2) Listing of controlled construction. equipment and
propose deletions,
China
Li,.st
No.
Proposed Dee an
Group
Japan UK Footnote
0 131 Pumps designed for working pressure x
of 75 PSI and over
0 210 Welding machines and'equipment x
0 255 Diesel engines 25 HP and over x x
C 256 Internal combustion engines x x
C 266 Electric generating equipment x x
(C-255 or C-256 powered)
C 320 Industrial-type trucks, trailers, x
stackers with crane booms,,
winches etc.
C 321 Civil Engineering '.and building x x
equipment, concrete mixers -
concrete pavers - bituminous
mixers;, spreaders, pavers -
crushing and screening outfits -
graders - rollers - bulldozers -
spray guns (cement)
.0 351 Mining equipment and machinery x Y.
PFRfa,
e u l;{ysh F T
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China
List
No.
Short Title
PFOpose Deletion
Group
Japan Footnote
C 380
Compressors (NES 1380) with
delivery pressure excluding
110 PAC
C 381
Portable hand-held mining and
quarrying power tools (pneumatic,
electric and petrol operated)
C 383
Crushing equipment,. crushers,
x
grinders, pulverizers
C 384
Conveyor belting
x
C 841
Rubber hose and tubing
C'575
Surveying instruments
x
C 385
Core drills - core drill bits
x
C 771
Petroleum asphalt
x
C 635
Semi-finished steel products
x
C.362
Jacks' 10 ton and over
C 430
Steel cable
0.701
Explosives
6.472.
Railway rails
Transportation Function
(1) Intelligences
The trade of Communist China is now estimated to be carried propor-
tionately half by sea and half overland,, largely over the Trans-Siberian
railway. To date, China has not been in a position to make a significant
contribution to the fulfillment of her requirement for near-seas and
ocean-going shipping. The construction of two major vide-gauge rail
lines linking China with the Russian railway system will eventually make
a major contribution to expediting the international overland traffic.
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For the proximate future, this traffic will continue to be limited by
the single connecting East,-West rail artery (the Trans-Siberian RR)
(a) Rail
In order to remove the transportation bottleneck to continued
economic expansion and military maneuverability and support, about 70%
of planned expenditures earmarked for transportation has been allocated
to the improvement and expansion of the railroads. Comrrnud.st. China is
not meeting the requirements for rails specified In recently stepped
up construction plans. During the current plan 6250 miles of track are
to be laid of which 2500 idles represent new lines. Even with the
planned augmentation of equipment manufacturing and repair facilities,
Communist China will continue to import for a number of years locomo-
tives and rolling stock, including semifinished materials, in order to
meet its equipment and traffic goals. While the Biropean Soviet bloc
potentially could supply much of the additional locomotive equipment
required by Communist China, there is little evidence to indicate it
.will in fact do so. The new Soviet 5 -year plan gives considerable
emphasis, for example, to the development and rehabilitation of the
Russian System, and the Satellite .Systems also have growing requirements.
(b) Water
Communist China has some 10,000 ocean going junks with a total
cargo carrying capacity of approximately 1402,000 tons, Some of these
j inks, sampans and fishing vessels have been armed for patrol and coastal
escort duty; others are used as naval auxiliary units, e.g. as radar
pickets, Chinese Commur>i st junks operate largely along the southern
coastal areas and generally represent substantial military transport
reserve capacity.
It should be noted that at present the embryonic and non-ocean-
going Chinese merchant fleet is employed in river and coastal traffic.
Mere is still a dearth of good harbors along the China coast. Of the
hundred or more ports and landings along the coast only a handful. are of
major importance to foreign and domestic traffic. Rather ambitious plans
have been announced, however, for the enlargement of this branch of
transport. The accomplishment of these plans would create substantial
demands for construction items, and storage and distribution systems.
While Communist China does have shipbuilding capacity for some
types of ships, this capacity is now devoted almost entirely to
.ship repair on Chinese and Soviet account, to coastal tugs, barges and
ships, or to naval construction. Decontrol therefore would pernrtit
continuation of Communist China naval construction programs unhairpered.
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increased availability of such items as plate, boiler tubes, boilers,
diesel engines, etc., which have been proposed for decontrol, will
provide considerable aid to Chinese shipbuilding and ship repair
progr u s, and in the case of large diesels alone would obviate the
tortuous overland haul from Western Russia.
(c) Road
The need for vehicles, particularly trucks, will increase. At
present, road transport of the long-haul type is almost entirely absent
in areas served by river, coastal, and rail transport. Ire important
commercial roads represent about 50,000 miles of the 86,000 miles now
open to traffic. Most of the 6,000 miles of new roads built since 1919
have linked remote regions with the existing road system of south-central
China. China has no highways in the accepted western sense.
China) s present production capacity for highway motor vehicles is nil;
production. cannot commence until new plants are built; and operating; for
example, the first Chinese truck might be produced with much fanfare
before the end of 1956; a ubstantial'production is not scheduled until 1960.
In view of the backlog of unfilled delivery commitments and demand -for
motor vehicles of all types within the USSR and some of the satellites,
only vehicles required for ur ;ent military needs and key construction
projects are being made available to China by the rest of the bloc.
strong attempts to procure automotive equipment and parts in free-world
countries are continuing, A. larger consignment of British passenger
automobiles to China in 1951 received considerable notice from the
Communist press.
Included in the list of items proposed for decontrol in this category
are two items covering diesel engines. (Item C-255, Diesel Engines 25 hp
and over. Item, 3256 Diesel engines,.n.e.s. as follows: (a) 300 to 800
hp with rotary speeds of 600 rpm or over; (b~ 800 hp or over, with rotary
speeds of 400 rpm or over; (c) l500 hp or over, with rotary speeds of
200 rpm up to but not including Lj00 rpm). If these items are decontrolled,
all diesel engines except those on IL-I would be available for export to
Conmraianist China.
Chinas s current production and production capacity of diesel engines
is small. Diesel engines have been made in at least three plants in
Dairen, Tsingtao and Shanghai; there are several other plants where
diesel engines could be made on a custom basis. It has been reported that
the largest engine built domestically to date has a rating of about 250 hp,
but it is not known whether it is in commercial production. Smaller
engines have been made for.various applcatt one in agriculture and industry,
but it is doubtful that serial production has been achieved.
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The present Five Year Plan gives little information on China's
program for diesel engine production beyond the statement that experi-
mental production of a diesel engine of 675. hp is to start during the
current plan. This type of an engine would be adequate for powering
small seagoing vessels and small electric power stations. There is no
specific information on the capital investment expansion required to
increase the production of these diesel engines in China.
China will continue to need a wide variety of engines for industry
and agriculture. However, the lighter weights of engines, mostly under
100 hp, are used in the bloc to power heavy trucks and tractors, and
China's plans call for production of 15,000 tractors in 1960. At
present, no such vehicles are being produced in China. It is very likely
that plans for future production of heavy trucks and tractors in China
include the construction of shops making diesel engines for this
purpose. Small diesel engines also will be needed to power such indus-
trial machinery as pneumatic drills, mining machinery, pumps, irrigation
pumps, compressors and portable electric generators. Plans for expansion
of the electric power generating; equipment industry also may include
provisions for making diesel engines. But to achieve a large output of
diesel engines, China will have to make substantial imports of fairly
large foundry and machine shop equipment?
The rest of the Soviet bloc has been producing diesel engines for
many years and has the technical know-how approAmately equal to that of
the free world save in the most advanced experimental types. Some
difficulties have been reported in the production of crankshafts and
high-speed fuel injectors, but in the conventional bloc know-how is
adequate. On the other hand, the supply of diesel engines, especially
marine diesels, has not been adequate in the bloc and engines and parts
have been sought by the European satellites from the western countries.
The tremendous Soviet Submarine Construction Program also places a
heavy demand on diesel production facilities..
The decontrol proposal, if Implemented, would end controls on all
but the very high specialized types of engines and permit export to China
of all kinds of engines needed for general industrial and military uses.
(2) listing of controlled transportation equipment and
propose. -d a ons.
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Trans
por
tation
C~fin
a
Proposed Deletj.on
List
Group
No.
Japan
UK Footnote
A.
RAT L
C 470
Locomotives and locomotive parts
x
0 471
Railway rolling stock and parts
x
C 472
Railway rails
C 266
Equipment for electric power
generating and rectifying
x
x
C 255
B.
mesel engines
WATER
x
x
C 401
Watercraft and important components
x
C 255
Diesel engines, 25 hp and over
x
x
C 509
Ultrasonic,, radar,, and radio
navigation equipment of 3mc or l
ess
x
0 .703
Ships, bottom compositions, anti
corrosive and anti-fouling
-
x
C. 256
Internal combustion engines
x
x
C 266
Electric generating equipment
x
x
C 270
Turbines all types over 300 hp
x
C 275
Water tube boilers 80,,000
pounds - hour steaming capacity
C 430.
Steel cable
C. 405
Steel castings and forgLngs for
marine equipment
C 502
Detection apparatus - ultrasonic
detectors
C 576
Telescopes and binoculars
x
x
C 840
Water-lubricated bearings
7
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CHI a
List
No.
Short Title
Propose
Group
Japan
UK Footnote
C 901
Co
Abaca and sisal; fibres and cordage
ROAD
_ _
C 256
Internal combustion engines
x
C 255
Diesel engines, 25 hp and over
X
C 320
Industrial-typo trucks.and
trailers
X
C 450
Motor vehicles and equipment -
motorcycles, personnel carriers,
station wagons, uti lities, buses,
tractors? trailers, chasi.s,
components, parts, servicing
equipment and materials.
C 140
Containers of the "Jerry can" type
x
Note 1
Attention is invited to the "Communications Group'
a service vital to transportation.
Note 2 - Broad defin;:Ltians such as these tend to cover many of the
specific items not proposed for deletion.
Note 3 See "Rubber industry function" for intelligence on this item.
co Coiiumin_Ccation Function
(1) Intelligence
Communist China's. needs for both wireline and radio communications
systems is critical, At present, coinununications facilities are con-
centrated in the eastern part of the country. Industry and government
consume about 80 percent of the existing commv.n:i_cations service. China's
stated telecommunications policy is (a) to push wireline construction
as fast as possible to insure security of state and military messages,
and (b) to give priority to the national defense, military, and political
tasks of the state since communications facilities are not adequate to
meet other needs.
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. For 954, 37 major construction and expansion projects for long
distance telegraph lines were planned.. The telegraph system itself has
been expanding at the rate of about 11,000 km a year. In 1955 it was
announced that telephone lines would be extended by 12!000 km and that
33,000 switchboards would be added to the telephone system. These
figures give an indication of the magnitude of expansion being undertaken
in wireline communications, and of the importance of electrical, electronic,
communications, metals (i.e. copper and aluminum) and instrumentation
sectors to this task.
C Communist China produces little or no radio or land line communi-
cations equipment. At present one signal equipment plant is under con-
struction which was designed and is being built by East-German tech-
nicians. This plant, scheduled for completion in 1957 3, will manufacture
radio,, telephone and telegraph equipment and some precision instruments.
Projected annual production rate for this plant is almost negligible
in terms of Chinas short-term needs.
At present.$ China is inporting almost all of her requirements in
radio and land line communications equipment. Most of it comes from
the European satellites and some of it from the free world.
Communist China is in critical need of all typos of precision
instruments and control apparatus necessary to satisfactory communication
operation.
(2) Listing of controlled communication items and those
propose or '.econtro"
China
List
No,-
Short 'b, tle
i6po se De .e lo
n
Group
Japan UK Footnote
C 266 Power equipment
C 605 ' Transformer,, choke., laminations
and core assemblies
C 610 Flexible metal tubing X
C 617 Single and multicore electric x x
power cables
C 650 Lead in seniifabrieated and other x x
such forms
9
4~ ~v.M 4~ lv it I.Y,Y
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China
Ii.st
No,
C 501
C 502
C 503
C 5OI4
C 505
C 507
C 509
C 563
C 573
Proposed Deletion
Group
Short Title
Japan ,
UK
Footnote
Telecommuni.cati.on equipment and
x
non-specialized components
including tubes, capacitors,
resistors, transformers? chokes,
coils, antennae and power supplies
Detection apparatus
x
Ionosphere recording automatic
apparatus
'Sub-miniature electronic circuit
x
components
Coaxial electric cable
Photoelectric cells
Radar and radio navigation
x
equipment
Electric or electronic impulse
registers
Quartz crystals
C 561 Bridges for measuring capacitance,,. x
impedance ?- precision type
C 565 Geophysical prospecting equipment
including amplifiers with auto-
matic volume control, geophones,
etc.
C 566 Measuring and testing instruments x x
C 568 PH maters x x
C 570 Oscilloscopes and'parts x
'C-571 Precision, scientific and optical x x
instruments
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C na
List
No.
Propose Ile a on
Japan
C 577
Voltmeter,, ammeters and m3.cro-
ammeters
C 579 X-ray tubes 1000 PKV and over
C 580 Absorption meters - infra-red
C 582 Electrometers
C 585 Oscillographs, recording
Group
Footnote
I/ The Japanese propose decontrol , under the definition of C-501, of
The following telephone and telegraph (landline) equipment; (i) carrier
frequency telephone terminal equipment operating at 10 kc/s and under
(3-7 channel equipment); (ii) intermediate repeater and amplifier
equipment; (iii) parts and subassemblies; (iv) automatic, magnetic and
battery switchboard equipment; (v) inter-phone systems; (vi) toll and
.switchboard cable; (vii) bare wire line; and (viii) power supply line.
This equipment would give Comummist China a modern efficient telephone
system.
The following telegraph equipment would be deleted: (i) all voice
frequency telegraph terminal equipment; (ii) teleprinters; and (iii) teletype
equipment (the latter operating at 200 words or less a minute)' this equip-
ment, would give China a modern, efficient telegraph system.
All radio transmitters, subassemblies, and components, except the
specialized military types listed under International List Item 1517,
would be decontrolled. Acquisition of this equipment would give China
radio broadcasting facilities equal to those in free-world countries,
li.
11~r1~..`~,agl1.
~~YA~~~~'NSY9
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0 A
A
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SECT
L3.
INUDSTRIAL FUNCTIONS
A. The Electric/Electronic Industry
(1) Intelligence,
(Also see "Communications" and "Instrument/control
apparatus")
Communist China has now the greatest need for equipment for
generating, transforming, rectifying and converting electric current,
for its transmission and distribution; for control gear and access-
ories; for substation equipment; and for parts for all of the fore-
going.
It is reported that the Bloc production of all categories of
coaxial cable has been, and continues to be, less'than demands with
active attempts to import still continuing. The principal applications
of such cables, as would be covered under C-505, are radar and military
or quasi-military communications sytems, particularly at the very high
frequencies and above.
To reach industrial production goals, the following new factories
are scheduled to be built in the 1955-1961 period: 2 electric generator
factories, 1 electrical equipment factory, l electric who and cable
factory, 1 carbon brush factory, 1 electrical- equipment renovation
factory, 1 low-voltage switch factory, and 1 transformer factory. Thus,
a whole new industry is to be created. China cannot build. up this
industry without large imports and technical aid. Even if the 1960
goals are met, China's capacity to produce electric/electronic equip-
ment will be modest in terms of the gross needs of the economy.
The proposed deletions would provide Communist China an
opportunity to buy electric/electronic equipment which would materially
assist (and furnish relief from demands on other Bloc countries)
Communist China to swiftly construct, service and maintain indispen-
sable functions of its growing economy and military potential.
Listing of controlled electric/electronic items and
proposed deletions.
See electric/electronic items listed under
Section "Instrument control apparatus"
not repeated in this section.
12
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Ci1u T
Item
Group
96. Short title
UK
Footnote
C-201 Electrical components for ele
ctric furnaces
C-210 Welding machines
0-211 Electrodes
C-260 Electric motors
C-266 Power equipment
x
3
C-354 Machines for applying outer c
onductor
of coaxial electric cables
0-355 Cable making machinery
C-386 All tools/dies incorporating
diamonds
0-501 Telecommunication equipment
x
C-504 Sub-miniature electronic circ
uit components
x
0-505 Coaxial electric cable
C-509 Radar and Radio navigation eq
uipment
x
C-617 Single and multicore electric
power cable
x
x
?C-610 Flexible metal tubing
x
See - "Commanications"
See - "Electric Power Production and
Distribution" footnote
:A
I
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cncn pR
~~1f
B. Electric Power Production and Distribution
(1) Intelligence.
Currently China is severely short of electric power. The
development of electric power and of an industry to produce electric
power equipment are among the principal goals of China's present plan
and the cornerstone of the future industrial development of the
country.
China's small electric power generating capacity, consisting
of electric power generating machinery supplied by many different
countries (Germany, Japan, U.K., U.S.), suffered heavy damage during
World War It. It was partly dismantled by invading Soviet armies
which took some installations as booty. Some of the latter equipment
was subsequently returned, but in poor condition. Finally, during
the ensuing civil war between the Nationalists and the Comrnunists
still further damage was inflicted on the power capacity. Some
of the stations were rebuilt after 194 but the equipment remains
obsolete and in poor condition.
Communist China's present (1955) installed electric power
generating capacity is approximately 3,000,000 kw and is concentrated
in a few industrial centers in the East and in southeastern Manchuria.
This is approximately equal to the electric power generating capacity
of North Carolina. Most of the stations are small, a few exceeding
15,000 kw in capacity.
The much revised first Five Year Plan now calls for an
addition to installed electric power generating capacity of 1,060,000
kw, an increase of approximately 33 percent, to bring total installed
capacity up to about 4,060,000 kw by the end of 1957.
Specifically, the current Five Year Plan calls for the
completion of 54 new electric power stations, of which nine are to
be designed by Russian engineers. The majority of the stations will
be thermal stations. According to Chinese announcements, work will
also begin on another 38 stations, apparently of larger size, which
are not scheduled for completion until later.
Since China's plans call for development of industry
scattered throughout the country's interior, where there is little
or no electric power at present, the current plan emphasizes small
and middle sized thermal stations (5,000-15,000 kws) with equipment
of the type that has been proposed for decontrol. The full harnessing
of China's vast hydroelectric power potential and the control of
rivers awaits further industrial development of the country. However,
six hydroelectric power plants are being constructed or renovated at
present which will require equipment of about 50,000 kw.
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 Approved For Release 2000/09/13,:, CIA-RDP64-00014A000100040003-5
China has made persistent and vigorous attempts to contract
with free world suppliers for complete power units and spare parts.
For example, contracts were concluded with Brown-I3overi (Switzerland)
in 1954 for one 25,000 kw power plant and five other plants reportedly
with a capacity of 10,000 kw each. Other contracts with free-world
suppliers have been signed or are in an advanced stage of negotiation,
with actual deliveries contingent only on the deletions proposed*
The continuing series of requests to COCc /CHINC0M (by U.K.,
Belgium, France, Japan, and West Germany) for permission to ship
replacement parts for electric power generating equipment to China
reflects China's continued dependence in this diversified category
on free-world suppliers. Owing to the multi-national origin of
installed equipment, free-world parts are especially needed to
reclaim, rehabilitate, or maintain aging plants installed in the
course of the industrialization following World War I.
A relaxation in COCOM/CHINCOM controls on this equipment
might not only remove a major bottleneck for Chinese procurement of
equipment and parts, but might cause China to revise her power and
consequent industrialization goals upward. In any event, the demand
for free-world equipment and parts is strong and voluminous and is
expected to continue for at least two decades.
The decontrol proposal, if implemented, would decontrol
some of the critically needed non-ferrous metals in China. The
decontrol of electric cable, electric motors, power generating
equipment, etc., for example, would tend to nullify the existing
controls on copper, the embargo of which has been an objective of
the U.S. economic defense policy for several years.
From a strategic point of view, decontrol of electric
cable would be undesirable also because it would permit a rapid
improvement in China's weak communications system, and would reflect
a direct net contribution in the military operations field.
(2) ListinZ of Controlled Electric Power Production
and Distribution Items and Proposed Decontrol.
Item
No. Short Title
Proposed Deletion
Group
Footnote
C-131 Pumps - Designed to operate at temperatures x
of 220 F. & over
Designed for working pressures of
75 PSI and over
C-117 Water Treatment -- equipment
Japan _ - UK
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Proposed Deletions
No.
Short Title
Japan
UK
Footnote
Evaporators
0-133
Valves and Cocks - Partially or wholly
C-141
integral with a control. mechanism
designed for working pressures of 300
or more PS I
Gauges - for measuring pressures over
1470 PS I
0-250
Condenser Tubes - (seamless cupro-nickel)
C-256
Internal Combustion engines
x
x
C-255
Diesel Engines 25 HP and over
x
x
0-260
Electric Motors
x
x
C-266
Electric Generating - transforming,
C-266
rectifying, converting, transmission,
power distribution, control gear and
accessories
Substation Equipment
x
x
x
1
0-266
Parts - for above two items
x
x
1
C-266
Boiler House Plant
x
x
0-270
Turbines - All types over 300 HP
x
C-275
Water-Tube Boilers - 80,000 pound-hour
C-354
steam capacity
Machines - for applying outer conductor
0-380
of coaxial electric cable
Blowers - with capacity of over 35,000
cubic feet per minute
x
C-395
Precipitators
x
C-617
Single or multicore electric power
0-630
cable (RTES)
Aluminum - wrought or worked by
x
x
rolling, drawing
16
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Proposed Deletion
Item
Group
No.
Short Title
Japan
UK Footnote
0-650
Lead - sheet, strip, pipe and tube
x
x
C-384
Conveyor belting
x
0-383
Crushing equipment, crushers, grinders,
x
pulverizers
0-561
Bridges for measuring capacitance,
x
x
impedance, etc.
C-571
Precision - instruments
x
x
C-577
Voltmeter, ammeter and microammeters
x
x
0-582
Electrometers
x
C-566
Measuring and testing instruments
x
x
This broad definition is interpreted to also include items
C-384, 0-131, 0-117, 0-121, C-133, 0-141, 0--250, C-275
C-380, C-395, C-383, etc. The broad definition of C-260
proposed for decontrol would, if approved, remove effective
control of the entire function.
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C. Instrument ; and Control Apparatus. (Mannfacturn of)
(1)
Tntelli gence.
Communist China is in critical need of all. types of precision
instruments and control. apparatus necessary to the build-up of a
modern industry and to the production of armaments, weapons, planer,
military electronic devices, engines, of all types, chemicals and
explosives., the generating of elec?.ri, r. power, eta:. As Communist
Cili.na industrial!zes, it is reasonable to believe that, the Chinese
will equip their industry with as much precision, meas!1r ng, testing
and automatic equipment as feasible.
At the present time, Communist China cannot build precision
instruments or eler.tronic automatic equipment. Neither the skilled
labor nor the production experience is avRilable and it takes decades
to develop. The U.S.S.R. and the European satellites are not in a
position to furnish such equipment to the Chinese since by their on
admission a critical shortage of these instruments exists in their
own countries, and since only a beginning has been made in the
development of automatic equipment for us+, in their on industries.
It is believed that if the devices covered by embargo
become available to Communist China, they will plan for substantial
purchases of this equipment from the free-world over the next 20 to
30 years.
(2) Listing of controlled instruments, components and control
apparatus items and those proposed for econtro1.
SECTION A - EQUIPMENT PROLUCTS
Proposed e e ions
Item
Number Japan Uh lbotnote
r,-l 41
OZ~~;;es
C-502
Deter; ta, on apparatus
c-507
Photoelcct-ric cells
C-560
Balances
0-561
Bridges
c-563
Impulse registers
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 Approved For Release 2000/O IA-RDP64-00014AO00100040003-5
Tten
Number
Short Title
6'P g?
Japan
De e i on s
UK Footnote
C-564
Electronic heatt.ng instruments
x
C-565
Geophysical equipment
x
C-566
Measuring and te3ting instruments
x
x
C-571
Precision, scientific and optical
instruments
x
C-567
Metallurgical microscopes
x
x
C-568
PH meters
x
x
C-569
Optical curve generators
x
C-570
Oscilloscopes (cathode-ray)
x
C-572
Pyrometers
x
x
c-574
Spectrographs, spectrometers,
monochrometers
x
x
C-575
Precision Theodolites (surveying
instruments)
x
x
C-577
Voltmeters, anuneters, microamreters
x
x
C-579
X-ray tubes, 1000 P.K.V.
x
C-580.
Densitometers
x
x
C-582
Electrometers
x
C-583
Leak-detecting instruments
x
c-584
1 .c ro-hardness testers
x
x
C-585
Oscillographs
x
c-586
Strain gauge equipment
x
x
c-620
Platinum themocouples
x
Footnote 1 - Broad definitions such as these could be interpreted to
cover other items proposed for decontrol and also items
which actually have not been proposed
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SECTION B - PT TXJCTS ESSENTIAL `[C) THE PROTUCTION OF
EQUIPMkIVT LTSTET) UNDER SECTION A ABOVE.
?" Propose -De:fe on
Ttem
Number Short Ti tle Japan UK Footnote
C-910 Raw optical glass
C-651 Lithium (for high-conductivity copper)
C-655 Mercury
C-658 Molybdenum
0-663 Strontium
C-667 Tungsten (processed)
C-620 Platinum (wire-tube)
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EC[ET
D. Chemical Industry
The essentiality of chemicals in any picture of national prepared-
ness (or military potential) has dictated great increases in productive
oapaoity since World War II due to technical advances in modern weapons.
The complexity of the chemical industry and the dependence of other
industries upon it have led to the following two part appraisals
Part I
Chemical Process Industry
Includes manufacturing entterprises, involving large capital in-
vestment, which produce inorganic and organic chemicals.
(1) Intelligence.
The current shortage of chemicals is one of the main vulner-
abilities of Chinars economy. Unconfirmed reports indicate that other
Bloc countries have restricted exports of chemicals to China to con-
serve such products for use elsewhere, The current Red Chinese plans
call for almost a doubling of the output of-basic chemicals.
China currently produces practically no chemical equipment.
Reports indicate that some chemical producers have had to resort to
crude and primitive improvisations to maintain production.
Current plans for increasing the output of chemicals call
for the construction and renovation of five chemical production plants
with Russian assistance. While no specific information is available
on the extent of the Russian assistance, a high Chinese official has
stated that only a part of the equipment needed for those plant pro-
jects will actually come from the USSR.
The USSR has already encountered difficulties in fulfilling
specific delivery commitments for chemical equipment to China. It
has been reported that a Chinese delegation to the USSR was referred
to a satellite country as a source of equipment for a chemical factory.
The satellite country also was unable to furnish the desired machinery
without western technical assistance.
There have been persistent efforts by the Chinese to obtain
chemical production equipment from the free world. A conspicuous
example is China's recent effort to procure through clandestine
channels a water treatment plant of a type that the Japahese'. have now
proposed for decontrol.
Items proposed for decontrol would greatly assist China in
building up production facilities to meet its deficiencies in
explosives, industrial chemicals, rubber products and other essential
requirements.
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The current Chinese Five Year Plan also calls for the building
of a'chemical industrial. machinery and repair plant and an oil-refining
machinery plant. When these two plants are completed, probably only
in 1960, the country will be able to start production of some of its
own chemical equipment of the simpler types. However, the plans are
not given in detail and it is apparent that China is faced with the
creation of an entirely now industry. In this task it also will be
almost entirely dependent on imports of technical, know-how as well
as equipment. In addition the country will have to learn to produce
(or will have to import) the proper types of corrosion-resistant raw
stock (steel, ceramics, glass, etc.) and precision-controlling equip-
ment used in the production of chemical equipment and products. The U.S.S.R. and the European satellites, owing to internal
shortages, cannot easily supply China with the required quantities;
of chemical equipment incorporating corrosion-resistant materials and
advanced know-how. These materials are in short supply in the entire.
Bloc.
11 `I,1~~ly
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Item
No.
(2) Listing of controlled, chemical a ui ment and comuonents
with ,proposed dolettons. (Part I
C-101 Acid concentrating equipment
C-102 Ammonia oxidation equipment
C-104 Liquid/liquid solvent extraction equipment
C-107 Driers
0-109 Hydrogen-producing equipment
C-110 B drogenation.equipment
C-111 Methanol oxidation equipment
C-112 Nitrators
C-113 Chemical process vessels
C-114 Gas liquefying equipment
0-115 Sulphur extraction equipment
C-116 Sulphur burners
C-117 Water treatment equipment
C-118 Heat exchangers
C-119 Processing equipment operating at over 200 PSI
C-120 Distillation equipment
.C 121 Evaporators x
0-131 Pumps
0-132 Vacuum pumps x
0-133 Valves and cocks
0-140 Containers x
23 SECRET
Proposed Deletion
Group
UK Footnote
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 inr
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Item
No. __-Short Title
0-141 Gauges
C-143 Pipe and tubing
0-151 Petroleum refining equipment
0-250 Condenser tubes
0-303 Crucibles (graphite)
C-304 Separators
C-583 Leak-detecting instruments
0-620 Platinum (gauges)
0-383 Crushing and screening equipment
C-395 Precipitators
0-571 Precision instruments
0-103 Antibiotics production equipment
C-376 Air conditioning units
Items under this footnote run the gamut of essential
components required in the production of controlled
chemicals. It will be noted a number can be
interpreted as being covered by equipment defined,
under 0-101, 102, 104, 109, 110, 111, 114, 151, etc.;
on the other hand decontrol of the proposed items
would provide the means of constructing facilities
such as those complete integrated units identified
as C-101, etc.
24 SECRET
Proposed Deletion
Group
Japan-- - UK Footnote
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 Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
Chemical and Allied Products
Includes basic chemical products manufactured by predominantly
chemical processes. Such products are not generally cold as such
to the ultimate consumer, but rather to other manufacturers or
formulators.
Chemicals such as acids and alkalies, salts, organic compounds,
solvents, gases, pigments and dyes are used, (1) by the chemical
industry itself to produce, drugs and medicines, dyes, explosives,
fertilizers, paints, plastics, synthetic fibers, synthetic rubber,
etc.; (2) other industries in the production of (a) durable goods
such as electrical equipment, transportation equipment, machinery,
hardware, etc., and (b) non-durable goods such as food products,
textiles, rubber products, paper products, petroleum products, etc.
The Nearity of end uses of basic chemicals and compounds make an
accurate evaluation of a "hard core" military potential grouping
impractical. For example, calcium carbide (proposed for decontrol
by Japan) is a raw material for plastics, insect sprays, vitamins,
aspirin, synthetic fibers, synthetic rubber, acetylene gas, eta.
(1) Intelligence.
China's present production of basic chemicals to meet the
military, industrial, and agricultural needs of the country is woefully
inadequate as indicated under Part I above. The development plan of:
China calls for approximately doubling the 1955 output by 1960, as
indicated by the following tables
PROJECTED PRODUCTION OF SELECTED CHEMICALS
IN COMMUNIST CHINA
1,000 metric tons
Co nodity
1 O
Calcium Carbide
15.0
30,0
Synthetic Ammonia
62.0
112.5
Refined Naphthalene
5.300
8.200
Chlorine
N.A.
N.A.
Refined Benzol
15.0
28,8
Toluoi
3.8
5.8
Xylol
1.300
2.100
Phenol
0.300
0.500
Cresol.
0.700
1.100
Caustic Soda
44.5
65.0
Sulfuric Acid
2
67.0
435.0
Soda Ash
3
65.1
690.0
Nitric Acid
20.6
40.0
Ammonium Sulfate.
3
60.0
600.0
25 T
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 Approved For Release 2000/09/13 : 6ld-RDP64-00014A000100040003-?
Even if the plans can be met (which has been described as
questionable), China's growing industry win have a large need for
many different typos of chemicals.
At the present time, the rest of the Soviet Bloc is not in a
strong position to export chemicals to China. In many basic chemicals,
particularly in sulfuric acid, there is no exportable surplus in the
Soviet Bloc.
Communist China has increased its reliance on the free world
for a supply of chemicals. Chemicals have been sought in many trade
agreements with the free world. Dyes have figured as one of the
preferred items in clandestine procurement efforts and some continue
to command a premium price. Chemicals also figured prominently in'
CHINCOM exceptions.
The only petroleum products or derivatives which have been
proposed for decontrol are parfffin wax and petroleum asphalt.
Certain forms of petroleum wax are included in the International
Atomic Energy List, and therefore must be continued under control for
China as well as for other Bloc areas. When petroleum asphalt was
proposed for deletion from IT,-III, its addition to the Special China
List was important because Chinese production was believed to be
negligible or nonexistent and procurement attempts from the free
world were considered to be substantial. Quantities of asphalt are
believed to have reached Communist China by clandestine means.
(2) List of controlled chemical and allied products
and those which have been proposed for decontrol
The following listing presents the result of-an intelligence
evaluation.of the supply position of the items concerned.
Item
No.
Proposed Deletion
Footno
Jayan UK
Group
te
0-757 Vanadium compounds
0-730 Glycerine
1'
C-738 Pariffin wax, etc.
2/
21 Should be redefined.
26
SECRET
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 'Approved For Release 2000/09/13 : A
64-00014A000100040003-5
Item rroposea Veietlon
No. Short Title Ja n Group
UK Footnote
C-742 Permanganates
0-744 Phosphorus
C-752 Sodium cyanide
C-771 Petroleum asphalt
C-717 Calcium carbide
3766 Polyvinylbutyral
0-702 Flotation reagents, synthetic organic
C-715 Benzene or benzole
C-716 Bismuth compounds
C-718 Carbon black
0-719 Cellulose, ethyl
C-721 Chlorates; and preparations consisting
mainly thereof.
C-723 Cresyloo acid including para-meta and
ortho-cresol and xylenol
0-729 Glycols and their derivatives
C-740 p-phenylenediamine
C-756 Tricresyl phosphate
3753 Phenol
3761. Sulphur
C-706. Rubber-compounding agents
C-714 Barium chromate
C-724 1:2 Dibromoothane (ethylene dibromide)
C-727 Fluorinated hydrocarbQnd, as defined
C-734 Methyl-isobutylketone
27
SECRET
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 'Approved For Release 2000/09/14E I4RDP64-00014A000100040003-5
Item Proposed Deletion
No. Short Title Group
0-736 Monoohlorobenzene; mononitrobenzene
0-737 Nitric acids ammonium nitrates potassium
nitrate
C-741 Perohlorio acid; and its salts
C-745 Phosphoric acid catalyst
C-746 Pnthalio anhydride; and phtalio esters
(except alkyd resins)
C-747 Polyisobutylene
0-751 Silioon(e) organic compounds, n.e.s.,
as defined.
0-753 Sulphuric acid:
C-754 Styrene
0-787 Liquid gum inhibitors
C-701 Explosives
28
SI-Colu,
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 5a1' , F. c
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E. Rubber Products Industry --
(1) Intelligence.
China's production of rubber products is inadequate. In
facts, it has been the target of considerable criticism and even
ridicule. With a few exceptions tires are produced by handicraft
methods at small plants. The quality is poor. As a results, tires
are an import item. Under China's plans of developments, the domestic
output of rubber products is to be expandeds, although this expansion
can only take place if additional machinery is obtained from abroad.
Rubber products are not in ample supply in the rest of the
Bloc, which is unable to furnish such products to China except by
seriously neglecting commitments in other Communist areas. There
are unconfirmed reports that other Bloc countries have restrioted
exports of rubber and rubber products to China as a conservation
measure.
There have been unrelenting attempts to procure from the
free world tires of all types and sizes through clandestine channels;
premium prices have often been paid.
It is believed that a substantial market for tires of all
types will exist in China for many years to come. The motor vehicle
park of the country is scheduled to increase considerably. The poor
quality of Chinese roads will require for many years to come a greater
than average replacement of tires. Even considerably increased
indigenous production will continue to be outdistanced by demand for
the next decade. In substances, therefore, the Japanese and UK proposal
would effect the decontrol of most types and sizes of tires for
motor vehicles, including may useful for military purposes.
Rubber (product) manufacturing machinery is not currently
produced in China and it is questionable if the European Soviet
bloc can supply China with its schedule of requirements. The
demand for this equipment from free world sources is likely to be
strong if controls are removed.
(2) Listing of controlled equ3. ent essential to the rubber
ustX7 basio materials consumed and res tan finished
jwoddu~,a~a" as we as Lose proposed for decontro .
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 Approved For Release 2000/09/1
China
List
Proposed Deletion
Short Title Japan UK Footnote
C 718 Carbon black
C 350 Carbon black manufacturing plant
C 330 Calendars
C 331 Masterbatch mixers
C 332 Tire-curing presses
C 820 Tires and tubes
C 706 Rubber-compounding agents
C 803 Masterbatch
C 805 Rubber scrap and Rubber (3801)
C 802 Rubber solution
C 801 Synthetic rubbers
0 840 Rubber water-lubricated bearings
C 841 Rubber hose
A,+k P64-00014A000100040003-5
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 Approved For Release 2000/09/13 : tCI kl RDP64-00014A000100040003-5
F. Fuel
(Solid, liquid,, gaseous)
(1) Intelligence.
Current. Chinese production of mining-machinery is inadequate
as regards both quality and quantity, Considerable progress has been
made by China in restoring a number of small (and heavily cannibal.
ized) plants and some production of simplest type mining machinery
has been resumed, but the country is still faced with the creation
of virtually a new industry. There have been numerous reports of
waste and difficulties in the production of machinery and excessive
breakage and other shortcomings in the use of it. The current supply
of machinery is insufficient to permit the country to carry out the
very ambitious expansion of the production of coal, iron ore, non-
ferrous metal ores, cement and other raw materials projected for the
current Five year Plan, and for expansion of exportable surplusages.
Several, plants producing mining machinery are scheduled for
renovation during the current Five Year Plan. Furthermore a new
mining machinery plant, designed by the USSR, is to be completed
in China in 1960 when production is scheduled to begin at that
plant. This will be the first indigenous source of supply for more
complex types of mining machinery,
Mining machinery of all types has been manufactured in
other parts of the Soviet bloc for many years. While the bloc
supply has not always been adequate, particularly with regard to
crushers, it is believed that machinery of the simpler types could
be furnished China in limited quantities_-_
Gina has sought to obtain mining ni chinery from the
free world for several years. Actual contracts have been concluded
for the delivery of such machinery as soon as present COC0WCHINCOM
restrictions are relaxed.
The-country currently produces only a part of the crude
oil and refined products that it needs. The delivery of petroleum
products to China by other members of the bloc is a costly and
difficult operation (running of the blockade by sea or costly
railroad transport and transshipment with empty. tank cars returning
for distances of thousands of miles).. China is scheduled to expand
production of refined products during the current Five Year Plan,,
especially when full production' begins in the Yumen oil fields,
Currently China is virtually unable to produce the geological'
drilling, prospecting or oil'refining equipment or accessories
that are required for this development, ,--) /\
SECRET
Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
 Approved For Release 2000/09/139 1 =RDP64-00014A000100040003-5
There has been an increase in the contribution of the
petroleum industry to the economic potential of Communist China
during the past five years. The output of roflned products,
only 400,000 tons in 1951, reached about 736,000 tons in 195!i.
This supply.0 however, provided only one-third of the country's requirements.
1jr The crude oil resources of China will support increases
in production,$, but transportation difficulties -- both great
distances and lack ouipment -. together with a shortage of
he
n ex
a
1 on 01
1c is
o restr
li ti
.
p
.a...
c v
o
es, .i.I~Jpos
~~ ro3.1I ing fac1.
that petroleum refinery output
bssUtlit
a
i
Th
y
p
ere
s
industry.
4 _
.,..'1?a s
n he i . of operati ona) m a y reach 1_000.000 tons by - t 4
(
y
n
ld
d
d
t
upo
n
epen
en
/ ~ 1960. Even then, however, %.41ILLLta wou a emaa / / imr orts for a substantial part of her growing requirements of
ao petroleum products.
The rest of Soviet bloc produces a sufficiently large 'Y
, y amount of petroleum products to furnish China' s present restricted ?
needs, However, here again the problem of transportation is one
that presents very considerable difficulty. Kerosene and gasoline "'"1no,
are -a preferred item in illicit trade with free world supplies at
the two main Asian-ports - Hong Kong and Macao. Moreover, Russian
? I .LLLS, C:c-j-M, V4 J.A.WL %4%1. ?va, vr+. w v...----0 ------ -- - ----- __, -v '___ - I
run of several thousand miles, except for those shuttling from 4t c-4
,,x,._..
Far East Soviet dumps. POL is available only at very considerable
^1
economic cost to China as well as the rest of the bloc. 1^'
(2) Listing of controlled fuel items and those proposed C WA+
Chi China
Fropose
Dee
on
Li. st
Group
No.
Short Title
Japan
UK
Footnote
Section A
Exploration, drilling and other
basic producing operations
0-575
Surveying instruments
c-565
Geopbysical prospecting equipment
x
0-385
Core drUls and core drill bits
x
0-270
Turbines
.C-260 -
Electric motors
x
1
3265
C-256 -
Diesel internal combustion engines
x
x
3265
32 S. E G llI
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 Approved For Release 2000/09/13 : 1 RbP64-00014AO00100040003-5
uni.na
List
Group
No.
Japan
UK Footnote
C-266
Power equipment
0-701
Explosives
C-131
Pumps
C-380
Compressors and blowers
3809
C-381
Portable hand-held power tools
0-617
Power cables
C-841
Conveyor belting
C-351
I.ning equipment and machinery
C-1170 -
Mine locomotives/parts
3171
0-472 -
Rails
x
x
3477
C-1430
Steel cable
C-321 -
Civil engineering and building
x
x
3323
equipment
C-383
Crushing equipment
x
C-717
Calcium carbide
x
C-635
Iron and steel products
l~ Also used in the following section.
FUELS - SECCON B
REFINING AND PROCESSING
33
Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
 Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
na
Propose e- T
on
List
No.
Short Title
Japan UK
group
Footnote
C-151
Petroleum refinery equipment
C-120
DIstillation equipment
C-121
Evaporators
C-132
Vacuum pumps
C-250
Condenser tubes
C-110
Hydrogenation equipment
C-1014
Liquid/liquid solvent extraction
C-119
equipment
Processing equipment operating
C-117.
at, pressures over 200 p j.
Gauges
C-266
Biel gas plant
C-ar09
C-114
Hydrogen producing equipment
Gas liquefying equipment and
C-118
equipment for handling liquefied
gas
Heat exchangers
2
C-110
Contai ner s
x
2
C-583
Leak detecting instruments
2
C-620
Platinum products
x
2
C-143
Pipe and tube
C-133
Valves and cocks
0-5714
Speotro-instruments
2/ See Intelligence in relation to;
a. Instruments and control apparatus
b. Chemical equipment
c. Chemicals
34 E9T
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 Approved For Release 2000/09/13 : A 64-00014A000100040003-5
G. The Metallurgical Industry
Part I`
Basic extraction and prooessinn
(1) Intelligence
An early plan to produce 10 million tons of steel in 1962,
has been revised downward for reasons unknown. The most recent realistic
estimates of pre Plan, current and likely future production is given in
the following tablet
RECENT AND PROJECTED PRODUCTION OF FERROUS METALS
IN COMMUNIST CHINA
FOR SELECTED YEARS 1952 1960
millions of metric tons
,Sateria]
1932
1955
.1260
S
4,'-
S
Pig iron
1.9
4.1
S.6
Crude steel
1.4
2.6
3.8
4-515-
Finished steel
1.1
1.9
3.0
4.2
The planned expansion calls for a great deal of capital
equipment which China cannot provide indigenously, for example: 6 auto-
matic blast furnaces; 3 modern steel smelting plants; 16 steel rolling
mills; and 4 new fire refractories plants.
At the present time China is not self-sufficient in iron
and steel products and imports perhaps 500,000 tons of steel and steel
products per year. As steel products are not plentiful in the export
sense in the rest of the Soviet bloc, the needs of Communist China
cannot be satisfied from this source. Exception requests in.CHINCOM-
COCOM have been substantial. Significant amounts have been obtained by
transshipment and through clandestine channels.
The text of China's Five -Year Plan recognizes that the
non-ferrous metals industry is the "weak-link" of China's heavy
industry; the development of resources and production facilities of
these metals is one of the important tasks of the current plan. An
emphasis is being placed not only on modernization of the existing
mines and opening up of new ones, but also on geological exploration.
35
EGRET
Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
 (2) Listing of controlled metallurgical extraction
and processing eauixiient with Proposed deletions.
f'_.
Approved For Release 2000/09/13: .P64-G0"0'14A000100040003-5
Item
N?s-
Proposed Deletion
Group
Japan: UK Footnote
0-565 Geophysical prospecting equipment
C-385 Core drills and core drill bits
C-266 Power equipment
C-701 Explosives
0-131 Pumps
C-380 Compressors and blowers
C-381 Portable hand-held power tools
C-384 Conveyor belting
0-841 Hose
C-351 Mining equipment
3323 Power operated excavators
C-470 Locomotives
C-471 Rolling stock
0-472 Rails
C-430 Steel cable
C-321 Engineering and building equipment
C-383 Crushing equipment
C-201 Electric furnaces
C-211 Electrodes
C-301 Foundry plant
x x
x
36 ECP
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 Approved For Release 2000/09/1 3 L I RDP64-00014A000100040003-5
Short Title
Proposed Deletion
C-302 Blast furnace equipment
C-403 Graphite crucibles
C-304 Electrostatic separators
C-305 Sintering equipment
C-306 Tinning units
C-315 Hand-chrome plating plants
C-316 Metal-spraying equipment
C-320 Materials - handling equipment
C-395 Precipitators
Part II
Group
IIK Footnote
Minerals and Metals
Includes basic minerals and metals not generally sold as such to
the ultimate consumer, but rather to other manufactures and fabricators.
(1) Intelligence
The ferrous metal items proposed for decontrol by the UK
and Japan include some products which Communist China produces in very
limited quantities and others of which Chinese output is of inferior
quality. A sufficient supply of iron and steel products is basic to
any industrial expansion program as well as to mobilization plans.
For example, such products are needed for ship repair, steam boilers,
and construction of factories projected under the current Chinese
Five-Year Plan.
China has sought to obtain copper, aluminum and several
other nonferrous metals and their products from the Satellites, from
the USSR,and through clandestine sources from the free world. Premium
prices have been paid for some of these Items.
The rest of'the Soviet Bloc is also critically short of
copper, is currently attempting to import significant amounts of
mercury, aluminum and bauxite.
Commodities of high production cost in the Bloc, as
compared with the US include most nonferrous metals and minerals,
coaxial cable (made of copper, steel, lead, etc.), magnetic materials
37
am,
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 Approved For Release 2000/09/13 : GhJ 64-00014A000100040003-5
(cobalt, etc.), aluminum, cobalt) columbium, copper, mercury,
molybdenlm, nickel, and bismuth. These high Bloc coats are believed
to be explained by low-quality ores, inconvenient geographic locations,
low rate of capital investment and relatively inefficient use of machinery.
Graphite crucibles and graphite to make crucibles are used
in the making of fine grade tool steel, and aluminum. Graphite is also
used to make electric motor brushes, as a lubricant, in paint and in
pencils. It is treated hero as one of the inputs for the metallurgical
industry because of the strategic significance in this application.
China's current supply of graphite appears to be inadequate.
(2) List of controlled minerals and metals and
those which have been Proposed for decontrol.
Item Proposed Deletion
No. Short Ti+9
0-661
C-670
C-62o
Potassium metal
Zirconium: metal and compounds
Platinum products
C-630 Aluminum or aluminum alloys
C-635 Iron and steel products
C-643 Ferroohrome
C-655 Mercury and its compounds
0-658 Molybdenum compounds
C-660 Nickel catalysts
C-662 Sodium (metallic)
0-664 Sulphur-bearing pyrites
C-668 Vanadium
C-641 Cadmium
C-663 Strontium
0-665 Tin
C-666 Ferrotitanium
C-667 Tungsten
38
Group
Footnote
Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
 Approved For Release 2000/09/13 :'t1RN-P64-00014A000100040003-5
Item
Proposed Deletion
Short Title Group
Japan Footnote
0-651 Lithium (except metal, oompounde, ores
and concentrates included under IL A-35)
Note: It is the US position that Item C-651
is oovered by International Atomic
Energy List Item 35.
39
EC T
Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
 Approved For Release 2000/09/13 : GiA bP64-00014A000100040003-5
Part III
ENGINEERING (FABRICATION) EQUIPM1,21T
(1) Intelligence.
Machinery is needed by Communist China to develop production
of other machine tools as well as to develop production of critical
components of such end items as freight cars and locomotives, tractors,
motor vehicles, general industrial equipment and military items, for
which it is now dependent on outride sources.
The success of China's five Year Plan to a considerable
extent will depend on the availability of machine tools which, in
the long runs will depend on the completion of a number of key plants
on schedule. It is also believed that the quality of China's machine
building will be largely dependent on the availability of technical
and material aid extended to it by the rest of the Soviet Bloc.
Even when present plans have been completed, China will continue to
depend on imports of many kinds of metal working machinery for many
years to come.
At the present time, most of the machinery suggested for
decontrol is either not being produced in China or is produced in
small quantities and in very limited sizes; currently, only about
70 types are being built, many of them reflecting significant
shortcomings persisting in.the machine tool industry. All of the
drilling lathes produced in the first quarter of 1955, numbering
380, were returned "due to wrong procedures in manufacturing; the
item of wasted parts alone cost 1.2 million yuan".
The machine tool production of the rest of the Soviet
bloc is very large in terms of numbers and value. Certain types of
tools, however' are in short supply - particularly metal - forming
machines such as presses and precision casting machinery. Some
types of grinders are also in short supply. In the general subgroup
of metalcutting machinery., however, the Bloc is in a fairly strong
position to fill China's needs with a minimum of inconvenience,
although not in all types.
Some metal cutting machines are being exported by the
European satellites to some underdeveloped areas as part of barter
arrangements and for propaganda purposes.
Data on over-all imports of machine tools into Communist
China are not available. A recent report states that China has
placed an order for 2,000 grinders in a western country (non-COCOM
member). These machines were of the small type which would be
Io
nff
Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
 Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
useful in a garage or a maintenance shop. The value of the order
is not known but if it is assumed that each machine would be worth
$,,500 (v i ch Is a minimal figure),, the total order would amount to
L million,, making it one of the largest placed recently.
Currently bearings have boon sought from the free world
through legal and other sources. They have been a preferred item in
clandestine trade. Bearings and parts of all types and sizes,, but
mainly of the middle (IL-II) range,,9 have figured in this trade. They
can be used in trucks, heavy machine tools? and railroad rolling
stock.
The supply of abrasives in Comrnini.st China is inadequate
and numerous procurement attempts have been made through clandestine
channels. The supply of high-grade abrasives and grading wheels in
the rest of the Soviet Bloc is not abundant and it would be difficult
for the Bloc to supply China without considerable replanning.
As Communist China's indastrialization advances,, an even
greater market will develop for bearings and parts of all types
including unmounted balls.
(2) Listing of controlled metallurgLcal engineering
equ pn~en and componen h proposo e e ons
Item.
No.
Short Title Japan
Group
Footnote
C-001
metalworking machinery and accessories x
C-260
Electric motors
C-375
Abrasives
C-381
Portable hand-held power tools
x
C-380
Compressors
C-266
Power equipment
x
x
C-366
All tools incorporating diamonds
C-387
All articles incorporating diamond abrasives
C-210
Welding machines
x
x
C-S66
Noasuring and testing equipment
x
x
hi ~"n
LAI.
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 l,jugAST 9
Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
No.
Short Title J
an
UK
Footnote
C-601
Anti-friction bearings
3008
Multi-station machine tools
x
x
1
3010
External cylindrical grinding machines
x
x
1
30U
Internal cylindrical grinding machines
x
x
1
3012
Combined internal and external cylindrical
grinding machines
3017
Single-spindle surface grinders
x
x
1
i 3018
Crankshaft., crankpin and camshaft grinder
x
1
3034
,axle lathes
x
x
1
3050
Automatic milling machines
x
1
3055
Horizontal draw-cut shapers
x
x
3067
Metal cutting and working tools
x
x
3068
Carbide and carbide-tipped cutting
x
x
tools or dies
3072
Presses? mechanical and hydraulic
x
x
lf. Due to the overall control of metal-working cutting
and forming tools exercised under the China item
C?-001 definition (the decontrol of which both the
UK and Japanese have proposed) their proposal
to decontrol noted COCOM I/L III items appears
to be a rave to establish exceptions the scope
of which would reduce control of this area to
a degree that its effectiveness would be lost.
The I J ftl ng of thi s burden from the Europe an
;Soviet bloc would soon be recognized by
increased Communist trade in underdeveloped
areas subject to econorrd.c penetration
advantageous to eom unist objectives,
.2
E 'GM i d t-
Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
 Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
Item
No.
C-562
4. Items of Least Advantage to the Military Potential of Communist China.
The following list of "China Differential Items" have been
compiled on the basis of (1) essentiality to the functions previously
described, and (2) items which are demonstratively not in short supply
in the Sino-Soviet Bloc, Consideration was also given to complexity,
know-how, availability of satisfactory substitutes, and quantity of
requirements. A small number of items are being further researched
to determine whether or not they would qualify for inclusion to this
list.
Short Supply
Cartographic equipment
C-352 Equipment for the manufacture of synthetic
fibres
C-578
C-680
C-920
C-625
C-905
C-142
C-930
C-315
C-388
C-640
C-642
C-669
C-6$5
C-690
C 704
C-705
Warburg apparatus
Asbestos
Photo-plan printing
Tinplate
Asbestos textiles
Plastic moulding machines
Nylon products
Hard chrome plating equipment
Dynamometers
Japan UK
Antimony x
Calcium metal
Zinc x x
Mica
Steatite
Metalo artificial colouring
Hydraulic fluid (castor oil base)
43
SECRET
Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5
 Approved For Release 2000/09/13 :
k4464-00014AO001 00040003-5
Item
No.
-.--Short Title
Japan
UK
0-710
Acetic acid
C-711
Acetone
x
x
0-712
Aluminum chloride
0-713
Anidine
C-720
Cellulose nitrate
0-722
Chromium compounds
C-728
Formaldehyde
C-731
Hydroquinone
C-732
Igo propylalcohol
C733
Methanol
C-735
Methyl methacrylates
0-739
p-aminophenol
C-743
Persulphates
0-755
Thallium bromoiodide
C-758
Vinyl
0-770
Naptha
0--788
Coke--coke flour
C-905
Asbestos textile
4f
Approved For Release 2000/09/13 : CIA-RDP64-00014AO00100040003-5