CHINESE AID IN THE THIRD WORLD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP08S02113R000100090001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 22, 2016
• Document Release Date: August 24, 2012
• Sequence Number: 1
• Publication Date: June 30, 1972
• Content Type: REPORT

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DIRECTORATE OF
INTELLIGENCE
Chinese Aid in the Third World
Special Report
WEEKLY IRLEV
N2 472
30 June 1972
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Chinese Aid
in the Third World
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China moved from the isolation of the Cul-
tural Revolution in 1969 to recoup its diplomatic
losses and compete for major power influence.
The Chinese economic aid program in the Third
World was revived after being stagnant, in terms
of new commitments, for some five years. Chi-
nese aid commitments of nearly $1.6 billion in
the past two years have more than doubled
Peking's previous total. Aid allocations thus far in
1972 maintain the pace of the previous two years,
indicating the priority given to economic aid di-
plomacy. Military aid, although totaling only an
estimated $440 million, has become important
for some, recipients.
Peking has at the same time sought to re-
move the subversive taint many Third World
countries associated with Chinese aid. Ideological
rhetoric has given way to the pragmatic considera-
tion of expanding Chinese influence. Peking real-
izes that its earlier tactics, such as aiding dissident
groups seeking to overthrow the host government,
impede normal state-to-state relations. Peking is
making compromises with monarchies and mili-
tary juntas and is courting non-revolutionary re-
gimes in Ethiopia, Iran, Kuwait, and Turkey. The
Chinese have even warmed to the Numayri regime
in Sudan, which decimated the Sudanese Com-
munists in mid-1971.
Economic Aid Step-Up
Some 60 percent of the nearly $2.6 billion
worth of aid extended under Peking's 16-year-old
program has been committed during the past two
and a half years. During this period aid has been
extended to 27 countries, many of them new
recipients.
Of the peak extensions of nearly $710 mil-
lion in 1970, about 60 percent was allocated for
the Tan-Zam Railroad while some $200 million
went to Pakistan. About one fifth of the $553
million extended in 1971 went to Somalia alone.
Peking also revived $57 million of unused credits
to Burma and extended an additional $24-million
commodity credit in an effort to normalize rela-
tions with Rangoon. Last year also saw China's
first economic aid commitments to Chile, Ethi-
opia, Iraq, Peru, and Sierra Leone.
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The pace has quickened this year with nearly
$305 million already extended to ten countries.,
Burundi, Guyana, Malta, Mauritius, and Rwanda,
accepting their first Chinese aid, received almost
half. The largest Chinese credit to a Latin Amer-
ican country also was recorded this year when
$65 million was committed to Chile.
About 40 percent of Chinese aid has been
allocated for the construction of railroads and
roads. More than $400 million has been extended
for the Tan-Zam Railroad, the largest single Com-
munist financial commitment for an aid project in
a less developed country. The Chinese also have
built roads in Nepal, Pakistan, Yemen (Aden),
and Yemen (Sana), and others are scheduled for
Somalia and Sudan.
A third of total Chinese aid has been in the
form of commodities and foreign exchange, con-
trasting with less than five percent of Soviet aid
devoted to these purposes. China has committed
at least $160 million in hard currency, of which
almost $60 million has been supplied since early
in 1970.
Light industrial projects such as textile,
plywood, paper, food processing, and agricultural
implement plants, which are simple to operate
and maintain and require a minimum of imported
raw materials, account for about 15 percent of
Chinese aid. The only heavy industrial project
under China's foreign aid program is a machine-
building complex and foundry-forge plant in
Pakistan. The balance of Peking's aid has been for
agricultural and multipurpose projects, sports
stadiums, conference halls, schools, hospitals,
theaters, and hotels.
The repayment terms of Chinese aid are al-
most unbeatable among world assistance offers.
All credits are extended without interest and are
repayable in goods over ten to 30 years after
grace periods of five to ten years. The Tan-Zam
railroad agreement, for example, calls- for repay-
ment over 30 years beginning in 1983. The
lengthy repayment periods are intended to ensure
that the projects financed by the credits will pay
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Chinese-aided textile factory in Yemen (Sana).
for themselves. Projects usually are scheduled for
full-scale operation long before repayments fall
due.
Technical Assistance
The Chinese characteristically flood their aid
projects with their own personnel, including
semi-skilled as well as skilled workers. This has
speeded construction of Chinese projects, because
it avoids many labor problems encountered under
Western and Soviet programs which depend on
local workers to perform all but the highly skilled
and professional. tasks. The number of Chinese
technicians in less developed countries has grown
from 25 in 1957 to some 20,000. More than 90
percent are in Africa.
Despite this growth, the number employed
has fluctuated sharply and has been determined
largely by the demands of a few labor-intensive
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construction projects. The 1,000 working on the
Sana - Al Hudaydah road in 1961 represented
more than 70 percent of all Chinese technicians
abroad at that time. During the mid-1960s large
numbers were used to construct a road in Nepal
and several plants in Guinea and Mali. The num-
ber of technicians abroad increased fivefold from
1968 to 1971 as work on the Tan-Zam Railroad
accelerated. By mid-1972, an estimated 15,000
Chinese were in Tanzania and Zambia, nearly
three fourths of all Chinese in the less developed
countries.
The presence of Chinese technicians costs
the host country little. Peking pays all of the
foreign exchange costs, such as transportation and
salaries. This contrasts with Soviet and most West-
ern aid programs, which usually require hard cur-
rency repayment for technical services. China asks
only that the recipients pay room and board and
other local costs, and these usually are covered by
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Chinese Economic Aid Extended 1956-June 1972
Europe
2% (44) Latin America
5% (135)
10% (247)
Tanzania (256)
Zambia (218)
Somalia (132)
Algeria (92j
Ethiopia (84)
Sudan (82)
Guinea (79)
Other (322)
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Chinese technician in Guinea teaches operation of Chinese
machinery.
commodity imports under the Chinese credit.
Furthermore, Peking requires its technicians to
live at the same standard as their local counter-
parts, keeping expenditures to a minimum.
Military Aid-Small but Selective
Military assistance has played a compara-
tively small role in the Chinese aid program. Only
about $440 million has been provided since 1956.
Most of this has gone to legitimate governments
and only a negligible amount to revolutionary
movements. About $300 million went to Pakistan
and nearly $40 million to Tanzania, the only
countries which have developed some dependence
on Chinese arms.
Pakistan, apparently concerned over its de-
pendence on US arms, began seeking an arms aid
relationship with Peking in 1965 even before that
year's Indo-Pakistani war, during which the US
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Local and Chinese personnel work on Tan-Zam Railroad.
halted its arms shipments. During the war, Pak-
istan negotiated an agreement with China for $75
million worth of arms, which were delivered not
only rapidly, but without charge. The following
year China provided an additional military aid
grant of $42 million. Through 1971 several other
pacts totaling $130 million were concluded.
By mid-1972, China had delivered an esti-
mated $200 million worth of military equipment
to Islamabad. Ground force.materiel included 750
medium tanks, about 700 artillery pieces and
anti-aircraft guns, more than 50,000 small arms,
ammunition, communications and other support
equipment, and spare parts. The Pakistani Air
Force received about 165 MIG-19 jet fighters, at
least four IL-28 jet light bombers, and various jet
trainers. Chinese-supplied equipment currently
accounts for about half of Pakistan's air and
ground force inventories.
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Jtl..rw 1
MIG-19 supplied by Chinese to Pakistan.
Pakistan is believed to have signed another
agreement valued at more than $50 million early
this year, presumably to replace equipment losses
of the most recent Indo-Pakistani war as well as
for additional ground force equipment and jet
fighters to modernize the armed forces. Naval
equipment, including Shanghai-class gunboats,
was ordered for the first time.
China has also become Tanzania's chief
source of military aid. Peking has delivered light
tanks, patrol boats, landing craft, anti-aircraft
Chinese Military Aid to
Less Developed Countries
1956 - June 1972
Million US $
TOTAL
440 a/
Pakistan
300
Tanzania
38
Indonesia
21
Cambodia
14
Ceylon
6
Congo
3
Syria
2
Guinea
2
Burundi
2
Sudan
2
Not including Algeria, Ghana, Iraq, Mali,
Sierra Leone, Uganda, and Zambia. Military aid
has been provided to these countries, but there is
no information on its magnitude. However, the
total is not believed to be significant.
Special Report
guns, and large quantities of small arms and other
military-related equipment. In addition, it has
constructed an arms repair facility and a police
training school. Tanzania also acts as a storehouse
and distribution center for Chinese assistance to
southern African dissident groups. Guerrilla train-
ing for these organizations is conducted in Tan-
zania by Chinese instructors.
Dar es Salaam's decision to unify its main-
land and Zanzibar armed forces and to place the
servicing of its military establishment largely in
the hands of the Chinese apparently was made
early in 1969. Within a year, Canadian and Soviet
programs were pushed out. The number of Chi-
nese military advisers and technicians rose from
220 in 1969 to an estimated 735 in 1971.
Advisers are attached to infantry, artillery, logis-
tic, and communications units of the Tanzanian
Peoples Defense Force on the mainland, and some
are training Tanzania's newly authorized Peoples
Militia. Chinese engineers also are supervising con-
struction of a naval facility at Dar es Salaam,
scheduled for completion this year. In addition,
almost 350 Tanzanians have gone to China for
one to two years of naval training, half of whom
have returned.
China also is developing an air defense sys-
tem for Tanzania, including the construction of
an airfield some 90 miles from Dar es Salaam.
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About 240 air force trainees are undergoing two
years of training in China; at least 20 are pilots
and the rest presumably are support personnel.
An undisclosed number of jet fighters will be
provided after the airfield and training are com-
pleted this year.
Two new military aid clients already have
been added this year-Burundi and Sudan. The
Sudan, looking for a way to eliminate its depend-
ence on Soviet arms, is receiving MIG-17 jet
fighters and tanks, and China is to train Sudanese
in the use and maintenance of Soviet-built ground
forces equipment. The agreement with Burundi
provides for Chinese assistance for the construc-
tion of military barracks and probably the supply
of some engineering equipment and small arms.
Foreign aid will continue to serve as a key
instrument of Peking's policy in Third World
Chinese-built cigarette factory in Mali.
Special Report
countries. Aid in each case has reflected the gen-
eral warming of relations between China and the
recipient and has most often followed diplomatic
recognition. It has been China's means of estab-
lishing a presence in many Third World countries
and promises to remain the most effective tool
for expanding Chinese influence in these coun-
tries.
New aid commitments are likely to fluctuate
with political considerations and new opportuni-
ties, but over the next few years, are likely to
remain at a high level. Chinese programs will
continue to emphasize labor-intensive projects,
and are expected to continue to focus on Black
Africa, where Peking can meet aid requirements
and effectively challenge Soviet and Western in-
fluence. While the emphasis remains on Africa,
more Chinese economic and military aid may
flow to Asia, the Middle East, and Latin America,
but in those areas it is not likely to be as great as
(See chart on reverse)
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Chinese Economic Aid to Less Developed Countries,
Extended and Drawn
Total drawn Ni
553246 6-72 CIA
Special Report -8- 30 June 1972
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Secret
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