ECONOMIC PROSPECTS FOR NORTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01141A001000030001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 78
• Document Creation Date: December 23, 2016
• Document Release Date: May 20, 2013
• Sequence Number: 1
• Publication Date: December 20, 1957
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
SECRET
ECONOMIC INTELLIGENCE REPORT
N? 75
ECONOMIC PROSPECTS FOR NORTH VIETNAM
CIA/RR 118
20 December 1957
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
SECRET
0 963--
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
ECONOMIC INTELLIGENCE REPORT
ECONOMIC PROSPECTS FOR NORTH VIETNAM
CIA/RB 118
(ORR Project 15.1789)
CENTRAL INTET,T,TGENCE AGENCY
Office of Research and Reports
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
FOREWORD
This report synthesizes the fragmentary information available on
economic activities -- reconstruction and planning -- in North Vietnam
since the Communist government assumed control over the area in late
1954. The present state of the economy is analyzed, and an estimate
of the prospects for economic development is made. Estimates are
made of agricultural production, agricultural self-sufficiency, and
the status of the land reform program; of the level of activity of
industry (principally textiles, cement, and mining); of the progress
of socialization; and of the state of the transportation system. The
foreign economic relations of North Vietnam with the Sino-Soviet Bloc
and the Free World are discussed.
50X1
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
CONTENTS
Page
Summary and Conclusions
I. Introduction
II. Trends in the Economy
A. Plan Fulfillment and Government Finance
B. Agriculture
1
3
5
5
11
1. Rice
12
2. Subsidiary and Industrial Crops
15
3. Forestry, Fishing, and Animal Husbandry
17
4. Land Reform
18
5. Socialization
19
6. Irrigation and Flood Control
20
C.
Industry and Mining
20
1. Electric Power
23
2. Coal
25
3. Cement
26
4.. Phosphate
27
5. Tin and Other Minerals
27
6. Textiles
29
7. Miscellaneous Industrial Activities
30
D.
Transportation and Telecommunications System
?
?
?
30
1. Transport
30
a. Railroad Transport
31
(1) Hanoi - Nam Quan Line
32
(2) Hanoi - Lao Kay Line
32
(3) Hanoi - Nam Dinh - Thanh Hoa - Vinh
17th Parallel Line
33
b. Highway Transport
35
-v -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
(1) Nam Quan - Hanoi - Thanh Hoa - Vinh -
South Vietnam Frontier Road
(2) Haiphong - Hanoi - Hoa Binh - Son La -
Lai Chau Road
(3) Hanoi - Tuyen Quang - Ha Giang Road .
.
Page
37
37
38
c. Water Transport
39
(1) Inland Waterways
39
(2) Maritime
40
d. Civil Air Transport
41
2. Telecommunications
41
E.
Domestic Trade
42
F.
Foreign Trade and Foreign Economic Relations
? ?
?
?
43
1. With the Sino-Soviet Bloc
45
a. Communist China
45
b. USSR
46
c. Czechoslovakia
47
d. East Germany
48
e. Hungary
49
f. Poland
50
g. Bulgaria
51
h. Rumania
51
i. North Korea and Outer Mongolia
51
2. With the Free World
52
a. France
52
b. India
52
c. Indonesia
53
d. Japan
53
e. Hong Kong
54
f. South Vietnam and Laos
55
g. Remainder of the Free World
55
- vi -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Appendixes
Appendix A. Chronology of Events Leading up to the Communist
Control of North Vietnam and of Subsequent
Economic Developments
Page
57
Tables
1. Planned Increases in the Economic Output in North
Vietnam, 1956 and 1957 7
2. State Budgets of North Vietnam, 1955 and 1956 9
3. Value of Industrial Production in North Vietnam, 1955,
1956, and 1957 Plan 22
4. Estimated Output of Major Industrial Products in North
Vietnam, 1939, 1955-57, and 1960 24
5. Estimated Exports of Anthracite Coal from North Vietnam,
Prewar Average, 1955, 1956 and 1960 26
Map
Economic Activities in North Vietnam as of July 1957 .
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Inside
. . . Back Cover
50X1
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
CIA/RR 118
(ORB Project 15.1789)
S-E C-R-E-T
ECONOMIC PROSPECTS FOR NORTH VIETNAM*
Summary and Conclusions
The economy of North Vietnam** has been substantially restored to
its prewar level, but because of the unbalanced nature of the economy,
attainment of viability and independence will still take some time.
The regime has initially tackled the problems of increasing agricultural
production, restoring the transportation network, and rehabilitating
and expanding export industries such as those involving coal, cement,
tin, phosphates, and other minerals. It is moving gradually to extend
its control over all aspects of the economy -- in collectivization of
agriculture, in nationalization of foreign and domestic trade and small
productive units, and in over-all economic planning.
The major economic problem of the regime has been to raise production
of foodstuffs to meet the minimum needs of the population while
developing a self-supporting economy. The extensive efforts of the
regime to mobilize all segments of the population for flood control
and irrigation work, reclamation of abandoned land, cultivation of
new land, and planting of subsidiary crops has led to a significant
increase in domestic output. The spring and fall crops of 1956 were
reportedly good, and'the regime has claimed to have surpassed the prewar
level in the production of foodstuffs and to have achieved a net food
surplus. The regime in emphasizing production and domestic consumption
of subsidiary agricultural crops is attempting to keep domestic consump-
tion of rice low in order to provide some rice exports. Beginning near
the end of 1956 and continuing to date, North Vietnam has been exporting
small quantities of rice, probably reflecting a temporarily favorable
* The estimates and conclusions contained in this report represent
the best judgment of ORB as of 1 August 1957.
** The term North Vietnam refers to that area of the former state of
Vietnam north of the 17th parallel. The Democratic Republic of Vietnam
(Viet Nam Dan Chu Cong Hoa), or DRV, is the governmental apparatus of
the Dang Lao Dong (the Workers' Party), the Communist Party of Vietnam.
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
position. In addition, the regime is placing emphasis on the
development of the cultivation of cotton, the major industrial crop, in
an effort to meet domestic raw cotton demands in the long run. Further
increases in agricultural production will depend largely on imported
chemical fertilizer and improved seed.
The land reform has been basically completed. Implementation of,
the program was full of excesses and abuse, and there has been consider-
able opposition to the program for this reason. The Party and government
have shown an awareness of these failures, excesses, and shortcomings
and have outlined constructive measures to be taken. Socialization of
agriculture is proceeding very slowly, and disruptions caused by the
land reform program have hindered any rapid advance. Most of the
presently constituted mutual aid teams are of a temporary seasonal
nature but should become increasingly more permanent as government
pressure increases. If the pace is moderate, a fair degree of sociali-
zation should be attainable in the not too distant future.
Rehabilitation of modern industries has proceeded rapidly with the
extensive aid of the Soviet Bloc, and most major mining and industrial
installations are now back in production, although output is generally
well below prewar levels. Production of coal (the major industrial
asset of the area) in 1956 is estimated at about 1.2 million metric
tons,* about half of the prewar peak but about 170 percent above that
of 1955. Nearly 1 million tons of production in 1956 was exported,
and it is estimated that by 1960 coal exports will increase by about 50
percent. Production of cement is approaching its former annual rate
of about 300,000 tons.
Other enterprises primarily serving the domestic economy, such
as the Nam Dinh cotton textile plant and the Haiphong phosphate crushing
plant, have returned to production, and production of small industry and
handicrafts has increased markedly. In spite of this progress in
industrial reconstruction, North Vietnam is still far from being able
to provide either a satisfactory supply of goods for home consumption
or sufficient exports to pay for the large quantities of imported
food, materials, and equipment necessary for further economic devel-
opment.
With Chinese Communist technical and manpower assistance, rapid
progress has been made in restoring transportation and communications
* Tonnages are given in metric tons throughout this report unless
otherwise indicated.
- 2 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
facilities. Rail lines have essentially been reconstructed with the
exception of the line south from Hanoi to the 17th parallel, where
unforeseen difficulties have prevented progress as originally planned
and may delay completion until 1959. The highway system of North
Vietnam has been generally restored to its prewar status and in some
areas improved. Major emphasis is being directed toward bridging
numerous streams in order to eliminate ferries on the primary roads.
The Hanoi - Lai Chau route and roads south from Hanoi toward the 17th
parallel have been significantly improved and will facilitate the
rapid movement of troops and supplies to many points along the Laotian
South Vietnamese border. The assistance of the Soviet Bloc is making
possible improvement of port facilities which will further expedite
the handling of increasing trade requirements.
North Vietnam still is confronted with a chronic deficit in its
balance-of-payment position, and abnormally high requirements for
foreign goods and technical aid will continue for some time. Restoration
of agricultural and industrial production and development of exportable
resources have lessened the pressures somewhat, but the outlook for
any great volume of exports is unfavorable.
The regime of North Vietnam probably will continue to concentrate,
with moderate success, on efforts to increase agricultural, mineral,
and light industrial production. The area has the resources to increase
exports and to support a modest industrial development. For at least
several years, however, it will require substantial aid from the Soviet
Bloc to support even a minimum standard of living, and there appears
little prospect for substantial forced saving to support rapid
industrialization in the near future.
I. Introduction.
The conditions for normal production and economic development have
not existed in North Vietnam since the mid-1940's. The Japanese wartime
occupation was followed by the Chinese occupation at the end of World
War II, and from late 1946 until the time of the French withdrawal in
late 1954 and early 1955 the area was the field of a continuing civil war.*
* See Appendix A.
- 3 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Under French colonial control before World War II, economic
developments in Tonkin Province in northern Indochina were limited
to exploitation of coal and some mineral resources and to the develop-
ment of agricultural and mineral processing plants and a few factories
producing consumer goods for local use. Under the Japanese occupation
during World War II, further exploitation of the deposits of coal,
phosphates, tin, chrome, and other minerals was emphasized. Except
for specific mining and forestry activities, almost all of the productive
capacity (both agricultural and industrial) is located in the Red River
delta area (see the map*). During the period of civil war these
facilities were denied the Communists, but under the conditions of guerrilla
warfare they were able to exist on the little that could be produced in
the hills and jungle, which in time was supplemented by economic and
military aid from Communist China and the USSR and from clandestine
procurement of grain, medical supplies, and other items in the French-
controlled areas.
With the withdrawal of French forces from the Red River delta in
1954 and early 1955, the Communists assumed full obligation for orderly
government of economic activity and for providing food and essential
consumer goods for the total population. The eventual success or
failure of the regime will in great measure depend on its ability to
carry out these duties. The new regime found that much of the existing
industrial plant had been damaged to some extent by the war or by the
withdrawing French forces, that French technicians and supervisors
had been evacuated for the most part, and that a large segment of the
skilled native labor force had fled to South Vietnam. In the rural
areas the war had devastated large tracts of cultivable land, flood
control and irrigation works were in advanced stages of disrepair,
and the rural populace even initially showed some hostility to their
new rulers.
In 1954 and most of 1955 the regime was burdened with unprecedented
natural calamities, including a 2-year drought, severe flooding, and
a devastating typhoon. During 1954 and at least up to the fall harvest
in 1955, there undoubtedly was acute distress in many parts of the
countryside. The year 1955 was to have been the first of 2 years of
a planned economic recovery. Delays in delivery of Bloc aid to relieve
the food shortage; continued delays in obtaining essential Bloc
commitments for technical aid and equipment; and delays in developing
comprehensive plans, because of a general lack of administrative and
planning experience in the DRV government, contributed to making 1955
* Inside back cover.
- 4 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
generally a year of trial and error, of false starts and backtracking.
Up to the end of 1955, only in the fields of railroad and road rebuilding.
and in rehabilitation of irrigation and flood control systems, where
Chinese Communist aid was most readily available, was substantial prog-
ress made. Little progress has been made in the redevelopment of estab-
lished industries, such as coal, cement, electric power, ferrous and non-
ferrous mining, and textiles, where rehabilitation had to be delayed pe
pending the availability of aid equipment, which began arriving in the
spring of 1956.
The formation of a National Planning Board in October 1955 and of a
statistical service in November 1955, and the arrival finally of Bloc
advisers and technicians, enabled the government by early 1956 to inaugu-
rate planned economic development and to utilize planned Bloc aid effec-
tively.
II. Trends in the Economy.
A. Plan Fulfillment and Government Finance.
The 1956 State Plan of the DRV was formulated by the National
Planning Board after its appointment in October 1955. It was first
announced by Ho Chi Minh in December 1955 and was elaborated on in more
detail and its principal points emphasized later by Premier Pham Van Dong
and other ministers inaarticles and public announcements and in various
conferences. The Plan apparently was developed under the influence of
and with the advice and assistance of Soviet and/or Chinese Communist tech-
nical consultants along lines of Chinese experience in 1949-52.
The general over-all aim of the regime remains to build up the
strength of the DRV for the eventual "peaceful" unification of North and
South Vietnam under a Communist government. In order to make progress
toward this aim, the 1956 program called for expansion of the state-owned
sector, preparation of peasants' organizations and private industry for
transition to socialism, restoration of production to the prewar level,
rehabilitation and repair of old industries, development of new industries
and processes, and intensive technical training of cadres and workers.
Details of the plan have been couched in generalities, and few over-all
figures of production of financial allocations have been given. It is
clear, however, that specific production goals were set for the planned
development of the economy. Total capital expenditures were to be allo-
cated, with agriculture and irrigation receiving 20 percent; industrial con-
struction, 38 percent; transport and communications, 23 percent; and cul-
ture, health, education, and miscellaneous activities, 19 percent. The
percentage increases in production targeted for North Vietnam for 1956 are
shown in Table 1.*
* Table 1 follows on p. 7.
- 5 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
The rate of industrial growth has been very rapid but from a
very low base, and the level of production is still below the prewar
period. Most of the production goals for 1956 were met, prewar
industrial facilities have in general been reconstructed, and there
has been selected new construction. By far the most basic achievement
during 1956 was the restoration of agricultural production to prewar
levels. Production of rice exceeded its consumption, which in such a
primitive economy outweighs many things. There were a number of short-
falls: the relative failure of industrial crops; poor management of
various state enterprises; and, most important, failure to produce
sufficient consumer goods to meet the increased demand created by the
excellent rice harvests. These shortcomings were caused by extremely
poor planning and implementation of policies by the Party and the
government.
The economy of North Vietnam remains basically unstable. The
regime has attempted to maintain a stabilized currency, through forced
savings and a tight control of gold, but at present bank deposits are
still dangerously low and the state has little control over the circula-
tion of money. The purchasing power of the peasant was significantly
increased by the good harvests of 1956-57, but supplies of consumer
goods have been grossly insufficient. Hoarding and speculation have
been widespread. Although the price of rice has generally been held
stable, the prices of other foodstuffs and consumer goods have risen
at will, hitting especially hard at the industrial worker and urban
population. The regime is paying specific attention to the encourage-
ment of consumer industry, but there is no real prospect in sight of
eliminating continued inflation.
Improvement of the system of taxation and restraint on govern-
ment expenditures, both planned aims, may help improve the situation.
The regime claimed that the national budget for 1956 was balanced with
revenues up nearly 34 percent above that for 1955. 2/* Commercial
and industrial taxes were the main source of revenue in 1956, although
agricultural taxes had the widest application. Collection of agricultural
taxes, which are payable in kind, has given the regime a constant
headache, as a result in great part of faulty administration among
rural cadres. Income from state-owned enterprise profits provided about
27 percent of government income in 1956 following restoration of major
industries, compared with only 4.5 percent in 1955. 2/ Sales of consumer
- 6 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
50X1
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Table 1
Planned Increases in the Economic Output
in North Vietnam
1956 and 1957
1956 1957
as a Percent as a Percent
of 1955 of 1956
Rice 122 102.6
Cotton N.A. 120
Tea N.A. 110
Pigs N.A. 120
Buffalo and oxen N.A. 107
Electricity 252 145
Phosphate 492 N.A.
Tin 329 N.A.
Coal 228 102.4
Cement "Large" N.A.
Cotton yarn "Large" 149
Fabrics 356 140
Canvas shoes 300 N.A.
Silk goods 215 209
Matches N.A. 400
Paper 230 119
Soap 416 151
Salt N.A. 140
Brick and tile 262 N.A.
Agricultural implements 266 N.A.
Transport volume
Mail volume
Total value
Total investment
N.A. 139
N.A. 110
328 141
N.A. 105
- 7 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
goods received under various aid programs undoubtedly also contributed
to government revenues.
Expenditures in 1956 for economic development were increased
about 100 percent above 1955, and those for social and cultural develop-
ment were increased about 140 percent. Administration costs were
reported to be up 23 percent above 1955, but defense expenditures were
reduced about 9.4 percent. .3./
The regime has encountered numerous problems of financial
inefficiency and has set up budgetary control commissions at each
administrative level to check administration of state fiscal policies
in all government organs, state enterprises and factories, and
cooperatives established with state funds. V
The state budgets for 1955 and 1956 shown in Table 2* were
compiled from various official statements.
The tremendous cost of rehabilitating the economy has largely
been met from outside the state budget with Sino-Soviet Bloc aid.
The USSR has extended at least $100 million** to the regime, and in
addition it has granted long-term loans. Communist China's aid has
amounted to about $330 million, XXX and lesser grants have come from
most of the Satellites. Assistance from the Bloc was critical in
supplying foodstuffs and goods in the lean months following the
Communist assumption of power and has been essential in restoring the
bases of the economy -- agricultural and irrigation works, transporta-
tion and telecommunications facilities, and major industrial installa-
tions.****
Table 2 follows on p. 9.
** Based on an exchange rate of 4 rubles to US $1.
xxx Based on an exchange rate of 2.43 yuan to US $1.
*xxx This aid can be compared with US nondirect military assistance in
South Vietnam of about $330 million obligated in 1955 and about $236.5
million estimated as obligated in 1956. Of the US aid, about 90 percent
has been in direct dollar transfers and in allocations for imports of
salable commodities. Project assistance has primarily been in housing,
community development, health and sanitation, public administration,
and transportation. Agriculture and natural resources projects have
been allocated only about 10 percent of project assistance funds, and
industry and mining only about 4 percent. 2/
- 8 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20: CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Table 2
State Budgets of North Vietnam 21
1955 and 1956
1955
1956
Amount
(Million US $)
Percent of
Total
Amount
(Million US $)
Percent of
Total
Revenue
Commercial and industrial taxes
N.A.
N.A.
31.1
37
State enterprise profits
2.8
4.5
22.7
27
Agricultural taxes
29.6
47
26.9
32
Other
N.A.
N.A.
3.3
4
Total
63
loo
84
loo
Expenditures
Industrial construction16.8
20
Other construction
{119.3
{31
21.8
26
Social and cultural
4.5
7
10.9
13
Defense
20.4
32
18.5
22
Administration costs
8.5
13
10.5
12.5
Not identified
10.3
17
5.5
6.5
Total
63
loo
84
loo
a. Calculated at an unofficial exchange rate of 3,248 dong to US $ 1.
- 9 -
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20: CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
The regime is moving slowly in its aims for socialization,
respecting the militant independence of the rural peasantry and private
entrepreneurs. Increased state control of production and consumption,
however, can be expected as the regime moves to attempt to correct the
economic ills of the country. Cooperativization following the land
reform program is just getting under way, and the government appears
to be setting a very moderate pace in effecting further farm collecti-
vization. Although major industrial plants, mines, and construction
projects are under state operation, most small-scale industry and handi-
craft production remain in private hands. The regime apparently intends,
at least for the time being, to control small industry indirectly through
taxation and state-controlled marketing and supply mechanisms while
attempting to gradually organize artisan craftsmen for cooperative prod-
uction.
The broad outline of the 1957 State Plan of the DRV was released
on 30 April 1957 after it had been approved in mid-April by the Council of
Ministers. Although the main outlines of the Plan followed those of the
1956 Plan in calling for completion of the rehabilitation effort and a
furtherance of socialism, the 1957 Plan points specifically at the problem
of stabilizing the domestic economy. Special attention is being given to
increasing the supply of consumer goods and foodstuffs; The level of
industrial production will still be below that of 1939, but the value of
production is to exceed that of 1956, by 41 percent. Most of the increase
will be in consumer goods, production of which is to increase about 60
percent above that of 1956. State-owned enterprises (primarily producing
for export or producers items) will contribute only 37 percent of the
total value of industrial production in 1957, compared with their 45-per-
cent contribution in 1956, leaving private industry (primarily producing
consumer items) showing a large increase in production. Total investment
in basic construction is to increase only 5 percent. above the relatively
high level seen in 1956. The percentage increases in production targeted
for North Vietnam for 1957 are shown in Table 1.*
Agricultural production, as a whole, is planned to exceed the 1939
level by about 70 percent. Most of the increases in production will come
from secondary crops, livestock, and industrial crops (especially cotton).
Production of rice is planned to increase only 2.6 percent above the bumper
harvests of 1956.
In order to accomplish the Plan goals, the regime has called
for continued austerity, with restricted consumption of goods so that
imports may be reduced and exports increased. Close attention is to
be given to marketing and pricing and to assuring an adequate supply of
* P. 7, above.
-10-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
raw materials for industry, especially the small consumer goods producers,
in an effort to stimulate production of light industry and handicrafts
and to direct the zeal of private entrepreneurs and traders toward state
programs. Widespread speculation has irritated inflationary pressures
and contributed to the failure to meet many 1957 State Plan goals for the
first half of the year. Effective control of the economy is still lacking,
collection of taxes has continued to be difficult, and throughout large
areas the peasants are largely alienated from the regime.
The DRV has announced no long-range economic plans. Statements
that planning in 1956 and 1957 is aimed toward reestablishing the economy
to its prewar level so that conditions can be created for switching over
to a new stage of economic development indicate that the regime may
consider 1955-57 as an era of reconstruction in which the Party plans to
consolidate its position and gain planning experience before possibly
launching a long-range plan in 1958. It is doubtful, however, whether
the regime will be in a position to plan or execute a long-term plan
within the next few years.
The regime will continue to face many difficult problems in
attempting to attain a position of relative economic independence. Pro-
duction of food must be greatly increased to keep up with the pressure
of increasing population. Droughts and floods may easily destroy the
precarious food surplus and set back industrial development. Exports
must be raised substantially. Finally, a body of skilled technical and
administrative personnel must be built up. Even with Bloc aid continuing
at its present high level, achievement of an independent viable economy
will take some time and will place a very heavy burden on the mass of
the population.
B. Agriculture.
The basic achievement of the DRV in 1956 was to exceed the prewar
level of food production and to attain a surplus from the rice crop.
Since 1954, when the regime came to power, it has been faced with
a long series of adverse weather setbacks and crop failures. Extremely
severe drought throughout much of the area in the winter of 1953-54,
extending in a lesser degree through the spring of 1956, and periodic
floods, especially severe in the summer and fall of 1955, seriously
reduced crop production. In addition, military activity, manpower levies
from the rural population, and disrupted local subsistence and food
distribution patterns adversely affected crop harvests, helping to
create acute shortages of rice and other foods. The severity of
famine in many parts of the country in 1954 and early 1955 prompted
the regime to request aid rice from the Bloc. Although some aid
arrived early in 1955, the bulk was delayed and arrived in the latter
- 11 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
part of 1955 and the early part of 1956.
The regime early recognized that in order to develop a sound
economy it would be necessary to overcome the deficit in production
of food crops and to attain self-sufficiency in agricultural raw
materials. Agriculture, as a sector, has been afforded a much greater
emphasis than has been noted in other Communist countries, receiving
about 20 percent of the total capital investment allocated under the
1956 State Plan. Flood control and irrigation programs were stressed
during 1955 and 1956, and achievements in these areas have been signifi-
cant. Of nearly 235,000 hectares reported affected by drought and rain-
water flooding in early 1956, only a little more than 1,600 hectares
were reported to have failed to yield crops. Reclamation of "scorched
earth" was pushed forward, and by late 1956 nearly 85 percent of the
143,000 hectares claimed to have been laid waste during the war were
said to have been reclaimed.
The 1957 State Plan calls for continued emphasis on agriculture.
Only a minor increase in production of rice above that of 1956 is
planned, but production of subsidiary crops and industrial crops is
expected to continue to increase at a rapid pace (see Table 1*).
Under the 1957 Plan, agricultural production is expected to reach a
level about 70 percent above that of 1939.
1. Rice.
Rice is the principal crop and main staple of the diet in
North Vietnam. In the prewar period, production of rice made up more
than 90 percent of the total grain harvested in the area. The 1956
total paddy production (5th month,** 10th month, and intermediate crops)
was reported by Premier Pham Van Dong as 4,132,000 tons. He gave
production for 1955 as 3.6 million tons, for 1954 as 2.6 million tons,
and for prewar 1939 as 3.5 million tons.
These claims would appear to be generally valid. Prewar
French statistics for production of rice in the same area put the crop
for 1939 at 2.41 million to 2.48 million tons. // There is good reason
to believe that French estimates of the paddy crop were far from complete
and that if the whole crop had been included, the crop in 1939 would have
* P. 7, above.
** North Vietnam has two major harvest periods as well as intermediate
harvests. The fall harvest, or the "10th month" crop, is the principal
harvest. The spring harvest, or the "5th month" crop, is the secondary
harvest.
- 12 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
amounted to about 3.5 million tons. !8_/ The French estimated the
population in the area now included in North Vietnam at about 13
million, 2/ which would thus give a per capita production in 1939
of about 270 kilograms (kg).
The yield in 1939 was given as 1.33 tons per hectare (tph),
which checks favorably with prewar French statistics, which gave 1.2
to 1.3 tph for 1943-44. 2211/ The DRV figure would also give an area of
about 1.95 million hectares in 1939, compared with prewar French area
estimates of 1.88 million to 1.93 million hectares for 1943-44. 11/
Reports of famine were common during 1954 and the early
part of 1955. The reported low production in 1954 of only 2.6
million tons would have provided a per capita production of only 190
to 200 kg (based on a population estimate of 13.0 million to 13.6
million), nearly a third less than normal, from which widespread distress
and hunger certainly would have followed.
These conditions extended into 1955, and the situation in
the pre-5th month harvest period was acute. The government undertook
strict control measures to insure availability of rice. Rationing was
initiated in Hanoi in February 1955, in March the monthly rice ration
was lowered by 10 percent to 13.5 kg for adults and 7.5 kg for
children, 12/ and it was further reduced in June 1955 to 12 kg per
month for adults. IV Even this quantity often was difficult to obtain
at government stores. The 5th month harvest apparently was fair, and
there were some reports that the famine was "almost over." 11.-Y The 5th
month crop is the "second" crop in Vietnam, and supplies of rice
undoubtedly were still inadequate. Continued disruptions in the
distribution system aggravated the situation.
North Vietnam experienced severe flooding and a devastating
typhoon in the summer of 1955, but extensive flood control efforts
may have prevented any great amount of damage. The 10th month rice
crop, the primary harvest in the area, was reported to be "pretty good,"
the first good harvest in 2 years, and on the basis of the DRV crop
estimate of 3.6 million tons (and an estimated population of 13.0
million to 13.6 million people) for the year as a whole, per capita
production would have risen to between 265 and 277 kg) approximating
the prewar level.
The average yield in 1955 was stated as 1.5 tph, giving
a total cultivated area for rice of 2.4 million hectares, or about
5 percent above the announced area for 1956. Some areas formerly
-13-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
sown in rice were reported to be sown in cotton and other crops in 1956,
but this would not fully account for the discrepancy in the statistics.
The DRV received approximately 190,000 tons of rice as
Bloc aid in 1955 and early 1956. The peak of rice shipments from the
Bloc occurred in the last quarter of 1955, as a result of a delayed
response by the USSR to earlier DRV requests for assistance at the time
of greatest need. Urgent requests to the Bloc for relief supplies of
grain were prompted by the extremely severe conditions of 1954 and
early 1955. In the early months of 1955, however, only Communist China
had sent antifamine aid to the DRV (estimated at 10,000 tons of rice
through May). In late May a Polish shipment of about 5,000 tons of
Burmese rice arrived at Haiphong. 12/ The bulk of the aid was finally
supplied by the USSR.
In January 1955 the USSR initiated negotiations with the
government of Burma for the purchase of about 200,000 tons of rice
(total shipments of rice as Soviet aid to the DRV amounted to 170,000
tons). This purchase served two purposes for the USSR. Burma's efforts
at finding markets for its exportable surplus of relatively low-grade
rice had not met with great success, and the USSR stood to gain increased
political stature by giving partial solution to the problem. In addition,
the rice acquired could be used by the USSR to meet aid requests of the
DRV. The negotiations were difficult, and the agreement was not signed
until 1 July 1955. 16/ The first Soviet shipment arrived in North
Vietnam in late July 1955. Regular arrivals began in September (before
the 10th month harvest) and continued through February. The last Soviet
arrival was in May 1956. If the negotiations had not been prolonged,
initial shipments of Soviet aid might have more nearly coincided with
the period of greatest need. As it was, the actual peak period of
arrivals of aid rice did not necessarily conform to the actual time of
need.
Production of 4,132,000 tons of rice in 1956 was about 15
percent above the claimed level for 1955. The total area cultivated in
rice in 1956 was reported to be 2.28 million hectares. The area planted
for each crop has not been reported. Considerable areas in Interzone IV
(northern Annam) and the southern part of the Red River delta have been
noted following the 5th month harvest with an intermediate crop of
quick-growing Chinese rice. On some of this land the usual 10th month
crop has then given a third rice harvest, and the remainder of the land
has provided winter vegetables. Apart from multiple cropping, the
yield per hectare should also increase as more areas are irrigated and
the use of fertilizers (apart from the traditional dung and waterweeds)
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
is increased. It has been reported that during 1956 about 33,000 tons
of chemical fertilizer (presumably including crushed phosphate) were
used (presumably on all crop areas) and that about 30,000 tons had been
imported, principally from the USSR. 17/
The average annual yield of paddy rice in 1956 was given, as
1.812 tph. This national average covers wide variations. In the Red
River delta the average yield was 2.1 tph, with several provinces
yielding 2.3 to 2.4 tph. Much lower yields were obtained from "dry"
areas, and it has been reported that the regime is considering converting
such land to other crops. 18/
An additional Plan goal was to attain a per capita production
of 300 kg, and it was claimed that 303 kg per capita had been achieved.
Based on the announced production, this would give a population of about
13.6 million, which is in line with current estimates of the North Vietnam
population. Imports of rice ceased in May 1956, and the acute distress
that had usually preceded harvests was greatly reduced. Non-Communist
observers in North Vietnam have indicated that critical shortages of rice
no longer exist. The regime has continued strict controls over distribution
and the price of rice to insure availability. In February 1956 the dis-
tribution control system was expanded by placing rationing into effect in
all provinces and towns of more than 2,000 persons. A ration of 15 kg per
month was authorized for government cadres, administrative personnel, and
university students, and special allocations were provided for members of
the armed forces and those employed on specific reconstruction projects.
By April 1957 the ration of rice was reported to be as high as 20 to 22 kg
per month for military personnel and heavy laborers. 19/
Following the 10th month harvest, the DRV began exporting
small quantities of rice, probably totaling about 30,000 tons by the
end of the year. The DRV probably exported about 100,000 tons of rice
during the first half of 1957. Exports in January and February averaged
over 20,000 tons monthly. 22/ In May 1957, at least 5 Bloc vessels of
5,000 to 7,000 tons were noted loading rice at Haiphong 21/; and in
June one Indian vessel at least loaded rice under the DRV-Indian trade
agreement.
2. Subsidiary and Industrial Crops.
The regime has attempted to diversify agricultural production
by increasing the area of subsidiary crops -- that is, vegetables and
grains other than rice. Tax reductions on lands planted in these crops
-15-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
and preferential pricing were used as incentives to increase production
in 1956. The program met with a fair degree of success. Production of
sweet potatoes, manioc, and other vegetables was apparently good, and the
regime has been able to export fair quantities of maize. Surprisingly,
the regime has said little about achievement in this area.
Attention has been focused on the relative failure of
industrial crops which apparently led to the nonachievement of the 1956
Plan goal of a 49-percent increase in industrial and subsidiary crops
as a whole. Only production of groundnuts and jute achieved the Plan
goals (given as 3-1/2 and 1-1/2 times, respectively, production in 1939).
Production of cotton achieved only 90 percent of the Plan goal; production
was reported as 6,300 tons compared with 4,500 tons produced in 1939.
Sugarcane, tobacco, castor-oil seed, tea, coffee, and lack all fell
short of the 1939 production. Industrial crops were reported to represent,
in 1956, 4.6 percent of agricultural production (probably by value) and
3 percent of the cultivated area.
The regime has placed special emphasis on the development of
the cultivation of cotton. Before World War II, more than 90 percent of
the raw cotton needs of the cotton industry were imported. It is now
planned to insure self-sufficiency in cotton so that imports of raw
cotton and yarn can be discontinued. Soviet specialists are working at
the cotton research center at Gia Lam, outside Hanoi, attempting to
develop a long-staple variety of cotton for the conditions of the
country, and quantities of Chinese seed have been imported for experi-
mental and general use. The main cotton-growing areas are the four
provinces of Interzone IV (northern Annam) and Thai Binh Province.
The cotton crop in 1956 was admittedly poor, partly as a
result of drought in some areas and as a result of poor selection of
areas for planting, poor storage and distribution of seed, and general
inexperience among the peasants and agricultural officials. The regime
is now attempting to increase interest in cotton with attractive prices
and favorable tax rates on cotton land and by supplying seed and credit.
These factors, plus promises of considerable local discretion in selection
of suitable cotton land, should help attract more peasants to growing
cotton. It may take some time to overcome inexperience, but the outlook
over the long run for growth of a domestic cotton supply is promising.
The 1957 Plan calls for a 20-percent increase in production, which, if
attained, will still fill less than a third of the needs of the country
for cotton.
-16-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
The regime is also fixing higher prices for other industrial
crops in an effort to raise production. Although production in 1956
was apparently still below prewar levels, oil grains, tea, coffee,
and other products have been offered as exports in many of the 1957
trade protocols.
Production of tea in 1956 was reported to be only half
of the prewar level, which was given as 5,000 tons of dry leaf, from
an area of 12,000 hectares. Production of tea is planned to increase
about 10 percent in 1957. The USSR is ass?sting the government in
constructing two tea-processing plants.
3. Forestry, Fishing, and Animal Husbandry.
The regime has said very little concerning forestry operations,
but exploitation of woods and other forest products has been intensive
to meet heavy local construction demands and for export. Although
reforestation and conservancy practices -- strict under the French --
have probably suffered somewhat, reports of the planting of about 17
million trees, mainly in the coastal areas, dispel the impression
that forest management is being neglected. 2E/
Fishing is largely a part-time peasant industry in North
Vietnam, and possibly because of peasants' commitments on corvee
assignments during offseasons, it has not made the relative rapid
recovery noted in other agricultural sectors. The 1955 catch was
reported to have been about 152,000 tons. There was little increase
in 1956: the salt water catch was reported to have been nearly
120,000 tons, 21/ and the fresh water catch has been said to be about
30,000 tons annually. Li-/ The regime has apparently pushed socialization
of the industry, and a recent report stated that 1,400 collectives and
more than 2,200 teams, with nearly 58,000 members, had been set up. 22/
In November 1956 the DRV received four deep-sea trawlers,
with radar equipment, as aid from East Germany. They are to work out
of the new fish cannery now under construction at Haiphong.
The 1956 and 1957 State Plans both emphasize increasing
the number of livestock to provide cattle and buffaloes for draft
purposes and hogs and poultry for food consumption. Although the
climate in the plains of North Vietnam makes cattle raising difficult,
the government has encouraged cattle breeding through tax exemptions on
grazing land and on areas used to grow fodder and through low-interest
loans for purchases of breeding stock (to those farmers raising cattle).
The 1956 Plan for an increase in the number of cattle and buffaloes
-17-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
was overfulfilled by nearly 8 percent, with the actual increase
amounting to about 257,000 head. It was also reported that the
number of cattle was about 58 percent above that of 1938 (probably
about 1.3 million), or about 2 million head. 2W The 1957 Plan calls
for the number of cattle and buffaloes to increase by 7 percent, El/
or approximately 14,000 head.
The number of pigs and poultry has not been reported,
but there was a concerted effort in 1956 to raise the number of pigs.
A serious porcine epidemic, however, occurred near the end of 1956,
which by mid-January 1957 was reported to have affected more than 100
localities in the Red River delta and a part of Annam, killing about
2,000 pigs and affecting at least 10,000 others. Efi The 1957 State
Plan calls for the number of pigs to be increased by 20 percent.
4. Land Reform.
Land reform has been one of the heavily emphasized features
of the DRV agricultural program. By the end of 1956 it had been
basically completed in the Red River delta and upper midland regions,
and the fifth, or final stage, in the central coastal provinces was
well under way. There is no reason why the program should not be
totally completed within the near future. It was reported near the
end of 1956 that about 700,000 hectares of land and more than 100,000
draft animals had been redistributed to more than 8 million peasants. 22/
The land reform program was initiated in 1953, preceded in
many areas by rent reduction. The program has proceeded in five stages,
which appear to represent concentration first on the areas most firmly
under Communist control and leading finally into the newly "liberated"
areas north of the demarcation line.
In the haste of reform the program has been full of excesses
and abuse. Some ethnic and religious groups, especially Catholics,
have suffered discrimination, and many independent peasants who owned
and tilled small sections of land had land and property confiscated
along with the larger landowners in the heat of the campaign. In
addition, the inexperience of Party cadres led to faulty registration
of land areas and inaccurate, excessive estimates of production
which in turn involved excessive tax assessments. There have been
numerous instances of individual and group resistance to the program,
one of the most recent being the uprising in November 1956 in Nghe
An Province which required intervention of the armed forces.
-18-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
The popular revulsion engendered by the impossible tax
burden and harsh collection policies of the local cadre, together
with the continued discontent over unjust partition of land, was such
that the regime inaugurated an "error-correction" program in the fall
of 1956. The regime, however, has admitted that the basic revisions
of acreage and productivity assessments will not be completed until
the winter of 1957-58. Meanwhile, tax collections will proceed on
the basis of the old assessments and quotas, with every indication
that extractions will be harsh. 12/ In addition, efforts to correct
the wrong done to unjustly dispossessed peasants have not had the
desired effect of relaxing tensions in the countryside, because of
resentment on the part of poor peasants who received land in the original
program and now must give it up. Faced with the possibility of losing
the support of the mass of poor peasantry, the regime in February 1957
shifted ground and ordered a temporary halt to restoration of property
to former owners under the "error-correction" program. This shift
evoked renewed criticism from the countryside. Thus the vacillating
land reform policy is at present creating dissatisfaction and confusion
among the peasantry. It is doubtful, however, at least up to the
present time, that the disruptions and unrest which have been created
by the regime's land reform policies have seriously affected agricultural
production.
5. Socialization.
The regime has proceeded slowly in the field of socialization
following the mistakes and excesses of the land reform program and
peasant discontent. By mid-1956 it was reported that about 60 percent
of the peasant households were members of about 190,000 mutual aid
teams, which, although equivalent to lower form agricultural producer
cooperatives, are for the most part temporary and seasonal in nature.
At the year's end the government announced the same figure, indicating
that peasant discontent concerning unjust land reform actions had led
to the atrophy of many mutual aid groups. Socialization of land newly
acquired will create further problems and [resistance among the peasants,
as many will not wish to lose their newly gained paddy fields. The
government will nevertheless continue to apply pressures and the usual
methods of persuasion, and if the pace is moderate, a fair degree of
socialization should be attainable in the not too distant future.
The state is also extending its control over the peasant
through the system of supply and marketing cooperatives, controlled by
the state trading organization, and through credit cooperatives,
controlled by the National Bank.
-19-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
The government has reported there are 16 state farms, 6
of which are described as "large estates." The regime has said very
little about state farms, most of which are on confiscated French
plantations and comprise experimental collectives and research farms.
Some of these state farms support foreign technical missions -- for
example, Soviet cotton experiments at Gia Lam.
6. Irrigation and Flood Control.
The regime has placed major emphasis on irrigation and flood
control works. Any expansion of agricultural production in North
Vietnam depends in great part on the control of river floods and of
sea floods in the typhoon season; restriction of water-logging, by
means of drainage; and adequate maintenance of large and small irrigation
systems.
According to official DRV figures, the total area irrigated
in 1956 was about 1,267,000 hectares, .11/ or more than 55 percent of
the announced rice area. The agricultural plan for 1956 had called for
irrigation of 73 percent of the 5th month rice area and 53 percent of
the 10th month rice area. 2/
Major irrigation works have been reported to cover more
than 360,000 hectares at present, supposedly about 13 percent more
than the area covered under French control. These works include
about 14 old works which have been rebuilt and extended to cover
170,000 hectares and 9 new works covering 55,000 hectares. The area
covered by minor irrigation works in 1955 was reported to have been
doubled in 1956.
Major flood-prevention works were accomplished in 1955
involving the strengthening and repair of both river and sea dikes.
Dike work in 1956 has been limited to increasing the height of dikes,
and at the end of the year the length of major dikes was given as
3,000 kilometers (km), the same as at the end of 1955.
C. Industry and Mining.
Largely with Soviet assistance, most of the major industrial
and mining enterprises of North Vietnam, many of which suffered
heavy damage during hostilities, have been restored, and production
has increased markedly. The regime is giving priority to development
of light industries and industries with an export potential and is
relying on the Sino-Soviet Bloc for assistance in the field of heavy
-20-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
industry. In many industries the 1956 Plan was achieved or over-
fulfilled, although production rarely approached prewar levels.
Although restoration of industrial plants has made steady
progress, there have been several unsettling factors. During the
latter part of 1956, there were numerous complaints about wages
and working conditions. The regime has apparently taken steps to
improve conditions and has revised wage scales, but no doubt there
was some temporary slackening of production in state enterprises.
In addition, there has been a growing disinclination of private
entrepreneurs to continue or increase production unless there is
some relief from tax disabilities and unless they are given better
access to raw materials, practically all of which are supplied
through the state trading organization. The shortage of various
consumer goods produced by private industry was accentuated by heavy
village demands after the good 10th month rice crop in 1956 which has
prompted the regime to promise to give more incentives to private
industrial enterprises in the future.
In spite of the steady progress in reconstruction of the
primary industries of the country, the regime is still far from
being able to provide either a satisfactory supply of goods for
home consumption or sufficient exports to pay for the large quantities
of imported food, materials, and equipment required for further
economic development. The relatively large increases in industrial
production in 1956 were primarily the result of restoration of
existing large industrial facilities -- coal mines, tin and other
mines, the cement works, phosphate crushing plants, the Nam Dinh
cotton mill, and powerplants. Production increases in 1957 will
come principally from producers of consumer goods -- that is, small
industry and handicrafts. The 1957 Plan calls for investment in
industrial construction to increase only 5 percent above the relatively
high level seen in 1956. Industrial production is to increase only
41 percent above that of 1956 compared with a 330-percent increase
in 1956 above that of 1955.
Major industrial plants (including mines) have been taken over
by the state, and, although small in number, they represent the essential
core of the industrial sector esid their proportion of the national
industrial product is high. Table 3* shows that the value of production
of state-operated enterprises (and their percentage of total value of
production) increased greatly between 1955 and 1956 as relatively large
plants and mines resumed production.
* Table 3 follows on p. 22.
- 21 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part- Sanitized Copy Approved forRelease2013/05/20 : CIA-RDP79R01141A001000030001-5
J.
Table 3
Value of Industrial Production in North Vietnam 21
1955, 1956, and 1957 Plan
1955
1956
1957 Plan
Sector
Million US $
Percent
Million US $
Percent
Million US
Private
22.2
80
49.9
55
80.7
(residual)
Public
5.5
20
40.9
45
47.3
(planned 37 percent of total)
Total
27.7
100
90.8
100
128.0
(planned 41 percent above 1956)
a. Calculated at an unofficial exchange rate of 3,248 dong to US $ 1.
-22 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20: CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Production of the private sector (equivalent to small industry
and handicrafts) more than doubled between 1955 and 1956, but its
relative contribution decreased from about 80 percent to about 55
percent in 1956. In 1956 it was reported that there were nearly
60,000 small enterprises in North Vietnam.
In 1957 the public sector is calculated to produce only 37
percent of the total product compared with its 45-percent contri-
bution in 1956. Production of consumer goods (private industry) is
to increase more than two-thirds of its 1956 level, and private
industry will increase its share of the total industrial product to
more than 60 percent.
Progress in rehabilitation and the outlook for major industries
in North Vietnam is outlined below, and output of major products is
shown in Table 4.*
1. Electric Power.
In 1952, North Vietnam had only 18 power stations (of
more than 100-kilowattfc.if capacity) with an installed power capacity
of 59,000 kw. More than 6 percent of the country's total capacity
(7 stations, with 51,000 kw) is concentrated in the Hanoi-Haiphong
area. Much of this is located in three coal-fired steam plants -- a
22,500-kw plant in Hanoi, a 6,300-kw plant in Haiphong, and a 12,200-
kw plant at the Haiphong Cement Works. The only other significant
plants in the country are a 4,000-kw-installed-capacity plant at the
Hon Gay Coal Mine and a 3,450-kw-installed-capacity plant at the Ben
Thuy wood products mill.
During hostilities, some of this installed capacity was
reduced by damage to equipment, and some equipment was removed in
major stations by the withdrawing French forces. The French have
subsequently replaced equipment at Hon Gay and at the Hanoi Water
and Electricity Company. 12/ The capacity of existing plants is being
increased with Bloc aid, and new plants have been reported under
construction at Cao Bang, Vinh Yen, Thanh Hoa, Vinh, Lao Kay, and Viet
Tri. The majority of these plants are being installed by the USSR,
with completion scheduled for 1957 or earlier. The capacity of the
system in 1952 has no doubt been restored; production in 1956 was
planned to increase about 152 percent above that of 1955. The 1957
Plan calls for only a 45-percent increase in production above that of
Table 4 follows on p. 24.
-23-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20: CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Table 4
Estimated Output of Major Industrial Products in North Vietnam
1939,
1955-57, and 1960
Product
Unit
1939
1955
1956
1957
1960
Electric power
Million kwh
29.6
46
117
170
227
Coal 2/
Thousand metric tons
2,615
459 12/
1,215
1,245
2,000
Cement 2/
Thousand metric tons
305
100 2/
187
250
300
Phosphate (phosphorous
content, 15-20 percent) 2/
Thousand metric tons
35.7
8.7
34.1
50
50
Tin
Thousand metric tons
0.7 0.8
0.2
0.7 0.8
0.9
Cotton yarn
Thousand metric tons
12
1
5
7
11
Cotton cloth 2/
Thousand metric tons
8.9
1.3
7.1
9.9
13
a. Production series for 1939, 1955, and 1956 published in Nhan Dan (Party Organ) on 1 May 1957. 11/
b. May-December production only.
c. Total year production. Announced figure of 8,500 tons for November-December.
-24-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20: CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
1956. It is estimated that by 1960 the total capacity will be increased
to about 100,000 kw.
2. Coal.
Coal continues to be North Vietnam's major industrial
asset. With Sino-Soviet material and technical assistance, production
of coal in the state-operated Quang Yen coalfield* (Hon Gay - Campha) --
which accounts for nearly all North Vietnam's production of anthracite
coal -- rose sharply during 1956. References to production of coal
have been confusing, but production in 1956 probably was about 1.2
million tons compared with about 459,000 tons in 1955. Production
in 1956 exceeded the Plan goal. The 1957 Plan for production calls
for a negligible increase of only 2.4 percent above that of 1956.
Domestic consumption of coal is historically limited.
The export market is the major outlet for Vietnamese coal, and future
production will largely depend on the amount of coal the regime is
able to sell abroad (see Table 5**). Anthracite coal, inherently
lacking in some of the attributes essential for industrial and
metallurgical uses, is limited generally to such domestic uses as
space heating and cooking. High shipping costs curtail the demand
for Vietnamese coal in Western Europe, so that the market tends to
be limited to traditional outlets in China, Japan, and Hong Kong and
to a lesser extent some Southeast Asian countries.
Exports of coal in 1956 amounted to nearly 1 million tons
compared with about 300,000 tons exported in 1955. Exports to China
probably reached about 200,000 tons, whereas the prewar annual average
was more than 500,000 tons. Exports to Japan in 1956 are estimated at
380,000 tons compared with the prewar annual average of more than
600,000 tons. Exports to Hong Kong of 200,000 tons in 1956 are slightly
in excess of the prewar average.
Although opportunities exist in these markets, especially
China, for increased sales of Vietnamese coal, it cannot be expected
that there will be dramatic increases in demand. It is estimated that
by 1960 production may reach about 2 million tons. Exports should
reach about 1.5 million tons, which is more than 50 percent above the
estimated exports in 1956 and only slightly less than the prewar annual
average of 1.6 million tons.
* See the map inside back cover.
** Table 5 follows on p. 26.
-25 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Table 5
Estimated Exports of Anthracite Coal from North Vietnam
Prewar Average, 1955, 1956, and 1960
Thousand Metric Tons
Prewar
Average
1955
1956
1960
Communist China
546
0
200
400
Japan
608
187
380
400
Hong Kong
178
15
200
300
Other Southeast Asia
100
Malaya
0
25
25
Thailand
0
3
o
Singapore
0
N.A.
4
France
122
58
58
100
Other West Europe
100
Belgium
0
9
75
Italy
0
0
19
Other and bunker
150
N.A.
N.A.
100
Total
1,60)4-
297
961
1,500
Percent of total production
61
65
79
75
3. Cement.
The output of the Haiphong Cement Plant constitutes the
largest volume of production of any single industry other than coal
in North Vietnam. This plant is the largest cement producer in
Southeast Asia, with an installed annual capacity of about 400,000
tons, and an effective annual production of about 300,000 tons.
Operations at the plant were disrupted in March 1955 during the French
withdrawal. The plant was taken over by the state and, with heavy
reliance on Soviet technical assistance, was put back into operation
in November 1955. The plant is vulnerable to numerous breakdowns,
as much of the equipment was installed about 1930. Maintenance and
repair apparently are a critical problem.
Including production under the French in the first quarter,
production in 1955 is estimated at only about 100,000 tons. There has
- 26 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
been a heavy demand for cement for the extensive rehabilitation programs
and for export. Production in 1956 is estimated to have reached about
187,000 tons. In 1956, about 80,000 to 90,000 tons (45 percent of
production) were exported, principally to Communist China and possibly
to Ceylon and Indonesia. During January and February 1957, exports
were maintained at 15,000 tons &month, but they decreased to only
about 5,000 tons in March on account of technical difficulties at the
plant. E/ As domestic construction demands slack off, more cement
will be channeled into exports, which in 1937-39 took more than half
of the total production.
Unless new capacity is added, and/or present equipment
is replaced, it is doubtful if the present relatively high rate of
production can be maintained. Because of lags in designing and
production schedules, installation of new production lines or replace-
ment of existing plants probably will not take place before 1958.
4. Phosphate.
Important apatite (calcium phosphate - fluoride) deposits
in North Vietnam are located near Lao Kay; deposits of rock phosphate
(18 to 25 percent P205) are located near Thanh Hoa. The state-
operated Haiphong phosphate crushing plant, the largest in Vietnam,
was reopened in April 1956 after many years of inactivity but since
then has often been shut down because of machinery breakdowns. The
reopening of this plant and the completion of the Lao Kay - Haiphong
rail link have greatly stimulated production at Lao Kay, where East
German technicians are assisting in development. Much of the produc-
tion at Lao Kay is being exported, principally to Japan through the
port of Haiphong. Other smaller plants at Ben Thuy, Chu Le, Bac Giang,
and Nam Phat (near Thanh Hoa) are in operation, producing phosphate
fertilizer for the domestic market. The practice in North Vietnam
is to apply the powdered rock directly to the soil without further
processing, and, because of its low solubility, this type of fertilizer
is not as effective as chemically prepared phosphate fertilizers.
North Vietnam is presently dependent on imports for
nitrogen fertilizers and in part dependent on imports for chemically
prepared phosphate fertilizers, especially superphosphates.
5. Tin and Other Minerals.
Mineral exploitation in North Vietnam was most widespread
under the Japanese occupation. Postwar production was negligible, and
- 27 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
the civil war deterred any major mining efforts. Several small tin
mines in the Tinh Tuc area have been reestablished by the regime,
and a small smelter has been erected. 1.Y Restoration, with Soviet
assistance, was completed in September 1956. Although production will
be increased in order to provide a source of export income, exploita-
tion of tin resources will tend to be limited by the already developed
large reserves in Yunnan, production of which can be expected to
increase with completion of the Kunming-to-Haiphong rail outlet. Under
the DRV-Polish trade agreement, Poland is importing the entire DRV
output of tin. It is estimated that production is presently approaching
prewar levels of about 700 tons per year.
Soviet geologists have been conducting an intensive mineral
survey in order to determine the reserves of known deposits and to find
new deposits of exportable ores and metals; about 50 sites were reported
surveyed in 1956. 22/ Other minerals are presently being worked.
Tungsten (previous production, about 580 tons of 66 percent WO concen-
trate in 1937) is being mined in connection with the exploitation of
the Tinh Tuc tin deposits, but production is probably negligible.
Production of chromite (previous production, 12,000 tons of )-i-5 percent
concentrate in 1943-44) was resumed in March 1956 with the reopening
of the Co Dien mine, in Thanh Boa Province, under the 1956 State Plan.
The mine fulfilled its norm by mid-November, but no output figures
have been released. Iron ore (previous production, 135,000 tons of
50 to 70 percent content ore in 1939) is being worked in Thai Nguyen,
at Co Dien, and near Vinh, supporting small local foundries, and also
in the Quang Yen coalfield. Unspecified quantities have been exported.
Production of zinc (previous production, 7,000 tons of zinc metal in
1941) was resumed in 1955; present production probably is no more than
about 2,000 tons of metal content of concentrate, and Poland has contrac-
ted to take the entire DRV output. There have been no reports that the
heavily damaged zinc smelter at Quang Yen has yet been restored.
Other known reserves in minor quantities include
manganese (former peak production, 7,700 tons in 19)44); lead (former
peak production, 200 tons in 19)4-3), which possibly is being worked
in connection with zinc; and bauxite (former peak production, 12,800
tons in 19)4-2). The Soviet survey also indicated several mineral
deposits not previously known: copper near Son La, iron near Yen
Bay, and an unlocated mercury deposit.
-28-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
6. Textiles.
The Nam Dinh Cotton Mill (formerly the Societe Cotonnire
du Tonkin), the largest textile plant and industrial producer of cotton
fabrics in North Vietnam, was taken over by the state from the former
French owners and was restored to operation in November 1955. LS/ In
1956 the Chinese Communists supplied 600 automatic looms to aid in
reequipping the plant. L1/ A new powerplant was also completed at
the factory in 1956. Production of cotton cloth at the Nam Dinh mill
in 1956 amounted to about 22 million meters (about 3,000 tons) despite
labor troubles during the year. Some canvas apparently was also
produced for use in making canvas-top shoes.
Historically, about 60 percent of North Vietnam's production
of cotton fabrics has come from cottage looms centered for the most
part in the Nam Dinh area. Private artisan weavers w6re reported to
have produced more than 30 million meters (about 5,000 tons) of cloth
(silk as well as cotton) in 1956. LE/ During the year the regime
reportedly supplied about 4,000 tons of yarn to artisan weavers to
supplement yarn produced by local spinning. In addition to cloth,
small workshops are producing toweling, mosquito netting, and cotton
tricot for underwear and socks.
Production of cotton fabrics is thus approaching prewar
levels, but even prewar production was not sufficient to meet domestic
demand, and both fabric and yarn are imported from the Bloc, especially
Communist China.
The output of cotton yarn was to have increased markedly
during 1956, but there have been no reports of levels of production.
Nearly three-quarters of the estimated 142,000 spindles in North Vietnam
are in the state-operated Nam Dinh Cotton Mill. The only other large-
scale spinning mill, the former Societe des Filteries de l'Indochine
at Haiphong, apparently has not been reopened. Privately operated
spinning mills have had difficulty obtaining raw cotton through the
state trading monopoly. It is estimated, therefore, that production
of cotton yarn might have been about 5,000 tons. Requirements for cotton
yarn for production of cloth in 1956 alone would have amounted to about
8,000 tons. Imported yarn was therefore required to supplement local
production.
The textile industry has been dependent on imports also
for more than three-quarters of its raw cotton requirements. The DRV
is planning on future self-sufficiency in raw cotton. Although the
-29-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
cotton crop in 1956 was poor and the yields are relatively low, the
long-run outlook for a supply of domestic cotton is promising (see
II, A, 2, above).
7. Miscellaneous Industrial Activities.
The output in 1955 of small industries and handicraft
enterprises, producing almost entirely for the domestic market, more
than doubled in 1956, although the level of production seldom approached
prewar levels. Early in 1957 it was reported that there were presently
nearly 60,000 small industry and handicraft enterprises, employing
more than 100,000 workers and producing 5,000 kinds of goods. Private
capital, driven out of commerce by the state, supposedly is being guided
into this type of industry. Small industry produces (a) consumer
items, such as food products, cloth, matches, tobacco, soap, wood,
and household products; (b) construction materials, such as bricks
and tile; and (c) light manufactures, such as bicycles, bicycle
tires, and such small iron manufactures as threshing mills, ploughs,
and sprayers.
The regime is constructing several small industrial
plants under various Bloc aid programs. The Phu Tho Tea Plant with
Soviet aid began trial production in March-April 1957, la/ with much
of its production probably being exported. A machine tool factory is
being constructed with Soviet aid at Hanoi, but no details are yet
available.LO-1/ The USSR is also supervising construction of a fish
cannery at Haiphong, and the Chinese are aiding in furnishing textile
equipment as well as sponsoring a match factory, 10 rice mills, and
a cigarette plant.
The total value of items produced by small industries in
1957 should nearly double the level of 1956, but during the past year
timely and adequate supply of raw materials by the state trading
monopoly to industry has been wanting, and any sizable increases in
production will be dependent on the regime's ability to rectify the
situation in 1957.
D. Transportation and Telecommunications System.
1. Transport.
With large-scale technical and material aid from
Communist China, the regime in North Vietnam is carrying out an
ambitious rehabilitation of the rail, highway, amd water transport
-30-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
systems and has initiated an embryonic civil air organization. The
transportation system, although not highly developed, is presently
capable of supporting the demands of the North Vietnam economy.
During 1956 the regime completed the rail line from Hanoi to Lao Kay
and continued work on the rail line between Nam Dinh and Thanh Hoa.
The capacity of the road system was being increased by bridge construc-
tion. Shortage of materials, particularly for permanent bridges,
hampered progress in both the rail and road programs. The ports of
Haiphong, Hon Gay, Cam Pha, and Ben Thuy were being improved by
dredging of the channels of approach.
The prompt restoration of main lines of communication
has greatly facilitated absorption of foreign aid and furthered
economic development. Although no absolute performance figures
have been released, an announcement in August 1956 expected that
the volume of goods transported in 1956 would increase about 50
percent above that of 1955.112/
The 1956 transport plan called for a performance of
291 million ton-kilometers (tkm). In the plan, railroads were to
carry about 42 percent 16./ of the total performance (or about 122
million tkm), with primary importance being given to the railroad
links with Communist China. Waterways were to carry about 47 percent
of the plan, with the bulk of traffic concentrated in the Red River
delta area and in coastal movements to Chinese Communist ports and
ports in the southern part of the country. Motor transport, to
carry only about 11 percent of the plan (or about 32 million tkm),
apparently is reverting to a secondary role as a local distributor
from its dominant role during and immediately after the hostilities
as a long-haul carrier. The 1957 State Plan calls for the volume
of transport to increase about 39 percent above that of 1956.
Private means of transport still carries a large share
of the transport volume. The 1957 State Plan calls for state-
owned transport to carry about 61 percent of the total volume of
transport.
a. Railroad Transport.
The DRV authorities inherited from the French a
badly damaged meter-gauge rail system consisting of four single-
track lines radiating from Hanoi. Only the 100-km Hanoi-Haiphong
line was operable, and even on this line numerous culverts and
bridges needed to be rebuilt.
-31-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
(1) Hanoi - Nam Quan Line.
In reconstruction of the remaining three lines,
the strategically important line north from Hanoi to Nam Quan on the
Chinese bordcr was accorded priority. Rail over this line had been
removed during hostilities, and the roadbed was in a bad state of
repair, but under the direction of the Chinese Communist 102d Military
Railroad Engineering Battalion)1// this 167-km line was rebuilt to
its original meter gauge between December 1954 and March 1955 and
partially restored to service. Through passenger service between
Communist China and North Vietnam was initiated in August 1955.)2_3./
In the second quarter of 1956 this line was reported to be in a good
state of repair, and the roadbed was being maintained and additional
sidings constructed using Chinese labor. At that time, 2 passenger
trains were operated each way per week; freight trains averaged about
1 a day going each way.)12/ This line is planned eventually to be
converted to Chinese standard gauge (4 feet 8-1/2 inches). Conversion
would aid considerably in augmenting capacity and would eliminate the
delays necessitated by transloading at the change-of-gauge point on
the Chinese side of the border at P'ing-hsiang. At present, however,
there is no evidence that actual conversion is under way or that work
will be initiated within the next few years.
(2) Hanoi - Lao Kay Line.
The 296-km section of the meter-gauge Kunming-
Hanoi-Haiphong line extending from Hanoi to Lao Kay on the Chinese
border had been largely destroyed in the French-Vietnamese fighting.
The regime announced in March 1955 that reconstruction was under way, 22/
but collection of old rails and ties and preliminary construction had
been noted for at least 6 months before that time. L1/ Restoration was
originally scheduled for completion before the end of 1955, but severe
floods delayed necessary bridge and trestle work and by January 1956
only about 104 km of new track were operable. 2/ By April 1956,
however, it was announced that the line had reached Lao Kay. A
ceremony heralding the completion of the entire line was held on 20
July, _U./ and on 7 August through service to the border was inaugurated
with the dispatch of a train from Hanoi. 2V It was reported on 23
October that as a result of the completion of the line the volume of
goods transported from the Haiphong-Hanoi area to Lao Kay during the
previous 3 months was nearly equal to the amount transported during
all of 1955. 25/ Shipment of apatite from Lao Kay to Haiphong has
been especially facilitated. The trip from Hanoi to Lao Kay, with
stops, takes about 20 hours.
-32-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Although this line is of importance to the
development of the North Vietnamese domestic economy, its primary
significance is as a link of the Haiphong-Kunming line, potentially
the most expeditious transport link between Yunnan and the industrial
areas of China. Reopening of this entire line will permit export of
Yunnan's tin, copper, and other strategic minerals through the ocean
port of Haiphong and imports of producer goods for development of the
mining and industrial economy of Southwest China. The potential of
this line is emphasized by the fact that in 1939 it carried more
than 565,000 tons of freight and nearly 4.9 million passengers. LY
The 176-km section of the Kunming-Haiphong
line extending from Lao Kay to Pi-se-chai in Yunnan was destroyed
during World War II. Reconstruction has been difficult and has in-
volved rebuilding about 250 tunnels and 47 bridges. Reconstruction
was originally scheduled to be completed by the end of 1956 but has
been delayed and is now scheduled for late 1957. The Chinese and
Vietnamese recently signed an agreement providing passage of Chinese
civil freight through North Vietnam.
(3) Hanoi - Nam Dinh - Thanh boa - Vinh - 17th
Parallel Line.
Reconstruction of this line has so far proceeded
very slowly. Bridging is an especially difficult problem, as more
than 200 bridges had been demolished by the Vietnamese during the
war.
The 80-km section of this line from Hanoi to
the textile center of Nam Dinh was restored during 1955 and extension
of the line 88 km through Ninh Binh to Thanh Hoa had been planned for
1956. This target was not achieved, partly because of bridging
difficulties, flooding during the rainy season, delayed allocation of
technical personnel because of the delays in completion of the Hanoi -
Lao Kay line, and the nonarrival of promised Polish technical and
material aid. By early January 1957, rails were laid as far as the
Ninh Binh bridge, just north of that town.
On the Ninh Binh - Thanh Hoa section, Vietnamese
and Chinese technicians and laborers formerly employed on the Hanoi -
Lao Kay line have augmented the local construction force. 2// In this
section, stockpiles of Chinese-supplied rails, sleepers, switching
equipment, and machine tools have been reported at various railyards
along the right-of-way. 2/
-33-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Bridges remain the chief problem. Only 12 of the
36 required between Nam Dinh and Thanh Hoa have been completed. Z.1/ Of
the three major bridges, the 160-km bridge at Do Len, about 30 km north
of Thanh Hoa, was reported completed "in the main" in early May 1957. LI/
The 525-foot (ft) steel-arch road-rail bridge at Ham Rong, just north
of Thanh Hoa, has presented especially difficult engineering problems, LI
and work also has been delayed because of the serious general shortage
of structural steel. Work on the third major bridge, the long span just
north of Ninth Binh, was delayed in 1956 by flooding during the rainy
season. The first pillar of the bridge was completed by pouring rein-
forced concrete around the base of the pillar under water, apparently
the first time concrete had been used under water in North Vietnam.
Little has been said about reconstructing this line
south of Thanh Hoa. A 50-km section of line extending from Chu Le
(18012' N - 105040' E) to Dong Le (17053' N - 106?01' E) was operable
during the period of hostilities, but nearly all bridges were damaged
to some extent. In January 1957 it was reported that this section had
been extended so that about 135 km, extending from Due Tho (18 km
southwest from Vinh) to Minh Le Station (17043' N - 106022' E), were
open to traffic. Operations were limited, but regular freight and
passenger service was maintained centered on Chu Le Station, and
phosphate ores from the La Khe area were transported by rail to the
small phosphate plant at Chu Le. LV Further expansion of this stretch
of line is hindered by major bridging projects. Through operations on
this southern line probably will not be possible before 1959. Through
service at least as far as Vinh would enable more advantageous use of
the ocean port of Ben Thuy.
In less than 2 years the DRV has thus reconstructed
the important rail links with Communist China and is presently
pushing the one remaining line in the network south to the South
Vietnam frontier at the 17th parallel. In carrying out this ambitious
reconstruction program, however, the regime has depended heavily on
the Chinese Communists for financial, technical, and material assistance.
About 2,000 cadres and workers were reported working in bridging units
alone in November 1956. Material aid has included locomotives and
freight cars, bridging materials, machines, tools, and workshops. The
value of Chinese Communist aid in 1955 and 1956 for railroad equipment,
machines, and tools alone amounted to about 67 million dong (about $21
million). ?2V In addition, the Chinese have operated the rail system
and supervised rail shop work.
-34-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Faced with increased traffic loads, the railroads are
experiencing a shortage of rolling stock. ?J./ In early 1955 it was
reported that the North Vietnamese possessed 67 locomotives, 1,131
freight cars, and 36 passenger cars, most of which were of 1910-15 vin-
tage. L6_,/ In December 1955, however, the regime claimed that only
60 locomotives and 700 freight cars were available in North Vietnam. .?.//
The Chinese are known to have supplied at least 5 locomotives, 68/r
b. Highway Transport.
The prewar highway system of North Vietnam, comprising
about 12,250 km of main and secondary roads, was established to satisfy
military needs and to extend French influence inland from Hanoi and
Haiphong. From a fairly dense network in the Red River delta area, only
a few roads extended into the highlands to link the delta with the more
Important villages. Because of their limited military and political
use, these roads never received extensive improvements, which could have
been justified only in terms of more intensive economic development.
Little more than half of the network contained all-weather surfacing,
and fords and ferries were the rule for stream crossing. During the
civil war the road net was heavily damaged, but concurrently both the
French and especially the Vietnamese placed a major emphasis on improv-
ing tactical communications by reconstructing existing roads and trails
and constructing new roads to bypass stretches or road subject to inter-
diction. The regime constructed several new motorable supply routes to
connect points laterally on the centrally focused existing highway net-
work. Noteworthy among the roads built by the regime during the hostili-
ties is the important supply route connecting Dong Dang, on the Chinese
border opporite the rail head of P'ing-hsiang, to Thai Nguyen, one of
the major North Vietnamese supply centers during the war.
When the Communists took over control of the entire
area, only half of the total highway mileage in North Vietnam was
usuable /2/; much of the damaged portion lay in the Red River delta
area or to the south. By intensively using army units and corvee gangs
on road reconstruction, two-thirds of the war-damaged highways were
reported restored by January 1955. /1/ Reconstruction has largely been
concentrated on trunk routes, with some work on strategic secondary
routes. Throughout 1955 the highway reconstruction program proceeded
apace, even in the face of destructive floods, and by December 1955
it was reported that the length of highways open to traffic was twice
that of the summer of 1954. E./
-35-
S -E -C -R-E -T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
50X1
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Announcements of road restoration during 1954 and 1955
reflected the results of efforts to restore essential roads to at least
limited use for motor vehicle traffic. The rehabilitation and construc-
tion program in 1956 aimed at further improvement of some of the major
roads so that they would become limited all-weather roads. During the
latter part of 1956, priority was being given to improvement of roads
in the northern provinces (Bac Giang, Thai Nguyen, Bac Kan, and Cao
Bang). Old Route Coloniale No. 3 and its feeders, serving a large
forest region and the Tinh Tuc (tin) and Cho Dien (zinc) mining areas,
have been given particular attention. Numerous ferry crossings have
limited the through capacity of the main road system, and during 1956
an intensive program to build both wooden and larger concrete and
steel bridges was undertaken in order to eliminate most ferries on
primary roads.
By November 1956 it was estimated that road links
between Hanoi and Communist China were capable of carrying 60 percent
more traffic than in 1955. Di By the end of 1956, almost all of the
main-roads had been reconstructed or improved, and in addition many
important bridges had been constructed or restored and some new roads
had been built.
The primary highway network being developed in North
Vietnam comprises (1) main routes extending from Hanoi to areas in
the north and west not served by rail lines and (2) connecting routes
furnishing lateral communications and access to the strategic Laotian
frontier and to outlying mining developments. In the, south, highway
transport will be most important until reconstruction of the rail line
is completed. The condition of the highway system in general is only
fair. Most of the mileage is trafficable only in dry weather, and many
of the roads are rutted.
Two trunk routes are of special strategic significance.
One is a north-south road linking Nam Quan, on the Chinese Communist
border, with the South Vietnam frontier via Lang Son, Bac Minh, Hanoi,
Thank boa, and Vinh. The other is an east-west road linking Haiphong
with Lai Chau via Hanoi, Hoa Binh, and Son La. These two routes, with
their extensions, make possible movement of military forces and supplies
to many points along the Laotian - South Vietnamese border. The current
status of these routes is given below.
-36-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
(1) Nam Quan - Hanoi - Thanh Hoa - Vinh - South
Vietnam Frontier Road.
The Nam Quan-to-Hanoi section of this road
following Route Federale (RF) No. 4 and No. 1, as the most important
highway link with Communist China, was one of the first roads restored
to service. This road is hard-topped for about 35 km north of Hanoi,
and over this section is a modern two-lane highway. The remainder
of the road is in fair condition, although badly rutted in spots. All
ferries are operating and are in good condition and capable of handling
3-ton trucks. An alternate route via Thai Nguyen (following RF No. 3
and Route Provinciale (RP) No. 30, No. 32, and No. 33) is reported to
be graveled and in good condition. 12/
The section of this road extending south from
Hanoi (following RF No. 1) was subsequently repaired and by the end
of 1956 was open to traffic to the demarcation line. Construction was
under the supervision of the Chinese Communists using forced labor
and locally available material. The capacity of through traffic is
hampered by the use of numerous ferries. One of the ferries, at Gian
Khau, was recently replaced by a bridge inaugurated on 1 May 1957. :L/
The road is suitable for all-weather use, although some spots are
badly rutted, but must be constantly maintained; it is tarred for a
short distance south of Hanoi. /1/
It was reported in January 1957 that RP No. 3 in
Quang Ninh Province, south of Dong Hoi, had been repaired and widened,
thus giving the DRV two parallel north-south roads open to traffic
in the area immediately north of the demarcation line. IY RF No. 7,
extending laterally northeast from Phu Dien Chau, on RF No. 1, to the
Laotian border, was reported in December 1956 to have been repaired
throughout. IV
(2) Haiphong - Hanoi - Hoa Binh - Son La - Lai
Chau Road.
The section of this road between Haiphong and
Hanoi (RF No. 5) is in good condition and is capable of all types of
civilian and military traffic.
The road from Hanoi to Lai Chau (following RF
No. 6 and RP No. )4-1) in the past was a poor secondary road but was
rehabilitated and improved, so that in December 1955 it was described
as a limited all-weather trunk route. .1821/ In March 1956 the road was
-37-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
reported to be graveled and in good condition as far as Son La, 81/
but west of that point it was good only in dry weather.(
/ In the section east
of Son La the road was in good condition in January 1957, bridges of
steel and concrete were being built to replace temporary wooden ones,
and new and enlarged motorized ferries were being installed capable
of handling 3-ton trucks. !U/ The Son La - Thuan Chau section was
in a poor state of repair, but some attempt was then being made to
maintain it. The section from Thuan Giao into Lai Chau, over
mountainous terrain, was metaled but badly rutted. Repairs in that
section had been limited, there were no ferries in operation, and the
bridge at Ta Pao was the only permanent structure.
In the first quarter of 1956 the route northward
from Lai Chau toward Ban Nam Coum, on the Chinese border, was reported
to be under major construction, and the formerly unmaintained spur
extending south from Than Giao to Dien Bien Phu was being restored.
it was expected
to accommodate truck traffic by the early summer of 1956. !1,W In
January 1957 this road was reported to be in good condition and to be
carrying truck traffic.
(3) Hanoi - Tuyen Quang - Ha Giang Road.
This route, following RF No. 2, is graveled between
Hanoi and Tuyen Quang and was reported in January 1957 to be in good
condition, although the surface was badly rutted in spots. Washouts
on three bridges just south of Ha Giang during the rainy season of 1956
have interrupted movement on the last few kilometers of this route.
The DRV motor park appears to be adequate. There have
been large imports of trucks, other vehicles, and spare parts under the
assistance program of the Sino-Soviet Bloc. 112/ The present truck park
probably consists of more than 3,000 vehicles, an increase of more than
-38-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
50X1
50X1
50X1
50X1
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
1,000 since the armistice, and it is probable that a larger percentage
of trucks is now operational than during the war years. Most of the
new trucks seen in use around Hanoi in 1956 have come from Czecho-
slovakia. 2Y Soviet trucks have been imported, with many reportedly
in use in the Hon Gay mines.
Whereas truck transport was a dominant carrier of
both long-haul supply and local distribution during the war, its future
use apparently will be in a feeder capacity for the rail system and
in servicing outlying garrisons, mines, and villages. Pack carriers
operating in the high country furnish an important supplement to truck
transport.
c. Water Transport.
(1) Inland Waterways.
The principal inland waterway system in North
Vietnam is located in the delta area, where the Red River and lesser
streams, joined by a system of canals, serve an important function in
local cargo transport. Normally these waterways are heavily trafficked
by sampans and junks, and screw and paddle-wheel launches regularly
serve Hanoi, Haiphong, and Nam Dinh. The total inland waterways
network is about 800 km in length during high-water, and somewhat less
during low-water, periods. The waterway system suffered from silting
and destruction of some dams and locks during the hostilities, 21/
but with Chinese aid limited traffic was moving by the end of 1955. 22/
As a result of considerable attention given to rehabilitation during
1956, 22/ it is likely that the condition of the inland waterway
network is approaching its prewar status.
Work is under way on the Red River route to Lao
Kay which could permit vessels with up to 7 feet draught to use the
waterway at high water. The nature of the streams and the terrain of
North Vietnam, however, precludes any other significant increase in
the waterway network outside of the delta area.
Shortage of equipment is probably the weakest
aspect of inland waterway transportation. Some vessels are being
constructed or repaired by the regime.211/ Because of the lack of
both adequate facilities and materials for construction, however, some
additions to the inland waterways fleet are being obtained abroad.
For example, 20 steel river barges have been ordered from Poland. 22/
-39-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
(2) Maritime.
Perhaps the most important asset gained by North
Vietnam in the armistice agreement of May 1954 was the ocean port of
Haiphong. Control of Haiphong has permitted the regime to have direct
foreign trade with countries other than Communist China and has reduced
the reliance on overland transportation facilities with that country.
Ships carrying aid from the Soviet Bloc began
arriving at Haiphong as early as June 1955. Compared with the prewar
period, however, traffic through the port has been rather small,
although the volume has been increasing. Facilities at the port had
deteriorated because of wartime neglect, and extensive silting in the
channel and berthing area has prevented large vessels from docking.
With Soviet technical and material assistance, wharf facilities have
been markedly improved. LW The USSR also has sent 2 dredges to
combat the extensive normal silting and to remove the accumulation
from the period of hostilities 21/ in order that the 24-foot depth in
the approach channel can be restored. Although there have been delays,
the work has proceeded so that vessels up to 8,000 gross register
tons (GRT) can now call at Haiphong and 10,000-GRT vessels at Cam
Pha. Orders have been placed in the USSR and the Netherlands for
several more dredges. 2j,/ Although the unloading capacity of the
port has reportedly been doubled since the regime assumed control
of the port, 221./ this capacity probably still does not approach the
8,000 tons per day estimated for 1952. 100/
Seaborne trade undoubtedly will increase as the
condition of Haiphong and other ports is improved and as the economy
is rehabilitated. Exports of coal from Hon Gay and Cam Pha may
presently be resuming some of their prewar importance. 101/ Processing
of deep-water shipping at the small southern river port of Ben Thuy
is being expedited with Soviet assistance by dredging the estuary of
the Song Ca so that coastal vessels up to 500 GRT may enter.
With the withdrawal to South Vietnam of the
French-owned coastal fleet which had served the Gulf of Tonkin area,
North Vietnam was left dependent on small coastal junks and upon Soviet
and Chinese Communist vessels supplied on a temporary basis to handle
coastal transport requirements with the southern coastal ports and
with China. The coastal fleet was considerably augmented in 1956 by
gifts of vessels from Bloc countries. Communist China has presented
North Vietnam with the 610-GRT cargo ships Hoa Binh (Peace) and
Thong Nhat (Unity) 102/ (coastal cargo vessels built for China by
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Poland), two 900-GRT ships, 103/ two 260-GRT ships, 104/ and a number
of barges and lighters. The USSR has contributed at least four medium
and small tugs 105/ in addition to the dredges and reportedly also has
offered a merchant vessel, 106/ the characteristics of which are un-
known. Poland has sent 2 tugs and 4 barges. 107/
Although maritime operations are presently
embryonic, the DRV is preparing for expansion. A Sea Navigation
Company has been established, 108/(
d. Civil Air Transport.
Before 1956, North Vietnam was dependent for civil air
transport on the services set up by the French and the Poles to provide
air transportation for the International Control Commission (ICC). In
December 1955 the DRV established a Civil Aviation Administration 110/
and in January 1956 acquired 5 transport aircraft from Communist
China 111/ -- 2 Soviet-built Li-2's, accommodating 1)4. passengers each,
and 3 Czechoslovak-built Aero-45's carrying 3 passengers plus a pilot
each. These aircraft are used for civil air transport service and
presently also provide internal air transport for the ICC. 112/
Development of civil air transport has proceeded with
the assistance of the Sino-Soviet Bloc. 113/ The Chinese Communists
have directed the airfield rehabilitation program, and Chinese
technicians took over initially as flight and ground operating personnel.
It is possible, however, that Chinese-trained North Vietnamese may
have partially taken over airfield and airline operations during the
past year. 114/ North Vietnamese pilots have been reported in training
in China. In April 1956, domestic air service scheduled by the Chinese
Communists was extended to Hanoi. 115/
2. Telecommunications.
The total telephone and telegraph network in the DRV
presently measures about 14,000 km. Hanoi is linked with about 26
provinces by long-distance telephone lines (36 lines) and with 22
provinces by telegraph also. This provides adequate coverage to serve
the internal administrative needs of the government. During 1956
a new trunk telephone switchboard was installed to supplement existing
facilities in Hanoi, and a new 300-number telephone exchange was
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
50X1
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
installed in Nam Dinh. 116/ There is evidence that the establishment
of automatic telephone systems in all major cities is one of the regime's
long-range objectives. 117/
No information is available to indicate changes in North
Vietnam's 13-station domestic point-to-point radio system. The DRV
has increased the effectiveness of international point-to-point radio
telecommunications, with the establishment of direct radio telephone
or radio telegraph service, or both, with East Germany, Czechoslovakia,
France, India, and Hong Kong. 118/
Wireline broadcast reception was increased during 1956,
in the interest of achieving more effective coverage and control of
information reaching the people, by the installation of 11 additional
wire-diffusion centers by Soviet technicians. 119/
Future prospects for improving the telecommunications
system of North Vietnam will continue to rest largely on imports of
equipment from the Sino-Soviet Bloc. As more North Vietnamese are
trained in the fields of telecommunications, reliance on technical
assistance from the Soviet Bloc will lessen.
E. Domestic Trade.
The total volume of domestic trade has not been specified,
but retail sales (probably by the state only) were reported to be
about 53.2 billion dong ($16 million) in 1956 compared with 23.8
billion dong ($7 million) in 1955. State purchases of rice and maize
were reported to be above plan, and timber purchases were about 15
times greater in 1956 than in 1955. Sales of consumer staples -- cloth,
salt, sugar, oils, and paper -- in 1956 were reported to have been
about three times greater than in 1955.
Internal trade still is largely in private hands. The State
Trading Organization (Mau Dich), however, in accordance with the regime's
program of acquiring control over the trade of all basic commodities and
industrial materials, has grown tremendously during the past 2 years
and presently handles over 70 percent of total wholesale trade. At the
end of 1956, there were 10 main branches of the Mau Dich as well as count-
less shops holding Mau Dich agencies. In 21 provinces or cities, 136
supply and marketing cooperatives had been established. 120/ Private
retailers still handle about 70 percent of total retail trade.
The Mau Dich has received continuing criticism, varying in
intensity, directed at its sheer inefficiency in distribution, sales,
- 42 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
and purchases; at its inadequate foresight of the needs of small
industry; and at its incapacity to control prices. Regarding prices,
the Mau Dich has generally maintained the low price of rice and
salt, but prices of many secondary items -- firewood, sugar, cotton
textiles, and meat -- have been allowed to spiral. There have been
instances reported where the Mau Dich has "profiteered" on imported
goods such as kerosine, canned milk, and paper.
The 1957 State Plan calls for commercial gross sales to
increase about 17 percent above 1956, with retail sales of a number
of main commodities increasing markedly. The Plan calls for sales
of salt to increase by 9 percent, sugar and milk by 22 percent, fabrics
by 27 percent, paper by 57 percent, kerosine by 28 percent, and soap
by 47 percent. Although the Plan encourages increased sales and
production, it also calls for restricted consumption in order to reduce
imports and allow for increased exports. In addition, under the
1957 Plan, state-owned trade services and cooperatives are to increase
their share of total retail sales to about 41 percent.
F. Foreign Trade and Foreign Economic Relations.
Restoration of the economy of North Vietnam depends in large
part on the development of foreign trade, presently a government
monopoly. Overland transportation links with Communist China have
been restored, and the port of Haiphong, the only large port in
North Vietnam, is reopened and its capacity is being increased. The
country still is heavily dependent upon foreign aid to cover the
deficit in its balance-of-payments position and to provide funds and
materials for economic rehabilitation and development.
Although announcements of volume and value of trade lack
precision, it is clear that trade is expanding tremendously. In 1956,
total foreign trade (including aid imports) amounted to slightly less
than $200 million, more than double the level of 1955. 121/ This
increase reflects the restoration of export industries but, most
important, the increasing implementation of Bloc aid.
The commodity pattern of total trade in 1956 shows that most
normal imports showed large increases above 1955. Petroleum imports
increased about 20 percent, and imports of iron and steel products
(primarily fabrications for aid and other rehabilitation projects)
also increased markedly. Cotton yarn, fertilizer, machinery, and
medicines were also important imports.
-43-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Imports of rice, the major import in 1955, fell to half the
level of 1955. Since mid-1956, there have apparently been no further
imports of rice, and during the latter half of the year after the
excellent rice harvests in 1956 at least 30,000 tons of rice (about
1 percent of production) were exported to the European Satellites.
Rice exports have continued at a relatively high rate during the
first half of 1957 probably exceeding 100,000 tons.
Coal is by far the largest export, accounting for about one-
third of total exports. Exports of coal in 1956 amounted to nearly
1 million tons compared with 300,000 tons exported in 1955. Cement
and maize were also significant exports. Exports of tin in 1956
approached the prewar volume. Many other items were exported but in
small volume of relatively little value. These include such items
as timber, fruits, other food products, seaweed, and handicrafts
(lacquer, embroidery, rattan articles, bamboo products, feathers,
shell products, and the like). Exports of all items of this type
were reported to generate only about $450,000 per year. 122/
North Vietnam's foreign trade has been carried on almost
entirely with countries of the Sino-Soviet Bloc, China and thp USSR
together accounting for nearly 80 percent of total trade. Trade with
the Free World increased its relative share in 1956 but still amounted
to only about 10 percent of total trade. In 1956, coal was the major
export to the West, and rice and other foodstuffs were the major
imports. Japan was the major Free World trading partner of the DRV.
Coal was the major item exported to Japan, and imports consisted of
small amounts of cotton textiles and other goods. The DRV is
attempting to broaden its trade relations with the West. The regime
has trade agreements with France, India, and Indonesia as well as
unofficial contracts with several Western European countries, Hong
Kong, Japan, and Egypt.
The basis of DRV trade is a series of agreements signed in
1955, 1956, and 1957 with all the Bloc countries except North Korea
and Albania. Formalized trade with Communist China extends back
as far as 1952. 123/ These agreements cover primarily the barter of
North Vietnamese minerals, forest and agricultural products, cement,
and some handicrafts for such essentials as raw cotton, cotton
textiles, fertilizers, industrial chemicals, metal manufactures and
- 44 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
machines, medicines, and foodstuffs.
In addition, the DRV has concluded aid, and some technical
assistance, agreements with the USSR, Communist China, and all the
European Satellites except Bulgaria and Albania. Bulgaria and North
Korea have extended aid without formal agreement. The USSR has
extended aid totaling about 400 million rubles ($100 million), and
Communist China has granted about 800 million yuan (about $325 million)
in economic and technical aid. Total Satellite aid is relatively
small. It is difficult to maintain a clear distinction between those
imports effected under aid agreements and those effected under barter
agreements which often were signed at the same time. In some cases
a formal loan agreement was concluded to finance the materials and
equipment for a given project which provided for the DRV to export to
the creditor goods of the same value in due course.
It is roughly estimated that during 1956 imports under
Soviet aid agreements probably amounted to about $30 million, that
imports under agreements with Communist China amounted to about $75
million, and that total Satellite aid amounted to about $25 million.
Commercial trade with the Bloc and the Free World in 1956 is estimated
at about $60 million and was probably roughly balanced. Excluding aid
imports, trade in 1956 (measured in 1937 prices) had reached a level
only slightly more than half the prewar level.
The foreign economic relations of the DRV with the Bloc and
Free World countries are outlined below.
1. With the Sino-Soviet Bloc.
a. Communist China.
In July 1955, Communist China agreed "to present without
compensation to the Government of the Democratic Republic of Vietnam
800 million Chinese. yuan" ($325 million). This sum is to extend over
a 5-year period and is to assist the DRV in rebuilding transportation
facilities and in restoring and constructing industrial enterprises.
Communist China has also provided foodstuffs and manufactured goods,
is providing technicians to supervise and implement rehabilitation
and construction work, and is training DRV workers as apprentices
both in North Vietnam and in establishments in China. 124/
Chinese aid has been most important in the rapid
rehabilitation of the economy of North Vietnam. Communist China has
-45-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
been responsible for timely reconstruction of the railroad system,
has set up the embryonic DRV civil air organization, has supervised
most of the highway and bridge rehabilitation and construction, and
has aided in building up the merchant shipping potential. Communist
China has assisted in installation of telephone equipment at Hanoi
and Nam Dinh and in restoring more than 1,200 km of telephone
wirelines. Much of the reconstruction of flood control and irrigation
works has been under the guidance of Chinese Communist technicians.
The Chinese furnished equipment to restore the Nam Dinh Cotton Mill;
have constructed the Thong Nhat "Unity" Match Factory (opened in
June 1956); and are assisting in designing a number of construction
projects, including 10 large rice mills, a paper mill, and cotton-
spinning mill.
Trade protocols between the DRV and Communist China
covering general trade and special border trade were signed con-
currently with the aid agreement in July 1955 125/ and were extended
in 1956 and 1957. 126/ Trade in 1956 (and reported as not including
assistance) was about 2-1/2 times the level of 1955. 127/ It is
difficult to distinguish between aid and trade imports from Communist
China. In addition to imports of equipment, machinery, and materials
that probably would be used strictly in aid programs, receipt has
been noted of such items as textiles, medicines, paper, rice, and
other foodstuffs. In return the DRV has exported to Communist China
such items as anthracite coal, chrome ore, tin, timber, and agri-
cultural products. In 1955, about 40 percent of Chinese imports of
chromium ore were reported to have come from North Vietnam. In 1956,
exports of cement were also an important item going to China, reflecting
in part the continuing rehabilitation of the DRV's export industries.
b. USSR.
In July 1955 the USSR concluded a trade agreement with
the DRV which has since been extended through 1957. Trade in 1956 was
planned to show a fivefold increase above that of 1955, and the 1957
protocols provide for a "notable increase" above 1956. The 1957 protocol
calls for the DRV to ship timber, tea, coffee, spices, starch, handicraft
articles, and other goods to the USSR in return for Soviet fertilizers,
petroleum products, medicines, paper, sugar, and other necessary goods.
Concurrently with the trade agreement, in July 1955
the USSR granted North Vietnam 400 million rubles ($100 million) as
aid over a 2-year period. The agreement promised Soviet assistance
in "the reconstruction and building of 25 industrial and public utility
-46-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
enterprises" and in checking epidemic diseases and in providing food. 12,Y
According to a recent North Vietnamese announcement, Soviet aid has
amounted to "170,000 tons of rice, 10 million meters of fabrics, 14,000
tons of chemical fertilizers, machines to restore factories and mines,
transport and communications equipment, agricultural machines, cotton
(essential in reviving production at Nam Dinh), yarn, gasoline, kerosine,
medicines, and so on, worth 200 million rubles." 129/ Bui Cong Trung,
Chief of the Economic and Financial Bureau of the Premier's Office,
recently stated that in addition to the $100-million grant, the USSR
had provided the DEV with a long-term loan of about 30 million rubles
($7.5 million). He further implied that the 170,000 tons of rice were
a gift outside the monetary aid agreements. 130/
With Soviet assistance in tin-processing plant at Tinh
Tuc has been restored; a petroleum tank farm has been constructed at
Haiphong; numerous power-generating stations have and are being
constructed; and two tea-processing plants, a machine tool plant, a
fish cannery, and other plants are being constructed. Soviet geologists
have been conducting an intensive survey of the area and in 1956 were
reported to have covered 50 mining sites. Soviet mining and transport
equipment has greatly aided coal production at Quang Yen. Two Soviet
dredges have been given the DRV to clear the channels into Haiphong,
Cam Pha, and other ports, and severartugs and barges have also been
turned over. Soviet medical and public health teams have been active,
a Soviet-staffed 150-bed hospital has been opened in Hanoi, and Soviet
specialists have assisted in opening the Nam Dinh Waterworks and are
working on other similar projects. The USSR has installed 10 complete
broadcasting wire relay systems in Hanoi, Haiphong, Nam Dinh, Hong
Quang, Thai Nguyen, Lang Son, Thai Binh, Phat Diem, Thanh Hoa, and
Vinh. Most of these stations contain 2,000 speakers; the Haiphong
station has been described as having a 10-kw transmitter and 40,000
speakers.
Arrivals under the Soviet aid agreement have been
slow. The agreement runs out in July 1957, and although the DRV needs
further aid, the USSR has not indicated when or how much additional
aid would be granted. 131/
c. Czechoslovakia.
Several agreements between the DRV and Czechoslovakia
were signed in August 1955. An aid agreement provided that Czecho-
slovakia would supply scientific and technical experts in addition
to "machines and commodities" and that Vietnamese would be trained
-7 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
in technical studies in Czechoslovakia. 132/ A commercial agreement
called for Czechoslovak deliveries of diesel motors, water pumps,
other machines, textiles, and chemicals in exchange for oilseeds,
timber, rattan, tea, coffee, and spices. 133/
In January and March 1956, goods exchange and
payments protocols were signed for the year 1956. Under these agreements
the DRV continued to export those products mentioned in the 1955
agreements, and Czechoslovakia would export products similar to those
of 1955. The volume of exchange was to increase 5 to 6 times the small
1955 volume. A triangular agreement with Japan was included in the
protocol whereby Japan would import coal from the DRV and Japan would
export various items to Czechoslovakia on a switch account basis. 134/
Trade protocols for 1957 were signed in March 1957 and
called for only a 20-percent increase in trade volume. DRV exports
were expanded to include rice, maize, and manioc, and Czechoslovakia
is to export more light manufactures, such as electrical equipment
and consumer goods. 135/
Czechoslovak aid to the DRV was summarized recently
in a DRV announcement. 136/ It was reported that the Czechoslovaks
had given the DRV credits amounting to 35 billion dong (about $11
million) which had been used to purchase tractors, steam shovels,
pumps, lathes, cutting machines, fork-lift trucks, trucks, and consumer
goods from Czechoslovakia. They were also furnishing the DRV with
3 lumber mills, 2 of which are now under construction, and, together
with Communist China, were furnishing equipment for the Thang Long
state-operated cigarette plant. Czechoslovak specialists have assisted
in construction activities and in servicing machinery and equipment.
The DRV and Czechoslovakia also have concluded an
agreement of technical and scientific cooperation, and Czechoslovak
medical personnel are supervising and staffing a new 550-bed hospital
now under construction in Haiphong. 137/
d. East Germany.
Although there had been unconfirmed reports of earlier
trade agreements between the DRV and East Germany, the initial agree-
ment between the two countries probably was the one signed at the
Leipzig Trade Fair in March 1956. According to the terms of the agree-
ment, the DRV was to export timber, peanuts, sesame, coffee, and
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E7C-R-E-T
handicraft products in exchange for East German machinery, chemicals,
and medicines. 138/
The goods exchange and payments agreement for 1957
was signed in Hanoi in February 1957 and called for the exchange of
goods to increase about 2-1/2 times the level of 1956. DRV exports
were expanded to include "minerals, farm and forest products, fine
art and handicraft articles, and other articles" in exchange for an
expanded East German offering of "machinery, cloth, medical equipment,
bicycles and accessories, chemical products, electrical equipment, and
other products." 139/
An economic aid agreement was signed in January 1956
whereby East Germany was to provide optical equipment, chemicals,
machine tools, equipment for chemical works, mining equipment, a
polygraph printing plant, and automatic telephone equipment (possibly
that installed by the Chinese in Hanoi or Nam Dinh). East Germany
also was to survey and develop phosphate deposits 140/; East German
technicians have been active at the phosphate deposits near Lao Kay.
East Germany also has supplied the DRV with four modern deep-water
trawlers for use in connection with the fish cannery being constructed
by the USSR. 141/
East Germany in addition has an extensive medical
aid program in North Vietnam. 142/ East Germany equipped the 500-bed
Phu Doan Hospital in Hanoi (inaugurated in July 1956), is constructing
a sizable addition to the Ho Xa Hospital in Hanoi, 143/ has helped
staff several other Hanoi hospitals, has helped construct two medical
centers in North Central Vietnam as well as an artificial limb plant,
and has trained "many" medical workers.
e. Hungary.
Hungary has sent aid supplies to the DRV since 1954,
but the first formal aid agreement was not signed until December 1955.
Under this agreement, Hungary was to supply agricultural and industrial
machinery, transport vehicles, metal articles, medicine and medical
instruments, and consumer goods to the DRV during 1955 and 1956. 144/
In addition, Hungarian technicians have been sent to assist in bridge
construction and for general engineering assistance.
During the Hungarian uprising in October 1956 the DRV
offered monetary aid to Hungary amounting to about 3 billion dong
(about $900,000).
-49-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
At the time the aid agreement was signed, a protocol
was concluded for trade during 1956. This agreement was extended in
May 1957 for the year 1957 and called for the volume of goods exchanged
to double the level of 1956. Under the 1957 exchange agreement the DRV
will export "agricultural products, such as rice, maize, oil-bearing
grains, vegetable essences, handicraft articles, and other goods" to
Hungary in exchange for Hungarian machinery, electrical equipment,
chemicals, medical supplies and equipment, and other goods. 145/
f. Poland.
Poland furnished aid to the DRV throughout 1955 before
formal economic relations were established. In July 1955, Polish aid
included trucks, automobiles, rice, medicines, and medical equipment. J.46/
In February 1956, that aid was formalized in an agreement covering
1955 and 1956. Under the agreement, Poland was to provide machinery,
equipment, tugboats, barges, motor cars, tools, rice, pharmaceuticals,
textiles, and other products. 147/ A DRV announcement in April 1957
summarized Polish aid, emphasizing large Polish shipments of cloth.
The report stated that the Poles had granted the DRV (probably a credit
of) 30 million zlotys ($7.5 million) and in addition had sent 5,000
tons of rice and goods valued at about 30 million dong (about $9,000). 148/
Poland also has furnished the DRV with medical supplies
valued at more than 1.2 million dong (about $370,000) and has given
a mobile X-ray vehicle. 149/
In February 1957 the DRV signed a long-term loan
agreement with Poland whereby Poland will grant a credit for equipping
a sugar factory and for powerplant heating equipment which will be
repaid through delivery of Vietnamese goods. 150/
At the time the 1956 aid agreement was signed, a goods
exchange and payments agreement was signed providing for DRV exports
of coal, minerals, agricultural products, forest products, and handi-
crafts in exchange for Polish machinery, metal articles, pharmaceuti-
cals, chemicals, and "stable" industrial consumer goods. 151/ A
further report concerning this trade agreement stated that one of
the provisions called for Poland to receive the entire production of
the Tinh Tuc tin mine and the Bac Thi zinc mines. 152/ A trade
agreement for 1957 was signed in February 1957 and called for
"substantial" increases in the volume of exchange of essentially
the same commodity classes as in 1956. 153/
-50-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
g. Bulgaria.
Bulgaria had sent the DRV such items as rice, clothing,
canned meat, and oil before formal trade relations were established
in January 1956 with the signing of a trade agreement. This agreement
provided for DRV exports of lumber, peanuts, sesame, opium, ores, and
almond oil in exchange for Bulgarian electrical goods, chemicals,
medicines, and industrial goods for construction purposes. The DRV
summarized Bulgarian imports in 1956 as "medical products and raw
materials necessary for state-owned enterprises and for small industry
and handicrafts." This report added that Bulgaria had also supplied
outright aid to the DRV in the form of "cloth, kerosine, shoes,
tobacco, and other goods." Bulgaria has been reported to be equipping
a hospital in Hanoi.
A goods exchange and payments agreement for 1957 was
signed in February 1957 and called for trade between the two countries
to increase "considerably" above that of 1956. The DRV is to export
mineral and agricultural products, oil-bearing grains, timber, and
other products in exchange for Bulgarian electrical equipment, chemicals,
pharmaceuticals, textiles, and building materials.
h. Rumania.
The DRV and Rumania signed an economic aid and trade
agreement in April 1956 providing for DRV exports of tea, timber,
agricultural products, and handicrafts in exchange for Rumanian
electrical apparatus and various consumer goods and for Rumanian
technical aid and aid goods, such as agricultural equipment, generators,
and cloth. 154/
A goods exchange and payments agreement for 1957 was
signed in February 1957 calling for DRV export of rice, oil-bearing
grains, and handicrafts in exchange for Rumanian cloth, paper, pharma-
ceuticals, chemicals, and other products. 155/
I. North Korea and Outer Mongolia.
A North Korean delegation was reported visiting in
Hanoi and Haiphong in August 1955. 156/ A DRV press release in November
1955 mentioned that North Korea, among other countries, was giving
aid to North Vietnam. 157/ Apparently the aid is small, or token, as
no formal trade relationship has been established between the two
countries.
- 51-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Outer Mongolia made a token gesture of friendship in
November 1955 by presenting the DRV with 600 animals, 200 tons of meat,
25 tons of butter, and 25 tons of sausage. 158/ In June 1957 the first
goods and exchange agreement between the DRV and Mongolian Peoples Re-
public was signed in Hanoi by a visiting Mongolian trade delegation. 159/
2. With the Free World.
a. France.
The DRV is reimbursing the French for transfer of
industrial assets in North Vietnam. Payment for the La Societe' Frangaise
des Charbonnages has been estimated at 5 billion dong (about $1.5 million),
or 1 million tons of coal, payable over a 15-year period; payment for
the Haiphong Cement Plant is estimated at 25 billion dong (about $77
million). 160/ In June 1955 the French were reported to have sold the
Hanoi tramway for about 300 million francs (about $86,000). 161/ This
was for the most part abrogated when in September they agreed to pay
the DRV 265 million francs (about $760,000) for damages to equipment
removed from public buildings during the evacuation. 162/
In October 1955 the French and the North Vietnamese
concluded a trade agreement providing for 500 million francs (about
$1.)4- million) in trade each way for 1 year. According to the agree-
ment, 163/ the DRV will deliver coal, raw silk, agricultural products,
forest products, and handicraft products in exchange for French machines,
spare parts, textiles, vehicles, pharmaceuticals, chemicals, building
materials, ironware, and books. A DRV trade delegation visited France
from April to July 1956 negotiating contracts under the agreement of
October 1955. A further agreement was reached in October 1956 whereby
the balances of the agreement of October 1955 would be carried forward
and new exchanges of 1 billion francs (about $2.8 million) each way
were to be negotiated. 164/
Trade in 1956 was below the level expected but should
have increased during 1957. Ships of the French Messageries Maritimes
have arrived roughly about one a month at Haiphong since August 1956.
French receipt of DRV coal in 1955 and 1956 was estimated at about
58,000 tons for each year.
b. India.
In September 1956 a DRV delegation to the Industrial
Fair at New Delhi concluded an exchange of letters with the government
- 52 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
of India to facilitate over the next 3 years commerce between state
trading organizations and private firms in a wide range of goods. 165/
Indian exports would include various types of machinery, agricultural
implements, electrical goods, jute, cotton, woolen and silk textiles,
oil, tea, coffee, fish, tobacco, rubber, and leather goods. DRV exports
would include livestock, timber, fruits, cement, limestone, and porcelain
clay. Trade in many of these items would appear to be wishful thinking.
Other provisions of the exchange are that trade representatives may be
exchanged, that India will receive most-favored-nation treatment in the
DRV, that the DRV will be included in India's soft-currency area, and
that payments are to be made in rupees or sterling.
In May 1957 a further trade agreement was signed
calling for the DRV to sell 7,000 tons of rice to India during May 1957
in exchange for jute bags, hemp, machinery, and hides. 166/
c. Indonesia.
In early January 1957 a DRV delegation in Djakarta
signed a government-to-government trade agreement between Indonesia
and the DRV covering a 1-year period. Under this agreement 167/ the
DRV is to export to Indonesia rice, sea products, phosphate, cement,
coal, and other goods, whereas Indonesia is to export to the DRV
rubber, sugar, coconut oil, pepper, quinine, tin, and unspecified
manufactured goods. All payments are to be effected in transferable
pounds sterling. As in the Indian agreement, the financial scope is
not mentioned, nor the quantities of the individual commodities involved.
According to an agreement signed on 20 July 1957, Indonesia will purchase
20,000 tons of rice from the DRV. In the case of tin (which is produced
in the DRV) and rubber (which the DRV has no appreciable capacity for
processing) imports from Indonesia possibly will be reexported to meet
commitments under various Satellite exchange agreements.
Neither the Indonesian nor the Indian agreement has been
given much publicity, implying that the trade involved is to be relatively
small. It seems likely that it will be some time before a pattern of
trade develops between the DRV and India and Indonesia.
d. Japan.
Trade with Japan has steadily increased, and Japan is
by far the largest Free World trading partner of the DRV. Japan is
eagerly attempting to reestablish trade on the Asian mainland, and
private Japanese firms were negotiating with the DRV government in
1955. An initial trade agreement was reached in May 1956 between the
- 53 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
DRV and two Japanese private trading groups, the Japanese International
Trade Promotion Association and the Japan-Vietnam Trade Association.
This accord called for DRV exports of coal, manganese, chrome, bauxite,
antimony, timber, and other products in exchange for Japanese exports
of iron and nonferrous metals, construction machinery and parts, railroad
equipment, sampans and fishing vessels, soft coal, and coke. The Japanese
originally had aimed at a level of trade of about 1.5 million pounds
sterling ($4.2 million) each way, but by September 1956 it had reached
only about 0.4 million pounds sterling (about $1.1 million). A pro-
tocol signed in September by a Japanese delegation to Hanoi therefore
specified that exports up to the end of 1956 would include 100,000 tons
of coal, 15,000 tons of apatite, and 30,000 tons of rice and that im-
ports up to March 1957 would include 1 million to 3 million meters of
cotton textiles. 168/ Japanese ships have regularly called at Cam Pha
to load coal, and imports of DRV coal during 1956 have been reported to
be about 380,000 tons (compared with prewar imports of about 600,000 tons).
An unspecified part of this tonnage, however, is DRV coal technically
exported to France but which was in turn reexported by France to japan.
Since the summer of 1956, when phosphates from Lao Kay were made avail-
able for export by the opening of the Lao Kay - Haiphong railroad,
Japanese ships have regularly called at Haiphong to load phosphate.
In January 1957 a Japanese delegation in Hanoi repre-
senting about 11 major companies signed a supplementary accord to the
May 1956 trade agreement "extending the validity of that agreement and
increasing the volume of trade." Although neither the absolute level
of trade nor the time period called for in the accord has been announced,
it was unofficially reported in Tokyo that it called for a level of
about $12.6 million each way. 169/ Commodities to be traded included
DRV exports of coal, apatite, maize, rice, and medicinal herbs for
Japanese exports of metals, chemicals, transportation accessories,
cotton thread, chemical fertilizers, and office equipment. 170/
e. Hong Kong.
Hong Kong imported about 200,000 tons of coal from
North Vietnam in 1956. Traditionally, Hong Kongls coal needs were
supplied in large measure by imports from Japan. In January 1955
the Hong Kong government handed the coal trade over to local mer-
chants. 171/ This opened the door for imports of Vietnamese anthra-
cite by which the Hong Kong merchants could recover capital previously
accumulated in Vietnam. After a slow start in 1955, imports picked
up in 1956 and largely. have displaced Japanese coal.
- 54 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
Other than coal, trade is small, consisting primarily
of such things as Chinese medicines, traded outside the state trading
mechanism. Almost all transport is by motor junk.
f. South Vietnam and Laos.
Following the cession of Haiphong to North Vietnam, all
legal trade with South Vietnam ceased. An undetermined but relatively
small amount of smuggling has persisted in the exchange of foodstuffs,
native medicines, native products, and probably other products. An
ambiguous statement made by the DRV in August 1955 in connection with
a propaganda campaign calling for the establishment of normal relations
with South Vietnam claimed that the quantity of goods exchanged "during
the early half of 1955 alone was 1.5 times that of 1954." 172/ More
recently there has been little mention of either the normalization issue
or the amount of trade going on. There have been relatively few in-
stances of large-scale smuggling reported, and these have generally
been one-shot affairs. Localized clandestine trade will no doubt
continue, but because of the political situation, the prospects for
increased trade between these neighboring and formerly economic-inter-
dependent areas are dim.
g. Remainder of the Free World.
Although there were several unofficial reports that
Egypt and the DRV had earlier concluded a trade agreement, it was not
until June 1957, after the DEV had attempted to negotiate a trade
agreement with an Egyptian trade mission visiting the Far East, that
an agreement was concluded in Hanoi with a private Egyptian firm for
the exchange of Egyptian cotton, cotton yarn, and cloth for DRV rice,
tea, linseed oil, coal, cement, and timber. The trade probably will
be limited principally to exchanges of cotton and coal.
Premier Pham Van Dong in a speech before the National
Assembly in January 1957 reported that the DRV had trade contacts with
the business communities of West Germany, Switzerland, Austria,
Belgium, Luxembourg, Sweden, Holland, Italy, Denmark, and Greece.
Italy and Belgium imported small amounts of DRV coal in 1956, possibly
through resale arrangements by European Satellites. The trade relation-
ships with the other countries of the Free World are not known.
-55-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
APPENDIX A
CHRONOLOGY OF EVENTS
LEADING UP TO THE COMMUNIST CONTROL OF NORTH VIETNAM
AND OF SUBSEQUENT ECONOMIC DEVELOPMENTS
Phase I
Negotiations and Developments to the Outbreak of Hostilities 173/
(March 1945 - May 1957)
1914.5
9 March
15 March
March-April
The Japanese seized and disarmed
most French garrisons in Indochina.
The Viet Minh called for uprisings
against the Japanese.
A government was formed under Bao
Dai as puppet of the Japanese.
Annan was renamed Vietnam.
14-15 August Cochin-China was joined with Vietnam
by the Japanese. Japan surrendered.
16 August
The Peoples National Liberation Com-
mittee was formed with Ho Chi Minh
as president and with complete inde-
pendence as its aim.
24 August Abdication of Bao Dai in favor of the
DRV.
2 September Vietnam declaration of independence.
Mid-September Chinese occupied North Vietnam and
northern Laos.
12 October The provisional government of Pathet
Lao was established.
- 57 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
1945 (Continued)
25 October The French began an offensive against
the Viet Minh in South Vietnam.
1946
6 January
28 February
2 March
6 March
18 March
27 May
6 July - 12 September
14 September
Elections to the National Assembly
of the DRV; the Viet Minh won 230
of 300 seats.
Sino-French agreement signed in Chung-
king -- Chinese troops to withdraw
by 31 March in return for economic
concessions.
First session of the Vietnamese
National Assembly) which elected
the government and Ho as President
on 3 March.
French-DRV agreement signed by Sainteny
and Ho Chi Minh. The DRV recognized
as an independent state within the
French Union.
French troops entered Hanoi with forces
from the South.
The Vietnam National United Front (Lien
Viet) established.
Fontainebleau Conference with Ho Chi
Minh heading the DRV delegation.
Ho-Moutet modus vivendi on economic
and cultural affairs was signed. The
preliminary agreement of 6 March was
reaffirmed.
28 October Second session of the Vietnam National
Assembly was convened.
8 November DRV constitution adopted.
- 58 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
1946 (Continued)
20-22 November
S-E-C-R-E-T
Viet Minh - French clashes at Lang
Son and Haiphong, which were occupied
by the French.
23 November The French bombarded Haiphong.
17-19 December
20 December
1947
January
1 April
Fighting began in Hanoi, spreading
through much of Vietnam.
Ho Chi Minh called on the Vietnamese
people to expel the French.
French troops took Hanoi after a
battle.
French mission to Ho Chi Minh failed
to establish peace because of demands
for Vietnamese disarmament and freedom
of French troop movements.
Phase II
Deepening Conflict and Formation of a Rival Vietnam
(May 1947 - December 1949)
8 October The French established a rival govern-
ment in South Vietnam.
1946
27 NAY
6 June
22 November
France recognized the new Vietnamese
government, recently reorganized.
The provisional government of Vietnam
was proclaimed.
The DRV applied unsuccessfully for UN
membership.
- 59 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
1949
21 May France approved accession of Cochin-
China to Vietnam.
14 June Bao Dai proclaimed himself Emperor.
The people were later to choose
between monarchy and republic.
7 August
Pham Van Dong was made Vice-President
of the DRV, and its delegation was
withdrawn from France.
16 August The French began another offensive in
Tonkin.
16 December Chinese Communist troops reached
Vietnat's borders.
Phase III
Spreading International Dimensions of the Conflict
(January 1950 - December 1952)
1950
January
19 January
31 January
3 February
7 February
The Viet Minh began an offensive in
the area near the Chinese border.
The Peoples Republic of China recognized
the DRV.
The USSR recognized the DRV. France
protested, but the protest was rejected.
Poland, North Korea, Rumania, and
Hungary recognized the DRV.
The US and the UK recognized the States
of Vietnam (South), Laos, and Cambodia.
-6o-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
1950 (Continued)
8 may
S-E-C-R-E-T
US arms aid for the State of Vietnam
was announced.
29 May The French announced that all the Viet
Minh forces had been cleared from the
Red River delta.
30 May A US economic mission arrived in Saigon.
15 July A US military mission arrived in Indo-
china.
27 July The French began an offensive in South
Vietnam.
10 August US war materials began arriving in
Indochina.
13 August Formation of the "Pathet Lao United
Front of Free Peoples" and a "National
Resistance Government."
18-20 September Battles fought near the Chinese frontier;
the French abandoned several posts.
5-9 October
3,500 French troops were wiped out in
ambush; the Lang Son - Cao Bang line
was crumbling.
October The French abandoned all posts along
the Chinese border.
3 November
The French abandoned Lao Kay. They
held only two posts in the extreme
northeast of Vietnam.
27 November A new French offensive in South Vietnam.
23 December US military aid conventions with South
Vietnam, Cambodia, and Laos.
-61-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
1950 (Continued)
December 1950 - January 1951 A Viet Minh attack on the Red River
delta was checked.
1951
11-19 February
3 March
11 March
7 April
7-9 September
National Congress of the DRV in
session -- adopted a manifesto,
program, and Party constitution.
Also it elected a Central Executive
Committee of the new Party.
The Vietnam Lao Dong (Workers) Party
was founded. It became part of the
new revolutionary front; the Viet
Minh and the former Lien Viet were
merged into a new Lien Viet.
Organization formed to ally united
fronts of the DRV, Cambodia, and
Pathet Lao.
Ho Chi Minh called for the Viet Minh
(actually the Lien Viet) to end
conventional warfare and return to
guerrilla tactics.
US agreements on economic matters
and use of military aid with South
Vietnam, Cambodia, and Laos.
November The French began an offensive south-
west of Hanoi with initial successes.
25 December
1952
19 September
Communists checked the French offensive.
The USSR vetoed France's proposal of
UN membership for the Associated States
and the anti-Communist bloc prevented
membership of the DRV.
-62-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
1952 (Continued)
21 September Communist attack near Saigon --
first action in this area for a long
time.
15 October The French evacuated 6 posts northwest
of Hanoi.
16 October Communist offensive in Tonkin. The
French were driven out of the Black
River region.
30 October
The French began an offensive and took
Phutho. The de Lattre defense line
was formed not far from the Chinese
border.
November A French offensive in the delta area.
29 December The French retook Na-Sam in the north-
west.
Phase IV
International Crisis and the Geneva Agreements
(January 1953 - November 1954)
1953
25 January
13 April
Local elections held in the DRV resulted
in victories for the government except
in Hanoi.
The Communists invaded Sam-Neua province
in northeastern Laos in cooperation
with the "Lao Peoples Liberation Army."
US planes and pilots were soon engaged
in supplying opposing forces.
12 May Communist forces began to retreat from
Laos.
- 63 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
1953 (Continued)
27 July
9-10 August
August-September
S-E-C-R-E-T
Korean armistice agreement was signed.
The French evacuated Na-Sam.
French military offensive in lower
Tonkin. Another phase of the offensive
began in mid-October but bogged down
in November.
20 November French troops took Dien Bien Phu.
1 December
11 December
21-26 December
1954
January-February
18 February
28 March
26 April
28 April
Third session of the DEV National
Assembly passed a land reform law
drafted by the Workers Party.
The Communists took Lai Chau, capital
of the westernmost province of Tonkin,
whence they moved toward Dien Bien
Phu.
Communist offensive into Laos cut
Indochina in two when it captured
Thakhek on the Mekong River.
Communist Vietnamese and Pathet Lao
forces expanded their occupation of
areas in Laos.
Big Four agreed at Berlin upon a
Geneva Conference on Korea and Indo-
china to commence 26 April.
Communist Bloc created $500-million
military and economic aid pool to
reenforce the DRV.
The Geneva Conference opened.
Joint French-Vietnamese declaration
that Vietnam was totally independent.
- 64 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
1954 (Continued)
8 May Dien Bien Phu fell to the Vietnam
Peoples Army.
1-1- June
15 June
29 June
4 July
7 July
14 July
21 July
26 July
A treaty of independence and association
was signed by representatives of
France and Vietnam.
Ngo Dinh Diem became Prime Minister
of Vietnam.
The French began evacuation of the
southern part of the Red River delta.
The French began talks with the
Communists at Trunggia on details
of a truce and exchange of prisoners.
DRV-Chinese trade agreement signed.
Exchange of prisoners began.
Agreements reached were signed at
Geneva.
Pham Van Dong discussed medical aid
with Soviet officials in Moscow.
9 October The Communists occupied Hanoi.
20 November DRV-Chinese agreement on posts and
telecommunications signed.
Phase V
Recent Developments
(December 1954 - to date)
December Recontruction of Hanoi - Nam Quan
rail line initiated.
-65-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
1955
March Hanoi - Nam Quan rail line restored
to service.
March Reconstruction of Hanoi - Lao Kay rail
line initiated.
April Pham Van Dong diplomatic mission to
India and Burma and to Bandung Conference.
13 May
June
June-August
July
July
August
August
10 August
19 September
October
October
November
The French evacuated Haiphong.
First ships with Bloc aid arrive
Haiphong.
Ho Chi Minh's mission to Peking and
Moscow.
DRV-Chinese aid and trade agreement
signed in Peking.
DPW-Soviet aid and trade agreement signed
in Moscow.
North Korean delegation visited Hanoi
in Haiphong.
Through passenger service inaugurated
on Hanoi - Nam Quan rail line.
DRV-Czechoslovak aid and trade agree-
ment signed.
France agreed to pay indemnity to the
DRV for war dnmages.
National Planning Board established.
French-DRV trade agreement signed.
Outer Mongolia presented token aid
of foodstuffs to the DRV.
-66-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
S-E-C-R-E-T
1955 (Continued)
November Haiphong Cement Plan resumed operations
after being idle since March 1955.
November
December
16 December
1956
10 January
State Statistical Service established.
President Ho Chi Minh announced 1956
State Plan.
DRV-Hungarian aid and trade agreement
signed.
DRV-Bulgarian aid and trade agree-
ment signed.
27 January DRV-Czechoslovak 1956 goods and pay-
ments agreement signed.
January DRV - East German aid agreement signed.
7 February DRV-Polish 1955-56 aid agreement and
1956 trade protocol signed.
March DRV-Czechoslovak supplementary trade
protocol signed in Prague.
March Initial DRV - East German trade agree-
ment signed in Leipzig.
March Co Dinh chrome mine reopened.
April Hanoi-Canton civil air route inaugurated.
6 April Haiphong Phosphate Plant resumed full
production.
7 April DRV-Rumanian aid and trade agreement
signed.
May DRV and Japanese Trade Associations
signed trade agreement.
- 67 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
1956 (Continued)
5 May
26 July
7 August
25 October
October
October
1957
2 January
4 January
8 January
28 January
7 February
14 February
20 February
S-E-C-R-E-T
DRV-Soviet trade agreement signed.
DRV-Chinese 1956 aid and trade agree-
ment signed in Hanoi.
Hanoi - Lao Kay rail line opened to
traffic.
Supplementary French-DRV trade
protocols signed.
Soviet-built Phu Tho Tea Plant
turned over to the DRY..
Soviet-rebuilt Tinh Tuc Tin Processing
Plant inaugurated.
Premier Pham Van Dong reported to
Sixth Session of the DRV National
Assembly on the state of the nation.
Track laying completed as far as
Ninh Binh bridge on Hanoi - Thanh
Hoa rail line.
DRV-Indonesian trade agreement signed
in Djakarta.
Supplementary DRV-Japanese trade
accords signed.
DRV-Polish long-term loan agreement
and 1957 trade protocols signed.
DRV-Bulgarian 1957 trade protocols
signed in Hanoi.
DRV-Rumanian 1957 trade protocols
signed in Hanoi.
-68-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
1957 (Continued)
25 February
13 March
30 March
30 April
April
3 May
7 May
31 May
S-E-C-R-E-T
DRV - East German 1957 trade protocols
signed in Hanoi.
DRV-Czechoslovak 1957 trade protocols
signed in Hanoi.
DRV-Soviet 1957 trade protocols signed
in Hanoi.
Council of Ministers announced the 1957
State Plan.
DRV-Soviet 1957 trade protocol signed.
Indian-DRV trade protocol signed.
DRV-Hungarian 1957 trade protocols
signed in Hanoi.
DRV and private Egyptian firm signed
trade agreement.
-69-
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
R
Next 9 Page(s) In Document Denied
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
50X1
, Declassified in Part - Sanitized Copy Approved for Release 2013/05/20: CIA-RDP79R01141A001000030001-5
SECRET
Shih-ping
K'ai-yiian
'104
Meng-tzu
C H I
Ha Giang
Tinh Tar
Coo Bang
Banning
Block
Lao Kay
? Tin Processing Plant
Rehabilitation
Dong Khe
Cha Pa
That Khe
Bac Kan
Lai Cha
Na
Cham
ong Doh
oPhong Saly
Tuyen Quang
Dien Bien Phu Son La
R
.nh Yen
Mon Coy:
Tien Ye
? Tea Processing Plant Construction
? Power Plant Construction Son Tay
ab4,
Hoa Binh
HAN
Ha Don
u Lang Thuong
ac Ninh
Hai Duong
?
? Coal Mine Rehabilitation
on Gar
1G gar< QuariYen
(j
?'w-, a
? CO _, Cement Plant Rehabilitation ?
?Fish Connery Construction
I ? Rice Mill Construction
l? Phosphate Plant Rehabilitation
Ninh Binh
? Engineering Works Construction
? Plywood Works Construction
? Match Factory Construction
? Rice Mill Construction
Luang Prabang
-
? Textile Mill Rehabilitation
? Rice Mill Construction
Power Plant Construction
Muong Sen
7 ( .\- \- I .\'
Power Plant Construction
e n,Thuy
Linh Cam
Chu Le
Ha Tinh
VIENT NE
ECONOMIC ACTIVITIES
IN NORTH VIETNAM
July 1957
?Operable railroad ? ?Non-operable railroad
? Selected road net
? Foreign Aid Industrial Projects
t Major Port Facility
50
100 MILES
0 50 100 KILOMETERS
24592 10.57
Thakhek
Dong Hoi
DEMARCATION LINE
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20: CIA-RDP79R01141A001000030001-5
OX1
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5
SECRET
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/05/20:
CIA-RDP79R01141A001000030001-5