ECONOMIC DEVELOPMENTS AND PROSPECTS IN NORTH VIETNAM

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• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01141A001400050002-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 23, 2016
• Document Release Date: August 8, 2013
• Sequence Number: 2
• Publication Date: May 1, 1959
• Content Type: REPORT

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btt...Kt I
ECONOMIC INTELLIGENCE REPORT
N? 94
ECONOMIC DEVELOPMENTS AND PROSPECTS
IN NORTH VIETNAM
6.1 e? STA S 01 P.St9>Ct
CIA/RR 59-17
May 1959
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
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SECRET
MI- 727967
FM-
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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.
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ECONOMIC INTELLIGENCE REPORT
ECONOMIC DEVELOPMENTS AND PROSPECTS IN NORTH VIETNAM
CIA/ER 59-17
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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FOREWORD'
This report reviews the economic development in North Vietnam
achieved by the end of 1957, discusses the present economic situation
and the principal economic problems facing the regime, indicates the
goals of the Three Year Plan (1958-60), and estimates probable eco-
nomic developments. Also intluded are estimates of agricultural pro-
duction, agricultural self-sufficiency, the extent of agricultural
socialization) the level of industrial production, and the state of
the transportation system.. In addition, the report discusses the
foreign economic relations of North Vietnam with the Sino-Soviet Bloc
and the Free World and the extent and nature of economic aid to North
Vietnam.
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CONTENTS
Page
Summary and Conclusions 1
I. Economic Developments 3
A. Period of Reconstruction (1955-57) **** ?? 3
B. Three Year Plan (1958-60) 5
II. Foreign Economic Relations 9
9
A.
Economic Aid
B. Foreign Trade
III. Prospects
Appendixes
Appendix A. Statistical Tables
Appendix B. Chronology of Events of Economic Developments
in North Vietnam
13
15
23
Tables
1. Estimated Population of North Vietnam, 1938 and
1955-60
2. Estimated Production of Selected Agricultural
Commodities in North Vietnam, 1939) 1955-58, and
1959 and 1960 Plans
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3. Estimated Production of Selected Industrial
Commodities in North Vietnam, 1939, 1955-58, and
1959 and 1960 Plans
Page
17
4. Estimated Gross Value of Production in North Vietnam,
1955-58, and 1959 and 1960: Plans .??? ***** 18
5. The Budget of North Vietnam, 1955-57 and 1958 Plan 19
. "
6. Sino-Soviet Bloc Economic Assistance to North Vietnam,
1953-59 ? 20
7. Estimated Value of Foreign Trade of North Vietnam,
1955-58
8. Estimated Commercial Imports into North Vietnam,
by Category of Product, 1955-57
North Vietnam: Economic Activities, March 1958 . ? ?
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Inside
Back Cover
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ECONOMIC DEVELOPMENTS AND PROSPECTS IN NORTH VIETNAM*
Summary and Conclusions
North Vietnam,** having gone through a period of reconstruction, has
launched an ambitious Three Year Plan (1958-60) to transform a back-
ward agricultural economy into an advanced agricultural and industrial
state. Aid from the Sino-Soviet Bloc has been the principal factor
In establishing the basis for economic growth and self-sufficiency,
and continued foreign support of present programs is essential to the
development of the economy. These programs should enable North Vietnam
to achieve some degree of economic self-sufficiency by the end of 1960,
but continued growth will be slow and will require guaranteed deliveries
of raw materials and equipment from the Bloc as well as markets for the
limited range of North Vietnamese exports. Communist China inevitably
will incorporate North Vietnam more and more into its orbit of economic
Influence, so that eventually North Vietnam will become a satellite
without any clear national economic identity.
The principal goal of the Three Year Plan of North Vietnam is the
development of agriculture to provide increased quantities of food and
raw materials. Although production of food by the end of 1956 had in-
creased to prewar levels, such production during 1958 remained at about
the level of 1957, while the population continued to grow. Thus the
minimum requirements for feeding the population and developing a self-
supporting economy require a breakthrough in production of food. The
Communist regime feels that it is essential to collectivize agriculture
In order to increase production and, at the same time,-plans to place
greater emphasis on irrigation, the use of chemical fertilizers, and
the improvement of agricultural machinery and techniques. The Viet-
namese had proceeded cautiously in socialization, but quickened the pace
in the fall of 1957. By the end of 1958, about 60 percent of the peasant
households were enrolled in work-exchange or cooperative programs, al-
though most of these units would operate only on a seasonal basis and
represent only an elementary state in the transition to socialism. By
* The estimates and conclusions contained in this report represent the
best Judgment of this Office as of 1 April 1959.
** The term North Vietnam refers to that area of the former state of
Vietnam north of the 17th Parallel. The governmental apparatus of
North Vietnam, under control of the Communist Party of North Vietnam
(Dang Lao Dong -- Workers' Party), is known as the Democratic Republic
of Vietnam, or DRY.
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the end of 1960, all peasants are to be organized into cooperatives of
an elementary form, and some of the cooperatives are to be of an ad-
vanced form. Such a goal will require very rapid progress in 1959 and
may cause disaffection to crystallize in rural areas, but the govern-
ment appears determined to exert continued pressure on the peasants.
? Substantial material, financial, and technical assistance from the
Sino-Soviet Bloc has permitted the restoration and, in some cases, the
re-equipment or enlargement of nearly all the important existing in-
dustrial installations. New plants have been constructed, and the basis
for further industrial development is being laid in the construction of
power and building material plants and in surveys of mineral resources.
Industrial goals reflect plans for the close relationship of industry
and agriculture. The immediate policy is to build up light industry to
produce consumer goods for domestic consumption, to supply agricultural
and industrial needs, and to provide goods for export. In the future,
more emphasis is to be accorded heavy industry, but development will
follow the general aims for industry. The emphasis on mining will con-
tinue, and the construction of an iron and steel plant and of several
fertilizer plants is to start by 1960.
The transportation system of North Vietnam has been restored, and
the volume of traffic handled is equal to prewar levels. Reconstruc-
tion of the Hanoi-Saigon rail line has been extended to Thanh Hoa and
is being continued to Vinh, the major economic center of Interzone
IV.* The Hanoi-Lao Kay and Hanoi-Nam Quan rail lines have carried an
increasing volume of Chinese Communist goods in transit between the
K'un-ming area and the main Chinese railroad network in South China.
North Vietnam still is confronted with a chronic deficit in its
balance-of-payments position, and abnormally high requirements for
foreign goods and technical aid will continue for some time. Resto-
ration of agricultural and industrial production and development of
exportable resources have lessened the pressures somewhat, but the
long-run prospects for any great volume of exports are unfavorable.
* For the boundaries of this economic region) see the map inside
back cover.
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I. Economic. Developments.
A. Period of Reconstruction (1955-57).
The year 1957.marked the end of a 3-year period of economit
rehabilitation which was aimed at establishing the basis for future
programs for the economic development of North Vietnam. During this
period the aims were to restore production to prewar levels, to re-
build and expand industry; to sponsor technical training, and to
promote the socializatibn of the economy --ra. formidable program
indeed for so young and inexperienced a regime! When the Communists
assumed control over all of North Vietnam, they found that much of
the industrial plant had-been damaged to some extent during the
hostilities, -that most of the French technicians and supervisors had
beat evacuated, and that a large proportion of the native skilled
labor had fled to South Vietnam. In the rural areas, large tracts
of cultivable land were devastated, and flood control and irrigation
works had deteriorated badly:
Economic recovery in Ncirth Vietnam progressed very slowly at
first. In 1954 and 1955, -there occurred unprecedented natural calam-
ities, including a 2-year drought, severe floods) and a crippling
typhoon. Undoubtedly distress was acute in many rural areas. The
regime was handicapped not only by a general lack of administrative,
planning, and technical experience but also by serious and prolonged
delays in obtaining aid from the Sino-Soviet Bloc to relieve the
shortages of food, equipment, and technicians. By the end of 1955,
substantial progress had been made only in rebuilding roads and rail-
roads and in rehabilitating irrigation and flood control systems,
fields in which Chinese Communist aid was most readily available.
By early 1956, however, North Vietnam launched a program of
planned economic rehabilitation, and advisors and technicians began
to arrive from the Sino-Soviet Bloc. Financial, material, and tech-
nical assistance from the Bloc, especially from Communist China and
the USSR) has been the principal factor responsible for such successes
as have been achieved under the program.* Although the program fell .
short of the desired goals, its accomplishments have been significant.
Perhaps the greatest success of this period was the production
of more food in 1956 than in 1939,** thus permitting the exportation
* For further details, see II, p. 9, below.
** See Table 2, Appendix A, p. 15, below.
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of small amounts of rice. The regime emphasized flood control and
irrigation programs, and, by the end of 1957, claimed to have re-
stored the old irrigation systems, to have launched a,number of new
irrigation projects, and to have expanded the irrigated area beyond
that of the prewar period. On the negative side, efforts of the
government in land reform and socialization apparently affected agri-
cultural growth adversely. These adverse effects were noted especially
during 1957, when, as a result of the program for "correction of mis-
takes in land reform" and local resistance to organization of the
peasants, agricultural productioh fell below that of 1956.
The North Vietnamese regime also initiated programs to in-
crease production or industrial crops -- for example, cotton, jute,
sugar cane, peanuts, coffee, and tea -- to provide raw materials for
native industries and products for export, but these programs achieved
only slight success by the end of 1957.
The North Vietnamese authorities proceeded slowly in sociali-
zation of agriculture, reflecting in part a decision to follow the
precepts advocated by Communist China and in part a respect for the
militant independence of the peasants and local opposition. By the
end of 1957, less than 1 percent of the peasant families were members
of socialized organizations, but a measure of control had been ex-
tended over agricultural production through state-operated supply and
marketing cooperatives and credit cooperatives. By the end of 1957
the state controlled about 61 percent of the wholesale trade, 36 per-
cent of the retail trade, and all banking.
By the end of 1957 the internal communications and transport
systems of North Vietnam had been restored and were handling traffic
at prewar levels. Assistance from the Sino-Soviet Bloc helped to
develop the telecommunications system to a point where it was capable
of serving the administrative needs of the government. Substantial
technical and material aid from Communist China and other countries
of the Sino-Soviet Bloc permitted the rehabilitation of the rail,
highway, and water transport systems. Although not highly developed,
the transport system could support military and civil demands.
The rehabilitation and expansion of North Vietnamese in-
dustry were undertaken with substantial material, financial) and
technical aid from the Sino-Soviet Bloc. By the end of 1957, pro-
duction of most of the principal industries was still far below
prewar levels,* but nearly all of the important prewar installations
had been restored, and in some cases re-equipped or enlarged. New
* See Table 3, Appendix A, p. 17, below.
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plants were constructed, primarily to process or ptOduce consumer 'goods.
The basis for further industrial development was laid in the construc-
tion of eleatric power and building materials plants and in surveys of
dmineral resources. In the large industrial installations operated by
the state, productive efforts were hampered by inept management and
labor'unrest, Which apparently were the main reason S for the substantial
underfulfillment of goals for 1957.
Production of the handicraft industries, which accounted for
nearly 60 percent of total industrial produation in North Vietnam in
1957, generally exceeded prewar levels.* Although socialization of
handicrafts and other private industries proceeded slowly, the govern;
'merit was able to exert strong control over production by means of tax-
ation and of control of the markets for raw materials and finished
products. In 1957, more than one-quarter of private industrial pro-
duction was handled through government contracts, with the state furnish-
ing raw Materials and buying the finished products. ?
B. Three Year Plan (1958-60).
Having completed its program of economic recovery, North Vietnam
launched its first Three Year Plan for economic development (1958-60)
aimed at transforming the backward agricultural economy into an advanced
agricultural and industrial state along socialist lines. Unlike other
Communist governments, the regime recognized at the outset that agri-
culture must be the basis for developing the economy and that production
of sufficient food and consumer goods would require the.eXpansion of
agriculture and small industry. Thus the primary aim of the program is
to increase production of food crops (especially rice, corn, potatoes,
manioc, and 'livestock), industrial crops, and forest products. Although
production of food had regained the prewar levels by the end of 1956,
production remained relatively constant in 1957 and 1958, whereas the
populatiOn continued to increase.** Thus sustained economic growth
requires a sharp increase in production of food.
The Communist regime in North Vietnam feels that the expansion
of production requires the collectivization of agriculture, greater
emphasis on irrigation, the use of chemical fertilizers) and the im-
provement of agricultural machinery and techniques. Plans and policies
essentially are based on those of Communist China, and the regime, with
Chinese Communist technical assistance is carrying out an ambitious
? * See Table 4,.Appendix A, p. 18, below.
** See Tables land. 2, Appendix A, p. 15 and 16, respectively, below.
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program of irrigation. Large projects, such as the Bac-Hung-Bal system
(adjacent to Hanoi), and some of medium size are being constructed by
the central government, whereas many smaller systems are being built by
local governments. The Vietnamese estimate that the nationwide program
will be completed by 1960 and that more than 42 percent of the cultivated
area then can be double-cropped. Much of the industrial development is
directed toward the support of agriuclture -- for example, agricultural
processing plants, implement plants, and fertilizer plants.
The Communist program for North Vietnam emphasizes collectivi-
zation as the means of educating the peasants in the use of new tech-
niques, materials, seeds, fertilizers, insecticides, and the like and
of organizing the peasants for a greater exploitation of their labor.
The Vietnamese regime proceeded cautiously in its program for sociali-
zation up to 1957 but launched a move in the fall of that year to
quicken the pace. The regime had found difficulty in educating the
peasants for collective work, partly because of a lack of experienced
cadres to exercise Party discipline at the local level and partly be-
cause of inadequate communication between the central and the local
units of the government. To help alleviate this problem, personnel
from the central ministries were moved into rural positions, and in-
struction was given to Party workers in organizing work-exchange
groups and cooperatives. By the end of 1958, about 60 percent of the
peasant households had been enrolled in work-exchange or cooperative
programs, although most of these units operate only on a seasonal basis
and represent only an elementary stage in the transition to socialism.
Following the Chinese Communist pattern, the North Vietnamese
profess belief in a gradual institutional development of the sociali-
zation of agriculture -- that is, in proceeding through work-exchange
groups to primary ?and advanced cooperatives. By early 1959 the sociali-
zation of agriculture in North Vietnam had reached approximately the
stage achieved in Communist China in 1952. The Three Year Plan, however,
provides that all the peasants in North Vietnam are to organized into
cooperatives of at least an elementary form, some of them into coop-
eratives of an advanced form. In 1960, North Vietnam is scheduled to
reach the stage of pocialization achieved in Communist China during
the early part of 1956, a goal which would require very, rapid sociali-
zation in 1959. Considering the status of the Party in the countryside
and the traditional independence of the peasants, such a quickening of
the pace involves the danger of disaffection in rural areas and at least
passive resistance. Nevertheless, the government appears determined to
apply pressure on the peasants, mainly through state control of domestic
commerce. Concurrent with the drive for agricultural socialization has
been an expansion in the number of supply marketing cooperatives and
credit cooperatives. By 1960, government leaders expect to control nearly
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all of the wholesale trade and some 58 percent of the retail trade by
means of state trade and the supply and marketing cooperatives and most
of the private commerce by means of state-private organizations. By the
end of 1958, nearly 45 percent of the retail trade and nearly 75 percent
of the wholesale trade were under state eontrol.
Under the Three Year Plan the 16 state-operated farms, most of
which are located on plantation lands and grow industrial crops, are to
be used also as experimental food farms. The number of army farms,
established during 1958, generally on reclaimed land, is to be expanded,
and these are to be used as examples in collective and planned production.
. The socialization of agriculture in North Vietnam is patterned
after that of Communist China and is directed toward eventual communi-
zation. An editorial on the collectivization of agriculture under the
Three Year Plan, which appeared in the Party theoretical journal, declared:
Collectivized rural areas will create even better
conditions for the surging development of agriculture.
They will become not only a stable support for the ex-
pansion of industry and other economic sectors and for
the socialist transformation of capitalist trade and in-
dustry, but will also open the way for the peasants --
under the leadership of the Party and with the aid of
state-operated industry -- to develop their great force
in the building of regional industries, bring about a
mutual assistance between and parallel development of
agriculture and industry and a further strengthening of
the worker-peasant alliance. li*
Another article on industrial and agricultural relations which appeared
in :the same journal stated:
..; After being cooperativized, agriculture w111
become a vast Source of capital for establishment of
socialism. An increase in agricultural 'production
will enable peasants to improve their living standards
and accumulate capital for industrial development.
After achieving a high degree of agricultural coopera-
tivization, peasants will be better able to contribute
to building industry, and by so doing they will grad-
ually eliminate the contradictions between rural and
cities and between peasants and workers. ?../
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' Advanced cooperativization probably Will not be achieved for
at least 3 or 4 years, and it appears that the North Vietnamese are
not planning to move into joint agricultural-industrial development
until this state has been consolidated. Thus the establishment of
commune-type socio-economic units, althougb a likely final objective,
is still a number of years away.
The development of industry In North Vietnam reflects the aim
of closely relating agriculture and industry. The immediate objective
Is to expand production of consumer goods by light industry sufficiently
to meet all domestic demands and to provide items for export Small in-
dustry is being encouraged, and some larger mechanized and semimechanized
plants are being built. A concerted effort is being made to reorganize
handicrafts and other private industry along socialist lines. At the
end of 1957) only 20 percent of the handicraftsmen belonged to coopera-
tives, collective organizations, or other producers' groups. The Three
Year Plan calls for the organization of 70 percent of the handicraftsmen
into such groups by the end of 1960., During 1959, most of the small
private enterprises are to be reorganized as joint state-private plants.
Government control over the private sector is already very strong through
control of supply and distribution, banking, and taxation. According to
the Three Year Plan, production by large industry will account for about
45 percent of all industrial production in 1960) compared with about
25 percent in 1957) reflecting the increased produdtion of new and re-
novated large installations operated by the state. Poor management and
labor problems may continue to hamper the regime, but programs for ad-
ministrative and technical training soon will begin providing graduates
to fill technical positions.
More emphasis is to be accorded heavy industry in North Viet-
nam, but development still will follow the general Aims for developing
the national economy. Continued emphasis will be given to mining, espe-
cially to the processing of coal, apatite, phosphate) tin) chrome) and
Iron. Scheduled construction includes a number of nitrate and phosphate
fertilizer plants (most of them using locally available raw material).
Also scheduled is an "iron and steel complex," which will use _Local iron
ore, coal, and limestone and which will produce primarily for domestic
use for production of equipment for agriculture, mining) and industry.
The cement plant at Haiphong is to be reequipped in order to increase
its productive capacity. During 1958 an increase of more than 80 per-
cent in production of cement was achieved by the overutilization of
existing equipment, so that the plant is now producing above its rated
capacity, and further increases will be dependent upon installation of
additional kilns.
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Nearly all of the goals for production under the Three Year Plan
of North Vietnam* appear reasonable and reflect plans to expand capacity
for production of specific minerals or manufactures. Production of handi-
crafts) most of which is consumer goods produced outside control channels,
is already approaching the planned goal.
The transportation system of North Vietnam has been maintained
and in some instances improved. The support of military activities has
required the maintenance of major routes and border access routes.
Bridges and motorized ferries have been added to main highways) most of
which now are all-weather routes. The reconstruction of the Hanoi-Saigon
rail line has been extended to Thanh Hoa and is being continued to Vinh,
the major economic center of Interzone IV.** The Hanoi-Lao Kay and Hanoi-
Nam Quan lines have been maintained to carry the increasing volume of
Chinese goods in transit between the Kinn-ming area and the main Chinese
rail network in South China. With aid from the Sino-Seviet Bloc, the
numbers of vessels and barges in the coastal and inland water fleet have
been increased. Water transport is especially important as a link be-
tween the delta and the southern coastal area. The harbors of Haiphong
and Ben Thuy have been improved and are capable of handling all normal
shipping requirements.
II. Foreign Economic Relations.
A. Economic Aid.
Without the large amounts of aid received from the Siho-Soviet
Bloc, North Vietnam would have found it impossible to achiete any degree
of economic recovery. Although progress has been impeded by inexperience)
mistiming, and administrative red tape, the program appears to furnish a
sound basis for further industrial development in a viable economy, with
various projects and activities supported by countries of the Bloc which
have specialized competence in that field. Aid has been channeled prin-
cipally into the rehabilitation of old and the construction of new in-
dustrial and communications facilities. With such assistance) North
Vietnam has reconstructed or re-equipped obsolete or damaged facilities,
trained large numbers of workers on the job or abroad to fill the tre-
mendous gap in technical and administrative manpower, and imported in-
dustrial raw materials as well as complete production units. About
70 percent of all aid has been used for these purposes. Of secondary
importance have been deliveries of consumer products to complement the
limited output of consumer goods industries in.North Vietnam.
See Tables 3 and 4) Appendix A) p. 17 and 18) respectively, below.
** For the boundaries of this economic region) see the map inside back
cover.
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Capital funds for expansion of the Vietnamese economy have come
largely 'from foreign aid.* Such aid is believed to have financed about
43 pereent of the national budget in 1955; and although this proportion
declined to less than 40 percent in 1956, the absolute amount supplied by
foreign funds increased about 40 percent. In the budget for 1958, foreign
funds still furnished about one-third of the total revenue. As industrial
facilities come into production during the next few years, more capital
will be generated locally, but foreign aid still will be required.
During the period 1953-59, total financial aid to North Vietnam
from the Sino-Soviet Bloc -- loans, grants, materials, and relief aid --
amounted to about US $520 million.** Communist China contributed nearly
60 percent of this amount, providing grants totaling $225 million; a long-
term loan of $75 million, and $75,000 in other forms of assistance. The
USSR supplied grants and materials totaling $100 million, which were used
between 1954 and 1959, in addition to granting long-term, low-interest
loans valued as follows: in 1957, about $12 million; in 1958, about
$28 million; and in 1959, $25 million. The European Satellites contrib-
uted about $54 million in grants and loans, of which Czechoslovakia, East
Germany, and Poland furnished $48 million.
Chinese Communist assistance has been extremely important in
the restoration and development of transportation, communications, and
irrigation, and has contributed markedly to industrial development in
constructing and equipping a number of light industrial installations
and consumer goods plants. Chinese Communist administratOrs and tech-
nicians -- who have been spread through most of the government offices,
transport and telecommunications facilities, and industrial installations
of North Vietnam -- play a major role in economic planning, and their
Influence in everyday operations appears to be growing. The Chinese
Communists have undertaken most of the new industrial construction pro-
jects, including a 100,000- to 200,000-ton*** "iron and steel complex,"
and a number of nitrate and phosphate fertilizer plants. Most of the
production of the principal coal mines, of several nonferrous mines, and
of the cement plant is being allocated to Communist China, and the
Chinese are asserting greater control to assure delivery of these pro-
ducts. In the field of transport the Hanoi-Lao Kay and Hanoi-Nam Quan
rail lines have become almost integral parts of the Chinese rail system,
* See Table 5, Appendix A, p. 191 below.
** Dollar values are given in US dollars throughout this report. For
further statistical details on foreign aid to North Vietnam, see Table 6,
Appendix A, p. 20, below.
*** Tonnages are given in Metric tons throughout this report..
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with 3 or 4 trains operating over the lines in transit between Mun-ming
in Southwest China and the main Chinese rail net in South China. In .
February 1959, China signed an agreement which assured economic aid to
North Vietnam through 1960. ?
Soviet aid to North Vietnam has emphasized machinery and equip-
ment and) to a lesser extent, industrial raw materials and petroleum
products. Nearly all of the industrial aid has been channeled into
basic activities, such as the construction of power plants, the explo-
ration and exploitation of mineral resources, the construction of mineral
processing plants, and the construction and reconstruction of basic in-
dustrial plants -- for example, a foundry and machine shop, tea-processing
plants) and a fish-processing plant. The USSR also has emphasized train-
ing activities, constructing and staffing Schools in North Vietnam and.
training Vietnamese in the USSR. Signed agreements assure Soviet aid
through 1960.
The amount of aid to North Vietnam from the European Satellites --
although small compared with that furnished by Communist China and the
USSR -- has been significant in constructing and reconstructing specific
industrial plants, power plants) and communications facilities; in build-
ing and staffing several hospitals and other health installations; and in
furnishing technical assistance in mining and other facilities. The
funds for these purposes have been almost completely Spent, and although
medical teams and some technicians are still in residence, most of the
remaining programs appear to be on a strict contractual basis. Trade
agreements between North Vietnam and the European Satellites have been
drawn to extend through 1960.
In summary) the ability of the North Vietnamese regime to survive,
to strengthen its control, to provide food and essential consumer goods
for the population) to expand production, and to increase exports has
been made possible primarily by the imports granted as uncompensated aid
from the Sino-Soviet Bloc.
B. Foreign Trade.*
During the period of reconstruction the value of North Vietnamese
imports financed through foreign aid far exceeded that of imports which
entered in commercial trade. In-1957 the value of imports received in
trade may finally have surpassed that of imports derived through foreign
aid.
* Estimates of the value of the foreign trade of NOrth Vietnam during
- 1955-58 are shown in Tables 7 and 8, Appendix A) p. 21 and 221 respec-
tively, below.
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Communist China is the principal trading partner of North Vietnam,
the value of such trade having risen continuously since 1955. Trade with
the Sino-Soviet Bloc in 1958 leveled off as the result of a decline in
trade with the European Satellites, which had amounted to about 25 to 30
percent of the total in 1957.
In the trade of North Vietnam with the Free World the most im-
portant trading partner has been Japan, which accounted for nearly 75 per-
cent of the value of such trade in 1957. The decline in trade with the
Free World in 1958 reflected a sharp decrease in trade with japan which
more than offset the expansion in trade with other countries.
Exports of commodities which should be significant sources of
foreign exchange for North Vietnam, such as coal, cement, rice, and vege-
table oils, still are below the levels of 1939. The variety of products
available for export has been increased, however, and the quality of
these commodities is being improVed. Agricultural and mineral products
still account for most of the exports, but the volume of light industrial
products has increased.
The composition of imports into North Vietnam has changed greatly
since 1955. Capital equipment, which represented about 19 percent of all
imports in 1955, accounted for 31 percent of the total in 1956 and was
scheduled to represent about 28 percent in 1958. Imports of raw materials
increased in relative importance from 30 percent of the total in 1955 to a
scheduled 44 percent in 1958. Imports of consumer goods, however, which
represented more than 50 percent of all imports in 1955, were scheduled to
decline to about 28 percent in 1958 and to only 12 percent in 1960.
Under the Three Year Plan of North Vietnam, the value of foreign
trade in 1960 is scheduled to be 3 times that in 1957, but long-term
prospects are less promising. The redevelopment of the extractive in-
dustries is just beginning to show productive results, as are the con-
struction and reconstruction of the processing industries, and exports of
such products should increase markedly in the next few years. For long-
run growth, however, except for coal and phosphate, the reserves of most
valuable minerals available for export, such as chrome and tin, exist
only in relatively small amounts.
North Vietnam has been expanding trade with the Free World, and
by the end of 1958 had signed formal trade agreements with seven countries
outside the Sino-Soviet Bloc: Cambodia, Ceylon, Egypt, France, India,
Indonesia, and Japan. An attempt will no doubt be made to increase trad-
ing relations with the Free World, but various factors serve to limit
such expansion and to keep the trade of North Vietnam oriented to the Bloc.
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Only a limited number of buyers in the Free World are attracted by the
products which North Vietnam is able to offer for export: tin, chrome,
and other ores; rice and other agricultural products; and a wide range
of handicrafts. On the other hand, North Vietnam is increasing its
strong ideological and economic ties with the Bloc, especially with
Communist China'. Technicians from the Bloc have directed the develop-
ment of the extractive industries and of other manufacturing industries
oriented toward the export market. The Bloc, especially Communist China,
consumes most of the products being developed for export, such as ores,
cement, agricultural produce, and handicrafts. Exports of coal to Japan,
which have constituted the largest single export to the Free World, were
reduced markedly in 1958 as Chinese Communist demands for Vietnamese
coal increased sharply. Thus, it is probable that the economy of North
Vietnam will be more and more oriented toward that of its northern neigh-
bor and that increased foreign trade will be directed primarily toward
Communist China and; to a lesser extent, toward the rest of the Bloc.
III. Prospects.
With the initiation of a period of economic development the North
Vietnamese Communists began the crucial test of their ability to sur-
vive and maintain economic growth. Success will depend in large measure
on the outcome of the programs for socialization. Discontent both in
the cities and in the countryside is reflected in the government, the
Party, and the army. This discontent will persist but, in the absence
of major disasters, probably will?not become organized and will not
interfere with the ultimate enforcement of decrees for achieving so-
cialization.
Continued economic support from the Sino-Soviet Bloc will be essen-
tial to the development of the economy of North Vietnam. Programs now
under way should make possible some degree of self-sufficiency by 1960.
Continued growth will be slow, however, and will require guaranteed
deliveries of raw materials and equipment and a guaranteed market for
the limited range of North Vietnamese exports. Communist China will
incorporate North Vietnam more and more into its orbit of economic in-
fluence, and eventually North Vietnam probably will become a dependent
satellite without clear national economic identity.
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APPENDIX A
STATISTICAL TABLES
Table 1
Estimated Population of North Vietnam 2./
1938 and 1955-60
Year
Million Persons
1938
13.0
1955
13.0
1956
13.2
1957
13.4
1958
13.6
1959
13.8
1960
14.0
a. Y. Midyear 'figures.
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Table 2
Estimated Production of Selected Agricultural Commodities in North Vietnam
1939, 1955-58, and 1959 and 1960 Plans
?J
Thousand Metric Tons
Commodity
1939
1955
1956
1957
1958
1959 Plan
1960 Plan
Rice
2,400
3,600
4,132
3,950
4,576.9
6,200
7,600
Maize
140
187
259
197
197
N.A.
280
Potatoes
N.A.
534
1,062
540
540
N.A.
910
Manioc
N.A.
163
366
186
N.A.
N.A.
360
Soybeans
N.A.
N.A.
8
7
10.7
N.A.
9
Cotton
1
N.A.
6
6
6
7
9
Peanuts
3
N.A.
18
24
31.2
N.A.
55
Sugar cane
109
N.A.
168
333
492
674
623
Tea
6
N.A.
2.3
2.6
- 2.8 12/
N.A.
3.2
Coffee
N.A.
N.A.
N.A.
0.35
N.A.
N.A.
o.46
Tobacco
3.2
N.A.
0.9
1.7
1.8 12/
N.A.
2.3
Fish (salt water)
80
N.A.
118
115
N.A.
N.A.
6,000
Salt
38
95
86
106
120
150
N.A.
b. Planned.
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Table 3
Estimated Production of Selected Industrial Commodities in North Vietnam 2/
1939, 1955-58, and 1959 and 1960 Plans
Commodity
Electric power
Coal.
Cement
Apatite
Phosphate
Tin (pure)
Chromite
Cotton yarn
Cotton cloth
Silk cloth
Tea
Fish (canned)
Cigarettes
Matches
Unit
1939
Million kwh 120
Thousand
metric tons 2,615
Thousand
metric tons 310
Thousand
metric tons N.A.
Thousand
?metric tons 35.7
Thousand
metric tons 0.7
Thousand
metric tons 2.9 b/
Thousand
metric tons 12.6
Million
meters 59.8
Million
meters 1.2
Thousand
metric tons N.A.
Thousand
metric tons
Million packs N.A. N.A.
Million boxes 162 N.A.
1955
53
46o
8.5
N.A.
8.4
Negligible
Negligible
0.2
8.6
0.03
N.A.
1956 1957 1958 1959 Plan 1960 Plan
94 123.5 162.3 204.3 271
1,214 1,088 1,500 2,100 2)700
197 165 302
23.5 65.0 138.7
34.1 22.5 32.1
Negligible 0.11 0.223
1.2 3.7 5.7
6.8 9.5 8.7
47.6 64.7 67.2
0.37 0.7 4.1
N.A. 1.5 2.1
N.A.
N.A.
385 450
N.A. 400.o
52.3 65.0
N.A. 0.43
N.A. 32.0
N.A. N.A.
78.0 11.9.0
5.0 1.7
N.A. 2.5
N.A. N.A.
8.9 29.3 37.7
87.0 82.8 N.A.
Si
a. 2/
b. 1943.
c. State-operated mills only.
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Table 4
Estimated Gross Value of Production in North Vietnam
- 1955-58 and 1959 and 1960 Plans
Million Dong (New Currency)
Economic Sector
1955
1956
1957
1958
1959 Plan
160 Plan
State industry
30
160
230
380
570
730
Private and handicraft industry
190
280
700
710
970
1,010
Private
(75)
(115)
(160)
(130)
(155)
N.A.
Handicraft
(115)
(165)
(540)
(580)
(815)
N.A.
Total industry
220
44o
930
1,090
1,540
74o
Total agriculture (including
cultivation, livestock, and
subsidiary production)
1,550
N.A.
1,840
2,070
2,870
3,195
Total production
1,770
N.A.
2,770
3,160
4 410
4,935
a. Y. Dong may be converted to dollars at the rate of exchange of 4 dong to US $1.
. b. Planned.
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Table 5
The Budget of North Vietnam Liti
1955-57 and 1958 Plan
?Item
Amount
(Thousand US $) 12/
Proportion of Total
(Percent)
1955
1956 1957
1958 Plan
1955
1956
1957
1958 Plan
Revenue 2/
State enterprises
5,583
35,000
48,022
64,732
4.5
18.8
24.6
29.2
Taxes
58,806
67,250
65,396
75,373
47.4
36.1
33.5
34.0
Foreign aid
53,471
73,057
70,276
69,387
43.1
39.3
36.0
31.3
Other
6,203
10,787
11,517
12,193
5.0
5.8
5.9
5.5
Total
124,063
186,094
195,211
221,685
100.0
100.0
100.0
100.0
Expenditures
Economic construction
38,869
81,624
80,734
103,748
32.8
46.0
42.5
46.8
' Social, cultural, and welfare
9)922
20,051
22,605
28)377
8.4
11.3
11.9
12.8
Defense
43,088
39,038
40,652
44,780
36.4
22.0
21.4
20.2
Administration
17,626
22,181
19,756
23,055
14.9
12.5
10.4
10.4
Other
8,990
14,552
26,215
21,725
7.5
8.2
13.8
9.8
Total
118,492_
177,446
189,962
221,685
100.0
100.0
100.0
100.0
Surplus
5,568
8,648
5,249
0
a. I/
b. Converted at the rate of 4 dong to US $1.
c. Excluding carryover funds.
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Table 6
Sino-Soviet Bloc Economic Assistance to North Vietnam 21/
1953-59
Million US $ bJ
Country
Extended
- Utilizations
Grants
Credits
Grants
Credits
Communist China
225
75
140
N.A.
USSR
100
65
100
N.A.
East Germany
-.15
15
Czechoslovakia
9
Poland
8
169f
8
N.A.
Rumania
4
4
Bulgaria
SY
1/
Mongolia
..sli
9-!-4
Albania
4/
Hungary
2
2
Total
363
156
278
N.A.
a. Assistance extended by 13 March 1959.
b. Currencies were converted at appropriate exchange rates.
c. Czechoslovakia, Poland, and Rumania together had extended credits totaling
more than $16 million. The status of this -credit and the portion extended by
each country has never been announced.
d. Less than $1 million.
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Table 7
Estimated Value of Foreign Trade of North Vietnam 2/
1955-58
Million US $ 12/
Type of Trade
1955
1956
1957
1958
Exports
12.5 '
15.1
41.7
50.9
Bloc
11.4
13.8
27.5
38-7
Non-Bloc
1.1
1.7
14.2
12.2
Imports
ILI
24.0
86.1
N.A.
Bloc
7.6
23.5
76.5
N.A.
Non-Bloc
0.1
0.5
9.6
N.A.
Total trade
20.2
39.5
127.8
N.A.
Foreign aid 2/
53.5
73.1
70.3
N.A.
Total trade and foreign aid
-13L.T
112.6
.198.1
N.A.
a.
b.
C.
Converted at the rate of 4 dong to US $1.
Budget allocations.
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Table 8
EstiMated Commercial Imports into North Vietnam
- by Category of Product 2../
1955-57
(Million US
sr21 -
Proportion of Total
(Percent)
Category
1955
1956
1957-
1955 ?
1956
1957
Equipment, and spare parts
1.46
7)42
17.22 ,
19
31
20
Raw materials
2.30
. 7.42
37.87
30
31
44
Consumer goods
3.92
9.10
30.99
51
38
36
Total
7.68
23.94
86.08
loo
100
loo
a. AV
b. Converted at the rate of 4 dong to US $1.
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APPENDIX B
CHRONOLOGY OF EVENTS OF .ECONOMIC DEVELOPMENTS IN NORTH VIETNAM.*
1957
July-August
7 August
le September
11 September
5 October
Ho Chi Minh tours the Sino-Soviet Bloc.
DRV-East German 5-year cultural exchange
agreement signed in Hanoi.
Seventh Session of the National Assembly
opens. Program for correction of errors
said to be basically completed.
? DRV-Czechoslovak post and telecommuni-
cations exchange agreement signed in
Prague.
DRV and India sign small trade contract.
October-January 1958 .Ho Chi Minh visits USSR and Communist
China. .
18 December
30 December
1958
20 January
3 February
4 February
Kunming - Lao Kay - Haiphong railroad
restored to operation.
DRV-Mongolian trade and payments agree-
ment for 1958 signed in Hanoi.
DRV-Chinese railroad volume agreement
signed (relating to Chinese goods in
transit over DRV railroad between
Lao Kay, Haiphong, and Nam Quail).
DRV-Soviet postal interchange agreement
signed.
Ho Chi Minh begins tour of India and
Burma.
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1958 (Continued)
March DRV-Polish trade and payments.agree-
ment for 1958 signed.
March Vinh Power Plant (Soviet aid) completed.
7 March DRV-Ceylonese rice agreement signed in
Peking.
8 March DRV-East German trade and payments
agreement for 1958 signed in Leipzig.
12 March DRV-Soviet goods exchange protocol Tor
1958 and trade and navigation agreement
signed in Hanoi.
19 March
Second trade agreement between DRV and
Japanese Trade Associations signed in
Hanoi.
26 March DRV-Czechoslovak trade and payments
agreement for 1958 signed in Hanoi.
31 March DRV-Chinese trade and payments agreement
for 1958 and 1958 protocol to 1955 aid
agreement signed in Peking.
DRV-Hungarian 1958 trade protocol signed
in Hanoi.
1 April
12 April
16 April
30 April
14 May
24 May
Hanoi Machine Tool Factory (Soviet aid)
officially inaugurated..
Eighth Session of the National Assembly
opens. Three Year Plan (1958-60) for
etonomic development outlined.
MT-Czechoslovak 1958 cultural exchange
protocol signed in Prague.
DRV-East German postal agreement signed
in Hanoi.
DRV-Rutanian and DRV-Hungarian cultural
exchange protocol signed.
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1958 (Continued)
4 June
19 June
23 June
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DRV-Hungarian medical aid agreement for
1958-59 signed.
DRV-Hungarian radiobroadcasting cooper-
ation agreement signed in Hanoi.
DRV-Indian trade contract for Vietnamese
purchase of gunny sacks signed in
New Delhi.
July DRV contributes over 149 million dong
(old currency) (US $37,000) to support
of Algerian rebels.
July DRY-Rumanian technical and scientific
cooperation agreement signed in
Bucharest.
10 July DRV-Indonesian trade agreement signed
In Djarkarta.
? 11 July DRV-Rumanian trade and payments agree-
ment for 1958 signed in Hanoi.
19 July DRV-Chinese railroad volume agreement
signed.
? 2 August DRV-Bulgarian technical and scientific
cooperation agreement signed in Sofia.
September DRV permanent trade office established
in Cairo under 1957 trade and payments
agreement.
October
October
5 October
DRV-French trade agreement annual pro-
tocol signed.
DRV-Czechoslovak health cooperation
agreement signed in Prague.
DRV-Indian trade contract for exchange of
Vietnamese cement for Indian sugar signed
In New Delhi.
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1958 (Continued)
18 October
25 October
NoVember
19 November,
25 November
29 November
1 December
1 December
1 December
3 _December
8 December
9 December
9 December
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DRV-North Korean technical and scien-
tific cooperation agreement signed in
Hanoi.
First domestic airmail service initiated
in flight between Hanoi - Dong Hoi.
DRV trade group to set up trade promotion
offices in Hong Kong.
DRV-Cambodian trade and payment agreement ?
signed in Phnom Penh.
DRV-Albanian 1959-60 protocol on cultural
exchange agreement signed in 1957.
DRV-Hungarian trade and scientific and
technical cooperation agreement for
1959-60 and the 1959 trade protocola
signed in Budapest.
DRV-East German trade and payments agree-
ment for 1959-60 signed in Hanoi.
DRV-Czechoslovak trade and payments agree-
ment for 1959-60 signed in Prague.
DRflOrean trade and payments agreement
for 1956-60 signed in Hanoi.
DRY-Czechoslovak radiobroadcas ting mutual
aid agreement signed.
DRV-Chinese railroad volume agreement for
1959 signed in Kunming.
DRV-East German radiobroadcasting mutual
aid agreement signed.
DRV, Soviet, Chinese, Mongolian, and
North Korean railroad transit agreement
signed in Ulan Bator.
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1958 (Continued)
9' December
29 December
1959
)12 January.
15 January
16 January
20 January
23 January
12 February
16 February
18 February
24 February
26 February
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Ninth Session of National Assembly:.
Three Year Plan (1958-60) presented
.in detail.
. DRV-Soviet trade and payments agreement
signed.
DRV-Rumanian 1959-60 trade and payments
agreement signed.
DRV-Mongolian 2-year trade and payments
agreement and 1959 protocol signed in
Ulan Bator.
DRV-Chinese 5-year
signed in Hanoi.
Ho Chi Minh begins
Communist China.
cultural agreement
trip to USSR and
DRV-Bulgarian 1959-60 trade agreement
and goods and payments protocol for
1959 signed.
DRV-Polish 1959-60 trade agreement and
1959 protocol signed in Hanoi.
DRV-Albanian 1959-60 trade agreement
and goods and payments protocol for
1959 signed.
DRV-Chinese economic and technical aid
agreement and protocols, 1959 aid pro-
tocol, trade and payments agreement for
1959, and a long-term trade agreement
(1960-62) signed in Peking.
DRV-East German protocol on 1957 cultural
exchange signed in Hanoi.
DRV-Rumanian 1959 cultural exchange pro-
tocol signed in Hanoi.
- 27 -
S-E-C-R-ErT
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Declassified in Part - Sanitized Copy Approved for Release 2013/08/08 :
CIA-RDP79R01141A001400050002-8
S-E-C-R-E-T
1959 (Continued)
26 February .flo Chi Minh begins tour to Indonesia.
28 February Currency reform: old dong replaced by
new dong at exchange of 1,000 old dong
10r-1 new dong.
?
7 March
10 March
DRV-Soviet new economic and technical
aid agreement signed.
DRV-Czechoslovak cultural cooperation
agreement for 1959 signed in Hanoi.
- 28 -
S-E-C-R-E-T
Declassified in Part - Sanitized Copy Approved for Release 2013/08/08 :
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CIA-RDP79R01141A001400050002-8
le#
40 Next 2 Page(s) In Document Denied
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Declassified in Part - Sanitized Copy Approved for Release 2013/08/08: CIA-RDP79R01141A001400050002-8
INDUSTRIAL CONSTRUCTION AND
REHABILITATION PROJECTS
HA MANG
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Declassified in Part - Sanitized Copy Approved for Release 2013/08/08 :
CIA-RDP79R01141A001400050002-8
SECRET
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/08/08 :
CIA-RDP79R01141A001400050002-8