STAFF NOTES: CHINESE AFFAIRS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000300080013-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 23
• Document Creation Date: December 21, 2016
• Document Release Date: October 31, 2008
• Sequence Number: 13
• Publication Date: June 9, 1975
• Content Type: REPORT

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Top Secret
Chinese Affairs
State Dept. review completed
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Top Secret
-1 f7 r
June 9, 19 .4 J
75
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June 9, 1975
Progress in the Provinces 6
Concern About Textile Export Restrictions . . . 9
An Unhappy Anniversary for Chiang Ching . . . . 11
Pressuring Taipei 13
The Red Guards Are Back? . . . . . . . . . . . 16
Whetting Dacca's Appetite . . . . . . . . . . . 18
Notes 20
CHRONOLOGY 22
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Progress in thQ Provinces 25X1
The appointment of a first secretary in Hupeh
and the initial results of "get tough" measures
aimed at dissident workers indicate that Peking is
making progress on two of its bigger headaches:
demilitarization of provincial party committees and
restoration of labor discipline in Chinese factories.
The new first secretary is Chao Hsin-chu, a
cultural revolution purge victim who was rehabil-
itated two years ago. Like other recent appointees,
Chao is a veteran civilian administrator who seems
to have close ties to the moderate group now in com-
mand in Peking.
The appointment of Chao points up Peking's
continuing drive to remove military men from major
provincial posts. In Hupeh, the center passed over
the ranking party secretary (a military man) to
name Chao, the most senior of the civilian secre-
taries, to the top post, which was last filled by
one of the senior military commanders rotated 18
months art. Moreover, Chao is the fourth first sec-
retary named in the past five months; all have been
civilians, and all have replaced military men. Only
eight provinces still have an active duty army of-
ficer as first secretary, down from 17 just two years
ago.
Although determined to ease military men out
of traditionally civilian political posts, Peking's
attitude toward disfavored officers seems to have
changed in the past year. During the height of the
anti-Confucius campaign, Peking seemed intent on
purging a number of them outright. Now, the center
has apparently decided instead to reassign some of
them to purely military duties. The former first
secretary of Shansi has been appearing in Peking,
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where he may be performing military duties, and the
former boss of Tsinghai has apparently been trans-
ferred to Shantung after a stint at the center. Also,
career officers who have managed to stay on the right
side of central authorities are being rewarded. Foochow
Military Region Commander Pi Ting-chun is the latest
provincial army officer to lead a militar friendshi
delegation abroad.
Peking's efforts to increase worker discipline
and boost la in production also seem to be bearing
frui
many wor ers are ac,. on eir jo s an 25X1
a pro uc i n is up, at least temporarily. The situa-
tion has apparently improved slightly in a few other
provinces as well.
The improvement is at least partially attribut-
able to new "get tough" measures authorized by Peking
in March. Wages are being withheld from workers who
claim to be "ill" or whose productivity has dropped
significantly. Rail disruptions of all sorts are the
target of another strict directive. Threats have been
coupled with incentives, too. Some bonuses are being
paid to workers, evidently based as much on their
attitude as on their performance. Similar measures
have been used before with limited success, but the
proletarian dictatorship campaign with its strong
law-and-order undertones and its stress on punishing
economic misdeeds seems to have provided new force.
Formidable problems remain in both the provinces
and the economy, despite Peking's latest efforts. Ap-
pointing a new first secretary is only part of the
story; each new leader--like Chao Hsin-chu--must
establish his authority before he can effectively
deal with the problems of a particular province.
Some have had difficulty doing so, like Tan Chi-lung
in Chekiang, and others who seem to be relatively
successful--like Chao Tzu-yang of Kwangtung--face
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continuing challenges to their authority. While
Peking seems to be making some headway in con-
trolling the effev:ts of worker discontent, it has
not yet really come to grips with its causes.
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Concern About Textile Export Restrictions 25X1
The Chinese are showing increasing concern over
a depressed world market for their textiles, tradi-
tionally a major earner .-f hard currency. Countries
running a large trade surplus with China are re-
ceiving particular attention, and Chinese trade of-
ficials are threatening some with retaliatory action
for alleged discrimination. With other countries,
notably the US, they are taking a conciliatory at-
titude in an effort to increase textile exports to
the American market.
Australia, which is seeking to restrain imports
of Chinese textiles, has received the bluntest warn-
ing. The PRC has threatened to reduce wool purchases
if textile exports are disrupted. This type of threat
is not unique in Sino-Australian trade relations.
Twice in the 1960s, China responded to curbs in Aus-
tralian footwear imports by cutting purchases of Aus-
tralian hides.
With regard to Japan, China's textile trade last
year was aimed at importing cloth and yarn and export-
ing finished garments. Although there is no contractual
link between sales and purchases, the Chinese feel a
strong moral commitment exists to balance roughly this
trade agreement. They were extremely annoyed that they
imported large amounts of cloth and yarn without
reciprocity by the Japanese. Exports of Japanese
textile products to China rose from $63 million in 1973
to more than $200 million last year, but Chinese ex-
ports of clothing to Japan only doubled, from $47 mil-
lion in 1973 to $100 million in 1974. If this trend
continues, China may resort to the same type of threat
against Jz.pan that it has used with Australia.
China is showing a conciliatory attitude toward
development of textile trade with the US. During the
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recent visit to the US by representatives of the
China National Textiles Import and Export Corpora-
tion, delegation members expressed a strong desire
to increase textile sales to the US. They studied
types of cloth, fabric colors, and patterns that
are attractive to US consumers avid discussed pack-
aging and currency problems. The delegation also
agreed to lower textile prices, something the
Chinese had previously said they would not do.
There has been some concern by US textile
producers over the rising amount of imported Chinese
textiles. Textile imports to the UUS of $38 million
in 1974, up from $12 million in 1973, however, rep-
resent less than 1 percent of total US textile im-
ports. In the event of US import restrictions on
PRC textiles, retaliatory action is unlikely. Any
reduction in imports of Chinese cotton, a-textile
related product, is more likely to be tied to a
rise in cotton output in China. Moreover, cotton
imports from the US are contracted for through
private firms instead of a national organization,
making it difficult to political leverage.
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An Unhappy Anniversary for Chiang Ching
The anniversary on May 23 of Mao's talks on
literature and art v greeted with the customary
outpouring of propaganda and a month-long festival
sponsored by the Ministry of Culture. Missing from
this year's festivities, however, is any direct
mention of China's cultural czar, Chiang Ching.
Neither Radio Peking nor the provinces referred
to Chiang Ching in their broadcasts commemorating
the anniversary. Last year, by contrast, four
provinces mentioned her--Heilungkiang on three
separate occasions. It may be significant that the
then party boss of Heilungkiang, military man Wang
Chia-tao, seems now to be in political trouble.
Madame Mao did manage to elbow her way into
the anniversary celebration, but not without
difficulty. The only mention of her name occurred
not in China but in Hong Kong, in the PRC-controlled
newspaper Wen Hui Pao, which has appeared to act
as a mouthpiece for Chiang Ching. In an interview
with a Peking musician, the paper carried his
reference to a 1965 instruction from Chiang Ching
on composing a "revolutionary" symphony.
In Peking, People's Daily ran an unexceptional
article on May 23 under the pseudonym Chu Lan,
who seems to be Chiang Ching or someone who writes
on her behalf. The arti:nle lacked the usual
stridency of earlier Chu Lan pieocs, however, and
seemed to follow the propaganda line established
the previous day by Liang Hsiao, another pseudonym
for an obviously authoritative person whose identity
is not clear but who generally adopts a moderate
position. The only distinguishing feature of Chu
Lan's article was its bold praise of Chiang Ching's
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"model" cultural works, which wore said to have
borne "rich fruit." :iang Itsiao merely wrote that
the model works "exemplified" the current revolu-
tion in culture.
Chiang Ching's minuscule role in this year's
anniversary is another sign of her diminishing
political status. She has made only six public
appearances this year. The Chinese media have
praised her by name only three times since the
beginning of the year, and only once from Peking.
Interestingly, Madame Mao's political woes do
not seem to have affected Yao Wen-Yuan, generally
regarded as her closest associate. Yao has logged
some 26 public appearances this year, most of them
since April. In the past, Yao's public appearances
roughly paralleled those of Chiang Ching. He has
maintained a fairly high public profile, however,
since he took part in substantive talks with visit-
ing North Korean President Kim Il-song in April.
For the moment at least, it appears that Yao's
political fortunes are not so closely linked to
Madame Mao's as they once were. Should this state
of affairs continue, it would seem likely that Yao,
sensing that his future would be limited if he con-
tinued to throw in his lot with Chiang Ching, had
tried to seek a modus vivendi with those in the
leadership whose future appears reasonably secure
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Pressuring Taipei
Peking's efforts to pressure the Chinese Na-
tionalirits into some form of communication wish
the mainland continue to be rebuffed by Taipei.
Ten former Nationalist, officers, released by
Poking earlier this year an part of an amnesty of
"Kuomintang war criminals," have been in [long Kong
for nearly two months awaiting Taipei's decision on
their applications to visit Taiwan. On June 2, the
Hong Kong government granted the releasees a one-
month extension of their stay in the colony; it was
the fourth such extension since they arrived on April
14. Taipei has made it clear that the releasees will
not be granted permission to enter Taiwan unless
they are willing to publicly declare their opposition
to Peking.
Since Taipei certainly recognizes that it would
be extremely awkward for the "war criminals" to re-
verse their well-publicized pro-Peking positions,
it is clear that Taipei is in no mood to do any
kind of business now with Peking.
Taipei is also very much aware of the ramifica-
tions of admitting the "war criminals." In April,
Premier Chiang Ching-kuo told the US ambassador
that he had issued instructions to reject any
attempts the releasees make to visit Taiwan. Last
month, Nationalist Foreign Minister Shen Chang-huan
said that if any of the amnestied group were allowed
to enter Taiwan, Peking would claim that it signaled
the beginning of "contact" between the two parties.
Shen added that this might lead to rumor and
speculation that would put Taipei on the defensive--
which is what Peking obviously has in mind.
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For its part, Poking has continued through its
media outlets in Hong Kong to decry Taipei's "in-
sensitivities" to the plight of the "war criminals."
The pro-Peking press in Hong Kong has also argued
that Taipei's fear of accepting the releasees re-
flects the weakness of the Taipei government. For-
tunatelyy for Taipei, however, the international press
has not given heavy play to the issue because of its
preoccupation with recent events in Indochina.
The June 4 suicide of one of the releasees,
however, could refocus foreign press attention on
the situation. News of the suicide received banner
headlines in many of Hong Kong's major newspapers,
which attributed the act to despair over the failure
of the Nationalist government to act on requests to
visit Taiwan.
Peking's current campaign for communication with
Taipei began last February when Liao Cheng-chih sug-
gested increased "compatriot-to-compatriot" contact
in a speech commemorating the 1947 Taiwan "uprising."
Recent Chinese propaganda has also encouraged Taiwan
residents to visit relatives on the mainland and has
included rather heavy coverage of Peking's invitation
to Taiwan residents to participate in China's national
games this fall in Peking.
Peking appeared to be following up on this theme
last month in a broadcast beamed to Taiwan. Although
the broadcast did not refer directly to the desir-
ability of communications with the mainland, it
explicitly linked the collapse of pro-US regimes
in Indochina with the situation faced by the Taipei
government, and equated former South Vietnam president
Nguyen Van Thieu's regime with the Nationalist leader-
ship. The broadcast called upon officials in Taipei
to draw the appropriate "lessons" from the South
Vietnamese example, especially regarding the futility
of reliance on the US, and to work for the "liberation"
of Taiwan.
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Peking seems to be telling the Nationalists
that, despite current US support, their long-term
prospects are doomed--unless Taipei recognizes the
inevitability of reunification. Peking is also
implying that Nationalist lea(Lers can avoid a fate 25X1
similar to that of former president Thieu only by
i
agree
ng to some sort of accommodation wit
mainland.
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The Red Guards Are Back? 25X1
Final preparations appear to have started for
the Tenth National Congress of the Communist Youth
League, the final step in rebuilding the mass youth
organization. The Inner Mongolian League Committee
recently held an enlarged plenum to greet the con-
vocation of the National Congress and elect their
delegates.
Despite the imminence of the National Congress,
which would indicate that conditions have stabilized
and questions regarding the approach to youth work
have been resolved, recent events indicate that
the league's role vis-a-vis that of the Red Guards
still has not been resolved.
At a recent experience exchange rally in Shang-
hai., the Red Guards were given an equal role with
the league in the effort to "grasp education of
young people" under the current dictatorship of the
proletariat campaign. Although both the league and
Red Guards were well represented at the rally,
greater emphasis was placed on the need to strengthen
the building and organizational role of the Red Guards.
Red Guards also re-emerged in a Shanghai middle
school establishing and leading theoretical study
groups under the current dictatorship of the prole-
tariat campaign, a role previously reserved for party
cadres. Moreover, an article by the Party Committee
of the No. 17 Shanghai Cotton Mill, which is asso-
ciated with Wang Hung-wen, stresses the leading role
of party and league cadres in leading theoretical
study groups with no mention of a Red Guard role.
The Red Guards as an institution have had no
political power since late 1968. Those who now be-
long to the rather shadowy remnant organizations which
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had flourished in 1966-68 are at best the younger
brothers and sisters of those students who engaged
in "struggle" at the height of the cultural revolu-
tion. Unlike the cadres and workers whose cultural
revolution as.3ociations re-emergeu luring last year's
anti-Confucius campaign, these young students have
little or no partisan memory of the heady days of
the "revolution." They are therefore not a politi-
cal pressure group in the sense thy,: the workers'
and cadre groups were last year and probably still
are.
The Red Guards are, however, a symbol precisely
of the cultural revolution itself. And as a symbol,
their role--like the historical significance of the
"revolution"- -remains unresolved. For this reason
the question of whether or not the Red Guard organ-
izations are to play a role in youth work is a po-
litical issue--one of considerable sensitivity. Al-
though several other provinces have mentioned the
Red Guards in connection with preparations for the
Youth League congress, none has spoken of a specific
role for the Red Guards. Most provinces have made
no mention of the Red Guards at all. This diverse
treatment suggests that the issue is alive as well
as sensitive.
The treatment of the issue in Shanghai may be
merely an isolated incident, but it highlights the
problem that even a token role for this symbol of
the cultural revolution is a question that will
have to be tackled by the Youth Lea 1 7 when
it convenes.
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Whetting Dacca's Appetite 25X1
China and Bangladesh have recently established
formal trade relations, but this does not mean that
diplomatic ties are just around the corner. The
four trade contracts signed not long after a
Bengalee delegation attended the Canton export fair,
however, represent the most significant step along
this path since the two countries began to talk
about exchanging ambassadors almost a year ago. It
has encouraged Dacca, which heretofore has been much
the unrequited suitor seeking diplomatic ties with
the hope that they will bring with them badly needed
economic aid.
Although the trade breakthrough has given rise
to Bengalee press rumors that China will soon recognize
Bangladesh, this is almost certainly wishful thinking.
To be taken more seriously is the remark last week by
Bangladesh's foreign minister to the US, ambassador in
Dacca that diplomatic ties are not likely to occur be-
fore autumn. He went on to say that talks on this sub-
ject would be resumed at the UN General Assembly in
September.
The foreign minister's reading of China's state
of mind was shape,1 by a visit to China in late May by
Dacca's ambassador to Burma, K.M. Kaiser. The Chinese
probably reiterated to Kaiser their long-standing
position that full relations cannot come until Dacca
resolves its differences with Islamabad over the
questions of Bangladesh's unwanted Bihari minority
and how to divide the assets and liabilities of pre-
1971 Pakistan. Thus far, only very limited progress
has been made toward resolving these problems.
Even though the Pakistanis have given the Chinese
the green light to establish relations with Dacca
whenever they see fit, Peking has held firm to its
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precondition. When Vice Premier Li Hsien-ninn
visited Pakistan in April, he reaffirmed this posi-
tion. To some extent this may be a stalling tactic
which buys China time to get a better fix on the
staying power of President Mujibur Rahman. At the
same time, the Chinese are probably genuinely con-
cerned that continuing Bengalee-Pakistani differences--
leave room for the Indians (read Soviets) to enlarge
further their influence in Dacca. Peking appears to
be using the promise of diplomatic relations as an
inducement to the Bengalees to reduce India's in-
fluence by breaking the stalemate with the Pakistanis.
In this context China's decision to establish trade
ties helps ensure that Dacca will. remain interested
in dealing with Peking without forgoing the consider-
able leverage which comes from withholding recognition.
Despite this pressure from Peking, resolution
of Bengalee-Pakistani differences is likely to
take a long time. Should Bangladesh's relations
with India and the Soviet Union begin to grow even
closer, Peking will probably feel more inclined to
establish diplomatic ties with Dacca. On the other
hand, if Dacca's relationships with Islamabad, New
Delhi, and Moscow remain unchanged over the next
several months or so, the Chinese may well move
ahead anyway with diplomatic relations should they
come to believe that Bangladesh's interest in ties
with Peking is waning. 25X1
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The current issue of Red Flay carries a strong
call for the now standard theme of unity and sta-
bility and links this theme to the proletarian
dictatorship campaign. Dubbing the campaign a
"study movement," the article makes it clear that
the campaign is not to interfere with the promotion
of stability or to be used as an excuse for fac-
tionalism and divisiveness. Repeating the goal of
achieving modernization by the and of the century,
as stated by Chou En-lai at the National People's
Congress, the article argues that unity and sta-
bility are needed in order to "gain time" to pursue
modernization in a variety of fields. The article's
repeated use of the phrase "unity and stability"--
it is mentioned some 26 times--and its call to
"defend" this notion suggest that Peking remains
worried about potentially disruptive elements in
society and that unity and stability have not yet
become a universally accepted practice.
A month after raising the controversial issue
of how to treat college graduates and what kinds
of jobs to assign them, Liaoning Province announced
on May 27 that college graduates are expected to
regard themselves not as an elite group but as
ordinary workers. In late April, the provincial
radio broadcast the texts Df two wall posters, one
of which contended that highly trained college
graduates would be wasting their education if they
were assigned to positions as "ordinary" workers,
and the other insisting that college graduates
are no better than anyone else. The recently
announced resolution of this conflict came after
"heated dqbate" that was not conducted in the open
media and therefore did not become a national issue.
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The announcement was conciliatory in its attitude
toward the writer of the now-discredited poster
and toward others who supported this view. Local
officials were said to have used "patience" and
"reason" to persuade them to change their minds.
The writer of the "losing" poster made some valid
arguments that are generally in line with China's
current preoccupation with economic progress and
modernization. Liaoning's decision to endorse the
opposing argument, however, suggests that the edu-
cation issue remains highly contentious.
The Chinese press has reported in a favorable
light the results of President Ford's meeting with
Egyptian President Anwar Sadat in Salzburg. In a
news release on June 3, NCNA sought to convey the
impression that the talks were held in a cooperative
spirit and were productive. More specifically, it
gave positive treatment to the announcement that the
US is prepared to provide Cairo with long-term
economic aid and to the news that arrangements are
being made for an exchange of US-Egyptian presiden-
tial visits. It also raised the possibility that
Secretary Kissinger might undertake another round
of shuttle diplomacy.
The article mentioned that the US will pro-
pose its own plan for the settlement of the Middle
East problem and linked this to President Ford's
tp,lks with Israeli Prime Minister Rabin in Washington
this week. Peking obviously hopes that the US will
direct most of th^ rr3ssure for concessions at Tel
Aviv, a position which Chinese diplomats abroad have
been voicing since the breakdown of Secretary
Kissinger's shuttle diplomacy in March. The Chinese
believe that unless such pressure is brought to bear,
the US risks losing the initiative in Middle East
diplomacy to the Soviet Union. China has been de-
cidedly unenthusiastic about a reconvened Geneva
conference, fearing that this will give Moscow a
larger voice in any settlement.
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May 23 Chinese military friendship delegation
arrives in the Sudan.
May 27
May 28
May 29
May 30
Egyptian trade delegation led by Min-
ister of Trade arrives in Peking; May
31--signs 1975 trade protocol.
Chao Hsin-chu, a civilian veteran,
identified as first secretary of
Hupeh.
Syrian trade union delegation arrives
Peking.
Vice Foreign Minister Ho Ying greets
the Palestine 'Saiga' delegation in
gresses.
Inner Mongolia elects delegates to
National Trade Union, Women's Federa-
tion and Young Communist League con- 25X1
Chinese military delegation headed by
Deputy Chief of Staff Hsiang Chung-hua 25X1
vi a i l Vrnrrna l w4 n
Romanian party leader Ceausescu receives
+a~,.aau c~+ IJx V11111y L' U-11.71G11y .
June 1 Trinidad and Tobago oil delegation ar-
rives in Peking. F_ -1 25X1
June 2 Teng Hsiao-ping receives delegation of
American Society of Newspaper Editors.
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June 2 General manager of the China ocean
Shipping Company departs to attend
the reopening of the Suez Canal.
Vice Foreign Minister Ho Ying meets
with delegation of the Popular Move-
ment for thA r.; reratior& of Angola.
June 3 Thai parliament "goodwill" missioai
concludes one-week visit to China.
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New China News Agency (NCNA) delega-
tion, headed by NCNA director Chu
Mu-chih, arrives in Tokyo as quests
of Kyodo News Service.
June 4 Philippine trade and manufacturing
Keng Piao, head of the International
Liaison Department, fetes a delega-
tion of the Revolutionary Communist
delegation arrives in Peking.
Party of Chile.
June 6 Australian foreign Minister Don
Villesce arrives in Peking and
meets with Premier Chou En-lai.
June 7 Philippine President Ferdinand
Marcos arrives in Peking to conclude
agreement on establishment of diplo-
matic relations;' meets with Chairman
Mao and Premier Chou there.
June 9 Joint communique, issued from Peking,
announces establishment of diplomatic
relations betwoen ;'hina and the
Philippines.